Case Name: Emad Zureik v. Yahoo! Inc., et al.

Case No.: 16CV295422

Defendant Yahoo Holdings, Inc.’s Motion for Summary Judgment or, in the Alternative, Summary Adjudication

Plaintiff Emad Zureik (“Zureik”) was born on July 21, 1948. (Complaint, ¶8.) On or about April 19, 2010, defendant Yahoo Holdings, Inc. (sued as Yahoo! Inc.; hereafter, “Yahoo”) hired plaintiff Zureik into full time employment in the position of Telecom Billing Analyst. (Complaint, ¶9.) In or around early fall 2015, plaintiff Zureik was diagnosed with lung cancer and, thereafter, underwent treatment including surgery, chemotherapy, and radiation therapy. (Complaint, ¶10.)

Defendant Yahoo was informed of plaintiff Zureik’s health condition and granted plaintiff Zureik’s request for leave under the California Family Rights Act (“CFRA”) for the period between October 27, 2015 and January 18, 2016. (Complaint, ¶11.) During this time, plaintiff Zureik advised Yahoo of his doctor’s recommendation of continued leave as an accommodation for lung cancer and treatment thereof. (Id.) Defendant Yahoo approved plaintiff Zureik’s “accommodation leave” following completion of his CFRA leave period and through February 28, 2016. (Id.)

On or about February 17, 2016, defendant Yahoo informed plaintiff Zureik that his employment would be terminated effective April 18, 2016. (Complaint, ¶12.) On February 18, 2016, defendant Yahoo informed plaintiff Zureik that, per plaintiff’s doctor’s recommendation, his new return date of May 2, 2016 would be accommodated. (Complaint, ¶13.) On February 29, 2016, defendant Yahoo informed plaintiff Zureik in writing that the April 18, 2016 separation date would be moved to May 2, 2016 to coincide with the currently scheduled end date of plaintiff’s approved leave of absence. (Complaint, ¶14.)

On May 20, 2016, plaintiff Zureik filed a complaint against defendant Yahoo asserting causes of action for:

(1) Wrongful Termination in Violation of Gov. Code §12940(a) [Physical Disability]
(2) Wrongful Termination in Violation of Gov. Code §12940(a) [Medical Condition]
(3) Wrongful Termination in Violation of Gov. Code §12940(a) [Age]
(4) Wrongful Termination in Violation of Gov. Code §12940(a) [Retaliation]
(5) Failure to Accommodate Physical Disability in Violation of Gov. Code §12940(m)(1)
(6) Failure to Engage in Interactive Process in Violation of Gov. Code §12940(n)
(7) Failure to Take Reasonable Steps to Prevent Discrimination in Violation of Gov. Code §12940(k)

On July 18, 2016, defendant Yahoo filed an answer to the complaint.

On November 20, 2017, defendant Yahoo filed the motion now before the court, a motion for summary judgment or, in the alternative, summary adjudication.

I. Defendant Yahoo’s motion for summary judgment is DENIED.

A. Defendant Yahoo’s alternative motion for summary adjudication of the first and second causes of action [physical disability/medical condition discrimination] is DENIED.

Plaintiff Zureik’s first cause of action alleges defendant Yahoo wrongfully terminated his employment based on his “physical disability , to wit, lung cancer.” (Complaint, ¶24.) In the second cause of action, plaintiff Zureik alleges defendant Yahoo wrongfully terminated his employment based on his “medical condition , to wit, lung cancer.” (Complaint, ¶29.)

“The specific elements of a prima facie case [for discrimination] may vary depending on the particular facts. [Citations.] Generally, the plaintiff must provide evidence that (1) he was a member of a protected class, (2) he was qualified for the position he sought or was performing competently in the position he held, (3) he suffered an adverse employment action, such as termination, demotion, or denial of an available job, and (4) some other circumstance suggests discriminatory motive.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 355 (Guz).)

