In Trujillo v. North County Transit District, 63 Cal. App. 4th 280 (1998), the plaintiffs claimed racially discriminatory denial of promotions and raises and racial harassment. The jury found that there had been no discrimination or unlawful harassment but that the employer violated Government Code section 12940(i), which requires that an employer take all reasonable steps to prevent discrimination and harassment.
In a case of first impression, the Court of Appeal affirmed the trial court's grant of the employer's motion for judgment notwithstanding the verdict, concluding that the FEHA does not support recovery on a private right of action for failure to prevent harassment when no harassment or other discrimination was found to have occurred.
Perhaps the question receiving the most attention from the courts last year was the scope of individual liability for discrimination. On the federal level, Mercer v. Borden, 11 F. Supp. 2d 1190 (C.D. Cal. 1998), analyzed whether managers could be liable in their individual capacities under the Family and Medical Leave Act, 29 U.S.C. § 2601, by looking to the FMLA definition of "employer," which is "any person who acts, directly or indirectly, in the interest of an employer to any of the employees of such employer." 29 U.S.C. § 2611(4)(A)(ii)(1).
Noting that the definition is identical to that under the Fair Labor Standards Act, which a handful of district courts have interpreted to permit individual liability, the court held that individuals may be personally liable under the FMLA. The court noted the absence of any 9th U.S. Circuit Court of Appeals precedent on this issue, making it an issue to watch this year.
The most prominent California court opinion on individual liability was Reno v. Baird, 18 Cal. 4th 640 (1998). In Reno, the California Supreme Court held that persons claiming discrimination under the FEHA may not sue individual supervisors. The court pointed out that the FEHA prohibits "an employer . . . or any other person" from harassing an employee, but prohibits only "an employer" from engaging in improper discrimination. Cal. Gov't Code §§ 12940(h)(l), 12925(d).
The Reno court noted that harassment consists of conduct that is not necessary for management of the employer's business or performance of the supervisor's job, but rather, is conduct that is presumably engaged in for personal motives. Discrimination, on the other hand, may arise out of the performance of necessary personnel management duties.
The court recognized that holding supervisors personally liable for discrimination would be inconsistent with a "clear and growing consensus" under federal law, would be incongruous with FEHA's specific exemption of employers with five or fewer employees from discrimination claims, would do little to enhance the ability of victims of discrimination to recover monetary damages and would put supervisory employees in a conflict of interest with their employees when making personnel decisions. In holding that individual supervisors could not be sued under the FEHA or common law for discrimination, the court specifically reserved opinion regarding individuals' liability for harassment.
Following the lead of Reno, the Court of Appeal in Le Bourgeois v. Fireplace Manufacturers Inc., 1998 Daily Journal D.A.R. 12970 (Dec. 22, 1998), determined that a supervisory employee is not subject to individual liability under the Americans with Disabilities Act.
Also following the distinctions set forth in Reno, the court in Carrisales v. Department of Corrections, 77 Cal. Rptr. 2d 517 (1998), attempted to clarify the circumstances under which a supervisor may be held personally liable for harassment. Specifically, the court analyzed supervisor liability for failing to respond properly when on notice of harassment. The Carrisales court concluded: "Making decisions about what corrective action, if any, to take in response to an employee's complaints, is precisely the type of 'inherent and unavoidable part of the supervisory function' for which the Supreme Court was reluctant to hold an individual supervisor liable."
The Carrisales court also addressed whether a nonsupervisory employee may be personally liable for engaging in harassment. Citing Government Code section 12940(h)(1), which makes it unlawful for "an employer . . . or any other person" to harass "an employee or applicant," the court determined that the FEHA requires an employment relationship between the harasser and harassee, preventing nonsupervisory employees from being subject to individual liability for harassment.
The Supreme Court granted review of Carrisales on Nov. 4, 1998. Although the Carrisales holding regarding personal liability for supervisors for harassment under the FEHA seems correctly reasoned, the decision on co-worker liability is more controversial. As the California Supreme Court has offered no opinion on the subject of personal liability for nonsupervisory co-workers, Carrisales provides an opportunity for it to do so.
Two federal cases played a significant role in defining the scope of protections under the discrimination laws. The first is Oncale v. Sundowner Offshore Serv. Inc., 118 S. Ct. 998 (1998), in which the U.S. Supreme Court put to rest the issue of whether same-sex sexual harassment is actionable under Title VII. The Court held that the prohibition against sexual harassment must extend to sexual harassment of any kind, as long as the plaintiff proves that the conduct at issue was not "merely tinged with offensive sexual connotations, but actually constituted 'discrimination because of sex.'"
