Opinion
No. C 03-4921 CRB.
October 28, 2004
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT MAJESTIC INSURANCE COMPANY'S MOTION TO DISMISS UNDER FRCP RULE 12(b)(6)
In this employment action, Dana Walton ("plaintiff") alleges that Majestic Insurance Company ("Majestic" or "defendant"), along with six other defendants, discriminated against her on the basis of race and gender. Now before this Court is defendant's motion to dismiss plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(6) for failing to state a claim for which relief may be granted. After carefully considering the papers filed by the parties, the Court concludes that oral argument is unnecessary, see Local Rule 7-1(b), and GRANTS in part and DENIES in part defendant's motion.
BACKGROUND
Plaintiff is an African American woman who was jointly employed by Defendants International Longshore and Warehouse Union, Local 10 ("ILWU") and Pacific Maritime Association ("PMA"). Plaintiff alleges her supervisor, Defendant Richard Mead ("Mead"), physically attacked her at work during a dispute over office keys. Mead does not deny that a fight occurred but claims that plaintiff was the initial aggressor. As a result of injuries sustained during the attack, plaintiff was unable to work from November 3, 2002 until March 10, 2003.
Majestic is PMA's workers' compensation insurance carrier. Majestic denied plaintiff's claim for workers' compensation on the basis that plaintiff was the "initial aggressor." Plaintiff alleges that Majestic actually denied the claim because it was retaliating against her for filing a worker's compensation claim. Plaintiff further states that Majestic conspired to and did discriminate against her on the basis of race and gender.
Plaintiff alleges nine causes of action against Majestic including: (1) race, gender, and sex discrimination and harassment; (2) retaliation and harassment; (3) violation of California Civil Code section 52; (4) violation of California Civil Code section 51.7; (5) negligent infliction of emotional distress; (6) intentional infliction of emotional distress; (7) defamation; (8) fraud and misrepresentation; and (9) violation of California Unfair Business and Professions Code section 17200.
DISCUSSION
I. Standard under Rule 12(b)(6)
The Federal Rules of Civil Procedure do not require a claimant to set out in detail the facts upon which he bases his claim.See Conley v. Gibson, 355 U.S. 41, 47 (1957). All the rules require is "a short and plain statement of the claim" that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests. Id.; Fed.R.Civ.P. 8(a)(2). A 12(b)(6) dismissal is proper only where there is either a "lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). The Supreme Court has stated that a "complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no sets of facts in support of his claim which would entitle him to relief."Conley, 355 U.S. at 45-46.
A complaint must be construed in the light most favorable to the plaintiff. See Russell v. Landrieu, 621 F.2d 1037, 1039 (9th Cir. 1980). A court generally assumes the factual allegations to be true. See W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981), cert. denied, 454 U.S. 1031 (1981). However, a court does not necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations. Id. To dismiss with prejudice, it must appear to a certainty that the plaintiff would not be entitled to relief under any set of facts that could be proven. See Reddy v. Litton Indus., 912 F.2d 291, 293 (9th Cir. 1990), cert. denied, 502 U.S. 921 (1991).
II. Plaintiff's Claims
A. Preemption by California's Workers' Compensation Act
Defendant argues that plaintiff's claims are preempted by California's Workers' Compensation Act ("WCA") because the claims are based on defendant's denial of workers' compensation benefits. Plaintiff responds that the WCA does not preempt her causes of action because defendant acted outside its role as an insurer and violated fundamental public policies.
The underlying premise of workers' compensation is the "compensation bargain" wherein an employer assumes liability for industrial personal injury or death without regard to fault in exchange for limitations on the amount of their liability. See Vacanti, M.D., Inc. v. State Comp. Ins. Fund, 24 Cal. 4th 800, 811 (2001). To effectuate this bargain, the California legislature enacted several provisions limiting the remedies available for injuries covered by the WCA. See id.; Cal. Lab. Code §§ 3600-3602. Under these provisions, workers' compensation provides an exclusive remedy for injuries "arising out of and in the course of his employment." Cal. Lab. Code §§ 3600-3602.
