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Tuesday, April 19, 2016

Davis v. Farmers Insurance Exchange: Same Decision Defense Applies to Common Law Wrongful Termination Claims; Trial Court Erred in Granting Directed Verdict on Illegal Deduction Claims

In Davis v. Farmers Insurance Exchange (Cal.App. 3/28/16, mod. 4/21/16), William Davis sued his former employer, alleging wage and hour violations based on independent contractor misclassification and common law wrongful termination in violation of public policy. The court granted Farmers' motion for directed verdict on the wage claims. On the wrongful termination claim, the court instructed the jury with CACI instructions amended to reflect the holding in Harris v. City of Santa Monica (2013) 56 Cal.4th 203. The jury found that Davis was an employee and that his age was a substantial motivating factor in his termination, but also found that Farmers would have made the same termination decision for legitimate business reasons. Davis appealed, and the Court of Appeal affirmed in part, holding as follows:

The trial court did not err in instructing the jury based on Harris: that Davis must prove that his age was a substantial motivating reason for his termination; that Farmers could use the same decision or mixed motive defense; and that a same decision finding would eliminate reinstatement, back pay, and damage remedies. Wrongful termination claims are analogous to FEHA claims, and the same standards apply in each. 

Davis did not seek declaratory or injunctive relief relevant to his wrongful termination claim. He did not state a cause of action for declaratory relief, and his request for injunctive relief in connection with his claim under the UCL addressed only his wage claims and was not sufficiently broad to cover his wrongful termination claim. Even if Davis had raised the injunctive relief claim, he did not demonstrate an imminent threat of continued age discrimination against him or any current Farmers employees. 

Davis could not recover his attorney fees. Although a plaintiff who proves that discrimination was a substantial motivating factor for an adverse employment action may recover fees in a FEHA action under Harris, Davis did not bring a FEHA action. 

Davis also could not recover his fees under Code of Civil Procedure section 1021.5, which allows an award of attorney fees when a plaintiff enforces important rights affecting the public interest without private gain. 

The trial court erred in granting a directed verdict on plaintiff's wage claims. Davis alleged that Farmers unlawfully deducted money from his compensation for items such as insurance premiums, operational expenses, loans, and advanced commissions. The jury found that Davis was an employee, rather than an independent contractor, and Davis made out a prima facie case that Farmers' deductions were not "clearly authorized by law."

The Court modified a number of parts of its opinion on April 21, 2016. The modified opinion is available here. The modifications do not change any of the Court's holdings. 

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