Judge: Martha K. Gooding, Case: 2021-01223068, Date: 2022-10-17 Tentative Ruling
Motion for Summary Judgment and/or Adjudication
The Court grants the Motion by Defendant Americold Logistics LLC (“Americold” or “Moving Defendant”) for summary adjudication of the issue of punitive damages sought by Plaintiffs Elias Sagastume (“Sagastume”) and Jose Alvarez (“Alvarez”)(collectively, “Plaintiffs”)) in their First Amended Complaint.
Evidentiary Objections
The Court overrules Defendant’s objection nos. 1-14 and 18.
The Court sustains objection nos. 15, 16 and 17.
Legal Standard
Punitive damages are not assessed against employers on a pure respondeat superior basis. (Rony v. Costa (2012) 210 Cal. App. 4th 746.) That is, under the respondeat superior doctrine, the employer is not liable for punitive damages absent fault or misconduct on the employer's part. CRST, Inc. v. Superior Court (2017) 11 Cal. App. 5th 1255).
Pursuant to statute, in an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant. (Civ. Code, § 3294, subd. (a).)
Civil Code § 3294(b) imposes punitive damages liability against a corporate defendant only where the corporate employer itself acted egregiously or knowingly failed to act in connection with its wrongdoing employee. The employer is not punished for the employee's wrongful act but rather for its own wrongful conduct. (White v. Ultramar, Inc. (1999) 21 C4th 563, 571-572; see also CRST, Inc. v. Sup.Ct. (Lennig) (2017) 11 CA5th 1255, 1264-1265—employer's admission of vicarious liability for employee's tort does not bar punitive damages claim against employer for its own negligent hiring, supervision and retention of employee.)
The “clear and convincing” standard of proof required for recovery of punitive damages under Civ. Code § 3294(a) also applies to an employer's punitive damages liability for wrongful acts of agents and employees under § 3294(b). Thus, “clear and convincing” evidence is required of:
• the employer's advance knowledge of the employee's unfitness and conscious disregard for the safety of others; or
• the employer's authorization or ratification of the employee's wrongful acts;
• and, where a corporate employer is involved, the employee's status as an “officer, director or managing agent.”
(See Civ. C. § 3294(b); Barton v. Alexander Hamilton Life Ins. Co. of America (2003) 110 CA4th 1640, 1644, clear and convincing evidence is required to show managing agent.)
Merits
Plaintiffs allege they worked for Americold in its Brea facility and they both experienced sexual harassment by their supervisor, Defendant Humberto Flores (“Flores”). (FAC, ¶¶13, 35.) All of their claims are under the Fair Employment and Housing Act (“FEHA”) and carry the potential for punitive damages. (SSUF 24; See FAC generally).
Punitive damages may be awarded in civil actions for FEHA violations. (Commodore Home Systems, Inc. v. Sup.Ct. (Brown) (1982) 32 C3d 211, 221; Myers v. Trendwest Resorts, Inc. (2007) 148 CA4th 1403, 1435-1436; Colucci v. T-Mobile USA, Inc. (2020) 48 CA5th 442, 458-459.) Such awards are based on the standards set forth in Civil Code § 3294 (including the requirement of “clear and convincing evidence”). (Weeks v. Baker & McKenzie (1998) 63 CA4th 1128, 1147-1148.)
Sagastume was employed by Americold from March 12, 2020 to April 30, 2021 and his supervisor was Defendant Flores. (FAC, ¶12.) Sagastume experienced unwanted sexual harassment including (among other things) Flores slapping Sagastume on his buttocks, grabbing Sagastume’s private parts, and “humping” Sagastume. (FAC ¶¶15-30.)
Alvarez was employed by Americold for approximately 4 months in 2020, ending in or around July 2020, and Defendant Flores was also his supervisor. (FAC, ¶34.) Alvarez experienced unwanted sexual harassment by Flores, including (among other things) Flores caressing his ear, commenting on his shoe/penis size, and telling Alvarez how good he looked; Alvarez also overheard many of the harassing comments directed to and harassing acts committed against Sagastume by Flores. (FAC, ¶¶35-41.)
Americold brings this Motion to show that Defendant Flores was not a managing agent as a matter of law; there is no evidence that Americold knew of Flores’ unfitness or acted in conscious disregard for the safety of others; or that Americold authorized or ratified Flores’ wrongful conduct. (See Civ. C. § 3294(b).)
