Carroll v. City and County of S.F. ( 2019 )

Filed 10/31/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FOUR
JOYCE CARROLL,
Plaintiff and Appellant,
A155208
v.
CITY AND COUNTY OF SAN (San Francisco City & County
FRANCISCO et al., Super. Ct. No. CGC-17-562580)
Defendants and Respondents.
Plaintiff Joyce Carroll appeals the trial court’s entry of a stipulated dismissal with
prejudice of her age discrimination complaint under the Fair Employment and Housing
Act (FEHA) (Gov. Code,1 § 12900 et seq.). The dismissal followed the court’s order
sustaining defendants’ demurrer on the ground that plaintiff did not file a complaint with
the Department of Fair Employment and Housing (DFEH) within one year of the date the
alleged unlawful employment practice occurred. (§ 12960, subd. (d).) We conclude that
plaintiff’s disparate treatment and disparate impact claims were timely with respect to the
allegedly discriminatory disability retirement payments plaintiff received within one year
of the date on which she filed her DFEH complaint. We therefore reverse the judgment.
BACKGROUND
Plaintiff was 43 years old when she began working for the City and County of San
Francisco (City or defendants). She worked for the City for approximately 15 years
before retiring at age 58 due to rheumatoid arthritis. On June 22, 2000, plaintiff applied
for disability retirement, and the City granted her request “[s]hortly thereafter.” Since
1
Statutory references are to the Government Code unless otherwise stated.
1
then, plaintiff has received monthly disability retirement benefit payments from
defendants.
Plaintiff brought a putative class action lawsuit on behalf of herself and others
similarly situated, alleging that defendants discriminate on the basis of age in violation of
FEHA by providing reduced disability retirement benefits to older employees who took
disability retirement after working for the City for less than 22.22 years.
The Charter for the City and County of San Francisco (Charter) contains the
formula that defendants use to calculate the benefit for employees who retire due to
disability.2 Charter section A8.584-3 applies to individuals, like plaintiff, who were
classified as miscellaneous employees and who began working for the City after
November 1, 1976. Charter section A8.584-3 provides the following formula for
disability benefits for employees whose retirement allowance does not exceed one-third
of their average final compensation: “1 1/2 percent of [the employee’s] average final
compensation multiplied by the number of years of City service which would be credited
to [the employee] were such City service to continue until attainment by [the employee]
of age 60.”3 Under this formula, when an employee has worked for the City for at least
10 years but must retire due to disability, the City credits additional service time to the
employee to increase his or her disability retirement benefit if his or her retirement
allowance falls below one-third of his or her average final compensation. However, the
City limits this imputed service time to the number of years the disabled employee would
have worked for the City had he or she continued City employment until age 60.
Defendants referred to these imputed service years as “bonus years” in the letter to
plaintiff explaining her retirement disability calculation.
2
The City first implemented this formula for calculating disability retirement
benefits in 1947; the formula has been carried forward without material change in
subsequent charter provisions.
3
Charter section A8.584-3 provides an alternative method to calculate the
retirement benefits for employees whose retirement allowance exceeds one-third of their
average final compensation. These employees receive 1.5 percent of their average final
compensation for each year of credited service. (S. F. Charter, § A8.584-3.)
2
For example, plaintiff retired at age 58 after 15 years of service with two “bonus
years,” resulting in approximately 17 years of service. Defendants credited her with
16.75 years of service, estimating her retirement benefit to be “equal to 25.125% of her
final average salary.” In contrast, an employee who was hired at age 18 with 15 years of
service and 27 years of imputed service, resulting in a total of 42 years of service, would
receive a retirement benefit of 33.33 percent of her final average salary (Charter,
§ A8.584-3 sets a maximum benefit of one-third). Plaintiff alleges that because Charter
section A8.584-3 provides employees who were hired over the age of 40 with “reduced
retirement benefit[s],” defendants violate FEHA by intentionally discriminating against
these employees on the basis of age and by using a standard policy that has a disparate
impact on older employees.
Plaintiff alleged that she became aware that defendants paid her retirement
benefits based on her age after seeing an advertisement on or about July 20, 2017, which
was more than 17 years after her retirement. She filed her complaint with the DFEH on
November 17, 2017.
Defendants demurred, arguing that the statute of limitations barred her claims
because she failed to timely file an administrative charge with the DFEH. The court
sustained the demurrer with leave to amend to allow the substitution of a new named
representative to properly represent the class. Plaintiff appealed.4
4
Plaintiff requests that we take judicial notice under Evidence Code sections 452,
subdivision (c) and 453 of the originally-enacted version of the California Fair
Employment Practices Act, Labor Code former section 1410 et seq. (Stats. 1959, ch. 121,
§ 1, p. 1999 et seq.); the California Law Revision Commission, A Study relating to
Sovereign Immunity (Jan. 1963); and the California Law Revision Commission,
Recommendation relating to Sovereign Immunity No. 1 - Tort Liability of Public Entities
and Public Employees (Jan. 1963). As defendants do not oppose this request, we will
grant it.
3
DISCUSSION
I. Standard of Review
When a trial court sustains a demurrer, we independently review the complaint to
determine whether it states a valid cause of action, accepting all factual allegations as
true. (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal. 4th 412, 415.) We construe the
allegations liberally and draw all reasonable inferences in the plaintiff’s favor. (Coleman
v. Medtronic, Inc. (2014) 223 Cal. App. 4th 413, 422.) “ ‘A demurrer based on a statute of
limitations will not lie where the action may be, but is not necessarily, barred. [Citation.]
