Steele v. Youthful Offender Parole Bd.

Facts

The statutory framework. The California Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et seq.) makes it unlawful “‘[f]or any employer … or person to discharge, expel, or otherwise discriminate against any person because the person has opposed any practices forbidden under [FEHA] or because the person has filed a complaint, testified, or assisted in any proceeding under [FEHA].’” (Gov. Code, § 12940, subd. (h); Steele v. Youthful Offender Parole Bd. (2008) 162 Cal.App.4th 1241, 1252.) To establish a prima facie retaliation claim under the section, “a plaintiff must show (1) she engaged in a protected activity, (2) she was subjected to an adverse employment action, and (3) there is a causal link between the protected activity and the adverse employment action.” (Steele, supra, 162 Cal.App.4th at p. 1252.) The implementing regulation in force at the time, California Code of Regulations, title 2, section 7287.8, “expressly defines ‘assisted … in any proceeding under [FEHA]’ … to include ‘[i]nvolvement as a potential witness which an employer … perceives as participation in an activity of the [DFEH] or [Fair Employment and Housing] Commission.’” (Id. at pp. 1252–1253.)

The kiss and the “damage control.” Lisa Steele began work for the Youthful Offender Parole Board (YOPB) as an office assistant/receptionist in January 2001, completed her six-month probation “without any problems,” and “never received any criticisms of her job performance.” (Steele, supra, 162 Cal.App.4th at p. 1244.) In October 2001, Raul Galindo, chairman of the YOPB, attended a bikini contest in which Lisa competed; afterward, “Galindo leaned in to kiss her on the mouth,” and Lisa “turned her head so that she received the kiss on her cheek.” (Id. at pp. 1244–1245.) She was “taken aback, but not offended.” (Id. at p. 1245.) When a coworker, Kym Kaslar, told supervisor Anthony Peacock about the incident, Peacock “shut down very quickly and told Kaslar to go back into the office and keep her mouth shut,” warning her that “what she knew could get Galindo fired, as well as get her into trouble.” (Ibid.) Galindo was a political appointee facing reappointment and Senate confirmation in May 2002, and executive officer Susan Wallace and others “were both concerned Galindo’s actions had the appearance of impropriety.” (Ibid.)

Mounting pressure on Lisa. Beginning in November 2001, Lisa’s new supervisor, Shelley Jones, issued memoranda criticizing her work performance — criticisms Peacock himself “agreed … were unfair, excessive and inappropriate” and assured Lisa “did not constitute a performance issue or grounds for discipline.” (Steele, supra, 162 Cal.App.4th at pp. 1246–1247.) Although Peacock promised to intervene, “[h]e did neither.” (Id. at p. 1247.) Peacock warned only Lisa and Kaslar — not other employees — that budget cuts loomed and “it might be in their best interests to look for other jobs.” (Ibid.) In mid-January 2002, when the YOPB transferred Kaslar, “Lisa testified Peacock told her the department had decided to transfer Kaslar ‘due to a sexual harassment suit she had pending at the time.’” (Id. at p. 1247.)

The threatened suspension and the coerced resignation. On October 31, 2001, Kaslar filed a complaint with the State Personnel Board alleging retaliation, and on February 5, 2002, the YOPB received Kaslar’s DFEH complaint making a similar charge. (Steele, supra, 162 Cal.App.4th at pp. 1246, 1248.) Three days later, Peacock told Lisa “he would be suspending her in 30 days based on the mail trashing,” despite his own doubts about that accusation and despite skipped disciplinary steps. (Id. at p. 1248.) When Lisa asked for a leave of absence instead, “Peacock told her she needed to seek employment elsewhere,” explaining it “‘would be in my best interest to seek employment elsewhere, because I would make the office look bad if the investigators … are there investigating and I was still there.’” (Ibid.) Wallace directed Peacock to change Lisa’s hours “‘to make Lisa’s job less desirable’” and to “‘[d]ocument it all.’” (Id. at p. 1249.) After taking sick leave “because she could not handle the stress of the work atmosphere,” Lisa resigned on February 26, 2002. (Id. at pp. 1249–1250.) Peacock then “asked Lisa to draft another document describing the events of the bikini contest,” “telling her to omit any mention of the kiss,” and to type and sign a note Peacock wrote in his own words falsely stating that “‘Raul Galindo did not kiss me.’” (Id. at p. 1250.)

