Court Opinion

ID: 5664657
Source: CourtListenerOpinion
Date Created: 2022-01-12 03:40:19.561635+00
Date Added: 2024-06-11T08:38:23.911704
License: Public Domain

FYBEL, J., Dissenting.
I respectfully dissent. For the reasons explained in detail below, I believe the majority’s holdings are unprecedented, incorrect, and contrary to California Supreme Court decisions. The two dispositive questions presented by this appeal are and our answers to them should be:
First, should the Unruh Civil Rights Act be extended to cover for the first time a physician who works as an independent contractor in a hospital?1 No. To create liability to this plaintiff under the Unruh Civil Rights Act based on the pleadings in this case is unprecedented and, I believe, contrary to authority.
Second, must a physician claiming tort damages resulting from the failure of a hospital to fairly investigate and act on claims of racial discrimination allege invocation and exhaustion of the hospital’s internal remedies? Yes. Where, as here, the hospital has internal procedures to address requests for corrective action for discriminatory or harassing conduct, those internal procedures must be invoked and exhausted before a civil lawsuit is instituted. Plaintiff Dr. David H. Payne failed to allege invocation and exhaustion of internal remedies; therefore, his civil lawsuit for damages does not withstand a motion for judgment on the pleadings. I also disagree with the majority’s conclusion that this court should deem the remedies inadequate, even though Dr. Payne’s complaint never alleged such inadequacy.
*750I.
Unruh Civil Rights Act
The Unruh Civil Rights Act, Civil Code section 51, subdivision (b), provides: “All persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, disability, or medical condition are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever.” Our Supreme Court has interpreted the Act “ ‘in the broadest sense reasonably possible.’ ” (Isbister v. Boys’ Club of Santa Cruz, Inc. (1985) 40 Cal.3d 72, 76 [219 Cal.Rptr. 150, 707 P.2d 212] (Isbister).) Nevertheless, our Supreme Court has also held, “there is no indication that the Legislature intended to broaden the scope of section 51 to include discriminations other than those made by a ‘business establishment’ in the course of furnishing goods, services or facilities to its clients, patrons or customers. [Citation.]” (Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 500 [86 Cal.Rptr. 88, 468 P.2d 216] (Alcorn).)
In particular, the Act does not apply to discrimination within the employment relationship. (Rojo v. Kliger (1990) 52 Cal.3d 65, 77 [276 Cal.Rptr. 130, 801 P.2d 373] [“the Unruh Civil Rights Act has no application to employment discrimination”]; Isbister, supra, 40 Cal.3d at p. 83, fn. 12 [“the employer-employee relationship was not covered by the Act, which was confined to discriminations against recipients of the ‘business establishment’s . . . goods, services or facilities’ ”]; Alcorn, supra, 2 Cal.3d at p. 500 [affirming dismissal of terminated employee’s Unruh Civil Rights Act claim against former employer because “it is doubtful that the Legislature intended these sections to apply to discrimination in employment”]; Jurado v. Eleven-Fifty Corp. (C.D.Cal. 1985) 630 F.Supp. 569, 573; see 2 Wilcox, Cal. Employment Law (2004) Overview, § 40.12[1], pp. 40-32 to 40-33 (rel. 23-3/01).)