In order for the bar of the statute of limitations to be raised by demurrer, the defect must
clearly and affirmatively appear on the face of the complaint; it is not enough that the
complaint shows that the action may be barred.’ ” (Guardian North Bay, Inc. v. Superior
Court (2001) 94 Cal. App. 4th 963, 971–972.) When a court sustains a demurrer without
leave to amend, we review for abuse of discretion the determination that amendment
could not cure the defects, reversing only if the plaintiff bears his or her burden of
establishing a reasonable possibility that amendment could cure the defects. (Brown v.
Deutsche Bank National Trust Co. (2016) 247 Cal. App. 4th 275, 279.)
II. FEHA
FEHA is a comprehensive statutory scheme. (§§ 12900–12996.) Section 12920
declares it the “public policy” of California to “protect and safeguard” the rights of
employees against discrimination. It also states that “the practice of denying employment
opportunity and discriminating in the terms of employment . . . foments domestic strife
and unrest, deprives the state of the fullest utilization of its capacities for development
and advancement, and substantially and adversely affects the interests of employees,
employers, and the public in general.” The statute concludes: “It is the purpose of this
part to provide effective remedies that will eliminate these discriminatory practices.”
Plaintiff argues that defendants’ payment of disability retirement benefits is
discriminatory on the basis of age, in violation of FEHA. Under section 12940,
subdivision (a), it is unlawful “[f]or an employer, because of the . . . age . . . of any
4
person, . . . to discriminate against the person in compensation or in terms, conditions, or
privileges of employment.”
Defendants demurred to plaintiff’s complaint on the ground that it was barred by
the one-year statute of limitations for filing an administrative complaint with DFEH.
Compliance with the statute of limitations for filing a DFEH complaint is a prerequisite
to a civil action for damages under FEHA (Morgan v. Regents of University of California
(2000) 88 Cal. App. 4th 52, 63 (Morgan)), and the statute of limitation runs “from the date
upon which the alleged unlawful practice or refusal to cooperate occurred.” (§ 12960,
subd. (d), italics omitted; Morgan, at p. 63). We consider whether plaintiff’s disparate
treatment and disparate impact claims were timely under FEHA.
III. The Disparate Treatment Claim
The parties disagree as to what triggered the running of FEHA’s limitations
period. Defendants contend that the limitations period began running in 2000 when they
granted plaintiff’s request for disability retirement. Plaintiff argues that her disparate
treatment claim is timely under what she calls the “continuous accrual doctrine”; the
theory underlying her argument is that each discriminatory disability retirement check
she received constituted a new FEHA violation.5 We thus must decide whether an
unlawful employment practice occurred only when defendants granted plaintiff’s request
for disability retirement benefits or whether an unlawful practice occurred each time
5
“Generally speaking, continuous accrual applies whenever there is a continuing
or recurring obligation: ‘When an obligation or liability arises on a recurring basis, a
cause of action accrues each time a wrongful act occurs, triggering a new limitations
period.’ [Citation.] Because each new breach of such an obligation provides all the
elements of a claim—wrongdoing, harm, and causation [citation]—each may be treated
as an independently actionable wrong with its own time limit for recovery. [¶] However,
unlike the continuing violation doctrine, which renders an entire course of conduct
actionable, the theory of continuous accrual supports recovery only for damages arising
from those breaches falling within the limitations period.” (Aryeh v. Canon Bus. Sols.,
Inc. (2013) 55 Cal. 4th 1185, 1199.)
5
plaintiff received an allegedly discriminatory disability retirement check. For reasons
explained below, we believe that an unlawful event occurred each time plaintiff received
a discriminatory payment, such that a new limitations period applies to each allegedly
discriminatory check.
The parties do not cite California authority directly addressing whether each
paycheck rendered pursuant to an alleged discriminatory compensation or benefits
scheme is separately actionable under FEHA.6 We thus begin by reviewing relevant
caselaw addressing accrual of the limitations period under FEHA.
We start with the unremarkable premise that an employee can sue over
discriminatory acts that occur within the one-year period prior to the employee’s filing of
a DFEH complaint. (§ 12960, subd. (d).) In Morgan, for example, the court addressed
whether the statute of limitations barred a plaintiff’s suit challenging numerous alleged
retaliatory hiring decisions that occurred in 1995 and 1996 when the plaintiff filed his
DFEH complaint in April 1997. The court found that each of the decisions not to hire the
plaintiff was a discrete, allegedly discriminatory act, and that the plaintiff’s challenge to
the decisions after April 1996 was timely. (Morgan, supra, 88 Cal.App.4th at pp. 63–
67.) In contrast, the plaintiff’s challenge to the decisions that occurred before April 1996
was time-barred. (Ibid.; accord National Railroad Passenger Corp. v. Morgan (2002)
536 U.S. 101, 113 (National Railroad) [“The existence of past acts and the employee’s
6
Our Supreme Court has recognized that the language of California’s Equal Pay
Act (Labor Code, § 1197.5) embodies a theory of continuous accrual under which a claim
can be made for the payment and recovery of unequal wages paid within the Equal Pay
Act’s limitations period. (Jones v. Tracy School Dist. (1980) 27 Cal. 3d 99, 105–107.)
