The California Court of Appeal held last week in Cardenas v. M. Fanaian, D.D.S., Inc. that retaliation claims under California Labor Code § 1102.5 need not be based on a report of employer wrongdoing or promote a fundamental public policy. Rather, a plaintiff may establish a Section 1102.5 retaliation claim based on a report to law enforcement of wrongdoing by an individual, nonsupervisory employee against the plaintiff’s personal property or interests.

Plaintiff Rosa Lee Cardenas, who worked as a dental hygienist, reported to the local police department that a coworker might have stolen her wedding ring at the workplace. In investigating the report, the police visited the dental office twice and questioned office personnel. Ultimately, the dentist met with Cardenas, told her that the situation had caused great tension, and fired her. The ring was found at the office the next day.

Cardenas sued the dental office and the dentist individually, seeking damages based on (1) California Labor Code § 1102.5, which forbids employers from retaliating against employees who report violations of law to law enforcement, and (2) Tameny wrongful termination, a common-law tort theory which requires a showing that the termination violated fundamental principles of public policy. Cardenas alleged in both causes that she was terminated in retaliation for reporting the theft of her wedding ring to the police.  Defendants argued that such a termination would not violate either Section 1102.5 or public policy because the police report concerned Cardenas’s individual interests (her desire to recover her ring or make a claim on her homeowner’s insurance policy), and did not involve a public policy.  

The jury found in Cardenas’s favor on both causes of action, concluding in the special verdict form that Cardenas’s report to the police was a motivating reason for defendants’ termination of her employment. The jury awarded Cardenas $117,768 in past economic losses, including lost earnings.

The Court of Appeal affirmed the judgment. It noted that Section 1102.5 has been “broadly construed to protect an employee from retaliation by his or her employer even where the report to law enforcement concerned a violation of law committed by a fellow employee or contractor, and not by the employer.” The Court further noted that, as a statutory cause of action, a retaliation claim under Section 1102.5 is a standalone theory of recovery distinct from a common-law Tameny claim. “In other words, a section 1102.5 retaliation claim is based on the statute itself, which has been construed as providing for a right of action for damages, while a common law Tameny claim is based on whether or not a fundamental public policy was violated by the employment termination.” 

The court enumerated the elements of a prima facie case of retaliation under Section 1102.5: the plaintiff must show that (1) she engaged in a protected activity, (2) her employer subjected her to an adverse employment action, and (3) there is a causal link between the two.  An employee engages in protected activity under section 1102.5 when he or she discloses a reasonably-based suspicion of illegal activity to a governmental agency. According to the court, “Nothing in the enumeration . . . of the prima facie elements for recovery indicates that, where a statutory violation under section 1102.5 is proven, the trial court must also scrutinize the plaintiff‘s motives or the particular crimes reported to make sure they are ‘public’ enough.” The court also rejected defendants’ argument that a Section 1102.5 claim may only be based on employee reports to law enforcement of employer (rather than employee) wrongdoing: “Section 1102.5 makes no mention, express or implied, that its protections are limited to reports of unlawfulness concerning an employer‘s enterprise, operations or practices.”

Based on its application of Section 1102.5, the majority did not reach the issue of whether Cardenas’s allegations supported a common law Tameny claim. 

Cardenas is noteworthy because it expands the scope of Section 1102.5 retaliation claims. Before Cardenas, courts interpreted Section 1102.5 as a whistleblower statute, designed to further the public policy of protecting employees who report corporate wrongdoing from unfair retaliation. Cardenas extends Section 1102.5 beyond that whistleblower context and into the context of purely private matters that are unrelated to the employer’s business and are only of practical concern to the individual making the report. 

Employers who become aware of employee reports to law enforcement of potential crime by a third party should cooperate in the resulting investigation and consult an attorney before taking disciplinary action against anyone involved in the report or investigation.