Shepherd v. Kohl's Department Stores, Inc.

Filing 62

ORDER GRANTING IN PART and DENYING IN PART Defendant's 46 Motion for Summary Judgment signed by District Judge Dale A. Drozd on 8/2/2016. (Sant Agata, S)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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JUSTIN SHEPHERD,

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No. 1:14-cv-01901-DAD-BAM

Plaintiff,
v.
KOHL’S DEPARTMENT STORES, INC.,
Defendants.

ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT
(Doc. No. 46)

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This matter is before the court on defendant’s motion for summary judgment on all

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claims. A hearing on the motion was held on July 5, 2016. Attorneys Anthony Sperber and Kurt

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Dreger appeared at that hearing on behalf of plaintiff and attorney Leila Narvid appeared for the

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defendant. The court has considered the parties’ briefs and arguments. For the reasons discussed

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below, the court will grant defendant’s motion in part and deny it in part.

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BACKGROUND
The facts of this case are largely undisputed. Plaintiff was hired by Kohl’s to work as a

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material handler at its distribution center in Patterson, California in June 2006. As part of his

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hiring, he signed a written agreement which included a provision which stated he was an at-will

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employee. Plaintiff had generally positive attendance and performance reviews, and was

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promoted to assistant shift supervisor in 2007. Plaintiff experienced some negative performance

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reviews during 2010 and early 2011. In August 2011, plaintiff was diagnosed with acute and
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chronic anxiety and received a recommendation for medical marijuana. Plaintiff did not disclose

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that recommendation for, or his use of, medical marijuana to his employer. In 2012, defendant

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updated its personnel policies to include exceptions to its drug testing and substance abuse

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policies, stating (as described further below) that employees in certain states, including

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California, who had a valid medical marijuana recommendation would not be discriminated

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against on that basis in hiring, termination, or other employment actions. Plaintiff testifies he

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reviewed those policies and relied on them in electing to continue using medical marijuana to

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treat his anxiety and to cease looking for a new job.

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On January 14, 2014, plaintiff strained his back at work while unloading cargo from a

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trailer. His supervisor advised him to go to U.S. HealthWorks, which is defendant’s health care

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provider for worker’s compensation purposes. There is some dispute about whether plaintiff was

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told he would be required to take a drug test in order for treatment to be provided. Ultimately, he

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signed a form consenting to a drug test. Two days later, on January 16, 2014, plaintiff received a

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call from U.S. HealthWorks advising him he had tested positive for trace amounts of marijuana

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metabolites. Plaintiff knew he had used marijuana while off-duty several days prior to the injury

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and that metabolites of the drug remained in one’s system for some time, and was therefore

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unsurprised by the test results.

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Five days after the call from U.S. HealthWorks, on January 21, 2014, plaintiff was called

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into a meeting with Maurice Barrera and Irma Ochoa, respectively the local operations manager

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and human resources manager for defendant. Barrera and Ochoa asked plaintiff about his drug

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test results. Plaintiff advised them he used medical marijuana to treat his anxiety. Plaintiff

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showed Barrera and Ochoa the recommendation for his medicinal marijuana, which he had in his

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locker at work. At the end of the meeting, Barrera and Ochoa suspended plaintiff from work.

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The next day, on January 22, 2014, plaintiff left a voicemail for Elizabeth Barnick, a

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corporate human resources director and Ochoa’s superior. Barnick returned plaintiff’s call on

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January 23, 2014, and was apparently unreceptive to any assertions that plaintiff was not under

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the influence at work, and only used marijuana in conjunction with his valid diagnosis for

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anxiety, stating, “You should have chosen a different medication.” On January 24, 2014, Ochoa
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left plaintiff a voicemail, saying he was terminated from employment, effective immediately, with

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no further explanation. Shortly thereafter, he received an “associate counseling form” from

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defendant, which asserted he had violated three of the company’s guidelines: (1) he reported to

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work in a condition unfit to perform his duties or under the influence of a controlled substance;

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(2) he violated a safety rule pertaining to specific work areas; and (3) he acted “in conflict with

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the interest of Kohl’s.” (Doc. No. 54 at 7.) This suit followed.

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This case was removed here on diversity grounds from Stanislaus County Superior Court

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on December 1, 2014. (Doc. No. 1.) Plaintiff’s second amended complaint states seven state law

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causes of action: (1) disability discrimination in violation of California’s Fair Employment and

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Housing Act (“FEHA”); (2) failure to engage in an interactive process in violation of the FEHA;

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(3) failure to reasonably accommodate in violation of the FEHA; (4) invasion of privacy in

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violation of the California Constitution; (5) wrongful termination in violation of public policy; (6)

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breach of implied contract and the covenant of good faith and fair dealing; and (7) defamation.

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(Doc. No. 44.) Defendant filed a motion for summary judgment on June 6, 2016. (Doc. No. 46.)

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Plaintiff filed an opposition on June 21, 2016. (Doc. No. 52.) Defendant filed its reply on June

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28, 2016. (Doc. No. 56.)

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LEGAL STANDARD

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Summary judgment is appropriate when the moving party “shows that there is no genuine

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dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.

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Civ. P. 56(a).

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In summary judgment practice, the moving party “initially bears the burden of proving the

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absence of a genuine issue of material fact.” In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387

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(9th Cir. 2010) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). The moving party

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may accomplish this by “citing to particular parts of materials in the record, including

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depositions, documents, electronically stored information, affidavits or declarations, stipulations

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(including those made for purposes of the motion only), admissions, interrogatory answers, or

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other materials” or by showing that such materials “do not establish the absence or presence of a

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genuine dispute, or that the adverse party cannot produce admissible evidence to support the
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fact.” Fed. R. Civ. P. 56(c)(1)(A), (B). When the non-moving party bears the burden of proof at

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trial, “the moving party need only prove that there is an absence of evidence to support the

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nonmoving party’s case.” Oracle Corp., 627 F.3d at 387 (citing Celotex, 477 U.S. at 325.). See

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also Fed. R. Civ. P. 56(c)(1)(B). Indeed, summary judgment should be entered, after adequate

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time for discovery and upon motion, against a party who fails to make a showing sufficient to

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establish the existence of an element essential to that party’s case, and on which that party will

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bear the burden of proof at trial. See Celotex, 477 U.S. at 322. “[A] complete failure of proof

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concerning an essential element of the nonmoving party’s case necessarily renders all other facts

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immaterial.” Id. In such a circumstance, summary judgment should be granted, “so long as

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whatever is before the district court demonstrates that the standard for entry of summary

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judgment . . . is satisfied.” Id. at 323.

