Donald Schriver, Inc. v. Fair Employment & Housing Com.

• Decision Date: 09 October 1986
• Citation: 46 Cal.Rptr.2d 440,220 Cal.App.3d 396
• Court: California Court of Appeals Court of Appeals
• Parties: DONALD SCHRIVER, INC., Petitioner, Appellant and Cross-Respondent, v. FAIR EMPLOYMENT AND HOUSING COMMISSION, et al., Respondents and Cross-Appellants. Civ. B014521.

Page 440

46 Cal.Rptr.2d 440

220 Cal.App.3d 396

DONALD SCHRIVER, INC., Petitioner, Appellant and Cross-Respondent, v. FAIR EMPLOYMENT AND HOUSING COMMISSION, et al., Respondents and Cross-Appellants.

Civ. B014521.

Court of Appeal, Second District, Division 3, California.

Oct. 9, 1986.

[220 Cal.App.3d 399] Thomas Keiser, Los Angeles, for petitioner, appellant and cross-respondent.

John K. Van de Kamp, Atty. Gen., Marian M. Johnston, Louis Verdugo, Jr., Deputy Attys. Gen., Los Angeles, for respondents and cross-appellants.

ARABIAN, Associate Justice.

INTRODUCTION

Appellant and cross-respondent Donald Schriver, Inc. (appellant) appeals from the judgment of the superior court which denied its request, in its petition for writ of mandate (Code Civ.Proc., § 1094.5), to compel respondent and cross-appellant California Fair Employment and Housing Commission (Commission) to set aside the following determinations: (1) that appellant violated the California Fair Employment and Housing Act (the Act) (Gov. Code, § 12900 et seq.) by depriving Michelle Marie Ehlers of a harassment-free work environment and (2) that Ehlers was entitled to back pay and compensatory damages. The superior court granted appellant's petition only in the respect that it determined the Commission is not empowered to award punitive damages and ordered it to vacate and set aside its award of punitive damages to Ehlers. The Commission has cross-appealed from that portion of the superior court's determination.

PROCEDURAL BACKGROUND

On January 21, 1982, Ehlers filed a complaint with the California Department of Fair Employment and Housing (Department) alleging she was terminated from her job at Bahia Lodge (the Lodge) in Montebello, California because she refused her supervisor's sexual advances and reported the harassment to the management of the Lodge. During the period of Ehlers' employment at the Lodge, it was owned and operated by appellant, a corporation that builds, buys, manages, and sells a variety of income properties.

The Department filed an accusation, dated January 21, 1983, based upon Ehlers' complaint, charging the Lodge with violating the Act by harassing and terminating Ehlers on the basis of sex. An administrative hearing resulted in a proposed decision by the administrative law judge who found the accusation to be true and ordered Bahia Lodge to pay Ehlers back pay in the amount of $1,000 plus interest, compensatory damages of $5,000 for emotional distress, and punitive damages in the amount of $10,000.

The Commission did not adopt the proposed decision, but instead rendered its own decision on March 1, 1984, ordering appellant to pay Ehlers back pay in the amount of $12,599.28, compensatory damages for emotional injury in the amount of $7,500, plus punitive damages in the amount of $20,000, together with interest on these amounts. On April 25, 1984, appellant filed a motion for reconsideration; the motion was denied on May 9, 1984.

On June 6, 1984, appellant filed in the superior court a petition for writ of mandate (Code Civ.Proc., § 1094.5) and temporary stay, challenging the Commission's decision. Pursuant to the stipulation of the parties, the superior court issued an order staying enforcement of the Commission's decision pending the conclusion of the mandamus proceedings. The Commission answered the petition on April 9, 1985.

Following an April 18, 1985, hearing on appellant's petition, the court, exercising its independent judgment, ruled that the award of punitive damages was not within the authority

of the Commission. The court struck the punitive damages award, but upheld the remainder of the Commission's order. This appeal and cross-appeal followed.

STATEMENT OF FACTS

At the administrative hearing, Ehlers testified that she began working at the Lodge as a day bartender in January of 1981. In addition to her daytime duties, Ehlers occasionally worked at night. The Lodge furnished its bartenders and waitresses with uniforms consisting of revealing short skirts and low tops with black and white ruffles.

In August or September of 1981, appellant hired Paul Petery as bar and restaurant manager of the Bahia Lodge. Shortly after his arrival, Petery began a pattern of persistent sexual conduct and advances towards Ehlers. He described himself to her as "Count Paul, the mad Hungarian lover," and bragged of his sexual exploits with other women.

