DFEH Issues FAQ for Employers on Transgender Rights in the Workplace

The California Department of Fair Employment and Housing (DFEH) has issued an "FAQ for Employers" on transgender rights in the workplace. Among other things, the FAQ provides:

Employers should not ask questions designed to detect a person’s sexual orientation or gender identity or questions about an employee's plans to have surgery.

If an employer has a dress code, it should apply it a non-discriminatory manner. For example, an employee who identifies as a female should be held to the same standards as other females.

Employers should allow employees to use restrooms that correspond with their gender identities. Where possible, employers should provide private restrooms for use by any employee who wants greater privacy, including those who do not want to share facilities with transgender coworkers.

The FAQ is available here.

Park v. Board of Trustees: Cal. Supreme Court Grants Review of Discrimination Case Raising Anti-SLAPP Issues

In Park v. Board of Trustees of the California State University (Cal.App. 8/27/15) (discussed here), the plaintiff alleged that the Board of Trustees of the California State University (CSU) discriminated against him based on his national origin when it denied his application for a tenured faculty position and consequently terminated him. The trial court denied CSU's motion to strike the complaint under CCP 425.16, the anti-SLAPP statute. The Court of Appeal reversed, holding that the plaintiff's allegations arose from the reviews and evaluations given to him in CSU's retention, tenure, or promotion (RTP) proceedings, and that those communications were protected.

The California Supreme Court granted review on December 16. The issue as stated on the Court's web site is as follows:

Does Code of Civil Procedure section 425.16 authorize a court to strike a cause of action in which the plaintiff challenges only the validity of an action taken by a public entity in an "official proceeding authorized by law" (subd. (e) ) but does not seek relief against any participant in that proceeding based on his or her protected communications?

Park is case number S229728, and the Court's web page for it is here. As always, you can request electronic updates on the Court's web site.

New Law Adds Gender Identity Protection in Public Contracts

On October 7, 2015, Governor Brown signed Senate Bill 703, enacting section Public Contracts Code section 10295.35, which provides that state agencies "shall not enter into any contract for the acquisition of goods or services in the amount of one hundred thousand dollars ($100,000) or more with a contractor that, in the provision of benefits, discriminates between employees on the basis of an employee’s or dependent’s actual or perceived gender identity, including, but not limited to, the employee’s or dependent’s identification as transgender."

Legislative Counsel's Digest is available here. 

Jumaane v. City of Los Angeles: Continuing Violation Doctrine Did Not Apply, and Plaintiff Did Not Prove Discrimination, Harassment, or Retaliation During Limitations Period

In Jumaane v. City of Los Angeles (11/10/15) --- Cal.App.4th ---, Jabari Jumaane sued the City of Los Angeles for disparate impact and disparate treatment discrimination based on race (African-American), harassment based on race, and retaliation. Jumaane alleged that the adverse employment actions against him included suspensions in June, 1999, and again in April, 2011. Jumaane filed his DFEH complaint on April 16, 2002, and filed suit thereafter.

The City prevailed in the first trial, held in 2007, but the trial court reversed based on juror misconduct, and the Court of Appeal affirmed. In the second trial, held in 2013, Jumaane prevailed on all claims, except his disparate treatment discrimination claim. The trial court denied the City's nonsuit motion, the City appealed, and the Court of Appeal reversed, holding as follows:

Jumaane could not recover for acts occurring more than one year before he filed his DFEH complaint. For the continuing violation doctrine to apply, the plaintiff must prove that conduct occurring outside the limitations period was (1) similar or related to the conduct that occurred earlier; (2) the conduct was reasonably frequent; and (3) the conduct had not yet become permanent. While substantial evidence supported a finding as to the first two elements, Jumaane failed to show that the conduct taking place in the 1990s had not become permanent by the time of his June, 1999, suspension.

Substantial evidence did not support a finding of disparate impact race discrimination during the limitations period. Jumaane failed to meet his burden to show that any facially neutral discipline policy of the City's had a significant adverse impact on African-Americans. While Jumaane introduced evidence to show that there "appeared to be a disproportionate amount of discipline against Blacks" during the early 1990s, this evidence did not show disparate treatment during that time period, let lone during the time period at issue.

Substantial evidence did not support a finding of harassment based on race during the limitations period. The only alleged harassment during the limitations period was the suspension in April, 2011, but a disciplinary suspension "does not constitute harassment under FEHA as a matter of law."

Substantial evidence did not support a finding of retaliation during the limitations period. Assuming for the sake of argument that Jumaane proved a prima facie case of retaliation, he could not demonstrate that the City's proffered legitimate reason for suspending him was pretextual.

