Judge Kerry Bensinger, Case Number: 23STCV30704, Date: 2024-09-10 Tentative Ruling

This is a Fair Employment and Housing Act (FEHA) action. Plaintiff Gloria Balderrama (Balderrama or Plaintiff) was hired by Optum Care, Inc. (Optum) in 2008 as a supervisor in the Utilization Management Department. One of Balderrama’s managers/supervisors was Diana McIntyre (McIntyre). In June or July 2022, Balderrama was a witness in an investigation conducted by Optum’s HR department after another employee complained she was being discriminated against by McIntyre. After the investigation, McIntyre began treating Balderrama differently, including giving her more work than other employees with unreasonably short deadlines, as well as prohibiting Balderrama from receiving support on her assignments from co-workers. As a result, Balderrama developed extreme symptoms of anxiety and PTSD and began receiving medical treatment in September 2022. Balderrama complained about McIntyre’s conduct. In September 2022, Plaintiff took a leave of absence due to her anxiety and mental health issues. Balderrama conveyed her request for a leave of absence to Optum.

In January 20203, Balderrama returned to work. After she returned, McIntyre’s misconduct continued. Plaintiff complained to Optum’s HR department. In response, Balderrama received an auto-generated email.

Around this time, McIntyre gave Balderrama a negative performance review. In March 2023, Balderrama appealed the performance review and concurrently complained to the Department of Labor that she was being retaliated against for taking CFRA/FMLA medical leave, and was misclassified by Optum.

In April 2023, Balderrama complained to McIntyre about the discrimination, retaliation, and hostile work environment. The concerns were repeated to Optum’s HR department and other management. Days later, McIntyre terminated Balderrama’s employment.

Balderrama argues the decision to terminate her employment was substantially motivated by her actual or perceived disability and her requests for accommodations, including the medical leave, as well as her continued complaints to Optum and the Department of Labor. Balderrama filed a complaint with the Civil Rights Department (CRD).

On December 15, 2023, Plaintiff filed a Complaint against Optum and McIntyre (collectively, Defendants) for (1) FEHA Discrimination (Disability); (2) FEHA Failure to Accommodate Disability, (3) FEHA Failure to Engage in the Interactive Process, (4) FEHA Retaliation, (5) Violation of the California Family Rights Act (CFRA), (6) Retaliation in Violation of the California Family Rights Act (CFRA), (7) FEHA Failure to Take All Reasonable Steps to Prevent Discrimination or Retaliation, (8) Violation of Labor Code § 1102.5; (9) Violation of Labor Code § 232.5, and (10) Wrongful Termination in Violation of Public Policy.

On April 25, 2024, McIntyre (hereafter, Defendant) filed this demurrer to the Eighth Cause of Action in the Complaint.

A demurrer for sufficiency tests whether the complaint states a cause of action.¿ (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)¿ When considering demurrers, courts read the allegations liberally and in context, accepting the alleged facts as true.¿ (Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406.)¿ “Because a demurrer challenges defects on the face of the complaint, it can only refer to matters outside the pleading that are subject to judicial notice.”¿ (Arce ex rel. Arce v. Kaiser Found. Health Plan, Inc. (2010) 181 Cal.App.4th 471, 556.)¿

Defendant requests judicial notice of eight (8) superior court rulings on violations of Labor Code section 1102.5. Because the court does not rely on the matters for which Defendant seeks judicial notice, the court declines to rule on the request.

The sole issue to be decided is whether Plaintiff may bring a cause of action for violation of Labor Code section 1102.5 (retaliation against whistleblower) against an individual. No California Appellate Court has ruled on this issue yet.

Defendant McIntyre argues she is not liable under Labor Code section 1102.5 because she was Plaintiff's supervisor, and not her employer. In support, Defendant cites a federal district court case, Tillery v. Lollis, (E.D. Cal. Aug. 13, 2015) 2015 WL 4873111 (Tillery). In Tillery, the district court was faced with a Federal Rule 12(b)(6) motion to dismiss in which individual non-employer defendants argued that the plaintiff’s whistleblower retaliation claim was invalid under the newly amended Labor Code Section 1102.5. The district court first noted that California courts have not addressed the issue of whether individual non-employers may be liable under the whistleblower statute in light of the Labor Code’s 2014 amendment. However, relying on California Supreme Court cases Reno v. Baird (1998) 18 Cal.4th 640 (Reno) and Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158 (Jones), the district court reached the conclusion that individual non-employers cannot be liable for whistleblower retaliation under Labor Code section 1102.5. (Tillery, at pp.* 9-10.)

