Jacobus

The question before us is whether an employee who is sued by a coworker 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…