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Sutton v. BDT Products, Inc.

California Court of Appeals, Fourth District, Third Division
Jun 29, 2011
No. G043899 (Cal. Ct. App. Jun. 29, 2011)

Opinion

NOT TO BE PUBLISHED

Appeal from a judgment of the Superior Court of Orange County, No. 30-2008-00116576, Randell L. Wilkinson, Judge.

Blanchard, Krasner & French, A. Kipp Williams, Alan Keith Williams and Michael Weitz for Plaintiff and Appellant.

Gordon & Rees, M.D. Scully, and Jason R. Dawson for Defendant and Respondent.


ARONSON, J.

Plaintiff Thomas Sutton appeals from a judgment entered after the trial court granted defendant BDT Products, Inc.’s (BDT) summary judgment motion. Sutton sued BDT on a single cause of action for wrongful termination in violation of public policy. He claimed BDT terminated him in retaliation for reporting his concerns regarding BDT’s possible state and federal tax law violations to other BDT executives after BDT’s president repeatedly told him not to raise the matter with anyone else.

Sutton contends the trial court erred when it found that (1) Sutton’s complaints to BDT executives did not constitute activity protected by a fundamental public policy, (2) no causal link existed between his complaints and his termination, and (3) Sutton failed to present sufficient evidence establishing a triable issue of material fact on whether BDT’s stated, nonretaliatory reason for terminating Sutton was untrue or pretextual. We agree and reverse the judgment in BDT’s favor.

I

Facts and Procedural History

Sutton, a certified public accountant, joined BDT as a temporary employee to help audit its financial records in early 2006. Pleased with Sutton’s work, BDT later offered him a full-time position as its corporate controller. Sutton accepted the offer and assumed his new duties in May 2006. Sutton’s responsibilities included preparing internal financial statements and managing BDT’s financial reporting.

Within a few months Sutton became concerned BDT may have violated state and federal tax laws because it failed to report all taxable income it paid its employees. Sutton identified the following issues: (1) BDT paid certain employees monthly auto and home office allowances without tracking the employees’ actual expenses or reporting the payments as taxable income for the employees; (2) BDT failed to pay a Michigan employee’s state and federal payroll taxes despite withholding the taxes from the employee’s salary; (3) BDT paid the life insurance premiums for certain employees without reporting those payments as taxable income to the employees; and (4) BDT contributed to deferred compensation accounts at Fidelity Investments for two executives — president Glenn Klein and corporate secretary Douglass Bass — without obtaining documentation from Fidelity showing the accounts complied with tax laws and without reporting the contributions to state or federal tax authorities.

During 2006 and 2007, Sutton repeatedly brought these issues to Klein’s attention. Typically, Klein responded by claiming Sutton misunderstood the controlling tax laws or asking, “What is the audit risk?” Klein, however, did nothing to address Sutton’s inquiries and specifically instructed him not to discuss the issue with any other BDT executive. On one occasion, Klein warned Sutton, “I’ll run you down the road if you ever try to shake me down.” Sutton grew increasingly frustrated by Klein’s failure to address these matters, but Sutton followed Klein’s instruction not to tell anyone else.

Although Sutton continued to raise his concerns with Klein, his complaints did not affect his standing with BDT. Sutton received pay increases in early 2007 and 2008 and also several merit-based bonuses during that same period.

In June 2008, BDT employee Sean Murphy e-mailed Bass to document three “incidents” in which Sutton created a hostile work environment by verbally abusing and threatening Murphy. Murphy complained Sutton frequently reacted to the point of near violence when coworkers disagreed with him. BDT contends Klein took Sutton to lunch to “counsel” him about this behavior, but Sutton denies Klein ever counseled him or raised any concerns regarding Sutton’s behavior toward any employee. Sutton asserts he never received any verbal or written warnings from anyone at BDT regarding his work or behavior.

