Conducting Adequate Investigations: Five Cases Every Investigator Needs to Know

California law clearly requires employers to adequately investigate an employee’s claims of discrimination, retaliation, or harassment. But what makes an investigation “adequate”? These five cases provide insight as to what does—and what does not—constitute an adequate investigation under California law.¹

1. Defining the Standard: Cotran v. Rollins Hudig Hall Int’l, Inc., 17 Cal. 4th 93 (1998)
In Cotran, the California Supreme Court set forth the standard for determining whether an employer had good cause for terminating an employee accused of sexual harassment. In Cotran, the plaintiff contended the employer had breached an implied contract not to terminate except for good cause. The Court held that it is not the role of the jury to determine whether or not the employee had, in fact, committed harassment. Instead, the role of the jury is to determine whether the employer had fair and honest reasons, regulated by good faith, that were not trivial, arbitrary, or capricious, unrelated to business needs or goals, or pretextual. In short, a reasoned conclusion “supported by substantial evidence gathered through an adequate investigation” meets this standard.

In so holding, the Court declined to specify the essentials of an adequate investigation, indicating this should be developed through “incremental, case-by-case jurisprudence, adjusting the standard as its sufficiency is tested in practice.” However, the Court specifically noted that an adequate investigation includes both “notice of the claimed misconduct and a chance for the employee to respond.”

2. Further Guidance: Silva v. Lucky Stores, Inc., 65 Cal. App. 4th 256 (1998)
Silva further refined the requirements as to what constitutes an adequate investigation. The Court applied the Cotran standards and held that the employer’s investigation was adequate based on the following facts:

• Lucky Stores had a written policy specifying how sexual harassment allegations were to be investigated. The policy directed: treat complaints seriously, investigate immediately, treat the matter confidentially, conduct interviews in a private area, listen to the allegations and make complete notes, attempt to identify all persons involved as well as possible witnesses, and interview the accused employee.
• Lucky Stores designated Jeff Szczesny—a human resources representative uninvolved with the situation—to handle sexual harassment complaints. Szczesny had been trained by in-house counsel on how to conduct investigations.
• Szczesny notified Plaintiff John Silva of the charges against him and afforded him the opportunity to present his version of the incidents. Szczesny allowed Silva to correct or contradict relevant statements prejudicial to his case.
• Szczesny promptly investigated and interviewed 15 store employees. Szczesny memorialized his findings on witness interview forms. He had important witnesses provide their own written statements regarding the events at issue.
• Szczesny asked relevant, open-ended, non-leading questions. He attempted to elicit facts, as opposed to opinions or supposition.
• Szczesny maintained confidentiality by conducting some interviews off of the premises or by telephone. He encouraged those he interviewed to page him if they wanted to speak to him again.
• Szczesny provided the critical witnesses with the opportunity to clarify, correct, or challenge information provided by other witnesses that was contrary to their statements or that could cast doubt on their credibility.
• After interviewing all of the other witnesses, Szczesny gave Silva a final opportunity to comment on the information he had gathered.
• Szczesny summarized his findings in an investigative report that analyzed information offered by Silva.

In light of all of these facts, the court determined that, “[w]hile the investigation was not perfect, it was appropriate given that it was conducted ‘under the exigencies of the workaday world and without the benefit of the slowmoving machinery of a contested trial.’”

3. “Exemplary” Conduct: Casenas v. Fujisawa USA, Inc., 58 Cal. App. 4th 101 (1997)
In Casenas, the court described a “textbook example” of how to respond appropriately to an employee’s harassment complaint. Plaintiff Bernadine Casenas alleged that her district manager had sexually harassed her and then retaliated against her by issuing an unfair performance review.

The investigation was conducted by Denis Ison, a regional sales manager, and Barbara Sheiman, a personnel manager. They interviewed Casenas as soon as she was available, interviewed the district manager, and interviewed the district manager’s other current and former direct reports as well as a manager from a related corporate enterprise. Five people re-reviewed Casenas’ performance review, including Fujisawa’s president. Using the company’s statistical data, they found that her rating of “highly commendable” but not “outstanding” was reasonable based on her sales performance compared to other employees. They further found Casenas’ 7% salary increase was at the very top of the merit increases recommended by the district manager and did not indicate retaliation.

