Is the plaintiff in a Cal. Lab. Code § 1102.5 whistleblower retaliation claim required to prove that the employer’s proffered reason for the employee’s termination was merely a pretext for retaliation?

To resolve the confusion, we now clarify that section 1102.6, and not McDonnell Douglas, supplies the applicable framework for litigating and adjudicating section 1102.5 whistleblower claims.

By its terms, section 1102.6 describes the applicable substantive standards and burdens of proof for both parties in a section 1102.5 retaliation case: First, it must be "demonstrated by a preponderance of the evidence" that the employee's protected whistleblowing was a "contributing factor" to an adverse employment action. (§ 1102.6.) Then, once the employee has made that necessary threshold showing, the employer bears "the burden of proof to demonstrate by clear and convincing evidence" that the alleged adverse employment action would have occurred "for legitimate, independent reasons" even if the employee had not engaged in protected whistleblowing activities. (Ibid.)

PPG suggests that the sole pertinent effect of section 1102.6 was to codify a kind of defense available to employers, colloquially known as the "same-decision defense," and to impose a heightened burden to prove the defense by "clear and convincing evidence." (Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 239 (Harris).) Section 1102.6 indeed does those things, but that is not all it does. The first prong of the statute

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also tells us what plaintiffs must prove to establish liability, and by what evidentiary standard. Specifically, plaintiffs must show, by a preponderance of the evidence, that whistleblowing was a contributing factor in the employer's decision. This is a complete set of instructions for the presentation and evaluation of evidence in section 1102.5 cases; it is not merely the codification of an affirmative defense.

It is true, as PPG points out, that much of the legislative history of section 1102.6 focuses on the employer's same-decision defense - particularly the Legislature's interest in prescribing a more demanding standard for establishing the defense. (Assem. Com. on Judiciary, Analysis of Sen. Bill No. 777, supra, as amended May 29, 2003, p. 2 [bill provides employer "an affirmative defense against retaliation claims" by "clear and convincing evidence" standard]; Enrolled Bill Mem. to Governor on Sen. Bill No. 777 (2003-2004 Reg. Sess.) Oct. 6, 2003, p. 1 ["This bill extends the current protection of the state whistleblower law by . . . increasing the burden of proof on the employer to a clear and convincing evidence standard"].) But even though the codification of the plaintiff's burden received less attention in the legislative history, the Legislature undoubtedly understood what is clear from the face of the statute it enacted: that section 1102.6 established "the evidentiary burdens of the parties participating in a civil action or administrative hearing involving an alleged violation of the bill's provisions." (Legis. Counsel's Dig., Sen. Bill No. 777 (2003-2004 Reg. Sess.) 5 Stats. 2003, Summary Dig., p. 222, italics added; see Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1169 [the Legislative Counsel's Digest is" 'printed as a preface to every bill considered by the Legislature'" to" 'assist the Legislature in its consideration of

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pending legislation' "].) That is, section 1102.6 sets forth the evidentiary burdens of both sides in a whistleblower retaliation suit, not just one.

1102.6. Burden of proof in civil action

In a civil action or administrative proceeding brought pursuant to Section 1102.5, once it has been demonstrated by a preponderance of the evidence that an activity proscribed by Section 1102.5 was a contributing factor in the alleged prohibited action against the employee, the employer shall have the burden of proof to demonstrate by clear and convincing evidence that the alleged action would have occurred for legitimate, independent reasons even if the employee had not engaged in activities protected by Section 1102.5.

