Arroyo v. City of San Diego

Filed 3/27/06 Arroyo v. City of San Diego CA4/1

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California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL and cross-appeal from a judgment of the Superior Court of San Diego County, Luis R. Vargas, Judge. Reversed in part and affirmed in part and remanded with directions.

Felipe Arroyo, a City of San Diego (City) police officer, brought an action against the City claiming the City discriminated against him based on his Mexican nationality and unlawfully retaliated against him for reporting details of the discrimination claim to a federal agency. The jury found in Arroyo's favor on these claims and awarded him $1,325,000 in economic and noneconomic damages.

On appeal, the City contends Arroyo's discrimination and retaliation claims do not state viable causes of action and, alternatively, that insufficient evidence supports the jury's findings. In his cross-appeal, Arroyo contends the court erred in granting the City's motion for directed verdict on his discrimination claim for failure to promote and in barring him from relying on the continuing violations doctrine.

We conclude insufficient evidence supports the jury's findings on the intentional discrimination claim and the jury's economic damage award on the retaliation claim. On the cross-appeal, we determine the court erred in granting a directed verdict on Arroyo's discrimination claim based on the City's failure to promote him in 1998. Accordingly, on Arroyo's intentional discrimination cause of action, we: (1) reverse the judgment in its entirety; and (2) remand for a trial on Arroyo's claim that the City's refusal to promote him in 1998 constituted unlawful discrimination based on his national origin. On Arroyo's retaliation claim, we: (1) affirm the judgment to the extent it holds the City liable for unlawful retaliation and awards Arroyo $750,000 in noneconomic damages; and (2) strike the award of $150,000 in economic damages.

FACTUAL AND PROCEDURAL SUMMARY

Pursuant to well settled appellate rules, we view the facts in the light most favorable to Arroyo and infer all reasonable inferences in his favor. (Scofield v. Critical Air Medicine, Inc. (1996) 45 Cal.App.4th 990, 996, fn. 2.)

Factual Background

Arroyo was born in Mexico and spoke Spanish as his first language. In 1978, Arroyo began working for the City's police department (Department) and was then assigned as a patrol officer. Eleven years later, in 1989, he transferred into the narcotics section and was promoted to detective. The Department asked Arroyo to join the narcotics division because there was "a desperate need" for Spanish-speaking officers to handle narcotics cases involving Spanish-speaking, Hispanic suspects.

Several years later, in 1995, Arroyo transferred into the Narcotics Task Force, which is a law enforcement unit led by the federal Drug Enforcement Agency (DEA). The Task Force is composed of geographic teams of federal and local officers working together to enforce drug laws. Because he was one of the few Task Force officers who spoke fluent Spanish, Arroyo was frequently assigned to perform the critical, and sometimes more dangerous, tasks that other non-Spanish-speaking officers could not perform. These assignments included working undercover, acting as the front-of-the-line officer in warrant executions, advising suspects of their constitutional rights, writing reports, and being the "star" witness at criminal trials.

It is undisputed that Arroyo's work on the Narcotics Task Force was outstanding. Arroyo received numerous awards and excellent performance reviews, reflecting his strong work ethic, outstanding reputation as an undercover agent, and exceptional leadership and supervision skills. Despite his excellent work and the fact that Arroyo enjoyed working on the Narcotics Task Force, Arroyo wanted to advance within the Department and understood it was important to have diversified experience. He therefore repeatedly attempted to transfer to other divisions within the Department, including to the canine unit, criminal intelligence, special investigations, and homicide. He was denied each of those transfer requests. In 1992, Arroyo was told his transfer was denied because his Spanish-speaking skills were needed in the narcotics division. In 1996, Arroyo was denied the opportunity to serve as acting supervisor of the Narcotics Task Force team because he "was one of the only Spanish speaking agents" available on his team to assist with undercover work.

Arroyo was also unsuccessful in obtaining a promotion to sergeant. Departmental promotions are based on an eligibility list that is maintained for a two-year period. In 1996, Arroyo applied for the sergeant position and his name was placed on the promotion eligible list. His supervisors rated Arroyo "highly qualified" for the promotion based on his demonstrated "leadership, interpersonal skills [and] investigative ability." As part of his promotion application, Arroyo submitted information documenting his extensive supervisory and management experience. Arroyo also submitted job performance reviews showing he had achieved "mastery" at every level of responsibility and praising Arroyo for his communication and leadership skills and for his knowledge and creativity in addressing narcotics law violations. Many of Arroyo's colleagues with similar seniority had obtained a promotion to sergeant many years earlier.

Despite Arroyo's excellent qualifications, the Department notified Arroyo in March 1998 that he was not selected for promotion. Shortly thereafter, Arroyo filed an internal complaint with the Department's equal opportunity office, claiming he was subject to discrimination on the basis of his Spanish speaking abilities and national origin. He claimed his Hispanic background and language skills precluded him from obtaining a promotion, asserting that the Department had "channeled" his career exclusively to a narcotics detective because "they need an Hispanic who speaks fluent Spanish to do the undercover work, to do the buys."

After the Department failed to investigate this claim, in December 1998, Arroyo filed a complaint with the federal Equal Employment Opportunity Commission (EEOC) and the California Department of Fair Employment and Housing (DFEH). In January 2000, the EEOC conducted a mediation in an effort to resolve Arroyo's complaints. As part of the mediation, the City and Arroyo submitted documents pertaining to Arroyo's assignments and workload. In reviewing the City's documents, Arroyo discovered that his supervisor, Lieutenant Robert Kanaski, had submitted inaccurate information about Arroyo's caseload, the number of informants he was assigned to handle, and the number of fluent Spanish-speaking officers available to assist in investigations.

