Indemnification And The Circle Of Litigation

An employee sues his employer for, among other things, violations of the California Labor Code.  The quondam employer responds with a counterclaim against its erstwhile employee claiming that to the extent it is liable, the employee is partially liable for creating that liability.  The employee responds with a reply counterclaim seeking indemnification based on Section 2802 of the California Labor Code, Section 317 of the California Corporations Code, and the employer’s Bylaws.

In Andresen v. Int’l Paper Co., 2014 U.S. Dist. LEXIS 112542 (Aug. 11, 2014), U.S. District Court Judge Christina Snyder addressed the employee’s indemnification reply counterclaims as follows.  First, she granted the employer’s motion to dismiss as to the claim for indemnification under Labor Code Section 2802 on the basis that it does not apply when an employer sues an employee.  See Court of Appeal Holds That Employee Indemnification Statute Does Not Reach “First Party” Lawsuits.  Second, Judge Snyder found that the employee’s reply counterclaim stated a claim under Corporations Code Section 317, reasoning that unlike Labor Code Section 2802, Section 317 is not limited to third party lawsuits.  Finally, she dismissed the employee’s reply counterclaim under the employer’s bylaws on the basis that the reply counterclaim did not identify the provisions of the employer’s bylaws that established the employee’s right to indemnification.Cycle Graphic



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