Labor and Employment
Lawson Ushers in a New Era for Employee Whistleblowers …or Does It?
By Ramit Mizrahi
I. INTRODUCTION AND BACKGROUND
Within the past two years, Cal. Lab. Code § 1102.5, California’s general whistleblower protection law, went from being a secondary cause of action to the most important one for most employees alleging retaliation. Two critical events spurred this change: (1) the 2020 amendment to section 1102.5 allowing successful plaintiffs to recover attorney’s fees; and (2) the California Supreme Court’s January 2022 decision in Lawson v. PPG Architectural Finishes, Inc., which clarified the framework for evaluating section 1102.5 claims. But while the benefits of attorneys’ fees are readily apparent, the extent of Lawson’s impact remains to be seen.
By way of background, section 1102.5 protects employees who disclose information to a government or law enforcement agency, to those with authority over them or with the authority to investigate, discover, or correct the violations, or to a public body conducting an investigation, hearing, or inquiry, regarding what they reasonably believe to be violations of or noncompliance with a local, state, or federal rule or regulation. It protects employees who refuse to violate the law. It also protects employees suspected of being whistleblowers (or who have that potential) as well as whistleblowers’ family members.
II. LEGISLATIVE DEVELOPMENT
Before 2020, section 1102.5 did not provide for attorney’s fees. Successful plaintiffs could seek attorney’s fees under Cal. Code Civ. Proc. § 1021.5 for enforcing “an important right affecting the public interest,” but the bar was high, and the odds were low. As a result, section 1102.5 claims often took a back seat to causes of action that provided for statutory attorneys’ fees—those offered plaintiffs a far greater upside and leverage for settlement. This also meant that plaintiffs who only had section 1102.5 retaliation claims, even very strong ones, often had difficulties finding counsel.
That changed with A.B. 1947, which went into effect on January 1, 2021, and added subdivision (j) to section 1102.5. Subdivision (j) is a one-way, fee-shifting provision that authorizes courts to award reasonable attorney’s fees to plaintiffs who bring successful actions under the statute. With that, section 1102.5 was now on equal footing with important civil rights laws that contained attorney’s fee provisions, such as the Fair Employment and Housing Act (FEHA).
But section 1102.5 held the promise of being even more employee-friendly than other statutes because of the framework laid out in section 1102.6. On the books since 2003 (a response to the Enron and WorldCom scandals), section 1102.6 provides: “In a civil action or administrative proceeding brought pursuant to [s]ection 1102.5, once it has been demonstrated by a preponderance of the evidence that an activity proscribed by [s]ection 1102.5 was a contributing factor in the alleged prohibited action against the employee, the employer shall have the burden of proof to demonstrate by clear and convincing evidence that the alleged action would have occurred for legitimate, independent reasons even if the employee had not engaged in activities protected by [s]ection 1102.5.” Despite this clear framework, some appellate courts still imposed the McDonnell Douglas burden-shifting test when evaluating section 1102.5 claims, essentially disregarding section 1102.6. See, e.g., Hager v. County of Los Angeles; Mokler v. County of Orange; and Patten v. Grant Joint Union High School Dist. Lawson disapproved all these decisions.
III. THE LAWSON DECISION
Then came the California Supreme Court’s decision in Lawson. The decision, authored by Justice Leondra Kruger, made clear that the McDonnell Douglas burden-shifting test does not apply to section 1102.5 claims. Lawson held that section 1102.6 alone provides the governing framework for presenting and evaluating these claims.
This holding promised to be a game-changer for California employee whistleblowers. Surely, many more cases would get past a motion for summary judgment and succeed at trial with the burden now shifted to the defendant to meet a clear and convincing evidence standard once the plaintiff made their initial showing. Indeed, PPG had expressed these concerns, and the court acknowledged them: “To the extent PPG is concerned that the existing framework sets the plaintiff’s bar too low by requiring only a showing that retaliation was a contributing factor in an adverse decision, PPG’s remedy lies with the Legislature that selected this standard, not with this court.”
IV. POST-LAWSON CASE LAW
Thus far, however, this has not been borne out by the cases applying Lawson. The author has reviewed all published and unpublished post-Lawson California and Ninth Circuit appellate and federal district court decisions involving section 1102.5 claims—there were 25 of them as of December 31, 2022. A review of these cases failed to find any case in which a section 1102.5 claim survived a motion for summary judgment or other challenge while a concurrently presented FEHA retaliation claim (or other statutory retaliation claim evaluated under the McDonnell Douglas test) based on the same facts did not. Indeed, it appears that defendant employers are still regularly succeeding in disposing of section 1102.5 claims with little impact yet seen from the Lawson decision.