On April 6, 2000, Arroyo had a meeting with Lieutenant Kanaski, during which Arroyo gave Lieutenant Kanaski a report showing that during the previous year Arroyo had worked undercover on 40 occasions and no other Task Force member had been assigned undercover work. This report contradicted Lieutenant Kanaski's submissions to the EEOC. Lieutenant Kanaski became "very upset" with Arroyo for attacking his credibility and preparing the report. Lieutenant Kanaski said his "responsibility was to protect the [C]ity, protect the police department," and that he "could tell the truth" to the City, "but not to the EEOC."

Eleven days later, on April 17, 2000, Lieutenant Kanaski decided that Arroyo should be transferred out of Team 7 of the Narcotics Task Force, which covered the northern San Diego county area, and transferred to Team 1, which covered the central and southern San Diego county areas. Although Arroyo had been working on Team 7 for the past five years, and it was undisputed that he was performing in an outstanding manner, Lieutenant Kanaski said he decided to transfer Arroyo because Team 7 was "dysfunctional." Arroyo told Lieutenant Kanaski he opposed this transfer because his assignment to Team 1 would require him to work more frequently in neighborhoods close to his businesses and residence. He explained he was "too well known in this area" and this geographic change would place him at substantial additional risk in his professional and personal life.

Lieutenant Kanaski spoke with his supervisors, including the assistant police chief, about the transfer. Lieutenant Kanaski testified he was concerned the move "might be considered retaliatory and we wanted to make sure our bases were covered under that effect." Lieutenant Kanaski was ultimately given approval to make the transfer. After the transfer, Arroyo was concerned for his safety because of the greater likelihood he would encounter a suspect while he was off duty. Arroyo testified problems did in fact occur, including his being required to apprehend a suspect who lived across from his upholstery business and, in another case, to lead a team that was targeting a suspect who lived close to Arroyo's residence.

On September 5, 2000, Arroyo filed a complaint with the EEOC and the DFEH, alleging that the transfer constituted unlawful retaliation. As will be discussed more fully below, a right-to-sue letter was issued by the DFEH, and later, following a lengthy investigation, by the EEOC.

Superior Court Action

In January 2003, Arroyo filed a superior court complaint against the City and various individuals employed by the Department. As amended, the complaint alleged: (1) discrimination on the basis of Arroyo's national origin in violation of the Fair Employment and Housing Act (FEHA); and (2) unlawful retaliation in violation of the FEHA. (Gov. Code, § 12940, subds. (a), (h).)^[1] Arroyo divided his discrimination claim into a "disparate treatment" cause of action and a "disparate impact" cause of action. Arroyo sought compensatory and punitive damages, and equitable relief.

Before trial, the City requested the court to adjudicate several of its pleaded defenses, including: (1) its statute of limitations defense that Arroyo's discrimination claim was limited to acts occurring within one year of Arroyo filing his administrative claim (December 8, 1998); and (2) its administrative exhaustion defense that Arroyo's retaliation claim was barred by his failure to obtain a right-to-sue notice from the DFEH.

After a hearing on the City's motion, the court ruled that Arroyo's discrimination claim could be based only on acts of discrimination occurring between December 8, 1997, and December 8, 1998. In so concluding, the court rejected Arroyo's reliance on the continuing violations doctrine, but stated the ruling did not bar Arroyo from introducing evidence of the City's prior actions if the evidence was relevant to show unlawful discrimination during the December 1997-December 1998 time period. On the second issue, the court found Arroyo exhausted his administrative remedies and therefore the court rejected the City's argument that the retaliation claim was barred on this ground.

At trial, Arroyo's discrimination claim was based on his argument that because he is Hispanic and speaks Spanish fluently, he was: (1) given more work than non-Hispanic/non-Spanish-speaking officers; (2) given more dangerous work than non-Hispanic/non-Spanish-speaking officers; and (3) unfairly rejected for promotion in March 1998. To support these claims, Arroyo relied primarily on his own testimony.

With respect to his workload arguments, Arroyo testified that because of the City's proximity to Mexico, much of the narcotics investigations in the San Diego area involve Hispanic, Spanish-speaking suspects and because he was one of the only Spanish-speaking/Hispanic officers assigned to the Narcotics Task Force, he was required to perform most of the undercover work. According to Arroyo, this assignment was the most dangerous job in the Department because an undercover officer does not have a badge, gun, baton, mace, walkie-talkie, or handcuffs, and is "in the criminal element," dealing with armed drug dealers. A Department police captain acknowledged in his testimony that an undercover officer can be a more dangerous job than a uniformed officer. To further substantiate the dangerousness of his job, Arroyo stated that he was involved in three shootings as a narcotics officer and no shootings as a patrol officer. Arroyo also discussed the emotional stress of having to perform "all the work," and being subjected to more dangers than one's fellow officers.

Arroyo admitted, however, that "police work is dangerous whether you are in uniform or you are out of uniform," and acknowledged that the other officers on his54

Narcotics Task Force team make "contributions" to the team that are "important," even if they are different from his undercover work. Arroyo also conceded that other police officers perform dangerous work, but claimed that "generally speaking, I'm exposed to it more frequently and it is therefore more dangerous."

Arroyo also testified that he worked "harder" than his fellow Narcotics Task Force team members because his ability to speak Spanish means he is "one of the most valuable persons" on the team, requiring him to communicate directly with the suspects, testify in criminal trials for longer periods, and to respond to off-duty emergency calls involving Spanish-speaking suspects. Arroyo acknowledged, however, that he was fully compensated for the work performed, including overtime, and that he essentially works the same amount of hours as the other officers on the Narcotics Task Force.