In July 2008, after learning Klein would retire in August, Sutton decided to disregard Klein’s instructions and share his concerns with other BDT executives. On July 18, 2008, Sutton described BDT’s possible tax violations to Bass and Daniel Jan, a BDT vice-president and the executive named to succeed Klein as BDT’s president. Both Jan and Bass promised to address the issues and resolve Sutton’s concerns. Sutton again met with Jan and Bass on July 21, 2008, to further explain his views. On the morning of July 24, 2008, Sutton and Bass visited Fidelity Investments to investigate BDT’s contributions to the deferred compensation accounts for Bass and Klein. They discovered the accounts were not properly structured retirement accounts.

When Sutton returned from lunch on July 24, 2008, he received an e-mail from Bass placing Sutton and six other office personnel on paid administrative leave effective immediately. Bass was the only office employee not placed on leave. On July 26, 2008, Sutton received an e-mail from the chairman of BDT’s board of directors instructing him to “cease and desist” all activities relating to BDT, but also assuring Sutton that qualified, independent auditors would conduct a thorough investigation regarding his tax violation allegations.

On July 28, 2008, while Sutton remained on leave, BDT employee Tom Myers sent an e-mail to Jan and Bass describing several complaints about Sutton’s behavior similar to the complaints Murphy raised in his June 2008 e-mail. After receiving Myers’s e-mail, BDT instructed its corporate counsel to investigate the complaints about Sutton’s behavior toward other employees. BDT’s counsel interviewed several employees regarding their experiences with Sutton, but did not interview Sutton. Nor did BDT inform Sutton about the complaints or the subsequent investigation.

On August 6, 2008, BDT’s counsel prepared a confidential memorandum on the investigation into Sutton’s behavior. At BDT’s Board of Directors meeting held on August 12, 2008, corporate counsel presented its conclusions regarding the investigation and recommended BDT terminate Sutton based on employee complaints. BDT’s board voted to follow counsel’s advice and terminate Sutton’s employment. The board also directed counsel to prepare a report regarding its investigation for inclusion in Sutton’s personnel file. Counsel prepared a report dated August 14, 2008.

On August 15, 2008, Sutton received a letter informing him BDT immediately terminated his employment, but no reason was given for taking this action. Sutton also received a box from BDT returning his personal belongings from his office.

In October 2008, Sutton requested a copy of his personnel file. The copy he received did not include the report BDT’s corporate counsel prepared regarding its investigation into Sutton’s behavior. The only reason given for Sutton’s termination appeared on a “Termination Check List, ” which stated “Reason for Termination[:] Creating Hostile Work Environment in Violation of Company Policy.”

In December 2008, Sutton filed this action, asserting a single claim for wrongful termination in violation of public policy. Sutton alleged BDT terminated him in retaliation for reporting BDT’s failure to report all taxable income it paid to its employees. Sutton further alleged his complaints served the public interest because they deterred criminal activity and BDT’s underlying conduct harmed the public at large by depriving the government of tax revenues.

BDT moved for summary judgment on several grounds. First, BDT argued Sutton’s termination did not violate public policy because his internal complaints to BDT executives did not constitute protected activity. Second, BDT argued no causal connection existed between Sutton’s complaints and his termination because BDT did not fire Sutton until two years after he first reported his tax violation concerns to BDT. Finally, BDT asserted it terminated Sutton for a legitimate, nonretaliatory reason — namely, the complaints about his behavior toward other employees.

The trial court agreed with BDT and granted the summary judgment motion. The trial court thereafter entered judgment in BDT’s favor and Sutton timely appealed.

II

Discussion

A. Governing Legal Standards

1. Wrongful Termination in Violation of Public Policy

Employment in California is generally terminable at either party’s will. (Lab. Code, § 2922.) “But the employer’s right to discharge an ‘at will’ employee is still subject to limits imposed by public policy, since otherwise the threat of discharge could be used to coerce employees into committing crimes, concealing wrongdoing, or taking other action harmful to the public weal.” (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 665.)

Thus, a wrongful termination claim lies against an employer who terminates an employee in retaliation for engaging in an activity protected by a fundamental public policy. (Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 176.) In trying an employee’s claim for wrongful termination in violation of public policy, California courts utilize the three-stage, burden shifting framework adopted by the United States Supreme Court in McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792. (Loggins v. Kaiser Permanente Internat. (2007) 151 Cal.App.4th 1102, 1108 1109 (Loggins).)

