Johnson Controls, Inc. v. Fair Employment & Housing Com.

Facts

The statutory framework. The Fair Employment and Housing Act makes it “an unlawful employment practice, unless based upon a bona fide occupational qualification, . . . [para.] (a) For an employer, because of the . . . sex of any person . . . to refuse to hire or employ the person . . . .” (218 Cal.App.3d at p. 533, quoting Gov. Code, § 12940.) Two regulatory and statutory provisions sharpened the dispute. The Commission’s own regulation provides that “[i]t is unlawful to refuse to hire a female because she is of childbearing age” (id. at p. 533, quoting Cal. Code Regs., tit. 2, § 7291.0, subd. (c)), and Government Code section 12945.5 makes it unlawful “to require any employee to be sterilized as a condition of employment” (ibid.). The court framed the case against the backdrop of competing public policies: society’s “interest in safeguarding the well-being of its employees, their families and, indeed, the public generally from industrial hazards,” set against its “substantial interest in safeguarding equal employment opportunities for women.” (Id. at pp. 524–525.)

The lead hazard. Globe Battery, a division of Johnson Controls, manufactured automobile batteries whose “principle component . . . is lead oxide.” (218 Cal.App.3d at p. 525.) Lead is “a highly toxic substance,” and “presently available research indicates that lead may be hazardous to children and fetal offspring at exposure levels lower than those which appear adversely to affect adults.” (Ibid.) Because lead in a pregnant woman’s blood “passes directly to the fetus through the placenta,” a fetus carried by a woman with an elevated blood-lead level “is at risk of adverse effects,” including “an increased risk of spontaneous abortion” and neurological harm. (Id. at pp. 526–527.) Critically, the federal OSHA lead standard’s preamble states that “both males and females exposed to lead who wish to plan pregnancies should keep their blood lead levels below 30ug/100ml,” and that standard “do[es] not include a different standard for female workers, nor do[es it] require that fertile women be excluded from jobs involving lead exposure.” (Id. at p. 527.)

The fetal protection program. The program “was not mandated by any state or federal rules,” but “was voluntarily adopted and enforced by Globe Battery.” (218 Cal.App.3d at p. 525.) Under it, “women of childbearing age and capacity are categorically excluded from certain jobs,” and “[a]dmission to those jobs requires proof of infertility.” (Ibid.) The program defined women of childbearing capacity as “all women except those whose inability to bear children is medically documented.” (Id. at p. 528.) Its “most significant feature . . . was a blanket prohibition of hiring of any new female employees capable of bearing children at any production job at the Fullerton plant.” (Ibid.) The court was blunt about the program’s reach: “In short, the FPP bars all women of childbearing capacity from employment. An affidavit of sterility must be produced before any female will be employed.” (Id. at p. 533.)

The applicant. Queen Elizabeth Foster “was and is a young, physically able woman seeking and needing employment.” (218 Cal.App.3d at p. 525.) She applied for a position as a cast-on-strap (COS) loader at the Fullerton plant — a job that “requires the COS loaders physically to handle the product, exposing the worker to lead dust and fumes.” (Id. at p. 525, fn. 1.) The Company refused to hire her “because she declined to provide medical verification of an inability to bear children,” even though “[a]t the time she applied for the job, she was neither pregnant nor planning to become pregnant.” (Ibid.) Because of the policy’s bidding, bumping, promotion, and transfer rules, “fertile women were excluded from hire in all of the production jobs at [the Company’s] Fullerton plant in April 1985, even though only 34.89 percent of the production jobs were ‘unacceptable’ in terms of their blood lead sample results.” (Id. at p. 529.)

