Opinion ID: 2625280
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Heading: The Purpose and Scope of Subdivision (b)(2)

Text: In construing statutory language our objective is to determine and effectuate the Legislature's intent. ( People v. Yartz (2005) 37 Cal.4th 529, 537, 36 Cal. Rptr.3d 328, 123 P.3d 604.) Such language, however, is construed in the context of the entire law. Courts properly examine the manifest purpose of the statute as a whole in interpreting its provisions. [Citations.] We examine the history and the background of the statutory provision in order to ascertain the most reasonable interpretation of the measure. ( Hellinger v. Farmers Group, Inc. (2001) 91 Cal. App.4th 1049, 1056-1057, 111 Cal.Rptr.2d 268.) In Aaronoff v. Martinez-Senftner (2006) 136 Cal.App.4th 910, 39 Cal.Rptr.3d 137, the court observed that the purpose of subdivision (b)(2) is to target third party defendants who, by virtue of certain specified relationships to the perpetrator (i.e., employee, volunteer, representative, or agent), could have employed safeguards to prevent the sexual assault. It requires the sexual conduct to have arisen through an exploitation of a relationship over which the third party has some control. ( Aaronoff, at p. 921, 39 Cal.Rptr.3d 137.) The language of the provision expressly supports this characterization. ( California Teachers Assn. v. Governing Bd. of Rialto Unified School Dist. (1997) 14 Cal.4th 627, 632, 59 Cal.Rptr.2d 671, 927 P.2d 1175 [In interpreting statutes, we follow the Legislature's intent, as exhibited by the plain meaning of the actual words of the law....].) Subdivision (b)(2) extends past a plaintiffs 26th birthday claims against a nonperpetrator defendant who is or was in a specified relationship with the perpetratoremployee, volunteer, representative, or agentand who, knew or had reason to know, or was otherwise on notice of the perpetrator's unlawful sexual conduct and failed to take preventative measures to avoid acts of unlawful sexual conduct in the future by that perpetrator. The statute's enumeration of the necessary relationship between the nonperpetrator defendant and the perpetrator implies that the former was in a position to exercise some control over the latter. This interpretation of the statute is also confirmed by a review of the relevant legislative history of Senate Bill No. 1779 (2001-2002 Reg. Sess.) (Sen. Bill No. 1779), which added subdivision (b)(2). [4] ( Barratt American, Inc. v. City of Rancho Cucamonga (2005) 37 Cal.4th 685, 697, 37 Cal.Rptr.3d 149, 124 P.3d 719 [Although the plain language of the statutes dictates the result here [citation], legislative history provides additional authority].) [Senate Bill No. 1779] is intended to ensure that victims severely damaged by childhood sexual abuse are able to seek compensation from those responsible. [¶].... [T]his bill provides that the extended statute of limitations in childhood sexual abuse cases against a third party extends beyond age 26 of the victim, when the third party knew, had reason to know, or was otherwise on notice, of unlawful sexual conduct by the individual and the third party failed to take reasonable steps and to implement reasonable safeguards to avoid future acts of unlawful sexual conduct by that individual.... In support of the measure, the author states: [¶] This bill is essential to ensure that victims severely damaged by childhood sexual abuse are able to seek compensation from those responsible. While current law allows a lawsuit to be brought against a perpetrator within three years of discovery of the adulthood aftereffects of the childhood abuse, current law bars any action against a responsible third party entity (such as an employer, sponsoring organization or religious organization) after the victim's 26th birthday.... [¶] ... This arbitrary limitation unfairly deprives a victim from seeking redress and unfairly and unjustifiably protects responsible third parties from being held accountable for their actions that caused injury to victims. (Assem. Floor Analysis of Sen. Bill 1779, as amended June 17, 2002, pp. 3-4.) Clearly then, the Legislature's goal in enacting subdivision (b)(2) was to expand the ability of victims of childhood abuse to sue those responsible for the injuries they sustained as a result of that abuse. This reading of subdivision (b)(2) is also consistent with the Legislature's larger purpose in enacting section 340.1, the limitations statute of which subdivision (b)(2) is a part. The overall goal of section 340.1 is to allow victims of childhood sexual abuse a longer time period in which to bring suit against their abusers. [Citation.] The legislative history makes this abundantly clear. The statute has been amended numerous times since its enactment in 1986, to enlarge the period for filing claims `to hold molesters accountable for their behavior so that they are not `off the hook' as soon as their victims reach age 21,' [citation] [and] to extend the expanded limitations period to actions not just against molesters, but against `any person or entity who owed a duty of care to the plaintiff, where a wrongful or negligent act by that person or entity was a legal cause of the childhood sexual abuse....' [Citations.] Each time, plaintiffs' access to the courts was expanded. ( McVeigh v. Doe 1, supra, 138 Cal.App.4th at pp. 903-904, 42 Cal.Rptr.3d 91; see Shirk v. Vista Unified School Dist. (2007) 42 Cal.4th 201, 207-208, 64 Cal.Rptr.3d 210, 164 P.3d 630) [review of the history of section 340.1 from its original enactment in 1986 through its 2002 amendments demonstrates a continual expansion and enlargement of the statute in to allow sexual abuse victims to sue perpetrators and nonperpetrator defendants].) One caveat applies, howeverin construing this, or any statute, we may not