SAN FRANCISCO--A California Supreme Court ruling that individual managers and supervisors cannot be held personally liable for retaliation is a victory for employers on several fronts, observers say.

The ruling will lower legal costs by reducing the number of defendants in cases alleging retaliation and it will make it easier for multistate employers with California operations to move cases to friendlier federal courts because local defendants will not be involved, they say.

The court's March 3 decision in Scott Jones vs. The Lodge at Torrey Pines Partnership extends a 1998 ruling that held that individuals cannot be held liable for discrimination, to include retaliation.

However, co-workers, supervisors and managers, still can be named defendants in suits claiming sexual harassment, attorneys say.

According to the opinion, Mr. Jones, who had been responsible for restaurant and other operations at the La Jolla, Calif.-based Torrey Pines Golf Course sued his employer, his supervisor and others on various counts, including retaliation, after he resigned from the company.

Mr. Jones claimed he was retaliated against after he complained about vulgar remarks made to him by his supervisor Jean Weiss and another co-worker in 2001, according to court papers.

A jury awarded Mr. Jones $1.4 million in compensatory damages against the Lodge and $155,000 against Mr. Weiss.

The trial court ruled that Mr. Weiss, as an individual, could not be held liable for retaliation. An appeals court overruled that decision.

But the California Supreme Court in its 4-3 decision agreed with the trial court, citing the California Fair Employment and Housing Act, which says it is unlawful for "any employer, labor organization, employment agency or person" to engage in retaliation.

Mr. Jones argued that, according to that law, an individual can be held personally liable. "Its language does lend itself to plaintiff's interpretation, but...that is not the only reasonable interpretation of the statutory language," the court said.

After a lengthy analysis, the majority opinion concluded that the court's 1998 decision in Reno vs. Baird, which held that "non-employer individuals" are not personally liable for discrimination, applies to retaliation as well.

The same reasons in reaching the conclusion for discrimination apply to retaliation as well, the opinion states. Among them is supervisors would be placed in a position of conflict of interest with their employers when they were making personnel decisions if they could be held personally liable.

The court quoted an earlier opinion, which stated that the supervisor "would be pressed to make whatever decision was least likely to lead to a claim of discrimination against the supervisory employee," putting him in a position of "choosing between loyalty to the employer's lawful interests" versus protecting his own personal interests, according to court papers.

Observers say this decision will make it easier for multistate employers with California-based operations to move cases to friendlier federal courts under the "diversity" legal concept, which gives federal courts the power to decide cases between citizens of different states.

A multistate employer with no California resident named as a defendant could have cases moved to federal court, observers say. Typically, to preclude that, a plaintiff attorney will name a California individual as a defendant in order to keep his case in state court, said Thomas McInerney, an attorney in the San Francisco office of Ogletree, Deakins, Nash, Smoak & Stewart P.C., who is not involved in the case. This decision makes that harder to accomplish, he said.

Employers prefer having their cases heard in federal court, observers say. Regina A. Petty, an attorney with Wilson Petty Kosmo & Turner L.L.P. in San Diego, who represented Torrey Pines in the litigation, said, "Federal courts are more conservative in the handling of civil litigation. And many federal courts, unlike a lot of state courts, still require a unanimous jury verdict, and the federal court standards for granting summary judgment is more favorable to defendants."

Additionally, by barring individuals as defendants, litigation costs will be reduced because separate attorneys won't be needed, observers say.

The decision "is a particularly excellent result" because it eliminates the need to have multiple counsels in these cases, said Ms. Petty.

Having fewer defendants "will just make defending the case more manageable," said Mr. McInerney.

Melanie M. Poturica, an attorney with Liebert, Cassidy Whitmore in Los Angeles, representing the League of California Cities, who submitted an amicus brief in the case on behalf of Torrey Pines, said the decision also "enables employers to ensure getting the best and the brightest in their supervisory and management positions, people that will not be concerned with holding back on taking legitimate, nonretaliatory personnel actions."

"The Supreme Court was very mindful of the practical implications of personal liability of managers" in retaliation suits, said Christopher Olmsted, an employer attorney with Barker Olmsted & Barnier in San Diego, who is not involved in the case.

But Scott Toothacre, an attorney with Toothacre & Toothacre in San Diego, who represented Mr. Jones, said, "The court engaged in judicial activism in imposing their policy over the stated policy of the legislature."

There were two dissenting opinions in the case, with both asserting the majority opinion misinterprets the law. The majority opinion rejects "the most commonsense reading of the statute," said one of the dissenting opinions.

Scott Jones, plaintiff and appellant, vs. The Lodge at Torrey Pines Partnership et al., defendants and respondents, Supreme Court of California, S151022; March 3, 2008