No. S070177
IN THE SUPREME COURT
OF THE STATE OF CALIFORNIA
THOMAS M. WHITE,
Respondent, No. S070177
vs.
ULTRAMAR, INC.,
Appellant.
___________________________________
PETITION FOR REVIEW FROM COURT OF APPEAL
FOURTH DISTRICT, DIVISION ONE, No. D023907
SAN DIEGO COUNTY SUPERIOR COURT No. 670423
THE HONORABLE DONALD J. MELOCHE, JUDGE
______________________________________________
REQUEST BY THE CALIFORNIA EMPLOYMENT LAWYERS
ASSOCIATION (CELA) FOR PERMISSION TO FILE
AMICUS CURIAE BRIEF AND AMICUS CURIAE BRIEF
IN SUPPORT OF RESPONDENT THOMAS M. WHITE
__________________________________________
JOSEPH POSNER, INC.
[S.B. # 62428]
16311 Ventura Blvd., Suite 555
Encino, CA 91436-4303
(818) 990-1340
Norman Pine, Esq.
[S.B. # 67144]
14156 Magnolia Blvd., Ste. 200
Sherman Oaks, CA 91423
(818) 379-9710
Attorneys for Amicus Curiae
California Employment Lawyers
Association
No. S070177
IN THE SUPREME COURT
OF THE STATE OF CALIFORNIA
THOMAS M. WHITE,
Respondent, No. S070177
vs.
ULTRAMAR, INC.,
Appellant.
___________________________________
PETITION FOR REVIEW FROM COURT OF APPEAL
FOURTH DISTRICT, DIVISION ONE, No. D023907
SAN DIEGO COUNTY SUPERIOR COURT No.670423
THE HONORABLE DONALD J. MELOCHE, JUDGE
______________________________________________
REQUEST BY THE CALIFORNIA EMPLOYMENT LAWYERS
ASSOCIATION (CELA) FOR PERMISSION TO FILE
AMICUS CURIAE BRIEF IN
SUPPORT OF RESPONDENT THOMAS M. WHITE
________________________________________
TO THE HONORABLE CHIEF JUSTICE OF CALIFORNIA AND THE ASSOCIATE
JUSTICES OF THE SUPREME COURT:
The California Employment Lawyers Association (CELA) is an
organization composed of attorneys who represent primarily
plaintiffs in employment discrimination and related cases. CELA is
familiar with the issues in this case and believes that there is a
need for further argument on these points:
- The legislative history of SB 1989 confirms that the
Legislature adopted the term "managing agent" to codify this
Court's decision in Egan v. Mutual of Omaha, 24 Cal. 3d 809 (1979).
- A company whose managing agent commits a tortious act with
the requisite malice or oppression or conscious disregard is liable
for punitive damages where that manager's actions determine the
company's policies in actual practice.
If this request is granted, the following brief is
respectfully submitted.
Respectfully submitted,
NORMAN PINE, ESQ.
JOSEPH POSNER, INC.
By__________________________
JOSEPH POSNER,
Attorneys for California Employment
Lawyers Association, Amicus Curiae
No. S070177
IN THE SUPREME COURT
OF THE STATE OF CALIFORNIA
THOMAS M. WHITE,
Respondent, No. S070177
vs.
ULTRAMAR, INC.,
Appellant.
___________________________________
PETITION FOR REVIEW FROM COURT OF APPEAL
FOURTH DISTRICT, DIVISION ONE, No. D023907
SAN DIEGO COUNTY SUPERIOR COURT No. 670423
THE HONORABLE DONALD J. MELOCHE, JUDGE
______________________________________________
AMICUS CURIAE BRIEF IN
SUPPORT OF RESPONDENT THOMAS M. WHITE
__________________________________________
TO THE HONORABLE CHIEF JUSTICE OF CALIFORNIA AND THE ASSOCIATE
JUSTICES OF THE SUPREME COURT:
INTRODUCTION
This Court posed two questions in granting review. Respondent
Thomas M. White has offered answers to both questions but much more
needs to be said. Also, Ultramar's briefs muddy the waters and
require an additional response.
ARGUMENT
1. THE LEGISLATIVE HISTORY OF S.B. 1989, INCLUDING THE
LEGISLATURE'S ADOPTION OF THE TERM "MANAGING AGENT," RATHER
THAN THE ORIGINAL PROPOSED TERM "SENIOR EXECUTIVE OFFICER,"
CONFIRMS THAT THE PRINCIPLES SET FORTH IN EGAN WERE CODIFIED,
NOT REPUDIATED.
Ultramar's argument about the Legislative intent surrounding
SB 1989, the bill that amended Civil Code 3294 ["section 3294"], is
predicated on the assumption that this Court's decisions in Egan v.