6
prior knowledge of their occurrence . . . does not bar employees from filing charges about
related discrete acts so long as the acts are independently discriminatory”].)7
The leading California case on the application of FEHA’s statute of limitations is
Romano v. Rockwell Internat. Inc. (1996) 14 Cal. 4th 479 (Romano). In Romano, the
Supreme Court addressed whether FEHA’s statute of limitations ran from an employee’s
termination date or from the date the employer conveyed to the plaintiff its alleged
discriminatory and retaliatory decision to terminate him. The employer in Romano
informed the plaintiff in December 1988 that his employment would terminate in May
1991, but the plaintiff continued to work for the defendant for more than two years. (Id.
at pp. 484–485.) The Supreme Court rejected the employer’s argument (which relied on
title VII of the Civil Rights Act of 1964 (Title VII) (42 U.S.C. § 2000e et seq.)). and
federal authorities) that the plaintiff’s FEHA claims accrued in December 1988 when he
was informed of the employer’s discharge decision. (Romano, at pp. 484–485.) Looking
first to the language of FEHA, the court noted that the unlawful employment practice at
issue was the employee’s discharge, and suit must be brought after the unlawful practice
“occurred.” (Roamno, at pp. 492–493.) The court then reasoned that requiring the
plaintiff to sue when he was first notified of the discharge decision would reduce any
chance of conciliation and encourage premature litigation. (Id. at p. 494.) Finally, the
7
National Railroad considered whether discrete discriminatory or retaliatory acts
were subject to the continuing violation doctrine, pursuant to which an employer may be
liable for actions against an employee that take place outside of the limitations period if
these actions are sufficiently linked to unlawful conduct that occurred within the
limitations period. The United States Supreme Court concluded that discrete acts “are
not actionable if time-barred, even when they are related to acts alleged in timely filed
charges,” and held that the continuing violation doctrine applies only to hostile work
environment claims. (National Railroad, supra, 536 U.S. at pp. 113, 116–118.)
California law diverges with National Railroad on this issue. In Richards v. CH2M Hill,
Inc. (2001) 26 Cal. 4th 798, 823 (Richards), our Supreme Court held that the continuing
violation doctrine applies to individual claims for failure to accommodate and disability
harassment. Subsequently, in Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal. 4th 1028,
1058–1059, the Court held that the continuing violation doctrine was not limited to
individual suits alleging hostile work environment or disability accommodation claims
and instead may be applied in retaliation suits alleging a retaliatory course of conduct.
7
court also noted that FEHA “should be interpreted so as to promote the resolution of
potentially meritorious claims on the merits.” (Roamno, at p. 494.) Thus, the court
rejected a restrictive interpretation of FEHA and held that plaintiff’s FEHA claim accrued
on the date of his discharge, not when he was informed of his discharge. (Romano, at
pp. 495, 499–500.)
Following Romano, McCaskey v. California State Automobile Assn. (2010)
189 Cal. App. 4th 947 (McCaskey), reached a similar result. There, the plaintiffs brought
disparate impact and disparate treatment age discrimination claims under FEHA alleging
that they were fired in 2005 as a result of a discriminatory compensation plan that
eliminated reduced sales quotas for older employees, which their employer had adopted
in 2001. (McCaskey, at pp. 953–955, 975.) Although the plaintiffs had worked under
this plan for a number of years, the court held that their FEHA claims accrued upon their
termination rather than upon the earlier implementation of the allegedly discriminatory
compensation plan. (McCaskey, at p. 977.)
Romano and McCaskey thus recognize that an employer’s discriminatory decision
to take an unlawful employment act is not actionable only when made but instead when
statutorily prohibited acts or practices occur pursuant to that decision. The allegedly
unlawful employment practice here is discrimination “in compensation or in terms,
conditions, or privileges of employment” (§ 12940, subd. (a)), and we believe this
logically occurred when the employer paid the purportedly discriminatory retirement
benefits. Plaintiff alleges that each disability retirement check provides her reduced
benefits and that age was a substantial motivating factor for the payment of these reduced
benefits. As such, she describes repeated discriminatory acts (payment of benefits
pursuant to a discriminatory policy), and she may sue over disability retirement payments
falling within one year of her filing of a DFEH complaint. This interpretation is
consistent with the language of FEHA and the command that we liberally interpret its
provisions. (§ 12993, subd. (a); Romano, supra,14 Cal.4th at pp. 493–494.)
Federal cases addressing whether paychecks issued pursuant to a discriminatory
compensation scheme under Title VII, while not dispositive, are also instructive in this
8
regard. (Linsley v. Twentieth Century Fox Film Corp. (1999) 75 Cal. App. 4th 762, 766
[California courts have relied upon federal law interpreting Title VII and the Age
Discrimination in Employment Act (29 U.S.C. § 621 et seq.) to interpret FEHA].)
In Bazemore v. Friday (1986) 478 U.S. 385, 395–396 (per curiam), the United
States Supreme Court recognized that when an employer adopts a facially discriminatory
pay structure that puts some employees on a lower scale because of race, the employer
engages in intentional discrimination under Title VII whenever it issues a check to one of
these disfavored employees. In Bazemore, the defendant originally segregated employees
into a white and Negro branch with the latter receiving less pay but merged the branches
in 1965. (Id. at pp. 389–391.) After Title VII was extended to public employees in 1972,
black employees sued, claiming that pay disparities attributable to the old dual pay scale
persisted. (Bazemore, at p. 391.) The lower court held that the defendant had no duty to
eradicate salary disparities between workers that had their origin prior to the date Title
VII was made applicable to public employees. The United States Supreme Court
disagreed. “Each week's paycheck that delivers less to a black than to a similarly situated
white is a wrong actionable under Title VII, regardless of the fact that this pattern was
begun prior to the effective date of Title VII.” (Bazemore, at pp. 395–396; accord Pollis
v. New School for Social Research (2d Cir. 1997) 132 F.3d 115, 119.)