This limitation on the Act’s application extends to employment discrimination between those not in a traditional employer-employee relationship. (See 3 Wilcox, Cal. Employment Law, supra, Agency Enforcement, § 42.01 [2] [b], p. 42-14 & fn. 22 (rel. 23-3/01).) In Strother v. Southern Cal. Permanente Medical Group (9th Cir. 1996) 79 F.3d 859, 863, a medical doctor sued the medical group of which she was a partner, alleging racial and gender discrimination. The court of appeals affirmed the grant of summary judgment on the plaintiff’s claim for violation of the Act. (Id. at pp. 874-875.) “Strother argues that she is protected by the Unruh [Civil Rights] Act because in her position at the Medical Group she is ‘entitled to receive economic benefits, the use of certain medical facilities, medical supplies and other goods, management courses, and a variety of privileges, advantages, and *751services, including opportunities for promotion and advancement.’ These benefits, however, are no different than those that would be received by any doctor who was, as she once was, a mere employee of the Medical Group. Being a ‘recipient’ of these benefits does not entitle Strother to the protection of the Unruh Act any more than an employee’s being the ‘recipient’ of a paycheck gives him or her Unruh Act protection. Even if Strother were considered a bona fide partner rather than an ‘employee’ for the purpose of [California’s Fair Employment and Housing Act], her relationship to the Medical Group is more like that of an employee than that of a ‘client, patron or customer.’ ” (Id. at p. 874.) Strother v. Southern Cal. Permanente Medical Group does not create a special rule that the Act does not apply to physicians. Rather, the case stands for the unremarkable proposition that the Act does not apply to employment discrimination claims, whether the parties have a traditional employer-employee relationship or something else.
In Dept. Fair Empl. & Hous. v. Children’s Hospital and Health Center (1987) No. 87-24, FEHC Precedential Decs. 1986-1987, CEB 10, the Fair Employment and Housing Commission concluded that, as with employer-employee relationships, the Act does not apply when an independent contractor claims discrimination by its employer. (See also Sprewell v. Golden State Warriors (9th Cir. 2001) 266 F.3d 979, 989 [Unruh Civil Rights Act claim properly dismissed because player’s suspension by the National Basketball Association (NBA) and termination of player’s contract by team both “stemmed from [NBA player’s] employment relationships”]; Robinson v. Ladd Furniture, Inc. (M.D.N.C. 1994) 872 F.Supp. 248, 250 [referring to earlier ruling which dismissed Unruh Civil Rights Act claim because “this Act does not apply to claims of discrimination in employment either as an independent contractor or as an employee”]; Gauvin v. Trombatore (N.D.Cal. 1988) 682 F.Supp. 1067, 1073 [Unruh Civil Rights Act does not apply to discrimination in employment “regardless of whether the relationship between the parties is characterized as employer-employee or contractor-subcontractor”].) These cases were recently cited and relied on in Alch v. Superior Court (2004) 122 Cal.App.4th 339, 393-394 [19 Cal.Rptr.3d 29], in interpreting the Act’s application.
The majority asserts that our Supreme Court has expressly “eschewed” the construction of the Act set forth in Alcorn, supra, 2 Cal.3d 493, 500 (which is cited above); the majority cites Isbister, supra, 40 Cal.3d at page 83, footnote 12, for this proposition. In Isbister, however, the Supreme Court held that the Act could apply to a noncommercial entity, and that the holding of Alcorn that the Act applies only to discriminations against recipients of a business establishment’s goods, services or facilities did not bar a claim against the Boys’ Club. The footnote from Isbister, on which the majority relies, addresses only the definition of “business establishment” for purposes of the Act’s application. The question here is whether the relationship between *752Dr. Payne and Anaheim Memorial Medical Center, Inc. (the Hospital) is an employment relationship, and thus removed from the Act’s reach, not whether the Hospital is a business establishment. The requirement, established by our Supreme Court over 35 years ago in Alcorn, that a plaintiff suing under the Act be a client, patron, or customer, is still alive and well. (See Alch v. Superior Court, supra, 122 Cal.App.4th at pp. 393-394.)
In this case, Dr. Payne conspicuously avoided including in his complaint any allegations relating to his status vis-á-vis the Hospital. He never alleged whether he was an employee, an independent contractor, a volunteer, or something else. In his opening appellate brief, however, Dr. Payne acknowledges he was “not an employee of the Hospital, but practices at the hospital facilities independently. [He] generally receives no wages directly from the hospital, and is responsible for his or her own billing to patients.”
California law effectively prohibits hospitals and the physicians who work in them from being in an employer-employee relationship. (Bus. & Prof. Code, §§ 2285, 2400.) If a physician could be directly employed by a hospital, he or she would unquestionably lack standing to sue the hospital for violating the Act by discriminating against him or her. The fact a physician is an independent contractor rather than an employee should not change this rule. I believe the majority’s contrary decision is legally unsupportable and a novel extension of the Act.