The California Supreme Court has adopted a two part analysis for determining whether a cause of action is encompassed within the WCA's exclusivity provisions. Vacanti, 24 Cal. 4th at 811-12. First, the court must determine whether the alleged injury is "collateral to or derivative of" an injury compensable by the exclusive remedies of the WCA. Id. at 811. Second, if the injury meets the "collateral to or derivative of" test, then courts examine whether the alleged acts or motives that establish the elements of the cause of action fall outside the risks encompassed within the compensation bargain. Id. at 811-12. Where the acts are a "normal" part of the employment relationship or workers' compensation claim process, or where the motive does not violate a fundamental public policy, then the cause of action is barred. Id. An employee may only maintain a private cause of action against the insurer when the insurer commits wrongful acts that are independent of its role as insurer of workers' compensation benefits. Id. at 822. The conduct must be "so extreme and outrageous" that the carrier in effect steps outside the role of insurer. Id. at 820.
In this case, the injuries allegedly caused by defendant were "collateral to or derivative of" a compensable injury because they arose from defendant's denial of worker's compensation benefits. See id. at 815 (stating that injuries that arise out of and in course of the workers' compensation claims process come within the exclusivity rules because this process is "tethered to a compensable injury").
Under the second part of the Vacanti analysis, the court must now consider whether defendant's alleged conduct violated a fundamental public policy. See id. at 811-12. A public policy is fundamental if it has a basis in constitutional or statutory provisions. See Maynard v. City of San Jose, 37 F.3d 1396, 1406 (9th Cir. 1994) (citing Gantt v. Sentry Ins., 1 Cal. 4th 1083 (1992)). In Maynard, the court held that plaintiff's claims for intentional infliction of emotional distress were not preempted by workers' compensation because the claims were based on conduct that implicated public policy, namely retaliating against employees who oppose or participate in the investigation of discriminatory practices under California Civil Code section 12940(f). Id. at 1406-07.
Here, plaintiff alleges that defendant denied benefits on the basis of plaintiff's race and gender. Taken as true, defendant's conduct constitutes a violation of California civil code section 51. Plaintiff's other causes of action, with the exception of defamation, are all based on defendant's alleged discriminatory conduct and thus arise out of conduct that implicates a fundamental public policy. Defendant's motion to dismiss plaintiff's claims under the exclusivity provisions of the WCA is DENIED.
Plaintiff also asserts that defendant violated California's Fair Employment and Housing Act and the U.S. Civil Rights Act of 1964 ("Title VII"). However, as discussed in Part II.B., these causes of action should be dismissed.
Plaintiff's defamation claim should be dismissed on alternate grounds, as discussed in Part II.G.
B. Race, Gender, Sex Discrimination, Harassment and Retaliation (First and Second Causes of Action)
In her first cause of action, plaintiff alleges that Majestic violated the United States Civil Rights Act of 1964 ( 42 U.S.C. section 2000e) ("Title VII") and California's Fair Employment and Housing Act (California Government Code sections 12900-12996) by discriminating against her on the basis of race, gender and sex. In her second cause of action, plaintiff alleges that Majestic retaliated against her based on those same protected categories.
Title VII and California's Fair Employment and Housing Act ("FEHA") provide that employers may not harass or discriminate against a person in compensation or in terms, conditions or privileges of employment on the basis of race, color, sex, or national origin. 42 U.S.C. § 2000e-2; Cal. Gov't Code § 12940. Both acts define employer to include any person acting as an agent of an employer. 42 U.S.C. § 2000e(2); Cal. Gov't Code § 12940(j)(4)(A).
Defendant argues that plaintiff cannot bring a cause of action under Title VII and FEHA because Majestic and plaintiff do not have an employment relationship. See Shephard v. Loyola Marymount Univ., 102 Cal. App. 4th 837, 842 (2002) ("In order to recover under the discrimination in employment provisions of the FEHA, the aggrieved plaintiff must be an employee."). In response, plaintiff argues that Majestic acted as the agent and alter ego of PMA, plaintiff's employer.
Plaintiff has not offered any factual basis for asserting that Majestic acted as an agent or alter ego of PMA. Rather, plaintiff only relies on conclusory assertions such as "all defendants, named or unnamed, were and now are duly appointed officers and/or employee or agents of the other defendants" and "each of the defendants herein was, at all times relevant, to this action, the agent or employee of the remaining defendants and was acting within the course and scope of that relationship." FAC ¶ 16-17. Plaintiff does not cite any authority that Majestic's status as PMA's workers' compensation insurance carrier creates an agency relationship for PMA's discriminatory acts in the workplace. Nor does plaintiff contend that if granted leave to amend she could, in good faith, allege facts that suggest Majestic was acting as her employer. Defendant's motion to dismiss plaintiff's first and second causes of action is GRANTED without leave to amend.
