Colarossi v. Coty US Inc.

Facts

The claim was for wrongful termination in violation of public policy, with the protected activity being the plaintiff’s cooperation in an internal sexual-harassment investigation. Retaliation analysis tracks the familiar burden-shifting frame the court borrowed from the FEHA case law: a plaintiff must show (1) protected activity, (2) an adverse employment action, and (3) a causal link, after which the employer must offer a legitimate reason and the plaintiff must prove that reason pretextual. (Colarossi, supra, 97 Cal.App.4th at p. 1152.) The facts here map almost perfectly onto each disputed element.

Kimberly Colarossi joined Coty US Inc., “a leading manufacturer and marketer of perfume,” in 1987 as a merchandising specialist whose “job was to visit retailers and make sure Coty’s products were being promoted and displayed properly.” (Id. at p. 1146.) “By all accounts, Colarossi was an exceptional employee. In fact, in 1997 she was named Coty’s top merchandiser in the entire nation,” an award for which the director of merchandising, Deborah Bassett, “personally selected” her. (Ibid.)

“A short time later, in May of 1997, Colarossi’s supervisor, DeAnna Roe, accused Bassett of sexual harassment.” (Id. at p. 1146.) Because Roe named Colarossi as a witness, “the company sought to interview Colarossi as part of its investigation.” (Ibid.) “After being assured her statements would remain confidential, Colarossi disclosed to an investigator that she had witnessed Bassett engage in what she considered to be sexually [*1147] inappropriate behavior.” (Id. at pp. 1146–1147.) The investigation “culminated with Bassett being reprimanded,” though “the company took no other action against her,” while Roe “was told she would have to transfer to another state if she wanted to keep her job” and “chose to resign instead.” (Id. at p. 1147.)

The pivotal evidence emerged from Roe’s exit. “Before leaving the company in September 1997, Roe had a conversation with fellow employee Frank Murdocco,” who, “[a]ccording to Roe, … told her he had heard Bassett say she was ‘going to get revenge’ on everyone who cooperated in the investigation.” (Id. at p. 1147.) At their depositions, “Murdocco said no,” and “Bassett also denied making any such statement,” claiming “she did not even know who participated in the investigation, let alone what they said about her.” (Ibid.)

After Roe left, Colarossi’s record-keeping suddenly came under scrutiny. Interim supervisor Mary Zabel told Colarossi that her “weekly reports had to contain legible signatures from the supervisors of the stores she serviced,” that she “had to keep better track of her hours,” and that these policies were “not open to flexibility.” (Id. at p. 1147.) Bassett ultimately gave Roe’s permanent position to Dawn Miranda-Nesbitt, who became Colarossi’s supervisor. (Ibid.) “In February 1998, Miranda-Nesbitt reviewed Colarossi’s weekly reports and became suspicious,” concluding that “some of the signatures from her store supervisors appeared to be fraudulent.” (Ibid.) Bassett ordered an audit, which “indicated that Colarossi was not keeping an accurate account of her hours and that she had falsified some of the supervisors’ signatures.” (Ibid.)

Colarossi did not deny the conduct. She “admitted she did not pay much attention to the reports and she sometimes forged the supervisors’ signatures [*1148] for the sake of expediency,” adding that she did not think it important “because Roe and other supervisors encouraged her to do so, and other merchandisers did it too.” (Id. at pp. 1147–1148.) When Miranda-Nesbitt reported the deficiencies, “Bassett immediately took them up with senior vice-president James McDougald,” who, “[a]lthough … considered Colarossi to be an ‘excellent employee,’ … ordered her to be fired.” (Id. at p. 1148.)

Two comparators framed the disparate-discipline argument. “Of the 10 other employees who participated in the investigation …, two have quit, one was terminated for falsifying her reports and the rest still work for the company.” (Id. at p. 1148.) And critically, “[i]n the past, Coty has not always terminated those employees who have engaged in fraud,” because “[s]ome employees who falsified their reports were merely put on probation, a sanction that is expressly contemplated in the company handbook.” (Ibid.)

Procedural history

Colarossi “sued Coty for wrongful termination in violation [*1149] of public policy,” alleging “that Bassett had her fired for cooperating in the sexual harassment investigation and that her record-keeping deficiencies were merely a pretext.” (Colarossi, supra, 97 Cal.App.4th at p. 1148.) She pleaded five other causes of action, “none of which are germane to this appeal.” (Id. at p. 1148, fn. 1.)

