McRae v. Department of Corrections & Rehabilitation

Facts

Dr. Margie McRae, an African-American woman and board-certified surgeon, began working in 1992 at the California Medical Facility in Vacaville (CMF), a Department-administered hospital for prisoners; for years “she regularly and uniformly received excellent performance evaluations.” (McRae, supra, 142 Cal.App.4th at p. 382.) In 1995 she applied to be Chief Medical Officer at the nearby California State Prison, Solano; in May 1996 the Department selected Dr. Jessica Clarke, a Caucasian woman, and on April 25, 1997, Dr. McRae filed a complaint with the Department of Fair Employment and Housing (DFEH) claiming she was denied the appointment because of her race. In her view, that filing “triggered a number of retaliatory actions by the Department that culminated in her involuntary transfer” to Solano. (Ibid.)

The claimed course of retaliation began in May 1997, when her supervisor, CMF Chief Medical Officer Dr. Raymond Andreasen — who was not on the Solano hiring committee — wrote two memoranda to his files reporting that Dr. McRae had left her post as emergency room physician unattended; the memoranda were written shortly after notice of the DFEH complaint reached him. (McRae, supra, 142 Cal.App.4th at p. 383.) After reports of late arrivals and a departure without coverage, and after Dr. McRae missed three scheduled meetings, Dr. Andreasen issued a “Letter of Instruction” directing her to familiarize herself with the governing regulations and to notify a supervisor before leaving her job site — stating expressly that it was “not to be construed as punitive or adverse in nature. It represents formal instructions and a means of documenting a situation which needs correction and gives guidelines for the performance of your duties.” (Ibid.) The letter would sit in her personnel file for one year, subject to removal on written request; she refused to accept or sign it, and it went into the supervisory file. (Ibid.)

Six months later Dr. Andreasen requested an internal affairs investigation into whether Dr. McRae had disobeyed his direct order to contact a patient’s distraught family and had failed to release information needed to move the patient to hospice; a month later Dr. Joseph Bick, director of CMF’s HIV unit, requested an investigation into whether she had ordered antibiotics withheld from a pneumonia patient without examining him, and Dr. Andreasen folded Dr. Bick’s allegations into his request. (McRae, supra, 142 Cal.App.4th at pp. 383–384.) The investigator reported to the warden on April 10, 1998. (Id. at p. 384.) That same month came the “HEPA filter” confrontation: Dr. McRae, concerned the air filter near her desk leaked ultraviolet light, had grieved its placement, lost, and taken to unplugging and moving it herself. On April 16, 1998, two nurses, Bruce Wiltse and Robert Burkhart, confronted her; the filter was unplugged and re-plugged three times; Nurse Burkhart shouted “Liar, liar,” jabbed his finger at her face, and touched her hand, while — according to Dr. McRae — Dr. Andreasen stood by until her union representative arrived. (Ibid.) She went out on nonindustrial disability leave the next day and sought a restraining order against both nurses. (Ibid.) On May 14, 1998, she filed a second DFEH complaint, alleging the letter of instruction was retaliation for the first. (Id. at p. 385.)

On June 25, 1998, the warden recommended a 30-day suspension based on the investigation; the recommendation was approved up the chain on July 14, 1998, and a statement of adverse action was drafted advising Dr. McRae of appeal rights to the State Personnel Board. But “[t]he letter was not sent to Dr. McRae, and Dr. McRae was not suspended, at least in part because by that time she was no longer working at CMF. Dr. McRae did not learn about the decision until after she filed her complaint.” (McRae, supra, 142 Cal.App.4th at p. 385.) Instead, on July 29, 1998, the chief deputy of clinical services wrote that her disability leave would expire August 15 and directed her to report to Solano Prison rather than CMF: “You are being transferred to Solano in an effort to resolve several of your safety concerns here at CMF,” listing proximity to the two nurses, the restraining orders, the HEPA filter and UV-light concerns, clinic health hazards, office space, and MOD (medical officer of the day) duty. (Ibid. & fn. 3.) Dr. McRae filed a third DFEH complaint on August 18, 1998, asserting the transfer was retaliatory; her grievance was denied; in March 1999 she reported to Solano Prison, left within three weeks, and filed this action two and one-half weeks later. (Id. at p. 386.)