broaden or narrow the scope of the provision by reading into it language that does not appear in it or reading out of it language that does. Our office ... `is simply to ascertain and declare' what is in the relevant statutes, `not to insert what has been omitted, or to omit what has been inserted.' ( Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 573, 71 Cal.Rptr.2d 731, 950 P.2d 1086.) `[A] court ... may not rewrite the statute to conform to an assumed intention which does not appear from its language.' ( In re Hoddinott (1996) 12 Cal.4th 992, 1002, 50 Cal.Rptr.2d 706, 911 P.2d 1381.) With these principles in mind, we turn to subdivision (b)(2). The words of subdivision (b)(2) create three conditions that must be met before it applies to a particular case: (1) the nonperpetrator defendant knew or had reason to know, or was otherwise on notice; (2) that the perpetratoran employee, volunteer, representative, or agenthad engaged in unlawful sexual conduct; and (3) failed to take reasonable steps, and to implement reasonable safeguards, to avoid acts of unlawful sexual conduct in the future by that person, including, but not limited to, preventing or avoiding placement of that person in a function or environment in which contact with children is an inherent part of that function or environment. Moreover, the unlawful sexual conduct refers to the acts specified in section 340.1, subdivision (e), which defines `[c]hildhood sexual abuse' in terms of seven provisions of the Penal Code describing various prohibited sexual acts against minors. Although plaintiffs are focused on the words knew, reason to know, and otherwise on notice in the statute, it bears emphasizing that these words must, of course, be read in the context of the provision as a whole. Thus, the subject of which the nonperpetrator defendant must have had knowledge or notice is, the statute clearly tells us, the perpetrator's unlawful sexual conduct as that term is defined in the statute to encompass particular prohibited sexual acts with a minor. As we shall demonstrate, it is the failure of plaintiffs to allege that either the City or the BSA had knowledge or notice that Kalish had engaged in past unlawful sexual conduct that dooms their complaint. Bearing this in mind, we turn to the knowledge and notice language. The words knew, reason to know, and otherwise on notice are not defined in the statute. The parties agree that knew refers to actual knowledge. They agree further that the phrase reason to know refers to a species of constructive knowledge, but they disagree as to its exact type. In their briefing, plaintiffs argued that the phrase imposes a duty of inquiry, a view shared by the Court of Appeal, which defined the phrase in the language of Civil Code section 19: Every person who has actual notice of circumstances sufficient to put a prudent man upon inquiry as to a particular fact, has constructive notice of the fact itself in all cases in which, by prosecuting such inquiry, he might have learned such fact. In plaintiffs' view, the allegations in their complaints that defendants were aware of circumstances that, if investigated, would have revealed Kalish was a child molester are sufficient to charge defendants with constructive knowledge of that fact. At argument, however, plaintiffs appeared to back away from the position and to agree that reason to know in the statute has the same meaning we ascribed to that term in John B. v. Superior Court (2006) 38 Cal.4th 1177, 1191, 45 Cal.Rptr.3d 316, 187 P.3d 153. ( Post, 67 Cal.Rptr.3d at p. 342, 169 P.3d at p. 569.) They shifted their argument regarding the inquiry notice to the otherwise on notice language, a point we take up momentarily. BSA, however, maintains that reason to know is a form of presumed actual knowledge where based on facts defendant actually knew, an inference can be drawn that he/she must have realized child abuse was occurring, because a reasonable person would have realized this under the circumstances. Accordingly, in BSA's view, the constructive knowledge requirement in subdivision (b)(2) refers not to facts defendants could have discovered upon inquiry, but facts they actually knew and from which known facts they could reasonably have inferred the ultimate fact of Kalish's deviant propensities. We recently had occasion to discuss the meaning of reason to know. Under the reason-to-know standard, `the actor has information from which a person of reasonable intelligence or of the superior intelligence of the actor would infer that the fact in question exists, or that such person would govern his conduct upon the assumption that such fact exists.' (Rest.2d Torts, § 12, subd. 1.) In other words, `the actor has knowledge of facts from which a reasonable man of ordinary intelligence or one of the superior intelligence of the actor would either infer the existence of the fact in question or would regard its existence as so highly probable that his conduct would be predicated upon the assumption that the fact did exist.' ( Id., § 12, com. a, p. 20.) ( John B. v. Superior Court, supra, 38 Cal.4th at p. 1191, 45 Cal.Rptr.3d 316, 137 P.3d 153, fn. omitted.) Thus, contrary to plaintiffs' argument, and the conclusion of the Court of Appeal, the Legislature's use of a reason to know standard is not the same as the inquiry notice described in Civil Code section 19. Rather, in determining whether an actor was in possession of the constructive knowledge described by the reason to know standard, we ask whether, after examining the facts in the actor's possession, a reasonable person of ordinary intelligenceor, in the particular circumstance, a person of superior intelligencewould have inferred the existence of the ultimate fact at issue or regarded its existence as so highly probable as to conduct himself or herself as if it