Featherstone v. Southern California Permanente Medical Group

Facts

The Fair Employment and Housing Act makes it unlawful for an employer, “because of the … physical disability [or] medical condition … of any person, to refuse to … hire or employ the person … or to bar or to discharge the person from employment.” (Gov. Code, § 12940, subd. (a); Featherstone, supra, 10 Cal.App.5th at p. 1160.) FEHA proscribes two species of disability discrimination — disparate treatment, “arising from an employer’s intentionally discriminatory act,” and disparate impact, “resulting from an employer’s facially neutral practice or policy.” (Id. at p. 1160.) Featherstone pursued only the disparate-treatment theory. (Ibid.) A prima facie disparate-treatment case requires a showing that the plaintiff “suffers from a disability,” “is otherwise qualified to do her job,” “suffered an adverse employment action,” and that “the employer harbored discriminatory intent.” (Id. at pp. 1160–1161.)

Ruth Featherstone began working for Southern California Permanente Medical Group (SCPMG) as an at-will employee in 2009, reporting to Vicky Sheppard. (Featherstone, supra, 10 Cal.App.5th at p. 1155.) She had a long history of chronic sinus conditions; between 1995 and 2008 she underwent five surgeries to treat an inverted papilloma tumor in her sinus cavity, and she suffered from chronic sinusitis throughout her SCPMG employment. (Ibid.) In October 2013 her doctor advised further surgery based on changes in the tumor. (Ibid.) SCPMG granted medical leave through December 13, 2013, and on December 16, 2013 Featherstone returned to work “without any work restrictions.” (Ibid.)

On December 23, 2013, at approximately 8:30 a.m., Featherstone telephoned Sheppard and said she was resigning effective immediately, telling her that “‘God had told [her] to do something else.’” (Featherstone, supra, 10 Cal.App.5th at p. 1155.) Before the resignation, neither Sheppard nor Sheppard’s supervisor knew Featherstone was suffering from an altered mental state. (Ibid.) Although Sheppard had to ask Featherstone to “‘slow down,’” she did not consider Featherstone to be “acting … in a way that [she] would consider to be odd in any manner.” (Ibid.) A Facebook post that day struck Sheppard as “a little out of the blue,” “a little erratic,” but it did not cause her to think Featherstone was “not in her right mind,” because the reference to God “was not inconsistent with Featherstone’s character.” (Id. at pp. 1155–1156.) Sheppard asked Featherstone to confirm the resignation in writing, notified human resources, and — on HR’s instruction to process the paperwork promptly so the final paycheck could issue timely — Sheppard’s supervisor completed and submitted the voluntary-termination paperwork that same day, marking Featherstone eligible for rehire. (Id. at p. 1156.) On December 26, 2013, Featherstone confirmed her resignation by e-mail. (Ibid.)

Unknown to her managers, Featherstone’s home behavior had begun “to progressively change” around December 21, 2013, and on December 24, 2013 — one day after she resigned — she was hospitalized. (Featherstone, supra, 10 Cal.App.5th at p. 1156.) A coworker, alerted by Featherstone’s sister, reported the hospitalization to HR that day; HR responded that it could not discuss the matter with a non-family member, and the coworker had no further communications about it. (Ibid.) On December 31, 2013, Featherstone told HR’s Eva Suarez that she had resigned while suffering an adverse drug reaction and asked to rescind. (Id. at p. 1157.) In a January 14, 2014 e-mail she explained that Phenergan with codeine, taken for a cough, “caused her to do abnormal things,” leading to a 72-hour hospitalization. (Ibid.) An attached note from Dr. An Hong Tran confirmed a hospitalization “due to a behavioral change that resulted from an adverse reaction from medication phenergan with codeine,” but also stated that on “confirmatory test, [Featherstone] does not have any PCP or cocaine.” (Ibid.) After consulting counsel, Suarez concluded nothing was improper about the December 23 acceptance and that no facts required rescission; on January 21, 2014, she notified Featherstone that SCPMG would not accede. (Ibid.) Featherstone never reapplied for her former position. (Ibid.)

Procedural history

Featherstone’s operative complaint pleaded five causes of action: disability discrimination under FEHA; failure to prevent discrimination under FEHA; failure to accommodate under FEHA; failure to engage in the interactive process under FEHA; and wrongful termination in violation of public policy. (Featherstone, supra, 10 Cal.App.5th at p. 1160.) The Superior Court of Los Angeles County (Gail R. Feuer, Judge) granted summary judgment for SCPMG. (Id. at p. 1154.) Featherstone appealed.

