M.F. v. Pacific Pearl Hotel Management LLC

Facts

The Fair Employment and Housing Act (FEHA) does not confine employer liability for sexual harassment to harassment committed by coworkers or supervisors. The statute provides that an employer “may … be responsible for the acts of nonemployees, with respect to sexual harassment of employees … , where the employer, or its agents or supervisors, knows or should have known of the conduct and fails to take immediate and appropriate corrective action. In reviewing cases involving the acts of nonemployees, … the extent of the employer’s control and any other legal responsibility that the employer may have with respect to the conduct of those nonemployees shall be considered.” (Gov. Code, § 12940, subd. (j)(1); M.F., supra, 16 Cal.App.5th at pp. 700–701.) The Act separately makes it unlawful “[f]or an employer … to fail to take all reasonable steps necessary to prevent … harassment from occurring.” (§ 12940, subd. (k); M.F., supra, 16 Cal.App.5th at p. 701.) The court noted that, effective January 1, 2018, subdivision (j)(1) would be amended to substitute the word “if” for “where,” an amendment that “does not affect our decision.” (Id. at p. 701, fn. 5.)

Because the case arrived on demurrer, the operative facts are the well-pleaded allegations of M.F.’s third amended complaint, which the court was bound to “accept as true for purposes of this appeal.” (M.F., supra, 16 Cal.App.5th at p. 697.) M.F. worked for Pacific Pearl Hotel Management LLC as a housekeeper at its five-building hotel property. (Ibid.) One morning, the hotel’s engineering manager saw a drunk man — not a guest — “walking around the hotel property with a beer in his hand.” (Ibid.) The engineering manager saw this trespasser three times: first on the third-floor balcony of one building, then on the second floor, and once more in the elevator descending to the first floor. (Ibid.) “The engineering manager did not ask the trespasser to leave,” and “also did not report the trespasser’s presence to housekeeping management or to the police department.” (Ibid.)

The trespasser then “approached housekeepers cleaning hotel rooms three times while he walked around the hotel property.” (M.F., supra, 16 Cal.App.5th at p. 697.) On the first occasion, after falsely claiming the room being cleaned was his cousin’s, he “made sexually harassing comments, showed the housekeeper a handful of $5 bills, and offered the housekeeper money in exchange for sexual favors”; a maintenance worker overheard the comments and helped persuade him to leave. (Ibid.) On the second occasion, he again “offered the housekeeper who was cleaning the room money for sexual favors,” and that housekeeper “closed the door on the trespasser and reported the incident to housekeeping management.” (Id. at pp. 697–698.) A housekeeping manager broadcast the trespasser’s activities and location over a walkie-talkie system and went to check on the housekeepers — but “did not go to the building where the second incident occurred because M.F.’s supervisor was assigned to that building,” and that supervisor “checked the first floor of the building, but did not check the second floor, where M.F. was working.” (Id. at p. 698.)

On the third occasion, the trespasser went to the room M.F. was cleaning. (M.F., supra, 16 Cal.App.5th at p. 698.) He blocked her exit, “forced M.F. back into the room,” and when she refused to close the blinds and tried to get past him, “he grew agitated and punched her in the face, knocking her out.” (Ibid.) When she regained consciousness the blinds were closed and the trespasser was raping her; he “sexually harassed, assaulted, battered, and sodomized her for over two hours,” during which “no one from the hotel came looking for her.” (Ibid.) When a housekeeping employee knocked to deliver a crib, the trespasser answered the door and told the employee to leave the crib outside, and the employee “did not inquire as to M.F.’s whereabouts.” (Ibid.) After the trespasser left, M.F. called housekeeping but no one answered; she then called the police, who rescued her. (Ibid.) She was hospitalized for weeks and “still has not recovered from her injuries.” (Ibid.)