Ehlers stated Petery would approach her in the bar, in his office, or in the restaurant kitchen, describe her body as a menu of dishes and tell her how he would prepare them. Ehlers testified she told Petery: "You can't be serious ... Why do you say these things? You're making me nervous Paul, would you just leave ... You're a nasty and rude person. My customers get upset at the way you speak to me, and you're supposed to be my supervisor."

Petery also invited Ehlers and Nancy Ruiz, a waitress at the Lodge, to a motel to watch a pornographic movie in which a headwaiter or a maitre d' forced half-naked waitresses to perform sexual acts for him. He told Ehlers on several occasions that "he had the power of the pen," and that "if [she wanted] pay, [she had] to play." Ehlers nevertheless rejected his invitation and advances.

Petery persisted in his rude behavior and Ehlers spoke to Marie Mattic about these incidents. Mattic at that time worked under contract with appellant to oversee its bookkeeping. Ehlers told Mattic that she was upset about Petery's comments, but did not want to lose her job.

Mattic testified that she told Ehlers to speak with Ron McCain, the general manager of the Lodge. After Ehlers expressed reluctance to go to McCain, Mattic spoke with McCain and told him that Ehlers did not like Petery's comments.

McCain testified that Ehlers never approached him directly with a complaint about Petery. He stated, however, that Mattic told him Ehlers complained to her about "some sort of wisecracks" or comments Petery made to her.

Jerry Eugene Annan, who worked as a bandleader at the Lodge while Ehlers worked there, testified he sometimes heard Petery's suggestive comments to Ehlers. He also overheard Petery describe himself as the "great Hungarian lover."

Petery testified that he made comments to Ehlers in passing, but that his comments were brief. He stated that due to the all-male clientele of the bar, he felt his remarks were not objectionable as long as they were not overdone. He said he called himself "Count Paul, the mad Hungarian," but never the "mad Hungarian lover." Petery stated that, as the manager, he commented to Ehlers on her blouses, which he considered too low cut. He testified that in January of 1982, McCain spoke with him and warned him that it was not good policy to make suggestive comments to Ehlers. He said he stopped making the remarks after McCain spoke to him about Ehlers' complaints.

In mid-January 1982, shortly after Ehlers complained to Ron McCain about Petery's conduct, Ehlers was terminated from the Lodge. Petery claimed he fired Ehlers because she kept the money she received from bar customers instead of putting it in the cash register; she failed to charge customers for drinks; her children called her constantly at work; she sometimes spent the night at the Lodge with bar customers; and she failed to punch in and out.

Following her termination from the Lodge, Ehlers went to her doctor; from February of 1982, continuing through May 1983, she complained to him of insomnia and several physical problems. Ehlers' doctor testified that

she seemed nervous and distraught and complained of fatigue.

CONTENTIONS

A. Appellant contends on appeal:

1. The superior court erred in upholding the Commission's determination that appellant violated the sex discrimination prohibition of the Act, as the Commission's findings and conclusions were not supported by substantial evidence.

2. The superior court erred in upholding the Commission's award of compensatory damages and back pay to Ehlers, as the Commission's findings and determinations were not supported by substantial evidence.

B. The Commission contends on cross-appeal:

1. The superior court erred in applying the independent judgment test, rather than the substantial evidence test, in reviewing the Commission's decision.

2. The superior court erred in concluding the Commission is not empowered to award punitive damages.

3. The Commission's award of punitive damages is supported by substantial evidence.

DISCUSSION

I. The trial court erred in applying the independent judgment test to determine whether the Commission's findings were supported by the evidence. ¹

The Commission contends the trial court erred in exercising its independent judgment, rather than the substantial evidence test, to determine whether the Commission's findings were supported by the evidence.

The Commission's ruling may be reviewed in the superior court by a petition for administrative writ of mandate (Code of Civil Procedure, section 1094.5). (See Bixby v. Pierno (1971) 4 Cal.3d 130, 137-140, 93 Cal.Rptr. 234, 481 P.2d 242.) Under section 1094.5, if the order or decision of an administrative agency substantially affects a fundamental vested right, the superior court must exercise its independent judgment to determine whether the agency's findings are supported by the evidence. (Bixby v. Pierno, supra, 4 Cal.3d at p. 143, 93 Cal.Rptr. 234, 481 P.2d 242.) If, on the other hand, the order or decision of the agency does not involve or substantially affect a fundamental vested right, the superior court's inquiry is limited to a determination of whether the findings are supported by substantial evidence in light of the whole record. (Id., at p. 144, 93 Cal.Rptr. 234, 481 P.2d 242.)

In Northern Inyo Hospital v. Fair Employment Practice Commission (1974) 38 Cal.App.3d 14, 112 Cal.Rptr. 872, the Court of Appeal stated at page 23, 112 Cal.Rptr. 872: "Applying Bixby guidelines, [the employer's] right to establish its...