Lales v. Wholesale Motors Company ( 2012 )

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
NO. 28516
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
GERARD R. LALES, Plaintiff-Appellant,
v.
WHOLESALE MOTORS COMPANY, dba JN AUTOMOTIVE GROUP,
JOHNNY MARTINEZ, and GARY MARXEN, SR.,
Defendants-Appellees.
APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CV. NO. 03-1-2415)
MEMORANDUM OPINION
(By: Nakamura, Chief Judge, and Foley and Fujise, JJ.)
This case arises out of an employment discrimination
lawsuit brought by Plaintiff-Appellant Gerald R. Lales (Lales).
Lales filed a First Amended Complaint in the Circuit Court of the
First Circuit (Circuit Court)1 against Defendants-Appellees
Wholesale Motors Company, dba JN Automotive Group (JN), Johnny
Martinez (Martinez), and Gary Marxen, Sr. (Marxen) (collectively,
Defendants). Lales alleged, among other things, that during the
course of his employment by JN as a car salesperson, he was
harassed by derogatory comments about his French national origin
and ancestry made by Martinez and Marxen and was later
terminated, in retaliation for his complaints of discrimination.
1
The Honorable Randal K.O. Lee presided over the proceedings relevant
to this appeal.
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
The First Amended Complaint asserted six causes of action (COA):
(1) discriminatory acts towards Lales, in violation of Hawaii
Revised Statutes (HRS) Chapter 3782 (COA 1); (2) retaliation for
Lales's complaints of discrimination, in violation of HRS Chapter
378 (COA 2); (3) breach of employment contract (COA 3); (4)
termination of Lales after he complained of national origin
harassment, in violation of public policy (COA 4); (5)
discriminatory acts towards Lales, in violation of Section 703 of
Title VII of the Civil Rights Act of 1964 (Title VII), 42 U.S.C.
§ 2000e-23 (COA 5); and (6) retaliation for Lales's opposing
2
At the time relevant to this case, HRS § 378-2 (Supp. 1999) provided
in pertinent part:
It shall be an unlawful discriminatory practice:
(1) Because of race, sex, sexual orientation, age,
religion, color, ancestry, disability, marital status,
or arrest and court record:
(A) For any employer to refuse to hire or employ or
to bar or discharge from employment, or
otherwise to discriminate against any individual
in compensation or in the terms, conditions, or
privileges of employment;
. . .
(2) For any employer, labor organization, or employment
agency to discharge, expel, or otherwise discriminate
against any individual because the individual has
opposed any practice forbidden by this part or has
filed a complaint, testified, or assisted in any
proceeding respecting the discriminatory practices
prohibited under this part; [or]
(3) For any person whether an employer, employee, or not,
to aid, abet, incite, compel, or coerce the doing of
any of the discriminatory practices forbidden by this
part, or to attempt to do so[.]
3
42 U.S.C. § 2000e-2(a)(1) states as follows:
(a) Employer practices
It shall be an unlawful employment practice for an employer--
(1) to fail or refuse to hire or to discharge any
individual, or otherwise to discriminate against any
individual with respect to his compensation, terms,
conditions, or privileges of employment, because of such
individual's race, color, religion, sex, or national
origin[.]
2
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
harassment, in violation of Section 704(a) of Title VII, 42
U.S.C. § 2000e-3(a)4 (COA 6). The Circuit Court granted summary
judgment in favor of Martinez, Marxen, and JN on all COAs raised
by Lales in the First Amended Complaint. The Circuit Court also
found that the claims raised by Lales in his First Amended
Complaint were frivolous and awarded attorney's fees of
$149,667.85 and costs of $9,272.81 to Defendants.
On appeal, Lales asserts that the Circuit Court: (1)
abused its discretion in failing to recuse itself on the basis of
bias or the appearance of bias; (2) erred in granting summary
judgment in favor of Marxen on COAs 1 and 2; (3) erred in
granting summary judgment in favor of JN on COAs 1, 2, 4, 5, and
6; (4) erred in awarding attorney's fees and costs to Defendants;
and (5) abused its discretion in denying Lales's post-judgment
motions.
For the reasons discussed below, we: (1) conclude that
the Circuit Court did not err in failing to recuse itself; (2)
vacate the Circuit Court's grant of summary judgment in favor of
Marxen on COAs 1 and 2; (3) vacate the Circuit Court's grant of
summary judgment in favor of JN on COAs 1, 2, 4, 5, and 6; (4)
vacate the Circuit Court's award of attorney's fees and costs to
Defendants; (5) conclude that it is unnecessary for us to
separately address Lales's claim that the Circuit Court abused
its discretion in denying his post-judgment motions; and (6)
4
42 U.S.C. § 2000e-3(a) states, in pertinent part, as follows:
(a) Discrimination for making charges, testifying, assisting, or
participating in enforcement proceedings
It shall be an unlawful employment practice for an employer to
discriminate against any of his employees or applicants for
employment . . . because he has opposed any practice made an
unlawful employment practice by this subchapter, or because he has
made a charge, testified, assisted, or participated in any manner
in an investigation, proceeding, or hearing under this subchapter.
3
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
remand the case for further proceedings consistent with this
Memorandum Opinion.5
BACKGROUND6
I.
Lales was employed by JN as a car salesperson for
almost a year before he was terminated. While employed by JN,
Lales worked with Martinez, who was his sales manager and
immediate supervisor for a period of time, and was supervised by
Marxen, the General Sales Manager for JN.
Lales received a termination notice, which stated that
he was being terminated due to a "lack of production," and
because he missed a "training meeting." Lales questioned Marxen
about these reasons, and Marxen reconsidered and allowed Lales to
continue working. However, the following day, Lales was again
terminated for allegedly selling a car to a customer by falsely
representing that it was equipped with air conditioning. The
previously issued termination notice was modified by changing the
date and adding the comment: "LIED TO CUSTOMER & THE USED CAR
MANAGER. CAUSING US TO INSTALL AIR CONDITIONING."
After his termination, Lales jointly filed a complaint
alleging national origin discrimination and retaliation with the
federal Equal Employment Opportunity Commission (EEOC) and the
Hawai#i Civil Rights Commission (HCRC). As part of his
5
In the Circuit Court, Lales did not oppose the grant of summary
judgment in favor of all Defendants on COA 3 for breach of employment contract
and did not oppose the grant of summary judgment in favor of Martinez and
Marxen on COAs 5 and 6 for claims under Title VII. On appeal, Lales does not
challenge: (1) the Circuit Court's grant of summary judgment in favor of
Martinez on all COAs; (2) the Circuit Court's grant of summary judgment in
favor of Marxen on COAs 3 through 6; and (3) the Circuit Court's grant of
summary judgment in favor of JN on COA 3. We affirm the Circuit Court's grant
of summary judgment in favor of Martinez, Marxen, and JN on the COAs that
Lales does not challenge on appeal; Lales has abandoned any challenge to these
rulings by failing to contest them on appeal. See State v. Cummings, 101
Hawai#i 139, 141 n.2, 63 P.3d 1109, 1111 n.2 (2003).
6
Because we must view the evidence in the light most favorable to the
non-moving party in reviewing a trial court's decision on a motion for summary
judgment, Kamaka v. Goodsill Anderson Quinn & Stifel, 117 Hawai#i 92, 104, 176
P.3d 91, 103 (2008), we present the evidence in the light most favorable to
Lales.
4
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
complaint, Lales submitted a statement under penalty of perjury,
in which he alleged, among other things, that Marxen "frequently
referred to me as a '[F]rench bastard'[] and told me to go back
to my country because America does not need French people[,]" and
that Marxen told Martinez "'to go and kick the ass of that French
bastard.'" According to Lales's statement, Martinez repeatedly
harassed Lales by calling him "Frenchy" and telling him that
"'the French are useless bastards'"; that despite his complaints
about Martinez's discrimination and harassment, Lales was
transferred to Martinez's sales team; and that Lales remained on
Martinez's sales team for months before being allowed to transfer
to a new sales team, despite protesting Martinez's continuing
harassment and discrimination. Lales alleged that he was
"discriminated against and harassed because of my national
origin, French"; that he "worked in a hostile environment and was
retaliated against for protesting the discrimination and
harassment"; and that the reasons given for his termination were
"pretextual."