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If the moving party meets its initial responsibility, the burden then shifts to the opposing

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party to establish that a genuine issue as to any material fact actually does exist. See Matsushita

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Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). In attempting to establish the

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existence of this factual dispute, the opposing party may not rely upon the allegations or denials

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of its pleadings but is required to tender evidence of specific facts in the form of affidavits, and/or

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admissible discovery material, in support of its contention that the dispute exists. See Fed. R.

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Civ. P. 56(c)(1); Matsushita, 475 U.S. at 586 n.11; Orr v. Bank of America, NT & SA, 285 F.3d

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764, 773 (9th Cir. 2002) (“A trial court can only consider admissible evidence in ruling on a

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motion for summary judgment.”). The opposing party must demonstrate that the fact in

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contention is material, i.e., a fact that might affect the outcome of the suit under the governing

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law, see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); T.W. Elec. Serv., Inc. v.

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Pacific Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987), and that the dispute is

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genuine, i.e., the evidence is such that a reasonable jury could return a verdict for the nonmoving

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party. See Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1436 (9th Cir. 1987).

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In the endeavor to establish the existence of a factual dispute, the opposing party need not

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establish a material issue of fact conclusively in its favor. It is sufficient that “the claimed factual

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dispute be shown to require a jury or judge to resolve the parties’ differing versions of the truth at
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trial.” T.W. Elec. Serv., 809 F.2d at 631. Thus, the “purpose of summary judgment is to ‘pierce

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the pleadings and to assess the proof in order to see whether there is a genuine need for trial.’”

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Matsushita, 475 U.S. at 587 (citations omitted).

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“In evaluating the evidence to determine whether there is a genuine issue of fact,” the

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court draws “all reasonable inferences supported by the evidence in favor of the non-moving

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party.” Walls v. Central Costa County Transit Authority, 653 F.3d 963, 966 (9th Cir. 2011). It is

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the opposing party’s obligation to produce a factual predicate from which the inference may be

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drawn. See Richards v. Nielsen Freight Lines, 602 F. Supp. 1224, 1244–45 (E.D. Cal. 1985),

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aff’d, 810 F.2d 898, 902 (9th Cir. 1987). Finally, to demonstrate a genuine issue, the opposing

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party “must do more than simply show that there is some metaphysical doubt as to the material

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facts . . . . Where the record taken as a whole could not lead a rational trier of fact to find for the

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nonmoving party, there is no ‘genuine issue for trial.’” Matsushita, 475 U.S. at 587 (citation

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omitted).

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ANALYSIS

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1.

The FEHA Claims

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Plaintiff’s first three causes of action allege defendant violated the FEHA. The analysis of

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each of these claims is instructed by the application of the decision in Ross v. RagingWire

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Technologies, 42 Cal. 4th 920 (2008). In RagingWire, the California Supreme Court held the

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FEHA was not impacted by the Compassionate Use Act, which ostensibly legalized medical

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marijuana in California. Id. at 924. That act, which provides immunity against criminal

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prosecution under two state statutes, made no other changes in the legal status of marijuana. Id.

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at 924. Because the understanding of the holding in that case informs the analysis of each of

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these claims, the FEHA claims are addressed in reverse order, starting with plaintiff’s cause of

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action for failure to accommodate, which is squarely controlled by the decision in RagingWire.

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a.

Third Cause of Action – Failure to Accommodate Under the FEHA

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California Government Code § 12940 states “[i]t shall be an unlawful employment

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practice . . . (a) For an employer, because of the . . . physical disability [or] medical condition . . .

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of any person, to refuse to hire or employ the person . . . or to bar or to discharge the person from
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employment.” See also RagingWire, 42 Cal. 4th at 925.

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refuse to hire someone who would be “unable to perform his or her essential duties even with

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reasonable accommodations,” California Government Code § 12940(a)(1)–(2), the statute

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“inferentially requires employers in their hiring decisions to take into account the feasibility of

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making reasonable accommodations.” RagingWire, 42 Cal. 4th at 925–26. However, the FEHA

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“does not require employers to accommodate the use of illegal drugs,” as “[n]o state law could

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completely legalize marijuana for medical purposes because the drug remains illegal under

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federal law, even for medical users.” Id. at 926 (citations and quotations omitted). Because the

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“operative provisions of the Compassionate Use Act (Health & Saf. Code, § 11362.5) do not

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speak to employment law,” but rather merely provide immunity to criminal prosecution under

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California Health and Safety Code §§ 11357 and 11358, the court held that a “plaintiff cannot

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state a cause of action under the FEHA based on defendant’s refusal to accommodate his use of

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marijuana.” Id. at 928–31.

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Because an employer may discharge or

Since the decision in RagingWire conclusively forecloses his third cause of action for

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failure to reasonably accommodate in violation of the FEHA, plaintiff instead advances several

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other arguments. First, plaintiff argues defendant waived its right to rely on RagingWire as a

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defense because it implemented policies prohibiting discrimination against medical marijuana

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card holders who test positive for medical marijuana in 2012, four years after the RagingWire

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decision. (Doc. No. 52 at 40–41.) Second, plaintiff claims defendant is estopped from relying on

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RagingWire as a defense for similar reasons. (Doc. No. 52 at 41–44.) Third, plaintiff argues

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RagingWire is inapplicable, essentially because his FEHA claims are based on defendant’s failure

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to follow its own policies. (Doc. No. 52 at 44–45.) Finally, plaintiff argues his FEHA claims are

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based on defendant’s withdrawal of an already existing accommodation they provided to him, an

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issue not litigated in RagingWire. (Doc. No. 52 at 45–46.) None of plaintiff’s arguments in this

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regard are persuasive.

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“[W]aiver is the intentional relinquishment of a known right after knowledge of the facts.”

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Waller v. Truck Ins. Exch., Inc., 11 Cal. 4th 1, 31 (1995) (quotations and citations omitted). “The

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object of estoppel is to prevent a person from asserting a right which has come into existence by
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contract, statute or other rule of law where, because of his conduct, silence or omission, it would

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be unconscionable to allow him to do so.” Westoil Terminals Co. v. Ind. Indem. Co., 110 Cal.