The contested science. The record was, in the court’s assessment, a record of speculation. “The Company’s experts produced no information as to any studies which would justify the FPP exclusion of fertile females only.” (218 Cal.App.3d at p. 537.) Instead, “[a]ll of the experts disclosed through their testimony that the Company’s policy is based on speculation (extrapolations) about the fetus and lead exposure, . . . assumptions that lack sound scientific support.” (Ibid.) There was, moreover, “a total lack of evidence of harm to any fetus in the Company’s experience.” (Id. at p. 538.) And the OSHA record supplied substantial evidence that lead “harms the reproductive capacity of males also and the chromosomes of both sexes”: lead-exposed males “with blood-lead levels as low as 41 ug/100g” suffered measurable harm to their sperm. (Id. at pp. 535–536.)

Procedural history

Foster “filed a complaint with the Commission,” which “issued an accusation initiating administrative proceedings.” (218 Cal.App.3d at p. 524.) After “an extensive hearing,” the Commission “found the Company’s hiring practices were discriminatory on the basis of sex, that the FPP was not based upon a bona fide occupational qualification (BFOQ), and ordered the Company to hire Foster and to cease and desist from implementation of the FPP.” (Id. at p. 526.) The Commission specifically found that the Company had failed to prove “(1) all or substantially all fertile women are unable safely and efficiently to perform the job of COS loader; and (2) the essence of the business operation would be undermined if the Company were to employ fertile women as COS loaders,” and that business necessity was unavailable because “that defense is available only to excuse a facially neutral practice having only an incidental adverse effect on women.” (Id. at p. 529.)

The Company sought a writ of mandamus under Code of Civil Procedure section 1094.5. (218 Cal.App.3d at pp. 529–530.) The trial court granted the writ, ruling “that the Commission erred as a matter of law in failing to consider the business necessity defense as set forth in Hayes v. Shelby Memorial Hosp. (11th Cir. 1984) 726 F.2d 1543,” and finding on the merits “that the Company had proven there was a substantial risk of harm to the fetus . . . from the woman’s exposure to lead . . . and that the risk does not also apply to the offspring of male employees.” (Id. at p. 530.) The court remanded to the Commission to apply the business necessity defense. (Ibid.) The Commission appealed. (Ibid.) The Court of Appeal, in an opinion by Staniforth, J. (a retired Associate Justice sitting under assignment), with Crosby, Acting P. J., and Sonenshine, J., concurring, reversed. The Supreme Court denied review on May 17, 1990.

Issue

Because “no material facts are in dispute,” the court framed its “task . . . to determine as a matter of law whether the Commission was correct in its finding of overt discrimination against women and whether it correctly stated the standard of justification.” (218 Cal.App.3d at p. 532.) Three questions followed: (1) whether the trial court erred in applying the independent-judgment standard rather than the substantial-evidence test to the Commission’s findings (id. at p. 530); (2) whether a policy excluding only fertile women is overt sex discrimination under Government Code section 12940 (id. at p. 533); and (3) the question that anchors this note — whether the Company was entitled to defend its program under the “business necessity” standard borrowed from federal fetal-protection cases, or whether, under FEHA, overt discrimination can be justified only by a BFOQ. (Id. at pp. 539–540.)

Holding

Reasoning

Standard of review: no fundamental vested right, so substantial evidence governs. The court began with the standard of review because it “involves the appropriate standard of review in this case.” (218 Cal.App.3d at p. 530.) Under Code of Civil Procedure section 1094.5, independent judgment applies only where the agency decision “substantially affects a fundamental vested right.” (Ibid.) Quoting Northern Inyo Hosp. v. Fair Emp. Practice Com. (1974) 38 Cal.App.3d 14, the court held that an employer’s “right to establish its employment practices and procedures and to impose conditions of employment can in no sense be termed a fundamental vested right,” because “there is no vested right to conduct a business free of reasonable governmental rules and regulations.” (Id. at pp. 530–531.) The trial court therefore “should have applied the substantial evidence test, not the independent judgment test.” (Id. at p. 531.) On appeal, the court “exercises the same function as the trial court,” reviewing “the findings and actions of the Commission ‘and not the findings of the trial court.’” (Ibid.) It also recognized that “the Commission’s interpretation of the Fair Employment and Housing Act is entitled to great respect.” (Id. at p. 532.)

