JENNINGS v. MARRALLE

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Court of Appeal, Fourth District, Division 3, California.

Janet JENNINGS, Plaintiff and Appellant, v. James J. MARRALLE, et al., Defendants and Respondents.

No. G012912.

Decided: July 14, 1993

Marvin D. Mayer, Orange, for plaintiff and appellant. Rutan & Tucker, James L. Morris and Carol L. Demmler, Costa Mesa, for defendants and respondents. Proskauer Rose Goetz & Mendelsohn, Jeffrey A. Berman, Steven G. Drapkin and Monica J. Lizka–Miller, Los Angeles, as amici curiae on behalf of defendants and respondents.

OPINION

Janet Jennings appeals the denial of her request to amend a wrongful termination complaint against James J. Marralle and his professional corporation, to add a cause of action for tortious wrongful discharge based on public policy.   We conclude the Fair Employment and Housing Act (FEHA), while it excludes Jennings from its administrative remedies for age discrimination in employment, nonetheless provides the necessary statutory public policy to support her common law claim.

I

Jennings was employed by Marralle, a sole practitioner endodontist, for a period of three to four years, ending in 1990.   The parties dispute the reason for termination.   Jennings insists she was fired because she was too old and was “making the office pension plan prohibitively expensive.”   Marralle contends Jennings “turned in her office key and quit in a huff after her demand for a raise was declined.”

In June, Jennings filed her complaint for wrongful termination (breach of agreement for indefinite employment), age discrimination (violation of the FEHA), and back wages and pension benefits.   The matter was removed to federal court based on an ERISA challenge.   In March 1991, following a hearing, Judge Gary Taylor granted summary judgment to Marralle on the second cause of action because “neither Defendant regularly employed five or more persons within the meaning of the FEHA and the applicable regulations.”   That portion of the third cause of action relating to pension benefits was dismissed without prejudice, as arising under ERISA.   The remainder of the third cause of action pertaining to overtime credit and the first cause of action for breach of an implied contract were remanded to state court.

In May, Jennings moved to amend her complaint to add a cause of action entitled “Wrongful Termination in Violation of Public Policy.” 1  She contended the apparent rule, that FEHA provided the only remedy for such a claim (Strauss v. A.L. Randall Co. (1983) 144 Cal.App.3d 514, 194 Cal.Rptr. 520), had been overturned by a recent Supreme Court case (Rojo v. Kliger (1990) 52 Cal.3d 65, 276 Cal.Rptr. 130, 801 P.2d 373).   The motion was denied without prejudice.   Jennings' petition to this court for a writ of mandate was summarily denied.

The remaining issues were presented to an arbitrator, who ruled there was no implied in law contract of employment breached by Marralle;  however, the requested overtime payment of $1,693.18 was awarded.   Jennings has appealed “as to that portion of the judgment denying plaintiff leave to amend her complaint to state a cause of action for wrongful termination in violation of public policy.”

II

Qualifying Under the FEHA

 Jennings insists her cause of action for age discrimination is properly founded in public policy, a policy she gleans from the FEHA itself:  “It is hereby declared as the public policy of this state that it is necessary to protect and safeguard the right and opportunity of all persons to seek, obtain, and hold employment without discrimination or abridgment on account of race, religious creed, color, national origin, ancestry, physical disability, medical condition, marital status, sex, or age.”  (Gov.Code, § 12920.) 2  “The opportunity to seek, obtain and hold employment without discrimination because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, or age is hereby recognized as and declared to be a civil right.”  (§ 12921.)

In fashioning remedies for abuses in derogation of the announced policy, the Legislature outlined what would be considered actionable “unlawful practices” and to whom its proscriptions would apply.   By definition, the statute does not provide a remedy against employers employing less than five people, religious associations, and nonprofit corporations.  (§ 12926, subd. (d).)  Thus, despite the fact the discharge, as alleged, meets the criteria for an “unlawful practice,” Jennings has no FEHA cause of action against Marralle, because he does not qualify as a designated “employer” under the act.

The questions presented are (a) whether the FEHA, because it specifically addresses discrimination in the employment field, supersedes common law remedies, and (b) whether an injured employee, without an FEHA remedy, may nonetheless rely on the public policy outlined in that statute to support a common law cause of action.

