Lawal v. 501(C) Insurance Programs, Inc., H029060 (Cal. App. 9/21/2007)

• Decision Date: 21 September 2007
• Docket Number: H029060
• Court: California Court of Appeals Court of Appeals
• Parties: TUTU LAWAL, Plaintiff and Appellant, v. 501(c) INSURANCE PROGRAMS, INC., Defendant and Respondent.

Page 1

TUTU LAWAL, Plaintiff and Appellant, v. 501(c) INSURANCE PROGRAMS, INC., Defendant and Respondent.

H029060

Court of Appeals of California, Sixth Appellate District

September 21, 2007

NOT TO BE PUBLISHED

Appeal from the Santa Clara County, Super. Ct. No. CV009786.

McADAMS, J.

Following the termination of her employment as vice president of the corporate defendant, plaintiff Tutu Lawal brought this action, asserting discrimination and other claims. Plaintiff's causes of action for race and gender discrimination were summarily adjudicated in defendant's favor, and plaintiff dismissed her remaining claims. On appeal, plaintiff asserts that the trial court erred in summarily adjudicating her discrimination claims. For reasons set forth below, we reject those assertions.¹ Plaintiff also argues that the trial court should have ruled on her evidentiary objections. As explained below, regardless of the validity of that argument, the outcome was not affected by the trial court's failure to do so here.² We therefore affirm the judgment.

BACKGROUND

Plaintiff and appellant Tutu Lawal is a certified public accountant. She holds a masters degree in business administration from the University of San Francisco. Though born in Nigeria, plaintiff is generally perceived as an African-American.

Plaintiff's former employer is defendant and respondent 501(c) Insurance Programs, Inc. Defendant provides investment and financial management to nonprofit organizations, as well as "insurance-related programs," mainly "in connection with unemployment claims by employees of such organizations." Among defendant's clients are several trusts, including the Northwest Agencies Trust (NAT). The company's founder and principal shareholder is defendant John Huckstadt. Huckstadt started the company in 1982. In 1995, he hired Susan Grose to assist him with daily operations and financial management. By 2001, Huckstadt had delegated all day-to-day management responsibility for the company to Grose. He promoted Grose to president and chief executive officer that same year.

In December 2001, Grose recruited plaintiff to serve as the company's vice president of finance and member services. An offer letter for at-will employment was prepared, which plaintiff signed. At the time, defendant had one other vice president, James Claitor, who was hired in 2000 to provide marketing services. According to Huckstadt's declaration, the two vice presidencies were created "to establish a possible succession of leadership for the company" when he and Grose "both retired and/or the company was sold."

Plaintiff began serving as defendant's vice president of finance and member services in January 2002. She had both "internal" and "external" duties. Among plaintiff's internal responsibilities were financial and staff management for defendant; her external duties included oversight of the financial services provided to defendant's clients. After plaintiff's first year in defendant's employ, Grose gave her a positive performance review, a raise, and a bonus. Grose rated plaintiff's performance as "very strong," while noting that in "the area of staff management ... she was still working on polishing some skills, primarily to do with communication...."

Starting in late 2002, Huckstadt began receiving employee complaints about plaintiff's "abusive and condescending behavior toward her staff." In early 2003, Huckstadt received more complaints from plaintiff's own "staff as well as ... other employees, independent contractors and vendors" about her "abusive, arrogant, disrespectful and overbearing treatment...." The complaints were not documented. Nor were they communicated to plaintiff. Huckstadt began talking with Grose about a "possible return to the company in an active role."

In April 2003, a proposal was floated to sell the company — or at least Huckstadt's shares — to plaintiff and Claitor. Arrangements were made for a business valuation, and financing discussions were undertaken. When the appraisal for the company came in, it was between five and six million dollars, which was well below Huckstadt's expectations. Rather than sell his shares, Huckstadt decided "to come out of retirement and return to an active role in the company, primarily as a leader in the sales and marketing area."

Huckstadt assumed the company's "day-to-day management" in May 2003. According to Huckstadt's declaration, Grose "was not willing to co-manage the company" with him, "and she submitted her resignation effective May 31, 2003." That fact is confirmed in plaintiff's declaration as well. Huckstadt's declaration continues: "Between May and July 2003 I continued to receive complaints from staff about [plaintiff's] behavior and treatment of subordinates and vendors." Huckstadt "observed her management style to be very inconsistent, and while she treated staff reasonably one day, she would be abusive the next day."

