NANCY A. KONIG, Plaintiff and Appellant, v. FAIR EMPLOYMENT AND HOUSING COMMISSION, Defendant and Appellant.
No. S087843
Supreme Court of California
July 29, 2002
28 Cal. 4th 743
NANCY A. KONIG, Plaintiff and Appellant, v. FAIR EMPLOYMENT AND HOUSING COMMISSION, Defendant and Appellant.
Nancy A. Konig, in pro. per., for Plaintiff and Appellant.
Sidley Austin Brown & Wood, Jeffrey A. Berman, James M. Harris and Melissa Grant for Employers Group as Amicus Curiae on behalf of Plaintiff and Appellant.
Covington & Burling and Michael A. Listgarten for National Fair Housing Alliance as Amicus Curiae on behalf of Defendant and Appellant.
Law Office of James D. Smith and James D. Smith for Nonprofit Fair Housing, Disability Rights and Legal Services Organizations as Amici Curiae on behalf of Defendant and Appellant.
OPINION
CHIN, J.—In Walnut Creek Manor v. Fair Employment & Housing Com. (1991) 54 Cal.3d 245, 267 [284 Cal.Rptr. 718, 814 P.2d 704] (Walnut Creek Manor), we held that the Fair Employment and Housing Commission‘s (Commission) award of emotional distress damages to a housing discrimination complainant violated the California Constitution‘s judicial powers clause (
FACTUAL AND PROCEDURAL BACKGROUND
The facts are largely taken from the Court of Appeal‘s opinion.
Sheryl Annette McCoy, an African-American police officer, inquired about renting a unit at a duplex, which Nancy A. Konig,3 who is Caucasian, owned. As McCoy read a rental notice posted on Konig‘s door,
Konig came to the door and stated to her: “Shame on you. What are you doing on my porch? Get off my porch. You‘re trying to break into my house.” McCoy inquired about the unit, after which Konig responded: “You know you don‘t want to rent this place. You‘re here to break in. Shame on you. I‘m not going to rent to you. I‘m not going to rent to a person like you.” Konig then slammed the door in McCoy‘s face.
To determine whether Konig‘s response to her was racially motivated, McCoy asked a police officer colleague, Terrence Smith, also African-American, to inquire about Konig‘s rental. When Smith approached Konig, she ran into her residence, slammed the door, and did not respond to Smith‘s knocks. Smith left his name, address, and telephone number on a piece of paper, which he slipped into the mail slot as directed by the notice on the door. Konig never contacted Smith.
When the unit was again advertised for rent approximately one year later, the Fair Housing Council of Long Beach sent two female “testers” to Konig‘s residence to inquire about the unit. Konig discouraged the African-American tester from renting the premises because it was too large. Also, Konig asked whether the tester had given notice at her present residence. The tester said that she had not, but that her landlord had waived such notice. Konig, however, insisted that the tester was not free to leave her present residence because she had not given proper notice. When the tester asked for an application, Konig refused to give her one. In contrast, Konig treated the Caucasian tester with deference, did not ask whether she had given notice at her present residence, and told her to telephone her if she wished to rent the unit.
McCoy became distraught and was humiliated by Konig‘s insults and rebuff. The event caused McCoy to relive an emotionally painful episode in her life when, at the age of six, she and her family had been victims of racial discrimination at a restaurant. Both McCoy‘s mother and her colleague, Smith, noticed the adverse effect the incident had on McCoy.
