Darjee v. Laboratory Corp. of America

Filed 11/30/05 Darjee v. Laboratory Corp. of America CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

MEHMOOD DARJEE, Plaintiff and Appellant, v. LABORATORY CORPORATION OF AMERICA, Defendant and Appellant.

B173711 (Super. Ct. No. BC 259854)

APPEALS from a judgment and orders of the Superior Court of Los Angeles County. Ricardo Torres, Judge. Plaintiff’s appeal: Dismissed in part and affirmed in part. Defendant’s appeal: Reversed in part with directions and affirmed in part.

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Paul, Hastings, Janofsky & Walker, Paul W. Cane, Jr., and Teresa J. Hutson for Defendant and Appellant.

Pine & Pine, Norman Pine and Beverly Tillett Pine; The Gillam Law Firm and Carol L. Gillam for Plaintiff and Appellant.

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In this action for wrongful termination in violation of public policy, we partially reverse the judgment for plaintiff Mehmood Darjee with respect to punitive damages only. We reverse the denial of defendant Laboratory Corporation of America’s (LabCorp) motion for partial judgment notwithstanding the verdict (JNOV) and enter a partial judgment for LabCorp on the punitive damages claim. In all other respects, we affirm the judgment and the attorney fee order.

FACTUAL BACKGROUND

LabCorp’s business depends upon having prompt, reliable couriers retrieve blood samples and other perishable medical specimens on schedule from the physicians and other clients who rely upon LabCorp’s medical testing services. Darjee, an at-will hourly employee and courier at LabCorp’s Torrance facility, missed two consecutive days of work without giving two hours notice to his immediate supervisor, Robert Urbino, in violation of company rules. Given the late notice, Urbino had to cover Darjee’s route himself on both days because it was too late to find a substitute courier.

On the first day of his absence, Darjee asked Urbino to cover for him because he and his child were sick and his wife was hospitalized. Urbino became upset, which he displayed with profanity, and told Darjee that he was calling too late. Urbino, who never spoke directly with Darjee again, then consulted with LabCorp’s human resources department and, together with Elizabeth Woodward, LabCorp’s human resources associate consultant, and Pamela Aaron, LabCorp’s human resources manager for the western region,^[1] decided to issue a written reprimand for Darjee’s violation of the two-hour notice rule. But when Darjee violated the same rule again the next day, Urbino, Woodward, and Aaron decided to fire him and began preparing the final paperwork and paychecks for his termination. Darjee remained absent from work for two more days without speaking directly to Urbino but left messages with the dispatcher saying that he would be absent.

Woodward discovered that Darjee’s wife had given birth on the second day of Darjee’s absence when, on the fourth day of his absence, Woodward notified Darjee that he was being fired for not coming to work.^[2] Darjee became quite upset and told Woodward that it was unfair to terminate him because his wife had just given birth.

After speaking with Darjee, Woodward immediately notified Aaron of the news that Darjee’s wife had just given birth. Given the news of the childbirth, Woodward and Aaron discussed whether Darjee was entitled to take family care leave under the Family and Medical Leave Act of 1993 (29 U.S.C. § 2601 et seq.) (FMLA). Aaron decided, however, that Darjee was ineligible for family care leave because “he didn’t have 12 months with” LabCorp^[3] and had failed to give reasonable notice that he wanted to take family care leave.^[4]

LabCorp provides its employees with personal leave benefits which may be taken as paid vacation or sick leave. Darjee, who had five days in his personal leave bank, never informed his supervisors of the number of days that he wanted to take off for the birth of his child.

Darjee, having only worked for LabCorp for 10 months, was not eligible for family care leave unless LabCorp gave him credit for his prior employment at Bio Diagnostic Laboratories (BDL), a company acquired by LabCorp. According to Aaron, LabCorp’s policy at that time was not to give credit for an employee’s prior employment with an acquired company in calculating the 12-month eligibility period for family care leave.^[5] In approving Darjee’s termination, Aaron believed that either reason – Darjee’s lack of 12 months service at LabCorp or his failure to give reasonable notice that he wanted to take family care leave – was sufficient to deny him family care leave.