With respect to the claimed discriminatory aspect of his work assignments, Arroyo repeatedly expressed his opinion that this unfair treatment was caused by the Department's failure to recruit and hire sufficient Hispanic, Spanish-speaking officers, resulting in Arroyo bearing the burden of a disproportionate amount of the work needed to handle the caseload of Spanish-speaking narcotics suspects. Arroyo testified that he has repeatedly complained about the Department's refusal to recruit and hire sufficient Spanish-speaking officers, and "at this time I'm asking the jury to help us." He agreed that this was the reason he brought the lawsuit, "to try to get a change in the police department" and said he was "hoping also that there will be some kind of relief for myself because I believe that I have been carrying the burden long enough." He testified that the Department is not "devoting enough resources to recruiting more" Spanish-speaking officers, and that if there were more Spanish-speaking officers, "[t]here would be more agents," and "it would probably open up doors for me to [obtain transfers and promotions]." Arroyo also presented several witnesses who testified about the Department's lack of meaningful efforts to recruit more Hispanic, Spanish-speaking officers.

On his failure-to-promote claim, Arroyo presented undisputed evidence that he was fully qualified for the promotion to sergeant in 1998, and argued the Department's refusal to promote him was based on his national origin. In support of this claim, Arroyo relied on evidence showing the Department did not have sufficient Hispanic/Spanish-speaking officers to work in the narcotics division and evidence showing the Department had previously denied him the opportunity to transfer out of the narcotics division because his skills as a fluent Spanish speaker and his Hispanic appearance made him indispensable to that division. In response, the Department did not present any evidence as to why it did not select Arroyo for a promotion in 1998.

With respect to his retaliation claim, Arroyo relied on evidence showing he was transferred to a different Narcotics Task Force team within two weeks of disclosing his EEOC memorandum to his supervisor (Lieutenant Kanaski), and argued that the Department imposed this transfer to penalize him for seeking to communicate the truth to the EEOC. As will be discussed more fully below, Arroyo claimed that this transfer was an adverse employment action because it required him to work undercover in areas close to his residence and approved outside businesses.

At the end of the evidentiary portion of the trial, the City moved for a directed verdict. The court granted the motion on several of Arroyo's claims or portions of those claims. Of relevance here, the court dismissed Arroyo's cause of action for discrimination based on a disparate impact theory. The court additionally dismissed Arroyo's cause of action for discrimination with respect to the City's failure to promote him in 1998. In so ruling, the court said it agreed with the City's argument that the claim had no merit because Arroyo did not call the ultimate decision maker on the promotion issue (former police chief Jerry Sanders) and Arroyo did not produce affirmative evidence showing that he was more qualified than the other selected candidates.

Thus, the jury was instructed that Arroyo's discrimination cause of action was based solely on Arroyo's claims that the City assigned him "an excessive amount" of work and "dangerous" work based on his national origin. With respect to the retaliation claim, the court instructed the jury that Arroyo must prove the City retaliated against Arroyo for complaining about national origin discrimination by transferring him from Team 7 to Team 1, and that this transfer constituted an adverse employment action.

Shortly after it began deliberating, the jury gave the court a note asking "Is there a definition of 'National Origin' that the EEO & EEOC uses? [¶] & What is it? or can the court give us a definition?" After the court discussed the question with both counsel, the court gave the following response: "National origin defines a person based upon birthplace[.] [I]n this case plaintiff's birthplace is Mexico."^[2] After a brief additional deliberation period, the jury returned a special verdict in Arroyo's favor on his discrimination and retaliation claims.

On the disparate treatment claim, the jury found: (1) the City assigned Arroyo "an excessive amount of work between December 8, 1997 and December 8, 1998"; (2) the City assigned and/or kept Arroyo in "work conditions that were dangerous between December 8, 1997 and December 8, 1998"; and (3) during this time period, Arroyo's national origin was a "motivating reason" for the City to assign him an excessive amount of work and/or keep him in work conditions that were dangerous. On this claim, the jury found Arroyo suffered $100,000 in past economic damages; $125,000 in future economic loss; $125,000 in past noneconomic loss; and $75,000 in future noneconomic loss.

On Arroyo's retaliation claim, the jury found: (1) Arroyo complained that the City was discriminating against him; (2) Arroyo's discrimination complaints were a motivating reason for the City to transfer Arroyo from Team 7 to Team 1; (3) the City's transfer of Arroyo from Team 7 to Team 1 was an adverse employment action; and (4) the City's retaliatory conduct was a substantial factor in causing harm to Arroyo. On this claim, the jury awarded Arroyo: $150,000 in past economic loss; $500,000 in past noneconomic loss; and $250,000 in future noneconomic loss.

The court denied the City's motions for new trial and judgment notwithstanding the verdict. The court thus entered judgment in Arroyo's favor for $1,325,000.

DISCUSSION

I. Discrimination Cause of Action

A. City's Appeal: Arroyo's Dangerous and Excessive Work Claims

The judgment on Arroyo's FEHA discrimination claim was based on the jury's findings that Arroyo was assigned an "excessive" amount of work and "dangerous" work because of his national origin. We conclude these findings were factually and legally insufficient to establish an FEHA violation under the particular circumstances of this case.

The FEHA makes it unlawful for an employer to discriminate against an employee based on his or her national origin. (§ 12940, subd. (a).) Where, as here, the employee asserts a disparate treatment claim, the employee must show the employer intentionally treated the employee less favorably than others because of the protected category. (See Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 354, fn. 20 (Guz); Teamsters v. United States (1977) 431 U.S. 324, 335-336, fn. 15.) Arroyo's claimed national origin was Mexican, but at trial the parties referred to Arroyo and the protected category as "Hispanic." For purposes of this appeal, we will do the same.^[3]

In a typical discrimination case, an employer takes an adverse action against an employee because of asserted poor performance or other business related justification and the employee alleges the action was actually motivated by unlawful discrimination. In this case, Arroyo alleges that he suffered from adverse employment actions because his performance in his unit was too good--that because he was such a valuable employee in the narcotics division, he was required to work harder and perform more dangerous tasks than other police officers. The discrimination aspect of his claim arises because his "good" performance as a narcotics agent is based on his ability to speak Spanish and the fact that he has a Hispanic background and appearance, making him particularly effective at performing undercover work involving Hispanic, Spanish-speaking suspects.

