Summary
In Brooks, the court of appeal held that the plaintiff could state a common-law cause of action for wrongful discharge in violation of the public policy against age discrimination only after the court first concluded that there was a fundamental public policy against age discrimination which predated FEHA.
Summary of this case from Ely v. Wal*Mart, Inc.Opinion
Ordered Not Published Previously published at: 29 Cal.App.4th 565
[DEPUBLISHED BY ORDER DATED FEBRUARY 23, 1995]
COUNSEL
[34 Cal.Rptr.2d 787] Robert P. Biegler, Edward E. Jaszewski, Matthew R. Eason and Hefner, Stark & Marois, Sacramento, for plaintiff, appellant and cross-respondent.
Kimberley A. Worley, Alicia F. Wagnon, Littler, Mendelson, Fastiff, Tichy & Mathiason, Sacramento, for defendants, respondents and cross-appellants.
OPINION
DAVIS, Associate Justice.
In this employment termination case, we conclude that where, as here, an employer is subject to the age discrimination provisions of the California Fair Employment and Housing Act (FEHA), there is a fundamental public policy in California against age discrimination in employment sufficient to invoke a tortious wrongful discharge cause of action under the theory advanced in Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330 (Tameny). We also conclude this public policy cause of action exists independently of the employment age discrimination remedy afforded by FEHA. (Gov.Code, §§ 12900, 12920, 12921, 12941.)
The plaintiff in this case (Brooks) appeals from a judgment that arose from a series of law and motion rulings deeming his complaint legally inadequate. As we shall explain, federal regulations promulgated under the authority of the Home Owners' Loan Act of 1933 (HOLA) (12 U.S.C.A. § 1461 et seq.) preempt Brooks's contractual causes of action because Brooks did not have a written contract with his employer, defendant Bell Savings (Bell). Brooks's cause of action against Bell for misrepresentation, alleging that Brooks contracted in reliance on Bell's fraud regarding job security, remains a viable theory to the extent Brooks can properly plead damages. Brooks's causes of action for violation of FEHA and for tortious discharge in violation of public policy, both of which are premised on age discrimination as noted, are viable as pled. That leaves Brooks's causes of action for negligent and intentional infliction of emotional distress. To the extent these causes of action for emotional distress are not based on Brooks's age discrimination claims or on a properly-pled misrepresentation claim, they are preempted by the workers' compensation exclusivity provisions because they allege acts by Bell that constitute a " normal part of the employment relationship," such as discharge, demotion, discipline, or criticism. (Cole v. Fair Oaks Fire Protection Dist. (1987) 43 Cal.3d 148, 160, 233 Cal.Rptr. 308, 729 P.2d 743; Gantt v. Sentry Insurance (1992) 1 Cal.4th 1083, 1099, 4 Cal.Rptr.2d 874, 824 P.2d 680 (Gantt ); Robomatic, Inc. v. Vetco Offshore (1990) 225 Cal.App.3d 270, 272-275, 275 Cal.Rptr. 70; Lab.Code, § 3600 et seq.)
[34 Cal.Rptr.2d 788] On several fronts, Bell has cross-appealed. Some of these claims are rendered moot or are addressed by our determinations outlined above. Four require discussion. We conclude that the trial court did not err in finding a triable issue of material fact as to whether Brooks suffered serious or severe emotional distress, that the trial court did not abuse its discretion in allowing Brooks to reinstate his age discrimination cause of action under FEHA, that Brooks's cause of action for misrepresentation is not preempted by the workers' compensation laws, and that Brooks's causes of action for age discrimination (FEHA and public policy) are not preempted by HOLA (we address this latter claim in our discussion of Brooks's appeal).
Accordingly, we affirm in part and reverse in part.
BACKGROUND
Brooks was employed as an investment officer from July 1984 to July 1985, by Bell, a state-chartered savings and loan association. In July 1985, the Federal Home Loan Bank Board (FHLBB) declared Bell insolvent and placed Bell in federal government receivership. Bell then became a federally-chartered savings association. (12 U.S.C.A. § 1462.) Brooks continued his duties in soliciting and obtaining deposits until he was fired on January 30, 1987.
About two weeks after being discharged, Brooks attempted to file an age discrimination complaint with the California Department of Fair Employment and Housing (Department). Ten days later, the Department sent Brooks a " Notice of Verification of Attempt to File," explaining that the Department had decided not to accept his complaint, that it deemed his attempt an exhaustion of administrative remedy, and that under Government Code section 12965, subdivision (b), persons who file complaints have the right to file a civil action within one year from the date " of this notification."
In a series of court complaints beginning in June of 1987, Brooks alleged causes of action for breach of employment contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, misrepresentation, negligent infliction of emotional distress (NIED), intentional infliction of emotional distress (IIED), violation of FEHA (age discrimination), and wrongful discharge in violation of public policy (age discrimination).
Because this case encompassed a series of complaints opposed by a series of pleading attacks, for convenience we will refer to the collection as simply one complaint. This is also appropriate given that some of these causes of action survived initial attacks only to succumb to later ones.
The trial court determined that the HOLA-authorized regulations preempted the causes of action for breach of employment contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, misrepresentation and NIED (the latter against Bell only). The workers' compensation laws, the trial court ruled, preempted the emotional distress claims (NIED and IIED against the individual defendants, who worked for Bell and supervised Brooks). And the age discrimination claims survived two demurrers only to fall on the day of trial to Bell's motion for judgment on the pleadings, the trial court concluding that there is no common law cause of action for wrongful discharge for age discrimination based on public policy and that Brooks failed to exhaust his administrative remedies under FEHA.
This appeal and cross-appeal then ensued.
DISCUSSION
A. Brooks's Appeal
Brooks's appeal can be viewed in four parts: (1) the HOLA preemption issue regarding the contractual claims; (2) the viability of the misrepresentation cause of action; (3) the age discrimination claims centered on FEHA and public policy; and (4) the emotional distress causes of action in light of the age discrimination and misrepresentation analyses.
1. The HOLA Preemption Issue Regarding Contractual Claims
In demurrer proceedings, the trial court concluded that a regulation promulgated [34 Cal.Rptr.2d 789] under the authority of HOLA (12 C.F.R. § 563.39 [hereafter, section 563.39]; see 12 U.S.C.A. §§ 1461, 1462, 1462a, 1463, 1464; 12 C.F.R. Ch. V, Subch. D, Part 563 [" Authority" — p. 196]; 12 C.F.R. §§ 545.2, 545.122) preempted Brooks's causes of action for breach of employment contract, breach of the covenant of good faith and fair dealing and breach of fiduciary duty. We agree.
The United States Supreme Court, in Fidelity Federal S. & L. Assn. v. de la Cuesta (1982) 458 U.S. 141, 102 S.Ct. 3014, 73 L.Ed.2d 664 (Fidelity Federal), summarized the preemption doctrine as follows:
" The pre-emption doctrine, which has its roots in the Supremacy Clause, U.S. Const, Art VI, cl 2, requires us to examine congressional intent.... Absent explicit pre-emptive language, Congress' intent to supersede state law altogether may be inferred because ‘ [t]he scheme of federal regulation may be so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it,’ because ‘ the Act of Congress may touch a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject,’ or because ‘ the object sought to be obtained by federal law and the character of obligations imposed by it may reveal the same purpose.’
" Even where Congress has not completely displaced state regulation in a specific area, state law is nullified to the extent that it actually conflicts with federal law. Such a conflict arises when ‘ compliance with both federal and state regulations is a physical impossibility,’ ... or when state law ‘ stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’ ... ¶ Federal regulations have no less pre-emptive effect than federal statutes." (458 U.S. at pp. 152-153, 102 S.Ct. at p. 3022, citations omitted.) (See also Aalgaard v. Merchants Nat. Bank, Inc. (1990) 224 Cal.App.3d 674, 686-687, 274 Cal.Rptr. 81.)
All of the parties in this appeal agree that section 563.39 applies to the contractual claims being asserted. Consequently, it is irrelevant that Bell was initially a state-chartered organization and later a federally-chartered one.
Section 563.39, moreover, is part of a set of federal regulations that apply to all insured savings associations. (12 C.F.R. Ch. V, Subch. D, Part 563.)
The Code of Federal Regulations, in Title 12, part 545, sets forth the Office of Thrift Supervision (OTS) regulations regarding the " operations" of insured federal savings associations. As section 545.2 in those regulations explains:
" The regulations in this part 545 are promulgated pursuant to the plenary and exclusive authority of the [OTS] to regulate all aspects of the operations of Federal savings associations, as set forth in section 5(a) of [HOLA]. [12 U.S.C.A. § 1464, subd. (a).] This exercise of the [OTS's] authority is preemptive of any state law purporting to address the subject of the operations of a Federal savings association." (12 C.F.R., § 545.2.)
The OTS replaced the FHLBB pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, effective August 9, 1989. (12 U.S.C.A. §§ 1461, 1462a.) In the wake of these changes, section 5 of HOLA now provides in relevant part: " In order to provide thrift institutions for the deposit of funds and for the extension of credit for homes and other goods and services, the Director [of the OTS] is authorized, under such regulations as the Director may prescribe— (1) to provide for the organization, incorporation, examination, operation, and regulation of associations to be known as Federal savings associations (including Federal savings banks) ... giving primary consideration of the best practices of thrift institutions in the United States. The lending and investment powers conferred by this section are intended to encourage such institutions to provide credit for housing safely and soundly." (12 U.S.C.A. § 1464, subd. (a).)
Section 545.122 of the regulations states that " [a] Federal Savings association, upon specific approval of its board of directors, may enter into employment contracts in accordance with § 563.39 of this chapter."
Section 563.39 is found in the " operations" portion of the OTS regulations that apply to all insured savings associations. (12 C.F.R. ch. V, subch. D, pt. 563.) At the time of [34 Cal.Rptr.2d 790] Brooks's discharge from Bell, Section 563.39 provided in pertinent part:
" (a) General. An insured institution may enter into an employment contract with its officers and other employees only in accordance with the requirements of this section. All employment contracts shall be in writing and shall be approved specifically by an institution's board of directors. An institution shall not enter into an employment contract with any of its officers or other employees if such contract would constitute an unsafe or unsound practice.... This may occur, depending upon the circumstances of the case, where an employment contract provides for an excessive term.
" (b) Required provisions. Each employment contract shall provide that:
" (l) The institution's board of directors may terminate the officer or employee's employment at any time, but any termination by the institution's board of directors other than termination for cause, shall not prejudice the officer or employee's right to compensation or other benefits under the contract. The officer or employee shall have no right to receive compensation or other benefits for any period after termination for cause. Termination for cause shall include termination because of the officer or employee's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the contract...." (Emphasis added, 12 C.F.R., § 563.39.)
