In a recent decision, the Court of Appeals for the Second Appellate District upheld a $150,000 sexual harassment verdict and a $680,000 attorneys’ fee award against one of the Countries’ largest rigging and drilling company, Nabors.  Given the nature of the allegations and the size of the award against the drilling tycoon, expect to see more of these types of cases in the near future.

Max Taylor, the Plaintiff in Taylor v. Nabors Drilling USA, LP (2014) 222 Cal. App. 4th 1228, began his employment as a “floor hand” on a drilling rig for Nabors in 2008.  Starting at an entry-level position, Taylor was subject to daily verbal abuse by his supervisor and by senior employees.  Several times a day they called him, among other things, “queer,” “fagot,” and “homo,” and posted pictures of him around the restroom with derogatory sexual comments.  Taylor’s supervisor and coworkers knew that Taylor was not a homosexual, knew that Taylor had a girlfriend, and their spouses’ and Taylor’s girlfriend would even go shopping together.  In addition to verbally abusing Taylor, his coworkers would also physically assault him by, among other things, spanking his buttocks.  According to Taylor’s girlfriend, Taylor would come home after work emotionally distressed.

Approximately one-and-a-half-years after his employment with Nabors began, Taylor complained to human resources about the harassment.  In response, Nabors removed Taylor’s supervisor from Taylor’s rig and the other employees stopped harassing him.  After a thorough investigation Nabors terminated the supervisor.  Three months later, however, Nabors terminated Taylor citing workplace absences, tardiness, and a confrontation with one of his new supervisors.  Three months later, Taylor filed suit alleging hostile work environment, failure to prevent sexual harassment, unlawful retaliation, and wrongful termination.  A jury awarded him $160,000 in damages based on his hostile work environment claim alone.

On appeal, the court upheld the jury award noting that “sex was used a as a weapon to create a hostile work environment” for Taylor.  The court further noted that Taylor’s seniors “’employed attacks on (Taylor’s) identity as a heterosexual male as a tool of harassment.’” Nabors argued that the rig crew’s comments were not sexually motivated as they all knew Taylor was not a homosexual.  In response, the court cited the newly amended Labor Code section 12940(j)(4)(C), which became operative on January 1, 2014, and which specifically provides that “sexual harassing conduct need not be motivated by sexual desire.”  As such, the court held that “a heterosexual male is subjected to harassment because of sex under the FEHA when attacks on his heterosexual identity are used as a tool of harassment in the workplace, irrespective of whether the attacks are motivated by sexual desire or interest.”  The court upheld $150,000 of the $160,000 award for non-economic damages to Taylor as well as the entire $680,520 attorney fees award.

While the facts of this case may seem shocking to some, to others who work in the oil fields this might seem like routine hazing.  Therein lays the problem.  In an industry where new employees are commonly known as “worms,” the historic hazing rituals in these small crews working at remote locations is difficult to break.  Given the amount of damages awarded, and given that this is the first case to discuss the newly-revised Labor Code section 12940(j)(4)(C), we expect to see an increase in sexual harassment cases filed against companies performing oil field services such as drilling, cementing, fracking, and treatment where small crews are the norm.  Such companies would be well advised to not only ensure that they are promoting trustworthy mature individuals to such crews, but regularly training them in sexual harassment, and mandating that every crew’s binder includes, at the very least, examples of what types of conduct is not permissible.

One of the key pieces of evidence a plaintiff in a trade secret case usually looks for is the downloading of company information from its computers prior to a former employee departing and joining a competitor.  Generally, this “smoking gun” type of evidence shows that the employee on his or her last day accesses and downloads a bunch of proprietary company information that is then used at his or her new place of business to compete with the former employer.  This key evidence can be used to support an application for a TRO/preliminary injunction early in the case to give the employer a litigation advantage.  However, merely finding evidence of the downloading may not be sufficient to establish trade secret misappropriation should the case go forward.  This was one of the issues that faced the Court in in Integral Development Corp. v Tolat, a recent decision rendered by the U.S. District Court for the Northern District of California.