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App. 4th 139, 151–52 (2003).

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In contrast to both of these affirmative defenses stands the California Supreme Court’s

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holding in RagingWire. As defendant correctly argues, RagingWire did not “create a right” under

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the FEHA which employers can relinquish: it simply acknowledged a plaintiff cannot state a

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claim under the FEHA based on an employer’s failure to accommodate medicinal marijuana

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usage. See 42 Cal. 4th at 931 (“[P]laintiff cannot state a cause of action under the FEHA based

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on defendant’s refusal to accommodate his use of marijuana.”). Put another way, it does not

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violate the FEHA to terminate an employee based on their use of marijuana, regardless of why

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they use it, and the Compassionate Use Act did not change that. Id. at 926–28. A defendant

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cannot waive into the ability to be sued for something that does not violate the law. See, e.g.,

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Nyberg v. Portfolio Recovery Assocs., LLC, Case. No. 3:15-cv-01175-PK, 2016 WL 3176585, at

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*3 (D. Ore. June 2, 2016) (“[F]ailure to state a claim for relief is a negative defense, not an

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affirmative defense.”); Phelps v. City of Parma, Case No. 1:14-cv-00085-EJL-REB, 2015 WL

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893112, at *2 (D. Idaho Mar. 2, 2015) (noting that, even if negative defenses were stricken from

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the pleadings, plaintiff “would still have the burden of proving his prima facie case and

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Defendants would still be entitled to argue that he does not state a claim upon which relief can be

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granted”).

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To the extent plaintiff attempts to argue around the holding in RagingWire by asserting his

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FEHA claim is based on defendant’s failure to follow its own policies, the court is unpersuaded.

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(Doc. No. 52 at 45.) Plaintiff presents no authority, and this court has found none, suggesting a

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cognizable FEHA claim can be based simply on an employer’s failure to abide by policies not

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required by FEHA. While the failure to abide by its own policies may be a breach of an implied-

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in-fact contract, for the reasons discussed below, refusing to accommodate an employee’s

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marijuana usage does not violate FEHA. See RagingWire, 42 Cal. 4th at 931.

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Similarly, plaintiff’s attempt to distinguish RagingWire by characterizing his termination

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as a withdrawal of a pre-existing accommodation is unavailing. The undisputed evidence before
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the court on summary judgment establishes that the first time defendant knew of either plaintiff’s

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disability or his medical marijuana recommendation was on January 21, 2014, when plaintiff

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advised Ochoa and Barrera of these facts in his meeting following his positive drug test. (Doc.

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No. 53 at 3, 6.) Plaintiff was terminated via voicemail three days later, and was suspended in the

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intervening time. In no sense of the word can defendant be described as having accommodated

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plaintiff’s use of marijuana given these undisputed facts. Given the above, defendant’s motion

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for summary judgment must be granted as to plaintiff’s third cause of action.

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b.

Second Cause of Action – Failure to Engage in an Interactive Process Under
FEHA

California Government Code § 12940 states it is “an unlawful employment practice . . .

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[f]or an employer . . . to fail to engage in a timely, good faith, interactive process with the

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employee or applicant to determine effective reasonable accommodations, if any, in response to a

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request for reasonable accommodation by an employee or applicant with a known physical or

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mental disability or known medical condition.” Cal. Gov’t Code § 12940(n). California courts

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have held this requirement requires employers to engage in an interactive process “only if a

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reasonable accommodation was possible.” Nadaf-Rahrov v. Neiman Marcus Grp., Inc., 166 Cal.

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App. 4th 952, 980–81 (2008). See also Nealy v. City of Santa Monica, 234 Cal. App. 4th 359,

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379 (2015); Scotch v. Art Inst. Of Cal.-Orange Cty., Inc., 173 Cal. App. 4th 986, 1018–19 (2009).

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“[T]he employee who brings a section 12940(n) claim bears the burden of proving a reasonable

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accommodation was available before the employer can be held liable under the statute.” Nadaf-

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Rahrov, 166 Cal. App. 4th at 984.

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Obviously, defendant cannot be compelled to accommodate plaintiff’s medicinal

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marijuana use. See RagingWire, 42 Cal. at 930. To the extent the only remedy sought by

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plaintiff from the interactive process was one this court cannot force defendant to accept—i.e.,

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that plaintiff be allowed to use medical marijuana or at least not be terminated because of his

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use—this claim must fail. It would be futile to compel a process seeking only a result the

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employer could not be made to accept. See Swonke v. Sprint, Inc., 327 F. Supp. 2d 1128, 1137

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(N.D. Cal. 2004) (“The Court cannot impose upon the employer an obligation to engage in a
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process that was guaranteed to be futile.”). At the hearing on the pending motion, however,

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plaintiff’s counsel represented that, if given a chance to participate in the interactive process,

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plaintiff would have switched medications or stopped using marijuana, rather than lose his job.

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However, there is no evidentiary support in the record before this court on summary judgment for

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this contention, upon which plaintiff would bear the burden of proving at trial. Accordingly,

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summary judgment must be granted for defendant on this claim. See Oracle Corp., 627 F.3d at

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387.

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Even assuming plaintiff could provide evidence of another alternative for accommodating
his anxiety at trial, his claim in this regard must still fail. This is because there is no causal link

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between defendant’s decision to terminate plaintiff and its failure to engage in the interactive

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process. The undisputed evidence before this court on summary judgment is that, for all of

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defendant’s agents involved in this decision, plaintiff’s positive test reflecting his use of

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marijuana was the sole reason for his termination. There is no evidence before the court that

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defendant was actually motivated by plaintiff’s disability rather than his chosen treatment for the

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disability.1 Whether defendant’s agents possessed the erroneous belief that a positive test for

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marijuana metabolites necessary implied plaintiff was impaired at work is immaterial. There is

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simply no evidence before the court on summary judgment that, had plaintiff engaged in an

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interactive process, he would not have been terminated for testing positive for marijuana.

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Without a causal link between the failure to engage in the interactive process and plaintiff’s

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ultimate termination, there can be no recovery since the damages to plaintiff are not connected to

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defendant’s alleged violation of the law. See Scotch, 173 Cal. App. 4th at 1018–19. Summary

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judgment in favor of defendant is therefore appropriate with respect to plaintiff’s second cause of

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action as well.

