Plaintiffs Charles Luke, Francis A. McCaskey, and John Mellen brought these actions against California State Automobile Association (CSAA) and California State Automobile Association Inter-Insurance Bureau charging breach of contract and age discrimination.
At the outset of the events giving rise to this suit, each of the plaintiffs was employed by CSAA as a sales agent (sales representative) at its San Jose-Oakridge branch office. CSAA hired plaintiff Mellen in 1969 at the age of 25, McCaskey in 1971 at the age of 27, and Luke in 1976 at the age of 31. When hired, each signed an "Appointment Agreement." Although the version signed by Mellen and McCaskey differed slightly from the one signed by Luke, both versions recited that CSAA would pay commissions on new and renewal business in accordance with a "Compensation Plan," which CSAA reserved the right to modify. Each provided that either party could terminate the agreement either "forthwith" or "without prior notice."
The compensation plan set out formulas for calculating the commissions plaintiffs would be paid for the various kinds of insurance they were expected to sell. The plan included sales quotas, called "Minimum Sales Quotas" in 1969, and later known as "minimum production requirements," "MPR's," or sometimes "MSPR's." In the early versions of the plan these were expressed as a minimum number of new or reinstated policies or memberships the agent was required to sell each month in four categories. By 2001 they had come to be expressed in the dollar value of "New Gross Written Premium," apparently meaning premiums on newly sold policies. At least some versions of the plan, including the 1969, 2001, and 2005 versions, expressly provided that failure to meet sales quotas was grounds for discipline or termination.
In 1973 CSAA amended the compensation plan to provide that quotas would be reduced by 15 percent for agents who reached the age of 55 with at least 15 years of service, and by a further 25 percentage points (for a total of
In early 2001, CSAA adopted a compensation plan that did not provide any reduction in MPR's for senior agents. Copies of this plan were transmitted to affected employees in late February. The plan included a signature page for agents to acknowledge that it was "Accepted and Approved." None of the plaintiffs signed it. Instead they engaged counsel, who wrote to CSAA on their behalf stating that elimination of the MPR reductions as to plaintiffs would violate the California Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et seq.), as well as the existing employment agreement, and that they would not sign it. This triggered an exchange of correspondence culminating in a statement by CSAA that plaintiffs would not be fired for failing to sign the new plan, but that its terms would govern their compensation, and that the prior plan, including the reduction in MPR's based on age and seniority, was "no longer in effect."
Plaintiffs continued to work for CSAA. Mellen and Luke at all times continued to produce new business sufficient to meet quota with no adjustment for seniority. McCaskey, however, failed to do so, and CSAA "counseled" him on several occasions beginning in 2002. Each such occasion resulted in issuance of a "Corrective Action Form" with the recital that "[f]ailure to maintain minimum production will result in corrective action, up to and including termination." On February 22, 2005, CSAA discharged him for the stated reason that he had not met MPR's for the preceding month.
Meanwhile, CSAA had prepared a newly revised compensation plan, to take effect April 1, 2005. Copies of the plan were apparently transmitted to all agents in February, 2005. CSAA told agents they would have to choose between signing the agreement by its effective date and terminating their employment as of that date. Because the plan still allowed no reduction in MPR's for veteran employees, Luke and Mellen refused to sign it. As of April 1, 2005, CSAA viewed them as having "left [its] employ."
The compensation plans generally entitled agents to commissions not only on sales of new policies (new business), but also on renewals of policies
Plaintiffs all declared that prior to 2001 it was CSAA's standard practice to transfer a departing sales representative's book of business to other representatives in the same office. From this it may be inferred that, prior to 2001, CSAA would generally owe a renewal commission to someone, whether or not the original seller of the policy was still in its employ. This approach apparently reflected a business model under which sales representatives bore significant if not primary responsibility for customer service. Defendant attempted below to depict this responsibility as a burden on sales representatives from which it sought to relieve them so that they could devote more time and energy to the development of new business. Plaintiffs attempted to depict it as a minimal burden but as an opportunity to generate new business from existing customers, which opportunity CSAA was intent on diverting to hourly employees so as to avoid any obligation to pay commissions on the resulting sales. Whatever part of the truth each side's depiction may constitute, it is undisputed that beginning in the 1990's CSAA began to move many of its customer service functions and at least some of its sales functions into telephonic "call centers" where hourly employees fielded calls from existing and potential customers. At the same time, the 2001 compensation plan
Plaintiffs each filed an action against CSAA on June 6, 2005, asserting claims for breach of contract, age discrimination in violation of FEHA, and "Tortious Wrongful Termination — Retaliation." CSAA answered with a general denial and 36 affirmative defenses. The court ordered the three cases consolidated for trial. CSAA moved against each plaintiff for summary judgment or, in the alternative, summary adjudication on each cause of action. The trial court granted the motions. It entered judgment, and denied plaintiffs' motions for reconsideration. Plaintiffs filed timely notices of appeal.
"We summarized the principles governing an appeal of this type in Reeves v. Safeway Stores (2004) 121 Cal.App.4th 95, 106-107 [16 Cal.Rptr.3d 717] (Reeves): `On appeal from an order granting summary judgment "we must independently examine the record to determine whether triable issues of material fact exist. [Citations.]" [Citation.] The question is whether defendant "`"conclusively negated a necessary element of the plaintiff's case or demonstrated that under no hypothesis is there a material issue of fact that requires the process of trial." [Citation.]' [Citation.]" ([Citations]; see Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 335, fn. 7 [100 Cal.Rptr.2d 352, 8 P.3d 1089] (Guz) ["the issue ... is simply whether, and to what extent, the evidence submitted for and against the motion ... discloses issues warranting a trial"].) ... [Citation.] Moreover, "we must view the evidence in a light favorable to plaintiff as the losing party [citation], liberally construing [his] evidentiary submission while strictly scrutinizing defendants' own showing, and resolving any evidentiary doubts or ambiguities in plaintiff's favor. [Citations.]" [Citations.] And a plaintiff resisting a motion for summary judgment bears no burden to establish any element of his or her case unless and until the defendant presents evidence either affirmatively negating that element (proving its absence in fact), or affirmatively showing that the plaintiff does not possess and cannot acquire evidence to prove its existence.
