Opinion
This is а wrongful termination action. Plaintiff Jennifer Scott was employed by defendant Phoenix Schools, Inc. (Phoenix), as the director of its Rocklin, California, preschool. She had the responsibility of assigning personnel to comply with the state regulations that set the minimum teacher-student ratios for childcare centers. (Cal. Code Regs., tit. 22, §§ 101216.3, 101416.5 & 101516.5.)
Phoenix terminated Scott in August 2006, shortly after she informed the parents of a prospective student that the school had no room for their child. Scott sued Phoenix, alleging her termination violated the public policy embodied in the state regulations. She alleged she was terminated for refusing to violate the staffing ratio regulаtions, the implication being that the admission of the extra child would have resulted in a regulatory violation. After a jury trial, judgment was entered in favor of Scott, awarding her $1,108,247 in compensatory and $750,000 in punitive damages.
Phoenix argues there was insufficient evidence to sustain the jury’s finding that it violated public policy when it terminated Scott, that the trial court erred in refusing to set aside the punitive damages award, that prejudicial evidentiary rulings compromised the fairness of the trial, and that the compensatory damage award was excessive and unsupported by the evidence.
In the published part of the opinion 1 we shall conclude there was substantial evidence that Phoenix violatеd public policy in dismissing Scott but there was insufficient evidence of malice or oppression to sustain the award of punitive damages and shall reverse the punitive damage award on that ground. We shall affirm the remainder of the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
On July 31, 2006, Juanita McMaster arrived at Phoenix’s Rocklin preschool campus to visit the school in anticipation of sending her child to
Juanita McMaster came back to the Rocklin school with her husband a couple of days later. This time, they were shown around by Suzie Aguirre, who was part of the school’s administrative staff. In contrast to the information Scott had given Mrs. McMaster two days earlier, Aguirre told the McMasters there was an immediate opening for their daughter.
Mr. McMaster sent an e-mail to Kelly Lister, who was the regional director for Phoenix. The message expressеd the following complaint:
“When my wife arrived for her appointment she got a very cursory tour of the facility and felt that Jennifer was only doing it because she felt she had to, not out of any genuine interest. Jennifer was asked if they taught any Spanish to the child as other schools have this as a part of their curriculum. She was told no they do not teach Spanish. My wife’s response was ‘Oh that’s too bad because my daughter speaks Spanish at home with us.’ Jennifer’s response was ‘Well, all of the instruction is in English, so you should really think about whether she should be in this School.’ This was delivered in [a] manner my wife understood as seriously trying to discourage her from enrolling our daughter .... My wife askеd if they had any spots available and was told ‘No, but you can get on the waiting list.’ She did this .... During her entire time with Jennifer she felt that Jennifer could not wait for her to leave and was only doing what she did out of some sense of obligation to her job. Just going through the motions, if you will.
“This morning (08/02/2006) my wife and I met at the pre-school and received another tour and introduction .... It was not with Jennifer. When we arrived she remembered my wife and pulled out the ‘Tickler File’ to find her information. After looking through the file 3 times she could not find my wife’s information and took us into the facility for a tour. It was a very good introduction to the facility, in fact, I liked it very much. During the tour it was mentioned that Spanish was taught at the schoоl and our daughter would move from the ‘ladybugs’ into the 3 year old class most likely in February. I found [Aguirre] to be very informative, interested in the children and excited about the place she worked. As the tour was concluding, I asked if they had any availability and she said, ‘Yes, we have 3 or 4 spots right now and it is probably best if you get her in before September, as it tends to fill up quicklyaround that time.’ ... As we left, my wife recounted with me once again what had happened on her tour with Jennifer.
“I went back in to the facility and confronted Jennifer and [Aguirre] about how my wife felt she was treated. She responded ‘Oh, I can’t imagine why.’ I asked her about availability and her response was to tell me that she put her on the waiting list and proceeded to show me the list .... I said ‘[Aguirre] just told me there were 3 or 4 spots available immediately.’ She gave a blank look to [Aguirre] (who confirmed availability) and then she began the backpedaling about having two teachers transfer, the school year starting on 8/26/06 and how she didn’t like to start new families before the new school year ended. None of this made any sense to me in regard to how this would limit my daughter enrolling immediately ....