In analyzing whether Arroyo proved a discrimination claim under these circumstances, we reject the City's initial contention that the alleged differential treatment was permissible because it was based on Arroyo's language skills, rather than his national origin. Arroyo presented evidence from which the jury could reasonably conclude that his Hispanic origin and appearance were significant factors, in addition to his language skills, in his work assignments. The jury was specifically instructed that national origin is defined as "a person based upon birthplace" and "in this case plaintiff's birthplace is Mexico." We presume the jury followed this instruction and based its finding on the evidence of Arroyo's Hispanic appearance and background, rather than solely his language skills.

We likewise reject the City's argument that the claimed discrimination did not violate the FEHA because it was "favorable" discrimination, i.e., that Arroyo's assignments were based on Arroyo's "special skills" and reflected that his superiors were very pleased with his work. The point of Arroyo's FEHA claim was that his assignments were unfair because he was treated differently from other employees based on his national origin. The fact that his employer viewed his assignments as "favorable" does not negate this claim.

But we conclude the judgment is unsupported for other reasons. First, Arroyo conceded at trial and on appeal that the Department had a valid, nondiscriminatory purpose for assigning him to the narcotics division because he was one of the few officers who could handle certain specialized tasks involving Hispanic, Spanish-speaking narcotics suspects. Arroyo argued that the assignments nonetheless violated the FEHA because it was unfair that he shoulder this burden for the entire Department. He claimed he was discriminated against because the Department did not recruit and hire sufficient Hispanic, Spanish-speaking officers.

This claim--pertaining to the Department's hiring practices--does not support the judgment in Arroyo's favor on a disparate treatment theory. To prove his disparate treatment claim, Arroyo was required to present "evidence supporting a rational inference that intentional discrimination, on grounds prohibited by the statute, was the true cause of the employer's action." (Guz, supra, 24 Cal.4th at p. 361, italics omitted.) However, there was no evidence the Department intentionally sought to treat Arroyo less favorably by assigning him to the Narcotics Task Force or by failing to hire sufficient bilingual police officers. At most, Arroyo's challenge to the City's hiring practices amounts to a disparate impact claim, which challenges a facially neutral employer practice that has a disproportionate adverse effect on members of a protected class. (Id. at p. 354, fn. 20.) The court, however, granted a directed verdict on this theory and Arroyo does not challenge this ruling on appeal.

We additionally conclude the judgment on the discrimination claim is unsupported because the jury did not find, and was not asked to find, that Arroyo was assigned more work than other employees and/or was required to perform more dangerous work than other employees because of his national origin. Instead, consistent with the instructions and the language of the special verdict, the jury found only that the City assigned Arroyo an "excessive amount of work" and "work conditions which were dangerous." These findings do not support that the City treated Arroyo differently from other employees, a necessary element of a discrimination claim. To prevail on a disparate treatment claim, the employee must show the employer treated the employee less favorably than others because of the protected criteria. (See § 12940, subd. (a); Teamsters v. United States, supra, 431 U.S. at pp. 335-336, fn. 15.) A finding that a police officer is assigned an "excessive" amount of work or "dangerous" work does not mean that other law enforcement officers were not also assigned this type of work. Because the jury's findings on the special verdict do not reflect a determination that Arroyo was treated differently from non-Hispanic officers with respect to work assignments, the findings cannot support the discrimination judgment in Arroyo's favor.

Moreover, on our review of the record, there is insufficient evidence to show that Arroyo was required to perform more work or more dangerous work than other Department officers to establish unlawful discrimination. To prove this claim, Arroyo focused primarily on the difference between his work assignments and those of his fellow Narcotics Task Force team members. However, Arroyo admitted he was assigned the same shift and worked the same hours as all other Narcotics Task Force members. Although Arroyo unquestionably had a heavy workload and was required to be "on call" for substantial periods because of his special language skills, the evidence showed that other Task Force officers were also on call for other work assignments, and that Arroyo was fully compensated for his overtime work. The different team members did not always perform the same tasks, but Arroyo admitted they all worked full time on their jobs, and the other officers on the Narcotics Task Force provided "important" contributions to the team, including in an undercover operation. The fact that an officer serves in a back-up position because the Department decides his attributes or skills are better suited to that position does not mean that he or she is not also performing dangerous work. Likewise, Arroyo's involvement in three firearm confrontations as a narcotics officer does not, without more, show that he had a more dangerous job than non-Hispanic officers. Additionally, although working undercover may be particularly dangerous, this type of assignment is not limited to the narcotics division. The evidence established that law enforcement officers are also required to work undercover on murder, kidnapping, burglary, vice, and conspiracy cases.

Further, even assuming the evidence showed that an undercover assignment on the narcotics team can be more dangerous or more time consuming than other assignments, this fact alone cannot form the basis of a discrimination claim. The law enforcement work performed by the Department is inherently dangerous, routinely subjecting officers to life-threatening situations, involving gunfire, high speed chases, and other forms of violent criminal behavior. In enacting the FEHA, the Legislature could not have intended to permit a court or jury to second-guess a law enforcement agency's assignment decisions by concluding the employer unlawfully discriminated against an officer by placing the employee in one "dangerous" assignment rather than another "dangerous" assignment. Just as our Supreme Court in other contexts has declined to permit a judge or jury to second-guess an employer's managerial decisions, such caution resonates here. (See, e.g., Cotran v. Rollins Hudig Hall Internat., Inc. (1998) 17 Cal.4th 93, 106.) Permitting a court or jury to distinguish between the amount of work involved and/or the dangers inherent in performing narcotics work, as opposed to a homicide, domestic violence, patrol, or vice assignment, to find a law enforcement agency liable for discrimination could substantially interfere with a law enforcement agency's necessary discretion to make personnel decisions to achieve its public safety objectives.

