By Cathleen S. Yonahara, Freeland Cooper & Foreman LLP

    Califronia employment lawThe following sexual harassment case was tried by a jury three times. The first time, the jury found in favor of the school district. The second time, a mistrial was declared before a verdict was rendered. The third time, the jury awarded the employee $199,399 for her sexual harassment claim. The trial court then awarded the employee $3,224,569 in attorneys’ fees. The school district and the alleged harasser appealed the verdict and the attorneys’ fee award.

    A brief history of the case

    Danielle Baez sued her former employer, Burbank Unified School District, and the district’s former chief facilities officer, Craig Jellison, for hostile work environment harassment in violation of the California Fair Employment and Housing Act (FEHA).

    She also alleged claims against Jellison for battery, false imprisonment, and intentional infliction of emotional distress. According to Baez, Jellison began pursuing her in December 2005 with the intent of engaging in an extramarital affair and then sexually assaulted her in his office in July 2006 after she rejected his advances.

    In response, the school district and Jellison alleged that Baez had engaged in an inappropriate sexual relationship with her direct supervisor, Steve Bradley, the assistant superintendent of business, and raised the complaint of harassment against Jellison only after she became the subject of a workplace investigation into her improper conduct with Bradley.

    The school district filed a cross-complaint against Baez for fraud, concealment, and implied indemnity based on her false representation that she was disabled from working between March and November 2007, and based on that representation, the district granted her a paid medical leave of absence while she secretly worked at another job.

    The first trial

    The first trial occurred in June 2009. Before the start of trial, Baez filed a motion to exclude evidence of her extramarital affair with Bradley. The trial court denied the motion, ruling that evidence of her affair with Bradley was admissible to rebut her claim that Jellison had sexually assaulted her and to show that she may have manufactured the claim against Jellison to deflect attention from the school district’s investigation into the affair.

    After the first trial concluded, the jury returned a verdict in favor of the school district and Jellison on Baez’s sexual harassment claim. The jury also found in favor of the district on its cross-complaint and awarded it $18,566. Baez appealed.

    An appellate court reversed the judgment and ordered a new trial, finding that the trial court erred by admitting the evidence of Baez’s extramarital affair with Bradley. Under Evidence Code Section 1106, a defendant seeking to present evidence of a plaintiff’s sexual conduct in order to attack her credibility must first file a motion under Section 783 and offer proof of the relevancy of the proffered evidence. However, neither the school district nor Jellison made such a motion.

    The second trial

    Before the second trial started, the school district and Jellison filed a motion under Section 783 to permit the introduction of evidence about Baez’s extramarital affair with Bradley. They argued that the evidence was relevant to challenging her credibility and disproving her claim for emotional distress damages. In response, Baez stated that she wouldn’t present any evidence about the effect that Jellison’s alleged conduct had on her marriage or seek damages for any marital discord.

    The trial court denied the Section 783 motion, concluding that evidence of a consensual affair between Baez and Bradley wasn’t relevant to Baez’s credibility or damages and there was a risk of undue prejudice. According to the trial court, “There’s not going to be any reference to the affair with Bradley, explicitly, implicitly, fleetingly or any other way and that includes other stressors. That’s the ruling.”

    The second jury trial began on October 10, 2013. However, on the third day of trial, Baez moved for a mistrial on the grounds that the defense counsel had repeatedly violated the trial court’s order by referencing the Baez-Bradley affair. The trial court granted the motion.

    The third trial

    The case went to a third jury trial, which lasted from October 18 to November 12, 2013. The following evidence was presented at trial.

    As a senior administrative secretary, Baez was directly supervised by Bradley. She also performed some work assignments for Jellison. She initially had a friendly relationship with Jellison, and they frequently had lunch together with other employees and conversed on the telephone outside work. At some point, however, their relationship changed as Jellison began expressing a romantic interest in Baez, even though they were both married.

    In December 2005, Jellison started to send Baez sexually suggestive e-mails and told her that he had romantic feelings for her. She admitted that she wasn’t offended by any of his e-mails, and before July 26, 2006, he hadn’t engaged in any conduct that offended her.

    Baez testified that on July 26, 2006, Jellison called her to his office to discuss a potential job transfer. They initially talked about the possibility of her transferring to his department, which she didn’t want. Suddenly, he sexually assaulted her.

    Immediately after the incident, Baez called her best friend. When she arrived at her friend’s home a short time later and told her about the assault, she was crying and her shirt was torn. At trial, Jellison denied that any sexual assault occurred, denied that he had a romantic interest in Baez at any time, and either denied sending the e-mails to her himself or stated that he couldn’t recall whether he sent them.

    In November 2006, a few months after the alleged assault, Jellison reported to the school district that Baez and another employee had engaged in misconduct at work. The following month, the school district retained outside counsel, Sukhi Sandhu, to investigate the allegation. In February 2007, during the course of the investigation, Baez reported to Sandhu that Jellison had sexually harassed and assaulted her.

    The school district authorized Sandhu to conduct an investigation into Baez’s sexual harassment complaint. In his interview with Sandhu, Jellison denied he ever sexually touched Baez or sent her any sexually inappropriate e-mails. Sandhu didn’t find his denials of Baez’s allegations credible.

    During the investigation of her sexual harassment complaint, Baez twice encountered Jellison at the school district’s administrative offices, which upset her because she had been assured that she wouldn’t have any contact with him.