“Needless to say, we will not be enrolling our daughter in the Rocklin pre-school.
“I await your response and sincerely hope that you can use this as a growth opportunity for your company. I have not decided if I feel further action is necessary on my part, it may be warranted as this type of behavior can not be allowed to continue.”
Lister forwarded the e-mail to Char Brohl, the senior vice-president of Phoenix’s parent company, Mini-Skools. Brohl made the decision to suspend Scott the next day. Scott was suspended for a day and a half, after which she took a preplanned week of vacation. During that week, the decision was made to terminate Scott because of poor job performance due to her failure to enroll the McMaster child.
The McMaster child was two years old. Out of nine total classrooms, the school had two classrooms for two- to three-year-old children who were not yet potty trained. The McMaster child would have gone into the Ladybugs classroom, which had only an aide permanently assigned to the room, and no qualified teacher permanently assigned. The Ladybugs classroom was short-staffed, because two teachers left during the summer.
Phoenix employed full-time, part-time, and temporary teachers and aides. The staff arrived at different times during the day, and the number of children attending changed from day to day. No teacher worked the entire eleven and one-half hours the school was open. If a teacher stepped out of the room, it was necessary to get another teacher in to replace her. The three administrative staffers at the school, including Scott, were also qualified teachers. They filled in as needed, but they also had their administrative duties to perform. Teachers from another room could be brought in as an emergency measure, but not as a permanent fix because they had their own classroom responsibilities.
DISCUSSION
I
Discharge in Violation of Public Policy
Following the jury verdict in favor of Scott, Phoenix brought a motion for judgment notwithstanding the verdict and for a new trial, which were both denied by the trial court. Phoenix argues the trial court erred in denying the motion for judgment notwithstanding the verdict because there was no substantial evidence Scott was terminated in violation of public policy.
We review the order denying the motion for judgment notwithstanding the verdict for substantial evidence.
(Sweatman v. Department of Veterans Affairs
(2001)
An employment contract for an indefinite duration is normally terminable at the will of either party. (Lab. Code, § 2922;
Tameny v. Atlantic Richfield Co.
(1980)
Violations of public policy generally fall into four categories: (1) termination for refusing to violate a statute, (2) termination fоr performing a statutory obligation, (3) termination for exercising a statutory right or privilege, or (4) termination for' reporting an alleged violation of a statute of public importance.
(Gantt, supra,
1 Cal.4th at pp. 1090-1091.) Refusal to violate a governmental regulation may also be the basis for a tort cause of action
In this case, Scott asserted she was terminated for refusing to violate California Code of Regulations, title 22, section 101216.3. Subdivisions (a) and (b) of that section provide that there must be one teacher for every 12 children, but if the teacher is fully quаlified, one teacher and one aide may supervise no more than 18 children. Phoenix argues the verdict must be overturned because (1) no substantial evidence exists that enrolling the McMaster child would have violated the regulation, (2) no substantial evidence exists that Scott notified Phoenix that enrolling the McMaster child would have violated the regulation, and (3) the regulation does not reflect a fundamental or important public policy.
A. Substantial Evidence of Violation of Regulation
In
DeSoto v. Yellow Freight Systems, Inc.
(9th Cir. 1992)
Phoenix argues the evidence showed that Scott’s unwillingness to enroll the McMaster child arose from a personal preference to wait until a permanent teacher was assigned to the classroom for McMaster’s age group, and not beсause the enrollment of the child would have violated the regulation. In support of this argument, Phoenix points to Scott’s testimony that she explained to Lister, in reference to the McMaster e-mail, that she did not have the steady staff in the two-year-old classroom, and that she would prefer not to enroll children when part of the enrollment process is introducing the teacher. Phoenix argues that Scott continued to staff the Ladybugs classroom after the two teachers left by rotating unassigned teachers and an aide into the classroom, and there was no evidence that enrolling the McMaster child in and of itself would have violated thе law.
