2005-12

Pregnant employee who was not yet "showing," had not revealed her pregnancy to her supervisor, and who could not show a connection between her firing and telling her friends she was pregnant, cannot support a pregnancy discrimination claim.

In Trop v. Sony Pictures Entertainment, Inc., 2005 DJDAR 6257 (June 1, 2005), the Court of Appeal found that where a pregnant woman was not yet showing, had not announced her pregnancy to her supervisor and could not show a nexus between telling her co-workers and friends that she was pregnant and her termination, she cannot establish a prima facie case of pregnancy discrimination and cannot show pretext. However, in dicta, the Court adopted the holding of the Sixth Circuit Court of Appeals? decision in Kocack v. Community Health Partners of Ohio, Inc. (6th Cir. 2005) 400 F.3d 466, 470 that a cause of action may be based upon an adverse employment action directed at a woman who is trying to become pregnant.

Betty Thomas, a movie producer for Tall Trees Productions,(1) hired Anne Trop as her assistant in May 2001. In June 2002, Trop began trying to become pregnant. During the summer of 2002, Trop had a discussion with Elisabeth Peery, a Tall Trees producer, regarding her efforts to get pregnant. No one else was present during those conversations, and Peery did not disclose Trop?s intent with any Tall Trees employee.

On September 28, 2002, Trop met with Lisa Sutton and Amy Lafayette, whom she believed to be herbal or Chinese doctors. Trop told them that she was trying to become pregnant and had a "session" with them during which they gave her acupuncture and herbs. Trop asked Sutton and Lafayette, who were good friends of Thomas and Jenno Topping, another producer at Tall Trees, not to "tell anyone at Tall Trees about this." The following week, Topping made a comment to Trop which made her wonder if Sutton and Lafayette had disclosed her plans to Topping.

By mid-October 2002, Thomas, noticed deficiencies in Trop?s performance. Thomas confronted Trop about her deficiencies and found her response to be "very cavalier." In her deposition, Trop admitted her deficiencies. At the end of October 2002, Trop told Thomas that she needed to have a fibroid removed. Thomas asked Trop, "What are you trying to do, get pregnant?" Trop responded, "Trying." Thomas "sarcastically" retorted, "Well, good luck."

Thomas spoke to Peery two or three times about her dissatisfaction with Trop?s work prior to November 2002. In November, Thomas decided to fire Trop. In November and December 2002, Thomas spoke with Tony Peyrot, Tall Tree?s business manager, Michael Wimer, her agent, and Topping about replacing Trop. On December 10, 2002, Peyrot faxed to Thomas the resume of a potential candidate with the intention that she ultimately replace Trop as Thomas?s assistant. The facsimile was sent to Trop?s attention.

On December 13, 2002, Trop took a home pregnancy test. The test results were "light positive," and so Trop was not sure that she was pregnant. Later that night, Trop went to the Tall Trees Christmas party at Thomas?s home. At some point during the evening, Trop went into the kitchen where she saw and played with Topping?s infant daughter, Mattie. According to Trop, in the presence of Thomas, Trop said, "It looks like I get to have one of my own." Thomas responded, "Not while you are working for me." Trop did not explain what she meant by her comment, but she did tell Sutton and Lafayette that it looked like she was pregnant. Neither Sutton nor Lafayette told anyone at Tall Trees. In declarations submitted with defendants? motion for summary adjudication, Sutton and Lafayette declared that they had not told anyone that Trop had sought medical treatment from them to become pregnant. They explained that they believed the physician-patient privilege precluded such disclosure and Trop had sworn them to secrecy.

Trop went on vacation, but returned three days late, due to inclement weather. Trop left messages with Tall Trees concerning her late return. Upon Trop?s return from vacation, she confirmed that she was pregnant. When Trop returned to work, she noticed Thomas?s negative attitude toward her. After Thomas left for Chicago, on a business trip, Trop told Peery that she was pregnant. Trop did not ask Peery to keep her pregnancy a secret, although Peery did not discuss it with any Tall Trees employee.

On January 17, 2003, Trop disclosed to the receptionist, that she was pregnant. Trop asked her not to tell anyone, and she honored the request. On about January 24, 2004, Thomas returned from a second trip to Chicago. According to Thomas, Trop left a series of messages on Thomas?s home phone detailing mistakes Trop had made. Each message included the phrase "my bad," acknowledging fault for the mistake addressed in the message.

