Konig v. Fair Employment and Housing Commission, S087843.

• Decision Date: 29 July 2002
• Docket Number: No. S087843.,S087843.
• Citation: 28 Cal.4th 743,123 Cal.Rptr.2d 1,50 P.3d 718
• Court: California Supreme Court
• Parties: Nancy A. KONIG, Plaintiff and Appellant, v. FAIR EMPLOYMENT AND HOUSING COMMISSION, Defendant and Appellant.

123 Cal.Rptr.2d 1

50 P.3d 718

28 Cal.4th 743

Nancy A. KONIG, Plaintiff and Appellant, v. FAIR EMPLOYMENT AND HOUSING COMMISSION, Defendant and Appellant.

No. S087843.

Supreme Court of California.

July 29, 2002.

Nancy A. Konig, in pro. per., for Plaintiff and Appellant.

Sidley Austin Brown & Wood, Jeffrey A. Berman, James M. Harris, Los Angeles, and Melissa Grant for Employers Group as Amicus Curiae on behalf of Plaintiff and Appellant. Bill Lockyer, Attorney General, Richard M. Frank and Roderick E. Walston, Chief Assistant Attorneys General, Louis Verdugo, Jr., Assistant Attorney General, Catherine Z. Ysrael and Kathleen W. Mikkelson, Deputy Attorneys General, for Defendant and Appellant.

Covington & Burling and Michael A. Listgarten for National Fair Housing Alliance as Amicus Curiae on behalf of Defendant and Appellant.

Law Office of James D. Smith and James D. Smith for Nonprofit Fair Housing, Disability Rights and Legal Services Organizations as Amici Curiae on behalf of Defendant and Appellant.

CHIN, J.

In Walnut Creek Manor v. Fair Employment & Housing Com. (1991) 54 Cal.3d 245, 267, 284 Cal.Rptr. 718, 814 P.2d 704 (Walnut Creek Manor), we held that the Fair Employment and Housing Commission's (Commission) award of emotional distress damages to a housing discrimination complainant violated the California Constitution's judicial powers clause (Cal. Const., art. VI, § 1).¹ In this case, we decide whether Walnut Creek Manor prohibits such an award under these facts, and whether subsequent amendments to the California Fair Employment and Housing Act (FEHA) (Gov.Code,² § 12900 et seq.) have eliminated the constitutional concerns we identified in our 1991 decision. Contrary to the Court of Appeal below, we conclude that Walnut Creek Manor is distinguishable, and that the amendments, in particular the judicial option provision (§ 12989), remedy separation of powers concerns over the Commission's authority to award emotional distress damages. (§ 12987, subd. (a)(4).) Thus, we reverse the Court of Appeal's judgment.

FACTUAL AND PROCEDURAL BACKGROUND

The facts are largely taken from the Court of Appeal's opinion.

Sheryl Annette McCoy, an African-American police officer, inquired about renting a unit at a duplex, which Nancy A. Konig,³ who is Caucasian, owned. As McCoy read a rental notice posted on Konig's door, Konig came to the door and stated to her: "Shame on you. What are you doing on my porch? Get off my porch. You're trying to break into my house." McCoy inquired about the unit, after which Konig responded: "You know you don't want to rent this place. You're here to break in. Shame on you. I'm not going to rent to you. I'm not going to rent to a person like you." Konig then slammed the door in McCoy's face.

To determine whether Konig's response to her was racially motivated, McCoy asked a police officer colleague, Terrence Smith, also African-American, to inquire about Konig's rental. When Smith approached Konig, she ran into her residence, slammed the door, and did not respond to Smith's knocks. Smith left his name, address, and telephone number on a piece of paper, which he slipped into the mail slot as directed by the notice on the door. Konig never contacted Smith.

When the unit was again advertised for rent approximately one year later, the Fair Housing Council of Long Beach sent two female "testers" to Konig's residence to inquire about the unit. Konig discouraged the African-American tester from renting the premises because it was too large. Also, Konig asked whether the tester had given notice at her present residence. The tester said that she had not, but that her landlord had waived such notice. Konig, however, insisted that the tester was not free to leave her present residence because she had not given proper notice. When the tester asked for an application, Konig refused to give her one. In contrast, Konig treated the Caucasian tester with deference, did not ask whether she had given notice at her present residence, and told her to telephone her if she wished to rent the unit.

McCoy became distraught and was humiliated by Konig's insults and rebuff. The event caused McCoy to relive an emotionally painful episode in her life when, at the age of six, she and her family had been victims of racial discrimination at a restaurant. Both McCoy's mother and her colleague, Smith, noticed the adverse effect the incident had on McCoy.

