A Definitive Approach to Analyzing Whistleblower Retaliation Cases

With an assist from the California Supreme Court, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit has identified the correct evidentiary standard to be used when evaluating whistleblower retaliation cases. Consistent with clarification recently provided by the high court in the Golden State, the Ninth Circuit ruled that the test set forth in California Labor Code §1102.6—one that is more favorable to employees—is the benchmark courts should use to analyze state whistleblower retaliation claims.

A Bit of Background

Wallen Lawson, a former employee of PPG Industries (a global paint supplier), sued his employer in federal district court, claiming he was wrongfully terminated after complaining about an unethical directive from his manager. For its part, the lower court applied the burden-shifting test applied by the U.S. Supreme Court nearly half a century ago in McDonnell Douglas Corp. v. Green. In so doing, PPG had to establish a legitimate, nondiscriminatory reason for firing him, and it did so by pointing to bad performance reviews as the basis for Lawson's termination. Under the McDonnell Douglas standard, Lawson then bore the burden to demonstrate that PPG’s reason for getting rid of him was a pretext for retaliation.

On appeal, the Ninth Circuit considered whether the district court was correct in using the (relatively) employer-leaning McDonnell Douglas test, or if the more employee-friendly evidentiary standard written into the Labor Code was applicable. It was then that the appellate court turned to the California Supreme Court to decide this state law issue.

A Shift in the Burden of Proof

With the benefit of the California Supreme Court’s interpretation, the Ninth Circuit told PPG, “not so fast.” It held that when an employee like Lawson pleads a whistleblower retaliation claim under Labor Code §1206, the employer must show by way of clear and convincing evidence that it would have taken the same allegedly unlawful action against the worker "for legitimate, independent reasons" even if the person had not engaged in protected whistleblowing activity. This is markedly different from the McDonnell Douglas test, which places the final burden upon the employee to articulate and establish evidence of pretext. Pursuant to the Section 1102.6 analysis adopted by the Ninth Circuit, it is the employer—in this case, PPG—and not the employee that bears the ultimate burden of proof.

The Takeaway

While the Ninth Circuit’s decision likely handicaps an employer’s defenses to state whistleblower retaliation claims brought under the Labor Code, the McDonnell Douglas standard seemingly remains the applicable test for retaliation actions pursued under the Fair Employment and Housing Act. Whatever the case may be, an employer must always be on solid footing whenever it fires or demotes an employee—this is especially true when that worker is a whistleblower.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.