McCoy filed a complaint with the Department of Fair Employment and Housing (DFEH). The DFEH sent Konig a copy of the complaint, along with a Guide for Respondents Accused of Housing Discrimination, issued by the DFEH. This guide stated that “[t]he parties will be given 20 days to elect
Konig filed a petition for a peremptory writ of mandate in superior court, contending that the Commission‘s factual determination that she discriminated against McCoy was erroneous. The court partially granted the petition by striking the $10,000 award for emotional distress and lost housing opportunity on the ground that the Commission was constitutionally prohibited from awarding general compensatory damages for emotional distress under Walnut Creek Manor, supra, 54 Cal.3d 245. The Commission appealed, contending that recent amendments to the FEHA, in particular
The Court of Appeal affirmed the trial court‘s judgment. It concluded that
DISCUSSION
A. The FEHA
The FEHA declares that it is against public policy to discriminate based on “race, color, religion, sex, marital status, national origin, ancestry, familial status, disability, or sexual orientation in housing accommodations. . . . [¶] It is the purpose of this part to provide effective remedies that will
Among the authorized forms of relief available to complainants, the Commission may award “actual damages.” (
B. Walnut Creek Manor
In Walnut Creek Manor, the Commission awarded relief to an unmarried African-American prospective tenant who had been discriminated against based on both his marital status and his race. (Walnut Creek Manor, supra, 54 Cal.3d at p. 253.) Among other forms of relief, the Commission awarded him special damages for the rent and utilities he had paid in excess of what he would have paid at the apartment denying him residence, punitive damages, and damages for emotional distress under the FEHA. (Ibid.) The Court of Appeal struck the emotional distress damages award. (Id. at p. 254.) Agreeing with the Court of Appeal, we found that the damages award for emotional distress constituted an exercise of judicial power by a nonjudicial body and thus violated the California Constitution‘s judicial powers clause. (Walnut Creek Manor, supra, 54 Cal.3d at p. 265.)
Our conclusion rested mainly on the “substantive limitations on administrative remedial power” as set forth in McHugh v. Santa Monica Rent Control Bd. (1989) 49 Cal.3d 348, 372 [261 Cal.Rptr. 318, 777 P.2d 91] (McHugh). (Walnut Creek Manor, supra, 54 Cal.3d at p. 265.) After determining that the power to award such damages was statutorily authorized by
Applying McHugh‘s rationale, in Walnut Creek Manor we held that the Commission‘s authority to award emotional distress damages under
C. 1992 and 1993 Amendments to the FEHA
After our Walnut Creek Manor decision, the Legislature amended the FEHA in several significant respects. (See Stats. 1992, ch. 182, § 19, pp. 924-925; Stats. 1993, ch. 1277, §§ 9, 10, pp. 7518-7522.) The Legislature sought to make the FEHA ” ‘substantially equivalen[t]’ ” (Cal. Fair Employment and Housing Com., Enrolled Bill Rep. on Sen. Bill No. 1234 (1991-1992 Reg. Sess.) July 2, 1992, p. 2) to the federal Fair Housing Act and its amendments (
In 1992, the Legislature amended the FEHA by adding
The Legislature also increased the amount of civil penalties available (
Although Senate Bill No. 1234 acknowledged our holding in Walnut Creek Manor, the 1992 legislation did not address the decision, “nor attempt[] to distinguish its remedy provision from that which was struck down in Walnut Creek.” (Cal. Fair Employment and Housing Com., Enrolled Bill Rep. on Sen. Bill No. 1234, supra, p. 2.) The Commission‘s enrolled report acknowledged that “the part of [Senate Bill No.] 1234 which authorizes the [Commission] to award unlimited actual damages could face constitutional challenge.” (Ibid.) However, the report also surmised that the judicial option provision (
The 1993 legislation (Stats. 1993, ch. 1277, §§ 9, 10, p. 7518 et seq.) also recognized the effect of Walnut Creek Manor‘s compensatory damages limitation. At HUD‘s suggestion, in light of Walnut Creek Manor the Legislature amended the FEHA to require that the DFEH advise that a housing discrimination complainant “may only be able to recover damages for emotional distress or other intangible injuries through a civil action. . . .” (
We must decide first whether Walnut Creek Manor‘s holding—emotional distress damages for housing discrimination are unavailable in an administrative proceeding—is controlling, or otherwise distinguishable. Next, we determine whether the 1992 and 1993 amendments eliminated the concerns identified in Walnut Creek Manor.