Procedural history

M.F. sued Pacific for hostile work environment sexual harassment and for failure to prevent sexual harassment. (M.F., supra, 16 Cal.App.5th at p. 698.) “The gravamen of the complaint as to Pacific was that Pacific violated the FEHA by allowing the trespasser to sexually harass M.F. and by failing to take reasonable steps to prevent the sexual harassment from occurring.” (Ibid.) Pacific demurred on the ground that the complaint failed to state a cause of action, arguing that M.F. “had not pleaded sufficient facts to show Pacific knew or should have known about any conduct by the trespasser requiring action by Pacific or putting Pacific on notice a sexual assault might occur,” and that her claims were therefore barred by the workers’ compensation exclusivity doctrine. (Ibid.)

The Superior Court of San Diego County, Judge Joel M. Pressman presiding, agreed with Pacific, sustained the demurrer to the operative third amended complaint without leave to amend, and dismissed the complaint with prejudice. (M.F., supra, 16 Cal.App.5th at pp. 698–699.) The court had earlier sustained demurrers to the first and second amended complaints with leave to amend. (Id. at p. 699, fn. 4.) M.F. appealed. The Court of Appeal, Fourth Appellate District, Division One, reversed in a unanimous opinion by Presiding Justice McConnell, with Justices Benke and O’Rourke concurring; there was no separate concurrence or dissent. (Id. at pp. 693, 696, 703.) The court “reverse[d] the judgment and remand[ed] the matter to the court for further proceedings,” awarding M.F. her costs on appeal. (Id. at pp. 697, 703.) The Supreme Court denied review on February 14, 2018. (Id. at p. 703.)

Issue

The court framed the question precisely: “whether, for purposes of overcoming the workers’ compensation exclusivity doctrine (Lab. Code, §§ 3600, subd. (a), 3602, subd. (a)), a housekeeping employee stated claims against her hotel employer for violating provisions in the [FEHA] … requiring the employer to protect the employee from nonemployee sexual harassment.” (M.F., supra, 16 Cal.App.5th at p. 696.) That inquiry subsumed several disputed sub-issues raised by Pacific’s demurrer: whether an employer can owe a FEHA duty as to a third party of whom it had no prior knowledge before he appeared on the premises; whether the duty extends to an employee toward whom the harasser had not yet directed his conduct; whether section 12940, subdivision (j)(1) is confined to a particular factual pattern; and whether the adequacy of the employer’s response can be resolved on demurrer. (Id. at pp. 701–702.) Because the appeal arose from an order sustaining a demurrer, review was de novo, treating “the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Id. at p. 699.)

Holding

Reasoning

The demurrer standard and the workers’ compensation gateway. The court began with the settled demurrer-review standard, treating the demurrer “as admitting all material facts properly pleaded” and asking whether the complaint “states facts sufficient to constitute a cause of action.” (M.F., supra, 16 Cal.App.5th at p. 699, quoting Finch Aerospace Corp. v. City of San Diego (2017) 8 Cal.App.5th 1248, 1251–1252.) It then set the threshold problem: ordinarily, workers’ compensation is “the exclusive remedy for an employee against an employer for a workplace injury,” a rule that “includes an injury caused by ‘an employer’s negligent or reckless failure to provide adequate premises security despite knowledge of danger to its employees.’” (Id. at p. 699, quoting Arendell v. Auto Parts Club, Inc. (1994) 29 Cal.App.4th 1261, 1263.) But Pacific did “not dispute” that “the workers’ compensation exclusivity doctrine is inapplicable to claims under the FEHA.” (Id. at p. 700.) The case therefore turned entirely on whether the complaint stated viable FEHA claims; if it did, exclusivity was “no bar.” (Ibid.)