The Court of Appeal reviewed the order de novo, “considering all the evidence set forth in the moving and opposition papers except that to which objections have been made and sustained,” viewing the evidence favorably to the plaintiff as losing party. (Featherstone, supra, 10 Cal.App.5th at p. 1158.) Because this is an employment-discrimination case decided on summary judgment, the court applied the burden-shifting framework: a moving defendant must present evidence that “its decision was motivated solely by legitimate, nondiscriminatory reasons,” after which the plaintiff must produce evidence supporting “a reasonable inference that discrimination was a substantial motivating factor.” (Id. at pp. 1158–1159.) The court emphasized the calibration rule from Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317: “The stronger the employer’s showing of a legitimate, nondiscriminatory reason, the stronger the plaintiff’s evidence must be in order to create a reasonable inference of a discriminatory motive.” (Featherstone, at p. 1159.)

Issue

Two questions drove the appeal. First, is an employer’s refusal to allow a former employee to rescind a voluntary resignation — accepted and processed by the employer — an adverse employment action under FEHA, where there is no coercion, constructive discharge, or contractual duty to permit rescission? Second, did SCPMG’s accommodation and interactive-process duties under Government Code section 12940, subdivisions (m) and (n), arise, given that no relevant decision maker knew of Featherstone’s temporary disability when she resigned and the resignation was accepted?

Holding

Reasoning

An adverse employment action protects employees, not former employees. The court anchored its analysis in Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, which defines an adverse employment action as one that “materially affect[s] the terms and conditions of employment,” interpreted “liberally and with a reasonable appreciation of the realities of the workplace.” (Featherstone, supra, 10 Cal.App.5th at pp. 1161–1162.) But the court drew a structural boundary around that generous standard: given Yanowitz‘s focus on guarding against conduct affecting “an employee’s job performance and/or opportunity for advancement,” “an adverse employment action is one that affects an employee, not a former employee, in the terms, conditions or privileges of his or her employment, not in the terms, conditions or privileges of his or her unemployment.” (Id. at p. 1162.) That distinction is the fulcrum of the opinion.

FEHA is silent, so the court looked to federal authority. The court acknowledged that FEHA’s text does not address whether refusing rescission is an adverse action, and that no California appellate decision had addressed the question. (Featherstone, supra, 10 Cal.App.5th at p. 1162.) Invoking the settled practice of consulting federal precedent under the ADA and Title VII “[b]ecause of the similarity between state and federal employment discrimination laws,” the court canvassed a body of federal decisions holding that an employer’s refusal to allow an employee to rescind a resignation is not an adverse employment action. (Id. at pp. 1162–1164.) The reasoning it adopted was that refusing to accept a rescission is “not an adverse employment action for the simple reason that the employment relationship has ended.” (Id. at p. 1163.) The court noted, with candor, contrary authority: the Fifth Circuit has held that in a retaliation action a failure to accept rescission may be an adverse action. (Id. at p. 1164 & fn. 7, citing Porter v. Houma Terrebonne Housing Authority Bd. of Commissioners (5th Cir. 2015) 810 F.3d 940.)

No coercion, no constructive discharge. The court foreclosed the off-ramp that might have changed the calculus. Featherstone did not allege constructive discharge, and none could be inferred: the evidence did not “show or even suggest that SCPMG made or allowed Featherstone’s working conditions to become ‘intolerable.’” (Featherstone, supra, 10 Cal.App.5th at pp. 1164–1165.) To the contrary, her wish to rescind and her deposition testimony that the job was “one of the best positions” she ever had pointed the other way. (Id. at p. 1165.) In a pointed sentence the court located the true source of any coercion: “To the extent[ ] Featherstone’s resignation was coerced, it was apparently coerced by an adverse drug reaction, not by anything SCPMG did or failed to do.” (Ibid.)

No contractual duty to permit rescission. Because Featherstone was undisputedly at-will and no agreement amended that status, “the normal rules governing resignations by at-will employees applied.” (Featherstone, supra, 10 Cal.App.5th at p. 1165.) Resignations are “contractual in nature,” and a resignation “is an offer which may be withdrawn prior to its acceptance.” (Ibid.) It follows that an at-will employee “has a right to rescind a resignation unilaterally (like any contractual offer) only prior to its acceptance.” (Ibid.) Once SCPMG accepted by processing the paperwork the same day, no duty to permit rescission existed, and taking the employee “at his word that he wants out” is not an adverse action. (Id. at p. 1165.) The court distinguished statutory regimes that do impose an investigatory duty — for example, the obligation to inquire when an employee signals a need for leave under the California Family Rights Act — but found no analogous duty “to investigate the circumstances surrounding a voluntary resignation … by an at-will employee.” (Id. at pp. 1165–1166.)

The accommodation duty turns on knowledge. Turning to section 12940, subdivision (m), the court restated the governing rule: an employer must accommodate the “known” disability of an employee, and the “duty to reasonably accommodate an employee’s disability is not triggered until the employer knows of the disability.” (Featherstone, supra, 10 Cal.App.5th at pp. 1166–1167.) The employee bears the burden of notice; the employer “has no affirmative … duty to investigate whether an employee’s illness might qualify as a disability,” and is not expected to “read his mind.” (Id. at p. 1167.) Knowledge can be inferred, “but knowledge will only be imputed to the employer when the fact of disability is the only reasonable interpretation of the known facts,” and “[v]ague or conclusory statements revealing an unspecified incapacity” do not suffice. (Ibid.) Critically, evidence that a decision maker learned of a disability “after deciding to take adverse employment action is not probative” of awareness at the time of decision. (Ibid.)