The Court notes that Americold assumes, for purposes of this Motion, that it employed both Plaintiffs. Consequently, most of Plaintiffs’ Additional Disputed Facts – that go to the issue whether Defendant was an employer and had control over Plaintiffs – are irrelevant.
Americold has shown that it had no advance knowledge of Flores’ unfitness. Sagastume never reported Flores’ alleged conduct to anyone at Americold, PLS, or to anyone else (including his wife). (SSUF 13) Alvarez did not report Flores’ alleged conduct to anyone at PLS, Americold, or to anyone else (including his wife). (SSUF 23). The only person that Plaintiff complained to about the conduct was Flores himself. (SSUF 41, 42.) Plaintiffs offer no evidence to dispute these facts or the fact that Flores had no prior history of harassment and had never been reported for any inappropriate conduct toward any employees at Americold’s Brea warehouse. (SSUF 50.)
Defendant never received any reports or complaints of inappropriate or wrongful conduct by Flores from Plaintiffs or anyone else at the warehouse. (SSUF 51)
Defendant’s human resources department were never given an opportunity to investigate Plaintiffs’ allegations of inappropriate or unlawful conduct by Flores. (SSUF 52)
Defendant’s officers, directors or managing agents were never informed of any concerns regarding Flores’ conduct. (SSUF 53)
Plaintiff Sagastume has not identified any of Defendant’s officers, directors or managing agents as individuals who have witnessed any conduct supporting the claims asserted in his FAC. (SSUF 54)
Plaintiffs argue that Americold “knew or should have known” that order selectors (including Plaintiffs) were extremely vulnerable to unlawful conduct by their supervisors but did not care and recklessly disregarded the danger. (Additional Disputed Fact No. 10; See Guerrero Depo. at 53:4 to 55:10, 92:15 to 95:19 (Ex. 3, Evidence).
But this evidence does not create a triable issue of material fact. None of this testimony shows that Americold knew or should have known about Flores’ conduct with Plaintiffs or with another employee, Guerrero (who is the plaintiff in another pending action). At best, this testimony from Guerrero shows that he “does not recall” if the personnel placed by PLS were provided an HR contact or given training on reporting sexual harassment. This testimony does not show that Americold knew that Flores was unfit or that Americold consciously disregard Plaintiffs’ rights.
Finally, Americold has met its burden to show that Flores was not a managing agent. Plaintiff does not show clear and convincing evidence of a triable issue of material fact. (See Barton v. Alexander Hamilton Life Ins. Co. of America (2003) 110 CA4th 1640, 1644.)
The FAC does not allege that Flores was a managing agent. Rather, it alleges that:
“Americold, through its supervisors, employees and agents, knew about or should have known about Flores’ sexual harassment of employees including Sagastume. But Americold did not discipline Flores for his gross misconduct. Americold failed to take all reasonable steps to prevent Flores from sexually harassing employees including Sagastume. Americold failed to take all reasonable steps to prevent Flores from retaliating against Sagastume.”
(FAC ¶32; see also ¶43.)
“Managing agent” includes only those corporate employees vested with substantial discretionary authority over decisions that ultimately determine corporate policy regarding the matter as to which punitive damages are sought. The scope of authority is a question of fact in each case. (White v. Ultramar, Inc., supra, 21 C4th at 566-567; see Gelfo v. Lockheed Martin Corp. (2006) 140 CA4th 34, 63—question of law where facts undisputed; and CACI 3943-3948.)
“[D]iscretionary authority over … corporate policy [refers to] … formal policies that affect a substantial portion of the company and that are the type likely to come to the attention of corporate leadership. It is this sort of broad authority that justifies punishing an entire company for an otherwise isolated act of oppression, fraud, or malice.” (Roby v. McKesson Corp. (2009) 47 C4th 686, 714 (emphasis added).)
The mere ability to hire and fire others generally is not enough to make a supervisory employee a corporate employer's “managing agent” for punitive damages purposes. But supervisors may be so classified if they have broad discretionary authority over decisions that ultimately determine corporate policy regarding the matter in question. (White v. Ultramar, Inc., supra, 21 C4th at 566-567; Roby v. McKesson Corp., supra, 47 C4th at 715—where employer had 20,000 employees, supervisor of 4 employees at local distribution center did not have type of authority to make her a “managing agent”.)
