KRISTINA RAINES et al.,
S273630
IN THE SUPREME COURT OF CALIFORNIA
August 21, 2023
Ninth Circuit 21-55229; Southern District of California 3:19-cv-01539-DMS-DEB
Justice Jenkins authored the opinion of the Court, in which Chief Justice Guerrero and Justices Corrigan, Liu, Kruger, Groban, and Evans concurred.
This case requires us to clarify the meaning of the term “employer” as used in the California Fair Employment and Housing Act (FEHA) (
Recognizing this ambiguity, the United States Court of Appeals for the Ninth Circuit asked this court to answer the following question: “Does California‘s Fair Employment and Housing Act, which defines ‘employer’ to include ‘any person acting as an agent of an employer,’
Plaintiffs Kristina Raines and Darrick Figg, on behalf of themselves and a putative class, allege that they received offers of employment that were conditioned on successful completion of preemployment medical screenings to be conducted by defendant U.S. Healthworks Medical Group (USHW), who was acting as an agent of plaintiffs’ prospective employers. Plaintiffs assert that USHW and its affiliates and successors (collectively, defendants) are “the nation‘s and California‘s largest providers of occupational health.” Plaintiffs claim that as part of its medical screenings, USHW required job applicants to complete a written health history questionnaire that included numerous health-related questions having no bearing on the applicant‘s ability to perform job-related functions. According to plaintiffs, these questions covered details of the applicant‘s health history including “whether the applicant has and/or has ever had: 1) venereal disease; 2) painful or irregular vaginal discharge or pain; 3) problems with menstrual periods; 4) irregular menstrual period; 5); penile discharge, prostate problems, genital pain or masses; 6) cancer; 7) mental illness; 8) HIV; 9) permanent disabilities; 10) painful/frequent urination; 11) hair loss; 12) hemorrhoids; 13) diarrhea; 14) black stool; 15) constipation; 16) tumors; 17) organ transplant; 18) stroke; or 19) a history of tobacco or alcohol use.” In addition, the questionnaire asked whether the job applicant was pregnant, sought information regarding medications taken, and required the job applicant to disclose prior job-related injuries and illnesses.
Plaintiff Kristina Raines received an offer from Front Porch Communities and Services (Front Porch) for a position as a food service aide, but the offer was conditioned on her passing the preemployment medical screening conducted by USHW. Raines alleges that she responded to most of the questions on the written questionnaire, but she declined to answer the question about the date of her last menstrual period. She alleges that the exam was then terminated, and Front Porch revoked its offer of employment.
Plaintiff Darrick Figg received an offer from the San Ramon Valley Fire Protection District to serve as a member of the volunteer communication reserve, but his offer, too, was conditioned on his passing the preemployment medical screening conducted by USHW. Figg alleges that he answered all the questions, successfully passed the screening, and was hired for the position.
Raines filed a state court action against Front Porch and USHW. After she later filed a first amended complaint that added additional defendants and class claims, defendants removed the action to federal court. (See
Defendants again moved to dismiss, and the district court granted the motion with prejudice as to all claims except plaintiffs’ unfair competition law claim. In dismissing plaintiffs’ FEHA claim, the district court concluded that the FEHA does not impose liability on the agents of a plaintiff‘s employer.
As to plaintiffs’ unfair competition law claim, the district court had granted dismissal without prejudice, but plaintiffs requested an order dismissing the claim with prejudice, and the district court granted their request. Plaintiffs then appealed the dismissal of their other claims. After holding oral argument, the United States Court of Appeals for the Ninth Circuit asked this court to answer the question quoted on page 2, ante.
II. DISCUSSION
At issue in this case is the proper interpretation of the definition of “[e]mployer” in
A. The Relevance of Reno v. Baird and Jones v. Lodge at Torrey Pines
As noted on page 1, ante,
The issue in Reno was whether an employer‘s supervisory employees could be held personally liable under the FEHA for their acts of employment discrimination. The plaintiff in Reno alleged discrimination and wrongful discharge, and she sued, among others, the individual supervisors who, she alleged, were directly responsible for the alleged discriminatory acts. She argued that the individual defendants, as agents of her employers, could be held personally liable under the plain meaning of
We further explained that imposing personal liability on supervisory employees would severely damage the exercise of supervisory judgment because supervisors would fear that their routine workplace decisions might lead to personal financial ruin. Among other things, this possibility would cause supervisors to have interests in conflict with those of their employers. (Reno, supra, 18 Cal.4th at pp. 651-653.) In addition, we noted that corporate decisions are often made collectively, and therefore assessing individual blame in a particular case of discrimination might be difficult. Individual employees might even find themselves pitted against one another, trying to protect their own interests. (Id. at p. 662.) Finally, we commented that defending even an unmeritorious lawsuit can be expensive, and supervisors should not have to face that cost every time they make a routine personnel decision. (Id. at p. 663.) For these reasons, we concluded in Reno that, notwithstanding the agent-inclusive language of
In Jones, we extended Reno‘s holding to a claim of retaliation in violation of
discrimination - supervisors can avoid [doing acts of] harassment but cannot avoid [making] personnel decisions, it is incongruous to exempt small employers but to hold individual nonemployers liable, sound policy favors avoiding conflicts of interest and the chilling of effective management, corporate employment decisions are often collective, and it is bad policy to subject supervisors to the threat of a lawsuit every time they make a personnel decision - apply equally to retaliation.” (Id. at p. 1167.) We also noted that
comparable bargaining power to the employer, enabling it to negotiate such differences at the time that it initiates or renews its business relationship with the employer. Indeed, such negotiations might include the question of indemnification regarding any potential FEHA liability that might arise. Finally, the role of a business-entity agent is often formally defined by the terms of its contract with the employer. Therefore, its fault, if any, for the employer‘s actions can be easily determined.
