Harris v. County of Orange ( 2012 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GAYLAN HARRIS; JERRY JAHN; 
JAMES MCCONNELL, on behalf of
No. 11-55669
themselves and others similarly
situated, D.C. No.
Plaintiffs-Appellants,  8:09-cv-00098-
AG-MLG
v.
OPINION
COUNTY OF ORANGE,
Defendant-Appellee.

Appeal from the United States District Court
for the Central District of California
Andrew J. Guilford, District Judge, Presiding
Argued and Submitted
October 11, 2011—Pasadena, California
Filed June 8, 2012
Before: Harry Pregerson and Dorothy W. Nelson,
Circuit Judges, and Barbara M.G. Lynn, District Judge.*
Opinion by Judge Barbara M. G. Lynn
*The Honorable Barbara M.G. Lynn, United States District Judge for
the Northern District of Texas, sitting by designation.
6819
6822 HARRIS v. ORANGE
COUNSEL
G. Scott Emblidge, Rachel J. Sater, Michael P. Brown, Mos-
cone Emblidge & Sater LLP, San Francisco, California, for
the plaintiffs-appellants.
Arthur A. Hartinger, Jennifer L. Nock, Meyers, Nave, Riback,
Silver & Wilson, Oakland, California, for the defendant-
appellee.
HARRIS v. ORANGE 6823
OPINION
LYNN, District Judge:
Named plaintiffs, on behalf of thousands of retired County
employees participating in County-sponsored health care
plans (collectively, the “Retirees”), filed this lawsuit against
the County of Orange (the “County”), challenging changes it
made to the structure of two health benefits. The Retirees
appeal the district court’s order granting a motion for judg-
ment on the pleadings filed by the County. We have jurisdic-
tion pursuant to 28 U.S.C. § 1291, and we reverse and
remand. To decide this case, we must address four issues: (1)
whether we take judicial notice of a declaration and five
Memoranda of Understanding (“MOUs”); (2) whether the dis-
trict court erred in holding that the Retirees’ Subsidy claim
was barred by claim preclusion; (3) whether the district court
erred in holding that there was no explicit authority requiring
the County to provide a benefit in perpetuity; and (4) whether
the district court erred in holding that the Retirees failed to
exhaust their administrative remedies.
I. Factual and Procedural Background
The Retirees allege that the County’s restructuring of their
health benefits violated the United States and California Con-
stitutions, and was a breach of contract, and constituted dis-
crimination against the Retirees on account of their age, in
violation of California’s Fair Employment and Housing Act,
California Government Code § 12940 et seq. (“FEHA”).
A. Retiree Health Benefits
From 1985 through 2007, the County subsidized health
insurance premiums for its retired employees by pooling
active and retired employees into one collective group of
health plan participants (the “Retiree Premium Subsidy” or
the “Subsidy”). Although the County’s program provided
6824 HARRIS v. ORANGE
retirees and active employees the same benefits at the same
costs, the pooling of the two groups had the effect of lowering
retiree premiums below what their actual rates would other-
wise have been, i.e., the program subsidized retired employ-
ees. From 1993 through 2007, retired employees also received
a monthly grant to be applied toward the cost of their health
insurance coverage, referred to as the Retiree Medical Grant
(the “Grant”). The terms and conditions of the Grant were set
forth in separate sections of the collective bargaining agree-
ments, known as MOUs, governing the relationship between
the County and its active and retired employees. For the small
number of retirees not represented by unions, the terms and
conditions were described in Personnel and Salary Resolu-
tions. The monthly grant for retirees was calculated by multi-
plying the employees’ years of service at the time of
retirement by a fixed-dollar amount (“the Grant Multiplier”).
The initial Grant Multiplier was $10, but it increased every
year by up to 5% to reflect inflation.
