2018-00226402-CU-OE

Gesunda Royal-Shipp vs. Samuel Merritt University

Nature of Proceeding: Hearing on Demurrer to Second Amended Complaint

Filed By: Kitzes, Daniel V.

*** If oral argument is requested, the parties are directed to notify the clerk and opposing counsel at the time of the request which of the issues and causes of action discussed below will be addressed at the hearing. Counsel are also reminded that pursuant to local rules, only limited oral argument is permitted on law and motion matters. ***

Defendants Samuel Merritt University (“SMU”), Sutter Bay Hospital (“SBH”), Sutter

Health (“Sutter”) and Isaac Bristow’s (“Bristow”) (collectively “Defendants”) demurrer to the Second Amended Complaint (“2AC”) is SUSTAINED IN PART and OVERRULED IN PART, with leave to amend except as to the 14th cause of action against Bristow.

The notice of demurrer does not provide notice of the court’s tentative ruling system, as required by Local Rule 1.06. Moving counsel is directed to contact opposing counsel and advise him/her of Local Rule 1.06 and the court’s tentative ruling procedure and the manner to request a hearing. If moving counsel is unable to contact opposing counsel prior to hearing, moving counsel is ordered to appear at the hearing in person or by telephone.

Factual Background

This is an employment action is brought by three plaintiffs against the numerous entities and individuals including the four demurring Defendants. The 2AC which spans 60 pages purports to assert 14 separate causes of action (“COA”) consisting primarily of discrimination, harassment, intentional infliction of emotional distress (“IIED”) and retaliation.

According to Defendants’ demurrer, all 14 COA are for various reasons inadequately pled but the court notes that the moving points & authorities do not actually appear to address all 14 COA. For instance, the moving points & authorities do not contain any argument about why the two harassment COA against defendant Bristow are deficient.

Plaintiffs oppose the demurrer but with at least one concession relating to the 14th COA being inappropriately directed at defendant Bristow. (Oppos., 9:19-20.)

Analysis

The FEHA. Having reviewed the 2AC, it is important to note at the outset that the Fair Employment and Housing Act (“FEHA”) on which a majority of the COA in the 2AC is premised is not a “civility code” designed to rid the workplace of all unpleasant conduct. (See, e.g., Pantoja v. Anton (2011) 198 Cal.App.4th 87, 92.) Instead, the FEHA merely proscribes certain conduct including discrimination and retaliation (both of which require some “adverse employment action” (see, e.g., Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1035-1036)) as well as harassment (which requires conduct so “severe or pervasive” as to create an objectively intolerable work environment (see, e.g., Serri v. Santa Clara University (2014) 226 Cal.App.4th 830,

869) that is motivated by some characteristic and/or conduct expressly “protected” by the FEHA statutes (e.g., age, gender, race, religion, sexual orientation, etc.)). Offensive or annoying conduct not motivated by “protected” characteristics and/or conduct does not violate the FEHA and thus, in Mokler v. County of Orange, it was held that a hostile work environment claim could not be based on isolated conduct which was simply rude, boorish, inappropriate and offensive. (Mokler v. County of Orange (2007) 157 Cal.App.4th 121.)

Moreover, it is important to discern the differences between harassment and discrimination, the latter of which encompasses retaliation. The Sixth District Court of Appeal recently explained in Serri that harassment actionable under FEHA consists of conduct which is not necessary to one’s job performance and is “presumably engaged in for personal gratification, because of meanness or bigotry, or for other personal motives [citing Reno v. Baird (1998) 18 Cal.4th 640, 646] and “is distinguishable from

discrimination,” with the latter “refer[ring] to bias in the exercise of official actions on behalf of the employer.” (Serri, at 869.) The Sixth District added, “[T]he Legislature intended that commonly necessary personnel management actions such as hiring and firing, job or project assignments, office or work station assignments, promotion or demotion, performance evaluations, the provision of support, the assignment or nonassignment of supervisory functions, deciding who will and who will not attend meetings, deciding who will be laid off, and the like, do not come within the meaning of harassment” since “These are actions of a type necessary to carry out the duties of business and personnel management” and “may retrospectively be found discriminatory if based on improper motives, but in that event the remedies provided by the FEHA are those for discrimination, not harassment.” (Serri, at 870 (emphasis added); see also, 2. Cal. Code of Regs. §11019(b)(1) [defining verbal, physical and visual harassment actionable under FEHA].)