In this litigation filed by Darjee against LabCorp for retaliatory discharge, the trial court determined, by means of a partial directed verdict, that LabCorp was required as a successor employer pursuant to federal regulations promulgated under the Family Leave Act to give Darjee credit for his prior employment at BDL. The jury then determined, by means of a special verdict, that LabCorp had violated Darjee’s rights under the Family Leave Act and awarded compensatory damages of $150,000 which LabCorp does not challenge on appeal. As we will discuss below, LabCorp contends that Darjee may not recover punitive damages for its violation of the Family Leave Act because Darjee failed to prove that LabCorp’s statutory violation was knowing and intentional and constituted malice, oppression or fraud. In addition, LabCorp contends that punitive damages should not have been awarded because Darjee failed to prove that any of the supervisors who approved his termination were corporate officers, directors, or managing agents.

PROCEDURAL BACKGROUND

Darjee sued LabCorp for retaliatory discharge and alleged claims for: (1) wrongful discharge in violation of public policy, (2) disparate treatment (wrongful termination) based on his Islamic religion, (3) hostile work environment and harassment based on religion, (4) religious discrimination as a result of a failure to accommodate his religious practices, (5) violation of the FMLA and the California Family Rights Act (Gov. Code, § 12945.2) (CFRA), (6) retaliation for exercising rights under the FMLA and CFRA (sometimes jointly referred to as “the Family Leave Act”), and (7) punitive damages.

A. The Compensatory Damages Award

Before the jury began deliberating, the trial court granted Darjee’s motion for a partial directed verdict on the issue of whether LabCorp was a successor employer under the FMLA. As a practical matter, this meant that Darjee’s prior employment at BDL must be counted toward the 12-month eligibility period. Labcorp does not challenge the court’s ruling on successorship.

1. The Partial Directed Verdict on the Successor-Employer Rule Issue

On Darjee’s motion for partial directed verdict on the successor-employer rule issue, the trial court considered the following: (1) under the FMLA, “any successor in interest of an employer” is an “employer” covered by the FMLA (29 U.S.C. § 611(4)(A)(ii)(II)); (2) according to federal regulations promulgated under the FMLA, successor employers “must count periods of employment and hours worked for the predecessor for purposes of determining employee eligibility for FMLA leave” (29 C.F.R. § 825.107(c)); and (3) according to the regulations, the factors to be evaluated in determining whether LabCorp qualifies as a successor-employer rule under the FMLA include: substantial continuity of the same business operations; use of the same plant; continuity of the work force; similarity of jobs and working conditions; similarity of supervisory personnel; similarity in machinery, equipment, and production methods; similarity of products or services; and the predecessor’s ability to provide relief (29 C.F.R. § 825.107(a)(1-8)).

After granting the partial directed verdict determining that LabCorp was a successor employer, the trial court gave an instruction which applied Darjee’s periods at both at BDL and LabCorp toward the 12-month eligibility period.^[6] Given that the remaining eligibility issues were undisputed, once the successor-employer rule issue was resolved by the partial directed verdict, no real disputes remained for the jury to resolve regarding Darjee’s eligibility for family care leave.

2. The Special Verdict Findings on Liability

By special verdict, the jury rejected all of the religious discrimination allegations. The jury found, however, that LabCorp had violated Darjee’s rights under the Family Leave Act and had discharged him in retaliation for requesting family care leave. By special verdict, the jury determined that: (1) Darjee was eligible for family care leave, (2) Darjee requested family care leave, (3) LabCorp discharged him, (4) Darjee’s request to take family care leave was a motivating reason for his termination, and (5) LabCorp’s retaliatory conduct was a substantial cause of harm. The jury awarded Darjee $150,000 in compensatory damages.

B. The Punitive Damages Award

Before the jury began its deliberations, LabCorp moved for a partial directed verdict on punitive damages. LabCorp argued that there was no evidence that it had violated the Family Leave Act with malice, oppression, or fraud. The trial court denied LabCorp’s motion.

