Hearsay Statements Increase an Employer’s Risk in California

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In reversing summary judgment for an employer in an age discrimination case, the California Court of Appeal extended the statement against interest exception to the hearsay rule set forth in California Evidence Code section 1230.  The case is Cheal v. El Camino Hospital No. H036548 (Sixth Appellate District, January 31, 2014), and it is now a must-read case on the admissions against interest exception to the hearsay rule.  A copy of the decision can be found here.

Plaintiff Cheal claimed that she had been terminated by Defendant El Camino Hospital because of her age.  She claimed that after 20 years of good reviews a new supervisor was appointed and started criticizing her solely because she was much older than other employees.  Ultimately, El Camino fired Cheal.  El Camino moved for summary judgment claiming that there were no material issues of fact because Cheal had been fired for making too many mistakes in violation of its guidelines, not because of her age.

A key element in Cheal’s effort to demonstrate a factual question about her supervisor’s discriminatory age animus was a declaration she obtained from the supervisor’s friend.  The declaration attested that during an after-work dinner at the supervisor’s home, the supervisor told the declarant:  “We shouldn’t have lunch anymore or talk socially at work … people are starting to notice I’m favoring the younger and pregnant ones.”  El Camino Hospital objected that the statement was inadmissible hearsay; the trial court sustained the objection.

The Court of Appeal reversed the evidentiary ruling, relying on Evidence Code section 1230.  Section 1230 provides that an extra-judicial statement is admissible if “the statement, when made, was so far contrary to the declarant’s pecuniary or proprietary interest, or so far subjected him to the risk of civil or criminal liability, … or created such a risk of making him an object of hatred, ridicule, or social disgrace in the community, that a reasonable man in his position would not have made the statement unless he believed it to be true.”  The Court of Appeal noted that “we have found no apposite California decision” finding that a statement that threatens the potential loss of employment, reduces the chance for future employment, or entails possible civil liabilities is sufficiently against the declarant’s interest so as to be admissible.

Without controlling California authority, the Court of Appeal looked to federal authority and analogous California decisions.  Following Gichner v. Antonio Troiano Tile & Marble Co. (D.C. Cir. 1969) 410 F.2d 238, 242, the Court of Appeal determined that the statement attributed to the supervisor was antithetical to the supervisor’s pecuniary interests because “if publicly known, it would expose her employer to liability and jeopardize her own present and future employment.”  Relying also on Reno v. Baird (1998) 18 Cal.4th 640, 662, the Court of Appeal observed that a supervisor guilty of engaging in unlawful discrimination can cause her employer to incur monetary liability and potentially suffer her own demotion or unemployment, thus also impacting the supervisor’s ability to obtain future employment.  Additionally, the statement, which itself could be seen as a form of harassment, could subject the supervisor to personal civil liability under California’s workplace laws.  The Court of Appeal concluded: “We think [the supervisor’s] statement…sufficiently jeopardized her career prospects to be found against her pecuniary interests for purposes of a hearsay objection.  It may also be admissible as a declaration against legal interest, i.e., as exposing her to civil liability.”

In so ruling, the Court of Appeal extended Section 1230 to the risk of civil liability, not just criminal liability.  Reviewing the record, including evidence of the supervisor’s extra-judicial statements, the Court of Appeal reversed the judgment, finding, inter alia, that there were “triable issues of fact with respect to … whether the discharge was the product of a … discriminatory animus against older workers on the part of plaintiff’s immediate supervisor.”

Cheal underscores the importance of a thorough investigation into “off the record” comments both in and out of the workplace in harassment and discrimination claims.  Finding out what was said casually among friends can prove to be critical in assessing an employer’s risk in a wrongful termination claim.  Further, counsel will want to remind clients that statements about business matters in informal settings may come back to haunt them in a subsequent lawsuit against the business.

Topics:  ADEA, Age Discrimination, Employer Liability Issues, Hearsay

Published In: Civil Procedure Updates, Civil Rights Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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