As the parties observe, Walnut Creek Manor did not consider whether either party‘s ability to opt out of the FEHA administrative proceeding would make a difference in the constitutional analysis. The FEHA‘s judicial option provision (
Like the Commission and its amici curiae, we find persuasive the high court‘s decision in CFTC, supra, 478 U.S. 833, which predates both Walnut
D. CFTC
In CFTC, the United States Supreme Court addressed whether the Commodity Futures Trading Commission‘s authority to adjudicate common law counterclaims to complaints brought before it violated the judicial powers clause, article III, section 1, of the federal Constitution. (CFTC, supra, 478 U.S. at p. 847 [106 S.Ct. at pp. 3254-3255].) The high court identified two distinct aspects of article III: (1) providing the “guarantee of an independent and impartial adjudication by the federal judiciary of matters within the judicial power of the United States” (CFTC, supra, 478 U.S. at p. 848 [106 S.Ct. at p. 3255]), and (2) “safeguard[ing] the role of the Judicial Branch in our tripartite system by barring congressional attempts ‘to transfer jurisdiction [to non-Article III tribunals] for the purpose of emasculating’ constitutional courts [citation], and thereby preventing ‘the encroachment or aggrandizement of one branch at the expense of the other.’ [Citations.]” (Id. at p. 850 [106 S.Ct. at p. 3256].) While the former aspect constitutes a “personal right” and is thus subject to waiver (id. at p. 848 [106 S.Ct. at p. 3255]), the latter implicates a “structural principle” for which “notions of consent and waiver cannot be dispositive.” (Id. at pp. 850-851 [106 S.Ct. at pp. 3256-2157].)
As relevant here, the high court held that the structural principle of the judicial powers clause was not violated, because the Commodity Futures Trading Commission‘s “jurisdiction over a narrow class of common law claims as an incident to the [Commodity Futures Trading Commission‘s] primary, and unchallenged, adjudicative function does not create a substantial threat to the separation of powers.” (CFTC, supra, 478 U.S. at p. 854 [106 S.Ct. at p. 3259].) In reaching this conclusion, the high court found significant that the respondent—who objected to the Commodity Futures Trading Commission‘s jurisdiction over the counterclaim—had the choice of filing a complaint in federal court or commencing a reparations proceeding before the Commodity Futures Trading Commission. (Id. at p. 855 [106
Similarly here, the Commission, in housing discrimination cases, deals with a narrow and particularized area of law, i.e., the elimination of discriminatory practices in housing accommodations that are “against public policy.” (
As emphasized in CFTC, the parties’ ability to choose between quasi-judicial and judicial proceedings highlights an important aspect of the constitutional analysis. (CFTC, supra, 478 U.S. at p. 855 [106 S.Ct. at p. 3259].) Because both complainants and respondents have the option of adjudicating an FEHA claim in state court (
The Court of Appeal below, however, distinguished CFTC and declined to apply its rationale to this action. The court concluded that deciding the common law counterclaim at issue in CFTC, which the high court deemed “an incident to the [Commodity Futures Trading Commission‘s] primary, and unchallenged, adjudicative function” (CFTC, supra, 478 U.S. at p. 854 [106 S.Ct. at p. 3259]), was fundamentally different from adjudicating a claim for emotional distress damages, which we held was “neither necessary to [the Commission‘s regulatory] purpose nor merely incidental thereto.” (Walnut Creek Manor, supra, 54 Cal.3d at p. 264.) In distinguishing CFTC, the Court of Appeal relied, in part, on the high court‘s observation that “the parties cannot by consent cure the constitutional difficulty” when a structural principle is implicated. (CFTC, supra, 478 U.S. at p. 851 [106 S.Ct. at p. 3256].) Unlike the dissent (dis. opn., post, at p. 764), we find that the Court of Appeal‘s interpretation of Walnut Creek Manor was misguided and that its attempt to distinguish CFTC is not persuasive.