The EEOC issued a "Determination" which stated that its
investigation revealed that Lales "was harassed because of his
national origin, French[,]" but that it was unable to conclude,
based on the information obtained, that Lales was discharged in
retaliation for opposing discrimination in the workplace. The
EEOC determined that "there is reasonable cause to believe that
Respondent [(identified in the Determination as JN)]
discriminated against [Lales] because of his national origin."
After the EEOC's Determination, the HCRC issued a "Notice of
Dismissal and Right to Sue" letter to Lales.
II.
Lales subsequently filed his Complaint and the First
Amended Complaint in Circuit Court. Martinez, Marxen, and JN
each filed separate motions for summary judgment. Lales filed
memoranda in opposition to these motions, which included his
declaration. In Lales's declaration submitted in opposition to
Marxen's motion for summary, Lales stated:
5
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
5. . . . I was subjected to discrimination on the
basis of my national origin/ancestry when my supervisor,
Defendant MARXEN[,] referred to me as "fucking French
bastard," "Frenchie," made derogatory remarks about French
people, told my immediate supervisor, Defendant JOHNNY
MARTINEZ[,] to "beat my fucken French ass," and made remarks
about French people. I was also subjected to ancestry
harassment by Defendant MARTINEZ and other employees at my
workplace, based upon my national origin - French. During
my work at JN AUTOMOTIVE GROUP, someone placed feces on my
car, for which a police report was made.
6. Defendant MARTINEZ was my immediate supervisor
and referred to me as "French fries," "Pepe Le Pieu," I was
told that I stink, that French women are just whores,
"French are wimps" and other derogatory remarks. I asked to
be transferred because of Defendant MARTINEZ's behavior
towards me which included threats.
Lales also asserted that Marxen prevented him from participating
in a radio promotion because of his French accent. Lales stated
that he was terminated for the false reason of not selling enough
vehicles, when he did not have the lowest sales at that time;
that he was told he was terminated for not attending a meeting,
but did not recall receiving notice of the meeting and did not
know of anyone being terminated for not attending a sales
meeting; and that he did not see or sign the termination notice
referring to his lying to a customer about air conditioning and
that he denied telling the customer the vehicle had air
conditioning. Lales declared that before he was terminated, he
complained orally to Marxen, his co-workers, and others about the
remarks made about his ancestry, and that he sought advice from
an attorney about hostile work environment and ancestry
discrimination. He stated that he was aware of other sales
representatives who were discriminated against on the basis of
race or national origin by Marxen and JN.
In Lales's declaration submitted in opposition to JN's
motion for summary judgment, he generally repeated these matters
and asserted additional details, including that: (1) he is French
and was born in France; (2) about a month before he was
terminated, he complained to Marxen about being harassed and
Marxen called him a "'Fucken French Bastard,'" told him to get
out of Marxen's office, and told Maritnez to "'beat his F******
6
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
French Ass'"; (3) after questioning the initial reasons for his
termination -- failing to sell enough vehicles and missing a
meeting -- Marxen changed his mind and allowed Lales to continue
to work; (4) the next day, Lales was terminated and told to leave
for selling a truck without air conditioning; (5) he "den[ied]
that [he] told the customer the truck had air conditioning" and
asserted that the sales agreement did not identify the truck as
having air conditioning and that the sales documents given to the
customer show that the truck was sold "'as is'"; and (6) "[o]ther
employees told [the customer] that the [t]ruck had air
conditioning in it and were not fired"; and (7) he suffered
financially and emotionally as a result of the discrimination and
being fired.
III.
The Circuit Court granted the motions for summary
judgment filed by Martinez, Marxen, and JN. In granting JN's
motion, the Circuit Court filed its "Findings of Fact,
Conclusions of Law and Order." The Circuit Court also issued an
order awarding attorney's fees and costs to Defendants.
The Circuit Court filed an Amended Final Judgment on
February 5, 2007, which entered judgment in favor of Defendants
and against Lales on all of Lales's COAs and awarded $149,667.85
in attorney's fees and $9,272.81 in costs to Defendants. The
Circuit Court subsequently denied Lales's motion for
reconsideration of the order awarding attorney's fees and costs
and Lales's "Motion to Vacate, Alter or Amend Judgment, Motion
for Stay of Entry of Judgment and for Rule 54(b) Certification
for Appeal." This appeal followed.
DISCUSSION
I.
Lales argues that the Circuit Court abused its
discretion in denying his motion for recusal, which was based on
the Circuit Court's alleged bias against Lales's counsel. We
disagree.
7
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
We review the denial of a motion for recusal or
disqualification for abuse of discretion. State v. Ross, 89
Hawai#i 371, 376, 974 P.2d 11, 16 (1998). The Hawai#i Supreme
Court has stated that "[d]ecisions on recusal or disqualification
present perhaps the ultimate test of judicial discretion and
should thus lie undisturbed absent a showing of abuse of that
discretion." Id. at 375, 974 P.2d at 15.
Over a year after Lales filed his First Amended
Complaint, the case was reassigned to Judge Randal K.O. Lee
(Judge Lee). Lales filed a motion to recuse Judge Lee because
before Judge Lee became a judge, he and Lales's attorney, Daphne
Barbee (Barbee), had been opposing counsel in a lengthy criminal
case, in which Judge Lee served as the prosecutor and Barbee
served as defense counsel. In support of this motion, Barbee
submitted a declaration of counsel, in which she stated that the
supreme court reversed her client's conviction after the first
trial, which lasted six months, due to the prosecutor's discovery
violations, and that a mistrial was granted at the retrial due to
the unconstitutionality of the indictment, which was affirmed on
appeal. Barbee asserted that as the result of "the longstanding
adversarial positions and lengthy litigation" between herself and
Judge Lee when he served as a prosecutor, she believed that Judge
Lee was biased against her, which may adversely affect her
clients, including Lales. Judge Lee denied Lales's motion for
recusal.
The Hawai#i Supreme Court has "suggested a two-part
analysis for disqualification or recusal cases." Ross, 89
Hawai#i at 377, 974 P.2d at 17. First, "HRS § 601-7 [(the
judicial disqualification statute)] is applied to determine
whether the alleged bias is covered by any of the specific
instances prohibited therein." Id. Second, "[i]f the alleged
bias falls outside of the provisions of HRS § 601-7, the court
may then turn, if appropriate, to . . . notions of due process
. . . in conducting the broader inquiry of whether 'circumstances
fairly give rise to an appearance of impropriety and reasonably
8
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
cast suspicion on the judge's impartiality." Id. (citation,
brackets, and ellipsis points omitted).
HRS § 601-7 (1993 & Supp. 2011) provides, in pertinent
part:
(b) Whenever a party to any suit, action, or
proceeding, civil or criminal, makes and files an affidavit
that the judge before whom the action or proceeding is to be
tried or heard has a personal bias or prejudice either
against the party or in favor of any opposite party to the
suit, the judge shall be disqualified from proceeding
therein. Every such affidavit shall state the facts and the
reasons for the belief that bias or prejudice exists . . . .
(Emphasis added.) HRS § 601-7 only refers to personal bias or
prejudice against a "party." However, Canon 3(E) of the Hawai#i
Code of Judicial Conduct (Revised) (1992) (HCJC), which was in
effect when Judge Lee rendered his decision, also required a
judge to disqualify himself or herself where the judge has a
personal bias or prejudice concerning a party's lawyer. In
addition, Canon 2 of the HCJC provided that "[a] judge shall
avoid impropriety and the appearance of impropriety in all of the
judge's activities."7
On appeal, Lales argues that Judge Lee abused his
discretion in failing to recuse himself on the basis of bias or
the appearance of bias. In support of this argument, Lales cites
the circumstances set forth in Barbee's declaration. Lales also
argues that Judge Lee's unfavorable rulings against Lales in this
case demonstrate bias.
We conclude that Judge Lee did not abuse his discretion
in denying Lales's motion for recusal. The circumstances cited
in Barbee's declaration did not demonstrate actual bias, that
Judge Lee's impartiality might reasonably be questioned, or that
Judge Lee's presiding over Lales's case would create an
appearance of impropriety. See Schutter v. Soong, 76 Hawai#i
187, 205-06, 873 P.2d 66, 84-85 (1994) ("[I]n order to establish
a 'personal' bias, [movant] must be able to show 'marked personal
7
The current Hawai#i Revised Code of Judicial Conduct contains
provisions very similar to Canon 3(E) and Canon 2 of the HCJC.