"The first step in analyzing a motion for summary judgment is to identify the issues framed by the pleadings. It is these allegations to which the motion must respond by showing that there is no factual basis for relief or defense on any theory reasonably contemplated by the opponent's pleading." (6 Witkin, Cal. Procedure (5th ed. 2008) Proceedings Without Trial, § 212, p. 650.) Here plaintiffs alleged that CSAA breached the parties' contract by (1) discontinuing the MPR reductions after plaintiffs had qualified for those reductions; (2) interfering with plaintiffs' performance of the contract by making it unreasonably difficult to meet quota; and (3) discharging them for, in McCaskey's case, failing to meet quota, and in Mellen's and Luke's cases, refusing to agree to be bound by the full, unadjusted quotas.
CSAA contended that none of these theories presented an issue of fact for trial because (1) the statute of limitations expired before plaintiffs filed their complaints; (2) the at-will character of the employment entitled CSAA to fire plaintiffs regardless of its grounds for doing so; (3) CSAA in any case had good cause to do so; and (4) CSAA did not breach the contract by eliminating the MPR reductions, because it had satisfied the preconditions giving it the power to do so under the principles applied in Asmus v. Pacific Bell (2000) 23 Cal.4th 1 [96 Cal.Rptr.2d 179, 999 P.2d 71] (Asmus). We do not find the summary adjudication of the contract claims sustainable on any of these grounds.
The trial court sustained CSAA's limitations defense as to two of plaintiffs' three contract theories. The court understood CSAA to argue that the claims were governed by the four-year statute of limitations applicable to claims based on a written contract. (Code Civ. Proc., § 337, subd. 1.) Since plaintiffs' complaints were filed on June 9, 2005, the question presented was whether, as a matter of law, the limitations period began to run before June 9, 2001. Defendant argued, and the court concluded, that the period began to run on April 1, 2001, when defendant first adopted a compensation plan omitting the MPR reductions. Plaintiffs argued that this conduct was at most
These contentions raise pure issues of law, which we will address without deference to the trial court's ruling.
CSAA seeks to avoid this logic by depicting the mere adoption of the 2001 plan as injurious to plaintiffs. Thus it describes that act as having "eliminated the ... right to the [quota] reduction." Similarly, it alludes to the "`right' CSAA took away" and "the remov[al] [of] a benefit [plaintiffs] previously had." These characterizations are inaccurate to the extent they are relevant, and irrelevant to the extent they are accurate. A promisor does not "eliminate" or "take away" the promisee's rights merely by announcing that he will not perform his promise. The promisee still has his rights; the promisor's announcement merely gives him the choice between suing immediately to vindicate his rights, and waiting to see whether the promisor will redeem himself when the time for performance comes. The promisor's repudiation deprives the promisee of no right and subjects him to no obligation; it merely empowers him to declare the contract breached and to seek recompense in court. Unless he exercises that power, the repudiation does not constitute a breach of contract in the eyes of the law, and cannot commence the running of the statute of limitations.
This rule seems particularly apt here, where the four years preceding plaintiffs' discharges were marked by an uneasy truce, or stalemate, in which each side insisted on its view of the contract while neither was willing to force the issue to a head, except as McCaskey could be said to do so when he began to fall below the unadjusted quotas. When CSAA finally discharged him in flat violation of the policy, followed shortly by the discharge of Mellen and Luke for refusing to accede to its abolition, plaintiffs moved with alacrity to seek administrative and then judicial relief. To hold their claims barred would be to reduce the statute of limitations to a legally deadly game of maneuver rather than the protective rule of repose it is intended to be.
CSAA cites Marketing West, supra, 6 Cal.App.4th 603, 614, for the proposition that the statute began to run when defendant presented plaintiffs with the 2001 plan modifications. To some extent this argument seems to overlap the contention, which we address below, that merely by continuing to work plaintiffs accepted the plan modifications, became bound by them, and thus suffered a legally cognizable injury if, as they insist, defendant had no right to impose them. The cited decision may indeed be understood to lend some weight to such a theory. The precise tenor of the plaintiffs' claims there is unclear, but they apparently alleged that the defendant employer had breached their employment contracts by discharging them without cause. The court held that their causes of action were barred, having accrued at an earlier time when the employer compelled the plaintiffs, under threat of firing, to sign a written agreement converting their employment relationship to one terminable at will. (Id. at pp. 608-609.) At this moment, said the court, the plaintiffs "were harmed by giving up their right to be terminated only for good cause." (Id. at p. 614.)
This analysis might be on point if plaintiffs here had signed the 2001 agreement and thereby acceded to the destruction of the promised rights. As it is, they explicitly refused to do so. Unless their rights were destroyed by some other means, they were preserved for another day. Nothing in Marketing
Indeed the court's treatment of the later agreement points to a discrepancy in its reasoning. If the plaintiffs there had predicated their claims on the employer's forcing them to sign the intermediate agreement, then it might well be that their claims would have accrued when that agreement was signed. But from the court's somewhat vague account it appears that their claims sounded in wrongful discharge. By logical necessity, then, they rested on a claimed breach of a promise not to discharge them without good cause. The only suggestion of such a promise is in the earlier agreement, which the employer clearly meant the later agreement to supersede. Thus a claim predicated on the earlier agreement necessarily presupposed that the later agreement was ineffectual to have the intended effect. If that was the case, the later agreement inflicted no harm on the plaintiffs, compensable or otherwise, and could not possibly commence the running of the statute of limitations. If, on the other hand, that agreement injured the plaintiffs, as the court supposed, by destroying their erstwhile right not to be terminated without cause, then they had no claim based on that earlier right; the promise sued upon was no longer in effect, and therefore could not have been breached, when they were fired. From a limitations perspective, a cause of action based on that theory had never accrued, and could never accrue.
In short, the later agreement could not inflict the harm on which the court predicated its holding unless it rendered the original promise substantively unenforceable. But if it did that, a claim based on the original promise failed on the merits. The net result of the court's analysis, seemingly, was to beg the truly dispositive question, which is whether the later agreement actually did excuse the employer from complying with the earlier one. If it did, the plaintiffs had no claim. If it did not, they had a claim. The statute of limitations had no proper place in either alternative.