Coty moved for summary judgment “based on lack of proof” and “objected on hearsay grounds to Roe’s allegation that Bassett threatened to get revenge.” (Id. at p. 1148.) The trial court, Hugh Michael Brenner, Judge, “sustained the objection and found Colarossi’s remaining evidence insufficient.” (Ibid.) The court ruled: “‘THE BASIC THING IS THIS: Coty had good cause to terminate this employee. She lied … on the report she was supposed to submit, then tried to cover it up. Balanced against that … [there] just [is not] any evidence [of retaliation]. There is really no evidence … of any weight that Bassett even knew that Colarossi had participated in that investigation.’” (Ibid.) Summary judgment was granted for Coty.

Colarossi appealed. The Court of Appeal, Fourth District, Division Three, in a unanimous opinion by Justice Bedsworth, reversed. (Id. at pp. 1146, 1155.) Because of the disposition, the court did not reach Colarossi’s separate claim that the trial court erred in denying a continuance or new trial based on newly discovered evidence. (Id. at p. 1155, fn. 2.)

Issue

The appeal posed three nested questions. First, did the trial court “improperly weigh[] the evidence in reaching its decision”? (Colarossi, supra, 97 Cal.App.4th at p. 1146.) Second, did the court err in excluding Roe’s declaration recounting Bassett’s revenge statement? Third, and dispositively, “Including Roe’s statement, was Colarossi’s evidence sufficient to defeat Coty’s motion for summary judgment?” (Id. at p. 1151.) On the merits the only contested element was causation: “did she show a causal link between her participation in the sexual harassment investigation and her subsequent termination?” (Id. at p. 1152.)

Holding

Reasoning

The court first rejected the “improper weighing” argument, defining what a summary-judgment court must do. Citing Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, the court recited that the movant “bears the burden of persuasion that there is no triable issue of material fact,” after which the opponent bears “a burden of production … to make a prima facie showing.” (Colarossi, supra, 97 Cal.App.4th at p. 1149.) A triable issue exists “if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion.” (Ibid.) The court “may not weigh the plaintiff’s evidence or inferences … as though it were sitting as the trier of fact, [but] it must nevertheless determine what any evidence or inference could show or imply.” (Ibid.) Seizing on the trial court’s words “balanced” and “weight,” Colarossi argued the court had crossed that line — but the panel disagreed: “it does not seem the court actually weighed Colarossi’s evidence against that put forth by Coty. Rather, it simply determined that Colarossi’s evidence fell short of proving that Coty’s proffered reason for firing her was pretextual.” (Ibid.) That was a proper exercise of the gatekeeping function, “as it would [not] have had it assayed to weigh the evidence or resolve factual conflicts.” (Ibid.)

The court then performed de novo review and held the revenge statement should have been considered — on three independent grounds. Reviewing the record de novo under Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, the panel held it “must determine which information in the record to consider.” (Colarossi, supra, 97 Cal.App.4th at pp. 1149–1150.) Roe’s declaration recounted that Murdocco “heard Debbie Bassett make a statement to the effect that she was going to get revenge on every one of the people on the list of those who gave statements during the investigation.” (Id. at p. 1150.)

Mental-state non-hearsay. Bassett’s statement “has relevance apart from its substantive truth.” (Id. at p. 1150.) “Quite apart from the truth of the statement — i.e., that she would get revenge — the statement shows Bassett’s mental state. It shows she felt she had been wronged and harbored ill will toward those she held responsible.” (Ibid.) Quoting Witkin, the court reasoned that “‘[i]f an utterance, regardless of its truth or falsity, justifies an inference concerning the declarant’s mental state … it may be admissible as circumstantial evidence of that mental state.’” (Ibid.)

Party admission. Although “Bassett was not actually named in the lawsuit,” she “authorized the audit,” “oversaw the investigation into Colarossi’s work habits,” and “consulted with McDougald regarding Colarossi’s fate,” making her, as Miranda-Nesbitt put it, involved “‘each step of the way.’” (Id. at p. 1150.) “Such involvement renders her remark to Murdocco admissible as a statement of a party.” (Ibid.)