There have been three published California appellate decisions to date applying Lawson. In Scheer v. Regents of the Univ. of California, the Court of Appeal reversed summary judgment in a case involving a university administrator who alleged retaliation in violation of section 1102.5, Cal. Gov’t Code § 8547 et seq., and Cal. Health & Saf. Code § 1278.5. The Court of Appeal held that the trial court erred in applying the McDonnell Douglas test to the first two causes of action instead of the section 1102.6 framework, requiring reversal and further proceedings under the appropriate standard. The court declined to review the evidence under the § 1102.6 framework in the first instance. The Court of Appeal also found that the trial court erred in finding no triable issues of material fact with respect to the Cal. Health and Saf. Code § 1278.5 cause of action, which relied on the same facts and was evaluated using the McDonnell Douglas burden-shifting test. This suggests that the court of appeal would have reversed as to the first two causes of action even if it has used the McDonnell Douglas test.
Vatalaro v. County of Sacramento, which took a different approach, involved a county employee who alleged retaliation in violation of section 1102.5 after she reported that she was working below her service classification. The trial court applied the McDonnell Douglas test and granted the defendant’s motion for summary judgment. The trial court found that the plaintiff could not show that she had a reasonable belief that she disclosed a violation of law, and further that she failed to raise a triable issue of material fact to support that the employer’s stated reasons for terminating her were pretextual. She appealed. The Court of Appeal acknowledged that the wrong standard had been used by the trial court. It nevertheless affirmed the judgment, as it concluded that, applying Lawson, the employer had presented sufficient undisputed “clear and convincing” evidence to satisfy its burden under section 1102.6 that the termination would have occurred for legitimate, independent reasons even if she had never complained.
Francis v. City of Los Angeles involved allegations by a police officer that she suffered retaliation in violation of section 1102.5. After the trial court denied the employer’s motion for nonsuit, the case went to trial and the jury found in the employer’s favor. The employee appealed, arguing that the jury instructions and special verdict form contained prejudicial errors. The employer, in turn, argued that there was no substantial evidence to support the employee’s claim and that the motion for nonsuit should have been granted. The Court of Appeal affirmed the judgment. It held that there was no substantial evidence of an adverse employment action under section 1102.5, such that nonsuit should have been granted.
The seven post-Lawson unpublished/non-citable California appellate decisions involving section 1102.5 claims fail to evidence a sea change in favor of whistleblower plaintiffs. In all seven, the employer defendants prevailed on appeal.
Killgore v. SpecPro Prof’l Servs., LLC, the Ninth Circuit’s only published post-Lawson 1102.5 case, reversed summary judgment with respect to a section 1102.5(b) claim, holding that the trial court erred when it deemed disclosures unprotected because they were made in the normal course of the plaintiff’s job duties to a supervisor who did not necessarily have the authority to investigate, discover, or correct the violations, and when it found that the plaintiff did not have a reasonable belief that he was disclosing a violation of law. In Tandon v. GN Audio USA, Inc., an unpublished memorandum disposition, the Ninth Circuit affirmed summary judgment in favor of the defendant, holding that the plaintiff failed to provide evidence of protected activity based on a statute, rule, or regulation.
Another 13 federal district court decisions addressing section 1102.5 claims are mixed, with a slight majority favoring the employer defendants.
Defendants have prevailed on summary judgment in the majority of post-Lawson section 1102.5 appellate and federal district court cases decided to date, with many plaintiffs unable to get past the first step of demonstrating that an activity proscribed by section 1102.5 was a contributing factor in an alleged adverse employment action. The author’s sense is that some courts may be treating this first step in the sections 1102.5/1102.6 analysis as creating a heavier burden than the first step in the McDonnell Douglas test (making out a prima facie case of retaliation). If so, the benefits of section 1102.6 to plaintiffs may largely be neutralized, contrary to the intentions of the California Legislature in enacting it.
Nevertheless, with the attorney’s fees provisions and broad protections that section 1102.5 provides, and with the (yet unrealized) promise of Lawson, we can all expect to see many more of these cases.
Ramit Mizrahi is a former Chair of California Lawyers Association's Labor and Employment Law Section and Chair of the Pasadena Bar Association Labor & Employment Law Section. She is the founder of Mizrahi Law and an employment law mediator.