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Court of Appeal, Second District, Division 7, California.

Jeffrey LANE et al., Plaintiffs and Appellants, v. HUGHES AIRCRAFT CO., Defendant and Respondent.

No. B090258.

Decided: January 06, 1997

Ian Herzog,Evan D. Marshall and Amy Ardell, Santa Monica, for Plaintiffs and Appellants. Paul, Hastings, Janofsky & Walker, Paul Grossman, Los Angeles, Dennis H. Vaughn, Santa Monica, and George W. Abele, Los Angeles, for Defendant and Respondent.

Jeffrey Lane, an African American, and David Villalpando, his former supervisor, appeal from a judgment notwithstanding the verdicts and an order alternatively granting a new trial following jury verdicts against plaintiffs' former employer, Hughes Aircraft Co. (Hughes).   The jury had found that Hughes racially discriminated against Lane, and retaliated against Villalpando for his refusal to write a poor job evaluation of Lane. Plaintiffs also challenge certain evidentiary rulings excluding expert testimony and allowing, in the trial's punitive damages phase, testimony of Hughes' activities in support of minorities.   In addition, plaintiffs contest a jury instruction limiting the period damages are recoverable, and denial of their motion to disqualify defense counsel.


Hughes is a large aerospace corporation which employs about 50,000 people.   In the 1980s and early 1990s, roughly half of its work consisted of classified, defense projects for the federal government, and the other half, nonclassified, commercial projects for private companies.

Hughes' Program Office administers contracts Hughes has with the federal government and with private companies.   The Program Office also deals directly and has primary contact with Hughes' customers.

Hughes' Human Resources (HR) Department handles internal employee complaints.   In 1987, attorney Susan Goland began working in the HR Department.   Her duties included investigating race discrimination claims and defending Hughes against discrimination complaints filed with the federal Equal Employment Opportunity Commission or the California Department of Fair Employment and Housing.

Plaintiffs Lane and Villalpando worked in Hughes' Space and Communications Division, which had between 5,000 and 5,500 employees.   This division contained laboratories divided into departments, which in turn were divided into sections.

At Hughes, the management positions started at level 4B, and a section head was an introductory line management position.   Spacecraft managers were generally level 4B employees, and operations (Ops) managers were generally ranked higher, at level 4A. The highest management position was at level 1. Laboratories managers were at level 2.

Employees were periodically evaluated, with a rating of 5 being the lowest performance level below Hughes standards, a rating of 1 being the highest performance level and a rating of 3 meeting Hughes standards.

In 1990 and 1991, Charles Lance Mohler was a level 2 laboratories manager in charge of about 500 employees in four laboratories in the Space and Communications Division, including the 4M Laboratory 1 where Lane and Villalpando worked.   Mohler's supervisor was Mal Meredith.   Directly under Mohler were assistant lab managers Gavien Miyata, ranked at level 2, and Howard Seeb. Assistant lab manager Hal Solomon reported to Seeb.

Of Mohler's over 50 managers level 4 and above, there were no black managers.   None of Mohler's approximately 20 department managers were black;  nor were any of the 10 “technical heads,” who were below department managers, black.   No black department managers or technical heads were proposed for 1992.

A. Plaintiff Lane's Work History Before Villalpando Became His Immediate Supervisor

Lane first worked for Hughes in the summer of 1974 as an assistant engineer while majoring in physics as an undergraduate student at the University of Southern California.   At the time, he was 19 years old.   He returned to Hughes in 1977, when he completed almost all his course work to obtain a bachelor's degree.2  At that time, Lane was an “MTS 1” test engineer, the lowest level 7 technical position.

In 1985, Lane tendered his resignation because the classified, military work he did conflicted with his religious beliefs.   However, a manager whom Lane was under convinced Lane to do commercial work for Hughes.   Lane then worked in the communication satellite field, performing engineering functions on satellites.

Lane's performance reviews in the 1980s were consistently good.   Nevertheless, in 1986, having never before been promoted, Lane had to request a promotion from Robert Ward, his supervisor at the time.   Lane received a one-step promotion in 1987, his tenth year at Hughes.

By 1987, Lane was a test director and a group head, positions which a Hughes organization chart indicated should be ranked at level 5. Even though Lane was ranked at no higher than a level 6, he was the highest ranked black employee in Ward's section.

When Lane received a promotion in 1987, he was assigned to the Inmarsat program.   The Inmarsat was a communications satellite for ship-to-shore communications.

Lane assumed ever-increasing responsibilities on the Inmarsat, from test director to spacecraft manager in 1988.   According to a Hughes chart, a spacecraft manager should be a level 4 position, but Lane was still ranked no higher than a level 6.

A performance appraisal from Ward dated December 9, 1988, and written by someone else, commended Lane as an “outstanding Inmarsat team leader” who “is competent, responsive and thorough in performing his tasks.   Mr. Lane also possesses the qualities of a good manager․   He is respected by his fellow workers and makes a conscious effort to build team work and morale.  [¶] I plan to train and groom Mr. Lane to assume the operations manager role on Inmarsat CM-4.”

In early 1989, Lane became the Ops manager on Inmarsat CM-4. Lane asked for and Ward denied Lane a promotion.   Consequently, Lane remained a level 6 employee.

Lane contacted the HR Department to complain about race discrimination, but an HR staff member named Mark said there was no discrimination.

Thereafter, on February 2, 1989, Lane wrote a memorandum to Robert Farmer, Lane's department manager at the time.   Lane stated that in the middle of his eleventh annual performance appraisal, he felt “compelled to respond to a chronic under-evaluation of my efforts․  [¶] ․ However, in discussing this issue with my immediate supervisor, Mr. Ward appears unable and/or unwilling to objectively assess my job performance against my overall rating and put forth the necessary effort to rectify this disparity.   Therefore, I appeal to the integrity of higher authority for a rational review of this matter.”

Following the February 2, 1989 memorandum, Lane received a raise in two allotments.

Two months after the memorandum, Ward rated Lane lower than before.   Instead of giving Lane a “2” performance rating, Ward rated Lane at a “3,” merely meeting Hughes standards.

In 1989, Lane additionally worked on the “Consolidated Test Laboratories” or “CTL” program, and was the test director of the KU Band. CTL was a plan to consolidate testing for equipment returned from Space Shuttle flights in a single organization.   The KU Band was the radar and communications system for the space shuttle.   Mohler's staff was responsible for testing the deployed assembly of the KU Band, while other organizations handled manufacturing parts.

In performing his CTL and KU Band tasks, Lane worked under James Samis, a level 5 employee.   As Samis was only supposed to be a temporary Ops manager for the CTL program, Samis groomed Lane to replace him.3

In 1989, Samis wrote in Lane's performance evaluation that Lane “has taken on the KU Band test direction tasks in the last couple of months and has performed very well in the limited operations and time available in conjunction with his Inmar Sat duties.”

Samis voluntarily left the CTL program in 1990.   In preparation of his departure from the program, Samis recommended in writing that Lane “continue to be the responsible person from Division 4M for overseeing daily activities on D.A. testing” 4 and that Howard Seeb “be the contact point for all CTL issues at this time.”

After Samis transferred from the CTL program, Lane was in charge of the KU Band project for Mohler's laboratory, and he remained the test director.   Occasionally referred to as an Ops manager, Lane lacked the official job title.

Before Samis left the CTL program in 1990, he was briefly part of an Ops and spacecraft managers organization formed by Mohler that same year.   Lane, however, was left out of the group.

B. Events Beginning in Spring 1990 When Villalpando Became Lane's Supervisor

In March or April 1990, Villalpando became acting “RF” Section Head under Solomon, who interviewed Villalpando for the position.   As such, Villalpando became Lane's immediate supervisor.   Solomon selected Villalpando over Lane because Solomon felt Villalpando had a stronger technical background than Lane and because Villalpando was cleared to work on commercial and classified spacecraft.   Villalpando, a level 5 employee, has a B.S. and an M.S. in electrical engineering.

Thinking it unusual for Lane to be a level 6 employee because he had the responsibilities of a level 4 Ops manager, Villalpando asked Lane why he was not a higher level than 6. Lane answered that it was because of his race.   Villalpando then approached Solomon, who said he did not know why Lane was not in Mohler's organization for Ops and spacecraft managers, but that he would look into the matter.

About a month later and then about a month or so afterward, Villalpando approached Solomon again to find out why Lane was not in Mohler's group.   Each time, Solomon responded that he was looking into the matter.

By around November 1990, Lane began to feel he was not wanted on the KU Band program because he was excluded from key meetings.   Some of these meetings were held for Mohler's organization created that same year.