The FEHA prohibits a variety of unfair labor practices including discrimination in terms, conditions or privileges of employment on the basis of physical disability or medical condition. (See Gov. Code, § 12940, subd. (a).) To establish a prima facie case of disability discrimination, a plaintiff must prove that: “(1) plaintiff suffers from a disability; (2) plaintiff is a qualified individual; and (3) plaintiff was subjected to an adverse employment action because of the disability.” (Brundage v. Hahn (1997) 57 Cal.App.4th 228 236 [internal citations, quotations marks and footnotes omitted].)

“California uses the three-stage burden-shifting test established by the United States Supreme Court for trying claims of discrimination based on a theory of disparate treatment,” known as the McDonnell Douglas test. (Scotch v. Art Institute of California (2009) 173 Cal.App.4th 986, 1004.) Under the McDonnell Douglas test, “the plaintiff [first] has the burden of establishing a prima facie case of discrimination. Second, if the plaintiff meets this burden, the employer must offer a legitimate nondiscriminatory reason for the adverse employment decision. Third, and finally, the plaintiff bears the burden of proving the employer’s proffered reason pretextual.” (Knight v. Hayward Unified School Dist. (2005) 132 Cal.App.4th 121, 129.)

“ ‘A defendant employer’s motion for summary judgment slightly modifies the order of these [McDonnell Douglas] showings.’ ” (Scotch, supra, 173 Cal.App.4th at p. 1005.) To prevail on summary judgment, the defendant employer is “required to show either that (1) plaintiff could not establish one of the [prima facie] elements of the FEHA claim, or (2) there was a legitimate, nondiscriminatory reason for its decision to terminate plaintiff’s employment.” (Avila v. Continental Airlines, Inc. (2008) 165 Cal.App.4th 1237, 1247.)

Here, defendant Yahoo argues both (1) plaintiff cannot establish an element of the prima facie elements and (2) there was a legitimate, nondiscriminatory reason for its decision to terminate plaintiff Zureik’s employment. To show that plaintiff Zureik cannot establish a claim for disability/ medical condition discrimination, defendant Yahoo contends Zureik has no evidence he was terminated because of his disability/ medical condition. Yahoo points to Zureik’s own testimony in which he testified he did not know whether his cancer or medical leave played any part of Yahoo’s decision to lay him off. No one at Yahoo made any negative comments about Zureik’s medical condition or medical leave. Zureik has no reason to believe that any of his managers, including Ben Haines, was biased against him because of his medical condition.

Yahoo also proffers evidence in support of a legitimate, nondiscriminatory reason for Zureik’s termination. Specifically, Yahoo explains one of Zureik’s job duties included issuing telecom purchase orders and reviewing/approving telecom invoices for payment. In January 2016, Ian Tervet and Ben Haines (“Haines”) determined that it made sense to outsource the telecom billing specialty job functions. The “telecom billing specialty” involved checking invoices from telecom providers, ensuring Yahoo was being billed for the services it was correctly using, and ensuring Yahoo was not overspending. Haines determined this part of Zureik’s position was viewed as “nonstrategic, and it could be outsourced and a commodity service that we could get other people to do.”

In mid-January 2016, a directive came from Haines’ supervisor—Laurence Mann—that the Chief Information Officer (CIO) organization needed to reduce its headcount. In deciding who should be selected for the layoff, Haines reviewed the average of the last four-quarter QPR (Quarterly Performance Review) scores from Q1 2015 through Q4 2015. Employees with a four quarter average QPR score above 3.0 generally were not considered for layoff unless an employee’s job position was not needed. Regardless of whether an employee’s QPR was above or below 3.0, Haines reviewed the individual’s position and determined whether it made sense strategically to retain the employee.

Zureik’s 4Q average QPR score was 2.6, the lowest of the 13 people in his group. Haines selected four employees from Zureik’s group for layoff in the February 2016 Reduction in Force (“RIF”). Regardless of whether Zureik had taken leave, the majority of his job duties were going to be outsourced and his position eliminated. Haines would have made the same decisions in October 2015 (before Zurich took leave) as he did in February 2016. Following the RIF, Zureik’s job duties were and continued to be, performed by others. Zureik has not been replaced and the employees who performed his duties during his leave continued to do so after his layoff.