Dr. Viral Tolat was one of the co-founders of Integral, a software development company and service provider in the area of online trading on foreign exchange markets.  From 1993 to December 2012, Dr. Tolat served as Integral’s Chief Technology Officer and Head of Integral Products and Services.  In December 2012, Dr. Tolat left Integral and joined one of its competitors.

Integral sued Dr. Tolat for trade secret misappropriation, among other claims.  Dr. Tolat moved for summary judgment and the Court granted it as to Integral’s trade secret misappropriation claim against him.

In addition to finding that Integral failed to identify the information it claimed to be trade secret with sufficient particularity, as well as a failure to establish damages, the Court concluded that Integral had not established that Dr. Tolat had misappropriated its alleged trade secrets.  Integral offered evidence that Dr. Tolat had downloaded a copy of Integral’s source code while still employed there and while he was engaging in negotiations to join the competitor.  Integral also argued that there was the short period of time for the competitor to bring its product to market, which showed that Dr. Tolat must have misappropriated Integral’s trade secrets.  The Court found that this “evidence” was insufficient to show that Dr. Tolat misappropriated the information, i.e., used the information he downloaded improperly.

Dr. Tolat was able to offer evidence that he deleted the information he downloaded prior to beginning his work at the competitor.  Further, there was no evidence that he had accessed or used the information after leaving Integral.

The Integral decision reminds plaintiff employers that their burden of establishing trade secret misappropriation is not met simply by showing that a former employee has downloaded or copied company information.  Rather, to prevail on a claim of trade secret misappropriation, the plaintiff employer must obtain evidence that the former employee has in fact used that information for improper purposes.  Otherwise, a plaintiff employer is at risk of losing its trade secret misappropriation claim.

On July 13, 2013, in an unpublished decision, the Second Court of Appeal reversed a lower court’s decision to dismiss a sexual harassment case on the grounds that plaintiff had not adequately pleaded a “hostile environment” theory.  For those interested in understanding what employers should not do in response to a harassment or discrimination complaint, the case is well worth reading.  Like a parable, this case offers a lesson:  Employers should respond to all complaints about harassment in the workplace.  A failure to act will usually create employer liability.

In Elster v. Fishman, a legal secretary complained that in the course of her work she was required to read her assigned attorney’s emails.  Some of those emails were “sexually explicit and pornographic.” The employee complained but the employer took no action in response to those complaints.  The employee went out due to stress and ultimately sued.  The law firm repeatedly challenged the adequacy of the former employee’s complaint for sexual harassment under the Fair Employment and Housing Act.  Essentially, it asked the Court to judge the adequacy of those pleadings as a matter of law.  The primary issue as to plaintiff’s FEHA case is whether the plaintiff alleged facts sufficient to establish “a pattern of continuous, pervasive harassment.”   The Court of Appeal concluded she had, reversing the trial court.

The case is also interesting because it illustrates that employer action in response to sexual harassment complaints should almost never include a transfer of the complainant.  Click on the link here for a full copy of the Elster v. Fishman.

Summary of Program

Employers continue to grapple with this very difficult area of employment law. It is not enough to focus on just one law when an employee is unable to work or is absent from the workplace due to some medical condition or injury suffered by the employee or his or her family member. Instead, employers need to understand and comply with how the courts, and various federal and state regulatory agencies, are interpreting the interplay between a number of laws like the FMLA/CFRA, ADA/FEHA, PDL, USERRA, and workers’ compensation. This seminar is designed to help employers and HR professionals understand this complex interplay and to provide some practical guidance on administering leaves and absences.

Date:          April 17, 2014

Time:         9:00 a.m. -12:00 p.m.

Location:  400 Capitol Mall, 11th Floor, Sacramento, CA

For more information and to register for this seminar, please click here.

 

Lizbeth West, Past Chair and Meagan D. Christiansen, Legal Affairs Chair invite you to attend SEAC’s Spring Workshop with a panel of experts on employee benefits.  Topics include The Affordable Care Act to Workers’ Compensation and everything in between.

Date:            Tuesday, April 8, 2014

Time:            7:30 a.m. -12:30 p.m.

Location:      Sacramento State Alumni Center, 6000 J Street, Sacramento, CA

For information and details of this workshop, please click here.