Northrop Grumman Corp. v. WCAB, 103 Cal. App. 4th 1021 (2002)
Robert C. Graves filed a workers’ compensation claim for psychiatric injuries he allegedly sustained following an investigation into his alleged racial discrimination against a subordinate employee whom he supervised at Northrop Grumman. The workers’ compensation judge (and the WCAB) found that the psychiatric injury caused Graves permanent disability of 20 percent, that further medical treatment was required and that the injury had resulted from a false accusation of racial prejudice. The Court of Appeal reversed the judgment, holding that pursuant to Labor Code § 3208.3(h), no compensation shall be paid by an employer for a psychiatric injury that was substantially caused by a “lawful, nondiscriminatory, good faith personnel action.” The Court found the judge’s decision that the employer had not acted in good faith was not supported by substantial evidence.