George v. California Unemployment Ins. Appeals Bd.

Facts

The statutory framework. The claim arose under the California Fair Employment and Housing Act (Gov. Code, § 12900 et seq.). FEHA “makes it unlawful for an employer to retaliate against an employee who has opposed any discriminatory action (the ‘opposition’ clause) or who has filed a complaint, testified, or assisted in a FEHA proceeding (the ‘participation’ clause). (Gov. Code, § 12940, subd. (h).)” (George, supra, 179 Cal.App.4th at p. 1490.) To recover, the court explained, a plaintiff “was required to prove that the suspensions resulted from retaliatory animus rather than other causes,” such that “there must be a causal link between the protected activity and the employer’s action.” (Id. at p. 1489.) The case turns on the interplay between that civil-rights statute and a separate civil service scheme: disciplinary actions against a state employee are reviewable by the State Personnel Board, which “has a duty to enforce the civil service statutes and to review disciplinary actions.” (Id. at p. 1483, citing Cal. Const., art. VII, § 2, subd. (a).)

The travel-assignment dispute. Cynthia Francene George was an administrative law judge in the Fresno office of the California Unemployment Insurance Appeals Board (the Agency). ALJs there were required to travel throughout the San Joaquin Valley to conduct hearings. (George, supra, 179 Cal.App.4th at p. 1479.) George came to believe travel assignments were unevenly distributed, and the calendaring supervisor told her “that two male … ALJ’s were given preference in travel assignments.” (Ibid.) She performed a statistical analysis that, “[a]lthough her numbers did not show a clear gender bias,” “did indicate that travel was not evenly distributed.” (Ibid.) She circulated a memo and raised her concerns with the presiding ALJ, telling him male ALJs were receiving preferences “although she did not use the word ‘discrimination.’” (Ibid.)

The warning. When George discussed her concerns with coworker ALJ Betsy Temple, Temple worried the complaints would prompt “the head office in Sacramento [to interfere] with how travel was assigned in Fresno” and disrupt the flexible, accommodation-driven system Temple favored. (George, supra, 179 Cal.App.4th at p. 1479.) Temple told George that she would be “‘sorry’” if she pursued her complaint. (Ibid.) That statement — made before George filed any formal charge — became the centerpiece of the nexus evidence at trial.

The DFEH charge and the Agency’s response. On November 6, 2001, George filed a complaint with the Department of Fair Employment and Housing, alleging she had been subjected to “‘differential treatment, [and] assigned less favorable overnight travel’” in violation of FEHA. (George, supra, 179 Cal.App.4th at pp. 1479–1480.) Within a month, the Agency “modified the travel assignment procedure to a standardized rotation, eliminating her concerns of gender bias,” and in doing so “eliminated all the accommodations previously made for individual ALJ preferences.” (Id. at p. 1480.) That outcome — precisely what Temple had feared — set the stage for the conflict that followed.

Temple’s promotion and the suspensions. In March 2002 Temple was promoted to presiding ALJ — and thus to decision-maker over George’s discipline. (George, supra, 179 Cal.App.4th at p. 1480.) George testified the relationship changed: Temple “did not discuss things with George, but only communicated by e-mail.” (Ibid.) Discipline soon followed. After a written warning for tardiness, the Agency, through Temple, suspended George for two weeks without pay in October 2002 (the first suspension), for three weeks in February 2003 (the second), and for two weeks in August 2003 (the third), each resting on accumulated allegations of misconduct. (Id. at pp. 1480–1481.)

What the Board found. George appealed the suspensions to the State Personnel Board, arguing not that the discipline was retaliatory but that “either the alleged acts of misconduct did not occur or that they did not warrant discipline.” (George, supra, 179 Cal.App.4th at p. 1481.) The Board’s rulings were mixed. It found “the first suspension was not supported” and revoked it in its entirety, restoring all benefits and pay. (Ibid.) It sustained the second but reduced it “from three weeks to two weeks,” having found several of its supporting allegations “without substance.” (Ibid.) It upheld the third only in part, “sustaining one of the three allegations of misconduct, but reducing it to a one-week suspension” after finding George had “‘placed her personal feelings and suspicions over her judicial duties.’” (Id. at pp. 1481–1482.) The net result: of three suspensions totaling seven weeks, the Board left standing roughly three weeks, and rejected the bulk of the asserted misconduct.