E. Consistency with Walnut Creek Manor
Though we did not consider a judicial option in Walnut Creek Manor‘s constitutional analysis, our analysis here is not inconsistent with that decision. In holding that an award of general compensatory damages is a judicial function and not one properly delegated to an administrative agency, we relied, in part, on Curtis v. Loether (1974) 415 U.S. 189, 195-197 [94 S.Ct. 1005, 1008-1010, 39 L.Ed.2d 260], which held that a respondent facing an actual damages award may demand a jury trial in a title VIII housing discrimination matter. (Walnut Creek Manor, supra, 54 Cal.3d at p. 262.) In our discussion of Curtis v. Loether, we found it significant that the high court distinguished between actual and punitive damages traditionally awarded in a court of law, and equitable relief. (Walnut Creek Manor, supra, 54 Cal.3d at p. 262.) In footnote 11, however, we observed that title VIII had subsequently been amended in 1988 to permit administrative awards of “actual
In Walnut Creek Manor we noted that “the purpose of the [FEHA] was to provide a streamlined and economic procedure for preventing and redressing discrimination in housing as an alternative to the more cumbersome and costly procedure of a civil suit.” (Walnut Creek Manor, supra, 54 Cal.3d at p. 264.) We recognized that an administrative remedy benefited complainants because, in a court action, respondents “by means of various procedural maneuvers could force the cost of litigation above the plaintiff‘s expected recovery.” (Id. at p. 259.) However, with the judicial option provision of
The Commission, which has candidly admitted having awarded emotional distress damages since 1992, has undoubtedly gained considerable experience in that regard.8 This experience, along with the Commission‘s expertise in housing discrimination cases, may go far towards ensuring that its proceedings remain “streamlined and economical.” (Walnut Creek Manor, supra, 54 Cal.3d at p. 264.) These factors support our conclusion that the Commission‘s authority to award emotional distress damages to housing discrimination complainants—in light of the judicial option provision of
Based on our holding, we need not and do not discuss the Commission‘s additional arguments.
Furthermore, subsequent legislative enactments, in addition to
We disagree with Konig‘s amicus curiae‘s argument that the Legislature made it evident “that recovery for emotional distress and other intangible injuries may only be sought in a court of law.” As part of the 1993 amendments, the Legislature enacted
CONCLUSION
In our constitutional analysis, we guard against “adopt[ing] formalistic and unbending rules.” (CFTC, supra, 478 U.S. at p. 851 [106 S.Ct. at p. 3257].) Thus, in this context, it is even more important that we not doggedly follow precedent, especially when we may reasonably distinguish it. In sum, we conclude that the judicial option provision of
DISPOSITION
We reverse the Court of Appeal‘s judgment, and remand the matter for proceedings consistent with this opinion.
George, C. J., Baxter, J., Werdegar, J., and Moreno, J., concurred.
KENNARD, J., Concurring.—In this case brought under the state Fair Employment and Housing Act (FEHA) (
Unlike the majority in Walnut Creek Manor, I would in that case have upheld the Commission‘s award of compensatory damages to Robert Cannon, a 55-year-old African-American man, who for two and a half years unsuccessfully sought to rent an apartment in a large complex and, while on a waiting list, was passed over 35 times. In each instance, the unit was rented to a non-African-American who had applied later than Cannon. (Walnut Creek Manor, supra, 54 Cal.3d at pp. 273-287 (dis. opn. of Kennard, J.).) I pointed out that the Commission‘s authority to compensate for emotional distress is crucial to the effective enforcement of FEHA, in part because in most cases of housing discrimination the victim‘s out-of-pocket damages are de minimis, thus leaving emotional distress as the only compensable injury. (Walnut Creek Manor, supra, at pp. 280-281 (dis. opn. of Kennard, J.).) As I explained, “[u]nless the administrative forum can continue to offer meaningful redress, many persons who have clearly suffered invidious discrimination may simply forgo their claims.” (Ibid.) Contrary to the majority‘s holding in
In response to the majority‘s decision in Walnut Creek Manor, the Legislature substantially amended FEHA. (Stats. 1992, ch. 182, § 19, pp. 924-925; Stats. 1993, ch. 1277, §§ 9, 10, pp. 7518-7522.) It added, among other things, a provision allowing either party to a claim of housing discrimination brought before the Commission to opt out of the administrative proceeding and “to have the claim[] asserted in the charge adjudicated in a civil action” in court. (
BROWN, J., Dissenting.—The notion that the acquiescence of parties to an administrative proceeding sanctions constitutionally suspect jurisdiction ignores the reason structural restraints, like the judicial powers clause, were built into constitutions in the first instance. The idea was to create a complex system of checks and balances that would operate to “counteract the effects of faction despite the inevitability of the factional spirit” (Sunstein, Interest Groups in American Public Law (1985) 38 Stan. L.Rev. 29, 44) and “prevent both majorities and minorities from usurping government power to distribute wealth or opportunities in their favor.” (Ibid.) These days, however, the Madisonian world has gone “topsy turvy” as factions, defined as groups ” ‘activated by some common interest . . . ,’ have become sectors of policy.” (Golembiewski & Wildavsky, The Cost of Federalism, Bare Bones: Putting Flesh on the Skeleton of American Federalism (1984) p. 73.) “Indeed,” as Aaron Wildavsky notes, “government now pays citizens to organize, lawyers to sue, and politicians to run for office. Soon enough, if current
The most disturbing aspect of this case is not that the court should cede constitutional ground with such alacrity; its willingness to do so is by now well established. (See Obrien v. Jones (2000) 23 Cal.4th 40 [96 Cal.Rptr.2d 205, 999 P.2d 95]; In re Rose (2000) 22 Cal.4th 430 [93 Cal.Rptr.2d 298, 993 P.2d 956]; Leone v. Medical Board (2000) 22 Cal.4th 660 [94 Cal.Rptr.2d 61, 995 P.2d 191].) Rather, it is the encouragement given this agency—and any others that are quick studies—to do what the agency deems best for its constituency or its consequence, even if that results in arrogating core judicial functions the Legislature itself has implicitly recognized are beyond reach. I respectfully dissent.
