Judge: CA Competition Law Fair Game in Discrimination Cases

June 16, 2003 (PLANSPONSOR.com) - Lawyers in California now have another potential weapon in their fight against employment discrimination as a result of a state appeals court ruling in an age-discrimination case.

>Second District Justice Joan Dempsey Klein ruled in a case against Nestle USA Inc. that California’s unfair competition law, the Business & Professions Code, can be used when businesses discriminate against older workers, according to a story in The Recorder. The appeals court’s ruling upheld a $5-million age discrimination jury award against the giant food conglomerate.

“An employer which practices age discrimination has an unfair competitive advantage over employers who comply with the [Fair Employment and Housing Act] because older workers frequently are more highly compensated than their younger colleagues,” Klein wrote for the court.

In the opinion, the 78-year-old Klein cited evidence demonstrating a “continuous pattern of age discrimination” at Nestle, and shot down Nestle’s arguments to throw out the trial court’s verdict.

Case History

The case involved Richard Herr, a Nestle manager in his mid-40s who was repeatedly passed over for promotions. While Herr was qualified for numerous job openings and had a track record of positive performance evaluations, Nestle repeatedly offered the jobs to employees in their early 30s, many of who did not meet the jobs’ minimum posted requirements. In 1995, after being passed over for the eighth time and frustrated by his inability to advance within the company, Herr quit.

“There is abundant evidence that the February 1995 failure to promote Herr was just one more manifestation of Nestle’s discriminatory policy of denying promotions to employees in their 40s or older,” Klein wrote.

Thursday’s opinion affirmed a Los Angeles jury’s 2000 verdict that leaves Nestle on the hook for $5.16 million in compensatory and emotional distress damages to Herr, as well as $1.7 million in attorney fees, for constructive discharge and age discrimination.

The published portion of the opinion upheld a bench ruling, arising out of Herr’s unfair competition claim, that prohibits Nestle from discriminating against employees older than 40 for promotions. The injunction also requires Nestle to repudiate a 1993 memo by parent company Nestle SA’s then-Chief Executive Officer Helmut Maucher, which laid out a policy to “continue hiring, identifying and developing young people to have in the long term enough resources for future management.”