Even if we thought Marketing West was soundly reasoned, we would see no basis for extending it to the facts here, where plaintiffs never signed a superseding agreement. It is true that CSAA contends plaintiffs were bound
For purposes of the present analysis it must be supposed that defendant wrongfully repudiated its undertaking to permit qualifying employees to continue in its employ under a relaxed performance standard. To hold that this repudiation instantly gave rise to a cause of action, even though plaintiffs remained employed by defendant for most of the next four years and were fully compensated throughout that time in accordance with the contract— while making clear their refusal to accede to the attempted destruction of their rights—would unjustifiably penalize plaintiffs for giving defendant the opportunity to retract the repudiation if and when the issue of compliance actually arose. The statute of limitations is supposed to be a shield by which defendants are protected against stale claims, faded memories, and the nasty surprise of a long-dead grievance brought back to life. (See Davies v. Krasna (1975) 14 Cal.3d 502, 512 [121 Cal.Rptr. 705, 535 P.2d 1161].) It is not supposed to operate as a minefield on which meritorious claims are obliterated by technicalities. Nor is it a force of nature falling blindly on the diligent and indolent alike. It is an act of man, and as such, is supposed to reflect that faculty by which man distinguishes himself, when he does, from the rest of nature: his reason. To accept defendant's limitations defense here would dishonor that faculty.
Plaintiffs' chief claim of breach is that CSAA failed to perform a promise, which it held out to them continuously for some 28 years, to employ them, once they reached age 55 with 15 years in service, under a relaxed standard of job performance. It is undisputed that all three plaintiffs fulfilled the stated conditions before the promise was renounced, and by the time of their discharge had satisfied the conditions for a further reduction in quotas. None of them, however, was ever permitted to enjoy the reduced quotas, and each was eventually discharged either for falling below the unadjusted quotas, or for insisting upon the right to do so.
Defendant's motion for summary judgment, as it bore on the merits of this theory of recovery, could be understood to assert that (1) CSAA was entitled under the rule of Asmus, supra, 23 Cal.4th 1, to nullify the promised reductions without incurring contractual liability; (2) recovery is precluded by
The trial court did not reach these arguments as independent grounds for its ruling, but did adopt at least the third, in substance, as part of its analysis of the statute of limitations defense. We find none of them sufficient to warrant judgment for CSAA as a matter of law.
Defendant does not dispute, at least for present purposes, that its adoption of the policy granting reduced quotas to senior agents gave rise to a contractual duty toward plaintiffs. Its chief contention is that it was relieved of that duty under the rule of Asmus, supra, 23 Cal.4th at page 6. The employer there had adopted a "`Management Employment Security Policy'" committing it "`to offer all management employees who continue to meet our changing business expectations employment security through reassignment to and retraining for other management positions ....'" (Id. at p. 7.) The policy stated that it would remain in effect "`so long as there is no change that will materially affect [the employer's] business plan achievement.'" (Ibid.) Four years later the employer announced that "industry conditions" might require it to discontinue the policy. (Ibid.) About two years after that, the employer announced that it would terminate the policy in about six months. (Ibid.) The plaintiffs were laid off, apparently, at least two years after the employer declared the policy ended. (Id. at pp. 7, 18.) They brought suit in a federal district court, which granted summary judgment in their favor, holding that under the circumstances, the employer lacked the power to unilaterally end the retention policy. On appeal, the Ninth Circuit certified to the California Supreme Court the question whether, under California law, the employer's "`unilaterally adopted policy,'" having "`become a part of the employment contract,'" could "thereafter" be "unilaterally" "rescind[ed]" by the employer, "even though the specified condition has not occurred." (Id. at pp. 5-6 & fn. 2.)
A divided Supreme Court held that the employer could unilaterally terminate its duty to honor the policy provided certain circumstances were present: "An employer may unilaterally terminate a policy that contains a specified condition, if the condition is one of indefinite duration, and the employer effects the change after a reasonable time, on reasonable notice, and without interfering with the employees' vested benefits." (Asmus, supra, 23 Cal.4th at p. 6.)
The general question before us is the same one presented in Asmus: how long must an employer honor a unilaterally adopted policy conferring an employment benefit? Beyond this, the two cases have little in common. In particular, the feature deemed most critical there was that the only indication of the intended duration of the employer's undertaking was its statement that it intended to grant the promised benefit as long as there was "`no change ... materially affect[ing]'" its "`business plan achievement.'" (Asmus, supra, 23 Cal.4th at p. 7.) This was a "`condition'" of "indefinite duration," the court reasoned, in that it "did not state an ascertainable event that could be measured in any reasonable manner." (Id. at p. 17.) Therefore the promise was one, in effect, to perform for an undefined period; as such it was terminable after a reasonable time. (Ibid.) By honoring the policy for six years, the court held, the employer had satisfied this condition. (Id. at pp. 17-18.) It was therefore entitled to terminate the policy on reasonable notice, and since it had done so, and its conduct infringed no vested right, it could not be liable to the plaintiffs in contract. (Ibid.)
Here the employer also failed to explicitly set an end date for its performance of the promise. But unlike the policy in Asmus, the employer's promise here, and the circumstances in which it was made, readily suggest an implied-in-fact durational term by which CSAA's duty to honor the policy would end, as to a qualifying employee, either (1) at age 65, (2) after 10 years, or (3) upon the employee's retirement. Such an intent is suggested, first, by the express terms of the promised benefit. A worker earned it only by continuing in CSAA's employment to age 55. At that point the worker would be entitled to a 15 percent reduction in MPR's for five years, i.e., to age 60, at which point a further 25 percentage point reduction would be granted, bringing the total reduction to 40 percent.
This view receives further support from the purpose of the policy, both from CSAA's point of view and that of employees. Although CSAA attempts to offer various other reasons for its adoption of the policy—which we discuss below in addressing the claims for employment discrimination—the most obvious function of the policy was to induce sales representatives to remain in CSAA's employ for their entire working careers. The record does not indicate the extent to which a representative's book of business might be "portable," i.e., might follow him to another insurance carrier were he to leave CSAA; nor does it indicate the rate at which his customers might migrate elsewhere on their own if and when the agent from whom they purchased their policies stopped handling their accounts. Whatever the particulars, the policy to all appearances was intended to, and did, induce persons in plaintiffs' position to remain loyal CSAA employees to the ends of their working lives. To do this it promised, in plaintiffs' words, to "ease" them "into retirement" by softening the demands of their jobs for the last stage of their careers. Such a benefit would only achieve this goal if it remained in effect until they might reasonably be expected to retire.