In short, in a case involving a business-entity agent, the competing statutory mandates that we needed to harmonize in Reno and Jones do not come into play, and the policy arguments that informed our analysis in those cases apply, if at all, with much less force. Hence, Reno and Jones do not control the outcome here. With that in mind, we turn to address the Ninth Circuit‘s question.
B. Section 12926, Subdivision (d)
When as here we are interpreting a statutory provision, ” “[o]ur fundamental task . . . is to determine the Legislature‘s intent so as to effectuate the law‘s purpose. We first examine the statutory language, giving it a plain and commonsense meaning. . . . If the language is clear, courts must
1. Plain Meaning
Defendants, however, point out that we reached a different conclusion in Reno, supra, 18 Cal.4th 640, holding that the agent-inclusive language of
The incongruity we identified in Reno is simply not present in a case like this one. (See p. 9, ante.) But as Reno implicitly recognized, the natural reading of
2. Legislative History
The FEHA was enacted in 1980 (Stats. 1980, ch. 992, § 4, p. 3140 et seq.), combining into one act the Fair Employment Practices Act (FEPA) (Lab. Code, former § 1410 et seq.; addressing employment discrimination) and the Rumford Fair Housing Act (Health & Saf. Code, former § 35720 et seq.; addressing housing discrimination). The FEHA‘s definition of employer came directly from the FEPA, and therefore its wording dates back to the FEPA‘s enactment in 1959. At that time, the FEPA defined employer as follows: ” ‘Employer,’ except as herein provided, includes any person regularly employing five or more persons, or any person acting as an agent of an employer, directly or indirectly; the State or any political or civil subdivision thereof and cities.” (Lab. Code, former § 1413, subd. (d), as enacted by Stats. 1959, ch. 121, § 1, p. 2000, italics added.) As relevant to our inquiry concerning the liability of an agent, the italicized part of the FEPA definition of employer is identical to the FEHA‘s present definition of employer (
Of significance to our analysis, the FEPA‘s 1959 definition of employer took its agent-inclusive language from the National Labor Relations Act (NLRA) (
Thus, the legislative history of the agent-inclusive language of
3. Federal Antidiscrimination Laws
Also instructive regarding the definition of employer in
Cal.4th 61, 74; Romano v. Rockwell International, Inc. (1996) 14 Cal.4th 479, 498.) More specifically, “‘[i]n interpreting California‘s FEHA, California courts often look for guidance to decisions construing federal antidiscrimination laws, including title VII of the federal Civil Rights Act of 1964.’ ” (Williams v. Chino Valley Independent Fire Dist., at p. 109, quoting Chavez v. City of Los Angeles, at p. 984; see Lyle v. Warner Brothers Television Productions (2006) 38 Cal.4th 264, 278; Miller v. Department of Corrections (2005) 36 Cal.4th 446, 463; State Dept. of Health Services v. Superior Court, at p. 1040; Aguilar v. Avis Rent A Car System, Inc. (1999) 21 Cal.4th 121, 129-130 (plur. opn. of George, C. J.); id. at p. 150, fn. 3 (conc. opn. of Werdegar, J.); Reno, supra, 18 Cal.4th at p. 647; Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, 1245-1246.)