“[T]he employer’s burden is satisfied if he simply ‘explains what he has done’ or ‘[produces] evidence of legitimate nondiscriminatory reasons.’” (Board of Trustees v. Sweeney (1978) 439 U.S. 24, 25.) Yahoo has met its initial burden here. “If the employer has met its burden by showing a legitimate reason for its conduct, the employee must demonstrate a triable issue by producing substantial evidence that the employer’s stated reasons were untrue or pretextual, or that the employer acted with a discriminatory animus, such that a reasonable trier of fact could conclude that the employer engaged in intentional discrimination or other unlawful action.” (DeJung v. Super. Ct. (2008) 169 Cal.App.4th 533, 553, citing Cucuzza v. City of Santa Clara (2002) 104 Cal. App. 4th 1031, 1038 and Guz, supra, 24 Cal.4th at p. 357.) “Speculation cannot be regarded as substantial responsive evidence.” (Cucuzza, supra, 104 Cal. App. 4th at 1038.) “Further, an inference of intentional discrimination cannot be drawn solely from evidence, if any, that the company lied about its reasons.” (Guz, supra, 24 Cal.4th at 360; see also Guz, supra, 24 Cal.4th at 361 (stating that “[t]he pertinent statutes do not prohibit lying, they prohibit discrimination… [and] there must be evidence supporting a rational inference that intentional discrimination, on grounds prohibited by the statute, was the true cause of the employer’s actions”) (emphasis original).) “[E]ven where the plaintiff has presented a legally sufficient prima facie case of discrimination, and has also adduced some evidence that the employer’s proffered innocent reasons are false, the fact finder is not necessarily entitled to find in the plaintiff’s favor.” (Id. at 361-362.) “For instance, an employer would be entitled to judgment as a matter of law if the record conclusively revealed some other, nondiscriminatory reason for the employer’s decision, if the plaintiff created only a weak issue of fact as to whether the employer’s reason was untrue and there was abundant and uncontroverted independent evidence that no discrimination had occurred.” (Id. at 362.)

In opposition, Zureik contends he has direct evidence of discriminatory intent. “Although rarely encountered, disparate treatment may be proved by direct evidence of the decision maker’s discriminatory intent: ‘Direct evidence is evidence which, if believed, proves the fact [of discriminatory animus] without inference or presumption.’” (Chin, et al., CAL. PRAC. GUIDE: EMPLOYMENT LITIGATION (The Rutter Group 2017) ¶7:359 citing Godwin v. Hunt Wesson, Inc. (9th Cir. 1998) 150 F3d 1217, 1221; see also DeJung v. Superior Court (2008) 169 Cal.App.4th 533, 550.)

Zureik proffers evidence that after going out on medical leave and after being laid off, his job duties were and continue to be performed by others. Zureik then proffers evidence that one of three reasons Haines (Yahoo’s Vice President of Global Information Systems) gave for selecting Zureik for layoff was because “his role is no longer required … because others were already performing his duties for several months while he was out.” Haines further testified that, Zureik’s “duties as a Telecom billing specialist and other roles were being allocated to others because he was out on medical treatment leave.” Yahoo’s Human Resources representative testified Yahoo redistributed Zureik’s work to others while he was on medical leave.

In this court’s opinion, the evidence above is not direct evidence of discriminatory animus or intent. Direct evidence of disability/medical condition would be testimony by Haines or Yahoo that Zureik was chosen for layoff because he was on medical leave or because he had cancer. Here, instead, the evidence before the court is that Zureik was chosen for layoff because his job was being performed by others. Zureik’s job was being performed by others because he was on medical leave. Zureik would have the court equate these two, but it is not the court’s duty to establish a causal nexus.

