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A New Defense for Employers in Quit-and-Sue Suits

By Procopio Partner Tyler M. Paetkau

Earlier this year, a California Court of Appeal published a decision that provides employers a defense against former employees who claim they were forced to quit due to intolerable working conditions, Simers v. L.A. Times.  Importantly, the court found that an employer may be entitled to a summary judgment (i.e., a dismissal without trial) of “quit-and-sue” claims known as “constructive” termination – even when the cases involves alleged discrimination.

What exactly is constructive termination?

To establish a constructive discharge, an employee must prove “that the employer either intentionally created or knowingly permitted working conditions that were so intolerable or aggravated at the time of the employee’s resignation that a reasonable employer would realize that a reasonable person in the employee’s position would be compelled to resign.” Turner v. Anheuser-Busch, Inc., 7 Cal. 4th 1238, 1244-45 (1994).

So what happened in Simers?

In March 2013, the plaintiff in this case, T.J. Simers, was a well-known albeit controversial sports columnist for the Los Angeles Times who had receiving uniformly favorable and often exceptional performance reviews from the L.A. Times since 2000. On March 16, 2013, Mr. Simers, then 62 years old, suffered a “mini-stroke.” He recovered quickly, resuming his regular columnist duties for the newspaper. Two-and-a-half months later, however, the L.A. Times reduced Mr. Simers’s columns from three to two per week, to “give [him] more time to write on [his] columns.” The LA Times managers told Mr. Simers that “they had been having problems with [his] writing for the past 18 months.”

Two weeks later, the L.A. Times learned that a Hollywood producer (who had just filmed a 90-second video that had “gone viral,” in connection with one of Mr. Simers’s columns) was apparently developing a television show loosely based on Mr. Simers’s life. Viewing this as a possible ethical breach, the L.A. Times put Mr. Simers’s columns “on holiday” for 10 days, and then, on June 24, 2013, suspended the column pending an investigation. On August 8, 2013, after completion of the investigation and several meetings with Mr. Simers, the L.A. Times issued a “final written warning” that removed Mr. Simers from his position as a columnist and made him a senior reporter, but with no reduction in salary “for now.” Mr. Simers’s attorney informed the L.A. Times on August 12 that Mr. Simers could not work in that environment and considered himself to have been “constructively” terminated.

On September 4, 2013, the L.A. Times asked Mr. Simers to return to his position as columnist.  But the L.A. Times did not answer Mr. Simers’s questions about how many columns he would write and whether he had to change his interviewing approach, and Mr. Simers did not trust the L.A. Times.  The next day, Mr. Simers met with editors at the Orange County Register, and by September 9, 2013, had accepted a position as a columnist there.

On October 15, 2013, Mr. Simers sued the L.A. Times. After a 28-day jury trial in the fall of 2015, the jury found in favor of Mr. Simers on his claims of disability and age discrimination, and on his claim of constructive termination. The jury awarded Mr. Simers $2,137,391 in economic damages for harm caused by his constructive termination (i.e., lost wages and benefits) and $5 million in noneconomic damages (i.e., emotional distress). 

However, the trial court granted motion by the L.A. Times for judgment notwithstanding the jury’s verdict (JNOV) on Mr. Simers’s constructive termination claim, and otherwise denied JNOV, finding substantial evidence supported the verdict on Mr. Simers’s age and disability discrimination claims. The court also granted the L.A. Times’ motion for a new trial on all damages, economic and noneconomic, finding that it was not possible to determine what amount of noneconomic damages the jury awarded because of the discrimination but not because of the constructive discharge. Both parties appealed.

What did the appeals court have to say?

The Court of Appeal affirmed the trial court’s order finding, “as a matter of law,” that “none of these circumstances, alone or in combination, amount to working conditions that are either unusually aggravated or a continuous pattern of mistreatment.” The Court of Appeal reasoned that “[t]here is no evidence to support some of the [alleged working conditions],” and that “[o]thers consist only of Mr. Simers’s subjective reaction to standard employer disciplinary actions – criticism, investigation, demotion, performance plan – that, even if undertaken for reasons (Mr. Simers’s age and disability) later found to include discrimination, are well within an employer’s prerogative for running its business.”  The Court of Appeal concluded: “Unless those standard tools are employed in an unusually aggravated manner or involve a pattern of continuous mistreatment, their use cannot constitute constructive discharge.”

The Court of Appeal also observed that the “[p]laintiff’s personal reaction to that investigation or to his demotion cannot provide a basis to conclude that Mr. Simers’s working conditions were ‘unusually aggravated’ or that there was a ‘continuous pattern of mistreatment.’” The plaintiff’s embarrassment about his reduced job responsibilities and lower pay didn’t constitute a constructive discharge, the court said, noting he was experiencing what occurs naturally with a demotion. Nor did criticism of his job performance constitute an intolerable working condition, the court found.

So what does this mean for employers?

This decision supports employers’ defense to “constructive” termination claims by former employees who quit and then sue their former employers, claiming that their former employers “forced” them to resign due to claimed “intolerable” or “aggravated” working conditions. It also provides employers with some practical guidance:

  • Criticism of an employee’s job performance, even “unfair or outrageous” criticism, does not create the intolerable working conditions necessary to support a claim of constructive discharge.  Employers should anticipate that some employees may decide to characterize performance counseling and/or discipline as a constructive termination.  Therefore, employers should take care to treat employees with respect during any performance counseling, and document performance criticisms and disciplinary decisions with care, precision and professionalism.
  • An employee’s subjective reaction to standard employer disciplinary actions – criticism, investigation, demotion, and performance improvement plan are well within an employer’s prerogative for running its business.  Unless those standard tools are employed in an unusually aggravated manner or involve a pattern of continuous mistreatment, their use cannot constitute constructive discharge.  Employers should train managers and supervisors on personnel issues, including how to manage difficult employees and document performance deficiencies.
  • Employers should conduct prompt, fair and thorough investigations of employee misconduct, as even the investigation itself may provide a defense, or limit an employer’s potential exposure.

 

Tyler M. Paetkau is a Partner in Procopio’s Labor and Employment Law Practice Group in the firm’s Silicon Valley office. He has represented employers in labor and employment law matters for more than 25 years, handling numerous litigation cases. Tyler’s areas of practice include defending employers against claims of wrongful termination, discrimination, retaliation, sexual harassment, defamation, wage and hour violations, unpaid commissions, collective and class actions, and unfair labor practice charges.  Tyler also represents employers in litigation involving unfair competition, misappropriation of trade secrets, restrictive covenants, and employee mobility issues. He also has extensive experience representing employers in union-management labor relations matters, including union organizing campaigns, strikes, and collective bargaining negotiations.