The First District Court of Appeal has thrown out a $113,830 pregnancy discrimination award — and a $1.1 million attorney fee — obtained two years ago against Lucasfilm Ltd.

The case, brought by former San Francisco Supervisor Angela Alioto and her son, Joseph Alioto Veronese, on behalf of Veronese’s wife, Julie, appears to be something of a grudge match, with the appellate court describing “numerous discovery disputes” and a motion to recuse one of the trial judges for gender bias.

In the end, Justice James Richman concluded that Marin County Superior Court Judge Lynn O’Malley Taylor committed instructional error, primarily because she didn’t tell the jury it could not find Lucasfilm liable if the company simply relied on its business judgment when deciding not to hire Julie Veronese, as long as it was not for a discriminatory reason.

The opinion, in which Justice Paul Haerle and James Lambden concurred, appears to be the first California appellate decision reversing a jury verdict for an employee based on the business judgment instruction.

Julie Veronese applied in April 2008 to be the assistant to the manager of George Lucas’ San Anselmo compound, a large complex with as many as nine houses on it. Lucasfilm hiring agents were wary at first that someone as socially connected as Veronese would embrace what can be a menial job, but agreed to give her a one-month tryout. Just before the tryout was to begin in June 2008, Veronese discovered she was expecting twins, and due to complications including the loss of one twin, the tryout start date was pushed back to August.

Her immediate supervisor, Sarita Patel, had scheduled her own vacation for Aug. 1, so the tryout was pushed to Aug. 11 and shortened to three weeks. That bothered Veronese, who emailed Patel and an HR employee, “Not only does it create a sense of doubt in my mind about Lucas’ commitment to me, it tells me that I am being set up to fail. I can’t help but think that things have changed because I am pregnant.”

Patel testified that the email raised “red flags” for her because she perceived Veronese as “entitled” rather than service oriented. She also testified that the job was “really stressful at the time” because of construction on Lucas’ properties and neighborhood opposition to it, “and I was afraid of Julie having lost [a] twin.”

Veronese sued, and “vigorous litigation” followed, according to Richman’s opinion in Veronese v. Lucasfilm. Two weeks before trial, Veronese challenged Marin County Judge Verna Adams for gender bias. Another judge rejected the challenge, but just before trial Adams elected to withdraw anyway and the case was assigned to Taylor, a retired Marin judge sitting by assignment.

The jury found Lucasfilm liable for pregnancy discrimination, failure to prevent pregnancy discrimination and wrongful termination, but found against Veronese on her retaliation and failure-to-accommodate claims. Veronese sought $2.5 million in attorney fees but was awarded $1.15 million.

On Monday, Richman wrote that Taylor had erred by declining Lucasfilm’s request for a special instruction on business judgment. Specifically, the company wanted the jury told that Lucasfilm could make a wrong or unfair decision, so long as it wasn’t “motivated by discrimination or retaliation related to her being pregnant.”

Although most California cases have dealt with the business judgment rule in the summary judgment context, Richman noted that some federal courts and a couple of other state courts have reversed jury verdicts for the same reason.

As Paul Hastings partner Paul Cane Jr., who helped argue the case for Lucasfilm, put it Monday, “the sole issue in a discrimination case is whether discrimination exists, nothing more. The court here makes clear that fair trials require that juries be told that they are not super-personnel departments entitled to second-guess business decisions.”

Richman also ruled that Taylor erred by instructing the jury that “a potential hazard to a fetus or an unborn child is not a defense to pregnancy discrimination.” The U.S. Supreme Court has held a blanket policy of refusing to hire women for that reason is discriminatory, but that doesn’t make a supervisor’s concern in an individual case automatically illegal, Richman held.

“The import of the instruction could be that if Patel manifested a concern — however genuine, however benign — for the safety of the remaining twin that Veronese was carrying, it was per se illegal,” he wrote. “Or as Veronese’s counsel point blank told the jury in closing argument, it is not a ‘defense to pregnancy discrimination to be so caring.’”

Lucasfilm also had argued on appeal that the $113,830 award was not based on evidence, but rather on the number 1138 that appears in many Lucas films and the 30th anniversary of The Empire Strikes Back. Richman said it was unnecessary to decide that issue due to the instructional error. Century City employment litigator Steven Drapkin also represented LucasFilm. Michael Rubin of Altshuler Berzon argued for Veronese.