Mutual of Omaha Ins. Co., 24 Cal. 3d 809 (1979) and Agarwal v.
Johnson, 25 Cal. 3d 932 (1979) were wild aberrations which the
Legislature wished to cure. According to Ultramar, these two
decisions constituted a doctrine which "dramatically expanded the
scope" of corporate employer liability for punitive damages and the
1980 amendments were intended to "repudiate" that doctrine and
"restore a balance" that more closely resembled the pre-1979 case
law. (Opening Brief ["Open. Br."], p.11, 12.) This argument is
riddled with fundamental flaws.
A. Long Before Egan, California Courts Had Affirmed Punitive
Damage Awards For The Actions Taken By Those Employees, Regardless
Of Their Titles, Who Had "Discretionary Powers."
Ultramar's argument about Legislative intent fails at the
starting gate because it is premised on the claim that pre-Egan,
California had only imposed punitive damages for the actions of
senior corporate executives. Indeed, some of the very cases
Ultramar cites as purported support for its position directly prove
the opposite.
For example, Ultramar relies upon this Court's opinion in
Bechtel Corp. v. Industrial Accident Comm'n, 25 Cal. 2d 171,174
(1944), a case construing "willful misconduct" under Labor Code
section 4553 (which imposes liability on a corporation for the
acts, inter alia, of its managerial employees). (Open. Br. pp. 15-
16.) In Bechtel, however, this Court said:
"A `managing agent or a managing representative is one who has
general discretionary powers of direction and control -- one
who may direct, control, conduct or carry on his employer's
business or any part or branch thereof.' (Citation.)"
25 Cal. 2d at 174, emphasis added and deleted.
This Court added another key concept as well: the test is the level
of "general discretionary powers" the employee has, not whether or
not any particular "title" (e.g., "foreman") is used. (Ibid.)
Obviously, Bechtel is indistinguishable from this Court's
later holdings in Egan and Agarwal. In Egan, this Court stressed
that the critical inquiry was that, regardless of their "`level'"
(or title) in the corporate hierarchy, the two managerial agents
had "broad discretion" to dispose of plaintiff's insurance claim
and, thus, to create the "ad hoc formulation of policy." (24 Cal.
3d at 822, 823.) Likewise, in Agarwal, a case involving wrongful
termination, this Court held that punitive damages were
appropriately imposed on the employer for the conduct of the
individuals who had "the most immediate control over the decision
to terminate" the plaintiff. (25 Cal. 3d at 952.) Such punitive
liability was appropriate because of the societal need "to
encourage careful selection and control of persons placed in
important management positions." (Id. at 947, emphasis added.)
Ultramar also cites Toole v. Richardson-Merrill, Inc., 251
Cal. App. 2d 689 (1967) as supposed support for its contention
that pre-Egan, California only imposed punitive damages for the
acts of "high-level management." (Open. Br. p. 14.) Again,
however, Ultramar's own case bites its hand. In Toole, the court
made clear that a mere head of a company sub-division (the
associate director of research, Dr. Van Maanen) was "high enough on
the executive scale of responsibility to hold appellant liable in
punitive damages." (251 Cal. App. 2d at 712.)
Finally, even Professor Witkin's treatise treats pre-and post-
Egan cases interchangeably. (6 Witkin, Summary of California Law
(9th ed. 1988), Torts, 1346, p. 808-809.) Indeed, section 1348
labels section 3294(b) as a "codification" of the Torts Restatement
Rule which California had recognized both pre-Egan and in Egan.
(Id. at p. 809.)
B. Given The Well-Settled State Of California Law In 1979, Section
3294(b) Cannot Be Viewed As Silently Repealing Egan and Agarwal.
In Torres v. Automobile Club of Southern California, 15 Cal.
4th 771 (1997), this Court reiterated a familiar, yet fundamental,
rule:
"In circumstances such as these, we are assisted by the rule
that courts should not presume the Legislature in the
enactment of statutes intends to overthrow long-established
principles of law unless that intention is made clearly to
appear either by express declaration or by necessary
implication."
15 Cal. 4th at ____.
Ultramar's interpretation of Section 3294(b) cannot be reconciled
with this rule.
It is striking that Section 3294(b) added a series of new
definitions for the terms "malice," "fraud," and "oppression" which
are critical to the determination of punitive damages. Yet, SB
1989 offered no definition for the term "managing agent." If use
of this term was really intended to overthrow existing law, the
Legislature surely would have taken some steps to make that
intention clear by adding one additional definition. But the
Legislature obviously wanted the term "managing agent" to remain
unchanged as this Court had been applying that term for at least
the 35 years between Bechtel and Egan.