III

FEHA Does Not Supersede Existing Common Law Remedies

 Addressing an age discrimination case, the court in Strauss v. A.L. Randall Co., supra, 144 Cal.App.3d 514, 194 Cal.Rptr. 520 upheld the dismissal of a common law claim based on public policy, stating, “[I]t is clear that there is no ‘common law’ cause of action for alleged age discrimination․”  (Id. at p. 520, 194 Cal.Rptr. 520.)   In construing the statute, however, it further stated the plaintiff's exclusive remedy lay in the FEHA procedures:  “ ‘Where a new right is created by statute, the party aggrieved by its violation is confined to the statutory remedy if one is provided․’  [Citations.]”  (Id. at pp. 518–19, 194 Cal.Rptr. 520.)

 Our Supreme Court, in Rojo v. Kliger, supra, 52 Cal.3d 65, 276 Cal.Rptr. 130, 801 P.2d 373, disagreed with Strauss' generalized analysis of FEHA and found it unnecessary to its holding.   Jennings notes the Rojo criticism and deduces from it that there must be per se a common law cause of action for age discrimination based on violation of public policy.   Not so.

First, the gravamen of the Rojo holding is that all of the FEHA remedies are cumulative and any “preexisting common law right ․ may be pursued at the plaintiff's election.”  (Rojo v. Kliger, supra, 52 Cal.3d 65, 79, 276 Cal.Rptr. 130, 801 P.2d 373, emphasis added.)   FEHA “expressly disclaims any intent to repeal other state laws relating to employment discrimination.”   (Id. at p. 73, 276 Cal.Rptr. 130, 801 P.2d 373.)

Second, the Rojo court, although stating the Strauss interpretation of legislative intent was incorrect,3 took no stand on its result, i.e., that a covered plaintiff failing to proceed under FEHA has no independent cause of action for age discrimination based on public policy.  (Id. at p. 82, fn. 10, 276 Cal.Rptr. 130, 801 P.2d 373.)   We emphasize that in Strauss, unlike the present case, the plaintiff was entitled to and did bring an FEHA cause of action, but failed to first exhaust his administrative remedies.   He had dismissed that action without prejudice.

Rojo disapproved a blanket ban on any cause of action other than under the FEHA, where the plaintiff's claim qualified under the act.  Strauss refused to allow a common law cause of action based on FEHA policy where an FEHA statutory remedy was provided.   We have no quarrel with either statement.   However, neither Rojo nor Strauss present our factual situation, where the act provides no remedy for an arbitrarily identified group.

IV

Common Law Remedies For Employment Discrimination

To avoid becoming mired in a slough of semantics, we briefly discuss the causes of action arguably available in the employment field.   The FEHA embodies the Legislature's broad pronouncement of public policy prohibiting age discrimination in employment.   The Act outlines the procedure for covered employees who bring their accusations before the commission for investigation and remedial action.

In addition to relief under the statute, common law causes of action may be applicable:  (1) breach of an express or implied employment contract;  (2) breach of the implied covenant of good faith and fair dealing; 4  (3) wrongful discharge based on public policy;  and (4) tortious invasion of a right not relating to the reason for discharge but the manner in which it was accomplished.

Jennings' cause of action for breach of an implied contract of employment was decided adversely to her in arbitration.   As to the existence of a common law cause of action, based on invasion of a personal right, Jennings did not plead any supporting facts.   The examples given in Rojo are of no avail to her:  “For example, as alleged in this case, an employer's discriminatory actions may constitute assault and battery or outrageous conduct redressable under a theory of intentional infliction of emotional distress.”  (Rojo v. Kliger, supra, 52 Cal.3d 65, 81, 276 Cal.Rptr. 130, 801 P.2d 373.)  “Although the common law theories do not per se ‘relate to discrimination,’ they are nonetheless a standard part of a plaintiff's arsenal in a discrimination case.”  (Id. at p. 74, 276 Cal.Rptr. 130, 801 P.2d 373.)   The cases relied upon in Rojo for its statements regarding the availability of discharge-related remedies dealt with sexually- or racially-based employment discrimination.  (See, e.g., Dyna–Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 241 Cal.Rptr. 67, 743 P.2d 1323;  Brown v. Superior Court (1984) 37 Cal.3d 477, 208 Cal.Rptr. 724, 691 P.2d 272;  Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211, 185 Cal.Rptr. 270, 649 P.2d 912;  Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 86 Cal.Rptr. 88, 468 P.2d 216.)   In each instance, if the challenged activity was sufficiently egregious, common law actions were available, such as those for intentional infliction of emotional distress.   And the California Constitution (art. I, § 8) 5 provided public policy statements for a separate cause of action.   The allegations in Jennings' complaint do not state a cause of action along these lines.6

