Filed 10/26/20; Opinion on rehearing

CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

MICHAEL A. TILKEY,

Plaintiff and Respondent,

v.

ALLSTATE INSURANCE COMPANY,

Defendant and Appellant.

 D074459

 (Super. Ct. No. 37-2016-

00015545-CU-OE-CTL)

APPEAL from a judgment of the Superior Court of San Diego County, 

Frederic L. Link, Judge. Affirmed in part; reversed in part. 

Brown Law Group, Janice P. Brown, Arlene R. Yang; Akin Gump 

Strauss Hauer & Feld, Rex S. Heinke, Jessica M. Weisel; Cozen & O’Connor, 

Anneliese Wermuth, and Jenny R. Goltz, for Defendant and Appellant. 

Edleson & Rezzo, Louis “Chip” Edleson, Joann F. Rezzo; Williams 

Iagmin and Jon R. Williams, for Plaintiff and Respondent. 

INTRODUCTION

While Michael Tilkey and his girlfriend Jacqueline Mann were visiting 

at her home in Arizona, the two got into an argument. Tilkey decided to 

leave the apartment. When he stepped out onto the enclosed patio to collect 

his cooler, Mann locked the door behind him. Tilkey banged on the door to 
2

regain entry, and Mann called police. Police arrested Tilkey and charged him 

under Arizona law with criminal damage deface, possession or use of drug 

paraphernalia, and disorderly conduct, disruptive behavior. Domestic 

violence charges were attached to the criminal damage and disorderly 

conduct charges. 

Tilkey pled guilty to the disorderly conduct charge only, and the other 

two charges were dropped. After Tilkey completed a domestic nonviolence 

diversion program, the disorderly conduct charge was dismissed. Before the 

disorderly conduct charge was dismissed, Tilkey’s company of 30 years, 

Allstate Insurance Company (Allstate), terminated his employment based on 

his arrest for a domestic violence offense and his participation in the 

diversion program. Allstate informed Tilkey it was discharging him for 

threatening behavior and/or acts of physical harm or violence to another 

person. Following the termination, Allstate reported its reason for the 

termination on a Form U5, filed with Financial Industry Regulatory 

Authority (FINRA) and accessible to any firm that hired licensed brokerdealers like Tilkey. Tilkey sued Allstate for wrongful termination in violation 

of Labor Code1 section 432.7 and compelled, self-published defamation. 

At trial, Allstate presented evidence that it would have terminated his 

employment based on after-acquired evidence that Tilkey had circulated 

obscene and inappropriate e-mails using company resources. 

1 Further statutory references are to the Labor Code unless otherwise 

specified. 
3

The jury returned a verdict in Tilkey’s favor on all causes of action and 

awarded him $2,663,137 in compensatory damages and $15,978,822 in 

punitive damages. It advised the court that it did not find Allstate’s afteracquired evidence defense credible, and the court agreed. 

Allstate appeals the verdicts, contending (1) it did not violate 

section 432.7 and so there was no wrongful termination; (2) compelled selfpublished defamation per se is not a viable tort theory; (3) it did not defame 

Tilkey because there is not substantial evidence its statement was not 

substantially true; (4) punitive damages are unavailable in compelled selfpublication defamation causes of action; (5) the defamatory statement was 

not made with malice; and (6) the punitive damages awarded here were 

unconstitutionally excessive. 

We agree that Allstate did not violate section 432.7 when it terminated 

Tilkey’s employment based on his plea and his participation in an Arizona 

domestic nonviolence program and will reverse that judgment. However, we 

conclude compelled self-published defamation is a viable theory, and 

substantial evidence supports the verdict that the statement was not 

substantially true, so we will affirm that portion of the judgment. 

Additionally, while we conclude punitive damages are available in this 

instance, the punitive damages awarded here are not proportionate to the 

compensatory damages for defamation, and we will remand the matter with 

directions regarding the recalculation of punitive damages. 

FACTUAL AND PROCEDURAL BACKGROUND

On August 16, 2014, Tilkey was staying with his girlfriend, Mann, and 

her young grandson in Arizona. After going out for the evening and drinking, 

the two began to argue, and Tilkey decided to leave the home. When Tilkey 
4

stepped outside onto the enclosed patio, Mann closed and locked the patio 

door, which was a traditional door with glass panes. Tilkey banged on the 

patio door, demanding to be let back in so he could gather his belongings, 

which were in the bedroom where Mann’s grandson was sleeping. Mann 

called police. 

When police arrived, Mann told them she did not want Tilkey in the 

apartment because she was afraid he would wake up her grandson. Police 

noted the interior trim on the framing above the patio door was broken. 

Officers searched Tilkey’s travel bag, which contained marijuana and a 

plastic container used to smoke marijuana. Police arrested Tilkey and filed 

three charges against him: criminal damage deface (Arizona Revised Statute 

[A.R.S.] § 13-1602A1), possession or use of drug paraphernalia (A.R.S. § 13-

3415A), and disorderly conduct - disruptive behavior (A.R.S. § 13-2904A1). A 

domestic violence label was attached to the criminal damage and disorderly 

conduct charges. 

On August 31, 2014, Mann sent an e-mail to Tilkey at work mentioning 

the charges that had been filed against him. A field compliance employee 

later discovered this e-mail while conducting a routine compliance review and 

forwarded it to Human Resources (HR). HR professional Tera Alferos 

conducted the initial investigation; she interviewed Tilkey December 4, 2014. 

She noted Tilkey had been asked to accept a plea deal to have two of the 

three charges dropped, then the last one dismissed. She never spoke with 

Mann or interviewed the arresting officers. She also did not investigate 

Mann’s background or review her social media accounts. 

Mann sent an e-mail to Allstate March 3, 2015, which revealed the 

arrests and made several other allegations. That same day, the e-mail was 

shared with Harriet Harty, Executive Vice President of HR; Christina 
5

Metzger, Vice President of HR; and Tyrone Burno, Director of HR. Alferos 

added the e-mail to the case file. A couple weeks later, Alferos sent Burno a 

summary of her investigation, which stated that the police report had been 

reviewed and noted Tilkey had been charged with but not convicted of a 

crime. The summary also explained there was no FINRA reporting 

obligation because there were no felony charges, and it concluded there had 

been no violation of company policy. 

On March 31, 2015, Alferos provided Burno with a revised summary of 

investigation that added that Tilkey had entered a diversion program for the 

disorderly conduct (domestic violence) charge, resulting in a deferred 

prosecution. Burno then changed the conclusion to state Tilkey’s behavior 

may have been at a level that caused the company to lose confidence in him. 

Burno supplied this version of the summary of investigation to Metzger, 

Harty, and Greg Burns, the senior vice president of HR, the same day. 

At Burno’s request, Alferos next added references to the domestic 

violence charge because it suggested Tilkey had engaged in behavior that 

could be construed as acts of physical harm or violence toward another 

person, in violation of company policy. 

On April 16, 2015, Metzger e-mailed Harty stating she and Burns could 

support a decision to terminate Tilkey’s employment or not. In a May 4, 2015 

e-mail referencing the decision to terminate Tilkey’s employment, Metzger 

wrote that they were amending the reason for terminating Tilkey to be 

“violence against another person whether employed by Allstate or not.” 

Alferos submitted a formal termination request two days later stating that 

based on Tilkey’s voluntary entrance into a diversion program, he had 

engaged in acts of physical harm or violence to another person. It identified 

the policy violation as “[t]hreats or acts of physical harm or violence to the 
6

property or assets of the Company, or to any person, regardless of whether 

he/she is employed by Allstate.” The summary of investigation attached to 

the termination request stated, “the retention of the domestic violence 

charges suggests that Tilkey engaged in behavior that was construed as acts 

of physical harm or violence towards another person.” 

Following written approval from Tilkey’s supervisors, the company 

terminated Tilkey’s employment on May 27, 2015. When the company 

terminated his employment, it informed Tilkey, “Your employment is being 

terminated as a result of engaging in behaviors that are in violation of 

Company Policy. Specifically, engaging in threatening behavior and/or acts 

of physical harm or violence to any person, regardless of whether he/she is 

employed by Allstate.” 

The company then filed a Form U5 with FINRA2 reporting its reason 

for terminating him as follows: “Termination of employment by parent 

property and casualty insurance company after allegations of engaging in 

behaviors that are in violation of company policy, specifically, engaging in 

threatening behavior and/or acts of physical harm or violence to any person, 

regardless of whether he/she is employed by Allstate. Not securities related.” 

On July 1, 2015, the State of Arizona filed a motion to dismiss the case 

against Tilkey with prejudice, and the court approved it the same day. 

Tilkey sued Allstate asserting three causes of action: (1) violation of 

section 432.7; (2) wrongful termination based on noncompliance with 

section 432.7; and (3) compelled self-published defamation to prospective

employers. 

2 The Form U5 is a document to let FINRA know if there is a change in 

the status regarding the licensing of a licensed broker dealer. 
7

As part of its defense at trial, Allstate presented evidence that Tilkey 

had used company equipment, including the company-issued laptop computer 

and the company’s Intranet and Internet system, to forward e-mails 

containing graphic nudity and racist jokes, among other items. It argued 

that had it known of these e-mails at the time, it would have discharged 

Tilkey. Tilkey presented evidence that the circulation of the e-mails was part 

of the culture of the workplace. 

Following trial, the jury returned a verdict for Tilkey and awarded 

$2,663,137 in compensatory damages, with $960,222 for wrongful 

termination and $1,702,915 for defamation, and $15,978,822 in punitive 

damages. The jury concluded that Tilkey engaged in misconduct by sending 

the inappropriate e-mails. However, it also advised the court that the 

misconduct was not sufficiently severe that Allstate would have discharged 

him as a matter of settled company policy because of that misconduct alone 

had Allstate known of it. The court agreed. 

Allstate moved for a judgment notwithstanding the verdict (JNOV) and 

for a new trial, motions which the trial court denied. Allstate timely 

appealed. 

On April 21, 2020, this court filed its original opinion, affirming the 

judgment in part and reversing it in part. 

Tilkey filed a timely petition for rehearing, arguing we incorrectly 

concluded his guilty plea was entered and asking us to determine the 

maximum permissible amount of punitive damages. Allstate also filed a 

timely petition for rehearing, arguing our opinion misstated the role of 

FINRA and the Form U5 reporting requirements, contending the role of the 

Form U5 in compelling self-published defamatory statements was overstated, 
8

noting some facts from the record were omitted from our opinion, and asking 

us to reverse our conclusion regarding the availability of punitive damages.

We granted the requests for rehearing on May 27, 2020 and received 

supplemental briefing. We have considered all the materials the parties 

submitted and we again affirm the judgment in part and reverse the 

judgment in part. 

DISCUSSION

I.

