Grant v. Comp Usa, Inc.

• Decision Date: 09 June 2003
• Docket Number: No. H023839.,H023839.
• Citation: 109 Cal.App.4th 637,135 Cal.Rptr.2d 177
• Court: California Court of Appeals Court of Appeals
• Parties: Saundrea Maria GRANT, Plaintiff and Respondent, v. COMP USA, INC., Defendant and Appellant.

135 Cal.Rptr.2d 177

109 Cal.App.4th 637

Saundrea Maria GRANT, Plaintiff and Respondent, v. COMP USA, INC., Defendant and Appellant.

No. H023839.

Court of Appeal, Sixth District.

June 9, 2003.

Rehearing Denied July 7, 2003.

Review Denied September 24, 2003.

Philip L. Ross, Littler Mendelson, San Francisco, Dennis M. Brown, Littler Mendelson, San Jose, for Appellant, Comp USA, Inc.

Ismael D. Perez, Law Offices of Ismael D. Perez, San Jose, Michael T. Morrissey, Law Offices of Michael T. Morrissey, Los Gatos, for Respondent, Saundrea Maria Grant.

BAMATTRE-MANOUKIAN, J.

On March 31, 1995, Saundrea Grant (employee) filed an administrative complaint against her former employer, COMP USA (employer), with California's Department of Fair Employment and Housing (DFEH). On April 11, 1995, the DFEH issued employee a right-to-sue notice. On September 14, 1995, the DFEH notified employee that the "case of discrimination is being reopened and the closing letter of April 11, 1995 has been rescinded." On March 21, 1996, the DFEH proposed a settlement that was not accepted. On April 11, 1996, employee filed this civil action against employer and former employees. After a trial the jury awarded employee $2.9 million on her claims of constructive discharge, hostile environment, retaliation, and fraud. The hostile environment and retaliation claims arise under the California Fair Employment and Housing Act (FEHA) (Gov.Code, § 12900 et seq.).

In a motion for judgment notwithstanding the verdict, employer asserted that employee was barred from pursuing her FEHA claims based on her failure to exhaust her administrative remedies. Employer contended that employee should have obtained a second right-to-sue notice from the DFEH after the DFEH rescinded its initial right-to-sue notice in order to investigate her administrative complaint. The trial court denied employer's motion, finding that the employee had exhausted her administrative remedies.

We find that under Government Code section 12965,¹ employee's right to sue arose by operation of law when the DFEH failed to resolve the matter within one year from the time she filed her administrative complaint. Employee's failure to obtain a second right-to-sue letter does not preclude a finding that she exhausted her administrative remedies. We therefore affirm the denial of the motion for judgment notwithstanding the verdict.

Proceedings

Employee, an African-American, worked as a corporate account manager for employer from February 17, 1994 through July 14, 1994. She alleges the following. Employer only hired her so that they could take her Open Vision Technologies account away from her and get rid of her. Employer defamed her to Open Vision Technologies account representatives. While she worked for employer, she was subjected to sexual and racial harassment and a hostile work environment. Although she complained to upper management, no corrective action was taken and she was demoted and constructively terminated.

On March 31, 1995, employee filed a complaint with the DFEH. On April 11, 1995, the DFEH wrote her that her case was being closed "on the basis of Processing waived to another agency." The letter advised her that she had the right to file a private lawsuit against employer within the next year. She was advised that the DFEH did not retain case files more than three years unless the case remained open.

On September 14, 1995, the DFEH wrote to notify employee "that the above cited case of discrimination is being reopened and the closing letter dated April 11, 1995 has been rescinded. This action is necessitated because the United States Equal Employment Opportunity [sic ] returned the case" to the DFEH for processing and investigation.

On March 21, 1996, the DFEH issued employee right-to-sue notices against individual employees of employer. On the same date the DFEH sent employer a proposed settlement agreement of employee's complaint. The proposal was not accepted.

On April 11, 1996, employee filed this civil action against employer and former employees, alleging fraud, defamation, intentional and negligent infliction of emotional distress, interference with economic advantage, sexual harassment, retaliation, sex and racial discrimination, and wrongful termination. Employee alleged that she had made a timely complaint to the DFEH and "has received her right to sue letter."

In its answer, employer alleged a number of affirmative defenses, including that employee had failed to exhaust her administrative remedies.