Three federal antidiscrimination laws have definitions of employer that are similar to the definition that appears in
Yet other federal decisions have addressed variants of the issue we now confront and have interpreted the agent-inclusive language to subject at least some business-entity agents to direct liability. These courts have often relied on the high court‘s decision in Los Angeles Dept. of Water & Power v. Manhart (1978) 435 U.S. 702 (Manhart), which involved a class action challenging the Los Angeles Department of Water and Power‘s (Department) practice of demanding higher retirement contributions from female employees than from male employees. This practice was actuarially justified based on the longer life-expectancy of women, but the high court concluded that it violated Title VII. The court limited the scope of its decision, however, saying: “Nothing in our holding implies that it would be unlawful for an employer to set aside equal retirement contributions for each employee and let each retiree purchase the largest benefit which his or her accumulated contributions could command in the open market.” (Manhart, at pp. 717-718.) After noting that limitation, the high court commented in a footnote: “We do not suggest, of course, that an employer can avoid his responsibilities by delegating discriminatory programs to
In Spirt v. Teachers Ins. & Annuity Ass‘n. (2d Cir. 1982) 691 F.2d 1054 (Spirt), the Second Circuit Court of Appeals read the Manhart footnote in the latter manner, although it did so in a case involving an agent that was an independent business entity, not a corporate shell of the employer. Spirt concluded that an insurance corporation and investment fund that acted as an agent to a university, providing retirement benefits to the university‘s employees, came within the agent-inclusive language of Title VII‘s definition of employer and therefore was liable under Title VII to the university‘s employees. The Second Circuit said: “It is clear that plaintiffs contract for retirement benefits is not with [her employer], but with TIAA-CREF, an independent insurer. Plaintiff clearly is not an employee of TIAA-CREF in any commonly understood sense. However, it is generally recognized that the term “employer,” as it is used in Title VII, is sufficiently broad to encompass any party who significantly affects access of any individual to employment opportunities, regardless of whether that party may technically be described as an “employer” of an aggrieved individual as that term has generally been defined at common law.’ ” (Spirt, at p. 1063, quoting Vanguard Justice Society, Inc. v. Hughes (D.Md. 1979) 471 F.Supp. 670, 696.) The Second Circuit then discussed the high court‘s comment in Manhart that ” Title VII applies to “any agent” of a covered employer,’ ” (Spirt, at p. 1063, quoting
Manhart, supra, 435 U.S. at p. 718, fn. 33), and it noted that many courts “have held Manhart applicable to pension plans run by third-party insurers.” (Spirt, at p. 1063.) The Second Circuit therefore concluded that TIAA–CREF, the pension plan administrator for the plaintiffs employer, was an “employer” of the plaintiff for purposes of
The First Circuit Court of Appeals, in Carparts Distri. Ctr. v. Automotive Wholesaler‘s (1st Cir. 1994) 37 F.3d 12 (Carparts), extended the reasoning of Spirt, supra, 691 F.2d 1054 to an ADA case. The plaintiffs in Carparts were a wholesale distributor of automotive parts and its sole shareholder and president, Ronald S. The defendants were the Automotive Wholesaler‘s Association of New England and its administering trust. Since 1977, the parts distributor had participated in a self-funded medical reimbursement plan offered by the defendants. But in
Finally, in DeVito v. Chicago Park Dist. (7th Cir. 1996) 83 F.3d 878 (DeVito), the Seventh Circuit Court of Appeals extended the holding of Williams, supra, 742 F.2d 586 to an ADA case. In DeVito, a park district employee alleged he was terminated in violation of the ADA. At issue, among other things, was whether the park district‘s personnel board came within the ADA‘s definition of employer. In holding that it might, the Seventh Circuit expressly relied on the definition‘s agent-inclusive language. The court, however, recognized an exception for agents that were small entities with few employees. The court said: “The plain language of the ADA defines employer as ‘a person engaged’ in an industry affecting commerce who has 25 or more employees9 ... and any agent of such person.’ [Citation.] Because (as discussed previously) the [personnel] Board is an agent of the Park District, it seems at first glance that the Board should be subject to suit. But ... [a]gents are liable under the ADA only if they
These federal cases hold that under federal civil rights law, aggrieved employees may sue, not only their employer, but also the institutional agents of their employer if those agents engage in an industry affecting commerce and are responsible for the civil rights violation at issue. The latter condition, that the agent be responsible for the violation, is analyzed in different ways, but the federal courts have generally focused on whether the agent exercised an administrative function traditionally exercised by the employer. For example, in Spirt, the court considered whether the agent exercised a gatekeeper role that would normally be exercised by the employer and, by serving in that role, violated the plaintiff‘s rights. Specifically, the court held that it was appropriate to impose direct liability on an agent where, as was true in Spirt, the agent “‘significantly affects access ... to employment opportunities.‘” (Spirt, supra, 691 F.2d at p. 1063.)
The court in Carparts, supra, 37 F.3d 12 reached a similar conclusion, noting that the agents in that case affected access to benefits in a similar way as the agent in Spirt. The court said: “Just as ‘delegation of responsibility for employee benefits cannot insulate a discriminatory [retirement benefits] plan from attack under Title VII,’ Spirt, 691 F.2d at 1063, neither can it insulate a discriminatory health benefits plan under Title I of the ADA.” (Carparts, supra, 37 F.3d at pp. 17-18.)