The court instructed the jury as follows on punitive damages: “You may award punitive damages against LabCorp only if Mr. Darjee proves that LabCorp engaged in that conduct with malice, oppression, or fraud. To do this, Mr. Darjee must prove one of the following by clear and convincing evidence: One, that the conduct constitut[ing] malice, oppression, or fraud was committed by one or more officers, directors, or managing agents of LabCorp acting in a corporate capacity; or two, that the conduct constituting malice, oppression, or fraud was authorized by one or more office[r]s, directors, or managing agents of LabCorp; or three, that one or more office[r]s, directors, or managing agents of LabCorp knew of the conduct constituting malice, oppression, or fraud and adopted or approved that conduct after it occurred.”^[7]

The jury awarded Darjee $2 million in punitive damages based on its affirmative answers to the following special verdict questions: (1) “Do you find by clear and convincing evidence that the defendant was guilty of malice, oppression or fraud in the conduct upon which you base your finding of liability?”; and (2) “Shall punitive damages be assessed against the defendant?”

C. LabCorp’s Motion for Partial JNOV

LabCorp moved for partial JNOV on the punitive damages claim. LabCorp contended, as it had in its motion for partial directed verdict, that Darjee had failed to present clear and convincing evidence to support the finding of malice, oppression, or fraud as required by Civil Code section 3294, subdivision (b). LabCorp argued that because “[n]o one at LabCorp had any idea that Mr. Darjee was eligible for Family Leave because he had not met the 12 months/1250 hour eligibility requirement[, i]t follows, as a matter of law, that no one at LabCorp could have acted with any intent to deprive plaintiff of any rights to Family Medical Leave, nor any willful and conscious disregard of Mr. Darjee’s rights.” The trial court denied the motion.

D. The Motion for New Trial, Remittitur, Judgment, and Fee Award

LabCorp moved for a new trial on the punitive damages claim, arguing that the $2 million award was excessive and constitutionally invalid. The trial court denied the motion on the condition that Darjee accept a remittitur of punitive damages to $900,000, which he did.

The trial court entered judgment for $150,000 in compensatory damages and $900,000 in punitive damages. The trial court granted Darjee’s motion for attorney fees in the full requested lodestar amount of $267,750, but refused to apply a multiplier.

E. The Appeal and Cross-Appeal

Both parties have appealed. LabCorp appeals from the judgment with respect to the punitive damages award and challenges the denial of its motion for partial JNOV on punitive damages. Darjee challenges the remittitur of punitive damages from $2 million to $900,000, and the denial of his request to apply a multiplier to the attorney fee award.

I

LABCORP’S APPEAL

LabCorp is entitled to a partial JNOV on punitive damages only if the record lacks substantial evidence to support the punitive damages award and the evidence compels a partial judgment in its favor on punitive damages as a matter of law. In determining a JNOV motion, the trial court “must view the evidence in the light most favorable to the verdict, disregard conflicting evidence, and indulge in every legitimate inference to support the verdict. [Citation.] [¶] On appeal, we determine de novo whether there is substantial evidence to support the verdict and whether the moving party is entitled to judgment in its favor as a matter of law. [Citation.]” (Paykar Const., Inc. v. Spilat Const. Corp. (2001) 92 Cal.App.4th 488, 493-494.)

In order for Darjee to recover punitive damages for the Family Leave Act violations, he must prove that LabCorp deprived him of his right to family care leave with malice, oppression or fraud. Malice is an act that is intended to cause injury or that is committed with a willful and knowing disregard of another’s rights. (Civ. Code, § 3294, subd. (c)(1).) In this case, unless LabCorp knew that it was required as a successor employer under the FMLA to count Darjee’s prior service at BDL toward the 12-month eligibility period, its failure to do so could not be deemed an intentional, willful or knowing act taken in disregard of his statutory rights. Similarly, oppression, which is a despicable act committed in knowing disregard of Darjee’s rights (§ 3294, subd. (c)(2)), requires proof that LabCorp knowingly disregarded the successor-employer rule in denying him family care leave. The same is true for fraud, which is an intentional misrepresentation or concealment of a material fact. (§ 3294, subd. (c)(3).)