Additionally, under California Supreme Court precedent, an employer’s reasons for taking action against an employee need not be correct, wise or prudent, so long as the employer did not act with a motive to discriminate on account of one’s “protected” characteristics and/or conduct. (See, Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 358.) As such, an employer cannot be liable for discrimination or retaliation if its actions were nothing more than foolish, imprudent or mistaken since this type of conduct is not prohibited by the FEHA. Likewise, non-employer individuals cannot as a matter of law be personally liable for either discrimination or retaliation in violation of the FEHA. (See, e.g., Reno, at 644-645 [superseded on other grounds by statute]; Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1160 [only employer may held be liable for discrimination and/or retaliation under the FEHA].)

Finally, under California law all statutory COA like those under the FEHA must be pleaded with particularity, showing every fact essential to the existence of liability under the relevant statute. (See, Covenant Care, Inc. v. Superior Court (Inclan) (2004) 32 Cal.4th 771, 790 (citing Lopez v. Southern Cal. Rapid Trans. Dist. (1985) 40 Cal.3d 780, 795) (emphasis added).)

FEHA COA Against Sutter and SBH. Defendants first demur to each of the FEHA-based COA directed at Sutter and SBH (i.e., 2nd and 4th for discrimination, 6th and 8 th for harassment, 9th for failure to prevent harassment, and 11 th for retaliation) on the ground that neither Sutter nor SBH were plaintiffs’ employer inasmuch as Paragraphs 16-17 admit that all three plaintiffs “were long-time employees of SMU” and the boilerplate, conclusory allegations in Paragraphs 5-6 that SBH and Sutter were plaintiffs’ “employers” within the meaning of the FEHA are insufficient to show otherwise. Defendants add that the 2AC’s attempt to characterize SMU, Sutter and SBH as either alter egos of one another or in a controlling parent-subsidiary relationship is also devoid of facts sufficient to establish plaintiffs have the requisite employment relationship with Sutter and/or SBH.

The court agrees and will sustain the demurrer to the 2nd, 4th, 6 th, 8th, 9 th and 11th COA under the FEHA to the extent these COA are directed at Sutter and/or SBH, thereby obviating the need to separately address here Defendants’ additional arguments about why the COA for discrimination and harassment remain deficient.

FEHA COA Against Bristow. Defendants contend that Bristow, explicitly identified in Paragraph 10 as plaintiffs’ “supervisor,” cannot be personally liable for the discrimination alleged in the 1st or 3rd COA or the retaliation alleged in the 12th COA

based on legitimate personnel management decisions made on behalf of his (and plaintiffs’) employer, SMU.

As noted above, the California Supreme Court has clarified that an individual who is not an employer can face no personal liability on a theory of either discrimination or retaliation in violation of the FEHA. (See, e.g., Reno v. Baird (1998) 18 Cal.4th 640, 644-645 [superseded on other grounds by statute]; Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1160 [only employer may held be liable for discrimination and/or retaliation under the FEHA].) Accordingly, the court will sustain the demurrer to the 1st, 3rd and 12th COA against defendant Bristow, specifically identified as not only an employee of SMU but also plaintiffs’ own “supervisor.”

The court acknowledges that each of these three COA also includes in Paragraphs 74, 90 and 158 essentially identical allegations of a variety of other offensive conduct by Bristow which is claimed to have “created a hostile work environment.” (See, 2AC, ¶¶75, 91.) However, as explained above, this type of conduct engaged in because of meanness, bigotry or other personal reasons gives rise to a claim not for discrimination or retaliation but rather for harassment, provided that the conduct is sufficiently “severe or pervasive” to create an objectively hostile work environment. Because this type of offensive conduct has no legitimate business purpose and involves no “adverse employment action” as defined in decisional law, it has no legal relevance to plaintiffs’ COA for discrimination and retaliation.