Applying the knowledge rule. On the undisputed record, SCPMG had neither actual nor constructive knowledge when Featherstone resigned and the resignation was accepted. (Featherstone, supra, 10 Cal.App.5th at p. 1168.) She had returned from sinus leave with no restrictions; her work-status reports during leave disclosed nothing about her condition or medications; and her references to God were “not inconsistent with [her] character.” (Ibid.) The coworker’s “lone, incomplete communication” to HR not only “occurred after Featherstone had resigned,” but was “insufficient by itself to put SCPMG on notice.” (Ibid.) The court analogized to Miller v. National Casualty Co. (8th Cir. 1995) 61 F.3d 627, where a relative’s statements that the employee was “‘mentally falling apart’” were held insufficient notice of manic-depression. (Featherstone, at p. 1168.) Because notice of the temporary disability “is not the only reasonable interpretation of the known and undisputed facts,” and because the employer learned of it only after the resignation was accepted, summary judgment on the accommodation claim was proper. (Id. at p. 1168.)

The interactive-process and derivative claims. The subdivision (n) claim failed for a parallel reason: Featherstone “never identified for SCPMG her temporary disability,” which “was not open, obvious or apparent” to her managers before she resigned, and she “never reached out to SCPMG to request any kind of accommodation … before she resigned.” (Featherstone, supra, 10 Cal.App.5th at p. 1169.) Having found no underlying discrimination, the court held the failure-to-prevent claim could not survive — “there’s no logic that says an employee who has not been discriminated against can sue an employer for not preventing discrimination that didn’t happen” (id. at p. 1166) — and the wrongful-termination claim, premised entirely on FEHA, “necessarily fail[ed],” the court adding that “FEHA does not confer on employees or applicants the right to take a medical leave.” (Id. at pp. 1169–1170.)

Significance

Featherstone is the first published California decision to hold squarely that an employer’s refusal to allow a former employee to rescind a voluntary, accepted resignation is not an adverse employment action under FEHA. (Featherstone, supra, 10 Cal.App.5th at p. 1162 [no California appellate decision addressing the issue].) That holding fills a doctrinal gap and supplies a clean, contract-based rule: acceptance extinguishes the unilateral right to rescind, and post-acceptance refusal cannot be an adverse action because there is no longer an employment relationship to affect. The Supreme Court denied review on July 12, 2017, leaving the decision as published, citable authority.

The opinion also crisply restates the knowledge predicate for the accommodation and interactive-process duties. By treating the timing of knowledge as dispositive — what the decision maker knew when the resignation was accepted, not what surfaced afterward — the court reinforces that subsequent-acquired information cannot retroactively manufacture a duty that never arose. (Featherstone, supra, 10 Cal.App.5th at pp. 1167–1168.) For practitioners, the case is a reminder that the generous Yanowitz standard for adverse actions has an outer limit defined by status: it protects employees in their employment, not former employees in their unemployment. (Id. at p. 1162.)

Key quotes

“[A]n adverse employment action is one that affects an employee, not a former employee, in the terms, conditions or privileges of his or her employment, not in the terms, conditions or privileges of his or her unemployment.” (Featherstone, supra, 10 Cal.App.5th at p. 1162.)

“To the extent[ ] Featherstone’s resignation was coerced, it was apparently coerced by an adverse drug reaction, not by anything SCPMG did or failed to do.” (Id. at p. 1165.)

“Put simply, unless there is some evidence an employer knows an employee is suffering from a disability, it is impossible for an employee to claim he or she was discharged because of it or that an employer refused to accommodate the disability.” (Id. at p. 1167.)

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Practice pointer

Open questions

Does a “temporary” disability qualify under FEHA? The court expressly reserved this, assuming the point arguendo because SCPMG had not raised it on summary judgment, while quoting Diaz v. Federal Express Corp. (C.D.Cal. 2005) 373 F.Supp.2d 1034 and acknowledging the “absurd” results that could follow from excluding any durational limit. (Featherstone, supra, 10 Cal.App.5th at p. 1161 & fn. 5.)

Retaliation claims. The opinion notes the Fifth Circuit’s contrary view that, in a retaliation action, failure to accept a rescission may be an adverse employment action. (Featherstone, supra, 10 Cal.App.5th at p. 1164 & fn. 7.) Whether a FEHA retaliation theory — as opposed to the discrimination theory decided here — could survive on a refusal-to-rescind theory was not presented and remains undecided in California.

Where is the line of acceptance? The court held acceptance occurred when SCPMG “processed the necessary paperwork” the same day the resignation was tendered. (Featherstone, supra, 10 Cal.App.5th at p. 1165.) What conduct short of completed paperwork constitutes “acceptance,” such that an employee’s still-pending offer remains revocable, is left for future cases.