FLANAGAN v. SID BARBER AND STYLE SALON (1993)

In this case we consider whether the California Fair Employment and Housing Act (FEHA) (Gov.Code, § 12900 et seq.) ¹ precludes a civil action based upon a discriminatory employment practice in violation of the FEHA where the Department of Fair Employment and Housing (Department) has elected to proceed against the employer by way of accusation and the Fair Employment and Housing Commission (Commission) has issued a final determination.   We hold that FEHA administrative proceedings are not the exclusive remedy for discriminatory employment practices under the FEHA and the complainant may bring a civil suit alleging the statutory violation once the administrative remedy has been exhausted.

FACTS

On October 11, 1984, petitioner, Verna Flanagan, filed a complaint with the Department which resulted in the filing one year later (i.e., October 15, 1985), of an accusation against real parties in interest, Sid's Barber and Style Salon, its owner, Sid Ford, and its manager, Curtis Stanton.   The accusation alleged that real parties had perpetrated acts of sexual harassment against petitioner during her employment at the salon, had harassed several other female employees, and had “established and maintained a hostile and offensive work environment permeated with sexual harassment and retaliatory conduct” in violation of the FEHA.   The Department requested the Commission to hold a hearing and to order real parties, among other things, to reinstate petitioner in the position of barber, to pay her compensatory and punitive damages, and to adopt a policy prohibiting sexual harassment in the salon.

The Commission rendered its final decision effective January 29, 1988.   It ordered petitioner to be reinstated and awarded her both back pay and $30,000 in compensatory damages.   The Commission did not award petitioner punitive damages because of the intervening decision of the California Supreme Court in Dyna–Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 241 Cal.Rptr. 67, 743 P.2d 1323 (Dyna–Med ), which had held that the Commission did not have the authority under section 12970, subdivision (a) to award punitive damages.  (At p. 1389, 241 Cal.Rptr. 67, 743 P.2d 1323.)

Thereafter real parties petitioned for a writ of administrative mandamus.  (Code Civ.Proc., § 1094.5.)   The superior court denied the petition as to the Commission's findings of sexual harassment, the order of reinstatement, and the award of back pay, but issued the writ setting aside the Commission's award of compensatory damages.   This was done in reliance upon the intervening decision of the California Supreme Court in Peralta Community College Dist. v. Fair Employment & Housing Com. (1990) 52 Cal.3d 40, 276 Cal.Rptr. 114, 801 P.2d 357 (Peralta ), which had held that the Commission was not authorized under section 12970, subdivision (a) to award compensatory damages either.   (Id. at p. 60, 276 Cal.Rptr. 114, 801 P.2d 357.)   The decision was affirmed on appeal in a nonpublished opinion.  (Sid's Barber & Style Salon v. California Fair Employment and Housing Commission (June 12, 1991) A045220.)

Having lost the ability to recover both compensatory and punitive damages from the Commission, petitioner responded by filing a civil complaint against real parties seeking damages for the FEHA violation.   In her prayer, petitioner asked for an award of “compensatory damages, according to proof at trial” and for a determination that real parties were estopped from denying that they had violated the FEHA.

Real parties demurred contending that the FEHA did not authorize a civil action where the Department has issued an accusation;  and the complaint was defective in that petitioner had failed to allege she had received a right-to-sue letter, a condition precedent to the filing of a civil action.   The trial court sustained real parties' demurrer with leave to amend, and the instant petition was filed.

REVIEW

At issue is whether petitioner is prohibited from commencing a civil action against real parties for the unlawful employment practice because the Department elected to proceed against real parties by way of an accusation.   The answer is no:  the fact that the Department has filed an accusation does not bar a claimant from pursuing a civil action against the offending party for employment discrimination.

A.

Because this case is somewhat unusual procedurally,² a little background is helpful, particularly to explain the interrelationship between an administrative FEHA action, an independent civil action for FEHA violations, the remedies available from the Commission, and the procedural posture of this case.

The California Fair Employment Practices Act was enacted in 1959 (former Lab.Code, § 1410 et seq.) and recodified in 1980 in conjunction with the Rumford Fair Housing Act (former Health & Saf.Code, § 35700 et seq.) to form the FEHA.  (Stats.1980, ch. 992, § 4, p. 3140 et seq.)   The FEHA establishes that freedom from employment discrimination on specified grounds, including sex, is a civil right (§ 12921), and declares that such discrimination is against public policy (§ 12920) and constitutes an unlawful employment practice (§ 12940).  (Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211, 215–219, 185 Cal.Rptr. 270, 649 P.2d 912 [Commodore ].)