Procedural history

Lisa sued the YOPB under FEHA for retaliation. A Sacramento County jury, answering a special verdict, “expressly found the YOPB authorized the creation of working conditions for Lisa that were so intolerable that a reasonable person in her position would have had no reasonable alternative except to resign and that Lisa resigned because of those intolerable conditions.” (Steele, supra, 162 Cal.App.4th at p. 1251.) The jury awarded her $9,046 in past economic damages, and the trial court (Hon. Raoul M. Thorbourne) granted her $146,705 in attorney fees “as the prevailing party in her FEHA action.” (Id. at pp. 1243–1244.) The YOPB appealed, contending there was insufficient evidence of (1) a constructive discharge (and therefore no adverse employment action) and (2) a causal link between Lisa’s protected activity and the alleged adverse action, and arguing the fee order must fall with the judgment. (Id. at p. 1244.) The Court of Appeal, Third Appellate District, affirmed in a unanimous opinion by Justice Cantil-Sakauye, with Davis, Acting P. J., and Hull, J., concurring; a petition for rehearing was denied June 3, 2008. (Id. at pp. 1244, 1262.)

Issue

The appeal presented two sufficiency-of-the-evidence questions on a FEHA retaliation verdict. First, whether substantial evidence supported the “adverse employment action” element — specifically, whether the evidence established a constructive discharge, that is, working conditions “‘so intolerable or aggravated … that a reasonable employer would realize that a reasonable person in the employee’s position would be compelled to resign.’” (Steele, supra, 162 Cal.App.4th at p. 1254.) Embedded in that question was a temporal one with doctrinal stakes: whether the court could consider the employer’s conduct beginning in late October 2001 — before Kaslar filed any complaint and before the YOPB concededly learned Lisa might be a witness — or whether, as the YOPB urged, only conduct after “late January and early February 2002” was relevant. (Id. at pp. 1253–1254.) Second, whether substantial evidence supported a “causal link” between Lisa’s protected activity as a potential witness in Kaslar’s DFEH proceeding and the adverse employment action. (Id. at pp. 1260–1261.)

Holding

Reasoning

Deferential substantial-evidence review. The court framed the entire appeal through the lens of the substantial-evidence standard, which it described as “well-settled.” It was required to “presume the judgment is correct, indulge every intendment and presumption in favor of its correctness, and start with the presumption that the record contains evidence sufficient to support the judgment.” (Steele, supra, 162 Cal.App.4th at p. 1251.) An appellant attacking the evidence “must set forth all the relevant evidence, not just the evidence favorable to the appellant, … otherwise, the contention is forfeited.” (Ibid.) The court “cannot reweigh the evidence, but must resolve all conflicts in favor of the prevailing party,” and “‘[w]hen two or more inferences can be reasonably deduced from the facts, the reviewing court is without power to substitute its deductions for those of the trial court.’” (Id. at pp. 1251–1252.) This posture was decisive throughout: the court repeatedly acknowledged the YOPB’s competing inferences but deferred to the jury’s.

Protected activity was conceded. Drawing on the regulatory definition, the court held the first element satisfied as a matter of effectively undisputed fact: because “Kaslar filed a complaint with the DFEH based, in part, on the YOPB retaliating against her for her report of the kissing incident involving Galindo and Lisa,” Lisa “was a ‘potential witness’ in such proceeding,” and thus “engaged in a protected activity.” (Steele, supra, 162 Cal.App.4th at pp. 1252–1253.) The court noted that “[t]he YOPB does not argue otherwise.” (Id. at p. 1253.)

Constructive discharge as the adverse action. The court reaffirmed the governing standard from Turner v. Anheuser-Busch (1994) 7 Cal.4th 1238: a constructive discharge requires proof “‘that the employer either intentionally created or knowingly permitted working conditions that were so intolerable or aggravated at the time of the employee’s resignation that a reasonable employer would realize that a reasonable person in the employee’s position would be compelled to resign.’” (Steele, supra, 162 Cal.App.4th at p. 1254.) The proper focus is “‘on whether the resignation was coerced, not whether it was simply one rational option for the employee.’” (Ibid.) The YOPB tried to shrink the evidentiary frame to a handful of February 2002 events viewed in its own favor; the court warned that in doing so the YOPB “comes perilously close to forfeiting its substantial evidence claims on appeal.” (Id. at p. 1254.)

