Case Number: BC545112 Hearing Date: May 24, 2018 Dept: 47

Maria Teresa Lopez v. CIA Wheel Group, et al.

MOTION FOR ORDER PERMITTING DISCOVERY OF DEFENDANT’S FINANCIAL CONDITION

MOVING PARTY: Plaintiffs Carlos Ramon Rubio, Jennifer Rubio, Emily Rubio, by and through her guardian ad Litem, to proceed as successor in interest to Maria Teresa Lopez

RESPONDING PARTY(S): Defendant CIA Wheel Group, Inc.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff alleges that she suffered sexual harassment and disability harassment and was eventually terminated.

Plaintiffs Carlos Ramon Rubio, Jennifer Rubio, Emily Rubio, by and through her guardian ad Litem, to proceed as successor in interest to Maria Teresa Lopez move for an order permitting discovery of Defendant’s financial condition.

TENTATIVE RULING:

Plaintiffs Carlos Ramon Rubio, Jennifer Rubio, Emily Rubio, by and through her guardian ad Litem, to proceed as successor in interest to Maria Teresa Lopez motion for an order permitting discovery of Defendant’s financial condition is DENIED.

DISCUSSION:

Motion For Order Permitting Discovery of Financial Condition

Plaintiffs Carlos Ramon Rubio, Jennifer Rubio, Emily Rubio, by and through her guardian ad Litem, to proceed as successor in interest to Maria Teresa Lopez move for an order permitting discovery of Defendant’s financial condition pursuant to Civil Code § 3295.

Civil Code § 3295(a) – (c) provides in pertinent part:

(a) The court may, for good cause, grant any defendant a protective order requiring the plaintiff to produce evidence of a prima facie case of liability for damages pursuant to Section 3294, prior to the introduction of evidence of:

(1) The profits the defendant has gained by virtue of the wrongful course of conduct of the nature and type shown by the evidence.

(2) The financial condition of the defendant.

(b) Nothing in this section shall prohibit the introduction of prima facie evidence to establish a case for damages pursuant to Section 3294.

(c) No pretrial discovery by the plaintiff shall be permitted with respect to the evidence referred to in paragraphs (1) and (2) of subdivision (a) unless the court enters an order permitting such discovery pursuant to this subdivision. . . . Upon motion by the plaintiff supported by appropriate affidavits and after a hearing, if the court deems a hearing to be necessary, the court may at any time enter an order permitting the discovery otherwise prohibited by this subdivision if the court finds, on the basis of the supporting and opposing affidavits presented, that the plaintiff has established that there is a substantial probability that the plaintiff will prevail on the claim pursuant to Section 3294. Such order shall not be considered to be a determination on the merits of the claim or any defense thereto and shall not be given in evidence or referred to at the trial.

Against this backdrop of legislative intent, in which protecting the financial privacy of defendants is paramount, we interpret the language of section 3295(c), requiring the trial court to find based on supporting and opposing affidavits that the plaintiff has established there is a substantial probability he will prevail on his claim for punitive damages, to mean that before a court may enter an order permitting discovery of a defendant’s financial condition, it must (1) weigh the evidence submitted in favor of and in opposition to motion for discovery, and (2) make a finding that it is very likely the plaintiff will prevail on his claim for punitive damages. In this context, we interpret the words “substantial probability” to mean “very likely” or “a strong likelihood” just as their plain meaning suggests. We note that the Legislature did not use the term “reasonable probability” or simply “probability,” which would imply a lower threshold of “more likely than not.”

Jabro, supra, 95 Cal.App.4th at758 (bold emphasis added).

Here, Plaintiffs have not met their burden of demonstrating a substantial probability that Plaintiffs will prevail on the punitive damages claim pursuant to Civil Code § 3294. The issue, is whether sales manager A.J Russo, who supervised decedent, acted with malice, oppression or fraud in connection with his responses to decedent’s request for a reasonable accommodation of her illness, and in connection with taking away decedent’s accounts away[1]. Another way punitive damages could be imposed upon Defendant is whether decedent’s termination on November 15, 2013 was committed with malice or oppression.