Procedural history

Dr. McRae sued the Department and four individual defendants under the FEHA for discrimination and retaliation. The trial court granted summary judgment to the individuals; the case proceeded to trial against the Department, and the jury rejected the discrimination claim but awarded $75,000 on the retaliation claim. The Department appealed from the judgment and from postjudgment attorney-fee orders; Dr. McRae appealed the costs award to the individual defendants. (McRae, supra, 142 Cal.App.4th at pp. 381–382.)

The appeal traveled an unusual road. The First District first reversed in an opinion filed March 18, 2005 (reported at 127 Cal.App.4th 779); the Supreme Court granted review and later “transferred the case back to us to reconsider in light of its decision in Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028,” and in light of Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, which held that an employee may seek FEHA relief “without first exhausting internal remedies available to the employee through the administrative process.” (McRae, supra, 142 Cal.App.4th at p. 382, fn. 1.) The panel noted that its earlier suggestion — that a disciplinary action will not ripen into an actionable adverse action while the employee retains power to contest it internally — was “not necessary to our decision, and we do not repeat it here.” (Ibid.) On reconsideration the court concluded “that although Yanowitz has an effect on our analysis, it does not alter our conclusion.” (Ibid.) It again reversed the judgment and the fee orders, affirmed the individual defendants’ costs award, and remanded for an award of the Department’s nonduplicative costs. (Id. at pp. 382, 398–399.) Rehearing was denied September 28, 2006, and the Supreme Court denied review December 13, 2006 (S147189). (Id. at p. 399.)

Issue

With protected activity conceded — “the filing of DFEH claims” — two questions controlled. (McRae, supra, 142 Cal.App.4th at p. 386.) First, was there substantial evidence that the Department subjected Dr. McRae to an adverse employment action within the meaning of Government Code section 12940, subdivision (h), as construed in Yanowitz — whether in any single act (the memoranda, the letter of instruction, the investigation, the unimplemented suspension, the transfer) or in the acts viewed collectively as a course of conduct? Second, even assuming a materially adverse action, did Dr. McRae carry her burden of producing substantial evidence that the Department’s legitimate reasons for the transfer were pretextual? (Id. at pp. 386–390, 397.)

Holding

Reasoning

The statutory frame. Section 12940, subdivision (h) makes it unlawful “to discharge, expel, or otherwise discriminate against any person because the person has opposed any practices forbidden under this part or because the person has filed a complaint, testified, or assisted in any proceeding under this part,” and the court noted the parallel whistleblower provision, Labor Code section 1102.5, subdivision (b). (McRae, supra, 142 Cal.App.4th at p. 386.) The prima facie elements are protected activity, adverse employment action, and causal link. (Ibid., citing Yanowitz, supra, 36 Cal.4th at p. 1042.)

Materiality, not mere displeasure, defines the adverse action. Reading Yanowitz, the court held the employee must show an action “that materially affects the terms, conditions, or privileges of employment,” not merely treatment “that reasonably would deter an employee from engaging in the protected activity.” (McRae, supra, 142 Cal.App.4th at p. 386.) It stitched together the pre-Yanowitz authorities that survive: “A change that is merely contrary to the employee’s interests or not to the employee’s liking is insufficient” (Akers v. County of San Diego (2002) 95 Cal.App.4th 1441, 1455); workplaces “are rarely idyllic retreats,” and trivial actions that an “ ‘irritable, chip-on-the-shoulder employee did not like’ ” cannot ground a suit (Thomas v. Department of Corrections (2000) 77 Cal.App.4th 507, 511); the retaliatory action must have “a detrimental and substantial effect on the plaintiff’s employment.” (Id. at pp. 386–387.) In a footnote, the court acknowledged that Burlington Northern & Santa Fe Railway Co. v. White (2006) 548 U.S. 53 had just held that Title VII’s antiretaliation provision reaches beyond workplace-related acts, but declined to consider its effect on California law because “Dr. McRae’s claims are based on employment-related acts and harm.” (Id. at p. 387, fn. 4.)

The policy rationale. Requiring a substantial adverse job effect “ ‘guards against both “judicial micromanagement of business practices” [citation] and frivolous suits over insignificant slights,’ ” and without that threshold “courts will be thrust into the role of personnel officers.” (McRae, supra, 142 Cal.App.4th at p. 387, quoting Akers, supra, 95 Cal.App.4th at p. 1455.) The court balanced the interests candidly, quoting Brooks v. City of San Mateo (9th Cir. 2000) 229 F.3d 917, 928: “On the one hand, we worry that employers will be paralyzed into inaction once an employee has lodged a complaint … , making such a complaint tantamount to a ‘get out of jail free’ card for employees engaged in job misconduct. On the other hand, we are concerned about the chilling effect on employee complaints resulting from an employer’s retaliatory actions.” (Ibid.)