WRONGFUL TERMINATION

Allstate argues it did not violate section 432.7 when it used as a factor 

in its termination decision Tilkey’s arrest and subsequent conditional plea 

and entry into a diversion program. Tilkey counters that the company’s 

reliance on his arrest records violated section 432.7; thus, he was wrongfully 

terminated. The parties’ disagreement hinges on the interpretation of 

section 432.7, subdivision (a)(1), which prohibits employers from utilizing as 

a factor in employment decisions any record of arrest or detention that did 

not result in conviction or any record regarding referral to or participation in 

any pretrial or posttrial diversion program.3 

A.

Standard of Review

Statutory interpretation is a legal issue, which we review de novo. 

(Weatherford v. City of San Rafael (2017) 2 Cal.5th 1241, 1247.) In 

interpreting a statute, we attempt “to ascertain and effectuate the law’s 

3 The statute also prohibits an employer from seeking or using as a 

factor in an employment decision any record that concerns a conviction that 

has been judicially dismissed. (§ 432.7, subd. (a)(1).) The parties did not 

raise this as a basis for the wrongful termination claim. 
9

intended purpose.” (Id. at p. 1246.) Our “ ‘fundamental task’ ” is “ ‘to 

determine the Legislature’s intent so as to effectuate the law’s purpose.’ ” 

(Carson Citizens for Reform v. Kawagoe (2009) 178 Cal.App.4th 357, 366; 

Fluor Corp. v. Superior Court (2015) 61 Cal.4th 1175, 1198 (Fluor).) 

“ ‘ “We begin with the plain language of the statute, affording the words of 

the provision their ordinary and usual meaning and viewing them in their 

statutory context, because the language employed in the Legislature’s 

enactment generally is the most reliable indicator of legislative intent.” 

[Citations.] The plain meaning controls if there is no ambiguity in the 

statutory language. [Citation.] If, however, “the statutory language may 

reasonably be given more than one interpretation, ‘ “ ‘courts may consider 

various extrinsic aids, including the purpose of the statute, the evils to be 

remedied, the legislative history, public policy, and the statutory scheme 

encompassing the statute.’ ” ’ ” [Citation.]’ [Citation.]” (Fluor, at p. 1198.) 

B.

Tilkey’s Conditional Plea Agreement

Section 432.7 prohibits an employer from considering as a factor in 

employment decisions including termination of “any record of 

arrest . . . that did not result in a conviction.” (§ 432.7, subd. (a)(1).) 

Allstate argues a conditional plea agreement qualifies as a conviction. Tilkey 

contends he never entered a guilty plea; thus, there was no conviction. As we 

will explain, we conclude the term “conviction” as defined in section 432.7 

does not require entry of judgment. 

“ ‘[T]he term “conviction” has no fixed definition and has been 

interpreted by the courts of this state to have various meanings, 

depending upon the context in which the word is used.’ [Citation.]” 

(People v. Kirk (2006) 141 Cal.App.4th 715, 720). However, here, the 
10

statute defines a “conviction” to include “a plea, verdict, or finding of guilt 

regardless of whether sentence is imposed by the court.” (§ 432.7, 

subd. (a)(3)(A).) The plain language here makes clear that a judgment is not 

required because the conviction can exist without respect to sentencing. (See 

ibid.) 

The statute’s legislative history supports this interpretation. In 

2013, the Legislature amended section 432.7 to include, among those items 

prohibited from a prospective employer’s consideration, prior convictions 

that were dismissed by a court pursuant to Penal Code section 1203.4 

unless the conviction was related to job performance. (Sen. Com. on Pub. 

Safety, Analysis of Sen. Bill No. 530 (2013-2014 Reg. Sess.) Apr. 23, 2013, 

p. 7, ¶ 3.) The purpose of the amendment was “to close some loopholes and 

provide additional tools and changes to existing law to make effective 

existing state policy to remove employment barriers to those who have 

committed crimes that have been expunged by the courts.” (Assem. Com. 

on Judiciary, Analysis of Sen. Bill No. 530 (2013-2014 Reg. Sess.) June 25, 

2013, pp. 2-3.) This addition demonstrates that convictions and dismissed 

convictions represent two different categories of convictions. It also 

verifies that a conviction can exist even before judgment is entered, and it 

is different from one that is subsequently dismissed or expunged. 

Allstate asks us to follow the example provided by People v. Laino 

(2004) 32 Cal.4th 878. While the cases are factually similar, there are 

distinctions between the provision of the “Three Strikes” law and 

section 432.7 that make the comparison imprecise. In Laino, the 

defendant pled guilty in Arizona to assault with a firearm against his wife 

and received probation that included a diversion program, which he 

successfully completed. (Laino, at p. 882.) The defendant was never 
11

sentenced for the crime because he complied with the terms of the 

agreement; instead, the court dismissed the charges. (Ibid.) The 

defendant was later charged with two counts of theft in California, and he 

argued the conditional guilty plea he entered in Arizona was not a 

conviction for purposes of the Three Strikes law. (Laino, at p. 896.) 

The Supreme Court disagreed because California’s Three Strikes law 

imposes punishment “[n]otwithstanding any other law” if the defendant 

was previously convicted of a felony. (Pen. Code, §§ 667, subd. (c), 1170.12, 

subd. (a).) The Three Strikes law defines “conviction” to include 

convictions in other jurisdictions that would be punishable by 

imprisonment if committed in California, based on the date of the 

conviction and unaffected by the sentencing. (Pen. Code, §§ 667, 

subd. (d)(1) & (2), 1170.12, subd. (b)(1) & (2).) Thus, under the Three

Strikes law, “it is settled that for purposes of a prior conviction statute, a 

conviction occurs at the time of entry of the guilty plea.” (People v. 

Castello (1998) 65 Cal.App.4th 1242, 1253.) 

Section 432.7 does not contain similar provisions. The Labor Code 

does not provide details for determining the impact of a conviction in 

another jurisdiction or state that a conviction occurs on the date of the 

conviction. However, it does define conviction to include a plea, regardless 

of whether the court ultimately imposes a sentence. (See § 432.7, 

subd. (a)(3)(A).) Thus, for purposes of the Labor Code, a conviction does 

not require an entry of judgment of guilt; it merely requires the entry of a 

plea. 

Having determined what “conviction” means in the context of 

section 432.7, we turn now to the plea-related documents in the matter. In 
12

his petition for rehearing, Tilkey revisits the analysis we offered below, 

arguing that the plea was a conditional plea never entered onto the record. 

We decline to alter our conclusion on the matter.

On January 15, 2015, Tilkey, his attorney, and the prosecutor signed 

a document entitled “Plea Agreement Diversion.” The agreement stated it 

would “serve the ends of justice to suspend entry of judgment so that the 

defendant may participate in a diversion program.” From this language, 

as well as a later-filed motion to dismiss the remaining charge, we 

conclude that there was no judgment of guilt in the Arizona court. 

However, as we have explained, a conviction under section 432.7 does not 

require an entry of judgment; it simply requires entry of a guilty plea. 

Section 9 of the Plea Agreement Diversion document suggests that 

the guilty plea agreement was not entered because it says that it “will be 

entered on the record by the Court” if the defendant “fails to timely show 

proof of compliance” with the conditions stated in the agreement. The 

defendant’s signature on the document certifies that he “agree[s] to enter 

my plea of guilty as indicated above on the terms and conditions set forth 

in this document.” These conditions included a domestic nonviolence 

program under the supervision of an Arizona company, as well as payment 

of court costs, and assessments, and compliance with other limitations, 

like nonpossession of firearms and staying away from Mann. Thus, this 

document shows Tilkey agreed to enter a type of deferred prosecution, 

with the entry of guilty plea delayed until the prosecutor determined that 

Tilkey had completed the diversion program and remained in compliance 

with the other terms of the agreement. 
13

However, also on January 15, 2015, the Arizona court held a guilty 

plea proceeding. Appearing in that proceeding, Tilkey “expresse[d] a 

desire to plead guilty to” a class 1 misdemeanor, disorderly conduct 

fighting (DV), A.R.S. § 13-2904A1. Tilkey, his attorney, and the court 

signed this document, in which Tilkey certified that he understood “the 

constitutional rights which [he] [gave] up by entering this plea and that 

[he] still desire[d] to plead guilty.” (Italics added.) The court’s signature 

on the document certifies that it “conclude[s] that the [d]efendant 

knowingly, voluntarily and intelligently enters a plea to the above 

charge(s), and [it] accept[s] their plea.” (Italics added.) The first document 

indicated a willingness to enter a diversion program on the promise of a 

deferred prosecution; the second document shows entry of a guilty plea. 

This understanding of what occurred is supported by the testimony 

of Tilkey’s Arizona attorney, Carlos Estrada, who could not recall 

discussing with Tilkey whether the agreement would lead to a conviction, 

just that it would lead to a dismissal of the charges. Estrada testified that 

the purpose of the plea agreement diversion document and the guilty plea 

proceeding document were for the court to suspend the entry of judgment

of guilt so that successful completion of the diversion program would 

result in dismissal of the remaining charge. Tilkey’s testimony likewise 

focused on the ultimate outcome of the case; when asked if he believed the 

plea of guilt he entered had been entered on the record, Tilkey replied that 

he believed completion of the diversion program would mean there would 

not be “any record of anything anywhere.” 

Because Tilkey appeared before the Arizona court and entered a 

guilty plea, which the court accepted, Tilkey’s guilty plea was a conviction 
14

under section 432.7. This information was used by Allstate to terminate 

Tilkey’s employment in May 2015, before the charges against Tilkey were 

dismissed on July 1, 2015. Thus, Allstate did not violate section 432.7 by 

using Tilkey’s Arizona arrest as a factor in its decision to terminate his 

employment. 

C.

Tilkey’s Referral to and Participation in Nondomestic Violence Diversion 

Program

Section 432.7 also prohibits an employer from considering as a factor 

in an employment decision records of referral to or participation in a 

diversion program. (§ 432.7, subd. (a)(1).) It defines a pretrial or posttrial 

diversion program as “any program under Chapter 2.5 (commencing with 

Section 1000) or Chapter 2.7 (commencing with Section 1001) of Title 6 of 

Part 2 of the Penal Code, Section 13201 or 13352.5 of the Vehicle Code, 

Sections 626, 626.5, 654, or 725 of, or Article 20.5 (commencing with 

Section 790) of Chapter 2 of Part 1 of Division 2 of, the Welfare and 

Institutions Code, or any other program expressly authorized and 

described by statute as a diversion program.” (§ 432.7, subd. (j), italics 

added.)