C. Ultramar's Interpretation Of "Managing Agent" Would Render The
Ratification Portion Of Section 3294(b) Complete Surplusage.
Ultramar contends that to be a "managing agent" under Section
3294(b), "one must be a final policymaker of the corporation"
concerning the conduct at issue. (Open. Br. p. 4, emphasis added.)
We would fully agree with that concept if we thought Ultramar
meant one could be a de facto "final" policymaker in the sense that
Agarwal defined the concept, e.g., a managing agent is the person
with "the most immediate control over the decision" in question.
(25 Cal. 3d at 952.)
Ultramar makes clear, however, that it really uses "final
policymaker" to connote the top of the corporate hierarchy. One
obvious problem with this interpretation is that it renders moot
the entire portion of section 3294(b) which creates punitive
damages exposure whenever a company ratifies a wrongful act. If
only persons at the top of the corporate hierarchy can "act" for
the corporation for punitive damages purposes, there is no one left
who can "ratify" their actions and thereby trigger punitive damages
under an alternative theory.
D. Ultramar's "Ordinary Language" And "Similar Statute" Analysis
Also Contradicts Its Interpretation.
Ultramar acknowledges that the starting point for statutory
analysis is the language of the statute. Claiming the term
"managing agent" is unclear, it turns to the definition in Black's
Law Dictionary. That definition, however, fully corresponds to the
concepts this Court articulated back in 1944 in Bechtel and
reaffirmed in Egan and Agarwal.
As quoted by Ultramar, the definition of "managing agent" in
Black's is a person invested with "general power, involving the
exercise of judgment and discretion" or a person with the exclusive
supervision "or control of some department of a corporation's
business, the management of which requires of such person the
exercise of independent judgment and discretion . . . ." (Open.
Br. p. 28, emphasis added.)
Likewise, Ultramar analogizes to the term "managing agent"
under the Federal Rules of Civil Procedure. That definition, too,
includes the same concepts which are fatal to Ultramar's
interpretation herein since a "managing agent" is defined merely as
one with "powers to exercise judgment and discretion in dealing
with corporate matters." (Open Br. p. 30, quoting so-called Rubin
test, emphasis added.)
Reference to use of the term "managing agent" in similar
statutes and rules raises a major ethical concern which this Court
should carefully consider. Rule 2-100 of the Rules of Professional
Conduct permits opposing counsel to initiate ex parte contacts with
unrepresented former employees and present employees other than
officers, directors and managing agents. (Continental Ins. Co. v.
Superior Court, 32 Cal. App. 4th 94, 118 (1995).) We suspect that
Ultramar, and other corporate entities, would raise howls of
protest if "managing agent" in that context was interpreted to
mean only the most senior policymakers of the corporation. If Mr.
White's counsel attempted to contact the individual tortfeasors ex
parte, Ultramar's corporate temper would rise as sharply as its
gasoline prices of late. Yet, there is no principled reason to
create a different definition of the term in the punitive damages
context than in the Rule 2-100 context.
E. Ultramar's Analysis Of Legislative History Is Filled With
Inaccuracies, Half-Truths And Logical Lapses.
SB 1989's original purpose was the reduction of punitive
damages and much of the final statute produced that result.
However, through the give-and-take of the legislative process, the
"tort reform" proponents had to give up on their effort to
repudiate Egan in order to achieve the other limitations they
wanted.
The final legislative compromise gave the tort reformers
definitions of malice, fraud and oppression and limits on
discovery of financial information of a defendant. However, the
final version of the bill rejected the language which Senator Maddy
and Assemblyman Knox had originally sought i.e., only permitting
punitive damages based on the actions of "a senior executive
officer or officers" of the corporation. [005, emphasis added.]
The evolution of the legislative compromise that resulted in
passage of the bill is easily traced. The Senate version contained
the "senior executive language" described above and language
limiting punitive damages except where the employer, itself, was
"personally guilty." [4-6.] Conversely, the Assembly version
rejected both of these concepts and proposed use of the "managerial
capacity" language contained in the Torts Restatement. [16-19,
201.] The bill therefore was submitted to a Conference Committee.
The result of that Conference Committee debate was the final
version of section 3294(b) which adopted the "personally guilty"
concept, but deleted the "senior executives" concept in favor of
the term "managing agent."
The process of what occurred in the Conference Committee was
described by Conference Committee member Senator Roberti who
printed a letter in the Senate Journal explaining that, "with
respect to the term `managing agent,'" the intent of the bill was
"not to alter the rule of corporate liability for punitive damages
as it related to that term in the case of Egan . . . ." [203.]
Ultramar strenuously argues the Roberti letter should be ignored
and that a letter to Governor Brown sent by Senator Maddy (and
Assemblyman Knox) should instead be believed. [255-259, 262-266.]