In the first stage, the employee must establish a prima facie case of retaliation. This requires a showing the employee (1) engaged in an activity protected by a fundamental public policy, (2) “‘“was thereafter subjected to adverse employment action by [his or] her employer, ”’” and (3) a causal link existed between the employee’s protected activity and the adverse employment action. (Morgan v. Regents of University of California (2000) 88 Cal.App.4th 52, 69 (Morgan); Loggins, supra, 151 Cal.App.4th at p. 1109.)

If the employee establishes a prima facie case, a presumption of retaliation arises and the burden shifts to the employer to rebut that presumption. (Scotch v. Art Institute of California (2009) 173 Cal.App.4th 986, 1004 (Scotch); Morgan, supra, 88 Cal.App.4th at p. 68.) To do so, the employer must produce admissible evidence raising a genuine issue of material fact that the employer took its actions for a legitimate, nonretaliatory reason. (Ibid.)

“If the employer produces evidence showing a legitimate reason for the adverse employment action, ‘the presumption of retaliation “‘“drops out of the picture, ”’”’ [citation], and the burden shifts back to the employee to provide ‘substantial responsive evidence’ that the employer’s proffered reasons were untrue or pretextual. [Citation.]” (Loggins, supra, 151 Cal.App.4th at p. 1109; see also, Scotch, supra, 173 Cal.App.4th at p. 1004.) “‘[T]he plaintiff may establish pretext “either directly by persuading the court that a discriminatory reason more likely motivated the employer or indirectly by showing that the employer’s proffered explanation is unworthy of credence.”’ [Citations.]” (Morgan, supra, 88 Cal.App.4th at pp. 68-69.)

2. Summary Judgment for Wrongful Termination Claims

Summary judgment is properly granted when there is no triable issue on any material fact and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) A defendant seeking summary judgment bears the initial burden to prove the plaintiff’s cause of action has no merit by showing either the plaintiff cannot establish one or more elements of the cause of action or a complete defense exists. (Id. at § 437c, subd. (p)(2).) Once the defendant meets his or her burden, the burden shifts to the plaintiff to show a triable issue of fact exists on the cause of action. (Ibid.)

“‘A defendant employer’s motion for summary judgment slightly modifies the order of [the McDonnell Douglas] showings....’” (Scotch, supra, 173 Cal.App.4th at p. 1005.) The employer bears the initial burden to either (1) negate an essential element of the employee’s prima facie case or (2) establish a legitimate, nonretaliatory reason for terminating the employee. (Wills v. Superior Court (2011) 195 Cal.App.4th 143, 160 (Wills).)

We review a trial court’s decision granting summary judgment de novo. We are not bound by the trial court’s stated rationale, but independently determine whether the record supports the trial court’s conclusion the plaintiff’s claim failed as a matter of law. (Wills, supra, 195 Cal.App.4th at p. 161.)

“‘“[W]e must view the evidence in a light favorable to plaintiff as the losing party [citation], liberally construing [plaintiff’s] evidentiary submission while strictly scrutinizing the defendants’ own showing, and resolving any evidentiary doubts or ambiguities in plaintiff’s favor.” [Citation.]’ [Citation.] [¶] ‘“In the summary judgment context, ... the evidence must be incapable of supporting a judgment for the losing party in order to validate the summary judgment.”’ [Citation.] ‘“Thus even though it may appear that a trial court took a ‘reasonable’ view of the evidence, a summary judgment cannot properly be affirmed unless a contrary view would be unreasonable as a matter of law in the circumstances presented.” [Citation.]’ [Citation.]” (Sandell v. Taylor-Listug, Inc. (2010) 188 Cal.App.4th 297, 308.)

B. BDT Failed to Negate an Essential Element of Sutton’s Prima Facie Case

BDT’s summary judgment motion asserted Sutton could not show (1) his internal complaints to BDT constituted activity protected by a fundamental public policy, or (2) a causal link existed between his protected activity and his termination. We disagree and conclude BDT failed to negate an essential element of Sutton’s prima facie case.