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Plaintiff’s counsel argued at the hearing on the pending motion that discrimination on the basis
of a medication for a disability is tantamount to discrimination on the basis of the disability itself.
While that is undoubtedly true for medications generally seen as benign, there is no reason to
believe it to be true for treatments the efficacy and legality of which are still contested at both the
state and federal levels of government.
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c.

First Cause of Action – Disability Discrimination in Violation of FEHA

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Finally, summary judgment in favor of defendant is also appropriate as to plaintiff’s first

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cause of action for the reasons already addressed above: namely, there is no evidence before the

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court at this stage of the litigation that plaintiff was terminated because of his disability, rather

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than because of the manner in which he chose to treat his disability.

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While a plaintiff generally has an initial burden of establishing a prima facie case of

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intentional discrimination, when an employer moves for summary judgment on a disparate

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treatment claim in a FEHA case, “‘the burden is reversed . . . because the defendant who seeks

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summary judgment bears the initial burden.’” Dep’t of Fair Emp’t & Hous. v. Lucent Techs.,

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Inc., 642 F.3d 728, 745 (9th Cir. 2011) (quoting Hanson v. Lucky Stores, Inc., 74 Cal. App. 4th

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215, 224 (1999)). See also Jackson v. Kaplan Higher Education, LLC, 106 F. Supp. 3d 1118,

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1123 (E.D. Cal. 2015); Gunther v. Xerox Corp., Case No. 13-cv-04596-HSG, 2015 WL 5769619,

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at *7 (N.D. Cal. Oct. 2, 2015) (assessing plaintiff’s prima facie showing in light of this standard).

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Therefore, “[t]o prevail on summary judgment, [the employer is] required to show either that (1)

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plaintiff could not establish one of the elements of [the] FEHA claim or (2) there was a

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legitimate, nondiscriminatory reason for its decision to terminate plaintiff’s employment.” Lucent

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Techs., Inc., 642 F.3d at 745 (quotations omitted).

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“‘Disparate treatment’ is intentional discrimination on prohibited grounds.” DeJung v.

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Superior Court of Sonoma Cty., 169 Cal. App. 4th 533, 549 n. 10 (2008). The FEHA prohibits

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discrimination in the workplace based on an employee’s disability.2 Cal. Gov’t Code § 12940(a).

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Generally, California courts utilize the same burden-shifting test adopted in McDonnell Douglas

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Corp. v. Green, 411 U.S. 792 (1973), requiring plaintiff’s to show the following in order to set

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out a prima facie case:

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(1) he was a member of a protected class, (2) he was qualified for
the position he sought or was performing competently in the
position he held, (3) he suffered an adverse employment action,

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Defendant contests whether plaintiff has come forward with sufficient evidence that he suffers
from a disability. Since defendant is entitled to summary judgment with respect to this cause of
action on a different basis, as discussed below, the court does not reach this issue.
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such as termination, demotion, or denial of an available job, and (4)
some other circumstance suggests discriminatory motive.

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Guz v. Bechtel Nat’l Inc., 24 Cal. 4th 317, 354–55 (2000). “While the plaintiff’s prima facie

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burden is not onerous, he must at least show actions taken by the employer from which one can

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infer, if such actions remain unexplained, that it is more likely than not that such actions were

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based on a prohibited discriminatory criterion.” Id. at 355 (internal quotations and citations

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omitted).

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In this case, it is undisputed plaintiff was terminated because he tested positive for
marijuana. (Doc. No. 53 at 4) (noting dispute concerning whether plaintiff’s failure to disclose

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his marijuana use to defendant played any role in his termination, but no dispute as to whether the

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reason for termination was his positive marijuana test). This is not only conceded by plaintiff, but

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often highlighted in his opposition to the pending motion. (See, e.g., Doc. No. 52 at 17, 19, 34,

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36–39, 60–61.) Again, there is no evidence before the court on summary judgment that plaintiff

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was fired because of his anxiety and not because of the manner in which he chose to treat that

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condition. Accordingly, defendant is entitled to summary judgment in its favor as to this FEHA

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claim as well.

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3.

Invasion of Privacy

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The California Constitution specifically provides for a right to privacy. Cal. Const. art. 1

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§ 1. To state a cause of action for a violation of the right to privacy, plaintiff has the burden to

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prove three elements: “(1) a legally protected privacy interest; (2) a reasonable expectation of

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privacy in the circumstances; and (3) conduct by defendant constituting a serious invasion of

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privacy.” Kraslawsky v. Upper Deck Co., 56 Cal. App. 4th 179, 185 (1997) (quoting Hill v. Nat’l

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Collegiate Athletic Ass’n, 7 Cal. 4th 1, 39–40 (1994)). These elements are to “be utilized to

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screen out claims that do not involve a significant intrusion on a privacy interest protected by the

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state constitutional privacy provision.” Loder v. City of Glendale, 14 Cal. 4th 846, 893 (1997).

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“A ‘reasonable’ expectation of privacy is an objective entitlement founded on broadly based and

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widely accepted community norms.” Hill, 7 Cal. 4th at 36. “Whether plaintiff has a reasonable

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expectation of privacy in the circumstances and whether defendant’s conduct constitutes a serious
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invasion of privacy are mixed questions of law and fact.” Id. at 40. “If the undisputed material

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facts show no reasonable expectation of privacy or an insubstantial impact on privacy interests,

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the question of invasion may be adjudicated as a matter of law.” Id. The analysis warrants a

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case-by-case inquiry: “requirements . . . imposed on private employers by the California

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constitutional right to privacy will depend upon the application of the elements and considerations

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we have discussed to the employer’s special interests and the employee’s reasonable expectations

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prevailing in a particular employment setting.” Id. at 55.

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Drug testing can give rise to privacy concerns. See Loder, 14 Cal. 4th at 897; Hill, 7 Cal.
4th at 41–43. However, “[a]dvance notice of drug testing minimizes . . . [any] intrusion on

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privacy interests.” Smith v. Fresno Irrigation Dist., 72 Cal. App. 4th 147, 161 (1999). Further,

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informed consent diminishes the reasonable expectation of privacy. Hill, 7 Cal. 4th at 43.

