Update 1/11/18: the California Supreme Court has (1) denied petition for review and (2) ordered this case depublished. (Docket linked here.) Here is my original post on Ly:
Employment and workers' compensation attorneys, call your attention to the Court of Appeal's opinion in Ly v. County of Fresno (CA5 F072351, filed 9/15/17, pub. ord. 10/12/17), holding that res judicata can bar your clients from bringing FEHA claims in a civil action if you seek emotional distress in your comp action flowing from the same discriminatory acts.
The factual allegations showing what these claimants asserted as evidence of pretext and discrimination are not in this opinion at all, so we can't tell how strong their cases were. But regardless, this key portion of the opinion reciting the ruling of the trial court that was affirmed and provides us with the key takeaway to apply to your comp practices:
The trial court noted that while plaintiffs could not be forced to litigate their FEHA claims before the WCAB, each chose to pursue their remedies in that forum on the exact claims asserted in the FEHA action. The trial court found the workers’ compensation proceedings were judicial in nature and the doctrine of collateral estoppel barred plaintiffs’ FEHA claims because (1) each plaintiff was afforded the opportunity to present evidence and call witnesses, with Ly represented by counsel, and Herr and Yang allowed to self-direct their testimony, produce documents and call witnesses; (2) the issues litigated were identical; and (3) each WCJ found the County’s actions “were non-discriminatory, in ‘good faith,’ and based upon ‘business necessity.’ ”
Slip op. at 5. The Court of Appeal affirmed.
So how do you avoid this result and ensure that your clients' FEHA civil claims aren't wiped out? Simple: don't allege racial/other discrimination in your comp cases before the WCAB (except possibly Labor Code section 132a, of course). After all, the law is clear that FEHA-prohibited discrimination is not within the employment bargain, and injured discrimination victims do not have to bring claims for such conduct in a comp proceeding. See, e.g., City of Moorpark v. Super. Ct., 18 Cal. 4th 1143, 1156 (1998); Bagatti v. Dept. of Rehab. 97 Cal. App. 4th 344, 368 (2002) (FEHA claim for physical injuries caused by employer's failure to accommodate not preempted by Workers' Compensation Act).
But---and this is critical---while an employee-claimant cannot be forced to litigate a discrimination claim before the WCAB, nothing prevents the claimant from doing so voluntarily. Ly, slip op. at 6, citing Labor Code § 3208.3.
In the Ly case, the claimants voluntarily sought compensation before the Workers' Compensation Appeals Board for what could have been brought as powerful FEHA claims for race discrimination in a separate civil action.
So applicant-side comp attorneys, get your employment-law colleagues involved with the FEHA-side well before you ever assert overlapping claims in your comp proceeding to make sure you evaluate whether it's in your client's best interest to do so. Employment attorneys, where your client has a comp action pending, make sure to get a copy of the case file and make sure that there are no overlapping claims that could create a res judicata risk.
Finally, be aware that employers may insert broad waivers, including waivers of the protections of Civil Code 1542, in their comp releases. At least one unpublished appellate opinion actually upheld such a release in the WCAB comp proceeding as a bar on later-filed wrongful-termination claims. See Belletich v. Carley, LLC, 2008 WL 651594 (Cal. Ct. App. 2d Dist. 2008) (unpublished).
In the Belletich case, the comp claimant signed a release containing broad release language:
This [Release] contains adequate consideration to settle any and all claims for a job displacement voucher. This [Release] settles all claim [sic] whether civil, administrative, federal, or state against defendants Carley LLC & State Farm.
2008 WL 651594 at *1.
The claimant filed a FEHA wrongful-termination/discrimination case (with an addition Labor Code 203 claim) in Los Angeles County Superior Court. The trial court (Judge Mel Recana) granted summary judgment for the employer on grounds that the claims were barred by the release signed in the comp case, and the Second District Court of Appeal affirmed in this unpublished decision.