I
In Walnut Creek Manor v. Fair Employment & Housing Com. (1991) 54 Cal.3d 245, 267 [284 Cal.Rptr. 718, 814 P.2d 704] (Walnut Creek Manor), this court determined an award by the Fair Employment and Housing Commission (Commission) of compensatory damages for nonquantifiable emotional distress—violated the judicial powers clause of the California Constitution. (
As the majority itself explains, the impetus for the changes was not to abrogate Walnut Creek Manor but to make the FEHA substantially equivalent to federal law to ensure certification by the United States Department of Housing and Urban Development (HUD). (Maj. opn., ante, at pp. 749-750.) Indeed, the legislation designed to accomplish this goal was initiated prior to the court‘s decision. (See Dept. of Fair Employment and Housing, Request for Approval of Proposed Legislation (Feb. 21, 1991) p. 1 [requesting amendment of the FEHA “to bring the housing discrimination provisions of California law into conformity with the equivalent federal statute“].) Subsequently, the Legislature acknowledged Walnut Creek Manor (see Cal. Fair
To the extent the 1992 and 1993 amendments contained any reference to the court‘s invalidation of Commission authority to award compensatory damages, they suggest legislative acquiescence:
It is equally clear, as the majority further acknowledges (maj. opn., ante, at p. 751), that these changes were sufficient for HUD to consider the FEHA substantially equivalent to the Fair Housing Act (
Accordingly, even though the Commission recommenced awarding compensatory damages following passage of the 1992 and 1993 amendments, it
II
Even if the majority has correctly interpreted the Legislature‘s intent in amending the FEHA, the result here remains incompatible with the reasoning of Walnut Creek Manor and the limitations imposed by the judicial powers clause. In McHugh v. Santa Monica Rent Control Bd. (1989) 49 Cal.3d 348 [261 Cal.Rptr. 318, 777 P.2d 91] (McHugh), the court delineated a two-part analysis for assessing the validity of an administrative agency‘s award of damages: “An administrative agency may constitutionally hold hearings, determine facts, apply the law to those facts, and order relief—including certain types of monetary relief—so long as (i) such activities are authorized by statute or legislation and are reasonably necessary to effectuate the administrative agency‘s primary, legitimate regulatory purposes, and (ii) the ‘essential’ judicial power (i.e., the power to make enforceable, binding judgments) remains ultimately in the courts, through review of agency determinations.” (Id. at p. 372, italics in original.)
Applying this analysis, the court in Walnut Creek Manor found the award of compensatory damages for housing discrimination ran afoul of the substantive prong. “[T]he primary regulatory purpose of the [FEHA] is to prevent discrimination in housing before it happens and, when it does occur, to offer a streamlined and economical administrative procedure to make its victim whole in the context of the housing [citation]. The award of unlimited general compensatory damages is neither necessary to this purpose nor merely incidental thereto; its effect, rather, is to shift the remedial focus of the administrative hearing from affirmative actions designed to redress the particular instance of unlawful housing discrimination and prevent its recurrence, to compensating the injured party not just for the tangible detriment to his or her housing situation, but for the intangible and nonquantifiable injury to his or her psyche suffered as a result of the respondent‘s unlawful acts, in the manner of a traditional private tort action in a court of law. [Citations.]” (Walnut Creek Manor, supra, 54 Cal.3d at p. 264, italics in original.)