Timing of knowledge: a duty can arise mid-stream. Pacific’s lead argument was that the complaint failed because M.F. could not allege Pacific “knew the trespasser posed a risk to housekeeping employees before he appeared on the hotel property and began harassing them.” (M.F., supra, 16 Cal.App.5th at p. 701.) The court rejected the premise that the relevant knowledge must predate the harasser’s arrival. That Pacific “may not have had any responsibility to housekeeping employees under the FEHA before the trespasser appeared … does not preclude Pacific from having such responsibilities after the trespasser appeared, particularly after the trespasser began confronting and aggressively propositioning housekeeping employees for sexual favors.” (Ibid.) Drawing on the established remedial-measures doctrine, the court explained that “[o]nce an employer is informed of the sexual harassment, the employer must take adequate remedial measures” — “immediate corrective action that is reasonably calculated to (1) end the current harassment and (2) to deter future harassment,” including both “temporary steps” while the employer investigates and “permanent remedial steps … to prevent future harassment.” (Ibid., quoting Bradley v. Department of Corrections & Rehabilitation (2008) 158 Cal.App.4th 1612, 1630.) The duty, in other words, is triggered by notice of the harassing conduct, whenever that notice arrives.

The victim need not be the harasser’s first or only target. The court next dispatched Pacific’s argument that, because “the trespasser’s initial harassment was not directed at M.F.,” Pacific owed her no duty. (M.F., supra, 16 Cal.App.5th at p. 701.) Borrowing from federal precedent — appropriate because “FEHA is modeled after federal antidiscrimination laws” (id. at p. 702, fn. 6, quoting Finegan v. County of Los Angeles (2001) 91 Cal.App.4th 1, 7) — the court reasoned that “[i]f an employer knows a particular person’s abusive conduct places employees at unreasonable risk of sexual harassment, the employer cannot escape responsibility to protect a likely future employee victim merely because the person has not previously abused that particular employee.” (Id. at pp. 701–702, citing Ferris v. Delta Air Lines, Inc. (2001) 277 F.3d 128, 136.) The obligation scales with the danger: “The more egregious the abuse and the more serious the threat of which the employer has notice, the more the employer will be required under a standard of reasonable care to take steps for the protection of likely future victims.” (Id. at p. 702, quoting Ferris, at p. 137.) On the alleged facts — a man known to be drunk, trespassing, and repeatedly soliciting housekeepers for sex — the risk to the next housekeeper he encountered was foreseeable.

The statute is not confined to the facts of Salazar. Pacific argued that subdivision (j)(1) was inapplicable to “the factual circumstances of this case.” (M.F., supra, 16 Cal.App.5th at p. 702.) The court held the statute’s text “does not limit its application to a particular fact pattern,” instead imposing liability “whenever an employer (1) knows or should know of sexual harassment by a nonemployee and (2) fails to take immediate and appropriate remedial action (3) within its control.” (Ibid.) Engaging the legislative history, the court accepted that the Legislature enacted the provision “to reject the analysis in Salazar v. Diversified Paratransit, Inc.” and “to clarify the FEHA protects employees from nonemployee sexual harassment.” (Id. at p. 702, citing Carter v. California Dept. of Veterans Affairs (2006) 38 Cal.4th 914, 921.) But “nothing in the legislative history indicates the Legislature intended to limit the statute’s application to the specific factual circumstances presented in the Salazar case.” (Ibid.) The committee reports Pacific relied on showed merely an intent “to limit the statute’s application to sexual harassment, and to not apply it to harassment on other prohibited bases” — not to restrict it to a customer-harassment scenario like Salazar’s. (Id. at p. 703.)

Adequacy of the response is a jury question. Finally, Pacific argued that even if it owed M.F. a duty, “it fulfilled its responsibilities by providing a reasonable and adequate response.” (M.F., supra, 16 Cal.App.5th at p. 702.) The court refused to resolve that on demurrer: “whether an employer sufficiently complied with its mandate to ‘take immediate and appropriate corrective action’ … is a question of fact,” and “[q]uestions of fact generally require the consideration and weighing of evidence, which makes them unsuitable for resolution on demurrer.” (Ibid., citing Bradley, supra, 158 Cal.App.4th at p. 1630, and Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1376.) Whether walkie-talkie broadcasts and partial building searches that bypassed the very floor where M.F. worked amounted to “immediate and appropriate corrective action” was for the factfinder, not the demurrer. (Ibid.) Because the failure-to-prevent claim under subdivision (k) was derivative — “[a] plaintiff cannot state a claim for failure to prevent harassment unless the plaintiff first states a claim for harassment” — it survived for the same reasons the harassment claim did. (Id. at p. 701, citing Trujillo v. North County Transit Dist. (1998) 63 Cal.App.4th 280, 288–289.)