Procedural history

After her second suspension, George filed a second DFEH charge alleging retaliation, and on July 15, 2005, “after exhausting FEHA administrative remedies,” she filed a civil action alleging that all three suspensions “were intended to retaliate against George for filing the DFEH charge in 2001.” (George, supra, 179 Cal.App.4th at pp. 1481–1482.) She sought lost wages, the $17,000 in attorney fees she had paid to defend the third suspension, and emotional-distress damages. (Id. at p. 1482.)

The Agency “twice moved for summary judgment,” urging that the action was barred by res judicata and/or collateral estoppel “because the propriety of the suspension had already been litigated before the Board.” (George, supra, 179 Cal.App.4th at p. 1482.) The trial court denied both motions, “concluding that the issues in the civil action and those litigated before the Board were different.” (Ibid.) Separately, George’s petition for writ of mandate challenging the Board’s decision had been denied. (Id. at p. 1481.)

The matter went to a jury, which “found that George had engaged in protected activity, had suffered an adverse employment action, and that her complaints of gender discrimination were a motivating reason for the decisions to discipline her.” (George, supra, 179 Cal.App.4th at p. 1482.) The jury awarded $25,000 in economic damages — $8,000 in lost wages and the $17,000 in fees — plus $75,000 in noneconomic damages, and the trial court later awarded $391,755 in attorney fees and costs. (Ibid.) The Agency appealed. The Court of Appeal, Fifth Appellate District, in a unanimous opinion by Acting Presiding Justice Wiseman, affirmed; the Supreme Court denied review on February 24, 2010. (Id. at pp. 1482, 1492.)

Issue

The published portions of the opinion presented two questions. First, a preclusion question: whether the doctrines of res judicata and collateral estoppel barred George’s FEHA retaliation suit because the propriety of the suspensions had already been adjudicated before the State Personnel Board — and, relatedly, whether she was required to raise her retaliation theory in the civil service proceeding. (George, supra, 179 Cal.App.4th at p. 1482.) Second, a sufficiency question that frames this article’s causation hook: whether substantial evidence supported the jury’s finding that George engaged in protected activity and that “a nexus exists between her DFEH charge and the suspensions imposed.” (Id. at p. 1489.) Embedded in the second was the governing causation standard — how much of a role retaliatory animus must play in the adverse decision for liability to attach.

Holding

Reasoning

Res judicata does not bar the FEHA claim because the primary rights differ. The court began with first principles: res judicata “precludes a second suit between the same parties on the same cause of action,” and a plaintiff “may not split a single cause of action or relitigate the same cause of action on a different legal theory or seek different relief.” (George, supra, 179 Cal.App.4th at p. 1482.) The Agency’s theory was that George’s administrative appeals and her retaliation suit shared a single claim — “the impropriety of the discipline imposed.” (Id. at pp. 1482–1483.) Conducting an independent review of this legal question (id. at p. 1483), the court rejected that framing under the primary-rights theory. “The primary right protected by the state civil service system is the right to continued employment, while the primary right protected by FEHA is the right to be free from invidious discrimination and from retaliation for opposing discrimination.” (Ibid.) Because “state employees may pursue their claims of employment discrimination with either the Board or the DFEH or both,” there is “no requirement that a state employee raise the FEHA issue during the administrative review process,” and res judicata “does not act as a complete bar to a FEHA action” brought after civil service review. (Id. at pp. 1483–1484.)