9
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
feelings on both sides inflicting lingering personal stings' on
[the judge]." (citation and ellipsis points omitted.)). There
was nothing to "'create in reasonable minds a perception that the
judge's ability to carry out judicial responsibilities with
integrity, impartiality and competence [was] impaired.'" Ross,
89 Hawai#i at 380, 974 P.2d at 20 (quoting commentary to Canon 2
of the HCJC). The rulings by Judge Lee against Lales also do not
support Lales's argument because parties "may not predicate their
claims of disqualifying bias on adverse rulings, even if the
rulings are erroneous." Id. at 378, 974 P.2d at 18.
II.
Marxen moved for summary judgment against Lales. With
respect to Lales's COAs 1 and 2, which asserted claims under HRS
Chapter 378, Marxen argued that he was entitled to summary
judgment because: (1) the right to sue letter issued by the HCRC
only covered JN and not Marxen; and (2) HRS § 378-2 only permits
claims against employers and not individual employees. In its
written order, the Circuit Court granted summary judgment in
favor of Marxen on Lales's HRS Chapter 378 claims on the ground
that "Lales did not receive [from the HCRC] a Right to Sue
[letter] against Defendant Marxen."
On appeal, Lales asserts that the Circuit Court erred
in granting summary judgment in favor of Marxen on COAs 1 and 2.
Lales argues that the Circuit Court erred in ruling that the
HCRC's right to sue letter did not cover Marxen simply because
Marxen's name was not in the caption of the letter. He also
argues that he is entitled to sue individual employees for
violating HRS § 378-2.
We review a trial court's grant of summary judgment de
novo. Kamaka v. Goodsill Anderson Quinn & Stifel, 117 Hawai#i
92, 104, 176 P.3d 91, 103 (2008).
Summary judgment is appropriate if the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of law. A
fact is material if proof of that fact would have the effect
10
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
of establishing or refuting one of the essential elements of
a cause of action or defense asserted by the parties. The
evidence must be viewed in the light most favorable to the
non-moving party. In other words, this court must view all
of the evidence and the inferences drawn therefrom in the
light most favorable to the party opposing the motion.
Id. (brackets omitted) (quoting Price v. AIG Hawai#i Ins. Co.,
107 Hawai#i 106, 110, 111 P.3d 1, 5 (2005)).
As explained in greater detail below, we conclude that
the Circuit Court erred in granting summary judgment in favor of
Marxen on Lales's HRS Chapter 378 claims.
A.
The background concerning the HCRC's issuance of its
right to sue letter and the Circuit Court's grant of summary
judgment in favor of Marxen is as follows. After he was
terminated by JN, Lales filed a complaint with both the HCRC and
the EEOC by means of a declaration. In his declaration, Lales
alleged that he had been discriminated against and harassed by
Marxen and Martinez while employed by JN, and that he had been
subjected to retaliation for protesting the discrimination and
harassment. Lales's complaint identified both JN and Marxen as
respondents. Lales's complaint was dual filed as Charge No.
11620 with the HCRC and Charge No. 378-A3-00050 with the EEOC.
The HCRC sent the same "Notice of Charge of
Discrimination" letter (Charge Letter) to both JN and Marxen. In
the caption, the Charge Letter stated:
Re: Gerard Lales vs. Wholesale Motors, Inc. JN Automotive
Group and Gary Marxen, Individually
FEPA[ 8] No. 11620; EEOC No. 378-A3-00050
The Charge Letter to Marxen informed him that Lales had filed
"the enclosed complaint of employment discrimination under the
Hawaii Employment Practices Law and the U.S. Civil Rights Act of
1964, as amended, . . . against your organization." Pursuant to
a work sharing agreement between the HCRC and the EEOC, Lales's
complaint was investigated by the EEOC. Based on its
investigation, the EEOC issued a "Determination" which identified
8
The acronym FEPA stands for "Fair Employment Practices Agency."
11
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Lales as the "Charging Party" and only JN as the "Respondent."
In its Determination, the EEOC found reasonable cause to believe
that Respondent harassed and discriminated against Lales because
of his national origin, but was unable to conclude that he was
discharged in retaliation for opposing discrimination. As the
result of the EEOC's investigation and final determination of
Lales's complaint, the HCRC dismissed Lales's complaint and
issued a notice of right to sue to Lales, pursuant to Hawai#i
Administrative Rules (HAR) §§ 12-46-11 (1999) and HAR 12-46-20
(1993).9
The caption of the "Notice of Dismissal and Right to
Sue" letter (Right to Sue Letter) sent by the HCRC to Lales did
not include Marxen's name and stated:
Re: Notice of Dismissal and Right to Sue in
Gerard Lales vs. Wholesale Motors, Inc. JN Automotive Group
FEP No. 11620; EEOC No. 378-2003-00050
9
HAR § 12-46-11 provides in pertinent part:
(a) The executive director [of the HCRC] shall dismiss the
complaint:
. . .
(6) If the complaint has been investigated by an
appropriate local, state, or federal enforcement
agency, such as the Equal Employment Opportunity
Commission, Department of Housing and Urban
Development, Office for Civil Rights, or Office of
Federal Contract Compliance Programs, and a final
determination regarding the complaint has been made by
the agency[.]
HAR § 12-46-20 provides in pertinent part:
(a) A notice of right to sue shall authorize:
(1) A complainant alleging violations of chapters 368,
378, or 489, HRS, to bring a civil suit pursuant to
section 368-12, HRS, within ninety days after receipt
of the notice;
. . . .
(d) The commission's executive director shall issue a notice
of right to sue:
(1) Upon dismissal of the complaint pursuant to section
12-46-11[.]
12
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
The Right to Sue Letter indicated that JN's president, Joseph
Nicolai, and Marxen received a copy of the letter, by the
notation:
c: Joseph Nicolai, President/Director
Gary Marxen, as an individual
at the end of the letter. The Right to Sue Letter informed Lales
that in accordance with HAR § 12-46-11, the HCRC was dismissing
Lales's complaint and issuing him a right to sue letter. It
further informed Lales that he had the right to file a private
lawsuit against "the Respondent in the State Circuit Court within
ninety (90) days after receipt of this notice pursuant to [HRS]
§ 368-12[10] and [HAR] § 12-46-20."
B.
The Circuit Court granted summary judgment in favor of
Marxen on Lales's HRS Chapter 378 claims on the ground that Lales
"did not receive a Right to Sue [letter] against Defendant
MARXEN." Noting the difference between the caption of the Charge
Letter, which includes Marxen's name, and the caption of the
Right to Sue Letter, which does not, the Circuit Court found that
10
HRS § 368-12 (1993) states:
The [Hawaii Civil Rights] commission may issue a notice of right
to sue upon written request of the complainant. Within ninety
days after receipt of a notice of right to sue, the complainant
may bring a civil action under this chapter. The commission may
intervene in a civil action brought pursuant to this chapter if
the case is of general importance.
The Hawai#i Supreme Court has explained that
Pursuant to HRS § 368–11(a) (1993), the HCRC has
jurisdiction, inter alia, "over the subject of discriminatory
practices made unlawful by . . . part I of [HRS] chapter 378,"
which includes HRS § 378–2 (1993). HRS § 368–11(d) (1993)
provides in relevant part that, "[f]or purposes of [HRS ch. 368,]
'unlawful discriminatory practice' means an unfair discriminatory
practice or like terms, as may be used in . . . part I of [HRS]
chapter 378."
Brown v. KFC Nat'l Mgmt. Co., 82 Hawai#i 226, 230 n.4, 921 P.2d 146, 150 n.4
(1996). As a section of HRS Chapter 378, Part I, HRS § 378-2 "is incorporated
by reference into the substantive and procedural provisions of HRS [Chapter]
368[.]" Id. at 231 n.6, 921 P.2d at 151 n.6.
13
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Marxen was "distinctively missing" from the Right to Sue Letter.