The United States Supreme Court addressed compensation discrimination again in
Ledbetter v. Goodyear Tire & Rubber Co. (2007) 550 U.S. 618 (Ledbetter). Lilly
Ledbetter alleged that she received negative performance evaluations because of her sex
and her pay continued to be affected by those past reviews; on that basis, she claimed sex
discrimination in pay in violation of Title VII and the federal Equal Pay Act (29 U.S.C.
§ 206(d)). (Ledbetter, at p. 622.) Because each relevant evaluation occurred more than
180 days before Ledbetter filed her U.S. Equal Employment Opportunity Commission
(EEOC) charge, she relied on a paycheck accrual rule and argued that each time she was
paid less than her similarly situated male colleagues as a result of the discriminatory
evaluations, the payment was a discrete wrong that triggered a new limitations period.
(Id. at p. 625.) The majority disagreed, holding that Ledbetter could not sue based solely
9
on the present effects of past discriminatory pay-setting evaluations that occurred outside
of the limitations period. (Id. at p. 621.) The majority also limited Bazemore to
circumstances involving a pay system that is facially discriminatory or not neutrally
applied. (Id. at pp. 635–636.) Justice Ginsburg, joined by three other justices, wrote a
vehement dissent. (Id. at p. 645 [an “unlawful practice is the current payment of salaries
infected by gender-based (or race-based) discrimination—a practice that occurs whenever
a paycheck delivers less to a woman than to a similarly situated man”].)
Congress responded with the Lilly Ledbetter Fair Pay Act of 2009 (FPA) (Pub.L.
No. 111–2, § 4 (January 29, 2009) 123 Stat. 6.)8, which, with respect to discrimination in
compensation9, states in pertinent part: “[A]n unlawful practice occurs . . . when a
discriminatory compensation decision or other practice is adopted, when a person
becomes subject to a discriminatory compensation decision or other practice, or when a
person is affected by application of a discriminatory compensation decision or other
practice, including each time wages, benefits, or other compensation is paid, resulting in
whole or in part from such a decision or other practice.” The FPA provides for recovery
of back pay for up to two years preceding the filing of an EEOC charge. (Id., § 3
(January 29, 2009) 123 Stat. 5.) In the FPA, Congress characterized Ledbetter as
undermining “bedrock principles of American law for decades” and being “at odds with
the robust application of the civil rights laws that Congress intended.” (Id., § 2 (January
29, 2009) 123 Stat. 5.) Thus, federal law pre-FPA recognized that each payment of
wages pursuant to a facially discriminatory compensation policy or a policy that is not
neutrally applied was actionable, and the law now extends to each compensation payment
resulting from a discriminatory decision or practice.
8
The FPA also amended the Age Discrimination in Employment Act of 1967
(29 U.S.C. §§621–634) and modified the Americans with Disabilities Act of 1990
(42 U.S.C. §§12101 et seq.) and the Rehabilitation Act of 1973 (29 U.S.C. §701 et seq.).
(Pub.L. No. 111–2, § 5 (January 29, 2009) 123 Stat. 6, 7.)
9
Federal law considers the payment of retirement benefits to be compensation.
(Arizona Governing Committee v. Norris (1983) 463 U.S. 1073, 1079.)
10
Relying on legislative history and finding No. 4 of the FPA (Pub.L. No. 111–2, § 2
(January 29, 2009) 123 Stat. 5), which provides that “[n]othing in this Act is intended to
change current law treatment of when pension distributions are considered paid,” federal
courts post-FPA have distinguished between pensions and wages and have found that
each pension check does not give rise to a separate claim because pensions are considered
to be paid at retirement. (Zimmelman v. Teachers’ Retirement System of City of New
York (S.D.N.Y. March 8, 2010, No. 08 Civ. 6958) 2010 U.S. Dist. LEXIS 29791, *28–
*30, citing H.R.Rep. No. 110-237, 1st Sess. (2007) & Florida v. Long (1988) 487 U.S.
223 (Long)); Abramson v. Board of Educ. of Middle Country School Dist. No. 11
(E.D.N.Y. June 27, 2012, No. 11-CV-3322) 2012 U.S. Dist. LEXIS 89410, *12–*15;
Pub.L. No. 111–2, § 4 (January 29, 2009) 123 Stat. 6.) But California does not appear to
adopt this fixed construction for when pensions are considered paid, instead recognizing
that the statute of limitations to challenge periodic pension payments to which a plaintiff
has an established right runs from when each periodic payment becomes due. (Dryden v.
Board of Pension Comm’rs. (1936) 6 Cal. 2d 575, 580–581 [pension benefits unlawfully
withheld]; Baxter v. State Teachers’ Retirement System (2017) 18 Cal.App.5th 340, 348,
379-382 [following Dryden to hold that, “under the continuous accrual theory, the statute
of limitations for periodic payments such as [t]eachers’ monthly retirement benefits here
commenced with the due date of each payment”].)
Nor do we believe that this case is governed by the statement in Long that “[i]t is
not correct to consider payments of benefits based on a retirement that has already
occurred as a sort of continuing violation.” (Long, supra, 487 U.S. at p. 239.) In making
this statement, Long confined its analysis to whether a future increase in pension benefits
was an appropriate remedy under Title VII where benefits were calculated using sex-
based actuarial tables before the practice was declared illegal. (Long, at pp. 237–240.)