Prior inconsistent statement. Both levels of the statement were also admissible under Evidence Code section 1235, because Coty “concede[d] the statements attributed to Murdocco and Bassett by Roe are fundamentally inconsistent with their deposition testimony.” (Id. at pp. 1150–1151.) Coty argued the section 770 foundation failed because the deponents “were not given an opportunity in their depositions to explain or deny their statements.” (Id. at p. 1151.) The court rejected that as misunderstanding the purpose of foundation: the chance to explain a prior inconsistent statement exists “to assist the trier of fact in assessing the witness’s credibility” and to set “the stage for effective cross-examination,” which “can only occur in the context of trial.” (Ibid.) Before the statement “is introduced in evidence,” there is “‘no compelling reason’” to lay that foundation at the discovery stage. (Ibid.)

With the statement in, the court found a triable issue on causation’s first sub-question: Bassett’s knowledge. Causation “[a]t a minimum … required Colarossi to present evidence that Bassett knew she participated in the investigation.” (Colarossi, supra, 97 Cal.App.4th at p. 1152.) Coty argued the revenge statement was “meaningless because Bassett did not specifically identify any of the employees.” (Id. at pp. 1152–1153.) The court drew the opposite inference: “according to Murdocco, Bassett was referring to a list of witnesses who had been interviewed. Since Colarossi had been interviewed, it is reasonable to presume that she was on the list.” (Id. at p. 1153.) Independently, Colarossi testified that after the investigation, “Bassett talked to her about certain information she had confidentially divulged to the investigators,” which Bassett disputed — “conflicting evidence [that] created a triable issue of fact.” (Ibid.)

The court then assembled the “mosaic” of direct and circumstantial pretext evidence — the heart of its CACI No. 2505 analysis. The panel invoked the rule that “[b]oth direct and circumstantial evidence can be used to show an employer’s intent to retaliate,” with direct evidence consisting of “remarks made by decisionmakers displaying a retaliatory motive” and circumstantial evidence relating to “the plaintiff’s job performance, the timing of events, and how the plaintiff was treated in comparison to other workers.” (Id. at p. 1153.) “Colarossi’s evidence covered all of these bases.” (Ibid.)

Direct evidence. Roe’s declaration was “a veritable ‘smoking gun’ in the form of Bassett’s expressed desire to get revenge,” from which “a trier of fact could logically find that Bassett intended to retaliate.” (Id. at p. 1153.) The court analogized to federal authority treating a decisionmaker’s retaliatory remark as direct evidence “‘sufficient to preclude summary judgment.’” (Ibid.)

Performance and timing. Before the investigation Colarossi “had been a ‘top performer,’ received ‘numerous awards,’ and ‘never had a [*1154] negative thing said about [her]’” — undisputed proof. (Id. at pp. 1153–1154.) “After that, everything seemed to change,” as Coty “began scrutinizing her weekly reports with a skepticism previously reserved for the Shroud of Turin.” (Id. at p. 1154.) The court emphasized temporal proximity: while Coty had every right to enforce its policies, “its decision to take these actions on the heels of Colarossi’s participation in the investigation might strike a trier of fact as being rather suspicious.” (Ibid.) “The timing of the decision may have been coincidental, but when viewed as part of the mosaic of evidence … it adds to the impression that Coty possessed a retaliatory motive, not a benign one.” (Ibid.)

Disparate discipline. The leniency comparators reinforced the inference: “at least two other employees who did not participate in the investigation were merely put on probation for doing the same thing.” (Id. at p. 1154.) That Coty had fired others for record-keeping fraud “still does not explain why it chose to terminate Colarossi rather than give her probation,” a question of “added significance when Colarossi’s vast experience and excellent work record are taken into consideration.” (Ibid.)