V

Tortious Wrongful Discharge Based on Public Policy

 The attempt to plead a cause of action for common law age discrimination based on public policy presents the intriguing question.   We recognize that “while an at-will employee may be terminated for no reason, or for an arbitrary or irrational reason, there can be no right to terminate for an unlawful reason or a purpose that contravenes fundamental public policy.”   (Gantt v. Sentry Insurance (1992) 1 Cal.4th 1083, 1094, 4 Cal.Rptr.2d 874, 824 P.2d 680.)   And “the policy in question must involve a matter that affects society at large rather than a purely personal or proprietary interest of the plaintiff or employer;  in addition, the policy must be ‘fundamental,’ ‘substantial’ and ‘well established’ at the time of the discharge.”  (Id. at p. 1090, 4 Cal.Rptr.2d 874, 824 P.2d 680.)

Long-standing public policy will support a common law cause of action based on others of the FEHA enumerated examples of prohibited discrimination.   The courts “long ago declared racial discrimination to be contrary to public policy under the common law duty of innkeepers and common carriers to furnish accommodations to all persons.”  (Gantt v. Sentry Insurance, supra, 1 Cal.4th 1083, 1093, 4 Cal.Rptr.2d 874, 824 P.2d 680.)   And an employee may not be fired for refusing to commit perjury (Petermann v. International Brotherhood of Teamsters (1959) 174 Cal.App.2d 184, 188–189, 344 P.2d 25), refusing to participate in an illegal price-fixing scheme (Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 170, 164 Cal.Rptr. 839, 610 P.2d 1330), or protesting unsafe working conditions (Hentzel v. Singer Co. (1982) 138 Cal.App.3d 290, 299–300, 188 Cal.Rptr. 159).

 However, “courts in wrongful discharge actions may not declare public policy without a basis in either constitutional or statutory provisions.”  (Gantt v. Sentry Insurance, supra, 1 Cal.4th 1083, 1095, 4 Cal.Rptr.2d 874, 824 P.2d 680;  see also Sequoia Ins. Co. v. Superior Court (1993) 13 Cal.App.4th 1472, 1480, 16 Cal.Rptr.2d 888.)   Jennings wishes to pluck the public policy language from the FEHA, despite the fact that she has no subsequently-defined remedy pursuant to the statute.   She had no preexisting common law right based on public policy, as there was no stated policy relating to age discrimination in employment until the FEHA.   While the majority of the suspect classifications listed in FEHA are also part of the California Constitution, age is not among them.

The declared purpose of the FEHA is broad:  The public policy of protection against discrimination in employment is granted to all persons.   Clearly, Jennings is one of those.   The FEHA attempts to eliminate discriminatory practices.   What is not broad is the remedial scheme outlined thereafter.   Employers with less than five employees are not subject to the statutory remedies.   But this is not because the policy against age discrimination in employment is any less important as to the non-covered employees.7  Rather, it bespeaks an arbitrary “cutoff” chosen by the Legislature for the convenience of the commission assigned to handle the claims.

Amici insist that if we allow Jennings to adopt the all-inclusive public policy pronouncement in the FEHA, we must also examine the countervailing policies underlying the less-than five-employees exemption.   Quite so.   However, we disagree with the assessment that the Legislature chose this particular exemption because it “is socially preferable and/or necessary to avoid problems of major constitutional dimension.” 8  The definition of “employer” in the FEHA arose, not from some deep-rooted social concern, but rather as an arbitrary expedient.

