United States: Cal. App. Court Finds In Favor Of Whistleblower Who Never Complained Of Unlawful Conduct By The Employer

In Cardenas v. M. Fanaian, D.D.S., Inc., Case No. F069305 (Cal. App. 5 Dist.), a California Court of Appeal determined that Plaintiff Cardenas could pursue a California Labor Code Section 1102.5 retaliation claim against her former employer, M. Fanaian, D.D.S., Inc. ("Company") based on her allegation that it discharged her because she reported her coworker's alleged theft of her property to law enforcement authorities—a complaint that did not implicate any wrongdoing by the Company itself.

Background

On October 11, 2010, Plaintiff, who was working as a dental hygienist, alleged that her wedding ring went missing at work.  She informed the Company that she planned to file a police report because she suspected that one of her coworker's stole it.  She testified that the Company tried to dissuade her from making such a report.  On October 21, 2011, her husband filed a police report and Plaintiff provided a formal statement a few days later.  Police officers came to Company and questioned office personnel.  On November 10, 2011, after a second visit from the police, the Company told Plaintiff that the situation was causing great tension and discomfort among staff and, therefore, her employment was being terminated.

Plaintiff sued the Company in California state court alleging retaliation in violation of California Labor Code Section 1102.5 and wrongful termination in violation of public policy.  The case proceeded to trial and after Plaintiff presented her case, the Company moved for nonsuit concerning Plaintiff's public policy claim, arguing that Plaintiff failed to prove that her termination involved a fundamental public policy.  The trial court denied the motion and the jury found for Plaintiff on both claims, awarding her $117,768 in total damages.

Appellate Court's Decision

For the first time on appeal, the Company argued that the Legislature intended to limit California Labor Code Section 1102.5 claims to employee disclosures of "business enterprise wrongdoing" by the employer and, therefore, Plaintiff's report of the theft of her ring was not protected activity.  The court focused on the plain language of Section 1102.5, which protects an employee from retaliation for disclosing information to a law enforcement agency that the employee reasonably believes discloses a violation of state or federal law.  The court further emphasized that Section 1102.5 does not explicitly state that the disclosure to law enforcement must relate to the employment enterprise, rather than individual concerns.  Accordingly, despite a dissenting opinion explaining that the Legislature did not intend for Section 1102.5 to encompass "private matters that are of no practical concern to anyone besides the individual who is claiming to be the victim of a criminal act," the appellate court affirmed the trial court's judgment.  It held that "Section 1102.5 prohibits an employer from retaliating against an employee who discloses information to law enforcement where the employee has a reasonable belief that a violation of law has occurred," regardless of whether the alleged violation relates to the business enterprise or strictly to the employee's personal interests.

Implications

As the dissenting opinion recognized, one would reasonably expect that an employee could not prevail on a whistleblower claim without alleging that he or she complained that the employer was engaged in unlawful conduct.  However, the Cardenas decision clarifies that in California, employers are exposed to potential liability when an employee makes any complaint to law enforcement—regardless of whether the complaint relates to the employer's conduct or not.  This serves as yet another example of the expanding scope of whistleblower protection in California and the attendant risks for employers.

Cal. App. Court Finds In Favor Of Whistleblower Who Never Complained Of Unlawful Conduct By The Employer

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