The Circuit Court subsequently issued an order awarding
attorney's fees and costs to Defendants. The Circuit Court's
order was based, in part, on its determination that Lales's
complaint against Marxen was frivolous because Lales did not have
a right to sue letter covering Marxen. Lales filed a motion for
reconsideration of the Circuit Court's order granting attorney's
fees and costs to Defendants. In support of his motion, Lales
submitted the declaration of William Hoshijo (Hoshijo), the
Executive Director of the HCRC. In his declaration, Hoshijo
asserted that: (1) the omission of any reference to Marxen in the
caption of the Right to Sue Letter was "an inadvertent clerical
error"; (2) "[t]he case numbers [in the caption], FEPA No. 11620,
EEOC No. 378-A3-00050,[11]. . . indicate that the entire case was
being dismissed, including any claims against Gary Marxen,
individually"; (3) the HCRC sent a copy of the Right to Sue
Letter to Marxen; and (4) the Right to Sue Letter "allowed Mr.
Lales to file a civil action against Gary Marxen despite the fact
that the 'with regards to' line of the letter did not contain Mr.
Marxen's name." The Circuit Court denied Lales's motion for
reconsideration.
C.
Lales was required to exhaust administrative remedies
by filing a complaint with the HCRC and obtaining a notice of
right to sue from the HCRC in order to file a civil action on his
HRS Chapter 378 claims. See French v. Hawaii Pizza Hut, Inc.,
105 Hawai#i 462, 475-77, 99 P.3d 1046, 1059-61 (2004); Schefke v.
Reliable Collection Agency, Ltd., 96 Hawai#i 408, 416 n.5, 32
P.3d 52, 60 n.5 (2001) (citing HRS §§ 368-11, 368-12, and 378-4);
Ross v. Stouffer Hotel Co., 76 Hawai#i 454, 460, 879 P.2d 1037,
11
Hoshijo explained that the initials "FEPA" stand for "Fair Employment
Practices Agency" and that numbers for the HCRC Charge No. 11620 and the
"FEPA" No. 11620 are the same. We note that the caption of the Right to Sue
Letter used the initials "FEP" rather than "FEPA" and states the EEOC charge
number as "EEOC No. 378-2003-00050" rather than "EEOC No. 378-A3-00050."
14
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
1043 (1994); Linville v. State of Hawai#i, 874 F. Supp. 1095,
1104 n.4 (D. Hawai#i 1994). We conclude that the Right to Sue
Letter issued to Lales was sufficient to authorize Lales to
proceed with his lawsuit against Marxen.
HRS Chapter 368, which establishes the filing of an
administrative action and the issuance of notice of right to sue
as prerequisites for Lales to bring a civil action on his HRS
Chapter 378 claims in court, is "a remedial statute designed to
enforce civil rights protections and remedy the effects of
discrimination," and therefore, "should be liberally construed in
order to accomplish that purpose." Furukawa v. Honolulu
Zoological Soc'y, 85 Hawai#i 7, 17, 936 P.2d 643, 653 (1997); see
also Ramirez v. Nat'l Distillers & Cem. Corp., 586 F.2d 1315,
1321 (9th Cir. 1978) (concluding that in keeping with the
remedial goals of the Civil Rights Act of 1964, the statute, the
procedural framework, and the pleadings must be liberally
construed in favor alleged victims of discrimination and that
"[p]rocedural technicalities should not be employed to impede a
Title VII claimant from obtaining a judicial hearing on the
merits"). The Hawai#i Supreme Court has held that construing a
prior statute of limitations provision in HRS Chapter 378 to
favor "adjudication on the merits is more consistent with the
remedial purposes of Part I of HRS Chapter 378 than one likely to
bar potentially meritorious claims." Ross, 76 Hawai#i at 462,
879 P.2d at 1045.
The purpose of requiring the filing of a prior
administrative complaint is to provide notice to the charged
party of the claim and to give the administrative agency the
opportunity to investigate and conciliate the claim. See Woodman
v. Runyon, 132 F.3d 1330, 1342 (10th Cir. 1997) (explaining the
purpose of the requirement of exhaustion of administrative
remedies with respect to Title VII claims); Martin v. Fisher, 13
Cal. Rptr. 2d 922, 924 (Cal. Ct. App. 1992) (explaining the
purpose of the exhaustion requirement under California's
employment discrimination law). Given the function served by the
15
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
administrative complaint and the remedial goals of the Civil
Rights Act of 1964, federal courts have liberally construed the
scope of a Title VII plaintiff's administrative claim to permit
the filing of a discrimination lawsuit, in response to arguments
that the plaintiff failed to exhaust administrative remedies.
See Sosa v. Hiraoka, 920 F.2d 1451, 1456-57 (9th Cir. 1990);
B.K.B. v. Maui Police Dept., 276 F.3d 1091, 1100-03 (9th Cir.
2002). Thus, even where a party is not named in an EEOC charge,
federal courts have permitted a Title VII lawsuit to be brought
against that party as long as the party not named in the EEOC
charge was involved in the acts giving rise to the EEOC charge or
should have anticipated that the claimant would name the party in
a Title VII lawsuit. Sosa, 920 F.2d at 1458-59; E.E.O.C. v.
Nat'l Educ. Ass'n, Alaska, 422 F.3d 840, 847 (9th Cir. 2005).
In Martin v. Fisher, 13 Cal. Rptr. 2d 922, the
California Court of Appeals considered a situation very similar
to this case under California's employment discrimination
statutory scheme. Martin jointly filed a discrimination
complaint against her employer, Texaco Refining and Marketing
Inc. (TRMI), with the EEOC and the analogous California
administrative agency, the Department of Fair Employment and
Housing (DFEH). Id. at 922. The administrative complaint did
not name Fisher as a charged party, but identified Fisher,
Martin's functional superior at TRMI, as the individual who had
taken some of the discriminatory actions against Martin. Id. at
922-23. Martin received right to sue letters from the EEOC and
the DFEH which named only TRMI and not Fisher. Id. at 923. The
trial court dismissed Martin's lawsuit against Fisher on the
grounds of failure to exhaust administrative remedies. Id. at
922.
On appeal, the California Court of Appeals framed the
issue as whether Martin's discrimination suit was barred "where
[Fisher] was named in the body of [Martin's] administrative
complaint, but not as a charged party." Id. at 923. In holding
that Martin's lawsuit against Fisher was not barred, the court
16
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
reasoned as follows:
The function of an administrative complaint is to
provide the basis for an investigation into an
employee's claim of discrimination against an
employer, and not to limit access to the courts. A
strict rule [that only a party named in the caption of
the administrative suit may be sued, regardless of any
other circumstances,] would harm victims of
discrimination without providing legitimate protection
to individuals who are made aware of the charges
through the administrative proceeding. If they are
described in the charge as the perpetrators of the
harm, they can certainly anticipate they will be named
as parties in any ensuing lawsuit.
. . . .
Similarly, the right-to-sue letter, while triggering
certain rights in the plaintiff, is primarily notification
that no further administrative action will be taken in the
case. Although its issuance is a prerequisite to judicial
action . . . , we do not believe the plaintiff should be
bound by the caption of the administrative charge, which is
reflected in the right-to-sue letter.
Id. at 924.
The reasoning in Martin is consistent with the Hawai#i
Supreme Court's liberal construction of Hawai#i's employment
discrimination statutes to accomplish their remedial purposes.
In this case, Lales's administrative complaint, which was jointly
filed with the HCRC and the EEOC, identified "Gary Marxen,
Individually" as a respondent and alleged that Marxen harassed
and discriminated against Lales on the basis of his national
origin. The record reflects that Marxen was notified of and
served with Lales's administrative complaint. Thus, Marxen had
ample and specific notice of Lales's discrimination claim against
Marxen and should clearly have anticipated that Lales would name
him in a discrimination lawsuit. In addition, Marxen was named
in the caption of the Charge Letter; the caption of the Right to
Sue Letter referred to Lales's discrimination cases before the
HCRC and EEOC, "FEP No. 11620; EEOC No. 378-2003-00050"; and
Marxen does not dispute that he was mailed a copy of the Right to
Sue Letter. Indeed, Lales presents a more compelling case for
allowing his lawsuit to proceed than that presented in Martin.