Allstate argues that because California views domestic nonviolence 

diversion programs as contrary to public policy, such a program is 

unauthorized, and thus the company’s consideration of Tilkey’s 

participation in one did not violate section 432.7. Tilkey contends that a 

domestic nonviolence diversion program is one that is expressly authorized 

and described by statute in Arizona, and thus Allstate was prohibited from 

considering Tilkey’s participation. 
15

Because there is ambiguity here, we consider the Legislature’s 

intent. (Fluor, supra, 61 Cal.4th at p. 1198.) In 1976, the California 

Attorney General issued an opinion questioning the authority of local 

prosecutors and courts to offer diversion programs for behavior identified 

by the Legislature as unlawful; it suggested counties could not legally 

institute diversion programs. (Health and Welfare Agency, Dept. of 

Health, Enrolled Bill Report on Assem. Bill No. 533 (1977-1978 Reg. Sess.) 

Aug. 31, 1977, p. 1; Assemblyman Majority Leader Howard L. Berman, 

letter to Governor Edmund G. Brown, Jr. re Assem. Bill No. 533 (1977-

1978 Reg. Sess.) Aug. 31, 1977, p. 1 [Berman Letter].) At the time, the 

state had collected little data regarding the effectiveness of diversion 

programs. (Berman Letter, at pp. 2-3.) Assembly Bill No. 533 authorized 

local communities to establish diversion programs and required counties 

employing the programs to supply annual reports to the Legislature. 

(Health and Welfare Agency, Dept. of Health, Enrolled Bill Report on 

Assem. Bill No. 533, supra, p. 2.) 

In 1979, the Legislature expressly authorized diversion for 

misdemeanor domestic violence charges using a system similar to the 

domestic nonviolence diversion program options available to Tilkey in 

Arizona. (See Stats. 1979, ch. 913, § 1; Pen. Code, § 1000.6 et seq. 

[repealed].) The California statutes allowed courts to permit pretrial 

diversion without an admission of guilt and to dismiss criminal charges 

following successful completion of the program. (Id. at §§ 1000.6, 

subds. (a), (c); 1000.9 [repealed].) 

During the 1995-1996 legislative session, the Legislature revisited 

domestic violence diversion programs. Domestic violence diversion 
16

programs were not meeting their intended goal, with only a 50 percent 

success rate reported in Los Angeles, and difficulty prosecuting cases 

when perpetrators failed to complete their diversion programs. (Sen. 

Rules Com., Office of Sen. Floor Analyses, 3d Reading analysis of Assem. 

Bill No. 168 (1995-1996 Reg. Sess.) as amended July 14, 1995, pp. 3-4; Sen. 

Rules Com., Office of Sen. Floor Analyses, 3d Reading analysis of Assem. 

Bill No. 169 (1995-1996 Reg. Sess.) as amended July 15, 1995, pp. 3-4.) 

The Assembly and Senate introduced competing bills. 

Assembly Bill No. 168 would have allowed domestic violence 

perpetrators to plead guilty and defer entry of judgment, contingent upon 

successful completion of a diversion program. (Sen. Rules Com., Office of 

Sen. Floor Analyses, 3d Reading analysis of Sen. Bill No. 168 (1995-1996 

Reg. Sess.) as amended July 14, 1995, p. 2.) Senate Bill No. 169 would 

eliminate diversion as an option in all domestic violence cases. (Sen. Rules 

Com., Office of Sen. Floor Analyses, 3d Reading analysis of Assem. Bill 

No. 169 (1995-1996 Reg. Sess.) as amended July 15, 1995, p. 3, ¶ 1.) 

After the Legislature passed both bills, the governor vetoed 

Assembly Bill No. 168, commenting, “we can no longer continue to treat 

domestic violence cases as if they are not more significant than traffic 

violations.” (Governor’s veto message to Assem. on Assem. Bill No. 168 

(Oct. 4, 1995) (1995-1996 Reg. Sess.) p. 1.) The governor compared the two 

bills, explaining that Assembly Bill No. 168 would deem the arrest, which 

formed the basis for the diversion to have never occurred, and explaining 

the “problem is a lack of accountability” because perpetrators could “opt to 

attend a counseling program without ever acknowledging that they have 

committed a crime and are prepared to accept the consequences.” (Ibid.) 
17

He wrote that offering a deferred entry of judgment would merely be a 

cosmetic change and stated, “We must change the culture which makes 

domestic violence acceptable and dispel the myth that the battering of a 

domestic partner is a family matter, and something less than a crime.” 

(Id. at pp. 1-2.) 

The state abolished domestic violence diversion programs about a 

decade before Tilkey engaged in the domestic nonviolence program in 

Arizona. Were he to have been charged with the same crime in California, 

a diversion program would not have been an option. It would be contrary 

to California’s public policy against misdemeanor domestic violence 

diversion programs to prohibit consideration of Tilkey’s participation in 

one. The location of the crime in Arizona does not have any effect on 

California’s public policy opposing diversion for domestic violence offenses. 

Accordingly, we conclude section 432.7’s reference to diversion 

programs excludes out-of-state domestic violence programs, and Allstate’s 

consideration of Tilkey’s participation in one did not violate the law. 

We are unpersuaded by Tilkey’s argument that the lack of reference 

to California authorities in section 432.7 means the Legislature did not 

intend to limit consideration of diversion programs only to those offered in 

California. The statutes cited by Tilkey as evidence the Legislature is 

capable of limiting the scope of its laws are different in kind than one 

authorizing diversion in lieu of criminal conviction because they relate to 

physical location for purposes of jurisdiction (see, e.g., sections 220.2 

and 226 referencing the location of employment records), or the 

geographical location of people protected by employment laws (see, e.g., 

§§ 250 [seasonal labor to include employees hired in California who 
18

perform work out of state]; 1060, subd. (c) [applying only to employees 

whose “primary place of employment” is within California]; 1071 

[addressing public transit employment within California].) 

We also disagree with Tilkey’s claim that concluding a domestic 

violence diversion program offered in Arizona is not protected under 

section 432.7 means section 432.7 applies only to California arrests, 

detentions, and diversion programs. Our conclusion is more narrow: 

domestic violence diversion programs offered outside California are not 

protected under section 432.7 because California policy excludes such a 

benefit. 

Finally, citing People v. Bedrossian (2018) 20 Cal.App.5th 1070, 

Tilkey maintains that California provides statutory protections to 

domestic violence arrests and convictions and, therefore, we should honor 

Tilkey’s participation in a domestic nonviolence diversion program. In 

Bedrossian, the First Appellate District Court of Appeal recognized that 

records of an arrest for domestic violence can be expunged under Penal 

Code section 851.8 when no accusatory pleading is filed. This case is not 

helpful because, unlike Tilkey, the defendant in Bedrossian did not plead 

guilty or admit any factual basis for the charges against him. (See id. at 

p. 1073.) There, the court reasoned that the risk Bedrossian would be 

harmed by a delay in destruction of arrest records was mitigated by 

statutory protections like section 432.7 (Bedrossian, at p. 1075), but 
19

Bedrossian was not at risk because his arrest did not result in a conviction 

or a referral to a diversion program.4 (Bedrossian, at p. 1073.) 

Having concluded that Allstate did not violate section 432.7 by 

utilizing Tilkey’s arrest or participation in a domestic nonviolence 

diversion program as a factor in its employment termination decision, we 

will reverse the wrongful termination verdict. 

II.

DEFAMATION

Allstate next challenges the defamation verdict, contending that selfcompelled defamation should not provide a basis for a defamation per se 

cause of action. It further contends there was no evidence here that 

Tilkey’s self-publication was compelled by its publication of the reason for 

his employment termination on the Form U5 because that publication 

4 Allstate does not argue, and we do not hold, that it would be proper for 

an employer to consider, after charges are dismissed, an arrest that results in 

conviction and punishment, followed by dismissal under Penal Code 

section 1203.4, which is the factual situation presented in the other cases 

cited by Tilkey. (See People v. Seymour (2015) 239 Cal.App.4th 1418, 1421-

1422 [defendant permitted to have felony domestic violence charge dismissed 

due to discharge from probation prior to termination of probation period]; see 

also Shirey v. Los Angeles County Civil Service Comm. (2013) 216 

Cal.App.4th 1, 4-5 [battery conviction set aside following probation and not 

guilty plea entered].) Penal Code section 1203.4 permits a court, in the 

interests of justice, after a defendant has fulfilled conditions of probation, or 

after a defendant has been discharged prior to the termination of probation, 

to withdraw a guilty plea or to set aside a guilty verdict, and to dismiss the 

accusations or information. The defendant is “thereafter. . . released from all 

penalties and disabilities resulting from the offense of which he or she has 

been convicted . . . .” (Pen. Code, § 1203.4, subd. (a)(1).) In contrast, when 

Tilkey was discharged from employment, the domestic violence charge 

against him had not been dismissed. Moreover, nothing prohibited Allstate’s 

consideration of referral to a diversion program. 
20

contained a privileged statement. Finally, Allstate maintains that its 

statement was substantially true, justifying reversal of the verdict. 

We review questions of law, and therefore the viability of selfcompelled defamation per se theory, de novo. (Topanga and Victory 

Partners v. Toghia (2002) 103 Cal.App.4th 775, 779-780.) We look for 

substantial evidence regarding whether Tilkey was compelled to selfpublish the defamatory statement, and we look for substantial evidence 

regarding whether the statement was substantially true. (See 

Sweatman v. Department of Veteran Affairs (2001) 25 Cal.4th 62, 68 

(Sweatman) [denial of JNOV reviewed under substantial evidence 

standard].) In so doing, we do not “ ‘weigh the evidence, consider the 

credibility of witnesses, or resolve conflicts in the evidence or in the 

reasonable inferences that may be drawn from it.’ ” (Do v. Regents of the 

University of California (2013) 216 Cal.App.4th 1474, 1492 (Do).) We 

consider disputed facts in a light most favorable to the jury’s verdict. 

(Ibid.) 

For a valid defamation claim, the general rule is that “the 

publication must be done by the defendant.” (Live Oak Publishing Co. v. 

Cohagan (1991) 234 Cal.App.3d 1277, 1284 (Live Oak Publishing).) There 

is an exception “when it [is] foreseeable that the defendant’s act would 

result in [a plaintiff’s] publication to a third person.” (Ibid.) For the 

exception to apply, the defamed party must operate under a strong 

compulsion to republish the defamatory statement, and the circumstances 

creating the compulsion must be known to the originator of the statement 

at the time he or she makes it to the defamed individual. (Beroiz v. Wahl 

(2000) 84 Cal.App.4th 485, 497 (Beroiz); Davis v. Consolidated 
21

Freightways (1994) 29 Cal.App.4th 354, 373 (Davis); Live Oak Publishing,

at p. 1285; McKinney v. County of Santa Clara (1980) 110 Cal.App.3d 787, 

796 (McKinney).) 

A.

Compelled Self-Published Defamation Per Se

Allstate asks us to reject combining the doctrines of defamation per 

se and self-defamation, arguing the two theories are at odds because 

compelled self-publication must occur for the purpose of countering an 

injury (loss of employment opportunity), while defamation per se does not 

require proof of actual damages. We do not find these theories in conflict. 

