McGrory v. Applied Signal Tech., Inc.

This is a Non Profit Project. We don't collect personal data and we don't use cookies.

McGrory v. Applied Signal Tech., Inc. in California

When an employer investigates misconduct in the workplace, employees have a duty to cooperate with the inquiry.

Employer investigation of discrimination: McGrory v. Applied Signal Tech., Inc.

By Sophia S. Lau. She is a partner at Early, Sullivan, Wright, Gizer & McRae in Los Angeles, where she handles commercial litigation.

Is an employee obligated to assist his or her employer in the investigation of another employee’s discrimination claim? According to a recent California appellate decision, the answer appears to be yes.

The case involved John McGrory, who had sued his former employer, Applied Signal Technology, for wrongful termination. (McGrory v. Applied Signal Tech., Inc., 212 Cal. App. 4th 1510 (2013).) Although the Silicon Valley company had determined (after an internal investigation) that McGrory had not discriminated against a lesbian subordinate, he was terminated for violating the company’s sexual harassment policy and, more to the point, being uncooperative and deceptive during the investigation of the underlying matter.

McGrory was an at-will employee. He supervised a dozen subordinates, including Dana Thomas, an openly gay woman. After McGrory criticized Thomas’s work performance, she complained to human resources that he did so only because of “sexual orientation and/or gender discrimination and harassment.” Thomas also claimed that she had witnessed McGrory “telling off-color jokes” that demonstrated a “lack of good judgment and sensitivity to those of other cultures.”

Applied hired a third-party attorney to investigate Thomas’s allegations of discrimination and harassment. The attorney-investigator’s report exonerated McGrory of discrimination charges and found that Thomas indeed had work-performance issues. However, the investigator also concluded that McGrory had been uncooperative and untruthful during the investigation and had violated company policies by making jokes based on race and sex in the workplace. Based on those findings, the investigating attorney concluded that McGrory’s termination was justified, as his conduct was unacceptable for a manager of his level and experience and he seemed unwilling to acknowledge or reform his behavior.

Immediately after he was fired, McGrory sued for wrongful termination and defamation, apparently because Applied had told one of his former coworkers that he was let go for being uncooperative in the investigation (a charge McGrory denied). McGrory alleged, among other things, that his termination violated public policy because he was fired as a result of participating in an employer’s internal investigation. (Thomas, the subordinate who filed the underlying complaint, eventually resigned and settled with Applied for approximately $90,000.)

The trial court, in ruling for Applied, found that being uncooperative or deceptive in an employer’s internal investigation is not a protected activity under state or federal law.

On appeal, since California’s Fair Employment and Housing Act (FEHA) (Cal. Gov’t Code §§ 12900-12996) did not address the issue of whether participating in an employer’s internal investigation was protected activity, the court looked to similar federal case law under Title VII (42 U.S.C. §§ 2000e-2000e-5). Following the reasoning in the federal decisions, the court concluded that California’s public policy protects neither deceptive activity nor the withholding of information during an internal investigation; it held that such conduct is a legitimate reason to terminate an at-will employee.

FEHA and Title VII prohibitions against retaliation do not prohibit an employer from imposing discipline based on an employee’s misbehavior during an internal investigation. By extension, refusing to cooperate with an employer’s investigation is not a protected activity. Thus, in affirming the employer’s termination decision, the court held that a company investigation does not meet the definition of a “proceeding” under FEHA and “public policy does not protect deceptive activity during an internal investigation.”

Consequently, McGrory was unable to demonstrate that Applied terminated him for an illegitimate reason. There was no evidence supporting a rational inference that intentional discrimination – or any other improper motive – was the root cause of his termination.

Finally, the court rejected McGrory’s defamation claim because Applied’s statements regarding the reasons for his termination were conditionally privileged; California’s statutory common interest privilege applies to statements by management to employees explaining why an employer disciplined an employee. (Cal. Civ. Code, § 47(c).) McGrory failed to show any actual malice on the employer’s part that would defeat the qualified common interest privilege.

The message from the McGrory decision: When an employer investigates a claim of discrimination, all employees should cooperate and be truthful.

Leave a Comment