Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Los Angeles County. Joseph De Vanon, Judge. Affirmed, Los Angeles County Super. Ct. No. GC 034704.
Law Offices of John R. Sorensen and John R. Sorensen for Plaintiff and Appellant.
Seyfarth Shaw, F. Scott Page and Edith Lee for Defendants and Respondents Southern California Permanente Medical Group and Kaiser Foundation Health Plan, Inc.
ROTHSCHILD, J.
Dr. Pascal John Imperato filed suit against Southern California Permanente Medical Group (SCPMG) and Kaiser Foundation Health Plan, Inc. (KFHP), alleging nine causes of action including wrongful termination and libel. The trial court granted defendants’ motion for summary judgment on the ground that Imperato was a partner in the SCPMG partnership, not an employee of SCPMG. Imperato appeals, and we affirm.
BACKGROUND
SCPMG is a general partnership of physicians. It contracts with KFHP to provide medical services to KFHP’s members in southern California.
Imperato is a physician. He moved from Pennsylvania to California to become an employee of SCPMG in 1990.
In July 1992, SCPMG’s board of directors tentatively approved Imperato to be submitted for election to the partnership, and the board asked Imperato if he wished to be considered for partnership status. He replied that he did wish to be considered. The board and the partners voted Imperato in as a partner in October 1992.
The membership and governance structures of SCPMG are spelled out in a written partnership agreement, which delegates broad management authority to the partnership’s board of directors. Only partners may serve on the board. Some directors are elected to the board directly by the partners. The remaining members of the board are the medical director and the associate medical directors. The medical director is appointed by a two-thirds vote of the board and must be confirmed by a two-thirds vote of the partners (with at least three-fourths of the partners voting). The medical director appoints the associate medical directors, who must be confirmed by vote of the board and the partners. In addition, amendments to the partnership agreement, admission of new partners, discharge of partners, and termination of the partnership are all subject to vote of the partners.
When Imperato became a partner, his compensation changed in certain respects. For example, upon becoming a partner, he became eligible for a year-end payment (in his deposition, he described it as a “bonus”). More generally, pursuant to SCPMG’s partnership agreement, “[a]ll of a partner’s compensation is dependent upon the overall financial performance of [SCPMG].” In contrast, SCPMG’s rules and regulations provide that the salary of an employee physician “is considered an expense and financial obligation of the partnership.”
The partnership agreement expressly provides that SCPMG is a “general partnership.” Nothing in the partnership agreement limits the partners’ personal liability for partnership debts. There is, however, evidence that KFHP “agree[s] to indemnify [SCPMG’s] partners . . . for liability for tort claims and to, in a very complicated way, partially indemnify them for losses in operations.”
Under the partnership agreement, “[a] partner will automatically be retired from the partnership at the end of the calendar year during which the partner reaches 65 years of age[.]” Partners can also be involuntarily removed from the partnership “for any reason whatsoever” by a three-fourths vote of both the board and the partners. Employee physicians may be terminated at will. When Imperato was an employee physician, he understood that he was an at-will employee.
In 1993, Imperato filed a complaint with the Department of Fair Employment and Housing (DFEH), challenging SCPMG’s then-existing practice of admitting new partner physicians to different partnership categories on the basis of age. He alleged that he and all other physicians over age 50 were limited to “Category III” partnership status, which provides for “severely restricted” benefits.
SCPMG, Imperato, and the DFEH settled the complaint in 1994. Under the settlement agreement, SCPMG agreed to “remove all benefit limitations based on age from [SCPMG’s] Partnership Agreement and any and all references to age as a criterion for eligibility within the Definitions of Physicians categories contained in [SCPMG’s] Partnership Agreement Rules and Regulations.” SCPMG also agreed that it would immediately convert all “Category III” partners over age 50, including Imperato, to “unrestricted partner status,” i.e., “Category I.”
Imperato turned 65 in 2003. At the end of that calendar year, he was forced to retire from the partnership, pursuant to the partnership agreement.