Section 563.39 remains substantively identical today but substitutes " savings association" for " insured institution."
The term " officer" in section 563.39 means the president, any vice-president, the secretary, the treasurer, the comptroller, and other persons performing similar functions. (12 C.F.R. § 561.35.) The term " employee" is not defined in the relevant regulations and presumably has its ordinary meaning. (See Estate of Richartz (1955) 45 Cal.2d 292, 294, 288 P.2d 857; Berry v. American Federal Sav. (Colo.App.1986) 730 P.2d 905 (Berry ); but see Cole v. Carteret Sav. Bank (1988) 224 N.J.Super. 446, 540 A.2d 923, 926 .)
In his complaint, Brooks alleges that on July 5, 1984, he entered into an oral employment contract with Bell. Prior to entering into this oral contract, Brooks alleges that he inquired about job security and long-range employment potential; Bell promised that he could be discharged only for cause or unsatisfactory job performance and that opportunities for his advancement existed within the company. According to Brooks, Bell's conduct in orally complimenting and formally reviewing his performance, confirmed these promises. When Bell was " federalized," Brooks alleges, the terms of this employment contract were affirmed by Bell's conduct and specific representations.
As to these contractual issues, there is no distinction between Bell and the individual defendants, all of whom worked for Bell and supervised Brooks. Therefore, we use the term " Bell" to refer to all of these defendants.
Thus, Brooks alleges he had an oral and implied-in-fact contract with Bell. (Civ.Code, §§ 1620, 1621; 1 Witkin, Summary of Cal.Law (9th ed. 1987) Contracts, §§ 11-12, pp. 46-47.) However, under section 563.39, Bell " may enter into an employment contract with its officers and other employees only in accordance with the requirements of this section. " (Emphasis added.) One of those requirements is that " [a]ll employment contracts shall be in writing and shall be approved specifically by an institution's board of directors." (Emphasis added.) Brooks's employment contract with Bell was neither in writing nor approved specifically by Bell's board of directors. Therefore, Brooks's contractual claims, based as they are on an oral and implied-in-fact contract, " actually conflict[ ] with federal law" as embodied in section 563.39. It is impossible to recognize and enforce Brooks's non-written and non-approved employment contract and comply with this federal regulation; to enforce this contract under state law would make " state law ‘ stand[ ] as an obstacle to the accomplishment and execution of the full purposes and [34 Cal.Rptr.2d 791] objectives of’ " of the federal law. (Fidelity Federal, supra, 458 U.S. at p. 153, 102 S.Ct. at p. 3022; see also Berry, supra, 730 P.2d 905; Dynan v. Rocky Mountain Federal S & L (Wyo.1990) 792 P.2d 631, 639; Sholer v. Security Federal Sav. & Loan Ass'n. (D.N.M.1990) 736 F.Supp. 1083, 1085.)
Our conclusion does not mean that Bell can make oral promises and representations to induce a person to become employed or to remain employed, and then hide behind the " writing" shield of section 563.39 to disavow the effect of those oral expressions. Such expressions could furnish the foundation for an action such as fraud in the inducement of a contract. Indeed, Brooks has alleged such an action here and we uphold his right to do so (assuming he can properly allege damages; see section A.2, post). This recognition strikes a proper balance in this situation. It precludes the employer from making oral promises with an impunity provided by section 563.39. It also forecloses the employee from decimating section 563.39 by simply alleging that since it is the employer who is responsible for extending a written contract, the employer is estopped from denying the employee's allegations of an oral one.
We conclude that section 563.39 preempts Brooks's causes of action for breach of employment contract. (See 12 C.F.R. § 545.122.) This conclusion also extends to Brooks's causes of action for breach of the covenant of good faith and fair dealing and for breach of fiduciary duty. The covenant of good faith and fair dealing is a contractual provision subject only to contractual remedies in the employment discharge arena. (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 682-700, 254 Cal.Rptr. 211, 765 P.2d 373 (Foley ).
In his breach of fiduciary duty cause of action, Brooks alleges that " [d]ue to the special relationship that exists between employers and employees, there exists a fiduciary relationship, giving rise to a fiduciary duty by the employer in its dealings with the employee," and that " [t]he wrongful termination and negligent conduct of defendants ... towards plaintiff constitutes a breach of this fiduciary duty." This cause of action is foreclosed by section 563.39 under the analysis set forth above. There is no " special relationship" between employers and employees as alleged by Brooks that gives rise to anything beyond contractual remedies in the wrongful discharge context. (See Foley, supra, 47 Cal.3d at pp. 690-693, 254 Cal.Rptr. 211, 765 P.2d 373.)
To save himself from the reach of section 563.39, Brooks looks to Hall v. Great Western Bank (1991) 231 Cal.App.3d 713, 282 Cal.Rptr. 640 (Hall), Honig v. Financial Corp. of America (1992) 6 Cal.App.4th 960, 7 Cal.Rptr.2d 922 (Honig), Meyer v. Fidelity Sav. (9th Cir.1991) 944 F.2d 562 (Meyer) and Cole v. Carteret Sav. Bank, supra, 540 A.2d 923 (Carteret). Because of factual and legal dissimilarities, these cases do not extricate Brooks from section 563.39's hold.
In Hall, the plaintiff alleged she was fired in violation of public policy because she refused to comply with her employer's instruction to withdraw her application for partial unemployment benefits. The issue was whether California's tortious wrongful discharge theory based on public policy (i.e., a Tameny claim) was preempted by section 563.39. The court said no.
First, the Hall court concluded that state courts have concurrent jurisdiction over claims arising under section 563.39, finding no express congressional intent to reserve jurisdiction exclusively in the federal courts. (231 Cal.App.3d at pp. 716-718, 282 Cal.Rptr. 640.)
Next, Hall, looked at the language in section 563.39, subdivision (b)(1), that " [e]ach employment contract shall provide that ... [t]he institution's board of directors may terminate the officer or employee's employment at any time, but any termination ... other than termination for cause, shall not prejudice the officer or employee's right to compensation or other benefits under the contract." Based on this language, Hall noted that section 563.39 provides protection to employees which is similar to that provided under state law where there exists a valid agreement for job security; in other words, said Hall, the regulation specifically and unambiguously protects an " ‘ employee's right to compensation or other benefits under the [34 Cal.Rptr.2d 792] contract’ " in the event the employee is fired without cause. (231 Cal.App.3d at p. 719, 282 Cal.Rptr. 640.)
Finally, in light of this language and Carteret's reasoning that it indicates a clear concern for employee rights, Hall concluded there is no conflict between California's wrongful discharge theory based on public policy, which allows for tort remedies, and section 563.39, which allows for contractual remedies for the lesser wrong of terminating employment without cause. (231 Cal.App.3d at pp. 721-722, 282 Cal.Rptr. 640.)
For our present purposes, the most important point about Hall is that its analysis assumed that Hall's employment contract satisfied the contractual requirements of section 563.39. As the decision explains:
" [Great Western Bank (GWB) ] informs us that [Hall], like the majority of its employees, had no written employment contract. [GWB] apparently seeks to avoid the rule that a demurrer tests only the sufficiency of the allegations of the complaint.... We note that [Hall's] complaint did not allege any particular contract, either written or oral. She merely alleged employment and termination in violation of public policy. We note that although 12 Code of Federal Regulations, section 563.39 requires employment contracts to be written, [GWB] nonetheless concedes that [Hall] ‘ indisputably falls within’ [this] provision...." (231 Cal.App.3d at p. 719, 282 Cal.Rptr. 640, fn. 7, emphasis added.)
That is not the case here. Brooks's contract did not meet the contractual requirements of section 563.39— it was not in writing and it was not approved specifically by Bell's board of directors. And Bell has not made a concession like GWB did in Hall.
Honig is of no help to Brooks. Honig merely agreed with Hall that California courts could hear claims implicating section 563.39 because that section does not reserve exclusive jurisdiction in the federal courts. (6 Cal.App.4th at pp. 964-965, 7 Cal.Rptr.2d 922.)
Nor is Meyer of any assistance to Brooks. There the court rejected an argument that section 563.39 is necessarily inconsistent with a contract for indefinite employment terminable pursuant to good cause. Meyer noted the difference between the language in section 563.39 and the statutory language at issue in Aalgaard, Inglis v. Feinerman (9th Cir.1983) 701 F.2d 97, and Bollow v. Federal Reserve Bank (9th Cir.1981) 650 F.2d 1093 (which gave the employer the unqualified power " to dismiss at pleasure" officers and employees). (944 F.2d at pp. 573-574.)
That brings us to Carteret. Carteret held that section 563.39 does not preempt a wrongful discharge cause of action based on New Jersey's implied-contract doctrine encompassing an employee manual. Because section 563.39 affords protection to employees of federal savings and loans fired without cause, the Carteret court reasoned, " [i]t seems unlikely that [the section] amounts to an intent ... to preempt federal savings and loans from the thrust of state law that affords protection to the employees of such institutions. An analysis of HOLA and the ... regulations implementing it fails to reveal any intent to bar state established protection for such employees." (540 A.2d at p. 926.)
The analysis in Carteret ran as follows. The court noted another HOLA regulation that mandates that member institutions take affirmative action to ensure that employees are treated without regard to " race, color, religion, etc." (540 A.2d at p. 926.) Then the court noted section 563.39's concern about employment contracts constituting an unsafe and unsound practice and noted the section's example of such a practice in the form of an excessive term contract. According to Carteret, " [i]t is hardly likely that the board [FHLBB] was concerned that middle management or lower level employees could jeopardize the management of a member institution due to long term contracts." (Ibid.) Coupling this observation with the evidence that the only contracts Carteret had were with senior executives, the court concluded that the " obvious concern of 563.39 is the type of formal contracts for top management positions." (Ibid. )
Based on this reasoning, the court in Carteret concluded " that regulation § 563.39 is simply an expression of policy instructing [34 Cal.Rptr.2d 793] member institutions that if they do contract formally with certain employees, that it must be in writing, authorized by its Board, etc. There is nothing to even suggest that the board [FHLBB] intended that the vast number of employees who have no formal contracts with such institutions be precluded from claiming reliance on a work manual which outlines specific steps for performance related terminations." (540 A.2d at p. 926.)
