California's Military and Veterans Code section 394
For purposes of review, we assume the truth of the following allegations extracted from the complaint (Wells Fargo Bank, N.A. v. Superior Court (2008) 159 Cal.App.4th 381, 385 [71 Cal.Rptr.3d 506]): While employed by defendant, Safway Services, LLC,
Pantuso sued Safway, Haligowski, and Chomenko for damages for discrimination and retaliation in violation of section 394, subdivisions (a) and (d). He also sought damages from Safway only for wrongful retaliation and termination in violation of public policy. Pantuso's complaint alleges, because of his membership in the Navy, that Safway and the individual defendants discriminated against him by giving him negative performance evaluations after he informed his employers that he would be deployed, and then terminating him from employment because of his military service, refusing to reemploy him upon return from service in Iraq, and refusing to pay him an earned bonus.
Haligowski and Chomenko (the individual defendants) demurred to the complaint on the ground that supervisors cannot be held individually liable for employment-related decisions under the Military and Veterans Code. The trial court overruled the demurrer ruling that "based on the plain language of California Military and Veterans' Code [section] 394, the individual defendants are subject to liability" because "person means person." The individual defendants then petitioned for writ of mandate to direct the trial court to vacate its order overruling the demurrer and to enter a new order sustaining the demurrer without leave to amend.
Section 394, subdivision (a) reads: "No person shall discriminate against any officer, warrant officer or enlisted member of the military or naval forces of the state or of the United States because of that membership. No member of the military forces shall be prejudiced or injured by any person, employer, or officer or agent of any corporation, company, or firm with respect to that member's employment, position or status or be denied or disqualified for employment by virtue of membership or service in the military forces of this state or of the United States." (Italics added.)
Section 394, subdivision (d) reads in part: "No employer or officer or agent of any corporation, company, or firm, or other person, shall discharge any person from employment because of the performance of any ordered military duty or training or by reason of being an officer, warrant officer, or enlisted member of the military or naval forces of this state . . . ." (Italics added.)
This case points a laser focus on the phrase "person, employer, or officer or agent of any corporation, company, or firm" in subdivision (a) and substantially identical language in subdivision (d) of section 394. The Legislature explained its intent with respect to section 394 thusly: "It is the intent of the Legislature that persons who are members of the military services not be harmed by virtue of that membership, with respect to their employment." (Stats. 1991, ch. 36, § 2, p. 128.) This declaration does not clarify whether, by the use of the words "person," "officer," and "agent," the Legislature intended to make supervisors personally liable for discriminating against a member of the armed forces while performing regular management functions, and so we must make that determination.
The use of the words "officer or agent of any corporation" and "person" in section 394 does not answer the question before us, namely whether that "agent," "officer" or "person" may be held personally liable for discrimination against a member of the military forces. Division 2, part 1, chapter 7 of the Military and Veterans Code, which encompasses section 394, does not define "employer," "person," "agent," or "officer." (See § 389.) Nor does section 394 spell out an employee's exposure to personal liability.
Thus, we perceive two possible constructions of the use of the words "person" and "agent" in section 394. The first, as Pantuso argues and as the trial court ruled, is that the Legislature intended to hold individual supervisors personally liable for discrimination under this statute. The second possible construction is that, as is generally accepted in other employment discrimination contexts such as the FEHA, the use of the words "agent" and "other person" was "`intended only to ensure that employers will be held liable if their supervisory employees take actions later found discriminatory, and that employers cannot avoid liability by arguing that a supervisor failed to follow instructions or deviated from the employer's policy.'" (Reno v. Baird (1998) 18 Cal.4th 640, 647 [76 Cal.Rptr.2d 499, 957 P.2d 1333] (Reno), quoting Janken v. GM Hughes Electronics (1996) 46 Cal.App.4th 55, 66 [53 Cal.Rptr.2d 741] (Janken).) Where "`the statutory language permits more than one reasonable interpretation, courts may consider other aids, such as the statute's purpose, legislative history, and public policy.' [Citation.]" (Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1163 [72 Cal.Rptr.3d 624, 177 P.3d 232] (Jones), quoting Coalition of Concerned Communities, Inc. v. City of Los Angeles (2004) 34 Cal.4th 733, 737 [21 Cal.Rptr.3d 676, 101 P.3d 563].)