Jumaane's claims for failure to prevent discrimination, harassment, and retaliation also failed.

The opinion is available here.

Park v. Board of Trustees: On Anti-SLAPP Motion in Discrimination Action, University's Decision to Deny Tenure Arose from Protected Communicative Activity; Court Remands for Determination of Plaintiff's Probability of Success on the Merits

Park v. Board of Trustees of the California State University (8/27/15) --- Cal.App.4th ---, is one of those all-too-rare examples of a clearly written appellate opinion. It begins: 

Plaintiff Sungho Park sued his former employer, defendant Board of Trustees of the California State University (CSU), alleging that CSU discriminated against him based on his national origin when it denied his application for a tenured faculty position and consequently terminated him. Park’s complaint sought damages and an injunction awarding him a tenured position. CSU moved to strike the complaint under Code of Civil Procedure section 425.16, the anti-SLAPP statute. The trial court denied the motion, concluding that Park’s claims did not arise from CSU’s communicative conduct related to the tenure review process, but rather from its allegedly discriminatory denial of tenure. Under the circumstances presented here, we conclude the gravamen of the complaint arises from protected activity and therefore reverse and remand with directions to the trial court to determine whether Park demonstrated a reasonable probability of prevailing on the merits of his claims.

The Court explained:

To prevail on an anti-SLAPP motion, the moving party first must show that the cause of action arises from protected activity, i.e., "an act in furtherance of the right of free speech or petition." If the moving party makes this prima facie showing, the opposing party must show that it has a reasonable probability of success on the merits.

CSU made a prima facie showing that its retention, tenure or promotion (RTP) policies qualified as protected activity in that they were "official proceeding authorized by law," and "the reviews and evaluations given to Park during the RTP process are therefore covered as statements or writings 'made in connection with an issue under consideration or review' in the RTP proceedings."

CSU also showed that Park's complaint arose from CSU's protected activity. The Court rejected Park's contention that his causes of action were based on “CSU’s conduct in denying Dr. Park’s tenure based on national origin,” rather then any communicative conduct by CSU. The gravamen of Park's complaint was CSU's refusal to grant him tenure, and was "entirely based on the evaluations of his performance and competency during the RTP proceedings."

Because the trial court found that CSU did not make the required prima facie showing, it did not determine whether Park had shown a reasonable probability of success on the merits. The Court remanded the case to the trial court to determine this issue.

The opinion is available here. 

New Law: Civil Code sections 52.4 and 52.45 Now Protect Individuals from Violence Based on Gender, Gender Identity, Gender Expression, and Sexual Orientation

Just a quick note on AB 830, which expands the protections for people based on gender identity, gender expression, and sexual orientation. This is not an employment law, but many will find it of interest.

Civil Code section 52.4 allows a person who has been subjected to gender violence to bring a civil action for damages against any responsible party. The law defines gender violence as an act of violence committed "at least in part based on the gender of the victim," or a "physical intrusion or physical invasion of a sexual nature under coercive conditions."

AB 830 amends section 52.4 to provide that "gender" under that section has the same meaning as in the Unruh Civil Rights Act, Cal. Civ. Code 51. The Unruh Act protects people from discrimination in all business establishments on the basis of sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, or sexual orientation." "Sex" includes gender, gender identity, and gender expression. Gender expression means a person’s "gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth."

In other words, section 52.4 now protects individuals from violence based on gender, gender identity, and gender expression.

AB 830 also adds Civil Code section 52.45, which allows a person who has been subjected to sexual orientation violence to bring a civil action for damages against any responsible party.

The text of AB 830 is available here.

Teamsters v. Washington Department of Corrections: Female Gender is a Bona Fide Occupational Qualification for Certain Correctional Officers in Female Prison

In Teamsters Local Union No. 114 v. Washington Department of Corrections, ___ F.3d ___ (9th Cir. 6/12/15), the Department of Corrections (DOC) designated a "limited number of female-only correctional positions—specifically, 110 positions to patrol housing units, prison grounds, and work sites." The local union for correctional officers sued the DOC under Title VII, alleging that its policy discriminated against male correctional officers. The district court granted summary judgment in favor of the State, the union appealed, and the Ninth Circuit affirmed, holding as follows:

While Title VII prohibits employment practices that discriminate on the basis of sex, a facially discriminatory employment practice is allowed if sex is a bona fide occupational qualification (BFOQ) for the position. 

