'Avoidable consequences' should apply to all FEHA claims

When an employee brings a claim for sexual harassment against an employer, there may be no question about liability. The California Supreme Court has determined that, under the Fair Employment and Housing Act (Gov. Code, Section 12900 et seq.) (FEHA), if a supervisor engaged in offensive conduct, the employer is strictly liable - even if the employee never reported the harassment.

But the court also held that an employer might be able to limit the damages assessed against it for workplace sexual harassment under the "avoidable consequences" doctrine. The doctrine, articulated by the court in State Dept. of Health Services v. Superior Court (McGinnis) ((2003) 31 Cal.4th 1026), can provide a measure of relief to employers who are found liable for sexual harassment under FEHA. They cannot completely escape liability for the harassment, but they may be able to reduce the monetary toll of such a claim.

The question now being asked is whether an avoidable consequences defense might provide relief to defendants in other types of FEHA claims. Although there is no definitive answer, other court decisions may provide guidance.

The avoidable consequences doctrine

In McGinnis, the plaintiff alleged that she was sexually harassed by her supervisor at the Department of Health Services (DHS). The California Supreme Court found that because the harassment involved a supervisor, DHS was strictly liable under FEHA. Strict liability, the court said, applies to an employer whenever there is sexual harassment by a supervisor, whether or not the employee reported the harassment internally.

The court then rejected a motion for summary judgment by DHS. The defendant had based its motion on two U.S. Supreme Court decisions: Burlington Industries, Inc. v.  Ellerth (1998) 524 U.S. 742, 765 [ 141 L.Ed.2d 633, 118 S.Ct. 2257] (Ellerth) and Faragher v. City of Boca Raton (1998) 524 U.S. 775, 807 [ 141 L.Ed.2d 662, 118 S.Ct. 2275] (Faragher). Those decisions established the federal Faragher/Ellerth defense, which exempts an employer from liability when it has taken prompt and appropriate action in response to workplace sexual harassment but the employee "unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise." (Ellerth, supra, at p. 765; Faragher, supra, at p. 807.)

The McGinnis court ruled that because FEHA governed the claim, the Faragher/Ellerth defense did not apply. The employer was still strictly liable for sexual harassment by a supervisor even if the victim failed to make any effort to avoid the harm or to take any preventative or corrective opportunities provided by the employer. However, the court went on to hold that the victim's damages could be limited to the extent she failed to avail herself of opportunities to avoid harm.

More specifically, the court held, "[u]nder the avoidable consequences doctrine as recognized in California, a person injured by another's wrongful conduct will not be compensated for damages that the injured person could have avoided by reasonable effort or expenditure." (McGinnis, supra, at p. 1043) It went on to clarify that "[t]his defense will allow the employer to escape liability for those damages, and only those damages, that the employee more likely than not could have prevented with reasonable effort and without undue risk, expense, or humiliation, by taking advantage of the employer's internal complaint procedures appropriately designed to prevent and eliminate sexual harassment." (McGinnis, supra, at p. 1044)

The court stated that to succeed with this defense in the context of a sexual harassment case, the employer must prove three things: (1) that it took reasonable steps to prevent and correct workplace sexual harassment; (2) that the employee unreasonably failed to use available corrective measures; and (3) that reasonable use of those measures would have prevented some or all of the harm suffered.

Applicability to other FEHA claims

The McGinnis case was focused solely on workplace sexual harassment, and the opinion does not explicitly address the applicability of avoidable consequences to other FEHA claims. CACI Jury Instruction No. 2526, based on McGinnis, is actually titled "Affirmative Defense - Avoidable Consequences Doctrine (Sexual Harassment by a Supervisor)," which would appear to limit the defense to sexual harassment claims.

But this may not be a correct or final reading of the law. The use notes for CACI No. 2526 recognize that extending the doctrine to other FEHA claims is an open question: "Whether this defense may apply to claims other than for supervisor sexual harassment has not been clearly addressed by the courts."

The use notes recognize that the avoidable consequences doctrine has also been allowed in a claim for age discrimination. In Rosenfeld v. Abraham Joshua Heschel Day School, Inc. ((2014) 226 Cal.App.4th 886)), an appellate court ruled that avoidable consequences could reduce damages where a plaintiff failed to follow internal complaint procedures for an age discrimination claim. The court cited McGinnis:

"[In] civil actions generally, the right to recover damages is qualified by the common law doctrine of avoidable consequences.... The Restatement Second of Torts states the doctrine this way: '[O]ne injured by the tort of another is not entitled to recover damages for any harm that he could have avoided by the use of reasonable effort or expenditure after the commission of the tort.' (Rest.2d Torts, § 918, subd. (1).) ... Although courts explaining the avoidable consequences doctrine have sometimes written that a party has a 'duty' to mitigate damages, commentators have criticized the use of the term 'duty' in this context, arguing that it is more accurate to state simply that a plaintiff may not recover damages that the plaintiff could easily have avoided." (McGinnis, supra, at pp. 1042-1043.)

The McGinnis court itself provided a broader context when it made its determination that avoidable consequences could be a defense in a sexual harassment claim: "The avoidable consequences doctrine is well established and broadly applied, and nothing in the FEHA's language and structure indicates that the Legislature intended to abrogate this fundamental legal principle." (McGinnis, supra, at pg. 1042)

Conclusion

If the governing principle behind avoidable consequences is that plaintiffs should not be rewarded for failing to limit their damages, courts are likely to conclude it should not matter whether a claim is for sexual harassment or any other form of discrimination under FEHA.

The California Supreme Court implied as much: "We further conclude that the avoidable consequences doctrine applies to damage claims under the FEHA..." Accordingly, California courts are likely to construe the McGinnis decision as extending the avoidable consequences doctrine to all FEHA claims, not just those for sexual harassment.