In an action for defamation per se, the meaning is so clear from the face of 

the statement that the damages can be presumed. (Contento v. Mitchell 

(1972) 28 Cal.App.3d 356, 358 (Contento).) However, that presumption 

does not mean an employee does not anticipate injury; nor does it mean 

there is no injury. 

Moreover, while compelled self-published defamation per se 

technically eliminates the need for publication by the defendant to a third 

party, a plaintiff cannot manufacture the defamation claim by simply 

publishing statements to a third party because the plaintiff must disclose 

contents of the employer’s statement to a third party after reading or being 

informed of the contents. (Live Oak Publishing, supra, 234 Cal.App.3d at 

p. 1284.) The originator of the statement is liable for the foreseeable 

repetition because of the causal link between the originator and the 

presumed damage to the plaintiff’s reputation (see id. at p. 1285), but the 

publication must be foreseeable. (Davis, supra, 29 Cal.App.4th at p. 373.) 
22

The presumed injury is no less damaging because the plaintiff was 

compelled to make the statement instead of the employer making it 

directly to the third party.5 

Allstate offers several other arguments for why we should not accept 

a theory of compelled self-published defamation. Allstate argues a theory 

of self-publication undermines at-will employment, which allows 

companies to discharge employees capriciously, as long as the decision is 

not unlawful. Allstate also argues that permitting this cause of action 

may have a chilling effect on communication between an employer and 

employee, reducing the free flow of information due to self-censorship. 

Next, Allstate argues this theory of defamation incentivizes an employee 

to spread defamatory statements instead of mitigating damages. Finally, 

Allstate notes that employment is primarily a contractual relationship. 

These arguments do not persuade us to alter our conclusion here. 

These same arguments could be offered to support the elimination of 

a defamation cause of action against employers altogether—the crux of 

Allstate’s argument is that because the employee controls whether a 

statement is repeated to a third party, the risks of an end-run around the 

at-will employment doctrine is greater. But the additional requirements 

of proving a strong compulsion, the necessity to disclose the statement, 

and the foreseeability of the repetition all contribute to discouraging

5 While defamation per se does not require a finding of actual damages 

(Contento, supra, 28 Cal.App.3d at pp. 357-358), in this case, the jury found 

that Tilkey suffered actual damages of $1,586,185 for harm to his profession 

or occupation, $111,000 for harm to his reputation, and $5,730 for shame, 

mortification, or hurt feelings. 
23

employees from simply repeating the defamatory information instead of 

mitigating their damages. (See Live Oak Publishing, supra, 234 

Cal.App.3d at pp. 1284, 1285.) 

Allstate argues only one published case has permitted a compelled 

self-publication claim to survive summary judgment, and that case, 

McKinney, relied on out-of-state cases with unique facts, implying it 

should not supply a basis for our conclusion. However, the facts of the 

cases discussed in McKinney are not so different from the one before us 

now. 

In Colonial Stores, Inc. v. Barrett (Ga.Ct.App. 1946) 38 S.E.2d 306, 

307-308, the plaintiff received a restricted statement of availability that 

prevented him from being hired by other employers, and he claimed that 

statement contained a false reason for his termination. There, the 

employee was required to share the statement with prospective employers. 

(Ibid.) In Grist v. Upjohn Company (Mich.Ct.App. 1969) 168 N.W.2d 389, 

405-406, the employer disclosed to a prospective employer the reason for 

termination, compelling the employee to repeat the reason so he could 

refute it. Allstate argues that because no one at Allstate made a 

nonprivileged disclosure of its reason for terminating Tilkey’s employment 

to prospective employers, his situation is not analogous. We disagree. 

Allstate provided a written explanation for Tilkey’s termination of 

employment on the Form U5 to FINRA, which was available to every 

prospective employer of similarly-licensed employees. As we explain post,

that disclosure was not absolutely privileged. Thus, Tilkey was compelled 
24

to explain the reason for his discharge, and this repetition was reasonably 

foreseeable. 

We are also not persuaded by Allstate’s remaining arguments. 

Nothing about compelled self-published defamation limits an employer’s 

right or ability to terminate employment unfairly or capriciously. (See 

Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 350-351.) And because 

a defamation cause of action does not arise from an employer’s statement 

to the employee of the reasons for termination of employment unless they 

include false accusations of criminal conduct, lack of integrity, dishonesty, 

incompetence, or reprehensible personal characteristics or behavior (see, 

e.g., Jensen v. Hewlett-Packard Co. (1993) 14 Cal.App.4th 958, 964-965 

[employee performance evaluation]; see, e.g., King v. United Parcel 

Service, Inc. (2007) 152 Cal.App.4th 426, 440 [employer statements about 

reasons for terminating another employee are generally privileged because 

of common interest in protecting workplace from abuse]), there is no 

additional chilling effect on the free flow of information between the 

employer and the employee. 

Additionally, the qualified privilege that attaches to communications 

about an employee’s job performance when made without malice or abuse 

to a third party likewise protects an employer against compelled selfpublished defamation. (See Cal. Civ. Code, § 47, subd. (c); Noel v. River 

Hills Wilsons, Inc. (2003) 113 Cal.App.4th 1363 [malice required for 

application of conditional privilege]; Neal v. Gatlin (1973) 35 Cal.App.3d 

871, 877 [“It is well established that a former employer may properly 

respond to an inquiry from a prospective employer concerning an 

individual’s fitness for employment, and if it is not done maliciously, such 
25

response is privileged”].) This conditional privilege helps protect the free 

flow of reference information. (Noel, at pp. 1373-1374.) 

B.

Form U5 Privilege

In its petition for rehearing, Allstate questioned our understanding 

of the purpose and role of the Form U5. We have reviewed the materials 

provided by both parties, and our conclusion on this topic remains the 

same. When the information provided in the Form U5 is not made in 

anticipation of or designed to prompt an official proceeding, it is not 

protected by an absolute privilege. 

Civil Code section 47, subdivision (b) confers an absolute privilege to 

any communication “ ‘(1) made in judicial or quasi-judicial proceedings; (2) by 

litigants or other participants authorized by law; (3) to achieve the objects of 

the litigation; and (4) that [have] some connection or logical relation to the 

action.’ ” (Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 

Cal.4th 1232, 1241.) The communication must be reasonably relevant to the 

subject matter of the action for privilege to apply. (Nguyen v. Proton 

Technology Corp. (1999) 69 Cal.App.4th 140, 148.) 

Additionally, the “privilege extends to communications intended to 

report wrongdoing or trigger an investigation.” (Hawran v. Hixson (2012) 

209 Cal.App.4th 256, 282 (Hawran).) “[T]he critical question is the aim of the 

communication, not the forum in which it takes place. If the communication 

is made ‘in anticipation of or [is] designed to prompt official proceedings, the 

communication is protected.’ ” (Hagberg v. California Federal Bank (2004) 32 

Cal.4th 350, 368 (Hagberg).) We look to the aim of the Form U5 and the role 

of FINRA to evaluate whether a statement was made as part of, or 
26

anticipation of an official proceeding.6 (See Fontani v. Wells Fargo 

Investments, LLC (2005) 129 Cal.App.4th 719, 732 (Fontani), disapproved of 

on other grounds in Kibler v. Northern Inyo County Local Hospital District 

(2006) 39 Cal.4th 192.)

Firms are required to file a Form U5 with FINRA whenever a 

registered representative leaves the firm. If the registered 

representative’s employment has been terminated, the form asks the firm 

to provide a reason for termination. When the Form U5 identifies 

allegations of improper conduct by a broker-dealer, an issue that FINRA 

may need to investigate, it can on those occasions be considered “a 

communication made ‘in anticipation of an action or other official 

proceeding.’ (Briggs [v. Eden Council for Hope & Opportunity (1999)] 

19 Cal.4th [1106,] 1115.)” (Fontani, supra, 129 Cal.App.4th at p. 732.) In 

those instances, the information reported on the Form U5 would be 

protected by the absolute privilege outlined in Civil Code section 47, 

subdivision (b).7 (See Fontani, at p. 734.) 

6 FINRA is a non-profit organization that works under the supervision of 

the Securities and Exchange Commission. (FINRA, 

<https://www.finra.org/#/> [as of Oct. 26, 2020] archived at 

<https://perma.cc/E3FW-5NKS>.) It is “authorized by Congress to protect 

America’s investors by making sure the broker-dealer industry operates fairly 

and honestly.” (About FINRA, <https://www.finra.org/about> [as of Oct. 26, 

2020] archived at <https://perma.cc/7NS8-AR4X>.)

7 In Fontani, Wells Fargo stated on the Form U5 that Fontani 

misrepresented information when selling annuities. (Fontani, supra,

129 Cal.App.4th at pp. 725-726.) The appellate court noted that an 

“investigation is at least one potential consequence of a Form U-5 filing that 

contains allegations of improper conduct by a broker-dealer.” (Id. at p. 731, 

italics added.) For that reason, it was a communication made in anticipation 

of an official proceeding. (Id. at p. 732.)
27

Allstate explains the Form U5 is used for a variety of purposes, 

including to identify and sanction misconduct, to make informed licensing 

and registration decisions, and to ensure the public can make informed 

decisions about hiring FINRA-registered representatives to manage 

portfolios. Indeed, FINRA’s “rules and guidance strive to protect the 

investors and ensure the integrity of today’s rapidly evolving market.” 

(FINRA Rules & Guidance, <https://www.finra.org/rules-guidance> [as of Oct. 

26, 2020] archived at <https://perma.cc/QNL5-5NE6>.) To that end, FINRA 

“investigates potential securities violations and, when appropriate, brings 

formal disciplinary actions against firms and the associated persons.” 

(FINRA Rules & Guidance Enforcement, <https://www.finra.org/rulesguidance/enforcement> [as of Oct. 26, 2020] archived at 

<https://perma.cc/44E6-GBTB>.) Those disciplinary actions are based on 

FINRA’s rules, which cover a variety of topics related to business activities of 

registered representatives and member firms. (See, e.g., FINRA Rule 2010, 

<https://www.finra.org/rules-guidance/rulebooks/finra-rules/2010> [as of Oct. 

26, 2020] archived at <https://perma.cc/A2E5-GUNY> [commercial honor and 

principles of trade]; FINRA Rule 2020 <https://www.finra.org/rulesguidance/rulebooks/finra-rules/2020> [as of Oct. 26, 2020] archived at 

<https://perma.cc/PQ74-DE8M> [use of manipulation of fraudulent devices]; 

FINRA Rule 2100, <https://www.finra.org/rules-guidance/rulebooks/finrarules/2100> [as of Oct. 26, 2020] archived at <https://perma.cc/CL8F-2SZN>

[transactions with customers]; FINRA Rule 4500 et seq., 

<https://www.finra.org/rules-guidance/rulebooks/finra-rules/4510> [as of Oct. 

