*1 Aug. S070177. 1999.] [No. WHITE,
THOMAS M. Plaintiff and Respondent, INC., ULTRAMAR, Defendant and Appellant.
Counsel Shaw, Geraldson, Seyfarth, Dritsas, Fairweather & William J. David D. Kadue and Michael J. Sears for Defendant and Appellant. Mendelson, Durham,
Littler David S. D. Lederman and Henry Arthur M. Inc., Eidelhoch for Beverly as Enterprises-California, Amicus Curiae on behalf of Defendant . and Appellant Abrahams,
Horvitz & Peter Levy, Mitchell C. Tilner and S. Thomas Todd for the American International and Fire Insurance Companies as Exchange Amici Curiae on behalf of Defendant and Appellant. Austin, Berman, &
Sidley A. Jeffrey James M. Harris and Deborah J. Muns for Employers as Amicus Group Curiae on behalf of Defendant and Appellant.
Paul, Walker, Grossman, & Hastings, Janofsky Paul W. George Abele and Christina L. McEnerney California Law Council as Amicus Employment Curiae on behalf Defendant and Appellant.
Larabee & Loadman and Dale R. Larabee for Plaintiff and Respondent. Marshall, Law Offices of Ian Herzog, Devries; Evan D. Ian Herzog; Douglas Broilett; Bruce Wrinkle; McClean; Christine Roland Spagnoli; Wayne James Sturdevant; Levine; Sacks; Smith; R. Harvey Leonard Daniel Robert Tanke; David; Steinberg; Deborah Tony Thomas G. Lea-Ann Stolpman; Tratten; Drivon; Keifield; Lawrence William D. Turley; Steven J. Thor Rosen; Simons;
Emblem; Alexander; E. Harbison David Rick Mary Joseph III; Lebovits; Jr., Moses and David for Consumer Casey, Attorneys as Amicus on behalf of Plaintiff and Respondent. California Curiae Quackenbush William C. as Amicus Curiae on behalf Plaintiff and Respondent. Posner; and California Lawyers Norman Pine for Asso-
Joseph Employment Curiae of Plaintiff ciation as Amicus on behalf and Respondent. Opinion
CHIN, J. resolve a in the Courts of granted review to conflict Appeal We define term agent” determining over how statutory “managing under Civil Code section subdivi damage liability case, courts, this (b).1 sion Some the Court including broadly *4 limited to include define the term who have decision- employees supervisory to but hire and fire authority, possess ability company making employ ees. Banker Inc. (See, Group, (1988) v. Coldwell Commercial e.g., Stephens Others limit the (Stephens).) Cal.App.3d to those substantial discretion in term’s who exercise application employees so determine decisionmaking their that their decisions ultimatély (See, Kelly-Zurian Shoe Co. e.g., Cal.App.4th Wohl policy. (Kelly-Zurian).) 421-422 Cal.Rptr.2d the mere with the Court of conclusion that to ability We disagree Appeal’s a hire fire renders a managing agent and supervisory employee Instead, (b). Legislature conclude under section we term to include those intended the “managing agent” only corporate employ- ees exercise substantial in their authority judgment who independent statutory references are Code unless noted. 1A11 to Civil otherwise damages (as damages) plaintiff exemplary “for the Section allows to seek by obligation when can show “clear and arising plaintiff breach of an from contract” fraud, guilty or convincing oppression, that a “has been malice.” evidence” defendant (§ (a).) subd. (b) qualifica- Legislature special to to add added subdivision section states, (b) part, an damages. tion Subdivision in relevant employer those employee’s based acts unless “the employer not be liable for on an shall employed him or her employer knowledge employee had advance of the unfitness or disregard rights safety of others or authorized ratified with a conscious guilty oppression, personally are or was wrongful conduct for which awarded fraud, qualification corporate employers, The statute an additional or malice.” includes knowledge and punitive damages unless “the conscious may who not be liable for advance authorization, fraud, on the oppression, part or act of or malice disregard, [is] ratification officer, director, (b).) (§ agent corporation.” subd. managing corpo- that their decisions so corporate decisionmaking discretion and rate The of a corporate policy. scope employee’s on a our test is therefore a of fact for decision question case-by-case under basis. noted, to the extent we the Court of its decision
As disagree under conflicts with our construction of “managing agent” Nonetheless, (b). we after affirm its favor judgment plaintiff’s Salla, and the concluding manager Lorraine defendant’s zone fired the statute. who was under plaintiff, Facts A.
Plaintiff Thomas M. convenience store (plaintiff) White worked Ultramar, He to (Ultramar). manager owned Inc. assistant promoted Gossman, in November The store Russ who hired manager, 1992. plaintiff, told him ignore written drink company’s coffee, could have free fountain sodas but if used their they only they The their cups. own to drinks if used policy required employees pay Gossman, Asemka, The store who company cups. manager replaced Larry told also that he did not written plaintiff follow the store’s drink policy. Asemka was later asked fired. He his plaintiff testify unemployment benefits to do hearing, agreed so. was in the at the hearing morning; begin shift store did not plaintiff’s
until afternoon. On the morning went to the store hearing, plaintiff Fimbres, another up Ernest had also pick agreed testify employee, *5 Plaintiff, time, at the hearing. who was not on at the entered the store duty fountain; and drew a soda drink from the soda Fimbres also took a the from fountain. Neither Fimbres sodas nor for the even plaintiff paid though they used company in violation the written drink cups company’s policy.