 The statute creates two administrative bodies:  the Department (§ 12901), whose function is to investigate, conciliate, and seek redress for claims of discrimination (§ 12930), and the Commission (§ 12903), which performs adjudicatory and rule-making functions (§ 12935).   An aggrieved person may file a complaint with the Department (§ 12960) which must promptly investigate the matter (§ 12963).   The Department may attempt to settle the claim in private—via conference, conciliation, or persuasion (§ 12963.7).   Or it may file an accusation to be heard by the Commission (§§ 12965, subd. (a), 12969).   In an action before the Commission, the Department acts as prosecutor and presents the complainant's case to the Commission.   (Dyna–Med, supra, 43 Cal.3d at pp. 1383–1384, 241 Cal.Rptr. 67, 743 P.2d 1323;  accord, Rojo v. Kliger (1990) 52 Cal.3d 65, 72, 276 Cal.Rptr. 130, 801 P.2d 373.)

 Until 1977 a remedy for violation of the FEHA could be obtained only from the Commission.   Since then, however, there has been a right to pursue a civil action for a violation of the FEHA.  (§ 12965, subd. (b) (added by stats. 1977, ch. 1188, § 34, p. 3911 [see former Lab.Code, § 1422.2, subd. (b) ].) ³  In that action, the plaintiff is entitled to recover both compensatory and punitive damages.  (Commodore, supra, 32 Cal.3d at pp. 215–219, 185 Cal.Rptr. 270, 649 P.2d 912.)   But a precondition to bringing the civil suit on the statutory cause of action is the exhaustion of the FEHA administrative remedy.  (Rojo v. Kliger, supra, 52 Cal.3d 65, 72, 276 Cal.Rptr. 130, 801 P.2d 373.)

When petitioner started the ball rolling in 1984, the Commission was exercising greater remedial powers than the Supreme Court found it to have in Peralta and Dyna–Med.   Indeed as early as 1980, the Commission had adopted a regulation providing for the award of punitive and compensatory damages “ ‘in situations involving violations which are particularly deliberate, egregious or inexcusable.’ ”  (See Dyna–Med, supra, 43 Cal.3d at p. 1407, fn. 5, 241 Cal.Rptr. 67, 743 P.2d 1323 [dis. opn. of Broussard, J.] (quoting former Cal.Admin.Code, tit. 2, § 7286.9, subd. (c)).)  It was not until 1987 that the Supreme Court ruled that the Commission could not award punitive damages, and not until 1990 that the Commission lost its power to award compensatory damages.

 The Legislature swiftly amended the FEHA in response to Dyna–Med and Peralta (see Stats.1992, ch. 911, § 1, subd. (c), No. 6 Deering's Adv.Legis.Service, p. 3795) by giving the Commission greater remedial powers.   The Commission may now award compensatory damages, civil penalties, and administrative fines within stated guidelines.  (See § 12970, subds. (a), (c), (d), (e) [as amended by stats.1992, ch. 911, § 6, No. 6 Deering's Adv.Legis.Service, pp. 3806–3807].) ⁴  Unfortunately for petitioner the amendments apply only to complaints filed with the Department as of January 1, 1993.  (Stats.1992, ch. 911, § 13, No. 6 Deering's Adv.Legis.Service, p. 3809.)   Petitioner's complaint was filed eight years too early to qualify under the statute.

B.

We turn now to real parties' contention that petitioner has no remaining civil remedy because the Department proceeded against them by way of accusation.

 The FEHA—i.e., subdivision (b) of section 12965—does not specifically preclude the pursuit of the civil remedy after the Commission has acted upon an accusation.   The statute provides that if an accusation is not issued within 150 days after the filing of a complaint or if the Department earlier determines not to prosecute the case and the matter is not otherwise resolved, the Department must issue the complainant a right-to-sue letter.  (See fn. 3, ante.)   While the issuance of a right-to-sue letter has been interpreted to be a prerequisite to the commencement of an independent civil action (e.g., Rojo v. Kliger, supra, 52 Cal.3d at pp. 82–84, 276 Cal.Rptr. 130, 801 P.2d 373;  Dyna–Med, supra, 43 Cal.3d at p. 1384, 241 Cal.Rptr. 67, 743 P.2d 1323;  Commodore, supra, 32 Cal.3d at p. 219, 185 Cal.Rptr. 270, 649 P.2d 912), no case has ever read section 12965, subdivision (b), as precluding a civil action if the department has proceeded by way of accusation.   Nor has the Department ever attached such an interpretation to the statute.⁵

