Warehime v. Farmers Ins. Exchange CA5 ( 2015 )

Filed 12/15/15 Warehime v. Farmers Ins. Exchange CA5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
SHARRON WAREHIME,
F068843
Plaintiff and Appellant,
(Super. Ct. No. 08CECG02976)
v.
FARMERS INSURANCE EXCHANGE, OPINION
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of Fresno County. Jeffrey Y.
Hamilton, Jr., Judge.
Tharpe & Howell, Christopher S. Maile, Stephanie Forman; Greines, Martin, Stein
& Richland, Robert A. Olson and Gary J. Wax for Defendant and Appellant.
Wanger Jones Helsley, Patrick D. Toole, Christine J. Levin, Dylan J. Crosby; and
Christine J. Levin for Plaintiff and Appellant.
-ooOoo-
Farmers Insurance Exchange (Farmers) challenges the jury verdict against it on
the age discrimination, retaliation and disability related causes of action brought by
Farmers’ former employee, Sharron Warehime. According to Farmers, these causes of
action are not supported by substantial evidence. Farmers additionally argues that the
trial court erred in awarding prejudgment interest and using an attorney fee multiplier.
Warehime challenges the trial court’s failure to award postjudgment attorney fees.
The record does not support the verdict on the retaliation cause of action.
However, the remaining causes of action are supported by substantial evidence. Further,
the trial court erred in awarding prejudgment interest to Warehime. However, the trial
court did not abuse its discretion in making the attorney fee award. Accordingly, the
verdict on the retaliation cause of action and the award of prejudgment interest will be
reversed. In all other respects, the judgment will be affirmed.
BACKGROUND
In 2002, Farmers began to transition its insurance claims adjusting process from a
paper based system to the customer restoration network (CRN), a centralized computer
system. Farmers hired Warehime, an experienced adjuster, to resolve leftover paper file
claims. This was a temporary job that would end when the paper files were adjusted. At
that time, Warehime was 56 years old.
Warehime adjusted paper files at three different Farmers offices. During this
period, Warehime received very positive performance reviews. For example,
Warehime’s first supervisor described Warehime as having good decisionmaking skills
and the ability “to relate to people and make them feel comfortable.” This supervisor
rated Warehime as “outstanding” in the categories of “personal development, decision-
making initiative, gathering and analyzing information, oral expression, written
expression, adaptable to change, observing rules, identifying of strengths and
weaknesses, identification of root causes, and handling special assignments.” The
supervisor found no area in which Warehime needed improvement. Moreover, in July
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2002, six months after she began at Farmers, Warehime received a superior service
award.
In August 2003, while still handling paper files, Warehime was again given a
positive performance review with no areas needing improvement. Warehime’s
supervisor noted Warehime “makes good decisions, is responsive to management and
understands the importance of a project or duty when given a special assignment. Her
completed work is documented and handled within company guidelines. She has always
been courteous and willing to help the team effort when asked to do so.”
After all the paper files were completed, Warehime was assigned to a permanent
position at the Fresno office to work as a computer-based adjuster. Warehime reported
for work in September 2003 and within a week or so, she received two days of training
on CRN.
At the Fresno office, Warehime was one of two adjusters handling the attorney-
represented claims, i.e., the injured party was represented by counsel. The other attorney-
represented claims adjuster was Nicholas McGuire.
The adjusters were supervised by branch claims supervisors. During Warehime’s
tenure, the Fresno office had two branch claims supervisors, Nancy Heins and Jim
Cavanaugh. Heins was about the same age as Warehime and was her direct supervisor.
Above the branch claims supervisors was the branch manager. At the beginning of
Warehime’s employment, Mark Burger was the branch manager. Thereafter, John
Perkins was the branch manager. Mike Smith was the division manager and oversaw
four valley offices, including Fresno.
Every claims adjuster is required to comply with the Department of Insurance
(DOI) regulations. Under these regulations, a claims adjuster must: respond within 15
days to “any communication received from a claimant, regarding a claim, that reasonably
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suggests that a response is expected”; accept or deny a claim within 40 days or request
additional time if required; and pay the claim within 30 days of settlement.
Claims adjusters employed by Farmers must also follow Farmers’ internal
policies. Upon receipt of a new attorney-represented file, a Farmers claims adjuster is
required to: (1) advise the attorney that he or she was in receipt of the claim; (2) review
the claim; (3) set reserves for the estimated value of the claim; (4) investigate the claim to
establish coverage and fault; (5) talk to the insured; (6) if possible, discuss the injuries
with the claimant; and (7) document all stages of the file handling in the CRN computer
system. Claims adjusters must also maintain a “diary,” an electronic reminder to either
review a file or complete a task.
To evaluate the value of a bodily injury claim, Farmers adjusters use a computer
program called Colossus. The adjuster inputs information regarding the claim and
Colossus generates a settlement range. However, Colossus is only a tool, not a substitute
for the adjuster’s judgment.
In February 2004, Warehime received a small caseload. However, by March
2004, Warehime’s caseload had increased to over 200 units, i.e., claims. Many of these
units Warehime inherited from another adjuster who had been terminated by Farmers.
Warehime’s supervisors acknowledged that Warehime’s workload was challenging.