Brooks does not rely, as did the plaintiff in Carteret, " on a work manual which outlines specific steps for performance related terminations." (540 A.2d at p. 926.) To that extent, Carteret is factually distinguishable. Moreover, the critical legal determination regarding the New Jersey implied-contract doctrine at issue in Carteret is whether a plaintiff reasonably could construe the work manual— which must have been distributed by the company and intended to cover the general work force— as an employment contract setting forth enforceable terms and conditions of employment. (Woolley v. Hoffman-LaRoche, Inc., (1985) 99 N.J. 284, 491 A.2d 1257, mod. 101 N.J. 10, 499 A.2d 515; Preston v. Claridge Hotel & Casino (N.J.Super.A.D.1989) 555 A.2d 12, 14.) With these qualifications, the work manual as envisioned in this New Jersey doctrine approaches section 563.39's requirement of a written contract that has been approved specifically by the savings institution's board of directors.
To the extent that Carteret dispenses with section 563.39's requirement of a specifically-approved written contract for regular employees, we disagree with the decision. It is inconsistent with the language of section 563.39. And it is quite possible that excessive term employment contracts covering the general work force could create an unsafe or unsound practice or detrimentally affect the operations of a savings institution.
That brings us to a recent decision from the Second District, Thomka v. Financial Corp. (1993) 15 Cal.App.4th 877, 19 Cal.Rptr.2d 382. Relying on Hall and Hall's reliance on Carteret, the court in Thomka held that section 563.39 does not preempt a cause of action for wrongful discharge based on a breach of an implied-in-fact contract. (Id. at p. 885-887, 19 Cal.Rptr.2d 382.) As Thomka explained: " [Financial Corp.] contends Hall does not apply because Hall involved a claim of discharge in violation of public policy, not as here, a breach of implied-in-fact contract. Hall, however, relied upon [ Carteret ], (a breach of implied contract case) as ‘ persuasive authority’ ...." (Id. at p. 886, 19 Cal.Rptr.2d 382.)
Hall did indeed rely on Carteret. But it did so by noting Carteret's observation that section 563.39 affords protection to employees fired without cause. The court in Hall assumed that Hall's employment contract satisfied the contractual requirements of section 563.39, including the written contract requirement. (231 Cal.App.3d at p. 719, 282 Cal.Rptr. 640, fn. 7.) Thus, Hall did not adopt Carteret's views on implied-in-fact contracts but instead recognized that section 563.39 requires that employment contracts be in writing. (Ibid.) Thomka goes further awry by quoting the relevant part of section 563.39 except for the requirement that " [a]ll employment contracts shall be in writing and shall be approved specifically by an association's [institution's] board of directors." (15 Cal.App.4th at p. 885, 19 Cal.Rptr.2d 382.) We therefore disagree with Thomka to the extent that it allows a contractual employment termination action under state law— based on a non-approved or an implied-in-fact contract— to be maintained by an employee of an insured savings association in the face of section 563.39.
We conclude that section 563.39 preempts Brooks's causes of action for breach of employment contract, breach of the covenant of good faith and fair dealing and breach of fiduciary duty.
2. The Misrepresentation Cause of Action
This cause of action was dismissed after the trial court sustained Bell's demurrer without leave to amend and granted the individual defendants' motion for judgment on the pleadings, both of which were premised on HOLA preemption. For purposes of appeal, we accept as true the properly pleaded factual allegations of the complaint. (Thompson v. County of Alameda (1980) 27 Cal.3d 741, 746, 167 Cal.Rptr. 70, 614 P.2d 728.) These allegations must be liberally [34 Cal.Rptr.2d 794] construed with a view to attaining substantial justice among the parties. (Code Civ.Proc., § 452; King v. Central Bank (1977) 18 Cal.3d 840, 843, 135 Cal.Rptr. 771, 558 P.2d 857.) When a demurrer is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment; if it can be, we reverse. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.) We conclude that Brooks can maintain this action to the extent he can properly plead damages. Accordingly, we reverse the dismissal of this action to that extent.
In his misrepresentation cause of action, Brooks incorporated his allegations regarding breach of contract and breach of the covenant of good faith and fair dealing and then alleged in pertinent part as follows:
" ... Since July, 1984, the agents and employees of defendants BELL SAVINGS & LOAN specifically promised and represented to plaintiff LARRY A. BROOKS and thereafter consistently promised and represented to plaintiff through conversations, memos, and other means of communication, that plaintiff would be terminated only for cause or unsatisfactory job performance after a fair consideration of grounds for termination. These promises were a reaffirmation of the original contract between plaintiff and BELL SAVINGS & LOAN ASSOCIATION.
" ... At the time the agents and employees of defendant[ ] BELL SAVINGS & LOAN made these representations to plaintiff, defendants knew or should have known that the representations were in fact false. At the time defendant made these promises to plaintiff, defendants had no intention of performing them.
" ... The representations and promises were made by defendants, its agents and employees, with the intent to induce plaintiff to remain in the employment of defendant, and to induce plaintiff to become employed by BELL SAVINGS & LOAN....
" ... In reliance on the representations and promises made by defendants, ... plaintiff agreed to employment by and remained in the employ of defendant BELL SAVINGS & LOAN. If plaintiff had known of the actual intentions of defendants, plaintiff would not have taken such actions.
" ... Defendants, ... failed to abide by said representations and promises by terminating plaintiff without good cause, despite outstanding job performance and in violation of the fundamental princip[les] of public policy of the State of California.
" WHEREFORE, plaintiff prays for damages as hereinafter set forth."
In essence, Brooks has alleged fraud in the inducement of his employment contract. " It is a familiar rule that where the plaintiff contracted in reliance on fraud of the defendant, he may elect either the contract remedy (restitution based on rescission) or the tort remedy (affirmance and damages). Where the defendant makes a promise without intending to perform, and later fails or refuses to perform, he is guilty of the tort of fraud as well as the breach of contract. The alternative remedy in tort has been recognized in California ... where the contract itself is valid and enforceable. A tort action has also been allowed where the contract is technically illegal." (3 Witkin, Cal.Procedure (3d ed. 1985) Actions, § 111, pp. 141-142, citations omitted.) " A tort action should not be allowed, however, if it would frustrate the purpose of the statute outlawing the contract action." (Id. at p. 143.)
Applying these well-recognized principles here, we conclude that Brooks can maintain a cause of action for fraud in the inducement of an employment contract (subject to certain limitations on damages we discuss later). As noted, Brooks has alleged that he became employed and remained employed with Bell in reliance on Bell's fraud. This is fraud in the inducement of a contract. Brooks alleges that Bell made representations and promises regarding job security (termination only for cause or unsatisfactory job performance after a fair consideration of grounds for termination) that Bell knew or should have known were false and that Bell had no intention of performing. Although section 563.39 preempts Brooks's contractual causes of action, the purpose of that section would not be frustrated by allowing Brooks to proceed [34 Cal.Rptr.2d 795] with a fraud action as alleged here; there is nothing in section 563.39 covering fraudulent representations regarding job security. Indeed, the relevant federal regulations, including section 563.39, are designed to ensure integrity in the operation of savings institutions. (See, e.g., 12 C.F.R. § 545.2; 12 U.S.C.A. § 1464, subd. (a).) As we have explained earlier, it would be unfair to allow Bell to make oral promises and representations as alleged here and then seek immunity under the shield of section 563.39's writing requirement.
The elements of fraud are a false representation made with knowledge of its falsity (or without sufficient knowledge to warrant it) and made with the intent to induce the plaintiff to act in reliance upon it, and such reliance to the plaintiff's damage. (Harding v. Robinson (1917) 175 Cal. 534, 538-539, 166 P. 808; see 1 Witkin, Summary of Cal.Law (9th ed. 1987) Contracts, § 393, p. 356.)
Brooks's allegations— aside from his " allegation" of damages— align with these elements. A knowingly false representation of job security, made to induce someone to accept employment but made without any intention of performing it, could result in fraudulent damage to an employee. That is the problem for Brooks, however. He has not alleged such damage.
Recently, in Hunter v. Up-Right, Inc. (1993) 6 Cal.4th 1174, 26 Cal.Rptr.2d 8, 864 P.2d 88, the California Supreme Court concluded— in light of Foley's theme that the employment relationship is " fundamentally contractual" — that wrongful termination of employment ordinarily does not give rise to tort damages for fraud or deceit, even if some misrepresentation is made in the course of the employee's dismissal.
In Hunter, the plaintiff employee, who worked for Up-Right for 14 years, asserted he was misled into quitting after Up-Right falsely told him that his position was being eliminated as part of a corporate reorganization. The jury found in favor of the plaintiff on the theories of breach of an implied contract not to terminate employment without good cause, breach of the covenant of good faith and fair dealing, and fraud. The jury awarded contractual and fraud damages. The Supreme Court limited the award to the contractual damages.
According to the Hunter court, the result of Up-Right's misrepresentation was indistinguishable from an ordinary constructive wrongful termination. " The misrepresentation transformed what would otherwise have been a resignation into a constructive termination. As the jury found that Up-Right lacked good cause to dismiss Hunter, the constructive termination was wrongful. Thus, Up-Right simply employed a falsehood to do what it otherwise could have accomplished directly. It cannot be said that Hunter relied to his detriment on the misrepresentation in suffering constructive dismissal. Thus, the fraud claim here is without substance." (6 Cal.4th at p. 1184, 26 Cal.Rptr.2d 8, 864 P.2d 88.) If the termination itself is wrongful because it breaches the employment contract, said the court in Hunter, then the employee is entitled to contractual damages under Foley. " But no independent fraud claim arises from a misrepresentation aimed at termination of employment." (Id. at p. 1185, 26 Cal.Rptr.2d 8, 864 P.2d 88; see Hine v. Dittrich (1991) 228 Cal.App.3d 59, 64-65, 278 Cal.Rptr. 330.)
Brooks has simply pled that defendants failed to abide by their representations and promises by terminating him without good cause. Assuming Brooks was damaged thereby, these fraud damages result from the termination itself and are therefore foreclosed under Hunter.
However, under Hunter, tort recovery is available if the plaintiff can establish all of the elements of fraud with respect to a misrepresentation that is separate from the termination of the employment contract, i.e., if the plaintiff can establish fraud damages that did not result from the termination itself. (6 Cal.4th at p. 1178, 26 Cal.Rptr.2d 8, 864 P.2d 88.) Brooks has alleged that he accepted employment and remained employed with Bell based on Bell's misrepresentations regarding job security. If this conduct on Brooks's part resulted in damage to him apart from the damages that resulted from his termination, then Brooks can maintain a [34 Cal.Rptr.2d 796] fraud cause of action based on these independent damages and claim the appropriate tort remedies.