The Legislature knows how to write a statute prohibiting a civil action under the FEHA where the Department has proceeded against the offending party by way of an accusation.   Recently it did just that in the context of housing discrimination under FEHA.   As added in 1992, section 12989.1 provides that:  “An aggrieved person may not commence a civil action with respect to an alleged discriminatory housing practice that forms the basis of an accusation issued by the department if the department has commenced a hearing on the accusation.”  (Emphasis added.)  (Added by stats.1992, ch. 182, § 20, No. 3 Deering's Adv.Legis.Service, pp. 932–933.)   No similar language was added to section 12965, subdivision (b), governing civil actions for discriminatory employment practices.   We take that omission to evidence the Legislature's approval of an independent civil action in the context of employment discrimination under the FEHA, even though the Department has proceeded against the offending party via an accusation.

Nor do the cases cited by real parties—Dyna–Med and Peralta—offer support to their reading of section 12965, subdivision (b), either.   It is clear that exhaustion of the FEHA administrative remedy is a precondition to the bringing of a civil action on a statutory cause of action (e.g., Rojo v. Kliger, supra, 52 Cal.3d at pp. 82–84, 276 Cal.Rptr. 130, 801 P.2d 373;  Commodore, supra, 32 Cal.3d at p. 219, 185 Cal.Rptr. 270, 649 P.2d 912).  Exhaustion of the administrative remedies will ordinarily be signaled by the issuance of a right-to-sue letter which the Department must provide if it determines that it will not bring an accusation.  (§ 12965, subd. (b);  Rojo v. Kliger, supra, 52 Cal.3d at p. 83, 276 Cal.Rptr. 130, 801 P.2d 373.)   But no case has held that exhaustion of administrative remedies occurs only when the Department has issued a right-to-sue letter and has not issued an accusation.   Certainly nothing in the text of Dyna–Med or Peralta suggests that to be the interpretation of the California Supreme Court.   Moreover, in each of these cases, the Supreme Court was limiting its review specifically to the issue of what types of damages the Commission was authorized to impose.  (See Dyna–Med, supra, 43 Cal.3d at p. 1385, 241 Cal.Rptr. 67, 743 P.2d 1323;  Peralta, supra, 52 Cal.3d at p. 48, 276 Cal.Rptr. 114, 801 P.2d 357.)   Nothing on the face of these opinions hints that the court considered—much less rejected—the possibility of a court action following the completion of the administrative adjudication.   Neither case can thus be treated as precluding that sequence.

Real parties rejoin that if a person is allowed to pursue both the administrative remedy and the civil remedy, excessive and unending litigation will result.   That argument is best made to the Legislature, for it is the body which adopted the procedure allowing for both administrative and judicial actions to remedy FEHA employment violations.

For these reasons, we hold that the filing of an accusation does not bar the subsequent commencement of a civil suit based upon a statutory cause of action for a discriminatory employment practice in violation of the FEHA.⁶  The trial court thus erred in sustaining real parties' demurrer on this ground.

Real parties alternative argument is that the issuance of a right-to-sue letter (§ 12965, subd. (b)) is a prerequisite to the commencement of the civil action (see Rojo v. Kliger, supra, 52 Cal.3d at p. 83, 276 Cal.Rptr. 130, 801 P.2d 373;  State Personnel Bd. v. Fair Employment & Housing Com. (1985) 39 Cal.3d 422, 433, fn. 11, 217 Cal.Rptr. 16, 703 P.2d 354;  Baker v. Children's Hospital Medical Center (1989) 209 Cal.App.3d 1057, 1062, 257 Cal.Rptr. 768 [and cases cited therein] ) and that petitioner's complaint was fatally defective in failing to allege that she had obtained a right-to-sue letter from the Department.