Lales's administrative complaint actually named Marxen as a
17
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
respondent, whereas Martin's complaint did not name Fisher as a
charged party, and Marxen received a copy of the complaint and
Right to Sue Letter, while Fisher was not served with either the
complaint or right to sue letter, but learned of the charges
through his employment and his interview by an EEOC
representative. See Martin, 13 Cal. Rptr. 2d at 922-23.
The purpose of a right to sue letter is to provide
notice that no further administrative action will be taken, that
the complainant has exhausted his or her administrative remedies,
and that the time for bringing suit has started to run. See HRS
§ 368-12; Martin, 13 Cal. Rptr. 2d at 924; Lacy v. Chrysler
Corp., 533 F.2d 353, 356-59 (8th Cir. 1976). Neither the
relevant statutes nor the HCRC rules require the HCRC to name a
person in the caption of the notice of right to sue in order for
that person to be sued in court for discrimination. Under the
circumstances of this case, to deny Lales the ability to pursue
his complaint in Circuit Court because the Right to Sue Letter
did not specifically name Marxen in the caption would elevate
form over substance and would be inconsistent with the remedial
purposes of Hawai#i's employment discrimination statutes. See
Furukawa, 85 Hawai#i at 17, 936 P.2d at 653; Ross, 76 Hawai#i at
462, 879 P.2d at 1045; Martin, 13 Cal. Rptr. 2d at 924; B.K.B.,
276 F.3d at 1100-03. We therefore conclude that the Circuit
Court erred in granting summary judgment in favor Marxen on COAs
1 and 2, Lales's HRS Chapter 378 claims, on the ground that the
HCRC's Right to Sue Letter did not authorize Lales to file suit
against Marxen.
D.
Because the Circuit Court granted summary judgment on
this ground, it did not address Marxen's alternative argument
that Marxen was not subject to liability in his individual
capacity under HRS § 378-2. If Lales was not entitled to sue
Marxen individually under HRS § 378-2, then the Circuit Court
would have been correct in granting summary judgment in favor of
Marxen on COAs 1 and 2, albeit on a different ground than it
18
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
asserted. We therefore consider whether Lales was entitled to
bring suit against Marxen individually under HRS § 378-2.
Citing federal cases holding that liability under Title
VII only extends to employers and not to employees in their
individual capacities, e.g., Miller v. Maxwell's Int'l. Inc., 991
F.2d 583, 587-88 (9th Cir. 1993), Marxen argues that HRS Chapter
378 and HRS § 378-2 should similarly be construed as only
subjecting employers, and not individual employees, to liability
for discriminatory acts.12 We disagree. As explained below, we
conclude that employees are subject to individual liability under
HRS § 378-2 when they are agents of an employer or when they aid,
abet, incite, compel, or coerce prohibited discriminatory
practices. Accordingly, Marxen was not entitled to summary
judgment on Lales's HRS Chapter 378 claims on the ground that HRS
§ 378-2 only permits claims against employers, and not employees
in their individual capacities.
We start with the language of the statute. HRS § 378-2
provided in relevant part:
It shall be an unlawful discriminatory practice:
(1) Because of race, sex, sexual orientation, age,
religion, color, ancestry, disability, marital status,
or arrest and court record:
(A) For any employer to refuse to hire or employ or
to bar or discharge from employment, or
otherwise to discriminate against any individual
in compensation or in the terms, conditions, or
privileges of employment;
. . .
(2) For any employer . . . to discharge, expel, or
otherwise discriminate against any individual because
the individual has opposed any practice forbidden by
this part or has filed a complaint, testified, or
assisted in any proceeding respecting the
discriminatory practices prohibited under this part;
[or]
12
The Circuit Court granted summary judgment in favor on Marxen on
Lales's Title VII claims, COAs 5 and 6, based on Lales's concession that
Marxen was not subject to individual liability under Title VII. As noted in
footnote 5, supra, Lales does not challenge the Circuit Court's grant of
summary judgment in favor of Marxen on COAs 5 and 6.
19
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
(3) For any person whether an employer, employee, or not,
to aid, abet, incite, compel, or coerce the doing of
any of the discriminatory practices forbidden by this
part, or to attempt to do so[.]
HRS § 378-1 (1993), in turn, (1) defines "employer" to mean "any
person, including the State or any of its political subdivisions
and any agent of such person, having one or more employees, but
shall not include the United States" (emphasis added); and (2)
defines "person" to mean "one or more individuals, and includes,
but is not limited to, partnerships, associations, or
corporations, legal representatives, trustees, trustees in
bankruptcy, receivers, or the State or any of its political
subdivisions."
Therefore, under HRS § 378-2, an employer, which is
broadly defined to include "any person . . . having one or more
employees" and "any agent of such person," is subject to
liability for engaging in the specified unlawful discriminatory
practices. A plain reading of the statutory provisions supports
the conclusion that an individual employee, who is an agent of an
employer, can be held individually liable as an "employer."
Moreover, HRS § 378-2(3) clearly provides that "any person[,]
whether an employee, employer, or not[,]" is subject to
individual liability for aiding and abetting the prohibited
discriminatory practices. Thus, the statutory language
contradicts Marxen's contention that HRS § 378-2 does not permit
claims against employees in their individual capacities.
In Sherez v. State of Hawai'i Dept. of Educ., 396 F.
Supp. 2d 1138 (D. Hawai#i 2005), the United States District Court
for the District of Hawai#i considered the question of whether
employees are subject to liability in their individual capacities
under HRS § 378-2. Noting a split among the judges of the
District of Hawai#i on this issue, the court in Sherez held that
under HRS § 378-2, employees are subject to individual liability
when they act as agents of an employer. Id. at 1146 & n.7. The
court employed the following reasoning, with which we agree,
20
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
in analyzing the Hawai#i Legislature's intent in using the term
"agent" in the definition of "employer":
[HRS] Chapter 378 casts liability for employment
discrimination broadly. It applies to the smallest
employers, even individual employers who employ only one
other person. In addition, [HRS § 378-2(3)] imposes
individual liability on those who aid, abet, or incite
employment discrimination. Aider and abettor liability
extends to everyone, even those not employed or affiliated
with the discriminatory employer. It is hard to imagine
that the Hawaii legislature meant to impose liability on
small employers and on individuals who aid and abet
discrimination, yet at the same time meant to immunize the
individual agents who actually engage in unlawful
discrimination. Thus, taken in context, the language "any
person . . . including . . . any agent of such person" in
the definition of employer contemplates that agents are
individually liable as employers under the statute.
Id. at 1147 (ellipsis points in original).
The Sherez court also explained, in a manner we find
persuasive, why federal precedents that had construed Title VII
as not subjecting employees to individual liability should not be
followed in construing HRS Chapter 378.
As discussed above, individual employees are not subject to
liability under Title VII which, like [HRS] chapter 378,
imposes liability on employers for employment
discrimination. Miller v. Maxwell's Int'l, Inc., 991 F.2d
583, 587 (9th Cir.1993). Miller interpreted the agency
language in the Title VII definition of "employer" as
imposing respondeat superior liability on the employer for
its agents' acts, while not imposing individual liability on
the agent. However, Title VII differs from chapter 378 in
relevant detail: federal law imposes liability only on
employers with fifteen or more employees while chapter 378
imposes liability on employers with one or more employees.
Compare HRS § 378-1 with 42 U.S.C. § 2000e-2.
Miller viewed the fifteen or more employee requirement
in Title VII critical in determining Congressional intent
with respect to individual liability. The court reasoned
that "if Congress decided to protect small entities with
limited resources from liability, it is inconceivable that
Congress intended to allow civil liability to run against
individual employees." Id. In contrast, HRS § 378-1 does
not limit employer liability to larger employers.
Additionally, unlike Title VII, chapter 378 imposes aider
and abetter liability on individuals. HRS § 378-2(3). As
discussed above, construing "employer" to include individual
agents of employers is entirely consistent with the
statutory scheme of chapter 378. Because of these crucial
differences between the levels [of] liability imposed by
Title VII and chapter 378, the court does not find Title VII
precedent helpful in interpreting the HRS § 378-1 definition
of employer.
Id. at 1148 (brackets omitted).
