Takeaway: An employee who was fired when he refused to continue working after city inspectors found numerous safety violations at the worksite was entitled to more than $7 million in damages for whistleblower retaliation under California law.
A California appellate court recently upheld a large jury award in favor of a former employee of a Los Angeles entertainment and media company. The jury found the employer liable for whistleblower retaliation under California Labor Code section 232.5, which prohibits an employer from discharging an employee who discloses information about the employer’s working conditions, and section 1102.5, which prohibits an employer from retaliating against an employee who refuses to participate in an activity that would violate the law. The jury awarded the employee more than $7 million in damages.
The employer initially produced internet programming, but in 2014, it began focusing on hologram technology by which images are projected onto a screen and reflected for audience viewing. The employee worked for the company from 2013 to 2017. During his employment, he became heavily involved in hologram production. He learned the technology; how to install the equipment; and how to stage productions that the company created for television shows, concerts and museums.
In September 2017, the employee began working at a church that the company was converting into a theater for hologram productions. He was responsible for installing production equipment used to create the holograms. The company had scheduled a special event at the theater for celebrities and potential investors to take place on Sept. 28, 2017.
When the employee began working at the theater, very little construction work had been done. There were no restrooms, fire exit signs, Americans with Disability Act-compliant ramps, or drywall. The hologram equipment had not been installed and remained in a storage unit.
The employee was at the theater on Sept. 25, 2017, when four different city inspectors arrived. Each of the inspectors indicated code deficiencies that required correction. The employee learned of approximately 20 code violations, including plumbing and electrical violations. Following the inspection, the city department of building and safety issued a correction notice, identifying multiple violations of various municipal code sections pertaining to work done at the theater.
The employee was concerned about the plumbing and electrical work in relation to the hologram equipment he was to install. Projection equipment weighing 700 pounds would be installed in the ceiling directly over the audience. He was concerned about the integrity of the ceiling and the floor and whether the equipment could fall on the theater attendees.
When the employee raised his concerns with the company owner, the owner shouted at him in front of his co-workers, telling him he was fired and using numerous obscenities. The employee left work and never returned.
The event went on as scheduled. The employee subsequently sued the company, claiming that his termination constituted retaliation under sections 1102.5 and 232.5.
The jury found the employer liable under both statutes and awarded the employee $368,717 in economic damages and $700,000 in noneconomic damages. The jury further found the employee had proved that the company had terminated his employment with malice, oppression and fraud and awarded him $6 million in punitive damages. The employer appealed.
Applicable Statutes
Section 1102.5 provides that an employer shall not retaliate against an employee for refusing to participate in an activity that would result in a violation of federal, state or local rule.
The trial court found that the employee’s continued installation of the hologram equipment in the theater after the inspectors’ findings would have violated sections of the city municipal code. The appeals court found substantial evidence to support this conclusion.
Section 232.5 provides that no employer may discharge an employee who discloses information about the employer’s working conditions. The appeals court found that substantial evidence supported the jury’s finding that the employee’s disclosure was a substantial motivating reason for his termination. There was evidence that immediately before the employee was fired, he repeatedly told the company owner that the working conditions at the theater were unsafe. In response, the owner became enraged, yelled obscenities in the employee’s face and told the employee he was fired.
Punitive Damages
The appellate court then noted that California law permits awards of punitive damages “for the sake of example and by way of punishing the defendant” when the defendant’s conduct is reprehensible.
It found that the award was justified and was not excessive. There was substantial evidence of reprehensible conduct by the employer, the court said. The owner ignored the employee’s disclosures of potentially hazardous conditions at the theater, evincing a disregard for the health and safety of others. When the employee voiced his concerns regarding workplace safety, the owner yelled and screamed obscenities at the employee in front of his co-workers.
The court also found that the award was not excessive despite the disparity between the punitive damages ($6 million) and compensatory damages (approximately $1 million) awarded.
There is no mathematical formula or bright-line ratio that a punitive damages award cannot exceed, the court said. The precise award, in any case, must be based upon the facts and circumstances of the defendant’s conduct and the harm to the plaintiff. The facts and circumstances here support the jury’s award, the court concluded.
Zirpel v. Alki David Productions, Calif. Ct. App., No. B317334 (July 14, 2023).
Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.