Lawson v. PPG Architectural Finishes, Inc.

• Decision Date: 07 December 2020
• Docket Number: No. 19-55802,19-55802
• Citation: 982 F.3d 752
• Parties: Wallen LAWSON, Plaintiff-Appellant, v. PPG ARCHITECTURAL FINISHES, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

982 F.3d 752

Wallen LAWSON, Plaintiff-Appellant,

v.PPG ARCHITECTURAL FINISHES, INC., Defendant-Appellee.

No. 19-55802

United States Court of Appeals, Ninth Circuit.

Filed December 7, 2020

ORDER

Before this panel of the United States Court of Appeals for the Ninth Circuit is an appeal concerning the appropriate evidentiary standard for California Labor Code section 1102.5 retaliation claims. As we are aware of no controlling state precedent that resolves this issue, we respectfully ask the Supreme Court of California to exercise its discretion to accept and decide the certified question below.

I. Question Certified

Pursuant to Rule 8.548 of the California Rules of Court, we request that the Supreme Court of California answer the following question: Does the evidentiary standard set forth in section 1102.6 of the California Labor Code replace the McDonnell Douglas test as the relevant evidentiary standard for retaliation claims brought pursuant to section 1102.5 of California's Labor Code? We understand that the Court may reformulate our question, and we agree to accept and follow the Court's decision. Cal. R. Ct. 8.548(b)(2), (f)(5).

II. Background

A. Facts¹

PPG Architectural Finishes, Inc. ("PPG") manufactures paints, stains, caulks and other products for homeowners and professionals, and sells its products to retailers such as The Home Depot, Menards, and Lowe's. Wallen Lawson began working as a Territory Manager ("TM") for PPG in June 2015. Lawson's duties as a TM included, among other things, merchandising PPG products in Lowe's Home Improvement stores and ensuring that PPG's displays were stocked and in good condition. Lawson reported directly to Clarence Moore, a Regional Sales Manager ("RSM"), who oversaw approximately a dozen TMs, including Lawson.

Lawson's performance as a TM was measured based on two metrics: (1) his ability to meet monthly sales goals, and (2) the score he received on "Market Walks." Market Walks involved the RSMs and TMs "visit[ing] several stores within the TM's assigned territory and walk[ing] through the store to ensure TMs were building relationships with Lowe's employees, PPG product is properly placed throughout the store, and TMs are training and helping customers." Lawson v. PPG Architectural Finishes, Inc. , No. SACV 18-00705 AG (JPRx), 2019 WL 3308827, at *1 (C.D. Cal. June 21, 2019) (alterations adopted) (internal quotation marks omitted) (unpublished). TMs were then "scored on a five-category spectrum ranging from ... ‘unsuccessful’ to ‘exceptional’ " based on their performance during these Market Walks. Id.

PPG management conducted several Market Walks with Lawson between October 2016 and August 2017. On the first Market Walk—the only Market Walk not conducted with Moore—Lawson received an "exceptional" score. On the second, Lawson received a "marginal" score. Lawson's scores dropped to "unsuccessful" on his third and fourth Market Walks.²

In April 2017, around the time of Lawson's fourth Market Walk, Moore instructed the TMs under his supervision to intentionally "mis-tint"³ PPG products at Lowe's stores. This fraudulent practice allowed PPG to avoid buying back the mis-tinted product from Lowe's, and forced Lowe's to sell the product at a deep discount. Lawson fundamentally disagreed with this practice, and submitted an anonymous report to PPG's web-based ethics reporting portal on April 21, 2017, which detailed Moore's directive. Nothing developed from this first report. But soon thereafter, Lawson spoke with Moore over the phone regarding the mis-tinting directive, telling Moore that there was "no way" he was going to intentionally mis-tint the product.

That same month, April 2017, Lawson was placed on a Performance Improvement Plan ("PIP"), which required, among other things, a "successful" score on a Market Walk by the time the PIP expired in July 2017. Before the July Market Walk took place, Lawson filed a second anonymous complaint regarding the mis-tinting directives on June 15, 2017. This complaint led to an investigation; after the investigation, PPG instructed Moore to tell his TMs (via text message) to immediately stop mis-tinting PPG products. However, during and after this investigation, Moore continued to supervise Lawson and oversee Lawson's Market Walks.

Lawson received only a "marginal" score on his July 13 Market Walk. Despite this subpar score, Lawson's PIP was extended by thirty days, and he was given another shot at earning a "successful" score. But Lawson fared even worse on his August Market Walk, resulting in both Moore and Moore's supervisor (Divisional Manager Sean Kacsir) recommending termination. Lawson was subsequently terminated on September 6, 2017.