Ultramar argues the Roberti letter "neither recounts
legislative events nor elucidates arguments made about SB 1989."
(Reply Br. 3.) On its face, this statement is absurd when
applied to the Roberti letter. By its express terms, Sen.
Roberti's letter sets "forth representations that were made to me
during the Conference Committee by the proponents" of the bill;
moreover, Sen Roberti's letter states that it was being printed in
the Senate Journal "to clarify the intent of the Conference
Committee" and states that it was written "with the knowledge of
the Conference Committee." [203, emphasis added.]
Ultramar also seeks to discredit the Roberti letter by
focusing on the slip of one word in the statement that the bill's
intent "with respect to the term `managing agent' is not to alter
the rule of corporate liability for punitive damages as it related
to that term in the case of Egan . . . ." [203, emphasis added.]
Gleefully noting that Egan did not use the term "managing agent"
- it referred to "managerial agent" instead -- Ultramar argues the
entire Roberti letter is therefore "nonsensical." (Reply Br. p.
4.) However, if "term" is simply replaced with the word
"concept," the letter makes perfect sense. Moreover, the same
"nonsensical" mistake which Ultramar accuses Senator Roberti of has
been made by the BAJI Committee, by Witkin, and by the California
courts. In the past 20 years they have all treated Egan as
defining the term "managing agent" in section 3294(b). (See, e.g.,
BAJI (8th Ed.), BAJI Nos. 14.73, 14.73.1, and 14.74 [treating Egan
and Agarwal as defining the proper meaning of "managing agent" as
that term is used in section 3294(b.); Witkin, supra, 1346,
1348, 1355.)
Finally, Ultramar goes to great lengths to show that the
August 28, 1980 Roberti letter was printed "too late" to affect the
Assembly vote and only one day before the Senate vote. (Reply Br.
p. 5.) So what? Whether the letter affected one house or not, it
could hardly matter. The significance of the letter is that it
memorializes representations that were made to Conference Committee
members, during the committee debate, with the intent that their
votes be swayed.
Besides discounting the Roberti letter, Ultramar is also
forced to discount the enrolled bill memorandum prepared for
Governor Brown. (Reply Br. p. 6.) The enrolled memorandum notes
the California Trial Lawyers' Association opposed the bill in
concept but that "they concede it does little more than codify
existing case law." [261, emphasis added.]
Ultramar's argument is that the enrolled bill memorandum is
"vacuous" because it relies on the "concession" of opponents of the
bill. However, that "concession" is quite important for two
reasons. First, it confirms the nature of the representations that
were made to Senator Roberti (and others) during the Conference
Committee debate. Second, it sheds light on the governor's state of
mind in agreeing to sign the bill.
Finally, in desperate search of support for its legislative
history argument, Ultramar submits that the California Trial
Lawyers' Association ("CTLA") "lobbied incessantly" against passage
of the bill and it implies the reason was because of CTLA's fear
that Egan's standards would be repudiated. (Open. Br. p. 22.)
However, none of the pages quoted by Ultramar support the
suggestion that the fear of repudiating Egan had anything to do
with CTLA's opposition. [45, 53, 89, 121-122, 134, 136-149, 236.]
Indeed, the only pages reflecting CTLA's view of the impact of
the proposed legislation on Egan simply reflect that CTLA was
concerned that after Egan had refined the Restatement of Torts
concept of corporate responsibility for actions of managerial
employees, "changing the technical terms and definitions" will
"only serve to confuse the law" and will invite "needless
litigation" over the proper interpretation. Indeed, as this very
case confirms, CTLA was amazingly prophetic - though, like
Cassandra, it could hardly derive any satisfaction from having been
proven so right.
2. A COMPANY WHOSE MANAGING AGENT COMMITS A TORTIOUS ACT WITH
THE REQUISITE MALICE OR OPPRESSION OR CONSCIOUS DISREGARD IS
LIABLE FOR PUNITIVE DAMAGES WHERE THAT MANAGER'S ACTIONS
DETERMINE THE COMPANY'S POLICIES IN ACTUAL PRACTICE.
This Court's second question in granting review is whether a
supervising employee who commits a tortious act must make corporate
policy in order to be a managing agent for the purposes of imposing
punitive damage liability. The answer to that question is yes,
assuming that we define corporate policy as what the company
actually does - not necessarily what the company says.
No better example of this concept can be found than the
seminal case of Egan v. Mutual of Omaha, 24 Cal. 3d 809 (1979).