B. The County Restructures the Retiree Medical Program
Beginning in 2004, the County engaged in negotiations
with labor unions to restructure its retiree medical program,1
which was underfunded and in danger of insolvency. On Sep-
tember 12, 2006, the County’s Board of Supervisors formally
approved an agreement with the Orange County Employees
Association. The agreement provided, in pertinent part, that
effective January 2008, (1) the County would separate retired
and active employees into different health plans or pools to
set premiums; (2) the maximum increase for the Grant Multi-
plier would be reduced from 5% to 3%; and (3) once a Retiree
became eligible for Medicare, the Grant would be reduced by
50%. In order to obtain the unions’ agreement to forego the
pooling structure that created the Subsidy and to reduce the
Grant benefits, the County agreed to pay active employees
1
The retiree medical program refers to all retiree health benefits, includ-
ing the Subsidy and Grant.
HARRIS v. ORANGE 6825
higher wages, but the Retirees received nothing. The Retirees
allege that as a result of the County’s decision to stop pooling
active and retired employees and to reduce the Grant, their
health care premiums increased significantly. The Retirees
allege they cannot afford the increases and that they have had
to abandon their County-sponsored health insurance plans,
and obtain coverage that costs less but provides lesser bene-
fits.
C. The Retired Employees Association of Orange County,
Inc. (“REAOC”) Lawsuit
On November 5, 2007, REAOC, a California non-profit
corporation representing more than 4,600 County retirees and
their spouses, filed suit in the Central District of California on
behalf of thousands of retired County employees, challenging
only the County’s decision to stop pooling active and retired
employees, and seeking declaratory and injunctive relief.
REAOC alleged the existence of an implied promise to con-
tinue the Subsidy. On December 14, 2007, the County moved
to dismiss REAOC’s suit, alleging, in part, that REAOC
lacked standing to sue for damages on behalf of its members.
The district court, in denying the County’s Motion to Dismiss,
observed that REAOC’s Complaint did not and could not seek
damages. On December 22, 2008, REAOC and the County
argued cross-motions for summary judgment. On June 19,
2009, the district court granted the County’s Motion for Sum-
mary Judgment, finding that the County was not contractually
obligated to provide Retirees with pooling throughout their
lifetimes, because there was no evidence of “any explicit leg-
islative or statutory authority” requiring the County to do so,
and because that obligation could not arise by implication
from past practices and course of dealing. Retired Emps.
Ass’n of Orange Cnty., Inc. v. Cnty. of Orange, 632 F. Supp.
2d 983, 987 (C.D. Cal. 2009). REAOC appealed that judg-
ment to this Court. On June 29, 2010, after oral argument, this
Court certified to the California Supreme Court the question
of whether, as a matter of California law, a California county
6826 HARRIS v. ORANGE
and its employees can form an implied contract that confers
on retired county employees vested rights to health benefits,
and the appeal from the district court was stayed pending the
California Supreme Court’s determination of the certified
question. See Retired Emps. Ass’n of Orange Cnty., Inc. v.
Cnty. of Orange, 610 F.3d 1099 (9th Cir. 2010). On Novem-
ber 21, 2011, the California Supreme Court answered the cer-
tified question, holding that under California law, a vested
right to health benefits for retired county employees can be
implied, under certain circumstances, from a county ordi-
nance or resolution. See Retired Emps. Ass’n of Orange Cnty.,
Inc. v. Cnty. of Orange, 266 P.3d 287, 301 (Cal. 2011).
D. Retirees’ Lawsuit
On January 22, 2009, while summary judgment motions
were pending in the REAOC lawsuit, the Retirees filed a class
action in the Central District of California, and it was
assigned to the same district judge presiding over the REAOC
lawsuit. The Retirees filed an amended complaint on February
3, 2009, alleging, on behalf of thousands of retirees (including
REAOC members and non-members), that the County’s
restructuring of its retiree medical program constituted an
impairment of contract and denial of due process, in violation
of the United States and California Constitutions, and was a
breach of contract, and constituted discrimination against the
Retirees on account of their age, in violation of the FEHA.