21
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Although the Hawai#i Supreme Court has not directly
addressed the issue of liability of employees in their individual
capacities presented by this appeal, decisions of the Hawai#i
Supreme Court support the conclusion that liability under HRS
§ 378-2 extends to employees in their individual capacities. In
Steinberg v. Hoshijo, 88 Hawai#i 10, 960 P.2d 1218 (1998), the
complainant and Dr. Steinberg were both employed by a medical
clinic, and Dr. Steinberg was the complainant's supervisor. Id.
at 11, 960 P.2d at 1219. The Hawai#i Supreme Court affirmed the
circuit court's order, which upheld a decision of the HCRC that
Dr. Steinberg had subjected the complainant to sexual harassment,
in violation of HRS § 378-2, and was liable for compensatory and
punitive damages. Id. The court noted that "[t]he parties do
not dispute that Dr. Steinberg was an agent of the Clinic and
therefore an 'employer' as defined by HRS § 378-1." Id. at 18
n.10, 960 P.2d at 1226 n.10; see also Sam Teague, Ltd. v Hawai#i
Civil Rights Comm'n, 89 Hawai#i 269, 275-77, 971 P.2d 1104, 1110-
12 (1999) (concluding that the HCRC properly allowed complainant
to amend her complaint to add owner of employer as a party in his
personal capacity because HRS § 378-1 defines "employer" to
include agents of persons having one or more employees).
In Schefke v. Reliable Collection Agency, Ltd., 96
Hawai#i 408, 32 P.3d 52, the plaintiff sued his two corporate
employers as well as the individual owners, Jonathan and Fred
Kirshner, of one of the corporate employers. Id. at 415, 417, 32
P.3d at 59, 61. The Hawai#i Supreme Court overturned the trial
court's grant of directed verdicts in favor of Jonathan and Fred
as to their liability in their individual capacities on
plaintiff's claim of retaliation in violation of HRS § 378-2.
Id. at 441-42, 32 P.3d at 85-86. The court rejected Fred's claim
that he could not be held personally liable for the alleged
retaliatory decision because the decision had ultimately been
left to Jonathan. The court held that given the broad language
of HRS § 378-2(3), which "provides that 'any person whether an
employer, employee, or not' can be held liable for 'aid[ing],
22
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
abet[ing], incit[ing], compel[ling], or coerc[ing] the doing of
any discriminatory practices forbidden by this part,'" Fred could
be held liable for inciting the discriminatory decision, even if
he was offering advice, and not making any decision. Id. at 442,
32 P.3d at 86 (brackets in original). The supreme court
concluded that the trial court erred in granting the directed
verdicts because based on the evidence presented at trial, the
jury could have found discriminatory retaliation by Jonathan and
Fred in violation of HRS § 378-2(3). Id.
Based on the plain language of the relevant statutory
provisions and Hawai#i Supreme Court decisions, we conclude that
Lales was entitled to bring suit against Marxen individually
under HRS § 378-2.
III.
Lales argues that the Circuit Court erred in granting
summary judgment in favor of JN on Lales's COA 1 (HRS Chapter 378
harassment), COA 2 (HRS Chapter 378 retaliation), COA 4
(termination in violation of public policy), COA 5 (Title VII
harassment), and COA 6 (Title VII retaliation). We agree.
A.
We first address the Circuit Court's grant of summary
judgment in favor of JN on COAs 1 and 5, Lales's HRS Chapter 378
and Title VII claims for harassment based on ancestry and
national origin discrimination. Lales argues that the Circuit
Court erred in granting summary judgment in favor of JN on these
claims because: (1) the Circuit Court erroneously applied the
legal test for vicarious liability based on harassment by a co-
worker, rather than harassment by a supervisor; (2) the Circuit
Court erroneously applied the affirmative defense set forth in
Faragher v. City of Boca Raton, 524 U.S. 775 (1998), to Lales's
HRS Chapter 378 harassment claim; and (3) the Circuit Court
failed to view the evidence in the light most favorable to Lales
and instead based its grant of summary judgment on improper
credibility determinations and findings on disputed facts. As
explained below, we conclude that the Circuit Court erred in
granting summary in favor of JN on COAs 1 and 5.
23
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
1.
HAR § 12-46-175 (1990), the HCRC rule for harassment
based on ancestry, provides, in relevant part, as follows:
Harrassment. (a) Harassment on the basis of ancestry
is a violation of chapter 378, HRS.
(b) Ethnic slurs and other verbal or physical conduct
relating to an individual's ancestry constitute harassment
when this conduct:
(1) Has the purpose or effect of creating an
intimidating, hostile, or offensive working
environment;
(2) Has the purpose or effect of unreasonably
interfering with an individual's work
performance; or
(3) Otherwise adversely affects an
individual's employment opportunity.
Similar standards apply to hostile work environment
harassment based on national origin under Title VII, which
requires a plaintiff to prove:
(1) that he [or she] belongs to a protected group, (2) that
he [or she] has been subject to unwelcome harassment, (3)
that the harassment was based on a protected characteristic
of the employee, such as . . . national origin, (4) that the
harassment was sufficiently severe or pervasive to alter the
terms and conditions of employment and create a
discriminatorily abusive working environment, and (5) that
the employer is responsible for such environment under
either a theory of vicarious or direct liability.
Piquion v Walgreen Co., 369 F. Supp. 2d 1339, 1346 (S.D. Fla.
2005).
HAR § 12-46-175 also addresses the circumstances under
which an employer may be held vicariously liable for the acts of
its employees, and it provides, in relevant part, as follows:
(c) The employer has an affirmative duty to maintain a
working environment free of harassment on the basis of
ancestry.
(d) An employer is responsible for its acts and those
of its agents and supervisory employees with respect to
harassment on the basis of ancestry regardless of whether
the specific acts complained of were authorized or even
forbidden by the employer and regardless of whether the
employer knew or should have known of their occurrence. The
commission will examine the circumstances of the particular
employment relationship and the job functions performed by
the individual in determining whether an individual acts in
a supervisory or agency capacity.
24
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
(e) With respect to conduct between fellow employees,
an employer shall be responsible for acts of harassment in
the workplace on the basis of ancestry, where the employer,
its agent, or supervisory employee, knows or should have
known of the conduct, unless the employer can show that it
took immediate and appropriate corrective action.
For purposes of imposing vicarious liability on an
employer for ancestry harassment, HAR § 12-46-175 distinguishes
between harassment by a co-worker and harassment by a supervisor.
With respect to harassment by a supervisor, HAR § 12-46-175(d)
imposes "strict" vicarious liability on the employer. On the
other hand, with respect to harassment by a co-worker, HAR § 12-
46-175(e) imposes vicarious liability on an employer if it knows
or should have known of the harassing conduct and fails to take
corrective action.
In Faragher and the companion case of Burlington
Indus., Inc. v. Ellerth, 524 U.S. 742 (1998), the United States
Supreme Court addressed the circumstances under which an employer
could be held vicariously liable under Title VII for sexual
harassment committed by a supervisory employee against a
subordinate. The Court in Faragher held as follows:
In order to accommodate the principle of vicarious
liability for harm caused by misuse of supervisory
authority, as well as Title VII's equally basic policies of
encouraging forethought by employers and saving action by
objecting employees, we adopt the following holding in this
case and in Burlington Industries, Inc. v. Ellerth, 524 U.S.
742, 118 S.Ct. 2257, 141 L.Ed.2d 633 (1998), also decided
today. An employer is subject to vicarious liability to a
victimized employee for an actionable hostile environment
created by a supervisor with immediate (or successively
higher) authority over the employee. When no tangible
employment action is taken, a defending employer may raise
an affirmative defense to liability or damages, subject to
proof by a preponderance of the evidence, see Fed. Rule Civ.
Proc. 8(c). The defense comprises two necessary elements:
(a) that the employer exercised reasonable care to prevent
and correct promptly any sexually harassing behavior, and
(b) that the plaintiff employee unreasonably failed to take
advantage of any preventive or corrective opportunities
provided by the employer or to avoid harm otherwise. While
proof that an employer had promulgated an antiharassment
policy with complaint procedure is not necessary in every
instance as a matter of law, the need for a stated policy
suitable to the employment circumstances may appropriately
be addressed in any case when litigating the first element
of the defense. And while proof that an employee failed to
fulfill the corresponding obligation of reasonable care to
avoid harm is not limited to showing an unreasonable failure
25
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
to use any complaint procedure provided by the employer, a
demonstration of such failure will normally suffice to
satisfy the employer's burden under the second element of
the defense. No affirmative defense is available, however,
when the supervisor's harassment culminates in a tangible
employment action, such as discharge, demotion, or
undesirable reassignment. See Burlington, 524 U.S., at
762-763, 118 S.Ct., at 2269.