The court in Long determined that this remedy was inequitable because it jeopardized
many state pension funds and declined to recognize a principle of equitable relief that
ignored the essential assumptions of actuarially funded pension plans. (Id. at p. 239.)
Questions of retroactivity and remedies, however, are not currently before this court.
11
Next, while defendants assert that “courts have explicitly rejected the proposition
that each alleged discriminatory payment by an employer creates a new cause of action
under FEHA,” they cite only Nero v. BAE Systems, Inc. (N.D. Cal. Nov. 25, 2013) 2013
U.S. Dist. LEXIS 167503 (Nero) in support of this contention. In Nero, plaintiff filed
FEHA discrimination and harassment claims in state court, alleging that he was demoted
from his position as foreman because of his race. (Id. at *1–*3.) At the hearing on the
defendant’s motion for summary judgment, the plaintiff argued that his claims were
timely under the FPA because he continued to perform foreman duties after he was
demoted and each failure to pay him an appropriate wage for his managerial duties
constituted a new act of discrimination. (Nero, at *4–*7.) Defendant removed the case
on the basis that the plaintiff’s reliance on the FPA showed that his claims were actually
Title VII claims. (Nero, at *7–*8.) In denying the plaintiff’s motion to remand, the
district court found that the plaintiff’s claims relied on a substantial federal question
under Title VII and were not brought under California law because the FPA was not part
of FEHA. (Nero, at *18–*19.) We do not find Nero to be persuasive because the court
there accepted defendant’s argument that the plaintiff’s FEHA claims were time-barred
with limited analysis of the issue, holding without explanation that “the importation of
the [FPA] limitations provision changes [the FEHA cause of action] into a federal claim.”
(Nero, at *18.)
Further, it appears that other state courts, in applying their states’ civil rights laws,
have determined that an unlawful or discriminatory practice occurs each time an
employee receives a discriminatory paycheck. In Alexander v. Seton Hall University
(N.J. 2010) 8 A.3d 198 (Alexander), female professors brought an action alleging unequal
pay on the basis of sex and age in violation of New Jersey’s Law Against
12
Discrimination10 (N.J.S.A. §§ 10:5–1 to 10:5–49). (Alexander, at pp. 199–200.) The
lower court dismissed the professors’ claims as untimely because they had not been filed
within two years of the discriminatory pay-setting decision, and the New Jersey Supreme
Court reversed. (Id. at pp. 199–200.) The court concluded that “[e]ach payment of such
discriminatory wages . . . constitutes a renewed separable and actionable wrong that is
remediable under the [wage discrimination law].” (Id. at p. 207.) The court therefore
held that the professors could pursue claims with respect to the paychecks they received
in the two years immediately preceding the lawsuit. (Ibid.)
In Zuurbier v. MedStar Health, Inc. (D.C.Ct.App. 2006) 895 A.2d 905, a female
physician alleged pay discrimination under the District of Columbia Human Rights Act
(D.C. Code §§ 2–1401.01 et seq.). The District of Columbia Court of Appeals concluded
that each discriminatory paycheck was a discrete act subject to its own limitations period,
and the court limited the plaintiff’s recovery to the three paychecks received within the
applicable limitations period. (Zuurbier, at pp. 910–914.)
More recently, in Dindinger v. Allsteel, Inc. (Iowa 2015) 860 N.W.2d 557, the
Iowa Supreme Court similarly held that an employee could sue under the Iowa Civil
Rights Act (ICRA) (Iowa Code § 216) for each discriminatory paycheck received within
the limitations period. Similar to FEHA, the governing statute of limitations provided:
“ ‘[A] claim under this chapter shall not be maintained unless a complaint is filed with
the [Iowa Civil Rights C]ommission within three hundred days after the alleged
discriminatory or unfair practice occurred.’ ” (Dindinger, at p. 567, citing Iowa Code
§ 216.15(13).) The court first held that the ICRA’s language prohibiting employers from
“otherwise discriminat[ing] in employment” (Dindinger, at p. 567) prohibited wage
10
New Jersey’s Law Against Discrimination makes it an unlawful employment
practice to “discriminate against [a protected employee] in compensation or in terms,
conditions or privileges of employment,” and such claims are governed by the two-year
statute of limitations in New Jersey Statutes section A.2A:14-2(a) (“Every action at law
for an injury to the person caused by the wrongful act, neglect or default of any person
within this State shall be commenced within two years next after the cause of any such
action shall have accrued.”). (Alexander, supra, 8 A.3d. at pp. 202–203, 207.)
13
discrimination based on sex, and then, rejecting the position endorsed by the Ledbetter
majority that each paycheck was merely an effect of prior discrimination where the
discriminatory pay setting decision occurred outside the limitations period, the court
concluded that a discriminatory practice occurred each time an employee received a
discriminatory paycheck. (Id. at pp. 572–573.) Out-of-state authorities thus support our
conclusion that discriminatory payments within the limitations period are actionable
wrongs under FEHA.11
Plaintiff additionally contends that her putative class action disparate treatment
claim is timely under a “continuing violation” theory, although she is careful to clarify
that she seeks to proceed only under the variation of the “continuing violation” doctrine
espoused in Alch v. Superior Court (2004) 122 Cal. App. 4th 339 (Alch) pertaining to
claims alleging a systemic policy of discrimination, and not on the theory involving
discrete acts toward an individual employee addressed in Richards.
