Wallen Lawson worked as a territory manager for defendant PPG Architectural Finishes, Inc. (PPG), a paint and coatings manufacturer.
He claimed he was ordered to intentionally mistint slow-selling PPG paint products – that is, to tint the paint to a shade the customer had not ordered. Lowe’s would then be forced to sell the paint at a deep discount, enabling PPG to avoid buying back what would otherwise be excess unsold product. Lawson did not agree with this mistinting scheme and filed two anonymous complaints with PPG’s central ethics hotline. He also told his supervisor directly that he refused to participate.
He filed suit in the United States District Court for the Central District of California, and claimed that PPG had fired him because he blew the whistle on his supervisor’s fraudulent mistinting practices, in violation of the protections codified in Labor Code section 1102.5. Because Lawson could not satisfy this third step of the United States Supreme Court’s decision in McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792, the district court granted summary judgment in favor of PPG on the whistleblower retaliation claim. The three steps require that (1) the plaintiff establish a prima facie case of retaliation, (2) the defendant provide a legitimate, nonretaliatory explanation for its acts, and (3) the plaintiff show this explanation is merely a pretext for the retaliation
The California Supreme Court in the case of Lawson v PPG Architectural Finishes, Inc. (Jan, 2022) decided that the District Court applied the wrong standard.
The question in this case concerns the proper method for presenting and evaluating a claim of whistleblower retaliation under Labor Code section 1102.5. Since 2003, the Labor Code has prescribed a framework: 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 then bears the burden of demonstrating by clear and convincing evidence that it would have taken the same action “for legitimate, independent reasons.”
But in the years since section 1102.6 became law, some courts have persisted in instead applying a well-worn, but meaningfully different, burden- shifting framework borrowed from the United States Supreme Court’s decision in McDonnell Douglas.
Noting the lack of uniformity, the United States Court of Appeals for the Ninth Circuit has asked the California Supreme Court to decide which of these frameworks governs section 1102.5 retaliation claims.
Unsurprisingly, the California Court concluded that courts should apply the framework prescribed by statute in Labor Code section 1102.6. Under the statute, employees need not satisfy the McDonnell Douglas test to make out a case of unlawful retaliation.
L.C. 1102.5 provides whistleblower protections to employees who disclose wrongdoing to authorities, and it prohibits an employer from retaliating against an employee.
In 2003, the Legislature amended the Labor Code’s whistleblower protections in response to a series of high-profile corporate scandals and reports of illicit coverups, specifically citing “the recent spate of false business reports and other illegal activity by Enron, WorldCom and others”
The 2003 amendments added a procedural provision, section 1102.6, which statesl: “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.
To resolve the confusion, the Court clarified that section 1102.6, and not McDonnell Douglas three step process, supplies the applicable framework for litigating and adjudicating section 1102.5 whistleblower claims.