As noted in Hunter, " a misrepresentation not aimed at effecting termination of employment, but instead designed to induce the employee to alter detrimentally his or her position in some other respect, might form a basis for a valid fraud claim even in the context of a wrongful termination." (6 Cal.4th at p. 1185, 26 Cal.Rptr.2d 8, 864 P.2d 88, italics in original.) Hunter further noted that the case before it was not one of promissory fraud, and that " nothing in this opinion affects the availability of tort damages in any case in which the elements of promissory fraud are pleaded and proved." (Id. at p. 1186, 26 Cal.Rptr.2d 8, 864 P.2d 88, fn. 1.) As we read Hunter, then, an employee in California who is fraudulently induced to accept or remain on a job and is damaged thereby can still sue his or her employer for fraud based on damages independent of the termination (one example of such damages would be where an employee incurs expenses to uproot his or her family to accept a job that was fraudulently represented by the employer).
Because there is a reasonable possibility that Brooks can amend his complaint to allege damages based on fraud in the inducement of his employment contract that are independent of the damages that resulted from his termination, he will be given an opportunity to do so. With the limitations we have noted, we conclude the trial court erred in dismissing Brooks's cause of action for misrepresentation.
We also conclude that Brooks cannot maintain this action against the individual defendants, as individuals, since their actions are alleged to be within the scope of their employment with Bell. Brooks originally alleged as much. However, he later alleged that these individuals acted outside the scope of their employment with Bell; this allegation was not based on any new facts but was made simply to thwart another demurrer. That type of inconsistent and conclusionary pleading is not allowed. (See Owens v. Kings Supermarket (1988) 198 Cal.App.3d 379, 383-384, 243 Cal.Rptr. 627.)
3. The Public Policy and the FEHA Causes of Action Based on Age Discrimination
a. Public Policy
The issue presented is whether employment termination on the basis of age discrimination (age 40 and over) contravenes a fundamental public policy. We conclude that where, as here, an employer is subject to the age discrimination provisions of FEHA, it does and that an action for wrongful discharge in violation of public policy may be predicated on such a basis under the theory advanced by our high court in Tameny and explicated in Rojo v. Kliger (1990) 52 Cal.3d 65, 276 Cal.Rptr. 130, 801 P.2d 373 (Rojo) and Gantt, supra, 1 Cal.4th 1083, 4 Cal.Rptr.2d 874, 824 P.2d 680.
In Rojo, our high court held that an action for wrongful discharge in violation of public policy is not limited to situations where, as a condition of employment, the employer coerces the employee to commit an unlawful act (Tameny) or restrains an employee from exercising a fundamental right, privilege or obligation (Foley), but exists whenever the basis of the discharge contravenes a fundamental public policy. (52 Cal.3d at pp. 90-91, 276 Cal.Rptr. 130, 801 P.2d 373.) One such fundamental public policy, the Rojo court found, was that against sex discrimination in employment. (Ibid. )
Because a fundamental public policy is implicated, a Tameny cause of action " ‘ reflects a duty imposed by law upon all employers in order to implement the fundamental public policies [of the state].... As such, a wrongful discharge suit [in violation of public policy] exhibits the classic elements of a tort cause of action.’ " (Gantt, supra, 1 Cal.4th at p. 1098, 4 Cal.Rptr.2d 874, 824 P.2d 680, quoting Foley, supra, 47 Cal.3d at p. 668, 254 Cal.Rptr. 211, 765 P.2d 373.) It is irrelevant if the employee is " at-will" — there can be no right to terminate for a purpose that contravenes fundamental public policy. (Gantt, supra, 1 Cal.4th at p. 1094, 4 Cal.Rptr.2d 874, 824 P.2d 680.)
In an action for wrongful discharge in violation of public policy, the public policy affected must be " fundamental," " substantial" and " ‘ firmly established’ at the time of [34 Cal.Rptr.2d 797] discharge." (Foley, supra, 47 Cal.3d at pp. 668-669, 254 Cal.Rptr. 211, 765 P.2d 373; Gantt, supra, 1 Cal.4th at p. 1090, 4 Cal.Rptr.2d 874, 824 P.2d 680; B & E Convalescent Center v. State Compensation Ins. Fund (1992) 8 Cal.App.4th 78, 90, 9 Cal.Rptr.2d 894.) The discharge must affect a duty which inures to the benefit of the public at large rather than to a particular employer or employee. (Ibid.) And such public policy must be grounded in some statutory or constitutional provision. (Gantt, supra, 1 Cal.4th at p. 1095, 4 Cal.Rptr.2d 874, 824 P.2d 680.)
We conclude that age discrimination in employment (age 40 and over) meets these requirements for establishing a wrongful discharge action in violation of public policy. At the time of Brooks's discharge, this public policy was fundamental, substantial and firmly established. As stated in FEHA: " It is hereby declared as the public policy of this state that it is necessary to protect and safeguard the right and opportunity of all persons to seek, obtain, and hold employment without discrimination or abridgment on account of ... age." (Gov.Code, § 12920, italics added; all further references to sections are to the Government Code unless otherwise specified.) Under FEHA, " [t]he opportunity to seek, obtain and hold employment without discrimination because of ... age is ... recognized as and declared to be a civil right. " (§ 12921, italics added.) And under section 12941 of FEHA, " [i]t is an unlawful employment practice for an employer to refuse to hire or employ, or to discharge, dismiss, reduce, suspend, or demote, any individual over the age of 40 on the ground of age, except in cases where the law compels or provides for such action." (Italics added.) " Age," as defined in FEHA, means 40 or over. (§ 12926, subd. (a).)
Substantially identical age discrimination provisions on " public policy," " civil right," and " unlawful employment practice" appeared in FEHA's predecessor— the Fair Employment Practices Act (FEPA). (Former Lab.Code, §§ 1411, 1412, 1420.1; Stats.1978, ch. 1361, §§ 1, 2, p. 4514; Stats.1972, ch. 1144, § 1, p. 2211.) It is unlikely, however, that Brooks can rely alone on these firmly-established statutory provisions to support his Tameny wrongful discharge action. (See Strauss v. A.L . Randall Co . (1983) 144 Cal.App.3d 514, 194 Cal.Rptr. 520 and Jennings v. Marralle (1994) 8 Cal.4th 121, 133-134, 32 Cal.Rptr.2d 275, 876 P.2d 1074 [characterizing Strauss as holding that there is no common law cause of action for age discrimination in employment based on FEHA's statement of public policy and noting that Rojo had not disapproved of this conclusion in Strauss ].) But there is no question the Legislature has plainly set forth through these provisions a public policy against age discrimination in employment (age 40 and over). (See Jennings, supra, at p. 134, 32 Cal.Rptr.2d 275, 876 P.2d 1074.)
In any event, a public policy against age discrimination in employment is not the exclusive province of these FEHA and FEPA provisions. As Brooks notes on appeal, and asks us to judicially note (which we do), there are over 30 California statutes, outside of FEHA and its predecessor (FEPA), that prohibit age discrimination. Most of these are centered on the basics of life— shelter (Civ.Code, § 51.2; Gov.Code, § 65008), health care (Health & Saf.Code, §§ 1317, 1317.3, 1365.5), education (Ed.Code, §§ 260, 262, 262.1, 262.2, 66030, 69535), and employment (Ed.Code, §§ 44100 [public schools], 87100 [community colleges]; Gov.Code, §§ 18932, 19700, 19706, 19793 [state employment]; Lab.Code, § 1777.6 [public works projects]; Pub.Util.Code, § 3542 [highway carriers]; Unemp.Ins.Code, §§ 2070, 2073, 2075, 2076 [1961 act regarding " Employment for Older Workers" — stating a public policy against age discrimination in employment] and Unemp.Ins.Code, § 16000 et seq. [Training and Employment Programs for Older Californians Act of 1983] ).
Although many of these employment discrimination statutes apply in a limited domain, that is not the case with the act entitled " Employment for Older Workers," which was adopted in 1961 and is still in force today. That act is a broad-based, general one and opens with the following salvo:
" It is the public policy of the State of California that manpower should be used to its fullest extent. This statement of [34 Cal.Rptr.2d 798] policy compels the further conclusion that human beings seeking employment, or retention thereof, should be judged fairly and without resort to rigid and unsound rules that operate to disqualify significant portions of the population from gainful and useful employment. Accordingly, use by employers, employment agencies, and labor organizations of arbitrary and unreasonable rules which bar or terminate employment on the ground of age offend the public policy of this State." (Unemp.Ins.Code, § 2070, italics added.)
Pursuant to this 1961 act, the Employment Development Department is to cooperate with public and private institutions " to protect and safeguard the right and opportunity of workers [over 40] to seek, obtain, and hold employment without discrimination or abridgment on account of age," is to " study the problems of discrimination [in employment] on account of age," and is to publish information based on such study that " will tend to minimize or eliminate discrimination in employment on account of age." (Unemp.Ins.Code, §§ 2073, 2075, 2076.)
Former Unemployment Insurance Code section 2072, part of the original framework of this 1961 act, stated in part: " It is unlawful for an employer to refuse to hire or employ; or to discharge, dismiss, reduce, suspend, or demote any individual between the ages of 40 and 64 solely on the ground of age, except in cases where the law compels or provides for such action." (Stats, 1961, ch. 1623, p. 3518, § 1.) This section was repealed in 1972 and replaced by a FEPA statute, former Labor Code section 1420.1, which adopted the language just quoted. (Stats.1972, ch. 1144, §§ 1, 2, pp. 2211-2212.) In 1978, the Legislature bolstered this unlawful employment practice proscription by amending FEPA to declare that age discrimination in employment is contrary to the public policy of California (former Lab.Code, § 1411) and that freedom from such discrimination is a civil right (former Lab.Code, § 1412). (Stats.1978, ch. 1361, §§ 1, 2, p. 4514.) As noted, these FEPA age discrimination provisions on unlawful employment practice, public policy and civil rights were superseded by substantially identical provisions in FEHA. (Gov.Code, §§ 12941, 12920 and 12921, respectively.)
In the " Training and Employment Programs for Older Californians Act of 1983" (Unemp.Ins.Code, § 16000 et seq.; applying to persons 55 and older), the Legislature found a " continuing pattern of age discrimination in employment." (Id. at § 16001, subd. (b).)
Under Government Code section 19793, the State Personnel Board, in its annual report on affirmative action in employment, is to " include information to the Legislature of laws which discriminate or have the effect of discrimination on the basis of ... age...."
