On Jan. 27, 2022, the Supreme Court of California issued Lawson v. PPG Architectural Finishes, Inc., No. S266001, ___ Cal. 5th ____, a decision that decisively changed the burden for employers in defending against claims under California’s general whistleblower statute — California Labor Code Section 1102.5.
Since approximately 2000, California courts required that employees asserting Section 1102.5 retaliation claims prove the following elements to meet their prima facie burden: (1) the employee engaged in protected activity; (2) the employee suffered an adverse employment action; and (3) there was a causal link between the two. The employer would then have to establish it had a legitimate, non-retaliatory reason for the adverse action. In the final, third step, the employee would have the burden to show that the employer’s legitimate reason was merely a pretext for retaliation.
However, Section 1102.6, which was enacted in 2003, prescribes a different test: First, the employee must establish that their protected activity “was a contributing factor in a contested employment action,” by a preponderance of the evidence. The employer must then establish, by clear and convincing evidence, that it would have effectuated the same action against the plaintiff even had the plaintiff not engaged in protected activity (commonly known as the same-decision defense). Following the enactment of Section 1102.6, a split developed among California courts with many still applying the McDonnell Douglas standard and not Section 1102.6. To resolve the split, the Ninth Circuit certified the question of which standard applies.
The plaintiff in Lawson sued his former employer in federal court, under Section 1102.5, for terminating him following his complaints that the employer was engaged in allegedly fraudulent practices. The district court granted the employer’s motion for summary judgment after applying the McDonnell Douglas framework. After the plaintiff appealed to the Ninth Circuit, the California Supreme Court held that Section 1102.6, and not McDonnell Douglas, applies in Section 1102.5 retaliation claims.
The Implications of the Decision
After Lawson, the plaintiff’s dual burden to establish the prima facie case and also that the employer’s legitimate reason was pretextual is replaced by one preponderance of the evidence burden. And this burden merely requires the employee to prove that the adverse action was a contributing factor to the contested employment action. The employer’s burden of production under McDonnell Douglas is also replaced by a clear and convincing threshold to prove it would have made the same decision notwithstanding the protected activity.
Further, while the Court made clear that under Section 1102.6 procedure employers will “be able to raise a same-decision defense on summary judgment,” allowing courts to dismiss “meritless” retaliation claims before trial, the heightened evidentiary burden will still make it easier for employees alleging retaliation to withstand summary judgment. This is because the new contributing factor standard will make it much harder for employers to dismiss claims for lack of a contributing factor when compared to disposition of a claim for lack of pretext — which typically requires specific and substantial evidence. Indeed, as the Court noted, a contributing factor is simply any factor, which alone or in connection with other factors, tends to affect in any way the outcome of the decision.
Additional Considerations in Litigating Section 1102.5 Claims Moving Forward
Numerous additional questions remain in the wake of Lawson. As stated above, to satisfy their initial burden under McDonnell Douglas, employees had to prove: (1) they engaged in protected activity under Section 1102.5; (2) they were subjected to an adverse employment action; and (3) there was a causal link between the two. Each of these elements carried with them an extensive body of case law that had developed over the years.
After Lawson, though, one reading is that each of these three prima facie elements is no longer required. For example, the causal link element has likely now been displaced by the contributing factor requirement in step one under Section 1102.6. It is unclear whether this causal element determination will remain good authority for purposes of employees proving, and employers refuting, retaliation under Section 1102.5. See, e.g., Morgan v. Regents of University of Cal., 88 Cal. App. 4th 52, 69-70 (2000) (analyzing the causal link element in Section 1102.5 claims and setting forth a standard in which the element is satisfied).
It is similarly unclear whether the “contested employment action,” as also set forth in step one of Section 1102.6, will carry the same meaning as “adverse employment action,” as was previously required in the McDonnell Douglas framework; the same is true of the protected activity element — although these two McDonnell Douglas elements are not as conceptually different from their counterparts as the causal link element is from contributing factor. These questions will ultimately have to be resolved in the lower courts.
The Lawson decision constitutes a significant relaxation of the burden placed on employees in providing Section 1102.5 retaliation claims. It thus follows that plaintiff-employees will be more easily able to both withstand summary judgment and prevail at trial on these claims.
Further, while the same-decision defense will remain a tool for employers to assert in defending Section 1102.5 claims after Lawson, the heightened clear and convincing evidentiary burden required to prove this defense is unlikely to compensate employers for what they will lose in no longer being able to undermine both an employee’s prima facie case and the employee’s showing of pretext under the McDonnell Douglas standard.