Employee Wins $7M On Claims That He Was Fired For Reporting Code Violations

CATEGORY: Nonprofit News
CLIENT TYPE: Nonprofit
DATE: Nov 03, 2023

Karl Zirpel began working at Alki David Productions, Inc. in 2013.  ADP is an entertainment and media company.  In 2014, ADP began focusing on hologram technology, by which images are projected for audience viewing.  By March 2014, Zirpel was ADP’s vice president of operations.

In September 2017, Zirpel began working at a theater that ADP was converting for hologram productions.  Zirpel was to install the hologram equipment.  ADP had publicized an invitation-only special event at the theater on September 28, 2017, for celebrities and potential investors.

Zirpel was at the theater on September 25, 2017, when four different Los Angeles City inspectors arrived.  Zirpel, ADP’s in-house counsel Manuel Nelson (Nelson), and ADP’s general contractor completed four walk-through inspections.  The inspector identified many deficiencies that required correction, and said the approvals would not occur before the September 28 event.   The Los Angeles Department of Building and Safety issued a correction notice identifying multiple violations of municipal code sections.

After the inspectors left, ADP’s principal Alkiviades David ordered the construction crew to use plywood and drapes to cover exposed electrical wiring on the theater walls.  Zirpel felt that David’s “fix” created a fire hazard and jeopardized ADP employees and the public.  On September 26, 2017, Zirpel informed ADP’s senior vice president of operations, Ian Robertson, that two inspectors had said the theater could not open on September 28, 2017.  Zirpel told Robertson he intended to telephone the fire inspector about these concerns.

Zirpel called a Los Angeles County fire inspector on September 26.  Zirpel eventually spoke to a receptionist.  Without giving his name, Zirpel said: the theater was scheduled to open on September 28; that inspectors had come, but “none of the work was approved;” no permits had been issued; and someone should come to the theater.

On September 27, 2017, Zirpel and ADP’s chief technical officer, “Nick,” met a fire inspector.  The inspector stopped all work, told everyone to leave, and said that no work could be done without posted fire exit signs.  Zirpel understood this to mean “when those signs were posted, we had the clearance to go back in and work again.”

Nick left the theater to purchase fire exit signs and Zirpel left in a U-Haul truck to retrieve the hologram equipment.  Zirpel texted in-house counsel Nelson about the conversation with the fire inspector.  Zirpel asked if there was a time frame for the permit, and said he would be “on standby to unload” the hologram equipment.  Nelson texted back, stating that a permit application had been submitted; that he was meeting with the inspectors the following day; and that until the application was denied, “all of us need to continue working toward the special event.”

David texted Zirpel, stating, “We need this setup done. I read this text you sent.  The permits will be given tomorrow morning.  Nothing stops.”  When Zirpel returned to the theater, he saw work being done.  Zirpel met with Ian Robertson and Nick and expressed concerns about installing the hologram equipment without approvals.  Zirpel said the work should not be proceeding because it was unsafe.  Zirpel stopped all work.

David arrived at the theater and demanded to know why no work was being done.  Zirpel responded, “we’ve got none of the inspectors signed off on any of the work done.”  He then listed reasons why the theater should not open on September 28.

David “immediately blew up,” and told Zirpel to shut up and “go with the program,” and that he was either “in or out.”  Zirpel repeatedly stated what they were doing was not safe.  David went into a “fit of rage,” yelled in Zirpel’s face, and using numerous obscenities, told Zirpel to “get out,” to “get the f . . . out, you faggot,” and that Zirpel was fired.

Zirpel handed David the U-Haul keys and left the theater.  David sarcastically told him to perform a sexual act.  Zirpel found David’s conduct “traumatic,” because Zirpel “wasn’t out to a lot of people.”  David followed Zirpel out of the theater and continued yelling.  David walked away, and then returned and “came to his senses,” realized “the mistakes he made,” and tried to embrace Zirpel.  Zirpel told David to get away.  Zirpel did not return to work.  The September 28 event occurred as scheduled.

Zirpel then filed a lawsuit alleging that his termination constituted retaliation under the Labor Code for disclosing information: 1) that Zirpel believed violated building codes (Section 1102.5); and 2) about his working conditions (Section 232.5).  The case went to trial and the jury returned a verdict for Zirpel, and awarded him nearly $7 M in total damages.  ADP then appealed the verdict.

Labor Code Section 1102.5(c) states: “An employer, or any person acting on behalf of the employer, shall not retaliate against an employee for refusing to participate in an activity that would result in a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation.”

A person suing for violation of Labor Code Section 1102.5 must identify both the specific activity and the statute, rule, or regulation at issue; the court then determines whether the activity would result in a violation or noncompliance, and, if so, the jury determines whether the person was retaliated against for refusing to participate in the activity.

The activity at issue in this case was the installation of the hologram equipment.  At trial, Zirpel showed that continued construction work would have violated county and city codes.  ADP appealed to the California Court of Appeal.

ADP first argued that ADP did eventually get a permit, and therefore there was no unlawful activity.  The Court noted that there was no evidence that any permit was approved before the September 28 event.  The Court also found that the trial court was correct to find that Zirpel’s continued work at the theater would have violated a statute, rule or regulation, as required to prove a violation of Section 1102.5.

The Court next turned to the Labor Code Section 232.5 claim.  That law states in part: “No employer may . . . [d]ischarge, formally discipline, or otherwise discriminate against an employee who discloses information about the employer’s working conditions.”  Here, the key question was whether Zirpel’s disclosures were a substantial motivating reason for terminating his employment.

The Court found evidence that Zirpel repeatedly told David about the unsafe working conditions.  David responded by becoming enraged, yelled obscenities, and telling Zirpel he was fired. Very close temporal proximity can establish retaliation.  Here, the temporal proximity was immediate. Also, the jury applied the correct legal standard when it determined that Zirpel’s disclosures were “substantial motivating” factors in his termination.

Finally, the Court found that the $6 million in punitive damages that the jury awarded would stand because it was not excessive, given this evidence of David’s malice and reprehensible conduct: screaming obscenities at Zirpel in the presence of coworkers; using a slur to disclose and describe Zirpel’s sexual orientation; sarcastically requesting Zirpel perform a sexual act; standing so close to Zirpel that spittle flew into Zirpel’s face; and firing Zirpel for standing up for the safety of others.

Zirpel v. Alki David Productions, 93 Cal.App.5th 563 (2023).

Note: This case is notable for the six-to-one ratio between the punitive and economic damages.  This case demonstrates how strongly juries condemn those who retaliate against whistleblowers.

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