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Consent is “generally viewed as a factor in the balancing analysis, and not as a complete defense

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to a privacy claim.” Kraslawsky, 56 Cal. App. 4th at 193. Company policies regarding drug

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testing can be taken into account, id. at 187–88, as can an employee’s understanding of what the

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policies meant, Luck v. S. Pac. Transp. Co., 218 Cal. App. 3d 1, 25 (1990).

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Here, the evidence on summary judgment establishes plaintiff was aware he could be drug

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tested long before he was injured. Plaintiff’s declaration in opposition to summary judgment

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states, while he was “never impaired at work, I was still uneasy about the possibility of a drug

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test, and the possible negative consequences of one,” which lead him to look for other prospective

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employers prior to Kohl’s adopting its medical marijuana policies. (Doc. No. 54 at ¶ 11.) After

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defendant adopted its new policies in 2012, plaintiff understood that “as long as I used the

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medicine at home and not close to a shift, I would be protected from getting fired even if [I]

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tested positive.” (Doc. No. 54 at ¶ 11) (emphasis added). Plaintiff testified at his deposition that

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he was screened for drug use when he began his employment. (Doc. No. 48-1 at 9.) Plaintiff also

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signed several forms during his employment acknowledging that he could be drug tested. (Doc.

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No. 48-1 at 10–11.) While plaintiff argues that defendant’s policies changed in 2012, rendering

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the 2006 consent form he signed invalid (Doc. No. 52 at 51), nothing in defendant’s changed

28

policies indicates employees would not be drug tested. Moreover, plaintiff’s own declaration
12

1

indicates he remained aware he could be drug tested even after those new policies were put into

2

place. Simply put, it is undisputed plaintiff knew he could be drug tested; he simply believed he

3

would not be fired as the result of a positive test.

4

Plaintiff also argues he should not have been drug tested at all in response to his injury,

5

because company policy only called for drug testing after an accident if it either (1) “involved

6

damage to company property that is outside of normal daily wear and tear on the building or

7

equipment” or (2) occurred on “power or non-power related equipment, which requires any

8

Associate to seek medical treatment.” (Doc. No. 55-7 at 4.) In actuality, defendant’s policy

9

mandates drug testing in those situations, but does not limit it to only those situations. (See id.)

10

Indeed, elsewhere the same policy says, “Kohl’s reserves the right to require an Associate to

11

submit to a breath, blood and/or urine alcohol/drug test when . . . the Associate has been involved

12

in a workplace accident.”3 (Doc. No. 55-7 at 3.) Plaintiff cannot create a reasonable expectation

13

of privacy out of a policy that generally permits alcohol and drug testing. Given the evidence

14

before the court on summary judgment, no reasonable jury could conclude plaintiff had a

15

reasonable expectation of privacy such that he could not be drug-tested following a workplace

16

accident.4 As such, summary judgment in favor of the defendant on this cause of action is called

17

for.

18

/////

19
20
21
22
23
24
25
26
27
28

3

To the extent plaintiff attempts to characterize the harm he suffered as an “injury” but not an
“accident” (see Doc. No. 52 at 50), in order to suggest this general provision does not apply to
him, the court is not persuaded. An “accident” is “an event or condition occurring by chance or
arising from unknown or remote causes.” Webster’s Third New International Dictionary
(unabridged) ed: Philip Babcock Gove 2002. An “injury” is “an act that damages, harms, or
hurts.” Id. The two terms are not opposed, and a single incident can be correctly labeled as both
an injury and an accident. Here, plaintiff has presented no evidence that his injury did not occur
by chance, or did not arise from an unknown cause. Plaintiff has presented no reason why this
injury would not fall within the ambit of defendant’s policy of allowing testing following a
workplace “accident.”
4

Plaintiff’s suggestion that his specific consent to the 2014 drug test was coerced (see Doc. No.
52 at 52), does not preclude the granting of summary judgment. As plaintiff himself
acknowledges, he knew he could be drug-tested, but merely thought he would not be fired for
testing positive for marijuana. (Doc. No. 54 at ¶ 11.)
13

1

4.

2

As plaintiff concedes in his opposition, his fifth cause of action for wrongful termination

Wrongful Termination in Violation of Public Policy

3

in violation of public policy is subject to dismissal if defendant prevails on summary judgment

4

with respect to his FEHA and privacy claims. Accordingly, and for the reasons set forth above,

5

summary judgment in favor of defendant is also proper on plaintiff’s wrongful termination in

6

violation of public policy cause of action.

7

5.

8

Defendant contends plaintiff was an at-will employee, as demonstrated by his signing of a

9

Breach of Implied Contract and the Covenant of Good Faith and Fair Dealing

form acknowledging as such when he commenced his employment in 2006. (See Doc. No. 53 at

10

10.) Plaintiff replies that defendant’s policies were amended in 2012 to specifically protect

11

individuals who are medical marijuana users in certain states from being terminated or

12

discriminated against on that basis. (See Doc. No. 52 at 54–58.) According to plaintiff, these

13

new policies therefore became terms of his employment agreement in 2012 and part of an implied

14

contract, and thereby bound defendant not to breach them. (Id.)

15

In California, “[a]n employment, having no specified term, may be terminated at the will

16

of either party on notice to the other.” Cal. Lab. Code § 2922. At-will employment “may be

17

ended by either party at any time without cause, for any or no reason.” Guz v. Bechtel Nat’l Inc.,

18

24 Cal. 4th 317, 335 (2000) (quotations and citations omitted). “While the statutory presumption

19

of at-will employment is strong, it is subject to several limitations.” Id. Parties are free to agree

20

to other limitations on an employer’s termination rights. Id. at 336. While a “good cause”

21

limitation is the most common, “[t]he parties may reach any contrary understanding, otherwise

22

lawful, ‘concerning either the term of employment or the grounds or manner of termination.’” Id.

23

(quoting Foley v. Interactive Data Corp., 47 Cal. 3d 654, 680 (1988)).