The reason for the Legislature's creation of the small-employer exemption is explained in Robinson v. Fair Employment & Housing Com. (1992) 2 Cal.4th 226, 240, 5 Cal.Rptr.2d 782, 825 P.2d 767 as “relieving the administrative body of the burden of enforcement where few job opportunities are available, and as keeping the agency out of situations in which discrimination is too subtle or too personal to make effective solutions possible.”  (Id. at p. 240, 5 Cal.Rptr.2d 782, 825 P.2d 767, emphasis added.)  “ ‘A sense of propriety and justice led the framers to believe that individuals should be allowed to retain some small measure of the so-called freedom to discriminate;  besides, they feared the political repercussions of eliminating an area of free choice whose infringement had been so bitterly opposed.   In the second place, the framers believed that discrimination on a small scale would prove exceedingly difficult to detect and police.   Third, it was believed that an employment situation in which there were less than five employees might involve a close personal relationship between employer and employees and that fair employment laws should not apply where such a relationship existed.’ ”  (Ibid., emphasis added.)

We find no opposing public policy which should countermand the protection granted to Jennings in Government Code section 12920.   Because she specifically has no administrative remedy under the FEHA, we see no reason to deny her a common law claim based on the broad public policy contained therein.

There is no basis for the speculation that this holding will emasculate the FEHA.   There was no statutory or constitutional public policy to support a tortious wrongful discharge cause of action prior to the FEHA.9  However, there are now, because of its enactment, two classes of plaintiffs, each with different choices when a claim of age discrimination arises.

Those who are covered under the act must, if they wish to rely on the FEHA policies, exhaust those remedies.   If they choose not to rely on FEHA, they are relegated to other common law remedies and may not base a claim on the policy proclaimed in the act.   On the other hand, those plaintiffs whose right to freedom from discrimination is recognized in the FEHA, but for whom there is no remedy provided, may avail themselves of the broad public policy delineated therein as the basis for a common law cause of action.

The Rojo court relied heavily on an article by David Oppenheimer, Employment Discrimination and Wrongful Discharge:  Does the California Fair Employment and Housing Act Displace Common Law Remedies? (1989) 23 U.S.F.L.Rev. 145, in its own analysis of the displacement issue.   Each in turn discussed Strauss at length, that being the then-leading case to hold there was, absent FEHA, no common law tortious discharge action based on a public policy against age discrimination.  Rojo merely overturned the Strauss conclusion that the FEHA provided the exclusive remedy.   It left intact, or chose not to discuss, the following statement:  “[I]t is clear there is no ‘common law’ cause of action for alleged [tortious] age discrimination․”   (Strauss v. A.L. Randall Co., supra, 144 Cal.App.3d 514, 520, 194 Cal.Rptr. 520.)   Because Strauss was a covered employee, the court had no occasion to address our situation—a victim of the very discrimination prohibited under the public policy of the statute, who is denied any recourse under its procedural plan.

We conclude this is an untenable situation.   The employee must be allowed to pursue a remedy, even though at the party's own expense.10  As noted in the Oppenheimer article, “The Strauss decision is well reasoned in its determination that age discrimination claims do not support a tortious discharge action, at least when the FEHA remedy is available.   Employees fired because of their age had no tortious discharge action prior to the expansion of the FEHA to prohibit such discrimination.   If an employer is covered by the FEHA, employees should be expected to use the statutory process.”  (Oppenheimer, Employment Discrimination and Wrongful Discharge:  Does the California Fair Employment and Housing Act Displace Common Law Remedies?, supra, 23 U.S.F.L.Rev. 145, 161, emphasis added.)   In other words, “[t]o the extent that process [for complaints under FEHA] is sufficient to enforce the new right, the Strauss court properly concluded that the FEHA process is exclusive because without the FEHA there would be no violation of public policy.”  (Id. at p. 182, emphasis added, fn. omitted.)

Here, we have the situation obliquely referred to above.   The FEHA clearly establishes a public policy concern and a new civil right for all employees.   However, the remedial procedures do not include protection for a worker like Jennings whose employer has less than five employees.   When the discrimination is based on race, religion, color, sex, or national origin, the problem does not arise;  other statutory and common law actions are available.   But where the only legislative pronouncement of public policy exists in the FEHA, that policy is enforceable in a civil action by a plaintiff who is arbitrarily denied access to its remedial scheme.

The order denying the motion to amend is reversed.   The court is directed to accept the amended complaint for filing.

Appellant to receive costs on appeal.