This conclusion should not be interpreted to mean that an unfavorable work assignment on the basis of a protected category cannot form the basis of a discrimination claim. The appropriate inquiry is whether the alleged discriminatory assignment materially impacts a term or condition of employment. (See Yanowitz v. L'Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1049-1055 (Yanowitz); infra at pp. 33-34.) For example, if an assignment to undercover work on the basis of a protected category (e.g., race, gender, national origin) means that the employee is not compensated on the same terms as other employees or is not given the same promotion opportunities as other employees, this assignment could potentially form the basis of a valid discrimination claim. (See Perez v. F.B.I. (W.D. Texas 1988) 707 F.Supp. 891, 912. ["Though Title VII may not prohibit the [FBI] from assigning Hispanic Special Agents to undercover work in disproportionate numbers, Title VII does prohibit the Bureau from failing to credit adequately the contribution of the undercover agent to the mission of the Bureau in terms of promotions and benefits"].) In this case, the undisputed evidence shows that Arroyo was fully compensated for his work. To the extent that Arroyo presented evidence that the assignment prevented him from obtaining fair promotion opportunities, this claim was not presented to the jury and therefore the jury verdict cannot be upheld on this ground.^[4]

We further emphasize that we do not accept the City's broad argument that a requirement that an employee work harder than others and/or perform more dangerous work than others cannot be the basis of a discrimination claim because these requirements do not constitute "adverse employment" actions as a matter of law. However, in the context of an employment where the inherent nature of the jobs are dangerous and overtime work is an expected part of the work, an employee cannot prove a discrimination claim because he or she was supposedly assigned a "more" dangerous job or "more" work based on a protected category.

B. Arroyo's Cross Appeal: Failure-to-Promote Claim

In his cross-appeal, Arroyo challenges the directed verdict on his discrimination claim based on the City's failure to promote him in 1998. We conclude the court erred in granting the motion.

To prove his failure-to-promote claim based on a disparate treatment theory, Arroyo was required to prove the City's discriminatory motive. (Guz, supra, 24 Cal.4th at p. 356.) Because direct evidence of discriminatory motive is ordinarily unavailable, California courts analyze disparate treatment claims under the three-stage burden-shifting test established by the United States Supreme Court in McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792. (Guz, supra, 24 Cal.4th at p. 354; Reeves v. Safeway Stores, Inc. (2004) 121 Cal.App.4th 95, 111.) Under the McDonnell Douglas test: (1) the plaintiff/employee must set forth sufficient evidence to establish a prima facie case of discrimination; (2) the defendant/employer must then articulate a legitimate, nondiscriminatory reason for the adverse employment action; and (3) the burden then shifts back to the employee to show the challenged action in fact resulted from discriminatory animus. (Guz, supra, at pp. 354-356.)

When analyzing a dispositive motion such as a directed verdict, a court must apply the McDonnell Douglas test to determine whether the moving party is entitled to prevail as a matter of law. (See Caldwell v. Paramount Unified School Dist. (1995) 41 Cal.App.4th 189, 204.) The court should grant a judgment in the employer's favor if the employee cannot establish a prima facie case of discrimination. (Guz, supra, 24 Cal.4th at p. 355.) On the other hand, if the employee satisfies each element of the prima facie case, and the employer cannot articulate a nondiscriminatory reason for the adverse employment decision, discrimination must be presumed. (Ibid.) "In those instances, no fact finding is required, and the case will never reach a jury." (Caldwell, supra, 41 Cal.App.4th at p. 204.) But if both the employee and employer satisfy their initial burdens, then the case should be presented to the jury. (Guz, supra, at p. 356.) In such case, the burden-shifting construct "'drops from the case,'" and "the fact finder will have only to decide the ultimate issue of whether the employer's discriminatory intent was a motivating factor in the adverse employment decision." (Caldwell, supra, at pp. 204-205.)

In moving for a directed verdict, the City conceded that Arroyo satisfied his burden to show a prima facie case of discrimination. This concession is supported by the evidence. A plaintiff's prima facie burden is minimal. (Guz, supra, 24 Cal.4th at p. 355.) Generally, the plaintiff must show "(1) he was a member of a protected class, (2) he was qualified for the position he sought or was performing competently in the position he held, (3) he suffered an adverse employment action, such as termination, demotion, or denial of an available job, and (4) some other circumstance suggests discriminatory motive." (Ibid.)

Arroyo established he was a member of a protected class. Additionally, it was undisputed at trial that he was well qualified for the promotion to sergeant. It was also undisputed that Arroyo suffered an adverse employment action--the denial of an available promotion. Finally, other factual circumstances suggested a discriminatory motive, e.g., the Department's repeated refusals to permit Arroyo to transfer from the narcotics division supported an inference that the City was unwilling to consider promoting Arroyo because the Department needed to keep him in the field given his Hispanic background and appearance and his Spanish-speaking abilities.

Once Arroyo produced evidence establishing that a discriminatory motive played a part in the Department's failure to select him for a promotion, the burden shifted to the City to explain its own conduct. To satisfy this burden, an employer "need only produce admissible evidence which would allow the trier of fact rationally to conclude that the employment decision had not been motivated by discriminatory animus." (Texas Dept. of Community Affairs v. Burdine (1981) 450 U.S. 248, 257.) If the employer identifies a specific and facially valid nondiscriminatory basis for the adverse action, the burden then shifts to the employee to prove there was a "'causal connection' between the employee's protected status and the adverse employment action." (Mixon v. Fair Employment & Housing Com. (1987) 192 Cal.App.3d 1306, 1319.)