The Retirees sought damages and injunctive and declaratory
relief. They alleged that the Subsidy was an implied term of
the MOUs and that they had a contractual right to receive the
Grant, as its terms were reflected in the MOUs in place on the
dates they retired. The suits filed by the Retirees and REAOC
overlapped, to the extent both sought declaratory and injunc-
tive relief related to the County’s elimination of the Subsidy,
alleging the same theories of contract and constitutional law.
One of the class representatives, James McConnell, had filed
a timely administrative complaint with the California Depart-
HARRIS v. ORANGE 6827
ment of Fair Employment and Housing on December 30,
2008. In his administrative complaint, he stated that:
For 23 years the county maintained one set of health
care plans for active and retired employees, and
charged premiums for coverage under those plans
based on a combined pool of all active and retired
employees. Beginning in 2008 the county removed
retired employees from the plans and ‘split the pool,’
for the express purpose of eliminating ‘older, less
healthy’ participants from the plans. The premiums
for retired employees rose dramatically as a result,
including my own premiums, which increased by
hundreds of dollars per month.
On April 7, 2010, the County moved, pursuant to Federal
Rule of Civil Procedure 12(c), for judgment on the pleadings.
On March 29, 2011, the district court granted the motion,
without giving the Retirees leave to amend. The district court
found that the Retirees’ Subsidy claims were barred by claim
preclusion, because there was an identity of claims between
those in the Retirees’ lawsuit and the REAOC lawsuit, and
because there was privity between the Retirees and REAOC.
The district court determined that the Retirees had been ade-
quately represented by REAOC, because the Retirees’ and
REAOC’s interests were aligned and because REAOC under-
stood itself to be acting in a representative capacity. The dis-
trict court also found that the Retirees’ Grant claims should be
dismissed, because the Retirees had not pled that any “explicit
legislative or statutory authority” required the County to pro-
vide the Grant in perpetuity. Finally, the district court found,
for purposes of the FEHA claim, that the Retirees failed to
exhaust administrative remedies because Mr. McConnell’s
administrative complaint did not state it was “on behalf of”
other class members. The Retirees timely appealed.
II. Standard of Review
We review de novo a district court’s grant of a Rule 12(c)
motion for judgment on the pleadings. United States ex rel.
6828 HARRIS v. ORANGE
Cafassov. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1053
(9th Cir. 2011). The Court inquires whether the complaint at
issue contains “sufficient factual matter, accepted as true, to
state a claim of relief that is plausible on its face.” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks
and citation omitted); Cafasso, 637 F.3d at 1054 n.4 (finding
Iqbal applies to Rule 12(c) motions because Rule 12(b)(6)
and Rule 12(c) motions are functionally equivalent). The
Court may find a claim plausible when a plaintiff pleads suffi-
cient facts to allow the Court to draw a reasonable inference
of misconduct, but the Court is not required “to accept as true
a legal conclusion couched as a factual allegation.” Iqbal, 556
U.S. at 678 (internal quotation marks and citation omitted).
Similarly, we review de novo a district court’s dismissal based
on claim preclusion. Stewart v. U.S. Bancorp, 297 F.3d 953,
956 (9th Cir. 2002). “Dismissal with prejudice and without
leave to amend is not appropriate unless it is clear on de novo
review that the complaint could not be saved by amendment.”
Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052
(9th Cir. 2003) (per curiam).
III. Discussion
A. Request for Judicial Notice
The Retirees request that we take judicial notice of (1) a
declaration filed by the County in the REAOC litigation, and
(2) five of the MOUs that were attached as exhibits to that
declaration. The County has not opposed the request for judi-
cial notice.
Under Federal Rule of Evidence 201, “[t]he court may judi-
cially notice a fact that is not subject to reasonable dispute
because it: (1) is generally known within the court’s territorial
jurisdiction; or (2) can be accurately and readily determined
from sources whose accuracy cannot reasonably be ques-
tioned.” Fed. R. Evid. 201. We may take judicial notice of
undisputed matters of public record, Lee v. City of Los Ange-
HARRIS v. ORANGE 6829
les, 250 F.3d 668, 689 (9th Cir. 2001), including documents
on file in federal or state courts. See Bennett v. Medtronic,
Inc., 285 F.3d 801, 803 n.2 (9th Cir. 2002). Moreover, docu-
ments not attached to a complaint may be considered if no
party questions their authenticity and the complaint relies on
those documents. Lee, 250 F.3d at 688.
