California Court Affirms Nearly $2.5 Million Verdict In Retaliation Case

In Green v. Laibco, LLC, 192 Cal. App. 4th 441 (2011), the Court affirmed a jury verdict awarding plaintiff $1,237,086 in compensatory damages and an equal amount in punitive damages on plaintiff’s claims that she was terminated “because of her complaints about patient care and safety, because she refused to give false information to the State Department of Health Care Services, and because she complained about the sexual harassment of one of her colleagues.”  Id. at 443-44

In this case, the plaintiff had worked for the defendant, a nursing home, for more than 21 years.  Plaintiff had been an excellent performer for the company and had enjoyed her job until the company’s CEO changed, and with this change, the quality of the company began to suffer.  Soon, the facility was “filled to capacity, and many of its residents were admitted with psychiatric diagnoses; some exhibited violent behaviors.  One resident assaulted plaintiff when she tried to calm him; many new patients were homeless; many were unkempt and dirty; and some had infectious diseases.  Other patients reported thefts.  Staffing problems increased, with patients ‘more neglected, laying in the bed more,’ and a ‘lackadaisical’ attitude.”  Id. at 444.

Plaintiff complained to management about “patient care and safety deficiencies in light of the problems that accompanied the influx of new patients into the population of frail and elderly patients.  She also complained about ‘dignity issues,’ where residents would ask for assistance to the restroom and be told to ‘just use your diaper,’ and about staffing issues, telling Greenspoon [the new CEO] that more staffing was needed and that the staff were not adequately trained for the patients coming in with psychiatric diagnoses.  Her complaints were ignored, or she was told management would ‘look into it.’”  Id

In addition, plaintiff’s assistant, Roxana Marroquin, told plaintiff that a maintenance worker was harassing her and that she would quit “if something wasn’t done.”  Id.  at 455.  Defendant’s policy required plaintiff to report sexual harassment, and the spring of 2006 she and Marroquin met with Greenspoon to report the harassment.  Id.  After this meeting, plaintiff was cut off from certain funding and assistance.  Id.  When she told management that she felt she was being retaliated against for reporting the harassment, one manager replied, “‘Well, why did you—why did you report that?’”  Id

About one year later, on Friday, March 30, 2007, one facility resident set himself on fire while smoking at the facility and he was badly burned.  Id.  At the time, the plaintiff was away from the facility running work-related errands.  Id.  The following Monday, April 2, 2007, the CEO called plaintiff at home because she was off duty that day.  Id.  at 445.  Plaintiff testified that “Greenspoon told her that ‘it would look better for the hospital, to the Department of Health, if I [(plaintiff)] were to say that I was present on the patio at the time of the accident,’ and she replied, ‘I was not present. I didn’t see it. I wasn’t there.’  Plaintiff said Greenspoon repeated his statement several times, and also said, ‘You could say that you were out there working on some charting or something like that.’”  Id.

On April 17, 2007, Greenspoon fired plaintiff.  “He testified he conducted a ‘thorough’ investigation of the [burning] incident, which he did not document, and that his investigation ‘concluded that it was [plaintiff’s] negligence.’”  Id.

After only 39 minutes of deliberation, the jury found in favor of the plaintiff on her claims that her “refusal to give false information to the State Department of Health Care Services, her complaint of sexual harassment of Roxana Marroquin, and her complaints about patient care and safety were motivating reasons for defendant’s decision to discharge her.”  Id.

On appeal, the defendant argued that (1) plaintiff failed to show the jury “any evidence of Las Flores’ net worth or financial condition” to support the punitive damages award, and (2) there was insufficient evidence to support the finding that plaintiff was fired in retaliation for making a complaint about sexual harassment of a colleague.  Id. at 449, 454-55.  The Court concluded that “(1) the record  contained sufficient evidence of defendant’s financial condition to support the punitive damages award, and (2) there was substantial evidence supporting the jury’s finding that plaintiff’s complaint of sexual harassment of a colleague was a motivating reason for her discharge.”

With respect to the punitive damages issue, the Court recited the following facts:

Plaintiff sought information on defendant’s financial condition during discovery.  The [trial] court denied plaintiff’s motion to compel further responses to interrogatories and ordered counsel for defendant to ‘provide to the Court a current financial statement on the day of trial.’  The trial began on August 12, 2008.  Defendant did not produce its current financial statement that day.  On August 18, after the jury’s verdict awarding compensatory damages and finding Las Flores had acted with malice, oppression or fraud, the court asked defense counsel for his ‘paper describing the financial condition of the defendant,’ and defense counsel stated he had ‘a financial statement with the balance sheet and [profit] and loss statement, most current one being, I think, of June ’08.’  The court instructed him to provide it to plaintiff’s counsel, and told plaintiff’s counsel to look at the financial statement.

[P]laintiff’s counsel said that the document ‘doesn’t even have totals that are comprehensible, [and] puts us at a significant disadvantage to begin now.’  The court asked plaintiff’s counsel what the document showed as the company’s net worth, and counsel said she did not know.  She said that she had read financial statements, ‘but this one is not condensed, compiled, nor summarized’; it was ‘24 pages, Your Honor, and I don’t exactly see a bottom line total.’  The court told defense counsel, ‘I do need to know whether it’s a positive net worth or not,’ and defense counsel responded, ‘It is, Your Honor.’  The court asked if defense counsel wanted ‘to shed any more information than that,’ but there was then another pause in the proceedings and defense counsel did not respond.

Id. at 449.