Distinguishing the Agency’s authorities. The court methodically dismantled the cases the Agency invoked. Swartzendruber v. City of San Diego (1992) 3 Cal.App.4th 896 actually cut the other way: the very issue — “whether res judicata bars a FEHA claim” — “was decided against the agency in Swartzendruber,” which held the exhaustion doctrine inapplicable to a FEHA claim “because separate rights were involved.” (George, supra, 179 Cal.App.4th at pp. 1484–1485.) Although a portion of Swartzendruber was later disapproved in Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, the court stressed that Johnson held only that “issue preclusion does apply in FEHA actions” after a prior administrative determination — it “did not … hold that res judicata applied to bar a subsequent FEHA action.” (Id. at p. 1485.) The court also distinguished its own decision in Takahashi v. Board of Education (1988) 202 Cal.App.3d 1464, where a prior state court judgment had independently determined that cause existed to dismiss the employee for incompetency, thereby resolving “the key issue in the FEHA claim — whether the discharge was for good cause.” (Id. at pp. 1485–1486.) Here, by contrast, “there was no finding that the Agency’s actions as a whole were justified,” and “no finding to preclude the conclusion that the imposition of the three relatively minor disciplinary actions was the result of a retaliatory motive.” (Id. at p. 1485.)

Collateral estoppel is the real risk — but it did not reach this claim. The court took care to separate issue preclusion from claim preclusion, treating collateral estoppel “as distinct from res judicata.” (George, supra, 179 Cal.App.4th at p. 1486.) It acknowledged the genuine peril a dual-track litigant faces: “[s]everal courts have recognized the risks of pursuing both an internal administrative remedy and a FEHA civil action given the possible application of collateral estoppel in the FEHA action to knock out a key element before trial.” (Id. at p. 1487.) Castillo v. City of Los Angeles (2001) 92 Cal.App.4th 477 was the cautionary example: there, the civil service forum had resolved “the issue of whether the employer’s stated reason for discharge was pretextual against the employee,” eliminating wrongfulness — an element of the FEHA claim — and entitling the employer to judgment. (Id. at pp. 1486–1487.) The lesson the court drew: an employee can lose a FEHA claim “not because she chose to pursue both remedies, but because the resolution of her claim in one forum resolved a necessary element of her claim in another forum.” (Id. at p. 1487.)

Why the Board’s findings left the retaliation claim intact. Applying that principle, the court held the Board’s mixed findings did not eliminate any element of the retaliation claim. George “is not simply challenging an adverse action on the ground that it was discriminatory”; she alleged the Agency “accumulated a number of minor incidents and used them collectively to support the suspensions with retaliatory animus.” (George, supra, 179 Cal.App.4th at p. 1488.) The court endorsed the trial court’s framing of the controlling question: whether the Board’s findings “‘are sufficiently inconsistent with the elements [George] must establish in order to prevail on her claim of unlawful retaliation.’” (Ibid.) They were not. The Board had “revoked the first suspension in its entirety, finding that it was without justification,” and reduced the others because “a number of the allegations … were found to be without substance.” (Ibid.) That left open “whether George was treated more harshly than other employees because she had challenged the ALJ travel policy,” and the court held that “a finding that some of the collected incidents were sufficient … to sustain a lesser discipline than imposed is not the equivalent of a finding that the discipline imposed was just, proper, and nonretaliatory.” (Ibid.) Estoppel ran both ways: George was “bound by the Board’s findings that she engaged in misconduct,” but the Agency was “equally bound by the Board’s determination that the first suspension was not justified and that much of the justification given to support the second and third suspensions was unfounded.” (Ibid.)