In this case, City did not proffer any evidence pertaining to the reason that it did not select Arroyo for a promotion. The court nonetheless granted a directed verdict on the claim, stating Arroyo had the burden of calling the police chief as a witness at trial to explain his decision not to promote Arroyo and Arroyo had the burden to produce evidence pertaining to the qualifications of the police officers who were promoted. This is an incorrect application of the McDonnell Douglas test. Because the City failed to offer a legitimate nondiscriminatory reason for denying Arroyo the sergeant position, the ultimate burden never shifted to Arroyo to produce additional evidence of a discriminatory motive. A plaintiff need not present evidence in addition to the prima facie case until the employer produces evidence of a specific, nondiscriminatory basis for its decision. (Guz, supra, 24 Cal.4th at p. 355.)

On appeal, the City does not attempt to argue that the court complied with the McDonnell Douglas test. The City instead contends that the court's error in granting a directed verdict was "harmless" because Arroyo did not present any evidence to prove the promotion was the result of a "discriminatory animus."

This argument reflects a misunderstanding of the McDonnell Douglas test. A primary purpose of the shifting-burdens analysis is to recognize the difficulty of proving discriminatory motive, and to establish certain reasonable presumptions through which discrimination may be inferred from facts creating a reasonable likelihood of bias if those facts are not satisfactorily explained. (Guz, supra, 24 Cal.4th at p. 354.) If, at trial, the plaintiff establishes a prima facie case, "a presumption of discrimination arises. . . . This presumption, though 'rebuttable,' is 'legally mandatory.' [Citations.]" (Id. at p. 355.) If a plaintiff meets this prima facie burden, and "'the employer is silent in the face of the presumption, the court must enter judgment for the plaintiff because no issue of fact remains in the case.'" (Ibid.) Put otherwise, if an employer cannot meet its minimal burden to identify a nondiscriminatory basis for the challenged action, a court or jury must infer that the true reason was discrimination.

Under these standards, Arroyo had no burden to come forward with evidence of discriminatory animus (beyond his prima facie burden) until the City identified the reason for the challenged employment action. Because the City failed to offer a legitimate nondiscriminatory reason for refusing to promote Arroyo to the sergeant position, the ultimate burden never shifted to Arroyo. On this record, the court's directed verdict constituted prejudicial error.

Moreover, the City's arguments that the evidence did not support an inference of discriminatory animus are unpersuasive. The City contends that the Department's refusal to promote Arroyo was "favorable" to Arroyo because he "loved his job," and "loved" the challenges and rewards that went with the job, and the undisputed evidence shows the Department "valued his service." The City suggests that under these circumstances its refusal to promote Arroyo "should be applauded, not criticized." This argument is unsound. A refusal to promote an employee on the basis of a protected factor such as national origin is unlawful discrimination, even if the employee excels and is happy in his current job. In this case, Arroyo's testimony made clear that although he enjoyed working in narcotics, he wanted to advance in the Department (as had so many of his colleagues) and he attempted to do so by repeatedly applying for promotions and transfers. The City cannot escape liability by arguing that it was doing Arroyo a favor by keeping him in a desirable assignment at which he excelled. Although a narcotics detective may be an important and coveted assignment within the Department, it is illegal to withhold a promotion and keep an employee in this position because of his national origin.

C. Arroyo's Cross Appeal: Continuing Violations Doctrine

In addition to contending the court erred in granting the City's motion for directed verdict on his claim that the City's denial of a promotion in 1998 constituted unlawful discrimination, Arroyo contends the court erred in ruling that he could not rely on the continuing violations doctrine to base his discrimination claim on the denial of a promotion between 1994 and 1996.

Legal Principles

Under the FEHA, a party must file an administrative claim within one year of the accrual of the cause of action. (Romano v. Rockwell Internat., Inc. (1996) 14 Cal.4th 479, 492.) Generally, only those incidents that occurred within one year of the administrative claim filing can be presented to the jury as a basis for the alleged discrimination. (Ibid.) An exception to this rule is embodied in the continuing violations doctrine. (See Richards v. CH2M Hill, Inc. (2001) 26 Cal.4th 798, 802.) Under this doctrine, an employer is liable for actions occurring outside the limitations period if these actions are sufficiently linked to unlawful conduct that occurred within the limitations period. (Ibid., see Yanowitz, supra, 36 Cal.4th at pp. 1055-1060.) This doctrine applies if the employer's actions were "'(1) sufficiently similar in kind . . . ; (2) have occurred with reasonable frequency; (3) and have not acquired a degree of permanence.'" (Yanowitz, supra, at p. 1059.)

Factual Background

Arroyo filed his administrative claim alleging discrimination on December 8, 1998. Before trial, the City moved to exclude evidence of its alleged discriminatory conduct that occurred before the limitations period (before December 8, 1997). The procedural basis of this motion was Code of Civil Procedure section 597, which permits a court to bifurcate a trial under certain circumstances. At the hearing on this motion, the City argued that the court should limit Arroyo's failure-to-promote claim to the City's denial of a promotion in 1998 based on the 1996-1998 eligibility list. The City asserted that Arroyo did not allege any wrongdoing with respect to the composition of the list, and that Arroyo's discrimination claim was based solely on his allegation that the Department's failure to select him from the list in 1998 constituted improper discrimination.

In opposition, Arroyo's counsel stated that Arroyo was also on a promotion eligibility list from 1994 through 1996 and he was denied a promotion during this time. Arroyo's counsel thus argued that based on the continuing violation doctrine, Arroyo should be permitted to base his discrimination claim on the Department's failure to promote him during the 1994 through 1996 time period.^[5] The City responded that the denial of a promotion during this time period was a discrete event, and therefore the continuing violations doctrine had no applicability to this claim.

