California Court of Appeal Overturns $1.3 Million in Damages and Attorneys’ Fees against Lucasfilm for Failure to Give Instruction on Business Judgment

by Orrick - Global Employment Law Group

On December 10, 2012, in Veronese v. Lucasfilm Ltd., a California Court of Appeal overturned a Marin County jury’s verdict against Lucasfilm based on its finding that several errors in jury instructions prejudicially affected the verdict. Plaintiff had sued under the Fair Employment and Housing Act (“FEHA”) for pregnancy discrimination and related claims when she accepted, but did not start, in a temporary position at Lucasfilm. After eleven days of testimony and three days of deliberation, a jury awarded Veronese a total of $113,800 in damages and the trial court awarded Veronese $1,157,411 in attorneys’ fees. Lucasfilm challenged both the judgment and the fee award. Lucasfilm argued that the trial court judge erred in giving certain instructions proposed by Veronese, failing to give certain instructions proposed by Lucasfilm, and failing to instruct on certain issues submitted to the jury. Notably, this Court of Appeal decision appears to be the first California appellate decision reversing a jury verdict for an employee based on failure to give a business judgment instruction.

It Was Error to Refuse a “Business Judgment” Instruction

Lucasfilm proposed a special instruction stating: “You may not find that Lucasfilm discriminated or retaliated against Julie Gilman Veronese based upon a belief that Lucasfilm made a wrong or unfair decision. Likewise, you cannot find liability for discrimination or retaliation if you find that Lucasfilm made an error in business judgment. Instead, Lucasfilm can only be liable to Julie Gilman Veronese if the decisions made were motivated by discrimination or retaliation related to her being pregnant.” The Court of Appeal found that refusing to give this business judgment instruction to the jury was error.

As the Court of Appeal noted, numerous California cases contain language similar to the proposed special instruction. It is well settled that a plaintiff in a discrimination case must show discrimination, not just that the employer’s decision was wrong, mistaken or unwise. See, e.g., Guz v. Bechtel Nat’l Inc., 24 Cal.4th317, 358 (2000) (defendant’s “true reasons need not necessarily have been wise or correct”). The court also found that several federal cases have held that refusing to give a business judgment instruction was prejudicial error. See, e.g., Walker v. AT&T Technologies, 995 F.2d 846 (8th Cir. 1993) (reversed verdict in age discrimination case because of district court’s refusal to give business judgment instruction stating that an employer has the right to “discharge an employee for good reason, bad reason, or no reason at all absent intentional age discrimination”); Scamardo v. Scott County, 189 F.3d 707, 710-11 (8th Cir. 1999) (same, retaliation case).

Thus, the court concluded that Lucasfilm was entitled to exercise its business judgment, without second guessing; failure to instruct the jury that was prejudicial error.

The Instruction about Potential Hazard to a Fetus Was Error

The trial court judge gave Veronese’s proposed instruction that said: “A potential hazard to a fetus or an unborn child is not a defense to pregnancy discrimination.” While the Court of Appeal acknowledged that the instruction’s words were accurate in the abstract, it found the instruction improper because Lucasfilm never contended that it denied Veronese a position at the company out of concern for her well-being or that of the fetus.  Further, the instruction was likely to mislead the jury because it could leave the impression that Lucasfilm could not have a concern for the health or safety of Veronese or the fetus. That is, the instruction could be interpreted as saying Lucasfilm could not have a conscience and, if it acted with one, it was per se illegal and would violate FEHA.

Failure to Instruct on Failure to Prevent Discrimination Was Error

Veronese’s third cause of action was for “Failure to Prevent and Investigate Discrimination Violation of FEHA.”  The jury found for Veronese on this cause of action, though the judge gave no instruction as to the required elements of the claim. The Court of Appeal found that the trial court must instruct on the law applicable to the facts developed by the evidence and every reasonable theory that the evidence supports to ensure that jurors are properly guided on controlling legal principles. The failure to instruct was thus error.

Failure to Instruct Regarding Difference Between “Termination” Claim and “Failure to Hire/Promote” Claim Was Error

The Court of Appeal also found it was error to deny two proposed instructions for “wrongful discharge” and “failure to hire”, which would have explained they were two separate claims. Similarly, it was error to deny instructions on the measure of damages for each claim. Damages for termination from the temporary position would run only to the end of the temporary employment, whereas damages for the failure to hire claim would run from the date Veronese would have started work if she had been selected. But the trial court judge lumped the two claims together and simply instructed that damages were what Veronese would earn up to the present.  Failing to differentiate between the claims prevented the jury from considering whether the alleged discrimination caused Veronese all of the claimed injury.

Aside from finding the errors as described above, the Court of Appeal ruled that the errors were prejudicial and that a “miscarriage of justice” occurred. The court concluded that the cumulative effect of the errors made it reasonably more probably that a result more favorable to the appealing party would have been reached in the absence of the error. Accordingly, the court reversed the jury verdict, vacated the attorneys’ fee award as premature, and remanded the matter for retrial.


This case highlights the importance of accurate jury instructions, whether or not they are contained in CACI. Further, this decision should bolster any defendant employer’s arguments for the inclusion of an instruction on business judgment, and the exclusion of prejudicial and unrelated instructions.


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.

© Orrick - Global Employment Law Group | Attorney Advertising

Written by:

Orrick - Global Employment Law Group

Orrick - Global Employment Law Group on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.