McCoy filed a complaint with the Department of Fair Employment and Housing (DFEH). The DFEH sent Konig a copy of the complaint, along with a Guide for Respondents Accused of Housing Discrimination, issued by the DFEH. This guide stated that "[t]he parties will be given 20 days to elect either to have the issues heard by the Fair Employment and Housing Commission, or to remove the matter to court." The record discloses that neither party elected to remove the matter to court. After a hearing before the Commission, the Commission found that Konig had discriminated against McCoy because of her race. The Commission ordered Konig to cease and desist her discriminatory conduct and to pay McCoy a civil penalty of $10,000, which is the maximum amount permitted under section 12987, subdivision (a)(3), and $10,000 "as actual damages for complainant Sheryl Annette McCoy's emotional distress and lost housing opportunity." Of the $10,000 actual damages award, nominal damages of $1 were for lost housing opportunity. McCoy suffered no out-of-pocket loss.

Konig filed a petition for a peremptory writ of mandate in superior court, contending that the Commission's factual determination that she discriminated against McCoy was erroneous. The court partially granted the petition by striking the $10,000 award for emotional distress and lost housing opportunity on the ground that the Commission was constitutionally prohibited from awarding general compensatory damages for emotional distress under Walnut Creek Manor, supra, 54 Cal.3d 245, 284 Cal.Rptr. 718, 814 P.2d 704. The Commission appealed, contending that recent amendments to the FEHA, in particular section 12989, rendered Walnut Creek Manor's damages limitation inapplicable. The Commission conceded that it had been awarding emotional distress damages since the 1992 legislation enacting section 12989.

The Court of Appeal affirmed the trial court's judgment. It concluded that section 12989, subdivision (a), which gives both sides in an FEHA administrative proceeding the choice to adjudicate the matter in court, did not render Walnut Creek Manor inapplicable in the present case. The Court of Appeal also distinguished Commodity Futures Trading Comm'n v. Schor (1986) 478 U.S. 833, 106 S.Ct. 3245, 92 L.Ed.2d 675 (CFTC). The Commission relied on CFTC to support its contention that the judicial option provision (§ 12989, subd. (a)) obviated the constitutional concerns we expressed in Walnut Creek Manor. For reasons that follow, we agree with the Commission and reverse the Court of Appeal's judgment.

DISCUSSION

A. The FEHA

The FEHA declares that it is against public policy to discriminate based on "race, color, religion, sex, marital status, national origin, ancestry, familial status, disability, or sexual orientation in housing accommodations.... [¶] It is the purpose of this part to provide effective remedies that will eliminate these discriminatory practices." (§ 12920.) As relevant here, the FEHA expressly states that it is unlawful for an owner of a housing accommodation to discriminate against a person because of race. (§ 12955, subd. (a).) A person subjected to an unlawful practice under the FEHA may file a verified complaint with the DFEH, which investigates the allegations and files an investigative report. (§ 12980, subds.(a), (g).) If, after the investigation, the DFEH issues an accusation against the respondent (§ 12965), the Commission is authorized to hold hearings on the accusation (§ 12981, subd. (c)), and award certain relief to the complainant. (See § 12987.)

Among the authorized forms of relief available to complainants, the Commission may award "actual damages." (§ 12987, subd. (a)(4).) Actual damages are "compensatory damages [that] include nonquantifiable general damages for emotional distress and pecuniarily measurable special damages for out-of-pocket losses." (Walnut Creek Manor, supra, 54 Cal.3d at p. 255, 284 Cal.Rptr. 718, 814 P.2d 704.) In Walnut Creek Manor, however, we held that the Commission's award of unlimited compensatory damages for emotional distress and other intangible injury violated the judicial powers clause of the California Constitution. (Walnut Creek Manor, supra, 54 Cal.3d at pp. 265, 267, 284 Cal. Rptr. 718, 814 P.2d 704; see also Smith v. Fair Employment & Housing Com. (1996) 12 Cal.4th 1143, 1154, fn. 5, 51 Cal.Rptr.2d 700, 913 P.2d 909 [applying Walnut Creek Manor].)

B. Walnut Creek Manor

In Walnut Creek Manor, the Commission awarded relief to an unmarried African-American prospective tenant who had been discriminated against based on both his marital status and his race. (Walnut Creek Manor, supra, 54 Cal.3d at p. 253, 284 Cal.Rptr. 718, 814 P.2d 704.) Among other forms of relief, the Commission awarded him special damages for the rent and utilities he had paid in excess of what he would have paid at the apartment denying him residence, punitive damages, and damages for emotional distress under the FEHA. (Ibid) The Court of Appeal struck the emotional distress damages award. (Id. at p. 254, 284 Cal.Rptr. 718, 814 P.2d 704.) Agreeing with the Court of Appeal, we found that the damages award for emotional distress constituted an exercise of judicial power by a nonjudicial body and thus violated the California Constitution's judicial powers clause. (Walnut Creek Manor, supra, 54 Cal.3d at p. 265, 284 Cal.Rptr. 718, 814 P.2d 704.)

Our conclusion rested mainly on the "substantive limitations on administrative remedial power" as set forth in McHugh v. Santa Monica Rent...