Thursday, December 16, 2010
Court of Appeal Allows Employer to Sue Over Racism Allegations
Divided Panel Says Company Showed It Fired Workers Because They Lacked Valid Social Security Numbers
By KENNETH OFGANG, Staff Writer
A company that fired about 200 workers after they failed to produce valid social security numbers following an IRS audit may sue a group of workers and a civil rights activist who claimed the firings were based on race and age, the Fourth District Court of Appeal has ruled.
Div. Three ruled, 2-1, that the suit by Overhill Farms, Inc. against Nativo Lopez and several Overhill workers was not a strategic lawsuit against public participation because the company is likely is prevail on its claims of defamation, interference with contract, interference with prospective business advantage, and extortion.
Justice William Bedsworth’s opinion was certified Tuesday for publication. Justice William Rylaarsdam concurred, while dissenting Justice Richard Fybel argued that Overhill’s claims should have been stricken because the allegedly injurious statements were protected opinion.
The fired workers turned to Lopez, a former Santa Ana school board member and head of Hermandad Mexicana Latinoamericana, after losing their jobs early last year. The company contended that it had no choice but to terminate them once it had given them sufficient time to clear up documentation problems discovered in an IRS audit.
The service told Overhill, which supplies produce to area grocers and restaurants, that it had turned up 231 instances—the Vernon-based company has about 1,000 employees—in which employees’ names and social security numbers did not match IRS records.
Overhill notified the employees that they needed to clear up the conflict within 30 days. One worker demonstrated that the IRS was in error and remained employed, 31 resigned, a few admitted that they had supplied phony numbers and other documentation in order to obtain employment and had entered the country illegally, and the majority simply did not respond.
Those who admitted undocumented entry were fired, while the rest were suspended with pay for 30 days, giving them additional time to provide accurate social security numbers. The company also presented evidence that it worked with the union that represents its workforce, in an effort to reinstate the workers’ employment without violating the law, and that the union acknowledged that nearly all of the affected employees were unauthorized to work in the United States.
The suspended workers were fired at the end of the suspension period. The company told them it had been forced to take that action because it would otherwise be exposed to civil penalties and criminal prosecution.
Lopez organized a boycott of the company, contacting its customers and in some cases picketing their businesses. He claimed that Overhill was using a “discrepancy of social security numbers” as an excuse to fire Latino workers, many of whom had been with the company for a decade or more, and to replace them with younger, part-time employees who cost less to employ.
In filing suit, Overhill sought damages but acknowledged it had little hope of collecting on a judgment. Its goal, it said, was to obtain injunctive relief and establish that the claims of racism and ageism were false.
In moving to strike the claims under the anti-SLAPP statute, the defendants argued that whether Overhill was racist was a matter of opinion and thus not actionable. But Orange Superior Court Judge Robert J. Moss said the plaintiff met its burden of demonstrating that it would probably prevail on the defamation and related claims.
Moss explained that while calling someone racist may be a matter of opinion in some contexts, Lopez and the boycotters were making a specific allegation that Overhill fired the employees because they were Latino, rather than because they could not provide valid social security numbers. Overhill, the judge said, “submitted substantial evidence that this was not true.”
The judge struck one claim, for unfair competition, on the ground that the defendants were not engaged in a business practice, but said the remainder of the action could proceed.
Bedsworth, writing for the trial court, agreed, citing Milkovich v. Lorain Journal Co. (1990) 497 U.S. 1. The high court held in that case that a statement in the form of an opinion may be actionable if it constitutes an implied assertion of fact, and the assertion is untrue.
The court gave the example of a speaker who says “In my opinion John Jones is a liar,” and thereby implies that Jones has told an untruth. On the other hand, the justices said, “a statement of opinion relating to matters of public concern which does not contain a provably false factual connotation will receive full constitutional protection,” and the totality of the circumstances will determine whether a statement in the form of an opinion falls in the protected category.
In this case, Bedsworth said, “defendants did not merely accuse Overhill of being ‘racist’ in some abstract sense,” but specifically accused the plaintiff of firing a quarter of its workforce based on race and using the issue of valid social security numbers as a pretext to do so.
“The assertion of racism, when viewed in that specific factual context, is not merely a hyperbolic characterization of Overhill’s black corporate heart – it represents an accusation of concrete, wrongful conduct,” the jurist wrote.
The justice went on to say that Overhill presented sufficient evidence to support its claims of extortion and interference with business relationships, including proof that the Fresh and Easy supermarket chain had subjected it to an “ethics audit” in response to the defendants’ claims.
Fybel argued in dissent that his colleagues “have incorrectly made this court the first state or federal appellate court in America, ever, to hold that the epithet ‘racist’ constitutes a provably false assertion of fact as the basis of a claim of defamation.”
The majority further erred in saying that the defendants had accused Overhill of having a racial motivation for terminating the employees, Fybel said, because the use of the term “racist” in this context constitutes “rhetorical hyperbole,” not an assertion of fact.
Noting that the firings had an indisputably disparate impact on female Hispanic immigrants, as the defendants had asserted, “[t]his hyperbole reflected the demonstrators’ contempt, frustration, and desperation in connection with their employment situation,” Fybel wrote.
“Defendants’ assertions might not be persuasive, but they are not actionable,” he argued.
Attorneys on appeal were Carol A. Sobel for the defendants and Steven J. Goon and Chris Heikaus Weaver of Rutan & Tucker for the plaintiff.
The case is Overhill Farms, Inc. v. Lopez, 10 S.O.S. 6906.
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