Intermediate acts and aggregation. Two corollaries followed. An employer’s “intermediate” action, even if retaliatory, is not actionable “unless it has or will have a substantial and material adverse effect on the terms and conditions of the plaintiff’s employment.” (McRae, supra, 142 Cal.App.4th at p. 387, citing Pinero v. Specialty Restaurants Corp. (2005) 130 Cal.App.4th 635, 641.) But where the employee is affected by a series of actions, “it is appropriate to consider the plaintiff’s allegations collectively under a totality of the circumstances approach,” because there “ ‘is no requirement that an employer’s retaliatory acts constitute one swift blow, rather than a series of subtle, yet damaging, injuries.’ ” (Id. at pp. 387–388, quoting Yanowitz, supra, 36 Cal.4th at p. 1055.) The court set out Yanowitz’s own “campaign” of retaliation — months of unwarranted public criticism, an implied threat of termination, contacts undermining a manager with her subordinates — as the benchmark for an aggregated claim that “placed her career in jeopardy.” (Id. at p. 388, quoting Yanowitz, at p. 1060.)

Causation and the limits of temporal proximity. For the prima facie case, causation may rest on “evidence of nothing more than the employer’s knowledge that the employee engaged in protected activities and the proximity in time between the protected action and the allegedly retaliatory employment decision.” (McRae, supra, 142 Cal.App.4th at p. 388, citing Morgan v. Regents of University of California (2000) 88 Cal.App.4th 52, 69.) “Such evidence, however, only satisfies the plaintiff’s initial burden”: once the employer produces a legitimate reason, the presumption of retaliation “ ‘ “ ‘drops out of the picture’ ” ’ ” and the employee must prove intentional retaliation — not that the decision was “ ‘wrong, mistaken, or unwise,’ ” but that the proffered reasons exhibit “such weaknesses, implausibilities, inconsistencies, incoherencies, or contradictions” that a reasonable factfinder could find them “ ‘unworthy of credence.’ ” (Id. at pp. 388–389, quoting Yanowitz, supra, 36 Cal.4th at p. 1042 and Morgan, at p. 75.) “The ultimate burden of persuasion on the issue of actual discrimination remains with the plaintiff.” (Id. at p. 389, quoting Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 356.)

Substantial evidence has teeth. Although juries find the facts, “the jury’s verdict stands only if it is supported by substantial evidence,” which must be “ ‘reasonable in nature, credible, and of solid value’ ”; an inference “cannot be based upon suspicion, imagination, speculation, surmise, conjecture or guesswork,” and the factfinder “may not indulge in the inference when that inference is rebutted by clear, positive and uncontradicted evidence.” (McRae, supra, 142 Cal.App.4th at pp. 389–390, quoting Beck Development Co. v. Southern Pacific Transportation Co. (1996) 44 Cal.App.4th 1160, 1203–1204.)

Application: a “course of conduct” that was neither continuous nor a course. The court found the claimed continuity illusory: the events were “a series of events, each bearing little relationship to the others, and at least some of which clearly were not the result of unlawful retaliation.” (McRae, supra, 142 Cal.App.4th at p. 390.) Dr. Bick’s investigation request and the nurses’ confrontation could not be included at all — “it is undisputed that the nurses acted because Dr. McRae disabled the air filter,” and her own theory of Dr. Bick was self-protection, not retaliation. (Ibid.) The “progressive discipline” narrative failed because the suspension and transfer rested on the investigation and the confrontation, “events outside of the ‘progression,’ ” and the letter of instruction was cited in the analyst’s report only as work history — alongside her “outstanding” evaluation. (Ibid.) Her grand unifying theory — that Dr. Andreasen engineered it all — was “too thin and too speculative,” resting on assumptions about an investigator he was not shown to have appointed and recommendations he was not shown to have made. (Id. at p. 391.) And the case “differs in significant ways from Yanowitz”: there, all wrongful acts came from two supervisors responding to a single protected act and created a hostile, abusive environment; “[h]ere, the allegedly wrongful acts were taken by many different persons, for different reasons, some of which indisputably had nothing to do with Dr. McRae’s protected conduct.” (Ibid.)