In the end of 1990 or beginning of 1991, when raises and promotion requests were made, Villalpando ranked Lane as the first on his list requesting promotions because Villalpando considered Lane one of his “top notch” employees.   Working directly with Lane, Villalpando found him to be a superior performer who was well-liked.   Mohler, under whom Lane had worked, likewise considered Lane a valued employee who did a good job.

Villalpando also recommended another black employee in his section, Rick Story, for promotion.   Story received the promotion.

Solomon agreed with Villalpando's recommendation to promote Lane. However, nothing happened.

In February 1991, on behalf of Mohler's laboratory, Lane led negotiations with the Program Office for the maintenance and repair of the KU Band project.   Villalpando assisted Lane. Throughout the negotiations, Lane and Villalpando followed Mohler's advice.   Mohler was not dissatisfied with Lane's and Villalpando's work in this area.

Around this time, Villalpando gave Lane an award for his superior performance on the KU Band. The award was issued by the Program Office, and signed by then-Program Manager Richard Johnson.

Johnson was later replaced by his assistant program manager, David Steele, in April 1991.

Meanwhile, a dispute arose between the Program Office and Mohler's staff negotiating for the CTL. The customer wanted less resources used than what Lane thought necessary to do the job satisfactorily.

While negotiations were ongoing, the Program Office told Mohler that it wanted to negotiate with someone possessing a higher rank than Lane.

On April 23, Steele told Mohler that Lane needed to be replaced.   By the end of April, Mohler took Lane off the KU Band.

Lane learned of his removal from his successor, level 3 Lab Manager Jan Sikola, who was previously Mohler's assistant on the original KU Band project.   At some point in time, Meredith called Villalpando to explain that Sikola replaced Lane because Sikola was better qualified than Lane as a result of Sikola's year of experience on the KU Band program.

In violation of Hughes' normal procedure for a removed employee to receive a transition plan, no such plan was made for Lane. Consequently, after Lane trained Sikola, he had nothing to do.

Sikola brought a level 4A assistant, Section Head Jack Collins, with him.   Sophie Neberling, who worked in a laboratory run by Sikola, took over the CTL negotiations.   Steele dealt with Neberling, and to some extent Collins and Sikola.   Eventually, two level 4 employees replaced Sikola and Collins.   None of Lane's replacements were black.   One of Lane's successors was a level 4 employee without a bachelor's degree.

When Lane asked Mohler, Solomon and Seeb why he was pulled off the KU Band, all three responded it was not a performance issue.   They told Lane that they had big plans for him and that he was a valued employee.   None of them gave Lane a reason for his removal, although Mohler mentioned Steele.

Knowing it can be distressing for a displaced employee not to have a transition plan, Mohler expected Sikola to at the minimum assist in making a transition plan for Lane. However, Sikola did not do so, expressing concern to Mohler about Lane's and Villalpando's performance.   Mohler relayed to Sikola his dissatisfaction with Sikola's failure to find a job for Lane, but did not document his displeasure.

Following Miyata's suggestion, Lane went to the HR Department, where he orally complained about race discrimination.

Later, on May 17, 1991, Lane brought Goland a written internal complaint after he understood that Goland would do nothing until she received a written complaint.   Before submitting the complaint, Lane expressed concern not to upset individuals who might retaliate against him, and requested Goland not contact his middle or lower management.   After Goland agreed to investigate outside Lane's management, Lane submitted the complaint.   In the complaint, Lane alleged that unlike non-black employees, it took him 10 years to receive his first promotion despite outstanding performance evaluations.

After Lane filed his complaint, he developed chronic fatigue.   Lane went on a temporary leave as of May 22.   While Lane was on leave, Meredith telephoned him on May 23, 24 or 25 to tell Lane to return to work.

On May 24, 1991, Meredith called Mohler to tell him the situation with Lane was critical, and that Mohler needed to find Lane a job right away.   In response, Mohler asked Steele to write a letter.

In a letter dated May 29, 1991, Steele compared Sikola with Lane and Villalpando, and was critical of Lane. This was the first criticism that Villalpando knew regarding Lane.

After Mohler received Steele's letter, he told Miyata, Seeb and Solomon that Meredith wanted them to transition Lane immediately.   Mohler assigned Solomon the task of getting Lane a job.

In early June 1991, Villalpando met with Goland and Solomon.   During the meeting, Goland expressed regret that Meredith telephoned Lane at home because it would look bad in court, and “she started talking about firing Jeffrey for insubordination for refusing assignments․”   Villalpando got the impression that Goland wanted him to document Lane's work performance.5  Miyata thought Goland discussed documentation in a general way.

Around the same time, Solomon was first advised of a possible problem with promoting Lane. The problem was that the promotions guidelines were made “somewhat more restrictive” in that Lane first needed to earn more before he could be eligible for the promotion that Villalpando recommended.

When Lane returned to work in early June 1991, no one had any concrete job offer, even though Lane asked Seeb and Mohler for assistance in finding a management position.   Lane did not get any career opportunity booklets, which periodically were supposed to list openings.

Around June 17, 1991, Lane met with Goland to give her additional documentation and express concerns of retaliation for filing the complaint.   Goland seemed to discount Lane's concerns, and he got the impression that Goland was not going to do anything about his retaliation claim.

In mid-June 1991, Villalpando contacted Goland who instructed Villalpando to document Lane's poor performance.

Not until June 22, 1991, did Solomon offer Lane a spacecraft manager position.   Lane considered this position a mere hypothetical position and a demotion in responsibilities because he was previously a spacecraft manager.   Lane told Solomon that he wanted his career to move forward.   Solomon told Lane that the spacecraft position was not a lesser position, that Lane would be responsible for managing more people, and that the budget would be about eight times greater than Lane's prior budget.

On June 22 Solomon also suggested that Lane speak to manager Jerry Hatch about a short-term position entailing writing proposals for new business.   Lane did not express interest in the job.

Meanwhile, Villalpando talked to Mohler, Solomon, Seeb, Miyata and Steele about the lack of a transition plan for Lane. Villalpando received vague responses to his questions, and was told that “big plans” were in store for Lane. Villalpando was also told that Lane did not receive a promotion because he did not earn enough to get promoted.   This was the first time Villalpando heard such an excuse for denying an excellent employee a promotion.

Unsatisfied with the responses, Villalpando called Meredith, a level 1 employee, to discuss the discrimination against Lane. Villalpando contacted Meredith because in a meeting held probably in 1989 Meredith expressed concern over the lack of minorities in Hughes' management levels.   Villalpando also contacted Meredith because there was still no transition plan for Lane.

Meredith told Villalpando that Hughes decided to make Lane assistant departmental manager to William Phillips, whose laboratory James Bradley ran as of June 1991.   Bradley, in turn, reported to Mohler.

Contrary to what Meredith said, Bradley had no intent of assigning any assistant managers.   Bradley only offered Lane a temporary job lasting three to six months, and this position had nothing to do with line management.

Sometime in late June 1991, Solomon told Lane he was assigned to work as Phillips' assistant manager, even though Hughes was eliminating the assistant manager position.6

In early July 1991 Lane began working for Phillips.   Lane told Phillips about his chronic fatigue, and that he could not work certain evenings because of his church commitments.   Although Lane was still organizationally under Villalpando until the transfer would occur, Villalpando was told that he was no longer Lane's supervisor.

At one of Phillips' weekly meetings, which Bradley rarely attended,7 Phillips introduced Lane and explained what his role was to be.   In addition, Phillips made sure in informal conversations that staff understood what Lane's role was.   In initial meetings between Phillips and Lane, no one mentioned Lane would be called assistant manager.

Lane was instructed to have test engineers write satellite testing procedures.   This assignment was difficult for Lane's predecessors because they had to compete with others for the test engineers' time.   Almost initially Lane requested that he be included on the organization chart to notify the test engineers that he had authority to supervise them.   However, Lane's request was not honored.

Not being transferred organizationally under Phillips was difficult for Lane because he had to tell a lot of people what to do, yet he was not on the organization chart showing those people had to report to Lane.8 Lane was not even on the department's “loan list” naming employees working in the department but officially listed in other departments.

Bradley told Phillips that he was dissatisfied with Lane's work.

In late summer of 1991, Hughes reorganized the laboratories, thereby opening up a new line management position.   This reorganization was planned beforehand.   Yet nobody asked Miyata to give Lane a position in any of the new positions resulting from the reorganization.

Sometime in the summer of 1991, Ed McFarlane, who worked as Phillips' RF Section Head, told Villalpando that upper management agreed to remove some of Villalpando's responsibilities.   Then lower management told Villalpando he was going to get more responsibilities.   At the same time, Villalpando was starting to receive negative input regarding Lane. Villalpando felt that the negative comments were made in an attempt to change his opinion about Lane.