24

“The contractual understanding need not be express, but may be implied in fact, arising

25

from the parties’ conduct evidencing their actual mutual intent to create such enforceable

26

limitations.” Id. The California Supreme Court has identified several factors that may bear upon

27

the existence and content of an implied-in-fact contractual limitation on discharging an employee,

28

including personnel policies or practices of the employer, the employee’s longevity of service,
14

1

actions or communications by the employer reflecting assurance of continued employment, or

2

standard industry practices. Id. at 336–37. “California law permits employers to implement

3

policies that may become unilateral implied-in-fact contracts when employees accept them by

4

continuing their employment.” Gorlach v. Sports Club Co., 209 Cal. App. 4th 1497, 1508 (2012)

5

(citing Asmus v. Pacific Bell, 23 Cal. 4th 1, 11 (2000)). A court is to look at the totality of the

6

circumstances, with an eye toward “seek[ing] to enforce the actual understanding” of the parties

7

to the agreement. Guz, 24 Cal. 4th at 337 (quoting Foley, 47 Cal. 3d at 677).

8

“Cases in California and elsewhere have held that at-will provisions in personnel

9

handbooks, manuals, or memoranda do not bar, or necessarily overcome, other evidence of the

10

employer’s contrary intent, particularly where other provisions in the employer’s personnel

11

documents themselves suggest limits on the employer’s termination rights.” Id. at 339 (citations

12

omitted). “On the other hand, most cases applying California law, both pre and post-Foley, have

13

held that an at-will provision in an express written agreement, signed by the employee, cannot be

14

overcome by proof of an implied contrary understanding.” Id. at 340 n.10. This distinction has

15

subsequently been articulated more fully by the California Supreme Court as follows: “[A] clear

16

and unambiguous at-will provision in a written employment contract, signed by the employee,

17

cannot be overcome by evidence of a prior or contemporaneous implied-in-fact contract

18

requiring good cause for termination.” Dore v. Arnold Worldwide, Inc., 39 Cal. 4th 384, 389

19

(2006) (emphasis added). These statements by the state high court do not, of course, limit the

20

ability to modify an at-will employment agreement after the contract is signed to add termination

21

protections at a later time. See also Weiner v. Fleischman, 54 Cal. 3d 476, 488 (1991) (“[E]ven

22

where a contract has been solemnized by a writing, an oral modification of that written contract

23

may be proved by a preponderance of the evidence.”).

24

Turning to the evidence before the court on summary judgment in this case, it is

25

undisputed plaintiff was a medical marijuana cardholder. It is also undisputed plaintiff signed a

26

statement acknowledging the at-will nature of his employment with defendant in 2006, when his

27

employment commenced. Finally, neither party disputes that, in 2012, the company amended

28

several of its written employment policies, including Policy 150 (the alcohol and substance abuse
15

1

policy) and Policy 126E (the drug testing policy) to include non-discrimination provisions

2

concerning the use of medicinal marijuana in certain states. Specifically, the provision added to

3

Policy 150 reads:

4

K.

5

1. Alaska, Arizona, California, Colorado, D.C., Maine, Michigan,
Montana, Nevada, New Jersey, New Mexico, Oregon, Rhode
Island, Vermont: No person will be discriminated against in hiring,
termination or in imposing any term or condition of employment or
otherwise be penalized based upon either:

6
7

a. The persons’ status as a registered medical marijuana
cardholder; or

8
9

b. A registered medical marijuana cardholder’s positive
drug test for marijuana components or metabolites.

10
11

State Specific Exceptions

(Doc. No. 55-7 at 4.) The provision added to defendant’s Policy 126E stated:

12

IV.

13

A.
Alaska, Arizona, California, Colorado, D.C., Maine,
Michigan, Montana, Nevada, New Jersey, New Mexico, Oregon,
Rhode Island, Vermont: No person will be discriminated against in
hiring, termination or in imposing any term or condition of
employment or otherwise be penalized based upon either:

14
15

1. The person’s status as a registered medical marijuana
cardholder; or

16
17

2. A registered medical marijuana cardholder’s positive
drug test for marijuana components or metabolites. Nothing
in this policy prevents Kohl’s from imposing discipline, up
to and including termination for any Associate who used,
possessed or was impaired by marijuana at any Kohl’s
location or in the performance of Kohl’s business.

18
19
20
21
22

State Specific Requirements

(Doc. No. 55-7 at 6.)
Defendant’s person most knowledgeable, Tim Kuckelman, testified at his deposition in

23

this matter that Kohl’s “wanted to make sure as a company that we were not discriminating

24

particularly against applicants and especially employees if they simply disclosed or the manager

25

or supervisor became aware of the fact that they were in possession of a medical marijuana card.”

26

(Doc. No. 55-3 at 23–24.) Defendant’s policies were enacted in recognition of the movement in

27

medical marijuana laws in a number of states and were for the benefit of both the employees and

28

the company, according to Kuckelman. (Id. at 24, 28). Plaintiff has submitted a declaration in
16

1

opposition to the pending motion stating that, while he did not remember when he saw the revised

2

drug testing policies, he believed he “reviewed them on the Company’s intranet site very soon

3

after they were announced,” because he “made a point of staying up to date on new policies.”

4

(Doc. No. 54 at 3.) Further, plaintiff states that he “understood the policies to very clearly say

5

that as long as I used the [medical marijuana] at home and not close to a shift, I would be

6

protected from getting fired even if I tested positive.” (Doc. No. 54 at 4.) This led plaintiff to

7

abandon his efforts to look elsewhere for a job. (Doc. No. 54 at 4.)

8
9
10

The existence and content of employer agreements not to terminate based on certain
assurances are particularly fact-driven inquiries. As the California Supreme Court has
recognized:

11

Every case thus turns on its own facts. Where there is no express
agreement, the issue is whether other evidence of the parties’
conduct has a “tendency in reason” to demonstrate the existence of
an actual mutual understanding on particular terms and conditions
of employment. If such evidence logically permits conflicting
inferences, a question of fact is presented.

12
13
14
15

Guz, 24 Cal. 4th at 337. See also Melbye v. Accelerated Payment Technologies, No. 10cv2040-

16

IEG (JMA), 2012 WL 90477, at * 9 (S.D. Cal. Jan. 11, 2012) (denying defendant’s motion for

17

summary judgment on the grounds that disputed issues of material fact existed as to whether there

18

was an implied in-fact agreement between the parties despite the written policies in place with

19

respect to the terms of employment). Here, a reasonable jury could conclude from defendant’s

20

policies and plaintiff’s testimony that the parties agreed, subsequent to his 2006 acknowledgment

21

of the at-will nature of his employment, that plaintiff would not be discriminated against for his

22

medicinal marijuana use, since he was a registered medical marijuana cardholder. Thus,

23

defendant has not established it is entitled to summary judgment as to plaintiff’s sixth cause of

24

action for breach of an implied contract and the covenant of good faith and fairdealing.5

25

/////

26

5

27
28

In its motion for summary judgment defendant advanced numerous other arguments concerning
plaintiff’s sixth cause of action. (See Doc. No. 46 at 4, 25–28.) However, at the hearing on the
pending motion defense counsel conceded with respect to those other arguments, noting they
were actually only applicable to plaintiff’s invasion of privacy claim.
17

1

6.

