Alamo v. Practice Management Information Corp.

Facts

The California Fair Employment and Housing Act (FEHA) makes it unlawful for an employer to discharge a person “because of” a protected characteristic (Gov. Code, § 12940, subd. (a)) and to retaliate against a person who has opposed practices forbidden under the statute (Gov. Code, § 12940, subd. (h)). The pregnancy-leave provisions in the Pregnancy Disability Leave Law (Gov. Code, § 12945) supply the protected activity at issue here — a leave “for pregnancy, childbirth or related medical conditions.” (Alamo, supra, 219 Cal.App.4th at p. 480.) The dispositive doctrinal question on appeal, however, was not the substance of those prohibitions but the standard of causation that links protected status to the adverse action.

Lorena Alamo began working for Practice Management Information Corporation (PMIC), “a small company that publishes medical coding and compliance books,” in July 2006 as a collections clerk, and was promoted to lead collections clerk responsible for billing PMIC’s largest customers. (Id. at p. 470.) She received regular pay raises and earned $18 per hour as of January 2009. (Ibid.) Her supervisor was operations manager Michelle Cuevas, who reported to executive vice-president Gregory Trupiano and to founder and president James Davis. (Ibid.)

Alamo “began a pregnancy-related leave of absence” on January 15, 2009; her baby was born on January 27, 2009; PMIC granted her an additional six weeks of bonding leave; and she was scheduled to return on April 22, 2009. (Alamo, supra, 219 Cal.App.4th at p. 471.) During the leave, Marcell Moran — whom Alamo herself had recommended — filled in part-time. (Ibid.)

The performance record was contested. Before the leave, Cuevas “had some concerns about Alamo’s performance, but did not consider any of these problems to be serious enough to warrant formal discipline,” and “never felt that it was necessary to issue Alamo any written warnings.” (Alamo, supra, 219 Cal.App.4th at p. 471.) During the leave, Cuevas testified she discovered further problems — unworked accounts and an inaccurate report that two customers were out of business — that she “intended to discuss … with Alamo once she returned.” (Id. at pp. 471–472.) Alamo, for her part, “denied that she had any performance problems,” testifying the neglected accounts were actually Cuevas’s and that she had never been counseled. (Id. at p. 471.)

A week before her return, Alamo got Trupiano’s permission to come in for lunch, and on April 17, 2009, “had a verbal altercation with Moran … in the hallway outside the office.” (Alamo, supra, 219 Cal.App.4th at p. 472.) By Alamo’s account, Moran initiated the argument and told her, “Well, that’s good, you’re going to get fired anyways.” (Ibid.) On April 22, 2009, after Alamo “return[ed] to work from her maternity leave” and worked about three hours, she was “called into a meeting with Cuevas and Trupiano and told that her employment was being terminated.” (Id. at p. 472.) “There was … no mention of Alamo’s pregnancy or maternity leave.” (Ibid.) Cuevas, Trupiano, and Davis each testified the discharge rested solely on performance and insubordination, with Davis stating he “made the decision … based solely on her performance issues … her act of insubordination … and her misconduct in engaging in a verbal altercation with a coworker.” (Id. at p. 473.) Each “denied that Alamo was terminated for any reason related to her pregnancy or maternity leave.” (Ibid.)

Procedural history

Alamo sued PMIC for pregnancy discrimination and retaliation under the FEHA and the California Constitution, wrongful termination in violation of public policy, and intentional infliction of emotional distress. (Alamo, supra, 219 Cal.App.4th at p. 470.) After partial summary adjudication, the case was tried on her FEHA claim and common law wrongful discharge claim. (Ibid.) The jury “returned a general verdict in favor of Alamo and awarded her damages in the amount of $10,000,” but found she had not proven malice, oppression, or fraud for punitive damages; the trial court then awarded her counsel $50,858.44 in fees as the prevailing FEHA plaintiff. (Id. at p. 473.)

