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D hired P to serve as the sales manager of its Sacramento office. Joyce Bruno was hired in January 1980 to be the liaison between trade associations and D's Sacramento and Walnut Creek offices. Bruno reported to both P and Gary Desser, the manager of the Walnut Creek office, as well as Brian Cullen, a technical supervisor at regional headquarters in Scottsdale, Arizona. Bruno experienced sexual harassment at the hands of Desser and she complained to P. He recommended she report it to Cullen in Scottsdale. P contacted both Bonnie Caroline, who was responsible for receiving complaints of sexual discrimination, and Dave Berg, his immediate supervisor, about the problem. The harassment continued. P took it upon himself to speak a second time with both Berg and Caroline. Finally, in early 1981, Desser was demoted from sales manager to sales representative and replaced by Robert Warren. In March, Bruno was transferred to a sales representative position. A month later she was fired. P was present at the meeting in which Berg directed Warren to fire Bruno and ridiculed P for supporting her. The following month, Berg himself resigned following an investigation into claims that he had engaged in sexual harassment. Berg's replacement, Frank Singer, assumed the title 'Director of Sales' and recruited John Tailby to assume Berg's old position supervising the various sales offices. Tailby said Singer told him that getting rid of P was to be one of his first tasks. Tailby resisted, and in 1981 P was ranked among D's top district managers in premium growth. Bruno filed a complaint with the Department of Fair Employment and Housing (DFEH). She alleged harassment by Desser and failure by D's higher management to act on her complaints. Caroline Fribance, D's house counsel undertook to investigate the matter. P informed Fribance that he had reported Bruno's complaints to personnel in Scottsdale. P gained the impression that he was being pressured by Fribance to retract his claim that he had informed Scottsdale of the complaints. Tailby cautioned P that Singer and others in the company did not care for P. In a follow-up memorandum, Tailby cautioned P that 'it sometimes appears that you are involved in some kind of 'intrigue' and 'undercover' operation.' In December 1982, Tailby rated P's overall work performance for the year as 'acceptable.' Without directly informing P, Singer changed the rating to 'borderline acceptable/unacceptable.' John Thompson, a DFEH investigator, contacted Fribance to arrange interviews with certain employees, including P. P arranged to meet secretly with Thompson before P's scheduled interview. P told him the facts of which he was aware, including his reporting of Bruno's complaints to Scottsdale, and Thompson assured him that he would be protected under the law from any retaliation for his statements. Thompson gained the impression that P felt he was being pressured and was extremely fearful of retaliation because of his unfavorable testimony. P met with Fribance the day before his formal DFEH interview. P reminded that he was the only management employee supporting Ms. Bruno's claim that she had notified management about the harassment. P felt that Fribance was unhappy with his testimony and that her unstated intent was to induce him to change his story. She also told him about another employee who had been found guilty of sexual harassment but retained by the company because he was a loyal employee. During this meeting, P discovered the change in his December 1982 evaluation. These events confirmed his fears that the company was pressuring him to withhold testimony or face retaliation. The official DFEH interviews took and Fribance was present during Thompson's interview with P. Fribance asked Thompson why he was not investigating sexual harassment charges against P; she indicated that P had harassed Bruno and was trying to deflect attention from himself. Thompson was surprised by Fribance's statements since he had never experienced a company attorney suggesting that charges be brought against one of the company's own employees. Two months later, on March 3, 1983, P attended an awards ceremony in Scottsdale to accept a life insurance sales award on behalf of his office. The following morning, Singer and Tailby informed him that he was being demoted to sales representative. P's new supervisor, Neil Whitman, warned him that he would be fired if he attempted to undermine Whitman's authority. P was also informed that he would not be given a 'book' of existing accounts to start his new job; according to P, such a book was necessary to survive. P was in the office only intermittently. He experienced a variety of illnesses and took vacation time and sick leave. In mid-April, he was offered and accepted a position with another company. He left P's payroll in early May. P filed the instant lawsuit alleging that 'as a result of the pressure applied by Ds … he was forced to resign.' The jury found that P had been constructively discharged and that D acted with malice, oppression, or fraud. The court of appeals affirmed. D appealed.

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