We reach a similar conclusion here. It would make little sense to require section 1102.5 retaliation plaintiffs to satisfy

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McDonnell Douglas for the sake of proving that retaliation was a contributing factor in an adverse action. The central problem lies at the third step of McDonnell Douglas, which requires the plaintiff to prove that an employer's proffered legitimate reason for taking an adverse action was a pretext for impermissible retaliation. (Morgan, supra, 88 Cal.App.4th at pp. 68-69.) Under section 1102.6, a plaintiff does not need to show that the employer's nonretaliatory reason was pretextual. Even if the employer had a genuine, nonretaliatory reason for its adverse action, the plaintiff still carries the burden assigned by statute if it is shown that the employer also had at least one retaliatory reason that was a contributing factor in the action. There is, then, no reason why whistleblower plaintiffs should be required to satisfy the three-part McDonnell Douglas inquiry - and prove that the employer's proffered legitimate reasons were pretextual - in order to prove that retaliation was a contributing factor under section 1102.6. To the contrary, placing this unnecessary burden on plaintiffs would be inconsistent with the Legislature's evident purpose in enacting section 1102.6: namely, "encourag[ing] earlier and more frequent reporting of wrongdoing by employees and corporate managers when they have knowledge of specified illegal acts" by "expanding employee protection against retaliation." (Assem. Com. on Judiciary, Analysis of Sen. Bill No. 777, supra, as amended May 29, 2003, p. 1, italics omitted.)

Third, the parties’ argument misunderstands the employee's need to show pretext. Both parties, again, argue that the

[294 Cal.Rptr.3d 398]

employee must show, at step three of the three-part burden-shifting framework, that the employer's proffered reason for taking an adverse action was merely a pretext for retaliation. But although that requirement may make sense under a burden-shifting framework that only requires the employer to show it had a legitimate, nondiscriminatory reason for its action, it makes no sense under the framework described in section 1102.6. As the Lawson court explained, "[u]nder section 1102.6, a plaintiff does not need to show that the employer's nonretaliatory reason was pretextual. Even if the employer had a genuine, nonretaliatory reason for its adverse action, the plaintiff still carries the burden assigned by statute if it is shown that the employer also had at least one retaliatory reason that was a contributing factor in the action." (Lawson, supra, 12 Cal.5th at p. 715-716, 289 Cal.Rptr.3d 572, 503 P.3d 659.)

For these reasons, we decline to apply the parties’ offered three-part framework for evaluating section 1102.5 claims. We instead look to section 1102.6, which "provides the governing framework." (Lawson, supra, 12 Cal.5th at p. 718, 289 Cal.Rptr.3d 572, 503 P.3d 659.) To sum up the statute's requirements: "First, it places the burden on the plaintiff to establish, by a preponderance of the evidence, that retaliation for an employee's protected activities was a contributing factor in a contested employment action.... Once the plaintiff has made the required showing, the burden shifts to the employer to demonstrate, by clear and

[79 Cal.App.5th 380]

convincing evidence, that it would have taken the action in question for legitimate, independent reasons even had the plaintiff not engaged in protected activity." (Ibid.; see also § 1102.6.)

We consider next Vatalaro's contention that the County's stated grounds for releasing her from probation "lack[ ] credence and competent evidence" and were merely a "pretext" for retaliation.

Vatalaro's argument on this point follows from her (and the County's and the trial court's) initial misunderstanding of the governing framework for section 1102.5 claims. Again, all proceeded on the understanding that an employer could defeat an employee's retaliation claim under section 1102.5 if (1) it showed it had a legitimate, nondiscriminatory reason for the adverse employment action and (2) the employee failed to show its proffered reason was merely a pretext for discrimination. But as covered above, their understanding was flawed. Once an employee makes a prima facie case under section 1102.5, the employer must do more than show it had a legitimate, nondiscriminatory reason for the adverse employment action. It must, per section 1102.6, "demonstrate, by clear and convincing evidence, that it would have taken the action in question for legitimate, independent reasons even had the plaintiff not engaged in protected activity." (Lawson, supra , 12 Cal.5th at p. 718, 289 Cal.Rptr.3d 572, 503 P.3d 659 ; see also § 1102.6.) And, as the Lawson court explained, the employee need not "show that the employer's nonretaliatory reason was pretextual." (Id. at p. 716, 289 Cal.Rptr.3d 572, 503 P.3d 659.)

