Court Opinion

ID: 4580652
Source: CourtListenerOpinion
Date Created: 2020-10-26 20:05:05.38276+00
Date Added: 2024-06-11T13:43:56.767651
License: Public Domain

Filed 10/26/20; Opinion on rehearing

                           CERTIFIED FOR PUBLICATION

            COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                       DIVISION ONE

                                 STATE OF CALIFORNIA

MICHAEL A. TILKEY,                              D074459

       Plaintiff and Respondent,

       v.                                       (Super. Ct. No. 37-2016-
                                                00015545-CU-OE-CTL)
ALLSTATE INSURANCE COMPANY,

       Defendant and Appellant.

       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
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 broker-
dealers like Tilkey. Tilkey sued Allstate for wrongful termination in violation

of Labor Code 1 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.

                                       2
      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 after-
acquired 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 self-
published 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 self-
publication 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

                                       3
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

                                      4
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

                                          5
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 FINRA 2 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.

                                       6
      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,

                                        7
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.

                                       8
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
                                         9
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
                                        10
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

                                      11
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.

                                     12
      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

                                      13
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.

                                      14
      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

                                       15
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.)

                                     16
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

                                      17
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

                                     18
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 self-
compelled 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.

                                       19
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 self-
compelled 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 self-
publish 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

                                      20
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.)

                                     21
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.

                                      22
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

                                      23
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 self-
published 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

                                     24
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

                                       25
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,
 [as of Oct. 26, 2020] archived at
.) It is “authorized by Congress to protect
America’s investors by making sure the broker-dealer industry operates fairly
and honestly.” (About FINRA,  [as of Oct. 26,
2020] archived at .)
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.)
                                      26
      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,  [as of Oct.
26, 2020] archived at .) 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,  [as of Oct. 26, 2020] archived at
.) 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,
 [as of Oct.
26, 2020] archived at  [commercial honor and
principles of trade]; FINRA Rule 2020  [as of Oct. 26, 2020] archived at
 [use of manipulation of fraudulent devices];
FINRA Rule 2100,  [as of Oct. 26, 2020] archived at 
[transactions with customers]; FINRA Rule 4500 et seq.,
 [as of Oct.
26, 2020] archived at  [books, records and
reports].)

                                       27
      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
                                     28
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.)
                                       29
“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,
 [as of Oct.
26, 2020] archived at .) Similarly, the anti-
intimidation 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,
 [as of Oct.
26, 2020] archived at .) These rules do not

                                       30
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,  [as of Oct. 26, 2020] archived at
.) 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,
 [as of
Oct. 26, 2020] archived at ; SEC Approves
Rule Change Regarding Arbitration of Statutory Employment Disputes,
Notice to Members 98-56, available at  [as of Oct. 26, 2020] archived at
.) In other words, FINRA’s jurisdiction over
workplace disputes is more contractual than regulatory.

                                         31
      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 self-
publication 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

                                       32
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

                                     33
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

                                     34
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
                                       35
     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 court-
generated 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.
                                     36
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.

                                      37
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
                                      38
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

                                       39
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.)

                                       40
      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.
                                        41
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

                                      42
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

                                       43
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 self-
published, 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

                                       44
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.

                                       45
      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

                                       46
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.

                                       47
        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

                                        48
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

                                       49
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.)

                                       50
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.
                                       51
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-to-
compensatory 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.)

                                       52
         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.

                                         53
    The parties shall bear their own costs on appeal.

                                                        HUFFMAN, J.

WE CONCUR:

McCONNELL, P. J.

GUERRERO, J.

                                    54