The court clarified that harassing conduct need not be motivated by sexual desire to support an inference of discrimination on the basis of sex. Discrimination because of sex may be proven by conduct evincing hostility to members of the same sex or by a comparison of the quality of conduct directed at members of each sex. The court emphasized that the statute only forbids behavior "so objectively offensive as to alter the 'conditions' of the victim's employment."
Two months after the Supreme Court issued its opinion in Oncale, a California district court struggled again with the scope of conduct actionable as discrimination. Kortan v. State of California, 5 F. Supp. 2d 843 (C.D. Cal. 1998). Aybike Kortan, a Caucasian female, complained of racial and sexual harassment because she heard her supervisor calling African-American bystanders "black goon" and because in a single conversation, she heard her supervisor call other women various derogatory names.
Kortan also alleged retaliation for engaging in protected activity, citing as evidence the facts that her supervisor laughed outside of her door and said, "She got me on sexual harassment charges"; that she received a lower performance rating than she was accustomed to receiving; and that her requests for a change of supervisor, a temporary transfer and access to internal investigation files pertaining to her complaint were all denied.
The court held that Kortan could not state an actionable claim for race discrimination because the racial statements on which she based her claim were not motivated by Kortan's race. In addition, the court held that the evidence Kortan presented to support her claim for sexual harassment lacked sufficient frequency and severity to create a sexually hostile working environment.
Also of note is the court's determination that the conduct on which Kortan based her claim of retaliation failed to state such a claim. Citing Oncale, the court ruled that her supervisor's comment outside Kortan's office fell "well below the level necessary to establish an adverse employment action." Most significant, the court noted that the other actions on which Kortan based her retaliation claim were not actionable because they did not result in a demotion or change of responsibilities and did not place Kortan in a worse position.
Finally, the courts turned their attention last year to defining the legal standards governing discrimination. The most prominent decisions in this area are the simultaneously released opinions of the U.S. Supreme Court in Burlington Indus. Inc. v. Ellerth, 118 S. Ct. 2257 (1998), and Faragher v. City of Boca Raton, 118 S.Ct. 2275 (1998).
The Supreme Court formulated in these cases an employer's affirmative defense to vicarious liability for a supervisor's creation of a hostile work environment under Title VII, holding an employer can avoid liability when the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior and the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.
The first federal court in California to apply the affirmative defense set forth in Faragher was Montero v. AGCO Corp., 19 F. Supp. 2d 1143 (E.D. Cal. 1998). Carrie Ann Montero sued under both Title VII and the FEHA, alleging that she was subject to sexual harassment by supervisory employees who created a hostile work environment. Montero did not report the alleged harassment until nearly two years after she began working for AGCO, claiming that she feared retaliation if she did so.
Three days after she reported harassment, an investigation was undertaken during which Montero, at her request, was placed on paid administrative leave. Eleven days after her report, one of the alleged harassers was discharged and two others were reprimanded and warned that they were subject to discharge if they were involved in any similar events. The results of the investigation and the action taken were reported immediately to Montero.
The court analyzed the facts in view of the affirmative defense set forth in Faragher and found that the employer had exercised reasonable care to prevent harassment, noting that AGCO's sexual-harassment policy allowed complaints to be lodged with either a supervisor or directly with the human resources department, that it promised reasonable confidentiality and no retaliation and that it was disseminated to all employees. The court found that AGCO followed its policy and immediately investigated Montero's complaints and acted to correct them.
The court also found that Montero unreasonably failed to take advantage of her employer's preventative and corrective opportunities. Accordingly, the court granted summary judgment in favor of AGCO on the Title VII claim of harassment, finding that the undisputed facts established the employer's affirmative defense.
While entering judgment on the federal claim for sexual harassment, the Montero court sidestepped the identical issues raised under the FEHA, declining to exercise supplemental jurisdiction over the state-law claims.
The first chance for the California Supreme Court to comment on the applicability to the FEHA of the standards set forth in Faragher may come when the court reviews Carrisales. In Carrisales, the Court of Appeal reversed summary judgment in favor of the employer, holding that there were questions of fact as to whether the employer took immediate and appropriate corrective action. The Supreme Court may use this Carrisales holding as an opportunity to clarify the circumstances under which the Faragher affirmative defense will apply.
Of particular interest for California employers in 1999 is the question of how close the California Supreme Court will come to analyzing claims of discrimination by the same standards as the federal courts.
This article was co-authored by Lynn A. Bersch, a partner in the San Francisco office of Crosby, Heafey, Roach & May, and Denise DeRose, a former partner in the firm's Oakland office.