Comp claimants should never agree to a general release, a release of "all claims," a release of "civil claims," a 1542 waiver, or anything other than a release of worker's-compensation claims (unless absolutely sure that they aren't going to pursue any other claims and if this is truly what is needed to get the deal done, when evaluated by their experienced comp attorneys and, prudently, with separate employment counsel also looking into the matter first). A claimant's comp attorney should advise the claimant language like this can cut off the claimant's rights to pursue civil claims.
On the 132a front, note that the appellate opinion in Dutra v. Mercy Medical Center Mt. Shasta, 209 Cal. App. 4th 750 (2012) (holding that there is no civil tort action premised on 132a and that 132a claims must be brought before the WCAB) is at the Court of Appeal level, while the Cal Supremes in City of Moorpark seemed to approve common-law tort claims for violations of 132a. This conflict was recognized in a recent federal Central District case:
In any event, the Court notes that the holding in Dutra is by no means settled law in light of the California Supreme Court's decision in City of Moorpark. Compare Dutra, 209 Cal.App.4th at 756, 146 Cal.Rptr.3d 922 (“Allowing plaintiff to pursue a tort cause of action based on a violation of section 132a would impermissibly give her broader remedies and procedures than that provided by the statute. Thus, the statute cannot serve as the basis for a tort claim of wrongful termination in violation of public policy ....”), with City of Moorpark, 18 Cal.4th at 1159, 77 Cal.Rptr.2d 445, 959 P.2d 752 (“[W]hen the constitutional provision or statute articulating a public policy also includes certain substantive limitations in scope or remedy, these limitations also circumscribe the common law wrongful discharge cause of action. Stated another way, the common law cause of action cannot be broader than the constitutional provision or statute on which it depends, and therefore it presents no impediment to employers that operate within the bounds of law.”).
Ramirez v. Saia Inc., 2014 WL 3928416 at *5 (C.D. Cal. 2014); see also Shaw v. Super. Ct., 2 Cal. 5th 983, 1005 n.18 (2017) (noting but not resolving the conflict).
Comp attorneys, one possible approach may be to allege a 132a claim while at the same time asserting both a 132a/WTVPP and FEHA retaliation claim in a separate civil action and inform both forums that you are doing so in an abundance of caution and will elect to proceed in the court action upon a determination that Moorpark and not Dutra prevails and applies; or take some other tactic. You can for example request a stay on the 132a issue with the WCAB until the court-action claim is resolved. But you should be aware of this issue and make sure that you plan your strategy with full knowledge of these issues.
More importantly, this seems to also be a doable tactic if you're ever in a position of being unsure whether to raise what could look like FEHA race or other discrimination in a WCAB comp proceeding instead of a civil action--bring them in both forums if you need to preserve statutes, then figure out what to do (e.g., refer out to employment counsel for the court action). The Ly court gives us some dicta that arguably supports this approach:
When two tribunals have jurisdiction and neither party objects to the jurisdiction of one or the other, then the first final judgment from one of the tribunals becomes conclusive and renders the same issue res judicata in the other court. (Busick, supra, 7 Cal.3d at p. 977.) While workers’ compensation was not plaintiffs’ exclusive remedy, once they elected to pursue that remedy to a final, adverse judgment instead of insisting on the primacy of their rights under the FEHA, the WCAB became the exclusive forum to recover for their injuries.
Ly, slip op. at 10.
Of course, you'll have to beware the doctrine of exclusive concurrent jurisdiction and possible plea in abatement, so do your research. Think carefully about how you want to approach this. But if you are representing the employee in a FEHA employment action and find that your client has overlapping claims asserted in a pending comp action, you should get on the phone immediately with the comp lawyer to figure this out together and agree on a strategy.
While this opinion provides a lot of takeaways for plaintiff- and applicant-side attorneys, both comp and civil, are there any takeaways for defense-side comp and employment attorneys? Of course. Employer-side comp attorneys, there's nothing stopping you from offering the applicant's counsel to have a broader set of facts and alleged harms adjudicated in your comp proceedings. Get buy-in on this, and you may have dodged a very expensive civil action and minimized your client's exposure. (And, theoretically, there could even be situations where resolving everything in the comp proceeding might be actually an advantage for both sides, such as where the harm is small or the alleged facts are tenuous, making the claim economically infeasible in a separate civil action.)