In White v. Ultramar (1999) 21 Cal.4th 563, the Supreme Court clarified that the amount of actual authority over decisions affecting corporate policy is the key to determining whether a person is a “managing agent” for purposes of Civil Code § 3294:

We therefore conclude that in amending section 3294, subdivision (b), the Legislature intended that principal liability for punitive damages not depend on employees’ managerial level, but on the extent to which they exercise substantial discretionary authority over decisions that ultimately determine corporate policy. Thus, supervisors who have broad discretionary powers and exercise substantial discretionary authority in the corporation could be managing agents. Conversely, supervisors who have no discretionary authority over decisions that ultimately determine corporate policy would not be considered managing agents even though they may have the ability to hire or fire other employees. In order to demonstrate that an employee is a true managing agent under section 3294, subdivision (b), a plaintiff seeking punitive damages would have to show that the employee exercised substantial discretionary authority over significant aspects of a corporation’s business.

Id. at 576-77 (bold emphasis and underlining added).

The term “managing agent” includes “only those corporate employees who exercise substantial independent authority and judgment in their corporate decisionmaking so that their decisions ultimately determine corporate policy.” (White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 566–567 [88 Cal. Rptr. 2d 19, 981 P.2d 944].) “[T]o demonstrate that an employee is a true managing agent … , a plaintiff seeking punitive damages would have to show that the employee exercised substantial discretionary authority over significant aspects of a corporation’s business.” (Id. at p. 577.) But the determination of whether certain employees are managing agents “‘does not necessarily hinge on their “level” in the corporate hierarchy. Rather, the critical inquiry is the degree of discretion the employees possess in making decisions … .’” (Kelly-Zurian v. Wohl Shoe Co. (1994) 22 Cal.App.4th 397, 421 [27 Cal. Rptr. 2d 457].)

Here, there was substantial evidence for a reasonable jury to conclude that Rocky Aiello was a “managing agent” of Yamaha for purposes of an award of punitive damages. The evidence established that Aiello was the “Regional Sales Manager for the Western Region” which included California and three other states. His region included between 140 and 240 dealerships. He managed a group of “district managers” and, as he testified, was “ultimately responsible for the total well-being of Yamaha Motor Corporation Dealers.” Further, evidence shows that Aiello was directly involved in the Powerhouse/MDK sale and was responsible for the decision to terminate the dealership.

Powerhouse Motorsports Group, Inc. v. Yamaha Motor Corp. (2013) 221 Cal.App.4th 867, 886 (bold emphasis and underlining added).

Here, Plaintiffs have not demonstrated that Russo was a “managing agent’ as that term is defined for purposes of punitive damages under case law cited above. As such, Plaintiffs have not demonstrated a substantial probability that they will prevail on their punitive damages claim based upon Russo’s behavior toward decedent.

As for the decision to terminate decedent’s employment on November 15, 2013, Plaintiffs have demonstrated a substantial probability that they will prevail on their punitive damages claim based upon decedent’s termination. First, Paul Yang, the vice president of TWG responsible for overseeing the H.R. Department of TWG, authorized Russo to terminate decedent. Day 5 Reporter’s Transcript (Pltf’s Exh. 10), 101:27, 102:15-28, 103:1-8. This would constitute ratification of Russo’s decision to terminate decedent. However, Plaintiffs have not submitted evidence that decedent’s termination was motivated by Russo’s unlawful retaliation against decedent for complaining about Russo’s inappropriate comments at work, or his perceived disability discrimination/failure to accommodate. Plaintiffs cite Day 2 Reporter’s Transcript (Pltf’s Exh. 7), 84:12-85:3 whereby Plaintiffs claim decedent reported Russo’s inappropriate behavior to the HR department. See Motion at Page 3:6-13. However, Casar actually testified that decedent complaint about Russo’s treatment of her being unfair because he was favoring another salesperson. ID. at 85:12-20. Thus, Plaintiffs have not demonstrated that Russo was retaliating against decedent for complaints she made to HR about conduct prohibited by FEHA. That is, treating a worker unfairly is not prohibited under FEHA, unless it was motivated by a prohibited animus (i.e. race or disability discrimination).

