Roby v. McKesson: Good News and Bad News for Employers

January 2010Newsletters California UPDATE Employment Law

The California Supreme Court’s recent opinion in Roby v. McKesson Corp. is a tale of two decisions – the best of worlds and the worst of worlds. On the one hand, the case dramatically limits the use of punitive damages in employment cases. On the other hand, it provides some sobering insights for California employers dealing with disability claims.

The Allegations

Plaintiff Roby had been a 25-year customer service employee at McKesson when she was terminated in 2000 for repeatedly violating the company’s new attendance policy. That policy contained strict guidelines for escalating discipline after a specified number of “occurrences” in any 90-day period.

Roby allegedly suffered from panic attacks that caused her to miss work frequently without notice, and she was documented under the attendance policy. Her managers allegedly knew that her absences were caused by a psychological problem but did not consider whether her absences might be related to a covered disability or whether she might be entitled to protected time off under the FMLA or California’s CFRA.

Additionally, the medication Roby took for her condition allegedly caused her to emit an unpleasant body odor, and her supposed nervous disorder caused her to “dig her fingernails into the skin of her arms, producing open sores.”

Supervisors made negative comments about Roby’s body odor and sores. She was allegedly excluded from meetings and was reprimanded and belittled in front of others. Roby said she complained about her supervisor’s conduct, to no avail.

After Roby was terminated for repeated violations of the attendance policy, she sued for harassment and disability discrimination.

The Court of Appeal rendered three holdings:

  1. The award of noneconomic (or emotional distress) damages was “hopelessly ambiguous” (justifying a reduction in compensatory damages from $3.5 to $1.9 million);
  2. There was sufficient evidence to support a harassment verdict against the individual supervisor; and
  3. The punitive damage award of $15 million exceeded the constitutional limit and should be reduced to a oneto- one ratio with the compensatory damage award (i.e., $1.9 million).

Discrimination and Harassment – The Bad News

The first lesson from this case is that employers should not mindlessly apply an attendance policy to an allegedly disabled employee. Managers must be trained to alert human resources when continued absences are related to an ongoing medical issue. Then HR must consider whether the employee’s absences are protected serious health conditions (under the FMLA/CFRA) or disabilities (under the ADA and/or California’s FEHA) and must realize that the law often requires exceptions to an attendance or leave of absence policy in order to accommodate a disability.

The second lesson here is a sobering reminder that supervisors (and even coworkers) can be held personally liable for harassment under California law. The court upheld the verdicts and damage awards against Roby’s supervisor, which included compensatory and punitive components. These awards stemmed mostly from the supervisor’s conduct in belittling and demeaning Roby in front of others. Companies should take steps to train their managers to understand that harassment based on any category protected by law (including disability) can subject them to personal liability.

Punitive Damages – The Good News

The constitutionality of unlimited punitive damages, as applied under California’s discrimination statute, has been debated for years. Finally, in a rather surprising result, the court limited the “exemplary (punitive) damages” in this case to no more than the amount of “actual damages” (economic and emotional). This one-to-one rule resulted from a fact-specific analysis that won’t necessarily apply in all cases. But it should help reduce the potential catastrophic risk of employment litigation in California.