The court ultimately agreed with the City's argument, and concluded that Arroyo could not base his claim on events occurring before 1997. The court, however, made clear it was not precluding Arroyo from presenting evidence of the City's conduct before December 1997 to the extent this conduct was relevant to show discrimination that allegedly occurred during the December 1997 through December 1998 time period. Consistent with this ruling, during trial Arroyo was permitted to present evidence of the City's pre-December 1997 acts that were allegedly relevant to Arroyo's discrimination claim. These acts included the specifics of the City's repeated refusals in 1992 through 1997 to permit Arroyo to transfer from the narcotics unit.

Analysis

In his cross-appeal, Arroyo contends the court violated his right to a jury trial on the applicability of the continuing violations doctrine to his nonpromotion claim. He argues that Code of Civil Procedure section 597 cannot be used to deny a party's jury trial right. We agree with this general principle. Code of Civil Procedure section 597 provides that defenses not involving the merits of an action, such as a statute of limitations defense, may be tried in a bifurcated proceeding before the trial in the action. The procedure seeks to avoid the time and expense of a trial that could be rendered moot if a special defense has merit. (Bedola v. Logan & Frazer (1975) 52 Cal.App.3d 118.) Where a special defense requires the resolution of factual issues, a party has a right to a jury trial in a Code of Civil Procedure section 597 proceeding.

This jury trial right, however, has no applicability here because Arroyo did not raise any issue requiring the resolution of a factual question. Although the applicability of the continuing violations doctrine can potentially present factual issues for a jury's determination (see Yanowitz, supra, 36 Cal.4th at p. 1060), it was undisputed that the City's failure to promote Arroyo from the 1994-1996 eligibility list was a discrete act that became permanent in 1996. In response to the City's arguments at the hearing below, Arroyo did not assert any factual basis to support a conclusion that the 1996 and 1998 promotion decisions constituted a continuing course of conduct. Each promotion decision constituted a separate and completed act by the City triggering a new limitations period. The continuing violations doctrine does not apply to unrelated discrete acts such as a series of rejected job applications. (See Morgan v. Regents of University of California (2000) 88 Cal.App.4th 52, 65-66; see also Narin v. Lower Merion School Dist. (E.D.Pa 1998) 24 F.Supp.2d 465, 473.)

To the extent Arroyo argues that he did not know, and could not have discovered, that the denial of the promotion was the result of discrimination, Arroyo never asked the court to toll the statute of limitations based on his alleged failure to discover the basis of the nonpromotion in the 1994 through 1996 time frame, nor has he identified any factual basis to support this contention. There is no question that by the end of 1996, Arroyo was aware that he had not been promoted. There is nothing to suggest Arroyo did not suspect the claimed discrimination, or that if he had investigated he would not have discovered the alleged discriminatory conduct. When Arroyo learned that he had not been promoted in 1996, the act had the degree of permanence that should have triggered his awareness of, and duty to, assert his rights.

This case is unlike Yanowitz, in which the California Supreme Court held that the continuing violations doctrine applies to a retaliation claim where the employee alleges a "retaliatory course of conduct rather than a discrete act of retaliation . . . ." (Yanowitz, supra, 36 Cal.4th at p. 1058.) In Yanowitz, the plaintiff presented facts showing her employer engaged in a "continuous and temporally related course of conduct" and that the employee could have reasonably believed that the employer's actions were not final and further conciliatory efforts would be productive. (Id. at p. 1059.) In contrast, the Department's refusal to promote Arroyo was permanent (final) when Arroyo learned in 1996 he would not be promoted, and there are no facts to suggest otherwise. Likewise, unlike Yanowitz, there is no factual basis for Arroyo to believe that the City's 1996 promotion decision was subject to modification through discussion.

II. Retaliation Claim

Under the FEHA, it is unlawful for "any employer . . . to discharge, expel, or otherwise discriminate against any person because the person has opposed any practices forbidden under [the FEHA] or because the person has filed a complaint under this [Act]." (§ 12940, subd. (h).) On Arroyo's retaliation claim, the jury found the City transferred Arroyo from Team 7 to Team 1 of the Narcotics Task Force for the purpose of retaliating against him for reporting his discrimination complaint, and that this transfer constituted an adverse employment action. The jury awarded Arroyo $900,000 in compensatory damages.

On appeal, the City contends the judgment on this claim must be reversed because: (1) Arroyo did not exhaust his administrative remedies; (2) there was insufficient evidence to show the transfer constituted an adverse employment action; (3) there was insufficient evidence to show Arroyo's complaints were a motivating reason for the Department to transfer Arroyo; and (4) there was insufficient evidence to support the damage award. We reject each of these arguments, except we conclude that the economic damages are unsupported and strike those damages.

A. Exhaustion of Administrative Remedies

An employee bringing a claim under the FEHA must exhaust the administrative remedy by filing an administrative complaint with the DFEH within one year after the alleged unlawful action occurred. (§ 12960, subd. (d).) If the DFEH does not issue an accusation within a specified period, it must issue a right-to-sue letter notifying the employee that he or she may bring a civil suit within one year of the date of the notice. (§ 12965, subd. (b).) This one-year period for bringing the claim after the DFEH issues the right-to-sue notice is tolled if the EEOC continues to investigate the employee's claims under a work-sharing agreement. (Downs v. Department of Water & Power (1997) 58 Cal.App.4th 1093, 1101-1103 (Downs).)

In a pretrial motion, the City argued that Arroyo's retaliation claim must be dismissed because there was no evidence that Arroyo filed his retaliation claim with the DFEH and that the DFEH issued a right-to-sue letter. In response, Arroyo presented evidence that he filed a joint retaliation complaint with the EEOC and the DFEH on September 5, 2000, and submitted evidence showing that under a work-sharing agreement, the EEOC took responsibility for investigating the complaint. (See Downs, supra, 58 Cal.App.4th at p. 1097.)