C. Unruh Civil Rights Act (Cal. Civ. Code § 51) (Third Cause of Action)
Plaintiff alleges that defendant violated the Unruh Civil Rights Act ("UCRA") by denying workers' compensation benefits based on plaintiff's race and gender. Defendant argues that the UCRA is inapplicable to workers' compensation claims.
The UCRA states that "All persons . . . are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, disability, or medical condition are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever." Cal. Civ. Code § 51. The UCRA prevents discrimination in access to a business and its services. See Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042, 1050 (9th Cir. 2000); Black v. Dept of Mental Health, 83 Cal. App. 4th 739, 745 (2000). The UCRA evidences concern not only with access to business establishments, but with equal treatment of patrons in all aspects of the business. See Koire v. Metro Car Wash, 40 Cal. 3d 24, 29 (1985). "The primary purpose of the Unruh Act is to compel recognition of the equality of all persons in the right to the particular service offered by an organization." Curran v. Mount Diablo Council of the Boy Scouts, 147 Cal. App. 3d 712, 733 (1983).
On a plain reading of the statute, plaintiff's allegation states a valid cause of action under the UCRA. See Kotev v. First Colony Life Ins. Co., 927 F. Supp. 1316, 1320 (C.D. Cal. 1996) (Plaintiff's allegations that he was denied insurance based solely on his association with a person with a disability was sufficient to state a claim under the UCRA.).
Defendant argues however that the UCRA is inapplicable to any employment based claims (including workers' compensation) based on the California Supreme Court's decision in Alcorn v. Anbro Eng'g, Inc., 2 Cal. 3d 493 (1970). In Alcorn, the plaintiff alleged that he was discharged based on his race and that such conduct constituted unlawful discrimination under section 51.Id. at 499. The California Supreme Court rejected his argument, holding that the UCRA does not apply to discrimination in employment. Id.
The California Supreme Court later clarified the scope ofAlcorn: "In context, the statement meant only that theemployer-employee relationship was not covered by the [Unruh] Act." Isbister v. Boy's Club of Santa Cruz, Inc., 40 Cal. 3d 72, 83 n. 12 (1985). In this case, Alcorn does not prohibit plaintiff from bringing a cause of action under the UCRA for defendant's alleged discriminatory denial of workers' compensation benefits because, as defendant previously asserts, plaintiff and Majestic did not have an employment relationship. Defendant's motion to dismiss plaintiff's cause of action under the UCRA is DENIED.
D. Ralph Act (Cal. Civ. Code § 51.7) (Fourth Cause of Action)
Plaintiff alleges that Majestic violated California Civil Code section 51.7 because she was attacked and intimidated by Defendant Mead with Majestic's approval. Defendant responds that plaintiff has failed to allege an essential element of section 51.7.
The Ralph Act, California Civil Code section 51.7, provides that "All persons . . . have the right to be free from any violence, or intimidation by threat of violence, committed against their persons or property because of their race, color, religion, ancestry, national origin, political affiliation, sex, sexual orientation, age, disability . . ." Cal. Civ. Code § 51.7.
Plaintiff has failed to state a claim for relief under section 51.7 because plaintiff has not alleged that Majestic engaged in any violent or intimidating conduct. Rather, plaintiff only alleges that Defendant Mead engaged in acts of violence. See Egan v. Schmock, 93 F. Supp. 2d 1090, 1094 (N.D. Cal. 2000) (dismissing claim under section 51.7 when plaintiff did not allege violence or intimidation by threats of violence). Further, there is no factual basis to conclude that Majestic was the agent or alter ego of Defendant Mead or PMA.
As plaintiff has not addressed defendant's arguments in her opposition, defendant's motion to dismiss plaintiff's claim under section 51.7 is GRANTED without leave to amend.
E. Negligent Infliction of Emotional Distress (Seventh Cause of Action)
Negligent Infliction of Emotional distress ("NIED") is a form of negligence, and NIED claims must satisfy the traditional elements of duty, breach of duty, causation, and damages. See Burgess v. Superior Court, 2 Cal. 4th 1064, 1073 (1992). Here, plaintiff has not alleged that Majestic owed a duty of care to her. As plaintiff has not addressed defendant's arguments in her opposition, defendant's motion to dismiss plaintiff's NIED claim is GRANTED without leave to amend.