As of August 20, 1991, Villalpando had a staff of about 45 people, while McFarlane had a staff of about 10 people.

In the late summer of 1991, at a presentation before about 10 or 15 people, McFarlane told Villalpando that upper management approved McFarlane to take over some of Villalpando's responsibilities.   Solomon was involved in the decision to select McFarlane as head of the newly created RF Department.   At the time, McFarlane required additional clearance to fully manage the department.

Unhappy with his encounter with McFarlane, Villalpando talked to Solomon, who assured Villalpando he would receive more responsibility.   Villalpando initially accepted a position in the new RF Department whereby he would continue to be responsible for the government portion of the RF activity but would have less responsibilities than before.

In September 1991, Solomon told Lane about another spacecraft opening.

That same month, Solomon spoke with Villalpando about Bradley's opinion that Lane did not show enough leadership or initiative.

On September 30, 1991, Goland scheduled a meeting with Solomon and Miyata to discuss her conclusions following her investigation of Lane's HR complaint.   During her investigation, Goland had found that it took an average of five years for a select group of employees to receive a promotion.   She found that Lane took the longest in getting a promotion.   Although Goland did not know why it took Lane so long to get a promotion, she considered the fact that most people hired out of school had engineering degrees, and Lane had a physics degree.   Goland noticed that Lane's early performance appraisals encouraged Lane to take engineering courses, but she could find no such courses in his record.

Despite assuring Lane that she would not contact his management while conducting her investigation of his complaint, Goland got information from Miyata and Solomon.   Miyata, however, only had a peripheral knowledge of the KU Band project, never worked with Lane on any project and did not know his work performance or job title.   Goland never spoke with Villalpando about whether Lane should be promoted in 1991.

Goland did not make it part of her investigation to determine whether in general black employees of Hughes were discriminated against in positions similarly situated as Lane. Nor did she try to find out how many blacks were in higher levels than Lane to determine whether Lane was underpaid and underpromoted as a result of his race.   She considered such an investigation unnecessary.

In investigating Lane's race discrimination claim, Goland did not go to Hughes' affirmative action office.   Having never worked in that office, Goland did not understand how affirmative action statistics were kept.   Nevertheless, Goland considered company-wide information irrelevant.

During her investigation, Goland discovered a white project engineer with the same title as Lane. The white employee also had a physics degree, had been with Hughes the same length of time as Lane, and was earning the same amount.   However, the white employee got his first promotion in less than five years.

At the September 30, 1991 meeting, Goland asked Solomon and Miyata what they would do to resolve Lane's HR complaint.   She also discussed the results of her investigation of the complaint, and her conclusion that there was no discrimination.   Right after the meeting, Miyata overheard Bradley mention Lane's poor performance.

Soon after the September 30, 1991 meeting, Villalpando told Lane that Bradley was criticizing Lane's performance.   Around this time, Lane was denied three promotion opportunities.   These opportunities included promoting Lane to become Phillips' assistant department manager, and giving Lane a position he had held which became elevated to a level 5 position.   The denial of the latter opportunity occurred publicly at a meeting.

In early October, Goland gave Lane her findings of no discrimination against him.

On October 1, 1991, Miyata told Villalpando to talk to Bradley because Miyata heard Bradley had performance problems with Lane. Miyata instructed Villalpando to document those problems, and not to talk to Phillips even though Lane was Phillips' assistant.9

Villalpando documented what Bradley said.   Villalpando then wrote to his department manager, Don Rath, a level 4 employee without a bachelor's degree, that Lane “has not worked up to his potential since April.   He could have provided better leadership for the 601TP effort.”

Notwithstanding Miyata's order not to talk to Phillips, Villalpando approached Phillips about eight items that Bradley listed regarding Lane's performance.   Phillips contradicted six items, stating they were either not Lane's responsibilities, Phillips never asked Lane to do them, or they were very low priorities.   Of the remaining two items, one item involved a huge task in which maintaining accuracy was difficult, but Phillips felt Lane did the best he could.   The other item was Lane's lack of good leadership over people whom Lane had no supervisory control in the organization chart.   Phillips opined that Lane met Hughes' performance standards.

Soon after meeting with Villalpando, on October 3, 1991, Phillips met with Bradley and Lane to discuss his work performance.   Bradley discussed where he felt Lane did not meet expectations given Lane earlier in the year.   They discussed what role Lane should have, and agreed that this was not a long-term job.

After Villalpando told Miyata about his conversation with Phillips, Miyata instructed Villalpando to write Lane a reprimand for poor performance.   Miyata remarked, “Dave, come on man, we are having a tough time deciding between you and Ed [McFarlane], we are looking for one of you to step forward and show that you got what it takes to be a department manager.” 10

Solomon also told Villalpando that Hughes was deciding whether to combine McFarlane's 10 employees with Villalpando's 45 employees, and, if so, whether McFarlane or Villalpando should be department manager.

At one time, Miyata told Villalpando that he had annoyed many people, including Mohler and Meredith, because of his support of Lane.

Feeling pressured by Miyata and Solomon, Villalpando rated Lane's performance as a “3,” meeting Hughes standards.

Thereafter, Villapando encountered Goland and Meredith once outside the building where Villalpando worked.   Goland told Villalpando, “I hear you are having performance problems with Jeffrey Lane.” Villalpando replied, “That's what Bradley said.”   Then Goland remarked, “Well, make sure you document it, we're going to need it some day in court.”   After Villalpando responded that he “wrote everything down,” Goland commented, “Isn't it great to see Dave coming around, who would have thought Jeff's strongest supporter would turn on him.” 11

Because Lane was supposed to be transferred under Phillips as of the summer of 1991, Villalpando did not include Lane on Villalpando's promotions list for 1992 promotions.   Relying on Villalpando's documentation of Bradley's eight-item list criticizing Lane, and Villalpando's mediocre rating of Lane, Miyata made the final decision to deny Lane's promotion.   Solomon was involved in the decision.

On October 16, 1991, Villalpando approached Phillips to request that Lane be transferred and promoted to assistant department manager.   Phillips did not object to Villalpando's request.

When Villalpando relayed to Miyata his October 16 conversation with Phillips, Miyata expressed anger at Villalpando's continued support of Lane, and warned Villalpando to never talk about promotions for Lane again.

Thereafter, in late October 1991, McFarlane informed Villalpando that McFarlane was going to be the new RF Department manager.   Initially, Villalpando was told he was going to work for McFarlane.   Villalpando repeatedly asked to meet with Mohler and Miyata, but was told there would be no meeting until Villalpando decided whether he was going to walk away from the rest of his responsibilities.

On October 30, 1991, Solomon told Villalpando in the parking lot that Mohler and Miyata did not want Villalpando around.

After Villalpando decided to give up his remaining duties, Mohler grilled Villalpando in the first week of November 1991 whether to promote Lane. Villalpando tried to avoid answering, and said, “I think I'm not going to buck my upper management anymore.”

On November 4, 1991, Mohler learned that Lane was not officially under Phillips.   Mohler discussed with Solomon how it would appear that Hughes retaliated against Lane for filing an HR complaint.   Mohler instructed Solomon to transfer Lane now, but Solomon did not comply.   He also involved Miyata and Seeb.

By November 7, 1991, McFarlane was given all Villalpando's accounts, and Villalpando lost all his responsibilities.

On November 8, 1991, Mohler met with Villalpando.   In the past few weeks before the meeting, Miyata, Seeb and Solomon had spoken to Mohler about Villalpando with respect to Lane. At the November 8 meeting, Mohler asked Villalpando whether he believed Lane was discriminated against.   Villalpando appeared to be nervous.   At the time, Mohler knew McFarlane instead of Villalpando became the RF Department manager.

After meeting with Villalpando, Mohler decided not to overrule the denial of a promotion for Lane. Mohler based his decision on Villalpando's failure to provide sufficient evidence to overrule the denial of a promotion.

In a letter dated November 11, 1991, Villalpando explained that his responses during Mohler's grilling on November 8 were made under duress.

On November 19, 1991, Goland wrote a report dismissing Lane's discrimination claim.   She discounted his high performance ratings in the 1980s, stating that “ratings frequently were inflated during that period.”   Goland further wrote that she could not decide why Lane was not promoted for more than 10 years.

In December 1991 Phillips and Bradley offered Lane a non-management position as a test engineer in their department.

Villalpando chose to work with Martin Short, a trusted friend.   Villalpando was offered multiple spacecraft manager jobs, which were lateral positions, and a quality assurance position which would have been a promotion.   He declined these offers because the jobs were not under Short and because Short told him that Short heard there were going to be a lot of layoffs in the Quality Assurance Department.

With no substantial tasks for about a four-month period, Villalpando researched the number of black employees in management positions at Hughes.   Around the time Lane began having problems with management, only one black employee, Ron Williams, was suddenly promoted to a level 5 effective April 27, 1991.