In November 2003, before Imperato retired, SCPMG sent letters to his patients informing them that he would soon be leaving the organization. The letters included the following text: “In order to best provide for your continuing medical care, we must inform you that Dr. Pascal Imperato will be leaving Kaiser Permanente effective December 31, 2003.” Imperato took those letters to imply that he had not been providing the best medical care to his patients.
On December 30, 2004, Imperato filed suit against SCPMG, and he later added KFHP as a defendant. His operative second amended complaint alleges causes of action for (1) wrongful termination in violation of public policy (based on age discrimination), (2) violation of Labor Code section 970, which prohibits the use of false representations to induce a worker to move from one location to another, (3) violation of the Fair Employment and Housing Act (FEHA), Government Code section 12940 (based on age discrimination), (4) violation of the FEHA, Government Code section 12941 (based on age discrimination), (5) breach of the implied covenant of good faith and fair dealing, (6) specific performance, (7) libel (based on the November 2003 letters from SCPMG to Imperato’s patients), (8) “false light” invasion of privacy (based on the same letters), and (9) breach of the 1994 settlement agreement concerning his DFEH complaint. He named SCPMG as a defendant on all causes of action, but he named KFHP as a defendant on only the libel and invasion of privacy claims.
Defendants moved for summary judgment. The trial court granted the motion. The court determined that the age discrimination, good faith and fair dealing, and specific performance claims all fail as a matter of law because the undisputed facts show that Imperato was a partner in the SCPMG partnership, not an employee of SCPMG. The court concluded that the Labor Code section 970 claim failed because it was time-barred and because Imperato had introduced no evidence that SCPMG made any false representations to him in order to induce him to move to California. The court further determined that the libel and invasion of privacy claims failed because the November 2003 letters to Imperato’s patients were not defamatory and did not invade Imperato’s privacy, and because Imperato had introduced no evidence of malice. Finally, the court concluded that the claim for breach of the settlement agreement failed because it was untimely and Imperato had introduced no evidence of a breach. The court overruled all of the parties’ evidentiary objections except defendants’ objections to evidence introduced by Imperato that contradicted his deposition testimony, which were sustained.
The court entered judgment on February 27, 2006. Imperato timely appealed.
STANDARD OF REVIEW
Because Imperato appeals from the summary judgment entered against him, “we independently examine the record in order to determine whether triable issues of fact exist to reinstate the action.” (Wiener v. Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1142.)
DISCUSSION
I. The Age Discrimination Claims
“The FEHA . . . prohibits only ‘an employer’ from engaging in improper discrimination.” (Reno v. Baird (1998) 18 Cal.4th 640, 644, quoting Gov. Code, § 12940, subd. (a); see also Vernon v. State of California (2004) 116 Cal.App.4th 114, 123.) The same requirement applies to the common law tort of wrongful termination in violation of the public policy against age discrimination—only an employer may be held liable. (Jennings v. Marralle (1994) 8 Cal.4th 121, 130; see also Reno v. Baird, supra, 18 Cal.4th at pp. 663-664.)
The trial court concluded that Imperato’s age discrimination claims fail because the undisputed facts show that SCPMG was not Imperato’s employer when it forced him to retire at age 65. Rather, Imperato was a partner in SCPMG, not SCPMG’s employee.
Imperato argues, as he did in the trial court, that he was not a bona fide partner but rather was a partner in name only, that in substance he was really an employee of SCPMG, and that he introduced sufficient evidence to create factual disputes on these points. We disagree.
