California Supreme Court Clarifies Burdens of Proof Applicable to Whistleblower Claims

Payne & Fears

In response to a certified question posed by the United States Court of Appeal for the Ninth Circuit, the California Supreme Court on Jan. 27, 2022, resolved a years-long split among California courts by confirming that an employee plaintiff advancing a claim of retaliation pursuant to California Labor Code section 1102.5 may prevail by showing that a retaliatory motive was merely a contributing factor behind an adverse employment action. Plaintiff-employees are not required to meet the McDonnell Douglas test, which employs burden-shifting between the plaintiff and the employer.

The Facts

The underlying case in Lawson v. PPG Architectural Finishes Inc. involved a former territory manager who filed a lawsuit in federal court advancing a whistleblower retaliation claim against his employer pursuant to California Labor Code section 1102.5. In granting the employer’s motion for summary judgment, the federal trial court applied the three-part McDonnell Douglas test to evaluate Lawson’s section 1102.5 claim. Under this test, the employee must first establish that an adverse employment action was somehow causally linked to some protected activity in which the employee engaged. Next, the employer has the burden of articulating a legitimate, non-retaliatory business reason for taking the adverse employment action against the employee.  Upon doing so, the burden shifts back to the employee to demonstrate that the employer’s articulated “legitimate” reason is only a pretext for retaliation. In granting summary judgment, the trial court determined that although the employee had met his initial burden, the employer had sustained its burden of articulating a legitimate, non-retaliatory reason for firing him and the employee failed to put forth sufficient evidence showing that the employer’s stated reason for firing him was pretextual.

Lawson appealed to the Ninth Circuit arguing that the trial court erred in applying the McDonnell Douglas test, and should have applied the framework outlined in California Labor Code section 1102.6, which: (1) only requires a plaintiff to show that retaliatory motives contributed to the adverse action; (2) does not require a plaintiff to show that the employer’s legitimate reasons were pretextual; and (3) requires the employer to prove (not just articulate) through clear and convincing evidence that its legitimate business reasons would have led to the same adverse action. The Ninth Circuit determined that a question existed between the applicability of either the McDonnell Douglas test or the standard under section 1102.6, and certified the question to the Supreme Court of California, noting that California appellate courts have not followed any consistent practice.

The Decision

The California Supreme Court granted review to clarify the standard. The court held that whistleblower retaliation claims under section 1102.5 are only subject to the framework laid out in section 1102.6, and expressly rejected the use of the McDonnell Douglas test for claims brought under California Labor Code section 1102.5.

The court explained that section 1102.6 expressly lays out the standards and burdens of proof for both parties in a section 1102.5 retaliation case. The court also rejected the argument that 1102.6 was not intended to supplant the McDonnell Douglas test, but rather was intended to codify a specific type of affirmative defense available to employers.

What Employers Should Know

Under the new framework announced by the California Supreme Court, employers may find that disposing of whistleblower retaliation claims before trial will now be more difficult due to the higher evidentiary burden placed on the employer to establish the legitimacy of their actions.  Employers should use caution and properly document any adverse actions contemplated against an employee who has engaged in anything that could constitute a protected activity.

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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