California - Scott Jones v. The Lodge At Torrey Pines Partnership:The California Supreme Court Denies Individual Liability in FEHA Retaliation Claims
May 14, 2008
Linda Auerbach Allderdice- Los Angeles
In Scott Jones v. The Lodge At Torrey Pines Partnership (Torrey Pines), decided March3, 2008, the California Supreme Court held that “nonemployer individuals” such as supervisors and managers cannot be personally sued for retaliation under the California Fair Employment and Housing Act (FEHA). But, significantly, the Court did not decide whether employees who are individually liable for sex harassment may also be individually liable for retaliating against someone who “opposes or reports that same harassment.”
Scott Jones managed The Grill, a restaurant at the Lodge at Torrey Pines, a resort in La Jolla, California. Soon after Jones started reporting to Jerry Weiss, the new food and beverage director, Jones’ work environment dramatically changed. After enduring daily “gay-bashing” jokes about himself and offensive and inappropriate sexual comments about female employees, Jones complained to the human resources director about sexual orientation discrimination and harassment directed to him and about harassment of female co-workers. Instead of receiving the desired relief, Jones received several performance warnings, which were unusual given that he had been promoted into increasingly responsible positions. Jones was then placed on probation for poor performance. After Jones took a disability leave of absence for “on-the-job-harassment,” he was asked to accept a different position at another hotel property. Jones declined the offer, which he felt was a demotion, and filed a charge of discrimination with the Department of Fair Employment and Housing. Jones refused to accept $10,000 to drop his charge, and returned to work at The Grill. Management ostracized Jones from key meetings and warned him about his performance. Jones resigned with two weeks notice and was terminated two days after announcing his resignation.
Jones sued The Lodge and Weiss under the FEHA. His claims for sexual orientation discrimination against The Lodge, and for retaliation against The Lodge and Weiss, were tried to a jury. The jury found for Jones on both claims, awarding compensatory damages of $1,395,000 against the Lodge and $155,000 against Weiss. The sole issue before the California Supreme Court was whether the verdict against Weiss should be overturned.
FEHA Provision for Retaliation
The Supreme Court considered Section 12940, subdivision (h), of the FEHA, which makes it an unlawful employment practice “[f]or any employer, labor organization, employment agency, or person to discharge, expel or otherwise discriminate against any person because the person has opposed any practices forbidden under this part or because the person has filed a complaint, testified, or assisted in any proceeding under this part.” As the Court noted, this provision of the FEHA is “often called simply ‘retaliation.’”
The Court followed its landmark decision in Reno v. Baird, 18 Cal. 4th 640 (1998). In Reno v. Baird, the Court held that while an employer may be liable for discrimination under FEHA, individuals working for the employer, including supervisors, are not personally liable for that discrimination. The Court concluded that the “Legislature’s differential treatment of harassment and discrimination is based on the fundamental distinction between harassment as a type of conduct not necessary to a supervisor’s job performance, and business or personnel management decisions – which might later be considered discriminatory – as inherently necessary to performance of a supervisor’s job.”
The Court in Torrey Pines determined that the same factors that supported the decision in Reno v. Baird not to impose individual liability for discrimination claims – “supervisors can avoid harassment but cannot avoid 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 threat of a lawsuit every time they make a personnel decision” – apply equally to retaliation.1 The Court rejected the argument that the Legislature’s use of the word “person” in describing those who were prohibited from retaliating in section 12940, subdivision (h), required a finding of individual liability for retaliation. There was no reason why the Legislature would “want to make nonemployer individuals personally liable for retaliation but not for discrimination.” Accordingly, the Court held that the “employer is liable for retaliation under section 12940, subdivision (h), but nonemployer individuals are not personally liable for their role in that retaliation.”
In sharply-worded opinions, three dissenting justices argued that FEHA does impose individual liability for retaliation and that the majority opinion would undermine the purpose of the FEHA. The dissenting justices urged the California Legislature to overturn the decision and impose individual liability for retaliation claims. Notably, the Legislature overturned the Supreme Court’s decision in Carrisales v. Department of Corrections, 21 Cal. 4th 1132 (1999), where the Court held that non-supervisory employees could not be individually liable for harassment. The California Legislature abrogated that holding in legislation effective January 1, 2001, when it amended the FEHA to provide for such liability.
Supervisors and Managers Affected Significantly
The Torrey Pines decision is significant not only because supervisors and managers will no longer face personal liability for retaliation claims, but also for the strategic effects it will have on defending individual retaliation claims. For example, this decision will eliminate those cases where individual supervisors have been named as defendants in retaliation claims in order to defeat diversity jurisdiction, to increase the costs of defending the claims, or to insert conflicts of interest in the defense. However, the fact that the decision leaves open the issue of whether individual supervisors can be liable for retaliation based on harassment means that employers will have to wait for future litigation to resolve this open question. It is also important to remember that individual supervisors can be liable for discriminatory harassment.
For more information, email Linda Auerbach Allderdice at linda.allderdice@hklaw.com or call toll free, 1.888.688.8500.
1 FEHA’s discrimination and retaliation provisions do not apply to employers with fewer than five employees; however, its harassment prohibition applies to employers with one or more employees. Compare Cal. Gov’t Code section 12926, subd. (d), with Cal. Gov’t Code section 12926, subd. (j)(4)(A).