Lagatree v. Luce, Forward, Hamilton & Scripps

Page 664

88 Cal.Rptr.2d 664

74 Cal.App.4th 1105, 15 IER Cases 865,

99 Cal. Daily Op. Serv. 7593,

1999 Daily Journal D.A.R. 9559

Donald LAGATREE, Plaintiff and Appellant, v. LUCE, FORWARD, HAMILTON & SCRIPPS, Defendant and Respondent.

Donald Lagatree, Plaintiff and Appellant, v. Keesal, Young & Logan, Defendant and Respondent.

Nos. B124263, B125272.

Court of Appeal, Second District, Division 1, California.

Sept. 13, 1999.

ACLU Foundation of Southern California, David S. Schwartz and Mark D. Rosenbaum, Los Angeles, for Plaintiff and Appellant.

Luce, Forward, Hamilton & Scripps, Charles A. Bird and Kelly Capen Douglas, San Diego, for Defendant and Respondent Luce, Forward, Hamilton & Scripps.

Keesal, Young & Logan, Ben R. Suter, San Francisco, Dawn M. Schock, Long Beach, and Lisa M. Bertain, San Francisco, for Defendant and Respondent Keesal, Young & Logan.

Sidley & Austin, Jeffrey A. Berman, Los Angeles, and Octavio A. Pedroza, for Employers Group as Amicus Curiae on behalf of Defendants and Respondents.

MASTERSON, J.

This appeal presents the question of whether an employee can state a cause of action for wrongful termination in violation of public policy where he was discharged in 1997 for refusing to sign a predispute arbitration agreement requiring that work-related disputes be resolved through binding arbitration. We conclude that the termination did not violate public policy.

BACKGROUND

In September 1993, plaintiff Donald Lagatree, a legal secretary, commenced temporary employment with the law firm of Keesal, Young & Logan in Long Beach. On March 14, 1994, Lagatree became a full-time employee of the firm. Throughout his employment with Keesal Young, Lagatree's job performance was rated satisfactory or better. He received pay raises and bonuses.

In early June 1997, Keesal Young asked Lagatree to sign an arbitration agreement, which stated: "I agree that any claims arising out of or relating to my employment or the termination of my employment with Keesal, Young & Logan ("KY & L") that KY & L may have against me or that I may have against KY & L or its present or former employees or agents shall be resolved by final and binding arbitration.... Notwithstanding the above, I understand that I am not required to arbitrate the following claims: discrimination claims, wage and hour claims, and other related statutory claims." The agreement provided that disputes would be heard by a panel of three retired superior court judges and that the arbitration would be conducted pursuant to the commercial arbitration rules of the American Arbitration Association. The agreement also provided that "the entire cost of the arbitration, including legal fees, shall be borne by the losing party."

Lagatree informed Keesal Young's managing partner that he did not want to submit disputes to arbitration. On or about June 30, 1997, Lagatree was discharged for refusing to sign the agreement.

Lagatree searched for another secretarial job. On September 12, 1997, he was offered a full-time position at the law firm of Luce, Forward, Hamilton & Scripps LLP. He accepted the offer. On September 16, 1997, Lagatree reported to Luce Forward's Los Angeles office for his first day of work. Later that day, Lagatree was given a "Letter of Employment," which purported to "confirm[ ] our offer of employment to you in the position as a non-exempt legal secretary ..., should you accept." The letter further stated: "In the event of any dispute or claim between you and the firm (including employees, partners, agents, successors and assigns), including, but not limited to claims arising from or related to your employment or the termination of your employment, we jointly agree to submit all such disputes or claims to confidential binding arbitration, under the Federal Arbitration Act."

On September 18, 1997, his third day at Luce Forward, Lagatree told his superiors that he would not agree to arbitrate disputes. Lagatree was advised that the arbitration provision was "not negotiable" and that his continued employment was contingent upon signing the agreement. Lagatree declined to sign the agreement and was discharged.