As our Supreme Court observed in Richards, supra, 26 Cal.4th at p. 813, the term
“continuing violation doctrine” refers loosely to “a number of different approaches, in
different contexts and using a variety of formulations, to extending the statute of
limitations in employment discrimination cases.” In Richards, a disabled employee
resigned after a five-year period during which she claimed her employer was unwilling to
accommodate her disability, and the question was whether her employer was liable for
actions that took place outside the limitations period if the actions were sufficiently
11
See also State v. Commission on Human Rights & Opportunities (Conn. 1989)
559 A.2d 1120 [each payment of retirement benefits constituted a separate discriminatory
act in violation of the state’s antidiscrimination statute where state employer engaged in
the discriminatory practice of paying smaller pension benefits to males as a result of use
of gender-based actuarial tables].) Prairie View A & M University v. Chatha (Tex. 2012)
381 S.W.3d 500, 510 is an exception. Relying on a prior endorsement of federal
authority holding that Title VII’s statute of limitations runs from the date of the
employer’s discriminatory decision, the Texas Supreme Court held that the Texas
Commission on Human Rights Act’s statute of limitations runs from the date of the
employer’s decision to pay discriminatory wages. (Chatha, at pp. 505–510.)
14
linked to unlawful conduct within the limitations period. (Id. at pp. 801, 812.) The
Supreme Court reasoned that FEHA’s statute of limitations should not be interpreted to
force upon an employee engaged in the process of seeking reasonable accommodation or
ending disability harassment the unappealing choice of resigning at the first sign of
discrimination or, on the other hand, persisting in the reconciliation process and possibly
forfeiting a valid claim should that process prove unsuccessful. (Richards, at p. 821.)
Thus, the court decided the statute of limitations began to run when the employee was on
notice that further efforts to end her employer’s unlawful conduct would be futile. (Id. at
p. 823.) As formulated in Richards, the continuing violation doctrine extends the
limitations period for individual claims when acts inside and outside the limitations
period are: (1) sufficiently similar in kind; (2) have occurred with reasonable frequency;
(3) and have not acquired a degree of permanence. (Ibid.)12
In contrast, the formulation of the continuing violation doctrine applied in Alch
provides a legal framework for statute of limitations issues that arise when a plaintiff
alleges “a systematic corporate policy of discrimination against a protected class that was
enforced during the limitations period, to the detriment of members of the class during
that period,” where the plaintiff seeks to recover for injury during the limitations period,
and “[n]o relief is sought for employer conduct predating the limitations period.” (Alch,
supra, 122 Cal.App.4th at p. 370.) In Alch, the court was called upon to decide whether
Richards’ futility test rendered the plaintiffs’ discrimination claims untimely because the
complaint showed that the defendants’ policy had been in place for many years. (Ibid.)
Alch held that Richards did not apply to systemic discrimination class action
claims and the actions before it could proceed based on allegations of a systemic policy
of age discrimination initiated before the limitations period that continued in effect within
that period to the detriment of class members who were not chosen for employment or
who were discouraged from applying during the limitations period. (Alch, supra,
12
Plaintiff disavows the applicability of the continuing violation doctrine adopted
in Richards and applied in Yanowitz v. L’Oreal USA, Inc., supra, 36 Cal.4th at pp. 1056–
1059.
15
122 Cal.App.4th at p. 377.) The court distinguished the legal issues presented in
systemic discrimination cases from those at issue in cases such as Richards where
individual employees seek relief for discrimination inside and outside of the limitations
period. (Id. at pp. 372–377.) It noted that, in pattern-and-practice class action cases, it is
unnecessary to determine whether unlawful actions outside the limitations period should
be viewed as part of a single, actionable course of conduct “because no relief is sought
for actions outside the limitations period.” (Id. at p. 375.) The need for permanence is
similarly lacking where no relief is sought for acts outside the limitations period and the
employer continues to use a systemic policy of discrimination to the detriment of
employees within the limitations period. (Id. at pp. 375–377.) Thus, the court found that
the plaintiffs were not barred from suing over unlawful acts occurring inside the one-year
limitations period regardless of the fact that those acts arose from a purportedly
entrenched policy that first came into existence in the preceding years. (Ibid.)
Plaintiff unequivocally argues that her class action claims proceed under the
continuing violation doctrine espoused in Alch. Although the plaintiffs in Alch did not
seek relief for discrimination outside the limitations period, the court repeatedly made
clear that class action claims brought under the continuing violation theory it espoused
may obtain relief only for discrimination that occurs during the limitations period. (Alch,
supra, 122 Cal.App.4th at p. 370 [systemic discrimination class claims seek “relief for
discrimination during the limitations period”]; id. at p. 372 [“The employers and the
agencies are not liable—and the writers do not claim they are—for discrimination in
hiring that occurred more than one year before the complaints in these cases were filed
with the Department of Fair Employment and Housing.”]; id. at p. 377 [“Certainly, the
employers and the agencies would not be liable for any discriminatory refusal to refer or
refusal to hire that occurred more than one year before the complaints in these cases were
filed with the Department of Fair Employment and Housing.”]; ibid. [“there is no reason
an employer should be at liberty to continue to discriminate . . . during the limitations
period, simply because it has done so, allegedly, for the past 20 years”]; ibid. [“if
[defendants] enforced a discriminatory policy during the limitations period, claims are
16
timely filed both by writers who applied for jobs during that period and were rejected,
and by writers who were deterred from applying for jobs during that period”].)
