COVERAGE, LIABILITY—Cal. App.: “Managing agents” ignored feces smeared in portable toilet, fear of retribution; punitive damages back on the table
By Lorene D. Park, J.D.
Because there were triable issues over whether a project manager and EEO officer had the discretionary authority to enforce corporate policies against harassment and retaliation when they instead ignored an employee’s complaints over feces and porn in the women’s portable toilet, a California Court of Appeals found that they could be “managing agents” for purposes of corporate liability and the employer could be liable for punitive damages (Davis v Kiewit Pacific Co, decided September 18, 2013 and published October 8, 2013, McDonald, A). Thus, the trial court erred in granting summary adjudication to the employer on the issue of punitive damages before the matter went to trial. The rest of the judgment entered following the jury’s award was affirmed.
The employee was one of two females on an excavation crew of over 100 employees working on a 12-mile excavation project. She had difficulty accessing the portable toilets (often miles away) and they were often left in an unsanitary condition. She asked her foreman, two superintendents, and the safety officer to resolve the issue but she was ignored. At one point her foreman told her to “go find a bush.” She complained to the project manager but nothing changed. Soon thereafter, she opened the door to the women’s portable toilet and saw feces smeared all over the toilet seat and a pornographic magazine on the toilet paper dispenser.
She immediately informed a foreman and a superintendent but there was no investigation. After that incident, her crew members would not even speak to her. She complained to the EEO officer, saying she was afraid of retaliation, but nothing was done. Less than a month later, she was laid off with the rest of the crew but, when the company selectively rehired crew members a week later, the employee was not among them.
The employee filed suit alleging gender bias, a hostile work environment, and retaliation. A jury found in her favor but, before the trial, the court granted the employer summary judgment on the issue of punitive damages. Appealing from that ruling, the employee argued that the trial court erred because there was a triable issue of fact regarding whether a “managing agent” of the company engaged in or ratified the wrongful conduct against her. The appeals court agreed.
Corporate liability. Under California Civ. Code Sec. 3294, an employer is not liable for punitive damages based on the acts of its employee unless it had advance knowledge of the unfitness of the employee and employed him with a conscious disregard of the rights or safety of others, authorized or ratified the wrongful conduct, or was personally guilty of oppression, fraud, or malice. For corporations, the advance knowledge, conscious disregard, ratification, or act of oppression, fraud, or malice must be by an officer, director, or managing agent. The term “managing agent” includes only “corporate employees who exercise substantial independent authority and judgment in their corporate decisionmaking so that their decisions ultimately determine corporate policy.” Here, the employee claimed that the project manager, who was the highest ranking employee at the worksite, and the EEO officer to whom she complained of retaliation were “managing agents” of the employer.
Project manager. The court explained that in moving for summary adjudication on punitive damages, the employer had the initial burden of making a prima facie showing that there were no triable issues regarding whether the project manager and EEO officer were managing agents. As to the project manager, it simply produced his declaration that he never drafted corporate policy or had substantial discretionary authority over decisions that determined policy. To the court, that simply stated a legal conclusion and parroted the legal standard set forth by the state supreme court. The corporation could not satisfy its burden of production of evidence by making a statement of law and the declaration did not sufficiently describe his duties or the nature and extent of his authority and discretion.
Even if the corporation had carried its burden, the employee produced sufficient evidence to show a triable issue of fact. She alleged the project manager was the top manager in charge of the $170 million project and all other managers reported to him. His duties included interfacing with stakeholders, operations and personnel oversight, and contract administration. A jury could conclude that in performing those duties he exercised substantial authority and discretion over a broad range of issues involving the project, including compliance with corporate polices. Accordingly, the trial court erred by concluding there was no triable issue of fact on whether he was a managing agent.
EEO officer. As to the EEO officer, the court again concluded that the corporation did not carry its initial burden of production because again the officer’s declaration merely parroted a legal standard and did not include a sufficient description of his duties or the nature and extent of his authority and discretion. Even assuming the employer carried its burden, the employee showed a triable issue on whether he was a managing agent. Testimony and other evidence, including the employer’s EEO policy manual, indicated that as EEO officer, he was responsible for administering corporate policies on preventing discrimination, retaliation, and harassment for the entire northwest district, including California and on-site EEO officers were trained to send concerns over policy violations to him. He also conducted training for supervisory personnel and oversaw the company’s investigations into policy violations.
Based on this, a trier of fact could reasonably infer he had authority and discretion in making, interpreting, and applying the employer’s EEO policies on a corporate-wide basis, the court found. It could also be inferred that, despite the fear the employee expressed to him on possible retaliation for her reporting the portable toilet issues, he exercised his authority and discretion to not enforce the policy against retaliation and/or to protect her from retaliation and, in so doing, exercised authority that resulted in the ad hoc formulation of corporate policy. Thus, the trial court erred in granting the employer’s motion for summary adjudication of the claim for punitive damages.
The case number is D062388.
Attorneys: Jason D. Dumbeck (Dumbeck & Dumbeck) for Lisa Davis. Ann Kotlarski (Seyfarth Shaw) for Kiewit Pacific, Co.
Companies: Kiewit Pacific, Co.
Cases: CoverageLiability RemediesDamages Discrimination Retaliation CaliforniaNews
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