On February 13, 1998, Lagatree filed separate actions against Keesal Young and Luce Forward. Both complaints alleged that Lagatree had been terminated in violation of public policy for refusing to waive his constitutional rights to a jury trial and a judicial forum (U.S. Const., 1st & 7th Amends.; Cal. Const., art. I, §§ 3, 16). Lagatree also alleged that his discharge violated the California Unfair Competition Law (Bus. & Prof.Code, §§ 17200-17209) ¹ and Civil Code section 1668. ² The law firms demurred to the complaints, arguing that an employer does not violate public policy by discharging employees who refuse to sign a predispute arbitration agreement as a condition of employment. The demurrers were sustained without leave to amend. Lagatree filed timely appeals from the dismissals. We ordered the cases consolidated for purposes of appeal. ³

DISCUSSION

In reviewing the ruling on a demurrer, "we are guided by long-settled rules. 'We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.... We also consider matters which may be judicially noticed.' ... Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.... When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action.... And when it is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm.... The burden of proving such reasonable possibility is squarely on the plaintiff." (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58, citations omitted.)

A. Overview of Wrongful Termination Law

"Labor Code section 2922 provides in relevant part, 'An employment, having no specified term, may be terminated at the will of either party on notice to the other....' This presumption may be superseded by a contract, express or implied, limiting the employer's right to discharge the employee.... Absent any contract, however, the employment is 'at will,' and the employee can be fired with or without good cause. But the employer's right to discharge an 'at will' employee is still subject to limits imposed by public policy, since otherwise the threat of discharge could be used to coerce employees into committing crimes, concealing wrongdoing, or taking other action harmful to the public weal." (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 665, 254 Cal.Rptr. 211, 765 P.2d 373, citations and fn. omitted ("Foley ").) "Accordingly, while an at-will employee may be terminated for no reason, or for an arbitrary or irrational reason, there can be no right to terminate for an unlawful reason or a purpose that contravenes fundamental public policy." (Gantt v. Sentry Insurance (1992) 1 Cal.4th 1083, 1094, 4 Cal.Rptr.2d 874, 824 P.2d 680, overruled on other grounds in Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 80, fn. 6, 78 Cal.Rptr.2d 16, 960 P.2d 1046.) ⁴

Our Supreme Court "[has] established a set of requirements that a policy must satisfy to support a tortious discharge claim. First, the policy must be supported by either constitutional or statutory provisions [or regulations enacted under statutory authority]. Second, the policy must be 'public' in the sense that it 'inures to the benefit of the public' rather than serving merely the interests of the individual. Third, the policy must have been articulated at the time of the discharge. Fourth, the policy must be 'fundamental' and 'substantial.' " (Stevenson v. Superior Court (1997) 16 Cal.4th 880, 889-890, 66 Cal.Rptr.2d 888, 941 P.2d 1157; see Green v. Ralee Engineering Co., supra, 19 Cal.4th at pp. 75-76, 79-80, 89-90, 78 Cal.Rptr.2d 16, 960 P.2d 1046.)

"The cases in which California courts have recognized a separate tort cause of action for wrongful termination in violation of public policy generally fall into four categories, where the employee is discharged for: (1) refusal to violate a statute ...; (2) performing a statutory obligation ...; (3) exercising (or refusing to waive) a statutory or constitutional right or privilege ...; or (4) reporting an alleged violation of a statute of public importance...." (Pettus v. Cole (1996) 49 Cal.App.4th 402, 454, 57 Cal.Rptr.2d 46, citations and fn. omitted; accord, Green v. Ralee Engineering Co., supra, 19 Cal.4th at p. 76, 78 Cal.Rptr.2d 16, 960 P.2d 1046.)

" 'Yet despite its broad acceptance, the principle underlying the public policy exception is more easily stated than applied. The difficulty, of course, lies in determining where and how to draw the line between claims that genuinely involve matters of public policy, and those that concern merely ordinary disputes between employer and employee.' " (Stevenson v. Superior Court, supra, 16 Cal.4th at p. 889, 66 Cal.Rptr.2d 888, 941 P.2d 1157.) Unfortunately, " '[t]he term "public policy" is inherently not subject to precise definition....' " (Gantt v. Sentry Insurance, supra, 1 Cal.4th at p. 1094, 4 Cal.Rptr.2d 874, 824 P.2d 680.) Thus, "it is generally agreed that ... courts should venture into this area, if at all, with great care and due deference to the judgment of the legislative branch, 'lest they mistake their own predilections for public policy....' ... [C]ourts 'should proceed cautiously' if called upon to declare public policy absent some prior legislative expression on the subject." (Id. at p. 1095, 4 Cal.Rptr.2d 874, 824 P.2d 680.)

A claim of wrongful termination in violation of public policy must be based on a "substantial public" policy. (See Green v. Ralee Engineering Co., supra, 19 Cal.4th...