The policy is overt, not facially neutral, discrimination. The court rejected the Company’s premise that its program was facially neutral because it applied to all “persons” capable of having children. “The Company’s FPP is expressly directed to women; it does not apply to men.” (218 Cal.App.3d at p. 533.) “Pregnancy is a condition unique to women,” but “not . . . a condition universally descriptive of all women,” so the practice “excludes only women, but does not exclude all women.” (Ibid.) The court traced the federal pregnancy-discrimination saga from General Electric Co. v. Gilbert (1976) 429 U.S. 125 through Nashville Gas Co. v. Satty (1977) 434 U.S. 136, observing that Congress “put an end to the foregoing most confusing benefit/burden analysis” by enacting the Pregnancy Discrimination Act, which made “categorical discrimination against a subclass of women, viz., pregnant women, discrimination on the basis of sex.” (Id. at p. 535.) The court concluded that excluding all fertile women “is a blatant, overt violation of Government Code section 12940.” (Ibid.)

The science did not support the female-only exclusion. The court reviewed the OSHA rulemaking record, which “rejected the implied assumption that lead poses much greater harm to the reproductive capacities of women than men,” marshalling evidence that “occupational lead harms the reproductive capacity of males also and the chromosomes of both sexes.” (218 Cal.App.3d at pp. 535–536.) Quoting the D.C. Circuit’s account of the OSHA hearings in United Steelworkers of America v. Marshall (D.C. Cir. 1980) 647 F.2d 1189, the court noted findings of “serious harm to . . . spermatogenesis” in lead-exposed males. (Id. at p. 536.) The Company’s own expert conceded the point obliquely: Dr. Noren testified “there was as great a likelihood of discovering harm to male lead workers’ offspring, if studied,” offering the candid aphorism, “If you don’t look for a problem, you don’t find it.” (Id. at p. 537.) The court concluded that the female-only ban rested “on speculation (extrapolations) . . . [and] assumptions that lack sound scientific support.” (Ibid.)

Under FEHA, only the BFOQ — not business necessity — answers overt discrimination. The court explained that the two defenses “have distinct conceptual bases.” (218 Cal.App.3d at p. 540.) The BFOQ governs “overt” or “facial” discrimination, while the business necessity defense “is to be applied in connection with facially neutral practices that have a demonstrably disproportionate and adverse impact on members of a protected class.” (Id. at pp. 541, 544, fn. 10.) Decisively for California practice, the court held that, “[u]nlike the federal law (tit. VII) . . . the BFOQ defense is expressly denoted as the business justification standard to be used in overt discrimination cases. (Gov. Code, § 12940.)” (Id. at p. 544.) There is, moreover, “no statutory or case law requirement that the Commission, in construing California’s statute, follow federal precedent construing title VII,” because “[t]he Legislature has expressly left to the Commission the duty to interpret the provisions of the FEHA.” (Id. at pp. 539–540.)

The two-part BFOQ test. The court set out the test that anchors this note. “First, the employer must demonstrate that the occupational qualification is ‘reasonably necessary to the normal operation of [the] particular business.’ Secondly, the employer must show that the categorical exclusion based on protected class characteristic is justified, i.e., that ‘all or substantially all’ of the persons with the subject class characteristic fail to satisfy the occupational qualification.” (218 Cal.App.3d at p. 540.) “In effect, the employer must establish that the class characteristic is a ‘proxy’ for lack of the necessary occupational qualification.” (Ibid.) The defense is “‘an extremely narrow exception to the general prohibition of discrimination on the basis of sex,’” so an employer must prove “‘that he had reasonable cause to believe, that is, a factual basis for believing, that all or substantially all women would be unable to perform safely and efficiently the duties of the job involved.’” (Id. at p. 541, quoting Dothard v. Rawlinson (1977) 433 U.S. 321, 334, and Weeks v. Southern Bell Telephone & Telegraph Company (5th Cir. 1969) 408 F.2d 228, 235.) And even where certain jobs do require members of one sex, the employer “must also ‘bear the burden of proving that because of the nature of the operation of the business they could not rearrange job responsibilities . . . .’” to reduce the necessity. (Ibid.)