Plaintiff testified at trial that the new store Thomas manager, McKinney, soda, saw him take the that he asked his the begin to shift earlier in plaintiff so, that do and plaintiff to that he said else as day, agreed nothing plaintiff and Fimbres left the store drinks. without for their testi- paying McKinney fied that he told the and Fimbres were to for plaintiff they supposed pay He drinks. called Salla and asked her fire them did to when permission not. to Salla told would consult the According McKinney, him she with human resources before action department taking any against company’s employees.
Plaintiff, Salla, Asemka’s hearing. and Fimbres testified at unemployment When went to after the told plaintiff McKinney work him he was hearing, to ordered him wait outside the until Salla store arrived. suspended arrived, better to Salla told him he when she According plaintiff, “kn[e]w ' told could not than to do that Plaintiff her she against like something [her].” him for she she firing fire him at Asemka’s was testifying hearing; replied she fired also Salla testified trial that stealing soda. Fimbres was fired. was drink. The store refusing plaintiff pay equipped 24 hours a Salla system day. day On videotaping designed operate however, the tape; fired there was of several minutes in plaintiff, gap and Fimbres time drinks got covered the when missing tape period told had to them they in the store McKinney, manager, purportedly pay. Ultramar, alia,. he that claiming, wrongfully
Plaintiff sued
inter
was
hearing,
terminated in retaliation for
at the
testifying
unemployment
under
Atlantic
Tameny
violation of
public policy
company policy2
Co.
Ultramar of reversed appealed. attorney Tameny otherwise favor on his judgment but affirmed the plaintiff’s claim. The court also the award Ultramar against upheld punitive damages 3294, on the section subdivi- ground Salla was under We sion because she was who fired him. supervisor review, Ultramar’s for our to the and limited review granted petition punitive damages and the construction of under section question “managing agent” (b).
B. Background amendment,
Before its “In an action for the 3294 provided: contract, of an breach obligation arising not from where defendant has fraud, malice, guilty been oppression, implied, express plaintiff, in addition to the actual damages, damages recover the sake may (Stats. example defendant.” ch. way punishing § 621.) The statute enacted originally was with minor amendments in 1901 and 1905.
Courts section 3294 to mean interpreted that a California was corporation itself, liable punitive only through if the damages acting corporation affairs, those who its managed general engaged requisite oppression, fraud, or malice. could be liable for Although corporation compensatory doctrine, tort under the employee’s respondeat superior where it corporation neither responsible directed nor ratified act. personally wrongful case, stated As in an “The entire basis doctrine of vindictive early himself, is that the is sued has [punitive] damages person, been guilty recklessness or which wickedness amounts to a that should criminality individual; for the and as a but to punished good society, warning such award master for the damages against criminality servant (Warner a man for which he that of is not v. Southern punish guilty.” italics; (1896) Co. 187], 113 Cal. original P. see also [45 Pacific Lowe v. Yolo P. County (1910) etc. Co. 157 Cal. 511-512 Water water [affirming damages award for with- against company water, holding irrigation after noting company’s president general directors, manager, who acted on behalf of the board of made the jointly decision]; wrongful Hartman Shell Oil Co. oppressive damage 248-250 Cal.App.3d [upholding punitive *7 570 after at the level of finding wrong
award was authorized responsible (1926) v. Industrial Acc. Cal. management]; Gordon Com. 199 corporate 420, 849, P. 58 that statutes 426-427 A.L.R. [noting governing [249 as define the term one has agent” discretionary who corporations “managing business]; of direction and control over Towt v. Pope powers corporate (1959) 528-529 P.2d workers’ compen- Cal.App.2d [336 276] [in action, officials, sation “executive vice- distinguishing presidents, of from fore- agents” presidents, corporation superintendents, men, and of “those in control and immediately management particular his work and his employee, place employment”].) this court to the of Torts looked Restatement Second section 909 be determine when insurer liable for might punitive based on its denial benefits. Mutual agent’s (Egan v. wrongful (1979) P.2d Omaha Ins. Co. 24 Cal.3d 822-823 Cal.Rptr. (Egan)] see Hale Farmers Ins. Exch. Cal.App.3d 146], on other Cal.3d at Egan, supra, p. disapproved grounds 5.) fn. draft of tentative the Restatement provided punitive “(a) allowed if authorized the damages were principal doing act, (b) or manner of the was unfit and was agent principal [ft him, (c) reckless in or agent manage employing employed [ft (d) or rial and was in the capacity acting scope employment, [ft of the the act.” or a ratified or principal approved principal (Rest.2d (Tent. 85.) (The 1973) Torts Draft No. Mar. § current differs version Restatement Second Torts in its substitution of or a wherever managerial agent” primarily “principal draft.) in the section’s tentative “principal” appeared Comment b to Second of Torts stated the section 909 Restatement rationale on when behind imposing damages liability employers punitive rule stated in this wrongful their conduct: “The engaged make damages, Section from the reasons for which awarding punitive results is it one who himself ordinarily damages against to award improper punitive however, is, It vicariously. innocent and therefore liable personally only has the rule to make liable an employer within the general spirit to be who was retained servant known recklessly employed vicious, . Nor it unjust if the harm resulted from that characteristic. . . has acted should be responsible on whose account another person if, be with full knowl- act for he would not outrageous which otherwise it, done, or, in cases of the act and the in which it was he ratifies edge way damages, for the act but not subject which he would liable cases, are . . he of it. . In these expresses approval conduct, own wrongful because of granted principal’s primarily [ft