During 2004, Heins created various development plans for Warehime. Heins met
with Warehime regularly to provide feedback.
In March 2004, Heins remarked that Warehime had made strides to improve her
work product and was working a very large inventory. However, Heins noted that
Warehime needed to improve on completing activities and meeting DOI time constraints.
By June 2004, Warehime had reduced her caseload from 200 units to 140 units, a
30 percent drop. On June 30, 2004, Warehime received notice that she had received a
superior service award based on the “exceptional customer service” she had provided on
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a claim. The Farmers national manager commended Warehime on her “outstanding
effort” and noted that she had set an example that her peers should follow.
In a July 2004 performance review, Heins stated that Warehime exceeded
expectations on the application of comparative negligence. Nevertheless, Warehime was
rated below expectations on file documentation and DOI regulatory compliance.
In January 2005, claims adjuster Dick Sanderson went on medical leave.
Warehime was assigned a number of Sanderson’s units. Around April 2005, McGuire
got married and was out of the office for a few weeks. During that time, the majority of
the attorney-represented cases that came in were assigned to Warehime.
In mid-January 2005, Heins gave Warehime her first year-end performance
review. Heins acknowledged that Warehime had come a long way in 2004. However,
while Warehime met expectations in most areas, she still needed to improve on quality
assurance and regulatory compliance.
Heins presented Warehime with a performance and development plan and review
in May 2005. Heins acknowledged that Warehime had received additional bulk
assignments from Sanderson and McGuire. Nevertheless, Heins criticized Warehime’s
settlement efficiency, noting that it was declining and her inventory was growing quite
large. Additionally, Warehime’s file quality was below expectations.
Warehime disagreed with the May 2005 evaluation. Warehime explained that she
had the largest inventory in the Fresno office. According to Warehime, the volume of
files she received because of Sanderson’s medical leave and McGuire’s extended
vacation was the problem, not her efficiency.
After receiving this evaluation, Warehime requested a meeting pursuant to
Farmers’ “open door” policy. In mid-May 2005, Warehime met with Heins, branch
manager Perkins and division manager Smith. Warehime expressed her concern about
receiving a higher volume of unit assignments than the other adjusters. Warehime
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explained that the size of her case load negatively impacted the quality of her work.
Smith confirmed that Warehime had a disproportionately high case load. Farmers
acknowledged the need to balance the unit assignments and to work with Warehime to
reduce her case load. However, no such efforts were ever made.
In late September 2005, Heins sent a memo to Warehime outlining a development
plan and explaining the areas of her job performance that needed to be improved. These
areas were: meeting the DOI time constraints; carefully reviewing demand packages and
properly using Colossus to determine settlement ranges; documenting the files by
showing the thought processes and reasoning for settlement offers; and settlement
efficiency. Warehime was informed that these areas would be monitored weekly and that
failure to meet these expectations could result in progressive discipline.
On October 3, 2005, Warehime and Heins met to discuss this development plan.
Heins took notes and typed them.
When Heins presented the development plan, Warehime responded that her case
load was too big and Farmers was harassing her. Warehime said she believed she had
been unfairly treated as to case load and that files had not been equitably assigned in the
office. Warehime further complained that Heins micro-managed and gave her too many
activities to keep up with. According to Warehime, Heins nitpicked her files.
At trial, Warehime testified about her thought processes during the October 3,
2005 meeting as follows:
“I was trying to explain that I needed the time to bring them down,
and [Heins] didn’t seem to, in my mind, understand that or agree with that.
And as I was trying every way to explain it, it was very frustrating, and
finally I just sort of stopped and, you know, re-analyzed the conversation in
my head of why wasn’t she understanding, this was so confusing, you
know. And it hit me that that wasn’t really the problem. [¶]…[¶]
“All of a sudden it just – [I] just seemed to understand that the
reason for the anger, and the yelling at me, and the constantly telling me to
do things that were done, or the telling me to shut up in the middle of a
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meeting, no one wanted to hear what I had to say. [¶]…[¶] All the
comments around the office, and the hostile environment and everything,
and the teasing of other people, it made sense to me that this was a situation
where I was being treated differently, and the workload was only the tool
that was used to accomplish it.”
Warehime explained that when she said she was “treated differently” she meant she “was
being judged by different standards,” and “was supposed to accomplish different things”
because she “was older and of the old school.” However, Warehime did not articulate
these thoughts.
Following the October 3, 2005 meeting, Perkins asked Heins to prepare a formal
warning letter to Warehime. A formal warning is the first step in progressive discipline.
Heins presented Warehime with the formal warning in mid-December 2005.
Heins acknowledged that there had been some improvement in inventory reduction but
concluded that Warehime’s progress in bringing her files current was unacceptable. The
warning then outlined a few examples of Warehime’s file handling deficiencies.
Warehime testified that she was totally confused by this formal warning and that the
alleged deficiencies were not correct.
Over the next month, Warehime exhibited some improvement in her file handling
and Heins extended the formal warning period for an additional 60 days. Nevertheless,
Heins continued to find Warehime’s job performance unacceptable.
On February 28, 2006, Warehime was placed on probation. Smith approved this
escalation in discipline based on information provided by Perkins and Heins.
