Supreme Court Decision--"Whistleblower" Law

The Law--Whistleblower Retaliation Law in California--Yanowitz v. L'Oreal USA, Inc. 36 Cal.4th 102

The following is my briefing of a major California Supreme Court case that expands the protections available to whistleblowers:

I. Yanowitz v. L'Oreal USA, Inc. 36 Cal.4th 1028, 32 Cal.Rptr.3d 436 (Aug. 11, 2005)

II. The Yanowitz Facts: Yanowitz hired in 1981 as sales rep. for L'Oreal. 1986 promoted to Regional Sales Manager. From '86 to '96 she was rated consistently high in job evaluations. She had some "consistent" entries however for "poor listening and communication" skills.

In 1997, Yanowitz named regional sales manager of the year for 1996. Biggest bonuses in Company given to her in 96 and 97.

Roderick was Yanowitz's immediate boss. Roderick reported to Wiswall. In June 1997, Roderick wrote a memo to Yanowitz's file: "poor listening skills" & "negative attitude". In August 1997, Roderick repeated these criticisms.

Fall, 1997, during tour by Wiswall and Yanowitz at Macy's location, San Jose, Wiswall instructed Yanowitz to terminate a dark skinned sales rep he did not find sufficiently physically attractive, and expressed a preference for fair-skinned blondes and directed Yanowitz to "get me someone hot". When Wiswall returned to the store to discover Yanowitz had not dismissed the sales rep, he stated: "GD it, get me one that looks like that", referring to a customer whom he saw at the time.

On several subsequent occasions, Wiswall asked if Yanowitz had fired the rep and replaced her. Yanowitz had not, and asked for Wiswall's justification for the directive. In March 1998, Yanowitz learned the sales rep was a top seller. She privately refused to fire her. She complained to no one that she was being pressured to fire the sales associate. She never stated to anyone that she thought Wiswall's directive was discriminatory.

In April 1998 Roderick began "seeking dirt" on Yanowitz from subordinates. In May 1998, he subjected her to stressful and intimidating meetings about her work performance. In June 1998 Roderick and Wiswall audited her expense reports. Wiswall screamed at Yanowitz in front of her staff. In June, 1998, Wiswall asked Roderick if he was "writing" the case against Yanowitz, whereupon Roderick, getting the message, did a quick series of "write-ups" on Yanowitz. In July 1998, Roderick wrote a detailed write up of an incident occurring in March 1998.

Yanowitz asked to meet to hold a "severance" negotiation shortly after the July 1998 "write-up", but also asked for time to give a written rebuttal to the July, 1998 memo from Wiswall, which was refused. Yanowitz was being treated for work related stress. Within two days post July 1998 meeting, she left on disability leave, and did not return.

III. The Yanowitz Issues:

A. Issue No. 1: Is an employee's refusal to follow a supervisor's order to fire another employee for reasons she privately believes to be discriminatory a "protected activity" under FEHA? (The Fair Employment & Housing Act)

PLAINTIFF'S ARGUMENT: The FEHA protects employees who "oppose" a discriminatory practice. Yanowitz reasonably believed Wiswall's directive was illegal because discriminatory based on sex. Wiswall's statements to Yanowitz when he discovered she had not fired the sales associate indicated his anger at her delay. She kept asking for justification for the decision, also indicating her opposition. Wiswall's statement to Yanowitz was so clearly discriminatory based on his sexual bias and desire that he knew Yanowitz's delay and refusal was based on opposition to his discriminatory purpose.

DEFENDANT'S ARGUMENT: The law has consistently required a complaint of some kind, even if the words of the complaint do not explicitly state "discrimination". Here, Yanowitz was completely silent as to why she refused to fire the associate. How can the company take corrective action or resolve a discrimination complaint informally unless management is put on notice of the problem? Besides, the history of problems with Yanowitz predates her so-called opposition, and those were the real reason for why she was "written up" in 1998 and before.

Court held: The total circumstances lead to a conclusion that Wiswall and Roderick understood that Yanowitz's refusal to follow their directive was because she disagreed with what she believed was a sexually discriminatory purpose. Therefore an explicit complaint was not required. In fact, resistance without any complaint whatever can be sufficient "opposition" to an illegal employment practice in the right circumstances.

B. Issue No. 2: How do we define a "adverse employment action", that is, what degree of harm need be done to an employee, as a condition of allowing a cause of action for damages?

1. What degree or severity of harm to the employee's career is required to qualify as a legally sufficient harm?

PLAINTIFF'S ARGUMENT: FEHA, Govt. C. Sec. 12940(h) [anti-retaliation section] uses terms not found in Govt. C. Sec. 12940(a) [anti-discrimination section]. The extra words are "otherwise discriminate against" a person who complains or opposes illegal discrimination. Well, these extra words would be unnecessary if not intended to confer more protection on whistleblowers. The legislature sought this extra protection in order to deter retaliatory conduct. So, the argument goes, even retaliatory acts short of termination, demotion, pay-cuts, and denials of promotion or pay raises, could be qualifying retaliatory acts. For example, repeated write-ups could qualify because they put a cloud over future advancement opportunities, or verbal abuse creating emotional stress should qualify. Such actions should be included in the "illegal" category of acts because these "less than severe" actions still deter employee's from complaining

DEFENDANT'S ARGUMENT: The words in Sec. 12940(h) don't add any significant meaning to the nearly identical words found in Sec. 12940(a). Both sections refer to discrimination "in the terms, conditions or privileges of employment". Acts by an employer that do not clearly affect the "terms, conditions or privileges of employment" are not illegal discriminatory acts under the F.E.H.A. The federal court decisions on this point support this view.