571 no fault a or other there has been on of Although corporation part a either an outra- managerial if in a does person acting employer, capacity subordinate, act the act of geous approves imposition serves as a deterrent to of unfit damages employment upon employer Torts, b, 468.) (Rest.2d for com. persons important positions.” p. § faith an of the against involved a bad claim insurer breach Egan covenant fair based failure good faith and on the of two dealing employ- ees to a claim before insurance The investigate denying coverage. adequately that, Restatement, court an concluded under insurer’s liability puni- title, tive should not on on turn official but whether either its damages any two acted in a on the employees “managerial capacity,” depending “degree discretion decisions that will employees possess making ultimately 822-823.) determine 24 at corporate (Egan, Cal.3d policy.” supra, pp. Egan “ observed that defendant should not be to shield able itself ‘from an and liability by giving nonmanagerial title to him employee relegating ” (Id. crucial 823.) decisions.’ at the insurer’s p. concluding worked in a that the capacity, Egan emphasized exercised substantial over decisions that discretionary authority resulted in an “ad hoc formulation of their actions could be policy,” (Id. 823.) to the at imputed employer. p. 24 Egan, Cal.3d we
Following supra, revisited punitive damages in a case question involving claim of a engineer’s that managers large international treated him corporation (Agarwal v. Johnson maliciously. 25 Cal.3d P.2d (Agarwal).) Again, we test to applied Egan's conclude that the fired the managers who were vested of discretion degree over decisions that would discretion, concluded, This we corporate policy. sufficient to against the support imposing punitive damages corporation under former section 952.) (Agarwal, supra, 3294. Cal.3d p.
C. Section Subdivision Intent Legislative After Egan, supra, 24 Cal.3d Agarwal, supra, Cal.3d (1979-1980 drafted Legislature Senate Bill No. Reg. Sess.) codify and refine further the for employer liability. requirements punitive damages (b) (Stats. new amendment added subdivision to section 3294. ch. 1242, 1, amendments, 4217.) Following minor the statute § subsequent now states in “An shall not be liable pertinent [punitive] part: employer (a), to subdivision of an based acts of the pursuant upon employee unless the had advance employer, knowledge unfitness employer him or her with a conscious employed disregard wrongful of others or authorized or ratified the conduct rights safety are awarded or was guilty oppression, which personally fraud, or to a the advance knowl- corporate employer, malice. With respect *9 authorization, or act oppression, and conscious edge disregard, ratification of director, or must be an fraud, part officer, managing agent or malice on of 3294, (§ (b), added.) The drafters’ goals subd. italics corporation.” of on who were merely were to avoid imposing punitive employers or and to distinguish ordinary respondeat superior reckless negligent (See Weeks v. Baker & damages. from corporate liability 1128, 510]; see (1998) 63 1150-1151 Cal.Rptr.2d Cal.App.4th [74 McKenzie 704, (1994) 712-713 Inc. v. Court 8 Cal.4th College Hospital, Superior also 898, that, 1979, after the Legislature 882 P.2d Cal.Rptr.2d [noting [34 894] be held liable for circumstances under which an limited employer Section 3294 is no silent on who bemay punitive damages].) longer respon- to a For corporate sible for imputing punitive damages corporate employer. 3294, (b), that the section subdivision punitive damages liability, requires be committed act rise to wrongful giving exemplary “officer, director, or managing agent.” construction, of we ascertain statutory
Under settled canons general (Dyna-Med, intent in order to effectuate the law’s Legislature’s purpose. 1379, (1987) 43 1386 v. Fair & Com. Cal.3d Employment Housing Inc. [241 67, 1323].) must look to the statute’s words give 743 P.2d We Cal.Rptr. (1992) Inc. (DaFonte v. ordinary meaning.” Up-Right, them their “usual 238, 593, 140].) “The 2 828 P.2d statute’s plain Cal.4th 601 Cal.Rptr.2d [7 unless are ambiguous. controls the court’s its words meaning interpretation should, need, no court or If the of a statute is language unambiguous, plain (Kobzoff v. intent.” Los Angeles of go beyond pure legislative expression 851, (1998) Cal.4th Medical Center County Harbor/UCLA [80 3294, 514].) Because section 968 P.2d Cal.Rptr.2d we turn agent,” define term “managing expres does specifically it statute’s relative context.3 sions of intent to construe in the legislative inter statutory to these rule specific In addition general principles, is, That Leg to our task. when pretation applicable especially statute, judicial it was aware fully prior amends a we presume islature Verdes Peninsula (See Faculty Assn. v. Palos construction. Palos Verdes 359, 580 P.2d (1978) 21 Cal.3d Cal.Rptr. Sch. Dist. Unified Verdes).) (Palos request judicial notice certain May granted that we take we Ultramar’s 3On (b), including committee legislative history section from the materials co-authors’) Assembly and legislators’ (including comments from the reports and individual Senate committee bill files. us, these we believe that in amend Using rules interpretive guide Egan, supra, (like intended Cal.3d ing Legislature 823) to limit to those damage liability corporate punitive exercise substantial over decisions independent authority judgment Our view finds in a support policy. principle which “seeks to ascertain common characteristics of the same things among class, kind, are nature when enactments.” cataloged legislative (Harris Growth Investors XIV Capital 52 Cal.3d ejusdem generis principle].) 