Warehime was presented with the probation memo at a meeting with Heins and
Cavanaugh. Heins went over the contents of the memo and explained the various
deficiencies that had been identified in certain of Warehime’s files.
Warehime became visibly upset and emotionally distraught. Warehime left the
office and immediately sought medical attention. She was referred to the psychology
department and placed on medical leave.
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One or two days later, Warehime telephoned Heins and informed her that she had
been placed on medical leave. Thereafter, Farmers received the medical leave
documentation by fax.
While Warehime was on leave, Farmers decided to terminate her.
Warehime was released to return to work on June 12, 2006. As an
accommodation, Warehime asked to work part-time for two weeks. However, when
Warehime arrived at work, there was a young man sitting at her desk. Perkins and Smith
immediately took Warehime to a small room, handed her a termination letter and told her
she was terminated effective immediately.
Warehime filed the underlying complaint under the California Fair Employment
and Housing Act (FEHA) alleging causes of action for age discrimination, retaliation,
failure to provide a reasonable accommodation, and failure to engage in an interactive
process. (Gov. Code, § 12900 et seq.) The jury found in favor of Warehime on all four
causes of action. Warehime was awarded $749,999 in damages.
Thereafter, the trial court awarded Warehime $696,576.50 in attorney fees and
applied a 1.25 multiplier increasing the attorney fees award to $870,720.63. The court
also granted Warehime’s request for prejudgment interest under Civil Code section 3291.
DISCUSSION
1. Farmers’ appeal.
a. Substantial evidence supports the jury’s age discrimination finding.
A prima facie case of discrimination under the FEHA generally requires the
employee to provide evidence that (1) he or she was a member of a protected class; (2) he
or she was qualified for the position sought or was performing competently in the
position; (3) he or she suffered an adverse employment action, such as termination; and
(4) some other circumstance suggests discriminatory motive. (Guz v. Bechtel National,
Inc. (2000) 24 Cal. 4th 317, 355 (Guz).)
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Here, it is undisputed that Warehime was a member of a protected class and
suffered an adverse employment action, i.e., she was 60 years old and was terminated. In
dispute is whether Warehime was performing competently and whether Farmers had a
discriminatory motive. To demonstrate a “discriminatory motive,” Warehime was
required to prove that her termination was “substantially motivated” by her age. (Harris
v. City of Santa Monica (2013) 56 Cal. 4th 203, 230-231 (Harris).)
To prevail on a discrimination claim, the employee must prove that the
decisionmakers had discriminatory intent. (Reid v. Google, Inc. (2010) 50 Cal. 4th 512,
539.) Although the ultimate decisionmaker may be innocent of discriminatory intent, the
employer can still be liable if the discriminatory comments were made by an employee
who can influence the decisionmaker. (Id. at p. 542.) Nevertheless, Government Code
section 12940, subdivision (a), does not outlaw discriminatory thoughts, beliefs, or stray
remarks that are unconnected to employment decisionmaking. Rather, it prohibits
discrimination that causes the decisionmaker to discharge the employee. (Harris, supra,
56 Cal.4th at p. 231.)
Warehime did not present any direct evidence of discriminatory remarks made by
a decisionmaker. However, an employee may rely on inferential proof that a
decisionmaker had discriminatory intent. (West v. Bechtel Corp. (2002) 96 Cal. App. 4th
966, 980.) Nonetheless, “there must be evidence supporting a rational inference that
intentional discrimination, on grounds prohibited by the statute, was the true cause of the
employer’s actions.” (Guz, supra, 24 Cal.4th at p. 361.)
Farmers argues there is no substantial evidence to support the jury’s finding that
Warehime was discharged because of her age. According to Farmers, the allegedly
discriminatory remarks relied on by Warehime could not have influenced the
decisionmakers. Farmers further contends it had legitimate business reasons for
terminating Warehime’s employment.
9.
In reviewing the sufficiency of the evidence, the power of this court begins and
ends with a determination as to whether, on the entire record, there is any substantial
evidence, contradicted or uncontradicted, to support the jury’s findings. (Crawford v.
Southern Pacific Co. (1935) 3 Cal. 2d 427, 429.) We must view the whole record in a
light most favorable to the judgment, resolve all conflicts in Warehime’s favor and give
Warehime the benefit of every reasonable inference. (Kuhn v. Department of General
Services (1994) 22 Cal. App. 4th 1627, 1632-1633.) We may not substitute our view of
the correct findings for those of the jury. Instead, we must accept any reasonable
interpretation of the evidence that supports the jury’s decision. Nevertheless, we may not
defer to that decision entirely. Substantial evidence is not synonymous with any
evidence. To be considered “substantial,” the evidence must be reasonable in nature,
credible, and of solid value. It must actually be “substantial” proof of the essentials that
the law requires in a particular case. (McRae v. Department of Corrections &
Rehabilitation (2006) 142 Cal. App. 4th 377, 389.)
Warehime asserts that “Fresno was a ‘young’ and ‘hip’ office that did not want
older employees.” According to Warehime, the record supports this characterization
through evidence of offensive age-related remarks that were made by Farmers’
employees and condoned by their supervisors. Warehime further points to the
promotions of certain young employees and demotions of two older employees.