The individual acts, measured. The memoranda and letter of instruction “in and of themselves, do not rise to the level of an adverse employment action”: they affected nothing “except to require Dr. McRae to remain at her post,” were private, and — unlike the evaluation and counseling memorandum in Akers that made the plaintiff “unpromotable” — carried no shown consequence for benefits or advancement. (McRae, supra, 142 Cal.App.4th at p. 392.) The investigation “made no material change in the terms or conditions of Dr. McRae’s employment.” (Ibid.) The confrontation, “although unquestionably very unpleasant, was a single instance of offensive conduct” not materially affecting employment. (Ibid.) The 30-day suspension “certainly would have been a material change . . . but Dr. McRae was not suspended for 30 days, or at all”; she did not show the unimplemented decision was “a career ender,” and the Department’s choice to transfer rather than discipline suggested a decision “to transfer Dr. McRae away from CMF and allow her the opportunity to thrive in another institution” — making the investigation and suspension decision “intermediate steps that led to the transfer.” (Id. at pp. 392–393.)

The transfer: comparable position, no tangible harm. “A transfer can be an adverse employment action when it results in substantial and tangible harm. A transfer is not an adverse employment action when it is into a comparable position that does not result in substantial and tangible harm,” and not merely because the plaintiff finds it “ ‘personally humiliating.’ ” (McRae, supra, 142 Cal.App.4th at p. 393, citing Akers, supra, 95 Cal.App.4th at p. 1457.) The court adopted the D.C. Circuit’s formulation from Brown v. Brody (D.C. Cir. 1999) 199 F.3d 446, 457, as “a formulation that reflects our own view”: a lateral transfer without diminution in pay or benefits is not actionable absent “some other materially adverse consequences … such that a reasonable trier of fact could conclude that the plaintiff has suffered objectively tangible harm. Mere idiosyncrasies of personal preference are not sufficient to state an injury.” (Ibid.) Measured so, the transfer involved no demotion, pay reduction, benefits loss, status change, less distinguished title, or (except on-call duty) change in responsibilities, hours, or commute. (Ibid.) Each asserted harm dissolved on the record: Solano’s supposed reputation as a dumping ground rested on “her personal beliefs” without supporting evidence; the missing lab coat and desk in her first three weeks “do not compare in significance to matters such as demotions, loss of pay or benefits, public humiliation, or harassment”; the claimed 30-minute on-call response requirement was contradicted by the labor liaison’s testimony and unsupported by the collective bargaining agreement — “Dr. McRae’s opinion, or even the opinion of a supervising physician, has no probative value absent a showing that the opinion is based on fact”; and the safety comparison ran the wrong way, since the record suggested Solano “provides a safer work environment than the environment at CMF.” (Id. at pp. 393–396.) “In sum, substantial evidence does not support a finding that the transfer of Dr. McRae from CMF to Solano Prison amounted to an adverse employment action.” (Id. at p. 397.)

Independently, no substantial evidence of pretext. The Department “proffered a compelling reason” for the transfer: Dr. McRae’s relationships at CMF had deteriorated to the point of restraining orders and a year-long leave, and she had herself complained of MOD duty and the HEPA filter — so the transfer “had every appearance of being a reasonable management decision.” (McRae, supra, 142 Cal.App.4th at p. 397.) Dr. McRae “made no showing that the Department routinely, or indeed ever, punished persons for filing FEHA complaints by transferring them,” and her argument that the Department should have disciplined or transferred the nurses instead proved nothing: “That some other action might also have addressed the Department’s concerns does not establish that the Department’s stated reasons for the transfer were pretextual,” particularly where the alternative “would have created its own set of problems.” (Ibid.) Her reliance on Begnal v. Canfield & Associates, Inc. (2000) 78 Cal.App.4th 66 failed because the Begnal plaintiff proved the stated reasons false and added statistical and admission evidence; here, giving Dr. McRae’s testimony full credence, “all that it proved was her belief that the defendants had retaliated against her and were lying about their motivation,” and “Dr. McRae’s beliefs are not substantial evidence of defendants’ motivation.” (Id. at p. 398.)