BDT does not dispute it subjected Sutton to an adverse employment action, the final element of Sutton’s prima facie case. (Morgan, supra, 88 Cal.App.4th at p. 69; Loggins, supra, 151 Cal.App.4th at p. 1109.)

1. Sutton’s Internal Complaints Constitute Protected Activity

The first element of a prima facie case for wrongful termination is that the employee engaged in an activity protected by a fundamental public policy. (Morgan, supra, 88 Cal.App.4th at p. 69; Loggins, supra, 151 Cal.App.4th at p. 1109.) A fundamental policy is beneficial to the public and embodied in a statute or constitutional provision. (Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, 1256 (Turner).)

Reporting an alleged “violation of a statute of public importance” (Turner, supra, 7 Cal.4th at p. 1256) or “other illegal, unethical or unsafe practices” in the workplace are activities protected by a fundamental public policy (Collier v. Superior Court (1991) 228 Cal.App.3d 1117, 1122 (Collier)). In Collier, the Court of Appeal held an employee engages in protected activity when the employee “report[s] to his or her employer reasonably suspected illegal conduct by other employees that harms the public as well as the employer....” (Collier, at pp. 1119-1120.)

The plaintiff in Collier worked for a record company and suspected other employees were illegally shipping large quantities of free, promotional recordings to certain retailers for unauthorized sale to the public. The record company terminated the plaintiff shortly after he reported his suspicions to management. He sued for wrongful termination in violation of public policy, alleging the record company terminated him for making the reports. The trial court sustained the record company’s demurrer, concluding the plaintiff’s reports benefitted no one other than the record company and therefore did not constitute a protected activity. (Collier, supra, 228 Cal.App.3d at pp. 1120 1121.)

The appellate court in Collier reversed, concluding the fundamental public policy of deterring crime and encouraging employees to report suspected illegal activity in the workplace protected the plaintiff’s reports to the record company. The conduct the plaintiff reported potentially violated laws against bribery and kickbacks, embezzlement, tax evasion, antitrust activity, and possibly drug trafficking and money laundering. (Collier, supra, 228 Cal.App.3d at pp. 1122-1123, 1127.) The reports benefited the public not only by advancing its interest in prosecuting crime in the workplace, but also by protecting potential victims harmed by the illegal activity — the recording artists deprived of royalties on the illegal sales of promotional recordings, the state and federal taxpayers deprived of tax revenues on those sales, and the legitimate retailers competing with the retailers making the illegal sales. (Id. at p. 1123.) Finally, the Collier court found this fundamental public policy embodied in Labor Code section 1102.5, subdivision (b), which prohibits employers from retaliating against an employee for reporting suspected illegal activities to the government. The Collier court explained, “[e]ven though the statute addresses employee reports to public agencies rather than to the employer and thus does not provide direct protection to [the plaintiff] in this case, it does evince a strong public interest in encouraging employee reports of illegal activity in the workplace.” (Collier, supra, 228 Cal.App.3d at p. 1123.)

Here, Sutton reported to his employer numerous instances in which he believed BDT violated state and federal tax laws by failing to report taxable income paid to its employees and, in one instance, failing to pay the payroll taxes on an employee’s salary. As in Collier, these reports served the fundamental public policy of deterring crime and encouraging employees to report suspected illegal activity in the workplace. The conduct Sutton reported potentially violated tax laws and therefore the reports benefited the public treasury and advanced the public interest in a workplace free from crime.

BDT attempts to distinguish Collier, arguing noncompliance with the tax code was incidental to the illegal distribution of free promotional recordings for unauthorized sale to the public, a violation of several criminal statutes. Here, BDT emphasizes Sutton alleged BDT violated only the tax code, and no one other than Sutton claimed BDT engaged in any illegal tax activity.

