The California Supreme Court's recent decision in a closely watched Fair Employment and Housing Act (FEHA) case should be of interest to employers around the country, even though — or perhaps because — it does not provide an outright win for either employers or employees.
The court unanimously held that under the FEHA, where a jury finds that unlawful discrimination was a "substantial motivating factor" in an adverse employment action in a mixed-motive case, and where the employer proves it would have made the same decision absent such discrimination for legitimate reasons, a court may not award damages, back pay or an order of reinstatement. The employer does not escape liability, however. In light of the FEHA's express purpose of "not only redressing but also preventing and deterring unlawful discrimination in the workplace," an FEHA plaintiff may still be awarded "declaratory relief or injunctive relief to stop discriminatory practices" and reasonable attorneys' fees and costs. Harris v. City of Santa Monica, No. S181004 (February 7, 2013), 2013 WL 4522959.
Although the ruling establishes a framework for mixed-motive defense and liability in employment discrimination cases under the FEHA, more litigation that tests this framework is likely.
In October 2004, the City of Santa Monica ("City") hired Wynona Harris as a bus driver trainee. During her 40-day training period, Harris had a "preventable" accident, during which the glass on the bus's back door was cracked. After she completed her training, Harris was promoted to probationary driver, an at-will employee. During a probationary period, Harris had a second preventable accident.
In addition to the accidents, Harris reported late to work and received her first of two "miss-out" incidents — a failure to give her supervisor at least one hour's warning that she would not be reporting for her assigned shift. The City's guidelines indicated that most drivers get one or two late reports or miss-outs a year, but more suggested that a driver had a "reliability problem." A miss-out resulted in 25 demerit points and the guidelines indicate that probationary employees were allowed only 50 demerit points.
In March 2005, Harris's her overall performance rating from her supervisor was "further development needed." That April, Harris incurred a second "miss-out," which prompted a management review of her complete personnel file. Members of management determined that Harris was not meeting the City's standards for continued employment.
That May, during a chance encounter, Harris told her supervisor she was pregnant. He reacted with seeming displeasure at her news, exclaiming: "Wow. Well, what are you going to do? How far along are you?" He then asked her to get a doctor's note clearing her to continue to work. Four days later, Harris provided a doctor's note permitting her to work with some limited restrictions. That same morning, her supervisor attended a supervisors' meeting and received a list of probationary drivers who were not meeting standards for continued employment. Harris was on the list, and her last day on the job was two days later.
Harris sued the City under the FEHA, alleging sex discrimination on the basis of her pregnancy. The City denied her allegations and asserted as an affirmative defense that it had nondiscriminatory reasons to fire her as an at-will, probationary employee. The jury awarded Harris $177,905 in damages, including $150,000 for mental suffering. The trial court also awarded Harris $401,187 in attorneys' fees.
The Appeal: Jury Instruction and Proper Standard of Liability
The City appealed to the Court of Appeal arguing that the trial court's refusal to give Book of Approved Jury Instructions (BAJI) No. 12.26, which pertained to its mixed-motive defense, prejudiced its defense. That instruction states in part: "If you find that the employer's action, which is the subject of plaintiff's claim, was actually motivated by both discriminatory and non-discriminatory reasons, the employer is not liable if it can establish by a preponderance of the evidence that its legitimate reason, standing alone, would have induced it to make the same decision."
The premise of this defense is that a legitimate reason was present and, standing alone, would have induced the employer to make the same decision. Instead of this instruction, the trial court gave California Civil Jury Instruction (CACI) No. 2500, which states that Harris merely had to prove that her pregnancy was a "motivating factor/reason for the discharge." "Motivating factor" was further defined according to BAJI No. 12.01.1 as "something that moves the will and induces action even though other matters may have contributed to the taking of the action."
The Court of Appeal concluded that the requested jury instruction based on BAJI No. 12.26 was an accurate statement of California law and that the refusal to give the instruction was prejudicial error. Given this finding, the Court of Appeal remanded for a new trial. Thereafter, the California Supreme Court granted Harris's petition for review to decide whether the BAJI No. 12.26 mixed-motive instruction was correct.
California Supreme Court Announces "Substantial Motivating Factor" Test
The California Supreme Court began its analysis by parsing the relevant part of the FEHA, California Government Code section 12940(a) ("Section 12940(a)"), which prohibits an employer from taking an employment action against a person "because of" the person's race, sex, disability, sexual orientation or other protected characteristic. The parties agreed the phrase "because of" means there must be a causal link between the employer's consideration of a protected characteristic and the adverse action taken by the employer. But what was disputed was the kind or degree of causation required.