Because all parties (and the trial court) relied on the wrong standard at the trial level, and because the parties continued to rely on this standard in their

[79 Cal.App.5th 384]

initial briefs on appeal, we asked the parties to submit supplemental briefing to account for Lawson and section 1102.6. According to Vatalaro's supplemental briefing, the County's evidence was insufficient to show that her release from probation would have happened even had she not complained that she was working on low-level assignments. But according to the County's supplemental briefing, the County met its burden "to establish by clear and convincing evidence that it would have made the same employment decision without [the] alleged protected conduct." We ultimately agree with the County. Although the County pointed to the wrong standard in its motion for summary judgment, it nonetheless supplied sufficient evidence to satisfy the more demanding standard under section 1102.6. In particular, it demonstrated by clear and convincing evidence that it would have released Vatalaro from probation for legitimate, independent reasons even had Vatalaro not engaged in the allegedly protected conduct.

Considering these and other facts in the record, we conclude that the County's undisputed evidence would require a reasonable factfinder to find it "highly probable" that the County's decision to release Vatalaro from probation would have occurred for legitimate, independent reasons even if Vatalaro had not complained about working on low-level assignments. (Conservatorship of O.B. (2020) 9 Cal.5th 989, 1011-1012, 266 Cal.Rptr.3d 329, 470 P.3d 41 [discussing appellate review of findings made under the clear-and-convincing evidence standard].) We find, that is, that the County presented sufficient undisputed evidence to satisfy its burden under section 1102.6 on summary judgment. We also find that Vatalaro failed to raise any triable issue of material fact that would preclude summary judgment in this case.

Throughout the history of this case, including the briefing to this court, Abernathy, Duncan, and the trial court have all analyzed Abernathy's whistleblower protection claim under section 1102.5 under the same rubric as Abernathy's Fair Employment and Housing Act claims. At oral argument appellant cited the recent California Supreme Court case of Lawson v. PPG Architectural Finishes, Inc. (2022) 12 Cal.5th 703 (Lawson), in support of a new argument that her section 1102.5 claim is subject to a different summary judgment analysis and thus should survive given the trial court's use of the McDonnell Douglas test.^[4] Although we agree that Lawson rejects the McDonnell Douglas framework for claims arising under section 1102.5, our de novo review of the trial court's ruling does not show reversible error.

After an in-depth review of other statutory schemes similar in nature to that added by section 1102.6, our Supreme Court confirmed that use of the McDonnell Douglas framework is not well suited for such cases. As the court wrote, the "central problem lies at the third step of McDonnell Douglas, which requires the plaintiff to prove that an employer's proffered legitimate reason for taking an adverse action was a pretext for impermissible retaliation. [Citation.] Under section 1102.6, a plaintiff does not need to show that the employer's nonretaliatory reason was pretextual. Even if the employer had a genuine, nonretaliatory reason for its adverse action, the plaintiff still carries the burden assigned by statute if it is shown that the employer also had at least one retaliatory reason that was a contributing factor in the action." (Lawson, supra, 12 Cal.5th at pp. 715-716.)

Thus, under the proper analysis, Duncan was only entitled to summary judgment if Abernathy's evidence was insufficient to draw a reasonable inference that an activity proscribed by section 1102.5 was a contributing factor in her termination. (Lawson, supra, 12 Cal.5th at p. 709.) Notably, even under this standard an employer that is shown to have considered an impermissible factor is still entitled to summary judgment if there is no conflict in the evidence showing it would have made the same decision absent the forbidden consideration; the so-called same-decision defense. (See id. at pp. 717-718, citing Texas v. Lesage (1999) 528 U.S. 18, 20-21.)

