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Jo Ann Fay v. Costco Wholesale Corporation

March 2, 2012


The opinion of the court was delivered by: Dean D. Pregerson United States District Judge



[Docket Nos. 44, 55, 72]


Presently before the court are Defendant Costco Wholesale Corporation's two Motions for Partial Summary Judgment ("Motions"), and Plaintiff Jo Ann Fay's Motion for Summary Judgment ("Cross-Motion"). Having reviewed the parties' moving papers and heard oral argument, the court grants Costco's Motions, denies Fay's Motion, and adopts the following Order.


Defendant Costco Wholesale Corporation ("Costco") operates warehouse retail stores, open to members only. Plaintiff Jo Ann Fay ("Fay") worked at a Costco warehouse in San Bernardino, California from 1998 until her discharge in August 2011 for alleged misconduct.*fn1 (Reply to Pl.'s Resp. to Costco's Separate Statement of Undisputed Facts in Supp. of 1st Mot. ("SS1") Nos. 1, 5, 52.)

In late 2006 or early 2007, Fay bought counterfeit jewelry from Costco manager Patricia Hansen. Fay reasonably believed that Hansen's sale of counterfeit jewelry violated the law. Fay therefore asked Costco Assistant General Manager Steve Fraga for permission to leave work to file a police report regarding the incident, on January 9, 2007. Fraga gave Fay permission, on the condition that she return to work to finish her shift. Because Fay did not return to work to finish her shift, Fraga issued a "Counseling Notice" to Fay. (SS1 Nos. 7-9.)

A few months after the incident, on June 25, 2007, Costco promoted Fay from Front End Supervisor to Marketing Supervisor. However, in September 2007, Costco told Fay that she had to either return to her position as Front End Supervisor or remain in Marketing as a "Clerk," instead of as a Supervisor, with a $1.00 per hour pay decrease. Fay chose the latter. (SS1 Nos. 5, 13-14.) Also in September 2007, Costco promoted Hansen to the position of Marketing Manager. Fay and six other Costco employees had applied for the position as well. (Pl.'s Reply to Def.'s Resp. to Pl.'s Statement of Facts in Supp. of Cross-Mot. ("SS3") No. 91.).

Starting approximately ten months later, in June 2008, Hansen verbally counseled Fay on various occasions for arriving early to scheduled shifts and clocking in early. Then, following a verbal altercation with Hansen in September 2008, Fay was taken to the hospital due to an increase in blood pressure. Fay returned to work a week later with a work restriction from her doctor that she not interact with Hansen. Costco complied with this restriction by transferring Fay to a different location in the warehouse and assigning her different direct supervisors. (SS1 Nos. 18-22.)

Problems persisted, however, as Hansen held a holiday party and gift exchange at her house in late 2008, inviting approximately twenty Costco employees, but not Fay. Also, sometime prior to December 11, 2008, another Costco employee - Assistant Manager Bruce Guzel - allegedly "told [Costco] Investigator [Hallie] Dilloway that Warehouse Manager [Richard] Battistoni told him that he had notes on file that Plaintiff Fay was diagnosed as a schizophrenic." (SS3 Nos. 148, 190 (emphasis omitted).)

As a result of incidents not at issue here, Costco transferred Fay from Marketing to "Front End Clerk (Cashier)" in March 2009. In July 2009, Fay injured her shoulder working as a Cashier. To accommodate Fay's shoulder injury, Costco provided her a temporary position in Member Services, from July 2009 until February 2010. In the meantime, in December 2009, Fay's treating physician issued a report with permanent work restrictions,*fn2 precluding Fay from returning to her Cashier position. Costco therefore held a meeting with Fay and her attorney on February 3, 2010, to discuss reasonable accommodations for Fay's restrictions. The parties agreed that there were no open positions at Fay's warehouse meeting her restrictions. Costco therefore placed Fay on a leave of absence starting February 15, 2010, and agreed to send Fay available job postings for eight nearby Costco locations. At the meeting, Costco also "mentioned a food court manager job opening in a neighboring warehouse," but did not offer the position to Fay since "it would be a promotion." Costco did tell Fay that she could "apply for this position." (SS1 Nos. 23-34; SS3 Nos. 195-202; Decl. of Leo James Terrell Re Index of Exs. Nos. 14-62 in Opp'n to 2nd Mot. ("Terrell Decl. 2"), Ex. 34 at 46-47.)

