In Reno v. Baird, the California Supreme Court held in 1998 that individuals are not personally liable for discrimination under the California Fair Employment and Housing Act (FEHA).  Similarly, today the Court ruled in Jones v. The Lodge at Torrey Pines Partnership that while employers may be held liable, individuals may not be held financially responsible for retaliation claims in the discrimination context.  Jones v. The Lodge at Torrey Pines Partnership, No. S151022, California Supreme Court (March 3, 2008). 

Factual/Legal Background

Scott Jones sued under the FEHA for sexual orientation discrimination by his employer, The Lodge at Torrey Pines, and retaliation by both his employer and his supervisor. Following a jury verdict for Jones, the trial judge granted the defendants’ motions for judgment notwithstanding the verdict (JNOV) and a new trial. Using the standards laid out in MacRae v. Dep’t of Corrections & Rehabilitation, the trial judge found that there was insufficient evidence of an adverse employment action for purposes of establishing sexual orientation discrimination or retaliation, because none of the alleged retaliatory acts had a tangible detrimental effect on Jones’ employment.

The California Court of Appeal reversed both rulings of the trial judge and reinstated judgment in favor of Jones. The appellate court found that the trial judge had used an overly restrictive definition of “adverse employment action,” because it considered only actions that had a substantial and detrimental affect on Jones’ employment.  Under a totality of circumstances approach, the appellate court reasoned, there was sufficient evidence of an adverse employment action. The evidence supporting the jury’s finding of an adverse employment action, which was not considered by the trial judge, included evidence that after Jones asked his supervisor to refrain from making derogatory remarks about women and homosexuals, he received warning notices based on false charges and was excluded from meetings.  Further, his supervisor continued to use offensive language. The Court of Appeal agreed with the trial judge, however, that under the FEHA an individual supervisor can be held personally liable for retaliation.

Legal Analysis

Holding that individuals cannot be liable in retaliation claims, the California Supreme Court applied its analysis and reasoning in Reno – noting the following five factors supporting its conclusion.  First, individual supervisors can avoid harassment, but cannot avoid personnel decisions (i.e., unlike harassing conduct, discriminatory behavior may be based on adhering to personnel decisions), and thus, individual supervisors/managers should not be held liable for discrimination or retaliation.  Second, given that the FEHA currently exempts employers employing less than five employees from discrimination lawsuits, it would prove incongruent to exempt small employers from liability but hold individuals financially responsible.  Third, permitting personal liability for retaliation could create a conflict of interest when a supervisor must choose between following management policies to make decisions that might be best for the company and subjecting the individual to potential liability (thereby resulting in a
chilling of effective management).  Fourth, corporate decisions generally are collective as opposed to individual.  Finally, it is bad public policy to subject individual supervisors to a threat of a lawsuit every time they have to make personnel decisions.     

The Court also examined what type of employment actions are sufficiently adverse to support a cause of action for retaliation.  Based on the plain language of the statute, Jones argued, that the test of what is an adverse employment action should be broader for retaliation claims than discrimination claims.  The Court disagreed, however, finding that: “When the provisions of section 12940 are viewed as a whole,  . . . we believe it is more reasonable to conclude that the Legislature intended to extend a comparable degree of protection both to employees who are subject to the types of basic forms of discrimination at which the FEHA is directed – that is, for example, discrimination on the basis of race or sex – and to employees who are discriminated against in retaliation for opposing such discrimination, rather than to interpret the statutory scheme as affording a greater degree of protection against improper retaliation than is afforded against direct discrimination.”  As such, the judgment of the Court of A
ppeals was reversed and the case was remanded to the lower court for further proceedings consistent with this decision.

Practical Impact

According to Thomas McInerney, a shareholder in Ogletree Deakins’ San Francisco office: “While retaliation claims oftentimes can be the most problematic to defend, this decision does limit the potential liability for such claims.  It also may make it easier for an employer to remove the case to federal court based on diversity, which could also be helpful depending on the circumstances.”

Note: This article was published in the March 3, 2008 issue of the California eAuthority.

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