Opinion ID: 1275413
Heading Depth: 3
Heading Rank: 2

Heading: The Statutory Agent Language

Text: The Janken court confronted the plaintiffs' argument that an individual supervisor acts as an agent of an employer within the meaning of employer in section 12926, subdivision (d), and is therefore personally liable as an employer. It found two possible constructions of the agent language. One construction is that argued for by plaintiffs here: that by this language the Legislature intended to define every supervisory employee in California as an `employer,' and hence place each at risk of personal liability whenever he or she makes a personnel decision which could later be considered discriminatory. The other construction is the one widely accepted around the country: that by the inclusion of the `agent' language the Legislature 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. ( Janken, supra, 46 Cal.App.4th at pp. 65-66, 53 Cal.Rptr.2d 741, original italics.) The court adopted the latter construction for several reasons.
The Janken court relied in part on decisions interpreting similar language in federal statutes. Because the antidiscrimination objectives and relevant wording of title VII of the Civil Rights Act of 1964 (Title VII) [(42 U.S.C. § 2000e et seq.)], the Age Discrimination in Employment Act (ADEA) [(29 U.S.C. § 621 et seq.)] and the Americans with Disabilities Act (ADA) [(42 U.S.C. § 12111 et seq.)] are similar to those of the FEHA, California courts often look to federal decisions interpreting these statutes for assistance in interpreting the FEHA. (See, e.g., Los Angeles County Dept. of Parks & Recreation v. Civil Service Com. (1992) 8 Cal.App.4th 273, 280, 10 Cal.Rptr.2d 150; Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 606;,262 Cal. Rptr. 842 8 Witkin, Summary of Cal. Law (9th ed. 1988) Constitutional Law, § 759, pp. 255-259.) Title VII defines employer as `a person... who has fifteen or more employees ... and any agent of such a person.' [(42 U.S-C. § 2000e(b).)] The ADEA defines employer as `a person ... who has twenty or more employees' including `any agent of such a person.' [(29 U.S.C. § 630(b).)] The ADA defines employer as `a person ... who has 15 or more employees ... and any agent of such person.' [(42 U.S.C. § 12111(5)(A).)] These three federal statutes thus contain definitions of employer identical in all relevant respects to the definition of employer contained in the FEHA: specifically, all the definitions of employer in these statutes are worded to cover the `agent' of the employer. ( Janken, supra, 46 Cal.App.4th at p. 66, 53 Cal.Rptr.2d 741, fns. omitted.) The court cited the clear and growing consensus ( Stephens v. Kay Management Co., Inc. (E.D.Va.1995) 907 F.Supp. 169, 173) of courts interpreting the federal statutes that supervisors cannot be held personally liable for employment discrimination. It noted that, since 1993, eight federal circuits have either (1) held that the agent language does not create individual liability for discrimination, or (2) found that, although individuals can be sued in their official or representative capacity, they may not be sued in their individual capacity and have no personal liability, or (3) interpreted similar language in a state statute as not creating individual liability. ( Janken, supra, 46 Cal. App.4th at p. 67, 53 Cal.Rptr.2d 741.) The court discussed these circuit decisions individually.  Tomka v. Seiler Corp. (2d Cir.1995) 66 F.3d 1295, 1313-1314 was a Title VII case. In Tomka, the Second Circuit rejected `a narrow, literal reading of the agent clause' which implied `that an employer's agent is a statutory employer for purposes of liability.' Instead, on `a broader consideration' of the purposes of Title VII, Tomka found that the `agent' language was intended as a simple expression of respondeat superior liability. (66 F.3d 1295, 1314.)  Birkbeck v. Marvel Lighting Corp. [(4th Cir.1994)] 30 F.3d 507 was an ADEA case. In Birkbeck, the Fourth Circuit noted that `[t]he few courts that have found individual liability under the ADEA tend to seize on the use of the word agent `in the definition of employer. Birkbeck found that rationale `unpersuasive,' finding instead that the `agent' reference was `an unremarkable expression of respondeat superiorthat discriminatory personnel actions taken by an employer's agent may create liability for the employer.' (30 F.3d 507, 510.)  