Wednesday, June 13, 2012

Anyone Can Sue Your Company for Retaliation -- Fitzsimons v. CEP Med. Group

In a very compelling decision, the First Appellate District of the California Court of Appeal concluded that a non-employee can sue an employer for retaliation.  In this case, a partner sued her partnership for allegedly retaliating against her after she complained that certain members of the partnership had sexually harassed female employees. 

This case applies to all employers.  It has particular significance to professional associations such as medical groups, law firms, accountancy firms, which have historically taken the position that their partners or shareholders could not sue the company under civil rights laws.  Moreover, these professions are filled with many headstrong personalities who push a particular agenda and do not appreciate criticism of their methods. 

Dr. Fitzsimons was a partner in the California Emergency Physicians Medical Group (CEP).  She had served as a medical director at one hospital.  Thereafter, she served in the appointed position of Regional Director over multiple hospitals.  She also served on the board of directors. 

Female employees complained to Dr. Fitzsimons of sexual harassment.  Dr. Fitzsimons forwarded these complaints for investigation and resolution.  She claimed that in response to making complaints of sexual harassment perpetrated on CEP's female employees, CEP removed her from the position of Regional Director.

Dr. Fitzsimons sued the partnership and two officers.  The claims were dismissed with respect to the individual defendants.  At trial, the court instructed the jury that if Dr. Fitzsimons was a partner and not an employee, she could not sue under the California Fair Employment and Housing Act (FEHA).  The jury concluded she was a partner and the trial court entered judgment in favor of CEP. 

The Court of Appeal made reference to two very important Supreme Court cases:  Reno v. Baird (1998) 18 Cal.4th 640; and Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158.  In Reno, the court concluded that a supervisor can be held liable for harassment, but cannot be held liable for discrimination.  Jones held that a supervisor cannot be held liable for retaliation.  (If you need a refresher course on the differences in these terms, please attend our Legal Beagle Bagel Breakfasts.)  In part, these decisions were based on the use of the term "person" used in those provisions of FEHA prohibiting discrimination, harassment and retaliation. 

The Fitzsimons case presented a different issue than Reno and JonesFitzsimons asked the question of whether an employer (not a supervisor) could be held liable for retaliation against a non-employee.  The court answered in the affirmative. 

The retaliation provision of FEHA reads:  "It is an unlawful employment practice for any employer ... or person to ... discriminate against any person because the person has opposed any practices forbidden under [FEHA] or because the person has filed a complaint, testified, or assisted in any proceeding under [FEHA]." 

Note that the term "person" is used three times in this provision.  It refers to two different persons.  The first reference identifies the person who can be held liable for retaliation.  The second and third references identify the person who suffers because of the retaliatory action.  The court concluded that Reno and Jones recognized that a person, as identified in the first reference, can include an employer only.  However, the court concluded that the term person in the second reference includes anyone who is the victim of retaliation, and that includes a partner. 

The court confirmed that a partner cannot assert a cause of action that (s)he was harassed by his/her employer.  FEHA does not cover such claims.  However, a partner can sue for retaliation imposed by the employer. 

This case should serve as a wake-up call to professional associations, and to other partnerships.  Big egos and dominant personalities are not uncommon in professional associations or business leaders.  They are successful, in part, due to their drive and determination.  However, much too often I see in the medical and other groups we represent, a dominant personality taking the place of good business judgment.  Treating a partner poorly because (s)he reported or opposed harassment of an employee may give rise to a claim against the company. 


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