In reviewing whether there was substantial evidence to show the enrollment of the McMaster child would have violated the teacher-student ratios, we resolve all conflicts and indulge all legitimate and reasonable inferences in favor of the verdict.
(Western States Petroleum Assn. v. Superior Court
The Ladybugs class roster as of the date Mrs. McMaster visited the school showеd 20 students were enrolled in the classroom, although not every child attended every day. Two days out of the week, 20 children were scheduled to attend. Two days out of the week, 18 were scheduled to attend. One day out of the week, 17 were scheduled to attend. Two of the 20 children in the classroom were transferring out of the class in August, and one child was scheduled to start the class in September. On the days the class had 20 children, two qualified teachers would have been required. On the days 17 or 18 children were present, one teacher and one aide would have been sufficient, although the addition of one more child on the two days the class had 18 children attending would have required an additional qualified teacher.
The McMasters were looking to enroll their child two or three mornings per week. Thus, if the McMasters were not particular about which day of the week their daughter attended, they could have been enrolled on the day of the week the Ladybugs class had 17 children, as well as the days the Ladybugs class had 20 children, because 20 children would have required two qualified teachers, in which case the two teachers could have handled 21 children as well as 20 children. If, however, the McMasters wanted to enroll their daughter on the days of the week that the classroom had 18 children, and only оne qualified teacher and one aide were available to staff those days, the attendance of the McMasters’ child would have violated the staffing ratios. No evidence was presented as to which days the McMasters were interested in enrolling their child.
It is unclear precisely what teachers or aides were available to staff the Ladybugs classroom. There was evidence that the Ladybugs classroom had lost its two teachers, and that no replacement had been hired. Wendy Terry had been assigned to that class, but she was not a qualified teacher. The three administrative workers were qualified teachers and were аvailable to fill in, but they still had their administrative jobs to perform, and they had to help out in other classrooms as well. Parveen Kajani was also a qualified teacher available to the Ladybugs classroom, but her schedule was sporadic because she was having family problems.
Plaintiff also offered more general evidence regarding the shortage of staff during the summer of 2006. Scott testified that various rooms were frequently out of compliance with staffing ratios during July 2006. Wendy Terry testified she felt the class was understaffed, and that there was not enough help in the classroom. She testified she was left alone in the classroom, even though she was not a qualified teacher. She testified the classroom violated the staffing ratios. Jessica Stribick testified that after the two teachers left the Ladybugs classroom, there were not enough teachers. There were two teachers in the classroom, but never the same ones, and the school had to pull teachers out of other classes and other schools. Suzie Aguirre also testified that the loss of the two Ladybugs teachers created staffing problems. She stated there were times when the class was out of compliance with staffing ratios.
Taken together this evidence indicates the school, and in particular the Ladybugs classroom, had a shortage of teachers, and that the only staff available to relieve this shortage was short-term and transitory. Because of the fluid nature of staffing at the school, it is difficult to determine whether the addition of one more student would have made it impossible to adequately staff the class, but given the fact the class was already operating at times in violation of the staffing ratios, and that the school was short-staffed, the jury’s conclusion that the addition of one more child would have caused the classroom to operate out of compliance was a reasonable inference. That is sufficient to sustain the verdict.
B. Substantial Evidence Phoenix Knew of Violation
Phoenix argues it was necessary for Scott to present evidence she disclosed to Phoenix that enrolling the McMaster child would result in a regulatory violation. Scott replies that only in a whistleblower case is it necessary for the employee to disclose to the employer the employer’s violation of the law. We decline to resolve this issue because we conclude there was substantial evidence from which the jury could reasonably infer that Scott did disclose the violation to Phoenix.
Scott testified that she told her superior, Lister, on a daily basis that she needed more teachers. She also stated that the staffing problem should have been obvious because she lost two teachers out of the Ladybugs class and had
Both Lister and Brohl demonstrated knowledge of the staffing requirements dictated by state regulation. Brohl had worked in childcare for approximately 11 years before she went to work for Phoenix in 2002. Her testimony exhibited a knowledge of the staffing requirements dictated by state regulation.