Moreover, the fact that the reason for decedent’s termination given by Russo was her job performance, despite decedent’s track record of being the highest producing sales person, may be evidence of pretext. However, pretext, by itself, without a showing of discriminatory or retaliatory animus, is insufficient to even demonstrate a violation of FEHA. much less clear and convincing evidence of malice, oppression or fraud. There must be evidence that the termination was substantially motivated by an animus prohibited under FEHA:

The plaintiff must do more than raise the inference that the employer’s asserted reason is false. “[A] reason cannot be proved to be ‘a pretext for discrimination’ unless it is shown both that the reason was false, and that discrimination was the real reason.” (St. Mary’s Honor Center v. Hicks (1993) 509 U.S. 502, 515 [125 L. Ed. 2d 407, 113 S. Ct. 2742].) If the plaintiff produces no evidence from which a reasonable fact finder could infer that the employer’s true reason was discriminatory, the employer is entitled to summary judgment. (Caldwell v. Paramount Unified School Dist., supra, 41 Cal.App.4th at p. 203.)

Hicks v. KNTV Television, Inc. (2008) 160 Cal.App.4th 994, 1003 (italics in original, bold emphasis added).

The ultimate issue when discriminatory discharge is alleged is what were the employer’s true reasons for terminating the employee. (Guz, supra, 24 Cal.4th 317, 358 [“the ultimate issue is simply whether the employer acted with a motive to discriminate illegally”]; Mamou v. Trendwest Resorts, Inc. (2008) 165 Cal.App.4th 686, 715 [81 Cal. Rptr. 3d 406] (Mamou) [“The central issue is and should remain whether the evidence as a whole supports a reasoned inference that the challenged action was the product of discriminatory or retaliatory animus.”].) As indicated above, an employer need not have good cause to terminate an at-will employee. The reason for termination need not be wise or correct so long as it is not grounded on a prohibited bias. (Guz, supra, 24 Cal.4th 317, 358.)n10

McGrory v. Applied Signal Technology, Inc. (2013) 212 Cal.App.4th 1510, 1524.

[W]rongful termination, without more, will not sustain a finding of malice or oppression. There was no evidence Phoenix attempted to hide the reason it terminated Scott. It admitted to terminating her because she would not enroll the McMaster child. Likewise, there was no evidence Phoenix engaged in a program of unwarranted criticism to justify her termination. Because there was nothing more than a wrongful termination here, punitive damages were not warranted, and the trial court should have granted defendant’s motion for judgment notwithstanding the verdict on the issue of punitive damages.

Scott v. Phoenix Schools, Inc. (2009) 175 Cal.App.4th 702, 717 (bold emphasis added).

Finally, the fact that another individual, Cindy Avila was terminated just weeks after she went out on medical leave is insufficient to demonstrate a substantial probability that Plaintiffs will prevail on their punitive damages claim based upon decedent’s termination.

As such, the motion for an order allowing discovery into Defendant’s financial condition pursuant to Civil Code § 3295 is DENIED.[2]

IT IS SO ORDERED.

Dated: May 24, 2018 ___________________________________

Randolph M. Hammock

Judge of the Superior Court

[1] The Court also finds that Plaintiffs are unlikely to prevail on the claim for punitive damages based upon the sexual harassment claims, as Russo was not alleged to have subjected decedent to such harassment directly.

[2] Of course, as suggested by the Defendant in its opposition, the Plaintiffs are free to simply serve a Notice in Lieu of Subpoena to produce certain financial records at trial in order to establish the “current financial condition” of the corporate defendant. Those documents would then have to be produced to the Plaintiff in the event the court makes the required findings which could allow for an award of punitive damages.