 The right-to-sue letter, while a prerequisite to suit, is the rule not the exception in Department practice.   Indeed, the Department's practice is to issue a right-to-sue letter at the employee's request as a matter of course.   (Rojo v. Kliger, supra, 52 Cal.3d at pp. 83–84, 276 Cal.Rptr. 130, 801 P.2d 373;  Dyna–Med, supra, 43 Cal.3d at pp. 1401–1402, 241 Cal.Rptr. 67, 743 P.2d 1323;  Commodore, supra, 32 Cal.3d at p. 218, fn. 8, 185 Cal.Rptr. 270, 649 P.2d 912.)   Although petitioner did not allege the existence of a right-to-sue letter in her complaint, she now has the ability to do so.⁷  Upon sustaining the demurrer, the trial court granted petitioner leave to amend her complaint.   Thus amendment of the complaint to allege issuance of the right-to-sue letter is a matter to be addressed at the trial court level.

C.**

D.

Let a peremptory writ of mandate issue directing respondent court to vacate its order of October 5, 1992, sustaining the demurrer to petitioner's complaint on the ground that the action was barred by the administrative accusation, and to allow petitioner to proceed to file an amended complaint.

I concur in the result.   For reasons explained below, I agree that petitioner is not precluded from maintaining her action in superior court.   However, I do not agree with the suggestion in the opinion that a complainant, other than one in the peculiar position of petitioner, may bring a civil suit alleging violation of the Fair Employment and Housing Act (FEHA) after exhausting the administrative remedy.   Nor can I subscribe to the majority's conclusion that our Legislature (by inaction) has approved “an independent civil action in the context of employment discrimination under the FEHA, even though the Department has proceeded against the offending party via an accusation.”  (Maj. opn. p. 196.)   It is not up to the Legislature alone to prevent the excessive and unending litigation that real parties predict.   The judiciary bears some responsibility on that score as well.   The ordinary rules of res judicata, applicable to prior administrative decisions (see People v. Sims (1982) 32 Cal.3d 468, 186 Cal.Rptr. 77, 651 P.2d 321) would prevent such a result.  (See Rest.2d, Judgments, § 17.)

If the administrative procedure resulted in a judgment for the employer, the doctrine of res judicata would bar an action in superior court.  (Gamble v. General Foods Corp. (1991) 229 Cal.App.3d 893, 898, 280 Cal.Rptr. 457.)  “A valid final judgment on the merits in favor of a defendant serves as a complete bar to further litigation on the same cause of action.”  (Slater v. Blackwood (1975) 15 Cal.3d 791, 795, 126 Cal.Rptr. 225, 543 P.2d 593;  Rest.2d, Judgments, § 19.)   If the administrative procedure resulted in a judgment in favor of the complainant, the general rule of merger would apply.   “When a valid and final personal judgment is rendered in favor of the plaintiff:  [¶] (1) The plaintiff cannot thereafter maintain an action on the original claim or any part thereof, although he may be able to maintain an action upon the judgment;  ․” (Rest.2d, Judgments, § 18.)

There are two exceptions to these general rules which apply to petitioner's cause of action.   A plaintiff's cause of action is not extinguished where “The plaintiff was unable ․ to seek a certain remedy or form of relief in the first action because of the limitations on the subject matter jurisdiction of the courts or restrictions on their authority to entertain ․ multiple remedies or forms of relief․”  (Rest.2d, Judgments, § 26, subd. (1)(c).)  The cause of action is also not extinguished where “The judgment in the first action was plainly inconsistent with the fair and equitable implementation of a statutory or constitutional scheme, or it is the sense of the scheme that the plaintiff should be permitted to split his claim;  ․” (Rest.2d, Judgments, § 26, subd. (1)(d).)   As further explained:  “The adjudication of a particular action may in retrospect appear to create such inequities in the context of a statutory scheme as a whole that a second action to correct the inequity may be called for even though it would normally be precluded as arising upon the same claim.”  (Id., com. e, at pp. 238–239.)

Whether or not petitioner had a right-to-sue letter is irrelevant in the instant case.   As the majority points out, both the Fair Employment and Housing Commission (the Commission) and the courts may entertain a complaint for a violation of the FEHA but a complainant must first pursue the administrative remedy.   The right-to-sue letter notifies the complainant that he or she may bring a civil action and starts the running of a one-year statute of limitations.   It must be sent when the Department of Fair Employment and Housing (the Department) decides not to issue an accusation and also must be sent if the Department cannot complete its investigation and issue an accusation within 150 days.  (Gov.Code, § 12965, subd. (b).)  In the first situation, it signals the exhaustion of the administrative remedy.   In the second it entitles the complainant to elect the civil action.   As the Supreme Court noted in Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211, 218, fn. 8, 185 Cal.Rptr. 270, 649 P.2d 912, “right-to-sue letters are the rule, not the exception, because the Department rarely is able to complete investigations, pursue conciliation, and issue accusations within the 150–day period.   For that reason, a right-to-sue letter is issued, even in advance of 150 days, to any person who states in writing that he wants to withdraw his complaint and file a civil action․”

