Businesses across the state scored a win earlier this month when the California Supreme Court made it harder for a fired employee to win damages for discrimination.
But the win could be short-lived, if plaintiffs’ attorneys and civil rights groups have their way. Led by the California Employment Lawyers Association in Encino, the groups are already strategizing how to negate the ruling through new legislation. Some started preparing for a potential fight before the ruling even came down.
The ruling, which was widely anticipated, states that a fired employee must prove that discrimination played a “substantial” role, and not just any role, in his firing in order to win damages, back pay or reinstatement from a former employer. Even then, employers can avoid a payout by proving the employee would have been fired for independent reasons. A plaintiff had previously only to prove there was some discrimination to win damages.
The ruling will make it easier for California employers to ward off discrimination lawsuits, experts say. Such claims present a legal headache for businesses in California, which has more employment discrimination claims than other states due in part to aggressive plaintiffs’ attorneys and generous state laws. In the week of the Feb. 7 ruling alone, at least 19 discrimination lawsuits were filed by fired employees in Los Angeles Superior Court against employers including Southern California Gas Co., Hula Post Production in West Los Angeles and downtown L.A. parking lot owner L&R Auto Parks Inc., according to court records.
Plaintiffs’ attorneys, with their ability to win such cases now weakened, aren’t happy with the ruling and are looking for a way to fight back. A spokeswoman for the Employment Lawyers Association, a statewide group with more than 1,000 members, told the Business Journal within days of the ruling that it was considering pushing a bill in the state Legislature that would undo the ruling and make it easier again for plaintiffs to recover damages. It began working with other organizations on a draft of a potential “spot bill” – a generic bill that can be amended later – even before the ruling came down.
The organization is now talking to groups including AARP and two San Francisco groups, Equal Rights Advocates and the Legal Aid Employment Law Center, to see whether new legislation might be possible.
“We are talking to civil rights organizations to see what legislative fix we can come up with,” said Toni Jaramilla, a Century City employment attorney and the group’s chairwoman. “The ruling would deny or cut off damages to the plaintiffs if the defense can prove it would have fired the employee anyway, and the legislative fix is going to be potentially addressing that.”
Jaramilla said it was too early to know if or when CELA would draft a bill. But attorneys on both the plaintiffs’ and employers’ sides believe a challenge is coming.
“I’m skeptical that the opinion is going to last long,” said Anthony Oncidi, a partner at the Century City office of Proskauer LLP who has defended Paramount Pictures Corp. and the National Basketball Association against employee discrimination lawsuits. “There is now a supermajority of Democrats in the Legislature who are very friendly toward the trial lawyers.”
Legislation undoing court rulings on employment law is not unprecedented. In October, the Legislature passed a bill that said all nonexempt employees were entitled to overtime pay, effectively reversing a California appellate court ruling from 2011.
The California Supreme Court ruling is similarly seen as favorable to employers. In the case decided Feb. 7, the court overturned a $178,000 jury award to a former bus driver for Santa Monica’s Big Blue Bus line. A jury found the driver was fired because she had revealed she was pregnant, but the city argued it would have fired her anyway because she had also had been in two accidents and failed to report to work on time.
Such arguments can now void damage claims, although an employer could still be on the hook for attorney fees if a jury finds an employee was discriminated against.
For now, however, the ruling is a boon for not only public-sector employers but most California employers facing discrimination claims.
One out of every 973 employees in California files an employment discrimination claim with the state in an average year, one of the highest rates in the country, according to a 2010 UCLA-Rand study. The average legal cost of defending a lawsuit through trial is $150,000 and the average jury verdict won by a plaintiff is about $205,000, the study said.
Cornerstone OnDemand, a software company in Santa Monica, has been fighting a pregnancy discrimination case filed by a former employee since 2010. It lost an arbitration award, but in January filed a motion to vacate the award, according to court documents.
The ruling will likely help the company’s efforts to vacate the award, but general counsel Adam Weiss declined to comment on pending litigation.
“We look forward to reviewing the law and hopefully it will continue to provide clarity to both employers and employees as to what their rights and obligations are,” he said.
Lisa Maki, president of the Consumer Attorneys Association of Los Angeles, said it would make her cases harder to win when they get to a jury, but that it would not change how she litigates them.
“I don’t think it’s a great decision and I don’t think it will likely last,” she said.
Kim Stone, president of the Civil Justice Association of California, a Sacramento organization that advocates for tort reform, was skeptical of the chances for a legislative end-around.
“This was a unanimous decision by the California Supreme Court and it’s a hard case to make that they made the wrong call,” she said. “I hope (plaintiffs’ attorneys) don’t bring a bill to legislatively overturn what the Supreme Court did, but if they do, I’m sure we’ll be there to fight it.”
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