California Court of Appeals Confirms McDonnell-Douglas Charge Shift Applies to Section 1278.5 Whistleblower Retaliation Claims | Arent Fox Schiff

In Scheer v. Regents of the University of California, the Second District Court of Appeals has ruled that the McDonnell-Douglas load-shifting framework applies to claims made under Section 1278.5 of the Health and Safety Code. For claims alleging violations of Labor Code Section 1102.5 and the California Whistleblower Protection Act, the Scheer court upheld the more plaintiff-friendly standard announced in the recent Supreme Court decision Lawson v. PPG Architectural Finishes will apply.

Key Considerations for California Hospitals and Medical Staff

  • Since most private hospitals in California do not employ physicians, most retaliation claims by physicians would be brought under Section 1278.5.
  • After Lawsonsome medical litigators have asserted that the plaintiff-friendly framework described in this decision would apply to claims under section 1278.5.
  • Notwithstanding the Scheer Court setting aside and dismissal of summary judgment in this case, the hospital and medical staff defendants will be able to assert legitimate, non-retaliatory grounds for summary judgment disciplinary action and shift the burden of proof to the plaintiff to show proof of the pretext.

Background

In 2016, Arnold Scheer, MD was removed from his position as administrative director of the Department of Pathology and Laboratory Medicine at UCLA. A year later, he sued his former employer and supervisors for whistleblower retaliation. In the complaint, Dr. Scheer alleged that he was wrongfully terminated in violation of Health and Safety Code Section 1278.5, Labor Code Section 1102.5, and the California Whistleblower Protection Act. (“CWPA”). The defendants sought summary judgment, arguing that Dr. Scheer was terminated for legitimate reasons and not for retaliation listed in a notice of intent to terminate. These reasons included behavioral issues such as bullying and intimidation. Dr Scheer countered that the reasons listed were pretense because he received an outstanding performance review in 2015 – the year before he was fired – and his supervisors’ official goals for 2016 identified no behavioral issues. .

The decision of the court of first instance

In Scheer v. Regents of the University of California, the Court of Appeals for the Second District quashed and remanded. The Court held that the analytical framework of Lawson v. PPG Architectural Finishes applies to claims under section 1102.5 of the Labor Code and CWPA claims.

In Lawsonthe California Supreme Court held that the standard of proof set out in Labor Code Section 1102.6, not the McDonnell-Douglas framework, applies to complaints of retaliation by whistleblowers under section 1102.5 of the Labor Code. While the McDonnell-Douglas contains three analytical steps, Article 1102.6 of the Labor Code contains two: first, the plaintiff has the burden of establishing by a preponderance of the evidence that the reprisals contributed to the dismissal; then, if the plaintiff meets this burden, the onus is on the defendant to show by clear and convincing evidence that he had legitimate and independent reasons to terminate the plaintiff. This standard of “clear and convincing evidence” contrasts with the standard under McDonnell-Douglas, which merely requires the defendant to state legitimate grounds for termination. Because the trial court applied the wrong framework to the Labor Code claim, the Court reversed and returned that claim. For the same reason, the Court quashed and returned the claim under the CWPA, which contains language nearly identical to section 1102.6 of the Labor Code.

On the other hand, the Court held that the Lawson does not apply to claims of retaliation under Section 1278.5 of the Health and Safety Code. Since this article is structured differently from the article of the Labor Code interpreted in Lawsonthe Court of Appeal concluded that the trial court was correct in applying the McDonnell-Douglas Dr. Scheer’s 1278.5 request. Even still, the Court considered the evidence presented by Dr. Scheer and found that adjudicable factual issues remained as to whether the defendants’ reasons for firing him were a pretense. The Court found that because Dr. Scheer had discharged his onus at the third stage of the McDonnell-Douglas analysis, the trial court erred in granting the defendants’ motion for summary judgment.

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