Significance

M.F. is the leading California appellate decision confirming that an employer’s FEHA duty to remedy sexual harassment extends to harassment by nonemployees — and that the duty reaches even an unknown, transient third party such as a drunk trespasser, once the employer is on notice that he is harassing its workers. It treats the nonemployee-harassment provision, Government Code section 12940, subdivision (j)(1), as a freestanding, text-driven liability rule rather than a narrow fix tethered to the customer-harassment facts of Salazar v. Diversified Paratransit, Inc. (M.F., supra, 16 Cal.App.5th at p. 702.) For practitioners, it supplies the analytical engine behind CACI No. 2527 (failure to prevent harassment, discrimination, or retaliation) and CACI No. 2528 in the nonemployee context: the operative inquiry is knowledge plus a failure to take immediate and appropriate corrective action within the employer’s control. The opinion also reaffirms that FEHA claims escape workers’ compensation exclusivity — so an employee assaulted at work is not relegated to the comp system if the assault flows from harassment the employer failed to prevent (id. at p. 700) — and that the adequacy of an employer’s response is quintessentially factual, defeating early dispositive motions where the complaint pleads notice and inaction (id. at p. 702). Its limits are equally important: this is a pleading decision. The court “express[ed] no view on whether these claims will ultimately prove meritorious,” and nothing in it relieves a plaintiff of proving, at trial, the employer’s knowledge, the inadequacy of its response, and causation. (Id. at p. 697, fn. 2.)

Key quotes

“The fact Pacific may not have had any responsibility to housekeeping employees under the FEHA before the trespasser appeared on the hotel property does not preclude Pacific from having such responsibilities after the trespasser appeared, particularly after the trespasser began confronting and aggressively propositioning housekeeping employees for sexual favors.” (M.F., supra, 16 Cal.App.5th at p. 701.)

“[T]he language of section 12940, subdivision (j)(1), does not limit its application to a particular fact pattern. Rather, the language of the statute provides for liability whenever an employer (1) knows or should know of sexual harassment by a nonemployee and (2) fails to take immediate and appropriate remedial action (3) within its control.” (Id. at p. 702.)

“[W]hether an employer sufficiently complied with its mandate to ‘take immediate and appropriate corrective action’ … is a question of fact. Questions of fact generally require the consideration and weighing of evidence, which makes them unsuitable for resolution on demurrer.” (Id. at p. 702.)

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Practice pointer

Open questions

The decision is a pleading ruling and leaves the merits wholly open: the court “express[ed] no view on whether these claims will ultimately prove meritorious.” (M.F., supra, 16 Cal.App.5th at p. 697, fn. 2.) Several questions remain. First, what counts as “immediate and appropriate corrective action” on these facts — whether Pacific’s walkie-talkie alert and partial, building-by-building searches sufficed, or whether reasonable care demanded ejecting the trespasser, calling police, or systematically accounting for every housekeeper — is a fact question the court left undecided. (Id. at p. 702.) Second, the precise contours of an employer’s “control” over a transient trespasser under subdivision (j)(1) — a factor the statute expressly directs courts to weigh — are undeveloped; the opinion confirms control is an element but does not map its boundaries where the harasser is a stranger rather than a customer or invitee. (Id. at pp. 700–702.) Third, the court resolved the case under the pre-2018 text and noted the “if”-for-“where” amendment effective January 1, 2018 “does not affect our decision,” leaving open any argument that the amended language alters the analysis in a different case. (Id. at p. 701, fn. 5.) Finally, because the duty here arose only “after the trespasser appeared” and “began … aggressively propositioning” workers, the opinion does not address how much notice, or how proximate a threat, is needed before the FEHA duty attaches in closer cases. (Id. at p. 701.)