Mcle Self-study: Clear and Convincing or Preponderance of the Evidence: What's a Workplace Investigator to Do?

• Publication year: 2022
• Author: Michael A. Robbins

MCLE SELF-STUDY: CLEAR AND CONVINCING OR PREPONDERANCE OF THE EVIDENCE: WHAT'S A WORKPLACE INVESTIGATOR TO DO?

AUTHORS^*

Michael A. Robbins

Scott Barer

The recent California Supreme Court decision in Lawson v. PPG Architectural Finishes, Inc., 12 Cal. 5th 703 (2022) held that Cal. Lab. Code¹ § 1102.6, and not the traditional McDonnell Douglas v. Green burden-shifting test,² supplies the applicable framework for litigating and adjudicating section 1102.5 whistleblower claims.³ The Lawson holding has created a quandary for workplace investigators on the standard for evaluating whistleblower retaliation.

THE LAWSON CASE AND HOLDING

In Lawson, a territory manager for paint manufacturer brought action against his employer for whistleblower retaliation and wrongful termination,⁴ in violation of

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§ 1102.5.⁵ The manager alleged that his employer terminated him after he reported that paints were purposefully "mis-tinted," so that retail stores would have to sell them at a discount, and the manufacturer could avoid having to buy back the paint.⁶

The District Court entered summary judgment for the employer.⁷ Applying the McDonnell Douglas test, the District Court reasoned that the paint manufacturer set forth a legitimate, nondiscriminatory reason for Lawson's termination, namely failing to meet sales targets, and that plaintiff failed to produce sufficient evidence that the termination was pretextual.⁸

On appeal to the Ninth Circuit, plaintiff argued that the District Court should have applied the standard set forth in § 1102.6 rather than the McDonnell Douglas standard. Because of "widespread confusion as to which evidentiary standard actually applie[d],"⁹ the Ninth Circuit certified a question to the California Supreme Court on whether the California Labor Code or the McDonnell Douglas standard applied to California whistleblower retaliation claims.¹⁰

The California Supreme Court granted review.¹¹ Examining legislative history, the Supreme Court explained that in 2003, the Legislature had amended the California Labor Code's whistleblower protections in response to a series of high-profile corporate scandals and reports of illicit coverups.¹² The 2003 amendments added § 1102.6, a procedural provision that provides that in a civil action or administrative proceeding brought pursuant to § 1102.5, "once it has been demonstrated by a preponderance of the evidence that an activity proscribed by [§] 1102.5 was a contributing factor in the alleged prohibited action against the employee, the employer shall have the burden of proof to demonstrate by clear and convincing evidence that the alleged action would have occurred for legitimate, independent reasons even if the employee had not engaged in activities protected by [§] 1102.5."¹³

After § 1102.6 took effect, while some California courts identified that provision as supplying the applicable standards for claims of whistleblower retaliation under section 1102.5, other courts continued to rely on the McDonnell Douglas framework without mentioning § 1102.6.¹⁴ To the extent these decisions are inconsistent with Lawson, the California Supreme Court disapproved them.¹⁵

For workplace investigators, Lawson presents challenges when a complainant raises both types of retaliation allegations for: (1) engaging in protected activity under state and federal discrimination laws; and (2) whistleblowing under § 1102.5.

RETALIATION UNDER THE DISCRIMINATION LAWS: THE TRADITIONAL APPROACH

Under the Fair Employment and Housing Act (FEHA)¹⁶ and Title VII of the 1964 Civil Rights Act,¹⁷ the plaintiff must first establish a prima facie case of retaliation. A prima facie case would show that the plaintiff engaged in protected activity, was subjected to an adverse employment action, and a causal link between the two exists.¹⁸ The burden then shifts to the defendant to articulate a legitimate, non-retaliatory explanation for the adverse action.¹⁹ If the employer successfully rebuts the inference of retaliation, the burden shifts back to the plaintiff to show that the defendant's proffered explanation is a pretext for impermissible retaliation.²⁰ The evidentiary standard used for all three burden-shifting prongs is preponderance of the evidence.²¹

As result, workplace investigators use the same preponderance of evidence standard applied by civil courts in discrimination and harassment cases.

RETALIATION UNDER THE WHISTLEBLOWING LAWS

However, analysis of retaliation under the California Labor Code is different.

Among other things, § 1102.5 prohibits an employer from retaliating against an employee because the employer believes that the employee disclosed or may disclose a violation of state or federal statute, or a violation of or noncompliance with, a local, state, or federal rule or regulation to a government or law enforcement agency, to a person with authority over the employee, or to another employee who has authority to investigate.²²

The evidentiary standard for a claim under § 1102.5 is found in § 1102.6: "In a civil action . . . brought pursuant to Section 1102.5, once it has been demonstrated by a preponderance of the evidence that an activity proscribed by Section 1102.5 was a contributing factor in the alleged prohibited action against the employee, the employer shall have the burden of proof to demonstrate by clear and convincing evidence that the alleged action would have occurred for legitimate, independent reasons even if the employee had not engaged in activities protected by Section 1102.5"²³ (emphasis added).

This two-stage burden shifting is very different from the three-stage test in McDonnell Douglas. The former subjects the employer to a much stricter evidentiary standard in order to prove it acted for legitimate business reasons.

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THE LAWSON HOLDING

In essence, the Lawson court found that the language in the Labor Code means what it says.

Specifically, whistleblower claims brought by a current or former employee are to be analyzed under the framework set forth in § 1102.6. Under this standard, an employee need only show by a preponderance of the evidence that an alleged whistleblowing activity was a "contributing factor" to an adverse employment action.

Once the plaintiff establishes this prima facie case, the claim may proceed unless the employer can demonstrate by clear and convincing evidence that it would have taken the same adverse action (discharge or otherwise) for "legitimate" reasons independent from the employee's protected whistleblowing activities. Under this two-stage burden shifting, "pretext" plays no part.²⁴

PRACTICAL IMPLICATIONS FOR WORKPLACE INVESTIGATORS

The Department of Fair Employment and...