Because plaintiff expressly seeks to proceed under Alch, the putative class claims
are timely if she alleges unlawful acts occurring during the limitations period even if
those acts arise from a systematic policy of discrimination that came into existence before
then.13 (Alch, supra, 122 Cal.App.4th at p. 377.) Plaintiff alleges that defendants use a
fixed discriminatory policy to pay reduced retirement disability benefits to employees
who worked fewer than 22.22 years for the City and began their employment when they
were over 40. She further alleges that defendants used this policy each month by paying
reduced disability retirement benefits, including during the limitations period, and this
use continued during the limitations period to the detriment of herself and the putative
class members. Thus, the putative class action claim for use of a systemic discriminatory
policy during the limitations period to the detriment of the class is timely under Alch.14
IV. The Disparate Impact Claim
Having decided that plaintiff’s disparate treatment claim is timely as set forth
herein, we turn to her disparate impact claim. Citing a lack of governing authority in
California regarding the accrual of disparate impact claims, the parties agree that Lewis v.
13
Plaintiff briefly argues that she can recover for all of the alleged harm she
suffered as a result of defendants’ acts since her retirement in 2000. Citing Aryeh v.
Canon Business Solutions, Inc., supra, 55 Cal.4th at p. 1192 and Richards, supra,
26 Cal.4th at pp. 818–819, she asserts that the continuing violation doctrine in this state
aggregates a series of injuries for purposes of the statute of limitations and converts an
entire course of conduct into a single wrong for which a plaintiff can recover. But Aryeh
relied on Richards when it stated that the continuing violation doctrine allows a plaintiff
to aggregate conduct inside and outside the limitations period and recover for that series
of injuries, and, again, plaintiff disavows the applicability of the continuing violation
doctrine adopted in Richards. (Id. at p. 1192.) Plaintiff thus cannot recover under
Richards or Alch for injuries going back to her retirement in 2000.
14
Because we conclude that plaintiff’s complaint does not show on its face that
her claims are untimely and a demurrer should not have been sustained on statute of
limitations grounds, we do not address her arguments regarding the single-filing or
delayed-discovery rules.
17
Chicago (2010) 560 U.S. 205 (Lewis) should guide our analysis of whether plaintiff’s
disparate impact claim is timely.
In Lewis, the plaintiffs challenged the City of Chicago’s use of written
examinations in hiring firefighters, alleging that the use of the written examinations to
exclude candidates had a disparate impact on African-American applicants. (Lewis,
supra, 560 U.S. at pp. 208–209.) Prior to the commencement of the limitations period,
the city used the results of the written examination to generate a hiring-eligibility list of
candidates ranked and grouped by score, and the city subsequently used that list multiple
times over several years to randomly select candidates from the top-ranked groupings for
advancement to the next stage of the hiring process. (Ibid.) Although the plaintiffs failed
to timely file an administrative charge challenging the creation of the list itself, they did
timely file charges attacking subsequent rounds of hiring done from the list. (Ibid.)
Under the relevant provision of Title VII, “a plaintiff establishes a prima facie
disparate-impact claim by showing that the employer ‘uses a particular employment
practice that causes a disparate impact’ on one of the prohibited bases.” (Lewis, supra,
560 U.S. at p. 212.) The United States Supreme Court thus held that disparate impact
claims under Title VII accrue when a discriminatory policy is “ ‘used’ ” or applied to
cause a disparate impact within the limitations period. (Lewis, at pp. 214–215.) Lewis
thus stands for the proposition that, even if a defendant’s decision to adopt the practice
would “g[i]ve rise to a freestanding disparate-impact claim,” a new actionable violation
of Title VII occurs when the defendant “implement[s] that decision down the road”; or, in
the words of the statute, when the defendant “uses a practice that causes disparate
impact.” (Id. at pp. 214, 217; see also City and County of San Francisco v. Fair
Employment & Housing Com. (1987) 191 Cal. App. 3d 976, 983 [complaint was timely
where the City used a candidate eligibility list to make promotions in the year prior to the
lawsuit although the City administered the written test that generated the list before that].)
Plaintiff claims that defendants use an employment policy to pay retirement
disability benefits each month and that use of this policy causes a disparate impact on
employees who worked fewer than 22.22 years for the City and began their employment
18
when they were over 40, in that such employees receive lower monthly benefits than
similarly situated employees who began employment before age 40. Plaintiff thus alleges
that defendants’ monthly application of an employment policy has a disparate impact;
under Lewis, then, plaintiff may sue for the payments that occurred within the year prior
to the November 17, 2017 filing of her DFEH complaint.
V. Government Immunity
Although they did not do so in the trial court, defendants argue on appeal that they
are immune from suit pursuant to section 818.2 of the Government Tort Claims Act (the
Act) (§§ 810 et seq.). They may present this legal question for the first time on appeal
from a dismissal following demurrer. (Bocanegra v. Jakubowski (2015) 241 Cal. App. 4th
848, 857.)
Section 818.2 provides: “A public entity is not liable for an injury caused by
adopting or failing to adopt an enactment or by failing to enforce any law.”15 This statute
is a special expression of discretionary act immunity. (Morris v. County of Marin (1977)
18 Cal. 3d 901, 911 [section 818.2 applies only to discretionary activity].) As such, acts
within legislative or administrative discretion have long enjoyed the shelter of immunity
from tort liability whereas mere government “operational” acts do not. (HFH, Ltd. v.
Superior Court of Los Angeles County (1975) 15 Cal. 3d 508, 519.) The need for political
accountability drives this immunity. “[B]oth constitutional and institutional
understandings require that legislative acts, even if improper, find their judicial remedy in
the undoing of the wrongful legislation, not in money damages awarded against the
state.” (Ibid.) If section 818.2’s immunity applied, the question would be whether FEHA
provides a “clear indication of legislative intent” that the otherwise applicable immunity
is withdrawn. (Caldwell v. Montoya (1995) 10 Cal. 4th 972, 986.) We need not reach this
question because we find that section 818.2 does not apply.
