A trial court erred in not instructing the jury that the employer’s possible error in business judgment is not tantamount to a discriminatory motive in a female job applicant’s pregnancy discrimination case under the California Fair Employment and Housing Act (“FEHA”), the California Court of Appeal has ruled. Veronese v. Lucasfilm Ltd., Nos. A129535 & A131660 (Cal. Ct. App. Dec. 10, 2012). The Court also held that the trial court’s decision to instruct the jury regarding the potential harm to the female job applicant’s unborn child was erroneous. Accordingly, the Court reversed a jury verdict of $113,830 and an attorney’s fee award of approximately $1.1 million in favor of the applicant, returned the case to the trial court and ordered a new trial.

Background

Lucasfilm Ltd. is a film and entertainment company founded by George Lucas. Julie Veronese interviewed for a position as an assistant to the company’s estate manager, Sarita Patel. On June 24, 2008, the company offered to hire Veronese on a project basis for a one-month term, beginning on June 30, 2008. Three days before she was to start, Veronese told Patel that she was pregnant and was feeling “nauseous and sick.” Patel told Veronese not to begin work until she was feeling better. One week later, Veronese told Patel that she was pregnant with twins. Veronese continued to suffer from morning sickness for several weeks. At the end of July, Veronese e-mailed Patel to confirm her start date. Patel replied that she (Patel) was preparing to go on vacation and wanted to arrange Veronese’s new start date after she returned in August. Veronese responded, “…Actually got some good/bad news yesterday. One of the babies [sic] heart stopped beating but the other baby looks strong….” Patel, who had suffered miscarriages of her own, was upset by the news and concerned for Veronese’s wellbeing.

Patel arranged for Veronese to start on August 11 for a three-week trial, through the end of August. When Veronese was informed of this, she accused Patel of not wanting to hire her because she was pregnant. Patel explained her reasons for the shortened trial period, none of which were related to Veronese’s pregnancy. The two later agreed that the position was no longer a good fit and left open the possibility that Veronese could seek another position at Lucasfilm. 

Veronese subsequently filed a complaint with the Department of Fair Employment and Housing and obtained an immediate right to sue letter. At trial, Lucasfilm requested the following jury instruction regarding business judgment be given: “You may not find that Lucasfilm discriminated or retaliated against Julie Gilman Veronese based upon a belief that Lucasfilm made a wrong or unfair decision. Likewise, you cannot find liability for discrimination or retaliation if you find that Lucasfilm made an error in business judgment. Instead, Lucasfilm can only be liable to Julie Gilman Veronese if the decisions made were motivated by discrimination or retaliation related to her being pregnant.” The trial court, without explanation, declined the jury instruction. The trial court then instructed the jury that “[a] potential hazard to a fetus or an unborn child is not a defense to pregnancy discrimination.” The jury returned a verdict in favor of Veronese. Lucasfilm appealed, arguing that the trial court erred in its jury instructions.

Trial Court Erred 

Under the law, a “plaintiff in a discrimination case must show discrimination, not just that the employer’s decision was wrong, mistaken, or unwise.” Reeves v. MV Transportation, Inc., 186 Cal. App. 4th 666, 673-74 (Cal. Ct. App. 2010). Further, although an “employer’s judgment or course of action may seem poor or erroneous to outsiders, the relevant question is … whether the given reason was a pretext for illegal discrimination. The employer’s stated legitimate reason … does not have to be a reason that the judge or jurors would act on or approve.” Arteaga v. Brink’s, Inc., 163 Cal. App. 4th 327, 344 (Cal. Ct. App. 2008).

The appeals court found the trial court’s refusal to give the business judgment instruction requested by Lucasfilm was prejudicial error because that instruction addressed an issue that was “crucial to a fair presentation of the case to the jury.” The Court noted the jury could have reacted to Veronese’s e-mail differently than Patel did, or it could have concluded that Patel overreacted and her decision not to hire Veronese reflected bad judgment. Without the business judgment instruction, however, the jury did not know that Lucasfilm could not be held liable for Patel’s bad judgment. The Court explained, “Patel was entitled to exercise her business judgment, without second-guessing.” Thus, the Court held the trial court erred in refusing to provide such instruction to the jury.

The Court also found the trial court erred in giving the “potential hazard to the unborn child” instruction because it was unsupported by the evidence. It noted that the instruction arose in a previous case challenging an employer’s sex-specific, company-wide fetal protection policy. Here, Veronese did not assert such a challenge, and Lucasfilm never defended its actions based on concern for her fetus.

In addition, the Court found the instruction was erroneous because it gave the jury the impression that Lucasfilm could not have any concern for the health or safety of the remaining fetus Veronese was carrying or such concern was irrelevant to the employer’s legitimate decision-making. The anti-discrimination laws, however, do not prevent an employer from “having a conscience,” the Court observed. Given the abundant evidence at trial of Patel’s genuine concern for the wellbeing of both Veronese and her fetus, the trial court’s instruction easily could have persuaded the jury that such concern was unlawful, the Court determined. Based on these errors, the Court reversed and remanded the case for a new trial.