When plaintiff’s counsel called Greenspoon to testify regarding the financial statement, Greenspoon testified that “I don’t know the balance sheet myself that well,” that he “[didn’t] know how to answer the question” of what the company’s current net assets were and that he didn’t know what they were, but that the company was “in the black,” not the red, and that the net income for the company in the last 12 months was $677,343.”

Id. at 450.

After closing arguments, plaintiff’s counsel requested the financial statement to be provided to the jury during deliberations but the court refused, stating, “You didn’t offer it into evidence during your case.  You got into evidence the important issue, which is that $677,000 was the net profit of the company for the 12 months ended June 2008.  If you can’t understand the financial statement and Mr. Greenspoon can’t understand the financial statement, I’m not going to ask the jury to understand the financial statement.  If you had asked to put it into evidence during your case, then I might have had a more difficult question, but you didn’t.”

Id. at 451.

After the jury returned with a punitive damages verdict against defendant in the amount of $1,237,086, defendant moved for JNOV, arguing only that “the punitive damages award was fatally defective because the trial record was ‘completely devoid of any meaningful evidence of the Defendant’s financial condition.’  Id. 

On appeal, the Court first stated that “[e]vidence of the defendant’s financial condition is a prerequisite for an award of punitive damages.  ‘Without such evidence, a reviewing court can only speculate as to whether the award is appropriate or excessive.’  Plaintiff has the burden of proof.”  Id.  at 452 (citations omitted).  The Court further stated:

‘Net worth is the most common measure, but not the exclusive measure.’ . . . In most cases, evidence of earnings or profit alone are not sufficient ‘without examining the liabilities side of the balance sheet.’  ‘What is required is evidence of the defendant’s ability to pay the damage award.’  Thus, there should be some evidence of the defendant’s actual wealth.  Normally, evidence of liabilities should accompany evidence of assets, and evidence of expenses should accompany evidence of income.’  

The question for us is whether, under the circumstances of this case, evidence of defendant’s profit of $677,343 for the then most recent 12-month period, and evidence of defendant’s positive net worth, constitutes the necessary ‘meaningful evidence of the defendant’s financial condition.’

Id. (citations omitted, emphasis added).

The Court concluded:

[T]he evidence presented was sufficient for an assessment of defendant’s financial condition.  Further, even if the record were ‘completely devoid of any meaningful evidence’ of defendant’s financial condition—which it is not—any deficiency may be laid at the door of defendant, whose chief executive officer purported to be both ignorant of his company’s financial condition and unable to read its financial statements.  Either way, the jury’s award of punitive damages is not ‘fatally defective’ for lack of sufficient evidence.  First, the evidence that plaintiff managed to eke out of CEO Greenspoon was meaningful evidence of defendant’s financial condition. . . . In the end, ‘[w]hat is required is evidence of the defendant’s ability to pay the damage award.’  Here, the punitive damages award was $1.237 million or, roughly speaking, not quite twice the most recent annual profit of a company whose assets exceed its liabilities.  It is reasonable to infer from the evidence that defendant had the ability to pay the award: that is, while the award will indeed punish the company, it will not bankrupt it.  No more is necessary.

Second, we cannot leave this subject without comment on what may be described colloquially as defendant’s chutzpah in insisting that plaintiff failed to meet her burden to prove defendant’s financial condition.  The notion that the jury did not have necessary information about defendant’s net worth because plaintiff did not move defendant’s financial statements into evidence—statements which defendant’s own CEO could not read—is the height of absurdity.  The jury did not have information about defendant’s net worth because defendant’s CEO engaged in stonewalling, pure and simple, from beginning to end. 

Id. at 453-54.

With respect to the sufficiency of the evidence on plaintiff’s claim that she was fired in retaliation for complaining about the sexual harassment of her colleague, Ms. Marroquin, to Greenspoon, the defendant argued that there was “‘no evidence that Las Flores was motivated to terminate [plaintiff’s] employment because she supported Marroquin’s charge,’ and that ‘[t]his means that [plaintiff’s] proof of causation must have rested entirely on an inference arising from the temporal proximity between her support for Marroquin and her eventual termination.’  Ergo (according to defendant), plaintiff’s claim fails because temporal proximity alone is insufficient to prove causation, and in any event, too much time elapsed between plaintiff’s complaint in the spring of 2006 and her termination in April 2007 to permit a reasonable inference that her complaint was a motivating factor for her termination.”  Id. at 455.

The Court rejected this argument, stating that “Defendant’s argument founders from beginning to end.  Its premise that there was no evidence plaintiff’s complaint was a motivating factor in her termination is simply wrong.  The evidence—which we view in the light most favorable to plaintiff—showed that various sorts of retaliatory conduct began immediately after her complaint and persisted until her employment ended.  From this a jury could reasonably infer that plaintiff’s complaint about Marroquin’s sexual harassment was a motivating factor in her later termination.”  Id. at 456 (citing Wysinger v. Automobile Club of Southern California, 157 Cal. App. 4th 413, 421 (2007) (“[a] long period between an employer’s adverse employment action and the employee’s earlier protected activity may lead to the inference that the two events are not causally connected,” but “if between these events the employer engages in a pattern of conduct consistent with a retaliatory intent, there may be a causal connection”.)  “The jury concluded there was a causal connection, and it is not within our province to conclude otherwise.”  Id.

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Bernstein & Friedland, P.C. is a boutique employment law firm in Los Angeles specializing in wrongful termination, discrimination, harassment, retaliation, and unpaid wage and overtime matters.  Please visit our website at www.laemploymentcounsel.com to learn more about us.

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