On January 28, 2003, Thomas met with Trop and fired her. According to Trop, Thomas gave her three reasons. First, Thomas stated that she needed "somebody here who wants to be here and who doesn?t have a life." Trop asked Thomas if she was talking about the vacation she had taken. Thomas said she was. Second, Thomas told Trop that she had taken a phone message from a particular person and had recorded the wrong number. Third, while Thomas was in a meeting with a writer on the movie "Valley of the Dolls 2," Trop put through a call from the head of 20th Century-Fox concerning that movie, and Thomas had not wanted the writer to know that the studio head had called.

Thomas and Trop?s versions of what happened next differed markedly. According to Trop, after Thomas fired her, she began to cry. She took a moment to regain her composure and said, "You knew I was pregnant. You knew that," or "You know I am pregnant." Thomas then went "crazy," asking, "What were you thinking? How could you possibly be my assistant and be pregnant? How did you think that ever was going to work?" Trop responded, "I actually wasn?t thinking about that." Thomas asked, "How could you possibly?how was that going to work for you?" Trop said, "Women get pregnant every day." Thomas responded, "Well, that was never going to happen here. It would never happen here." Before Thomas left the meeting, she told Trop that she could have a month to find another job.

According to Thomas?s version of the meeting, after she fired Trop, Trop began to cry. Trop said, "I don?t want to." Thomas said, "What? What is it?" Trop said, "I don?t want to tell you, because you?re going to think I?m saying this because you fired me." Thomas said, "Say it. What is it? Say it." Trop said, "I?m pregnant." Thomas was shocked and said something to the effect of, "Do you want to be pregnant?" Thomas said she asked Trop why she had not told her. According to Thomas, Trop responded that she was not sure she was pregnant. Thomas said, "You?re kidding. You?re?what are you thinking. How will you do this? What?s your situation?" Thomas could not understand how Trop was going to lead her life. Thomas offered to give Trop a good recommendation and to help her find another job. According to Thomas, prior to that meeting, neither Trop nor anyone else told her that Trop was pregnant or trying to become pregnant.

At her deposition, Thomas testified she terminated Trop for "poor performance that had been going on for months . . . a lack of enthusiasm about the job, which was reflected in desire to be at work, the lack of desire to be at work, the long vacation that she desired to take, the return from the vacation that was surprisingly longer." Thomas conceded she never expressly told Trop that her performance was poor.

Defendants brought a motion for summary adjudication as to Trop?s sixth cause of action for sexual discrimination based on pregnancy and seventh cause of action for wrongful termination in violation of public policy based on pregnancy. The trial court granted defendants? motion, finding that Thomas fired Trop because she was dissatisfied with Trop?s work performance and Thomas did not know that Trop was pregnant at the time she decided to fire Trop.

The Court of Appeal affirmed the trial court?s ruling on the grounds that Trop failed establish a prima facie case of discrimination because Trop failed to raise a triable issue of fact that Thomas knew Trop was pregnant before Trop was fired. (An employee cannot make out a prima facie case of discrimination based on pregnancy under FEHA in the absence of evidence the employer knew the employee was pregnant. (Geraci v. Moody-Tottrup Intern., Inc. (3d Cir. 1996) 82 F.3d 578, 581)). The Court further found that Thomas presented a nondiscriminatory basis for firing Trop based upon poor job performance, and that Trop did not present credible evidence to overcome the nondiscriminatory reason for the firing.

In so ruling, the Court rejected Trop?s argument that she presented direct evidence of discrimination which would have rendered the McDonnell Douglas test inapplicable. Relying on Kennedy v. Schoenberg, Fisher & Newman, Ltd. (7th Cir. 1998)140 F.3d 716, the Court noted that direct evidence of discriminatory intent in pregnancy discrimination cases generally is in the form of an admission by a supervisor or decision maker that the employee was suspended because she was pregnant. To rise to the level of direct evidence of discrimination, isolated comments must be contemporaneous with the discharge or causally related to the discharge decision making process.

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Employee who was fraudulently induced to leave prior job for new job is entitled to future lost income.

