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John Mcgrory v. Applied Signal Technology

January 24, 2013


Trial Court: Santa Clara County Superior Court Superior Court No.: CV153441 Trial Judge: The Honorable Kevin J. Murphy

The opinion of the court was delivered by: Rushing, P.J.


(Santa Clara County Super. Ct. No. CV153441)


Defendant Applied Signal Technology, Inc. (Employer) terminated its four-year employment of plaintiff John McGrory (Employee) in June 2009 after an outside investigator retained by Employer concluded that, while Employee had not discriminated against a lesbian subordinate on the basis of her sex or sexual orientation, in other ways Employee had violated Employer's policies on sexual harassment and business and personal ethics and he had been uncooperative and deceptive during the investigation.

As an at-will employee, Employee was subject to termination by Employer for no reason or almost any reason (Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 317, 335 (Guz)), except for a reason that violates a fundamental public policy recognized in a constitutional or statutory provision. (Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 170, 172-174; Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 79.) Public policy, expressed in part in California's Fair Employment and Housing Act (FEHA), prohibits employment discrimination on the basis of sex. (Gov. Code, § 12940*fn1 ; Rojo v. Kliger (1990) 52 Cal.3d 65, 91; see Lyle v. Warner Bros. Television Productions (2006) 38 Cal.4th 264, 277 (Lyle).)

In this case, Employee alleged that his termination violated four public policies. An employee cannot be terminated for (1) being male, (2) participating in an employer's internal investigation, or (3) trying to protect the confidentiality and privacy of co-workers. (4) A termination for misconduct must be preceded by notice and a hearing and honest findings of misconduct. As we will explain, he has abandoned these latter two claims on appeal. He further alleged that he was defamed when Employer's Vice-President of Human Resources told another employee why Employee was terminated.

Employer filed an alternative motion for summary judgment or summary adjudication (Code Civ. Proc., § 437c),*fn2 asserting that there was no evidence that Employee was terminated for an impermissible reason and that Employer could not be liable in defamation for privileged statements of opinion on a topic of mutual interest. Over Employee's opposition, the trial court granted summary judgment, concluding that Employer's motion had established "a legitimate, non-discriminatory reason for terminating" Employee, Employee had "failed to meet his burden of showing substantial evidence that [Employer's] stated reasons for the adverse action were untrue or pretextual, such that a reasonable trier of fact could conclude that [Employer] engaged in discrimination," and Employer had established "that the allegedly slanderous statements are privileged."

On appeal, Employee claims that he has presented triable issues of fact regarding Employer's true motivation for terminating him and that Employer's statements about him to co-workers were not conditionally privileged because they lacked reasonable grounds. For the reasons stated below, we will affirm the judgment after concluding that there is no evidence warranting a reasonable inference that Employee was actually terminated for being male, that being uncooperative or deceptive in an employer's internal investigation is not a protected activity under state or federal law, and that Employer's statements to its employees about Employee's termination were conditionally privileged.


The unverified first amended complaint filed on June 4, 2010 alleged the following facts. Employee worked for Employer from July 6, 2005 until his termination on June 23, 2009. He was hired as a section manager and promoted to department manager, reporting directly to Employer's Chief Financial Officer (CFO), James Doyle. In turn, a dozen employees reported directly to Employee.

What precipitated Employee's termination was a complaint against him lodged with Employer's Human Resources Department (HR) by Dana Thomas, a female who reported to him. As her supervisor, Employee, in consultation with HR, had given Thomas a documented verbal warning in late 2008 for poor work performance and a written Performance Improvement Plan (PIP) in 2009. In late May 2009, instead of signing the PIP, Thomas lodged her complaint accusing Employee of discriminating against her on the bases of gender and sexual orientation, but not sexual harassment.

This accusation led to an investigation of Employee by an outside female attorney, Sejal Mistry. Mistry interviewed Employee and many of his subordinates, including Curt Oliver. Oliver and Employee disliked Mistry's interview style and considered her to be biased and confrontational. She told Employee that "she was going to have problems with him because of his expressive face." Employer refused to provide Employee before his interview with either Thomas's eight-page complaint or a summary of the charges against him.

Mistry's report to Employer, dated June 16, 2009, exonerated Employee of charges of discrimination based on gender and sexual orientation and found that Thomas had work performance problems. However, she found that both Employee and Oliver had been uncooperative and untruthful during her investigation. In fact, Oliver and Employee had told the truth, though Employee had refused to answer two questions--regarding how he ranked his subordinates and who had complained about Thomas--based on his concern for the privacy and confidentiality of co-workers.