In light of this array of specific statutory expression, all of which predates Brooks's discharge, we conclude that where, as here, an employer is subject to the age discrimination provisions of FEHA, there is a fundamental public policy in California against age discrimination in employment that was firmly established at the time of Brooks's discharge and that " affects society at large rather than a purely personal or proprietary interest" of Brooks. (Gantt, supra, 1 Cal.4th at p. 1090, 4 Cal.Rptr.2d 874, 824 P.2d 680.) We conclude that this public policy is " carefully tethered to fundamental policies that are delineated in ... statutory provisions...." (Id. at p. 1095, 4 Cal.Rptr.2d 874, 824 P.2d 680.) As such, this public policy can furnish the basis for a Tameny wrongful discharge action. As stated succinctly by the court in Soules v. Cadam, Inc. (1991) 2 Cal.App.4th 390, 3 Cal.Rptr.2d 6, in noting Rojo's finding of a public policy against sex discrimination in employment, " [a] like rationale applies to age discrimination in the workplace." (Id. at pp. 401-402, 3 Cal.Rptr.2d 6.)
Recently, in Jennings v. Marralle, supra, 8 Cal.4th 121, 32 Cal.Rptr.2d 275, 876 P.2d 1074, the California Supreme Court concluded there is no fundamental public policy to support a Tameny wrongful discharge action for age discrimination by a small employer. The court noted the public policy statements on age discrimination that appear in FEHA and in the 1961 act regarding " Employment for Older Workers" . But the court also noted that FEHA applies only to employers of more than four persons, and the 1961 act [34 Cal.Rptr.2d 799] only to employers of more than five people. (§ 12926, subd. (d); Unemp.Ins.Code, § 2071, subd. (b).) Said Jennings: " It would be unreasonable to expect employers who are expressly exempted from the FEHA ban on age discrimination to nonetheless realize that they must comply with the law from which they are exempted under pain of possible tort liability." (8 Cal.4th at pp. 135-136, 32 Cal.Rptr.2d 275, 876 P.2d 1074.)
In reaching this conclusion, the court in Jennings noted some of the factors that led the drafters of FEHA to exempt the small employer from the statute's reach. These included a wariness of governmental intrusion into the business setting of a small employer and its close personal relationships; a belief that discrimination on a small scale would prove exceedingly difficult to detect and police; and a primary interest in attacking protracted large-scale discrimination by more economically powerful entities. (8 Cal.4th at pp. 133-134, 32 Cal.Rptr.2d 275, 876 P.2d 1074.) Because the employer in the present case is a large financial institution, the factors that led the court in Jennings to its conclusion do not lead us to the same destination. This point was recognized in Jennings in the following passage: " Whether discrimination in employment on the basis of age violates a ‘ fundamental’ public policy has not been resolved by this court. We need not decide that question here since the ‘ public policy’ on which plaintiff relies is not applicable to defendant. [Defendant] is not an ‘ employer’ subject to the age discrimination provisions of the FEHA." (Id. at p. 130, 32 Cal.Rptr.2d 275, 876 P.2d 1074.)
That brings us to the issues of whether Brooks's cause of action for wrongful discharge in violation of public policy (age discrimination) is preempted by his civil FEHA action, the workers' compensation laws or HOLA. We conclude there is no such preemption.
As for FEHA preemption, Rojo is again instructive. There the California Supreme Court concluded that " FEHA does not supplant other state laws, including claims under the common law, relating to employment discrimination; ..." (52 Cal.3d at pp. 70-71, 276 Cal.Rptr. 130, 801 P.2d 373.)
The Rojo court based this conclusion on the FEHA language in section 12993, subdivision (a), which the court quoted as follows: " The provisions of this part [Part 2.8— Department of Fair Employment and Housing] shall be construed liberally for the accomplishment of the purposes thereof. Nothing contained in this part shall be deemed to repeal any of the provisions of the Civil Rights Law or of any other law of this state relating to discrimination because of race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status, sex, or age." (52 Cal.3d at p. 73, 276 Cal.Rptr. 130, 801 P.2d 373, emphasis in original.) Based on this language, Rojo found this aspect of FEHA " plain and its meaning unmistakable: the act expressly disclaims any intent to repeal other state laws relating to discrimination, legislative or otherwise." (Id. at p. 79, 276 Cal.Rptr. 130, 801 P.2d 373.)
In reaching this conclusion, the Rojo court rejected the view advanced in Strauss, supra, 144 Cal.App.3d 514, 194 Cal.Rptr. 520 that FEPA, the predecessor to FEHA, constituted an exclusive remedy for age discrimination in employment. In Strauss , the employee filed a common law cause of action for wrongful discharge in violation of public policy based on age discrimination. Asserting that no common law remedy for age discrimination predated FEPA (age discrimination as an unlawful employment practice was added to FEPA in 1972 and such discrimination was added to the FEPA sections on public policy and civil rights in 1978), the Strauss court concluded that the Legislature, in creating a new statutory right, intended the statutory remedy to be exclusive. (144 Cal.App.3d at p. 520, 194 Cal.Rptr. 520.) The Strauss court used the " new right— exclusive remedy" rule of statutory interpretation to reach this conclusion. Under that canon of construction, " where a statute creates a right that did not exist at common law and provides a comprehensive and detailed remedial scheme for its enforcement, the statutory remedy is [generally deemed] exclusive." [34 Cal.Rptr.2d 800] (Rojo, supra, 52 Cal.3d at p. 79, 276 Cal.Rptr. 130, 801 P.2d 373.)
Rojo rejected Strauss's reliance on the " new right— exclusive remedy" rule and concluded:
" In determining legislative intent, however, Strauss and its progeny needlessly invoked the ‘ new right— exclusive remedy’ doctrine of interpretation. Because the FEHA, like its predecessor the FEPA, expressly disclaims any intent to displace other relevant state laws, no resort to interpretative aids is required and the existence vel non [or not] of a preexisting cause of action for the particular discrimination is irrelevant. While the FEHA conferred certain new rights and created new remedies, its purpose was not to narrow, but to expand the rights and remedies available to victims of discrimination. (§§ 12993, 12920.) Under the act, plaintiffs are free to seek relief for injuries arising from discrimination in employment under any state law, without limitation." (Italics in original, 52 Cal.3d at p. 82, 276 Cal.Rptr. 130, 801 P.2d 373.)
Since it had no age discrimination claim before it, the court in Rojo expressed no opinion on the result in Strauss . (52 Cal.3d at p. 82, 276 Cal.Rptr. 130, 801 P.2d 373, fn. 10.)
We note, in any event, that several statutes prohibiting age discrimination in employment predate the 1978 addition of age discrimination to the public policy and civil right sections of FEPA. (Stats.1978, ch. 1361, §§ 1-2, p. 4514; see Ed.Code, § 44100; Gov.Code, §§ 18932, 19700, 19706, 19793; Lab.Code, § 1777.6; Unemp.Ins.Code, §§ 2070, 2073, 2075, 2076; former Unemp.Ins.Code, § 2072.)
We conclude that FEHA does not preempt a common law cause of action for wrongful discharge in violation of public policy based on age discrimination.
Rojo held that a wrongful discharge cause of action in violation of public policy exists regarding sex discrimination in employment. This cause of action, said Rojo, is grounded in the fundamental public policy against sex discrimination in the workplace found in article I, section 8 of the California Constitution (" A person may not be disqualified from entering or pursuing a business, profession, vocation, or employment because of sex...."). This constitutional provision first appeared in 1879.
Nor does the workers' compensation scheme preempt an age discrimination cause of action for tortious wrongful discharge in violation of public policy. As the decision in Gantt, supra, 1 Cal.4th 1083, 4 Cal.Rptr.2d 874, 824 P.2d 680 explains:
" When an employer's decision to discharge an employee results from an animus that violates the fundamental policy of this state ... such misconduct cannot under any reasonable viewpoint be considered a ‘ normal part of the employment relationship [and therefore subject to the workers' compensation laws]’ (Cole v. Fair Oaks Fire Protection Dist., supra, 43 Cal.3d at p. 160 [233 Cal.Rptr. 308, 729 P.2d 743]) or a ‘ risk reasonably encompassed within the [workers'] compensation bargain [a bargain in which the employee gives up tort remedies in exchange for swift and certain compensation regardless of fault].’ (Shoemaker v. Myers, [ (1990) ] supra, 52 Cal.[3]d [1] at p. 16 [276 Cal.Rptr. 303, 801 P.2d 1054].) The obligation to refrain from such conduct is a ‘ duty imposed by law upon all employers to implement the fundamental public policies' of the state (Tameny, supra, 27 Cal.3d at p. 176 [164 Cal.Rptr. 839, 610 P.2d 1330] ); it cannot be bargained away (Foley v. Interactive Data Corp., supra, 47 Cal.3d at p. 670 [254 Cal.Rptr. 211, 765 P.2d 373], fn. 12); it is not preempted by other statutory remedies (Rojo v. Kliger, supra, 52 Cal.3d 65 [276 Cal.Rptr. 130, 801 P.2d 373] ); and its breach is most assuredly not a ‘ normal’ risk of the employment relationship subject to the exclusive remedy provisions of the Labor Code.
" ......................
" The same core values that underlay our holding in Tameny explain why such misconduct cannot be deemed ‘ a risk reasonably encompassed within the compensation bargain.’ As we explained in Foley v. Interactive Data Corp., supra: ‘ What is vindicated through the [ Tameny ] cause of action is not the terms or promises arising out of the particular employment relationship [34 Cal.Rptr.2d 801] involved, but rather the public interest in not permitting employers to impose as a condition of employment a requirement that an employee act in a manner contrary to fundamental public policy.’ (47 Cal.3d at p. 667 [254 Cal.Rptr. 211, 765 P.2d 373], fn. 7.) Just as the individual employment agreement may not include terms which violate fundamental public policy (ibid.), so the more general ‘ compensation bargain’ cannot encompass conduct, such as sexual or racial discrimination [and, we add, age discrimination], ‘ obnoxious to the interests of the state and contrary to public policy and sound morality.’ " (1 Cal.4th at pp. 1100-1101, 4 Cal.Rptr.2d 874, 824 P.2d 680.)
That leaves the issue of whether HOLA preempts Brooks's age discrimination claims, an issue that Bell tenders in its cross-appeal. Again, we find no preemption.
The court in Hall determined that HOLA does not preempt a Tameny action (the plaintiff in Hall alleged she was fired in retaliation for applying for partial unemployment benefits). (231 Cal.App.3d at pp. 719-722, 282 Cal.Rptr. 640.) Hall noted that section 563.39 of the HOLA/OTS regulations indicates a clear concern for employee rights by affording protection to federal savings and loan employees fired without cause. (See § 563.39, subd. (b).) Hall adopted the reasoning of the court in Carteret that, in view of this provision, " ‘ [i]t seems unlikely that the presence of said regulation amounts to an intent ... to preempt federal savings and loans from the thrust of state law that affords protection to the employees of such institutions.’ " (231 Cal.App.3d at p. 721, 282 Cal.Rptr. 640.) Hall then professed its belief that " this rationale applies with even greater strength where ... a termination in violation of public policy has been alleged [as opposed to the implied-in-fact contract regarding job security at issue in Carteret ]." (Ibid.) Hall then concluded: " We perceive no conflict between state law which, as a matter of public policy, protects individuals from such retaliation by allowing tort remedies, and the federal regulation [section 563.39] which allows for the recovery of contract benefits for the lesser wrong of terminating employment without cause." (Id. at p. 722, 282 Cal.Rptr. 640, citations omitted; see Fidelity Federal, supra, 458 U.S. at pp. 152-153, 102 S.Ct. at p. 3022.)