805 P.2d [describing that when requires statutory following we terms principle interpret general classes listing we must construe the specific persons things, *10 terms as or of the same nature or class as applying things general persons “ ' those listed. The “is on the that rule based obvious reason if the [writer] sense, had intended the be words to used in their general unrestricted [he not the would have mentioned or classes of particular things things she] ”’ (Id. which in 1160.) would that event become mere at surplusage.” p. the doctrine to aid our Using we note interpretation “managing agent,” that (b), section next subdivision that term to the terms placed “director,” and “officer” that intending a be more than a managing agent mere The supervisory employee. agent must someone who managing exercises substantial discretionary over decisions that authority ultimately Thus, the corporate by selecting agent,” term policy. “managing “director,” and it in the same as placing “officer” the category Legisla ture intended to the limit class of whose exercise of discretion in result corporate employer’s punitive damages.
Our interpretation intent in section Legislature’s adopting (b), Kelly-Zurian, subdivision is shared supra, 397. Cal.App.4th Kelly-Zurian held that are not under supervisory employees managing agents (b), unless in fact exercise substantial discre tion in their (Kelly-Zurian, supra, decisionmaking Cal.App.4th capability. 421.) at Kelly-Zurian, that p. sexual harassment action resulted in a verdict plaintiff’s the Court of held that compensatory damages, was not entitled to because evidence was punitive damages that her was a lacking agent under section supervisor managing he though even was administrator who had direct company over her (Kelly-Zurian, supra, authority employment responsibilities. 421-422.) at Cal.App.4th pp.
Kelly-Zurian based its decision on the failure to evi plaintiff’s present dence her in showing supervisor was whereas engaged policymaking, (Kelly- defendant substantial evidence to the corporation presented contrary. Zurian, supra, reasoning, Kelly-Zurian 422.) at For its p. Cal.App.4th “ that
relied observation determination whether Egan’s on ‘[t]he [i.e., are not necessarily act in a does managing agents] capacity Rather, in the critical inquiry on their “level” hinge corporate hierarchy. that decisions making is the discretion the degree employees possess 24 Cal.3d at policy.’ (Egan[,] supra, pp. will determine 421.) Kelly-Zurian at 822-823.)” (Kelly-Zurian, supra, Cal.App.4th p. “had that immedi supervisor observed the evidence showed specifically ate with the responsibility super and direct control over plaintiff] [the However, the fact plaintiff] reported her vising performance. [the [her her he to terminate merely that had supervisor] authority reflected] (Id. at pp. not he was supervisor, managing agent.” [he] [her] 421-422, italics.) had no The court original emphasized supervisor That to establish or business change company’s policies. authority (Id. 422.) another state. rested in the parent company court main was in of business charge opera also considered office tions; re guidelines it set business policies performed Moreover, could not set the plaintiff’s salary views. supervisor (Ibid.) office’s All a raise for her without main authorization. approve were Kelly-Zurian factors considered part determining They exclusive list. were equation, although important *11 conduct could justify whether the was a whose supervisor managing agent his damages against employer. awarding punitive the “managing of Kelly-Zurian’s The Court Appeal rejected approach concluding “Egan rejected agent” question, erroneously expressly of determin- for ‘managing agent’ narrow construction term purposes Instead, for the Court of followed damages.” Appeal ing liability punitive 1394). Cal.App.3d recent decision 199 Stephens (Stephens, supra, more manage- a national concluded that district of Stephens property supervisor 3294, of section meaning within the agent ment firm was a managing direct control over (b), because he “had immediate and subdivision evaluating he and was directly responsible decision to demote plaintiff, 1404.)4 In at p. 199 (Stephens, supra, Cal.App.3d plaintiff’s performance.” to include agent Kelly-Zurian’s reasoning, defining managing rejecting hire and fire ability all who possess essentially supervisory employees workers, a managing agent concluded that Salla was the Court Appeal over she “had control supervisory [plain- section 3294 purposes'because the decision the most immediate control over and had employment tiff’s] 1404, page at to the extent it conflicts Stephens, supra, Cal.App.3d disapprove 4We 199 Appeal Court of “managing agent” term. We also note that the with our construction 952, mere arguably implied Agarwal, supra, page 25 at language relied Cal.3d on fire ability to hire and managing agents long as as have supervisors could be construed, disapprove it. Agarwal we language so employees. To extent
575 him.” fire In so held that the doing, language Court implicitly (b), is to render all enough broad corporate note, Of how- agents damage potentially responsible liability. ever, is fact that the court did not address whether Salla specifically that ultimately exercised substantial over decisions discretionary authority determine corporate policy.
