H048910
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICT
Filed 8/5/22
CERTIFIED FOR PUBLICATION; (Santa Clara County Super. Ct. No. 20-CV-372366)
The issue in this case is whether the Department of Fair Employment and Housing can be compelled to arbitrate an employment discrimination lawsuit when the affected employee agreed to resolve disputes with the employer through arbitration. We conclude the Department cannot be required to arbitrate in that situation because it did not agree to do so. We will therefore affirm the denial of the employer‘s motion to compel arbitration.
I. BACKGROUND
Cisco Systems, Inc. hired John Doe in September 2015 to work as an engineer. (John Doe is a fictitious name used in the trial court proceedings to protect the employee‘s privacy.) Doe was required to sign an arbitration agreement as a condition of his employment. Under the agreement, Cisco and Doe must arbitrate “all disputes or claims arising from or relating to” Doe‘s employment, including claims of discrimination, retaliation, and harassment.
Several years after signing the agreement, Doe filed a complaint with the California Department of Fair Employment and Housing, the administrative agency responsible for enforcing state employment discrimination laws. The Department of Fair Employment and Housing investigates violations of
If the matter is not resolved informally, the Department can decline to pursue it further and instead issue a right to sue notice to the complainant, which allows the employee to file a lawsuit against the employer. (
Doe‘s complaint to the Department alleged Cisco discriminated against him because of ancestry or race. He reported that two supervisors denied him opportunities and disparaged him because, under the traditional caste system of India, he is from the lowest caste and they are from the highest. Doe also accused Cisco of retaliating when he complained about being treated unfavorably because of his caste.
The Department notified Cisco of Doe‘s complaint, investigated it, and decided it had merit. Attempts at informal resolution were unsuccessful. The Department then filed a lawsuit in Santa Clara County Superior Court against Cisco and the two supervisors. Doe is not a party to the suit.
The Department‘s complaint contains five causes of action alleging multiple violations of FEHA. It seeks a permanent injunction preventing Cisco from committing further violations, and mandatory injunctive relief requiring Cisco to institute policies to prevent employment discrimination. The complaint requests an order that Cisco compensate Doe for past and future economic losses. It also seeks punitive damages and any further relief the trial court decides is in the public interest.
Cisco moved to compel the Department to proceed only by arbitration based on the arbitration agreement Doe signed. The trial court denied the motion.
II. DISCUSSION
Cisco contends the Department is bound by Doe‘s arbitration agreement and that the trial court therefore should have granted the motion to
An arbitration agreement is a contract in which the parties agree to give up the right to take disputes to court in exchange for receiving a generally faster and less costly decision from an agreed-upon arbitrator. Issues regarding formation of an arbitration agreement are governed by state law principles applicable to contracts generally. (Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 980.)
Fundamental to any contract is mutual consent. A contract cannot exist unless both parties have agreed to the same thing. (
The Department never consented to resolve disputes with Cisco by arbitration, so it ordinarily cannot be compelled to arbitrate those disputes. However we acknowledge that arbitration agreements can be enforced against third parties in certain situations. (Cohen v. TNP 2008 Participating Notes Program, LLC (2019) 31 Cal.App.5th 840, 859.) Nonsignatories have been bound by arbitration agreements when the nonsignatory assumed the obligations of the party who signed the agreement; when an agency relationship exists between the nonsignatory and the signer; and when the nonsignatory is the alter ego of the signer. (Ibid., citing Benaroya v. Willis (2018) 23 Cal.App.5th 462, 468.) Cisco‘s theory is along those lines: that the Department is bound by the arbitration agreement because it is Doe‘s proxy in this action and is not acting independently.
The plain language of the Government Code sections giving the Department authority to enforce employment discrimination laws indicates otherwise. The Department is authorized “to bring civil actions pursuant to section 12965” and “to prosecute those civil actions before state and federal trial courts.” (
As the public arm of the enforcement procedure, the Department acts independently when it sues for FEHA violations.1 Were it merely a proxy, the employee would decide whether to bring an action, and the Department would be limited to pursuing only the relief that could be obtained by the employee. But under the relevant legislation, the Department has discretion to decide whether to file suit (
Department could be a proxy for an employee when the law contemplates that both the Department and the employee can be plaintiffs, each represented by separate counsel.