There, as in White, the buck stopped with the two claims managers
who actually made the decision to terminate Egan's disability
benefits. To Mr. Egan, it didn't matter what the board of
directors may have resolved, or what the company had written in its
claims manual; the only thing that really mattered was that the
claims managers both had, and exercised, the power to deny him his
benefits wrongfully. As far as he was concerned, they were the
company.
This is how it is in the real world, whether we are talking
about employment decisions as in Mr. White's case, or in the
manufacturing environment where managers decide to put a product
out among the consuming public knowing that it is only a matter of
time before the defective bumper bracket turns the automobile into
a raging inferno of death. In Grimshaw v. Ford Motor Co., 119 Cal.
App. 3d 757, 774-777, 813-814 (1981), Ford made much the same
argument that Ultramar makes here. That argument should be
rejected for the very same reason:
"There was also evidence that Harold Johnson, an assistant
chief engineer of research, and Mr. Max Jurosek, chief chassis
engineer, were aware of the results of the crash tests and the
defects in the Pinto's fuel tank system. Ford contends that
those two individuals did not occupy managerial positions
because Mr. Copp testified that they admitted awareness of the
defects but told him they were powerless to change the rear-
end design of the Pinto. It may be inferred from the
testimony, however, that the two engineers had approached
management about redesigning the Pinto or that, being aware of
management's attitude, they decided to do nothing. In either
case, the decision not to take corrective action was made by
persons exercising managerial authority. Whether an employee
acts in a `managerial capacity' does not necessarily depend on
his `level' in the corporate hierarchy."
119 Cal. App. 3d at 814, emphasis added.
As Egan pointed out, "Defendant should not be allowed to
insulate itself from liability by giving an employee a
nonmanagerial title and relegating to him crucial policy
decisions." 24 Cal. 3d at 823, emphasis added.
"Corporate policy" is a mere abstraction. California courts
have recognized consistently that it is decisions and actions that
shape corporate policy in reality. For example, in Roberts v. Ford
Aerospace, 224 Cal. App. 3d 793 (1990), the plaintiff was an
African-American seven year employee. Originally the company rated
his performance favorably but after Ford hired a new group of
employees, Roberts found racist statements scrawled on the bathroom
walls. After he complained, the graffiti was removed but a series
of events began in which he was excluded from discussions, meeting
times were changed without notice to him, he was given unjustified
reprimands, and he was ridiculed and mimicked. When he complained,
the harassment escalated and finally culminated in his firing.
He sued for retaliatory discharge under the Fair Employment &
Housing Act (FEHA), Govt. Code. Sec. 12900 et seq., and recovered
compensatory and punitive damages. By special verdict the jury
found that (1) Roberts' termination was racially motivated in
violation of the public policy against discrimination and (2) all
defendants acted with malice in retaliating against Roberts.
The Court of Appeal upheld the entire verdict, noting:
"Ford's manager, Mr. Luna, testified that he had the power
only to recommend hiring and firing, and although he
terminated respondent's employment, 'no single person in
Ford...has the authority to fire anybody.' To fire someone,
'you have to get the support...from Industrial Relations.'
The evidence more than supported a finding that Ford
participated in the discriminatory conduct."
224 Cal. App. 3d at 801.
Nowhere, of course, in the articles of incorporation or the
bylaws or the resolutions passed by the board of directors of Ford
Aerospace does it say that the company shall tolerate, encourage
and foster racial harassment. But the Court of Appeal had no
trouble recognizing that the policies of the company were
determined by what the company did, not by what the company said.
Or, consider Weeks v. Baker & McKenzie, 63 Cal. App. 4th 1128
(1988). There, after an extensive discussion of Senate Bill 1989
(1979-1980 Regular Session) (63 Cal. App. 4th at 1149-1151), the
court upheld the imposition of punitive damages where the employer
carried on, to put it mildly, a "policy" of benign neglect of the
animalistic impulses of one of its chief rainmakers. Testimony
established that any number of persons in the managerial hierarchy
knew what was happening and chose either to ignore it or to
administer a slap on the wrist when a swift kick was called for.
(63 Cal. App. 4th at 1138-1145). The Weeks court rejected the same
argument which Ultramar makes in the instant case:
"Baker & McKenzie thus interprets Civil Code Section 3294 as
permitting an award of punitive damages directly against an
employer only upon a showing that the employer both engaged in
the conduct defined by subdivision (b), and was itself guilty
of fraud, oppression or malice, i.e., the conduct authorizing
liability for punitive damages under subdivision (a). The
history of the statute, however, does not support that
interpretation. To the contrary, it seems that proponents of
Senate Bill 1989 understood and accepted that employers might
be found directly liable for punitive damages in any of the
situations outlined by Civil Code Section 3294, subdivision
(b), without an additional explicit finding that the employer
was guilty of fraud, oppression or malice. Senator Maddy thus
urged use of the term `managing agent' `to describe the lowest
level person within a corporation who must be "personally
guilty of oppression, fraud [or] malice" or possess the
requisite "advance knowledge" and "authorize or ratify" the
conduct at issue before punitive damages can be assessed
against the corporation.'..."