BDT, however, fails to cite any authority supporting its narrow interpretation of Collier. Although the conduct in Collier potentially violated numerous criminal statutes, Collier did not find protected activity based on the number of statutory violations the employee reported. Subsequent cases have not applied Collier in the narrow manner BDT urges, but instead have concluded any statutory violation will suffice, provided the law is “a statute of public importance.” (Turner, supra, 7 Cal.4th at p. 1256; Phillips v. St. Mary Regional Medical Center (2002) 96 Cal.App.4th 218, 232.) BDT does not argue that state and federal statutes requiring employers to report all taxable income they pay their employees are not laws of public importance.

BDT instead argues the alleged tax law violations Sutton raised were only minor or trivial violations and therefore the report of these insignificant matters did not constitute a protected activity. BDT, however, presented no evidence to show the potential tax law violations Sutton raised were minor or trivial. As the party seeking summary judgment, BDT must present evidence showing it is entitled to judgment as a matter of law; argument alone does not meet BDT’s burden. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854-855.)

More importantly, a claim for wrongful termination in violation of public policy depends on the importance of the statute or policy allegedly violated, not the severity or magnitude of the violation. It is of no import whether the violation was technical or egregious. Indeed, the employee need not prove a violation actually occurred; a reasonable and good faith suspicion will suffice. (Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1043 (Yanowitz) [“It is well established that a retaliation claim may be brought by an employee who has complained of or opposed conduct that the employee reasonably believes to be discriminatory, even when a court later determines the conduct was not actually prohibited by the FEHA.”]; Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 87 [“an employee need not prove an actual violation of law; it suffices if the employer fired him for reporting his ‘reasonably based suspicions’ of illegal activity”].)

Adopting BDT’s argument would undermine the fundamental public policy of deterring crime and encouraging employees to report suspected illegal activity in the workplace. An employee reporting certain conduct may not know whether it is trivial or significant. (Yanowitz, supra, 36 Cal.4th at p. 1043.) Allowing a plaintiff’s wrongful termination claim to proceed only if the plaintiff establishes a significant statutory violation would deter employees from alerting their employers to illegal activities potentially harmful to the employer and the public. (Ibid.)

Finally, both BDT and the trial court emphasized Sutton did not report his concerns to a governmental entity until after BDT placed him on administrative leave, and BDT did not discover those reports until after it terminated Sutton. Sutton, however, did not allege BDT fired him for making reports to a governmental agency. Rather, he alleged BDT fired him for reporting his suspicions to BDT itself. Collier makes clear that reports to the employer are sufficient to support a claim for wrongful termination in violation of public policy. (Collier, supra, 228 Cal.App.3d at pp. 1123-1124.)

2. A Causal Link Existed between Sutton’s Internal Complaints and His Termination

The final element of Sutton’s prima facie case is a causal link between his protected activity and his termination. (Morgan, supra, 88 Cal.App.4th at p. 69; Loggins, supra, 151 Cal.App.4th at p. 1109.) The required link “‘“may be established by an inference derived from circumstantial evidence, ‘such as the employer’s knowledge that the [employee] engaged in protected activities and the proximity in time between the protected action and allegedly retaliatory employment decision.’” [Citation.]’ [Citation.]” (Morgan, at pp. 69-70.)

For example, in Loggins, an employee established a sufficient causal link to defeat summary judgment by showing the employer terminated her one week after she made a discrimination complaint against the employer. (Loggins, supra, 151 Cal.App.4th at p. 1110.) In Flait v. North American Watch Corp. (1992) 3 Cal.App.4th 467 (Flait), a four-month interval between the protected activity and adverse employment action established the necessary causal link. (Id. at pp. 478, 479.)

Here, the evidence showed Sutton reported his suspicions to other BDT executives on July 18, 2008. Six days later, BDT placed Sutton on administrative leave and, on August 12, 2008, BDT’s board voted to terminate Sutton’s employment. This four-week interval between Sutton’s protected activity and BDT’s decision to terminate his employment establishes the causal link required for Sutton’s prima facie case.

BDT argues this timing does not establish a causal link because Sutton first reported his suspicions to Klein in 2006 and continued to discuss them with Klein throughout 2007. During that time period, Sutton received two pay raises and several merit-based bonuses. Consequently, BDT contends the required causal connection is lacking.