The appellate path is the analytical hinge of the case. The Court of Appeal “initially affirmed the judgment” on September 24, 2012, expressly “recognizing that related instructional issues were pending before the Supreme Court in Harris.” (Alamo, supra, 219 Cal.App.4th at pp. 469, 473.) The Supreme Court granted PMIC’s petition for review on January 23, 2013, and, “[a]fter … deciding a related issue in Harris v. City of Santa Monica (2013) 56 Cal.4th 203 … directed this court to vacate our decision and to reconsider the cause in light of … Harris.” (Id. at pp. 469–470.) On May 22, 2013, the matter was transferred back with those directions. (Id. at p. 474.) The present opinion is the reconsidered decision; there was no dissent — Perluss, P. J., and Woods, J., concurred in Justice Zelon’s opinion. (Id. at pp. 467, 483.)

Issue

PMIC raised two instructional-error questions. (Alamo, supra, 219 Cal.App.4th at p. 474.) First, whether the trial court erred by instructing the jury under former CACI Nos. 2430, 2500, 2505, 2507, and 2527 that Alamo had to prove her pregnancy or pregnancy-related leave was “a motivating reason” for her discharge — PMIC contending the correct standard was “but for” causation, and, in the alternative, that the instructions failed to capture the “substantial motivating reason” standard Harris would adopt. (Ibid.) Second, whether the court erred in refusing to instruct the jury under BAJI No. 12.26 that PMIC “could avoid liability under a mixed-motive defense by proving it would have made the same discharge decision even in the absence of any discriminatory or retaliatory motive.” (Ibid.) The reviewing court treated propriety of jury instructions as “a question of law that we review de novo.” (Id. at pp. 475–476.)

Holding

Reasoning

Reading Harris as the controlling framework. Because the Supreme Court had transferred the cause specifically to be reconsidered “in light of … Harris,” the Court of Appeal organized its analysis around three conclusions it drew from that decision. (Alamo, supra, 219 Cal.App.4th at pp. 476–478.) Harris, like Alamo, was a pregnancy-discrimination discharge case, and the central question there was “‘[w]hat is the trier of fact to do when it finds that a mix of discriminatory and legitimate reasons motivated the employer’s decision?’” (Id. at p. 476, quoting Harris, supra, 56 Cal.4th at p. 215.)

First Harris conclusion — substance over “but for.” The FEHA’s prohibition on discrimination “‘because of’” a protected characteristic “means that a plaintiff … must ‘show that discrimination was a substantial motivating factor, rather than simply a motivating factor,’ in the disputed employment decision.” (Alamo, supra, 219 Cal.App.4th at p. 477, quoting Harris, supra, 56 Cal.4th at p. 232.) But because the statute “‘is not limited to instances where discrimination is a “but for” cause,’” a plaintiff “is not required to prove ‘but for’ causation to establish liability.” (Ibid.) The court squarely rejected PMIC’s primary argument that the FEHA demands “but for” proof, noting Harris’s observation that “‘discrimination can be serious, consequential, and even by itself determinative of an employment decision without also being a “but for” cause.’” (Id. at pp. 478–479, quoting Harris, supra, 56 Cal.4th at p. 229.) Thus the trial court “did not err in failing to instruct the jury on a ‘but for’ standard.” (Id. at p. 479.)

Second Harris conclusion — same-decision limits remedies, not liability. Where a plaintiff proves discrimination was a substantial motivating factor, an employer’s showing that it would have made the same decision anyway “‘is not a complete defense to liability,’” but “may preclude an award of reinstatement, backpay, or damages and limit the plaintiff’s available remedies to declaratory or injunctive relief,” plus, where appropriate, fees and costs. (Alamo, supra, 219 Cal.App.4th at p. 477, quoting Harris, supra, 56 Cal.4th at pp. 225, 234–235.)

Third Harris conclusion — the defense must be pleaded. “‘Because the burden is on a defendant to make a same-decision showing, it should plead this defense’ in its answer.” (Alamo, supra, 219 Cal.App.4th at p. 477, quoting Harris, supra, 56 Cal.4th at p. 240.) In Harris itself the City had not pleaded a same-decision defense, but it had pleaded that the adverse actions “‘were … based on one or more legitimate nondiscriminatory reasons,’” which the Supreme Court held sufficient to put the plaintiff “‘on notice’” and therefore did not bar a same-decision instruction. (Id. at pp. 477–478, quoting Harris, supra, 56 Cal.4th at p. 240.)