In Helmer v. Bingham Toyota Isuzu, 2005 DJDAR 6203 (May 31, 2005), the Court of Appeal resolved the issue of whether a plaintiff who pursues a promissory fraud (or false promise) claim against his employer is entitled to receive economic damages as a result of the income he lost when he left his former employment after being induced to leave by his current employer. This question had yet to be definitively answered by any California court. The Court held that future lost income is recoverable under such circumstances.

Plaintiff Kevin Helmer ("Helmer") was the parts and service manager at Lithia Automotive, and was earning approximately $5,800-$5,900 per month. In September 1999, Helmer applied to work at Bingham Toyota Isuzu ("Bingham") and talked with Bob Clark, who was the Director of Parts and Service at Bingham. During this meeting, Clark asked Helmer how much he earned at Lithia. Helmer responded "it was 5700 and it could go up as high as 6,000." He testified that he told Clark that he needed to earn at least $5,700 per month.

According to Helmer, in response to this conversation, Clark then opened his desk drawer, pulled out a financial statement, made some calculations, and stated that "if [Helmer] had been employed by Bingham since January, [he] would have made $70,000 up to that point."

Clark denied that he ever told Helmer he could receive $70,000 in one year while working at Bingham. In addition, Clark denied that Helmer ever told him he needed to earn a minimum of $5,700 per month at Bingham before he would leave his job at Lithia. Clark admitted that he made some calculations using a financial statement in order to assure Helmer that earning $5,700 at Bingham was "doable." Clark also testified that no one in the parts department had ever made more than $70,000 per year.

Based on Clark?s representation, Helmer decided to leave Lithia and join Bingham. On Helmer?s first day with Bingham, Clark presented Helmer with a pay plan to sign, which was not explained to him. When Helmer received his first paycheck, he was concerned because it was only $4,400. Helmer approached Clark, who told him that he did not understand why he had received that amount and that he would look into it. Clark, however, never got back to Helmer. Helmer?s second paycheck was only $5,100. Helmer again questioned Clark about the amount, who suggested that if Helmer worked extra hours in the body shop, he could earn the additional money in his check.

Helmer?s third paycheck was $4,800. Helmer again discussed with Clark that his pay was less than $5,700 per month. According to Helmer, Clark asked for proof that Helmer had made $5,700 per month at Lithia and stated that Linda Gist, Bingham?s controller, did not believe that Helmer earned that amount of money at Lithia. Helmer provided his pay stubs from Lithia. Helmer believed that once he provided verification of his pay at Lithia, Clark would pay him according to what they had agreed prior to his accepting employment at Bingham.

According to Clark, Helmer expressed dissatisfaction about his pay and he explained to Helmer, "You?re in the three or four slowest months in the car business. Profits are not like where we would want them to be in October, November, December, January, and things are going to pick up." Clark expressly denied offering Helmer work in another department to earn extra money. Clark acknowledged that he asked Helmer to prove the amount of money he earned at Lithia; specifically, that he bring in his W-2 forms.

When the matter was not resolved, Helmer, Clark and Gist had a meeting, during which Helmer explained to Gist that Clark had promised Helmer he would earn over $70,000 and that he needed to receive the $5,700-per-month in compensation that he had been promised. Approximately two days later, Clark notified Helmer that he was "letting him go."

After his termination, Helmer filed for and received unemployment benefits. He could not return to Lithia, as it had a strict no-rehire policy. Helmer was offered and accepted a position in the parts department at Kitahara, during which he made approximately $3,200 per month. Eventually, Helmer accepted a job with Allstate Insurance, and earned $47,000 per year.

At trial, Helmer?s economic expert, Ted Vavoulis, explained that using an annual salary of $70,000 (which Helmer would have earned per year at Bingham), and assuming that Helmer would have worked at Bingham until age 61, Helmer would have earned $896,262. Given his current annual salary of $47,000 at Allstate, his earnings until age 61 will likely total $599,000. The difference between these two salaries is approximately $297,200.

The jury found Bingham liable for promissory fraud and awarded Helmer economic damages in the amount of $490,913 and noneconomic damages in the amount of $50,000. Bingham and Clark filed a notice of appeal. (2)

On appeal, Bingham contended that the jury improperly awarded future lost income from his employment at Lithia as damages to Helmer because these damages cannot be considered "benefit of the bargain" damages as the two parties only "bargained" for at-will employment. In addition, Bingham argued there is no evidence that Helmer had a loss of earning capacity.

