The Inmates Are In Charge...

We have an employee (we'll call her Posey) who has given us nothing but grief for over a year. She has been rude to customers, employees and managers. We suspect her of having "keyed" a manager's car because he wrote her up. She hit-and-ran another employee's truck, but eventually owned up to it...refused to pay for it, though. Now she was caught tagging 3 other employees' cars with bright orange paint. The police are now involved, and the 3 employees each have restraining orders against Posey. So I fired her Friday. She's going to fight it. She says I can't fire her for tagging the cars, because it didn't happen on the store property. She says I can't fire her for being rude because I don't have written reports for each of the many, many times I talked to her about it. She says I can't fire her for sexual harassment (she grabbed another employee's backside, and made a suggestive comment to him) because I don't have his complaint in writing. She says her lawyer will want to see all the documentation I have. Oh, and she says I have to build her a schedule around the restraining orders so she can still work here.

Some questions:
1. Why on EARTH would you want to work in a place where the other employees don't like you, the management team doesn't want you on their shifts, and the customers complain about you all the time?
2. How can a nineteen-year-old afford a lawyer?
3. Since when does an employer have to put up with such nonsense from a worker with poor work habits? California used to be an at-will state. What happened to that?