IIED COA Against Bristow. According to Defendants, the 10th COA against Bristow for IIED is precluded by the exclusive remedy of worker compensation particularly since the 2AC repeatedly alleges that Bristow was at all relevant times acting within the course and scope of his employment, thereby requiring plaintiffs to bring their emotional distress claims in the worker compensation forum.

The court rejects Defendants’ argument in light of recent appellate authority including but not limited to Light v. Dept. of Parks & Recreation (2017) 14 Cal.App.5th 75. In Light, the Fourth District Court of Appeal considered the question of whether the employee plaintiff’s IIED claims against her employer and supervisors were subject to the exclusive jurisdiction of the worker compensation system, which generally shields an employer and its agents from all tort liability for injuries arising out of the employment. (Light, at 96-102.) The Court first explained:

Even where an injury is otherwise compensable under the workers’ compensation system, a cause of action seeking damages based on the injury may nevertheless be allowable where the employer’s conduct falls outside the compensation bargain: “If the alleged injury falls within the scope of the exclusive remedy provisions, then courts consider whether the alleged acts or motives that establish the elements of the cause of action fall outside the risks encompassed within the compensation bargain. ‘[I]n some exceptional circumstances the employer is not free from liability at law for his intentional acts even if the resulting injuries to his employees are compensable under workers’ compensation.’ [Citation.] Where the acts are ‘a “normal” part of the employment relationship’ [citation], or workers’ compensation claims process [citation], or where the motive behind these acts does not violate a ‘fundamental policy of this state’ [citation], then the cause of action is barred. If not, then it may go forward.” (Charles J. Vacanti, M.D., Inc. v. State Comp. Insur. Fund (2001) 24 Cal.4th 800, 811-812.)

The same framework applies regardless of whether the claimed injuries are physical or emotional. … “So long as the basic conditions of compensation are otherwise satisfied (Lab. Code §3600), and the employer’s conduct neither contravenes fundamental public policy (Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167) nor exceeds the risks inherent in the employment relationship ( Cole v. Fair Oaks Fire Protection Dist. (1987) 43 Cal.3d 148), an employee’s emotional distress injuries are subsumed under the exclusive remedy provisions of workers’ compensation.” (Livitsanos v. Superior Court (1992) 2 Cal.4th 744, 754; accord, Miklosy v. Regents of University of California (2008) 44 Cal.4th 876, 902.)

(Light, at 96-97 (underline added for emphasis).)

The Fourth District then discussed a number of California appellate decisions which had in fact concluded claims for IIED arising from one’s employment may be asserted in a civil suit where the actionable conduct also forms the basis for a FEHA violation. ( Light, at 97-101.) In Accardi v. Superior Court (1993) 17 Cal.App.4th 341, the court of appeal reasoned that while emotional distress caused by misconduct in employment relations involving…promotions, demotions, criticism of work practices, negotiations as to grievances, is a normal part of the employment environment and therefore barred by the exclusive remedy provisions of the worker compensation law, “The Legislature… did not intend that an employer be allowed to raise the exclusivity rule for the purpose of deflecting a claim of discriminatory practices” such that plaintiff Accardi’s claim for emotional distress arising from a pattern of a continuing discriminatory pattern was founded upon actions which are “outside the normal part of the employment environment and violate this state’s policy against sex discrimination.” (Accardi, at 352-353.) Thus, “[Accardi’s] claim for emotional distress arising out of sexual harassment [was] not barred by the exclusivity provisions of workers’ compensation laws.” ( Accardi, at 352-353.)