63 Cal. App. 4th at 1153, first emphasis added, others in
original.
In Siva v. General Tire, 146 Cal. App. 3d 152, 159 (1983), a
tire service person recovered damages including punitives where the
local manager for a tire repair company knew the extent of damage
to a tire but allowed his subordinates to disregard company-wide
standards. The court focused on the policies which were followed
in actual practice:
"It is clear Bannish [the plant manager] acted in a managerial
capacity. (See Egan v. Mutual of Omaha Ins. Co., supra, 24
Cal. 3d at p. 822.) The jury could reasonably infer...that
Bannish knew the extent of damage to the tire but failed to
write an inspection tag. The jury then could have concluded
that because at least two and possibly several other workers
saw the extent of the repairs, there was an implicit local
policy to disregard General's written standards. General
demonstrated this tire to all its plant managers as an example
of poor quality control. The jury could thus infer the Los
Angeles plant disregarded the corporation's specifications.
Where there are production errors followed by other serious
errors in a setting which indicates the managers are simply
not looking at the final product, a jury can properly find the
managers have instituted a policy which tacitly approves the
work done. The tacit approval of misconduct in the
circumstances of this case constitutes ratification of it."
146 Cal. App. 3d at 159, emphasis added.
Mathews v. Govt. Emp. Ins. Co. (GEICO), 23 F.Supp. 2d 1169, 99
DJDAR 2519 (S.D. Cal., Sept. 17, 1998) provides a perfect example
of a regional manager who established a policy in practice that
differed from corporate guidelines and violated the law willfully.
The San Diego region used credit reports improperly in deciding
whom to accept or reject for employment, in violation of the
federal Fair Credit Reporting Act (FCRA), 15 USC 1681. Willful
violations of the FCRA can subject the violator to punitive
liability. (15 USC 1681n(a)). GEICO tried to claim the violations
were not willful, but it did not get very far. Mathews ruled that
punitives were recoverable: "Congress did not intend to enable
mass-users of credit reports to evade meaningful liability for
repeated violations of their `grave responsibilities' under the
FCRA by sticking their heads in the sand and pleading ignorance of
the law." 99 DAR at 2521.
But, said GEICO, our officers in Maryland knew the law but did
not know the illegal details of the San Diego region's policy.
Corporate leaders also did not know that the senior San Diego
officers who designed the illegal policies were completely unaware
of the company's policies or of their responsibilities under
federal law. This argument did not go very far, either. The court
said that the company's own argument would enable a reasonable
factfinder to determine that GEICO had adopted its illegal credit
screening policy in reckless disregard of whether the policy
contravened the rights of the applicants. If so, the plaintiff
class could recover punitives.
Note the Mathews court's emphasis on how the San Diego office
acted in practice, even though there was a corporate policy against
the very thing which the San Diego office was doing. The regional
human resources manager who instituted the illegal policy was
certainly a managing agent whose acts of conscious disregard were
enough to confer punitive damage liability on the corporation.
Even the United States Supreme Court looks to how an employer
acts in practice, as opposed to what it says. In Faragher v. City
of Boca Raton, 524 U.S. ____, 118 S.Ct. 2275 (1998), plaintiff was
a female lifeguard employed by the city at a city-run beach. The
workforce was overwhelmingly male, and according to Ms. Faragher,
two of her superiors, Terry and Silverman, subjected the few female
lifeguards to uninvited and offensive touching, lewd remarks, and
derogatory and offensive anti-women statements. Although the city
had adopted a written sexual harassment "policy" and revised it
during the time that Faragher worked there, no one in city
management bothered to tell the lifeguards that the policy even
existed, and so they were unaware of it.
Faragher sued under Title VII of the 1964 Civil Rights Act.
The case was tried to the court, which found that Terry and
Silverman had created an abusive work environment, but only awarded
Faragher $1.00 in nominal damages. The trial court also refused to
find the city liable on the basis of constructive knowledge.
The U.S. Supreme Court ruled that the city was liable
vicariously for the actions of the two supervisors. The court
reversed the judgment, pointing out that Terry and Silverman were
given virtually unchecked authority over Faragher and the other
employees. The wonderful "policy" which read so well on paper had
no effect on the realities of the workplace.