“ ‘Enactment’ means a constitutional provision, statute, charter provision,
15
ordinance or regulation.” (§ 810.6.)
19
Plaintiff alleges that defendants “enacted, implemented, and enforced the
unlawfully discriminatory retirement provisions at issue here”; however, the injury she
alleges arises not from the adoption of Charter section A8.584-3 in 197616, but instead
from the defendants’ subsequent enforcement of this provision with respect to her.
Section 818.2 does not immunize public entities from damages that result from injuries
that arise from the enforcement of a law. The Charter sets forth a formula for disability
retirement payments, and plaintiff does not allege facts suggesting that the defendants
enforced this provision through any discretionary legislative act when they granted
plaintiff’s request for disability retirement and later payments thereon.
Esparza v. County of Los Angeles (2014) 224 Cal. App. 4th 452 (Esparza), cited by
defendants, does not compel a contrary conclusion. In Esparza, peace officers employed
by the Los Angeles County Office of Public Safety (OPS) sued when their jobs were
terminated due to the Board of Supervisors’ vote to enact an ordinance and dissolve OPS
and merge its functions with the Los Angeles Sherriff’s Department. (Id. at pp. 455–
457.) The plaintiffs sued, alleging claims under FEHA for race, age, and disability
discrimination. (Id. at p. 458.) Defendant demurred, relying on section 818.2 immunity.
(Ibid.) The plaintiffs argued that immunity did not apply because their claims arose from
individual employment actions related to the termination after the ordinance was passed.
(Ibid.) Stating that “legislative immunity extends beyond the adoption of the enactment
to its implementation,” the court rejected the plaintiffs’ argument and found that their
complaint was directed at the adoption of the ordinance because each of them lost their
jobs as a direct result of the legislative decision to eliminate the entire department. (Ibid.)
Defendants assert that Esparza bars plaintiff’s claim because it stands for the
proposition that legislative immunity extends beyond the adoption of an enactment to any
16
Plaintiff alleges that defendants enacted the Charter provision at issue. The City
is a charter city, and, under the California Constitution, “For its own government, a
county or city may adopt a charter by majority vote of its electors voting on the
question. . . . A charter may be amended, revised, or repealed in the same manner.” (Cal.
Const., art. XI, § 3, subd. (a).)
20
actions taken to enforce or implement the law. Esparza, however, dealt only with injury
directly caused by adoption of an ordinance. Moreover, although Esparza cited Nunn v.
State of California (1984) 35 Cal. 3d 616 (Nunn) as the authority for its statement that
legislative immunity extends to implementation, Nunn does not categorically hold that
acts implementing a law are entitled to legislative immunity. (Esparza, supra,
224 Cal.App.4th at p.462.)
In Nunn, the Supreme Court addressed whether section 818.2 immunized the state
from a lawsuit arising from the Bureau of Collection and Investigative Services’ alleged
negligent failure to timely issue regulations implementing Business and Professions Code
former section 7514.1, subdivision (a).17 The Bureau’s eventual promulgation of
regulations, as directed by Business and Professions Code former section 7514.1,
implemented the statute. The Supreme Court found that the Bureau’s promulgation of
regulations necessarily involved discretionary “planning” rather than nondiscretionary
“operational” decisions. “As such, the quasi legislative implementation of basic
legislative decision is protected.” (Nunn, supra, 35 Cal.3d. at p. 622.) In so holding, the
Supreme Court distinguished cases where the plaintiff’s alleged injury arose from
nondiscretionary, operational acts implementing policy decisions. (Id. at pp. 622–623.)
Thus, governmental immunity applied in Nunn only because the implementation that
caused injury involved quasi-legislative discretionary acts. Unlike the plaintiffs in
Esparza or Nunn, plaintiff here does not allege that defendants took any legislative or
quasi-legislative acts in granting her retirement and enforcing the Charter. Thus, on the
face of her complaint, the injury that plaintiff alleges arising from these acts is not subject
to section 818.2 immunity.18
17
Business and Professions Code former section 7514.1 stated that “private patrol
[employees] shall complete a course of training in the . . . carrying and use of firearms.”
(Nunn, supra, 35 Cal.3d at p. 622, citing Bus. & Prof. Code, former § 7514.1, subd. (a),
adopted by Stats.1979, ch. 982, § 3, p. 3356.)
18
Because we find that plaintiff’s claims are not fully barred by the statute of
limitations or by section 818.2, it is unnecessary to address plaintiff’s arguments
regarding leave to amend her complaint.
21
DISPOSITION
The judgment is reversed.
_________________________
BROWN, J.
WE CONCUR:
_________________________
POLLAK, P. J.
_________________________
TUCHER, J.
Carroll v. City and County of San Francisco et al. (A155208)
22
Trial Court: San Francisco City & County Superior Court
Trial Judge: Hon. Mary E. Wiss
Counsel:
Aiman-Smith & Marcy, Randall B. Aiman-Smith, Reed W. L. Marcy, Hallie L. Von
Rock, Carey A. James, Brent A. Robinson, for Plaintiff and Appellant.
Dennis J. Herrera, City Attorney, Katherine H. Porter, Joseph M. Lake, Deputy City
Attorneys, for Defendants and Respondents.
Carroll v. City and County of San Francisco et al. (A155208)
23