To justify discrimination under the BFOQ exception, an employer must show, by a preponderance of the evidence, that: (1) the "job qualification justifying the discrimination is reasonably necessary to the essence of its business"; and (2) "sex is a legitimate proxy for determining" whether a correctional officer has the necessary job qualifications.

"Judgments by prison administrators that are the product of a reasoned decision-making process, based on available information and expertise, are entitled to some deference." The DOC in this case underwent an exhaustive process to determine that sex was a BFOQ for the positions at issue, and the DOC's judgment was entitled to deference.

Female gender was a BFOQ for the positions at issue. The DOC identified several reasons for placing only women into these positions: improving security, protecting inmate privacy, and preventing sexual assaults. Placing only women in these positions was reasonably necessary to the essence of prison administration. The employees' sex was a "legitimate proxy" for determining whether officers had the necessary job qualifications to meet these goals, and alternatives to the sex-based classification were "reasonably considered and refuted."

The opinion is available here. 

EEOC v. Abercrombie & Fitch: In Title VII Disparate Treatment Action, Job Applicant Need Not Show that Employer Actually Knew of Need for Accommodation or that Applicant Requested Accommodation

Title VII of the Civil Rights Act of 1964 prohibits a prospective employer from refusing to hire an applicant in order to avoid accommodating a religious practice that it could accommodate without undue hardship. The question presented is whether this prohibition applies only where an applicant has informed the employer of his need for an accommodation. 

EEOC v. Abercrombie & Fitch Stores, Inc. (6/1/15) ___ U.S. ___.

Samantha Elauf, a practicing Muslim who wears a headscarf for religious purposes, applied for a job at Abercrombie & Fitch (A&F). A&F staff assumed that Elauf wore the headscarf for religious purposes, but they did not know for sure and they did not ask. A&F rejected Elauf, believing her wearing a headscarf at work would violate its "Look Policy." 

The EEOC sued on Elauf's behalf, alleging that A&F violated Title VII. The trial court granted summary judgment for Elauf on liability, a jury awarded her damages, and the court entered judgment. The Tenth Circuit reversed, holding that A&F could not be liable because it did not know if Elauf actually needed a religious accommodation. 

The US Supreme Court granted certiorari and reversed the Tenth Circuit, holding that a plaintiff may prevail in a Title VII disparate treatment action without showing that the defendant had actual knowledge of his or her need for a religious accommodation. Instead, an employer may be liable "even if he has no more than an unsubstantiated suspicion that accommodation would be needed" and even if the applicant does not request religious accommodation.

The Court rejected the argument that a claim based on an applicant's religious practice must be raised as a disparate impact claim. "[R]eligious practice is one of the protected characteristics that cannot be accorded disparate treatment and must be accommodated."

An employer may be liable even if its policies treat religious practices no less favorably than similar secular practices. 

Title VII does not demand mere neutrality with regard to religious practices—that they be treated no worse than other practices. Rather, it gives them favored treatment, affirmatively obligating employers not “to fail or refuse to hire or discharge any individual . . . because of such individual’s” “religious observance and practice.” An employer is surely entitled to have, for example, a no-headwear policy as an ordinary matter. But when an applicant requires an accommodation as an “aspec[t] of religious . . . practice,” it is no response that the subsequent “fail[ure] . . . to hire” was due to an otherwise neutral policy. Title VII requires otherwise-neutral policies to give way to the need for an accommodation.

Justice Scalia wrote the opinion, with Chief Justice Roberts and Justices Kennedy, Ginsburg, Breyer, Sotomayor, and Kagan joining. Justice Alito wrote a concurring opinion, and Justice Thomas dissented. The opinion is available here. 

Dickson v. Burke Williams, Inc.: No Failure to Prevent Liability Absent Actionable Harassment or Discrimination

Just a very quick note on Dickson v. Burke Williams, Inc. (3/6/15) --- Cal.App.4th ---, in which the Court of Appeal held as follows:

[T]here cannot be a valid claim for failure to take reasonable steps necessary to prevent sexual harassment if, as here, the jury finds that the sexual harassment that occurred was not sufficiently severe or pervasive as to result in liability. A claim for failure to take reasonable steps necessary to prevent sexual harassment cannot prevail when the necessary element of sexual harassment is not established. Similarly, the jury's finding that defendant was not liable on plaintiff's sex discrimination claim because there was no adverse employment action precludes defendant's liability for failure to take reasonable steps necessary to prevent sex discrimination.

The opinion is available here. 