The core move: FEHA reaches preemptive retaliation. The YOPB’s temporal argument — that only post-late-January conduct counted because Lisa was not a protected “potential witness” until then — drove the court’s most important holding. Borrowing from Lujan v. Minagar (2004) 124 Cal.App.4th 1040, a Cal-OSHA retaliation case holding that the statute “‘applies to employers who retaliate against employees whom they believe intend to file workplace safety complaints,’” the court reasoned that the same logic governs FEHA. (Steele, supra, 162 Cal.App.4th at pp. 1254–1255.) Permitting preemptive retaliation “‘would create a perverse incentive for employers to retaliate against employees who they fear are about to file … complaints before the employees can do so,’” an “‘absurd result’” the Legislature could not have intended. (Id. at p. 1255.) Because “[t]he legislative purpose underlying FEHA’s prohibition against retaliation is to prevent employers from deterring employees from asserting good faith discrimination complaints,” the court held that “[e]mployer retaliation against employees who are believed to be prospective complainants or witnesses for complainants undermines this legislative purpose just as effectively as retaliation after the filing of a complaint.” (Ibid.) It therefore agreed with the trial court that “FEHA protects employees against preemptive retaliation,” and “consider[ed] the evidence of the YOPB’s actions from late October 2001 onward.” (Ibid.)

Applying the totality of the circumstances. Expanding the frame transformed the record. The court found that “from the moment YOPB learned about the kissing incident in October 2001, it feared that Lisa was a potential witness (if not a potential claimant) in a sexual harassment claim,” and that Peacock and Wallace “engaged in what they considered to be damage control.” (Steele, supra, 162 Cal.App.4th at p. 1255.) From those facts flowed a chain of supportable inferences: that Peacock “permitted [the conflict with Jones] to fester in order to encourage Lisa’s resignation” and left “unverified and possibly inaccurate criticisms” in place to “lay the groundwork for questioning her credibility in any future investigation of Galindo”; that warning only Lisa and Kaslar of budget cuts reflected a wish to have them “leave the YOPB before any complaint was made”; and that telling Lisa of Kaslar’s harassment-related transfer “clearly sent the message that the YOPB would take action against employees alleging such claims.” (Id. at pp. 1256–1257.) Three days after the YOPB received Kaslar’s DFEH complaint, Peacock threatened a suspension he privately doubted, telling Lisa to leave so investigators would not find her there. (Id. at p. 1257.) Viewing “the totality of these circumstances,” the court held substantial evidence supported a finding of “intolerable or aggravated working conditions,” because over four months “pressure was steadily ramped up on Lisa … in an effort to cause her to leave the YOPB before DFEH investigators arrived.” (Id. at pp. 1258–1259.)

Rejecting the “no yelling” and “no official act” defenses. The court engaged and rejected the YOPB’s two structural arguments. It distinguished Fitz v. Pugmire Lincoln-Mercury, Inc. (11th Cir. 2003) 348 F.3d 974 and Jones v. Department of Corrections (2007) 152 Cal.App.4th 1367, observing that, unlike those plaintiffs, “Lisa established Peacock intentionally and wrongfully held over her head several uninvestigated and allegedly false work performance criticisms, the budget crisis, the transfer of a coworker … and an inappropriate threat of suspension … in order to coerce Lisa into leaving.” (Steele, supra, 162 Cal.App.4th at pp. 1259–1260.) That Peacock “acted subtly and deceptively, as an amicable family friend, … does not change the underlying reality of his actions.” (Id. at p. 1260.) The court held that while a constructive discharge may rest on a supervisor “constantly yelling, screaming, intimidating, or disparaging,” such conduct is not “a necessary prerequisite.” (Ibid.) And it rejected as “[b]izarrely” conceived the contention that Peacock’s statements and threatened suspension “were not official acts of the YOPB,” holding the record showed the coercion was “approved, orchestrated and encouraged by Wallace, the executive officer.” (Ibid.)