The Court of broad of the term overly “managing Appeal’s interpretation “officer, director, agent” statute’s effectively abrogates Inc., agent” As amicus curiae requirement. Beverly Enterprises-Califomia, behalf, on Ultramar’s in the appearing explains, overwhelming majority cases, definition, had wrongdoer, employment authority supervisory over rule A as can plaintiff. defining managing any supervisor hire or fire but who does have substantial over employees, decisions that corporate allows policy, effectively pu- nitive damage liability more than tort proof anything without simple which we have is liability, long recognized (Neal insufficient. v. Farmers (1978) Ins. 21 Exchange Cal.3d 582 P.2d Cal.Rptr. [148 (Neal); (1979) Taylor Superior v. Court 24 Cal.3d Cal.Rptr. P.2d [something more than mere commission of a tort always required If we mere damage liability].) equate supervi- status, sory status with we create a rule where managing agent will corporate are liable for employers punitive damages most cases. Such employment a rule would ignore Egan’s sound reasoning, defeat intent Legislature’s fraud, to discourage acts of or malice under section oppression, and end our on the limited role and deterrent emphasis “to purpose punitive damages awards: wrongdoers thereby punish (Neal, deter the of wrongful commission acts.” Cal.3d fn. supra, 13; see also Adams Murakami Cal.3d *12 318, 813 P.2d deter quintessence damages is to punitive 1348] [“[T]he future misconduct the . . by .”].) defendant . It also might discourage from employers faith efforts to enforce making good that forbid policies (See Assn., discrimination or retaliation. Kolstad v. American Dental supra, 527 at U.S. S.Ct. at pp. 539-540 not be may pp. [employer [119 2126-2127] liable for managerial agents’ decisions that are discriminatory employment to faith contrary good efforts to with title employer’s VII of Civil comply 1964].) Act of Rights
Other Court of cases have a also broad rejected interpretation term. 22 managing agent Kelly-Zurian, Like supra, Cal.App.4th page 421, 3294, these cases have Egan, interpreted 822-823, 24 Cal.3d at supra, pages to damages permit imposition on an who has vested the with employer substantial offending employee
576 that determine authority ultimately corporate over decisions discretionary Richards, Eichler, (See, (1985) Hill 164 Hobbs v. Bateman Inc. e.g., policy. 174, that office 193 evidence Cal.Rptr. Cal.App.3d [substantial of discretion in decision making that broad manager degree “possessed Tire which determined Siva General employer’s] corporate policy”]; [the & Rubber Co. [no Cal.App.3d that did not claim management when evidence support to written standards for had discretion exceed corporation’s addition, Court the Ninth Circuit of Appeals supports repairs].) Glovatorium, (See, (9th Cir. Corp. we Inc. v. NCR interpretation adopt. e.g., 1982) 684 in the determina- [holding key F.2d that inquiry “[t]he ‘the of discretion degree tion of whether an is employee managing agent decisions will determine making ultimately employees possess ”].) corporate policy’ (b), is also consistent
The of section legislative history our and our view that the Legislature construction of “managing agent” intended to fact to limit section 3294 application cor- over exercise substantial decisions times The bill section 3294 was revised several amending porate policy. 1242, 1, (Stats. on its ch. before settled final version. Legislature § Senate, 4217.) “. . the advance amended the bill . provided As p. ratification, fraud, malice must be on or act of or knowledge, oppression, or in order for it of a senior officer officers corporation executive part Amend, (Sen. to Sen. Bill No. 1989 to be liable for [punitive] damages.” Sess.) 1980.) also inserted the term (1979-1980 Legislature The Reg. May “reckless,” Restatement’s so that an “conscious disregard” place research not be liable to merely recklessly failing found employer Amend, to Bill No. (See Conf. Sen. background. a potential employee’s (Assem.); (1979-1980 Sess.) (Sen.), Reg. Aug. Aug. bill, Torts, 909, 467.) changing Rest.2d amended Assembly § or . . “senior officer officers” . “agent employed executive phrase allowing impute punitive managerial capacity,” potentially in a if the “was employed to the corporation princi- or managerial capacity” principal “[t]he Amend, (Assem. act.” to Sen. Bill. No. 1989 ratified pal approved 1980.) But the (1979-1980 Sess.) rejected July Legislature Reg. the Leg- to the Restatement Before language. return Assembly’s attempt 1980, a conference August joint Senate Bill No. 1989 in late islature enacted director, “officer, or bill to substitute committee amended the *13 Amend, (Conf. . . a managerial capacity.” for agent” “agent. employed Sess.), (1979-1980 Reg. supra.) to Sen. Bill No. 1989 (b), the conclude that in subdivision amending We therefore not depend intended Legislature principal level, on the on but extent to which exercise they employees’ decisions that determine authority ultimately substantial over discretionary Thus, have broad corporate policy. supervisors discretionary powers and exercise substantial corporation discretionary authority no discretionary who have managing agents. Conversely, supervisors over would ultimately decisions that corporate policy not be agents ability considered even have the managing though they may to hire fire other In order to that an is demonstrate employees. employee true under section managing agent plaintiff have that the exercised seeking punitive damages would show substantial over of a discretionary authority significant aspects corporation’s business.