Indeed we see nothing in this record that would foreclose an interpretation under which the policy was intended to permit an agent to continue working under the reduced MPR's for as long as he or she was willing and able to do so. This would not produce the kind of perpetual, inescapable burden, potentially threatening an employer's very survival, that the courts feared in Asmus and cases cited there.
The court in Consolidated Theaters described a three-stage inquiry in which the first step is the obvious one: to consult the contract itself. If it specifies the duration of the duty at issue, that will ordinarily end the matter. (Civ. Code, §§ 1638, 1639.) If the agreement does not plainly state when the duty will end, its duration must be "judicially determined in accordance with established rules of construction." (Consolidated Theatres, supra, 69 Cal.2d at
In other words, the court first consults the terms of the contract; then the circumstances and other indicia of intent; and only when those steps fail to establish a durational term does the court impose a judicially determined "reasonable time" limitation on the duty at issue. This last step is a manifestation of the broader principle that when any essential term has been omitted from the contract, and the parties' intent concerning that term cannot otherwise be ascertained, the law will supply a reasonable term—provided the omission was not so grievous as to prevent the formation of a contract. (See Rest.2d Contracts, § 204; 1 Witkin, Summary of Cal. Law, supra, Contracts, § 751, pp. 841-842; cf. Civ. Code, § 1655.)
It follows that before it could properly rely on the "reasonable time" rule applied in Asmus, CSAA had to establish that no durational term could be derived from the terms and circumstances of the MPR reduction policy. It did not attempt such a demonstration. Given the facts to which we have already alluded, this failure was fatal to its claim that it was entitled as a matter of law to unilaterally nullify the policy as to plaintiffs.
Moreover, even if CSAA had established that the rule of Asmus governed the case, we fail to see how the present record can be read to conclusively establish that CSAA only sought to terminate the duty in question "after a reasonable time." (Asmus, supra, 23 Cal.4th at pp. 6, 17; see id. at pp. 11, 14.) The closest defendant came to acknowledging this question in the trial court was to observe that the policy "had been in place since 1973," i.e., for 28 years. But the question is not how long ago the promise was made; it is how long the promisor is required to perform. In Asmus these two periods were essentially coterminous, or at least commenced simultaneously, because the policy burdened the employer with a duty to the plaintiffs the moment it
The facts here differ starkly. So far as this record shows, CSAA assumed no immediate burden by announcing the MPR reductions. It assumed no general immediate obligation to an entire class of workers. It obligated itself to do nothing until a worker fulfilled the policy's conditions by remaining for at least 15 years and approaching the typical retirement age. CSAA thus received the immediate benefits of a loyal, stable workforce, solely on the promise of a future reward.
Although it is conceivable that additional facts, not reflected in this record, might sustain a different conclusion, nothing before us would permit a court to conclude that a "reasonable time" had passed, at least as to plaintiffs, so as to permit defendant to repudiate their undertaking without contractual liability. Determining what constituted a reasonable time under the circumstances would seem to require consideration of the facts we have already noted, i.e., that the benefit is readily understood as a way to ease plaintiffs into retirement, that plaintiffs had in fact devoted their careers to CSAA's service in anticipation of the benefit, and that CSAA had therefore received everything it bargained for while yielding nothing whatever in return.
The order granting summary judgment on the contract claims cannot be sustained on the authority of Asmus.
CSAA contends that because plaintiffs' employment was terminable at will, no liability could be predicated on discharging them for failing to satisfy, or agree to, the full production quotas. Plaintiffs reply that their employment was not terminable at will, despite express recitals to that effect in the various appointment agreements and employee handbooks promulgated by defendant over the years. CSAA responds that plaintiffs' argument rests at best on implied terms, which cannot be permitted to vary the express terms of the contract, and that in any event there was good cause to terminate plaintiffs' employment. CSAA also notes that it expressly reserved the right to modify the terms of the compensation plan, which is all it did when it abolished the MPR reductions.
Here, as discussed above, when CSAA announced the contested terms it was already—so far as this appeal is concerned—under an obligation not to discharge plaintiffs for failing to meet production requirements, unless they
Moreover, unlike the employer in Asmus, CSAA sought plaintiffs' express consent to the modifications it sought to impose. Plaintiffs—through their attorney—explicitly refused to give that consent. The plaintiff in DiGiacinto also apparently refused to sign a document acknowledging the new terms, but since his employment was entirely at will he was powerless to refuse the employer's terms; his only choices were to come to work on the stated terms, or stop coming to work. His situation with respect to the modified wage was no different than that of a brand new employee who first appears on the job declaring that he expects to be paid twice what the employer had offered him. There is no mechanism by which such an announcement can ripen into a contract unless the offeror somehow assents to it. If the employee nonetheless commences work he has either accepted the employer's terms or, perhaps, taken himself entirely outside the contract, so as to be entitled only to relief in equity, or to no relief, for the services he performs. But all this assumes that the employer was free to dictate the terms on which the work would be done, if done at all. Here, the employer was not free—or at least has not been shown to have been free—to discharge the workers for refusing to accede to the new terms. Therefore the rationale underlying the result in DiGiacinto does not apply.
This case may be further distinguished from DiGiacinto and other cases cited by defendant on the ground that the rights at issue here, when promised, would by their nature only accrue in the future, whereas the right the plaintiff claimed in DiGiacinto—to be paid at the rate specified in his original employment agreement—accrued only as he worked. Nothing in the facts suggests that the plaintiff had been promised, or had earned, a right to any particular salary for future work; his right to any particular salary was fixed only as to work he had already performed. Here plaintiffs contend that CSAA was under a duty which it must perform for either a time derived from the
Plaintiffs' second contract theory is that their employment was terminable only for cause and that defendant lacked the requisite cause, such that the termination of plaintiffs' employment was a breach of contract. The trial court ruled that there was no triable issue of fact on either of these points—that as a matter of law, plaintiffs' employment was terminable at will, and defendant had good cause to terminate it. As we have already held, the most plausible interpretation of the contract on the present record is that although CSAA had the general right to terminate the employment without cause, that right did not extend to terminating plaintiffs for underproduction so long as they conformed to the relaxed quotas CSAA had promised them. There is no dispute that CSAA discharged plaintiff McCaskey for failing to satisfy the unadjusted quotas, and discharged plaintiffs Luke and Mellen for refusing to agree to comply with those quotas. The contract can be understood as prohibiting CSAA from discharging them for that conduct. Thus, while the case really does not fit within the framework of a typical discharge-without-good-cause claim, plaintiffs have presented a colorable claim that defendant violated a promise not to discharge them for the reasons which actually led to their discharges.