Applying conclusion one — the causation instructions were wrong. Measured against that standard, former CACI Nos. 2430, 2500, 2505, and 2507 “required Alamo to prove that her pregnancy or pregnancy-related leave was ‘a motivating reason’ … rather than ‘a substantial motivating reason’ for her discharge.” (Alamo, supra, 219 Cal.App.4th at p. 478.) The court rejected Alamo’s argument that a jury would draw no meaningful distinction between the two phrasings, because the Supreme Court had reached “a contrary conclusion,” reasoning that the heightened standard “‘more effectively ensures that liability will not be imposed based on evidence of mere thoughts or passing statements unrelated to the disputed employment decision.’” (Id. at pp. 478–479, quoting Harris, supra, 56 Cal.4th at p. 232.) The court noted that the Judicial Council revised those instructions in June 2013 to substitute “a substantial motivating reason.” (Id. at p. 479, fn. 2.)

Distinguishing CACI No. 2527 — “because” tracks the statute. The failure-to-prevent instruction survived because it “did not use the phrase ‘a motivating reason’ or ‘a motivating factor.’” (Alamo, supra, 219 Cal.App.4th at p. 479.) Instead it required Alamo to prove she “‘was subject to discrimination or retaliation because she took a leave for pregnancy, childbirth or related medical conditions.’” (Id. at pp. 479–480.) That “because” formulation “is consistent with the express language of the FEHA,” and Harris “did not suggest that an instruction which used the phrase ‘because of’ … would be inaccurate or incomplete.” (Id. at p. 480.) The court also rejected PMIC’s effort to equate 2527’s separate “substantial factor in causing … harm” element with the disputed causation element, explaining that the “substantial factor” element “does not concern the causal relationship between the adverse employment action and the plaintiff’s protected status or activity” but rather “the causal relationship between the discriminatory or retaliatory conduct … and the plaintiff’s injury.” (Id. at p. 480, fn. 3.)

The mixed-motive instruction — two independent grounds. The court refused PMIC the BAJI No. 12.26 instruction for two reasons. First, the instruction was substantively wrong: as drafted, it told the jury “‘the employer is not liable if it can establish … that its legitimate reason, standing alone, would have induced it to make the same decision’” — treating same-decision as “a complete defense to liability,” which “directly conflicts with the holding in Harris.” (Alamo, supra, 219 Cal.App.4th at pp. 480–481.) Second, and dispositively, PMIC “did not plead the defense in its answer … nor did it assert as an affirmative defense that it had lawful reasons for discharging her.” (Id. at p. 481.) Reviewing the answer, the court found PMIC pleaded only “failure to state facts …; failure to mitigate damages; unconstitutionality of emotional distress damages; unconstitutionality of punitive damages; and workers’ compensation preemption,” and “never asserted … that it did not discriminate or retaliate against Alamo, that it acted lawfully in terminating her employment, or that it had legitimate reasons for any adverse employment decision.” (Id. at p. 482.) The first time PMIC raised the defense “was in a motion in limine filed approximately one month before the originally scheduled trial date.” (Ibid.)

Why the Harris notice safety-valve did not save PMIC. The court applied Harris’s own rule that a failure to plead is not fatal where “‘properly pleaded affirmative defenses placed the plaintiff on notice’” of the employer’s intent to defend on legitimacy grounds. (Alamo, supra, 219 Cal.App.4th at p. 482, quoting Harris, supra, 56 Cal.4th at pp. 239–240.) But unlike Santa Monica, PMIC’s “answer is devoid of any affirmative defense that would have placed Alamo on notice that it intended to defend on the basis that it had legitimate, nondiscriminatory or nonretaliatory reasons.” (Id. at p. 482.) The court could therefore not conclude the omission “did not adversely affect Alamo’s substantial rights,” so PMIC “waived its right to assert the … defense.” (Ibid.) Notably, the court could affirm the refusal on this ground even though the trial court’s actual reasoning was not in the record, because “we review a trial court’s ruling, not its reasoning.” (Id. at p. 481, fn. 5.)