D. Was Salla Agent"? “Managing detail, did Although Court not her it job review functions Salla, concluded that the zone who fired was his manager plaintiff, supervi- sor, and was therefore a (b). under section managing agent term, however, Under our construction of the to the Court of contrary Salla’s Appeal, supervision plaintiff her to fire him alone were ability Nonetheless, insufficient to make her a managing agent. all the facts viewing favor the trial court conclude that was a judgment, we Salla managing as we construe the term. Ultramar, As the zone Salla manager responsible managing stores, area, eight including two stores in the San and at least Diego her, The sixty-five individual store employees. managers reported Salla reported to heads in the department retail corporation’s management department.
The supervision retail stores and eight sixty-five sig- nificant of Ultramar’s aspect business. testimony Salla’s superiors most, all, establishes that if delegated responsibility these stores to her. The fact running that Salla with other spoke and consulted the human resources department firing before does not detract from her admitted to act ability of those sources. independently sum, In Salla exercised substantial over vital discretionary authority aspects of Ultramar’s that included business numerous on a daily stores basis and making significant decisions both store and affecting company White for at an Salla policy. firing testifying unemployment hearing, exercised substantial discretionary authority over decisions in a determined most crucial corporate policy Ultramar’s business. aspect
E. Conclusion (b),
Salla was a under section subdivision whose agent managing For conduct lead to on Ultramar. this damages imposing punitive alone, we affirm the Court of Appeal judgment. reason J., Kennard, J., Baxter, J., Brown, J., J., C. George, Werdegar, concurred. what I
MOSK, J. clarify concur in the result but write separately I test understand to be the correct under Civil Code (b), for the acts of a liability “managing agent.” for determining corporate
I
that a
Code section
in relevant part
Civil
provides
based on the wrong-
be liable for punitive damages
corporate employer may
if,
conduct, there
ful
regard
acts of an
wrongful
authorization, ratification or
“advance
and conscious
knowledge
disregard,
officer, director,
fraud,
act
or malice ...
on the
part
oppression,
corporation.”
under the statute?
is meant
the term
“managing agent”
What
state,
of corporate
As the
we have
addressed
majority
previously
scope
based on
their
damages
wrongdoing
punitive
Mutual
Ins.
Egan of its a claims manager based on the failure of two employees, contract coverage. a claim before investigate denying claims analyst, adequately be liable might We. determined that the insurance company the earlier version on the under wrongdoing, based employees’ version, 3294, which, was enacted with like present Civil Code section of objectionable “discourag[ing] perpetuation principal purpose 820). 24 Cal.3d supra, policies” (Egan, of the Restate that California follows approach we observed Egan, Torts, can properly Second of which states ment
579 “ alia, inter when a against awarded ‘the was principal, employed ” and mangerial acting (Egan, capacity scope employment.’ (Tent. at supra, citing Cal.3d Rest.2d Torts Draft No. Mar. p. 1973) (hereafter We “the Restatement).) sometimes that § explained critical is the of discretion the inquiry degree making employees possess ultimately corporate policy.” (Egan, supra, that decisions will determine 822-823.) Cal.3d at pp. to the Responding that neither was involved in argument employee
“ ” we that ‘high-level making,’ determination policy emphasized “[t]he whether act in a . . . does not employees managerial capacity necessarily on their ‘level’ in the hinge (Egan, Cal.3d at corporate hierarchy.” supra, 822.) title, p. should turn on official but on Corporate liability rather any the extent of discretion conferred on the employee by corporation. “ ‘Defendant should not be allowed to insulate itself from liability by giving an title and to him crucial nonmanagerial relegating ” (Id. at 823.) decisions.’ We observed that the two employees possessed broad and supervisory decisionmaking authority regarding disposition claims: “The exercised two authority results employees] necessarily [the ad hoc (Ibid.) formulation of policy.” alia,
In Agarwal, the plaintiff was awarded punitive damages inter against, mistreatment, harassment, his after he employer suffered including racial the hands of two his On supervisors. the defendants contended appeal, the trial court’s jury instruction on employer liability for the willful and malicious torts itsof failed to between the distinguish employer’s compensatory held damage liability. any We error was harmless because vested in the was sufficient supervisors support imposing punitive damages against corporation. Specifically, had discretion to they to menial assign evaluate his projects, location, his performance, change office him deny to attend permission seminars, educational and fire him on a reason. It was pretextual uncontro- “ ” verted that were (one in a was the ‘employed managerial capacity’ manager services for the project for 25 to 30 corporation, responsible assistant), in 3 the other his were departments, directly respon- sible for had “the supervising Agarwal’s performance, and most immediate control over the decision to terminate him.” (Agarwal, supra, Cal.3d at p. 952.) rule under both is thus Egan Agarwal corporation may
be liable for
based on the
wrongful conduct of an em-
who exercises substantial
ployee
authority over decisions that
discretionary
aspect
corporation’s
over
corporate policy
turns not on the
classification or
business. Liability
employee’s
cases,
title,
such
but on the extent of his
discretion. In some
decisionmaking
matter, a
Agarwal
hiring
as
and the present
supervisory employee
not, however,
That does
agent.”