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Although Abernathy's argument suggested the mere change in analysis identified in Lawson was sufficient to require we reverse the grant of summary judgment to Duncan, we do not agree. Our de novo review of a summary judgment ruling independently considers the evidence submitted and seeks to determine whether judgment is appropriate as a matter of law. (Law Offices of Dixon R. Howell v. Valley (2005) 129 Cal.App.4th 1076, 1092.) "We need not defer to the trial court and are not bound by the reasons in its summary judgment ruling; we review the ruling of the trial court, not its rationale." (Ibid.)

Upon an independent review of the record, this court finds no error in the grant of summary judgment. Rather, it is apparent that Abernathy's claim also fails under section 1102.6. Under section 1102.6, Abernathy was required to come forward with evidence upon which a reasonable inference can be drawn to suggest that her protected action of reporting Waples was a contributing factor in her dismissal. The evidence submitted permits no such inference.

Labor Code section 1102.5 prohibits an employer from preventing an employee's disclosure of information to a governmental agency. It is a whistleblower statute, the purpose of which is to encourage workplace whistleblowers to report unlawful acts without fearing retaliation. (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 287, 46 Cal.Rptr.3d 638, 139 P.3d 30.) Labor Code section 1102.6 is part of the same statutory scheme. It provides that once an employee-whistleblower establishes by a preponderance of the evidence that retaliation was a contributing factor in the employee's termination, demotion, or other adverse action, the employer bears the burden of demonstrating by clear and convincing evidence that it would have taken the same action for legitimate, independent reasons. (Lab. Code, § 1102.6.)²

In Lawson, supra, 12 Cal.5th 703, 289 Cal.Rptr.3d 572, 503 P.3d 659, our Supreme

[291 Cal.Rptr.3d 829]

Court addressed whether the evidentiary standard set forth in Labor Code section 1102.6 replaced McDonnell Douglas as the relevant evidentiary standard for retaliation claims brought pursuant to Labor Code section 1102.5. Lawson held that Labor Code section 1102.6, adopted in 2003, provides the governing framework for analyzing whistleblower retaliation claims brought under Labor Code section 1102.5. It "places the burden on the plaintiff to establish, by a preponderance of the evidence, that retaliation for an employee's protected activities was a contributing factor in a contested employment action. The plaintiff need not satisfy McDonnell Douglas in order to discharge this burden. Once the plaintiff has made the required showing, the burden shifts to the employer to demonstrate, by clear and convincing evidence, that it would have taken the action in question for legitimate, independent reasons even had the plaintiff not engaged in protected activity." (Lawson, at p. 718, 289 Cal.Rptr.3d 572, 503 P.3d 659, italics added.)

Here, the Regents moved to summarily adjudicate the second cause of action, violation of Labor Code section 1102.5, pursuant to the McDonnell Douglas framework, and the trial court utilized that framework to summarily adjudicate the second cause of action in favor of the Regents. Because the moving papers failed to employ the applicable framework prescribed by Labor Code section 1102.6, the Regents failed to meet their initial burden in moving to summarily adjudicate the second cause of action. Their motion as to the second cause of action should therefore have been denied.

Scheer's opposition papers in the trial court also did not invoke Labor Code section 1102.6. This does not preclude our consideration of the issue. Prior to Lawson, which resolved the question at the request of the Ninth Circuit, the state of the law was unsettled. Further, the trial court's "assessment of whether the moving party has carried its burden—and therefore caused a shift—occurs before the court's evaluation of the opposing party's papers " to the motion for summary judgment . (Y.K.A. Industries, Inc. v. Redevelopment Agency of City of San Jose (2009) 174 Cal.App.4th 339, 367, 94 Cal.Rptr.3d 424, italics added.) On our de novo review, we apply the same rules and standards which govern a trial court's determination of a motion for summary judgment. (Zavala v. Arce, supra, 58 Cal.App.4th at p. 925, 68 Cal.Rptr.2d 571.) Because the Regents’ moving papers in the trial court failed to apply the Labor Code section 1102.6 framework, they failed to meet their threshold burden. Summary adjudication of the second cause of action should have been denied.