"It’s Lawsuit Time; Do You Know What Your Supervisors Are Doing?"

October 03, 2008
Following on the heels of Myers v. Trendwest Resorts, Inc. (2007) 148 Cal.App.4th 1403, in which a court held a female employee created triable issues of fact that her supervisor sexually harassed her and that the company did not take reasonable steps to prevent the harassment, a court finds another Trendwest employee established triable issues of fact to proceed to trial on claims of discrimination and retaliation.

The following case is an important reminder to all employers to be mindful of the statements, actions, and attitudes displayed by supervisors that can be interpreted as an unlawful bias.

The Allegations

In Mamou v. Trendwest Resorts, Inc. (July 30, 2008) 165 Cal.App.4th 686, Mamou, a Syrian born naturalized citizen, worked for Trendwest as a manager. Mamou alleged that he was induced by his supervisors to assume the position of a project director and leave his position as regional director because he was told Trendwest was reducing the compensation for the regional director position. After doing so, he learned the position was filled by another individual at a materially better compensation package.

Mamou applied for the Northern California regional director position again in spring of 2004. Mamou was given what he called a "brush-off interview" by the vice president, Fiore, and later learned the position had already been filled prior to the interview.

Mamou presented evidence that at least three managers, Curtis, Lee and Fiore had discriminatory animus. Curtis allegedly stated in May 2004, "What the hell is going on down there in that Northern California region with all those f**king rag heads," and "we’ve got to get rid of those f**king rag heads." At his termination meeting, Curtis stated, "I am disappointed in you, my Arab friend." Comments were also attributed to Lee that he was looking to "bust up" the "Syrian" or "Arab regime" in the Northern California region. Fiore allegedly developed and implemented a policy of turning away would-be customers of Middle Eastern or East Indian origin. An employee indicated Fiore had great dislike for Mamou and at least two other Trendwest employees of Indian and Syrian descent.

There was also evidence Fiore may have had a retaliatory motive. In March, 2004, Mamou was informed by Fiore that there were too many employees on medical leave in the Northern California regional offices. Fiore urged Mamou to make sure that those who were out on leave never came back, or if they did, to make their lives so miserable they would quit. Mamou refused. Immediately prior to Mamou’s termination, Mamou had allegedly sent an e-mail suggesting that his treatment with respect to stock options in the company was discriminatory and retaliatory. Fiore apparently reacted to the e-mail, stating that he felt Mamou had acted disloyally. Mamou was terminated in June, 2004 in a meeting with Fiore and Curtis.

The Court’s Findings

In rejecting Trendwest’s motion for summary judgment, the court held Mamou stated a prima facie case that Trendwest discriminated and retaliated against him in violation of the Fair Employment and Housing Act ("FEHA"). Mamou raised a presumption that his termination was motivated by a discriminatory bias and/or by a retaliatory motive.

In defense, Trendwest alleged it had a legitimate, non-discriminatory reason for Mamou’s termination. In the official termination form, Trendwest alleged Mamou had been fired for "theft" and "violation of company policy." Trendwest stated Mamou had filed papers with the Secretary of State to form a corporation which used the name "Worldmark Heaven, Inc." "Worldmark" is a trade name used by Trendwest.

The court held there was evidence Trendwest’s stated reason for termination was false and merely a rouse for an illegitimate reason. Mamou stated he was not an attorney and unfamiliar with trade name laws. When Trendwest sent Mamou a cease-and-desist letter after his termination, Mamou immediately ceased using the name and switched to an alternate name.

There was also no evidence Mamou had stolen from Trendwest as far as business, customers, or "goodwill". Mamou had only attempted to set up a corporation, but was not actively engaged in any business. Mamou’s intended business was also not a business that was considered to be in direct competition with Trendwest’s business. Further, Trendwest’s in-house counsel stated it was not so much Mamou’s attempts to set up a business, but that he did it "secretly". The counsel stated that had Mamou been up front, it may not have been actionable. However, the counsel later stated he never asked Mamou about the incorporation because there was nothing Mamou could have said that would have changed his mind that it constituted "theft."

Trendwest also alleged the persons attributed with the possible discriminatory animus, Fiore and Curtis, were not the individuals who made the decision to terminate, but was rather upper management. However, Fiore and Curtis made statements during their depositions that could lead a reasonable jury to conclude Fiore and Curtis understood they had the authority to terminate Mamou. Further, one of the upper management indicated she merely "supported" the decision to terminate, but did not ascribe herself as making the determination.

The Lesson Learned

The lesson to be learned here, for any employer, is do not take an adverse action against an employee because of a protected status (i.e. race, gender, sexual orientation, etc.) or because the employee engaged in a protected activity (i.e. complaining of a supervisor’s racially motivated statements).

It is true that absent a contract, most private employment is at-will and an employer need not state the reason for the termination. However, if the employer is aware an employee has complained of discriminatory conduct or suspects an employee will allege discrimination or retaliation, whether substantiated or not, the employer is better off creating a record of the legitimate basis for termination. If an adverse action must be taken against an employee, make sure you have evidence of the legitimate reason for that action, not merely unsubstantiated rumor or suspicion. An employer does not have to prove, beyond a reasonable doubt, the employee has engaged in misconduct, but there must be some evidence of the employee’s misdeeds. The reason should then be documented in company files.

The employer need not specify to the employee the reason(s) for the termination. However, an employee who is not given a reason may suspect an improper motive on the part of the employer. By articulating a solid legitimate basis for termination, it may dissuade an employee from pursuing a claim against the employer for discrimination or retaliation.

This article was written by Frances Rogers, an attorney with the labor and employment law firm of Liebert Cassidy Whitmore (LCW). Ms. Rogers is an Associate in the Fresno office and can be reached at (559) 256-7800 or frogers@lcwlegal.com. For more information regarding the discussion above or on our firm please visit our website at www.lcwlegal.com, or contact one of our offices below.

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