Silva began working for Lucky in 1966 as an entry-level clerk. In 1974, after intervening promotions, Silva was made a store manager. He continued to work as a store manager until 1994, when two female employees reported that he had sexually harassed them. After a month-long investigation, Lucky’s internal review board concluded that Silva had violated the store’s sexual harassment policy and procedures and terminated his employment.
Mr. Silva’s problems began when, on October 7, 1994 courtesy clerk Leticia Barajas was taking an unscheduled restroom break from her job of bagging groceries at Lucky’s. As she ran through the double doors into the back room, Silva was standing near the entrance to the hallway that led to the restrooms. Ms. Barajas told Silva to move. Instead of moving, Silva crouched down and grabbed her buttocks. He then left the area. As a result, Ms. Barajas called the Head Clerk, who contacted Human Resources.
That same day, an individual from Human Resources came to the store and interviewed Ms. Barajas – who described the incident to him. When asked if she had heard any other women complain, Ms. Barajas said that checker, Rochelle Saldana had told her that Silva “slapped her on the butt.” Human Resources then interviewed Ms. Saldana later that night. Saldana told him that several weeks earlier, Silva had slapped her buttocks while she was bending into a melon bin. When Ms. Saldana told Silva she could charge him with sexual harassment, Silva smiled, removed his name badge and said, “I’m not on the clock.”
Human Resources interviewed Silva about the allegations the next morning. Silva admitted that he had crouched down as if he was going to tackle Ms. Barajas as she ran to the restroom. However, he said she bumped into him. He did not remember where his hands were but he denied touching her “butt.” Silva told Human Resources he had “smacked” Ms. Saldana on the back or side of her leg six to eight weeks earlier. She was reaching into the watermelon bin and Silva thought she would fall in and hurt herself.
Human Resources interviewed other Lucky employees regarding the allegations of sexual harassment. Witnesses to the Barajas and Saldana incidents corroborated that the physical contact had occurred. After the interviews, Human Resources spoke with Silva a third time to elicit his comments and explanations regarding the events reported
At the completion of his investigation, Human Resources concluded in a written report that it was reasonable to assume that both the Barajas and Saldana incidents took place. The events were corroborated by witnesses and Silva conceded he had physical contact with both women although he asserted it was not of a sexual nature. Human Resources acknowledged that some employees felt Ms. Saldana and Ms. Barajas had ulterior motives.
Based on the investigation, Lucky Stores’ review board concluded that Silva had violated Lucky’s sexual harassment policy and procedures. He improperly touched female employees in the workplace, made inappropriate comments of a sexual or offensive nature, intimidated subordinate employees, and demonstrated a willful disregard for Company policy regarding sexual harassment. These actions violated company policies as well as Silva’s job responsibilities. Silva was terminated on for violation of company policy and procedure.
Silva then sued for, among other things, wrongful termination in breach of an implied contract. Finding no triable issues of fact, however, the Trial Court granted Summary judgment.
First, the Court found that Silva failed to introduce admissible evidence to rebut the Labor Code section 2922 presumption and raise a triable issue of material fact that his employment by Lucky was other than at-will.
Second, Silva failed to introduce admissible evidence sufficient to raise a triable issue of material fact that Lucky’s decision to terminate his employment based on violation of the company’s sexual harassment policy, was not within the legitimate scope of its managerial discretion. Silva appealed that decision.
On appeal the Court considered the impact of the Cotran decision—a decision that had issued only after summary judgment had been granted.
The Court stated that Cotran set forth a new standard for good cause in termination decisions. Three factual determinations are relevant to the question of employer liability:
(1) Did the employer act with good faith in making the decision to terminate?
(2) Did the decision follow an investigation that was appropriate under the circumstances? and
(3) Did the employer have reasonable grounds for believing the employee had engaged in the misconduct?
All of the elements of the Cotran standard are triable to the jury. However, if the facts are undisputed or admit of only one conclusion, then summary judgment may be entered on issues that otherwise would have been submitted to the jury.
As to good faith: The Court stated that Silva does not claim that Lucky had a wrongful motive in determining there was good cause to terminate his employment. Moreover, he conceded in the trial court that Lucky did not breach the implied covenant of good faith and fair dealing because it determined honestly and in good faith that good cause existed for his discharge. “Silva’s concession constitutes an admission that there is no triable issue regarding Lucky’s good faith under the first element of the Cotran standard.”
