By Alex Li
A California appeals court in June 2023 affirmed a lower court award of $7 million dollars in damages to plaintiff Karl Zirpel for whistleblower retaliation in Zirpel v. Alki David Productions. A jury had found that Zirpel’s employer, Alki David Productions (ADP), had illegally fired Zirpel after he raised safety concerns regarding a theater he was renovating for ADP, and then reported his concerns to a state agency.
The trial jury found that ADP was liable under the Labor Code for retaliating against protected whistleblowing, and subsequently awarded $7 million in damages, broken down into $368,717 in economic damages, $700,000 in non-economic damages, and $6 million in punitive damages.
ADP Instructed Zirpel to Continue Work Despite Concerns about Safety and Legality
Zirpel was employed from 2013 to 2017 by ADP, a media company owned by the billionaire Alki David. In September 2017, Zirpel began working on renovating a theater in Hollywood that ADP would be hosting an event in, scheduled to take place the same month on September 28. Zirpel was tasked with converting the building, originally a church, into a theater and installing hologram production equipment in preparation for the event. On September 25, mere days before the scheduled event, four Los Angeles City inspectors conducted inspections of the theater and informed Zirpel of approximately 20 code violations. Two of the inspectors indicated to Zirpel that approval of the work would be impossible in time for the event. After the inspections, the LA Department of Building and Safety issued a notice indicating multiple violations of the municipal code.
Following the inspections, Zirpel was concerned about the safety of the other ADP employees and members of the public who were expected to attend the upcoming event. The next day, he informed a senior officer in the company that inspectors had said the theater was not approved and would not be able to open in time for the event. He also informed the supervisor that he intended to inform the LA fire inspector about his concerns.
The following day, the fire inspector arrived at the site, and after a brief tour of the theater, ordered work to stop and for everyone to leave. He also told Zirpel that fire exit signs needed to be posted prior to any work resuming. Despite this, David, Zirpel’s boss, ordered Zirpel to continue the renovations, and later that day arrived at the theater and asked Zirpel why there was no work being done. Zirpel explained the situation and why, given the current state of the renovations, the event should not go on as planned. In response to Zirpel’s concerns about the safety and legality of resuming the renovations, David “blew up” in a “fit of rage” and fired Zirpel, yelling at him while standing so close to Zirpel that his spittle flew in Zirpel’s face. David, who was one of the few people who knew Zirpel was gay, used multiple obscenities and homophobic slurs while screaming at Zirpel, who was not out to the majority of his coworkers. Zirpel found this especially distressing and traumatizing.
Zirpel Files Suit Against ADP Claiming Whistleblower Retaliation
Zirpel filed suit two months later in November 2017, claiming that his termination constituted retaliation under the labor code. At play were two sections of the California Labor Code: section 232.5, which prohibits retaliation against employees for disclosing working conditions, and section 1102.5, which prohibits retaliation against an employee for refusing to violate the law or for disclosing what they reasonably believe to be a violation of the law.
The jury found that had Zirpel continued to work on renovating the theater, as instructed by his employer, he would have violated the law. They also found that his disclosure of his concerns that the work was in violation of the law to a state agency was a substantial motivating reason for his termination by Alki David Productions. Consequently, the jury found that ADP had retaliated against Zirpel for his protected whistleblowing activity, and was thus liable under 1102.5 and 232.5, awarding over $1 million in economic and noneconomic damages.
During the subsequent punitive damages phase of the trial, the jury found that ADP had acted with malice, oppression, and fraud, meeting the criteria for punitive damages, and awarded Zirpel $6 million in punitive damages. (See our previous article for more on punitive damages: Rudniki v. Farmers: Wrongful Termination Suit Results in $150 Million Punitive Damages Award) Combined with compensatory damages of over $1 million, the total jury award was over $7 million.
California Appeals Court Upholds the Verdict on Appeal
ADP challenged the verdict, arguing that the punitive damages award was unconstitutionally excessive. The appeals court disagreed, and upheld the verdict and punitive damages award, determining that David’s actions had demonstrated a high degree of reprehensibility through his conscious and reckless disregard for the safety of others, and through the malice by which he had retaliated against Zirpel for his refusal to endanger others and whistleblowing. The court specifically cited David’s extreme use of verbal abuse against Zirpel to support their finding of a high degree of reprehensibility, and to distinguish the ruling from a less extreme case that ADP had cited in support of a lower punitive damages award.
While there is no formula for punitive damages, the appeals court noted that the 6:1 ratio awarded in Zirpel falls squarely within the 10:1 ratio maximum established by the California Supreme Court in Simon v. San Paolo U.S. Holding (2005).
The Law Protects Whistleblowers
Employees should never be punished or retaliated against for doing the right thing and standing up against illegal conduct. The law protects individuals who report concerns about conduct that they have reasonable cause to believe is illegal, whether they make their report to a supervisor or a state agency. The law also protects employees who refuse to engage in behavior that they reasonably believe to be illegal in the course of their job duties. The $7 million verdict in Zirpel demonstrates the high costs that companies may face by engaging in reprehensible conduct such as retaliating against whistleblowing employees.
At Valerian Law PC, we possess a deep understanding of laws protecting employees from work-related violations including wage theft, misclassification, unequal pay, unsafe workplaces, retaliation, and discrimination. Contact our employee rights attorneys today to schedule a consultation.