Plaintiffs' third breach-of-contract theory is that defendant breached the employment contract by "unreasonably interfering with [plaintiffs'] job responsibilities." The gist of this claim, as we understand it, is that defendant made it unreasonably difficult for plaintiffs to perform their contracts, i.e., to meet the quotas they were required to meet, by diverting sales opportunities
The legal principle underlying the claim is that "[p]revention or hindrance of performance operates not only as an excuse for the [promisor's] performance [citations], but is also a breach, giving that party the affirmative remedies for breach. [Citations.]" (1 Witkin, Summary of Cal. Law, supra, Contracts, § 851, pp. 937-938.) We question the applicability of this principle to the facts alleged by plaintiffs, but we have no occasion to examine the question further because CSAA offered no challenge to this theory in the trial court other than to lump it together with plaintiffs' other contract claims and assert that all were barred by the statute of limitations. The trial court agreed, but without acknowledging the quite different facts on which this claim is based. Defendant seeks to defend this approach on appeal by asserting that all of the claimed acts of interference "were merely aspects of the 2001 [Compensation] Plan," which CSAA was entitled to adopt, and to which plaintiffs acceded by continuing to work. Defendant asserts more specifically that the "terms" plaintiffs accepted by continuing to work after 2001 "included fixed `sales quotas' ..., redirection of renewal calls to `call centers' ..., and increased internet sales."
We have already rejected the limitations defense on grounds that seem equally applicable here. Likewise we have rejected the contention that plaintiffs bound themselves to the 2001 plan merely by continuing to work. Moreover, we detect no substance in CSAA's attempt to depict the challenged measures as contractual "term[s]" to which plaintiffs did or could assent. CSAA attempts to justify this characterization by stating parenthetically that an "aspect of the 2001 Plan" was "to relieve representatives of renewal work and encourage the development of new business." But this statement, and CSAA's entire argument on this point, conflates its business strategy with the parties' contract by using the term "plan" to refer to both. This is made possible only because CSAA has traditionally entitled its commission schedule, and associated terms, the "Compensation Plan." In the earlier parts of its brief CSAA uses the phrase "2001 Plan" repeatedly—more than two dozen times, in fact—to mean the 2001 compensation plan. It is only in discussing the interference claim that CSAA uses "2001 plan" to mean what its witness. Newcomer, referred to in deposition as a "business model," "sales model," or "distribution model," which was apparently intended to place increasing reliance on call centers and direct marketing through media including the Internet. There is no suggestion that anything arguably part of plaintiffs' employment agreement with CSAA so much as alluded to this "model" or otherwise called upon signatories to accede to the conduct that forms the basis for plaintiffs' interference claim. That CSAA
Defendant also seeks to justify the lumping together of plaintiffs' contract theories on the ground that "plaintiffs' `interference' and `vested rights' theories ... both centered around a single occurrence: implementation of the 2001 Plan with its elimination of the MPR reduction." In other words, the interference claim stands or falls with the discontinuation-of-benefits claim because both arose from the "implementation" of the 2001 plan. Again, this assertion conflates the contract with some larger business strategy. Nor do we see any inherent relationship between the two contract theories. The gist of the interference claim is that CSAA drew potential customers away from plaintiffs and thereby made it unreasonably difficult for plaintiffs to meet their quotas. Such a claim does not logically require, and can be easily distinguished from, the elimination of reduced quotas. Indeed it may be understood to assume that plaintiffs were bound by the full quotas but that defendant prevented their performing the resulting duties. In any event the parties' contract appears to have been utterly silent as to the conduct at issue and thus cannot sustain the summary adjudication of this claim.
Plaintiffs alleged that CSAA's conduct towards them was actionable under FEHA on three distinct theories: disparate treatment, disparate impact, and unlawful retaliation. Before getting into the substance of these claims, we must address the defense argument, which the trial court adopted, that "[t]o the extent" the disparate treatment and disparate impact claims were predicated on defendant's "unilaterally implementing the 2001 Compensation Plan," they were "barred by the statute of limitations for the same reasons that plaintiff's first two breach of contract claims are barred." This ruling is troublesome on its face in two respects. First, there can be no summary adjudication of less than an entire cause of action. (Code Civ. Proc., § 437c, subd. (f)(1) ["A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty."].) Therefore, an order granting summary adjudication "to the extent" a cause of action rests on this or that premise is invalid unless the matter thus adjudicated is properly viewed as a distinct "cause of action" for purposes of the provision thus cited. If a cause of action is not shown to be barred in its entirety, no order for summary judgment—or adjudication—can be entered.
The statute of limitations generally at issue in FEHA cases governs not the time for filing suit, as such, but the time for filing an administrative complaint with the Department of Fair Employment and Housing.
The leading case on the application of this statute is Romano, supra, 14 Cal.4th 479, in which the Supreme Court concluded that a claim brought within one year of the plaintiff's termination was timely despite the employer's having given notice well outside the one-year period of its intention to discharge the plaintiff. The court noted that the discharge was the only act complained of by the plaintiff that was made actionable by FEHA. (14 Cal.4th at pp. 491-492, citing Gov. Code, former § 12941, subd. (a); see now Gov. Code, § 12940, subd. (a).) "Accordingly," the court reasoned, the discharge was "the relevant unlawful practice for the purpose of the statute of limitations." (Romano, supra, 14 Cal.4th at pp. 492-493.) To interpret FEHA to require a claim within one year of notice of discharge would conflict with (1) its plain meaning, (2) its "remedial purpose," which is "to safeguard the employee's right to seek, obtain, and hold employment without experiencing discrimination," and (3) the legislative directive that the act be liberally construed to effectuate that purpose. (14 Cal.4th at p. 493; see Gov. Code, § 12993, subd. (a).)