LabCorp contends that the evidence was insufficient, as a matter of law, to show malice, oppression or fraud. The evidence showed that Aaron believed, based on LabCorp’s policy at the time, that Darjee was ineligible for family care leave because he lacked 12 months of service at LabCorp and failed to give proper notice. There is no evidence that Aaron (or anyone else) knew that Darjee had given reasonable notice under the law or knew that LabCorp was subject to the successor-employer rule and was required to count Darjee’s prior service at BDL toward the 12-month eligibility period.

Darjee contends that the jury was free to disregard Aaron’s explanation that she thought notice was improper and that Darjee lacked 12 months of service. Disregarding Aaron’s explanation, however, would not solve the problem of insufficient evidence because the record does not allow us to infer that LabCorp intentionally and knowingly violated the successor-employer rule. In some situations, malice may be inferred from the commission of an intentional tort because malice is defined as conduct which is intended to cause injury. (See Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1286; Civ. Code, § 3294, subd. (c)(1).) The commission of a battery, for example, may support a finding of malice based on an intentional act of striking someone. Here, however, LabCorp’s failure to consider Darjee’s prior service under the successor-employer rule will not support an inference of malice or intent to harm because the jury never received any evidence about the successor-employer rule or LabCorp’s knowledge of the rule and its applicability to this case. We cannot say, as a matter of law and without any supporting evidence, that the FMLA successor-employer rule is so well known that it would be reasonable to infer from its violation that it was done knowingly and intentionally.

LabCorp contends that, at worst, it made a negligent mistake in (1) failing to apply the successor-employer rule in this case and (2) failing to realize that Darjee was invoking the Family Leave Act. LabCorp argues that there is no evidence to support a theory that its mistake was intentional or that its ignorance was feigned. We agree. Given that punitive damages may not be imposed for acts of simple negligence which fall short of oppression, fraud, or malice (see Jackson v. Jackson (1992) 5 Cal.App.4th 1350, 1354 [“Simple negligence cannot support an award of punitive damages.”]), LabCorp’s negligence in failing to research the applicable law cannot support a punitive damages award.

Although Darjee argues that the record contains ample evidence of malice, oppression or fraud, we reject his contentions for the following reasons:

1. LabCorp Did Not Have the Burden of Proving Its

Ignorance of the Successor-Employer Rule

Darjee argues that LabCorp’s policy to disregard an employee’s prior service in calculating his eligibility for family care leave was “counter-intuitive” because “any reasonable person would have assumed that – in the absence of any clear notice of a change – conditions under the new company name, such as seniority, leave accrual, and related matters would remain the same as before. It is LabCorp’s super-technical interpretation of ‘employer’ which is strained, not the logical interpretation adopted by the federal regulators, . . . followed by the trial judge and assumed by all.”

If the term “counter-intuitive” is meant to suggest that LabCorp’s ignorance of the successor-employer rule was feigned, we note that LabCorp did not have the burden of proving its ignorance of the rule. As the party seeking punitive damages, Darjee had the burden of proving malice, oppression or fraud. Undeniably, some facts are so commonly known that a jury might reasonably conclude that a party knew them notwithstanding its denial of knowledge. Thus, for example a jury might, without further evidence that a large employer’s failure under certain circumstances to pay the minimum wage was knowing, infer that the employer was aware of the wage law and aware that it applied to him because the minimum wage law is a matter of such common knowledge. Neither the successor-employer rule itself nor the rule’s application to this particular business acquisition, however, is a matter of common knowledge. In order to show knowledge of violation of the rule Darjee was required, but failed, to present facts from which a juror could reasonably infer LabCorp’s knowledge of the rule and knowledge that the rule applied to the specific circumstances of LabCorp’s purchase of the business which previously employed Darjee.^[8]

2. LabCorp’s Personal Leave Policy Does Not

Prove Its Knowledge of the Successor-Employer Rule

Aaron testified that LabCorp had different accrual policies for personal leave versus family care leave. With regard to the accrual of personal leave benefits, LabCorp’s policy was to match the employees’ personal leave benefits at their previous jobs, whereas employees had to work for a full 12 months to become eligible for family care leave.