Warehime also notes that she was replaced by a much younger man.
Warehime’s co-workers regularly made age-related remarks. Warehime testified
that McGuire started a running “joke” that Sanderson was urinating all over walls and
floors in the bathroom due to his age. These comments were repeated multiple times in
front of the entire office. One supervisor, Cavanaugh, heard McGuire’s comments about
urine being on the floor.
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Employees at the Fresno office also teased older employees about their age.
Warehime testified she was repeatedly called “old school.” Gary Klitz was called
“grandpa” and Sanderson was called “pop,” nicknames that identified them as old.
Employee Maria Rocca often called Sanderson an “old fuddy-duddy.” When Sanderson
transferred to the Fresno office, Rocca stated she did not want him there because he just
did not fit in with the young, hip office. Again, these comments were made in the open
office in front of everyone, including supervisors.
Farmers asserts that these arguably age-related comments made by Warehime’s
co-workers cannot be imputed to the decisionmakers. However, the office was
completely open without any sort of dividers. Warehime’s supervisor, Heins, sat close to
Warehime. Thus, it is reasonable to infer that, at the very least, the branch claims
supervisors, Heins and Cavanaugh, were aware of the age-related comments. Heins and
Cavanaugh reported to the branch manager regarding the employees they supervised.
Smith, the division manager, testified at trial that these age-related comments were
inappropriate and that any supervisor who became aware of such comments should have
reported them. No such reports were ever made. Accordingly, it is reasonable to infer
that the supervisors who either influenced or made the personnel decisions condoned the
age-related comments.
This conclusion is further supported by evidence that Burger, the branch manager
at the beginning of Warehime’s tenure, did not take any action in response to certain
employee complaints. When an employee anonymously complained about an e-mail the
employee found offensive, Burger responded that the employee needed to get a sense of
humor. The need for employees to “get a sense of humor” became a running joke.
Farmers additionally notes that Heins, Warehime’s immediate supervisor, was
about the same age as Warehime. According to Farmers, this evidence supports the
conclusion that the Farmers decisionmakers did not discriminate against Warehime based
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on her age. However, at the time she retired, Heins was no longer a branch claims
supervisor. She was a claims representative, a step down from her previous position.
Similarly, Cavanaugh, who was a branch claims supervisor for 17 years, was a claims
representative at the time of trial. These position changes support the jury’s finding of
age bias on the part of Farmers decisionmakers.
When Warehime returned to work on June 12, 2006, Reed Clinton, who was 25 to
30 years old, was sitting at Warehime’s desk. Being replaced by a significantly younger
person provides additional inferential support for an age discrimination claim. (Sandell v.
Taylor-Listug, Inc. (2010) 188 Cal. App. 4th 297, 322-323.) Perkins initially testified that
Clinton could not have replaced Warehime due to Clinton’s lack of experience.
However, Perkins admitted he requested that two new employees be hired to replace
Warehime, who was out on leave, and McGuire, the other attorney-represented adjuster
who was entering management training. Clinton was the person hired in response to
Perkins’s request. Thus, the jury could have reasonably concluded that Clinton was hired
to replace Warehime.
In sum, viewing the record in a light most favorable to the judgment, resolving all
conflicts in Warehime’s favor and giving Warehime the benefit of every reasonable
inference, substantial evidence supports the jury’s findings on the age discrimination
cause of action. Based on the pervasive age-related comments, the open office
configuration, the position changes of two older supervisors, and the hiring of a
significantly younger replacement employee, the jury could reasonably infer that
Warehime’s age was a substantial motivating reason for Farmers’ decision to discharge
her.
Farmers argues it had a legitimate business reason to discharge Warehime and the
jury’s contrary finding is unsupportable as a matter of law. Therefore Farmers asserts, at
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a minimum, the judgment on Warehime’s age discrimination claim must be reversed for
retrial on the mixed-motive issue.
In the formal warning, probation memo, and termination letter, Farmers set forth
its justifications for the various disciplinary actions through written criticisms of
Warehime’s work. Each side spent significant trial time discussing and dissecting these
critiques. Although Warehime admitted to making a few of the listed errors, much of the
criticism of her work was discredited. Thus there was conflicting evidence on the issue
of whether Farmers had a legitimate business reason to discharge Warehime. Resolving
these conflicts in Warehime’s favor, the jury’s finding that Farmers did not have a
legitimate business reason to discharge Warehime is supported by substantial evidence.
b. Substantial evidence supports the jury’s findings on the disability related
claims.
Unlawful employment practices include an employer’s failure to make reasonable
accommodation for an employee’s known physical or mental disability. (Gov. Code,
§ 12940, subd. (m).) The essential elements of such a claim are: (1) the employee has a
disability covered by the FEHA; (2) the employee can perform the essential functions of
the position; and (3) the employer failed to reasonably accommodate the employee’s
disability. (Wilson v. County of Orange (2009) 169 Cal. App. 4th 1185, 1192.) The
covered disabilities include “any mental or psychological disorder or condition … that
limits a major life activity.” (Gov. Code, § 12926, subd. (j)(1).)
The FEHA also imposes a duty on the employer to engage in a timely, good faith
interactive process with an employee to determine an effective reasonable
accommodation when an employee with a known mental disability requests one. (Gov.