26, 2020] archived at <https://perma.cc/6YL8-FW3W> [books, records and 

reports].) 
28

To the extent the Form U5 provides information related to FINRA’s 

enforcement of its rules, the statements are protected. However, the scope of 

FINRA’s authority is not unlimited. Section 7 of the Form U5 includes a 

list of disclosure questions for full terminations that asks if the terminated 

employee was the subject of a governmental investigation; was under 

internal review for fraud, wrongful taking of property, or violated 

investment related laws, regulations, or industry standards relating to 

compliance; was convicted of or pled guilty to a felony; or was convicted of 

or pled guilty to a misdemeanor that related to investments, fraud, false 

statements, bribery, perjury, forgery, counterfeiting, extortion, or wrongful 

taking of property. These questions make clear that FINRA seeks 

termination information that allows it to assess whether the employee’s 

conduct lacked compliance with regulatory requirements in the securities 

arena. The explanation required in section 3 of the form helps FINRA 

determine whether and in what ways an employee may have engaged in 

unethical behavior or otherwise violated FINRA rules. 

Thus, the absolute privilege extends to communications required by 

FINRA, i.e., fraud- and securities-related information and other 

information covered by its rules. However, the communication of Tilkey’s 

termination here did not regard improper business activities, and Allstate 

did not limit its responses to such information. Instead, Allstate explained 

Tilkey’s departure was the result of a “termination of employment by 

parent property and casualty insurance company after allegations of 

engaging in behavior that are in violation of company policy, specifically, 

engaging in threatening behavior and/or acts of physical harm or violence 

to any person, regardless of whether he/she is employed by Allstate. Not 

securities related.” This statement did not contain allegations of improper 
29

securities conduct, theft, or allegations or charges of fraud or dishonesty. 

It was not offered in anticipation of or to initiate an investigation; nor was 

it offered in the course of any other official proceeding. (See Civ. Code, 

§ 47, subd. (b).) 

Allstate also argues that even if FINRA only initiates disciplinary 

matters in response to terminations issued under FINRA rules, the Form U5 

is still protected by absolute privilege because the Form U5 is itself an official 

proceeding. The cases Allstate cites to support this interpretation are 

distinguishable. Fontani concluded statements that alleged improper 

business conduct on the Form U5 were protected because an investigation 

was a possible consequence, making the allegations ones brought in 

anticipation of an official proceeding. (Fontani, supra, 129 Cal.App.4th at 

pp. 731-732.) O’Shea v. General Tel. Co. (1987) 193 Cal.App.3d 1040, 1048, 

did not address the Form U5. There, statements made during a background 

investigation conducted as required by state law were connected to the 

investigation about the applicant’s moral character. While Allstate is correct 

that these are examples of privileged statements in anticipation of or as part 

of investigations, neither supports the conclusion that the Form U5 is itself 

an official proceeding.8 Even recognizing, as we do, that an absolute 

privilege extends to communications related to official proceedings (Laker,

supra, 32 Cal.App.5th at p. 765), in this context, that means the absolute 

8 Allstate’s references to Laker v. Board of Trustees of California State 

University (2019) 32 Cal.App.5th 745 (Laker) and Nelson v. Tucker Ellis LLP 

(2020) 48 Cal.App.5th 827 (Nelson) are also unhelpful. In Laker, the 

challenged statements were made during an ongoing investigation. (Laker,

at p. 766.) In Nelson, the statements were submitted during a judicial 

proceeding in response to a subpoena; they were related to the issue over 

which there was litigation, and they were released by the holder of the 

privilege. (Nelson, at pp. 847-848.) 
30

“privilege extends to communications intended to report wrongdoing or 

trigger an investigation” (Hawran, supra, 209 Cal.App.4th at p. 282, citing 

Hagberg, supra, 32 Cal.4th at p. 368), and Allstate here was not intending to 

report wrongdoing or trigger an investigation by FINRA. 

Finally, Allstate maintains that the information provided on the 

Form U5 is connected to an official proceeding because FINRA plays a 

disciplinary role over employment-related conduct. Allstate offers two 

FINRA rules to support this claim, but neither addresses workplace disputes 

that do not also impact the business activities of the member. Specifically, 

FINRA Rule 2010, which falls under the umbrella of “standards of 

commercial honor and principles of trade,” expressly references the member’s 

behavior “in the conduct of its business” and cross-references other rules that 

focus on commercial business practices, like filing of misleading information, 

restrictions on the purchase and sale of initial equity public offerings, and 

prohibiting trading ahead of customer orders. (FINRA Rule 2010, 

<https://www.finra.org/rules-guidance/rulebooks/finra-rules/2010> [as of Oct. 

26, 2020] archived at <https://perma.cc/A2E5-GUNY>.) Similarly, the antiintimidation rule, FINRA Rule 5240, which falls within rules regarding 

“quotation and trading obligations and practices” prohibits engaging in 

conduct that “threatens, harasses, coerces, intimidates or otherwise attempts 

improperly to influence” another person or member. Subsequent language in 

that section explains the rule includes, but is not limited to, attempting to 

influence another person or member “to adjust or maintain a price or 

quotation,” a commercially-related concern. (FINRA Rule 5240, 

<https://www.finra.org/rules-guidance/rulebooks/finra-rules/5240> [as of Oct.

26, 2020] archived at <https://perma.cc/RXC9-B6X3>.) These rules do not 
31

persuade us that FINRA’s regulatory and disciplinary authority includes all 

employment-related conduct. 

Neither do the examples of disciplinary matters offered by Allstate in 

its request for judicial notice. Those matters involved situations in which the 

former employees had allegedly engaged in improper business activities, 

including misappropriating customer funds, harassing and threatening 

employees to secure leverage for post-employment commissions, making 

unauthorized transactions, converting firm funds, violating sales practices, 

and committing fraud. Thus, FINRA was exercising its authority under its 

rules.

We recognize there are adjudications via arbitration that raise 

defamation issues, including defamation arising out of the Form U5. (Top 15 

Controversy Types in Intra-Industry Arbitrations, FINRA Dispute Resolution 

Statistics, <https://www.finra.org/arbitration-mediation/dispute-resolutionstatistics#top15controversyindustry> [as of Oct. 26, 2020] archived at 

<https://perma.cc/98DA-VQM7>.) However, FINRA’s arbitration provisions 

are only mandatory for disputes involving customers, or pursuant to a 

written agreement; there is no requirement that employment disputes be 

arbitrated or brought to FINRA. (Ibid; FINRA Rule 13201, 

<https://www.finra.org/rules-guidance/rulebooks/finra-rules/13201> [as of 

Oct. 26, 2020] archived at <https://perma.cc/6JL2-B8W8>; SEC Approves 

Rule Change Regarding Arbitration of Statutory Employment Disputes, 

Notice to Members 98-56, available at <https://www.finra.org/rulesguidance/notices/98-56> [as of Oct. 26, 2020] archived at 

<https://perma.cc/8P8W-CWE2>.) In other words, FINRA’s jurisdiction over 

workplace disputes is more contractual than regulatory.
32

FINRA’s disciplinary authority extends to its own rules, which regard 

business activities of registered representatives and member firms, and 

statements that aim to prompt an investigation that would result in 

discipline under those rules are protected. (See Civil Code, § 47, subd. (b); 

Hagberg, supra, 32 Cal.4th at p. 368.) As we have explained, the statement 

in section 3 here did not relate to Tilkey’s business activities or any violation 

of FINRA Rules and was therefore not protected by an absolute privilege. 

Although we conclude the Form U5 statement was not absolutely privileged, 

even were we to have concluded otherwise, it would not preclude a finding 

that Tilkey was compelled to self-publish a defamatory statement because, as 

we next explain, there was substantial evidence to support compelled selfpublication even without the Form U5. 

C.

Substantial Evidence Supports Jury Findings That Tilkey Was Compelled 

to Self-Publish Statement That Was Not Substantially True

Finally, Allstate contends Tilkey was not under a strong compulsion 

to self-publish the defamatory statement and there was not substantial 

evidence to support the jury’s finding the statement was not substantially 

true. We disagree. 

We look for substantial evidence regarding whether Tilkey was 

compelled to self-publish and whether its statement that he was engaged 

in threatening behavior and/or acts of physical harm or violence to any 

person was substantially true. (Sweatman, supra, 25 Cal.4th at p. 68.) In 

so doing, we do not “ ‘weigh the evidence, consider the credibility of 

witnesses, or resolve conflicts in the evidence or in the reasonable 

inferences that may be drawn from it.’ ” (Do, supra, 216 Cal.App.4th at 
33

p. 1492.) We consider disputed facts in a light most favorable to the 

judgment. (Ibid.)

1. Compulsion

The jury concluded that Tilkey was under strong pressure to 

communicate Allstate’s defamatory statement to another person. There is 

ample evidence to support this conclusion. 

The vocational evaluator testified Tilkey would have a difficult time 

ever getting another job because he had been terminated, and the reason 

for termination reported on the Form U5 was negative. He testified that 

because job applications ask for information about whether the applicant 

had been terminated from employment, Tilkey would have to explain the 

situation, and that would be “an absolute killer.” He also noted that 

because Tilkey sold life insurance, he was required to hold securities 

licenses, and agencies and employers hiring those with securities licenses 

would have access to U5 forms. Tilkey’s supervisor at Allstate, William 

Vasquez, testified that Allstate routinely reviewed the securities public 

information from the Form U5 of any person they were hiring, and he 

could not recall ever hiring anyone at Allstate whose Form U5 stated he 

was terminated for cause. Tilkey likewise testified that when he recruited 

agents, he would have someone check the Form U5, and he never hired 

anyone whose Form U5 showed the termination was for cause. He also 

never received an interview from any company that had access to a 

Form U5, even though he had 30 years of experience and performed well, 

receiving the third largest bonus in the state just a few weeks before his 

termination. Tilkey’s knowledge of how companies used the Form U5, 

coupled with Allstate’s related hiring practice contributed to his 
34

compulsion to explain and respond to the allegation. (See Live Oak 

Publishing, supra, 234 Cal.App.3d at p. 1285 [compulsion from need to 

explain to employers who will learn of allegation if they investigate past 

employment].) 

Even without reference to the Form U5 specifically, there is 

substantial evidence that Tilkey was compelled to disclose Allstate’s 

reason for terminating his employment. Tilkey looked for work in other 

fields as well, but even then he was asked about whether he had been 

terminated from a job. He answered the question honestly, stating that 

Allstate alleged he had engaged in threatening behavior and/or acts of 

physical harm or violence to another person, then countered it by 

explaining he had never threatened anyone. (See Beroiz, supra,

84 Cal.App.4th at p. 497 [republication necessary to disprove accusation].) 

None of these facts is disputed. Taken together, in a light most 

favorable to the verdict, the implication is evident. Even if the company 

never offered any specific information about the reason for Tilkey’s 

discharge from employment to prospective employers, its statement at the 

time of discharge and separately its reporting of the information on the 

publicly-available Form U5 necessitated Tilkey’s self-publication in other 

settings. Without explaining Allstate’s claims, Tilkey would not have been 

able to explain his employment history and sudden departure after 30 

years. 