There is no question that if instead of a municipality, the
City of Boca Raton was a private company operating in California,
the actions of Terry and Silverman would subject it to well-
deserved punitive damage liability. Faragher is a perfect example
of the difference between a pious pronouncement at the top level
and the reality of what happens when the rubber hits the road. By
giving these two miscreants unchecked authority over the
subordinate lifeguards, Boca Raton established and perpetuated a
policy in practice of condoning, permitting and encouraging sexual
harassment.
CONCLUSION
We tell our children that actions speak louder than words. As
responsible adults, we can only become role models by our conduct,
because the children learn what they live, not what they hear.
That is exactly what Egan and the cases which have followed
the enactment of SB 1989 have told us consistently. The policy of
the company that matters - as actually set by those managing agents
with the discretion to do so - is what the company does. In the
real world, this is the only policy that counts. Mr. White's
verdict should be affirmed.
Respectfully submitted,
NORMAN PINE, ESQ.
JOSEPH POSNER, INC.
By__________________________
JOSEPH POSNER, ESQ.
Attorneys for California Employment
Lawyers Association, Amicus Curiae
TABLE OF CONTENTS
Page
Table of Authorities iii
REQUEST BY THE CALIFORNIA EMPLOYMENT LAWYERS
ASSOCIATION (CELA) FOR PERMISSION TO FILE
AMICUS CURIAE BRIEF IN
SUPPORT OF RESPONDENT THOMAS M. WHITE 1
AMICUS CURIAE BRIEF IN
SUPPORT OF RESPONDENT THOMAS M. WHITE 3
INTRODUCTION 3
ARGUMENT 4
1. THE LEGISLATIVE HISTORY OF S.B. 1989,
INCLUDING THE LEGISLATURE'S ADOPTION OF
THE TERM "MANAGING AGENT, RATHER THAN
THE ORIGINAL PROPOSED TERM "SENIOR EXECUTIVE
OFFICER," CONFIRMS THAT THE PRINCIPLES
SET FORTH IN EGAN WERE CODIFIED, NOT REPUDIATED. 4
A. Long Before Egan, California Courts
Had Affirmed Punitive Damage Awards For
The Actions Taken By Those Employees,
Regardless Of Their Titles, Who Had
"Discretionary Powers." 4
B. Given The Well-Settled State Of
California Law In 1979, Section 3294(b)
Cannot Be Viewed As Silently Repealing
Egan and Agarwal. 7
C. Ultramar's Interpretation Of
"Managing Agent" Would Render The
Ratification Portion Of Section 3294(b)
Complete Surplusage. 8
D. Ultramar's "Ordinary Language" And
"Similar Statute" Analysis Also Contradicts
Its Interpretation. 9
E. Ultramar's Analysis Of Legislative
History Is Filled With Inaccuracies,
Half-Truths And Logical Lapses. 10
2. A COMPANY WHOSE MANAGING AGENT
COMMITS A TORTIOUS ACT OF MALICE OR
OPPRESSION OR CONSCIOUS DISREGARD IS
LIABLE FOR PUNITIVE DAMAGES WHERE THAT
MANAGER'S ACTIONS DETERMINE THE COMPANY'S
POLICIES IN ACTUAL PRACTICE. 15
CONCLUSION 23
TABLE OF AUTHORITIES
Case Page
Agarwal v. Johnson, 25 Cal. 3d 932 (1979) 4
Bechtel Corp. v. Industrial Accident Comm'n, 25 Cal. 2d 171,174 (1944) 5
College Hospital Inc. v. Superior Court, 8 Cal. 4th 704, 712 (1994) 10
Commodore Home Systems, Inc. v. Superior Court, 32 Cal. 3d 211, 218-219 (1982) 14
Continental Ins. Co. v. Superior Court, 32 Cal. App. 4th 94, 118 (1995) 10
Egan v. Mutual of Omaha Ins. Co., 24 Cal. 3d 809 (1979) 4
Faragher v. City of Boca Raton, 524 U.S. ____, 118 S.Ct. 2275 (1998) 21
Grimshaw v. Ford Motor Co., 119 Cal. App. 3d 757, 774-777, 813-814 (1981) 16
Kuchta v. Allied Builders Corp., 21 Cal. App. 3d 541, 549 (1971) 6
Mathews v. Govt. Emp. Ins. Co. (GEICO), 23 F.Supp. 2d 1169, 99 DJDAR 2519 (S.D. Cal., 9/17/98) 20
Pusateri v. E.F. Hutton & Co., 180 Cal. App. 3d 247, 252 (1986) 13
Roberts v. Ford Aerospace, 224 Cal. App. 3d 793 (1990) 17
Siva v. General Tire, 146 Cal. App. 3d 152, 159 (1983) 19
Stephens v. Caldwell Banker Commercial Group, Inc., 199 Cal. App. 3d 1394, 1404 (1988) 13
Toole v. Richardson-Merrill, Inc., 251 Cal. App. 2d 689 (1967) 6
Torres v. Automobile Club of Southern California, 15 Cal. 4th 771 (1997) 7
Weeks v. Baker & McKenzie, 63 Cal. App. 4th 1128 (1988) 18
Other Authorities
6 Witkin, Summary of California Law (9th ed. 1988), Torts, 1346, p. 808-809 6
BAJI 14.73, 14.73.1, and 14.74 13
Civil Code 3294 4
Rules of Professional Conduct, Rule 2-100 9
Service List:
Dale Larabee, Esq.