Although the parties did not discuss it, we looked at the legislative history of section 394 and conclude that it does not shed light on the Legislature's intent as to the meaning of "person" and "agent" in section 394. The original version of section 394 was based on Penal Code former section 421, which provided "No association or corporation shall by any constitution, rule, by-law, resolution, vote or regulation, discriminate against any member of the national guard of California because of his membership therein. Any person who willfully aids in enforcing any such constitution, rule, by-law, resolution, vote or regulation against any member of said national guard of California, is guilty of a misdemeanor." (Stats. 1905, ch. 195, § 1, p. 190.) As enacted in
There is no California case on point. However, in an unpublished opinion, the federal district court in Kirbyson v. Tesoro Refining and Marketing Co. (N.D.Cal., Mar. 2, 2010, No. 09-3990 SC) 2010 WL 761054 (Kirbyson) addressed this same question, namely, whether individual supervisors, employees, and corporate agents could be held personally liable for employment discrimination claims under California's Military and Veterans Code when the discrimination arose out of the performance of normal management
As with section 394, the FEHA is a California employment discrimination statute and a review of cases under the FEHA sheds light on how California courts and the Legislature view the individual liability of supervisors for discriminatory conduct in the performance of regular management duties. The FEHA makes it illegal for "an employer" to discriminate. (Gov. Code, § 12940, subd. (a).) "Employer" is defined in the FEHA as including "any person regularly employing five or more persons, or any person acting as an agent of an employer, directly or indirectly . . . ." (Gov. Code, § 12926, subd. (d), italics added.) The FEHA also makes it unlawful to retaliate against an employee for opposing practices forbidden under the FEHA: Subdivision (h) of section 12940 of the Government Code forbids "any employer, labor organization, employment agency, or person" from retaliating. (Italics added.)
Although on their face, these FEHA provisions could be read to hold individual supervisors personally liable, two Supreme Court cases and one appellate court case have established that individual supervisors and agents of employers cannot be held personally responsible under these FEHA statutes.
Janken, upon which Kirbyson relied, was the first case to confront the question of whether a supervisor is "an agent of an employer" (Gov. Code,
First, Janken based its conclusion on the wording of the FEHA. (Janken, supra, 46 Cal.App.4th at p. 60.) Second, Janken noted the "fundamental distinction" between the way the FEHA treats harassment, on the one hand—for which supervisors may be held personally liable—and discrimination on the other hand—for which, Janken held, individuals are not personally responsible. (46 Cal.App.4th at pp. 63-64.) Harassment is conduct "not necessary for performance of a supervisory job." (Id. at p. 63.) "No supervisory employee needs to use slurs or derogatory drawings, to physically interfere with freedom of movement, to engage in unwanted sexual advances, etc. in order to carry out the legitimate objectives of personnel management." Supervisors can avoid harassment claims by refraining from such conduct. (Id. at p. 64.) Juxtaposed to harassment are discrimination claims which "arise out of the performance of necessary personnel management duties." (Id. at p. 63.) "An individual supervisory employee cannot . . . refrain from engaging in the type of conduct which could later give rise to a discrimination claim. Making personnel decisions is an inherent and unavoidable part of the supervisory function. Without making personnel decisions, a supervisory employee simply cannot perform his or her job duties." (Id. at p. 64.)