Although Light acknowledged another Fourth District Court of Appeal decision (Yau v. Allen (2014) 229 Cal.App.4th 144 which found that an employee’s emotional distress claim arising from Yau’s wrongful termination in violation of public policy (a claim not asserted in the case at bar), the Light court found Yau to have read Miklosy too narrowly and ultimately concluded:

In sum, absent further guidance from our Supreme Court, we are unwilling to abandon the long-standing view that unlawful discrimination and retaliation in violation of FEHA falls outside the compensation bargain and therefore claims of [IIED] based on such discrimination and retaliation are not subject to workers’ compensation exclusivity. While the Supreme Court in Miklosy held that allegations of whistleblower retaliation were insufficient to state an exception to workers’ compensation exclusivity, it did not remove the jurisprudential basis on which numerous authorities have held that allegations of FEHA discrimination and retaliation did state such an exception. We therefore adhere to those authorities here.

(Light, at 101 (underline added for emphasis).)

For the same reasons, the court holds that the three plaintiffs in the present case are not barred from pursuing their IIED COA against Bristow to the extent this COA is premised on the same conduct giving rise to their COA against Bristow for harassment (which is not otherwise challenged by the present demurrer) and consequently, the

court will overrule the demurrer to the 10th COA for IIED against Bristow based on the exclusive remedy of worker compensation.

Retaliation Under Labor Code §1102.5. Defendants maintain that the 13th and 14th COA are deficient in that there are no facts establishing plaintiffs disclosed or attempted to disclose to any governmental agency any illegal conduct and/or suffered any retaliation as a result of such disclosure. Instead, the 2AC merely asserts in Paragraph 164 that “Plaintiffs reported the egregious retaliatory acts and omissions to Defendant Sutter Health[’s] Compliance Department,…[plaintiffs’] healthcare providers, family, friends and colleagues,” “Plaintiffs had begun seeking input and advice from professional or legal advisors” and “Plaintiffs very clearly made Defendants aware of their desire and intent to continue pursing or filing new complaints with the DFEH or Department of Labor” and in Paragraph 165 that “Plaintiffs exercised their lawful rights and protected activities in complaining about Defendant Bristow’s unlawful and harmful acts…” Defendants add that individuals who are not employers cannot be personally liable for retaliation in violation of §1102.5.

Keeping in mind that statutory COA like this must be pleaded with particularity and show every fact essential to the existence of liability under Labor Code §1102.5, the demurrer to these two COA must be sustained because the 2AC currently fails to plead facts sufficient to establish that (1) any plaintiff actually made or attempted to make any report of illegal activity to a governmental agency or (2) any plaintiff suffered any retaliatory actions which was motivated in whole or part by such report or attempted report to a governmental agency. Coupled with the opposition’s concession that non-employers cannot be personally liable under §1102.5, the court will sustain the demurrer to the 14th COA against defendant Bristow without leave to amend.

Plaintiff Branscum’s FEHA COA. Defendants insist plaintiff Branscum’s FEHA COA are all time-barred because this suit was not commenced within one year of the last alleged FEHA violation, given that plaintiff Branscum admittedly resigned effective 1/27/2017 and this lawsuit was not commenced until 1/31/2018 (which, incidentally, was prior to plaintiff Branscum’s filing of her administrative complaint with the DFEH on 2/2/2018).

The court agrees and will sustain the demurrer to all COA asserted by plaintiff Branscum. While the opposition argues that this action was timely commenced by virtue of the tolling of the applicable statute of limitations, there are no facts alleged in the 2AC on which this court could conclude the limitations period was tolled for any reason much less those asserted in the opposition.

Conclusion

For the reasons explained above, Defendants’ demurrer to the 2AC is sustained except as to the IIED COA.

As this is first challenge to the complaint on which the court has had an opportunity to rule, leave to amend is granted except as to 14th COA against defendant Bristow for whistleblower retaliation under Labor Code §1102.5. Plaintiffs may file and serve a third amended complaint no later than 11/1/2018. Although not required by court rule or statute, plaintiffs are directed to present a copy of this order when the amended complaint is presented for filing.

Demurring Defendants to respond within 30 days if the amended complaint is personally served, 35 days if served by mail.

This minute order is effective immediately. No formal order or other notice is required. (Code Civ. Proc. §1019.5; CRC Rule 3.1312.)