Experience tells me why Dr. Payne pleaded his case the way he did. He did not attach the Hospital’s bylaws to the complaint; he did not explain or describe his status at the Hospital (as an independent contractor or otherwise) other than to allege he had privileges at the Hospital; he did not allege he was a client, patron, or customer of the Hospital as would be required by 35-year-old authority from the California Supreme Court interpreting the Act (Alcorn v. Anbro Engineering, Inc., supra, 2 Cal.3d at p. 500);2 and he chose not to amend the complaint after the trial court granted the motion for judgment on the pleadings. Instead, Dr. Payne included allegations purporting to show he was discriminated against by the poor care rendered to one patient, without any legal or analytical support. The language of the complaint shows, I believe, that Dr. Payne was attempting to plead around the well-settled principles of law set forth above, or simply ignore them. I recognize that the law requires that Dr. Payne’s complaint be construed liberally. But this rule does not mean the many blanks left by Dr. Payne *753should be filled in so as to judicially create standing when no basis for it has been pleaded.3 The majority’s extension of the Act is unprecedented and contrary to all authority cited in its own opinion and in this dissent.
n.
Negligent Infliction of Emotional Distress
When the parties’ agreement provides for a particular remedy, and the plaintiff does not pursue that remedy before filing a lawsuit, failure to exhaust remedies is routinely raised by affirmative defense. It can also be the basis for a demurrer or a motion for judgment on the pleadings. (Charles J. Rounds Co. v. Joint Council of Teamsters No. 42 (1971) 4 Cal.3d 888, 899 [95 Cal.Rptr. 53, 484 P.2d 1397] [the plaintiff failed to arbitrate before filing lawsuit]; De Gonia v. Building Material etc. Union (1957) 155 Cal.App.2d 573 [318 P.2d 486].)
Did Dr. Payne allege he exhausted his internal remedies? No. Dr. Payne did not allege that the bylaws provided internal remedies, or that he invoked or exhausted those remedies. Did Dr. Payne need to exhaust his internal remedies? Yes. As our Supreme Court has explained, “[i]t is the general and well established jurisdictional rule that a plaintiff who seeks judicial relief against an organization of which he is a member must first invoke and exhaust the remedies provided by that organization applicable to his grievance. [Citations.] This rule is analogous to the rule requiring the exhaustion of administrative remedies as a condition precedent to resorting to the courts [citation], and to the rule requiring the parties to a contract for arbitration of disputes to exhaust those remedies before seeking judicial relief. [Citations.] Such rules are based on a practical approach to the solution of internal problems, complaints and grievances that arise between parties functioning pursuant to special and complex agreements or other arrangements. They make possible the settlement of such matters by simple, expeditious and inexpensive procedures, and by persons who, generally, are familiar therewith. Such internal remedies are designed not only to promote the settlement of grievances but also to promote more harmonious relationships, and the courts look with favor upon them.” (Holderby v. Internat. Union etc. Engrs. (1955) 45 Cal.2d 843, 846 [291 P.2d 463]; see Palmer v. Regents of University of California (2003) 107 Cal.App.4th 899, 904 [132 Cal.Rptr.2d 567] [“When a private association . . . establishes an internal grievance mechanism . . . failure to exhaust those internal remedies precludes any subsequent private civil action”].)
*754This general rule should apply with equal force in the context of physicians practicing medicine in hospitals. Where a hospital provides a procedure to address the conduct complained of by the physician, the physician must first exhaust those internal remedies before seeking judicial relief. (Westlake Community Hosp. v. Superior Court (1976) 17 Cal.3d 465, 474-475 [131 Cal.Rptr. 90, 551 P.2d 410] (Westlake).) Dr. Payne chose not to amend his complaint after the trial court granted the motion for judgment on the pleadings; I presume the complaint states Dr. Payne’s strongest possible case. (Soliz v. Williams (1999) 74 Cal.App.4th 577, 585 [88 Cal.Rptr.2d 184].)
