Trerice v. Blue Cross of California
4 I.E.R. Cas. (BNA) 506, 209 Cal. App. 3d 878, 257 Cal. Rptr. 338 (1989)
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Rule of Law:
Employer conduct, even if perceived as awkward, inconsistent, or less advantageous to an employee during a legitimate corporate reorganization and workforce reduction, does not constitute 'outrageous conduct' sufficient to support a claim for intentional infliction of emotional distress unless it exceeds all bounds of that usually tolerated in a civilized society and goes beyond pursuing economic interests or asserting legal rights.
Facts:
- Barbara Trerice was hired by Blue Cross in December 1985 as an executive secretary to Russell Gray, a vice-president in Blue Cross’s human resources division.
- In 1986, Blue Cross underwent a reorganization involving moving its headquarters from Oakland to Woodland Hills, which resulted in approximately 300 employees, including Gray, losing their jobs.
- On October 24, 1986, Trerice learned Gray would be leaving, and with Gray’s assistance, she attempted to find an equivalent position within Blue Cross, but none was available.
- On October 29, Gray discussed Trerice’s termination with Blue Cross general counsel Angele Khachadour and, with compensation manager Don Horn, presented Trerice with a termination package including a lump sum, four weeks severance pay, and accrued vacation, to which Trerice agreed.
- The following day, Khachadour phoned Trerice, stating the termination package was rescinded, her position was not eliminated, and she would now work for Anne Monroe, instructing Trerice to report for work the following Monday.
- On November 6, Anne Monroe, now working from Woodland Hills, phoned Trerice and informed her that her Oakland position would be eliminated due to financial justification, effective December 5, 1986, and offered a less advantageous termination package.
- During her final 30 days with Blue Cross, Trerice was assigned tasks such as working as a receptionist, answering phones, and assisting secretaries who had previously been of a lower rank, leading her to feel treated as an “object of curiosity,” subjected to office gossip, and jokes.
- As a result of these events, Trerice alleged that she suffered stress and anxiety, cried frequently, could not eat or sleep, lost weight, and worried about her financial condition.
Procedural Posture:
- Barbara Trerice filed a complaint against Blue Cross of California and Angele Khachadour in the trial court (court of first instance), alleging causes of action for fraud and deceit, breach of the covenant of good faith and fair dealing, intentional infliction of emotional distress, and a violation of the Unfair Practices Act.
- The trial court sustained Blue Cross and Khachadour’s demurrer to Trerice’s unfair practice act claim.
- Blue Cross and Khachadour subsequently filed a motion for summary judgment, or in the alternative, summary adjudication of issues, on the three remaining causes of action.
- The trial court granted Blue Cross and Khachadour's motion for summary judgment, finding no triable issue with respect to Trerice’s remaining claims.
- Barbara Trerice (appellant) filed an appeal from the trial court's order for entry of summary judgment to the California Court of Appeal.
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Issue:
Does an employer's conduct, in the context of a legitimate corporate reorganization, which involves rescinding an initial termination package, offering a less advantageous one, and assigning menial tasks during the notice period, constitute 'outrageous conduct' sufficient to support a claim for intentional infliction of emotional distress?
Opinions:
Majority - ANDERSON, P. J.
No, the employer's conduct in this case does not constitute "outrageous conduct" sufficient to support a claim for intentional infliction of emotional distress. The court determined, as a matter of law, that Blue Cross's actions, while "not exemplary," did not meet the high standard of being "so extreme as to exceed all bounds of that usually tolerated in a civilized society." The conduct in question—presenting and then withdrawing a termination package, offering a less advantageous package, and assigning menial tasks during the notice period—was considered to be within the bounds of what might be expected during a legitimate corporate reorganization and workforce reduction. The court distinguished this case from Rulon-Miller v. International Business Machines Corp., noting that Trerice’s termination was part of a company-wide reduction and not a personal singling out or humiliation based on private activities. The court emphasized that an employer cannot be held liable for emotional distress when it has merely pursued its own economic interests and asserted its legal rights.
Analysis:
This case significantly clarifies the high bar for establishing "outrageous conduct" in intentional infliction of emotional distress claims, particularly within an employment termination context. It reinforces that an employer's actions, even if they cause an employee distress due to perceived unfairness, inconsistency, or a less favorable outcome during a legitimate business restructuring, generally will not meet the legal threshold for intentional infliction of emotional distress. This ruling provides a degree of protection for employers making difficult business decisions during reorganizations, limiting liability for emotional distress as long as their conduct does not involve extreme personal degradation or targeted maliciousness that transcends standard employment disputes. Future cases will likely reference this decision to argue that mere awkwardness or managerial missteps during a layoff do not qualify as actionable emotional distress.