The court rejected Coty’s exculpatory evidence. Coty’s argument that interviewing Colarossi for Roe’s position showed good faith failed because Bassett “ended up giving the job to Miranda-Nesbitt, who worked closely with Bassett … in digging up Colarossi’s record-keeping deficiencies.” (Id. at pp. 1154–1155.) The statistical defense — that seven of eleven investigation participants still worked there — also faltered: “four of the workers, over a third of the group, were either fired or have moved on,” and counting Roe’s forced departure, “the numbers do not cast a particularly favorable light on Coty’s actions.” (Id. at p. 1155.) Acknowledging that Colarossi “engaged in fraudulent conduct” and disclaiming any intent “to question an employer’s right to terminate on this basis,” the court nonetheless concluded that, “considering the totality of the evidence, … a rational trier of fact could reasonably conclude that Coty was motivated by retaliatory motives.” (Ibid.) “The fact there is evidence which would support either conclusion” was precisely why summary judgment was error. (Ibid.)

Significance

Colarossi sits squarely in the line of California retaliation cases — Iwekaogwu v. City of Los Angeles (1999) 75 Cal.App.4th 803, Flait v. North American Watch Corp. (1992) 3 Cal.App.4th 467, and Morgan v. Regents of University of California (2000) 88 Cal.App.4th 52 — that hold causation may be proved by a combination of direct decisionmaker remarks, performance history, suspicious timing, and disparate treatment. (Colarossi, supra, 97 Cal.App.4th at pp. 1152–1153.) Its enduring contribution is the “mosaic” framing: no single fact need be dispositive, and even concededly coincidental timing can “add[] to the impression” of retaliatory motive when stitched together with the other threads. (Id. at p. 1154.) This is the substantive logic CACI No. 2505 captures when it tells juries that retaliatory intent may be shown by circumstantial evidence including “the timing of [the] discipline” relative to the protected activity.

The case is equally important for evidence practitioners. It is a leading authority for three propositions that recur on summary judgment: that an out-of-court statement of revenge is admissible non-hearsay to prove the speaker’s motive; that a non-party who is involved “each step of the way” in the adverse decision can have her statements treated as party admissions under section 1220; and — most usefully — that the section 770 foundation for a prior inconsistent statement need not be laid at deposition because its credibility-testing function “can only occur in the context of trial.” (Id. at pp. 1150–1151.) That last holding meaningfully lowers the evidentiary bar a plaintiff must clear to put deposition-contradicted hearsay before a summary-judgment court.

The holding’s limits are candidly stated. The court “certainly do[es] not intend … to question an employer’s right to terminate” for record-keeping fraud and conceded “[i]t may well be determined that Coty’s actions were justified.” (Id. at p. 1155.) Colarossi thus decides only that a triable issue existed, not that Colarossi must win — a reminder that the case is a summary-judgment authority, not a liability rule.

Key quotes

“The strongest piece of evidence in Colarossi’s arsenal is no doubt Roe’s declaration. It contains a veritable ‘smoking gun’ in the form of Bassett’s expressed desire to get revenge on the people who cooperated in the investigation … . Based on this expression alone, a trier of fact could logically find that Bassett intended to retaliate against Colarossi … .” (Colarossi, supra, 97 Cal.App.4th at p. 1153.)

“The timing of the decision may have been coincidental, but when viewed as part of the mosaic of evidence Colarossi presented, it adds to the impression that Coty possessed a retaliatory motive, not a benign one.” (Id. at p. 1154.)

“[C]onsidering the totality of the evidence, we believe a rational trier of fact could reasonably conclude that Coty was motivated by retaliatory motives. The fact there is evidence which would support either conclusion convinces us the trial court erred in granting summary judgment … .” (Id. at p. 1155.)

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Practice pointer

Open questions

The opinion expressly reserves one issue. Because reversal disposed of the appeal, the court held it “need not address Colarossi’s remaining claim that the trial court erred in denying her request for a continuance or a new trial based on newly discovered evidence.” (Colarossi, supra, 97 Cal.App.4th at p. 1155, fn. 2.) The merits of that procedural ruling remain undecided.

The court also pointedly declined to resolve liability, noting it did not “intend … to question an employer’s right to terminate” for record-keeping fraud and that “[i]t may well be determined that Coty’s actions were justified and appropriate.” (Id. at p. 1155.) Whether Coty’s record-keeping rationale was genuine or pretextual was left to the trier of fact. Finally, the opinion does not decide how the section 770 foundation must ultimately be satisfied at trial, observing only that “Colarossi’s attorney will surely have to ask these questions in order to get Murdocco’s and Bassett’s prior inconsistent statements admitted into evidence” there. (Id. at p. 1151.)