California Court Nixes Wrongful Termination Claim by Manager Who Refused to Cooperate in Employer's Investigation

  • February 19, 2013

Affirming the dismissal of a manager’s wrongful termination and gender discrimination claims, the California Court of Appeal has held that an at-will employee may be terminated for being uncooperative or deceptive in an employer’s internal investigation of a discrimination claim. McGrory v. Applied Signal Technology, Inc., No. H036597 (Cal. Ct. App. Jan. 24, 2013). The Court also rejected the employee’s defamation claim, finding that the employer’s statements regarding the reasons for the employee’s termination were conditionally privileged.


John McGrory worked as a department manager for Applied Signal Technology, Inc. from 2005 to 2009; approximately one dozen employees reported to him, including Dana Thomas. In late 2008, McGrory, in consultation with Applied Signal’s Human Resources Department, gave Thomas a documented verbal warning for poor work performance and a written Performance Improvement Plan (“PIP”) in 2009. Thomas refused to sign the PIP; instead, she filed a complaint against McGrory accusing him of discriminating against her on the basis of her gender and sexual orientation. 

Applied Signal hired an outside female attorney to conduct the investigation into Thomas’s allegations. Although the attorney ultimately concluded that McGrory had not discriminated against Thomas and that Thomas had performance problems, the attorney found McGrory uncooperative during the investigation. She reported that he refused to answer questions regarding how he ranked his subordinates and who had complained about Thomas. As a result of the attorney’s report, Applied Signal terminated McGrory for having been uncooperative during the investigation. In response to questions from employees regarding the reasons for McGrory’s termination, McGrory’s supervisor replied that he had been terminated for failing to cooperate in the investigation.

McGrory subsequently sued Applied Signal for wrongful termination in violation of public policy, gender discrimination, and defamation. The trial court granted Applied Signal’s motion for summary judgment and dismissed the lawsuit; McGrory appealed.

Applicable Law

California law recognizes the at-will doctrine, meaning, an employer may terminate an employee for any reason except for a reason that violates a fundamental public policy recognized in a constitutional or statutory provision. Public policy, expressed in part in California’s Fair Employment and Housing Act (“FEHA”), prohibits employment discrimination on the basis of sex. To prevail in a discriminatory discharge case, an employer must show that one or more reasons for the adverse employment action were “unrelated to unlawful discrimination.”

California law also provides that a publication or broadcast is privileged if made “in a communication, without malice, to a person interested therein, (1) by one who is also interested, or (2) by one who stands in such a relation to the person interested as to afford a reasonable ground for supposing the motive for the communication to be innocent, or (3) who is requested by the person interested to give the information.” The common interest privilege applies to statements by management and coworkers to other coworkers explaining why an employer disciplined an employee. 

Claims Rejected

McGrory argued that California’s public policy protects anyone who participates in an internal investigation from discrimination and retaliation, even if the participant is uncooperative. As no California state law addresses this issue, the Court looked to analogous federal case law under Title VII of the Civil Rights Act of 1964. Federal courts have determined that the immunity for participating is limited to “sincere participation,” the Court found. In other words, the prohibition against discriminating against an individual for participating in an investigation does not prohibit an employer from imposing discipline for an employee’s misbehavior during an internal investigation, such as attempting to deceive the investigator. Likewise, refusing to cooperate with an investigation into a discrimination claim is not a protected activity. Following the reasoning in the federal decisions, the Court concluded that California’s public policy does not protect deceptive activity or withholding information during an internal investigation. “Such conduct is a legitimate reason to terminate an at-will employee,” the Court stated. 

The Court next determined McGrory’s gender discrimination claim was meritless. The evidence showed that Applied Signals disciplined male and female employees, the Court pointed out, and there was no evidence that the attorney conducting the investigation harbored any anti-male bias. Thus, the Court concluded, “No reasonable inference of a discriminatory motive can be drawn from this evidence.”

Finally, the Court examined McGrory’s claim that his supervisor defamed him by relating to another employee that he was terminated for failing to cooperate in the company’s investigation. The Court rejected McGrory’s contention, finding the statement was protected by the common interest privilege.

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 While McGrory may be good news for California employers who are confronted with at-will employees who refuse to cooperate in workplace investigations, it may not apply to employees covered by a collective bargaining agreement where the agreement provide them enhanced rights during an investigation. If you have any questions about this or other workplace developments, please contact the Jackson Lewis attorney with whom you regularly work. 

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