After Short told Villalpando that he was not going to support Villalpando, Villalpando began calling lawyers to find out what his rights were.   In March 1992, Villalpando telephoned the Paul, Hastings, Janofsky & Walker law firm on a Friday.   Villalpando was transferred to a female attorney, who asked him to detail what happened to him and Lane. Then the attorney told Villalpando that she worked for Hughes, and abruptly hung up.

The next Monday, Hughes' in-house counsel Warren Jackson asked Villalpando if he was “the Dave Villalpando that's been calling lawyers?”   Jackson told Villalpando that if he had a problem with Hughes, Villalpando should go to HR.

Following his conversation with Jackson, Villalpando ran out of the building, and never returned to his job.   At the time, Villalpando's wife was seven and a half months pregnant.

Pursuant to a letter written by Steve Dorfman, President of the Space and Communications Division, inviting staff to call Dorfman if they could not resolve a problem, Villalpando tried contacting Dorfman.

When Villalpando finally met with Dorfman, both men had attorneys accompanying them.   Hughes Vice President Tom Goley was also present.

In January 1992, Lane took a medical leave of absence due to the deterioration of his health, and he never returned to his job.

The next year, on January 18, 1993, Villalpando began a new job in the aerospace industry.   Villalpando earned more at the new job than at Hughes.


On February 24, 1993, Lane filed in superior court a complaint against Hughes.   His causes of action included race discrimination in violation of the California Fair Employment and Housing Act (FEHA), Government Code section 12900 et seq.

In June 1993, Villalpando filed a separate complaint against Hughes.

Lane amended his complaint several times, finally filing a third amended complaint on November 12, 1993.

Both Lane and Villalpando asserted causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional infliction of emotional distress, and retaliation in violation of FEHA. In addition, Villalpando claimed constructive discharge.

Hughes answered Villalpando's complaint on July 23, 1993, and Lane's third amended complaint on January 24, 1994.

On March 31, 1994, the superior court consolidated Lane's and Villalpando's actions.

On August 17, 1994, Hughes filed a motion in limine to exclude the testimony of Karlene Roberts and Russell Cunningham, whom plaintiffs designated as experts on discrimination, retaliation, and employers' human resources practices, procedures and policies.   Hughes made the motion on grounds that Roberts and Cunningham are not qualified to testify, and that their proposed testimony is irrelevant and prejudicial.

Over Lane's and Villalpando's opposition, on September 7, 1994, the trial court prohibited Roberts and Cunningham from testifying on the ultimate issues of retaliation and discrimination on the ground that such testimony would invade the province of the jury.   The court questioned Roberts' qualifications as an expert.

The case was tried in three phases, first liability, then all damages except punitive damages and last, punitive damages.

At the conclusion of the closing arguments at the liability phase, the trial court on September 29, 1994, orally instructed the jury.   The court explained that to prevail against Hughes, Lane and Villalpando need only prove one of their two bases of liability, breach of employment contract and violation of FEHA.

The court quoted portions of subdivisions (a), (f), (g), (h) and (i) of Government Code section 12940.   This statute makes it an unlawful employment practice “(a) For an employer, because of the race ․ of any person, ․ to discriminate against the person in compensation or in terms, conditions or privileges of employment ․ [¶] (f) For any employer ․ to ․ discriminate against any person because the person has opposed any practices forbidden under this part or because the person has filed a complaint, testified, or assisted in any proceeding under this part ․ [¶] (g) For any person to aid, abet, incite, compel, coerce the doing of any of the acts forbidden under this part, or to attempt to do so. [¶] (h)(1) For an employer ․ because of race ․ to harass an employee․   Loss of tangible job benefits shall not be necessary in order to establish harassment ․ [¶] (i) For an employer ․ to fail to take all reasonable steps necessary to prevent discrimination and harassment from occurring.”

The trial court further instructed that if Lane offers evidence that Hughes treated him differently because of his race, and if Hughes produced evidence that it had legitimate, nondiscriminatory and nonretaliatory reasons for its actions, then Lane may rebut Hughes evidence by “either directly showing that a discriminatory reason more likely was involved or indirectly by showing that the employer's explanation lacks credibility or is untrustworthy and not worthy of belief.  [¶] ․ The burden is always on the plaintiff to prove by a preponderance of the evidence that defendant discriminated against him because of his race.”   The court explained that Lane need not prove race was the sole or even dominant factor influencing Hughes to take adverse employment action.   Instead, Lane “need only show that there was a causal connection between plaintiff's race and the company's adverse employment action.”

On October 4, 1994, the jury returned verdicts for Lane and Villalpando on the liability stage.   The jury found that Hughes breached its employment contract with Lane requiring termination only for good cause, constructively discharged Villalpando in breach of its employment contract with Villalpando, breached the implied covenant of good faith and fair dealing, discriminated against Lane because of his race, and retaliated against Lane and Villalpando because they reported the discrimination.   The jury also found that Lane and Villalpando proved by clear and convincing evidence that Hughes was guilty of malice, oppression, fraud or despicable conduct.

A polling of the jury showed the jurors were unanimous in reaching their findings.

On October 6, 1994, the trial court heard Hughes' motion in limine to exclude the testimony of licensed social worker Victoria Dellaverson, Villalpando's treating psychotherapist, on the grounds that she is not qualified to testify as a psychoanalyst, and that her proposed testimony is irrelevant and prejudicial.   The trial court granted the motion.

During the second phase of the trial, the plaintiffs' family members testified.   Lane's treating psychiatrist, David Friedman, M.D., Ph.D., testified about Lane's depression.   Economist Joyce Pickersgill, Ph.D., testified on behalf of Lane and Villalpando.

On October 13, 1994, after closing arguments on all damages except punitive damages, the trial court instructed the jury, among other things, that it may not award plaintiffs economic or noneconomic damages for Hughes' conduct before February 1, 1989.

On October 18, 1994, the jury awarded Lane $295,000 for lost wages and other economic damages to his date of termination, $2.3 million for loss of wages and work-related benefits after October 6, 1994, and $3.5 million for emotional distress and other noneconomic damages.   Villalpando was awarded $125,000 for lost wages and other economic damages through October 6, 1994, after subtracting all wages and work-related benefits that Villalpando may have received from any other employer and any loss of wages or work-related benefits that Villalpando may have sustained due to his failure, if any, to take reasonable efforts to seek comparable employment.   The jury also awarded Villalpando $1.3 million for future loss of wages and work-related benefits after October 6, 1994, and $2 million for emotional distress and other noneconomic damages.

The jury was polled, and the jurors were unanimous on all findings except two jurors disagreed with the $3.5 million award for Lane's noneconomic damages.

Thereafter, the third phase of the trial on punitive damages commenced.   During this phase, Hughes stipulated that there was no written evidence of any reprimand or discipline taken against Solomon, Miyata, Goland and Mohler.

Only one witness testified in the trial's last phase.   This witness, David Barclay, was vice president of Hughes' work force diversity.   Over plaintiffs' objection, made in a trial brief dated October 13, 1994, to any evidence that Hughes reformed its conduct for the purpose of mitigating its liability for punitive damages, Barclay testified about Hughes' programs to benefit minorities.   These programs included Hughes' involvement in schools to encourage minorities to study mathematics and science.   Barclay testified that in January 1993 Hughes changed its internal grievance procedure.   He also testified that at the time of trial, Hughes had seven black vice-presidents.   On cross-examination, Barclay said that the first time he heard about Lane's and Villalpando's lawsuits was after the jury returned its verdicts.

On October 24, 1994, the jury reached two verdicts on the trial's last phase.   The jury awarded each plaintiff $40 million in punitive damages against Hughes.   A polling of the jury showed the jurors were unanimous in finding punitive damages should be awarded, but that two jurors did not agree with the amount of damages.

Following the entry of verdicts, the law firm of Paul, Hastings, Janofsky & Walker associated into the action as Hughes' co-counsel.   Previously, only the law firm of Arter & Hadden was Hughes' attorney of record.

On November 9, 1994, Hughes moved for a judgment notwithstanding the verdicts.   Hughes also filed a notice of intention to move for a new trial pursuant to Code of Civil Procedure section 657 or alternatively a remittitur pursuant to Code of Civil Procedure section 662.5.

Lane and Villalpando moved to disqualify the law firm of Paul, Hastings, Janofsky & Walker as defense counsel.

On December 15, 1994, the trial court heard all three motions, granted Hughes' motions for a judgment notwithstanding the verdicts and a new trial, and denied plaintiffs' motion.