Applying the test: the Company failed both prongs. On the first prong, “[t]here is no evidence that fertile women cannot efficiently perform jobs involving contact with lead at the Company’s facilities.” (218 Cal.App.3d at p. 542.) Although “some women have become pregnant while working there, thus creating the possibility of harm to their offspring, this fact falls far short of a showing that ‘all or substantially all’ female workers create such a risk.” (Ibid.) “Significantly, there was no evidence of any harm to a single child.” (Ibid.) On the second prong, the court adopted “the plain meaning of ‘essence’” — “‘[t]he most significant element, attribute, quality, property or aspect of a thing’” — and held that the only scenario in which the essence of the business would be undermined “would be where unsafe practices unique to a [protected] group . . . threatened the existence of the Company’s battery business.” (Id. at p. 542 & fn. 9.) The court also stressed the symmetry of risk: “Where men share the same risk as women, obviously that risk cannot justify a rule that excludes no fertile men and all fertile women.” (Id. at p. 542.)

The court refused to follow the federal fetal-protection cases. The Company relied on Wright v. Olin Corp. (4th Cir. 1982) 697 F.2d 1172, Hayes v. Shelby Memorial Hosp. (11th Cir. 1984) 726 F.2d 1543, and the Seventh Circuit’s decision in the parallel federal case, Int’l Union, UAW v. Johnson Controls, Inc. (7th Cir. 1989) 886 F.2d 871. The court declined to follow all three. Olin had dismissed the overt-discrimination theory as “mere semantic quibbling”; the court answered, “We do more than quibble; we disagree.” (218 Cal.App.3d at p. 544.) Hayes had treated overt discrimination as creating only “a presumption of discrimination” rebuttable by a two-prong showing; the California court refused to “champion an analysis which holds that overt, facial discrimination creates only a presumption of discrimination.” (Id. at p. 545.) Those courts, the opinion held, “failed to recognize that motive is irrelevant to and not an excuse for overt disparate treatment of women,” a lesson running back to the discredited paternalism of Muller v. Oregon (1908) 208 U.S. 412. (Ibid.) As to the Seventh Circuit’s finding that the very policy here satisfied even the BFOQ, the court was withering: “How can the policy possibly be ‘essential’ or ‘indispensable’ to the Company’s business?”, adding that requiring “all women must be actually excluded before discrimination is found” “twists the BFOQ standard.” (Id. at pp. 545–546.) The court found support in the EEOC’s January 1990 policy guidance, which had “sharply criticized” the Seventh Circuit decision and instructed that “field offices should not rely on the Johnson Controls decision.” (Id. at pp. 546–547.)

The stereotype rationale. Finally, the court rejected the Company’s claim that it was acting on “objective differences” between the sexes. “[T]he Company’s FPP does not discriminate on the basis of ‘objective differences’ between men and women; it discriminates on the basis of unfounded, unscientific stereotypic notions of women.” (218 Cal.App.3d at p. 550.) The policy excluded women “not because they are pregnant, but because they are fertile” (ibid.), resting on “categorical, long ago discarded assumptions about the ability of women to govern their sexuality and about the comparative ability of women to make reasoned, informed choices.” (Id. at p. 551.) “A woman is not required to be a Victorian brood mare.” (Id. at p. 551, fn. 15.) The Commission’s findings were “factually supported,” and “[i]ts decision and order were legally correct.” (Id. at p. 552.)