F. Intentional Infliction of Emotional Distress (Eighth Cause of Action)
Under California law, "the elements of a cause of action for intentional infliction of emotional distress are (1) outrageous conduct by the defendant, (2) intention to cause or reckless disregard of the probability of causing emotional distress, (3) severe emotional suffering, and (4) actual and proximate causation of the emotional distress." Molko v. Holy Spirit Assoc., 46 Cal. 3d 1092, 1120 (1989), cert. denied, 490 U.S. 1084, (1989). Severe emotional distress is defined as emotional distress of such a quantity or enduring quality that no reasonable member of society should be expected to endure it.See Bogard v. Employers Cas. Co., 164 Cal. App. 3d 602, 616 (1985).
Defendant argues plaintiff has failed to state a claim for IIED because she did not allege that her suffered distress was "severe." Plaintiff responds that she goes further than simply using a term of art such as "severe" and that the allegations clearly establish the depth and breadth of the severity of the emotional damage that resulted from defendant's conduct. In her words, the complaint "establishes that [t]he distress wrongly caused by Majestic was in fact severe." Taken as true, plaintiff's allegations are sufficient to establish that defendant's conduct was outrageous. It can be inferred from such outrageous conduct that any emotional distress suffered by plaintiff was severe. Under the liberal pleading standard of the Federal Rules of Civil Procedure, plaintiff has sufficiently alleged a cause of action for IIED.
Although defendant also argues that section 47(b)'s litigation privilege bars plaintiff's IIED claim, the privilege only applies to communicative acts and does not privilege tortious courses of conduct. See Olszewski v. Scripps Health, 30 Cal. 4th 798, 830 (2003). Plaintiff arguably alleges that defendant's discriminatory denial of workers' compensation benefits caused emotional distress, not the statements made in denying the claim. Defendant's motion to dismiss plaintiff's IIED cause of action is DENIED.
G. Defamation (Eleventh Cause of Action)
Plaintiff asserts that Majestic made the following defamatory comments when it denied her workers' compensation claims: "That Ms. Walton lacked credibility; that Ms. Walton was not to be believed when she accused MEAD of physically assaulting her . . . that Ms. Walton's allegations were without merit . . . that Ms. Walton was lying about being injured." FAC ¶ 68. Defendant argues that its statements were privileged under California Civil Code section 47(b).
California Civil Code section 47(b) protects any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action. See Olszewski, 30 Cal. 4th at 830; Cal. Civ. Code § 47(b). The privilege is absolute and applies to all torts except malicious prosecution. Olszewski, 30 Cal. 4th at 830. The principal purpose of the privilege is to provide litigants and witnesses with access to courts without fear of being subsequently harassed by derivative tort actions.See Rodriguez v. Panayiotou, 314 F.3d 979 (9th Cir. 2002).
Workers' compensation proceedings are "quasi-judicial proceedings." Harris v. King, 60 Cal. App. 4th 1185, 1187 (1998). In Harris, the court held that a doctor's report communicated to an insurance carrier after plaintiff filed a workers' compensation claim was privileged under section 47(b) as a prelitigation communication and could not form the basis for plaintiff's claims. Id. at 1187. There was no indication in Harris that the report was actually used or relied on in any proceeding before the Workers' Compensation Appeals Board. Here, defendant made the alleged defamatory statements when it denied plaintiff's workers' compensation claim. Based on the court's holding in Harris, defendant's statements are privileged under section 47(b).
Plaintiff erroneously cites Fremont Comp. Ins. Co. v. Superior Court, 44 Cal. App. 4th 867 (1996) for the proposition that section 47(b) immunizes an insurer from liability for reportsonly when made in good faith. However, section 47(b) creates an absolute privilege even if the communication is made maliciously and with knowledge of its falsity. See Harris, 60 Cal. App. 4th at 1188. Defendant's motion to dismiss plaintiff's defamation claim is GRANTED without leave to amend.
