SAN DIEGO (Leal Newsline) - A California appeals court ordered Allstate to pay some $4.3 million, including $2.6 million in punitive damages, to a top-performing salesman who was fired after he pled guilty to disorderly conduct related to a loud dispute with his girlfriend.
Michael Tilkey was summarily fired from his $200,000-a-year job in 2015 after he was arrested, pled guilty to a misdemeanor charge and agreed to enter a domestic nonviolence program under which his conviction was reversed. He was arrested after his girlfriend locked him out of her apartment in Arizona and he pounded on the patio door, breaking the trim.
A California jury in 2018 awarded him of $18.6 million for wrongful discharge and defamation, including $15,978,822 in punitive damages.
The ruling by the Fourth District Court of Appeal was a victory of sorts for Allstate, since the court threw out the wrongful discharge claim and dramatically cut the punitive damages. But the court agreed with Tilkey that the company engaged in a novel form of defamation by describing his disorderly conduct plea on a Form U5 required by the Financial Industry Regulatory Authority whenever a registered representative is fired for cause.
The decision creates a new cause of action California employers must guard against: “Self-compelled defamation,” in which terminated employees must refer potential employers to information on a form that they believe to be untrue. In this case, Tilkey said he was never convicted of a crime and nothing in his record supported Allstate’s statement that he had allegedly threatened violence to his girlfriend.
Allstate said it accurately reported he had pled guilty to a misdemeanor charge and it was reasonable to describe it as stemming from threatening behavior.
The court disagreed, saying “breaking a door frame to enter the home to retrieve belongings, if that is what happened, is not synonymous with threatening behavior or acts of harm or violence to another person.”
The court also rejected Allstate’s argument that anything it wrote on Form U5 was protected information because it was required by regulators and the public has a right to fully investigate the people they hire to manage their finances. The appeals court said FINRA is only interested in conduct related to financial regulations.
The court did throw out Tilkey’s wrongful-dismissal award because Allstate was justified in firing him after his guilty plea to the misdemeanor charge. California labor laws prohibit employers from discharging workers because of their arrest record, but Tilkey pled guilty and was technically convicted when he was fired, the court ruled. The fact his conviction was expunged after he participated in the diversion program doesn’t matter, the court ruled.
The court dismissed as moot Tilkey’s complaint Allstate improperly included post-firing evidence he had shared inappropriate emails as further justification for his termination. The court also rejected a claim Allstate had violated California labor laws prohibiting employers from discharging workers who participate in diversionary programs. California expressly prohibits such programs for domestic violence, the court ruled, and Tilkey’s participation in an Arizona program doesn’t overcome that policy objective.