This argument, however, ignores the basis for Sutton’s claim. Sutton did not claim BDT retaliated against him for reporting his suspicions to Klein. Rather, Sutton claimed BDT retaliated against him for disregarding Klein’s instructions not to share his suspicions with any other BDT executive. This is a viable theory given the board of directors that voted to terminate Sutton’s employment consisted of just Klein and one other director. The reports to other executives — not the complaints to Klein — establish the timeline in evaluating the temporal proximity between Sutton’s protected activity and his termination. Accordingly, the trial court erred in finding BDT met its initial burden by negating an essential element of Sutton’s prima facie case.

C. BDT Established a Legitimate, Nonretaliatory Basis for Terminating Sutton’s Employment

As an alternative means of meeting its initial burden on summary judgment, BDT argued it terminated Sutton for a legitimate, nonretaliatory reason. This is not an onerous burden and “is generally met by presenting admissible evidence showing the defendant’s reason for its employment decision [citation].” (Wills, supra, 195 Cal.App.4th at p. 160.) Indeed, the employer’s burden is merely to present evidence showing a legitimate, nonretaliatory reason for its actions, not to persuade the trier of fact the employer terminated the employee for that reason. (Morgan, supra, 88 Cal.App.4th at p. 68.)

BDT presented evidence it received complaints about Sutton’s behavior toward other employees and directed its corporate counsel to investigate Sutton’s conduct. After completing its investigation, BDT’s counsel recommended that BDT terminate Sutton for violating company policies against harassment and creating a hostile work environment. BDT’s board voted to follow counsel’s recommendation and terminated Sutton on that ground.

In the trial court, Sutton asserted evidentiary objections to some of the evidence BDT submitted to show its reason for terminating Sutton. The trial court overruled Sutton’s objections and he now contends it abused its discretion in doing so. Sutton, however, concedes BDT presented admissible evidence showing its reason for terminating Sutton, even if the trial court had sustained his objections. For example, although Sutton objected to BDT’s corporate counsel’s report, Sutton did not object to Jan’s declaration that BDT fired Sutton based on employee complaints regarding his behavior. Indeed, Sutton himself presented evidence from his personnel file showing BDT terminated him for “Creating Hostile Work Environment in Violation of Company Policy.” BDT therefore met its initial burden to show it terminated Sutton’s employment for a legitimate, nonretaliatory reason and Sutton’s evidentiary challenges to some of the evidence does not defeat BDT’s showing.

D. Sutton Established a Triable Issue of Material Fact on Whether BDT’s Reason for Terminating Him Was Untrue or Pretextual

To defeat the summary judgment motion after BDT met its initial burden by showing it discharged Sutton for a legitimate, nonretaliatory reason, Sutton had to present a triable issue of material fact on whether BDT actually discharged him for that reason. To do so, Sutton had to offer evidence BDT’s stated reason was untrue or pretextual, or evidence BDT acted with “‘“a [retaliatory] animus, or a combination of the two, such that a reasonable trier of fact could conclude [BDT] engaged in intentional [retaliation].”’ [Citation.] [Sutton] can not ‘simply show [BDT’s] decision was wrong, mistaken, or unwise. Rather, [Sutton] “‘must demonstrate such weaknesses, implausibilities, inconsistencies, incoherencies, or contradictions in [BDT’s] proffered legitimate reasons for its action that a reasonable factfinder could rationally find them “unworthy of credence, ” [citation], and hence infer “that [BDT] did not act for the [... asserted] non[retaliatory] reasons.” [Citations.]’ [Citations.]” [Citation.]’ [Citation.]” (Morgan, supra, 88 Cal.App.4th at p. 75, original italics.)

“Both direct and circumstantial evidence can be used to show an employer’s intent to retaliate. ‘Direct evidence of retaliation may consist of remarks made by decisionmakers displaying a retaliatory motive. [Citation.]’ [Citation.] Circumstantial evidence typically relates to such factors as the plaintiff’s job performance, the timing of events, and how the plaintiff was treated in comparison to other workers. [Citations.]” (Colarossi v. Coty U.S. Inc. (2002) 97 Cal.App.4th 1142, 1153 (Colarossi).)

