2004-22

Amendment to the Fair Housing and Employment Act Imposing Personal Liability Does Not Apply Retroactively

McClung v. Employment Development Department, 2004 DJDAR 13516 (Cal. Supreme Court, Nov. 4, 2004)

The California Supreme Court has held that the Legislature's amendment of the Fair Employment and Housing Act, which imposed personal liability on individual employees for workplace harassment, does not apply retroactively.

Lesli Ann McClung filed a claim of hostile work environment harassment against the Employment Development Department, her employer, and Manuel Lopez, a coworker. The Superior Court granted summary judgment for both defendants, but the Court of Appeal reversed as to Lopez. In doing so, it relied on an amendment to section 12940 that had been made after the action underlying the lawsuit. The court found the Legislature's statement in section 12940, subdivision (j)(2) that the amendment was merely "declaratory of existing law" supported the conclusion that the amendment did not change the statute at all, meaning that application of the statute to Lopez would not be retroactive.

The California Supreme Court reversed. The Court noted that in Carrisales v. Department of Corrections (1999) 21 Cal. 4th 1132, it interpreted FEHA as imposing "on the employer the duty to take all reasonable steps to prevent . . . harassment," but determined that it did not impose "personal liability for harassment on nonsupervisory coworkers." As amended, section 12940, subdivision (j)(3) now provides that "[a]n employee of an entity subject to this subdivision is personally liable for any harassment prohibited by this section that is perpetrated by the employee." The Court first found that this amendment necessarily changed the law. Because the Court in Carrisales had "finally and definitively interpreted section 12940," the Legislature lacked the power to "decide that the later amendment merely declared existing law." Rather, any statutory amendment that runs contrary to a Supreme Court decision necessarily changes the law. Because the amendment therefore changed the law, the Court was required to determine whether or not the legislature intended for the amended section 12940 to apply retroactively.

The Court found that no such retroactive application was intended. It noted that subdivision (j)(2) may have simply been intended to "demonstrate that clarification was necessary," and not to give the amendment a retroactive effect. Given the "presumption against retroactive legislation" that is "deeply rooted in our jurisprudence," a statute may be applied retroactively only if "it contains express language of retroactivity or if other sources provide a clear and unavoidable implication that the Legislature intended retroactive application." The Court determined that the Legislature's "erroneous statement that an amendment merely declares existing law" is not sufficient to overcome this presumption. Further, the Court found that retroactive application of the section would "raise constitutional implications." The "established rule of statutory construction" that requires the Court to "construe statutes to avoid ?constitutional infirmities,'" further warranted against retroactive application of the amended section.

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The Tort Claims Act Does Not Preclude Employee from Asserting New Theories of Wrongful Termination Not Specified in His Original Claim

Stockett v. Association of California Water Agencies Join Powers Insurance Authority, 2004 DJDAR 13311 (Cal. Supreme Court, Nov. 1, 2004)

The California Supreme Court held that a dismissed government employee is not precluded under the Tort Claims Act from asserting, in a complaint for wrongful termination, theories of illegal motivation that were not specified in the required notice of claim.

Plaintiff was terminated from his job as general manager with the Joint Powers Insurance Authority (JPIA) by JPIA's executive committee. When he asked the president of the committee why he had been terminated, he was told that the committee was unwilling to disclose its reasons. Stockett presented a notice of tort claim to JPIA, alleging that he had been wrongfully terminated. In his notice of claim, Stockett asserted that the committee had decided to terminate him because 1) he had supported a female employee's sexual harassment complaints, 2) he had discovered that insurance had been purchased without using a competitive process to ensure that the insurer provided the lowest price, and 3) he was considering soliciting other bids for insurance for the members of the JPIA.

Plaintiff was terminated from his job as general manager with the Joint Powers Insurance Authority (JPIA) by JPIA's executive committee. When he asked the president of the committee why he had been terminated, he was told that the committee was unwilling to disclose its reasons. Stockett presented a notice of tort claim to JPIA, alleging that he had been wrongfully terminated. In his notice of claim, Stockett asserted that the committee had decided to terminate him because 1) he had supported a female employee's sexual harassment complaints, 2) he had discovered that insurance had been purchased without using a competitive process to ensure that the insurer provided the lowest price, and 3) he was considering soliciting other bids for insurance for the members of the JPIA.

The California Supreme Court reversed. It noted that Government Code section 910 requires that a claim for damages brought against a public entity must state the "date, place, and other circumstances of the occurrence or transaction which gave rise to the claim asserted," and must provide a "general description of the . . . injury, damage or loss incurred so far as it may be known at the time of presentation of the claim." While a complaint is "vulnerable to demurrer if it alleges a factual basis for recovery which is not fairly reflected in the written claim," a claim "need not specify each particular act or omission later proven to have caused the injury."

The Court found that Stockett met the requirements of the statute. First, Stockett's claim stated the required cause of action by alleging that he had been terminated in violation of California public policy. Although Stockett later asserted that his termination was in violation of different public policies than those listed in the notice, the Court found that these new public polices did not constitute new causes of action. Rather, the new theories simply "added detail to his wrongful termination claim by alleging additional motivations and reasons for JPIA's single action of wrongful termination." Further, Stockett's notice of claim had stated "the date and place of his termination, named those JPIA officers and agents he believed responsible, and generally stated the ?circumstances' . . . of his termination." Because a "reasonable investigation by JPIA would have included questioning members of the committee to discover their reasons for terminating Stockett and an evaluation of whether any of the reasons proffered by the committee, including but not limited to theories in Stockett's claim, constituted wrongful termination," the Court held that Stockett had provided JPIA with sufficient information to investigate the merits of his claim. Therefore, Stockett was not precluded from amending his complaint as he did.

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