Therefore, pursuant to Rule 201 and Ninth Circuit authori-
ties, we take judicial notice of these documents that are on file
in federal court in the REAOC litigation and because the
Retirees make reference to the MOUs in their Complaint.
B. Retirees’ Appeal of the District Court’s Dismissal of the
Subsidy Claims
The Retirees contend that the district court erred by holding
that the REAOC litigation precluded them from pursuing their
claims for damages related to the County’s elimination of the
Subsidy because, among other reasons, REAOC could not
adequately represent the Retirees. We agree.
[1] Claim preclusion requires three things: (1) identity of
claims; (2) a final judgment on the merits; and (3) the same
parties, or privity between the parties. Cell Therapeutics, Inc.
v. Lash Grp. Inc., 586 F.3d 1204, 1212 (9th Cir. 2010)
(amended).
A court is to apply four criteria to decide whether there is
an identity of claims: “(1) whether rights or interests estab-
lished in the prior judgment would be destroyed or impaired
by prosecution of the second action; (2) whether substantially
the same evidence is presented in the two actions; (3) whether
the two suits involve infringement of the same right; and (4)
whether the two suits arise out of the same transactional
nucleus of facts.” United States v. Liquidators of European
Fed. Credit Bank, 630 F.3d 1139, 1150 (9th Cir. 2011). The
fourth criterion is the most important. Id. at 1151.
6830 HARRIS v. ORANGE
The Retirees challenge the County’s decision to no longer
pool active and retired employees for purposes of determining
health premiums, thereby eliminating the Subsidy, and assert
that the County’s past practice of pooling created an implied
contract to continue pooling. The Retirees acknowledge that
the County’s elimination of the Subsidy is also the subject of
the REAOC litigation. We find that there is an identity of
claims in the two cases with respect to the Subsidy.
The second factor for claim preclusion is also met, because
there was a final summary judgment on the merits in the
REAOC litigation. Retired Emps. Ass’n of Orange Cnty., Inc.
v. Cnty. of Orange, 632 F. Supp. 2d 983 (C.D. Cal. 2009); see
also Tripati v. Henman, 857 F.2d 1366, 1367 (9th Cir. 1988)
(per curiam) (stating that “[t]he established rule in the federal
courts is that a final judgment retains all of its res judicata
consequences pending decision of the appeal”) (quoting 18 C.
Wright, A. Miller & E. Cooper, Federal Practice and Proce-
dure § 4433, at 308 (1981)) (internal quotation marks omit-
ted).
[2] However, we find that REAOC and the Retirees are not
in privity, so the third factor is not met. Although the Retirees
were not named parties to the REAOC litigation, “in certain
limited circumstances, a nonparty may be bound by a judg-
ment because she was adequately represented by someone
with the same interests who [wa]s a party to the suit.” Taylor
v. Sturgell, 553 U.S. 880, 894 (2008) (internal quotation
marks omitted). “A party’s representation of a nonparty is
‘adequate’ for preclusion purposes only if, at a minimum: (1)
the interests of the nonparty and [the] representative are
aligned; and (2) either the party understood [itself] to be act-
ing in a representative capacity or the original court took care
to protect the interests of the nonparty.” Id. at 900 (internal
citation omitted). Relying on Anderson v. Waddle, 474 F.