In holding that Helmer was entitled to future lost income, the Court primarily relied on two cases: Lazar v. Superior Court (1996) 12 Cal.4th 631 and Toscano v. Greene Music (2004) 124 Cal.App.4th 685. In Lazar, the plaintiff asserted a claim for fraudulent inducement of employment contract, alleging that the defendant-employer had contacted him and tried to persuade him to leave his employment in New York and work for the defendant in Los Angeles. (Id. at p. 635.) As a condition of agreeing to relocate, the plaintiff required defendant-employer?s assurance that his job would be secure and would involve significant salary increases. (Ibid.) After the plaintiff relocated and began working for the defendant employer, he was fired. (Id. at pp. 636-637.) The plaintiff sued for lost and future income and employment benefits. (Id. at p. 637.) The Supreme Court held that the plaintiff could pursue a cause of action against the defendant-employer under the theory of promissory fraud. The court noted that the plaintiff could "properly seek damages for the costs of uprooting his family, expenses incurred in relocation, and the loss of security and income associated with his former employment in New York." (Id. at pp. 648-649, italics added.)

In Toscano, the plaintiff sued a prospective employer for promissory estoppel, stemming from the employer?s unfulfilled promise of employment, which had caused the plaintiff to resign from an at-will employment position with his former employer. (Id. at p. 689.) The trial court awarded the plaintiff damages that included his lost wages based on what he would have earned from his prior employer to the time of his retirement. (Ibid.) The prospective employer appealed. (Ibid.) The Court of Appeal recognized that "[n]o California case has squarely addressed the damages question presented: whether a plaintiff who resigns from at-will employment in reliance on an unfulfilled promise of other employment may recover, under a promissory estoppel theory, reliance damages based on wages lost from his or her prior employment." (Id. at p. 691.) In that case, the Court of Appeal held that the plaintiff could recover future wages if they were not speculative or remote and were supported by substantial evidence. (Id. at pp. 693, 694-695.) The Court of Appeal then concluded that the evidence of the plaintiff?s lost future earnings was too speculative because the plaintiff had no definite expectation of continued employment. The Court noted that neither the plaintiff nor the defendant had presented testimony from the plaintiff?s former supervisor regarding whether the plaintiff would have enjoyed continued employment. (Ibid.)

In the instant case, the Court held that future lost income is recoverable on a promissory fraud theory if the damages are not speculative or remote and that such damages may properly be considered as part of the "benefit of the bargain." The Court also concluded that the jury properly awarded Helmer future lost income damages pursuant to the jury instruction explaining that they were permitted to award Helmer reliance damages. Bingham did not object to this instruction.

The Court found that the damages were not speculative or remote because Helmer?s former supervisor, Ron Kirby, testified that he was "sad" to see Helmer leave and believed that Helmer was a "good" and "reliable" employee. The only reason he did not rehire Helmer after his termination from Bingham was due to a strict no-rehire policy.

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State Lawsuit Against Employer for Failing to Provide Meal Breaks Is Not Preempted by Federal Law.

In Valles v. Ivy Hill Corp., 2005 DJDAR 6568 (June 7, 2005), the Ninth Circuit found that ?301 of the Labor Management Relations Act, 29 U.S.C. ? 185 (2005) ("?301") does not preempt the California state-mandated meal period.

Ivy Hill, a Los Angeles printing facility, operated pursuant to a collective bargaining agreement ("CBA") that did not address rest breaks, but included two provisions regarding meal periods: one mandated non-working meal periods and the other provided for time and a half payment in the event an employee must work during a regularly scheduled meal period

From the time the printing facility opened in the 1960's until June 2002, employees who worked on the first shift were not afforded lunch periods. Despite the CBA language, they worked through lunch, and were paid their normal hourly rate. No employee filed a grievance about this practice.

In June 2002, Ivy Hill instituted non-working, unpaid lunch periods. Three months later, employees David Valles and John Breslin brought a class action lawsuit in state court, alleging that until June 2002, Ivy Hill had failed to provide them with uninterrupted thirty minute meal periods and ten minute rest breaks.