As to an appropriate investigation: The Court stated that Cotran did not delineate the earmarks of an appropriate investigation but noted that investigative fairness contemplates listening to both sides and providing employees a fair opportunity to present their position and to correct or contradict relevant statements prejudicial to their case, without the procedural formalities of a trial. The Court then reviewed this investigation with the Cotran standards in mind.
First, the Court reviewed Lucky’s policies– “treat complaints seriously, investigate immediately, treat the matter confidentially, conduct interviews in a private area, listen to the allegations and make complete notes, attempt to identify all persons involved as well as possible witnesses, and interview the accused employee”.
Second, the Court reviewed (in detail) the investigation that the Human Resources had conducted. Third, the Court reviewed the conclusions reached as a result of the investigation. The Court summarized:
Lucky’s evidence demonstrates an appropriate investigation under the circumstances. Lucky utilized an uninvolved human resources representative, to investigate the charges. He had been trained by in-house counsel on how to conduct an investigation. He investigated the complaints promptly and memorialized his findings on Lucky’s witness interview forms. He had important witnesses provide their own written statement regarding the events at issue.
He asked relevant, open-ended, nonleading questions. He attempted to elicit facts as opposed to opinions or supposition. He maintained confidentiality by conducting a number of interviews off the store premises or by telephone. He encouraged those he interviewed to page him if they wanted to talk with him again. The record does not indicate how he determined which independent employees to interview. Apparently, various employee witnesses gave him additional names of persons who might provide pertinent information. His notes indicate those interviewed were generally happy with their jobs, i.e., they were not disgruntled employees.
Moreover, he notified Silva of the charges promptly and afforded him an opportunity to present his version of the incidents. He encouraged Silva to call him if he wanted to talk with him again and Silva called him the next day to provide more information.
He provided the critical witnesses with an opportunity to clarify, correct or challenge information provided by other witnesses which was contrary to their statements or which cast doubt on their credibility. After interviewing all the other witnesses, He gave Silva a final opportunity to comment on the information he had gathered. As such, Lucky’s investigation of the sexual harassment allegations meets Cotran’s fairness requirements. Lucky listened to both sides, advised Silva of the charges and provided him with ample opportunity to present his position and to correct or contradict relevant statements prejudicial to his case.
Silva, however, contended that there were triable issues of fact regarding the appropriateness of the investigation. He claimed that “the evidence shows that Lucky failed to interview key people, ignored substantial exculpatory evidence and was swayed by rumor, gossip and innuendo.” Reviewing each contention, the Court concluded that:
“None of Silva’s evidence raises a triable issue regarding the appropriateness of Lucky’s investigation under the Cotran standard. While the investigation was not perfect, it was appropriate given that it was conducted ‘under the exigencies of the workaday world and without benefit of the slow-moving machinery of a contested trial.’ ”
As to the objective reasonableness of Lucky’s factual determination of misconduct:
As a preliminary matter, the Court recognized that “Silva does not contend that Lucky’s reasons for terminating his employment were trivial, arbitrary, unrelated to business needs or pretextual.” Instead, “Silva conceded he was terminated for violation of Lucky’s policies and procedures, following an investigation of reports by two subordinate female employees that he had sexually harassed them. He also conceded that sexual harassment by a store manager of subordinate female employees constituted good cause to terminate the manager.”
Thus, the Court held, “the issue presented is whether Silva raised a triable issue of fact as to whether Lucky’s determination that he engaged in the alleged sexual harassment constituted a reasoned conclusion supported by substantial evidence. We find no triable issue of material fact for this Cotran element.
Ms. Barajas’ and Ms. Saldana’s reported conduct by Silva undisputedly constituted sexual harassment under Lucky’s policy. Both incidents were witnessed by other employees who corroborated that the conduct occurred. Silva admitted he had physical contact with both women, but denied its sexual nature. A number of other employees told the investigator that Silva engaged in conduct—sexual innuendo, suggestive comments, physical contact–which violated Lucky’s sexual harassment policy. These reports constitute substantial evidence which supports Lucky’s conclusion that Silva engaged in the sexual harassment of which he was accused.” Thus, summary judgment was affirmed.