California Supreme Court Confirms Worker Friendly Evidentiary Standard for Whistleblower Retaliation Claims

01.28.2022

On January 27, 2022, the California Supreme Court clarified the evidentiary standard applicable to whistleblower retaliation claims under California Labor Code Section 1102.5 in Lawson v. PPG Architectural Finishes, Inc.  The worker friendly standard makes disposing of whistleblower retaliation claims exceptionally challenging prior to trial due to the heightened burden of proof placed on the employer. 

Factual Background

Mr. Lawson is a former Territory Manager for PPG Architectural Finishes, Inc. responsible for stocking and merchandising PPG’s paint products at Lowe’s Home Improvement stores.  In Spring 2017, Mr. Lawson claimed that his supervisor ordered him to intentionally mistint slow selling paint products by purposely tinting the products to a shade not ordered by the customer thereby enabling PPG to avoid buying back what would otherwise be excess unsold product.  Mr. Lawson anonymously reported this mistinting practice to PPG’s central ethics hotline, which led PPG to investigate.  PPG’s investigation resulted in Mr. Lawson’s supervisor discontinuing the mistinting practice.  Nonetheless, Mr. Lawson’s supervisor remained with the company and continued to supervise Mr. Lawson.  Mr. Lawson claims that his whistleblowing resulted in poor evaluations, a performance improvement plan, and eventually being fired.  PPG argued that Mr. Lawson was fired for legitimate reasons, such as Mr. Lawson’s consistent failure to meet sales goals and his poor rapport with Lowe’s customers and staff. 

US District Court 

Mr. Lawson filed suit against PPG in US District Court claiming that he was fired in violation of California Labor Code 1102.5.  Before trial, PPG tried to dispose of the case using a dispositive motion.  The Court applied a three-part burden shifting framework known as the McDonnell Douglas test and dismissed Mr. Lawson’s claim.  The McDonnell Douglas test allowed PPG to escape liability because PPG was able to present legitimate, non-retaliatory reasons for firing Mr. Lawson despite Mr. Lawson showing that he had been retaliated against due to his reporting of the mistinting practice.  

9^th Circuit Court of Appeals 

Unhappy with the US District Court’s decision, Mr. Lawson appealed the dismissal to the Ninth Circuit Court of Appeals arguing that the District Court applied the wrong evidentiary test.  In evaluating the case, the Ninth Circuit Court of Appeals noted that there was a lack of uniformity when evaluating California Labor Code claims under Section 1102.5.  The Ninth Circuit asked the California Supreme Court to decide on a uniform test for evaluating such claims. 

California Supreme Court 

The California Supreme Court responded to the Ninth Circuit Court of Appeals’ request on January 27, 2022.  The California Supreme Court rejected the contention that the McDonnell Douglas burden shifting analysis applied to California Labor Code 1102.5 claims.  Instead, it confirmed that the more worker friendly test contained in California Labor Code Section 1102.6 governed.  Under this less stringent analysis, the employee is only required to show that it was more likely than not that retaliation for whistleblowing was a contributing factor in the adverse employment action.  Once this burden is satisfied, the employer must show with clear and convincing evidence that it would have taken the same adverse employment action due to a legitimate and independent reason even if the plaintiff had not engaged in whistleblowing.  Clear and convincing evidence is a showing that there is a high probability that a fact is true, as opposed to something simply being more likely than not. 

Significance

The California Supreme Court’s decision in Lawson v. PPG Architectural Finishes, Inc. is important to employers because it reinforces a more worker friendly evidentiary test under California Labor Code 1102.5.  The varying evidentiary burdens placed on an employee versus the employer makes it extremely challenging for employers to defeat such claims before trial. 

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process. 
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