The holding of Romano strongly suggests, if it does not compel the conclusion, that plaintiffs' time to file a FEHA claim ran from the termination of their employment and not from any earlier event. Defendant makes no cogent argument to the contrary. It merely refers us to its arguments on the contract cause of action—which we have already rejected—and reiterates the highly equivocal point, which the trial court adopted, that "any discrimination claims based on events before April 2004 (e.g., matters concerning the 2001 Plan implementation) were time-barred." But on the face of their complaints plaintiffs' claims at least include, if they do not rest largely or entirely on, the termination of their employment, which took place well within the one-year period.
The gist of a disparate impact claim is that "a facially neutral employer practice or policy, bearing no manifest relationship to job requirements, ... had a disproportionate adverse effect on members of [a] protected class. [Citations.]" (Guz v. Bechtel National, Inc., supra, 24 Cal.4th at p. 354, fn. 20; see Sisemore v. Master Financial, Inc. (2007) 151 Cal.App.4th 1386, 1418 [60 Cal.Rptr.3d 719].) For purposes of an age discrimination claim, the protected class is persons over 40 years of age. (Gov. Code, § 12926, subd. (b).)
Plaintiffs alleged in essence that the withdrawal of the MPR reductions had a disparate impact on workers over age 40. On its face this is certainly true; indeed, because the MPR reductions only operated in favor of persons at least 55 years old, the only persons directly and immediately affected by their elimination were members of the protected class. However plaintiffs have made no attempt on appeal to demonstrate that the summary adjudication of this claim constituted error. In their opening brief they barely mentioned disparate impact claims. In their statement of facts they asserted—apparently quoting their complaints, though without record citations—that the quotas imposed upon them by withdrawal of the former policy "creat[ed] a `disparate impact on employees over the age of forty with large portfolios.'" Later, in introducing their legal argument on the discrimination claims, they observed that they had asserted claims for "both `disparate treatment' and `disparate impact' based on age." But the ensuing discussion addresses only the burden-shifting analysis applicable to "`claims of discrimination, including age discrimination, based on a theory of disparate treatment.'" (Italics added.) (Quoting Guz v. Bechtel National, Inc., supra, 24 Cal.4th 317, 354; see McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792 [36 L.Ed.2d 668, 93 S.Ct. 1817].)
In response, CSAA asserted that the disparate impact claims had been "abandoned `for lack of appellate argument.'" (Quoting McAllister v. County of Monterey (2007) 147 Cal.App.4th 253, 278 [54 Cal.Rptr.3d 116].) Plaintiffs did not meet this objection, or even acknowledge it, in their reply brief. Nor did they defend the disparate impact claims as such, though they did argue, in the context of their retaliation claims, that they reasonably believed CSAA's actions inflicted an unlawful disparate impact. They also cited the supposed disparate impact of defendant' actions as circumstantial evidence of discriminatory intent. These oblique statements furnish no reason to overlook the general rule that reviewing courts will not address claims of error first made in the reply brief. (See 9 Witkin, Cal. Procedure, supra, Appeal, § 723, p. 790.) We conclude that plaintiffs have abandoned their disparate impact
CSAA's argument for summary adjudication of the disparate treatment claim assumed that plaintiffs had made a prima facie case, but asserted that the challenged actions had nondiscriminatory motives. Plaintiffs sought to raise a triable issue of fact by presenting evidence on this point. The trial court, after sustaining certain evidentiary objections, found no triable issue of fact. The critical question before us is whether this determination was correct.
To establish a nondiscriminatory motive for plaintiffs' discharge, CSAA relied primarily on the declaration and deposition of sales and marketing vice-president Matthew Newcomer, who was the senior member of a "compensation plan team" that produced the 2001 compensation plan eliminating the reduced MPR's for senior sales agents. His proffered rationale for this action can be reduced to three points. The first is that the policy granting lower MPR's to senior sales agents was "obsolete." Its original purpose, he declared, was twofold: "to give tenured Sales Representatives the option of devoting more of their work time to conducting renewal transactions and servicing their renewal book of business than to developing new business," and "to give Sales Representatives a break on their [quota] in the event they needed time off for health-related reasons."
A jury could quite reasonably find this explanation unworthy of belief on its face. If the policy was really just an accommodation to the increased customer service demands of a large book of business, it was both underinclusive and overinclusive. It granted no relief to exceptionally productive younger workers who might amass a large book of business before reaching the qualifying age, or who came to CSAA later in their careers and had not accumulated the requisite time in its service. At the same time, the benefit was extended to all agents who met the age and service criteria, regardless of the size of their books of business. If the goal was merely accommodation, in other words, it would have been achieved much more simply and effectively by a policy based solely upon the size of an agent's book of business.
Nor does the policy appear particularly well suited to accommodating the health-related exigencies older workers might be expected to face. It eased their workload in times when they were healthy and granted only partial relief in times when they were not. A fact finder could also reasonably disbelieve the implication that the family leave legislation cited by Newcomer provided, or could genuinely be expected to provide, a level of protection comparable to that afforded by the reduced MPR's. In particular, plaintiff McCaskey declared that issues of health—his own and his wife's—played a central role in his inability to meet the unadjusted MPR's, contributing to the shortfall for which he was fired. Had he been able to invoke the reduced MPR's, he would not have been fired—at least not for the reasons cited by CSAA.
The two additional reasons Newcomer gave for the elimination of the policy were "internal fairness" and "competitive business reasons." No details were offered in support of the latter rationale, as for instance by summarizing the practices of CSAA's competitors. In contrast, as noted above, plaintiffs' insurance industry expert, Robert Westin, declared it "the common practice within the insurance industry" to "provide preferential treatment" to employees with seniority comparable to plaintiffs', "particularly those with exceptionally large and profitable books of business ...." This seems sufficient by itself to raise a triable issue of fact with respect to the claim of undefined "competitive business reasons."
