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Volume XII, Number 182

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California Court of Appeal Confirms McDonnell-Douglas Burden Shifting Applies to Section 1278.5 Whistleblower Retaliation Claims

In Scheer v. Regents of the University of California, the Second District Court of Appeal held that the McDonnell-Douglas burden-shifting framework applies to claims asserted pursuant to Health & Safety Code Section 1278.5. For claims made alleging violations of Labor Code Section 1102.5 and the California Whistleblower Protection Act, the Scheer Court confirmed that the more plaintiff-friendly standard announced in the recent Supreme Court decision of Lawson v. PPG Architectural Finishes will apply.

Key Considerations for California Hospitals and Medical Staffs

  • Because most private California hospitals do not employ physicians, most retaliation claims by physicians would be brought pursuant to Section 1278.5.

  • After Lawson, some physician litigants claimed that the plaintiff-friendly framework described in that decision would apply to Section 1278.5 claims.

  • Notwithstanding the Scheer Court’s reversal and remand of summary judgment in that case, hospital and medical staff defendants will be able to assert legitimate, non-retaliatory reasons for disciplinary action on summary judgment and shift the evidentiary burden to the plaintiff to show evidence of pretext.

Background

In 2016, Arnold Scheer, M.D. was terminated from his position as Chief Administrative Officer of the UCLA Department of Pathology and Laboratory Medicine. A year later, he sued his former employer and supervisors for whistleblower retaliation. In the complaint, Dr. Scheer alleged that he was wrongfully terminated in violation of Health & Safety Code Section 1278.5, Labor Code Section 1102.5, and the California Whistleblower Protection Act (“CWPA”). The Defendants sought summary judgment, arguing that Dr. Scheer was terminated for legitimate, nonretaliatory reasons that were listed in a Notice of Intent to Terminate. These reasons included behavioral problems such as bullying and intimidation. Dr. Scheer countered that the listed reasons were pretextual because he received an outstanding performance review in 2015 – the year prior to his termination – and his supervisors’ formal 2016 goals for him did not identify any behavioral problems at all.

The Trial Court’s Ruling

In Scheer v. Regents of the University of California, the Second District Court of Appeal reversed and remanded. The Court held that the analytical framework from Lawson v. PPG Architectural Finishes applies to Labor Code Section 1102.5 claims and CWPA claims.
 
In Lawson, the California Supreme Court held that the evidentiary standard set forth in Labor Code Section 1102.6, not the McDonnell-Douglas framework, applies to whistleblower retaliation claims under Labor Code Section 1102.5. While the McDonnell-Douglas framework has three analytical steps, Labor Code Section 1102.6 has two: first, the plaintiff has the burden to establish by a preponderance of the evidence that retaliation was a contributing factor in the termination; then, if plaintiff satisfies that burden, the burden shifts to the defendant to show by clear and convincing evidence that it had legitimate and independent reasons to terminate the plaintiff. This “clear and convincing evidence” standard contrasts with the standard under McDonnell-Douglas, which merely requires the defendant to articulate legitimate reasons for the termination. Because the trial court applied the wrong framework to the Labor Code claim, the Court reversed and remanded as to that claim. For the same reason, Court reversed and remanded as to the claim under CWPA, which contains language that is nearly identical to Labor Code Section 1102.6. 
 
On the other hand, the Court held that the Lawson framework does not apply to retaliation claims under Health & Safety Code Section 1278.5. Because that section is structured differently from the Labor Code section interpreted in Lawson, the Court of Appeal held the trial court was correct in applying the McDonnell-Douglas framework to Dr. Scheer’s Section 1278.5 claim. Even still, the Court examined the evidence presented by Dr. Scheer and held that triable issues of fact remained regarding whether the Defendants’ reasons for firing him was pretextual. The Court found that because Dr. Scheer met his burden on the third step of the McDonnell-Douglas analysis, the trial court erred in granting Defendants’ motion for summary judgment.

© 2022 ArentFox Schiff LLPNational Law Review, Volume XII, Number 118
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About this Author

Debra Albin-Riley Partner ArentFox Schiff LLP
Partner

Cementing her reputation as a tenacious health care litigator, Debra recently argued before the California Supreme Court and prevailed in establishing significant anti-SLAPP protections for medical staffs in peer review matters.  Having served as the lead attorney on numerous high-profile matters in courts across the country, Debra’s extensive experience allows her to take matters through hearing, trial, or appeal, or skillfully negotiate positive resolutions for her clients. She has been rated among the “Top Health Care Lawyers” and “Top Women Lawyers” in California by...

213-443-7545
Diane Roldán Attorney Health and Business Law ArentFox Schiff San Francisco
Partner

Diane helps clients avoid and resolve disputes. She counsels clients at every stage of the litigation process, from the initial complaint to the winning verdict, and in forums ranging from informal mediations to The Hague’s Peace Palace. In 2021, Diane was recognized by Chambers USA and the Legal 500 as a top attorney.

Diane specializes in the health care sector. She represents hospitals, medical staffs, residency programs, ambulatory surgery centers, health care districts, and major health care systems throughout California in...

415-805-7985
M.H. Joshua Chiu Attorney Commercial Law ArentFox Schiff Los Angeles
Associate

Joshua represents small and large companies as well as individuals in various business and commercial matters. He has advised and defended employers in a range of industries, including healthcare, real estate, and consumer products.

Previous Work

Prior to joining ArentFox Schiff, Joshua counseled families of children with disabilities as a Legal Advocate at the Lanterman Regional Center Special Education Law Clinic. He has also worked with immigrant families and detainees as an intern at the UCLA Immigrant Family...

213-443-7535
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