Esberg v. Union Oil Co.

• Decision Date: 24 June 2002
• Docket Number: No. S096524.,S096524.
• Citation: 28 Cal.4th 262,47 P.3d 1069,121 Cal.Rptr.2d 203
• Parties: Dan ESBERG, Plaintiff and Appellant, v. UNION OIL COMPANY of California, Defendant and Appellant, Jeff Winston et al., Defendants and Respondents.
• Court: California Supreme Court

121 Cal.Rptr.2d 203

28 Cal.4th 262

47 P.3d 1069

Dan ESBERG, Plaintiff and Appellant, v. UNION OIL COMPANY of California, Defendant and Appellant, Jeff Winston et al., Defendants and Respondents.

No. S096524.

Supreme Court of California.

June 24, 2002.

Law Offices of Dale M. Fiola, Dale M. Fiola, Mark Boling, Danville, Roger McCaffrey, William M. Pate, Ken R. Easey; Quackenbush & Quackenbush and William C. Quackenbush, San Mateo, for Plaintiff and Appellant.

La Follette, Johnson, De Haas, Fesler & Ames, La Follette, Johnson, De Haas, Fesler, Silberberg & Ames, Alfred W. Gerisch, Jr., Dorothy B. Reyes, David J. Ozeran, Michelle M. Wolfe, Los Angeles; and Richard Ettensohn, Brea, for Defendant and Appellant and for Defendants and Respondents.

KENNARD, J.

In this case, a 53-year-old employee, with the employer's approval, pursued an undergraduate degree at company expense. Three years later, he sought employer-paid postgraduate education. When the company denied funding, plaintiff brought suit claiming unlawful age discrimination.

This case does not involve any cause of action related to wrongful termination. Instead, plaintiff raises two novel issues related to age discrimination in the furnishing of employee benefits. First, he contends that the California Fair Employment and Housing Act (the FEHA) (Gov. Code, § 12900 et seq.)¹ prohibits an employer from discriminating on the basis of age in the terms, conditions, or privileges of employment. Second, he contends that an employer's denial of educational assistance to an employee over the age of 40 because of that employee's age violates a fundamental policy against age discrimination in employment and is therefore a common law tort for which an employee may recover damages under our decisions in Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330 (Tameny) and Rojo v. Kliger (1990) 52 Cal.3d 65, 276 Cal.Rptr. 130, 801 P.2d 373 (Rojo).

After a thorough review of the relevant statutory provisions, we conclude, as did both the trial court and the Court of Appeal, that the FEHA's prohibition against age discrimination in employment extends to hiring, discharging, suspension, and demotion, but not to the furnishing of employee benefits such as educational assistance. Because the FEHA is the source of the fundamental public policy against age discrimination in employment, that public policy is subject to the substantive limits set by the FEHA. Although as individuals we may applaud plaintiffs efforts at self-improvement through education, as judges we find nothing in either statutory or common law that obliges employers to ignore an employee's age in deciding whether to fund such efforts.

I. Facts

In February 1980, Union Oil Company of California (UNOCAL) hired plaintiff Dan Esberg, then 42 years old, as a telecommunications specialist. In 1991, supervisor Jeff Winston told a group of employees, including plaintiff, that any of them who had not received an undergraduate degree should obtain one. Plaintiff did not have a college degree at that time. Manager Nellis Freeman explained that through its educational aid program, UNOCAL would reimburse plaintiff's tuition and other costs for each undergraduate course as plaintiff completed it. Plaintiff obtained approval for educational aid and enrolled in the bachelor of science program at the University of Redlands. UNOCAL eventually paid all the expenses that plaintiff incurred in obtaining his undergraduate degree.

In early 1994, plaintiff and coworker John Marble discussed the advantages of obtaining a master of business administration (MBA) degree from the University of Redlands. In May 1994, plaintiff told his immediate supervisor, Walter Aldrich, that he and Marble were planning to enroll in the MBA program and to fund the expenses through UNOCAL'S education aid program. Aldrich's response was: "You're too old to invest in." Plaintiff was then 56 years old. In August 1994, UNOCAL formally denied funding for plaintiffs proposed graduate degree. UNOCAL granted educational aid for the MBA program to three younger employees, including the 42-year-old Marble.

In 1995, plaintiff filed a complaint with the Department of Fair Employment and Housing (DFEH) based on UNOCAL's refusal to fund an advanced degree for plaintiff because of his age. The DFEH chose not to prosecute plaintiff's case, but it gave him a "right to sue" letter that authorized him to file a private action in court. After plaintiff received the right-to-sue letter, he brought this action against UNOCAL. Plaintiff's complaint alleged, among other things, breach of contract, age discrimination in violation of the FEHA, and denial of benefits in violation of fundamental public policy.