As the California Supreme Court noted, there are at least three plausible meanings of the phrase "because of" in Section 12940(a): "(1) discrimination was the 'but for' cause of the employment decision, (2) discrimination was a 'substantial factor' in the decision, and (3) discrimination was simply 'a motivating factor.'" The Harris court also noted that each of the three interpretations was supported by some authority and, unfortunately, the FEHA's legislative history did not clarify the kind or degree of causation the FEHA requires.
Faced with this ambiguity, the court turned to federal anti-discrimination law for guidance. It first analyzed the famous Title VII mixed-motive case of Price Waterhouse v. Hopkins, 490 U.S. 228 (1989). In that case, the U.S. Supreme Court rejected the view that a Title VII plaintiff has the burden of proving "but for" causation. Instead, the high court held that once the plaintiff shows that discrimination was a motivating factor, the burden shifts to the defendant to negate "but for" causation by proving that it would have made the same decision at the time even without the discrimination. But as the California Supreme Court noted, Congress quickly superseded the Price Waterhouse holding by amending Title VII in the Civil Rights Restoration Act of 1991. The 1991 amendment to Title VII codified the rule that an employer's "same-decision" showing limits the remedies available to a Title VII plaintiff but does not provide a complete defense to liability. If the employer makes such a showing, a federal court can grant declaratory relief, injunctive relief and attorneys' fees and costs but neither damages nor an order requiring any admission, reinstatement, hiring, promotion or payment.The California Supreme Court also analyzed several other high court decisions to explain that the 1991 congressional amendment was intended to clarify but not change what Congress believed to be the meaning of "because of" in Title VII.
The court then noted that no California appellate decision had squarely decided the mixed-motive issue under the FEHA. Because the FEHA's legislative history was also silent on the matter, the court focused on the FEHA's dual purposes: compensating victims of discrimination and preventing and deterring unlawful discrimination. In seeking to promote and harmonize thee purposes, the court ultimately concluded that a same-decision showing by an employer "is not a complete defense to liability when the plaintiff has proven that discrimination on the basis of a protected characteristic was a substantial factor motivating the adverse employment action." It was careful to require that an FEHA plaintiff show that discrimination was "a substantial motivating factor, rather than simply a motivating factor" to ensure that "liability will not be imposed based on evidence of mere thoughts or passing statements unrelated to the disputed employment decision."
Addressing a second broad issue, and having set the "substantial motivating factor" test for liability, the court turned to the issue of remedies. After analyzing the proper balance for promoting the FEHA's public purpose of deterring future discrimination while preventing a windfall to an FEHA plaintiff who would have been terminated for legitimate reasons anyway, the court adopted the same remedial scheme as found under Title VII, as amended in 1991. Thus, proof that an adverse employment action was substantially motivated by discrimination may warrant a judicial declaration of employer wrongdoing, injunctive relief to stop discriminatory practices and "reasonable attorneys' fees and costs." The Harris court cautioned that such an attorneys' fee award must take into account the scale of the plaintiff's success and it must not encourage "unnecessary litigation of claims that serve no public purpose either because they have no broad public impact or because they are factually or legally weak."
Finally, the court rejected Harris's argument that the employer must prove its same-decision defense by "clear and convincing" evidence as opposed to a preponderance of the evidence. It also rejected Harris's argument that the City's failure to plead separately a mixed-motive defense in its answer required the mixed-motive jury instruction to be refused. Rather, is was enough that the City had pleaded that any adverse employment actions were "based on one or more legitimate nondiscriminatory reasons." This statement supported giving a mixed-motive jury instruction because it gave Harris notice that "the City intended to defend on the basis that it had not discriminated against her and had a legitimate reason for discharging her."
The Harris court'sadoption of the "substantial motivating factor" standard as that governing mixed-motive cases under the FEHA is a mixed result for employers. On the one hand, it is more exacting than the easily-met "motivating factor" test allowed by the trial court in Harris. On the other hand, it is not nearly as difficult a burden as the "but for" causation test that the City had argued for.
Consequently, employers are cautioned that simply having a legitimate reason for an adverse employment action will not suffice to prevent liability if a discriminatory reason for the adverse decision arguably exists.
Also, the remedial scheme adopted by the Harris Court makes clear that while a "same-decision" showing may preclude an award of reinstatement, back pay or damages, it will not preclude all liability. Judicial declarations, prospective injunctive relief, and attorneys' fees and costs are still available as remedies, even in the wake of a successful showing of a same decision by the employer predicated upon legitimate grounds. In such a situation, the most damaging penalty may be the attorneys' fees and costs awarded. What remains to be seen is how trial courts applying Harris will set the amount of such fees and costs. The Harris court emphasized that the touchstone for such an award is "reasonableness." But what this translates into remains an open question.