A court order drafted and signed by Trial Judge Malcolm Mackey stated that a new trial was granted on grounds of excessive damages, insufficiency of evidence to justify the verdict and decision, error in law, and misconduct of counsel.   The order rejected Lane's race discrimination and retaliation claims, Villalpando's retaliation and constructive discharge claims, and the awards for “front pay” damages and punitive damages.

On December 23, 1994, the trial court entered a judgment for Hughes notwithstanding the verdicts.


Lane and Villalpando first appeal the judgment notwithstanding the verdicts, and next the alternative grant of a new trial.   They then raise issues regarding the trial court's exclusion of their experts, Roberts and Cunningham, the exclusion of Villalpando's psychotherapist, Dellaverson, the admission of Barclay's testimony at the trial's punitive damages stage, the jury instruction that Lane could not recover damages accruing before a certain time, and the denial of their motion to disqualify the Paul, Hastings, Janofsky & Walker law firm as Hughes' counsel.   We first consider the judgment notwithstanding the verdicts, as resolution of this matter determines whether it is necessary to consider the remaining matters contested by appellants.



“In passing upon the propriety of a judgment notwithstanding the verdict, appellate courts view the evidence in the light most favorable to the party who obtained the verdict and against the party to whom the judgment notwithstanding the verdict was awarded.  [Citations.]   In other words, we apply the substantial evidence test to the jury verdict, ignoring the judgment.”   (Hasson v. Ford Motor Co. (1977) 19 Cal.3d 530, 546, 138 Cal.Rptr. 705, 564 P.2d 857.)

A. The Judgment Notwithstanding the Verdict on Lane's Race Discrimination Claim

 Lane's third amended complaint asserted in part that Hughes violated FEHA by treating him less favorably as a black man than employees of other races.

Where, as here, disparate treatment based on race is alleged, “the plaintiff must prove the ultimate fact that the defendant engaged in intentional discrimination.”  (Heard v. Lockheed Missiles & Space Co. (1996) 44 Cal.App.4th 1735, 1748, 52 Cal.Rptr.2d 620, citing St. Mary's Honor Center v. Hicks (1993) 509 U.S. 502, 113 S.Ct. 2742, 125 L.Ed.2d 407, Texas Dept. of Community Affairs v. Burdine (1981) 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 and McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668.)

Race discrimination cases are subject to a three-step analysis.   “First, the plaintiff has the burden of proving by the preponderance of the evidence a prima facie case of discrimination.   Second, if the plaintiff succeeds in proving the prima facie case, the burden shifts to the defendant ‘to articulate some legitimate, nondiscriminatory reason for the employee's rejection.’  [Citation.]   Third, should the defendant carry this burden, the plaintiff must then have an opportunity to prove by a preponderance of the evidence that the legitimate reasons offered by the defendant were not its true reasons, but were a pretext for discrimination.  [Citation.]”  (Texas Dept. of Community Affairs v. Burdine, supra, 450 U.S. at pp. 252-253, 101 S.Ct. at p. 1093.)

Hughes contends that in applying the third step for analyzing a disparate treatment case, one can use only three types of specific and probative evidence to prove that the employer's legitimate, nondiscriminatory reason for making an employment decision is in fact a pretext for race discrimination.   Citing Schlei and Grossman, Employment Discrimination Law (2d ed.1983, Supps.1989 and 1991) page 1314, Hughes states the three types of evidence are (1) direct evidence of discrimination, such as discriminatory statements or admissions;  (2) comparative evidence;  and (3) statistics.

In arguing for limiting the evidence, Hughes cites Miles v. M.N.C. Corp. (11th Cir.1985) 750 F.2d 867, 870 and Penk v. Oregon State Bd. of Higher Edn. (9th Cir.1987) 816 F.2d 458, 462 as support.   However, while these two federal opinions list the same three types of evidence, they significantly do not hold that these are the only types of evidence available to prove pretext.   Rather, both federal cases state that these three types of evidence “can” be used, thereby suggesting the availability of other types of evidence.

 In fact, it is well established that indirect or circumstantial evidence may be used to show discrimination.  (Heard v. Lockheed Missiles & Space Co., supra, 44 Cal.App.4th at p. 1749, 52 Cal.Rptr.2d 620.)   Accordingly, “[i]f the employer successfully rebuts the presumption raised by the prima facie case, ‘the McDonnell/Burdine presumption “drops from the case” and the factfinder must decide upon all of the evidence before it whether defendant intentionally discriminated against plaintiff.  [Citation.]   In short the trier of fact decides whether it believes the employer's explanation of its actions or the employee's.’  [Citation.]”  (Clark v. Claremont University Center (1992) 6 Cal.App.4th 639, 664, 8 Cal.Rptr.2d 151, italics added.)

 Hughes further contends that Lane failed to show a causal connection between Lane's protected status as a black person and Hughes' treatment of Lane. As Hughes correctly points out, the plaintiff must prove by a preponderance of the evidence a causal connection between the plaintiff's protected status and the adverse employment decision.  (Clark v. Claremont Univ. Center, supra, 6 Cal.App.4th at p. 665, 8 Cal.Rptr.2d 151.)

However, Hughes inappropriately compares Gonzales v. MetPath, Inc. (1989) 214 Cal.App.3d 422, 262 Cal.Rptr. 654 to the present action.   In that case, Helen Gonzales sued her employer, MetPath, Inc., for discriminating against her because of her Mexican-American heritage and her gender.   MetPath moved for and was granted summary judgment.   The appellate court affirmed, concluding that Gonzales “did not even establish a prima facie case” of discrimination.  (Id. at p. 426, 262 Cal.Rptr. 654.)   In contrast, it is uncontested that Lane set forth a prima facie case of discrimination.   Therefore, Gonzales is distinguishable from the instant action.

 Hughes also erroneously argues that the judgment notwithstanding the verdict was supported by the lack of evidence that Steele, Phillips or Bradley was biased against Lane. However, a plaintiff need not prove that every representative of an employer intentionally discriminated against the plaintiff.  (Clark v. Claremont University Center, supra, 6 Cal.App.4th at p. 668, 8 Cal.Rptr.2d 151.)   What matters in a disparate treatment case is “whether a particular individual was discriminated against and why.”  (Heard v. Lockheed Missiles & Space Co., Inc., supra, 44 Cal.App.4th at p. 1756, 52 Cal.Rptr.2d 620.)

In Clark, supra, Reginald Clark sued Claremont Graduate School for race discrimination after being denied promotion and tenure.  (Clark v. Claremont University Center, supra, 6 Cal.App.4th at p. 643, 8 Cal.Rptr.2d 151.)   Claremont hired Clark in 1979 as an assistant professor in the education department for a three-year term, and renewed his contract in 1982 for another three-year term.   According to Claremont's rules on staff appointments, promotions and tenure (APT), a full-time faculty member may not serve without tenure for more than seven years, including credited experience.   Clark requested tenure in his fifth year at Claremont.   While his departmental review resulted in a five-to-three vote for Clark, the former and current department chairmen voted against him.   At the second level of review, the APT committee voted against Clark by a four-to-one vote.   Clark appealed to Claremont's president, who upheld the APT committee's decision.  (Ibid.)

Quoting Roebuck v. Drexel University (3d Cir.1988) 852 F.2d 715, 727, the court in Clark stated, “ ‘It is true that University guidelines and witness testimony support [Claremont's] claim that each successive evaluator performed a de novo review of [Clark's] candidacy.   Nevertheless, it is also uncontroverted that at each stage of the process the evaluator had available and considered the reports and recommendations of each previous evaluator․  Hence it plainly is permissible for a jury to conclude that an evaluation at any level, if based on discrimination, influenced the decisionmaking process and thus allowed discrimination to infect the ultimate decision.’ ”  (Clark v. Claremont University Center, supra, 6 Cal.App.4th at pp. 665-666, 8 Cal.Rptr.2d 151.)

Roebuck, supra, was further quoted, “ ‘once the jury concluded that a particular rating decision at any given level was motivated by discrimination and would have come out differently but for that discrimination, the jury was also free to infer that that discrimination infected other decisions concerning the very same candidate and made at the very same time.’ ”  (Clark v. Claremont University Center, supra, 6 Cal.App.4th at p. 667, 8 Cal.Rptr.2d 151.)

Relying on Roebuck, supra, the Clark court held that the Claremont president's independent investigation and review of Clark's case “does not insulate Claremont from liability as a matter of law.”  (Clark v. Claremont University Center, supra, 6 Cal.App.4th at p. 669, 8 Cal.Rptr.2d 151.)

 As recognized in Clark, supra, quoting Roebuck, supra, individual employment decisions should not be treated as a “ ‘watertight compartment’ ” with discriminatory actions “ ‘sealed off from (that is, irrelevant to) every other decision.   In the real world ․ human beings (including triers of fact) are not compelled to reason that way.’ ”  (Clark v. Claremont University Center, supra, 6 Cal.App.4th at p. 667, 8 Cal.Rptr.2d 151.)