Nevertheless, plaintiff Zureik proffers evidence which would present a triable issue of material fact as to the truth of the reasons proffered by Yahoo for its selection of Zureik for layoff. Zureik presents circumstantial evidence as to each of Yahoo’s proffered reasons with which a reasonable trier of fact could conclude that Yahoo engaged in intentional discrimination. By way of example, one of the stated reasons for selecting Zureik for layoff was because Zureik’s job function was nonstrategic and could be outsourced. In opposition, Zureik proffers evidence that Haines had no indication that outsourcing was even viable until after making the decision. To this day, outsourcing has not occurred. Yahoo anticipated such an argument and attempts to explain by stating that the process of outsourcing was cut short in June 2016 as a result of Verizon’s acquisition of Yahoo. Yahoo admits, however, that Zureik’s telecom billing specialty job functions have still not been outsourced due to Verizon’s acquisition. At the very least, this presents a triable issue of material fact with regard to whether Yahoo’s stated reasons for selecting Zureik for layoff is untrue or pretextual such that a reasonable trier of fact could conclude that the employer engaged in intentional discrimination or other unlawful action.

Accordingly, defendant Yahoo’s motion for summary judgment is DENIED. Defendant Yahoo’s alternative motion for summary adjudication of the first and second causes of action of plaintiff Zureik’s complaint is DENIED.

B. Defendant Yahoo’s alternative motion for summary adjudication of the third cause of action [age discrimination] is DENIED.

“Given the varying nature of the problem, it is impossible to make an exact, all-inclusive statement of the elements of a prima facie age discrimination case applicable in all situations. [Citation.] The general requirement is that the employee offer circumstantial evidence such that a reasonable inference of age discrimination arises. The requirement is not an onerous one. [Citation.] [¶] … [A] prima facie case, of age discrimination arises when the employee shows (1) at the time of the adverse action he or she was 40 years of age or older, (2) an adverse employment action was taken against the employee, (3) at the time of the adverse action the employee was satisfactorily performing his or her job and (4) the employee was replaced in his position by a significantly younger person.” (Hersant v. Dept. of Social Services (1997) 57 Cal.App.4th 997, 1003.)

Again, Yahoo proffers the same facts concerning a legitimate, non-discriminatory reason for selecting Zureik for layoff. For the same reasons stated above, a triable issue of material fact exists. Accordingly, defendant Yahoo’s alternative motion for summary adjudication of the third cause of action of plaintiff Zureik’s complaint is DENIED.

C. Defendant Yahoo’s alternative motion for summary adjudication of the fourth cause of action [retaliation] is DENIED.

“To establish a prima facie case of retaliation, the plaintiff must show (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. Once an employee establishes a prima facie case, the employer is required to offer a legitimate reason for the adverse employment action. If the employer produces a legitimate reason for the adverse employment action, the presumption of retaliation ‘drops out of the picture,’ and the burden shifts back to the employee to prove intentional retaliation.” (Akers v. County of San Diego (2002) 95 Cal.App.4th 1441, 1453.)

In his complaint, Zureik alleges Yahoo terminated him based on “his exercise of the right to request reasonable accommodation for his known physical disability, to wit, lung cancer.” (Complaint, ¶39.) In moving for summary adjudication, Yahoo again argues that the reason for Zureik’s selection for layoff was because “the majority of his duties could be outsourced and the decision had been made to eliminate Zureik’s position in the RIF.” (MPA in Support, p. 17, lines 3 – 4.)

As stated above, a triable issue of material fact exists with regard to whether Yahoo’s stated reason of outsourcing is untrue or pretextual such that a reasonable trier of fact could conclude that the employer engaged in retaliation.

Accordingly, defendant Yahoo’s alternative motion for summary adjudication of the fourth cause of action of plaintiff Zureik’s complaint is DENIED.

D. Defendant Yahoo’s alternative motion for summary adjudication of the fifth and sixth causes of action [failure to accommodate/ failure to engage in the interactive process] is GRANTED.