The filing of a DFEH charge is protected activity — no good-faith inquiry required. Turning to sufficiency, the court first resolved the protected-activity element. The Agency leaned on Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028 to argue George had to show her protected activity rested on “a reasonable and good faith belief that the employer acted unlawfully.” (George, supra, 179 Cal.App.4th at pp. 1489–1490.) The court found that argument misplaced. Yanowitz addressed the opposition clause — specifically, whether refusing an employer directive based on an erroneous belief that it violated FEHA was protected — and answered yes if the employee acted “in good faith and with a reasonable belief.” (Id. at p. 1490.) But George’s conduct fell under the participation clause: she filed a DFEH charge, an act “protected under the participation clause of the statute” itself. (Id. at p. 1491.) Reading Yanowitz to require a good-faith showing here “improperly inserts a new element into a retaliation claim when the claim is based on conduct expressly identified by the statute as protected.” (Id. at p. 1490.) The court reaffirmed the long-settled rule that “whether an employee’s formal or informal complaint is well founded is immaterial to a FEHA retaliation claim,” so “a Yanowitz analysis is not required.” (Id. at pp. 1490–1491.) In a footnote, the court added that even if a good-faith showing were required, the record would support it, because “the reasonable good faith test does not require that the employee see the evidence the same way as the employer.” (Id. at p. 1491, fn. 2.)

The nexus — direct and circumstantial evidence of retaliatory intent. On causation, the court reviewed the entire record “in the light most favorable to the judgment,” asking only “whether there is any substantial evidence, contradicted or uncontradicted,” to support the verdict. (George, supra, 179 Cal.App.4th at p. 1489.) Temple’s pre-charge warning that George “would be ‘sorry’” supplied the core proof. Temple confirmed she knew George had filed a DFEH charge before becoming presiding ALJ and before the suspensions, satisfying the rule that “employer’s knowledge of protected activity is [an] essential element to [the] required causal link.” (Id. at pp. 1491.) Although the warning could be read innocently — that George would simply regret a less flexible system — “[t]he jury … was free to read Temple’s statement as a warning that George would suffer retaliation for her actions,” because “direct evidence of retaliation may include remarks by [a] decision maker that can be interpreted as indicating an intent to retaliate.” (Ibid.) The timing point cut against the Agency: that the statement preceded the charge did not disqualify it, since “[t]he timing of retaliatory action or animus is not necessarily determinative of its evidentiary value,” and “[p]reemptive action against prospective complainants is no less retaliatory than action taken after the fact.” (Ibid.) The court also confronted the awkward fact that Temple spoke before she became decision-maker, holding that “[d]irect statements by the decision maker that suggest a retaliatory intent, even if made prior to reaching decision maker status, are sufficient to support a finding of retaliatory intent.” (Id. at p. 1492.)

The causation standard — substantial or motivating factor, not sole cause. This is the doctrinal heart of the case and its CACI No. 2505 hook. The court held that even if Temple’s statement were not read as a direct threat, “the inference may be drawn that Temple’s displeasure with the way things turned out … gave rise to retaliatory intent,” and under the deferential standard, “[w]hen two or more inferences can reasonably be deduced from the facts, a reviewing court is without power to substitute its deductions for those of the fact finder.” (George, supra, 179 Cal.App.4th at p. 1492.) The verdict rested on additional inferences: “(1) the relatively close timing” between Temple’s promotion and the change in George’s treatment; “(2) the cool communication”; “(3) George’s prior discipline-free, 12-year work history”; and “(4) the number of allegations Temple made … that were deemed unfounded by the Board.” (Ibid.) The court then stated the governing rule of causation: “[i]t is well established that a plaintiff in a retaliation case need only prove that a retaliatory animus was at least a substantial or motivating factor in the adverse employment decision.” (Ibid.) Critically, the standard does not demand that animus be the only reason — the Board’s confirmation that some misconduct occurred did not defeat liability, because lawful and unlawful motives can coexist so long as the retaliatory animus was substantial. On that record, the court concluded, “there is substantial evidence to support the jury’s verdict.” (Ibid.)

No dissent. The panel was unanimous: Justices Cornell and Gomes concurred without separate writing. (George, supra, 179 Cal.App.4th at p. 1492.) The court resolved the Agency’s remaining challenge to the economic-damages award “on procedural grounds” in the unpublished part III, so that issue carries no precedential weight. (Id. at pp. 1479, 1492.)