Therefore, even if Steele, Phillips and Bradley were not biased against Lane because of his race, as long as the resulting employment decisions to remove him from the KU Band and to not promote him resulted from race-based bias, the judgment notwithstanding the verdict is erroneous.

Hughes compares Lane to the plaintiffs in Mixon v. Fair Employment & Housing Com. (1987) 192 Cal.App.3d 1306, 237 Cal.Rptr. 884 and Moore v. Eli Lilly & Co. (5th Cir.1993) 990 F.2d 812 in that Hughes maintains Lane complains of multiple unfair acts but shows no causal connection between his race and those acts.   However, Mixon and Moore are factually distinguishable.12

Unlike Lane's supervisors and management, Robert Mixon's supervisor, who interviewed him for his job as a union representative in the union's Stockton office and later fired him for refusing to relocate in order to reduce the union's expenses, was black, as well as one of the vice presidents.  (Mixon v. Fair Employment & Housing Com., supra, 192 Cal.App.3d at p. 1320, 237 Cal.Rptr. 884.)   All of Lane's supervisors and management were not black.

When interviewed, Mixon was told he would be required to relocate if his commute interfered with his work.   Unlike Lane, Mixon was a new employee of less than one year whose employment was subject to the contingent requirement that he relocate.   Mixon was repeatedly told to relocate and was notified as early as the first month after starting work that his travel expenses were too high for the union's Stockton office.   Although Mixon offered evidence of several white union representatives who commuted significant distances to their offices, none of those white employees serviced the Stockton office, whose members' union dues did not cover the office's operating costs.  (Mixon v. Fair Employment & Housing Com., supra, 192 Cal.App.3d at pp. 1320-1321, 237 Cal.Rptr. 884.)

In contrast, Lane attempted to comply with his supervisors' orders, and was told that he met his employer's job requirements.   While it is true that Lane expressed his desire not to work on classified material for religious reasons, this request was made in 1985, six years before he was removed from the KU Band. Likewise, his decision not to work after certain business hours was made years before the 1991 incidents, and was based on his long-standing church activities.

Jimmy Moore, who sued his employer for age discrimination, failed to produce any evidence of pretext, “either in connection with establishing his prima facie case or subsequently in response to Lilly's demonstration of a non-discriminatory reason for its action.”  (Moore v. Eli Lilly & Co., supra, 990 F.2d at p. 817.)

Unlike Moore, Lane proved that Hughes' reasons for not promoting him were pretext for a discriminatory reason.   For example, although Goland found a white employee with Lane's same title and educational background, she significantly did not recall the white employee's performance evaluations and responsibilities.   A legitimate comparison between employees requires knowledge of how an employee performs and what his duties are.   The lack of such knowledge reveals the superficiality of Goland's investigation.

Another nondiscriminatory reason that Hughes gave for Lane's compensation and rank level was that Lane had a physics degree instead of an electrical engineering degree and that he did not obtain the degree until after he began work in 1977.   However, there was evidence at trial that other, non-black employees ranked higher than Lane lacked bachelor's degrees, and not everyone had an electrical engineering degree.   Furthermore, no one controverted Lane's testimony that he studied engineering independently at home.   More importantly, Lane satisfactorily performed his tasks.   In fact, Mohler, whose laboratories Lane worked in at all relevant times, testified that Mohler never got complaints about Lane's technical abilities or performance.   As Laboratories Manager, Mohler was ultimately responsible for the staff under him.   Therefore, the fact that he heard no complaints suggests that Hughes' focus on Lane's educational background constituted a mere pretext for discriminating against Lane.

As for Lane's managerial skills, it is relevant that Mohler testified that he never received complaints about Lane's ability to work with people.   This testimony pierces a hole in Hughes' excuses for taking Lane's managerial duties away from him.

Viewing the record as a whole and in deference to the jury's factual findings, we hold substantial evidence supported the verdict on Lane's race discrimination claim.

B. The Judgment Notwithstanding the Verdicts on the Retaliation Claims of Lane and Villalpando

In their respective complaints, Lane pleaded that Hughes unlawfully retaliated against him for complaining about race discrimination, and Villalpando pleaded that Hughes retaliated against him for opposing Hughes' race discrimination against Lane.

 Retaliation claims under FEHA “are analogous to federal [Title VII] claims ․, and are evaluated under federal law interpreting Title VII cases.  [Citations.]  [¶] The elements of Title VII and CFEHA claims require that (1) the plaintiff establish a prima facie case of retaliation, (2) the defendant articulate a legitimate nonretaliatory explanation for its acts, and (3) the plaintiff show that the defendant's proffered explanation is merely a pretext for the illegal termination.  [Citations.]”  (Flait v. North American Watch Corp. (1992) 3 Cal.App.4th 467, 475-476, 4 Cal.Rptr.2d 522, fn. omitted.)

 “To establish a prima facie case, the plaintiff must show that he engaged in a protected activity, his employer subjected him to adverse employment action, and there is a causal link between the protected activity and the employer's action.  [Citations.]”  (Flait v. North American Watch Corp., supra, 3 Cal.App.4th at p. 476, 4 Cal.Rptr.2d 522.)   Pretext for a company's nonretaliatory explanation for the employment action may be “inferred from the timing of the company's termination decision, by the identity of the person making the decision, and by the terminated employee's job performance before termination.”  (Id. at p. 479, 4 Cal.Rptr.2d 522.)

 Hughes' reason for denying Lane a promotion after he filed his internal race discrimination complaint was that Hughes acted pursuant to Villalpando's request.   While Miyata testified that he denied the promotion pursuant to Villalpando's request, Villalpando testified to the contrary.   Where, as here, the evidence is in conflict, the reviewing court must defer to the findings of fact made in the trial court.  (Shamblin v. Brattain (1988) 44 Cal.3d 474, 479, 243 Cal.Rptr. 902, 749 P.2d 339.)   Therefore, Villalpando's testimony undermines Hughes' purported reason for not giving Lane the promotion Villalpando requested for 1991.   However, even if Miyata's testimony were uncontroverted, given the fact that at this time Phillips, not Villalpando, was supposed to have been Lane's supervisor for months, Miyata's reliance on Villalpando constitutes a pretext for retaliating against Lane for filing the internal discrimination complaint.

Moreover, Mohler had authority to overrule decisions regarding promotions.   In light of Phillips' satisfaction with Lane and Mohler's testimony that Lane was a good employee, Mohler's failure to overrule Miyata's denial of a promotion indicated that Hughes punished Lane for complaining about race discrimination.

With respect to Villalpando's retaliation claim, it is important to consider the purpose of the statutory law prohibiting employer retaliation against “whistle blowers.”  “Both the state and federal statutes are designed to foster open communication between an employer and its employees regarding perceived misconduct, encouraging employees to call their employers' attention to unlawful practices of which the employer might be unaware and which might result in litigation if not voluntarily changed.  [Citation.]   CFEHA goes even further than the federal statute by requiring that supervisors ‘take immediate and appropriate corrective action’ when harassment is brought to their attention.  (Gov.Code, § 12940, subd. (h).)  The statute then protects the supervisor who properly takes immediate corrective action from retaliation.”   (Flait v. North American Watch Corp., supra, 3 Cal.App.4th at p. 476, 4 Cal.Rptr.2d 522.)

 Rather than protect Villalpando for supporting Lane's race discrimination claim, Hughes pressured Villalpando into creating a paper trail against Lane, in part by threatening to give McFarlane a promotion over Villalpando unless Villalpando cooperated.   The company then penalized Villalpando for not completely cooperating in working against Lane. Significantly, Villalpando learned the promotion went to McFarlane just less than two weeks after Villalpando tried to salvage Lane's career by telling Miyata that Lane should be promoted to Phillips' assistant department manager-a position Solomon had initially misled Lane into believing he was already supposed to obtain.   The timing of these events constitutes circumstantial evidence of retaliation.

Viewing the evidence in the light most favorable to Lane and Villalpando, a reasonable trier of fact could conclude that Hughes' articulated reasons for not promoting Lane and Villalpando are merely a pretext for retaliating against them.

C. The Judgment Notwithstanding the Verdict on Villalpando's Constructive Discharge Cause of Action

To establish constructive discharge, Villalpando had to plead and prove by a preponderance of the evidence that Hughes “either intentionally created or knowingly permitted working conditions that were so intolerable or aggravated at the time of the employee's resignation that a reasonable employer would realize that a reasonable person in the employee's position would be compelled to resign.  [¶] For purposes of this standard, the requisite knowledge or intent must exist on the part of either the employer or those persons who effectively represent the employer, i.e., its officers, directors, managing agents, or supervisory employees.”  (Turner v. Anheuser-Busch, Inc., (1994) 7 Cal.4th 1238, 1251, 32 Cal.Rptr.2d 223, 876 P.2d 1022.)