However, Ison and Sheiman concluded that the district manager had engaged in inappropriate statements and actions. Accordingly, they issued the district manager a formal reprimand and directed him not to discuss Casenas or initiate any contact with Casenas.²

Because Casenas declined a face-to-face meeting, Ison and Sheiman issued a letter summarizing the investigation findings and advising her of the actions taken regarding the district manager. Although Ison continued to respond to additional concerns raised by the employee and met with her personally at length, Casenas refused to accept these findings and resigned. In affirming summary judgment to Fujisawa, the court described the company’s conduct as “exemplary.”³

4. Inadequate Investigation: Nazir v. United Airlines, Inc., 178 Cal. App. 4th 243 (2009)
In contrast with the previous examples, Nazir provides an example of an inadequate investigation. Plaintiff Iftikhar Nazir alleged a long history of harassment, including by his manager, Bernard Petersen. Three weeks after his last complaint, Nazir’s employment was terminated. Naszir’s termination followed a short investigation of a complaint concerning an incident involving Nazir and Iris Avellan, a contractor providing janitorial services for United. Petersen confirmed the termination in a letter stating that the investigation found Nazir made inappropriate comments and that Nazir “grabbed the arm of the individual, slamming it to the table.”

The court observed these flaws in the investigation:

• Despite the fact that United had a clear policy requiring an unbiased investigator, the complaint was investigated by Petersen, about whom Nazir had complained frequently, and a labor relations employee who “served” Petersen.
• The complaint against Nazir had questionable origins. Avellan did not complain to anyone about the incident for over a week and only raised the issue when Nazir raised concerns about her performance to her supervisor. The complaint was prepared at the request of a United manager, Flanigan, about whom Nazir had complained previously. Moreover, the complaint was not even written by Avellan; it was largely written by Knight, another United employee.
• United’s policy expressly required that a written complaint against an employee must be provided to the employee. No written statement was provided to Nazir.
• Nazir claimed to have been consensually “arm wrestling” with Avellan and denied grabbing her arm and slamming it down. Interview notes with Avellan contained this same description, as did the interview notes with the only other eyewitness to the incident. Without addressing this evidence, the investigation “found” that Nazir grabbed Avellan’s arm and slammed in down.
• Nazir asked the investigators to interview at least four people he believed would have evidence that would help him. None of the requested interviews were ever conducted. Here, the court explicitly noted that “[a]n employer’s failure to interview witnesses for potentially exculpatory information evidences pretext.”

5. Inadequate Investigation: Mendoza v. Western Medical Center Santa Ana, 222 Cal. App. 4th 1334 (2014)
Mendoza is another example of an inadequate investigation. Romeo Mendoza alleged that his supervisor, Del Erdmann, sexually harassed him. After an investigation, Western Medical Center terminated the employment of both Mendoza and Erdmann.

At trial, Mendoza’s expert witness questioned the quality of the investigation process. The individual who conducted the investigation was not a trained human resources employee. The investigator did not prepare a formal investigation plan. The investigator did not take written statements from Mendoza or Erdmann. The investigator did not immediately interview Erdmann and suspended the investigation when Mendoza missed work for several weeks following an accident. When Mendoza did return to work, Mendoza and Erdmann were interviewed simultaneously rather than separately. The investigator did not interview anyone other than Mendoza and Erdman—such as coworkers who might provide insights into the credibility of the two men.

The Court of Appeals agreed, finding that the lack of a “rigorous investigation” by Western Medical Center suggested they “did not value the discovery of the truth so much as a way to clean up the mess that was uncovered when Mendoza made his complaint.” Moreover, the fact that Mendoza and Erdmann provided conflicting accounts did not give the company license to “fir[e] every employee involved in the dispute.” Instead, in such situations, employers should “conduct a thorough investigation and make a good faith decision based on the results of this investigation.”

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In sum, what constitutes an “adequate investigation” depends on a number of variables and the underlying facts. As the quality of an investigation often plays an important role in the outcome of employment litigation, companies should ensure that their investigators have the appropriate training and experience to meet these legal requirements.

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¹ The California Department of Fair Employment and Housing’s Workplace Harassment Guide for California Employers is another helpful reference for more information.

² The district manager no longer supervised Casenas because he had transferred to a different region.

³ Casenas was decided before Cotran and involved a claim of constructive discharge. The court held that the timely response to and investigation of the sexual harassment allegations established as a matter of law that Fujisawa had neither deliberately created intolerable working conditions nor knowingly permitted them to exist.