CALIFORNIA RULING EXPOSES EMPLOYERS TO BIAS SUITS

SAN FRANCISCO -- California employers expect increased litigation will follow a state Supreme Court decision that allows employees to sue for discrimination if they are fired after returning to work from job-related injuries.

Employer groups said they will push for legislation to counter the high court's Aug. 17 ruling. The decision overturns seven appellate court decisions, rendered over 16 years, that found the workers compensation system provides an exclusive remedy for such cases, according to the Supreme Court's opinion in City of Moorpark et al. vs. The Superior Court of Ventura County.

A five-member panel of justices unanimously agreed that workers can sue in civil court for discrimination under California's Fair Employment and Housing Act. Two justices dissented from an opinion that employees also can sue for common-law wrongful termination, saying the ruling is duplicative.

Under California's FEHA, plaintiffs have far more remedies available than under the workers comp system, especially if defendants are found to have willfully or negligently allowed discrimination to occur, said Julianne Broyles, director of insurance and employee relations for the California Chamber of Commerce in Sacramento.

Plaintiffs can sue for compensatory and punitive damages under FEHA, legal experts agree. In contrast, employees typically can recover a maximum of $10,000 in damages and $250 for costs in the workers compensation system.

Under the ruling, plaintiffs can seek awards in both the workers comp system and in civil court. Collecting an award in one arena does not preclude action in the other, attorneys said.

"We're slowly chewing and swallowing and, unfortunately, it's sitting badly in our stomachs," Ms. Broyles said of the ruling. "It's a bad decision for employers. It's a big, big shift."

The Chamber of Commerce filed amicus briefs to the Supreme Court and the appellate court that heard the case earlier. After the appellate court rendered findings unfavorable to employers, the Chamber sought countering legislation.

But the Chamber delayed its lobbying effort in the Legislature, expecting the state Supreme Court to rule differently, Ms. Broyles said. Now the legislative battle will be renewed.

Under the workers comp system, compensation for attorneys representing employees is limited to 8% to 12% of awards, Ms. Broyles said. But in civil court, they can collect 30% of awards, in addition to being able to bill by the hour for costs.

Plaintiffs' attorneys "are dancing in the streets over this one. This is big-time money for them," Ms. Broyles said.

"The answer is, don't discriminate," said Maury Mills Jr., a Ventura, Calif., attorney who represented plaintiff Theresa L. Dillon in the case.

Even before the California high court's decision, workers sued for similar claims in federal court under the Americans With Disabilities Act, Mr. Mills said. But he acknowledged that the ADA sets award caps.

The caps are set on a sliding scale, depending on the number of employees in a company. For example, under the ADA, there is a $300,000 cap on awards for emotional distress.

Under California's FEHA, plaintiffs can collect unlimited damages.

There are other advantages for California plaintiffs, as well. For example, under FEHA, a plaintiff has a year to file a complaint from the day of the alleged discrimination, compared with 300 days under the ADA.

"Certainly, there is the possibility of a substantially greater settlement in a jury trial under the Fair Employment and Housing Act than under the ADA," Mr. Mills said. "But, by and large, that remedy (ADA) has always been there. It has just opened up a state court cause of action."

Some employers agree they may not face additional problems if they are already complying with ADA rules.

The court ruling could open employers up to more litigation, said Gregory Vach, director of workers compensation for Interstate Brands Corp. in San Diego. But employers have a defense similar to that under the ADA. For example, if the employer does not have a job available for the disabled worker, then the worker doesn't have to be offered a job, Mr. Vach said.

The high court's decision does appear to give employers some wiggle room.

"Disability sometimes impacts a person's ability to perform a specific job, in which case the employer may treat a disabled employee differently," Justice Ming W. Chin wrote.

But discrimination is another matter, the court held.

"Nevertheless, if disabled employees can prove that they can perform the job duties as effectively as non-disabled employees, taking into consideration the possibility, if any, that their condition will change, as well as the employer's short-term and long-term needs, then we think discrimination based on disability, like sex and age discrimination, violates a substantial and fundamental public policy," Justice Chin wrote.

No responsible employer bemoans the decision because their right to discriminate has been taken away, said Pamela Hemminger, a partner who represents management in labor and employment matters in the Los Angeles office of Gibson Dunn & Crutcher.

"However, employers are now exposed to substantial liability for making wrong judgment calls and from an increase in frivolous lawsuits," she said. Gray areas will also lead to increased exposure. But Ms. Hemminger does not expect a flood of new suits, Ms. Hemminger said.

State court proceedings favor plaintiffs, more so than the federal arena, Ms. Hemminger added. "From a defense perspective, we remove cases to federal court whenever we can," she said.

The Moorpark case arose when the plaintiff, Ms. Dillon, claimed she was denied her job as an administrative secretary for the city of Moorpark after she was out on disability for a work-related knee injury that resulted in surgery, court records show. City officials claimed she could no longer perform certain necessary functions, such as kneeling and climbing stairs. She sued in 1995 for disability discrimination and wrongful discharge.

The city argued before Ventura Superior Court that Ms. Dillon could not sue because, as an injured employee, her remedy was limited to workers compensation benefits. But the trial court overruled the city, as did the 2nd District Court of Appeal in Los Angeles. The state Supreme Court then became involved because the appellate decision in Moorpark conflicted with previous appellate court decisions. The case will now return to the trial court.

City of Moorpark et al. vs. The Superior Court of Ventura County, Calif., California Supreme Court; No. S057121