As we understand his argument, Darjee’s position is that because LabCorp could not possibly have had two different policies for personal leave and family care leave, it must be feigning ignorance of the successor-employer rule. We quote from his brief: “Given that blanket commitment to treat time spent at BDL as interchangeable with time spent at LabCorp – for purposes of accrual of leave – it takes ‘chutzpah’ beyond measure for LabCorp to now argue that it really believed employees’ time-of-service at BDL had no bearing on their right to claim leave under the FMLA or CFRA. [¶] Nor can LabCorp seriously argue that what it really meant was that vacation leave would be handled by crediting time spent working at BDL, but FMLA/CFRA leave would be treated totally differently. It never drew that distinction when it made its announcement.”

The evidence, however, is uncontradicted that LabCorp had two different policies for personal leave and family care leave.^[9] The fact that LabCorp matched the prior employer’s personal leave benefits does not necessarily mean that LabCorp also matched the prior employer’s family care leave benefits but intentionally failed to do so in this case.

3. Rudeness Does Not Prove Knowledge of the Successor-Employer Rule

There was evidence that Darjee was treated rudely by Urbino, who used profanity,^[10] and by Woodward, who did not listen to his explanation for his absence when she fired him.^[11] Darjee contends that such behavior is evidence of malice. Although we do not condone such rude behavior, the evidence is legally insufficient to establish malice under the circumstances before us. Regardless of such behavior, Darjee was still required to show that LabCorp knew about the successor-employer rule and its application but intentionally failed to apply it in this case.

4. LabCorp Is Entitled to JNOV on Punitive Damages

Having reviewed the record de novo, we conclude that it lacks substantial evidence to support the punitive damages verdict for the reasons explained above. Given our determination that the evidence is insufficient to support the finding of malice, oppression or fraud, we conclude that LabCorp is entitled to a partial JNOV on the punitive damages claim as a matter of law. In light of our ruling, we need not reach LabCorp’s remaining contentions regarding managing agents and excessive punitive damages.

II

DARJEE’S CROSS-APPEAL

Due to our reversal of the punitive damages award, we dismiss as moot Darjee’s cross-appeal from the order remitting punitive damages to $900,000.

Darjee challenges as an abuse of discretion the trial court’s refusal to apply a multiplier to the attorney fee award. In awarding Darjee attorney fees in the full requested lodestar amount of $267,750 without applying a multiplier, the trial court exercised its considerable discretion in evaluating the relevant factors including the novelty and difficulty of the issues, the length of the trial and pretrial preparations, and the contingent risk of nonpayment. The trial court was not required to apply a multiplier if, in its judgment, none was warranted. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1138.) We conclude that there was no abuse of discretion and affirm the fee award.

DISPOSITION

On LabCorp’s appeal: (1) the judgment is reversed in part with respect to punitive damages; (2) the order denying LabCorp’s motion for partial JNOV on punitive damages is reversed; and (3) the trial court is directed to enter a partial JNOV for LabCorp on the punitive damages claim. In all other respects, the judgment is affirmed. The parties are to bear their own costs.

On Darjee’s cross-appeal: (1) the appeal from the order of remittitur is dismissed as moot; and (2) the order awarding attorney fees of $267,750 without applying a multiplier is affirmed. The parties are to bear their own costs.

NOT TO BE PUBLISHED.

ROTHSCHILD, J.

We concur:

SPENCER, P. J.

VOGEL, J.

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^[1] LabCorp, which is headquartered in North Carolina, has 25,000 employees nationwide and 3,000 employees in the western region. Aaron is now LabCorp’s director of human resources.

^[2] The record is unclear but suggests that Urbino learned, from speaking with other employees, about the childbirth on the second day of Darjee’s absence. The record is uncontradicted, however, that Darjee never personally told Urbino while he was absent that his wife was pregnant and experiencing pregnancy-related complications, might be giving birth prematurely, or had given birth.