At all times relevant to Plaintiffs’ claims, Flores was Americold’s Warehouse Supervisor at the Brea location. (SSUF 45)
As a Warehouse Supervisor, Defendant Flores was responsible for coordinating and supervising warehouse activities during his shift by directing workers in the receiving, warehousing, and shipping of customer product. (SSUF 46)
Flores’ duties as Warehouse Supervisor included: coordinating efficient unloading of inbound shipments, stacking the product, picking and staging outbound shipments; ensuring all shipments are accurate and damage-free; ensuring the safe operation of all materials handling equipment; ensuring the maintenance of a clean and safe work area; ensuring proper safety practices are being followed and reporting and investigating any safety accidents; conducting shift meetings, planning work schedules and assigning duties to workers; maintaining records concerning employee time and wages, daily receipts, and inspection results; assessing training needs of staff and arranging for or providing trainings; solving work-related problems; evaluating employee performance and recommending various personnel actions, such as promotions, transfers, or disciplinary measures. (SSUF 47)
Flores was not involved in the creation or revision of any corporate or employee policies or procedures at Americold. (SSUF 48)
Flores did not have the power to exercise any independent authority and judgment over decisions that ultimately determined Americold’s corporate policy. (SSUF 49)
Plaintiffs’ evidence in opposition does not meet the standard for “managing agent” and renders this case distinguishable from other cases that have found triable issues of material fact on that issue.
Plaintiffs’ citations to Flores’ deposition testimony show that Flores helped implement policies and procedures concerning worker safety and quality control over food at the Brea warehouse, which included auditing the warehouse’s sanitation, food safety and quality control records (Plaintiffs’ Evidence, Ex. 1 at p. 43:19-44:1); that he had some ideas on how to improve case-picking operations in that one warehouse, such as relocating printers and identifying areas for storing empty pallets and parking pallet jacks at the Brea warehouse [notably, there is no evidence showing Flores had any authority to unilaterally implement any of those ideas] (id. at pp. 41:14-21, 42:7-11, 42:23-43:3); and that his efforts at improving employee retention were limited to encouraging employees at the Brea warehouse to make new workers feel welcome by promoting patience, teamwork and comradery (via occasional luncheons) during the shift Flores worked (id. at p. 43:8-18).
The Court finds these facts are not sufficient to show that (or to raise a triable issue of fact whether) Flores possessed the kind of broad authority that justifies punishing an entire company for otherwise isolated acts of oppression, fraud, or malice by a supervisor.
(See White, supra, 21 Cal.4th at p. 577, 88 Cal.Rptr.2d 19, 981 P.2d 944 [supervisor of eight stores with 65 employees was managing agent because her superiors delegated to her “most, if not all, of the responsibility for running [the] stores,” and she “ma[de] significant decisions affecting both store and company policy”]; Powerhouse Motorsports Group, Inc. v. Yamaha Motor Corp., U.S.A. (2013) 221 Cal.App.4th 867, 886, 164 Cal.Rptr.3d 811 [regional manager of district encompassing from 140 to 240 car dealerships was managing agent because he was “ ‘ultimately responsible for the total well being’ ” of the dealerships]; Davis v. Kiewit Pacific Co. (2013) 220 Cal.App.4th 358, 366–372, 162 Cal.Rptr.3d 805 [triable issues existed whether two employees were managing agents, as first was “top onsite manager” charged with wide range of responsibilities for completion of $170 million construction project, and second was main equal employment opportunity officer for entire corporation]; Major v. Western Home Ins. Co. (2009) 169 Cal.App.4th 1197, 1221, 87 Cal.Rptr.3d 556 [triable issues existed whether regional manager of claims adjusting firm was managing agent, as she supervised 35 employees who handled claims nationwide, oversaw the claims operation, supervised lower ranking supervisors, trained adjustors, worked on the budget, supervised the handling of certain files, authorized payment of benefits, and directly handled the claim at issue in the action]; Hobbs v. Bateman Eichler Hill Richards, Inc. (1985) 164 Cal.App.3d 174, 193–194, 204 [substantial evidence supported determination that stock brokerage's office manager possessed broad degree of discretion required for managing agent, as it showed that he supervised and reviewed all 8,000 accounts in his office to ensure suitable securities were purchased and no improper “churning” occurred]; Muniz v. United Parcel Service, Inc. (N.D.Cal. 2010) 731 F.Supp.2d 961, 976–977 [fact that operations manager was “ ‘in charge of 6 divisions, 23 package centers and approximately 40 managers, 150 supervisors and 4,200 employees’ ” insufficient to raise triable issue whether he was managing agent, absent evidence that he set corporate policy].)
The Motion is granted; moving party is ordered to give notice.
Counsel shall be prepared at the hearing to discuss the Notice of Related Case (and opposition thereto) recently filed in this action.