Faragher, 524 U.S. at 807-08 (emphases added).
Thus, under Faragher, an employer is subject to
"strict" vicarious liability for harassment by a supervisor, but
may assert the articulated affirmative defense, except "when the
supervisor's harassment culminates in a[n] [adverse] tangible
employment action." Id. at 808.
2.
In granting summary judgment in favor of JN on Lales's
harassment claims, the Circuit Court relied on the Hawai#i
Supreme Court's decision in Arquero v. Hilton Hawaiian Village
LLC, 104 Hawai#i 423, 91 P.3d 505 (2004), for the proposition
that to establish employer liability, the harassed employee must
show that the employer knew or should have known of the
harassment and failed to take appropriate corrective action. We
conclude that such reliance was misplaced because Arquero
involved co-worker harassment, and not harassment by a
supervisor.13 Here, Lales alleged that he was subjected to
repeated acts of harassment based on his ancestry and national
origin by Marxen who was his supervisor.
The Circuit Court also erred in applying the
affirmative defense set forth in Faragher because as Faragher
itself makes clear, the affirmative defense does not apply "where
a supervisor's harassment culminates in tangible employment
13
In Arquero, plaintiff sued her employer, claiming that she had been
sexually harassed by a co-worker. In support of the standards it applied to
evaluate the employer's liability, the Hawai#i Supreme Court cited the HCRC
rules for sexual harassment, HAR § 12-46-109 (1990), which basically applies
the same distinction between an employer's vicarious liability for harassment
by a co-worker and harassment by a supervisor as the HCRC rules for ancestry
harassment. See Arquero, 104 Hawai#i at 428 n.7, 91 P.3d at 510 n.7. Because
Arquero involved harassment by a co-worker, the Hawai#i Supreme Court did not
consider HAR § 12-46-109(c), which imposes "strict" vicarious liability on an
employer for sexual harassment by a supervisor.
26
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
action, such as a discharge . . . ." Here, because the alleged
harassment by Marxen did culminate in Lales's discharge, the
Faragher affirmative defense did not apply. We note that the
parties argue over, and several amicus curiae briefs were filed
on, the question of whether this court should apply the Faragher
affirmative defense to harassment claims brought under HRS
Chapter 378. We decline to decide this question. Because the
requirements set forth in Faragher for applying the Faragher
affirmative defense have not been met in this case, we need not
address what the result would be in a different case where a
supervisor's alleged harassment does not culminate in tangible
employment action.
Where a supervisor's harassment culminates in
tangible employment action, both Faragher and HAR § 12-46-175
impose "strict" vicarious liability on an employer. Accordingly,
the Circuit Court erred in applying the Arquero standards for co-
worker harassment and the Faragher affirmative defense in
granting summary judgment in favor of JN.14
3.
In ruling on JN's motion for summary judgment, the
Circuit Court was required to view all the evidence, including
the inferences drawn therefrom, in the light most favorable to
Lales, the non-moving party. See Kamaka, 117 Hawai#i at 104, 176
P.3d at 103. Lales argues that the Circuit Court failed to view
the evidence in the light most favorable to him and instead drew
inferences and made credibility determinations against him. We
agree.
For example, the Circuit Court supported its rejection
of Lales's assertion that he was subjected to numerous abusive
14
Relying in part on Faragher, Defendants, supported by several amicus
curiae, also argue that HAR § 12-46-175(d), which imposes "strict" vicarious
liability on employers for harassment by supervisors, is ultra vires as not
within the HCRC's rulemaking authority. We do not address the asserted
argument because it is directed at situations where the Faragher affirmative
defense would apply, a situation not presented by this case. We also decline
to address the argument because Defendants did not challenge HAR §
12-46-175(d) on ultra vires grounds in the Circuit Court.
27
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
verbal comments by Marxen regarding Lales's French ancestry and
national origin, which Lales set forth in his declaration filed
in opposition to JN's motion for summary judgment, by finding
that "Lales's credibility is questionable . . . ."15 In
addition, the Circuit Court rejected Lales's assertion, also
contained in his declaration in opposition to JN's motion for
summary judgment, that Lales opposed Marxen's suggestion that
Lales call himself "Frenchy" and use that name on Lales's
business cards because Lales felt that this was offensive. The
Circuit Court cited conflicting evidence presented on this issue
by JN and found that Lales's credibility was questionable.
We conclude that when viewed in the light most
favorable to Lales, the matters set forth in Lales's declaration
in opposition to JN's motion for summary judgment, which
presented evidence that Lales was subjected to persistent,
derogatory, and unwelcome statements and comments about his
ancestry and national origin, established that there were genuine
issues of material fact regarding his claims against JN for
harassment based on ancestry and national origin discrimination.
Therefore, the Circuit Court erred in granting summary judgment
in favor of JN on COAs 1 and 5.
B.
We also conclude that the Circuit Court erred in
granting summary judgment in favor of JN on COAs 2 and 4, Lales's
HRS Chapter 378 and Title VII claims for retaliation.
The Hawai#i Supreme Court has adopted a three-part test
for retaliation claims under HRS § 378-2(2) that is consistent
with the test applicable to such claims under Title VII. Under
the test adopted by the Hawai#i Supreme Court for retaliation
claims under HRS § 378-2(2):
(1) the plaintiff must first establish a prima facie case of
such retaliation by demonstrating that (a) the plaintiff (i)
15
The Circuit Court's finding that Lales's credibility was questionable
was based on inferences it drew from Lales's answers to requests for
admissions that did not directly refute Lales's claims.
28
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
"has opposed any practice forbidden by [HRS chapter 378,
Employment Practices, Part I, Discriminatory Practices] or
(ii) has filed a complaint, testified, or assisted in any
proceeding respecting the discriminatory practices
prohibited under this part," HRS § 378-2(2), (b) his or her
"employer, labor organization, or employment agency [has]
. . . discharge[d], expel[led], or otherwise discriminate[d]
against the plaintiff," id., and (c) "a causal link [has]
exist[ed] between the protected activity and the adverse
action"; (2) if the plaintiff establishes a prima facie case
of retaliation, the burden shifts to the defendant to
provide a legitimate, nondiscriminatory reason for the
adverse employment action; and (3) if the defendant
articulates such a reason, the burden shifts back to the
plaintiff to show evidence demonstrating that the reason
given by the defendant is pretextual.
Schefke, 96 Hawai#i at 426, 32 P.3d at 70 (case citations
omitted; brackets in original).16
In support of its motion for summary judgment, JN
presented evidence in the form of declarations and deposition
testimony of the following: (1) Lales never submitted a complaint
to Nicolai, JN's president, or other management personnel
regarding discriminatory treatment; (2) Lales introduced himself
as "Frenchy," asked people at JN to call him "Frenchy," and used
the name "Frenchy" on documents he submitted to JN; (3) Marxen
was not biased against Lales due to his French national origin,
Marxen would not have hired Lales if he were biased, and Marxen
did not harass or witness anyone else harassing Lales; (4) Lales
was initially terminated for his low sales production and missing
a mandatory meeting; (5) this termination was withdrawn based on
16
In Schefke, the Hawai#i Supreme Court described the test for
retaliation claims under Title VII as follows:
Under Title VII . . . federal courts have held that, in a
prima facie case of retaliation, "an employee must show that (1)
he [or she] engaged in a protected activity; (2) his [or her]
employer subjected him [or her] to an adverse employment action;
and (3) a causal link exist[ed] between the protected activity and
the adverse action." "If a plaintiff has asserted a prima facie
retaliation claim, the burden shifts to the defendant to
articulate a legitimate nondiscriminatory reason for its
decision." "If the defendant articulates such a reason, the
plaintiff bears the ultimate burden of demonstrating that the
reason was merely a pretext for a discriminatory motive."