 Villalpando's complaint pleaded that Hughes required Villalpando to falsely document Lane's performance as poor after Lane filed an internal race discrimination grievance, that Hughes removed Villalpando from his supervisory position and demoted him “in a manner calculated to embarrass him personally and professionally” even though positions comparable to the one from which he was removed were available, and that Hughes refused to meet with Villalpando and resolve his complaints of Hughes' unfair treatment of Villalpando and Lane. In addition, the complaint asserted that Hughes coerced Villalpando “into criticizing and neutralizing or withdrawing his support” for Lane, and forced Villalpando to create a fictitious justification for Hughes' mistreatment of Lane because Lane complained about race discrimination and because Hughes “had an unspoken policy establishing an artificial barrier” preventing black employees from obtaining management positions and wages.

We hold that these allegations support a constructive discharge cause of action.

Hughes defends the judgment notwithstanding the verdict partly by quoting Turner as holding that “a demotion, even when accompanied by reduction in pay, does not by itself trigger a constructive discharge.”  (Turner v. Anheuser-Busch, Inc., supra, 7 Cal.4th at p. 1247, 32 Cal.Rptr.2d 223, 876 P.2d 1022.)   However, the California Supreme Court recognized that “[i]n some circumstances, a single intolerable incident, such as ․ an employer's ultimatum that an employee commit a crime, may constitute a constructive discharge.”  (Id. at p. 1247, fn. 3, 32 Cal.Rptr.2d 223, 876 P.2d 1022.)

According to Villalpando's testimony at trial, Miyata threatened that McFarlane would be promoted over Villalpando unless Villalpando cooperated in creating false documentation against Lane. At two relevant time periods, Goland, whom Villalpando knew was an attorney and knew was handling Lane's internal complaint, urged Villalpando to sabotage Lane's career.   The first occasion was in early June 1991, soon after Lane filed his internal complaint, and the second occasion was around the time Miyata threatened Villalpando with the denial of his own promotion.   Clearly, this evidence indicates that Hughes' management tried to pressure Villalpando to commit the crime of perjury and to violate FEHA. We hold that such intolerable employer action would force a reasonable employee to leave his job.   Therefore, there is substantial evidence in support of Villalpando's constructive discharge claim.

D. The Judgment Notwithstanding the Verdicts on Plaintiffs' Breach of Implied Covenant Claims

 Lane's and Villalpando's respective complaints alleged that Hughes breached its implied covenant of good faith and fair dealing by evaluating the two employees arbitrarily and falsely, removing their managerial duties for arbitrary and untrue reasons, and refusing to place them in available, alternative employment.   Lane further pleaded that Hughes committed a breach by subjecting him “to higher and more onerous” performance standards than other employees, and not paying him at a level commensurate with his performance, skills and responsibilities.   Villalpando pleaded that Hughes committed a breach by requiring Villalpando to violate the law and ethics by falsely documenting Lane's performance as deficient, and requiring Villalpando to conspire to subject Lane to adverse employment actions because he filed an internal discrimination grievance “and in observance of an unspoken but enforced glass ceiling” preventing blacks from advancing above a certain managerial level.

In opposition to the judgment notwithstanding the verdicts on the claims of breach of implied covenant, Lane and Villalpando cite Scott v. Pacific Gas & Electric Co. (1995) 11 Cal.4th 454, 46 Cal.Rptr.2d 427, 904 P.2d 834 and Garcia v. Rockwell International Corp. (1986) 187 Cal.App.3d 1556, 232 Cal.Rptr. 490.

C. Byron Scott and Al Johnson sued Pacific Gas and Electric Co. (PG & E) for breach of an implied contract term not to demote employees without good cause.  (Scott v. PG & E, supra, 11 Cal.4th at p. 460, 46 Cal.Rptr.2d 427, 904 P.2d 834.)   Uncontradicted evidence at trial showed that PG & E intended to bind itself to written disciplinary policies which discussed demotion as an intermediate disciplinary step short of discharge.  (Id. at p. 461, 46 Cal.Rptr.2d 427, 904 P.2d 834.)   In contrast, the record in the instant case contains no evidence that Hughes intended to bind itself contractually as a result of any written policies, and Lane and Villalpando were not demoted in terms of their rank levels.   Instead, they were denied promotions.

While Lane and Villalpando are correct that the California Supreme Court in Scott, supra, 11 Cal.4th at page 464, 46 Cal.Rptr.2d 427, 904 P.2d 834, held that implied employment contract terms are not limited to the wrongful discharge area, this holding is inapposite here.

Like the plaintiffs in Scott, Joe Garcia in Garcia v. Rockwell International Corp., supra, 187 Cal.App.3d at page 1558, 232 Cal.Rptr. 490, sued his employer for being demoted.   In addition, Garcia sued for being suspended without pay.   Rockwell moved for and was granted summary judgment.   (Ibid.) Not only is Garcia factually distinguishable, but it does not concern any contractual breach claims.   Rather, the cause of action at issue in Garcia is for retaliation.  (Id. at pp. 1558, 1560, 232 Cal.Rptr. 490.)   The appellate court reversed on grounds based on tort, not contract, law.  (Id. at p. 1562, 232 Cal.Rptr. 490.)

Nevertheless, since substantial evidence supports Lane's and Villalpando's claims under FEHA, a fortiori their claims of breach of the implied covenant of good faith and fair dealing must also withstand a judgment notwithstanding the verdicts.

E. The Judgment Notwithstanding the Verdicts on Damages

 The trial court's order granting Hughes' motion for judgment notwithstanding the verdicts with respect to damages mentions only one aspect of the verdicts, “front pay.”   According to the court order's specification of reasons, front pay was not awardable as a matter of law “because both plaintiffs rejected unconditional offers of reinstatement.”   These offers were made during a one-day adjournment on October 5, 1994, after Hughes President Donald Cromer was advised of the jury's verdicts finding Hughes liable for discrimination and retaliation.

 Whether Hughes' offers were in good faith and whether Lane and Villalpando were reasonable in rejecting the offers are questions for the jury as the trier of fact.  (Ortiz v. Bank of America National Trust and Savings Assoc. (9th Cir.1987) 852 F.2d 383, 387.)   Given the timing of the offers, it would have been reasonable for the jury to find Hughes did not make them in good faith.

 In examining whether the damage awards were excessive, we try to uphold damages awards whenever possible.  (Bertero v. National General Corp. (1974) 13 Cal.3d 43, 61, 118 Cal.Rptr. 184, 529 P.2d 608.)   However, examining each case on its own facts, the reviewing court should act where an award as a matter of law appears excessive.   Whether an award “is so great as to shock the conscience of appellate judges and necessarily implies passion and prejudice on the part of the jury depends upon the nature and extent of the victim's injuries, his pain, suffering and humiliation, and the amount of special damages that may have been incorporated in the total award.”  (Henninger v. Southern Pacific Co. (1967) 250 Cal.App.2d 872, 882-883, 59 Cal.Rptr. 76.)

Looking at the record here, we note quite a few ambiguities and omissions.   Plaintiffs' economist, Dr. Pickersgill, opined that Lane's lost bonuses at their present value amounted to $67,000, and that his lost wages through his termination amounted to $238,596.   While this figure is close to the jury's $295,000 economic damages award, the record is unclear when this termination date occurred, since Lane might still have been paid when he took his medical leave of absence in January 1992.   A medical leave of absence would support a damages award for lost wages only if the leave of absence is without pay.

According to Lane's treating psychiatrist, Dr. Friedman, Lane could no longer work at a large corporation.   Assuming this is the case and considering that Lane was 39 years old in 1994, he lost over twenty years of employment at a large corporation.   This constitutes a significant period for anticipated future earnings.   However, it is questionable whether or not the jury gave an excessive award of $2.3 million for loss of wages and work-related benefits after October 6, 1994.   According to the testimony of Lane's wife and oldest son, as well as Lane's own testimony, Lane continued to volunteer for his church and worked with his wife on her home-based courier business created sometime after Lane stopped working for Hughes.   It is uncertain whether these activities indicated Lane's ability to work full time, and whether Lane will contribute to making the courier business profitable.

The jury awarded Villalpando $125,000 for economic damages, yet Dr. Pickersgill did not testify as to her opinion relative to Villalpando's lost wages or other economic damages.   Although Villalpando did not work from March 1992 to January 18, 1993, we cannot know from the record whether Villalpando received all of his paid leaves of absence, including for illness and vacation.   We also do not know how much Villalpando would have earned had he received the promotion instead of McFarlane.   Another troubling section of the record is that the job Villalpando began in January 1993 evidently paid more than his job at Hughes, but the record is silent as to how much Villalpando earned at either position.