Grant v. Lone Star Co. (5th Cir.1994) 21 F.3d 649, 651-653 was a Title VII case. In Grant, the Fifth Circuit stated that neither public nor private sector employees are subject to individual liability on the basis of the `agent' language, instead agreeing that the purpose of the `agent' provision was to incorporate respondeat superior liability into Title VII. (See also Harvey v. Blake (5th Cir.1990) 913 F.2d 226, 227-228 [public officials may be liable in their official capacities, but not in their individual capacities].)  U.S. E.E.O.C. v. AIC Security Investigations, Ltd. (7th Cir.1995) 55 F.3d 1276 was an ADA case. In U.S. E.E.O.C, the Seventh Circuit joined `analogous decisions of our sister Circuits in holding that individuals who do not independently meet the ADA's definition of employer cannot be held liable under the ADA.' (55 F.3d 1276, 1279.) The Seventh Circuit stated that the EEOC was `fighting against the weight of authority' in urging individual liability on the basis of the `agent' wording in the employer definition. While finding the EEOC's ` plain language `argument to have `surface appeal,' the Seventh Circuit found `upon closer examination that appeal is really an illusion.' (55 F.3d 1276, 1281.) The court ruled that the reason for the inclusion of the `agent' language in the definition of employer `was to ensure that the courts would impose respondeat superior liability upon employers for the acts of their agents. [Citations.]' ( [Ibid.], original italics.)  Miller v. Maxwell's Intern. Inc. (9th Cir. 1993) 991 F.2d 583 was a Title VII and ADEA case. In Miller, the Ninth Circuit rioted that, because of the use of the word `agent' in the definition of employer, `some courts have reasoned that supervisory personnel... are themselves employers for purposes of liability.' ( Miller, supra, 991 F.2d 583, 587.) Although the Ninth Circuit found that this statutory construction argument was `not without merit,' the court found the `better rule' to be that the purpose of the agent provision was to incorporate respondeat superior liability into the statute. ( [Ibid.]. ) [To the same effect, see also Green-law v. Garrett (9th Cir.1995) 59 F.3d 994, 1001.]  Sauers v. Salt Lake County (10th Cir. 1993) 1 F.3d 1122 was a Title VII case. In Sauers the Tenth Circuit found that a supervisor with significant control over hiring, firing or conditions of employment acts as an `agent' of the employer, and that the employer is therefore liable for a hostile work environment created by the supervisor whether or not the employer knew of the supervisor's conduct. (1 F.3d 1122, 1125.) The supervisor himself, however, was not the employer and could be sued only in his official, and not in his individual, capacity. The `agent' language in the definition of employer did not render the individual liable. (But see Brownlee v. Lear Siegler Management Services Corp. (10th Cir.1994) 15 F.3d 976, 978 [suggesting individual liability under Title VII in dictum].) The Eleventh Circuit has ruled that individual supervisory employees cannot be held personally liable under either Title VII or the ADEA, because they are not employers. Instead, the individual nonemployers may be sued in their official or agency capacity only. ( Cross v. State of Ala. (11th Cir. 1995) 49 F.3d 1490, 1504 [individuals may be sued under Title VII in their official capacities only]; Smith v. Lomax (11th Cir.1995) 45 F.3d 402, 403, fn. 4 [under Title VII and the ADEA, individual supervisors are not employers and cannot be held personally liable]; Busby v. City of Orlando (11th Cir. 1991) 931 F.2d 764, 772 [supervisory employees may be named in their agency capacity, but are not personally liable].) ( Janken, supra, 46 Cal.App.4th at pp. 67-69, 53 Cal. Rptr.2d 741, fn. omitted.) The last federal case the Janken court surveyed was Lenhardt v. Basic Institute of Technology, Inc. (8th Cir.1995) 55 F.3d 377, in which the Eighth Circuit Court of Appeals construed similar language in a Missouri statute as not imposing individual liability on supervisors. Reviewing federal law, the Eighth Circuit found a `clear consensus' that supervisors cannot be held liable in their individual capacity, and that instead supervisors could be named only in their `official' capacities, finding that `[e]very circuit that has considered the issue ultimately has concluded that an employee, even one possessing supervisory authority, is not an employer upon whom liability can be imposed under Title VII.' (55 F.3d 377, 381.) ( Janken, supra, 46 Cal.App.4th at pp. 69-70, 53 Cal. Rptr.2d 741, fn. omitted.)