Cruise v. Kroger: In Absence of Arbitration Policy Applicable to Employee, Arbitration Would Be Conducted Pursuant to California Arbitration Act

In Cruise v. Kroger Co. (8/27/14) --- Cal.App.4th ---, the plaintiff filed suit against her former employer for harassment, discrimination, retaliation, and related claims. The trial court denied the defendants' motion to compel arbitration, and the defendants appealed. The Court of Appeal reversed, holding as follows:

The plaintiff had signed an employment application that included a broadly-worded arbitration clause, which constituted an enforceable agreement to arbitrate. Slip op. at 9-10. The plaintiff's employment-related claims all fell within the scope of that agreement. 

Even though the defendants could not establish the precise terms of the applicable arbitration policy, which was incorporated by reference into the employment application's arbitration clause, the plaintiff was not relieved of her obligation to arbitrate her claims. Slip op. at 10-11. Instead, the arbitration would be conducted pursuant to the procedures set forth in the California Arbitration Act. As a result, the plaintiff could not argue that the arbitration clause was procedurally or substantively unconscionable. 

The Court concluded: 

Nothing herein should be construed as enabling an employer to enforce a missing arbitration agreement. We merely hold the language of the arbitration clause in the instant employment application, standing alone, was sufficient to establish an agreement by the parties to arbitrate employment-related disputes. While the parties’ agreement to arbitrate is enforceable, the employer’s inability to establish the contents of its Arbitration Policy precludes the employer from enforcing the provisions of said policy. Instead, the arbitration proceeding is to be conducted in accordance with the procedures set forth in the CAA as well as applicable case law.

The opinion is available here.

Anderson v. City and County of San Francisco: Ninth Circuit Rules on "Bona Fide Occupational Qualification" Exemption to Title VII Prohibition on Sex Discrimination

In Anderson v. City and County of San Francisco, ___ F.3d ___, (9th Cir. 7/2/14), the Ninth Circuit considered the "bona fide occupational qualification" (BFOQ) exception to Title VII's prohibition of sex discrimination. 

Plaintiffs, current and former deputies of the San Francisco Sheriff’s Department (“SFSD”), appeal the district court’s order granting summary judgment to the City and County of San Francisco (the “County”) on their challenge to SFSD’s policy prohibiting male deputies from supervising female inmates in the housing units of SFSD’s jails. The district court concluded that SFSD’s policy did not violate Title VII’s prohibition on sex discrimination because it fell within the statute’s “bona fide occupational qualification” exception, 42 U.S.C. § 2000e-2(e)(1). We reverse the district court’s grant of summary judgment to the County on the sex discrimination claims and vacate the denial of summary judgment to plaintiffs on those claims.

Slip op. at 5. 

Title VII permits employers to discriminate on the basis of sex where sex is a BFOQ. 

To justify discrimination under the BFOQ exception, an employer must “prove by a preponderance of the evidence: 1) that the job qualification justifying the discrimination is reasonably necessary to the essence of its business; and 2) that [sex] is a legitimate proxy for the qualification because (a) it has a substantial basis for believing that all or nearly all [men] lack the qualification, or . . . (b) it is impossible or highly impractical . . . to insure by individual testing that its  employees will have the necessary qualifications for the job.”

Slip op. at 13. 

While judgments by prison administrators are entitled to some deference in court, such decisions must be based on a “reasoned decision-making process, based on available information and experience.” A material issue of genuine fact arose as to whether the Sheriff's decision here met that standard. Slip op. at 14-18. 

The County set forth four rationales to justify its sex-based policy: (1) protecting female inmates from sexual misconduct by male deputies; (2) maintaining jail security; (3) protecting inmate privacy; and (4) preserving the ability of female inmates to rehabilitate. 

Each such rationale related to a job qualification "reasonably necessary to the essence of" operating SFSD's jails: (1) not posing a threat to the safety of female inmates due to a likelihood of perpetrating sexual misconduct against them; (2) not posing a threat to jail security; (3) not posing a threat to female inmates’ privacy; and (4) not posing a threat to female inmates’ ability to rehabilitate. Each such rationale thus satisfied the first prong of the BFOQ exemption test. Slip op. at 18-19. 

To satisfy the second prong of the exemption, the County would have to show that excluding all male deputies is a “legitimate proxy” for excluding deputies who lack one of these four qualifications. The County could do so by showing that there is: (a) “a substantial basis for believing that all or nearly all [men] lack the qualification”; or (b) “it is impossible or highly impractical . . . to insure by individual testing” whether or not a male deputy has the qualification. The County did not do so on the record before the Court. Slip op. at 20-25. 

The opinion is available here. 