Case law on this issue has generally relied upon statutory and common law definitions of partnerships and the master-servant relationship. For example, Wheeler v. Hurdman (10th Cir. 1987) 825 F.2d 257, looked to “the total bundle of partnership characteristics[,]” including “participation in profits and losses, exposure to liability, investment in the firm, partial ownership of firm assets, and . . . voting rights[,]” in concluding that a partner in a 500-partner accounting firm was not an employee for purposes of federal antidiscrimination law. (Id. at pp. 260, 276-277.) Similarly, Simpson v. Ernst & Young (6th Cir. 1996) 100 F.3d 436, relied upon “common-law principles as codified in the [Uniform Partnership Act], including, but not limited to: the right and duty to participate in management; the right and duty to act as an agent of other partners; exposure to liability; the fiduciary relationship among partners; use of the term ‘co-owners’ to indicate each partner’s ‘power of ultimate control;’ participation in profits and losses; investment in the firm; partial ownership of firm assets; voting rights; the aggrieved individual’s ability to control and operate the business; the extent to which the aggrieved individual’s compensation was calculated as a percentage of the firm’s profits; the extent of that individual’s employment security; and other similar indicia of ownership.” (Id. at pp. 443-444; see also Strother v. S. Cal. Permanente Medical Group (9th Cir. 1996) 79 F.3d 859, 866-867; Fountain v. Metcalf, Zima & Co., P.A. (11th Cir. 1991) 925 F.2d 1398, 1400-1401.)
The leading United States Supreme Court case in this area, Clackamas Gastroenterology Associates, P.C. v. Wells (2003) 538 U.S. 440, is factually distinguishable because it deals with physician shareholders of a professional corporation, rather than partners in a general partnership, but its analysis is similar to the analysis adopted by cases concerning partnerships. The Supreme Court stated that “the common law’s definition of the master-servant relationship . . . provide[s] helpful guidance” in determining whether a particular individual is an employee for purposes of antidiscrimination law. (Id. at p. 448.) In the case before it, the Court identified six factors that were relevant to determining whether the physician shareholders were employees, but it noted that the six factors “need not necessarily be treated as ‘exhaustive.’” (Id. at p. 450, fn. 10 [adding that there is no “shorthand formula or magic phrase” that will decide every case].) The Court further cautioned that the determination “depends on ‘“all of the incidents of the relationship . . . with no one factor being decisive.”’” (Id. at p. 451, quoting Nationwide Mut. Ins. Co. v. Darden (1992) 503 U.S. 318, 324.)
The factors were (1) “[w]hether the organization can hire or fire the individual or set the rules and regulations of the individual’s work[;]” (2) “[w]hether and, if so, to what extent the organization supervises the individual’s work[;]” (3) “[w]hether the individual reports to someone higher in the organization[;]” (4) “[w]hether and, if so, to what extent the individual is able to influence the organization[;]” (5) “[w]hether the parties intended that the individual be an employee, as expressed in written agreements or contracts[;]” and (6) “[w]hether the individual shares in the profits, losses, and liabilities of the organization.” (Id. at pp. 449-450.)
In this case, we conclude that Imperato’s right to participate in management, his participation in profits and losses, and his exposure to liability show that he was a bona fide partner, not an employee, of SCPMG.
Imperato argues that his compensation as a partner was “in form and essence the same as that” paid to employee physicians, but the argument is not persuasive. Employee physicians are paid salaries pursuant to their employment contracts with SCPMG, and SCPMG is legally obligated to pay those salaries just as it is legally obligated by any other contract to which it is a party. All compensation for partners, in contrast, “is dependent upon the overall financial performance of [SCPMG].” Imperato cites no evidence that calls into question this fundamental distinction—employee physicians are contract workers, whereas partners have no such contractual entitlement but rather share in the overall financial success (or failure) of SCPMG.
Imperato further contends that as a partner “he did not exercise any true or meaningful control over the management and business functions of [SCPMG].” But again Imperato cites no evidence sufficient to create a material factual dispute. SCPMG’s partners have delegated broad management authority to the board of directors. As a matter of law, they can do so without forfeiting their status as partners. (See, e.g., Moulin v. Der Zakarian (1961) 191 Cal.App.2d 184, 190.) Most of the members of the board are elected directly by the partners, and the remainder, though appointed, are subject to confirmation by vote of the partners. The board thus is not a self-perpetuating entity, insulated from partner control, but rather is democratically accountable to the partners, including Imperato (when he was a partner). (Cf. E.E.O.C. v. Sidley Austin Brown & Wood (7th Cir. 2002) 315 F.3d 696, 702-703 [describing the very different management structure of a large law firm run by an “unelected” executive committee whose composition is subject to “no control, direct or indirect,” by the firm’s partners].) SCPMG’s partners thus exercise democratic control over the board, which manages SCPMG. In addition, amendments to the partnership agreement, admission of new partners, discharge of partners, and termination of the partnership are all subject to vote of the partners. We conclude that Imperato’s right, when he was a partner, to participate in the management and control of SCPMG is undisputed. There is no evidence that SCPMG’s employee physicians have any such right.