Lister had been employed by Phoenix for 10 years. Prior to that she was a teacher, then a director at another preschool. Lister’s testimony demonstrated she was well versed in the regulatory staffing requirements.
The jury could have reasonably inferred that when Scott told her superiors the school was short-staffed, and that she did not enroll the McMaster child for that reason, she was in fact indicating there were not enough teachers and/or aides to maintain regulatory staffing ratios.
C. Substantial and Fundamental Policy
Phoenix argues the judgment should be reversed because the teacher-student ratios set forth in the administrative regulations do not embody a substantial and fundamental public policy. In support of this position, Phoenix points to the fact that the teacher-student ratio is different during nap periods, when the ratio is one teacher or one aide for every 24 children. (Cal. Codе Regs., tit. 22, § 101216.3, subd. (f).) Phoenix also stresses that because the regulations are based on the number of children attending, rather than the number enrolled, an employer would not have notice that termination of an employee for refusing to enroll a child without reference to an attendance date would give rise to tort liability.
In this context, courts have treated the concepts of “substantial” and “fundamental” as a single requirement.
(Stevenson
v.
Superior Court
(1997)
“[T]he primary rationale for requiring that a public policy be substantial and fundamental is ‘to ensure that employers have adequate notice of the conduct that will subject them to tort liability to the employees they discharge.’ [Citations.] A corollary of the substantial and fundamental requirement, then, is that a ‘ “constitutional or statutory provision must sufficiently describe the type of prohibited conduct to enable an employer to know the fundamental public policies that are expressed in that law.” ’ [Citations.]”
(Sullivan v. Delta Air Lines, Inc.
(1997)
Thе regulations governing teacher-student ratios are statutorily authorized by the California Child Day Care Facilities Act. (Health & Saf. Code, § 1596.81.) One of the express purposes of the act is a recognition that “affordable, quality licensed child care is critical to the well-being of parents and children in this state.” (Health & Saf. Code, § 1596.73, subd. (e).) The Legislature also found that it was the intent of the act to ensure a quality day care environment to “contribute positively to a child’s emotional, cognitive, and educational development,” and that “good quality child day care services are an essential service for working parents.” (Health & Saf. Codе, § 1596.72, subds. (a), (e).) Manifestly, the purpose of the teacher-student ratios is to protect the safety and ensure the educational development of the children by ensuring they are adequately supervised.
The public policy embodied by the regulation at issue here is no less substantial and fundamental than other public policies courts have found sufficient to subject an employer to tort liability. In
Hentzel v. Singer Co.
(1982)
Also, in
Eisenberg v. Insurance Co. of North America
(1987)
The regulation regarding teacher-student ratios has been in effect for over 20 years, since 1985. (Cal. Code Regs., tit. 22, § 101316.5, Register 85, No. 27 (July 6, 1985) p. 3111.) 2 The ratios are clearly set forth, and the record indicates that the administrators of Phoenix were well aware of the ratios. Thus Phoenix had adequate notice of their obligations to properly staff the classrooms.
We find no merit to Phoenix’s arguments that the policies were not fundamental because the staffing ratios changed depending on the children’s activities, and because the regulations are tied to attendance rather than enrollment. The fact that fewer teachers were needed during nap time did not absolve Phoenix from adequately staffing the classrooms the remainder of the school day.
Phoenix argues it had no notice that enrolling too many children could lead to liability because the regulation is tied to attendance rather than enrollment.
3
However, we assume that parents do not enroll their children unless they plan for the children to attend. Scott and Phoenix could legitimately
We conclude the public policy embodied in the regulation at issue was substantial and fundamental.
H
Punitive Damages
Phoenix argues there was insufficient evidence of malice, fraud or oppression to support the award of punitive damages. We agree.
Civil Code section 3294 provides that punitive damages may be awarded in an action for breach of an obligation not arising from contract, if the plaintiff proves by clear and convincing evidence that the defendant has been guilty of opрression, fraud, or malice. Here, the parties stipulated that the punitive damage instructions would contain no instruction as to fraud. Thus, the only issue is whether there was clear and convincing evidence that Phoenix was guilty of oppression or malice.