    The day after her second encounter with him, she went on a medical leave of absence and received 50 percent of her salary as a disability benefit from the school district. While she was on paid medical leave, she began working elsewhere, but she failed to notify anyone at the school district of her other employment.

    Sandhu prepared a written report of her investigative findings, which she provided to Dr. Gregory Bowman, the superintendent of the school district. The investigator concluded that Baez and Jellison had a consensual flirtatious relationship until July 26, 2006. However, she found that there was sufficient credible evidence to support some of Baez’s allegations about the incident on July 26. Her report stated:

    Given the nature of the e-mails exchanged between them and their extremely flirtatious relationship, it is more likely than not that something happened in the room that day. The question is whether what actually happened is closer to Ms. Baez’s version or to what Mr. Jellison claims. . . . I believe the conduct that took place in the room more closely comports with Ms. Baez’s version of the events than Mr. Jellison’s. Mr. Jellison was not credible when responding to the allegations brought by Ms. Baez.

    In May 2007, Baez received a letter from Bowman explaining the results of the school district’s investigation of her sexual harassment complaint. The superintendent stated that the school district’s investigator had determined that the e-mails Jellison sent her were not inappropriate or offensive and that “while certain conduct may have taken place” between them in Jellison’s office on July 26,”it was either not as [Baez] described and/or not unwelcome.” Shortly after receiving that letter, Baez filed a civil lawsuit against the school district and Jellison.

    In June 2007, Baez was notified that she was being demoted from senior administrative secretary to budget accounting technician, which meant that she would have more contact with Jellison on work-related matters.

    In an accompanying statement of charges, the school district stated that Baez had used school district resources and equipment to have personal e-mail exchanges with Jellison in violation of school district policy and had falsely represented to the school district’s investigator that she was offended by the communications when she was in fact an active and willing participant.

    After receiving notice of the demotion, Baez decided not to return to work from her leave of absence, and the school district terminated her employment.

    The following month, the school district disciplined Jellison for misusing school district resources and equipment in his e-mail correspondence with Baez. His job title was changed from chief facilities officer to senior director of facilities, and his salary was reduced. However, his job responsibilities and reporting structure remained the same.

    After Baez’s employment was terminated, Jellison’s former salary was reinstated, but his job title wasn’t restored, and he later resigned. He was never disciplined by the school district for any misconduct related to the July 26 incident.

    The jury’s verdict

    At the end of the third trial, the jury returned a verdict in favor of Baez on her sexual harassment claim against the school district and Jellison and awarded her $199,400 in damages. The jury returned a verdict in favor of Jellison on the claims for battery, false imprisonment, and intentional infliction of emotional distress. The jury also returned a verdict in favor of the school district on its cross-claim against Baez for intentional misrepresentation and awarded the district $19,501 in damages.

    Following the jury’s verdict, Baez filed a motion requesting her attorneys’ fees and costs as a prevailing plaintiff under the FEHA. The trial court awarded her $3,224,569 in attorneys’ fees. The school district and Jellison appealed the judgment in Baez’s favor and the postjudgment orders awarding her attorneys’ fees and costs.

    Appeal of evidentiary rulings

    On appeal, the school district and Jellison contended that the trial court improperly admitted evidence of Sandhu’s findings and opinions on credibility during her investigation into Baez’s sexual harassment complaint. They argued that it was the exclusive role of the jury to evaluate the credibility of witnesses.

    The appellate court disagreed, finding that such evidence was properly admitted because the school district asserted as a defense at trial that it had properly and timely investigated the sexual harassment complaint.

    The school district and Jellison also argued that the trial court improperly excluded evidence of Baez’s marital problems as an alternative source of her alleged damages. The appellate court held that filing the sexual harassment lawsuit didn’t waive Baez’s fundamental right to privacy in her marital relationship.

    Further, she didn’t claim any damages for loss of consortium or other special damages related to her marriage. Given the nature of the evidence and the privacy rights involved, the appellate court held that the trial court properly excluded it.

    Appeal of attorneys’ fee award

    The school district and Jellison also claimed that the trial court erred in awarding attorneys’ fees to Baez for the time her attorneys spent on the first trial because she didn’t prevail in that trial. The appellate court wasn’t persuaded.

    As a prevailing party under the FEHA, Baez was entitled to recover attorneys’ fees for all the hours her counsel reasonably spent litigating the action to a successful conclusion, including the time spent litigating the action in the first trial, which she successfully appealed. Baez v. Burbank Unified School Dist. (California Court of Appeal, 2nd Appellate District, 1/25/16, unpublished).

    Bottom line

    The jury awarded the employee in this case about $200,000 on her sexual harassment claim. Because a prevailing employee in an FEHA case is entitled to attorneys’ fees and the employee went to trial on her claims three times, she recovered more than $3 million in attorneys’ fees.

    It isn’t unusual for an attorneys’ fee award to exceed the damages award in FEHA cases. When evaluating your potential liability for FEHA violations, you need to consider the liability for damages as well as attorneys’ fees and costs.

    This case also serves as an important reminder that conducting a prompt and thorough investigation into sexual harassment complaints alone is not sufficient. If the investigation reveals that harassment occurred, you must take effective remedial action.

    In this case, the investigator found that the alleged harasser likely engaged in some type of sexual assault on July 26, 2006; however, the employer never disciplined him for that conduct. That likely played a role in the eventual outcome of the litigation.

    Cathleen S. Yonahara, an editor of California Employment Law Letter can be reached at Freeland Cooper & Foreman LLP in San Francisco, yonahara@freelandlaw.com.