The bylaws provide a procedure by which any member of the Hospital’s medical staff may seek corrective action. Paragraph 10.1.1 of the bylaws permits a staff member to initiate a request for corrective action when any physician’s activities or professional conduct (including, but not limited to, harassment) (1) are detrimental to patient safety or the delivery of high quality medical care, (2) are considered to be lower than the standards or aims of the medical staff, or (3) are disruptive to the Hospital’s operations. Paragraph 10.1.2 provides: “All requests for corrective action shall be in writing, submitted to the Medical Executive Committee, and supported by a reference to the specific activities or conduct which constitute the grounds for the request.” Dr. Payne did not allege the existence of those provisions of the bylaws or that he made a written request for corrective action or stated the grounds for the request in writing. Thus, Dr. Payne did not invoke or exhaust his internal remedies.
Internal remedies need not be exhausted if the remedies provided would be inadequate. (See Campbell v. Regents of the University of Cal. (2005) 35 Cal.4th 311, 322 [25 Cal.Rptr.3d 320, 106 P.3d 976].) Dr. Payne did not allege in his complaint that the internal remedies provided by the Hospital’s bylaws existed or would have been inadequate. I do not believe an appellate court should read into the complaint an allegation of inadequacy of the remedy when Dr. Payne did not so plead, even after he was given an opportunity to amend. I also do not believe an appellate court should engage in guesswork as to what would have happened if a sufficient request for corrective action had been made by Dr. Payne, and if he had explained the grounds for his request to the appropriate Hospital committee at the appropriate time. Unlike my colleagues in the majority, I do not believe we can say as a matter of law that the remedy would have been inadequate, and I therefore decline Dr. Payne’s invitation to insert allegations into his complaint and then to determine they are sufficient.
Dr. Payne argues that Westlake applies only to cases involving denial or loss of medical privileges, and that this case is not one involving a loss of privileges. I believe that Dr. Payne is fundamentally incorrect on both points.
*755Although the physician in Westlake had been denied privileges at one hospital and had her privileges revoked at another (Westlake, supra, 17 Cal.3d at p. 470), the rule of that case cannot be limited to those specific factual circumstances. The requirement that a physician exhaust internal remedies before filing a civil action has been applied where some, but not all, of the physician’s privileges have been suspended (Kaiser Foundation Hospitals v. Superior Court (2005) 128 Cal.App.4th 85, 92 & fn. 3 [26 Cal.Rptr.3d 744]), and where a physician’s patients’ charts were to be audited and the physician’s performance was to be monitored (McNair v. Pasadena Hospital Assn., Ltd. (1980) 111 Cal.App.3d 841, 843-844 [169 Cal.Rptr. 39]).
The purpose of requiring that a physician exhaust his or her internal remedies is to encourage the resolution of problems more quickly and appropriately. Our Supreme Court has explained the underlying rationale for this rule as follows: “[A]n exhaustion of remedies requirement serves the salutary function of eliminating or mitigating damages. If an organization is given the opportunity quickly to determine through the operation of its internal procedures that it has committed error, it may be able to minimize, and sometimes eliminate, any monetary injury to the plaintiff by immediately reversing its initial decision and affording the aggrieved party all membership rights; an individual should not be permitted to increase damages by foregoing available internal remedies. [Citation.] [][] Moreover, by insisting upon exhaustion even in these circumstances, courts accord recognition to the ‘expertise’ of the organization’s quasi-judicial tribunal, permitting it to adjudicate the merits of the plaintiff’s claim in the first instance. [Citation.] Finally, even if the absence of an internal damage remedy makes ultimate resort to the courts inevitable [citation], the prior administrative proceeding will still promote judicial efficiency by unearthing the relevant evidence and by providing a record which the court may review.” (Westlake, supra, 17 Cal.3d at p. 476.) Here, it seems to me that following the procedures set forth in the bylaws would have permitted the Hospital to have achieved, or attempted to achieve, these goals.