Although Arroyo initially had no evidence that the DFEH received the claim and/or issued a right-to-sue letter, before trial the EEOC gave Arroyo a copy of the DFEH right-to-sue letter and Arroyo submitted this letter to the court with his declaration explaining the circumstances under which he was given the letter. This DFEH right-to-sue letter was dated September 5, 2000. The letter advised Arroyo that his complaint filed with the DFEH would be handled by the EEOC, and that "[s]ince DFEH will not be issuing an accusation, this letter is also your right-to-sue notice."

Arroyo also submitted a declaration of the EEOC's acting area director, confirming that (1) Arroyo's retaliation complaint was "dually filed with the EEOC and DFEH" on September 5, 2000; (2) "[a]s per the normal procedure, it appears a Right to Sue Notice for DFEH was issued on or about September 5, 2000 in this case"; and (3) "A copy of the Right to Sue Notice is not contained in the current file. It appears a duplicate was issued pursuant to inquiries by the City of San Diego on or about April 16, 2004. The fact the document is not in the EEOC's file now is an administrative error on EEOC's part. Mr. Arroyo did properly exhaust his administrative remedies relating to his retaliation charge against the City of San Diego. Based upon our procedures, there is no reason to believe that a Right to Sue was not issued in this case on or about September 5, 2000 . . . ."

On this record, the trial court properly found that Arroyo exhausted his administrative remedies by timely filing a complaint with the DFEH and that the DFEH issued a right-to-sue letter. In challenging the court's ruling, the City relies on Martin v. Lockheed Missiles & Space Co. (1994) 29 Cal.App.4th 1718. This reliance is misplaced because in Martin there was no "showing that [the employee] filed her . . . charge, or caused it to be filed, with the DFEH, or that the DFEH had actual notice of the . . . charge from any other source . . . ." (Id. at p. 1727.) The Martin court found the employee's failure to file a complaint with the DFEH was not a "'procedural technicality'" because the DFEH never had the opportunity to "pursue the 'vital policy interests embodied in [the FEHA], i.e., the resolution of disputes and elimination of unlawful employment practices by conciliation.'" (Id. at pp. 1727, 1728.)

In this case, the record supports that Arroyo did timely file the complaint with the DFEH and the DFEH had the full opportunity to seek conciliation to resolve the complaint and to address the alleged unlawful retaliatory actions, but the DFEH made the discretionary determination to defer action to the EEOC. Further, although it appears that Arroyo did not initially receive a copy of the DFEH right-to-sue notice, there was evidence that this notice was timely issued, but for reasons not clear on the record, a copy was not mailed to Arroyo or properly maintained in the file. The City claimed in the proceedings below that the copy of the right-to-sue letter submitted to the court was "fraudulent" because it had not previously been in the EEOC file and it appears to have been "manufactured" by the EEOC from a prior DFEH letter. In support, the City submitted a declaration of a forensic examiner. The court, however, found the City's claim to be not credible. Based on the declaration submitted under penalty of perjury by the acting director of the EEOC, the court had a substantial evidentiary basis to reject the City's fraud argument. Moreover, any questionable conduct on the EEOC's behalf cannot be fairly attributed to Arroyo under the circumstances.

Additionally, the DFEH had a mandatory duty to issue a right-to-sue notice within one year after it received Arroyo's complaint. "[A] complainant's entitlement to a right-to-sue notice is unconditional. The DFEH is required to issue one even in the absence of a request." (Grant v. Comp USA, Inc. (2003) 109 Cal.App.4th 637, 648.) Thus, where as here, an employee has timely filed a proper complaint with the DFEH and the DFEH has notice of the complaint, the DFEH's failure to comply with its mandatory duty to issue a letter does not bar an employee's civil action. (Ibid.)

B. Adverse Employment Action

The City next argues that insufficient evidence supported the jury's finding that Arroyo suffered an adverse employment action.

The California Supreme Court recently held that to recover on a retaliation claim, an employee must show the employer's retaliatory conduct subjected the employee to an adverse employment action that materially affected the "terms and conditions" of the employment. (Yanowitz, supra, 36 Cal.4th at p. 1036; accord Akers v. County of San Diego (2002) 95 Cal.App.4th 1441, 1454-1455 (Akers).) In adopting this standard, the court made clear that courts should not take "an unduly narrow view of the type of adverse employment actions that are forbidden by section 12940(a)." (Yanowitz, supra, 36 Cal.4th at p. 1052.) Courts should instead broadly apply the materiality test to ensure employees are protected from discrimination in "the entire spectrum of employment actions that are reasonably likely to adversely and materially affect an employee's job performance or opportunity for advancement in his or her career." (Id. at pp. 1053-1054.) Thus, "[a]lthough a mere offensive utterance or even a pattern of social slights by either the employer or coemployees cannot properly be viewed as materially affecting the terms, conditions, or privileges of employment . . . ," courts should liberally construe the materiality requirement "with a reasonable appreciation of the realities of the workplace in order to afford employees the appropriate and generous protection against employment discrimination that the FEHA was intended to provide." (Id. at p. 1054.)

In applying this test, the Yanowitz court found that a series of actions directed against a retail sales manager, including unwarranted and sustained criticism and the implied threat of termination, constituted actionable adverse employment actions because these actions were more than "inconveniences" or "commonplace indignities typical of the workplace" and instead had the potential to undermine the employee's effectiveness and derail her career. (Yanowitz, supra, 36 Cal.4th at p. 1060.) In Akers v. County of San Diego, this court applied the materiality test to similarly hold that a negative performance review combined with management's demonstrated willingness to use this information against the employee in significant employment decisions could constitute an adverse employment action. (Akers, supra, 95 Cal.App.4th at pp. 1456-1457.) Relying on Yanowitz, a Court of Appeal recently appli