We agree with Hall that HOLA and its regulations do not preempt a cause of action for wrongful discharge in violation of public policy. We hasten to add the following.
Section 528.7 of the OTS regulations (that include the HOLA regulations) prohibits employment discrimination by savings associations and provides in pertinent part: " (f) Any violation of the following laws or regulations by a savings association shall be deemed to be a violation of this part 528 [part 528 governs nondiscrimination requirements]: (2) The Age Discrimination in Employment Act, 29 U.S.C. 621-633...." (12 C.F.R. § 528.7, subd. (f)(2).) Under 29 U.S.C. section 623, " [i]t shall be unlawful for an employer— (1) to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age; [or] (2) to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's age; ...." And, as stated in 29 U.S.C. section 633, " [n]othing in this chapter [Chapter 14— Age Discrimination in Employment] shall affect the jurisdiction of any agency or any State performing like functions with regard to discriminatory employment practices on account of age [with an exception not applicable here]...."
The federal Age Discrimination in Employment Act applies " to individuals who are at least 40 years of age but less than 70 years of age." (29 U.S.C.A. § 631, subd. (a).)
Thus, the relevant regulations recognize and apply the federal Age Discrimination in Employment Act; and that Act explicitly provides that it does not interfere with a state performing like functions regarding age discrimination in employment. The unlawful employment practices regarding age discrimination set forth in section 12941 of FEHA are analogous to the practices set forth in the federal Age Discrimination in Employment [34 Cal.Rptr.2d 802] Act (29 U.S.C.A. § 623, subd. (a)). And there is little threat that a California-based tortious wrongful discharge cause of action predicated on public policy will supplant HOLA's federal oversight over the contractual relationships governing insured savings associations and their officers and employees. Such a cause of action must be based on a fundamental, substantial, and firmly-established public policy that is grounded in statutory or constitutional law at the time of the employee's discharge, and this policy must further a societal interest rather than simply the interest of a particular employee.
We conclude that HOLA does not preempt Brooks's age discrimination causes of action based on FEHA and on wrongful discharge in violation of public policy.
Finally, there is no merit in Bell's contention that Brooks is limited to section 12941 of FEHA, and therefore only to FEHA, in asserting his age discrimination claim. Bell notes this was the only statute cited by Brooks in the trial court (section 12941 specifies the unlawful employment practices based on age). However, the legal basis of the age discrimination cause of action based on wrongful discharge in violation of public policy raises a question of law rather than a question of fact, and legal questions can be considered for the first time on appeal. (See California Pools, Inc. v. Pazargad (1982) 131 Cal.App.3d 601, 604, 182 Cal.Rptr. 568; Hale v. Morgan (1978) 22 Cal.3d 388, 394, 149 Cal.Rptr. 375, 584 P.2d 512; Adelson v. Hertz Rent-A-Car (1982) 133 Cal.App.3d 221, 225-226, 183 Cal.Rptr. 779; compare USLIFE Savings & Loan Assn. v. National Surety Corp. (1981) 115 Cal.App.3d 336, 343, 171 Cal.Rptr. 393 [cannot raise new factual matters on appeal].)
We conclude the trial court erred in dismissing Brooks's cause of action for wrongful discharge in violation of public policy (age discrimination).
b. Administrative Exhaustion Under FEHA
On the day of trial, the trial court dismissed Brooks's FEHA age discrimination claim, concluding that Brooks failed to exhaust his administrative remedies under that act. The trial court erred.
The exhaustion requirement applies to Brooks's FEHA claim but not to his wrongful discharge-public policy cause of action. (See Yurick v. Superior Court (1989) 209 Cal.App.3d 1116, 1120-1123, 257 Cal.Rptr. 665.) As Rojo held, exhaustion is not required before filing an employment discrimination lawsuit alleging non-FEHA causes of action. (52 Cal.3d at p. 88, 276 Cal.Rptr. 130, 801 P.2d 373.)
Brooks was discharged on January 30, 1987. Just over two weeks later, on February 17, 1987, he attempted to file an administrative complaint for age discrimination with the Department of Fair Employment and Housing (Department). Ten days after that, on February 27, 1987, the Department sent Brooks a letter entitled " Notice of Verification of Attempt to File," which stated:
" CHARGING PARTY: Larry Alan Brooks
" RESPONDENT: Bell Savings & Loan Association
" BASIS OF COMPLAINT: Age (over 40)
" This will acknowledge your attempt to file a discrimination complaint with the Department of Fair Employment and Housing. The Department, after careful consideration and evaluation, has made a decision not to accept the complaint. It is our position that an individual has exhausted the administrative remedy available under the Fair Employment and Housing Act by attempting to file a complaint with the Department.
" Please be advised that the Fair Employment and Housing Act, Government Code Section 12965(b), provides persons who file complaints the right to file a private action in a Municipal, Justice or Superior Court within one year from the date of receipt of this notification from the Department. This time limit may apply to you and you should seek legal advice if you intend to go to court.
" Complaint Rejected Date: February 27, 1987."
The trial court determined that since a complaint was not actually filed and Brooks did [34 Cal.Rptr.2d 803] not actually receive a right-to-sue letter, Brooks did not actually exhaust his administrative remedies. We disagree.
The relevant statute is Government Code section 12965. At the time of Brooks's discharge, that section provided in pertinent part: " (a) In the case of failure to eliminate an unlawful practice under this part through conference, conciliation or persuasion, or in advance thereof if circumstances warrant, the director in his or her discretion may cause to be issued in the name of the [D]epartment a written accusation.... ¶ (b) If an accusation is not issued within 150 days after the filing of a complaint, or if the [D]epartment earlier determines that no accusation will issue, the [D]epartment shall promptly notify, in writing, the person claiming to be aggrieved. Such notice shall indicate that the person claiming to be aggrieved may bring a civil action under this part against the [entity] named in the verified complaint within one year from the date of such notice. The superior, municipal, and justice courts of the State of California shall have jurisdiction of such actions, and the aggrieved person may file in any of these courts...."
The Department's February 27, 1987 notice to Brooks acknowledged that Brooks attempted to file an administrative complaint for age discrimination, stated that such action constituted an exhaustion of administrative remedy, and provided the information required by section 12965, subdivision (b). Given this notice, it was not Brooks's responsibility to demand, by judicial intervention if necessary, that the Department formally accept his administrative complaint. After all, under the language of section 12965, subdivision (b), it was apparent that the Department " earlier determine[d] that no accusation [would] issue."
Section 12965, subdivision (b), was amended in 1992, apparently to clarify the right-to-sue notice provisions.
In interpreting FEHA, California courts have adopted the methods and principles developed by federal courts in employment discrimination claims under Title VII of the federal Civil Rights Act (42 U.S.C. § 2000e et seq.). (Yurick, supra, 209 Cal.App.3d at p. 1121, 257 Cal.Rptr. 665; Cummings v. Benco Building Services (1992) 11 Cal.App.4th 1383, 1386, 15 Cal.Rptr.2d 53.) One such principle is the following:
" The Equal Employment Opportunity Act is a remedial statute to be liberally construed in favor of the victims of discrimination.... The broad structure and purpose of Title VII, as established by Congress, relies upon laymen, operating without legal assistance, to initiate both administrative complaints and lawsuits. Congress did not intend that such laymen, not schooled in the finer points of legal procedure, be presumed to know exactly what procedural step they must next take in order to perfect their claims, especially when they have been conclusively told that they have no further rights or remedies." (Kornman v. Baker (N.D.Cal.1988) 686 F.Supp. 812, 814; Mahroom v. Hook (9th Cir.1977) 563 F.2d 1369, 1375.)
Contrary to Bell's assertions, there is nothing in the record to indicate that Brooks was represented by counsel when he attempted to file his administrative complaint with the Department. In fact, the record, the wording of the February 27 notice, and the timing of Brooks' administrative complaint indicate he was acting on his own at this point. In any event, Brooks did everything that reasonably could be expected of him in the administrative sense given the February 27 notice's admonition that he exhausted his administrative remedy and that a private action could be filed in court " within one year from the date of receipt of this notification. " (Emphasis added.) Courts themselves often rely on an administrative agency's interpretation of a complicated statute within the agency's expertise. (See, e.g., Judson Steel Corp. v. Workers' Comp. Appeals Bd. (1978) 22 Cal.3d 658, 668, 150 Cal.Rptr. 250, 586 P.2d 564.) It seems only reasonable that Brooks could rely on the Department's interpretation of the much less-thornier issue of administrative exhaustion, something the Department probably deals with daily.
[34 Cal.Rptr.2d 804] Reasonably, Bell argues that the Department's failure to file Brooks's complaint shut it out of the administrative process because the statutory scheme contemplates that only filed complaints will be served on the employer. (§ 12962.) Bell then claims it suffered prejudicial delay and was denied due process. This is where Bell begins to stretch things.
As for prejudicial delay, Bell couples the one-year period in which to file an administrative complaint (§ 12960) with the one-year period in which to file a court complaint (§ 12965, subd. (b)) to argue that if the February 27 notice is deemed a right-to-sue letter, an employer could be kept in the dark for a two-year period. The problem with this argument is this did not happen here. Within two-and-a-half weeks of being discharged, Brooks attempted to file his administrative complaint. Within 10 days of that attempt, the Department notified Brooks that he could go to court. Brooks did so in June of 1987, within five months of being discharged. Prejudicial delay is not an issue in this case.
As for due process, Bell notes it was not notified of the administrative complaint and was denied the opportunity to participate in the administrative process of conference, conciliation, and persuasion. The notice issue poses little problem here, given the quick resort to administrative and court process. And the conference and conciliation route is initially in the hands of the Department. Under section 12963.7, if the Department " determines after investigation that the complaint is valid, the [D]epartment shall immediately endeavor to eliminate the unlawful employment practice complained of by conference, conciliation, and persuasion." Since the Department refused to accept Brooks's administrative complaint, it would not have taken the conference and conciliation avenue.
Nor is this case akin to Johnson v. Bergland (5th Cir.1980) 614 F.2d 415, 417-418, as claimed by Bell. In Johnson, the court concluded the plaintiff had failed to exhaust his administrative remedies because he failed to submit further information on his administrative claim after being reasonably requested to do so by the administrative agency. Brooks, by contrast, did everything that reasonably could be expected of him in the administrative sense.
