SAN FRANCISCO — An appellate court has extended the California Supreme Court’s new standard for proving workplace discrimination to retaliation cases.

Wednesday’s decision in Mendoza v. Western Medical Center of Santa Ana toppled a $283,000 jury verdict but came with a warning for employers: Don’t try to avoid liability for he said/she said sexual harassment cases by terminating both employees.

“Hopefully, this opinion will disabuse employers of the notion that liability (or a jury trial) can be avoided by simply firing every employee involved in the dispute,” Justice Raymond Ikola wrote.

Romeo Mendoza was by all accounts an exemplary nurse at an Orange County hospital for 20 years, reaching a middle management level. In 2010 he reported he was being harassed by a supervisor, Del Erdmann. Mendoza said Erdmann had made inappropriate comments, physical contact and even exposed himself to Mendoza. Erdmann told corporate investigators that Mendoza had been a willing participant in the conduct, and that Erdmann had only reluctantly gone along.

The company fired both men for unprofessional behavior, prompting Mendoza to sue for wrongful termination in violation of public policy—namely, retaliation for reporting sexual harassment. An Orange County Superior Court jury found Mendoza’s reporting to be “a motivating factor” in his dismissal and awarded him $93,000 in economic loss and $145,000 in emotional distress damages.

Last year, though, the California Supreme Court set a higher standard of causation in a case brought under the Fair Employment and Housing Act. Harris v. City of Santa Monica held that employees have to prove discrimination is “a substantial motivating factor” in a termination. Mendoza’s attorney argued that Harris applies only to FEHA cases, but the Fourth District disagreed Wednesday. “It would be nonsensical to provide a different standard of causation in FEHA cases and common law tort cases based on public policies encompassed by FEHA,” Ikola wrote, ordering a new trial.

Justices Kathleen O’Leary and William Bedsworth concurred.

The medical center had further argued that judgment should be entered in its favor because no evidence was presented at trial that it retaliated against Mendoza. In fact, the company argued, it had acted on Mendoza’s complaint in good faith by terminating Erdmann.

Ikola disagreed, pointing to evidence that the company’s investigation had been sloppy. Mendoza and Erdmann were interviewed together, rather than separately, and by their supervisor, rather than by an HR official. “The lack of a rigorous investigation by defendants is evidence suggesting that defendants 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,” Ikola wrote.

He noted that at oral argument, medical center attorney Donald Vaughn of Vaughn & Vaughn asked what employers were expected to do when two employees provide conflicting accounts of inappropriate conduct. “Our answer is simple,” Ikola answered. “Employers should conduct a thorough investigation and make a good faith decision based on the results of the investigation. Here, the jury found this did not occur.”

C. Athena Roussos of Elk Grove argued the appeal for Mendoza.

Contact the reporter at sgraham@alm.com.