Sutton offered both direct and circumstantial evidence to show BDT retaliated against him for reporting his tax violation concerns to executives other than Klein. Sutton’s showing included direct evidence that Klein repeatedly instructed Sutton not to share his concerns with any other BDT executives and, on one occasion, threatened Sutton by saying, “I’ll run you down the road if you ever try to shake me down.” When combined with evidence showing Klein was one of two decisionmakers who decided to terminate Sutton, these statements logically could support a finding Klein intended to retaliate against Sutton for reporting his concerns to other BDT executives. (Colarossi, supra, 97 Cal.App.4th at p. 1153 [executive’s statement she would “get revenge” on everyone who cooperated in a sexual harassment investigation against her established a triable issue on whether the proffered, nonretaliatory reason for firing an employee who participated in the investigation was pretextual]; see also DeJung v. Superior Court (2008) 169 Cal.App.4th 533, 551 [“showing that a significant participant in an employment decision exhibited discriminatory animus is enough to raise an inference that the employment decision itself was discriminatory, even absent evidence that others in the process harbored such animus”].)

The circumstantial evidence Sutton offered to show BDT’s retaliatory intent included evidence on the timing of his termination. For nearly two years, Sutton repeatedly reported his concerns regarding BDT’s potential tax violations to Klein while following Klein’s instructions not to tell anyone else. During that period, Sutton received two pay increases and several merit-based bonuses. When Sutton eventually disregarded Klein’s instructions and shared his concerns with other executives, BDT placed him on administrative leave within six days. It also investigated his conduct toward other employees and terminated his employment less than four weeks after Sutton first shared his concerns with other executives. The timing of these adverse employment actions reasonably supports an inference Klein and BDT retaliated against Sutton for revealing potential tax law violations to other executives. (Flait, supra, 3 Cal.App.4th at p. 479 [“Pretext may also be inferred from the timing of the company’s termination decision”]; Colarossi, supra, 97 Cal.App.4th at p. 1154 [trier of fact may view the timing of an investigation into an employee’s conduct as suspicious when it follows “on the heels” of the employee providing information regarding her supervisor’s inappropriate conduct].)

Citing Loggins, BDT argues evidence of timing may establish a prima facie case or retaliation or discrimination, but it may not establish pretext. This argument, however, ignores the foregoing authorities allowing timing evidence to help establish pretext and also misconstrues the Loggins decision. Loggins did not limit timing evidence to the employee’s prima facie case, but rather stated timing evidence alone could not establish pretext. Loggins expressly acknowledged that timing evidence could establish pretext when considered in conjunction with other evidence. (Loggins, supra, 151 Cal.App.4th at pp. 1112-1113.) Here, Sutton offered evidence regarding the timing of his termination in conjunction with other evidence to create a triable factual issue regarding pretext.

Sutton’s circumstantial evidence of BDT’s retaliatory intent also included evidence regarding the circumstances surrounding the investigation into his behavior toward other employees. In establishing that behavior as its nonretaliatory reason for terminating Sutton, BDT offered evidence showing it began the investigation after Myers’s complained about Sutton’s behavior in July 2008. Other evidence, however, suggests Myers’s e-mail had nothing to do with the decision to investigate Sutton.

Myers sent his e-mail to Jan and Bass only, but both testified at deposition they did nothing in response to the e-mail. Bass testified he simply filed it away and Jan testified he could not specifically recall his response, but may have forwarded the e-mail to Klein. Klein testified he never saw Myers’s e-mail until Sutton’s counsel showed it to him during a deposition. After reviewing the e-mail, Klein testified Myers’s complaints “were funny” and explained that a trivial matter like Myers’s complaint would not be brought to his attention. Despite the fact Klein never saw Myers’s e-mail, Jan testified Klein hired counsel to investigate Sutton. This testimony reasonably could support an inference Myers’s e-mail had nothing to do with BDT’s decision to investigate Sutton less than two weeks after he disregarded Klein’s instructions and reported his tax violation concerns to other executives. Indeed, based on the foregoing evidence, a trier of fact reasonably could infer BDT began its investigation in retaliation for Sutton sharing his suspicions with other executives and Myers’s e-mail was merely an after the fact justification.