Indeed we detect a certain tension between the claim of competitive advantage (or disadvantage) and Newcomer's averment that "[v]irtually none of the Sales Representatives used" the reduced MPR's. The only obvious mechanism by which the policy could inflict a competitive disadvantage was through the imposition of costs not borne by competitors. Yet if the policy was rarely invoked—"virtually" never, as Newcomer asserted—then any suggestion that it imposed burdensome costs on CSAA would seem doomed before a jury.
This leaves Newcomer's assertion that the policy was adopted because it would serve the interests of "internal fairness." He declared that it would "`level the playing field' for all Sales Representatives by applying MPR
A fact finder might find this account, as we do, nearly devoid of concrete substance. The repeated references to a "level playing field" convey little more than a vague sense that the reduced MPR's granted plaintiffs some undefined competitive advantage over their fellow sales representatives. The mechanism by which it did so, and the nature of the disadvantage thus inflicted, is nowhere explained. It is true, of course, that all agents were competing against each other, and against the agents of other companies, for the same theoretically limited resource, i.e., potential new customers. But from that perspective, imposing higher quotas on any one sales representative, or class of sales representatives, would appear harmful to the others because it would increase the competition for this limited resource.
The only sense in which Newcomer's testimony on this point suggests to us any concrete business concern is his reference in deposition to the "climate in which [agents] worked." (Italics added.) This suggests the possibility that having older workers working under relaxed production demands could damage the morale of younger workers and thus impair their productivity. But until CSAA announced its decision to eliminate the MPR reductions, every sales representative worked with the knowledge that veteran agents would earn a reduction in MPR's upon satisfying the age and years-in-service requirements. It is difficult to imagine why anyone would be offended by this policy or by its operation as to workers, like plaintiffs, who had satisfied its conditions and thus earned its benefits. On the contrary, it would naturally tend to operate as an incentive to remain productive and loyal. Nor are we directed to any evidence that during the 28 years of the policy's unquestioned existence anyone found it unfair. On the contrary, we would suppose that
In short, no unfairness would seem to appear in such a policy until it was abolished. The real thrust of CSAA's argument thus seems to be that the benefit promised to plaintiffs had to be sacrificed in order to render invisible the disparity between CSAA's past and present treatment of its workers. Assuming something like this is what Newcomer was attempting to describe with his references to a "level playing field," we question whether such a concern can be permitted to furnish a defense to a claim for age discrimination. We need not decide, however, for CSAA has not claimed that the purpose of eliminating the reduced MPR's was to protect the morale of younger workers. We have only derived that hypothesis by scrutinizing Newcomer's deposition testimony, which suggests it in passing. CSAA's actual explanation is one of "fairness," a claim to which it lends no substance whatever beyond frequent invocations of a hackneyed and inapposite metaphor.
Even if CSAA's evidence of a legitimate nondiscriminatory purpose were not doubtworthy on its face, plaintiffs put it in issue by presenting evidence of a quite different motivation for CSAA's treatment of them, i.e., that CSAA wanted to get rid of older agents because it saw them as insufficiently vigorous, in contrast to younger workers, and it wished to appropriate to its own advantage the renewal premiums to which they would be entitled as long as they remained employees. This motive is most directly suggested by the declaration of Ona Brooks, who averred among other things that in March 2005, while she was employed as a sales agent at CSAA's Mountain View branch, her branch manager, Cheryl Turner, said in specific reference to "the `Oakridge boys,'" that the company was "`going in a direction where they are making it harder for the older reps to survive because the company doesn't want to pay them their renewals.'"
In any event, the Brooks declaration pointed directly toward an antisenior animus by attributing statements to a CSAA manager that the company was "looking for new blood to go forward" and "did not want the older Sales Representative around anymore." Plaintiffs adduced other evidence to similar effect. Plaintiff Mellen declared, "In late 2004 or early 2005, the Manager of the San Jose-Stevens Creek office said that if it were up to him, he would get rid of the `old slugs,' referring to several other Sales Representatives and me that had been with CSAA in excess of 25 years at the time. He was in my cubicle when he said it." Mellen complained to his manager, who "did nothing about it."
In sum, there was more than sufficient evidence before the trial court—much of it inherent in the moving papers themselves—to raise a triable issue of fact concerning CSAA's real motivation for terminating plaintiffs' employment.
The gist of plaintiffs' retaliation claims here was that CSAA discharged them because of their opposition to the elimination of the MPR reductions as reflected in the 2001 and 2005 modifications to the compensation plan. Plaintiffs contend that the modifications themselves violated FEHA, or that they reasonably believed them to do so, and that their discharges were therefore accomplished in retaliation for opposing discrimination.
We do not doubt that plaintiffs engaged in a protected activity when they objected to the discontinuation of the MPR reductions as a violation of FEHA. CSAA's argument to the contrary presupposes that its conduct did not in fact violate FEHA, a premise it has failed to establish for purposes of summary judgment. Nor would it be dispositive if it were established. As CSAA acknowledges, a worker's opposition to an employment practice may be protected against retaliation even if the practice did not in fact violate FEHA, provided the plaintiff "reasonably believed" the practice was unlawful. (Thompson v. Tracor Flight Systems, Inc. (2001) 86 Cal.App.4th 1156, 1168 [104 Cal.Rptr.2d 95].) We reject CSAA's suggestion that plaintiffs could not have reasonably believed that the elimination of the MPR reductions violated FEHA. As we have held, it may well violate FEHA. The only basis for doubting it is that defendant might have acted, as it now insists, for a legitimate nondiscriminatory reason. Plaintiffs could hardly be expected to suppose that to be true, particularly since the conduct was exclusively aimed at older workers toward whom at least some CSAA managers had expressed hostility. Contrary to the point suggested by CSAA's citation of Querry v. Messar (S.D.N.Y. 1998) 14 F.Supp.2d 437, 451, the fact that plaintiffs consulted counsel would not weaken their case unless counsel could be supposed to have told them their complaints were meritless. Here, counsel could quite reasonably believe that CSAA's actions would be found to violate FEHA.