“Under section 12940, it is an unlawful employment practice ‘to fail to make reasonable accommodation for the known physical or mental disability of an applicant or employee’ unless the employer demonstrates doing so would impose an undue hardship. (§ 12940, subd. (m).) The essential elements of a failure to accommodate claim are: (1) the plaintiff has a disability covered by the FEHA; (2) the plaintiff is a qualified individual (i.e., he or she can perform the essential functions of the position); and (3) the employer failed to reasonably accommodate the plaintiff’s disability. [Citation.]” (Wilson v. County of Orange (2009) 169 Cal.App.4th 1185, 1192.)

“The FEHA makes it unlawful for an employer ‘to fail to engage in a timely, good faith, interactive process with the employee or applicant to determine effective reasonable accommodations, if any, in response to a request for reasonable accommodation by an employee or applicant with a known physical or mental disability or known medical condition.” (§ 12940, subd. (n).) Section 12940, subdivision (n) imposes separate duties on the employer to engage in the ‘interactive process’ and to make ‘reasonable accommodations.’ [Citations.]” (Scotch, supra, 173 Cal.App.4th 986, 1003.)

“ ‘[T]he interactive process requires communication and good-faith exploration of possible accommodations between employers and individual employees’ with the goal of ‘identify[ing] an accommodation that allows the employee to perform the job effectively.’ [Citation.] … [F]or the process to work ‘[b]oth sides must communicate directly, exchange essential information and neither side can delay or obstruct the process.’ [Citation.]” (Nadaf-Rahrov v. Neiman Marcus Group, Inc. (2008) 166 Cal.App.4th 952, 984 – 985 (Nadaf).) “Liability hinges on the objective circumstances surrounding the parties’ breakdown in communication, and responsibility for the breakdown lies with the party who fails to participate in good faith.” (Swanson v. Morongo Unified School Dist. (2014) 232 Cal.App.4th 954, 972.)

Here, Yahoo seeks summary adjudication of the fifth cause of action by proffering evidence that it did, in fact, provide Zureik with a reasonable accommodation. Yahoo granted Zureik a leave of absence from October 27, 2015 through January 19, 2016. When Zureik was unable to return to work on January 19, 2016, Zureik requested, and Yahoo provided, additional leave as an accommodation for his disability through February 29, 2016, and then again extended the leave until May 2, 2016.

In opposition, Zureik does not challenge the grant of leave served as a reasonable accommodation, but does argue that Yahoo’s failure to hold his job open amounts to a denial of a reasonable accommodation. “When the employee cannot presently perform the essential functions of the job, or otherwise needs time away from the job for treatment and recovery, holding a job open for an employee on a leave of absence or extending a leave provided by the CFRA, the FMLA, other leave laws, or an employer’s leave plan may be a reasonable accommodation provided that the leave is likely to be effective in allowing the employee to return to work at the end of the leave, with or without further reasonable accommodation, and does not create an undue hardship for the employer.” (Cal. Code Regs., tit. 2, § 11068; see also Jensen v. Wells Fargo Bank (2000) 85 Cal.App.4th 245, 263—“Holding a job open for a disabled employee who needs time to recuperate or heal is in itself a form of reasonable accommodation and may be all that is required where it appears likely that the employee will be able to return to an existing position at some time in the foreseeable future.”)

However, Zureik does not offer any argument or legal authority to overcome Yahoo’s citation to Tomlinson v. Qualcomm, Inc. (2002) 97 Cal.App.4th 934, 939–940 where the court wrote:

the provisions of California Code of Regulations, title 2, section 7297.2 (Regulation 7297.2), adopted by the Fair Employment and Housing Commission (FEHC) (see Reg. 7297.2, Register 95, No. 28 (July 14, 1998) p. 150), clarify that the guarantee of reinstatement to the same or comparable position does not preclude an employer from terminating the employee’s employment as part of a work force reduction. Subdivision (c) of Regulation 7297.2 states:

“(1) … [¶] An employee has no greater right to reinstatement or to other benefits and conditions of employment than if the employee had been continuously employed during the CFRA leave period. An employer has the burden of proving, by a preponderance of the evidence, that an employee would not otherwise have been employed at the time reinstatement is requested in order to deny reinstatement.