Supp. 2d 1116 (E.D. Mo. 2007), the Retirees argue that
REAOC could not adequately represent them because, as an
association, REAOC lacked the legal capacity to seek dam-
HARRIS v. ORANGE 6831
ages on their behalves, and thus, the interests of REAOC and
the Retirees are not aligned. In Anderson, individual members
of an association sought damages, when the association had
previously brought suit for injunctive and declaratory relief
for the same alleged violation. Id. at 1118-19. The defendant
urged dismissal of the individual plaintiffs’ claims based on
claim preclusion. Id. The court held that preclusion did not
apply because, under the doctrine of associational standing as
set forth in Warth v. Seldin, 422 U.S. 490 (1975), an associa-
tion may only seek injunctive or declaratory relief, and there-
fore, the association could not adequately represent its
individual members in claiming damages. Id. at 1119.
[3] The Restatement (Second) of Judgments § 26(1)(c) is
also relied on by the Retirees. Section 26(1)(c) states that
claim preclusion “does not apply to extinguish [a] claim, and
part or all of the claim subsists as a possible basis for a second
action by the plaintiff against the defendant” when:
[t]he plaintiff was unable to rely on a certain theory
of the case or to seek a certain remedy or form of
relief in the first action because of the limitations on
the subject matter jurisdiction of the courts or restric-
tions on their authority to entertain multiple theories
or demands for multiple remedies or forms of relief
in a single action, and the plaintiff desires in the sec-
ond action to rely on that theory or to seek that rem-
edy or form of relief.
The Comment to the provision explains that the doctrine of
claim preclusion:
is largely predicated on the assumption that the juris-
diction in which the first judgment was rendered was
one which put no formal barriers in the way of a liti-
gant’s presenting to a court in one action the entire
claim[,] including any theories of recovery or
6832 HARRIS v. ORANGE
demands for relief that might have been available to
him under applicable law.
Restatement (Second) of Judgments, § 26(1)(c) cmt. c.
[4] We find the reasoning of Anderson and Section
26(1)(c) persuasive. Therefore, we conclude that claim pre-
clusion does not bar a second action for damages, where a
damages remedy was unavailable in the first action. See Bio-
Tech. Gen. Corp. v. Genentech, Inc., 80 F.3d 1553, 1563
(Fed. Cir. 1996) (finding that “where a plaintiff was precluded
from recovering damages in the initial action by formal juris-
dictional or statutory barriers, not by plaintiff’s choice, a sub-
sequent action for damages will not normally be barred by res
judicata even where it arises from the same factual circum-
stances as the initial action”) (quoting Burgos v. Hopkins, 14
F.3d 787, 790 (2d Cir. 1994)). The County cites to United
States v. Tohono O’Odham Nation, 131 S. Ct. 1723, 1730-31
(2011), Feminist Women’s Health Center v. Codispoti, 63
F.3d 863, 868 (9th Cir. 1995), McClain v. Apodaca, 793 F.2d
1031, 1034 (9th Cir. 1986), and Jackson v. Hayakawa, 605
F.2d 1121, 1125 (9th Cir. 1979) to support its contention that
claim preclusion does not turn on the requested relief. How-
ever, both suits in those cases involved, or were treated as
involving, the same parties, and no formal barriers precluded
pursuit of a specific remedy.2
[5] We find that the interests of REAOC and the Retirees
are not aligned because associational standing rules prevent
REAOC from pursuing damages. The County recognized the
2
In Jackson v. Hayakawa, named plaintiffs in the first and second
actions were different. However, the Court found the parties to be the
same for purposes of claim preclusion because the first action was brought
on behalf of a class and was treated by the court as a class action. Further,
although named plaintiffs in the first action sought only declaratory and
injunctive relief, no formal barriers prevented them from seeking the dam-
ages that the named plaintiff in the second action sought. 605 F.2d at
1125-26.