Imperato also argues that, in reality, he “did not have unlimited liability for partnership debts.” He bases the argument on two purported facts: (1) “No SCPMG ‘partner’ has ever been held personally liable for an unpaid partnership debt[,]” and (2) KFHP indemnifies SCPMG’s partners for tort liability and certain operational losses. The first fact is irrelevant—even if no partner has ever been held liable, it does not follow that SCPMG’s creditors lack the right to hold the partners personally liable for the partnership’s debts. The second fact is similarly irrelevant—the existence of some sort of indemnity agreement (or an insurance policy, for that matter) does not show that the partners are not personally liable in the first instance. (See Wheeler v. Hurdman, supra, 825 F.2d at p. 274 [insurance “guarantees no safety from liability”].) It is undisputed that SCPMG is a general partnership. As a matter of law, general partners “are liable jointly and severally for all obligations of the partnership unless otherwise agreed by the claimant or provided by law.” (Corp. Code, § 16306, subd. (a).) It is therefore undisputed that SCPMG’s partners (including Imperato until his forced retirement) are liable for SCPMG’s debts.
In addition, Imperato points out that his “working conditions” and “duties” “varied little” between his positions as an employee physician and as a partner in SCPMG. Assuming that this argument is supported by sufficient evidence, it still has no tendency to show that Imperato was not a bona fide partner. SCPMG’s partners, like SCPMG’s employee physicians, all work as physicians, i.e., they provide medical care to patients. Their working conditions and work duties thus vary little regardless of their different roles in the management or ownership of SCPMG. Because the partners really do own and control SCPMG, however, they are bona fide partners, even if they also work as physicians and thus have the same day-to-day medical duties as employee physicians.
Imperato’s remaining arguments do not require extensive discussion. He points out that he “never gave knowing, written consent to waive his [c]ivil [r]ights.” But the point is not that he waived any rights—the point is that as an SCPMG partner he had no right (waived or unwaived) to sue SCPMG for age discrimination, because SCPMG was not his employer. Imperato also raises a number of public policy arguments, but none of them changes the undisputed facts that show he was a partner, not an employee.
For all of the foregoing reasons, we affirm the trial court’s determination that there is no disputed issue of material fact on Imperato’s age discrimination claims and that defendants are therefore entitled to judgment on those claims as a matter of law.
II. The Labor Code Section 970 Claim
Labor Code section 970 prohibits employers from making certain false representations to employees in order to induce the employees to move from one place to another. Imperato alleged in his second amended complaint that SCPMG violated the statute by falsely representing that it did not discriminate on the basis of age, in order to induce Imperato to move from Pennsylvania to California to work for SCPMG. The trial court concluded that the claim fails as a matter of law because it is time-barred and because Imperato introduced no evidence of the required false representations. Imperato argues that the trial court erred on both points. We disagree.
The parties disagree about the applicable statute of limitations. Defendants invoke the one-year limitations period applicable to “[a]n action upon a statute for a penalty.” (Code Civ. Proc., § 340, subd. (a); Lab. Code, § 972 [imposing civil liability for double the damages caused by a violation of section 970]; see also Munoz v. Kaiser Steel Corp. (1984) 156 Cal.App.3d 965, 980.) Imperato contends that a violation of Labor Code section 970 is in the nature of a fraud, so the three-year limitations period for fraud actions applies. (Code Civ. Proc., § 338, subd. (d).) Assuming arguendo that Imperato is correct, his claim is still untimely if it accrued more than three years before he filed suit on December 30, 2004, unless the statute of limitations was tolled.
If SCPMG induced Imperato to move from Pennsylvania to California on the basis of false representations, then Imperato was damaged when he moved to California in 1990. His claim (if any) under section 970 therefore accrued in 1990 and was time-barred by the end of 1993, unless the statute of limitations was tolled.