These goals are equally applicable when a physician’s privileges are negatively impacted rather than terminated. Indeed, Westlake must apply to employment actions less than revocation or denial of privileges for the simple reason that a contrary rule might result in harsher actions being taken against physicians by hospitals. “A contrary result would leave hospitals and persons who serve on committees which police medical personnel vulnerable to an immediate suit for damages by a disgruntled physician. This might provide them with encouragement to terminate staff privileges completely rather than impose some lesser discipline which might be both appropriate and sufficient. We don’t wish to provide that encouragement.” (McNair v. Pasadena Hospital Assn., Ltd., supra, 111 Cal.App.3d at p. 846.)
*756Additionally, contrary to Dr. Payne’s argument, I believe this is a case about an alleged negative impact on medical privileges. In his complaint, Dr. Payne alleged, among other things; the Hospital, through its agents and employees, had engaged in a “pattern of emotionally and professionally debilitating interference with [his] use of [the Hospital]’s business facilities”; the actions of the Hospital and Dr. Siegel resulted in a monitoring surgeon overseeing Dr. Payne’s surgical work; the peer review meetings conducted by the Hospital’s medical staff “could affect [his] staff privileges”; “in reality, and as all physicians know, all surgery evaluations affect staff privileges since one cannot ‘un-ring the bell of criticism’ if and when such information may subsequently be relied upon when evaluating future staff privileges”; and the Hospital “engaged in a well-orchestrated surreptitiously executed plan of harassment and intimidation of [Dr. Payne] of such magnitude and scope that [he] was effectively barred from practicing medicine at [the Hospital].”
In my view, the majority has read into the complaint facts necessary to sustain Dr. Payne’s complaint that were clearly not alleged in the complaint itself, nor asserted in other filings or in the appellate briefs. I respectfully disagree with my colleagues’ actions as well beyond and indeed contrary to legal authority.
Westlake also requires that, after exhausting internal remedies, a potential litigant pursue the judicial remedy of a writ of mandate before instituting a lawsuit. (Westlake, supra, 17 Cal.3d at p. 484.) I believe Dr. Payne’s failure to comply with this requirement provides a second, separate ground for affirming the judgment.
Finally, I wish to respond directly to the majority’s references to fairness. I agree wholeheartedly that racial discrimination is a horrible offense and a serious charge. But I also believe fairness is a two-way street. Our law, as described above, and fairness require certain prerequisites to filing in civil court a lawsuit for damages based on charges like those asserted in Dr. Payne’s complaint. Based on consistent authority from the California Supreme Court, the California Courts of Appeal, the Ninth Circuit and federal district courts (applying California law), and the California Fair Employment and Housing Commission, the Unruh Civil Rights Act does not apply to Dr. Payne. It is precisely because racial discrimination is abhorrent and needs to be investigated and addressed that the Legislature and the courts have developed rules to be fair to the accused and the accuser alike.
*757In this case, the majority permits Dr. Payne to skip the rudimentary internal step of a written complaint and a statement of reasons. How simple can a step be? How many minutes would it have taken Dr. Payne to satisfy this basic step and give fair notice to the Hospital? The majority also takes the unprecedented step of permitting an independent contractor (liberally reading Dr. Payne’s complaint to include his description of his capacity set forth in his appellate brief) to state a claim under the Unruh Civil Rights Act. The majority’s result—though well-intentioned—conflicts with precedent and, yes, fairness.
A petition for a rehearing was denied July 20, 2006, and respondent’s petition for review by the Supreme Court was denied October 21, 2005.

 The Unruh Civil Rights Act is codified at Civil Code section 51.1 will sometimes refer to this statute as the Act.

 The closest Dr. Payne comes is on page 8 of his complaint where he alleged the Hospital “fail[ed] to affirmatively protect classes of minority employees, privileged physicians, and patients to provide!] unencumbered equal access to its business facilities, including those for surgery and post-operative treatment.” But Dr. Payne did not allege (nor presumably could he) that he was denied access to treatment.

 Contrary to the majority’s suggestion, this dissent does not rest on the belief that the complaint is “ ‘ambiguous or uncertain.’ ” I am construing Dr. Payne’s complaint liberally. But the fact remains that his complaint does not allege the necessary elements of his claims, not that it is “ ‘ambiguous or uncertain.’ ”