In reaching this conclusion, the court did not question the Commission‘s contention that compensatory damages “serve to deter discrimination and compensate its victim . . . . Under McHugh . . . , the issue, rather, is whether the award of substantial emotional distress compensatory damages
Neither can legislative enactment. Regardless of statutory changes that now permit either complainant or respondent to opt out of administrative proceedings (
The Commission also fails to explain why it is no longer the case that “[t]he availability of unlimited damages risks converting the focus of
In response, the majority and the Commission rely substantially, if not exclusively, on CFTC, supra, 478 U.S. 833, in which the United States Supreme Court upheld the authority of the Commodity Futures Trading Commission to adjudicate a state law counterclaim in a reparation proceeding based on the parties’ consent to the agency‘s assumption of jurisdiction. (See maj. opn., ante, at pp. 751-755.) Because the FEHA did not previously contain a bilateral opt-out provision and the question of consent and its impact on the judicial powers analysis was not at issue in Walnut Creek Manor, the court is supposedly at liberty to reconsider its prior conclusions.
As the Court of Appeal below correctly understood, however, the CFTC rationale does not—and cannot—obtain when the judicial powers concern is one of substance rather than procedure. The Supreme Court expressly recognized this distinction: “Article III, § 1, safeguards the role of the Judicial Branch in our tripartite system by barring congressional attempts ‘to transfer jurisdiction [to non-Article III tribunals] for the purpose of emasculating’ constitutional courts, [citation], and thereby preventing ‘the encroachment or aggrandizement of one branch at the expense of the other.’ [Citations.] To the extent that this structural principle is implicated in a given case, the parties cannot by consent cure the constitutional difficulty for the same reason that the parties by consent cannot confer on federal courts subject-matter jurisdiction beyond the limitations imposed by Article III, § 2. [Citation.] When these Article III limitations are at issue, notions of consent and waiver cannot be dispositive because the limitations serve institutional interests that the parties cannot be expected to protect.” (CFTC, supra, 478 U.S. at pp. 850-851 [106 S.Ct. at pp. 3256-3257].)
What the high court characterized as a “structural” limitation in CFTC, this court identified as a “substantive” one in Walnut Creek Manor. (See Walnut Creek Manor, supra, 54 Cal.3d at pp. 256, 265-266; McHugh, supra, 49 Cal.3d at p. 372.) Whatever the label, the principle remains the same: the parties cannot confer upon an administrative agency authority that contravenes constitutional constraints. (Cf. Walnut Creek Manor, at pp. 257, 265;
III
There is a qualitative difference between a bureaucratic process and a judicial decision and that difference remains, even when an administrative agency takes on all the attributes of a court. The preserving virtue of the judiciary is its independence. Not only are administrative agencies not immune to political influences, they are subject to capture by a specialized constituency. (See, e.g., Macey, Separated Powers and Positive Political Theory: The Tug of War Over Administrative Agencies (1992) 80 Geo. L.J. 671, 675 [“administrative agencies, like legislatures, are subject to substantial interest group influence“].) Indeed, an agency often comes into existence at the behest of a particular group—the result of a bargain between interest groups and lawmakers. (Ibid.)
Administrative processes are often touted as quicker and less costly. Here, counsel argued that the Commission‘s expertise makes it more efficient than the judicial system and that it could not successfully compete with the courts without authority to award compensatory damages. In this context, however, the streamlined and economical administrative procedure is efficient precisely because it is limited to making the victim whole in the context of housing and not trying to offer a broad array of judicial remedies. (Walnut Creek Manor, supra, 54 Cal.3d at pp. 261-262, 264.) In any event, these arguments are irrelevant to the constitutional question. Many constitutional mandates are inefficient, but neither efficiency nor convenience should have determinative weight when the structural integrity of the Constitution is at stake. A single branch of government that arrogated all power to itself would unquestionably be efficient. It would merely be unconstitutional.
Clearly, the administrative state is with us to stay. The question is all the more incumbent, therefore, how the courts will take the measure of administrative forays into territory assigned to the judicial branch. I would not