Code, § 12940, subd. (n).)
The failure to accommodate and the failure to engage in the interactive process are
separate, independent claims involving different proof. The interactive process is to
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determine what accommodation is required. Once a reasonable accommodation has been
granted, the employer has a duty to provide such reasonable accommodation. (A.M. v.
Albertsons, LLC (2009) 178 Cal. App. 4th 455, 463-464.)
The jury found that Farmers failed to provide reasonable accommodation for
Warehime’s mental disability and that Farmers failed to participate in a timely, good faith
interactive process with Warehime to determine whether reasonable accommodation
could be made.
Warehime claimed a mental disability based on job related stress and depression.
In support of this claim, Warehime’s medical records from her treatment with Dennis
Lewis, Ph.D., were admitted into evidence. Dr. Lewis’s notes state he diagnosed
Warehime with “AXIS I: Depression NOS.”
The parties stipulated to Dr. Lewis’s records being admitted into evidence.
However, Dr. Lewis was not called as a witness to lay a foundation for these records.
Farmers moved to strike Dr. Lewis’s records on the ground that its stipulation to
admit those records was based on mistake and excusable neglect. Farmers explained that
it entered into the stipulation upon the representation of Warehime’s counsel that Dr.
Lewis would be called to testify. However, no such condition for admission of the
records is contained in the record.
The trial court denied Farmers’ motion to strike the medical records. The court
noted that Farmers had stipulated to the admission of those exhibits and the court was not
going to strike them based on whatever reason the mistake was made. The court further
ruled that Farmers was not prejudiced by Dr. Lewis’s failure to testify because Dr.
Lewis’s notes stated a diagnosis of depression and, if called to testify, Dr. Lewis would
have repeated what was in his notes.
Farmers argues the trial court erred in allowing the foundationless medical records
to stay in evidence. According to Farmers, the records were hearsay. Farmers further
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asserts that, without the doctor’s foundation and testimony, the jury was left with a
diagnosis of “depression NOS” without an explanation of what that means.
However, Farmers stipulated, on the record, to the admission of the medical
records. Parties have the right to stipulate to the admission of evidence that would
otherwise be inadmissible. (County of Alameda v. Risby (1994) 28 Cal. App. 4th 1425,
1430.) Such a stipulation precludes objection to evidence that has been agreed on.
(Ibid.) Accordingly, the trial court did not err when it permitted the medical records to
stay in evidence.
Before an employer can be liable for failure to reasonably accommodate an
employee’s disability, the employer must be aware of the specific disability. (Avila v.
Continental Airlines, Inc. (2008) 165 Cal. App. 4th 1237, 1252.) While the initial burden
rests on the employee to identify the disability and resulting limitations, the employer’s
knowledge of the disability can be inferred from the circumstances. (Scotch v. Art
Institute of California (2009) 173 Cal. App. 4th 986, 1013 (Scotch); Brundage v. Hahn
(1997) 57 Cal. App. 4th 228, 237.)
The jury found that Farmers knew of Warehime’s mental disability that limited her
ability to work. Farmers contends this finding is not supported by substantial evidence.
According to Farmers, Warehime failed to present any evidence that her employer knew
about her depression.
Warehime suffered an emotional breakdown when she was placed on probation on
February 28, 2006, and left the office. One or two days later, Warehime informed Heins
by telephone that she had been placed on medical leave. Shortly thereafter, the note from
Warehime’s doctor placing her on medical leave and excusing her from work was
received by Farmers.
Viewing the evidence in the light most favorable to the judgment and giving
Warehime the benefit of every reasonable inference, substantial evidence supports the
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jury’s finding. Farmers was aware that Warehime left the office emotionally distraught
and that she was almost immediately placed on medical leave and excused from work.
From these circumstances, the jury could reasonably infer that Farmers knew that
Warehime had a mental disability.
With regard to a claim for failure to engage in the interactive process, the burden
is on the employee to suggest a reasonable accommodation that was available at the time
the interactive process should have occurred. (Scotch, supra, 173 Cal.App.4th at pp.
1013, 1019.) Further, the employee must prove the requested “reasonable
accommodation” would have enabled her to perform the essential functions of the job.
(Nadaf-Rahrov v. Neiman Marcus Group, Inc. (2008) 166 Cal. App. 4th 952, 978.)
Warehime requested part-time work for two weeks. Reasonable accommodations
include part-time work schedules. (Swanson v. Morongo Unified School Dist. (2014) 232
Cal. App. 4th 954, 969.)
Farmers argues Warehime did not meet her burden to prove the part-time
accommodation would have enabled her to perform the essential functions of the job
because she was never able to competently perform her essential job functions when she
was working full time. According to Farmers, there is no evidence that working part-
time for two weeks would have corrected Warehime’s repeated violations of company
policy and DOI regulations or that part-time was reasonable given the job’s required
workload.
However, the jury found otherwise. The jury first concluded that Farmers did not
have a legitimate business reason to discharge Warehime, i.e., she was competently
performing her job. As discussed above, substantial evidence supports this finding. The
same evidence supports the jury’s finding that Warehime could have performed the
essential job duties working part-time for two weeks. The jury found Warehime was able
to do the job before she went on leave and thus the jury could reasonably infer that she
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could have completed the essential tasks after returning from leave working part-time for
two weeks.
c. The jury’s retaliation finding is not supported by the record.