Starting in late May 2003, negotiations were undertaken between defendant and the two vice presidents, conducted through the company's counsel, Peter Whitman, and apparently aimed at modifying the terms of employment both for plaintiff and for Claitor. By e-mail, Whitman sent plaintiff a letter agreement, addressed to her from Huckstadt, dated June 20, 2003, and marked "draft." The unsigned letter begins: "As we have discussed, I am very interested in having you remain an important part of the 501(c) management team. Therefore, I am writing in order to modify the terms of your employment which are established in our letter to you of December 19, 2001." Under the draft proposal, there would be no change in position, fringe benefits, or eligibility for an annual performance bonus. Unless terminated earlier by either party, employment would continue through June 2005. The company would offer retention bonuses, in "recognition of the importance of [plaintiff's] continued services at [defendant] during this transition period...." Plaintiff believed that defendant was satisfied with her services at this time, particularly given the proposed bonuses and the specified duration of employment.

By early July 2003, however, defendant's attorney sent an e-mail to plaintiff advising that Huckstadt was "for the moment, withdrawing his proposal of additional employment terms and compensation." Huckstadt describes the precipitating event for the break-down in negotiations as an incident in which the company's "outside unemployment claims manager, Paul Fountain of TALX, was ordered out of the room so ... Claitor and [plaintiff] could interview Mr. Fountain's assistant out of his presence." Huckstadt's declaration continues: "Mr. Fountain and his superior were outraged by this conduct and considered it overbearing and inappropriate." Huckstadt "strongly rebuked" both vice presidents. Again, however, the company did not memorialize the incident or Huckstadt's statements to plaintiff and Claitor.

"In late June or early July 2003," Huckstadt declares, he decided to relieve plaintiff of her "staff management responsibilities" and to have plaintiff's subordinates report directly to him. He made a similar decision concerning Claitor. He advised the two vice presidents "that they would continue to perform all non-supervisory responsibilities of their positions without reduction in their compensation." In deposition testimony, Huckstadt refers to this action as a "demotion," which took place in June 2003. As reasons for the claimed demotion of plaintiff, Huckstadt cited her "clear unwillingness to make adjustments in her personal management style, continued problems with personnel, [and] a belligerent attitude toward [him]." Plaintiff declares that she first learned of the "phantom demotion" when she read Huckstadt's deposition transcript.

Huckstadt described subsequent events and decisions in his declaration as follows: "Through September 2003, even though [plaintiff] was not managing staff, she still worked with them. I continued to receive complaints about her from staff and I tried to counsel her to change her approach to the staff with whom she still had to work. On several occasions during the summer of 2003 [plaintiff] acted in a manner toward me that I considered disrespectful or insubordinate, including walking out of meetings with me in the middle of our discussions." As before, however, complaints about plaintiff's conduct were never memorialized. Ultimately, Huckstadt "determined that it would be bad for the company to return [plaintiff] to a staff management role and that if she was not managing staff, [he] could not justify paying her a vice president's salary of $150,000 per year." Huckstadt therefore decided to end the company's employment relationship with plaintiff.

In early October 2003, Huckstadt had a lunch meeting with plaintiff at which he terminated her employment, effective as of the end of the month. At that time, Huckstadt offered plaintiff "an independent consulting role to assist in financial management without staff or contractor supervisory responsibility but she declined the offer."

PROCEDURAL HISTORY

Plaintiff brought this action in November 2003. She asserted five causes of action against the company: race discrimination; gender discrimination; tortious employment termination in violation of public policy; breach of contract; and breach of the implied covenant of good faith and fair dealing. In addition, plaintiff asserted a battery claim against Huckstadt personally, based on an allegation that he threw wine corks at her during a client meeting.

Summary Adjudication: Motion, Opposition, Reply, and Objections

In February 2005, the company moved for summary adjudication as to all five causes of action asserted against it. In support of the motion, defendant submitted a separate statement of undisputed facts supported by evidence that included Huckstadt's declaration and excerpts from the deposition transcripts of plaintiff and three other employees,...