2. Substantial Truth

The truth of a statement is an absolute defense against civil liability. 

(Ringler Associates Inc. v. Maryland Casualty Co. (2000) 80 Cal.App.4th 

1165, 1180.) The defendant does not need to prove the literal truth of 
35

every word in the challenged statement; the defense is complete “so long 

as the imputation is substantially true so as to justify the ‘gist or sting’ of 

the remark.” (Campanelli v. Regents of University of California (1996) 

44 Cal.App.4th 572, 582 (Campanelli).) 

The jury was asked whether Allstate stated, “[Tilkey] engaged in 

threatening behavior and/or acts of physical harm or violence to another 

person,” and it concluded Allstate did. The jury also found the statement 

was not substantially true. These conclusions are supported by 

substantial evidence. 

The facts of the evening of Tilkey’s arrest, which formed the basis of 

Allstate’s conclusion that he engaged in threatening behavior and/or acts 

of physical harm or violence, are largely undisputed. Tilkey and Mann 

were at Mann’s one-bedroom apartment after an evening out when they 

began to argue. Tilkey stepped onto the enclosed patio, and Mann closed 

and locked the door behind him. Tilkey banged on the door loudly, 

demanding to be let into the home to gather his belongings from the room 

where Mann’s grandson was asleep. When police arrived, Mann told them 

she was afraid Tilkey would wake her grandson, and the interior trim on 

the framing of the patio door was broken. Tilkey was arrested for 

misdemeanor criminal damage deface and disorderly conduct - disruptive 

behavior, and a domestic violence label was attached to the disorderly 

conduct charges. Tilkey pled guilty to disorderly conduct fighting (DV).9 

9 In its petition for rehearing, Allstate contends certain facts that Tilkey 

admitted to were omitted from our opinion. The first two sets of facts 

Allstate identifies were related to Tilkey pounding on the door, the door 

frame being broken, and Tilkey’s possession of marijuana paraphernalia. 

Those facts were included in our initial opinion, as they are now. The third 
36

These facts do not include evidence that Mann was ever directly 

threatened; nor do these events indicate that Tilkey was threatening to 

physically harm Mann or her grandson. Tilkey’s attorney explained that 

the charges did not reflect threats of violence or harm. Estrada testified 

that A.R.S. section 13-2904A.1, the charge to which Tilkey pled guilty, 

defines the crime as engaging in fighting, violent, or seriously disruptive 

behavior. The basis of Tilkey’s guilty plea was his admission that he 

engaged in seriously disruptive behavior on the date, time, and location 

listed in the charges against him. Estrada explained that while the courtgenerated guilty plea form references fighting, the departmental report 

and his understanding were that the conduct was disruptive behavior and 

not fighting, which is why the departmental report listed “disruptive 

behavior” on it. Estrada also testified that there is a separate charge for 

threatening behavior, A.R.S. section 13-1202, for which Tilkey was not 

fact Allstate highlighted, that Tilkey had been drinking, was not included 

because there was no evidence or argument that the information was 

relevant to the outcome of the case. 

Allstate further contends in its petition for rehearing that our 

statement of facts is inaccurate because we did not include reference to 

testimony about whether Tilkey broke the door and whether Tilkey told 

Mann he would pay for repairs to the door. Although Allstate does not 

explain why these “omitted” or “inaccurate” facts should be added, we 

presume Allstate asks us to include them because it believes this information 

supports its statement that Tilkey “engaged in threatening behavior and/or 

acts of physical harm or violence to another person.” But these factual 

details do not support the statement, as the jury ultimately found. 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. And although Tilkey agreed to pay Mann for 

repairs to the door, offering to pay for the door without admitting he caused 

the damage is not evidence that he threatened or harmed her. Even if it 

were, the standard of review on this point is whether there is substantial 

evidence to support the judgment that the statement was false, and there is.
37

charged. Tilkey similarly testified that he agreed to enter a diversion 

program because he felt like he was guilty of making noise that night. 

Additionally, Alferos’s summary of her investigation into the arrests 

initially concluded Tilkey was not in violation of company policy. It was 

only after her supervisor Burno directed her to revise the summary of 

investigation that Alferos concluded Tilkey’s behavior “may [have been] at 

a level which causes management to lose confidence in his ability to work 

at Allstate.” When Burno modified the conclusion again later, he relied on 

the retained charge against Tilkey to conclude “Tilkey engaged in behavior 

that was construed as acts of physical harm and violence towards another 

person.” And Alferos’s termination request form stated that based on 

Tilkey’s voluntary entrance into the diversion program, he had engaged in 

acts of physical harm or violence to another person. But Estrada’s 

testimony made clear that a domestic violence label does not mean the 

person engaged in physical violence or even threatened violence. 

Thus, there is substantial evidence that the events of August 16, 

2014, do not support Allstate’s statement, especially when construed in a 

light most favorable to the jury verdict. Tilkey and his girlfriend had a 

heated exchange during which there was shouting, a door slam, and 

banging on the door. The charge to which Tilkey initially pled guilty was a 

disorderly conduct charge, not a threat charge. And while there was a 

factual basis for that guilty plea, disorderly conduct does not require any 

physical violence or threat of physical violence, so the existence of that 

charge is not sufficient on its own to conclude Tilkey engaged in physical 

harm or threatened physical harm. The factual basis for the plea was 

disruptive behavior, not physical harm, or even threat of physical harm. 
38

Finally, Tilkey explained that he entered the diversion program because 

he felt like he was guilty of making noise that night. 

The “gist or sting” of Allstate’s remarks was that Tilkey behaved in a 

physically violent or threatening manner, and that was why his 

employment was terminated. (See Campanelli, supra, 44 Cal.App.4th at 

p. 582.) But the facts do not point to Tilkey threatening Mann, physically 

harming her, or being violent. Thus, there is substantial evidence to 

support the jury’s verdict that Allstate’s statement to the contrary was not 

substantially true, and we will affirm. 

III.

PUNITIVE DAMAGES

Allstate presents four arguments for why the judgment on punitive 

damages should be reversed: (1) no managing agent acted to terminate 

Tilkey with knowledge of violating section 432.7 or with knowledge of or a 

reckless disregard for the truth; (2) Allstate did not consciously disregard 

the requirements of section 432.7; (3) punitive damages are not available 

in compelled self-publication defamation matters; and (4) the award is 

excessive in violation of due process rights. Having already concluded 

Allstate did not violate section 432.7, we do not address Allstate’s contentions 

relating to that section of the Labor Code. We address the remaining three 

contentions in turn below. 

A.

Standard of Review

We review whether a punitive damages award is constitutionally 

excessive de novo, independently assessing the “reprehensibility of the 

defendant’s conduct, the relationship between the award and the harm 

done to the plaintiff, and the relationship between the award and civil 
39

penalties authorized for comparable conduct.” (Simon v. San Paolo U.S. 

Holding Co., Inc. (2005) 35 Cal.4th 1159, 1172 (Simon).) 

We likewise review denial of a motion for JNOV de novo. (Linear 

Technology Corp. v. Tokyo Electron Ltd. (2011) 200 Cal.App.4th 1527, 

1532) “ ‘[W]e determine whether substantial evidence supported the 

verdict, viewing the evidence in the light most favorable to the party who 

obtained the verdict. [Citation.] We resolve all conflicts in the evidence 

and draw all reasonable inferences in favor of the verdict, and do not 

weigh the evidence or judge the credibility of witnesses.’ ” (Ibid.;

Licudine v. Cedars-Sinai Medical Center (2016) 3 Cal.App.5th 881, 890.) 

B.

Managing Agents Acted with Reckless Disregard

We first turn our attention to whether managing agents knew the 

reason given for termination was not substantially true and whether they 

acted with reckless disregard for the truth. 

For punitive damages, the plaintiff must prove by clear and convincing 

evidence that the defendant acted with “oppression, fraud, or malice” and 

that those acts were performed or ratified by an “officer, director or managing 

agent.” (Civ. Code, § 3294, subds. (a), (b); College Hospital Inc. v. Superior 

Court (1994) 8 Cal.4th 704, 726.) A company ratifies a managing agent’s 

decision when it knows about and accepts the decision. (Ibid.; Cruz v. 

HomeBase (2000) 83 Cal.App.4th 160, 168.) 

The term “managing agent” includes “only those corporate employees 

who exercise substantial independent authority and judgment in their 

corporate decisionmaking so that their decisions ultimately determine 

corporate policy.” (White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 566-567 

(White).) It does not depend on the person’s level within the corporate 
40

hierarchy but instead the amount of discretion permitted in making 

decisions. (Powerhouse Motorsports Group, Inc. v. Yamaha Motor Corp., 

U.S.A. (2013) 221 Cal.App.4th 867, 886, quoting Kelley-Zurian v. Wohl Shoe 

Co. (1994) 22 Cal.App.4th 397, 421.) Moreover, a managing agent does not 

need to be a corporate policymaker and can formulate operational policies 

through discretionary decisions. (Colucci v. T-Mobile USA, Inc. (2020) 

48 Cal.App.5th 442, 452-453 (Colucci).) The scope of an employee’s discretion 

and authority is a question of fact. (Davis v. Kiewit Pacific Co. (2013) 

220 Cal.App.4th 358, 366.) 

“The reckless disregard test is not a negligence test measured by 

whether a reasonably prudent person would have published, or would have 

investigated before publishing, the defamatory statement.” (McGarry v. 

University of San Diego (2007) 154 Cal.App.4th 97, 114.) Instead, a reckless 

disregard for truth or falsity is demonstrated when there is “ ‘sufficient 

evidence to permit the conclusion that the defendant in fact entertained 

serious doubts as to the truth of his publication,’ ” but published the 

statement anyway. (Copp v. Paxton (1996) 45 Cal.App.4th 829, 846-847.) 

This may be demonstrated through circumstantial evidence, including a 

failure to investigate, anger and hostility toward the plaintiff, or reliance on 

unreliable sources. (Id. at p. 847, quoting Reader’s Digest Assn. v. Superior 

Court (1984) 37 Cal.3d 244, 258.) 
41

In its petition for rehearing, Allstate reiterates its argument that the 

decisionmaker here was not a managing agent. We remain 

unpersuaded.10 Burno was the director of HR, and employees including 

Alferos reported directly to him. Allstate argues Burno’s job title and role as 

a supervisor do not establish that he is a managing agent. Although Burno’s 

hiring and firing authority is not sufficient in itself to characterize him as a 

managing agent (White, supra, 21 Cal.4th at p. 566), in his role overseeing 

the centralized staff who investigated complaints, he helped guide the 

application of company policy. The vice president of HR explained that when 

judgment was required, as in cases that were not straightforward like 

attendance issues, the manager would make the decisions about discipline. 

