Davis v. Zurich American Insurance Co.

Background

Howard Davis worked for Zurich American Insurance Co. for approximately 31 years in its San Francisco office. Zurich terminated him in July 2018, when he was 58. Davis had worked in claims support, billing review, and claims adjustment. He said he had never received a negative performance evaluation or been disciplined during roughly his first 30 years at Zurich, and that his evaluations from 2007 through 2017 were highly positive.

Lyn Fortin became Davis’s direct supervisor in March 2017. The parties agreed that Fortin assigned Davis additional duties, but they disputed the amount and difficulty of the work and whether Davis’s performance problems resulted from poor performance or an unreasonable workload. Davis received generally positive reviews in August 2017 and February 2018, although both identified areas for improvement. Zurich later issued him two written warnings related to overtime and placed him on a performance improvement plan.

During Davis’s vacation in July 2018, Zurich employees discovered a disorganized file room in the San Francisco office. Fortin concluded that many documents and items belonged to Davis and believed they included sensitive information and unprocessed materials. Davis disputed responsibility for the room, said many employees had access to it, and contended that employees used it during office moves and clean-desk audits. Zurich said Fortin, Robin Roberts, and Andrew Atkinson decided to terminate him because of the file room. The court noted that Zurich’s stated explanation shifted among the file room, Davis’s performance, and a combination of those matters.

Rulings on the discrimination claims

Davis brought claims under California’s Fair Employment and Housing Act for age discrimination and failure to prevent age discrimination, along with a California wrongful-termination claim based on the alleged discrimination. Zurich moved for summary judgment, which asks whether the evidence leaves a genuine factual dispute requiring a trial.

The court denied summary judgment on all three discrimination-based claims. Applying the burden-shifting framework used for employment-discrimination claims, the court found that Davis had presented enough evidence to make an initial showing of discrimination and to support a possible finding that Zurich’s stated reason was pretext—a false or misleading reason used to conceal discrimination.

The court identified evidence that could support Davis’s position, including his decades of positive performance reviews before Fortin became his supervisor, his replacement by a 34-year-old worker, Fortin’s termination of three other people over age 55 without terminating anyone under age 40, statements that a jury could interpret as age-coded, unusually intensive discipline, and the failure to conduct a thorough investigation of the file room before terminating him. The court emphasized that deciding whether Zurich’s explanation was truthful and whether age motivated the termination required credibility determinations and weighing disputed evidence, which are tasks for a jury rather than a judge on summary judgment.

Because Zurich’s motion on the underlying age-discrimination claim was denied, the court also denied it on Davis’s failure-to-prevent-discrimination claim. The court likewise allowed the discrimination-based wrongful-termination claim to proceed because it was derivative of the discrimination claim. The court denied summary judgment on punitive damages, finding that a reasonable jury could determine that the alleged conduct was malicious or oppressive, while expressly stating that it was not holding that Zurich actually acted maliciously or oppressively.

Breach-of-contract claim

Davis claimed that Zurich and he had an implied agreement that Zurich could terminate him only for good cause rather than at will. The court granted summary judgment to Zurich on this claim.

California generally presumes employment is at will, although the presumption can be overcome by an express or implied agreement requiring good cause for termination. The court found that Davis conceded in his deposition that he understood his employment to be at will. Zurich’s written policies and the performance improvement plan that Davis signed also stated that employment was at will.

The court rejected Davis’s reliance on his long service, positive treatment, and statements by Charmaine Cook and Fortin that they wanted or expected him to remain with Zurich. It held that those facts, individually or together, did not show a mutual understanding that Davis could be terminated only for good cause.

Wage claims

Davis alleged that Zurich failed to pay overtime, provide accurate itemized wage statements, and pay wages when due. The court granted summary judgment to Zurich on all three claims.

The court explained that an employer generally is not liable for unreported overtime when it did not know, and had no reason to know, that the employee was working overtime. Zurich investigated whether Davis had worked additional overtime, including by reviewing his building-entry records, and directly asked him to report any overtime. Davis stated that he had no overtime to report. The court treated that affirmative statement as defeating Davis’s argument that Zurich knew or should have known about the overtime. Davis identified no separate basis for the wage-statement or delayed-payment claims, so the court granted summary judgment on those claims as well.

Evidentiary issues and sealing motions

The court denied Zurich’s request to strike an errata filing correcting missing pages, omitted exhibits, and typographical errors. It addressed several evidentiary objections, explaining that some statements could be considered to show what decisionmakers believed but not for the truth of disputed facts. The court did not rely on certain photographs or a declaration statement raised in reply briefing.

Zurich moved to redact personal identifying information and Zurich insurance claim identifiers from briefs and exhibits. The court stated that this information was highly confidential, unrelated to the merits, and narrowly targeted for sealing. The provided opinion text ends before stating the final disposition of the motions to seal, so that disposition is not included here.

Disposition

The court’s conclusion states that Zurich’s motion for summary judgment or summary adjudication was GRANTED with respect to claims three, five, six, and seven and DENIED with respect to claims one, two, and four. Summary judgment was also denied with respect to punitive damages.