Prejudice and disposition. Reversal followed because the error went to the heart of liability: “the proper standard of causation … is not ‘a motivating reason,’ … but rather ‘a substantial motivating reason.’” (Alamo, supra, 219 Cal.App.4th at p. 483.) Because the standard of review treats instructional error as reversible only where “‘it is reasonably probable that a result more favorable to the appealing party would have been reached in the absence of the error’” (id. at p. 476), and the record contained substantial evidence of legitimate, nonretaliatory reasons that a properly instructed jury could credit, the misstatement of the causation standard was prejudicial. The court reversed both the judgment and the fee award and remanded for retrial under the corrected standard, barring the same-decision defense on remand. (Id. at p. 483.)

Significance

Alamo is one of the first published decisions to operationalize Harris v. City of Santa Monica, and it does three things that matter to retaliation practice. First, it confirms that Harris’s “substantial motivating reason” causation standard applies not only to status discrimination but to FEHA retaliation claims and to associated wrongful-termination-in-violation-of-public-policy claims tried on the same theory — every instruction keyed to “a motivating reason” (CACI Nos. 2430, 2500, 2505, 2507) was held erroneous. (Alamo, supra, 219 Cal.App.4th at p. 469.) That makes Alamo a clean citation for the proposition that the post-Harris standard is trans-substantive across FEHA causes of action that share the “motivating reason” causal element.

Second, Alamo sharpens the pleading rule that Harris announced in dictum-like fashion. Harris held that a same-decision defense “should” be pleaded but excused the City’s omission because its legitimate-reasons affirmative defense gave notice. Alamo supplies the negative example: where the answer contains no affirmative defense signaling a legitimacy theory, the defense is waived and cannot be instructed — and the waiver carries forward to retrial. (Alamo, supra, 219 Cal.App.4th at pp. 482–483.) The decision thus converts Harris’s notice principle into a concrete, defendant-defeating outcome.

Third, Alamo marks the boundary of the new standard. The failure-to-prevent instruction (CACI No. 2527) was upheld because it used the FEHA’s own “because” language rather than “a motivating reason,” showing that Harris reworked the phrasing of the causation element, not the statutory text from which it derives. (Id. at pp. 479–480.) For plaintiffs, the holding is double-edged: the substantial-motivating-reason standard is harder to satisfy than “a motivating reason,” but the same-decision defense is a remedies limitation, not a liability shield — and it is easily forfeited by a careless answer.

Key quotes

“[T]he proper standard of causation in a FEHA discrimination or retaliation claim is not ‘a motivating reason,’ as used in the CACI instructions, but rather ‘a substantial motivating’ reason, as set forth in Harris.” (Alamo, supra, 219 Cal.App.4th at p. 469.)

“PMIC was not entitled to an instruction on the mixed-motive or same-decision defense because it failed to plead that defense or any other affirmative defense alleging that it had a legitimate, nondiscriminatory or nonretaliatory reason for its discharge decision in its answer.” (Id. at pp. 469–470.)

“In the absence of any affirmative defense in PMIC’s answer indicating that it intended to assert at trial that it had legitimate reasons for discharging Alamo, we cannot conclude that PMIC’s failure to plead the mixed-motive defense did not adversely affect Alamo’s substantial rights.” (Id. at p. 482.)

Read the full opinion (official slip opinion)→

Practice pointer

Open questions

The court left two matters unresolved. First, it did not decide whether the general verdict could support the attorney’s fees award independent of the merits ruling: “In light of our disposition, we need not address PMIC’s remaining argument as to whether the general verdict rendered by the jury supported the attorney’s fees award.” (Alamo, supra, 219 Cal.App.4th at p. 483, fn. 7.) Second, borrowing Harris’s own reservation, the court declined to define what proof suffices under the new standard — quoting the Supreme Court’s refusal to “‘opine “on what evidence might be sufficient to show that discrimination was a substantial factor motivating a particular employment decision.”’” (Id. at p. 479, quoting Harris, supra, 56 Cal.4th at p. 232.) The line between a “substantial” motivating reason and the mere “motivating reason” it replaced thus remains, by design, a jury question without a bright-line evidentiary floor.