Because he (1) expressed his disapproval of the mis-tinting directive leading to PPG's investigation of Moore and (2) confronted Moore about the directive, Lawson believes that Moore knew he was the one who reported Moore's misconduct. Lawson also believes this knowledge influenced the poor scores he received from Moore in his July and August Market Walks and motivated Moore's recommendation that Lawson be terminated.

B. Procedural History

Based on these beliefs, Lawson brought claims for (1) retaliation in violation of California Labor Code section 1102.5, and (2) wrongful termination in violation of public policy.⁴ Id. The district court granted PPG's motion for summary judgment on both claims. See id. In dismissing the claims, the court applied the McDonnell Douglas "burden-shifting" framework⁵ to Lawson's section 1102.5 retaliation claim. Id. at *3–5. This test requires the plaintiff to first establish, by a preponderance of the evidence, a prima facie case of retaliation. McDonnell Douglas Corp. v. Green , 411 U.S. 792, 802, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). If the plaintiff can do so, the defendant must carry a burden of production "to articulate some legitimate, nondiscriminatory reason for the [adverse employment action]." Id. If the defendant can carry its burden of production, the plaintiff is "afforded a fair opportunity to show that [the employer]’s stated reason for [the employee]’s rejection [or dismissal] was in fact pretext." Id. at 804, 93 S.Ct. 1817.

Applying this burden-shifting framework to Lawson's section 1102.5 claim, the district court first found that Lawson had made out a prima facie case for retaliation under section 1102.5. Lawson , 2019 WL 3308827, at *3–4. The court then found that PPG bore its burden to produce evidence of a legitimate, nondiscriminatory reason for Lawson's termination. The court found that PPG had done so with its evidence that Lawson was fired for failing to meet the performance expectations set forth in his PIP. Id. at *4.

But the district court concluded that Lawson failed to carry his burden "to raise triable issues of fact regarding pretext." Id. In so doing, the court found, among other things, that: (1) no reasonable jury would find Lawson's decline in Market Walk scores attributable to retaliatory intent, and (2) PPG's reasons for firing Lawson did not shift over time. Id. at *4–5. On these bases, the district court granted PPG's motion for summary judgment on the first claim. Id. at *5. Then, finding that Lawson's claim for wrongful termination in violation of public policy "depends entirely on the sufficiency of [his] retaliation claim ... in the previous section," the district court also granted summary judgment on this second claim. Id. at *5.

On appeal, Lawson argues that the district court erred in applying the McDonnell Douglas test to his section 1102.5 retaliation claim. Instead, he argues that the district court should have applied the materially different evidentiary standard set forth in section 1102.6. Having considered the parties’ briefs and arguments, we are convinced that Lawson's claims turn on the application of the proper evidentiary standard. Because the Supreme Court of California has provided no clear guidance on this specific question,⁶ we request clarification regarding the applicable evidentiary standard for Lawson's section 1102.5 retaliation claim.

III. Explanation of Certification

The sole question for the Supreme Court of California is this: what is the appropriate evidentiary standard for Lawson's section 1102.5 retaliation claims? The district court applied the McDonnell Douglas test; Lawson argues that the standard set forth in section 1102.6 should apply. However, before analyzing the important distinctions between the two standards, it is important to (1) discuss the basis for the district court's application of the McDonnell Douglas test, and (2) highlight the confusion among both state and federal courts regarding which standard applies to section 1102.5 retaliation claims.

A. History of courts’ inconsistent application of McDonnell Douglas to section 1102.5 retaliation claims.

The McDonnell Douglas test originated in the context of a Title VII case, where a plaintiff was required to show that he was denied employment "because of his involvement in civil rights activities" or "because of his race and color." 411 U.S. at 801, 93 S.Ct. 1817. McDonnell Douglas ’s burden-shifting framework was subsequently adopted by California state courts because they found Title VII claims analogous to California's "retaliatory employment termination" claims and thought federal case law provided helpful guidance for the adjudication of these state-law claims. See Flait v. N. Am. Watch Corp. , 3 Cal.App.4th 467, 4 Cal. Rptr. 2d 522, 528 (1992) (noting that "[l]awsuits claiming retaliatory employment termination ... are analogous to federal Title VII claims, and are evaluated under federal law interpreting Title VII cases"); see also Clark v. Claremont Univ. Ctr. , 6 Cal.App.4th 639, 8 Cal. Rptr. 2d 151, 164 (1992) ("We hold the federal McDonnell Douglas test provides the applicable standard of proof in this case. Other published decisions under [California's Fair Employment and Housing Act] have repeatedly referred to federal...