^[3] Among other things, the eligibility requirements for family care leave include employment (i) “for at least 12 months by the employer with respect to whom leave is requested”; and (ii) “for at least 1,250 hours of service with such employer during the previous 12-month period.” (29 U.S.C. § 2611(2)(A)(i-ii).) The California Family Rights Act (CFRA) contains the same eligibility requirements. (Gov. Code, § 12945.2, subd. (a).)

^[4] Aaron testified that even though the baby was born prematurely and, therefore, unexpectedly, Darjee failed to give proper notice because he should have informed LabCorp that his wife was pregnant and that he would need to take family care leave when the time came. The jury rejected this position and LabCorp does not dispute the jury’s special verdict finding that reasonable notice was given.

^[5] After Darjee was terminated, however, LabCorp changed its policy and now counts the employee’s prior service at the acquired company in determining family care leave eligibility.

^[6] The court instructed the jury: “To show that he was eligible for family care leave, Mr. Darjee must prove all of the following: [1] that Mr. Darjee was an employee of LabCorp; [2] that LabCorp employed 50 or more employees within 75 miles of Mr. Darjee’s workplace; [3] that at the time Mr. Darjee requested and/or began leave, he had more than 12 months of service with LabCorp and/or BDL and worked at least 1250 hours for LabCorp and/or BDL during the previous 12 months; and [4] that at the time Mr. Darjee requested and/or began leave, Mr. Darjee had taken no more than 12 weeks of family care or medical leave in the preceding 12-month period.”

^[7] The court gave the following definitions of malice, oppression, and fraud: “Malice means that LabCorp acted with intent to cause an injury or that LabCorp’s conduct was despicable and was done with a willful and knowing disregard of the rights or safety of another. A person acts with knowing disregard when he or she is aware of the probable dangerous consequences of his or her conduct and deliberately fails to avoid those consequences. [¶] Oppression means that LabCorp’s conduct was despicable and subjected Mr. Darjee to cruel and unjust hardship in knowing disregard of his rights. [¶] Despicable conduct is conduct that is so mean, vi[le], base, or contemptible that it would be looked down on and despised by reasonable people. [¶] Fraud means that LabCorp intentionally misrepresented or concealed a material fact and did so intending to deprive Mr. Darjee of property or of a legal right or otherwise to cause Mr. Darjee injury.”

^[8] The application of the successor rule depends upon the existence of several factors not mentioned in the statute but defined by the regulations: substantial continuity of the same business operations; use of the same plant; continuity of the work force; similarity of jobs and working conditions; similarity of supervisory personnel; similarity in machinery, equipment, and production methods; similarity of products or services; and the predecessor’s ability to provide relief (29 C.F.R. § 825.107(a)(1-8)).

^[9] As LabCorp points out in its reply brief, “[c]ompanies regularly distinguish between eligibility for vacation time and for family care leave time. Employees are eligible for vacation time long before they have worked for a company for 12 months, see Suastez v. Plastic Dress-Up Co., 31 Cal.3d 774, 784 (1982) (declaring that vacation as a matter of law vests pro rata, rather than on an anniversary date); vacation eligibility has nothing to do with other forms of benefits.” We also note that family care leave, which may be taken for up to 12 weeks in any 12-month period with a guarantee of the same or comparable position upon return, differs in many ways from personal leave which is usually taken in smaller increments.

^[10] Darjee testified that when he called in late on the first day of his absence, he asked Urbino to cover his route because he and his child were ill and his wife was hospitalized. Urbino, angry about the late notice, told Darjee that this was “‘not going to work’” because he was calling too late. Darjee, who had not told Urbino that his wife was pregnant and suffering from a pregnancy-related complication, testified that he tried to respond but Urbino cut him off with, “‘I don’t give f[---] to your kids and family.’” Urbino, however, denied using profanity.

^[11] When Woodward terminated Darjee, she refused to listen to his explanation for his absence, stating, “‘You’re gone, that’s it.’”