In Reno, the California Supreme Court found that liability does not extend to individual non-employers for discrimination under the FEHA although the statute defines “employer” to include “any person acting as an agent of an employer. . . .” (Reno, supra, 18 Cal.4th at p. 645.) The Reno court reached this conclusion by making a distinction between harassment (in which supervisory employees may be held personally liable under the FEHA) and discrimination (in which supervisory employees may not be held personally liable under the FEHA). As “actions such as hiring and firing, job or project assignments, office or work station assignments, promotion or demotion, performance evaluations, the provision of support, the assignment or nonassignment of supervisory functions, deciding who will and who will not attend meetings, deciding who will be laid off,” are “necessary personnel management actions,” it would place every supervisory employee “at risk of personal liability whenever he or she makes a personnel decision which could later be considered discriminatory.” (Id. at pp. 646-47.) In contrast, “[n]o supervisory employee needs to use slurs or derogatory drawings, to physically interfere with freedom of movement, to engage in unwanted sexual advances, etc. in order to carry out the legitimate objectives of personnel management.” (Id. at p. 646.)

In Jones, the California Supreme Court analyzed Government Code section 12940(h), which forbids retaliation by making it unlawful for “any employer . . . or person to discharge, expel, or otherwise discriminate against any person because the person has opposed any practices forbidden under this part. . . .” Similar to the Reno Court, the Jones Court similarly rejected the argument that the use of the word “person” imposes liability for retaliation upon “all persons who engage in prohibited retaliation” and not just the employer. (Id. at p. 1162.) The Court reasoned that the Legislature included “clear language” in Government Code section 12940(j)(3) “imposing personal liability on all employees for their own harassing actions,” which reads: “An employee of an entity . . . is personally liable for any harassment prohibited by this section that is perpetrated by the employee. . . .” (Id.)

In opposition, Plaintiff argue Defendant’s citation to the federal district court case is non-binding, and that the two California cases involve different statutory sections and frameworks than the whistleblower retaliation statute at hand. The court agrees with Plaintiff’s points, but finds the reasoning in Tillery persuasive. The whistleblower statute here makes it unlawful for “[a]n employer, or any person acting on behalf of the employer,” from retaliating against an employee by subjecting the employee to adverse employment action upon the employee engaging in protected activity. (Lab. Code, § 1102.5, subd. (b).) The Reno Court, facing a similar issue in the context of the FEHA discrimination statute, held that while the FEHA statute defines “employer” to include “any person acting as an agent of an employer,” liability does not extend to individual non-employers. (Reno, supra, 18 Cal.4th at p. 645.) Reading this statute similarly is appropriate. Absent authority to the contrary, the court sides with Defendant on this issue.[1]

Defendant Diana McIntyre’s Demurrer to the Eighth Cause of Action is SUSTAINED. Because amendment would be futile, leave to amend is DENIED.

Kerry Bensinger

Judge of the Superior Court

[1] “In the absence of argument or authority to the contrary, this Court joins the growing number of District Courts to predict that the California Supreme Court would not permit Section 1102.5 claims to proceed against nonemployer individuals. See, e.g., Dawson, 2024 WL 661198, at *6; Mewawalla v. Middleman, 601 F. Supp. 3d 574, 608 (N.D. Cal. 2022); Rosas v. NFI Indus., No. 221CV00046WBSCKD, 2021 WL 1264921, at *5 (E.D. Cal. Apr. 6, 2021); Crone v. Tracy Unified Sch. Dist., No. 2:20-CV-01451-JAM-AC, 2020 WL 7182345, at *2 (E.D. Cal. Dec. 7, 2020); Tillery v. Lollis, No. 1:14-CV-02025-KJM, 2015 WL 4873111, at *9–10 (E.D. Cal. Aug. 13, 2015).” (Friedman v. Jenkins (N.D. Cal., Mar. 19, 2024, No. 23-CV-05036-JSW) 2024 WL 1182878, at *6.)