Thursday, December 13, 2007
C.A.: Firm Erred in Firing Worker Who Opposed ‘Payment Packing’
By KENNETH OFGANG, Staff Writer
An Orange County firm that sells aftermarket products to automobile dealers wrongfully terminated a sales representative who complained about the company’s involvement in fraudulent marketing practices, the Fourth District Court of Appeal ruled yesterday.
Div. Three, in an opinion by Justice Richard Fybel, rejected the contention that “payment packing” by auto dealers—quoting a monthly payment that includes the price of aftermarket products that the customer has not ordered—was not illegal at the time Zachary Casella was fired in 2003.
While specific payment-packing legislation was not enacted until after Casella’s suit went to trial, the justice explained, if the conduct described by Casella occurred, it constituted theft by false pretenses in violation of Penal Code Sec. 487. And if, as the jury found, Casella was fired because he reasonably suspected that his employer was engaged in, or was assisting, such conduct and complained about it, his firing constituted a violation of fundamental public policy, Fybel wrote.
Accepted Sales Position
Casella, a former area sales manager for Toyota Financing Services in New York, came to California to accept a sales position with SouthWest Dealer Services, Inc. Among the clients he was hired to service was the Spreen group of dealerships.
Casella and his witnesses testified that one of Casella’s duties was to prepare reports for Spreen that contained a column labeled “P.A.,” which stood for “payment assistance” or “leg.” Leg, Casella testified, refers to the difference between the true monthly payment amount and the amount quoted by the salesperson to account for the purchase of aftermarket products.
The misquote, Casella explained, aids the dealership “in selling those extra products that they offer you in the finance department.” The dealership, he added, then offers to sell the customer additional products at seemingly low prices, when the real prices are higher when the “leg” is figured in.
When the practice was explained to him by his predecessor, the plaintiff said, he was told “it is kind of illegal, but the dealer wants it done, so that’s the way we got to do it.”
Casella admitted that he went along with the practice, despite his reservations, for a couple of months prior to attending a training session at which he questioned his company’s head trainer. The trainer, he said, told him to “just make sure our logo doesn’t appear on any dealer reports and make sure it doesn’t appear on the sales, that manager’s report that you are doing,” and that if he still had concerns, to talk to the company president, Eric Hamann.
He did that a few days later, he said, but found Hamann unconcerned. Hamann, he testified, told him that if was uncomfortable with “P.A.,” he could call it “rate spread profit.”
When he was fired a few weeks later, Casella testified, he was told it was because of complaints from clients, including AutoNation, a major client which Casella said was engaged in the same type of payment packing at one or more of its dealerships.
Casella sued for wrongful termination in violation of public policy and fraudulent inducement. SouthWest, he alleged, induced him to quit his previous job, come to California, and go to work for the company by concealing the fact that he would be required to assist in fraud.
The jury found in Casella’s favor on both claims and awarded him $480,000, half of it as punitive damages. Orange Superior Court Judge Thierry Colaw denied the company’s motion for JNOV, which was based in part on the contention that “payment packing” was not then illegal, so the wrongful termination claim was not based on any statutory or constitutional policy as required by California law.
Fybel said the trial judge was correct in holding that payment packing was a crime at the time the Spreen group was allegedly engaged in it.
“Defendants’ argument hinges on a demonstrably false premise—namely, that conduct which falls within a new criminal statute must have been permissible under already existing criminal statutes,” Fybel wrote. In criminal law, he noted, a defendant may be convicted of violating multiple statutes based on the same conduct, even though only one punishment may be imposed.
There was, the justice went on to say, substantial evidence “that SouthWest required Casella to aid and abet the Spreen dealerships in fraudulent activities as defined in Penal Code section 487.”
Fybel acknowledged that “payment packing” is an imprecise term that does not define a crime. But the jury, he pointed out, was not instructed on payment packing, it was instructed on Sec. 487 and on aiding and abetting, and thus could find that Casella was fired for opposing illegal activities that were being engaged in or aided and abetted by his employer.
The case is Casella v. SouthWest Dealer Services, Inc., G036883.
Copyright 2007, Metropolitan News Company