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Jacobus v. Krambo Corporation3/3/2000
CERTIFIED FOR PUBLICATION
The question before us is whether an employee who is sued by a co-worker for sexual harassment is entitled under Labor Code section 2802 to indemnification from his employer of the legal costs incurred successfully defending the sexual harassment action. We conclude that he is, and we reverse the summary judgment in favor of the employer.
Background
The Claim for Indemnification
Plaintiff Russell Jacobus was employed by Krambo Corporation, a six-person investment banking firm, and served as the company's treasurer and chief financial officer. In 1995 Jacobus and Krambo were sued for sexual harassment by Rosie Vera-Aviles, a secretary at the firm. Vera-Aviles alleged that Jacobus had created a hostile work environment through his unwelcome sexual communications and touching.
Jacobus asked Krambo to defend him in the action, but Krambo refused, and Krambo eventually settled with Vera-Aviles. Jacobus proceeded to trial alone and the jury found in his favor that no sexual harassment had occurred. Jacobus incurred $82,083 in attorney fees and costs in successfully defending that action, and Krambo refused to reimburse Jacobus for his expenses. Jacobus then filed the present lawsuit against Krambo for indemnification pursuant to Labor Code section 2802.
Jacobus and Krambo each moved for summary judgment, contending that the underlying facts were undisputed and that Krambo's liability for indemnification was a question of law. The trial court granted Krambo's motion and entered judgment in its favor. Jacobus appeals.
The Sexual Harassment Claim
Jacobus and Vera-Aviles had a friendly relationship in the office, which was marked by frequent sexual bantering. They discussed their personal lives with each other, including their sexual encounters. Vera-Aviles also had frequent conversations with other workers in the office involving sexual matters.
Jacobus and Vera-Aviles also socialized outside of work: i.e., they played softball, they had dinner together, and they played pool. Vera-Aviles frequently would jokingly invite Jacobus to take her to a strip club, and she occasionally rubbed Jacobus's shoulders at work as a friendly, non-sexual gesture.
During his employment with Krambo, Jacobus stored in his office drawer some erotic stories written with his sister-in-law. Vera-Aviles asked to see the stories, and Jacobus acquiesced. In April or May 1995, Jacobus received two faxes at work from his sister-in-law containing sexual materials, and he shared them with Vera-Aviles. In May or June 1995 Jacobus composed a sexually explicit five-paragraph story on his office computer, which he also shared with Vera-Aviles at her request. He and Vera-Aviles passed the story back and forth with handwritten post-it notes attached. A few days later, Jacobus composed another erotic story and gave it to Vera-Aviles.
One day Jacobus and Vera-Aviles played a computer golf game. When Vera-Aviles asked Jacobus to play again, he wrote her a note suggesting a "strip poker" version, and he put his hand on her thigh at one point during the game.
Jacobus was not Vera-Aviles's supervisor, although he commonly reviewed her work. In mid-July 1995 Jacobus conveyed a co-worker's complaint about Vera-Aviles to Krambo's vice-president, Stephen Young. Young and Jacobus met with Vera-Aviles to discuss the complaint that she was spending too much time on the phone. Vera-Aviles became upset that her job performance was being criticized.
Later that day, Vera-Aviles met privately with Young and showed him some of Jacobus's sexually explicit notes. She asserted
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