Claxton v. Waters

• Decision Date: 30 August 2004
• Docket Number: No. S106106.,S106106.
• Court: California Supreme Court
• Parties: Carolyn CLAXTON, Plaintiff and Appellant, v. Ray WATERS et al., Defendants and Respondents.

18 Cal.Rptr.3d 246

34 Cal.4th 367

96 P.3d 496

Carolyn CLAXTON, Plaintiff and Appellant, v. Ray WATERS et al., Defendants and Respondents.

No. S106106.

Supreme Court of California.

August 30, 2004.

As Modified September 15, 2004.

Law Offices of Joseph R. Zamora and Joseph R. Zamora, Santa Monica, for Plaintiff and Appellant.

Gibson, Dunn & Crutcher, David A. Cathcart, Paul DeCamp, Washington, DC, Michele L. Maryottt, Irvine and Jeffrey F. Webb, Los Angeles, for Defendants and Respondents.

KENNARD, J.

In executing the standard preprinted form used to settle workers' compensation claims, does an injured worker also release causes of action that are not exclusively subject to the workers' compensation law or are not within the scope of that law? The answer is "no." Those causes of action, however, may be the subject of a separate settlement and release.

I

From February 1995 until her resignation in September 1997, Carolyn Claxton worked as an office assistant for defendant Pacific Maritime Association (PMA). Claxton's supervisor was Ray Waters.

On December 16, 1997, Claxton filed a claim with the Workers' Compensation Appeals Board (WCAB) against PMA for an injury to her "left lower extremity and psyche" from a slip and fall on May 7, 1997. On January 16, 1998, Claxton filed a second and separate workers' compensation claim against PMA for injury to "psyche due to sexual harassment."

On September 15, 1998, Claxton filed this civil action against PMA and Waters alleging, as relevant here, sexual harassment in violation of the Fair Employment and Housing Act (Gov.Code, § 12900 et seq.). On November 6, 1998, defendants filed their answer to the complaint.

On February 25, 1999, Claxton and PMA settled the workers' compensation claims for $25,000. As part of the settlement, Claxton executed a preprinted compromise and release form (WCAB form 15). The use of this form is mandatory. (Cal.Code Regs., tit. 8, § 10874.) The form had only the case numbers for Claxton's two claims for workers' compensation; it made no reference to the pending civil action against PMA and Waters.

In preprinted paragraph 3, WCAB form 15 states: "Upon approval of this compromise agreement by the Workers' Compensation Appeals Board or a workers' compensation judge and payment in accordance with the provisions hereof, said employee releases and forever discharges said employer and insurance carrier from all claims and causes of action, whether now known or ascertained, or which may hereafter arise or develop as a result of said injury, including any and all liability of said employer and said insurance carrier and each of them to the dependents, heirs, executors, representatives, administrators or assigns of said employee."

On March 16, 1999, a workers' compensation judge approved the compromise and release. The order approving the settlement contained the case numbers for both of Claxton's workers' compensation claims, but not the case number for the civil action.

Thereafter, in the civil lawsuit alleging sexual harassment, defendants PMA and Waters moved in the superior court for leave to file an amended answer adding, among other things, an affirmative defense that the execution of the workers' compensation compromise and release also extinguished Claxton's claims in her civil action against PMA and Waters. The court granted the motion. Claxton then moved for summary adjudication of, among other things, the affirmative defense.

In support of that motion, Claxton submitted declarations by herself and by the attorney who had represented her in the workers' compensation proceedings. Claxton's declaration stated that she thought the workers' compensation release related only to her knee injury "and did not include" her claim for damages in the civil action alleging sexual harassment by her "employer," that the preprinted workers' compensation release form said nothing about the settlement of her civil action alleging sexual harassment, and that she had not authorized her workers' compensation attorney to settle her civil action.

The declaration of Claxton's workers' compensation attorney stated that the workers' compensation settlement was intended to cover only plaintiff's knee injury claim "and did not include the applicant's claim for civil damages for injuries as a result of the sexual harassment which is the subject of her civil action against her employer. . . ." The declaration pointed out that the preprinted release form had no reference to the pending civil action for sexual harassment, and said Claxton had not authorized settlement of the civil lawsuit by means of the workers' compensation compromise and release.

While Claxton's motion was pending in the superior court, defendants moved for summary judgment, asserting that in executing the workers' compensation compromise and release form Claxton extinguished any recovery for emotional distress damages in her civil lawsuit against defendants.

The trial court granted defendants' motion for summary judgment, took plaintiff's motion for summary adjudication off calendar as moot, and awarded defendants $92,459.75 in attorney fees.

