Finding a triable issue of fact existed as to whether the employer’s stated reason for terminating the employee, that the employee violated his confidentiality agreement, was pretextual, the California Court of Appeal reversed summary judgment in favor of the employer in a wrongful termination and retaliation case. Redeker v. Collateral Specialists Inc., No. A136291 (Cal. Ct. App. Nov. 4, 2013) (unpublished). The Court questioned the timing of the employee’s termination, which occurred shortly after he had contacted government agencies regarding the employer’s classification of certain workers as independent contractors. 

Background

James A. Redeker was employed by Collateral Specialists Inc. (“CSI”) as its Operations Manager, reporting to CSI’s Vice President of Operations. As a condition of employment, Redeker signed a confidentiality agreement. 

In November 2009, Redeker told his supervisor and CSI’s President that he was concerned about CSI’s classification of its field representatives as independent contractors. Redeker suggested that the field representatives should be reclassified as employees and was told that it would be too expensive to reclassify the field representatives.

Nevertheless, Redeker continued to examine the classification of field representatives. On January 26, 2010, Redeker e-mailed his supervisor that he had further researched the issue, even contacting officials in three states. He then urged that CSI to further examine state law to ensure it was acting legally. 

Redeker’s supervisor was surprised since he thought the issue had been resolved at the November 2009 meeting. The supervisor forwarded Redeker’s e-mail to CSI’s President and CSI’s Executive Vice President. The President and Executive Vice President decided to review Redeker’s other e-mails on the corporate servers. As a result, CSI learned that Redeker had forwarded an electronic file containing a list of CSI’s field representatives from his work e-mail account to his personal e-mail account in early January 2010. CSI considered the file to be confidential information under Redeker’s confidentiality agreement.

Redeker originally had obtained the field representatives file in December 2009 and used it to check against names in public records in a sex-offender database. His review of the file revealed three matches. On January 5, 2010, Redeker e-mailed his supervisor about his investigation and the matches. He also indicated that he had checked half the list and wanted to know whether he should continue his review. On January 6th, Redeker’s supervisor e-mailed that he should “hold off” until he spoke with CSI’s President and that he would get back to Redeker the following week. Later that day, Redeker spoke with his supervisor. They disagree about what happened next. The supervisor maintained that he told Redeker to stop the review, while Redeker claimed that the supervisor allowed him to continue the search from home that evening. Redeker e-mailed the file to his personal e-mail account later on January 6, 2010.

On January 7th, his supervisor e-mailed Redeker that the field representatives had been deactivated. He also noted that CSI plans to review all newly contracted representatives. Redeker was thanked him for his efforts.

On March 15, 2010, Redeker e-mailed his personal attorney from his work computer for advice about the classification issue and possible retaliation. Later that day, Redeker’s employment was terminated for violating his confidentiality agreement. 

Redeker subsequently sued CSI for wrongful termination in violation of public policy and whistleblower retaliation under California law. CSI moved for summary judgment. The trial court granted the motion, finding Redeker did not establish that CSI’s reason for his termination was pretextual. Redeker appealed.

Applicable Law

Claims under California Labor Code § 1102, as well as public policy wrongful termination claims, are analyzed under the burden-shifting framework of McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). First, the plaintiff must establish a prima facie case by showing (1) he or she engaged in a protected activity, (2) the employer subjected the employee to an adverse employment action, and (3) a causal link between the protected activity and the employer’s action. The employer then must present evidence that it had a legitimate, non-retaliatory reason for its action. The burden then shifts to prove that the employer’s proffered reasons were pretextual. To prove pretext, the employee may show that “the proffered reason had no basis in fact, the proffered reason did not actually motivate the discharge, or[] the proffered reason was insufficient to motivate the discharge.” Hanson v. Lucky Stores, Inc., 74 Cal. App. 4th 215, 224 (Cal. Ct. App. 1999).

Issue of Fact

Redeker argued that a genuine issue of material fact existed regarding whether the employer’s proffered reasons for his termination was pretextual as the parties disputed whether he had permission to continue the sex offender check. The appeals court agreed. The Court noted Redeker maintained that his supervisor gave him permission to continue his investigation and that is why he sent the file to his personal e-mail account. Redeker’s supervisor, on the other hand, contended that he told Redeker to stop the investigation. Thus, the Court said, a factual question existed regarding whether Redeker had violated his confidentiality agreement.

In addition, the Court found the timing of Redeker’s termination to be suspect since it occurred only a few weeks after he sent the e-mail disclosing that he had been discussing the field representatives’ classification issue with government agencies. The Court further noted that it could be inferred that CSI started monitoring Redeker’s e-mail to find a reason to fire him, which “suggests that the subsequent [termination] imposed was for purposes of retaliation.” Accordingly, the Court concluded Redeker had raised sufficient factual issues regarding pretext, reversed summary judgment and returned the case to the trial court.