Schefke, 96 Hawai#i at 425, 32 P.3d at 69 (citations and footnote omitted;
brackets in original).
29
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Lales's pleas, but was reinstated upon discovery that Lales had
misrepresented to customers that a vehicle sold by Lales had air
conditioning, when it did not; (6) the customers, husband and
wife, advised JN that Lales lied about the vehicle containing air
conditioning and the wife stated that Lales introduced himself as
"Frenchy."
Lales submitted a declaration in opposition to JN's
summary judgment motion, which presented the following evidence:
(1) Lales is French; (2) Marxen, his supervisor, and Martinez,
his immediate supervisor for a period of time, repeatedly made
derogatory comments to Lales about, and used derogatory terms to
describe, Lales's French ancestry and national origin; (3)
shortly before his termination, Lales verbally complained to
Marxen about the ancestry and national origin harassment; (4)
Marxen told Lales "'You Fucking French Bastard, get out of my
office'"; (5) Lales was initially told he was being terminated
for not selling enough cars and for missing a meeting, even
though other employees had lower sales, he had not received
notice of the meeting, and was not aware of other employees being
terminated for missing a meeting; (6) after Lales questioned
Marxen about the reasons given for his termination, Lales was
allowed to continue to work, but the next day, Lales was
terminated for purportedly lying to a customer about air
conditioning; (7) Lales denied telling the customer that the car
had air conditioning and asserted that other JN employee had told
the customer that the car had air conditioning, but were not
fired; and (8) he suffered financially and emotionally as a
result of the discrimination and being fired.
In granting summary judgment in favor of JN on Lales's
retaliation claims, the Circuit Court concluded that there were
no genuine issues of material fact and that JN was entitled to
judgment as a matter of law because: (1) Lales failed to prove a
causal link between the protected activity and the adverse
action, an element of his prima facie case; and (2) Lales failed
30
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
to prove that JN's proffered reason for termination was
pretextual.
We conclude that given the conflicting evidence
presented by the parties, the Circuit Court erred in granting
summary judgment in favor of JN on Lales's retaliation claims.
When viewed in the light most favorable to Lales, he presented
sufficient evidence to establish a prima facie case of
retaliation by showing that: (1) he verbally complained to Marxen
about harassment based on Lales's ancestry and national origin,
see O'Neal v. Ferguson Const. Co., 237 F.3d 1248, 1255 (10th Cir.
2001) ("Informal complaints to superiors constitute protected
activity."); Passantino v. Johnson & Johnson Consumer Products,
Inc., 212 F.3d 493, 506 (9th Cir. 2000) (same); (2) JN terminated
Lales, thereby subjecting Lales to an adverse employment action;
and (3) his termination was within a month of his complaints to
Marxen regarding the harassment. See Suzuki v. State, 119
Hawai#i 288, 302, 196 P.3d 290, 304 (App. 2008) ("Causation in
retaliation cases 'can be inferred from timing alone where an
adverse employment action follows on the heels of protected
activity.'" (quoting Villiarimo v. Aloha Island Air, Inc., 281
F.3d 1054, 1065 (9th Cir. 2002)); Passantino, 212 F.3d at 507("[W]hen adverse employment decisions are taken within a
reasonable period of time after complaints of discrimination have
been made, retaliatory intent may be inferred. Moreover, . . .
evidence based on timing can be sufficient to let the issue go to
the jury, even in the face of alternative reasons proffered by
the defendant." (citations omitted)). In addition, Lales
presented sufficient evidence to establish genuine issues of
material fact regarding whether JN's proffered reasons for
Lales's termination were pretextual. The Circuit Court erred in
granting summary judgment in favor of JN on Lales's COAs 2 and 4.
C.
Lales contends that the Circuit Court erred in granting
summary judgment in favor of JN on Lales's COA 4 for termination
in violation of public policy because JN did not address this
31
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
claim in its motion for summary judgment and thus Lales was not
given a fair opportunity to respond. A trial court is normally
precluded from granting summary judgment on a ground to which the
nonmovant was given "either an inadequate opportunity or no
opportunity to respond." Edwards v. Honeywell, Inc., 960 F.2d
673, 674 (7th Cir. 1992). On the other hand, to the extent that
Lales's COA 4 is based on public policy derived from the
provisions of HRS Chapter 378, it would be barred. See Takaki v.
Allied Machinery Corp., 87 Hawai#i 57, 63, 951 P.2d 507, 513
(App. 1998) ("If . . . the statutory or regulatory provisions
which evidence the public policy themselves provide a remedy for
the wrongful discharge, provision of a further remedy under the
public policy exception is unnecessary." (block quote format,
citation, and emphasis omitted)).
In this case, the substance of Lales's public policy
claim is unclear because the parties did not address it in
connection with JN's motion for summary judgment. In light of
the undeveloped state of the record regarding Lales's COA 4 and
our decision to remand the case for further proceedings on other
COAs asserted by Lales, we vacate the Circuit Court's grant of
summary judgment in favor of JN on COA 4.
IV.
The Circuit Court's decision to award attorney's fees
and costs to Defendants was based in significant part on its
finding that Lales made claims against Marxen and JN that were
frivolous, and thus attorney's fees and costs were authorized by
HRS § 607-14.5 (Supp. 2011). The Circuit Court found that Lales
made frivolous claims against Marxen and JN in that: (1) Marxen
was not entitled to file suit against Marxen on Lales's HRS
Chapter 378 discrimination claims because the Right to Sue Letter
issued by the HCRC did not name Marxen in the caption; and (2)
Lales's claims against JN were not reasonably supported by the
facts and law as evidenced by the Circuit Court grant of summary
judgment in favor of JN on all of Lales's COAs. Our analysis in
this case and decision to vacate the Circuit Court's grant of
32
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
summary judgment in favor of Marxen and JN on numerous COAs
asserted by Lales undermines the principal bases for the Circuit
Court award of attorney's fees and costs in favor of
Defendants.17 Accordingly, we vacate the Circuit Court's award
of attorney's fees and costs to Defendants.
V.
We need not separately address Lales's claim that the
Circuit Court abused its discretion in denying his post-judgment
motions. This is because in support of this claim, Lales simply
incorporates the arguments he previously made with respect to his
other points of error.
CONCLUSION
For the foregoing reasons, (1) we vacate the Circuit
Court's Amended Final Judgment to the extent that it (a) entered
judgment in favor of Marxen on COAs 1 and 2, (b) entered judgment
in favor of JN on COAs 1, 2, 4, 5, and 6, and (c) awarded
attorney's fees and costs to Defendants; (2) we affirm the
Amended Final Judgment to the extent that it (a) entered judgment
in favor of Martinez, (b) entered judgment in favor Marxen on
COAs 3, 4, 5, and 6, and (c) entered judgment in favor of JN on
COA 3; and (3) we remand the case for further proceedings
consistent with this Memorandum Opinion.
DATED: Honolulu, Hawai#i, May 9, 2012.
On the briefs:
Daphne E. Barbee
for Plaintiff-Appellant Chief Judge
Roger S. Moseley
Renee M. Furuta
(Moseley Biehl Tsugawa Lau & Associate Judge
Muzzi LLLC)
for Defendants-Appellees
Associate Judge
17
We also note that the Circuit Court did not have the benefit of our
analysis in this Memorandum Opinion in evaluating Martinez's request for
attorney's fees and costs.
33
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
On the briefs (continued):
Wesley M. Fujimoto
Bryan P. Andaya
Ryan E. Sanada
(Imanaka Kudo & Fujimoto LLLC)
for Amicus Curiae
Hawai#i Employers Council
John Ishihara
Hawai#i Civil Rights Commission
Department of Labor and
Industrial Relations
for Amicus Curiae
Hawai#i Civil Rights Commission
Shelton G.W. Jim On
Henry F. Beerman
(Jim On & Beerman)
for Amicus Curiae
Hawaii Automobile Dealers Assn.
John L. Knorek
(Torkildson, Katz, Moore &
Hetherington)
for Amicus Curiae
The Chamber of Commerce of Hawaii
Ronald Albu
(Albu & Albu)
for Amicus Curiae
National Employment Lawyers
Association- Hawai#i Chapter
34