Similarly, in Williams, the court considered whether the agent performed functions, typical of the employer, that might give rise to a civil rights violation. The court noted that the personnel board that was acting as the employer‘s agent in Williams exercised “‘control of some of the employer‘s traditional rights, such as hiring or firing.‘” (Williams, supra, 742 F.2d at p. 589.) The court further noted the agent‘s “power to exercise duties traditionally reserved to the employer: establishing a pay plan, formulating minimum standards for jobs, evaluating employees, and transferring, promoting, or demoting employees.” (Ibid.) Finally, the court commented that “[t]hese functions are traditionally exercised by an employer, but the [employer‘s agent] utilizes these powers in the instant case....” (Ibid.) On that ground, the court held that the agent bore direct liability for violating the plaintiff‘s civil rights. (Ibid.)
These cases establish that an employer‘s agent can, under certain circumstances, appropriately bear direct liability under the federal antidiscrimination laws. As noted on pages 15 to 16, ante, we have long held that “‘[i]n interpreting California‘s FEHA, California courts often look for guidance to decisions construing federal antidiscrimination laws, including title VII of the federal Civil Rights Act of 1964.‘” (Williams v. Chino Valley Independent Fire Dist., supra, 61 Cal.4th at p. 109.) The federal court decisions in Spirt, supra, 691 F.2d 1054, Carparts, supra, 37 F.3d 12, Williams, supra, 742 F.2d 586, and DeVito, supra, 83 F.3d 878 support the conclusion that a business-entity agent of an employer can fall within the FEHA‘s definition of employer, and it may be directly liable for FEHA violations, in appropriate situations. Although the question presented in this case does not require that we go further and attempt to identify the specific scenarios in which a business-entity agent will be subject to liability under the FEHA, we recognize as a necessary minimum that, consistent with the FEHA‘s language and purpose, a business-entity agent can bear direct FEHA liability only when it carries out FEHA-regulated activities on behalf of an employer.10
4. Public Policy
This reading of
In addition, reading the FEHA to authorize direct liability on an employer‘s business-entity agents furthers the statutory mandate that the FEHA “be construed liberally” in furtherance of its remedial purposes (
Therefore, we conclude that legislative history, analogous federal court decisions, and legislative policy considerations all support the natural reading of
C. Defendants’ Arguments
Defendants argue that a business-entity agent of an employer should not be held directly liable under the FEHA because, according to the law of agency, an agent acts under the control of its principal, and therefore the principal is the entity primarily responsible for any inadequate performance by the agent. Defendants concede that an agent may, at times, be held directly liable to a third party that it has injured, but defendants contend that liability may be imposed only if the agent has breached a duty it owes to that third party, and such duty must exist independent of the agency relationship.
At the outset, it is important to note that defendants’ argument relies heavily on the common law of agency. Here, however, we are interpreting the scope of statutory language referencing agent liability, and so the common law of agency is not determinative.11
In any event, defendants’ arguments assume a degree of employer control of the agent that has not yet been shown here. Plaintiffs allege that the degree
Defendants also assert that an employer‘s obligations under the FEHA may not be delegated to an agent; it follows, according to defendants, that an employer‘s agent cannot be held liable under the FEHA. It is true that an employer‘s obligations under the FEHA may not be delegated, thus freeing the employer of liability. However, the question we decide here is not whether an employer may delegate its FEHA obligations to its business-entity agents, but whether, under the language of the FEHA, the business-entity agents of an employer can be liable for violations of their own FEHA obligations. We have concluded that, by statute, business-entity agents can be considered “employers” for purposes of FEHA liability, and as such, they are independently liable for violations of the FEHA. Stated another way, a business-entity agent‘s obligation to comply with FEHA and its consequent liability for FEHA violations results from the entity‘s own engagement in FEHA-regulated activities on the employer‘s behalf. Thus, a rule holding that the business-entity agents of an employer can be held liable for FEHA violations neither delegates the employer‘s FEHA obligations nor abrogates the employer‘s FEHA liability. Nor will it lead to a double recovery for the plaintiff, as defendants argue; rather, it merely increases the number of defendants that might share liability for the plaintiff‘s damages.
Last, as discussed (see pp. 9–10, ante), this is not a situation like the one we considered in Reno, where imposing FEHA liability on supervisorial employees might lead to a conflict between the supervisorial employee‘s
For these reasons, we reject defendants’ arguments. Simply put, we are not persuaded by defendants’ arguments that business-entity agents with at least five employees are categorically exempt from liability for FEHA violations under
III. CONCLUSION
We answer the Ninth Circuit‘s question as follows: The California Fair Employment and Housing Act, which defines “employer” to “include[]” “any person acting as an agent of an employer” (
JENKINS, J.
We Concur:
GUERRERO, C. J.
CORRIGAN, J.
LIU, J.
KRUGER, J.
GROBAN, J.
EVANS, J.