Under Government Code section 12940, an employer may not discharge an
employee because the employee opposed the employer’s unlawful conduct. Such
unlawful conduct includes discrimination based on age. (Gov. Code, § 12940,
subds. (a) & (h).)
Farmers argues Warehime failed to establish that she complained of age-related
harassment and unequal treatment and therefore did not prove a critical element of her
retaliation cause of action, i.e., that she was discharged because of an age-related
complaint. Farmers further asserts that the jury never found, because it was not asked to
find, that Warehime’s complaints were age-related. In other words, the jury was not
properly instructed on the elements of a retaliation cause of action.
To establish a prima facie case of retaliation, an employee must show “(1) he or
she engaged in ‘protected activity,’ (2) the employer subjected the employee to an
adverse employment action, and (3) a causal link existed between the protected activity
and the employer’s action.” (Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal. 4th 1028,
1042 (Yanowitz).) For the employee to show the required causal link, there must be
evidence the employer knew the employee engaged in protected activity. (Id. at p. 1046.)
If the employer is unaware of the employee’s protected activities or attributes, it cannot
be liable for retaliation. (Reeves v. Safeway Stores, Inc. (2004) 121 Cal. App. 4th 95, 107.)
To prove retaliation, the employee need not have told the employer explicitly and
directly that he or she believes the employer is engaging in discrimination. (Yanowitz,
supra, 36 Cal.4th at p. 1046.) Nevertheless, “an employee’s unarticulated belief that an
employer is engaging in discrimination will not suffice to establish protected conduct for
the purposes of establishing a prima facie case of retaliation, where there is no evidence
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the employer knew that the employee’s opposition was based upon a reasonable belief
that the employer was engaging in discrimination.” (Ibid.) While an employee is not
required to use legal terms or buzzwords when opposing discrimination, complaints about
personal grievances or vague or conclusory remarks will not suffice. (Id. at p. 1047.)
“‘The relevant question … is not whether a formal accusation of discrimination is made
but whether the employee’s communications to the employer sufficiently convey the
employee’s reasonable concerns that the employer has acted or is acting in an unlawful
discriminatory manner.’” (Ibid.) Where the record is devoid of evidence that the
employee ever complained to anyone about the alleged unlawful discrimination or did
anything to imply that unlawful discrimination was an issue, a retaliation claim fails.
(Villanueva v. City of Colton (2008) 160 Cal. App. 4th 1188, 1199.)
Warehime’s retaliation claim is based on the October 3, 2005, meeting with Heins.
At that meeting, Warehime complained that she was being harassed and unfairly treated.
According to Warehime, Heins was micro-managing and nitpicking Warehime’s files.
Warehime testified that during this meeting she came to the realization that she
was being discriminated against because of her age. However, there is no evidence that
she ever conveyed this thought to Farmers. Rather, Warehime complained that her
workload was excessive. She claimed she was being subjected to generic harassment and
unequal treatment but did not tie those complaints to any unlawful conduct.
The trial court noted this absence of evidence when the parties were discussing
CACI No. 2505, the jury instruction that sets forth the essential factual elements of a
retaliation cause of action. CACI No. 2505 provides, in part:
“[Name of plaintiff] claims that [name of defendant] retaliated against
[him/her] for [describe activity protected by the FEHA]. To establish this
claim, [name of plaintiff] must prove all of the following:
“1. That [name of plaintiff] [describe protected activity]; …” (Joaquin v.
City of Los Angeles (2012) 202 Cal. App. 4th 1207, 1229.)
18.
The court observed that Warehime did not base her complaint on age during the
October 3, 2005 meeting. Accordingly, the court did not include age or any other
“activity protected by the FEHA” and instead instructed the jury that Warehime’s
retaliation cause of action was based on her “complaint of harassment and unequal
treatment.” However, general harassment and unequal treatment is not unlawful under
the FEHA. Rather, to be unlawful, the discrimination must be based on “race, religious
creed, color, national origin, ancestry, physical disability, mental disability, medical
condition, genetic information, marital status, sex, gender, gender identity, gender
expression, age, sexual orientation, or military and veteran status.” (Gov. Code, § 12940,
subd. (a).) Therefore, the jury was incorrectly instructed on the elements of a retaliation
cause of action. Moreover, the record is devoid of evidence that Warehime ever
complained or implied to Farmers that she was being discriminated against for an
unlawful reason, i.e., her age. Thus, the verdict on the retaliation cause of action must be
reversed.
d. A new trial on noneconomic damages is not required.
As discussed above, the verdict on the retaliation claim, one of the four causes of
action, must be reversed. Relying on Roby v. McKesson Corp. (2009) 47 Cal. 4th 686
(Roby), Farmers argues that the reversal of any cause of action requires a new trial on the
noneconomic damages.
In Roby, a wrongful termination case, the jury was instructed to determine one
amount for the economic damages for all causes of action. However, for the
noneconomic damages, the jury was instructed to determine the appropriate amount
applicable to each of the three theories of recovery because that amount could vary for
each theory. Accordingly, the jury awarded different amounts of noneconomic damages
for each theory of recovery, wrongful termination in violation of public policy,
discrimination, and failure to accommodate.