The Janken court also noted that the FEHA exempts small employers from liability for discrimination. Section 12926, subdivision (d) defines `employer as including `any person regularly employing five or more persons.' A person who regularly employs less than five other persons is not an `employer' for purposes of FEHA prohibitions on discrimination, and hence cannot be sued for discrimination. ( Jennings v. Marralle (1994) 8 Cal.4th 121 [32 Cal.Rptr.2d 275, 876 P.2d 1074].) For purposes of harassment, however, `employer' is specially defined in section 12940, subdivision (h)(3)(A) to include any person regularly employing one or more persons. Section 12940, subdivision (h)(4) and (5) make clear that this special definition of `employer' as someone employing only one other person applies only to harassment claims, and that discrimination claims continue to be covered by the `five or more' definition in section 12926, subdivision (d). The Legislature thus made a clear distinction in California in the treatment of harassment claims versus the treatment of discrimination claims: small employers can be sued for harassment, but they cannot be sued for discrimination. In Title VII and the ADA, employer is defined as a person employing 15 or more. [(42 U.S.C. §§ 2000e(b), 12111(5)(A).)] In the ADEA, employer is defined as a person employing 20 or more. [(29 U.S.C. § 630(b).)] These definitions exempt small employers from federal employment discrimination litigation because `Congress did not want to burden small entities with the costs associated with litigating discrimination claims.' ( Miller v. Maxwell's Intern. Inc., supra, 991 F.2d 583, 587; see also, e.g., Birkbeck v. Marvel Lighting Corp., supra, 30 F.3d 507, 510 [purpose of exempting small employers is to reduce burden on small businesses].) Many of the federal cases which found no personal liability against individual supervisory employees based their decisions in part on the incongruity that would exist if small employers were exempt from liability while individual nonemployer supervisors were at risk of personal liability. ( Tomka v. Seller Corp., supra, 66 F.3d 1295, 1314 [inconceivable that a Congress concerned with protecting small employers would simultaneously impose liability on individual employees]; Birkbeck v. Marvel Lighting Corp., supra, 30 F.3d 507, 510 [incongruous to impose personal liability on individual nonemployer when small employers are exempted]; Grant v. Lone Star Co., supra, 21 F.3d 649, 652 [inconceivable that Congress intended to protect small entities, yet allow liability against individuals'the smallest of legal entities']; U.S. E.E.O.C. v. AIC Security Investigations, Ltd., supra, 55 F.3d 1276, 1281 [limitation protecting small employers balances goal of stamping out discrimination with protection of small entities from hardships of litigation, individual liability for employees upsets that balance]; Miller v. Maxwell's Intern. Inc., supra, 991 F.2d 583, 587 [if Congress intended to protect small entities with limited resources, inconceivable that Congress intended to allow liability against individual employees].) The same reasoning applies to our task of construing the employer definition in the FEHA. The Legislature clearly intended to protect employers of less than five from the burdens of litigating discrimination claims. ( Jennings v. Marralle, supra, 8 Cal.4th 121 [32 Cal.Rptr.2d 275, 876 P.2d 1074].) We agree that it is inconceivable' that the Legislature simultaneously intended to subject individual nonemployers to the burdens of litigating such claims. To so construe the statute would be `incongruous' and would `upset the balance' struck by the Legislature. ( Janken, supra, 46 Cal.App.4th at pp. 71-72, 53 Cal.Rptr.2d 741, original italics, fns. omitted.)