In so doing, Burno formulated operational corporate policy at least related to 

discipline and attendance. (See, e.g., Colucci, supra, 48 Cal.App.5th at p. 452 

[explaining a district manager’s discretionary authority over daily store 

operations like disciplinary measures, investigations, and employee 

transfers, led to the “ad hoc formulation of policy”].) 

Moreover, Burno exercised independent authority and judgment in his

handling of this particular matter, directing Alferos to change her conclusion, 

10 We note that Allstate highlighted several “omitted” facts regarding this 

issue. One was that Burno was a lower level manager, under Metzger and 

Harty, information evident from our discussion, noting that Burno was a 

director, Metzger was the vice president of HR, and Hardy was the president 

and head of HR. The other items identified, the number of employees Burno 

supervised and how HR fit within the larger corporate structure, are not facts 

we omitted; they are facts that were not presented at trial. This information, 

while potentially helpful, is not necessary to our determination.

Allstate also contends no evidence was introduced that Burno exercised 

substantial discretionary matters on matters that dictated corporate policy. 

As we explain, we disagree with that assessment. 
42

then altering the conclusion himself later and ultimately deciding whether 

company policy prohibited the behavior in which Tilkey had engaged. 

Burno’s decision that Tilkey’s behavior was at a level that caused 

management to lose confidence in his ability to work for the company, when 

none of Tilkey’s direct managers expressed any concern, is further evidence 

that Burno’s judgment was forming corporate policy about what behavior was 

acceptable and how it would be disciplined. Burno’s day-to-day work 

required the exercise of independent authority and judgment, making him a 

managing agent. 

Even if Burno were not a managing agent for Allstate, other managing 

agents, Metzger and Harty, ratified the decision. Although Metzger framed 

the termination decision as Burno’s, other evidence suggests there was 

collective agreement by other managing agents, and thus ratification, of the 

decision. Metzger testified that she was involved in high-profile cases and 

unique situations, counseling Burno and serving as his sounding board. She 

“fully supported” Burno’s decision, and she talked it through with several 

“very high-level managers at Allstate,” including Harty, who was the head of 

HR for the company. In their communications, Metzger and Harty expressed 

concern about Tilkey’s conduct and whether he should continue to serve as a 

face of Allstate. The executive vice president and the president of HR knew 

about and supported the decision to terminate Tilkey before his discharge; 

they had discussions about it, and they reviewed the paperwork in advance. 

Allstate argues that managing agents did not act with malice because 

Metzger did not personally gather any information or see the version of the 

summary of investigation that concluded there was no violation of company 

policy, and because she testified that she considered Tilkey’s behavior to be 

threatening. This argument ignores that Burno, who supervised the 
43

investigation from the outset, was a managing agent, and Burno’s actions 

demonstrate a conscious disregard. He directed Alferos to change her 

conclusion to justify terminating Tilkey’s employment for loss of confidence in 

him. Then he changed the conclusion completely to say Tilkey had “engaged 

in behavior that was construed as acts of physical harm and violence towards 

another person” without information that Tilkey had, in fact, engaged in 

physical harm or violence. Metzger was aware of this change. Moreover, no 

one from Allstate ever interviewed Mann or looked into her background, even 

though it was her e-mails that prompted the internal investigation. 

Allstate’s reliance on the testimony of Metzger to challenge the finding as one 

she made in earnest is self-serving, and testimony which the jury and trial 

court found not credible. (See People v. Maciel (2013) 57 Cal.4th 482, 519 

[trial judge or jury determines credibility of witness and truth or falsity of 

facts upon which determination depends].) 

C.

Availability of Punitive Damages

Allstate asks us to follow a Minnesota Supreme Court case, Lewis v. 

Equitable Life Assurance Soc. (Minn.S.Ct. 1986) 389 N.W.2d 876 (Lewis) to 

conclude punitive damages are unavailable in compelled, self-published 

defamation cases, noting no California cases have expressly addressed this 

issue. Tilkey contends that California law permits punitive damages for 

defamation, and compelled self-publication is not less worthy of the same 

punishment. We agree with Tilkey. 

In Lewis, a group of employees were discharged for “gross 

insubordination” after refusing to alter their expense reports following a 

business trip for which their work was commended. (Lewis, supra,

389 N.W.2d at pp. 880-882.) The company failed to provide expense 
44

guidelines, then offered differing instructions after the employees returned 

from the business trip, each time asking the employees to adjust their 

accounting and to repay the company the difference. (Id. at pp. 881-882.) 

The employees who refused to do so were terminated for gross 

insubordination and denied severance pay. (Id. at pp. 881-882.) 

The company’s policy was to give only the dates of employment and 

final job titles of former employees unless specifically authorized in writing to 

release additional information. (Lewis, supra, 389 N.W.2d at p. 882.) 

Despite this, at least once, each employee stated the reason for termination 

and attempted to explain the situation in subsequent job applications. (Ibid.) 

The Minnesota Supreme Court recognized for the first time the validity of a 

compelled self-publication defamation cause of action. (Id. at p. 888.) 

However, it declined to permit punitive damages because it was concerned 

that their availability could encourage employees to publish the defamatory 

statements by employers, deterring employer communication of the reason 

for the employee’s discharge to the employee. (Id. at p. 892.) 

We reach a different conclusion here. First, punitive damages are 

available in cases where the trier of fact finds slander per se. (See 

Manguso v. Oceanside Unified School Dist. (1984) 153 Cal.App.3d 574 [libel 

per se]; Contento, supra, 28 Cal.App.3d at p. 359.) The slander here was selfpublished, but that does not change access to punitive damages. To be 

successful with compelled self-publication defamation, a plaintiff already 

must prove a necessity and a strong compulsion to disclose the statement, 

and the employer must be able to reasonably anticipate the self-publication. 

(Beroiz, supra, 84 Cal.App.4th at p. 497; Davis, supra, 29 Cal.App.4th at 

p. 373; McKinney, supra, 110 Cal.App.3d at p. 796.) The plaintiff also must 

demonstrate that he actually published the statement. (Dible v. Haight 
45

Ashbury Free Clinics (2009) 170 Cal.App.4th 843, 851; Live Oak Publishing 

Co., supra, 234 Cal.App.3d at p. 1285.) As we discussed ante, these 

requirements mean a plaintiff cannot simply manufacture a defamation 

claim. 

Moreover, the focus for punitive damages is not the plaintiff’s repetition 

of the defamatory statement to a prospective employer, but the employer’s 

intent. To recover pecuniary damages, the plaintiff must prove by clear and 

convincing evidence that an employer has acted with malice, oppression, or 

fraud. (Civ. Code, § 3294, subds. (a), (b), & (c).) An affirmative finding on 

malice or oppression demonstrates that the jury has concluded the plaintiff 

proved the defendant “acted with the requisite reprehensible 

motivation . . . thereby defeating the qualified privilege” and also that the 

“defendant[‘s] conduct was also intentionally injurious to, or in conscious 

disregard of, plaintiff’s rights, thereby meeting the heightened requirements 

of malice (or oppression) necessary to support an award of punitive damages.” 

(Lundquist v. Reusser (1994) 7 Cal.4th 1193, 1214, citing Civ. Code, § 3294, 

subd. (c)(1) & (2) [discussing prejudicial error after concluding plaintiff bears 

the burden of proving malice].) Collectively, these additional elements and 

heightened burden of proof already provide a safeguard against the plaintiff 

self-publishing defamatory statements just so he or she can sue a former 

employer. If the employee were not already encouraged to repeat the 

defamatory statements because of the availability of a cause of action for 

compelled self-defamation, we fail to see how the additional burdens created 

by the need to also prove the defendant’s motive by clear and convincing 

evidence, even in light of potentially increased recovery, increases the 

likelihood that a plaintiff would bring a defamation lawsuit. 
46

We note, too, there are some factual differences between Lewis and the 

matter before us. Chief among them is the company policy in Lewis not to 

disclose more than a former employee’s dates of employment and final job 

title. (See Lewis, supra, 389 N.W.2d at p. 882.) Although the court there 

ultimately found there was a viable compelled self-publication cause of action 

(Id. at p. 888), this type of fact would tend to cut against the requirement 

that self-publication be foreseeable (Beroiz, supra, 84 Cal.App.4th at p. 497; 

Live Oak Publishing, supra, 234 Cal.App.3d at p. 1285). In contrast, here the 

evidence that the self-publication was compelled, necessary, and foreseeable 

was strong: Allstate published the statement on the Form U5, which was 

available to all firms that hired licensed broker-dealers; the jobs to which 

Tilkey applied included such jobs, and employers, including Allstate, 

routinely reviewed that information before hiring an individual. This was 

not a situation where the availability of the statement to prospective 

employers was questionable; Tilkey’s disclosure of the allegation was already 

in the public sphere, necessitating its repetition to challenge its veracity. 

Even with an explanation of his situation, the allegation would be, as the 

vocational expert explained, “an absolute killer.” 

D.

Constitutionality of Punitive Damages

Allstate contends the punitive damages award violates due process 

because the large ratio between punitive damages and compensatory 

damages, a ratio greater than six to one, is disproportionate and far exceeds 

civil penalties for the same violation. We agree. 

“Appellate courts conduct de novo review of a trial court’s application of 

the guideposts to the jury’s punitive damage award.” (Nickerson v. 

Stonebridge Life Insurance Co. (2016) 5 Cal.App.5th 1, 15 (Nickerson).) Three 
47

factors determine whether punitive damages are excessive: (1) degree of 

reprehensibility of the defendant’s misconduct; (2) disparity between actual 

or potential harm suffered and the pecuniary award; and (3) the difference 

between the punitive damages award and comparable civil penalties.11 

(Simon, supra, 35 Cal.4th pp. 1171-1172; State Farm Mutual Auto Insurance 

Co. v. Campbell (2003) 538 U.S. 408, 418 (State Farm); Major v. Western 

Home Insurance Co. (2009) 169 Cal.App.4th 1197, 1222-1223 (Major).) 

Because the parties agree there are no corresponding civil penalties for the 

defamation, we consider only the first two factors. 

1. Reprehensibility

The degree of reprehensibility is the most important indication of the 

reasonableness of the defendant’s conduct. (Roby v. McKesson Corp. (2009) 

47 Cal.4th 686, 713 (Roby); Nickerson, supra, 5 Cal.App.5th at p. 16.) Courts 

consider five factors for assessing the degree of reprehensibility: (1) physical 

harm; (2) indifference or reckless disregard for health or safety of others; 

(3) whether target was financially vulnerable; (4) if the conduct was repeated 

or isolated; and (5) if the conduct was intentional or accidental. (Major,

supra, 169 Cal.App.4th at p. 1223, citing State Farm, supra, 538 U.S. at 

p. 419; Simon, supra, 35 Cal.4th at p. 1180.) 