1230 Columbia Street, Ste. 910
San Diego, CA 92101
William J. Dritsas, Esq.
David D. Kadue, Esq.
Michael J. Sears, Esq.
Seyfarth Shaw et al.
101 California Street, Ste. 2900
San Francisco, CA 94111-5858
Clerk of the Court
Court of Appeal
Fourth Appellate District
Division One
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San Diego, CA 92101
Clerk of the Court (for delivery to
Hon. Donald J. Meloche, trial judge)
Superior Court for the County of San Diego
220 W. Broadway
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Courtesy copies to:
Fred Ashley, Esq.
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Suite 710
Irvine, CA 92715
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Santa Monica, CA 90401
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1231 Market St.
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San Francisco, CA 94133
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Chris Bello, Esq.
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Teri Chaw
National Employment Lawyers Association
600 Harrison St., #535
San Francisco, CA 94107
Ultramar implies that this Court's decisions in these two
cases were really dictated by the "heart-rending tale" and the
"shocking story" the cases presented factually. (Open. Br. p. 18.)
This suggestion insults the institutional function this Court
serves and its heavy responsibilities under CRC Rule 29(a).
In so ruling, this Court relied on Kuchta v. Allied
Builders Corp., 21 Cal. App. 3d 541, 549 (1971), a case that pre-
dated Egan by eight years and which, in turn, relied on long-
standing California authorities.
Although the punitive damages were assessed against
appellant Richardson-Merrill, Inc., the bad conduct was performed
by one of its divisions, the Wm. S. Merrill, Co. Inc. division.
(251 Cal. App. 2d at 695.) This division, in turn, consisted of
two lesser divisions, one of which was the Biological Science
Division. Dr. Van Maanen headed this lesser division. (Ibid.)
Ultramar concedes that avoiding surplusage is important and
it argues that its interpretation is necessary in order to make
sense out of the statutory words "personally guilty." (Open. Br.
p. 32.) Its argument, however, makes no sense. Whatever
definition of "managing agent" is adopted, the phrase "personally
guilty" will remain the same. The only real question is what
level of managerial responsibility the Legislature thought
appropriate to trigger such "personal guilt" on the corporation.
Ultramar's surplusage argument adds nothing to that analysis.
This legislative compromise underscores how grossly
misleading is Ultramar's reference to this Court's decision in
College Hospital Inc. v. Superior Court, 8 Cal. 4th 704, 712
(1994). Ultramar notes this Court stated section 3294(b) "limits
the circumstances" of punitive damages and, from that passing
aside, Ultramar leaps to the conclusion that the limitation alluded
to involved "the number of people whose conduct can be imputed to
the corporation." (Open. Br. p. 27.) Nothing in College Hospital
remotely supports that leap. Indeed, this Court expressly declined
to reach the issue of whether Egan was meant to be undercut . (8
Cal. 4th at 723.)
References to page numbers in brackets refer to the two
volume Legislative History submitted by Ultramar.
In contrast, it is the Maddy-Knox letter that is the proper
subject of Ultramar's criticism. Although Ultramar baldly asserts
that the Maddy-Knox letter "recount[s] legislative discussions", it
cites no pertinent passage which supports that claim. (Reply Br. p.
4, fn. 3.) Indeed, comparison of the Roberti letter with the
Maddy-Knox letter shows that it is the latter, not the former,
which contravenes the rule that a letter from an individual
legislator which merely reflects the personal understanding or
opinions of the author is not properly considered.
Moreover, since section 3294(b) was adopted in 1980, Egan
and Agarwal have been treated by the Court of Appeal as jointly
defining the meaning of the term "managing agent". (See, e.g.,
Stephens v. Caldwell Banker Commercial Group, Inc., 199 Cal. App.
3d 1394, 1404 (1988); accord, Pusateri v. E.F. Hutton & Co., 180
Cal. App. 3d 247, 252 (1986).)
This Court has recognized the propriety of considering
enrolled bill memoranda. (Commodore Home Systems, Inc. v. Superior
Court, 32 Cal. 3d 211, 218-219 (1982).)