The employees based their claims entirely on the provisions of state law and not on any terms contained in their CBA. They sought penalties back to October 1, 2000, the date upon which the state's meal period and rest break penalty provisions became applicable.

Ivy Hill removed the case to federal court on the ground that the employees' meal period claims were completely preempted by ?301. The employees moved the district court to remand the matter to state court, while Ivy Hill moved for summary judgment on the ground of preemption. The district court denied the employees' motion to remand and granted summary judgment in favor of Ivy Hill. The employees appealed.

The complete preemption exception to the well-pleaded complaint rule is applied primarily under ?301, which vests jurisdiction in federal courts over "[s]uits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce." 29 U.S.C. ? 185(a). Although the text of ?301 contains only a jurisdictional grant, the Supreme Court has interpreted it to compel the complete preemption of state law claims brought to enforce CBAs. Avco Corp. v. Aero Lodge No. 735, Int'l Ass'n of Machinists & Aerospace Workers, 390 U.S. 557, 560 (1968). In addition, although the language of ?301 is limited to "[s]uits for violation of contracts," the Supreme Court has expanded ?301 preemption to include cases the resolution of which "is substantially dependent upon analysis of the terms of [a CBA]." Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 220 (1985); see also Franchise Tax Bd., 463 U.S. at 23; see also Balcorta, 208 F.3d at 1107-08 (discussing development of Supreme Court precedent on complete preemption); Cramer, 255 F.3d at 689-90 (same).

Ivy Hill contended that the state statutes and regulations affording the right to meal periods do not apply to workers covered by CBAs, and therefore the employees' claim arose from their contract, not from state law, and was preempted under ? 301. Alternatively, Ivy Hill contended that even if the state-established right to meal periods did apply to workers covered by CBAs, the right is still negotiable and it can be, and was, waived in the governing CBA. It also argued that resolution of the waiver issue required the interpretation of the CBA, including its history and past practice, and that the claim is preempted for this reason as well.

The Ninth Circuit found that a claim brought in state court on the basis of a state-law right that is independent of rights under the collective-bargaining agreement will not be preempted, even if a grievance arising from precisely the same set of facts could be pursued. In addition, when the meaning of contract terms is not the subject of dispute, the bare fact that a CBA will be consulted in the course of state-law litigation plainly does not require the claim to be extinguished. In order for complete preemption to apply, "the need to interpret the CBA must inhere in the nature of the plaintiff's claim. The Ninth Circuit further found that ?301 does not permit parties to waive, in a CBA, nonnegotiable state rights conferred on individual employees.

The Ninth Circuit held that since the Industrial Welfare Commission's Wage Order 1-2001, as amended, declared that workers covered by CBAs could agree to a meal period that commences after six hours of work (as opposed to five hours of work for workers without CBAs), it applied to workers covered by a CBA.

Finally, the Ninth Circuit held that meal periods and penalties are nonnegotiable, and hence, the right to a meal-period cannot be waived. The Ninth Circuit noted that even assuming that the right to meal periods could be bargained away by a union, the Court could not determine that the employees had waived their rights without clear and unmistakable language so indicating in the CBA. Ivy Hill cited no clear and unmistakable language waiving the right to non-working meal periods or penalties. Further, although past practice at the plant was to work meal breaks, and although the CBA stated that employees shall be paid at one and one-half times their hourly rate for lunches worked, since the CBA also stated that "[n]o employee shall be compelled to work more than five (5) hours without being permitted to have one-half (?) hour for lunch," the CBA language did not clearly and unmistakably waive the right to meal periods and penalties.

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1. Tall Trees, a general partnership between two corporations?Tub O'Laughs, Inc. and Girls On Top, Inc., entered a three-year "first look" agreement with Columbia Pictures Industries, Inc., a division of Sony. Under the agreement, Tub O'Laughs, Inc. loaned Thomas to Tall Trees to provide services as a producer and director, and Girls On Top, Inc. loaned Jenno Topping to Tall Trees to provide services as a producer. Sony agreed to pay a specific amount per year to Tall Trees for overhead, including the salaries and benefits of six staff employees plus an assistant for Thomas.

2. Helmer was also awarded $1.5 million in punitive damages, which was later reduced by the trial court to $675,000. Helmer cross-appealed the reduction, contending that the trial court erred in reducing the amount of punitive damages.