The third relevant reason for Janken's conclusion that individual supervisors may not be held personally liable under the FEHA is pragmatic and policy based. Janken elucidated, "imposing personal liability against individual supervisory employees [would] add[] little to an alleged victim's legitimate prospects for monetary recovery." (Janken, supra, 46 Cal.App.4th at pp. 74-75.) By contrast, Janken perceived "potentially severe adverse effects of imposing personal liability on individual supervisory employees." (Id. at p. 72.) Janken determined "it is manifest that if every personnel manager risked losing his or her home, retirement savings, hope of children's college education, etc., whenever he or she made a personnel management decision, management of industrial enterprises and other economic organizations would be seriously affected." (Id. at p. 73.) Thus, Janken concluded,
The Supreme Court in Reno, supra, 18 Cal.4th 640 resoundingly approved Janken. Reno held that the "FEHA, like similar federal statutes, allows persons to sue and hold liable their employers, but not individuals." (Id. at p. 643.) In defending Janken, Reno rejected the argument that respondeat superior principles could be found in the FEHA even without the "agent" language, and so the use of the word "agent" was surplusage and unnecessary. (18 Cal.4th at p. 657.) Reno stated: "The issue in this case is individual liability for discrimination. Therefore, we express no opinion on the scope of employer liability under the FEHA for either discrimination or harassment.. . . [W]hatever that language means precisely, it is not surplusage. The Legislature may reasonably have chosen to define the scope of employer liability expressly rather than to leave it to judicial interpretation. . . . [¶] . . . Legislatures are free to state legal principles in statutes, even if they repeat preexisting law, without fear the courts will find them unnecessary and, for that reason, imbued with broader meaning." (Id. at p. 658.)
Reno also held that the language in former subdivision (g) of section 12940 of the Government Code, forbidding "`"any person to aid, abet, incite, compel or coerce the doing of any of the acts forbidden"'" under the FEHA did not impose personal liability on individuals. (Reno, supra, 18 Cal.4th at pp. 655-656, italics added.) Reno adopted Janken's reasoning that "`The concept of aiding and abetting involves two separate persons, one helping the other. Here we deal with individual employees of a corporate employer. A corporation can act only through its individual employees. [Citation.] . . . [¶] . . . [¶] . . . Linguistically, it is questionable whether it can properly be said that an employee who exercises delegated personnel management authority is "aiding and abetting" his or her employer in managing personnel . . . .'" (Ibid., quoting from Janken, supra, 46 Cal.App.4th at pp. 77-79.) For these
More recently, the Supreme Court in Jones, supra, 42 Cal.4th 1158 analyzed Government Code section 12940, subdivision (h) which, similar to Military and Veterans Code section 394, as noted, forbids "any employer, labor organization, employment agency, or person" to retaliate. (Gov. Code, § 12940, subd. (h), italics added.) Jones rejected the argument that the use of "person" "compels the conclusion that all persons who engage in prohibited retaliation are personally liable, not just the employer." (Jones, supra, at p. 1162.) Jones first looked at the statutory language and concluded it is not plain and unambiguous. Although the Legislature knew how to clearly make an employee "personally liable" for harassment (see Gov. Code, § 12940, subd. (j)(3) ["An employee of an entity . . . is personally liable for any harassment prohibited by this section that is perpetrated by the employee. . . ."]), the language of the retaliation provision was much less patent. (Jones, at p. 1162.)
The retaliation provision, Government Code section 12940, subdivision (h), Jones explained, is similar in effect to the discrimination statute, section 12940, subdivision (a). Reno had held that notwithstanding subdivision (a) does not utilize the word "person" to describe who may not discriminate, it nonetheless governs discrimination by a "person" because Government Code section 12926, subdivision (d) defines "employer" as including "`any person acting as an agent of an employer, directly or indirectly . . . .'" (Jones, supra, 42 Cal.4th at p. 1163, italics added.) Thus, Jones applied the Reno and Janken rationale for concluding that individuals would not be personally liable for retaliation under the FEHA. (42 Cal.4th at p. 1164.) Jones reasoned that imposing liability on individual supervisory employees would not enhance plaintiffs' recovery while it would threaten individual supervisory employees with the specter of financial ruin (id. at pp. 1165-1166) and that it would severely impair the exercise of supervisory judgment and place supervisors in direct conflict of interest with their employers (ibid.). Additionally, Jones found support for its position in the lack of legislative history behind inclusion of the word "person" in Government Code section 12940, subdivision (h). (Jones, at pp. 1169-1173.) Thus, Jones held that an individual may not be held personally liable for retaliation under the FEHA. (42 Cal.4th at pp. 1160, 1173.)