During a jury trial in February and March 2001, employer made a motion for nonsuit. Among the grounds asserted was failure to exhaust administrative remedies. Employer alleged that employee had not introduced evidence that the DFEH had given her a right-to-sue letter. Employee's attorney claimed that the letter existed. The court allowed him to reopen his case to introduce this evidence. In the jury's absence, Ismael Perez, one of employee's attorneys, testified that employee had given him eight right-to-sue letters, all dated March 21, 1996. While he retained the seven letters pertaining to individuals, he had lost or misplaced the one pertaining to employer. Employee's other attorney asserted that they could not get a copy of the letter from the DFEH because the agency only retained records for three years. Employer contended it was unlikely the DFEH had issued a letter while its proposed settlement of March 21, 1996, was outstanding. The court took the issue under submission.

Employer brought up the issue again while the jury was deliberating. The trial court stated: "I was hopeful they'll bring it up in chambers, but my thinking is that I am going to require the plaintiff to produce some additional evidence other than the recollection of Mr. Perez that there is a right to sue letter out there at some point in time. [¶] On balance, I'm convinced there was not as of the date of the settlement letter." Employee argued that no letter was required so long as a year had passed since she filed a DFEH complaint.

The court had not ruled on this ground of the nonsuit motion by the time the jury returned a verdict. The jury awarded employee $2.9 million on her claims of constructive discharge, hostile environment, retaliation, and fraud.

Employer filed motions for new trial and judgment notwithstanding the verdict. In part the motions asserted that the verdict under the FEHA must be set aside because employee had not exhausted her FEHA administrative remedies.

The court granted a new trial on several grounds. However, the court denied judgment notwithstanding the verdict on the ground of exhaustion, explaining orally: "I think the real rule she's exhausted her administrative remedies. She obtained a right-to-sue letter. Whether that was legitimately retracted or rescinded or whatever or not, I think that's what the goal is here. She exhausted her administrative remedies. I think the right-to-sue letter is a symbol of exhaustion of administrative remedies, not a goal, in and of itself, in my opinion. I think she got one, and it suffices here, and in terms of equity I think it's plain unfair to grant a J.N.O.V. on these grounds."

The written order on employer's motions states: "The Court finds that, while the preponderance of the evidence does not show that [employee] had an outstanding notice of right-to-sue as against [employer] at the time she brought this action, the [DFEH] had previously issued such a notice of right-to-sue, which it later rescinded. The Court finds that based on these facts, [employee] adequately exhausted her administrative remedies."

1. OVERVIEW OF FEHA

In Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211, 213-214, 185 Cal.Rptr. 270, 649 P.2d 912 (Commodore Home Systems, Inc.), the California Supreme Court provided an overview of California's Fair Employment and Housing Act (FEHA). "The California Fair Employment Practices Act (FEPA) was enacted in 1959 (former Lab.Code, § 1410 et seq.; see Stats.1959, ch. 121, § 1, p.2000 et seq.). In 1980 it was recodified as part of the FEHA. (Stats.1980, ch. 992, § 4, p. 3140 et seq.) The law establishes that freedom from job discrimination on specified grounds, including race, is a civil right. (§ 12921.) It declares that such discrimination is against public policy (§ 12920) and an unlawful employment practice (§ 12940)....

"The statute creates a Department of Fair Employment and Housing (Department) (§ 12901), whose function is to investigate, conciliate, and seek redress of claimed discrimination (§ 12930). Aggrieved persons may file complaints with the Department (§ 12960), which must promptly investigate (§ 12963). If it deems a claim valid it seeks to resolve the matter—in confidence—by conference, conciliation, and persuasion. (§ 12963.7.) If that fails or seems inappropriate the Department may issue an accusation to be heard by the Fair Employment and Housing Commission (Commission). (§§ 12965 subd. (a),² 12969; see too § 12903.)[¶] ... [¶]

"If no accusation is issued within 150 days after the filing of the complaint and the matter is not otherwise resolved, the Department must give complainant a right-to-sue letter. Only then may that person sue in the superior court `under this part' (§ 12965, subd. (b))." (cf. Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379,1383-1384, 241 Cal.Rptr. 67, 743 P.2d 1323; Rojo v. Kliger (1990) 52 Cal.3d 65, 72, 276 Cal.Rptr. 130, 801 P.2d 373 (Rojo ).)

2. EXHAUSTION OF ADMINISTRATIVE REMEDIES

"[E]xhaustion of administrative remedies furthers a number of important societal and governmental interests, including: (1) bolstering administrative autonomy; (2) permitting the agency to resolve factual issues, apply its expertise and exercise statutorily delegated remedies; (3) mitigating damages; and (4) promoting judicial economy." (Rojo, supra, 52 Cal.3d at p. 86, 276 Cal.Rptr. 130, 801 P.2d 373.)

In considering the...