In view of the record, we cannot adequately review the economic damages award for Villalpando.   Nevertheless, given Villalpando's managerial position in the high-paying aerospace industry, a $125,000 award for economic damages through October 6, 1994 may not be unreasonable.

 As for the jury's award of $1.3 million for Villalpando's economic damages after October 6, 1994, the record is deficient in this area as well.   While Dr. Pickersgill opined that Villalpando's work life expectancy ended at age 62.5 years, there was no testimony in the record on Villalpando's age, a relevant factor in deciding whether the $1.3 million award is excessive.   Moreover, although Villalpando testified that he could no longer supervise others, the fact that he obtained a higher paying job than at Hughes may show his constructive discharge did not harm his future earning ability.   On the other hand, he may have earned even more had he been promoted over McFarlane.   However, how much more Villalpando would have earned is not in evidence.   Notwithstanding the record's deficiencies, the fact that the jury awarded Villalpando $1 million less than Lane shows the jury considered that Villalpando was in a financially better situation than Lane. In deference to the jury as the trier of fact, we will not disturb this award.

 We also defer to the jury's role as the trier of fact on the amount of noneconomic damages awarded to Lane and Villalpando.   The jury's award of $1.5 million more to Lane than to Villalpando shows the jury recognized that Lane, as the direct victim of race discrimination, suffered more than Villalpando.

Review of the punitive damages awards requires consideration of two issues.   The first issue is whether clear and convincing evidence shows the defendant was guilty of oppression, fraud, or malice.  (Civ.Code, § 3294.)  “With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.”   (Civ.Code, § 3294, subds.(a) and (b).)

If the first preliminary issue is answered in the affirmative, punitive damages are recoverable.   The second issue is whether substantial evidence supports the amount of punitive damages awarded.

 With respect to the first issue as applied to corporate defendants, “[t]he determination whether employees act in a managerial capacity ․ does not necessarily hinge on their ‘level’ in the corporate hierarchy.   Rather, the critical inquiry is the degree of discretion the employees possess in making decisions that will ultimately determine corporate policy.”  (Egan v. Mutual of Omaha Insurance Co. (1979) 24 Cal.3d 809, 822-823, 169 Cal.Rptr. 691, 620 P.2d 141.)

Pursuant to Egan, supra, the California Supreme Court deemed two employees “managing agents” for punitive damages purposes, even though the employees were lower in a company's hierarchy than other corporate officials who participated in plaintiff Anand Agarwal's discharge.  (Agarwal v. Johnson (1979) 25 Cal.3d 932, 952, 160 Cal.Rptr. 141, 603 P.2d 58.)   The court focused on the fact that the two employees “were directly responsible for supervising Agarwal's performance and had the most immediate control over the decision to terminate him.”  (Ibid.)

 In rejecting the verdicts here, the trial court noted that there was no evidence of vicious racist remarks and epithets, and no statistical evidence of discrimination.   The lack of such evidence, however, does not invalidate the punitive damages awards.   That race discrimination can come in subtle, covert forms does not mean there is any less malice than found in the more blatant, overt forms.

As support for the judgment notwithstanding the verdicts, Hughes argues that Kelly-Zurian v. Wohl Shoe Co. (1994) 22 Cal.App.4th 397, 27 Cal.Rptr.2d 457 is on point because no officers or directors were involved in any decisions in the present case.   This argument lacks merit, as Miyata, Solomon and Mohler were clearly managing agents for purposes of Civil Code section 3294.

In Kelly-Zurian, supra, Kathleen Kelly-Zurian sued her supervisor, Robert Lawicki, and her former employer, Wohl Shoe Co., for sexual harassment.   Lawicki was the highest level Wohl employee in Southern California, but Wohl's corporate headquarters were in St. Louis, Missouri.   The jury returned a verdict against Lawicki and for Wohl, finding that Lawicki's conduct involved oppression or malice.  (Kelly-Zurian v. Wohl Shoe Co., supra, 22 Cal.App.4th at p. 407, 27 Cal.Rptr.2d 457.)   Kelly-Zurian then moved for a new trial on the issue of punitive damages with respect to Wohl. The trial court denied the motion.  (Id. at p. 408, 27 Cal.Rptr.2d 457.)

Affirming the denial, the Kelly-Zurian court ruled that Lawicki was not a managing agent for purposes of Civil Code section 3294.   In so ruling, it considered the absence of evidence showing Lawicki was in a policy-making position and Wohl's evidence that Lawicki lacked authority to change or establish business policy in Southern California.   The court also considered Lawicki's inability to even set Kelly-Zurian's salary or give her a raise without authorization from Wohl's corporate headquarters.  (Kelly-Zurian v. Wohl Shoe Co., supra, 22 Cal.App.4th at p. 422, 27 Cal.Rptr.2d 457.)

In contrast, Mohler, Miyata and Solomon, who were based in Hughes' Southern California headquarters, admitted having authority regarding promotions, assignments, affirmative action and transfers.   They clearly had control over Villalpando's and Lane's employment conditions.

Based on the record, we conclude that punitive damages were recoverable.

 While the amount of punitive damages is not fixed or susceptible to mathematical calculation (Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 790, 157 Cal.Rptr. 392, 598 P.2d 45), in determining the second issue of whether substantial evidence supports the amount of punitive damages, we consider the degree of reprehensibility of the defendant's conduct and the relationship between the amount of the award and the actual harm suffered.   (Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 928, 148 Cal.Rptr. 389, 582 P.2d 980.)   Although a defendant's financial condition is another factor to consider (ibid.), we cannot adequately do so in light of the record.   However, we do recognize the recent recession's impact on the aerospace industry and the federal government's cutbacks in the defense industry.

 While race discrimination is clearly reprehensible, the punitive damages awards far exceeded the compensatory damages awarded here.   The jury awarded 85 percent more in punitive damages for Lane than the $5,595,000 in total economic and noneconomic damages, and more than 91 percent more in punitive damages for Villalpando than the $3,425,000 in total economic and noneconomic damages.

Moreover, in contrast to the jury's award of less compensatory damages to Villalpando than to Lane, the jury awarded each plaintiff $40 million in punitive damages.   The identical awards indicate the jury did not differentiate between the two plaintiffs' injuries.   As a direct victim of race discrimination, Lane was entitled to a greater award than Villalpando.

Having concluded the punitive damages awards are excessive, we exercise our discretion to promote justice and the public policy of judicial economy by modifying the awards.   We remand with directions to the trial court to reduce Lane's punitive damages award to $5 million and Villalpando's punitive damages award to $2,830,000.



The judgment notwithstanding the verdicts is reversed, and the cause remanded with directions to enter a judgment heretofore entered on December 23, 1994, for plaintiffs on the jury verdicts, with further directions to modify said judgment to award plaintiff Lane $5 million in punitive damages and plaintiff Villalpando $2,830,000 in punitive damages.   Costs on appeal are awarded to appellants.


1.   The 4M Laboratory was also known as 4M2X.

2.   Lane obtained his degree a few years later.

3.   On direct examination for the defense, Samis did not deny grooming Lane to become the KU Band's Ops manager, but testified that he did not recall doing so.

4.   The phrase “D.A. testing” referred to deployed assembly.

5.   Goland denied directing Villapando or anyone to document poor performance from Lane.

6.   At some point in time, Phillips told Solomon he thought it was misleading and unfair to give Lane the impression he would be Phillips' assistant manager, since Hughes no longer had such a position.

7.   Bradley disagreed.

8.   Even in an organization chart dated as late as October 25, 1991, Lane was shown as under Villalpando instead of Phillips.

9.   Miyata denied telling Villalpando not to talk to Phillips.

10.   Miyata denied making such a statement.

11.   Goland denied making such a comment.

12.   Following oral argument, Hughes called our attention to Nidds v. Schindler Elevator Corp. (9th Cir.1996) 103 F.3d 854.   There, the federal appellate court affirmed a summary judgment for the defendant-employer in an action based on alleged age discrimination and retaliation asserted under California law.   The court held that the plaintiff did not show the employer's stated reasons for laying off the plaintiff were pretextual for an illegal termination.   The Nidds opinion is inapposte, factually differing from the cause before us and providing no new guidance on parties' burdens of proof in race discrimination cases.

FOOTNOTE.   See footnote *, ante.

LILLIE, Presiding Justice.

JOHNSON and WOODS, JJ., concur.

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Docket No: No. B090258.

Decided: January 06, 1997

Court: Court of Appeal, Second District, Division 7, California.

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