Additionally, the statutory language of section 394 is parallel to that used in the FEHA. All of these statutes forbid a "person" from engaging in acts that are discriminatory or retaliatory. (Compare § 394, subds. (a) ["No person shall discriminate . . . ."] & (d) ["No employer or officer or agent of any corporation, company, or firm, or other person" shall discriminate] with Gov. Code, §§ 12926, subd. (d) [defining employer who may not discriminate as "any person"], 12940, subd. (h) [unlawful employment practice for "any employer, labor organization . . . or person" to retaliate].) (Italics added.) Given the similarity in the language of, and goals behind, these employment discrimination statutes, it would be illogical and incongruous to hold that the word "person" in section 394 subjects supervisory employees to personal liability whenever they engage in a discriminatory act against members of the military forces when they are not otherwise personally at risk for managerial acts that discriminate on the basis of race, gender, age, or disability.
Furthermore, just as under the FEHA, a supervisor cannot avoid engaging in the type of conduct, such as hiring, firing, demoting, and the like, which might later give rise to a discrimination claim by a member of the military or naval forces. Making and implementing personnel decisions are inherent in supervisors' duties and for that reason the Supreme Court held personal liability should not attach to managers for engaging in their regular duties. (Reno, supra, 18 Cal.4th at pp. 651-653; Jones, supra, 42 Cal.4th at p. 1166.) We are persuaded by Janken, Reno, and Jones, that holding individual supervisors personally liable for discriminatory acts against members of the military forces based solely on those personnel decisions could discourage effective management while adding minimal compensation to victims. (Janken, supra, 46 Cal.App.4th at pp. 72-75; Reno, at pp. 651-653; Jones, at pp. 1164-1173.)
Most important, the Legislature knows how to specify its intent to hold a manager individually liable. The Legislature spelled out the personal liability of supervisory employees for harassment because supervisors can avoid harassment claims by refraining from such conduct. (Janken, supra, 46 Cal.App.4th at p. 64.) Subdivision (j)(3) of Government Code section 12940 states, "An employee of an entity subject to this subdivision [(prohibition against harassment in workplace)] is personally liable for any harassment prohibited by this section that is perpetrated by the employee . . . ." (Italics added.) Although the Legislature could make individual employee supervisors
Pantuso contends that we should not analogize to the FEHA cases because that statute does not employ the "officer or agent" language found in section 394. (See, e.g., § 394, subd. (d) ["No employer or officer or agent of any corporation, company, or firm, or other person," shall discharge an employee who is subject to military duty or training that interrupts work (italics added)].) To the contrary, as we explained, the FEHA defines "employer" as including "any person regularly employing five or more persons, or any person acting as an agent of an employer, directly or indirectly . . . ." (Gov. Code, § 12926, subd. (d), italics added.) Reno and Janken analyzed this language and held that individual supervisory employees are not personally liable for managerial acts that are discriminatory notwithstanding they are "agents" of employers. (Reno, supra, 18 Cal.4th at pp. 645, 647-655, quoting Janken, supra, 46 Cal.App.4th at pp. 65-66, 69-72, 76-77.) Furthermore, Reno rejected the argument that respondeat superior principles could be found in the FEHA without resort to the "agent" language and so the word "agent" was surplusage. The Supreme Court explained that the Legislature could define the scope of employer liability expressly and could state legal principles without rendering them surplusage. (Reno, supra, at pp. 657-658.) Applying Reno's and Janken's conclusions, the use of "agent" in section 394 is to ensure that employers cannot evade liability by arguing that supervisors deviated from their employer's policies.