Serri v. Santa Clara University: Court of Appeal Affirms Summary Judgment in Discrimination, Wrongful Termination Action

In Serri v. Santa Clara University (5/28/14) --- Cal.App.4th ---, Conchita Franco Serri sued Santa Clara University and a number of individuals for discrimination, retaliation, wrongful termination in violation of public policy, and other employment-related claims. The trial court granted the defendants' motions for summary judgment, and Serri appealed. 

The primary issue on appeal was whether Serri raised a triable issue of material fact as to whether the University had a legitimate, nondiscriminatory reason to terminate her employment or whether its reasons for doing so were untrue or pretextual. The Court framed the issue and its holding as follows: 

We are asked to determine whether an employee who is terminated for failing to perform an important job function can avoid summary judgment by arguing, based on expert evidence obtained for the purpose of opposing a motion for summary judgment or summary adjudication, years after the employee’s termination, that the failure to perform did not and would not result in any adverse consequences to the employer. We hold that after-acquired expert evidence that there were no adverse consequences from an employee’s failure to perform does not create a triable issue of fact on the question whether the employee failed to perform his or her job duties and thus has limited relevance, if any, to the question of discrimination. 

In this case, expert evidence that the failure of performance did not harm the University, acquired years after Serri was terminated, did not create a triable issue of material fact on the question whether the University’s stated reasons for terminating Serri were untrue or pretextual such that a reasonable trier of fact could conclude that the employer engaged in discrimination. Before she was terminated, Serri told the University her failure to prepare an Affirmative Action Plan could have adverse consequences, including the loss of federal grants. That the University ultimately suffered no adverse consequences did not create a triable issue on the questions whether the University had a legitimate, nondiscriminatory reason to terminate her employment or whether its reasons for doing so were untrue or pretextual. 

Slip op. at 2.  

The opinion is available here. 

Salas v. Sierra Chemical: Court Schedules Oral Argument In Undocumented Worker Case

In Salas v. Sierra Chemical Co. (Supreme Court Case No. S196568, docket here), the California Supreme Court will consider whether an employee's use of a false social security number to obtain employment prevents the employee from later suing his employer for disability discrimination. The issues stated:

Did the trial court err in dismissing plaintiff's claims under the Fair Employment and Housing Act (Gov. Code § 12900 et seq.) on grounds of after-acquired evidence and unclean hands, based on plaintiff's use of false documentation to obtain employment in the first instance?  

Did Senate Bill No. 1818 (2001-2002 Reg. Session) preclude application of those doctrines in this case? (See Civ. Code § 3339; Gov. Code § 7285; Health & Saf. Code § 24000; Lab. Code § 1171.5.) 

On February 27, the Court asked the parties to address an additional issue:

Does federal immigration law preempt state law and thereby preclude an undocumented worker from obtaining, as a remedy for a violation of "state labor and employment laws" (Lab. Code § 1171.5; Civ. Code § 3339; Gov. Code § 7285; Health & Saf. Code § 24000), an award of compensatory remedies, including backpay? (See Hoffman Plastic Compounds, Inc. v. NLRB(2002) 535 U.S. 137.)

The Court has scheduled Salas for oral argument on Wednesday, April 2, 2014, at 9:00 a.m., in Los Angeles. The Court's decision will be due 90 days later, or July 1, 2014.

We are working to bring you a Watch List webinar on the decision shortly after it comes down. 

Volpei v. County of Ventura: Public Employer May Not Compel Arbitration of FEHA Claims Unless Collective Bargaining Agreement "Clearly and Unmistakably" Waives Employee's Right To Proceed in Court

A quick word on Volpei v. County of Ventura (11/7/13) --- Cal.App.4th ---.

Mark Volpei worked as an investigator for the Ventura County District Attorney's office (County). Volpei was a member of the Ventura County Deputy Sheriffs' Association (Association), which had a memorandum of agreement (MOA) with the County.

In 2011, Volpei sued the County for retaliation, harassment, disability discrimination, and other claims under the Fair Employment and Housing Act (FEHA). In 2012, the County petitioned to compel arbitration under the MOA, which provided that a grievance, including a claim of disability discrimination, "may be submitted to arbitration by the Association...."

The trial court denied the petition, and the Court of Appeal affirmed, holding that the MOA did not "clearly and unmistakably" waive Volpei's right to proceed in court:

We conclude that the provision that an unresolved grievance "may be submitted to arbitration by the Association" is not a clear and unmistakable agreement to arbitrate Volpei's statutory claims against the County. 

Slip op. at 3. 

The opinion is available here. 

