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Individual Liability for Employment Discrimination in New York and California

December 31, 1999

Attorneys for discrimination plaintiffs often perceive a tactical advantage in naming as defendants not only the corporate employer but individual managers or supervisors as well. For example, naming individuals as defendants often facilitates the discovery of information by the plaintiff that otherwise might be unavailable; in addition, conflicts of interest sometimes arise between individual defendants and the employer, which necessitate the engagement of separate counsel, thereby increasing the cost of the defense of the litigation. Not surprisingly, employers have resisted efforts to impose liability on individual managers and supervisors, and courts in both New York and California have recently issued decisions that clarify whether and to what extent an individual may be held liable for acts of employment discrimination, including harassment and retaliation, under local, state and federal law.

Individual liability under federal law

Although there continues to be disagreement among the various federal Circuit Courts as to whether supervisors may be held personally liable for violations of Title VII, the Second Circuit (which includes New York) and the Ninth Circuit (which includes California) have both ruled held that a supervisor may not be sued in his/her individual capacity for employment discrimination under Title VII. See Miller v. Maxwell's International, 991 F.2d 583 (9th Cir. 1993), cert. denied, 114 S.Ct. 1049 (1994); Tomka v. Seiler Corp., 66 F.3d 1295 (2nd Cir. 1995). Both Circuits have concluded that the statutory scheme and the remedial provisions of Title VII, coupled with the absence of any discussion concerning individual liability in the legislative history of Title VII, indicates that Congress intended to limit Title VII liability to business entities and to preclude individual liability. The weight of authority also indicates that individual shareholders of a corporate defendant may not be held liable in their individual capacities as "employers." See Maloney v. Connecticut Orthopedics, P.C., 47 F.Supp.2d 244 (D. Conn. 1999).

Similar reasoning has been applied by courts to reject individual liability under the other federal employment discrimination statutes as well. Accordingly, absent a significant change in the law, it appears that all Title VII, Age Discrimination in Employment Act, and Americans With Disabilities Act claims against individuals will continue to be barred in New York and California.

Individual liability under state law

Unlike federal law, various state laws do provide for individual liability. Recent case law has clearly established personal liability under the New York Human Rights Law ("HRL") and the California Fair Employment and Housing Act ("FEHA").

New York

Although the New York Court of Appeals (the state's highest court) has yet to provide a definitive standard under the HRL for imposing individual liability for acts of discrimination, two distinct theories for doing so have emerged from the relevant case law.

First, under HRL § 296(1), which prohibits certain acts of discrimination by an "employer," the Court of Appeals has ruled that no individual liability may attach to any supervisor if he/she "is not shown to have any ownership interest or any power to do more than carry out personnel decisions made by others." See Patrowich v. Chemical Bank, 63 N.Y.2d 541, 542 (1984). Thus, supervisors who own some portion of the employer-entity, or who possess sufficient authority to affect personnel decisions, may be held individually liable for acts of discrimination. See Bonner v. Guccione, 916 F. Supp 271, 279 (S.D.N.Y. 1996) (holding that there is no unfairness in imputing liability to an owner or person high enough up in a company's hierarchy that she or he has power over personnel decisions); Sacay v. The Research Foundation of the City University of New York, 44 F. Supp.2d 505 (E.D.N.Y. 1999) (noting that inference that a supervisor played a role in the allegedly discriminatory decision to discharge an employee provided a minimally sufficient basis for individual liability under the HRL). New York courts have not, however, set forth a clear standard concerning either the level of an individual's interest in an employer that is required to establish "ownership," or the degree of responsibility that must be held by an individual before he/she can be subjected to personal liability.

Second, some New York courts have ruled that supervisors may incur liability for acts of discrimination under HRL § 296(6), which forbids "any person to aid, abet, incite, compel, or coerce" the commission of an unlawful discriminatory employment practice -- commonly referred to as the "aiding and abetting" clause. Tomka, 66 F.3d at 1317; Salvatore v. KLM Royal Dutch Airlines, No. 98 Civ. 2450 (LAP), 1999 WL 796172, at *8 (S.D.N.Y., Sept. 30, 1999); Steadman v. Sinclair, 636 N.Y.S.2d 325 (1st Dep't 1996). Generally, courts have not imposed individual liability under this clause unless the individual in question "actually participated in the conduct giving rise to the discrimination claim." Sowemimo v. D.A.O.R., 43 F.Supp.2d 477, 487 (S.D.N.Y. 1999); Dewitt v. Lieberman, No. 97 Civ. 4651 (SAS), 1999 WL 13236, at *12 (S.D.N.Y., Jan. 13, 1999). This generally entails the affirmative commission of a discriminatory act by the individual.

However, a New York federal court has recently ruled that in situations concerning unlawful harassment -- where a supervisor has an affirmative duty to investigate and/or remedy complaints of harassment -- a supervisor who fails to do so may be held individually liable for harassment as an aidor and abettor, even though he or she did not commit any of the complained-of acts of harassment. Lewis v. Triborough Bridge & Tunnel Authority, 1999 U.S. Dist. LEXIS 17850 (S.D.N.Y., Nov. 11, 1999).