Our views on the exhaustion question align with the overriding principle of FEHA that it is to be " construed liberally for the accomplishment of [its] purposes." (§ 12993, subd. (a).) As stated by Martin v. Fisher (1992) 11 Cal.App.4th 118, 122, 13 Cal.Rptr.2d 922, albeit in a different context, " [t]he function of an administrative complaint [under FEHA] is to provide the basis for an investigation into an employee's claim of discrimination against an employer, and not to limit access to the courts."
Brooks's age discrimination causes of action based on FEHA and on wrongful discharge in violation of public policy are against Bell only.
4. The Claims for Negligent and Intentional Infliction of Emotional Distress (NIED and IIED)
The trial court determined these claims were preempted under HOLA and the workers' compensation scheme.
Our conclusion that HOLA does not preempt Brooks's age discrimination claims defeats the contention that HOLA preempts Brooks's causes of action for NIED and for IIED, to the extent these emotional distress claims are based on the conduct that gave rise to Brooks's age discrimination claims.
The causes of action for NIED and IIED also remain viable, notwithstanding HOLA, to the extent they are based on a properly-pled misrepresentation claim. As we have explained, Brooks has alleged that he contracted in reliance on Bell's fraud, and HOLA does not stand in the way of this tort remedy.
That leaves the issue of how the workers' compensation exclusivity provisions affect the NIED and IIED causes of action. We conclude that to the extent the causes of action for NIED and IIED are based on the conduct giving rise to Brooks's claims of age discrimination or (properly-pled) misrepresentation, the trial court erred in dismissing [34 Cal.Rptr.2d 805] them under the workers' compensation exclusivity provisions.
We discuss here only the viability of the causes of action for NIED and IIED. Brooks can seek emotional distress damages as part of his civil FEHA age discrimination action, as part of his tortious wrongful discharge cause of action for age discrimination in violation of public policy, and as part of his misrepresentation claim. (Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211, 221, 185 Cal.Rptr. 270, 649 P.2d 912; see Gantt, supra, 1 Cal.4th at pp. 1100-1101, 4 Cal.Rptr.2d 874, 824 P.2d 680.)
In setting forth his NIED and IIED causes of action, Brooks incorporated all of the allegations of his complaint— the contractual claims, the misrepresentation claim, and the age discrimination claims. These emotional distress causes of action were also the subject of a defense motion for summary judgment/summary adjudication of issues. The incorporated allegations and the motion evidence show the following basis for these two causes of action.
When Brooks was hired as an investment officer with Bell, and during his tenure there, he was assured of a certain job security and assured that he would not be discharged without cause. Bell knew or should have known that these representations were false. At the time Bell made these representations to Brooks, it had no intention of performing them.
Bell had no grounds to discharge Brooks since Brooks was one of Bell's most productive investment officers. Brooks received outstanding evaluations regarding his job performance. Nevertheless, Bell began a course of conduct to render Brooks' employment unbearable. As described by Brooks, this conduct encompassed:
" 1. BROOKS and one other very successful investment officer were singled out for a reduction in salary. The only people whose salaries were reduced were over 40 years of age. None of the younger employees' salaries were reduced;
" 2. The commission structure was altered so as to ensure that certain other investment officers who were more favored by [BELL] obtained the highest commissions. BROOKS' commissions were reduced;
" 3. The toll-free telephone number which had been placed in service in Sacramento for BROOKS' use and which BROOKS successfully had published in numerous financial locations and publications around the country, and which resulted in a large amount of business for BROOKS, was rerouted to another [ ] BELL location for the sole purpose of depriving BROOKS of business which he had generated;
" 4. A telephone number which was also published in financial journals was rerouted to another [ ] BELL office for the benefit of investment officers more favored by [BELL];
" 5. [Defendant] MARY MATOS attempted to get BROOKS fired by attempting to entice BROOKS to claim credit for phony deposit accounts;
" 6. ‘ House accounts' which were previously under BROOKS' control were taken away from him;
" 7. Accounts which BROOKS had given to novice investment officers were not returned to BROOKS when those investment officers left [ ] BELL;
" [8]. [Defendants] [e]stablished an incentive payment plan that created a conflict of interest between plaintiff and other employees by paying commissions to other employees for new accounts generated as a result of plaintiff's efforts;
" [9]. After promising positions as loan agents to all investment officers when the investment officer program was terminated, [BELL] refused to provide such a position to BROOKS in spite of the fact that BROOKS offered to work without salary, hire his own secretary and pay all of his own expenses as a loan agent in Sacramento. The only Investment Officers not given the opportunity to remain with [ ] BELL in some classification were over 40 years of age;
" [10]. [BELL] gave completely pretextual reasons for not giving BROOKS a loan agent position in Sacramento;
" [11]. Throughout this entire period, BROOKS' complaints regarding the actions stated above, and others, fell on completely [34 Cal.Rptr.2d 806] deaf ears and merely resulted in [BELL's] further determination to deprive BROOKS of his well being. BELL ... had adopted grievance procedures with which BROOKS attempted to comply. [BELL] ignored the procedures and informed BROOKS there was nothing that could be done or would be done in spite of the unfairness of the situation [; and]
" [12]. Plaintiff was discharged by defendants from his employment with defendant BELL ... based on his age of over 40 years old, notwithstanding that other employees of defendant BELL ... who were below the age of 40 years old, who had less experience and far less seniority, and who were less qualified than plaintiff were retained as employees by defendant BELL ... in the same job classification as that held by plaintiff."
Based on this treatment, Brooks testified in his deposition that he suffered headaches, insomnia, stomach problems, acute distrust of people, anger, and irritability.
In Cole, supra, 43 Cal.3d 148, 233 Cal.Rptr. 308, 729 P.2d 743, our high court held that the workers' compensation exclusive remedy provisions (Lab.Code, §§ 3600-3602) preempted an aggrieved employee's claim of IIED. The Cole court explained: " An employer's supervisory conduct is inherently ‘ intentional,’ " and " it would be unusual for an employee not to suffer emotional distress as a result of an unfavorable decision by his employer." (43 Cal.3d at p. 160, 233 Cal.Rptr. 308, 729 P.2d 743, emphasis in original; see Gantt, supra, 1 Cal.4th at p. 1099, 4 Cal.Rptr.2d 874, 824 P.2d 680.) Therefore, reasoned Cole, where the acts attributed to the employer constitute a " normal part of the employment relationship," such as a discharge, demotion, discipline or criticism, an employee may not avoid the exclusive remedy provisions of the Labor Code merely by characterizing the employer's decision as one calculated to cause severe emotional disturbance. (Ibid.) In a similar way, an action for NIED resulting from employment dismissal is barred by the workers' compensation exclusivity provisions. (Robomatic, Inc. v. Vetco Offshore, supra, 225 Cal.App.3d at pp. 274-275, 275 Cal.Rptr. 70.)
Unlike IIED which constitutes an independent tort, NIED is not a distinct tort but rather the tort of negligence, involving the usual duty and causation issues. (See 6 Witkin, Summary of Cal.Law (9th ed. 1988) Torts, § 838, p. 195.)
The scope of the Workers' Compensation Act is not universal, however. Where the employer's conduct cannot be considered a " normal part of the employment relationship" or a " risk reasonably encompassed within the [workers'] compensation bargain [employee gives up tort remedies in exchange for swift and certain compensation regardless of fault]," such conduct falls outside the workers' compensation exclusive remedy principles. (Gantt, supra, 1 Cal.4th at p. 1100, 4 Cal.Rptr.2d 874, 824 P.2d 680.) Such is the case with an employment discharge in violation of fundamental public policy. (Id., at pp. 1100-1101, 4 Cal.Rptr.2d 874, 824 P.2d 680; see also Livitsanos v. Superior Court (1992) 2 Cal.4th 744, 754, 7 Cal.Rptr.2d 808, 828 P.2d 1195; B & E Convalescent Center v. State Compensation Ins. Fund, supra, 8 Cal.App.4th at pp. 89-92, 9 Cal.Rptr.2d 894.) We have concluded there is a fundamental public policy in California against age discrimination in employment (age 40 or over).
Indeed, the court in Rojo upheld a wrongful discharge cause of action based on the public policy against sex discrimination in employment, and a cause of action for IIED based on the same conduct, noting that an " employer's discriminatory actions may [also] constitute ... outrageous conduct under a theory of intentional infliction of emotional distress." (52 Cal.3d at p. 81, 276 Cal.Rptr. 130, 801 P.2d 373.) As Rojo explained, " [i]t is ... settled that the common law of this state provides any number of remedial theories to compensate for injuries ‘ relating to discrimination,’ ... [and that a] responsible attorney handling an employment discrimination case must plead a variety of statutory, tort and contract causes of action in order to fully protect the interests of his or her client ...." (Id. at p. 74, 276 Cal.Rptr. 130, 801 P.2d 373, emphasis in original.)
The conduct that Brooks attributes to Bell, as summarized above, can be considered a [34 Cal.Rptr.2d 807] " normal part of the employment relationship" or a " risk reasonably encompassed within the [workers'] compensation bargain" except to the extent that Bell engaged in these acts in discriminating against Brooks on account of his age or in making the alleged misrepresentations (fraud in the inducement of an employment contract) to him. Therefore, to the extent that Brooks alleges distinct causes of action for NIED and for IIED that are not based upon the violation of the fundamental public policy against age discrimination in employment, or upon Brooks's (properly-pled) misrepresentation claim, these causes of action are subsumed under the exclusive remedy provisions of workers' compensation. (Cole, supra, 43 Cal.3d at p. 160, 233 Cal.Rptr. 308, 729 P.2d 743; Shoemaker v. Myers (1990) 52 Cal.3d 1, 25, 276 Cal.Rptr. 303, 801 P.2d 1054; Livitsanos, supra, 2 Cal.4th at p. 754, 7 Cal.Rptr.2d 808, 828 P.2d 1195; Gantt, supra, 1 Cal.4th at pp. 1099-1101, 4 Cal.Rptr.2d 874, 824 P.2d 680.) To the extent these emotional distress causes of action are based on the conduct that gave rise to Brooks's age discrimination or (properly-pled) misrepresentation causes of action, they remain viable claims. (Ibid. )
Because Brooks can maintain his age discrimination and misrepresentation causes of action against Bell or the individual defendants as agents or employees of Bell, as noted, he can maintain his age discrimination and misrepresentation-related causes of action for NEID and IIED in similar fashion. (See fns. 6, 12, ante. )
B. Bell's Cross-Appeal
Bell contends the trial court erred (1) in finding there is a triable issue of material fact as to whether Brooks suffered severe or serious emotional distress, (2) in allowing Brooks to reinstate his FEHA age discrimination cause of action, (3) in refusing to award attorney fees and costs to Bell, (4) in finding that Brooks's claims for NIED and for IIED are not preempted by HOLA and in determining initially that these actions are not preempted by the workers' compensation exclusivity principle, (5) in failing to find that Brooks's cause of action for misrepresentation is preempted by workers' compensation, (6) in finding that the age discrimination claims under FEHA and Tameny are not preempted by HOLA, and (7) in initially determining there is a fundamental public policy based on age discrimination in employment.