Significance

Johnson Controls is California’s definitive holding that a fetal-protection policy excluding fertile women is overt sex discrimination governed exclusively by the BFOQ defense — not by the more forgiving business necessity test that several federal circuits had applied. The opinion’s enduring contribution is its crisp articulation of the two-part FEHA BFOQ test: the qualification must be “reasonably necessary to the normal operation of [the] particular business,” and the employer must prove that “all or substantially all” of the excluded class “fail to satisfy the occupational qualification.” (218 Cal.App.3d at p. 540.) That formulation tracks the “extremely narrow exception” language of Dothard and Weeks and aligns FEHA with CACI No. 2501 and its companion BFOQ instructions. The case also confirms a structural point of FEHA practice: California is not bound to follow Title VII, and where “Title VII precedent does not appear sound, . . . or would conflict with the essential purposes of the Act,” the Commission need not follow it. (Id. at pp. 539–540.)

The decision’s most striking feature is its relationship to the federal litigation over the identical policy. This California court refused to follow the Seventh Circuit’s 1989 decision upholding the program. Roughly one year later, the United States Supreme Court reversed that Seventh Circuit decision in Int’l Union, UAW v. Johnson Controls, Inc. (1991) 499 U.S. 187 — holding, under Title VII, that such a fetal-protection policy is facial sex discrimination defensible only as a bona fide occupational qualification the employer could not establish, the same worker-protective result the California court reached here under FEHA. (That federal decision postdates this opinion and so is not cited in it; it is noted only to place this case in its doctrinal arc.) What can be said with confidence from the four corners of the opinion is that California reached the worker-protective result first, and reached it by reading FEHA’s plain text rather than by importing Title VII’s business necessity gloss.

Key quotes

“The BFOQ defense, as required by the statute, when applied to justify overt disparate treatment, has two components: First, the employer must demonstrate that the occupational qualification is ‘reasonably necessary to the normal operation of [the] particular business.’ Secondly, the employer must show that the categorical exclusion based on protected class characteristic is justified, i.e., that ‘all or substantially all’ of the persons with the subject class characteristic fail to satisfy the occupational qualification.” (Johnson Controls, supra, 218 Cal.App.3d at p. 540.)

“There is no evidence that fertile women cannot efficiently perform jobs involving contact with lead at the Company’s facilities. Although some women have become pregnant while working there, thus creating the possibility of harm to their offspring, this fact falls far short of a showing that ‘all or substantially all’ female workers create such a risk. Significantly, there was no evidence of any harm to a single child.” (Id. at p. 542.)

“[T]he Company’s FPP does not discriminate on the basis of ‘objective differences’ between men and women; it discriminates on the basis of unfounded, unscientific stereotypic notions of women.” (Id. at p. 550.)

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Practice pointer

Open questions

A narrower fetal-protection policy. The court took pains to confine its holding. The Commission “has not ‘held as a matter of law that all fetal protection policies are unlawful,’” but “only that the Company’s fetal protection policy, which categorically excludes all fertile women, is unlawful.” (218 Cal.App.3d at p. 550, fn. 14.) The Commission “has not considered a fetal protection policy which excludes women from hazardous jobs based on pregnancy in fact,” and it observed that the Company’s earlier “1977 voluntary fetal protection program appears to represent a sound and proper response to this problem under the FEHA,” because it “educated women as to the risks involved and then left them free to make their own decisions.” (Ibid.) A policy keyed to actual pregnancy, with informed choice rather than categorical exclusion, was left undecided.

Risk to third parties under the BFOQ. The court found the BFOQ defense factually unavailable “regardless of whether the BFOQ defense does or does not apply to the safety of third persons.” (218 Cal.App.3d at p. 543.) Whether, and how, the safety of non-employee third parties (such as fetuses) can ever supply a BFOQ under FEHA was thus not resolved on the merits.

The business necessity defense for truly neutral hazard rules. The court reaffirmed that “a business justification which would not suffice as a BFOQ for class-based disparate treatment might, nevertheless, suffice under the ‘adverse impact/business necessity’ standard.” (218 Cal.App.3d at p. 541.) The contours of that defense for a genuinely facially neutral hazard policy — one that excludes by measured exposure rather than by sex — remained open, the court cautioning only that the “theoretical possibility vanishes” where the neutral trait “is but a proxy for membership in the protected class.” (Id. at p. 542, fn. 7.)