2

Defendant asserts it is entitled to summary judgment on plaintiff’s seventh cause of action

Defamation

3

for defamation both because its activity is protected by the common interest privilege and

4

plaintiff has presented insufficient evidence of malice. (Doc. No. 46 at 28–30.) Plaintiff agrees

5

the common interest privilege is applicable here in general, but argues that defendant lost its

6

protection here because it acted with malice or reckless disregard. (Doc. No. 52 at 60–62.)

7

“A claim for defamation requires proof of a false and unprivileged publication that

8

exposes the plaintiff ‘to hatred, contempt, ridicule, or obloquy, or which causes him to be

9

shunned or avoided, or which has a tendency to injure him in his occupation.’” McGarry v.

10

University of San Diego, 154 Cal. App. 4th 97, 112 (2007) (quoting Cal. Civ. Code § 45). A

11

communication is privileged, and thus cannot be the basis for a defamation claim, when it is made

12

without malice by one person with an interest in the communication to another interested party.

13

Cal. Civ. Code § 47(c). If the privilege applies and there is no demonstration of malice, the

14

privilege is a complete defense to defamation. See King v. United Parcel Serv., Inc., 152 Cal.

15

App. 4th 426, 442 (2007). “The malice necessary to defeat a qualified privilege is ‘actual malice’

16

which is established by a showing that the publication was motivated by hatred or ill will towards

17

the plaintiff or by a showing that the defendant lacked reasonable grounds for belief in the truth of

18

the publication and therefore acted in reckless disregard of the plaintiff’s rights.” Noel v. River

19

Hills Wilsons, Inc., 113 Cal. App. 4th 1363, 1370–71 (2003) (quoting Sanborn v. Chronicle Pub.

20

Co., 18 Cal. 3d 406, 413 (1976)). Evidence sufficient to establish negligence is insufficient to

21

establish malice, because the defendant must have shown “a reckless or wanton disregard for the

22

truth, so as to reasonably imply a wilful [sic] disregard for or avoidance of accuracy.” Id. at 1371

23

(quoting Roemer v. Retail Credit Co., 3 Cal. App. 3d 368, 371–72 (1970)).

24

Here, the Associate Counseling Form (the “termination form”) states plaintiff sought

25

medical treatment and “was tested for drugs per company policies and protocol. The result of that

26

Drug test was positive for a controlled substance.” (Doc. No. 54 at 7.) According to the

27

termination form, this violated three of Kohl’s policies: (1) “[r]eporting to work in a condition

28

unfit to perform your duties or under the influence of alcohol, illegal non[-]prescription drugs or
18

1

other intoxicants or controlled substances. Using, consuming or selling illegal non-prescription

2

drugs, alcohol or other intoxication or controlled substances on Company property”; (2)

3

“Violating Safety rules pertaining to specific work areas”; and (3) “Acting in conflict with the

4

Interest of Kohl’s.” (Doc. No. 54 at 7.) There is also no dispute that the only evidence of

5

plaintiff’s impairment at work was the positive test result for marijuana metabolites. Plaintiff has

6

come forward with evidence on summary judgment that marijuana metabolites may be detectable

7

in a person’s urine for up to 30 days after use, though impairment from the drug would last only a

8

few hours. (See Doc. No. 55-1 at 2–3.) He also has provided a declaration stating he “had a

9

personal policy of not using the medicine within several days of working,” and testified at his

10

deposition that he had not used marijuana for “several days” before he worked in January 2014.

11

(Doc. Nos. 54 at 4; 55-5 at 8, 11.) Based on this evidence, a reasonable jury could find plaintiff

12

was not in a condition unfit to perform his job, was not under the influence of alcohol or other

13

drugs at work, and/or was not using, consuming, or selling alcohol or other drugs at work.

14

Further, given the dearth of evidence presented by defendant of plaintiff’s purported impairment,

15

a reasonable jury could conclude these statements were made with a “reckless or wanton

16

disregard for the truth,” thus establishing malice and removing the protections of the common

17

interest privilege. See Noel, 113 Cal. App. at 1371.6

18
19

Therefore, the undersigned concludes defendant has not established it is entitled to
summary judgment as to plaintiff’s defamation claim.

20

7.

21

Finally, defendant argues it is entitled to summary judgment with respect to plaintiff’s

22

Punitive Damages

claim for punitive damages because plaintiff cannot prove the decision-makers behind his

23
24
25
26
27
28

6

Defendant’s arguments that such conduct is at most merely negligent, and not reckless, are
unavailing. A jury could determine that, given the complete lack of evidence available to
defendant’s employees Barrera, Ochoa, and Barnick from which to conclude plaintiff was ever
impaired at work, that the defendant acted recklessly in so documenting in plaintiff’s termination
form. (See Doc. No. 55-1 at 27–28, 32–34, 36–37, 59; No. 55-2 at 12–13, 20–22, 38–42.)
Further, plaintiff’s statements that he did not believe Barrera, Ochoa, and Barnick had a personal
vendetta against him, even if admissible, fail to conclusively establish that they did not act in
reckless disregard of the truth in documenting his termination. (See Doc. No. 48-1 at 42–43, 49.)
19

1

termination had a sufficiently high enough level of discretion to warrant imposition of punitive

2

damages against the defendant corporation. (Doc. No. 46 at 30.) Plaintiff concedes Ochoa and

3

Barrera do not meet the test for corporate punitive liability, but asserts their decisions were

4

ratified by Barnick, defendant’s Human Resources Director, and Dallas Moon, a corporate officer

5

and defendant’s Vice President of Employment and Labor Law, thereby establishing punitive

6

damages liability. (Doc. No. 52 at 62–64.)
California Civil Code § 3294 allows for punitive damages in non-contract claims “where

7
8

it is proven by clear and convincing evidence that the defendant has been guilty of oppression,

9

fraud, or malice.” Cal. Civ. Code § 3294(a). Corporate employers are not liable for punitive

10

damages based on the acts of their employees unless an officer, director, or managing agent

11

authorized or ratified the act of oppression, fraud, or malice. Id. § 3294(b). Generally, these

12

terms require acting in “conscious disregard” of the plaintiff’s rights. Id. § 3294(c). The

13

California Supreme Court has held this statute restricts “corporate punitive damage liability to

14

those employees who exercise substantial independent authority and judgment over decisions that

15

ultimately determine corporate policy.” White v. Ultramar, Inc., 21 Cal. 4th 563, 573 (1999).