“(A) If an employee is laid off during the course of taking CFRA leave and employment is terminated, the employer’s responsibility to continue CFRA leave, maintain group health plan benefits and reinstate the employee ceases at the time the employee is laid off ….” (Italics added.)

Tomlinson would appear to apply with greater force here where Zureik’s initial leave was pursuant to CFRA but was thereafter on extended leave as a reasonable accommodation by Yahoo. If an employer’s obligation to reinstate is terminable under CFRA, then it stands to reason that any obligation to hold Zureik’s position while he was on non-CFRA leave is also terminable. Accordingly, defendant Yahoo’s alternative motion for summary adjudication of the fifth cause of action of plaintiff Zureik’s complaint is GRANTED.

Since Yahoo’s obligation to hold Zureik’s position terminated upon layoff, Yahoo has met its burden of demonstrating that it made a good faith effort to engage in the interactive process by authorizing a leave of absence and thereafter extending the leave of absence. Zureik does not create a triable issue of material fact by asserting that Haines ignored his pleas and redirected Zureik to HR as part of the separation process. Accordingly, defendant Yahoo’s alternative motion for summary adjudication of the sixth cause of action of plaintiff Zureik’s complaint is GRANTED.

E. Defendant Yahoo’s alternative motion for summary adjudication of the seventh cause of action [failure to prevent discrimination] is DENIED.

A claim for “Failure to Prevent Discrimination” necessarily depends upon establishing that discrimination occurred in the first place. Under FEHA, an employer has an obligation to “take all reasonable steps necessary to prevent discrimination and harassment from occurring.” (See Gov. Code §12940, subd. (k).) A prerequisite to a finding of liability for the failure to take all reasonable steps, however, is a finding that the plaintiff actually suffered unlawful discrimination, harassment, or retaliation. (See Trujillo v. North County Transit Dist. (1998) 63 Cal.App.4th 280, 282 – 283; see also Scotch v. Art Institute of California (2009) 173 Cal.App.4th 986, 1021.) Defendant Yahoo argues that since there is no discrimination in the first instance, there can be no claim for the failure to prevent it. However, in light of the rulings above on the first through fourth causes of action, defendant Yahoo’s alternative motion for summary adjudication of the seventh cause of action of plaintiff Zureik’s complaint is DENIED.

F. Defendant Yahoo’s alternative motion for summary adjudication of plaintiff Zureik’s prayer for punitive damages is DENIED.

Pursuant to Civil Code section 3294, punitive damages may be recovered “where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.”

“In 1980, the Legislature added subdivision (b) to section 3294, to add a special qualification for employer liability for those damages. Subdivision (b) states, in relevant part, that an employer shall not be liable for punitive damages based on an employee’s acts unless ‘the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice.’ The statute includes an additional qualification for corporate employers, who may not be liable for punitive damages unless ‘the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice [is] on the part of an officer, director, or managing agent of the corporation.’”

(White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 566.)

Yahoo moves for summary adjudication of Zureik’s prayer for punitive damages by arguing that Zureik has not alleged any despicable conduct in conscious disregard of his rights. To the extent Yahoo is challenging the adequacy of the pleadings, Yahoo does not direct the court to that portion of the pleading which is lacking. In a cursory review, the court finds allegations of malice and oppression at paragraphs 26, 31, 36, 41, 46, 51, and 57.

Yahoo concludes with the statement that Zureik has not met his burden of showing the applicability of punitive damages. Yahoo misunderstands its burden on summary judgment/ adjudication. Yahoo must affirmatively demonstrate that Zureik cannot establish an entitlement to punitive damages. The initial burden on summary judgment/ adjudication lies with Yahoo, not with Zureik. Yahoo has not met its burden with regard to plaintiff Zureik’s prayer for punitive damages.

Accordingly, defendant Yahoo’s alternative motion for summary adjudication of plaintiff Zureik’s prayer for punitive damages is DENIED.