Had the rule that the Commission could not award compensatory damages been announced when petitioner filed her complaint to the Department, she could have requested, and would have been given, a right-to-sue letter.   There was no reason for her to request the letter, or act on the one allegedly issued, since the Department's investigation convinced it that compensatory and exemplary damages should be awarded by the Commission and the regulations of the Commission provided for such damages.   As petitioner argues, she “should not be denied a chance to present her case because she chose the wrong line of precedent.”  (Valenzuela v. Kraft, Inc. (9th Cir.1986) 801 F.2d 1170, 1175, mod., 815 F.2d 570 [equitable tolling applicable where plaintiff was unaware of flux in Title VII law and therefore mistakenly pursued her Title VII claim in the wrong forum].)

Because of the circumstances in which petitioner found herself after she had pursued her administrative remedy, it is my view that she was entitled to file a civil action regardless of whether a right-to-sue letter had issued.

FOOTNOTES

1.   All further statutory references are to the Government Code unless otherwise indicated.

2.   Although unusual, the circumstances of this case are by no means unique.   An amicus brief has been filed by four persons who are similarly situated in that they have commenced civil actions after their compensatory awards from the Commission were set aside following the Peralta decision.   The amicus brief reports that there are approximately 13 individual cases similar to petitioner's case.

3.   At all times relevant to this proceeding, subdivision (b) of section 12965 has provided:  “If an accusation is not issued within 150 days after the filing of a complaint, or if the department earlier determines that no accusation will issue, the department shall promptly notify, in writing, the person claiming to be aggrieved.   Such notice shall indicate that the person claiming to be aggrieved may bring a civil action under this part against the person, employer, labor organization or employment agency named in the verified complaint within one year from the date of such notice.   The superior, municipal, and justice courts of the State of California shall have jurisdiction of such actions, and the aggrieved person may file in any of these courts․   In actions brought under this section, the court, in its discretion may award to the prevailing party reasonable attorney fees and costs except where such action is filed by a public agency or a public official, acting in an official capacity.”  (Added by Stats.1980, ch. 992, § 4, p. 3157;  amended by Stats.1984, ch. 217, § 1, pp. 688–689.)

4.   Section 12970 now permits the Commission to award compensatory damages not to exceed “in combination with the amounts of any administrative fines imposed pursuant to subdivision (c), fifty thousand dollars ($50,000) per aggrieved person per respondent” (id., subd. (a)(3)) except in cases of violence or intimidation in violation of Civil Code section 51.7, in which case the limit is $150,000 (id., subd. (a)(4)).   The Commission may impose an administrative fine for persons guilty of oppression, fraud, or malice, to be paid into the General Fund (§ 12970, subds. (c) and (d)), and assess a civil penalty of up to $25,000 to be awarded to a person denied any right provided for by section 51.7 of the Civil Code (§ 12970, subd. (e)).

5.   According to its chief counsel, the Department does not interpret section 12965, subdivision (b), as prohibiting complainants from filing a civil action if the Department has elected to file an accusation:  “Based upon my knowledge and experience in conformance with the Department's policies, the Department has not nor would it seek to preclude an individual from filing a civil action for violation of the FEHA where an accusation has been issued.”

6.   We have no occasion to consider whether in a given factual situation the merger/bar or collateral estoppel aspects of res judicata might apply to limit the recovery in the civil action.   The narrow issue presented on review of the demurrer before this court is whether petitioner as a matter of law is barred from proceeding against real parties because the Department had earlier proceeded against real parties by way of an accusation.   The answer to that question is no.   We trust the trial court will be able to resolve competently any issues that might arise in this case concerning the damages petitioner is entitled to recover in this action.

7.   According to its acting chief counsel, the Department's practice since 1983 has been to automatically issue by computer a right-to-sue letter to all persons filing a complaint.   The practice was followed with petitioner as well:  Department records show a right-to-sue letter was issued to petitioner on March 24, 1985.

FOOTNOTE.   See footnote *, ante.

POCHÉ, Associate Justice.

PERLEY, J., concurs.