Case Name: James JONES, Plaintiff-Appellant, v. COSTCO WHOLESALE CORPORATION, Defendant-Appellee
Court: United States Court of Appeals for the Ninth Circuit
Jurisdiction: United States
Decision Date: 2002-04-23
Citations: 34 F. App'x 320
Docket Number: No. 01-15014; D.C. No. CV-99-20967-JW
Parties: James JONES, Plaintiff—Appellant, v. COSTCO WHOLESALE CORPORATION, Defendant—Appellee.
Judges: 
Reporter: West's Federal Appendix
Volume: 34
Pages: 320–325

Head Matter:
James JONES, Plaintiff—Appellant, v. COSTCO WHOLESALE CORPORATION, Defendant—Appellee.
No. 01-15014. D.C. No. CV-99-20967-JW.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted Feb. 15, 2002.
Decided April 23, 2002.
Fisher, J., dissented and filed opinion.
Before REINHARDT, MAGILL and FISHER, Circuit Judges.
The Honorable Frank Magill, United States Circuit Judge for the Eighth Circuit, sitting by designation.

Opinion:
MEMORANDUM
Plaintiff James Jones appeals the district court's grant of summary judgment in favor of Defendant Costco Wholesale Corporation ("Costco"). Because this action is before us on the basis of diversity jurisdiction, we apply state substantive law and federal procedural law. Gasperini v. Center for Humanities Inc., 518 U.S. 415, 427, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996).
The history of this action began with complaints made by several female Costco employees against Jones for sexual harassment and misconduct. Upon receiving the complaints, three Costco managers undertook an investigation. They interviewed approximately seventeen employees, including some managers and supervisors. Jones was personally interviewed twice. He prepared two written statements, to which he attached declarations from other employees. After completion of the interviews and upon review of the evidence collected, including statements corroborating many of the complainants' allegations, Costco concluded that Jones had violated the company's sexual harassment policy and therefore terminated his employment. Jones subsequently brought this wrongful termination action.
Jones argues first that Costco breached an implied contract to terminate his employment on the basis of good cause. According to California law, in an implied contract case there are three factual determinations that are relevant to the question whether the employer had "good cause" for an employee's termination due to misconduct:
1) whether the employer acted with good faith in making the decision to terminate;
2) whether the decision followed an investigation that was appropriate under the circumstances; and
3) whether the employer had reasonable grounds for believing that the employee engaged in the misconduct.
Cotran v. Rollins Hudig Hall Int'l 17 Cal.4th 93, 69 Cal.Rptr.2d 900, 948 P.2d 412, 414, 424 (1998); John Silva v. Lucky Stores, Inc., 65 Cal.App.4th 256, 76 Cal.Rptr.2d 382, 387 (1998). If the facts are undisputed as to these three questions or the facts necessarily lead to only one conclusion, then summary judgment is justified. Silva, 76 Cal.Rptr.2d at 387.
With regard to the first determination, Jones does not allege that Costco failed to make its decision in good faith. Jones puts forward no evidence of a wrongful motivation for his termination. Jones does, however, dispute the second determination regarding the appropriateness of the investigation. An investigation is adequate if it gathers substantial evidence, includes notice to the employee of the alleged misconduct, and provides the employee with a chance to respond to the allegations. Cotran, 69 Cal.Rptr.2d 900, 948 P.2d at 422. Both sides of the dispute must have an opportunity to present their view on the alleged misconduct. Silva, 76 Cal.Rptr.2d at 387 (citing and discussing Cotran).
Jones first argues that the investigation was inadequate because Costco did not give him sufficient time to prepare his response. However, the record shows that Jones did have the time necessary to prepare both of his written responses to the complaints. Moreover, he fails to specify any evidence that he was not able to produce because of the alleged time constraint. The one piece of evidence he stated that he wanted more time to obtain, he was still able to produce. Thus, Jones fails to raise a genuine issue of fact with regard to the adequacy of the time given him to prepare his defense.