Rope v. Auto-Chlor System of Washington: Court Addresses Donation Protection Act, Associational Discrimination, and Other Discrimination and Retaliation Causes of Action

Rope v. Auto-Chlor System of Washington, Inc. (10/16/13) --- Cal.App.4th ---, deals with a unique set of facts, stated succinctly in the opinion:

When he was hired in September 2010, plaintiff Scott Rope informed his employer, defendant Auto-Chlor System of Washington, Inc. (Auto-Chlor) he planned in February 2011 to donate a kidney to his physically disabled sister, and requested that he be given leave to do so. Rope later requested that the leave be extended and paid under the then-newly enacted Michelle Maykin Memorial Donation Protection Act (DPA), Labor Code sections 1508–1513, which would become effective January 1, 2011. Rope was fired two days before the DPA became effective. He sued his former employer for violation of the DPA and other provisions of the Labor Code, violation of the Fair Employment and Housing Act, Government Code section 12940 et seq. (FEHA), and wrongful termination in violation of public policy. 

Slip op. at 2. 

The trial court sustained Auto-Chlor's demurrers without leave, Rope appealed, and the Court of Appeal affirmed in part and reversed in part. 

Rope did not state a cause of action for violation of the DPA, retaliation for requesting leave under the DPA, or retaliation for complaining about refusal to grant DPA leave. Slip op. at 5-9. Auto-Chlor terminated Rope before the DPA became effective, and the DPA was not retroactive. 

Rope did not state a cause of action under any other provision of the Labor Code. Slip op. at 9-12. He could not allege violation of Labor Code section 1102.5 because he did not claim either that he reported his suspicions of unlawful activity to any governmental agency or that he refused to violate the law. He did not allege any other Labor Code violation, and his causes of action under Labor Code sections 98.6 and the Private Attorneys General Act (Cal. Lab. Code 2698 et seq.) also failed. 

Rope did not state a cause of action for retaliation because he did not allege that he had opposed any conduct forbidden by or filed a complaint under the FEHA. Slip op. at 12-16. Merely requesting leave under the DPA did not constitute protected activity for FEHA purposes. 

Rope stated a cause of action for associational discrimination under the FEHA. Slip op. at 18-22. "The reasonable inference is that Auto-Chlor acted preemptively to avoid an expense stemming from Rope's association with his physically disabled sister," and this was sufficient to allege associational discrimination. Slip op. at 22. 

Rope did not state causes of action for discrimination based on an actual or perceived disability because he did not allege "an impairment that constitutes a physical disability" or that Auto-Chlor perceived him as having such an impairment. Slip op. at 22-23. 

For the same reasons stated with regard to his claim for associational discrimination, Rope stated causes of action for wrongful termination in violation of public policy and for failure to maintain an environment free from discrimination. Slip op. at 23-24. 

The opinion is available here. 

State of Arizona v. ASARCO: Court Reduces $300,000 Punitive Damage Award in Title VII Action

In State of Arizona v. ASARCO LLC (9th Cir. 10/24/13), the Ninth Circuit considered whether a $300,000 punitive damage award in a Title VII sexual harassment suit violated constitutional limits where the jury awarded no compensatory damages and only one dollar in nominal damages. 

Angela Aguilar worked for ASARCO at a copper mining and refining facility in Arizona. She alleged that two supervisors harassed her, and management failed to remedy the situation. At trial, the jury awarded her no compensatory damages, one dollar in nominal damages, and $868,750 in punitive damages. The district court reduced the punitive damages to $300,000, the statutory maximum under Title VII for an employer of ASARCO’s size. 42 U.S.C. § 1981a(b)(3)(D). 

The Court of Appeal reversed after examining the "guideposts" for determining excessiveness of a punitive damage award: (1) “the degree of reprehensibility of the defendant’s conduct”; (2) “[the] ratio to the actual harm inflicted on the plaintiff”; and (3) “civil or criminal penalties that could be imposed for comparable misconduct.” BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). 

First, the Court held that the district court did not err in finding that ASARCO's conduct was reprehensible and would support "a very large punitive award." Slip op. at 9-13. 

Second, the Court considered whether the punitive damage award bore "a reasonable relationship to compensatory damages." Slip op. at 13-16. The Court found that this requirement "suggested" that the damages should be reduced. Slip op. at 16. 

Third, the Court held that Title VII's $300,000 punitive damage cap is a "civil penalty" that gives defendants "fair notice . . . of the severity of the penalty that a State may impose" and supports a $300,000 punitive damage award. Slip op. at 16-17. 