19.
The Court of Appeal in Roby concluded that the noneconomic recovery on each
cause of action overlapped, at least in part, and therefore had the effect of compensating
the employee multiple times for the same injury. (Roby, supra, 47 Cal.4th at p. 703.)
The California Supreme Court agreed noting that the jury’s intent in making its
noneconomic damages awards could not be determined to a reasonable certainty.
Nevertheless, the court did not remand for a new trial on damages because the employee
agreed to withdraw her challenge on this issue. (Id. at p. 705.)
Here, unlike in Roby, the jury was instructed that each item of damages could only
be awarded once regardless of the number of theories alleged and that it was to determine
one amount for noneconomic damages. Thus Warehime was not compensated multiple
times for the same injury and the jury’s intent in making the award is not ambiguous.
Further, all the causes of action stem from Farmers’ discipline and termination of
Warehime. In other words, each theory of liability relates to the same wrong. Therefore,
the reversal of the retaliation cause of action does not require retrial of the noneconomic
damages award.
e. The trial court erred in awarding prejudgment interest.
Civil Code section 3291 authorizes prejudgment interest in “any action brought to
recover damages for personal injury” if the defendant fails to accept an offer to
compromise pursuant to Code of Civil Procedure section 998 and the judgment exceeds
the amount of the compromise offer. (Gourley v. State Farm Mut. Auto. Ins. Co. (1991)
53 Cal. 3d 121, 125 (Gourley).) Whether Civil Code section 3291 applies depends on the
primary purpose of the cause of action. (Bihun v. AT&T Information Systems, Inc. (1993)
13 Cal. App. 4th 976, 1002 (Bihun), disapproved on an unrelated ground in Lakin v.
Watkins Associated Industries (1993) 6 Cal. 4th 644, 664.) If the action is brought
primarily to recover an economic loss, prejudgment interest is not available. This is so
even if the plaintiff sought emotional distress as well as economic damages. (Gourley,
20.
supra, 53 Cal.3d at p. 129.) However, if the action seeks to vindicate decidedly personal
rights, prejudgment interest can be awarded. (Bihun, supra, 13 Cal.App.4th at p. 1005.)
Here, the trial court concluded that Warehime suffered “more an emotional injury
than just simply economic” and awarded prejudgment interest. Farmers argues that a
wrongful termination case such as this is brought primarily to recover an economic loss
and therefore the trial court erred. Farmers is correct.
The trial court relied on Bihun in making the prejudgment interest award. There,
however, the action was based on workplace sexual harassment. As the Bihun court
noted, sexual harassment is the invasion of a personal right, a “‘form of violence against
women.’” Thus, the court concluded, the principal injury was personal, not economic.
(Bihun, supra, 13 Cal.App.4th at p. 1005.)
However, Warehime’s complaint sought damages due to being wrongfully
terminated by Farmers. The primary purpose of Warehime’s action was to be
compensated for the economic loss caused by not having a job. The nature of such a
wrongful termination tort is to recover for the infringement of property rights, not
personal injury. (Holmes v. General Dynamics Corp. (1993) 17 Cal. App. 4th 1418,
1436.) The fact that Warehime sought and received damages for emotional distress does
not change the nature of her complaint. Accordingly, the trial court erred in awarding
prejudgment interest.
f. The trial court did not abuse its discretion in applying an attorney fee
multiplier.
The trial court may award attorney fees to the prevailing party under Government
Code section 12965, subdivision (b). Such an award should be fully compensatory and
“include compensation for all the hours reasonably spent, including those relating solely
to the fee.” (Ketchum v. Moses (2001) 24 Cal. 4th 1122, 1133 (Ketchum).)
21.
In calculating a reasonable attorney fee award, the court begins by determining
“the reasonable hours spent, multiplied by the hourly prevailing rate for private attorneys
in the community conducting noncontingent litigation of the same type.” The result is
known as the “lodestar” figure. (Ketchum, supra, 24 Cal.4th at p. 1133.) The court may
then adjust the lodestar figure based on a number of factors that weigh in favor of
augmentation or diminution. To enhance a fee, a court may apply a multiplier. (Weeks v.
Baker & McKenzie (1998) 63 Cal. App. 4th 1128, 1171.)
Warehime filed a motion for attorney fees requesting $747,115.50 as the lodestar
with an enhancement multiplier of 1.5. After considering the various billings and
Farmers’ objections, the trial court made certain deductions and determined the lodestar
figure to be $696,576.50. The court then enhanced the award with a multiplier of 1.25
based on “the risk of the case,” for a total attorney fee award of $870,720.63.
Farmers first notes that the reversal of any of a plaintiff’s theories may require
revisiting the attorney fee award. While we are reversing the jury’s verdict on
Warehime’s retaliation cause of action, the attorney fee award need not be reconsidered
on this ground. Warehime’s claims were factually related and intertwined. In such a
situation, fees are not reduced when a plaintiff prevails on fewer than all of the claims.
(Chavez v. City of Los Angeles (2010) 47 Cal. 4th 970, 989.)