Jones also argues that Costco failed to interview all of the employees he named as witnesses on his behalf. Although it is true that Costco did not contact every person Jones listed, the investigation Costco conducted was adequate, as a matter of law, "under the exigencies of the workaday world." Cotran, 69 Cal.Rptr.2d 900, 948 P.2d at 420. Moreover, Jones does not present any explanation as to why the few witnesses Costco failed to contact were important to his defense.
The investigation was clearly appropriate in other aspects as well. Jones was given notice of the allegations against him. Costco evaluated the credibility of both Jones and those who made complaints against him and followed up on various allegations made by Jones. In sum, Jones has failed to raise a genuine issue of fact regarding the adequacy of Costco's investigation.
The third determination relevant to Costco's liability is whether the employer had reasonable grounds for believing the employee engaged in the misconduct. Silva, 76 Cal.Rptr.2d at 387. The question under California law is not: " 'Did the employee in fact commit the act leading to dismissal?' " Cotran, 69 Cal.Rptr.2d 900, 948 P.2d at 422, but rather: "Was the factual basis on which the employer concluded a dischargeable act had been committed reached honestly, after an appropriate investigation and for reasons that are not arbitrary or pretextual?' " Id. We are not free here to apply a standard that is genuinely protective of an employee's rights, even one that requires that an employee discharged for cause be guilty of having engaged in some misconduct of some kind. If Jones fails to raise a genuine issue of material fact as to whether Costco had reasonable grounds to believe that he engaged in the misconduct, under California law, Costco is entitled to summary judgment regardless of what Jones may or may not have actually done.
We conclude that under California law Costco had reasonable grounds for its belief regarding Jones. First, Jones does not assert that Costco fired him for any trivial, arbitrary, or capricious reasons, or in bad faith. Jones stated in his deposition that he knew he was being terminated as a result of charges relating to the anti-harassment policy and/or insubordination, and not for any other reason. Second, as previously explained, Jones fails to raise a triable issue of fact with regard to the adequacy of the investigation. Third, given the complaints against him and the investigation conducted by Costco, Jones fails to raise a genuine issue of material fact regarding whether the decision to terminate him was a reasoned one based on that investigation.
Although Jones denies having committed any improper act, under California law, as we have noted, the fact that he may have engaged in no improper conduct is insufficient to preclude judgment in favor of his employer. Accordingly, we hold that Jones failed to present sufficient evidence to create a genuine issue of material fact regarding Costco's good faith, investigation, or grounds for Jones's termination. Therefore, we affirm the district court's finding of "good cause."
Jones also contends that the Costco Employment Agreement is a binding written contract that establishes a higher standard of cause for termination decisions than is applicable in implied contract cases. Assuming arguendo that the Agreement is indeed a binding employment contract, we are compelled to conclude that under California law the Agreement's specific terms of employment do not establish a higher standard of cause for an employee's termination than is provided under Cotran. Therefore, the above finding of "good cause" for Costco's termination of Jones's employment resolves James's claims based on the Employment Agreement as well. The Employment Agreement does, however, require that terminations in cases like Jones be reviewed by an executive vice-president. The record does not reflect a genuine issue of fact as to whether such review was conducted. Costco's evidence on this point stands unrefuted.
In sum, we agree with the district court that under California law Costco had "good cause" to terminate Jones's employment and therefore affirm the grant of summary judgment in Costco's favor.
AFFIRMED.
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as may be provided by Ninth Circuit Rule 36-3.
. "Good faith" is defined in part as "[a] state of mind consisting in honesty in belief or purpose" or "observance of reasonable commercial standards of fair dealing in a given trade or business." Black's Law Dictionary 701 (7th ed.1999).
. We cannot agree with our dissenting colleague that under Costco's Employment Agreement persons accused of sexual harassment are entitled to greater protection against discharge then persons accused of all other offenses. The sections the dissent quotes set forth the employer's policy against sexual harassment. The disciplinary sections are entirely separate and make no distinction among individuals subject to the disciplinary process.
. We also hold that the district court's decision to exclude expert testimony offered by Jones was not an abuse of discretion. See Kennedy v. Collagen Corp., 161 F.3d 1226, 1227 (9th Cir. 1998).