Significance

McRae is the leading Court of Appeal application of Yanowitz’s adverse-action standard in the retaliation setting, cited by well over a hundred subsequent opinions, and it performs three distinct jobs in the doctrine. First, it operationalizes materiality: Yanowitz announced that FEHA retaliation requires an action materially affecting the terms, conditions, or privileges of employment, and McRae supplies the working taxonomy — file memoranda, instructional letters, investigations, and unconsummated discipline are ordinarily “intermediate steps,” actionable only through a materially adverse endpoint. (McRae, supra, 142 Cal.App.4th at pp. 387, 392–393.) Second, it fixes the California rule for transfers: lateral moves without tangible harm are not adverse actions, with Brown v. Brody’s “objectively tangible harm” formulation expressly adopted. (Id. at p. 393.) Third, its statement that temporal proximity “only satisfies the plaintiff’s initial burden” became the anchor for Loggins v. Kaiser Permanente Internat. (2007) 151 Cal.App.4th 1102, 1112, which adopted McRae to hold that timing alone cannot defeat summary judgment once the employer produces a legitimate reason — together they are the standard citation pair on the point. (Id. at p. 388.)

The opinion’s limits matter as much as its holdings. McRae does not reject aggregation — it accepts Yanowitz’s totality-of-the-circumstances approach and the “no one swift blow” principle, and turns instead on the facts: acts by “many different persons, for different reasons,” some concededly nonretaliatory, do not cohere into a campaign. (McRae, supra, 142 Cal.App.4th at pp. 387–388, 391.) Plaintiffs distinguish McRae most effectively on exactly that ground — unity of actor, unity of trigger, and cumulative career harm. Nor does McRae hold that investigations or warning letters can never be adverse: it contrasts Akers, where paper discipline made the plaintiff “unpromotable,” preserving the argument where an employee can prove concrete downstream consequences. (Id. at p. 392.) Finally, footnote 4 deliberately left open whether Burlington Northern’s broader federal deterrence standard has any purchase on California law — a question McRae answered only by avoidance. (Id. at p. 387, fn. 4.)

For employee-side practitioners, McRae is the case to plan around at the pleading stage: it rewards records built on tangible consequence (lost pay, lost promotion eligibility, documented career damage) and punishes records built on the client’s own suspicions. Its companion lesson — that the plaintiff’s sincere belief in retaliation is not evidence of it — has become a fixture of defense briefing on summary judgment and JNOV alike. (McRae, supra, 142 Cal.App.4th at p. 398.)

Key quotes

“In California, an employee seeking recovery on a theory of unlawful discrimination or retaliation must demonstrate that he or she has been subjected to an adverse employment action that materially affects the terms, conditions, or privileges of employment, rather than simply that the employee has been subjected to an adverse action or treatment that reasonably would deter an employee from engaging in the protected activity.” (McRae, supra, 142 Cal.App.4th at p. 386.)

“A transfer can be an adverse employment action when it results in substantial and tangible harm. A transfer is not an adverse employment action when it is into a comparable position that does not result in substantial and tangible harm.” (McRae, supra, 142 Cal.App.4th at p. 393.)

“Such evidence, however, only satisfies the plaintiff’s initial burden. ‘Once an employee establishes a prima facie case, the employer is required to offer a legitimate, nonretaliatory reason for the adverse employment action. [Citation.] If the employer produces a legitimate reason for the adverse employment action, the presumption of retaliation “ ‘ “drops out of the picture,” ’ ” and the burden shifts back to the employee to prove intentional retaliation. [Citation.]’ ” (McRae, supra, 142 Cal.App.4th at p. 388, quoting Yanowitz, supra, 36 Cal.4th at p. 1042.)

“Dr. McRae’s beliefs are not substantial evidence of defendants’ motivation.” (McRae, supra, 142 Cal.App.4th at p. 398.)

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Practice pointer

Open questions

McRae expressly reserved the question whether Burlington Northern’s holding — that Title VII’s antiretaliation provision “extends beyond workplace-related or employment-related retaliatory acts and harm” — has “any effect on California law,” because Dr. McRae’s claims were all employment-related. (McRae, supra, 142 Cal.App.4th at p. 387, fn. 4.) The panel also withdrew, without resolving, its earlier suggestion that discipline does not ripen into an actionable adverse action while internal contest rights remain — stating only that the discussion was “not necessary to our decision” after Schifando — leaving the ripeness of contestable discipline unsettled. (Id. at p. 382, fn. 1.) The opinion does not decide when an unimplemented disciplinary decision lodged in a personnel file crosses into adversity; it holds only that Dr. McRae failed to show this one was “a career ender” or a basis for denying future opportunities, inviting future litigants to make precisely that showing. (Id. at p. 392.) And because the court found the acts here uncoordinated, it did not delineate how much commonality of actor or motive Yanowitz aggregation requires — the space between Yanowitz’s single-supervisor campaign and McRae’s scattered actors remains the contested territory in course-of-conduct retaliation claims. (Id. at p. 391.)