As a result of this report, Employer terminated Employee on June 23, 2009, and disciplined Oliver one day later. Employee was terminated at a meeting with Employer's male CFO, Doyle, and Mike Forcht, male assistant vice-president of HR. When Employee asked why he was being terminated, Doyle said it "was not based on his conduct relating to Thomas, but rather because he had been uncooperative during the investigation and that he had made 'factual denials' during the investigation." When Employee asked for the details, Forcht refused to elaborate.

In response to the same question by one of Employee's co-workers, Forcht answered that Employee was terminated after several warnings for not cooperating with the investigation.

Thomas was allowed to continue working with Employer until she received a generous retirement package at the end of 2009.

The complaint predicated three causes of action on the above conduct. First, based on disparate treatment of male Employee and his male subordinate, Oliver, and his female subordinate, Thomas, plaintiff alleged that his termination resulted from gender discrimination by Employer. Second, his termination violated several public policies, namely policies protecting the privacy and confidentiality of co-workers, precluding retaliation for statements made during an internal investigation, and guaranteeing employees notice of adverse charges and an unbiased investigator. The complaint cited cases that purportedly establish these policies. Third, the reasons given by HR to third parties for Employee's termination were slanderous.


Employer's summary judgment motion asserted that there were 28 separate facts that were both undisputed and material. Employee's response conceded that 10 facts were undisputed, but asserted that six of these were immaterial. In setting out the facts we regard as material, we will note those that Employee has disputed.


Employee accepted a written job offer from Employer dated June 28, 2005. The offer contained the following sentence. "I understand and agree that my employment with [Employer] is at-will, and that my employment is therefore for an unspecified period of time and may be terminated at any time, with or without good cause, and with or without advance notice, by [Employer] or by me."*fn3

As manager of Employer's Contracts/Pricing Department, Employee supervised about a dozen subordinates, including a contract administrator named Dana Thomas. As her manager, he presented her with a PIP in late May 2009. Thomas's response to the PIP was to complain about Employee orally and in writing to Michael Forcht, Employer's Vice-President of HR. In short, she believed her work performance did not merit a PIP, and that his increasing "[m]icromanagement" and criticism of her work performance could only be explained by "sexual orientation and/or gender discrimination and harassment" of her as an openly gay female who had announced to her co-workers in an e-mail on November 10, 2008 that she had gotten married despite Proposition 8. In addition to Employee's criticism of her work and abilities, Thomas claimed she had witnessed Employee "telling off-color jokes in the presence of groups, that demonstrate his lack of good judgment and sensitivity to those of other cultures."*fn4

B. The Investigator's Conclusions

Through outside counsel, Employer retained an employment attorney, Sejal Mistry, to investigate Thomas's complaint. Mistry interviewed Employee and a number of his subordinates and co-workers before issuing a 13-page report dated June 16, 2009. Among the subordinates were three female contracts administrators, including Thomas and Kathy Bosza, and two male contracts administrators, Curt Oliver, Sr., and Dennis Backens.

According to Employee's declaration, HR Vice-President Forcht told him that Employer was investigating a complaint by Thomas. "The only direction [Employee] was given by Mr. Forcht was to cooperate in the investigation." Forcht refused his requests for either a summary of the allegations against him or a copy of the complaint. During Employee's two-hour interview with Mistry, she was "rude, condescending" and seemed to have "reached a conclusion about [Employee] before" talking to him.

Mistry's report reached the following conclusions. As to Thomas, Employee "did not discriminate against Thomas on the basis of her sexual orientation" and he "did not discriminate against Thomas on the basis of her gender." There were legitimate concerns about Thomas's work performance. Thomas was taking more time off than fellow employees and was not meeting performance expectations. Employee was even-handed in terms of sex in criticizing and praising subordinates for their work. "Thomas does appear to have a distorted view of her work performance," though she was credible in describing Employee's behavior.