Plaintiffs' retaliation claim appears insupportable, however, when it comes to the element of causation. As we understand plaintiffs' theory, the event triggering their objections was CSAA's announcement that it was eliminating the MPR reductions plaintiffs had earned. As discussed in connection with the statute of limitations, this announcement by itself inflicted no injury on plaintiffs. The injury occurred only when CSAA discharged plaintiffs. In McCaskey's case, that action was predicated, at least ostensibly, on his failure
Similarly, when Mellen and Luke were presented with the 2005 plan they were told that they must sign it or be deemed to have resigned. They refused to sign it, and CSAA discharged them. This may have constituted a breach of contract; it may have constituted age discrimination; but we fail to see how it could constitute retaliation for their "opposing" CSAA's conduct. They were discharged not for objecting, but for refusing to sign. There is no suggestion that had they signed, they would still have been discharged merely for objecting to, or otherwise opposing, CSAA's conduct.
In short, by asserting that CSAA's announced discontinuation of the MPR reductions would violate FEHA, plaintiffs certainly engaged in a protected activity. But whether it makes any factual or legal sense to characterize their subsequent discharges as retaliation for this activity is another question. Reduced to its essentials, this case presents the situation of an employer who announces that he is going to discharge workers who fail to meet certain conditions; the workers object that the conditions violate, and the threatened discharge would violate, FEHA; the conditions come into being; and the employer goes ahead with the threatened discharge. In the absence of some reason to suppose that the original threat was not genuine, or that the employer would not have carried it out but for the workers' opposition to it, there is simply no basis to conclude that the discharge was caused by, or in retaliation for, their invocation of FEHA.
We therefore conclude that while CSAA is mistaken in challenging the status of plaintiffs' objections as protected conduct, it has succeeded in demonstrating the absence of any triable issue of fact on the question of causation.
The judgment is reversed with directions to set aside the order granting summary judgment and to enter a new order granting defendant's motion for summary adjudication as to plaintiffs' disparate impact and retaliation claims only, and otherwise denying defendant's motion for summary judgment or summary adjudication. Costs to appellants.
Premo, J., and Elia, J., concurred.
Moreover, another of plaintiffs' witnesses declared that one of defendant's own branch managers alluded to plaintiffs' "huge books of business" as a motive or reason for their discharge. The only colorable objection to this testimony was that "[i]nsufficient information is given as to the speaker to establish that an exception to the hearsay rule applies." However, the declarant, Ona Brooks, identified the speaker by name (Cheryl Turner) and title (branch manager of the Mountain View office), which made her, apparently, Brooks's supervisor. Brooks also described the circumstances of the quoted statement, i.e., Turner was attempting to address concerns Brooks had raised about "the negative changes that were happening at the company." We think this was an adequate prima facie showing — particularly given the constraints of summary judgment procedure — that the declarant "had express or implied authority to make that kind of statement" to an employee she supervised on behalf of CSAA. (1 Witkin, Cal. Evidence (4th ed. 2000) Hearsay, § 121, p. 828; see Evid. Code, § 1220; O'Mary v. Mitsubishi Electronics America, Inc. (1997) 59 Cal.App.4th 563, 572-573 [69 Cal.Rptr.2d 389]; W. T. Grant Co. v. Superior Court (1972) 23 Cal.App.3d 284, 286-287 [100 Cal.Rptr. 179].)
In an apparent attempt to contest Newcomer's account, each plaintiff declared, "Renewal calls are typically not productive sources for sales that would satisfy MPR requirements or otherwise. In large part, they are busy work, which is why they were eliminated in the early '90s and automatic renewal practices imposed." If we accept this statement as true for the moment, it does not seem effectual to contradict Newcomer's implication that renewal activities took up a considerable amount of an agent's time and that the reduced MPR's were intended in part to recognize this additional burden accompanying a large book of business.
Defendant also objected to the Westin declaration in its entirety on grounds that (1) "the entire declaration consists of naked argument"; (2) "it introduces no new evidence that could possibly create a triable issue of fact"; and (3) "Westin's opinions are based on financial data unrelated to CSAA and which was not used by nor even available to CSAA at the time it made its business decisions." Only the first of these suggests a recognized ground of objection— impermissible opinion—and it is so overbroad that it could quite properly have been overruled on that basis. The obligation of an objecting party is "to make clear the specific ground of the objection." (Evid. Code, § 353, subd. (a).) Depending on the nature of the evidence and the objection, the mere allusion to a rule of evidence may or may not satisfy this requirement. Here a blanket objection of "opinion" must necessarily have been overruled unless the court found the declarant unqualified to testify as an expert—a determination that CSAA did not invite the trial court to make. The second stated ground is utterly meaningless as an evidentiary objection. The third may be—and apparently was by the trial court—liberally construed as a claim that Westin's testimony was irrelevant because the sources from which he drew his figures did not exist when CSAA took the challenged actions. This argument could at most limit the purposes for which his opinions concerning CSAA's financial and competitive position might be admitted. To have that effect, it would have to appear that the underlying facts—as distinct from the sources cited for them—were of such a character that CSAA could not reasonably be supposed to have been aware of them. We find it unnecessary to decide whether this point appeared with sufficient clarity to sustain the trial court's ruling. Assuming the objection was well taken, considerable portions of the Westin declaration—including those we cite here—were entirely unaffected by it.
CSAA's objections to this evidence are discussed in footnote 4, ante.
CSAA also asserted that Mellen's averments on this point conflicted with his deposition testimony on two points, i.e., whether he understood "old slugs" to include himself, and whether his own branch manager did anything in response to his complaints. The first point depends on Mellen's testimony that he did "not know who specifically" the manager "was referring to." This testimony is not logically incompatible with a belief that Mellen was among the "old slugs" in question. Moreover, the evidence would be probative of discriminatory animus whether or not Mellen so understood. The second point depends on his testimony that after complaining to his own manager, he did not follow up because he believed his manager's statement that he would do something. Again, the cited testimony is not logically incompatible with Mellen's averment that the manager in fact did nothing. While this testimony will undoubtedly provide fodder for cross-examination at trial, it cannot have the effect contended for on summary judgment.
Bogle also declared that one of her jobs was training new sales representatives and discharging new hires who proved unsuitable, and that "[t]he direction I was given was that CSAA wanted young, aggressive Sales Representatives who would last three to five years." CSAA's hearsay objection is in this case well taken. With no identification of the speaker or indication of his or her capacity, it is impossible to say whether the conditions of a vicarious admission were present. (See Evid. Code, § 1222.) CSAA's other grounds of objection—lack of foundation and relevance—are meritless.