Significance

It cements the substantial-or-motivating-factor causation standard for FEHA retaliation. George is a clean appellate statement that a retaliation plaintiff carries her causation burden by showing animus was “at least a substantial or motivating factor” — not the sole, and not the but-for, cause — of the adverse action. (George, supra, 179 Cal.App.4th at p. 1492.) That formulation is the one carried into CACI No. 2505, and it explains why an employer cannot defeat a retaliation verdict simply by proving that some legitimate basis for discipline also existed. The decision sits in the line running through Yanowitz and Reeves v. Safeway Stores, Inc. (2004) 121 Cal.App.4th 95, and it predates — but harmonizes comfortably with — the Supreme Court’s later “substantial motivating reason” gloss in Harris v. City of Santa Monica (2013) 56 Cal.4th 203 for status-discrimination claims. The mixed-motive logic is the same: lawful and retaliatory reasons can coexist, and liability follows so long as retaliation’s contribution was substantial.

It maps the preclusion terrain for the dual-track public employee. The opinion’s lasting practical value is its careful separation of res judicata from collateral estoppel in the civil service/FEHA context. (George, supra, 179 Cal.App.4th at pp. 1482–1488.) Claim preclusion does not bar a FEHA suit after Personnel Board review, because the two regimes protect different primary rights; but issue preclusion can be lethal where the board resolves a fact that is an element of the FEHA claim — as Castillo showed when an administrative pretext finding eliminated wrongfulness. (Id. at pp. 1486–1487.) George teaches that a board’s partial vindication of the employee — revoking and reducing discipline — leaves the retaliation claim alive precisely because no necessary element was foreclosed. (Id. at p. 1488.)

It draws a bright line between the opposition and participation clauses. By holding that the Yanowitz reasonable-good-faith requirement does not police the participation clause, George reinforces that filing a DFEH charge is categorically protected — its merit is “immaterial.” (George, supra, 179 Cal.App.4th at pp. 1490–1491.) That distinction matters: it forecloses an employer defense premised on the weakness of the underlying discrimination complaint whenever the protected activity is a formal charge rather than informal opposition.

Key quotes

“It is well established that a plaintiff in a retaliation case need only prove that a retaliatory animus was at least a substantial or motivating factor in the adverse employment decision.” (George, supra, 179 Cal.App.4th at p. 1492.)

“The timing of retaliatory action or animus is not necessarily determinative of its evidentiary value. … Preemptive action against prospective complainants is no less retaliatory than action taken after the fact.” (Id. at p. 1491.)

“The primary right protected by the state civil service system is the right to continued employment, while the primary right protected by FEHA is the right to be free from invidious discrimination and from retaliation for opposing discrimination.” (Id. at p. 1483.)

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Practice pointer

Open questions

Whether a good-faith requirement attaches to participation-clause activity at all. The court held no Yanowitz analysis is required for a DFEH charge, but added — “[e]ven if we were to read Yanowitz … as requiring that every protected activity be reasonable and based on a good faith belief” — that the record would satisfy it. (George, supra, 179 Cal.App.4th at p. 1491, fn. 2.) The alternative holding leaves the categorical reach of the participation clause technically unresolved for harder records.

The precise boundary of issue-preclusive board findings. The court held the Board’s findings did not eliminate a necessary element here, but its analysis turned on the “unique circumstances of this case.” (George, supra, 179 Cal.App.4th at p. 1486.) It did not chart, beyond the Castillo wrongfulness example, exactly which administrative findings will and will not knock out a FEHA element — leaving that line to be drawn case by case. (Id. at pp. 1487–1488.)

The economic-damages question. The court rejected the Agency’s challenge to the $25,000 economic award “on procedural grounds” in an unpublished portion, so the substantive propriety of awarding the $17,000 in administrative-defense attorney fees as FEHA damages was not decided in any citable way. (George, supra, 179 Cal.App.4th at p. 1479.)