Farmers does not dispute the reasonableness of the lodestar figure awarded by the
trial court. Rather, Farmers objects to the court’s use of a multiplier to enhance the
award. Farmers argues the lodestar amount adequately compensates counsel. According
to Farmers, a multiplier is not warranted because there were no novel or complex legal
issues, Warehime’s counsel did not display an exceptional degree of skill and expertise,
and counsel did not turn down other cases to work on this one. Farmers further asserts
that the contingent fee risk of non-recovery does not justify the multiplier.
22.
We review a trial court’s award of attorney fees for abuse of discretion. (Robbins
v. Alibrandi (2005) 127 Cal. App. 4th 438, 452.) “The ‘experienced trial judge is the best
judge of the value of professional services rendered in his court, and while his judgment
is of course subject to review, it will not be disturbed unless the appellate court is
convinced that it is clearly wrong.’” (Serrano v. Priest (1977) 20 Cal. 3d 25, 49
(Serrano).) Accordingly, our review must be highly deferential to the views of the trial
court. (Nichols v. City of Taft (2007) 155 Cal. App. 4th 1233, 1239 (Nichols).) Thus, the
award will be upheld unless there is no reasonable basis for the court’s action. (Ramos v.
Countrywide Home Loans, Inc. (2000) 82 Cal. App. 4th 615, 621 (Ramos).)
Here, the trial court applied a multiplier based on counsel’s risk of not being paid
the contingent fee. In his declaration, Warehime’s counsel further explained that he took
over the case after discovery was already closed and thus the risk inherent in a contingent
fee case was substantially increased because he was unable to conduct his own discovery.
It has long been recognized that a fee enhancement may be reasonable in a
contingent case. (Horsford v. Board of Trustees of California State University (2005)
132 Cal. App. 4th 359, 394-395.) Since a contingent fee contract involves a gamble on the
result, it may provide for a larger compensation than would otherwise be reasonable.
(Ketchum, supra, 24 Cal.4th at p. 1132.) The economic rationale for such fee
enhancement is that the contingent fee compensates the lawyer not only for the legal
services he or she renders but for the loan of those services. “‘The implicit interest rate
on such a loan is higher because the risk of default (the loss of the case, which cancels the
debt of the client to the lawyer) is much higher than that of conventional loans.’” (Id. at
pp. 1132-1133.) Thus, a court awarding attorney fees is permitted to include a fee
enhancement for the purpose of compensating the attorney who agreed to undertake such
representation at the risk of nonpayment or delayed payment. (Id. at p. 1136.)
23.
This being a contingent fee case where the trial attorney took over late in the
litigation, we cannot conclude that the trial court had no reasonable basis for using a 1.25
multiplier to enhance the fee. The 1.25 multiplier is relatively modest and is less than
requested by Warehime’s counsel. Accordingly, the attorney fees awarded to Warehime
will be affirmed.
2. Warehime’s appeal.
Following the jury verdict in her favor, Warehime moved for attorney fees. In her
reply to Farmers’ opposition to this motion, Warehime requested an additional $57,441 in
attorney fees incurred since the motion was filed. The trial court did not increase the
attorney fee award. Warehime argues the trial court erred in refusing to consider her
request.
As discussed above, it is up to the trial judge to determine the value of
professional services rendered in his or her court, and the appellate court will not disturb
the trial judge’s ruling unless convinced that it is clearly wrong. (Serrano, supra, 20
Cal.3d at p. 49.) Accordingly, our review is highly deferential and the award will be
upheld unless there is no reasonable basis for the court’s action. (Nichols, supra, 155
Cal.App.4th at p. 1239; Ramos, supra, 82 Cal.App.4th at p. 621.)
At the hearing on the attorney fees motion, the following discussion took place
between Warehime’s counsel and the trial court:
“[COUNSEL]: The big issue I also wanted to raise, too, with regard
to attorneys’ fees, Your Honor, was that … since the filing of our attorney
fee motion, we incurred another $57,441 in attorney’s fees. I wasn’t clear
whether the Court’s award of 696,576, that included that additional work
that was –
“THE COURT: That’s all of your fees.
“[COUNSEL]: Pardon me?
“THE COURT: That’s the entirety of your fees.
24.
“[COUNSEL]: Okay.
“THE COURT: Plus your multiplier, plus whatever you get
contingent from the $750,000. A pretty good pay day.
“[COUNSEL]: That’s not the way it works, Your Honor, but I
appreciate the -- I understand what the Court is saying. So the total award
does include the 57,000, so the fee award was reduced from a request of
804,000 to 696,576, is that right?
“THE COURT: Correct.”
Thus, contrary to Warehime’s position, the trial court did consider her request for
the additional $57,441 in arriving at the lodestar figure. Accordingly, the trial court
reasonably exercised its discretion in reducing the entire fee request to approximately
$697,000.
DISPOSITION
The jury’s finding in favor of Warehime on the retaliation cause of action is
reversed. The award of prejudgment interest is reversed. In all other respects, the
judgment is affirmed. No costs on appeal are awarded.
_____________________
LEVY, J.
WE CONCUR:
_____________________
HILL, P.J.
_____________________
PEÑA, J.
25.