Cisco seizes on statutory language providing that the Department files suit “on behalf of the person claiming to be aggrieved” (
A real party in interest has a substantial interest in the subject matter of the action and stands to benefit from or be injured by a judgment. (Cohen v. TNP 2008 Participating Notes Program, LLC, supra, 31 Cal.App.5th 840, 859.) All real parties in interest are bound by the judgment in the action. (Wolford v. Thomas (1987) 190 Cal.App.3d 347, 357.) Ensuring the employee is bound by the judgment, favorable or unfavorable, protects employers from successive litigation. (See Redevelopment Agency of San Diego v. San Diego Gas & Electric Co. (2003) 111 Cal.App.4th 912, 920–921 [statutes limiting standing to real parties in interest prevent duplicative claims on the same demand]; see also
In section 12965, the Legislature has allowed the Department to sue for violations and seek various remedies, even though the affected employee is the real party in interest. Nothing in section 12965 eliminates the broader state interest in litigating the suit to protect the public from unlawful discriminatory practices. Cisco asserts that the Legislature‘s purpose was merely to require the Department to provide legal representation to employees in FEHA suits. Cisco bases the argument on the legislative history of a 1992 amendment to section 12965 (which implemented an administrative adjudication procedure that the Legislature has since eliminated).2 The former administrative hearing process applied where damages could be awarded against employers, but also allowed employers to opt out, in which case the Department could file suit to resolve the claims. Although later amendments
We reject Cisco‘s legislative history argument for three reasons. First, the statutory language authorizing the Department to “bring a civil action in the name of the department on behalf of the person claiming to be aggrieved,” is sufficiently clear in describing an independent action. Legislative history is properly considered only where the plain statutory language is unclear or where the literal meaning of a statute is at odds with its clear purpose. (See Huff v. Securitas Security Services USA, Inc. (2018) 23 Cal.App.5th 745, 755.) Second, the words of the statute—authorizing the Department to bring a civil action—are directly contrary to the meaning urged by Cisco (which would limit the Department‘s role to providing legal counsel to employees). (Ibid. [“Legislative history, even when appropriately considered, cannot be used to contradict language that the Legislature decided to include in the statute.“].) Using legislative history to alter the meaning of the text would be particularly inappropriate here where the legislative history relates to a former version of the statute. And third, the documents Cisco relies on show
only the subjective motivation of the bill‘s author, rather than the Legislature as a whole. Materials that reflect the understanding of an individual legislator, even the bill‘s author, are generally not considered in ascertaining the meaning of a statute as they do not demonstrate the Legislature‘s collective intent. (Metropolitan Water District of Southern California v. Imperial Irrigation Dist. (2000) 80 Cal.App.4th 1403, 1426.)
Cisco compares the text authorizing the Department to bring an action for employment discrimination under section 12965 with FEHA provisions allowing the Department to sue in other contexts. In Cisco‘s view, that comparison reflects legislative intent to allow an independent action by the Department in the other contexts but not for individual complaints of employment discrimination. Cisco points to section 12981, relating to housing discrimination, which expressly acknowledges the ability of the Attorney General to bring suit for housing discrimination and authorizes the Department to do so as well. But the lack of a similar reference to the Attorney General in section 12965 does not change the clear meaning of the language that the Department can “bring a civil action in the name of the department
Our conclusion is consistent with related authorities. In Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 99, fn. 6, the California Supreme Court decided that an employee‘s claim for employment discrimination in violation of FEHA is not categorically exempt from arbitration. In dicta there, the Supreme Court stated, “Nothing in this opinion, however, should be interpreted as implying that an arbitration agreement can restrict an employee‘s resort to the Department of Fair Employment and Housing, the administrative agency charged with prosecuting complaints made under the FEHA, or that the department would be prevented from carrying out its statutory functions by an arbitration agreement to which it is not a party.” (Ibid., at p. 99, fn. 6.) Although whether the Department is bound by an employee‘s arbitration agreement was not decided in Armendariz, Supreme Court dicta “is not to be blithely ignored,” and is typically followed by appellate courts. (Bunch v. Coachella Valley Water Dist. (1989) 214 Cal.App.3d 203, 212.)
Our conclusion reflects the view of the United States Supreme Court in EEOC v. Waffle House, Inc., supra, 534 U.S. 279, 291, which held that the federal agency charged with enforcing employment discrimination laws is not bound by an employee‘s agreement to arbitrate. And very recently, the Supreme Court decided Viking River Cruises, Inc. v. Moriana (2022) ___ U.S ___ [2022 U.S. LEXIS 2940], a case involving an unrelated issue (whether California‘s rule invalidating waivers of representative claims under the Private Attorneys General Act is preempted by federal law). That decision reaffirmed, consistent with what we say here, that arbitration is a matter of consent and a party cannot be compelled to arbitrate absent a contractual basis for concluding the party agreed to do so. (Viking River Cruises, Inc. v. Moriana, at p. *6..)
Our reasoning also aligns with a decision from the Ninth Circuit Court of Appeals and cases from other states declining to require administrative
We note “the public policy of this state that it is necessary to protect and safeguard the right and opportunity of all persons to seek, obtain, and hold employment without discrimination or abridgment on account of race, religious creed, color, national origin, ancestry,” or other protected characteristics. (
III. DISPOSITION
The order denying the motion to compel arbitration is affirmed. Costs are awarded to respondent by operation of
Grover, Acting P. J.
WE CONCUR:
Danner, J.
Lie, J.
H048910 - Department of Fair Employment and Housing v. Cisco Systems Inc. et al.
| Trial Court | Santa Clara County Superior Court Superior Court No. 20-CV-372366 |
| Trial Judge | Hon. Drew C. Takaichi |
| Counsel for Plaintiff and Respondent Department of Fair Employment and Housing | Sirithon Thanasombat Melanie Lea Proctor Janette L. Wipper California Department of Fair Employment & Housing Chaya M. Mandelbaum Michelle G Lee Rudy, Exelrod, Zieff & Lowe, LLP |
| Overview Party | Office of the Attorney General 455 Golden Gate Avenue, Suite 11000 San Francisco, CA 94102 |
| Counsel for Defendant and Appellant Cisco Systems, Inc. | Lynne C. Hermle Joseph C. Liburt Carolina Aicon Garcia Orrick, Herrington & Sutcliffe Rex Heinke Jessica M. Weisel California Appellate Law Group LLP |
| Counsel for Defendants and Appellants Ramana Kompella and Sundar Iyer | Alexander John Hernaez Andrew Stephen Esler Fox Rothschild LLP |