FOOTNOTES

1.   Jennings alleged she was terminated solely because of her age “in violation of public policy which prohibits discrimination in employment on the basis of age.”   She claimed damages for loss of earnings, employee benefits, and emotional distress.We note the recent United States Supreme Court case, holding “an employer does not violate the [Age Discrimination in Employment Act] just by interfering with an older employee's pension benefits that would have vested by virtue of the employee's years of service.”  (Hazen Paper Co. v. Biggins (1993) 507 U.S. 604, ––––, 113 S.Ct. 1701, 1703, 123 L.Ed.2d 338.)   The court did not, however, “consider the special case where an employee is about to vest in pension benefits as a result of his age, rather than years of service [citation], and the employer fires the employee in order to prevent vesting.”  (Ibid.)  Moreover, said the court, “We do not mean to suggest that an employer lawfully could fire an employee in order to prevent his pension benefits from vesting.   Such conduct is actionable under § 510 of ERISA․”  (Id. at p. ––––, 113 S.Ct. at 1707.)

2.   The remainder of the section provides:  “It is recognized that the practice of denying employment opportunity and discriminating in the terms of employment for such reasons foments domestic strife and unrest, deprives the state of the fullest utilization of its capacities for development and advance, and substantially and adversely affects the interest of employees, employers, and the public in general.  [¶][¶] It is the purpose of this part to provide effective remedies which will eliminate such discriminatory practices.  [¶] This part shall be deemed an exercise of the police power of the state for the protection of the welfare, health, and peace of the people of this state.”All statutory references are to the Government Code unless otherwise specified.

3.   “In determining legislative intent ․ Strauss and its progeny needlessly invoked the ‘new right—exclusive remedy’ doctrine of interpretation.   Because the FEHA, like its predecessor the FEPA, expressly disclaims any intent to displace other relevant state laws, no resort to interpretative aids is required and the existence vel non of a preexisting cause of action for the particular discrimination is irrelevant.”  (Id. at p. 82, 276 Cal.Rptr. 130, 801 P.2d 373.)

4.   Although the cause of action is still viable, in an employment situation it is subject merely to contract remedies.  (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 700, 254 Cal.Rptr. 211, 765 P.2d 373.)

5.   “A person may not be disqualified from entering or pursuing a business, profession, vocation, or employment because of sex, race, creed, color, or national or ethnic origin.”  (Cal. Const., art. I, § 8.)

6.   This is not to say that an age discrimination allegation might not, in another situation, be so odious or malicious as to approach defamation or intentional infliction of mental distress.   This, of course, is the reason the Rojo court took exception to the broad exclusivity statement in Strauss.

7.   Respondents conceded at oral argument that there is essentially no remedy (other than contractual or for an oppressive method of termination) for an employee discriminated against on the basis of age, physical disability or marital status, where his or her employer has five or less employees.

8.   Amici fear their exempt position as religious and charitable organizations will suffer.   However, we hasten to point out that our determination relates solely to age discrimination by an employer of less than five employees.   We do not address the constitutional concerns which might weigh in the balance in other situations.   Consequently, the authorities upon which Amici depend are inapplicable to the narrow issue before us.  (See, e.g., Rubin v. Green (1993) 4 Cal.4th 1187, 17 Cal.Rptr.2d 828, 847 P.2d 1044 [right to bring a cause of action under Bus. & Prof.Code, § 17204 outweighed by immunity granted under Civ.Code, § 47].)

9.   Jennings points to Civil Code section 51 (the Unruh Act) as further substantiation of a public policy favoring her position.   However, the Unruh Act does not apply to “the subject of discrimination in employment․”  (Alcorn v. Anbro Engineering, Inc., supra, 2 Cal.3d 493, 500, 86 Cal.Rptr. 88, 468 P.2d 216.)

10.   A covered employee need only file a complaint with the Department of Fair Employment and Housing, “whose function is to investigate, conciliate, and seek redress of claimed discrimination (§ 12930), and the Fair Employment and Housing Commission ․ (§ 12903), which performs adjudicatory and rulemaking functions (§ 12935).”  (Rojo v. Kliger, supra, 52 Cal.3d 65, 72, 276 Cal.Rptr. 130, 801 P.2d 373.)   The Department “must promptly investigate” (ibid.) and attempt to resolve the matter.   If an accusation is filed, “[t]he Department acts as prosecutor on the accusation and argues the complainant's case before the Commission.”  (Ibid.)  That considerably less expensive path is unavailable to one in Jennings' position.

SONENSHINE, Associate Justice.

MOORE, Acting P.J., and WALLIN, J., concur.