Brief Summary of the Facts and Allegations:
Plaintiff was employed by a marketing corporation to perform administrative work and reported to the Executive Director who she alleged subjected her to a sexually hostile work environment, discriminated against her because of her sex and age, retaliated and wrongfully terminated her when she complained. The marketing corporation employed only three employees. The marketing company contracted with the City to promote the City and had no other connection with the Plaintiff. Plaintiff was hired, employed and paid by the marketing corporation.
Plaintiff sued the City and marketing corporation for sex and age discrimination, sexual harassment, retaliation, wrongful termination in violation of public policy, breach of contract and breach of implied covenant of good faith and fair dealing. Plaintiff sued the Executive Director individually for sexual harassment. Following an attorney-client privileged investigation by counsel, and execution of conflict of interest waivers, Lisa Sherman, who primarily handled the case, represented the marketing corporation and Executive Director. The City was separately represented by its own counsel.
Plaintiff’s FEHA Claims Failed Because Defendants Did Not Meet the Definition of “Employer”:
Ms. Sherman conducted an up-front legal and factual attorney-client investigation of the allegations and defenses, served written discovery and set the Plaintiff’s deposition. Liability for the lion share of the claims raised in the lawsuit turned on whether the marketing corporation could be held liable as an “employer” under California’s Fair Employment and Housing Act (FEHA). The definition under FEHA stated: “’Employer’ includes any person regularly employing five or more persons, or any person acting as an agent of an employer, directly or indirectly, the state or any political or civil subdivision of the state, and cities …” Cal. Gov’t Code §12926(d). To save the cost of unnecessary motions, Ms. Sherman immediately notified Plaintiff’s counsel, providing proof and legal authority, evidencing that Marketing Corporation employed only three employees, and therefore, with the exception of the sexual harassment claim and public policy claim based on the alleged sexual harassment, the remaining claims must be dismissed as a matter of law because Marketing Corporation was not a covered “employer” under FEHA. At the same time, the City also requested that Plaintiff’s Counsel dismiss the City as a party to the lawsuit because the City did not employ, directly or indirectly, the Plaintiff.
Soon after, Ms. Sherman wrote Plaintiff’s counsel to inform them that her up-front legal and factual investigation of the facts and law not only refuted plaintiff’s substantive allegations, but as a matter of law, failed to state viable claims. Ms. Sherman reminded them of their obligation to conduct a similar investigation. Plaintiff’s counsel did nothing in response to counsel for the Defendants’ letters. In fact, for the first nine months of the litigation, Plaintiff’s counsel conducted no discovery of its own, other than responding to Defendants’ discovery efforts, which included targeted written discovery and taking the deposition of Plaintiff.
Little did Plaintiff know that when Ms. Sherman prepared to take Plaintiff’s deposition, Ms. Sherman’s strategy was to obtain admissions (her testimony at deposition is under penalty of perjury) that would enable the Defendants to file a motion for summary judgment and a motion for sanctions against Plaintiff, and/or her counsel, for pursuing, and continuing to pursue claims that were not supported by the facts or the law. A summary judgment motion is an involved, time-consuming dispositive motion that, if successful, dismisses a plaintiff’s entire lawsuit. On a summary judgment motion, the Court, assumes, solely for the purpose of the motion, that all of Plaintiff’s factual allegations are true. If all of the material undisputed factual allegations do not state a cause of action against each Defendant, the motion will be granted.
Delaying Nine Months to Even Conduct Any Discovery and Over-Reaching Based on Conjecture and Unsupported Legal Theories Set the Groundwork For Sanctions.
After Plaintiff’s sworn deposition testimony and authentication of documents established that she could not state any cause of action against the Defendants, Ms. Sherman provided counsel with the opportunity to dismiss the claims again, but this time, she outlined the basis of her motions, and her intention to seek sanctions against Plaintiff and her counsel for filing and continuing to pursue frivolous claims. Soon after both sets of Defendants filed their motions for summary judgment, Plaintiff’s counsel served the City with over 120 specially prepared interrogatories. After the City objected to most of them, producing only documents evidencing the contractual agreement between the City and Marketing Corporation, Plaintiff filed a motion compelling the City to fully respond, seeking sanctions against the City for its unjustifiable failure to do so, and sought emergency relief from the Court to continue the motion for summary judgment and allow Plaintiff additional time to conduct additional discovery and oppose the summary judgment motion. The Court denied Plaintiff motions.
Two months before trial, the Court granted Defendants’ Motions for Summary Judgment after issuing a lengthy tentative ruling and oral argument. Plaintiff’s counsel contended that the City was liable because the Marketing Corporation was the agent of the City, and therefore, was an “employer” under FEHA. Because Marketing had no power to bind the City, and did nothing more than the gardener hired by the City to cut the trees, Marketing does not become an “employer” under FEHA merely because the City, who itself meets the definition of “employer” because it employs more than five employees, and contracts their services with Marketing, when the City had no connection whatsoever with the Plaintiff. In other words, because the City was never employed Plaintiff, directly or indirectly, to begin with the whole agency language under the “employer” definition did not apply. The Court agreed.
As to the remaining claims, the Court adopted the arguments Ms. Sherman raised as to each claim in her motion. While Ms. Sherman’s clients could be held liable for sexual harassment under FEHA, the claims failed for the additional reason that Plaintiff failed to timely exhaust her administrative remedies with the Department of Fair Employment and Housing. Further, even under the broad standards of summary judgment, the nine actions or incidents that plaintiff testified created a sexually abusive working environment for her were neither severe or pervasive sexual conduct that was offensive to a reasonable woman in her position. While Plaintiff’s counsel contended that several of the Executive Director’s alleged inappropriate comments referencing her body parts were pervasive enough, the Court concluded that at most, a few of the comments were crude and possibly vulgar but did not alone or in the totality create a sexually abusive work environment for a reasonable woman. As a result, Plaintiff’s public policy claims based on her dismissed FEHA claims were also dismissed. Plaintiff’s retaliation claims failed, for the additional reason, that no such claim lies for a complaint that was made after the alleged adverse action. Finally, Plaintiff’s breach of contract claims failed because she expressly signed an at-will agreement; Plaintiff’s conclusion out of whole cloth from a warning that she had to improve her performance did not constitute a change in her status that she could only be fired for just cause.
The City’s motion for summary judgment was also granted at which time the Court ordered that the City recovery its attorneys’ fees against Plaintiff, directing City’s counsel to submit paperwork to support the amount of the award. After Ms. Sherman filed a Motion seeking her clients’ attorneys’ fees as Sanctions against Plaintiff and her counsel, jointly and severally, under Code of Civil Procedure §128.7, for filing and continuing to pursue a frivolous lawsuit, the City asked the Court revise its previous order to impose statutory attorney fees’ against Plaintiff’s counsel also under this same section, which the Court rejected.
Court’s Tentative Decision Granting Sherman’s Sanctions Motion for $55,550.25 against Plaintiff and her Counsel was Adopted as Final.
As to Ms. Sherman’s Motion seeking her attorneys’ fees as sanctions against Plaintiff and her counsel, jointly and severally, in the amount of $55,550.25, for filing and maintaining a frivolous lawsuit against her clients, the Court’s tentative decision granted the Motion in its entirety. At oral argument, following a heated exchange between Plaintiff’s counsel and the Judge, the Judge ordered the tentative final and hastily returned to his chambers.
For more information, feel free to call Lisa Sherman at (323) 488-2087 or email lisa@sherm-law.com.
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