Causation: Lisa as corroborating witness. Finally, the court addressed the YOPB’s causation theory — that because Lisa had only “exculpatory information,” the YOPB had no motive to retaliate and indeed “was motivated to ensure that she talked to the DFEH.” (Steele, supra, 162 Cal.App.4th at p. 1261.) The court rejected the premise that the kiss was innocuous: “Galindo’s actions were not quite as innocent as the YOPB now portrays,” and Peacock, Wallace, and Beutler “all immediately understood the appearance of impropriety.” (Ibid.) Even granting that Lisa was not offended, “she was still a percipient witness to Galindo’s conduct, which was potentially strong, prejudicial corroborative evidence in the event any sexual harassment claims were raised, as they apparently were by Kaslar.” (Ibid.) Substantial evidence supported the conclusion the YOPB “understood the situation just this way” — the “best explanation” of Peacock’s telling Lisa to leave so as not to “‘make the office look bad if the investigators are there.’” (Ibid.)

Significance

Steele is a leading published statement that FEHA’s anti-retaliation provision, Government Code section 12940, subdivision (h), reaches “preemptive” retaliation — adverse action taken because the employer believes the employee is, or will become, a complainant or a witness. By importing the reasoning of Lujan from the Cal-OSHA context, the Third District filled a gap left open by cases keyed to the timing of a formal complaint, holding that liability attaches to retaliation against “employees who are believed to be prospective complainants or witnesses for complainants.” (Steele, supra, 162 Cal.App.4th at p. 1255.) The holding closes a loophole that would otherwise reward employers who move fast enough to push a witness out before she ever surfaces in a proceeding.

The decision is also a useful constructive-discharge precedent for plaintiffs. It confirms that intolerable conditions need not take the form of overt abuse — “yelling, screaming, intimidating, or disparaging” — and may instead be built from a pattern of subtle, deniable pressure: stale and uninvestigated performance criticisms, selective budget warnings, a manipulated work schedule, and a threatened-but-pretextual suspension. (Id. at pp. 1259–1260.) And the causation analysis illustrates that a witness’s value as “corroborative evidence” — even where her own account is partly favorable to the employer — can supply the retaliatory motive. (Id. at p. 1261.) The opinion’s reach is bounded by its posture: it resolves only the sufficiency of the evidence on a completed jury verdict, deferring throughout to the jury’s permissible inferences rather than announcing a new substantive test.

Key quotes

“We agree with the trial court that FEHA protects employees against preemptive retaliation by the employer. We will consider the evidence of the YOPB’s actions from late October 2001 onward.” (Steele, supra, 162 Cal.App.4th at p. 1255.)

“Employer retaliation against employees who are believed to be prospective complainants or witnesses for complainants undermines this legislative purpose just as effectively as retaliation after the filing of a complaint.” (Id. at p. 1255.)

“[S]he was still a percipient witness to Galindo’s conduct, which was potentially strong, prejudicial corroborative evidence in the event any sexual harassment claims were raised, as they apparently were by Kaslar.” (Id. at p. 1261.)

Read the full opinion (Justia) →

Practice pointer

Open questions

Whether any single act sufficed. Because it analyzed the conduct cumulatively, the court expressly declined to parse the record act-by-act: “We do not have to determine whether each individual action was an intolerable condition because the actions taken together … support a finding that Lisa was unlawfully coerced into resignation.” (Steele, supra, 162 Cal.App.4th at p. 1259.) The opinion thus leaves unresolved which, if any, of the discrete measures — the threatened suspension, the schedule change, the stale criticisms — would independently rise to a constructive discharge.

The reach of the “potential claimant” theory. The court repeatedly framed the YOPB’s fear in the alternative — that Lisa was “a potential witness (if not a potential claimant)” — but rested its protected-activity holding on her witness status under the regulation, declining to decide whether or how a purely “potential claimant” who has herself opposed nothing would be protected. (Steele, supra, 162 Cal.App.4th at pp. 1252–1253, 1255.)

The non-retaliatory explanations. On causation, the court acknowledged that “[t]he YOPB’s disclosure of Lisa’s contact information to the DFEH after her resignation could have a number of explanations and does not necessarily change the conclusion” of retaliatory motive — leaving for the factfinder, not the appellate court, the weighing of competing innocent explanations. (Steele, supra, 162 Cal.App.4th at p. 1261.)