H. Fraud and Misrepresentation (Twelfth Cause of Action)
Plaintiff alleges, "Defendants's conduct above was fraudulent because Defendants acted to deprive Ms. Walton of her rights and prevent her from seeking redress for wrongs committed upon her person and to deprive her of the benefits of a safe employment environment." FAC ¶ 72. Although somewhat unclear, plaintiff apparently bases her fraud/misrepresentation claim on Majestic's alleged defamatory statements outlined in paragraph 68 of the FAC discussed above.
When claims are based on fraud, Federal Rule of Civil Procedure 9(b) requires the plaintiff to plead the circumstances constituting fraud "with particularity." Fed.R.Civ.P 9(b). To avoid dismissal for inadequacy under Rule 9(b), plaintiff's complaint must state the "'time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentation'" Edwards v. Marin Park, 356 F.3d 1058, 1066 (9th Cir. 2004) (quoting Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1393 (9th Cir. 1989)).
Assuming defendant's alleged defamatory comments form the basis of plaintiff's fraud claim, plaintiff probably provides sufficient detail to comply with rule 9(b). For example, plaintiff describes the content of the statements and when they occurred. She also states that Majestic made the statements in the context of denying her workers' compensation claim. FAC ¶ 31.
Aside from the particularity requirement, the fraud claim is insufficient because plaintiff has failed to plead an essential element of the cause of action. The elements of fraud are (1) misrepresentation; (2) knowledge of falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage.Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996). The misrepresentation may consist of a false representation made intentionally or negligently, concealment, or nondisclosure.Id.; Cal. Civ. Code 1710. Here, plaintiff has not pled any reliance on the alleged misrepresentations. See Mirkin v. Wasserman, 5 Cal. 4th 1082, 1089 n. 2 (1993) (stating that plaintiff must plead actual reliance on the misrepresentation to state a cause of action for intentional or negligent misrepresentation); Reed v. King, 145 Cal. App. 3d 261, 264 (1983) (stating that the elements of actual fraud include reliance upon the representation).
Additionally, as discussed above, California civil code section 47(b) provides an absolute privilege against communications made in a judicial or quasi-judicial proceeding.
As plaintiff has not addressed any of defendant's arguments in her opposition, defendant's motion to dismiss plaintiff's fraud claim is GRANTED without leave to amend.
I. Unfair Competition Act (Cal. Bus. Prof. Code § 17200) (Fourteenth Cause of Action)
Plaintiff alleges that defendant violated California's Unfair Competition Act ("UCA") by discriminating against her on the basis of race and gender. See Cal. Bus. Prof. Code § 17200.
Under the UCA, any unlawful, unfair or fraudulent business act or practice constitutes unfair competition. See id. Section 17200 of the UCA "works by borrowing violations of other laws and treating those transgressions, when committed as a business activity, as unlawful business practices." Stevens v. Superior Court, 75 Cal. App. 4th 594, 602 (1999). The California Supreme Court has stated that UCA's "sweeping language . . . includes 'anything that can properly be called a business practice and that at the same time is forbidden by law.'" Stop Youth Addiction, Inc. v. Lucky Stores, Inc., 17 Cal. 4th 553, 560 (1998) (internal citations omitted). Virtually any federal, state or local law can serve as a predicate for a section 17200 violation. See Stevens, 75 Cal. App. 4th at 602. Plaintiff's allegation that defendant violated the UCRA establishes a cause of action under section 17200. Defendant's motion to dismiss plaintiff's cause of action under section 17200 is DENIED.
CONCLUSION
Defendant's motion to dismiss is GRANTED, without leave to amend for the following claims: (1) Discrimination and Harassment (First Cause of Action); (2) Retaliation and Harassment (Second Cause of Action); (3) Violation of the Ralph Act (Cal. Civ. Code § 51.7) (Fourth Cause of Action); (4) Negligent Infliction of Emotional Distress (Seventh Cause of Action); (5) Defamation (Eleventh Cause of Action); and (6) Fraud/Misrepresentation (Twelfth Cause of Action).
Defendant's motion to dismiss is DENIED for the following claims: (1) Violation of the Unruh Civil Rights Act (Cal. Civ. Code § 51) (Third Cause of Action); (2) Intentional Infliction of Emotional Distress (Eighth Cause of Action); and (3) Violation of the Unfair Competition Act (Cal. Bus. Prof. Code § 17200) (Fourteenth Cause of Action).
IT IS SO ORDERED.