Court held: The employee must demonstrate that the employer's retaliation caused a "material affect" on the "terms, conditions, or privileges of employment". The "material affect" does not require a demonstration of measurable economic harm, nor does it require a "tangible psychological injury". (Harris v. Forklift Sys., Inc. (1993) 510 U.S. 17. The CA S. Ct. took an explicitly "middle ground" between the extremes of job loss and "hurt feelings" because of an isolated instance of employer rudeness. The test is whether the conduct is so severe or so pervasive that it produces a "discriminatory abusive work environment". [Meritor Sav. Bank v. Vinson (1986) 477 U.S. 57, 67.]. The test is whether the discriminatory/retaliatory conduct: 1) detract from employees' job performance; 2) discourage employees from remaining on the job; 3) keeps employees from advancing in their careers.

2. Is each "harm" to be viewed in isolation and separately from every other "harm" if the retaliation is ongoing? (Thereby creating separate causes of action for each wrong)

PLAINTIFF'S ARGUMENT: Roderick and Wiswall conducted a continuing campaign of retaliation over a period of two years (going back to June 1997 through November 1998. The acts were all connected by frequency of occurrence, connected as kinds of employment retribution, and all connected by the purpose to "intimidate, disempower & punish" Yanowitz. The series of connected acts should be considered as "one act" of retaliation.

DEFENDANT'S ARGUMENT: Each separate act produces a separate injury, and is a separate wrong. Each act should be separately considered to determine if that isolated act is severe enough to effect the "terms, conditions or privileges of employment". Only those acts separately meeting the test of "material affect" should be the basis for a suit. If it doesn't meet the test, its irrelevant as evidence.

Court held: All the separate acts of retaliation are to be considered collectively if the employee alleges an ongoing pattern of related retaliatory actions. If the actions collectively produce a "material affect" on the terms, conditions and privileges" of employment, then "an adverse employment action" has occurred.

3. Does the Statute of Limitations bar retaliatory actions occurring outside the statutory period, or will we apply the "continuing violations doctrine" to retaliation cases?

PLAINTIFF'S ARGUMENT: True, Yanowitz filed her D.F.E.H. complaint in June 1999, and given the usual one year statute of limitations, acts before June 1998 should not be considered. But, those pre-June 1998 acts were part of the campaign. They are like one continuous act, and should all be captured by the June 1999 filing because the last act in the pattern of retaliation occurred after June 1998. The Court should use the "continuing violation doctrine" it adopted in Richards v. CH2M Hill, Inc. (2001) 26 Cal.4th 798, 111 Cal.Rptr.2d 87, 29 P.3d 175 (Richards ).

DEFENDANT'S ARGUMENT: The alleged illegal acts discrimination are time specific, and each is separate and distinct. Each is the basis for a separate cause of action. The statute of limitations should be applied strictly. Also, the "continuing violation doctrine" should apply only to harassment claims, not to claims of discrimination or retaliation. National Railroad Passenger Corp. v. Morgan (2002) 536 U.S. 101.

Court held: Richards applies in reasoning and purpose to retaliation claims. Morgan's reasoning is rejected for California retaliation claims. Following Richards is wise because it will avoid the Plaintiff filing a series of small, independent, but related claims. It reasons that if a course of conduct is viewed legally as a "continuing violation", then it also should be viewed as "one act" for purposes of the statute of limitations. Following Richards will prevent premature lawsuits, and will encourage informal resolution of disputes.

C. Issue No. 3: Did Yanowitz meet her burden of proving that L'Oreal's stated reasons for discipline were false? ["pretextual"]

PLAINTIFF'S ARGUMENT: Yanowitz had some problems, but the evidence is that only after her "opposition" to Wiswall's directive did she come under a new scathing attack.

DEFENDANT'S ARGUMENT: L'Oreal produced evidence that Yanowitz had serious problems with "listening and communication" for years before the alleged "opposition" to discrimination. Customers complained about her years before. Managers noted her "negative attitude" years before. These problems existed between 1987 and 1996.

Court held: There was a "triable issue of fact" whether L'Oreal was lying about its reasons for discipline. Yes, the record shows a history of problems, but it also shows she received "the sales manager of the year" award the year before her "opposition", and in previous years, despite her problems, she was rated overall as "above expectations". That Roderick actively sought out negative feedback about Yanowitz in 1998 strongly suggests "pretext".

What You Can Do

1. Yanowitz was silent, and still had a case to make, but you should not be silent. Only extraordinary circumstances like Yanowitz's will legally permit the employee's privately motivated resistance be interpreted as a "opposition to discrimination" known to be such by the employer.

2. Why be indirect when you can be direct? If you're going to complain, then put all your cards on the table. If you think the boss's conduct is discriminatory, say so, and say why. Gather your thoughts, and provide the specifics. Don't be deterred by not having direct information, such as an admission of purpose, that the conduct is discriminatory. Providing information showing of a double standard based on sex, race, age, disability, medical condition, religion, national origin, or other protected category, is sufficient.

3. From the time you complain, be prepared for the worst (while hoping for the best). Retaliation may be subtle, progressive, and over a long duration of time. Therefore, keep track of each retaliatory incident, as it occurs. Be prepared to rebut unjust performance criticisms by your own written statement of the true facts, and request the record be placed in your personnel file. Keep this record off-site for later retrieval in the event the employer later denies receiving it.

4. If matters become intolerable, you may consider finding other employment. Before doing so, put upper management on notice of the intolerable conditions, and how they are affecting your physical and emotional health. If the employer does nothing, the employer may be liable for "constructive termination" of employment. Even if there is no "constructive termination", you will still have the right to recover damages for emotional injury caused by the discrimination and harassment.

Conclusion

Employee Rights Attorney Frank Pray

5160 Campus Drive

Newport Beach CA 92660

949.251.1006

877.job.atty

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