We likewise disagree with Pantuso that other cases have held individuals personally liable for employment discrimination. For this proposition, he cites Accardi v. Superior Court (1993) 17 Cal.App.4th 341 [21 Cal.Rptr.2d 292]. But, Accardi involved claims of harassment (id. at pp. 345-346), and as Janken pointed out, it is the "fundamental distinction" between the way in which the FEHA treats harassment and discrimination that results in holding
Next, Pantuso points to the federal counterpart to section 394, the Uniformed Services Employment and Reemployment Rights Act of 1994 (the USERRA) (38 U.S.C. § 4301 et seq.), which is designed to protect those who serve in the armed forces from wrongful termination and discrimination. Pantuso cites the United States Department of Labor's regulations under the USERRA establishing that individual supervisors may be held personally liable for discrimination in violation of the USERRA. (20 C.F.R. § 1002.5(d)(1)(i) (2011).) The Department of Labor justified its position based on at least two federal opinions holding that individual supervisors may be held liable under the USERRA, and on the USERRA's definition of "employer" (38 U.S.C. § 4303(4)(A)(i); 70 Fed.Reg. 75246 (Dec. 19, 2005).) Pantuso observes that Bursese v. Paypal, Inc. (N.D.Cal., Feb. 12, 2007, No. C-06-00636 RMW) 2007 U.S.Dist. Lexis 12785 and Tarin v. County of Los Angeles (9th Cir. 1997) 123 F.3d 1259, have held that "`the same analysis applies to plaintiff's claim under California Military and Veterans Code section 394'" as applies to claims under the USERRA, and so he argues we must import the USERRA definition of "employer" into section 394. We disagree with Pantuso, first, because Bursese and Tarin involved procedural issues, and not construction of the meaning of the USERRA's use of the word "person" (Bursese v. Paypal, Inc., supra, at pp. *16-*22 [burden of proof]; Tarin v. County of Los Angeles, supra, at pp. 1265-1266 [collateral estoppel], superseded by statute as stated in Leisek v. Brightwood Corp. (9th Cir. 2002) 278 F.3d 895, 899, fn. 2.)
Lastly, Pantuso argues that California law cannot be interpreted to provide lesser benefits than the USERRA. He cites 38 United States Code section 4302(b) which states: "This chapter supersedes any State law (including any local law or ordinance), contract, agreement, policy, plan, practice, or other matter that reduces, limits, or eliminates in any manner any right or benefit provided by this chapter, including the establishment of additional prerequisites to the exercise of any such right or the receipt of any such benefit." (Italics added.) Pantuso argues that were we to construe section 394 as precluding him from recovering against managers and supervisors individually, we would be limiting the benefits to which he is entitled. But, what the USERRA says in section 4302(b) is that the states may not limit the rights and benefits that the USERRA provides. (See Breletic v. CACI, Inc.—Federal (N.D.Ga. 2006) 413 F.Supp.2d 1329, 1337 ["Congressional intent behind the USERRA is clear: Section 4302(b) was intended to preempt employer-employee agreements that limit rights provided under the USERRA or put additional conditions on those rights."]; accord, Lopez v. Dillard's Inc. (D.Kan. 2005) 382 F.Supp.2d 1245, 1249, disagreed with in Kitts v. Menards, Inc. (N.D.Ind. 2007) 519 F.Supp.2d 837, 840; see also § 395.5.) The USERRA says nothing about the rights to which members of the military and naval forces are entitled under state law. We note Pantuso has not sued under the USERRA. Nothing in our construction of section 394 limits or reduces any right to which a member of the military forces is entitled under the USERRA. Indeed, our interpretation of section 394 maximizes the rights of members of the military forces by preventing employers from avoiding liability by claiming individual managers or supervisors deviated from their employers' policies. (Reno, supra, 18 Cal.4th at p. 647; Janken, supra, 46 Cal.App.4th at p. 66.)
The petition is granted. The order to show cause is discharged. Let a peremptory writ of mandate issue directing the trial court to vacate the order overruling the demurrer of Haligowski and Chomenko, and enter a new order sustaining the demurrer without leave to amend. All parties to bear their own costs on appeal.
Croskey, Acting P. J., and Kitching, J., concurred.