did exist. Nonetheless, contrary to BSA's formulation, having a reason to know something is not the same as actual knowledge. In light of the Legislature's explicit inclusion of an actual knowledge standard, to construe the reason to know standard as simply a restatement of actual knowledge impermissibly creates surplusage in the statute. We must, of course, avoid any construction that would create such surplusage. ( Navellier v. Sletten (2002) 29 Cal.4th 82, 95, 124 Cal.Rptr.2d 530, 52 P.3d 703.) A reason to know standard does not require proof that a person must have inferred the existence of the ultimate fact but only, under the circumstances described above, that a person would have inferred the existence of the ultimate fact or would have regarded the existence of the ultimate fact as so highly probable as to have behaved in conformity with that belief. The parties also disagree about the meaning of the phrase-otherwise on notice. Plaintiffs argue that the phrase, juxtaposed against actual notice and inquiry (i.e. constructive) notice ... is reasonably interpreted as an even broader form of constructive knowledge, that encompasses facts and behaviors inconsistent with the protection of minors, while not fully rising to the level of `childhood sexual abuse,' as that term is defined in subdivision (e) of § 340.1. Thus, as plaintiffs made clear at argument, it is their position that otherwise on notice imposes a duty of inquiry on nonperpetrators triggered when, in the words of their brief, the nonperpetrator is in possession of facts [that] suggest the minor was at risk. At that point, according to plaintiff, the policy must be for non-perpetrator defendants to have reasonably reacted to that risk and determined its nature and scope. This position is consistent with their pleadings in which, in Doe 1's complaint, for example, it is alleged that, based on the various types of improper conduct by Kalish, that [defendants and each of them knew or should have known that Kalish presented a risk of sexual exploitation to boys in the Devonshire Explorer/Scout program. BSA, by contrast, argues that otherwise on notice means imputed actual noticethat is, actual knowledge imputed to a principal based on actual or constructive knowledge, including both inquiry notice and reason to know, in the possession of the principal's agent. Because the phrase is admittedly ambiguous, we consult the legislative history. ( Torres v. Parkhouse Tire Service, Inc. (2001) 26 Cal.4th 995, 1003, 111 Cal. Rptr.2d 564, 30 P.3d 57[[I]f the statutory language permits more than one reasonable interpretation, courts may consider various extrinsic aids, including ... the legislative history....].) The language `or was otherwise on notice' was added ... to address a concern that an entity might be able to avoid responsibility if a formal complaint had not been filed. (Assem. Com. on Judiciary, Rep. on Sen. Bill No. 1779, as amended June 6, 2002, p. 10-.) The apparent purpose of this language was to prevent a nonperpetrator defendant from disclaiming knowledge of the unlawful sexual conduct of the perpetrator on the grounds that it had not been notified of this conduct through a formal complaint process where the evidence demonstrates that some other form of notice was provided. Thus, the legislative history does not support either plaintiffs' claim that the otherwise on notice language imposes a duty of inquiry or BSA's claim that what the Legislature intended was imputed actual knowledge. We need not determine the precise contours of the phrase, however, because even if we were to assume arguendo that plaintiffs interpretation is tenable, they have failed to satisfy the further requirement that the nonperpetrator defendant have knowledge or notice of the perpetrator's past unlawful sexual conduct. It is not enough, under the statute, as plaintiffs maintain, that knowledge or notice of conduct that does not amount to unlawful sexual conduct is sufficient to trigger a duty of inquiry, even if we assume that otherwise on notice refers to such a duty. The preliminary reference in subdivision (b)(2) to unlawful sexual conduct by an employee, volunteer, representative, or agent, is clarified by the subsequent language regarding the non-perpetrator defendant's failure to take preventative action to avoid acts of unlawful sexual conduct in the future by that person, including, but not limited to, preventing or avoiding placement of that person  in circumstances involving contact with children. (Italics added.) Thus, construing the subdivision as a whole, the knowledge or notice requirement refers to knowledge or notice of past unlawful sexual conduct by the individual currently accused of other unlawful sexual conduct. Again, this construction of the statute is supported by the legislative history. In an analysis of the policy reasons supporting Senate Bill No. 1779, it was noted: According to the proponents, many of the victims that would be covered under this bill were abused for years during their childhood, enduring hundreds of assaults from employees or agents that the employer knew or had reason to know had committed past unlawful sexual conduct but failed to take reasonable steps to prevent future occurrences. (Assem. Com. on Judiciary, Rep. on Sen. Bill No. 1779, as amended June 6, 2002, p. 9.) Fairly construed, then, subdivision (b)(2) requires the victim to establish that the nonperpetrator defendant had actual knowledge, constructive knowledge (as measured by the reason to know standard), or was otherwise on notice that the perpetrator had engaged in past unlawful sexual conduct with a minor and, possessed of this knowledge or notice, failed to take reasonable preventative steps or implement reasonable safeguards to avoid acts of future unlawful sexual conduct by the perpetrator.