After trial of the merits of plaintiff's complaint, the jury returned a special verdict finding that UNOCAL had wrongfully denied plaintiff educational assistance benefits for the MBA program because of his age. The jury also found that UNOCAL breached an agreement it had with plaintiff that it would not discriminate because of age. The jury awarded plaintiff $35,000 in noneconomic damages and $51,000 in economic damages.

UNOCAL moved for judgment notwithstanding the verdict, contending that denial of an employment benefit such as educational assistance violated neither the FEHA nor the fundamental public policy against age discrimination in employment. The trial court agreed and set aside the jury's $35,000 award of noneconomic damages. Because plaintiff had prevailed on his contract claim, the trial court entered judgment awarding plaintiff $51,000 in economic damages.

Plaintiff appealed, alleging that UNOCAL's refusal to reimburse him for the costs of obtaining a master's degree violated the FEHA prohibition against age discrimination in employment, and that public policy supported a common law tort claim for denial of employment benefits based on age. The Court of Appeal rejected these contentions and affirmed the trial court's judgment. We granted plaintiffs petition for review.

II. Discussion

A. Overview of the FEHA's Antidiscrimination Provisions

The Legislature enacted the FEHA to establish a comprehensive scheme to eliminate certain discriminatory practices in employment and housing. An overview of the relevant employment discrimination provisions provides the background for the discussion of plaintiffs FEHA and common law public policy tort claims.

Section 12920 outlines the FEHA's general policy against employment discrimination: "It is hereby declared as the public policy of this state that it is necessary to protect and safeguard the right and opportunity of all persons to seek, obtain, and hold employment without discrimination or abridgment on account of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age, or sexual orientation."

Section 12935, subdivision (a) authorizes the Fair Employment and Housing Commission (FEHC) to "adopt ... suitable rules, regulations, and standards ... to interpret, implement, and apply all provisions of [the FEHA]."

The FEHA has two separate provisions—sections 12940 and 12941—prohibiting various forms of workplace discrimination and identifying the classes that are protected against these forms of discrimination. Section 12940 prohibits an employer from discriminating, among other things, in the "terms, conditions, or privileges of employment" because of an employee's "race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, or sexual orientation." Notably, section 12940 does not prohibit employment discrimination on the basis of age.

Section 12941, the specific FEHA provision addressing age discrimination in employment, makes it "an unlawful employment practice for an employer to refuse to hire or employ, or to discharge, dismiss, reduce, suspend, or demote, any individual over the age of 40 on the ground of age, except in cases where the law compels or provides for such action." (Italics added.) Notably, section 12941 does not prohibit discrimination in the terms, conditions, or privileges of employment.

B. Plaintiff's Contentions

Plaintiff contends that by denying his application for educational assistance for an MBA degree his employer violated sections 12940 and following of the FEHA prohibiting employment discrimination. As we have observed, however, neither section 12940 nor section 12941 prohibits discrimination in the terms, conditions, privileges of employment on the basis of age. Section 12940 prohibits discrimination in the terms, conditions, or privileges of employment on various bases, but not on the basis of age, while section 12941 prohibits some forms of employment discrimination on the basis of age, but not discrimination in the terms, conditions, or privileges of employment.

Under well-established rules of statutory construction, we must ascertain the intent of the drafters so as to effectuate the purpose of the law. (Preston v. State Bd. of Equalization (2001) 25 Cal.4th 197, 213, 105 Cal.Rptr.2d 407, 19 P.3d 1148.) Because the statutory language is generally the most reliable indicator of legislative intent, we first examine the words themselves, giving them their usual and ordinary meaning and construing them in context. (People v. Lawrence (2000) 24 Cal.4th 219, 230, 99 Cal.Rptr.2d 570, 6 P.3d 228.) When statutory language is clear and unambiguous, "`there is no need for construction and courts should not indulge in it.'" (People v. Benson (1998) 18 Cal.4th 24, 30, 74 Cal.Rptr.2d 294, 954 P.2d 557, quoting People v. Overstreet (1986) 42 Cal.3d 891, 895, 231 Cal. Rptr. 213, 726 P.2d 1288.)

Of the various FEHA provisions, only sections 12941 and 12941.1 address age discrimination in the workplace. Section 12941, subdivision (a), provides in pertinent part: "It is an unlawful employment...