From February 17, 2010, to May 6, 2011, Costco provided Fay with job postings of available positions. Costco failed to send the postings on a few occasions, however, causing Fay to "go a week without getting a posting . . . packet." Costco also hired four people into unposted, entry-level "cart pusher" and "front-end assistant" positions during this period, without "personally notify[ing]" Fay of the openings. Costco "promoted three individuals to front-end supervisor" positions as well, without offering the positions to Fay. Costco did notify Fay of a "Payroll Clerk" position, but told her that she lacked sufficient experience for the job. Fay ultimately accepted a full-time "Member Services Assistant" position at her own warehouse location, on June 30, 2010. Costco permitted Fay to take a planned vacation and start on August 14, 2010. Costco also continued to send Fay job postings, since her Member Services position was at a lower pay scale than Fay's prior Cashier position. (SS1 Nos. 34-37; SS3 Nos. 219-21, 228-33; Decl. of Leo James Terrell Re Index of Exs. Nos. 1-13 in Opp'n to 2nd Mot. ("Terrell Decl. 1"), Ex. 1 at 70-71.)

Fay's duties in Member Services included, among other things, greeting customers, checking receipts, and conducting floor walks. After starting her position, Fay told General Manager Wally Nelson on several occasions that the position was not meeting her work restrictions, because checking receipts required her to repetitively raise her left arm above shoulder level for more than fifteen minutes per hour. Nelson believed, to the contrary, that Fay could use her right arm to check receipts and comply with the work restriction, but told her "we'll do what we can." Several months later, after Fay brought another copy of her doctor's note to Costco, Nelson told Fay that she could perform only floor walks until further notice, to accommodate her restriction. In February 2011, Nelson implemented a rotation schedule, allowing Fay to spend less than fifteen minutes per hour checking receipts. Fay agreed that this rotation met her restriction, in a meeting on June 7, 2011. (SS1 Nos. 40, 44-51; Decl. of Jamie C. Chanin in Supp. of 1st Mot. ("Chanin Decl."), Ex. A at 37.)

It was Costco policy at Fay's warehouse that members were "not supposed to leave the building through the entrance." However, on August 2, 2011, Costco member William Thompson tried to exit the warehouse through the entrance door, where Fay was then working. Thompson approached Fay, to show her his receipt for the item he had purchased. Fay asked Thompson to re-enter the warehouse and walk around a fence to use the exit door, but Thompson refused. When Thompson then attempted to walk away from the building, Fay touched his arm, which Thompson pulled away. Thompson became upset and yelled at Fay and another employee. Thompson then complained about the incident to Costco managers working at the time. When the managers asked Fay whether she had touched Thompson, she denied doing so and stated that Thompson had pushed her. (Reply to Pl.'s Resp. to Costco's Separate Statement of Uncontroverted Facts in Supp. of 2nd Mot. ("SS2") Nos. 6-10; SS3 Nos. 257-58; Terrell Decl. 2, Ex. 57 at 432.)

The managers then investigated the incident by obtaining written statements from Fay, Thompson, and employee witnesses, and by watching video from a warehouse surveillance camera. Fay wrote in her statement that she had not touched Thompson at all. Three employees wrote in their statements that Fay told them that Thompson had pushed her. The video appeared to show Fay touch Thompson's elbow in some manner, and Thompson pulling his arm away. The following week, after further investigation, General Manager Nelson prepared an "Employee Termination Request." In the "Terminating Facts" section, Nelson concluded that Fay grabbed Thompson's arm and lied about the incident, in violation of four Costco policies. Nelson also listed Fay's "Prior Counseling Notices," in a separate section. Costco then terminated Fay on August 10, 2011. (SS2 Nos. 12-20; Terrell Decl. 2, Exs. 14, 62.)

Finally, on September 3, 2011, Fay called Costco because her son planned to return an Xbox video game device purchased from Costco in about 2005 or 2006. A Membership Supervisor informed Fay that her son would receive a full refund. At the warehouse, however, a Refund Clerk and a different Supervisor instead offered Fay's son a refund of approximately one-half the purchase price -the price of a new Xbox at the time. Fay's son refused the offer. The next day, Fay went to return the Xbox herself and obtained a full refund. (SS2 Nos. 23-30.)

During these time periods, Fay filed numerous internal and external complaints, culminating in this action. Fay first brought suit in state court on September 30, 2009, and filed her first complaint with the California Department of Fair Employment and Housing on February 10, 2010. Costco eventually removed the lawsuit to this court in June 2010. Fay filed a Third Amended Complaint ("Complaint") on November 3, 2011. Fay alleges four causes of action under California's Fair Employment and Housing Act ("FEHA"), for retaliation, disability discrimination, failure to engage in the investigative process, and failure to provide reasonable ...

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