The Janken court stated that imposing liability on individual supervisory employees would do little to enhance the ability of victims of discrimination to recover monetary damages, while it can reasonably be expected to severely impair the exercise of supervisory judgment. The minimal potential for benefit to an alleged victim juxtaposed with the potentially severe adverse effects of imposing personal liability on individual supervisory employees is an additional reason for our conclusion that this is not the result intended by the Legislature. Many courts have noted the importance of maintaining the conditions in which impartial judgment can be exercised by officials performing duties in the public sector. (See, e.g., Caldwell v. Montoya, supra, 10 Cal.4th 972, 982 [42 Cal.Rptr.2d 842, 897 P.2d 1320][[N]oting `vital public interest in securing free and independent judgment' of public sector employees in `dealing with personnel problems.']; Lipman v. Brisbane Elementary Sch. Dist. (1961) 55 Cal.2d 224, 230 [11 Cal.Rptr. 97, 359 P.2d 465] [`There is a vital public interest in securing free and independent judgment of school trustees in dealing with personnel problems, ...']; ... ) Judge Learned Hand made a similar point long ago in Gregoire v. Biddle (2d Cir.1949) 177 F.2d 579, 581, stating: `It does indeed go without saying that an official, who is in fact guilty of using his powers to vent his spleen upon others, or for any other personal motive not connected with the public good, should not escape liability for the injuries he may so cause; and, if it were possible in practice to confine such complaints to the guilty, it would be monstrous to deny recovery. The justification for doing so is that it is impossible to know whether the claim is well founded until the case has been tried, and that to submit all officials, the innocent as well as the guilty, to the burden of trial and to the inevitable danger of its outcome, would dampen the ardor of all but the most resolute, or the most irresponsible, in the unflinching discharge of their duties ... the answer must be found in a balance between the evils inevitable in either alternative.... `rather than in subjecting `those who try to do their duty to the constant dread of retaliation.' (See also Tietz v. Los Angeles Unified Sch. Dis. (1965) 238 Cal.App.2d 905, 910 [48 Cal.Rptr. 245], quoting Judge Learned Hand.) No one could reasonably doubt that effective and efficient management of industrial enterprises and other economic organizations is also important to the public welfare. The societal interest in effective private sector personnel management may be less direct, but only marginally (if at all) less compelling.... Yet 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 organization would be seriously affected. (See, e.g., Birkbeck v. Marvel Lighting Corp., supra, 30 F.3d 507, 510 [`personal liability would place a heavy burden on those who routinely make personnel decisions'].) . . . . Plaintiffs' theory would place a supervisory employee in a direct conflict of interest with his or her employer every time that supervisory employee was faced with a personnel decision.... [It] would coerce the supervisory employee not to make the optimum lawful decision for the employer. Instead, the supervisory employee would be pressed to make whatever decision was least likely to lead to a claim of discrimination against the supervisory employee personally, or likely to lead only to that discrimination claim which could most easily be defended. The employee would thus be placed in the position of choosing between loyalty to the employer's lawful interests at severe risk to his or her own interests and family, versus abandoning the employer's lawful interests and protecting his or her own personal interests. The insidious pressures of such a conflict present sobering implications for the effective management of our industrial enterprises and other organizations of public concern. We believe that if the Legislature intended to place all supervisory employees in California in such a conflict of interest, the Legislature would have done so by language much clearer than that used here. Moreover, imposing personal liability against individual supervisory employees adds little to an alleged victim's legitimate prospects for monetary recovery. The plaintiff-employee's primary target remains the employer. Adding individual supervisors personally as defendants adds mostly an in terrorem quality to the litigation, threatening individual supervisory employees with the spectre of financial ruin for themselves and their families and correspondingly enhancing a plaintiffs possibility of extracting a settlement on a basis other than the merits. Enhancing the prospects for obtaining a settlement on a basis other than the merits is hardly a worthy legislative objective.... The only marginally legitimate purpose for adding individual supervisory employees as defendants is the possibility that the employer will file for bankruptcy protection and be unable to respond fully in damages. This prospect cuts both ways, however. Employment with an employer about to go bankrupt is in jeopardy in the first instance, and hence is of inherently lesser value than employment with a healthy and solvent employer. Loss or impairment of employment with an employer on the brink of bankruptcy would thus cause correspondingly less compensable damage. At the same time, it is often when companies are struggling for their financial survival that the most difficult personnel decisions must be made. A legal regime in which individual supervisory employees were personally liable after bankruptcy of the employer (a bankruptcy which would potentially result in unemployment for the supervisory employees as well) would mean that salvage of a troubled business would be all that less likely, as managers declined to make decisions necessary to save the enterprise.... ... The construction we choose avoids conflicts of interest by harmonizing the FEHA statutory provisions with the duties of supervisory employees, and does so without doing any significant harm to plaintiffs' legitimate interests. ( Janken, supra, 46 Cal. App.4th at pp. 72-76, 53 Cal.Rptr.2d 741, fns. omitted.)
