This week, the California Supreme Court held there can be no individual liability for retaliation claims under the Fair Employment and Housing Act (FEHA). In Jones v. The Lodge at Torrey Pines Partnership (Sp. Ct. No. GIC811515), the Court concluded that although an employer may be held liable for discrimination under the FEHA, individual managers were not subject to personal liability; “The same rule applies to actions for discrimination: The employer, but not nonemployer individuals, may be held liable.”
In California, the FEHA imposes liability for individual managers on claims of harassment, but not discrimination. Ten years ago, in Reno v. Baird (1998) 18 Cal.4th 640, the California Supreme Court held that although an employer may be held liable for discrimination under the FEHA (Gov. Code § 12900 et seq.), individual managers are not personally liable for discrimination. The Court in Reno left unaddressed the issue of individual liability for retaliation claims. In the interim, a number of lower court decisions interpreted the FEHA to also find individual liability for retaliation claims.
In Jones, the California Supreme Court disapproved these lower court decisions, holding no such liability is permitted. As discussed in greater detail below, the Court relied on its rationale in Reno, to explain that imposing individual liability for retaliation claims is contrary to the Legislative intent and inevitably creates a conflict for managers who might face personal liability for normal personnel decisions. The Jones decision marks a significant victory for employers and offers further protection in defending against retaliation claims.
A. Procedural History and Facts
Plaintiff Scott Jones sued his employer, The Lodge at Torrey Pines Partnership (The Lodge), and his supervisor at work, Jean Weiss, for various causes of action including sexual orientation harassment, sexual orientation discrimination, and retaliation, in violation of the Fair Employment and Housing Act.
In 2000, Plaintiff was the outlet manager for The Grill, a restaurant at The Lodge at Torrey Pines. Plaintiff alleged that Jean Weiss, the food and beverage director, and another manager, had a practice of telling sexually explicit jokes, including “gay-bashing jokes” directed at Plaintiff. Plaintiff eventually complained to Weiss about the comments. Shortly thereafter, Weiss allegedly threatened to fire Plaintiff if he "aired any dirty laundry" by reporting to human resources. In May 2001, Plaintiff again confronted Weiss and sent him an interoffice memorandum requesting he refrain from his "unprofessional remarks." Plaintiff alleged Weiss confronted and threaten him in response.
Plaintiff alleged the remarks continued and in June 2001, a female employee informed him of her intent to lodge a complaint related to gay-bashing jokes by Weiss. The next day, Plaintiff met with the human resources director of an affiliate of The Lodge, to state his complaint. Plaintiff alleged he was told he would have to ask Weiss's permission to seek counseling and advised to quit his job because "things like this get worse." Following that meeting, Plaintiff received a written warning for absenteeism from Weiss and was put on a 30-day performance improvement plan. Plaintiff alleged that Weiss then stopped talking to him, excluded him from weekly management meetings, and continued to use offensive language. In July, Plaintiff was placed on disability leave that was followed by paid administrative leave. Plaintiff eventually filed a complaint with the DFEH and subsequently resigned from his employment in January of 2002.
Plaintiff then brought suit. Ultimately, only two causes of action, sexual orientation discrimination and retaliation, went to trial. The jury found for Plaintiff on both claims, awarding compensatory damages of $1,395,000 against The Lodge and $155,000 against Weiss. The trial court entered judgment on the verdict, but later granted both The Lodge's and Weiss's motions for judgment notwithstanding the verdict and for a new trial. The trial court concluded that Plaintiff had not presented sufficient evidence that he had suffered an adverse employment action as to both causes of action, and ruled that Weiss, as an individual, could not be liable for retaliation. Plaintiff appealed and both Defendants cross-appealed. The Court of Appeal reinstated the original judgment on the verdict, holding that Plaintiff had presented sufficient evidence, and that an individual could be held liable for retaliation under FEHA. The California Supreme Court granted the Defendants' petition for review to answer the specific question of whether an individual may be personally liable for retaliation under FEHA.
B. The California Supreme Court’s Decision
The question before the California Supreme Court in Jones was whether the FEHA imposes individual liability for retaliation claims. More specifically, the Court evaluated the language in Gov. Code section 12940 subdivision (a) (concerning discrimination) and subdivision (h) (concerning retaliation) to determine if it required a different rule as to the issue of individual liability for retaliation. Subdivision (h) makes it unlawful employment practice of “any employer, labor organization, employment agency, or person” to retaliate. The California Supreme Court in Jones, relying on its rationale in Reno, found the difference between subdivisions (a) and (h) of section 12940 was not great, and the statutory reference to “person” was intended to apply to the entity and not the individual:
“The question whether personal liability exists where the statutes prohibit discrimination by ‘any person acting as an agent of an employer’ (§ 12926, subd. (d)) and by ‘any person’ who aids and abets an unlawful employment practice (§ 12926, subd. (i)) – which we resolved in Reno, supra, —is similar to the question presented here – whether personal liability exists where the statute prohibits retaliation by “any employer, labor organization, employment agency or person….” (Id. subd.(h)). We can and must analyze it similarly. In the context, the Legislature may have used the word “person” in subdivision (h) for reasons unrelated to a desire to make individuals personally liable for retaliation.” (Id. at p. 6.) (Emphasis added.)
Specifically, the Court found the “Legislative history or, more precisely, the absence of legislative history, behind the inclusion of the word “person” in subdivision (h) of section 12940 also supports our conclusion that the subdivision does not impose personal liability on nonemployer individuals.” (Id. at 14.) The Court also considered the Legislature’s differential treatment of harassment and discrimination. It noted that the Legislature imposes individual liability for claims of harassment (as opposed to discrimination) because claims of harassment arise out of conduct not necessary or essential to the supervisors’ job functions. However, a claim of retaliation or discrimination arises out of conduct (i.e. discipline, terminations), that is “inherently necessary to performance of a supervisor’s job.” (Id.)
The Court in Jones, explained that by imposing such liability, managers would be faced with a conflict of interest in carrying out standard personnel decisions, such as disciplining or terminating employee. Such a contradiction would not meet the Legislative’s intent and “[b]y limiting the threat of lawsuits to the employer itself, the entity ultimately responsible for discriminatory actions, the Legislature has drawn a balance between the goals of eliminating discrimination in the workplace and minimizing the debilitating burden of litigation on individuals” (Id. p. 11) Thus, the Court found that “employment actions that can give rise to a claim for retaliation are identical to the actions that can give rise to a claim for discrimination.” Relying on that same rationale, the Court explained “[n]o reason appears why [the Legislature] would want to make nonemployer individuals personally liable for retaliation but not for discrimination.” (Id. p. 12.)
The Court also explained that individual liability would also not be appropriate as because “corporate decisions are often made collectively by a number of persons…Imposing individual liability for collective decisions might place the individual in an adversarial position to each other (as well as the corporation).” (Id. at p. 11.) The Court did not find the Legislative intent or the FEHC’s interpretations of the statute supported individual liability for retaliation claims.
The Court appropriately concluded: “For these reasons, we conclude that the employer is liable for retaliation under section 12940, subdivision (h), but nonemployer individuals are not personally liable for their role in retaliation.” (Id. at p.21.) A PDF copy of the Court’s decision in Jones can be found at Court Info Online.