The Court concluded that the Constitution did not bar the imposition of a "substantial punitive award," but that the 300,000 to one ratio was excessive. Slip op. at 18-20. Finding no discrimination case upholding a ratio greater than 125,000 to one, the Court held that $125,000 was the highest award that would maintain a "reasonable relationship" between compensatory and punitive damages.  Slip op. at 20. 

The Court remanded and ordered that the district court could order a new trial unless the plaintiff accepts a remittitur to this level. 

The opinion is available here. 

Davis v. Kiewit Pacific Co.: Court Finds Triable Issue as to Managing Agent Status, Overturns Summary Adjudication of Punitive Damages

In Davis v. Kiewit Pacific Co. (9/18/13, pub. 10/8/13) --- Cal.App.4th ---, the trial court entered a judgment for plaintiff Lisa Davis after a jury found defendant Kiewit Pacific Co. liable for gender discrimination, hostile work environment harassment, retaliation, and failure to prevent harassment, gender discrimination, or retaliation. However, before trial, the trial court granted Kiewit's motion for summary adjudication on Davis's claim for punitive damages, concluding there were no triable issues of material fact whether a managing agent of Kiewit had engaged in or ratified any oppressive, malicious and/or fraudulent conduct against her. The Court of Appeal reversed, finding triable issues of material fact on managing agent status. 

Davis worked for Kiewit on a construction project. She alleged that she complained of harassment to the project manager, Kyle Preedy, and Kiewit's EEO officer, John Lochner. On Kiewit's motion for summary adjudication of punitive damages, she argued that Preedy and Lochner were its managing agents. 

The Court found that Preedy's declaration in support of the motion "simply parroted" the managing agent standard set forth in White v. Ultramar, Inc. (1999) 21 Cal.4th 563, and did not state "sufficient evidence to make a prima facie showing that there was no triable issue regarding whether Preedy was a managing agent of Kiewit." Slip op. at 16. Even if Kiewit had introduced such evidence, Davis met her burden to raise a triable issue of material fact on the issue. Specifically:

Preedy, as the Project's manager, was Kiewit's top on-site manager. He had the responsibility to oversee and manage the $170 million project, including over 100 Kiewit employees working on the site. Preedy's duties included interfacing with stakeholders on the Project, contract administration, operations and personnel oversight, and making sure the Project was completed according to the contract. In performing those duties, a trier of fact could reasonably infer he exercised substantial authority and discretion regarding a broad range of issues involving the Project, including compliance with Kiewit's policies and the hiring, supervision, and laying off of Project employees. Absent evidence showing that management of a $170 million project with supervision of 100 employees is an insignificant part of Kiewit's business, a trier of fact could reasonably infer from the above evidence that Preedy "exercised substantial discretionary authority over significant aspects of [Kiewit's] business" and therefore was a managing agent of Kiewit.

Slip op. at 17-18. 

Lochner's declaration also failed in that it stated conclusions of law, rather than factual evidence. Slip op. at 20. In any event, Davis met her burden of raising a triable issue based on the following facts: 

Lochner, as Kiewit's EEO officer, had the duties and responsibilities to enforce its policies against discrimination, retaliation, and harassment based on gender and other protected classes. A trier of fact could therefore reasonably infer he had the authority and discretion regarding enforcement of those policies because he did not conduct, or direct anyone else to conduct, an investigation regarding the [alleged harassment]. In his declaration, Lochner stated, as Kiewit's district EEO officer, he was responsible for administering Kiewit's policies that prevent discrimination, retaliation, and harassment based on gender and other protected groups for the Northwest District. Lochner stated he "conducted training for staff employees (supervisory personnel); took and responded to employee complaints about EEO and other issues; and conducted or oversaw investigations regarding a variety of employee relations issues including alleged discrimination, retaliation and/or harassment." ... [A] a trier of fact could reasonably infer he had authority and discretion in making, interpreting, and applying Kiewit's EEO policies on a corporation-wide basis and therefore had authority and discretion to make decisions that ultimately determine corporate policy.

Slip op. at 21-22. 

The opinion is available here. 

Pacific Shores Properties v. City of Newport Beach: Ninth Circuit Reverses Summary Judgment in Action Alleging Discrimination Against Sober Living Group Homes

This is an interesting case on discrimination in the housing context. In Pacific Shores Properties, LLC v. City of Newport Beach (9th Cir. 9/20/13), the Ninth Circuit reversed an order granting summary judgment in a case alleging that a City ordinance violated the Fair Housing Act, the Americans with Disabilities Act, the California Fair Employment and Housing Act, and the Equal Protection Clause by having the practical effect of prohibiting new group homes for recovering alcoholics and drug users from opening in most residential zones and requiring existing group homes to undergo a permitting process.  