The Janken court argued that its interpretation would not create a chamber of horrors. In many of the federal cases which construed the `agent' language not to create personal liability for individual supervisors, it was argued that such a construction would open the floodgates of discrimination, would give supervisors a `free pass' to discriminate, would `liberate' supervisors to discriminate `with impunity,' and the like. All the recent cases have rejected such arguments. One case rejected this `parade of horribles' as `Chicken Little-esque.' ( U.S. E.E.O.C. v. AIC Security Investigations, Ltd., supra, 55 F.3d 1276, 1282.) Another considered this `chamber of horrors' argument and was `not persuaded.' ( Lenhardt v. Basic Institute of Technology, Inc., supra, 55 F.3d 377, 381.) Another found the argument `unsound.' ( Miller v. Maxwell's Intern. Inc., supra, 991 F.2d 583, 588.) The cases have rejected such arguments because the employer remains liable. `An employer that has incurred civil damages because one of its employees believes he can violate Title VII with impunity will quickly correct that employee's erroneous belief.' ( Miller v. Maxwell's Intern. Inc., supra, 991 P.2d 583, 588.) The employing entity is still liable, and that entity and its managers have the proper incentives to adequately discipline wayward employees, as well as to instruct and train employees to avoid actions that might impose liability.' ( U.S. E.E.O.C. v. AIC Security Investigations, Ltd., supra, 55 F.3d 1276, 1282.) `As a practical matter employees who unlawfully discriminate against their fellow employees, and who thereby expose their employer to liability, do not get anything like a free pass to continue their wrongdoing with impunity. By incorporating the principles of respondeat superior into Title VII, Congress has required employers to answer for prohibited acts of discrimination perpetrated by their employees. An employer subjected to well-founded claims of employment discrimination as a result of an employee's intentional acts of discrimination is not likely to look favorably upon the offending employee. To the contrary, the employer, to protect its own interests and to avoid further liability, almost certainly will impose some form of discipline upon the offending employee. That discipline may include a free pass to the unemployment line, a result that would seem particularly likely if the employee engages in repeated acts of intentional discrimination against fellow employees.' ( Lenhardt v. Basic Institute of Technology, Inc., supra, 55 F.3d 377, 381; see also Birkbeck v. Marvel Lighting Corp., supra, 30 F.3d 507, 510 [`Employer liability ensures that no employee can violate the civil rights laws with impunity']; Stephens v. Kay Management Co. Inc., supra, 907 F.Supp. 169, 174 [supervisory employees are not liberated to discriminate with impunity because the employer remains liable].) The reasoning of these cases applies here. The fact that the employer is liable via the respondeat superior effect of the `agent' language provides protection to employees even if individual supervisors are not personally liable. Hence we do not find this consideration to compel a conclusion that the Legislature must have intended to impose personal liability on individual supervisory employees. ( Janken, supra, 46 Cal.App.4th at pp. 76-77, 53 Cal.Rptr.2d 741, fn. omitted.)