As we explain, the trial court acted properly in finding a triable issue of material fact regarding the nature of Brooks's emotional distress and in reinstating Brooks's age discrimination cause of action based on FEHA. We conclude that Brooks's cause of action for misrepresentation— based on a properly-pled action for fraud in the inducement of an employment contract— is not preempted by the workers' compensation exclusivity provisions. We have previously determined that Brooks's age discrimination claims under FEHA and Tameny are not preempted by HOLA. We have also determined that Brooks's causes of action for NIED and for IIED remain viable only to the extent they are based on the conduct giving rise to Brooks's age discrimination or (properly-pled) misrepresentation claims.
Our prior analysis also disposes of Bell's contention that there is no public policy outside of FEHA on which to base a Tameny claim of wrongful discharge in contravention of public policy. That leaves the issues of trial costs and attorney fees, issues which have been rendered moot in light of our determinations.
[34 Cal.Rptr.2d 808] 1. The Triable Issue of Material Fact Regarding Whether Brooks Suffered Serious or Severe Emotional Distress
Bell claims the trial court, in ruling on the defense motion for summary judgment/adjudication of issues, erroneously found there was a triable issue of material fact as to whether Brooks suffered serious or severe emotional distress. We disagree.
We have previously set forth the allegations and evidence regarding Brooks's emotional distress causes of action. These allegations and evidence are sufficient to create a triable issue of material fact as to whether Brooks suffered serious or severe emotional distress. In other words, this issue cannot be determined as a matter of law at this point. As the court in Molien v. Kaiser Foundation Hospitals (1980) 27 Cal.3d 916, 930, 167 Cal.Rptr. 831, 616 P.2d 813, put it: " ‘ In cases other than where proof of mental distress is of a medically significant nature, the general standard of proof required to support a claim of mental distress is some guarantee of genuineness in the circumstances of the case’ .... [J]urors are best situated to determine whether and to what extent the defendant's conduct caused emotional distress, by referring to their own experience.... To repeat: this is a matter of proof to be presented to the trier of fact. The screening of claims on this basis at the pleading stage [or even on the basis of Brooks' deposition testimony here] is a usurpation of the jury's function." (Citations omitted.)
Bell's reliance on Girard v. Ball (1981) 125 Cal.App.3d 772, 178 Cal.Rptr. 406 is misplaced. That case presented a situation where the issue of the severity of emotional distress could be determined as a matter of law. As Girard noted: " The suggestion that appellant, an attorney, banker, builder, investor and businessman, suffered extreme emotional distress from respondent's two letters and some phone calls requesting payment is absurd and does not present a triable issue of fact." (Id. at p. 788, 178 Cal.Rptr. 406.) Brooks's allegations and testimony are not in this (minor) league. A question of fact rather than law is presented here.
2. Reinstatement of Civil FEHA Cause of Action
Brooks dismissed this cause of action in October of 1991, thinking it was preempted by this court's October 1990 decision in Aalgaard v. Merchants Nat. Bank, Inc., supra, 224 Cal.App.3d 674, 274 Cal.Rptr. 81. Aalgaard determined that the National Bank Act (12 U.S.C. § 24, Fifth) preempted an action under FEHA for age discrimination. In June of 1991, the court in Hall, supra, 231 Cal.App.3d 713, 282 Cal.Rptr. 640, determined that the language in the HOLA regulation, section 563.39, was materially different from the " dismiss at pleasure" language at issue in Aalgaard, and held that section 563.39 does not preempt a cause of action for wrongful discharge in violation of public policy. (Id. at pp. 719-720, 282 Cal.Rptr. 640.)
Bell contends the trial court abused its discretion in allowing Brooks, under Code of Civil Procedure section 473, to reinstate his civil FEHA claim for age discrimination. We disagree.
First, Bell notes that ignorance of the law is no excuse. That may be, but there were extenuating circumstances offered by Brooks's counsel. Brooks's counsel explained that early in 1991 he met with Bell's counsel regarding the latter's motion to dismiss the FEHA cause of action based on Aalgaard. Brooks's counsel thought the motion had merit and decided to dismiss the FEHA action. A conflict of interest then arose, and Brooks's counsel was unable to work on the case. After the conflict was resolved in September 1991, Brooks's counsel, in October of 1991, filed the dismissal unaware of the Hall decision. In this light, Brooks's counsel acted reasonably, even admirably toward Bell in the face of what appeared to be an adverse decision. We cannot say the trial court abused its discretion under Code of Civil Procedure section 473— which allows relief for mistake, inadvertence, surprise or excusable neglect— by granting Brooks relief under these circumstances.
Bell also claims that Brooks failed to meet the procedural requirements of section 473 by not submitting a proposed pleading and [34 Cal.Rptr.2d 809] by failing to seek relief within a reasonable time. As for the pleading, Brooks, in reinstating his FEHA action, was not seeking to file a substantively new pleading to cure prior defects and he already had on file the basic pleading regarding his FEHA age discrimination claim. As for the deadline, section 473 requires that application for relief be made within a reasonable period, not to exceed six months. Brooks filed his section 473 motion within six months of dismissing his FEHA action. Under these circumstances, there was no prejudice to Bell and the trial court did not abuse its discretion in allowing Brooks relief under section 473 to reinstate a cause of action that Bell was well aware of and that Brooks had dismissed solely on the basis of Aalgaard.
3. The Misrepresentation Cause of Action Is Not Preempted by the Workers' Compensation Law
In discussing above the preemptive effect of the workers' compensation laws on Brooks's claims for age discrimination and emotional distress, we set forth the legal framework for resolving this issue. In line with that framework and the specific allegations of this case, the issue is whether an employer's knowingly false representations to an employee that the employee will be terminated only for cause or unsatisfactory job performance after a fair consideration of grounds for termination— made with the intent to induce the employee to become employed and to remain employed with the employer, and made without any intention of performing them — can reasonably be viewed as a " normal part of the employment relationship" or as a " risk reasonably encompassed within the [workers'] compensation bargain." (Gantt, supra, 1 Cal.4th at p. 1083, 4 Cal.Rptr.2d 874, 824 P.2d 680; Cole, supra, 43 Cal.3d at p. 160, 233 Cal.Rptr. 308, 729 P.2d 743; Shoemaker, supra, 52 Cal.3d at p. 16, 276 Cal.Rptr. 303, 801 P.2d 1054.)
We think not. To sanction knowing falsehoods such as these, falsehoods that go to the very core of the employment relationship by fraudulently inducing one to accept employment, would be " ‘ contrary to ... sound morality.’ " (Gantt, supra, 1 Cal.4th at p. 1101, 4 Cal.Rptr.2d 874, 824 P.2d 680.) It would countenance unfair manipulation of the highest order with an interest dear to the heart of every employee: their livelihood. As our high court recently stated in Fermino v. Fedco, Inc. (1994) 7 Cal.4th 701, 30 Cal.Rptr.2d 18, 872 P.2d 559, " [w]hat matters ... is not the label that might be affixed to the employer conduct, but whether the conduct itself, concretely, is of the kind that is within the compensation bargain." (Id. at p. 718, 30 Cal.Rptr.2d 18, 872 P.2d 559 [employee's suit against employer for false imprisonment not barred by Workers' Compensation exclusivity provisions].) The fraudulent conduct alleged here simply cannot be considered a " normal part of the employment relationship" or a " risk reasonably encompassed within the [workers'] compensation bargain." (Livitsanos, supra, 2 Cal.4th at p. 754, 7 Cal.Rptr.2d 808, 828 P.2d 1195; Gantt, supra, 1 Cal.4th at p. 1100, 4 Cal.Rptr.2d 874, 824 P.2d 680.) Through this alleged conduct, Bell " stepped out of [its] proper role." (Fermino v. Fedco, Inc., supra, 7 Cal.4th at p. 708, 30 Cal.Rptr.2d 18, 872 P.2d 559, internal quotation marks omitted.) For these reasons, we conclude that Brooks's cause of action for misrepresentation— to the extent it can be properly pled as discussed in section A-2 of this opinion— is not preempted under the exclusive remedy provisions of workers' compensation. (Ibid; contrast Angell v. Peterson Tractor, Inc. (1994) 21 Cal.App.4th 981, 26 Cal.Rptr.2d 541.)
DISPOSITION
We affirm the judgment to the extent it dismisses Brooks's causes of action for breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, and NIED and IIED to the extent these emotional distress claims are not based on Brooks's causes of action for age discrimination or (properly-pled) misrepresentation. We reverse the judgment to the extent it dismisses Brooks's causes of action for misrepresentation (to the extent that Brooks can properly plead such an action, as discussed herein), FEHA violation (age discrimination), wrongful discharge in violation of the public policy against age discrimination in employment, [34 Cal.Rptr.2d 810] and NIED and IIED to the extent these emotional distress claims are based on the conduct giving rise to the age discrimination or the (properly-pled) misrepresentation claims. As noted, these actions are against Bell or the individual defendants as agents and employees of Bell; they cannot be maintained against the individual defendants as individuals. This resolution moots the issues of trial costs and attorney fees. Brooks is awarded his costs on appeal.
PUGLIA, P.J., and BLEASE, J., concur.
Actually, the IIED cause of action was originally asserted against only the individual defendants (Bell employees), after the trial court sustained without leave Bell's demurrer to the NIED action, and sustained with leave the individual defendants' demurrer to the NIED action to allow Brooks to allege they acted outside the scope of employment. We have determined that these causes of action are properly asserted against Bell or the individual defendants as agents or employees of Bell— to the extent noted— because the individual defendants were alleged to be acting in the scope of their employment with Bell. Brooks alleged to the contrary simply to obviate a demurrer. No facts were asserted to support the nonemployment context and to contravene prior allegations that the individual defendants were acting within their scope of employment with Bell. (See fn 6, ante. )
As we explain in section 3 of Brooks's cross-appeal, Brooks's misrepresentation cause of action is not preempted by the workers' compensation law because the alleged misrepresentations cannot be considered a normal part of the employment relationship.