These inferences are bolstered by additional evidence showing BDT’s counsel interviewed every employee who worked with Sutton as part of the investigation, but never sought to interview Sutton. Indeed, Sutton did not learn of the investigation or the complaints regarding his behavior until after BDT terminated him. An employer’s failure to conduct a balanced or thorough investigation reasonably supports an inference the employer acted with a retaliatory or discriminatory intent. (Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 280 [“An employer’s failure to interview witnesses for potentially exculpatory information evidences pretext”]; see also Reeves v. Safeway Stores, Inc. (2004) 121 Cal.App.4th 95, 120-121 (Reeves).)

When viewed together, the foregoing direct and circumstantial evidence establishes a triable issue of material fact on whether BDT’s stated reason for discharging Sutton was untrue or pretextual. (See Johnson v. United Cerebral Palsy/Spastic Children’s Foundation (2009) 173 Cal.App.4th 740, 758 [facts that individually are not sufficient to establish a triable issue of material fact regarding pretext may nonetheless establish a triable issue “when taken together” (original italics)].) Indeed, based on Klein’s statements to Sutton, the timing of his discharge, and the facts surrounding the investigation into his conduct, a reasonable fact finder could conclude BDT’s proffered reason for terminating Sutton was not credible and BDT instead retaliated against Sutton. In reviewing a summary judgment ruling, “our analysis is confined to evaluating inferences which may, but need not, be drawn from th[e] record. It is not for us to say whether they represent the best or only inferences. Our task must end with the conclusion that they are inferences a reasonable factfinder could draw.” (Reeves, supra, 121 Cal.App.4th at p. 121, italics original.)

Sutton offered additional evidence he contends also showed BDT’s stated reason for terminating him was untrue or pretextual. Because we conclude the evidence discussed above establishes a triable issue of material fact, we need not address Sutton’s remaining evidence.

BDT argues the trial court properly granted its motion because Sutton failed to present substantial evidence showing BDT retaliated against Sutton for making complaints regarding potential tax violations. According to BDT, Sutton’s evidence amounted to little more than speculation regarding BDT’s motivation. BDT, however, ignores much of the evidence described above and fails to explain why the foregoing inferences are not reasonable.

Sutton’s evidence showing Klein told him not to share his concerns with any other BDT executive and Klein’s threat to “run [Sutton] down the road” is not speculative. It is direct evidence of statements Klein made showing a retaliatory motive and BDT neither objected to the evidence nor offered any response to it. Similarly, Sutton’s evidence regarding the timing of his termination and the circumstances surrounding BDT’s investigation into Sutton’s behavior is not speculative. Sutton offered evidence of specific facts regarding the timing of his termination and BDT’s investigation. Those facts reasonably support an inference that BDT’s stated reason for terminating Sutton was untrue or pretextual. This evidence satisfied Sutton’s burden to establish a triable issue of material fact and the trial court erred in reaching a contrary conclusion.

Because we conclude Sutton presented sufficient evidence to create a triable issue of material fact, we need not address Sutton’s contention the trial court abused its discretion in denying his request for a continuance to allow additional discovery.

III

Disposition

The judgment is reversed and the matter remanded to the trial court for further proceedings consistent with this opinion. Sutton shall recover his costs on appeal.

WE CONCUR: BEDSWORTH, ACTING P. J.IKOLA, J.


Summaries of

Sutton v. BDT Products, Inc.

California Court of Appeals, Fourth District, Third Division
Jun 29, 2011
No. G043899 (Cal. Ct. App. Jun. 29, 2011)
Case details for

Sutton v. BDT Products, Inc.

Case Details

Full title:THOMAS SUTTON, Plaintiff and Appellant, v. BDT PRODUCTS, INC., Defendant…

Court:California Court of Appeals, Fourth District, Third Division

Date published: Jun 29, 2011

Citations

No. G043899 (Cal. Ct. App. Jun. 29, 2011)