The clear and convincing standard “ ‘requires a finding of high probability .. . “ ‘so clear as to leave no substantial doubt’; ‘sufficiently strong to command the unhesitating assent of every reasonable mind.’ ” [Citation.]’ [Citations.]”
(Lackner
v.
North
(2006)
Malice is “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Civ. Code, § 3294, subd. (c)(1).) Oppression is “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Civ. Code, § 3294, subd. (c)(2).)
Despicable conduct is conduct that is “ ‘ “. . . so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.” ’ [Citation.] ‘Such conduct has been described as “[having] the character of outrage frequently associated with crime.” [Citation.] As well stated in
Flyer’s Body Shop Profit Sharing Plan v. Ticor Title Ins. Co.
(1986)
Thus, in order to sustain the punitive damages award, the evidence must leave no substantial doubt that Phoenix engaged in despicable conduct, or conduct intеnded to cause injury to Scott. “ ‘Something more than the mere commission of a tort is always required for punitive damages. There must be circumstances of aggravation or outrage, such as spite or “malice,” or a fraudulent or evil motive on the part of the defendant, or such a conscious and deliberate disregard of the interests of others that his conduct may be called wilful or wanton.’ [Citation.]”
(Taylor v. Superior Court
(1979)
The only evidence of wrongful conduct directed toward Scott was her termination for an improper reason. This evidence was insufficient to support a finding of despicable conduct, because such action is not vile, base or contemptible. Nor do we find this evidence shows a conscious and deliberate disregard of plaintiff’s interests. “Conscious disregard of rights is conduct by a defendant who is aware of the probable dangerous consequences of such conduct to plaintiffs interests and wilfully and deliberately fails to avoid those consequences.”
(Smith
v.
Brown-Forman Distillers Corp.
(1987)
In
Smith
v.
Brown-Forman Distillers Corp.
the employer required the employee to commit a crime as a condition of employment.
(Smith v. Brown-Forman Distillers Corp., supra,
In
Cloud
v.
Casey
(1999)
In
Stephens
v.
Coldwell Banker Commercial Group, Inc.
(1988)
Based upon the foregoing cases, we conclude that wrongful termination, without more, will not sustain a finding of malice or oppression. There was no evidencе Phoenix attempted to hide the reason it terminated Scott. It admitted to terminating her because she would not enroll the McMaster child. Likewise, there was no evidence Phoenix engaged in a program of unwarranted criticism to justify her termination. Because there was nothing more than a wrongful termination here, punitive damages were not warranted, and the trial court should have granted defendant’s motion for judgment notwithstanding the verdict on the issue of punitive damages. 4
Ill, IV *
The award of punitive damages is reversed. In all other respects the judgment is affirmed. Appellant shall be awarded costs on appeal. (Cal. Rules of Court, rule 8.278(a)(3).)
Sims, J., and Nicholson, J., concurred.
Respondent’s petition for review by the Supreme Court was denied September 23, 2009, S175432. Werdegar, J., did not participate therein.
Notes
The Reporter of Decisions is directed to publish the opinion except for parts HI and IV of the Discussion.
The amendment allowing an aide who meets certain qualifications to increase the number of children a teacher and qualified aide can handle from 15 to 18 was added in 1994. (Cal. Code Regs., tit. 22, § 101316.5, Register 94, No. 34 (1994).)
Phoenix likewise argues enrolling the McMaster child would not have violated the staffing regulations because the ratios are based on attendance rather than enrollment. Thus, they argue, Scott could have enrolled the McMaster child, and not permitted her to attend. We reject this argument for the same reason we reject the argument that Phoenix had no notice that overenrollment could lead to a violation of public policy. We assume that children are enrolled in the school for the purpose of attending class. Even though attendance on any given day may vary due to illness, vacation, and the like, the school must be prepared to staff its classrooms for the contingency that the students who are enrolled will be attending.
Because we have determined Scott was not entitled to punitive damages, we need not consider Phoenix’s arguments that the punitive damages awarded were excessive.
See footnote, ante, page 702.