will
as
firing power
qualify
“managing
fire,
hire
mean that all
or all
with the
are
personnel
supervisors,
power
*16
facto
Nor are all
makers
“man-
agents.”
necessarily
ipso
“managing
policy
must be decided on its facts.1
Each case
aging agents.”
Salla,
matter,
made the initial
Lorraine
who
decision
supervisor
this
in
an
com-
to terminate
retaliation for
at
testifying
unemployment
plaintiff
was a “zone
for
manager” responsible
overseeing opera-
pensation hearing,
such,
of
As
she
tions
several convenience stores
the San
area.
was
Diego
Ultramar,
(Ultra-
not a
or final
maker for
Inc.
manager
high-level
policy
mar)—a
that
a chain of stores and gasoline
large corporation
operates
effect,
California. In
she was a local
throughout
supervisor;
service stations
indeed,
she
lacked
to
of her
according
testimony
supervisors,
apparently
to terminate
without the
of Ultramar’s human
the authority
approval
and
Nor did she
to set
manager.
any
resources
division
manager
purport
of
for
or official
termination
testi-
concerning
employees
firm-wide
Like the
and
hearings.
Egan
Agarwal,
fying
unemployment
however,
in the ad hoc
she exercised
that
“necessarily resulted]
(Egan, supra,
formulation of
that
affected
adversely
plaintiff.
policy”
823.)
she
in local
of
practice
retaliating
Cal.3d at
Specifically,
engaged
of
hearing
an
testified at the unemployment
who
against, by firing,
A
manager
authority may
another Ultramar
with such
employee.
corporate
deemed a
under Civil Code section
subdivi-
fairly
managing agent
be
(b).
is
analysis
Egan, supra,
sion
That conclusion
compelled by
815-817, and
As acts majority Legislature, by explain, “officer, director, Egan intended managing agent” codify The Senate Code had Agarwal. bill amend Civil limited damages to “senior executive wrongdoing officer or officers.” The Assembly version substituted the Restatement’s or a agent.” The final conference committee phrase, “principal version, however, substituted the words “officer” and “director” the word and used term “principal,” “managing agent.” What was the of this final significance change? “Principal” simply another term for “officer” and “director.” There is no substantive difference terms “managing between “managerial agent”; agent” word *17 “of, to, of, “managerial” means or characteristic a a relating manager,” and conducts, directs, is “one that a “manager” that manages: person or super (Webster’s vises something.” (3d New ed. It 1961) 1372.) Internat. Dict. p. would thus that the ultimate appear legislative intent was to retain the test the under Restatement Second of Torts section 909—which uses almost identical in a language to referring “principal managerial agent”—as articulated in our decisions. This is conclusion by supported contemporane ous legislative indicating materials that the bill’s and even its sponsors, Association, opponents, including the California Trial Lawyers that believed it codified rather than narrowed existing law.2 2Thus, committee, committee, member knowledge conference with of the requested that a letter be published in the Senate regarding significance Journal of the bill, in adoption, the final of the version “principal managerial agent.” term The letter that purpose clarify states its “to is the intent the Conference Committee and to set representations forth the that were made during to [the member] Conference Committee by proponents legislation, The intent of as amended in . . [f] conference . [the bill] respect with ‘managing agent’ to the term is not to alter the of corporate liability rule Roberti, (Sen. as it Egan related to that term in the .” case of . . . David A. 28, 1980) letter to Sen. (1979-1980 President Pro Tern. James Mills (Aug. Reg. R. 8 Sen. J. Sess.) 14548.) p. bill, legislators urging letters to individual them vote for the sponsors represented measure’s codify that the bill “would existing establishing case law liability employers (See, e.g., the acts of their . . . .” from Letter Associa Reform, 23, 1980.) tion for Tort understanding California June The same is reflected in the report: “Although opposed Governor’s enrolled bill concept by bill is the California Association, Lawyers they Trial codify existing concede that it does little more than caselaw. Office, (Governor’s
This also the understanding clear of the final conference committee.” Affairs, Legal (1979-1980 Dept. Sess.) Rep., Reg. Enrolled Bill Bill p. Sen. italics added.) only contrary The intent is indicated identical letters authored two individual legislators, Assembly one Speaker Tempore from the Pro Speaker, addressed to the sign another from the to the urging bill’s author Governor him to the bill. These letters a similar con- cases in have reached uniformly Court of Appeal point (1994) 22 Kelly-Zurian clusion. In v. Wohl Shoe Co. Cal.App.4th particular, 457], states that is consistent with Agarwal Cal.Rptr.2d 419-422 [27 that a and recites the Restatement section 909 rule Civil Code section acts an em- be liable for may corporation The Court of case present in a “managerial capacity.” ployed did not hold that Kelly-Zurian, “Egan characterized observing similarly to be be in make actually directly must employee position Agarwal deemed a and that held managing agent,” supervisors under the statute. agents managerial authority may managing (1983) 146 158-159 Cal.App.3d Siva v. General Tire & Rubber Co. 51], also consistent with our decisions in Egan There, an claim his brought against Agarwal. products that a from a tire. Siva arising defectively repaired explains employer (b), “is an as the term is used in section agent, . . .a . . managerial capacity individual who has the discretion act ‘. making corporate policy.’ decisions will [by] 159.) (146 It determined that workers Egan.]” [Citing Cal.App.3d there tire in a because acting managerial capacity, were repaired “had the discretion to exceed written was no evidence employer’s] [the manager this It then concluded that the plant standards nature.” repairs because he knew the extent of did act in clearly capacity, *18 written standards to to the tire but failed to follow damage company’s it, to the standards. disregard local policy” correct thus creating “implicit no to create (Ibid.) express It that the had plant manager appears those standards. violating but he made ad hoc policy by corporate policy, in and decisions have also rule applied Egan Other Court of Appeal (1998) (See, Baker & 63 Cal.App.4th Weeks v. Agarwal. e.g., McKenzie 1128, “we have no and that Egan noting 1151 [citing Cal.Rptr.2d [74 510] 3294, than (b),] does no more doubt that Code section subdivision [Civil law”]; Banker Commercial and refine v. Coldwell codify existing Stephens 1394, (1988) 1403 [citing Inc. Group, Cal.Rptr. 199 Cal.App.3d [245 606] 247, (1986) 250 v. F. Co. 180 Cal.App.3d Pusateri E. Hutton & Agarwal]; Eichler, v. Bateman Hobbs [citing Agarwal]; Egan 526] [225 “manage- by eliminating the term repudiated Restatement standard represent that the bill using “managing agent” apparently Because letters were capacity” and instead. these rial Guaranty Co. (see Co. v. Stewart Title Legislature Quelimane made available to the entire 709, 26, 45, 513]), by the (1998) P.2d were contradicted Cal.Rptr.2d fn. 960 19 Cal.4th 9 [77 committee, and indicate of the conference representing Journal intent letter in Senate entitled report, are in the Governor’s enrolled bill purpose a different from that reflected weight. no to
583 Richards, (1985) Hill Inc. 193 Cal.App.3d Cal.Rptr. [210 reason, For would [citing Egan Agarwal].) this it appear (in amendments section since Legislature’s repeated 1992), without altering “managing agent” language (b), signifies construction. judicial approval (People (1996) Masbruch 13 Cal.4th 920 P.2d Cal.Rptr.2d a ‘Where statute is framed in of an on the earlier enactment same language [“ construed, or an analogous enactment has been subject, judicially Legislature presumed have that construction.’ adopted (opn. ”] Chin, J.).)
Ultramar urges the term should “managing agent” be construed mean someone with final only akin to that of a policymaking authority very director or officer. I high-ranking Like the a reject such majority, standard as too narrow and too vague; it would strictly applied, appear case, absolve corporate employer every almost liability particularly large corporation levels of many hierarchy.
I also reject any that Ultramar could avoid future implication liability by instituting formal simply its against retaliatory firing employ- ees; I doubt that is what the Legislature enacting intended Civil Code (b). Ultramar cites the recent United Su- States Court preme decision Kolstad v. American Dental Assn. 527 U.S. 494], S.Ct. 144 L.Ed.2d that it should our urging guide Kolstad, decision herein. In which involved the employers statutes, under the punitive damages federal antidiscrimination court high general common law adapted agency light concepts specific of title VII of the Civil objectives (42 Act of et Rights U.S.C. 2000e § state, theAs seq.). majority we have no occasion to to what consider extent this, those same be objectives relevant in might case any hypothetical, under Civil Code section 3294. But in no should event a corporation to shield itself permitted from of a liability by expedient having pro *19 forma official by policy—issued high-level management—while conferring broad discretion in lower-level ain implement policy company or otherwise discriminatory manner. It is does— culpable company what including of its it through discretionary acts what just employees—not in a stated says or written that matters.3 policy, As in Egan Agarwal, regardless of stated or written official any policy Ultramar, had Salla sufficient discretion to necessarily take actions that 3Indeed, the “company record indicates that it was a policy” violation of Ultramar’s against retaliate unemployment compensation hearings. who testified at over the
resulted the ad hoc formulation aspect corpora- reason, For rise to cause of action. plaintiff’s tion’s business giving for Ultramar. On this view she be treated as may my fairly basis, I Ultramar. against would affirm the judgment J., concurred.
Werdegar, for a was denied October 1999. rehearing Appellant’s petition