Not all New York courts recognize the "aiding and abetting" theory of liability. Some courts have outright rejected the theory as contrary to the purpose of the HRL and prior precedent. For instance, one appellate court, applying a narrow reading to the statutory and case law authority concerning individual liability, ruled that individual liability may be imposed only under the standard set forth by the Court of Appeals decision in Patrowich, and therefore only "employers," those who possess an ownership interest in an employer, or those with sufficient authority concerning personnel decisions may be held liable for discrimination. Trovato v. Air Express Int'l., 655 N.Y.S.2d 656 (2d Dep't 1997). Indeed, one court has ruled that the phrase "aid and abet" may be applied only to persons wholly outside of the employment relationship who assisted in the commission of the discriminatory act. Foley v. Mobil Chemical Co., 647 N.Y.S.2d 374 (Monroe Cty., 1996). This disagreement among New York courts concerning the aiding and abetting theory of liability has compelled at least one federal district court to refuse to hear a state law claim concerning individual liability under the HRL. In Ponticelli v. Zurich American Insurance Group, 16 F.Supp.2d 414 (S.D.N.Y. 1998), the court noted the unsettled nature of the law concerning this issue and, citing the risk of jury confusion with regard to the issues of liability under federal and state law, refused to hear the state law claims against the individual defendants.

Whereas the status of individual liability under New York state law is unsettled, it is quite clear that individuals may be held liable for employment discrimination under New York City law. Section 8-107 (a) of the New York City Administrative Code expressly provides that it is unlawful for "an employer or an employee or agent thereof" to engage in discriminatory employment practices. Thus, liability may be imposed against supervisors or others in their individual capacity. See Murphy v. ERA United Realty, 674 N.Y.S. 2d. 415, 417 (2d Dep't 1998).

California

California courts have also grappled with the issue of individual liability under California's Fair Employment and Housing Act ("FEHA"). In the past, these courts had generally ruled that individuals could be liable in some types of discrimination cases. However, in two recent decisions, California's highest court has held that supervisors may not be sued for discrimination under the FEHA, nor may non-supervisory individuals be sued for harassment under that statute.

The FEHA, like Title VII and the other federal discrimination laws, makes unlawful certain employment practices -- including harassment, retaliation and discrimination based on age, race, sex, medical conditions, and other protected classes. Regarding the parties who may be held liable for such acts, the FEHA distinguishes harassment and retaliation from ordinary discrimination; that is, the statute prohibits "an employer . . . or any other person" from harassing or retaliating against an employee, but prohibits only "an employer" from engaging in unlawful discrimination. An "employer," in turn, is defined as a person regularly employing 5 or more persons, or "any person acting as an agent of an employer, directly or indirectly." Thus, while the statute apparently made clear that individual liability may be imposed against an individual supervisor (or any other person) in connection with an action alleging harassment or retaliation, it was unclear whether an individual supervisor may be held liable for acts of other forms of employment discrimination.

In Reno v. Baird, 18 Cal. 4th 640, 957 P.2d 1333 (Cal. 1998), the California Supreme Court resolved this ambiguity. There, the plaintiff, Kimberly Reno, sued her employer and several individual supervisors for discriminating against her in her employment and ultimately discharging her because of a medical condition in violation of the FEHA. Reno argued that the individual defendants who terminated her and discriminated against her acted as "agents" of the corporate employer and thus were also "employers" as defined in the FEHA. The lower court agreed with the plaintiff and permitted the lawsuit to go forward against the individuals.

On appeal, however, the California Supreme Court disagreed. The court decided that it would be incongruous for an individual to be held liable for acts of discrimination as an agent of an employer when the employer itself could not be held liable unless it employed five or more people. Additionally, the court sought to insulate supervisors from the "ever-present threat of a lawsuit each time they make a personnel decision." Thus, the court ruled, individual liability may not be imposed against a supervisor for acts of ordinary discrimination (as opposed to harassment or retaliation) unless he or she meets the definition of an "employer," i.e. a person who employs 5 or more persons.

A California federal court recently declined to extend the Reno decision beyond its limited holding that individuals may not be held liable under the FEHA in discrimination cases. Specifically, in Loberto-Blanck v. City of Arroyo, 33 F. Supp.2d 1241 (C.D. Cal. 1999), the court dismissed discrimination claims as against individual supervisors, but held that those supervisors could still be held liable for acts of retaliation.

Unlike the federal court in Loberto-Blanck, California's highest court has seized the opportunity to impose additional limitations on individual liability under the FEHA beyond those established in Reno. Specifically, in Carrisales v. Department of Corrections, the state supreme court held on December 9, 1999 that non-supervisory individuals may not be sued for sexual harassment under the FEHA. Thus, it appears that while supervisors may continue to face liability under the FEHA in limited circumstances, non-supervisory individuals accused of harassment will not.

Conclusion

While it appears that the trend under federal law is clearly against personal liability of managers and supervisors, individuals may still be held liable for violations of New York law and, to a more limited extent, California law.

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