The Ninth Circuit held that the district court erred in disregarding evidence that the City’s sole objective was to discriminate against persons deemed to be disabled under state and federal housing discrimination laws. The plaintiffs, who were operators and residents of sober living homes,  were not required to identify similarly situated individuals who were treated better than themselves in order to survive summary judgment. Where there is direct or circumstantial evidence that the defendant has acted with a discriminatory purpose and has caused harm to members of a protected class, such evidence is sufficient to permit the protected individuals to proceed to trial under a disparate treatment theory.

The district court erred in concluding that the plaintiffs failed to create a triable issue of fact as to whether the losses that their businesses suffered were caused by the enactment and enforcement of the ordinance when the plaintiffs presented evidence that they experienced a significant decline in business after the ordinance’s enactment, that the publicity surrounding the ordinance reduced referrals, and that current and prospective residents expressed concern about whether the homes would close. In addition, costs borne by the plaintiffs to present their permit applications and to assure the public that they were still operating despite the City’s efforts to close them were compensable. 

The opinion is available here.  

Governor Brown Vetoes Bill to Amend FEHA After Harris v. Santa Monica

Governor Brown has vetoed legislation intended to address the California Supreme Court's decision in Harris v. City of Santa Monica (2013) 56 Cal.4th 203 (discussed here), which held:

A plaintiff in an action under the Fair Employment and Housing Act (FEHA) must prove that unlawful discrimination was a “substantial factor motivating” the alleged adverse employment action;  

A defendant in such an action may use a “mixed-motive” defense by proving, by a preponderance of the evidence, that it would have made the same decision absent such discrimination;  

A defendant making such a showing need not concede that unlawful discrimination played any role in its decision-making process; and  

If the defendant makes such a showing, the plaintiff may not obtain reinstatement, backpay, front pay, or noneconomic damages, but may obtain declaratory relief, injunctive relief, and reasonable attorney’s fees and costs.

In response to Harris, the California legislature passed SB 655, which would have defined "substantial motivating factor" as follows: 

For purposes of this section, “substantial motivating factor” means a factor that contributed to the employment action or decision. It shall be more than a remote or trivial factor, but need not be the only or main cause of the employment action or decision. Evidence that the person claiming to be aggrieved had a protected characteristic at the time of the employment action or decision is not, by itself, sufficient proof that the protected characteristic was a substantial motivating factor. 

SB 655 also would have provided a $25,000 civil penalty in any action in which the employee proved that discrimination was a substantial motivating factor for an adverse employment action, even if the employer proved that it would have made the same decision without considering the protected characteristic or activity.

Governor Brown vetoed SB 655 on October 10, 2013. He wrote in his veto message:

I think Supreme Court Justice Goodwin Liu got it right in his well-reasoned opinion in [Harris] and I see no reason for further legislative intervention. 

Additional information is available here.  

Quin v. County of Kauai: Ninth Circuit Addresses Whether Discrimination Action May Proceed When Plaintiff/Debtor Fails to List it as an Asset in Bankruptcy Proceeding, Then Reopens Proceeding to Do So

A quick note on Quin v. County of Kauai Department of Transportation (9th Cir. 7/24/13) ___ F.3d ___, in which the Ninth Circuit considered whether an individual can prosecute an employment discrimination action when she fails to list it as an asset in her bankruptcy petition schedules, then reopens her bankruptcy case to do so. 

When the failure to list the asset is a result of inadvertence or mistake, judicial estoppel does not prevent the plaintiff/debtor from pursuing the discrimination action. The question is how to define "inadvertence or mistake." The majority of Circuits have adopted a narrow interpretation of these terms that focuses on whether the plaintiff knew of the claims and had a motive to conceal them. Disagreeing with this narrow test, the Court held: 

In these circumstances, rather than applying a presumption of deceit, judicial estoppel requires an inquiry into whether the plaintiff’s bankruptcy filing was, in fact, inadvertent or mistaken, as those terms are commonly understood. Courts must determine whether the omission occurred by accident or was made without intent to conceal. The relevant inquiry is not limited to the plaintiff’s knowledge of the pending claim and the universal motive to conceal a potential asset—though those are certainly factors. The relevant inquiry is, more broadly, the plaintiff’s subjective intent when filling out and signing the bankruptcy schedules.

Slip op. at 19. The Court remanded to the district court to determine the plaintiff/debtor's intent in completing her bankruptcy schedules. 

The opinion is available here.