However, Employee had "violated [Employer's] policies on Sexual Harassment and Business/Personal Ethics, both of which prohibit making jokes or remarks based on race or sex."*fn5 "Thomas and other witnesses reported that [Employee] has made comments or jokes of a sexual or racial nature on a regular basis." He readily admitted it to Mistry. He told her a couple of the jokes, one of which made fun of the accent and English-speaking abilities of an East Indian man, another of which make vulgar references to a woman's breasts and a man's penis. He continued to make such jokes though a female subordinate, Kathy Bosza, had expressed discomfort with them. Employee admitted that he and other men in his department went into an office during and after office hours to tell jokes. He indicated that he thought this complied with Employer's policies as females were not present. One female subordinate asked a male subordinate when she would be admitted to " 'the dirty old bastards club.' " Curt Oliver also made jokes at the expense of ethnic groups. Employee told his subordinates that his wife buys him a Playboy magazine four times a year.

Mistry concluded that Employee was forthcoming about some of his conduct, but "he was uncooperative and appeared to have intentionally misrepresented some facts during the course of the investigation." Citing concern for privacy, he refused to disclose his written rankings of subordinates and the identities of people who had complained about Thomas.*fn6 He denied making many of the statements that Thomas quoted, though other witnesses confirmed that he had made similar statements. Employee denied that e-mail protocol was on the agenda of a staff meeting after Thomas's e-mail announcement of her wedding, but Thomas produced an agenda with staff e-mail as an item.*fn7 Employee spoke derisively of political correctness.

Mistry found that other witnesses were generally credible except for Curt Oliver, whose answers were evasive and defensive. Unlike every other witness, he denied that Employee had discussed Playboy magazines.

Mistry concluded that termination of Employee was justified, as Employee's conduct was unacceptable for a manager of his level and experience, and he seemed unwilling to acknowledge misconduct or reform his behavior. Alternatively, Employer could impose lesser discipline such as suspension without pay for one month, denial of a bonus, monitoring of Employee's performance review meetings by HR personnel, and required participation in a management skills class.

Mistry recommended that Curt Oliver receive a written warning for his intentional misrepresentations to her and that Thomas be informed by HR and management about her performance deficiencies.

Employee cannot dispute that Mistry's report contains the above statements, but he does dispute the accuracy of Mistry's conclusions.


According to a declaration by Michael Forcht, Employer's Vice-President of HR, he, Bill Van Vleet, Employer's Chief Executive Officer, and Jim Doyle, Employer's CFO, discussed how to respond to Mistry's report at several meetings over several days. They considered her recommendations as well as the alternative of demoting Employee. "At the end of our discussions, we decided to terminate Plaintiff. Our decision was based upon: (a) Ms. Mistry's finding that [Employee] had violated [Employer's] Sexual Harassment and Business/Personal Ethics policies; (b) Ms. Mistry's finding that [Employee] had been untruthful during her investigation and did not participate in the investigation good faith [sic]; and (c) our concern that [Employee's] behavior (as well as the conclusions reached about him by Ms. Mistry in the Report) exposed the Company to a risk of future legal liability based on claims that might be made by Ms. Thomas and/or other female employees." Employer terminated Employee on June 23, 2009. A male was selected to take Employee's position.

Employee disputes that he was terminated for these reasons. According to Employee's declaration, he was terminated on June 23, 2009 at a meeting with Forcht and his supervisor, Doyle. Doyle told him "that the investigator had found that [Employee] had used foul language and made some inappropriate comments and jokes but that wasn't the reason [he] was terminated, as he (Doyle) had been guilty of the same conduct. He specifically told me there were only two reasons for my termination were: [sic] 1. that [Employee] was uncooperative during the investigation and, 2. that [Employee] had made 'factual denials' during the course of the investigation (presumably [Employer] thought [he] was lying although Doyle used those words)." When Employee asked for details, Forcht said that Employer was unable to divulge that information.

On June 24, 2009, Oliver received a written warning from CFO Doyle regarding his intentional misrepresentations to the investigator and his racial and sexual joking in the workplace. The following day, Oliver submitted a written rebuttal disputing Mistry's conclusion that he had intentionally misrepresented facts to her. He claimed that he honestly failed to recall Employee mentioning Playboy magazine. Despite his honesty, she accused him of lying and defending Employee. He considered her investigation "to be geared towards a conclusion that she had already formulated, rather than being an unbiased, professional fact-finding effort."

Dana Thomas remained subject to the PIP prepared by Employee under new managers until August 13, 2009, when she was recognized to have met her objectives. Following an annual performance appraisal meeting on October 14, 2009, Thomas was demoted, to which she objected. She contacted an attorney who wrote Employer on November 19, 2009 that not only was Employer continuing to discriminate against her, but co-workers were retaliating against her for causing Employee's termination. As evidence of discrimination, the letter listed five pages of conduct by Employee. Thomas resigned ...

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