11 The parties do not clearly parse out these factors with attention to each 

cause of action separately. Because we conclude the company’s termination 

was not wrongful, damages should be limited to those resulting from the 

defamation cause of action, and we have attempted to so limit our review 

here. We are cognizant that the jury concluded the reason provided for 

Tilkey’s termination, while not unlawful under section 432.7, was 

nonetheless not substantially true and was defamatory. Accordingly, we view 

the emotional distress that arose from defamation as the basis for punitive 

damages in this case. 
48

Harm is physical when it affects emotional and mental health and is 

not purely economic. (Roby, supra, 47 Cal.4th at p. 713.) Tilkey testified that 

he endured weight gain, bouts of crying, loss of sleep, physical tension, and 

tightness in his chest. Thus, there was evidence that he suffered physical 

symptoms from emotional distress. (See Nickerson, supra, 5 Cal.App.5th at 

p. 17.) It is not clear from the record whether these physical manifestations 

were the result of his termination, the defamatory statement, or a 

combination of the two. However, the jury awarded separate amounts for 

emotional distress damages tied to wrongful discharge and for shame, 

mortification, or hurt feelings tied to defamation, suggesting distress from 

each action. It is not possible to separate out the physical manifestations of 

the distress resulting from the discharge from the shame, mortification, or 

hurt feelings resulting from the defamation, but it is clear this factor weighs 

in favor of a finding of reprehensibility. 

Allstate argues that the second factor is not supported because Allstate 

was motivated by concerns about the health and safety of others, by enforcing 

its policy prohibiting threats of violence against any person. This 

interpretation of the facts presented relies on the conclusion that Tilkey’s 

actions constituted a threat of violence against another person, a conclusion 

with which the jury disagreed in light of its finding that the statement was 

not substantially true. Instead, the trial court viewed Allstate’s motivations 

as concerned more with its own reputation than ascertaining the truth. This 

conclusion, again, is supported by the evidence outlined in greater detail 

ante. 

With respect to the third factor, Allstate argues that Tilkey’s only 

financial vulnerability was that his employment was terminated, making him 

no different than any other person who lost a job. Tilkey was different than 
49

the typical employee because he relied on the company-issued cell phone and 

car for his everyday use. However, this evidence, as well as evidence of his 

30-year career with Allstate, is only relevant if Tilkey’s termination were 

wrongful. Having previously concluded it was not, we focus on financial 

vulnerability with respect to the defamatory statement Allstate made. As the 

trial court mentioned, the circumstances of Tilkey’s termination precluded 

him from finding future employment and forced him to live off his “dwindling 

401K” without job prospects, in part because Allstate blocked him from 

accepting lucrative jobs. In some sense, Tilkey’s long-standing professional 

relationship with Allstate made him dependent on the company’s 

recommendation for future employment, making Allstate’s description of his 

behavior as threatening or causing physical violence against another 

particularly damaging for future job prospects. Allstate points out Tilkey 

earned an average of $200,000 annually, had savings, and was awarded 

compensatory damages. Perhaps Tilkey’s savings meant he was not as 

financially vulnerable as someone without. This factor is close but probably 

weighs slightly against supporting a finding of reprehensibility. 

Finally, although Allstate contends its conduct was a one-time event, a 

statement offered only at the time of Tilkey’s termination meeting, this 

ignores its defamatory statement on the Form U5, which could be repeatedly 

accessed by third parties, and it ignores Tilkey’s need and strong compulsion 

to repeat the statement, even to companies that could not access the 

Form U5. These additional acts, for which Allstate is responsible, weigh in 

favor of finding its action reprehensible. 

Although the fifth factor is of little consequence because acts must be 

intentional to qualify for punitive damages, (Major, supra, 169 Cal.App.4th at 

p. 1223, quoting Simon, supra, 35 Cal.4th at p. 1181), we address it here 
50

briefly to note the jury’s determination that the statement was not 

substantially true indicates some intentionality on the part of the company. 

(Roby, supra, 47 Cal.4th at p. 716 [jury award of punitive damages requires 

finding malice, fraud, or oppression].) Metzger testified that she sincerely 

believed Tilkey’s admission that he banged on the door to gain access for his 

personal belongings, the frame of the door was broken, and Tilkey was 

arrested was sufficient evidence that he engaged in threatening behavior 

and/or acts of physical harm or violence to another. The company made this 

determination without communicating directly with Mann, without seeming 

to consider that the charge was for disorderly conduct and not threatening 

behavior, and while recognizing that the decision to discharge Tilkey’s 

employment really could go either way. After observing the evidence offered 

at trial, the court concluded Allstate had not made a reasonable effort to 

determine whether its statement was true, and it explained: “Allstate’s 

contention that Plaintiff’s banging on the door was reasonably interpreted as 

‘threatening behavior’ was not believable.” 

Our independent review of these factors supports the conclusion that 

Allstate’s defamatory behavior was reprehensible. 

2. Relationship Between Punitive and Compensatory Damages

Punitive damages must bear a “reasonable relationship” to 

compensatory damages. (BMW of North America, Inc. v. Gore (1996) 517 U.S. 

559, 580-581; Little v. Stuyvesant Life Insurance Co. (1977) 67 Cal.App.3d 

451, 469.) While “ ‘relatively high ratios could be justified when “ ‘a 

particularly egregious act has resulted in only a small amount of economic 

damages,’ ” ’ ” when a jury awards substantial compensatory damages, a 

lesser ratio can reach the limits of the due process guarantee. (Major, supra, 

169 Cal.App.4th at p. 1224, quoting Simon, supra, 35 Cal.4th at p. 1182.) 
51

Although there is no bright line regarding the proper ratio of punitive to 

compensatory damages, the United States Supreme Court has suggested the 

ratio should generally be no higher than four to one and almost never nine to 

one. (Gober v. Ralphs Grocery Co. (2006) 137 Cal.App.4th 204, 213 (Gober), 

citing State Farm, supra, 538 U.S. at p. 425.) 

The jury awarded Tilkey $960,222 for wrongful discharge and 

$1,702,915 in actual damages for defamation. The punitive damages award 

was $15,978,822, a ratio of six times the compensatory damages amount. 

Even without excluding the damages awarded for wrongful discharge, this 

ratio strikes us as excessive given the level of reprehensibility here. Without 

the compensatory damages awarded for wrongful discharge, the ratio is 

greater than nine to one, a ratio we conclude is constitutionally excessive. 

(See Gober, supra, 137 Cal.App.4th at pp. 213, 214.) 

In our initial opinion, we explained that because the jury’s punitive 

damages award is not allocated to the various liabilities it found, it is not 

possible to know how much punishment the jury felt was necessary for the 

company’s defamatory action, which must serve as the basis for the damages 

in this case. In his request for rehearing, Tilkey argued the jury’s 

compensatory damages award for defamation and Allstate’s stipulated net 

worth of $2.87 billion provide all the required elements for evaluating the 

appropriate amount of punitive damages and requested a remittitur on the 

punitive damages issue.12 There is some authority that doing so is 

appropriate.

In Colucci, a panel of our division issued a remittitur that set a 

constitutional limit of 1.5-to-one as the ratio between punitive and 

12 Tilkey qualifies the request, asking for “at the very least” a conditional 

remittitur, “provided that Tilkey consents to that remitted amount” and if he 

does not, then a retrial on the issue of punitive damages. 
52

compensatory damages. (Colucci, supra, 48 Cal.App.5th at p. 459.) There, 

the plaintiff successfully sued his employer for wrongful termination based on 

workplace retaliation and was awarded $1,020,042 in compensatory damages 

and $4 million in punitive damages. (Id. at pp. 449-450.) The court of appeal 

explained that in practice few punitive damages awards exceed a single-digit 

ratio when compared to compensatory damages and noted that when 

compensatory damages are substantial, a lesser ratio of punitive damages 

may be more appropriate. (Id. at p. 458, citing State Farm Mut. Automobile 

Ins. Co. v. Campbell (2003) 538 U.S. 408, 425.) The court concluded that 

“[g]iven the low to moderate range of reprehensibility of [the company’s] 

conduct here, we conclude that a 1.5-to-one ratio between punitive and 

compensatory damages is the federal constitutional maximum.” (Colucci, at 

p. 459.) 

The facts here are similar, although the ratio of compensatory - to 

punitive damages is much higher, making their excessiveness even more 

extreme. The jury awarded $1,702,915 in actual damages for defamation, 

with the largest sum—$1,586,105—allocated to harm to Tilkey’s profession or 

occupation. The jury allocated $5,730.00 to shame, mortification, or hurt 

feelings, and $111,000 to harm to reputation, which is roughly seven percent 

of the total award. We do not know from the record if the jury’s financial 

allocation was driven by limited evidence of emotional distress or if this also 

reflected the jury’s assessment of Allstate’s reprehensibility. (See Colucci,

supra, 48 Cal.App.5th at p. 459.) However, the act here did not result in only 

a small amount of economic damages; thus, a lesser ratio of punitive-tocompensatory damages is appropriate to ensure due process. (Major, supra,

169 Cal.App.4th at p. 1224, quoting Simon, supra, 35 Cal.4th at p. 1182.) 
53

Accordingly, we will reverse the punitive damages award and remand 

the matter with directions to enter judgment in the amount of $2,554,372.50, 

or one and one-half times (1.5) the compensatory damages awarded for 

defamation. 

IV.

AFTER-ACQUIRED EVIDENCE

An employer may exercise an after-acquired evidence defense in 

response to a wrongful termination cause of action. (McKennon v. Nashville 

Banner Publ. Co. (1995) 513 U.S. 352, 362-363.) To establish this defense, 

the employer must demonstrate the employee engaged in wrongdoing that 

would have resulted in a termination of employment. (Ibid.) This cuts off 

damages from the date on which the evidence was discovered. (Salas v. 

Sierra Chemical Co. (2014) 59 Cal.4th 407, 430.) 

Because the company did not violate section 432.7, the after-acquired 

evidence defense is not relevant. Accordingly, we decline to address this 

issue. 

DISPOSITION

The order denying Allstate’s motion for JNOV regarding wrongful 

termination for violation of section 432.7 is reversed, and the matter is 

remanded to the trial court with directions to enter a judgment for Allstate 

on this cause of action. 

We affirm the portions of the judgment finding Allstate liable for 

defamation and punitive damages. However, the punitive damages portion of 

the judgment against Allstate is reversed, and the matter is remanded to the 

trial court with directions to modify the punitive damages award to 

$2,554,372.50, representing a ratio of 1.5 times the amount awarded in 

compensatory damages.
54

The parties shall bear their own costs on appeal.

HUFFMAN, J.

WE CONCUR:

McCONNELL, P. J.

GUERRERO, J.