Davis v. Farmers Insurance Exchange
245 Cal. App. 4th 1302
| Cal. Ct. App. | 2016Background
- William A. Davis was a long‑time Farmers district manager under an appointment agreement (since 1983) that paid him overwrites (commissions) and permitted cancellation on 30 days’ notice; Farmers terminated the appointment in 2006 and paid contract value installments thereafter.
- Davis sued Farmers for wrongful termination in violation of public policy (age discrimination), unpaid wages (Labor Code), and UCL restitution; he did not bring a FEHA claim. The trial was bifurcated; the jury found Davis was an employee (not an independent contractor).
- In phase two the jury found Davis’s age was a substantial motivating reason for discharge but also found Farmers would have discharged him for poor performance anyway, and awarded no damages after the court gave post‑Harris mixed‑motive instructions (CACI adjusted to Harris v. City of Santa Monica).
- The trial court granted a directed verdict for Farmers on the wage/deduction claim (Labor Code §§ 221, 224), and denied Davis declaratory/injunctive relief and attorney fees (Code Civ. Proc. § 1021.5), then entered judgment awarding costs to Farmers.
- On appeal the court affirmed the Harris‑based instructions and denial of equitable relief and private‑attorney‑general fees, but reversed the directed verdict on the wage claim and remanded that claim (and related UCL restitution) for retrial.
Issues
| Issue | Plaintiff's Argument (Davis) | Defendant's Argument (Farmers) | Held |
|---|---|---|---|
| Whether Harris mixed‑motive causation/same‑decision rules apply to common‑law wrongful termination claims | Harris is limited to FEHA; common‑law public‑policy tort should permit recovery if improper motive played any part | Harris reasoning applies; wrongful termination tethered to FEHA/public policy should use the substantial‑motivating‑factor standard and allow "same‑decision" defense | Court: Harris causation and same‑decision rule apply to public‑policy wrongful termination claims; CACI post‑Harris instructions were proper |
| Whether plaintiff was entitled to declaratory or injunctive relief or FEHA‑style fees after a mixed‑motive verdict | Jury’s finding that age was a substantial motivating reason supports declaratory/injunctive relief and fee award under Harris rationale | Davis didn’t plead or pursue declaratory/injunctive relief; no preserved equitable claim; no showing of future harm or public benefit for private‑attorney‑general fees | Court: Davis forfeited/failed to plead proper equitable claims; no injunction appropriate; §1021.5 fees improperly awarded — trial court did not abuse discretion in denying fees and equitable relief |
| Whether Farmers properly obtained directed verdict on Labor Code wage/deduction claim | Deductions (loan balloon, repayment of advanced commissions, E&O premiums, office expenses) were unlawful wage deductions under Lab. Code §§ 221, 224; evidence sufficed to send to jury | Deductions were authorized by agreement/contract or were proper business‑related items; Barnhill and other authority distinguish Davis’s circumstances | Court: Directed verdict was erroneous — Davis presented prima facie evidence that some deductions were not legally authorized; remand for retrial of wage claim (and UCL restitution to that extent) |
| Whether Farmers was prevailing party for costs after mixed‑motive verdict | Davis argued he prevailed on misclassification and discrimination findings and thus was prevailing party | Farmers argued Davis obtained no damages/relief and thus Farmers prevailed | Court: Premature to deem Farmers prevailing because wage/UCL restitution claims remanded; trial court’s award of costs reversed pending resolution of remanded claims |
Key Cases Cited
- Harris v. City of Santa Monica, 56 Cal.4th 203 (2013) (establishes "substantial motivating factor" standard and same‑decision defense for FEHA mixed‑motive cases)
- Kerr’s Catering Service v. Department of Industrial Relations, 57 Cal.2d 319 (1962) (employer may not shift ordinary business losses to employees via wage deductions)
- Barnhill v. Robert Saunders & Co., 125 Cal.App.3d 1 (1981) (employer cannot set off employee debts by deducting wages due at termination)
- Quillian v. Lion Oil Co., 96 Cal.App.3d 156 (1979) (limitations on deducting business losses from commission wages)
- Hudgins v. Neiman Marcus Group, Inc., 34 Cal.App.4th 1109 (1995) (invalidates commission deductions that effectively pass employer business losses to employees)
- Ralphs Grocery Co. v. United Food & Commercial Workers, 42 Cal.4th 239 (2007) (discusses limits on employer deductions and protections of commission wages)
- Mendoza v. Western Medical Ctr. Santa Ana, 222 Cal.App.4th 1334 (2014) (applies Harris principles to common‑law wrongful termination claims)
- Alamo v. Practice Mgmt. Info. Corp., 219 Cal.App.4th 466 (2013) (applies Harris causation standard to public‑policy wrongful termination claim)