After a reversal by the Court of Appeal, we granted defendants' petition for review.

II

California's workers' compensation scheme was developed early in the 20th century as a result of the inadequacy of the common law that often denied injured workers any recovery for work-related injuries. (Western Indemnity Co. v. Pillsbury (1915) 170 Cal. 686, 693, 151 P. 398; see generally Mathews v. Workmen's Comp. Appeals Bd. (1972) 6 Cal.3d 719, 728-734, 100 Cal.Rptr. 301, 493 P.2d 1165 [describing the history and development of California's workers' compensation law].)

The workers' compensation law applies to employee injuries "arising out of and in the course of the employment" when the statutorily specified "conditions of compensation concur." (Lab.Code, § 3600.) Generally, it is the exclusive remedy for such injuries. (Id., §§ 3600, subd. (a), 3601.) But some claims, including those based on sexual or racial discrimination or other conduct contrary to fundamental public policy, are not subject to the exclusivity provisions of the workers' compensation law. (City of Moorpark v. Superior Court (1998) 18 Cal.4th 1143, 1155, 77 Cal.Rptr.2d 445, 959 P.2d 752.) Thus, such claims may be the subject of both workers' compensation proceedings and civil actions. (Id. at p. 1161, 77 Cal.Rptr.2d 445, 959 P.2d 752.) For convenience, we will here refer to claims "outside" the workers' compensation system as meaning claims that are either not within the scope of workers' compensation law or not subject to the exclusivity provisions of that law.

Liability under the workers' compensation law is founded in neither tort nor contract law. (2 Witkin, Summary of Cal. Law (9th ed. 1987) Workers' Compensation, § 7, p. 565.) Instead, it is liability without fault (Cal. Const., art. XIV, § 4; Lab.Code, § 3600; Charles J. Vacanti, M.D., Inc. v. State Comp. Ins. Fund (2001) 24 Cal.4th 800, 811, 102 Cal.Rptr.2d 562, 14 P.3d 234), to ensure that injured workers are quickly provided benefits to relieve the effects of the industrial injury (Cal. Const., art. XIV, § 4). Thus, informal rules of pleading apply to such proceedings (Rivera v. Workers' Comp. Appeals Bd. (1987) 190 Cal.App.3d 1452, 1456, 236 Cal.Rptr. 28), and workers may be represented by individuals other than attorneys (Lab.Code, § 5501). Also, all workers' compensation statutes are to be liberally construed in favor of the injured worker. (Id., § 3202; Department of Rehabilitation v. Workers' Comp. Appeals Bd. (2003) 30 Cal.4th 1281, 1290, 135 Cal. Rptr.2d 665, 70 P.3d 1076.)

To safeguard the injured worker from entering into unfortunate or improvident releases as a result of, for instance, economic pressure or bad advice, the worker's knowledge of and intent to release particular benefits must be established separately from the standard release language of the form. (Sumner v. Workers' Comp. Appeals Bd. (1983) 33 Cal.3d 965, 972-973, 191 Cal.Rptr. 811, 663 P.2d 534 (Sumner).) Even with respect to claims within the workers' compensation system, execution of the form does not release certain claims unless specific findings are made. (See former Lab.Code, § 4646, subd. (a) [vocational rehabilitation services cannot be settled without specific findings]; Thomas v. Sports Chalet, Inc. (1977) 42 Cal.Comp.Cases 625 [same]; Rodgers v. Workers' Comp. Appeals Bd. (1985) 168 Cal.App.3d 567, 214 Cal.Rptr. 303 [potential claim for later injury in rehabilitation program cannot be released without specific language].)

The concerns just discussed are even stronger when the employer seeks to apply the standard preprinted workers' compensation release language to claims outside the workers' compensation scheme. Of note here is the Court of Appeal's decision in Lopez v. Sikkema (1991) 229 Cal. App.3d 31, 280 Cal.Rptr. 7 (Lopez). There, the surviving family members of a worker shot and killed by strike breakers hired by the employer brought a civil lawsuit against the employer and the individuals that killed the worker, alleging personal injury, wrongful death, conspiracy to violate civil rights, and violation of civil rights. (Id. at pp. 33-34, 280 Cal.Rptr. 7.) The employer moved for summary judgment on the ground that the standard workers' compensation release executed by the family members barred the civil claims arising out of the worker's death. The trial court granted the motion.

The Court of Appeal reversed. It noted that there was no evidence that civil claims were discussed in connection with the workers' compensation settlement, and that there was nothing in the record to indicate that the workers' compensation judge was aware of the civil action or had sufficient information to determine the desirability of releasing the civil claims or the adequacy of the compensation for approving such a release. (Lopez, supra, 229...