16

See also Garcia v. New Albertson’s, Inc., No. 2:13-CV-05941-CAS (JCGx), 2014 WL 4978434,

17

at * 7 (C.D. Cal Oct. 3, 2014). “In order to demonstrate that an employee is a true managing

18

agent [§ 3294(b)] a plaintiff seeking punitive damages would have to show that the employee

19

exercised substantial discretionary authority over significant aspects of a corporation’s business.”

20

Id. at 577. Corporate policies generally include the “general principles which guide a

21

corporation, or rules intended to be followed consistently over time in corporate operations.”

22

Taylor v. Tress, Inc., 58 F. Supp. 3d 1092, 1106 (E.D. Cal. 2014) (quoting Cruz v. HomeBase, 83

23

Cal. App. 4th 160, 167 (2000)). These are “formal policies that affect a substantial portion of the

24

company and that are the type likely to come to the attention of corporate leadership.” Roby v.

25

McKesson Corp., 47 Cal. 4th 686, 714–15 (2009). Finally, punitive damages are generally

26

available for violations of FEHA, see Weeks v. Baker & McKenzie, 63 Cal. App. 4th 1128, 1147–

27

48 (1998), subject to the limitations noted above.

28

/////
20

1

Plaintiff argues Human Resources Director Barnick “most likely is a managing agent.”

2

(Doc. No. 52 at 63.) White makes clear it is plaintiff’s burden to demonstrate a given employee

3

has sufficient discretionary authority to warrant the imposition of punitive damages. White, 21

4

Cal. 4th at 577 (“[A] plaintiff seeking punitive damages would have to show that the employee

5

exercise substantial discretionary authority over significant aspects of a corporation’s business.”).

6

In White, the court found there was sufficient discretionary authority because the manager in

7

question oversaw eight stores and sixty-five employees, and had been delegated most, if not all,

8

of the responsibility for managing these stores, as established by testimony from the manager’s

9

supervisors. 21 Cal. 4th at 577. In Roby, the California Supreme Court assumed a mid-level

10

manager could be a corporate officer, but concluded that actions by a single supervisor, combined

11

with the one-time failure of higher-level managers “to take prompt responsive action,” was

12

insufficient to establish a “conscious disregard” of that plaintiff’s rights. 47 Cal. 4th at 715–16.

13

The only evidence before the court concerning Barnick’s status as a managing agent is the

14

deposition testimony of Ochoa, who stated Barnick was her supervisor and held the title of

15

Human Resources Director, and that when an employee was to be terminated, the decision was

16

made jointly by Ochoa and Barnick, with approval from “corporate, HR director [presumably

17

Barnick], and legal.” (Doc. No. 55-1 at 25–26, 48–49.) This is not sufficient evidence from

18

which a jury could determine that Barnick’s job responsibilities involved the exercise of

19

“substantial discretionary authority over significant aspects of a corporation’s business.” White,

20

21 Cal. 4th at 577. Rather, this evidence demonstrates only that Barnick was one of several

21

people from whom approval was sought prior to a decision to terminate an employee. It says

22

nothing about Barnick’s role in “determin[ing] corporate policy.” Id. at 573. Nor, even if

23

Barnick is a managing agent, is a one-time failure to take responsive action to an immediate

24

supervisor’s decision sufficient to establish a “conscious disregard” of plaintiff’s rights. See

25

Roby, 47 Cal. 4th at 715–16. Defendant is therefore entitled to summary judgment in its favor

26

with respect to plaintiff’s claim for punitive damages.

27
28

Plaintiff also takes the position that Moon, who is indisputably a corporate officer, ratified
the termination decision by rejecting the demand letter sent to him by plaintiff’s counsel. (Doc.
21

1

No. 52 at 63.) As indicated at the hearing on the pending motion, this argument is completely

2

unpersuasive. While Moon is a corporate officer, Federal Rule of Evidence 408 provides that

3

“conduct or a statement made during compromise negotiations about the claim” is “not

4

admissible . . . either to prove or disprove the validity . . . of a disputed claim.” Correspondence

5

between counsel for the purpose of compromise negotiations is generally excludable under Rule

6

408. See E.E.O.C. v. Gear Petroleum, Inc., 948 F.2d 1542, 1545 (10th Cir. 1991). The purpose

7

of Rule 408 is to encourage compromise and settlement of existing disputes. Josephs v. Pac.

8

Bell, 443 F.3d 1050, 1064 (9th Cir. 2005). Exposing a corporate defendant to a punitive damages

9

claim merely for responding to a demand letter from plaintiff’s counsel would create an

10

extraordinary disincentive to even acknowledge receipt of such a communication, let alone

11

engage in actual settlement negotiations. Exposure to an award of punitive damages cannot be

12

supported by such a slender reed.

13

CONCLUSION
Given the foregoing, defendant’s motion for summary judgment (Doc. No. 46) is granted

14
15

in part and denied in part, as follows:
1. Defendant’s motion for summary judgment is granted as to plaintiff’s first, second, and

16
17

third causes of action (the FEHA claims), fourth cause of action (the invasion of privacy claim),

18

and fifth cause of action (the wrongful termination claim). Defendant’s motion is also granted as

19

to plaintiff’s request for the award of punitive damages on any remaining claims.
2. Defendant’s motion for summary judgment is denied as to plaintiff’s sixth cause of

20
21

action (breach of contract and the implied covenant of good faith and fair dealing) and seventh

22

cause of action (defamation).

23

IT IS SO ORDERED.

24
25

Dated:

August 2, 2016
UNITED STATES DISTRICT JUDGE

26
27
28
22