Imperato argues that he was not damaged until 2003, “when he was terminated due to age.” The argument lacks merit. If, as he alleges, SCPMG induced him to move to California in 1990 under false pretenses, then he was damaged when he moved.
Imperato contends that the limitations period was tolled by fraudulent concealment, because SCPMG concealed the falsity of its representation that it did not discriminate on the basis of age. The argument fails because Imperato himself filed a DFEH complaint against SCPMG for age discrimination in 1993. Thus, assuming that SCPMG did falsely represent that it did not discriminate on the basis of age, and assuming that SCPMG initially concealed the falsity of that representation from Imperato, Imperato was nonetheless aware of the falsity of the representation by 1993. His claim (if any) under section 970 was therefore time-barred by the end of 1996 (again assuming that the statutory period is three years, not one). He filed this action in 2004, at least eight years too late.
Insofar as Imperato seeks to base his claim on an alleged representation that SCPMG would not force him to retire on the basis of his age, the claim still fails because the partnership agreement, which Imperato received when he became a partner in 1992, expressly provides for mandatory retirement at age 65, and that provision has never been changed. Thus, assuming that SCPMG induced Imperato to move to California on the basis of a representation that he would not be forced to retire because of his age, and again assuming that SCPMG initially concealed the falsity of that representation, SCPMG revealed the falsity of that representation in 1992 when it gave Imperato a copy of the partnership agreement. Any claim based on that alleged representation was time-barred by the end of 1995, at the latest.
Finally, Imperato contends that the 1994 settlement agreement concerning his DFEH complaint contains misrepresentations by SCPMG. The contention is irrelevant, because no representations made by SCPMG in 1994 could have induced Imperato to move from Pennsylvania to California in 1990. Indeed, Imperato does not allege that any representations in the 1994 settlement agreement induced him to move from one place to another, so they cannot form the basis for a claim under Labor Code section 970.
For all of these reasons, we affirm the trial court’s determination that Imperato’s claim under Labor Code section 970 fails as a matter of law.
III. The Libel and Invasion of Privacy Claims
The trial court concluded that Imperato’s libel and invasion of privacy claims fail as a matter of law because the November 2003 letters to Imperato’s patients were neither defamatory nor invasive of Imperato’s privacy, and because Imperato introduced no evidence of malice, which would be necessary to defeat the common interest privilege of Civil Code section 47, subdivision (c). On appeal, Imperato argues that malice can be inferred because the person who sent the letters on behalf of SCPMG lacked reasonable grounds to believe that the statements in the letters were true. Imperato cites no evidence to support that contention, however, so his argument fails. (Colt v. Freedom Communications, Inc. (2003) 109 Cal.App.4th 1551, 1560.) We therefore affirm the trial court’s rejection of Imperato’s libel and invasion of privacy claims.
IV. The Breach of Settlement Agreement Claim
The trial court determined that Imperato’s claim for breach of the 1994 settlement agreement fails as a matter of law because it is untimely and because Imperato has introduced no evidence that SCPMG breached the agreement. Imperato argues that SCPMG did breach the settlement agreement by failing to remove the age-based mandatory retirement provision from the partnership agreement. The argument fails because the settlement agreement did not require SCPMG to remove the mandatory retirement provision. Rather, it required SCPMG to “remove all benefit limitations based on age from [SCPMG’s] Partnership Agreement and any and all references to age as a criterion for eligibility within the Definitions of Physicians categories contained in [SCPMG’s] Partnership Agreement Rules and Regulations.” The mandatory retirement provision is not contained in the “Definitions of Physicians categories” and is not a benefit limitation based on age. Moreover, there would be no reason for SCPMG to remove it, because it is not unlawful. (See Part I, ante.) We therefore affirm the trial court’s rejection of this claim as well.
DISPOSITION
The judgment is affirmed. Respondents shall recover their costs on appeal.
We concur: MALLANO, Acting P.J. JACKSON, J.
(Judge of the L. A. S.Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.)