HARRIS v. ORANGE 6833
limits of REAOC’s authority when it proactively moved to
dismiss REAOC’s claims, arguing that REAOC lacked stand-
ing to sue for damages. The district court denied the motion
because no such claims were asserted by REAOC, but in
doing so, the Court recognized the limits of REAOC’s stand-
ing. Therefore, we find that the district court erred when it
ruled that the Retirees’ Subsidy claims for damages are barred
by claim preclusion.3
[6] Although the parties dispute whether the district court
ruled on the merits of the Subsidy claim, we decline to reach
this issue. In the REAOC litigation, we certified the question
of whether an implied contract to continue the pooling bene-
fits was formed under state law. Retired Emps. Ass’n of
Orange Cnty., Inc. v. Cnty. of Orange, 610 F.3d 1099, 1101
(9th Cir. 2010). On November 21, 2011, the California
Supreme Court answered the certified question, holding that
under California law, a vested right to health benefits for
retired county employees can be implied, under certain cir-
cumstances, from a county ordinance or resolution. See
Retired Emps. Ass’n of Orange Cnty., Inc. v. Cnty. of Orange,
266 P.3d 287, 301 (Cal. 2011). Consistent with this Court’s
decision reached in the REAOC litigation after the California
Supreme Court’s decision, we remand the Retirees’ Subsidy
claims so that the district court may reassess those claims in
light of the California Supreme Court’s opinion, and coordi-
nate those claims with the REAOC litigation.
C. Retirees’ Appeal of the District Court’s Dismissal of the
Grant Claims
The Retirees argue that the district court erred when it dis-
missed the Grant claim, finding that there was no explicit leg-
3
At oral argument, counsel for the Retirees stated that the Retirees are
only pursuing their damages claims. Therefore, we decline to decide here
whether claims by the Retirees for declaratory and injunctive relief are
barred by the REAOC litigation.
6834 HARRIS v. ORANGE
islative or statutory authority requiring the County to provide
the Grant in perpetuity. We do not disagree with the district
court’s conclusion to that effect, but find that the district court
should have granted the Retirees leave to amend.
[7] Under California law, in the public employment con-
text, a contract with employees must be created by a resolu-
tion or ordinance formally enacted by a majority of the Board
of Supervisors. Cal. Gov’t Code § 25300; Cnty. of Sonoma v.
Superior Court, 93 Cal. Rptr. 3d 39, 56 (Cal. Ct. App. 2009);
see also Glendale City Emps. Ass’n v. City of Glendale, 540
P.2d 609, 613-17 (Cal. 1975) (stating that once an MOU is
approved by a governmental body, it becomes a binding
agreement). In order to state a claim for a contractual right to
the Grant, the Retirees must plead specific resolutions or ordi-
nances establishing that right. Sonoma Cnty. Ass’n of Retired
Emps. v. Sonoma Cnty., No. 09-04432, 2010 WL 1957463, at
*3-4, 5 (N.D. Cal. May 14, 2010) (“Sonoma I”); Sonoma
Cnty. Ass’n of Retired Emps. v. Sonoma Cnty., No. 09-04432,
2010 U.S. Dist. LEXIS 143345, at *9, 27 (N.D. Cal. Nov. 23,
2010) (“Sonoma II”) (dismissing case with prejudice, where
none of the Board resolutions or Board-certified MOUs “ex-
plicitly provide[d] that Sonoma agreed to provide health
insurance benefits to retirees in perpetuity, [and so] a contract
to do so has not been formed”).
[8] Although the Retirees did not plead in their Complaint
the specific resolutions or ordinances providing a continued
right to the Grant, nor refer to any such resolution or ordi-
nance in their opposition to the Rule 12(c) motion, they have
requested judicial notice of a limited number of MOUs, two
of which are accompanied by a Board of Supervisors Resolu-
tion adopting those MOUs “as detailed in [the] submitted
Attachment.” There are no terms or provisions in the MOUs,
or in the Board resolutions adopting them, that guarantee the
Grant will continue as that Grant existed in the MOUs in
place on the dates of retirements. Further, the referenced
MOUs, including those adopted by the Board of Supervisors,
HARRIS v. ORANGE 6835
contain durational language.4 Sonoma II, 2010 U.S. Dist.
LEXIS 143345, at *15-21 (finding that each proffered MOU
had durational language and that there was no explicit lan-
guage in any of them providing that the benefits would sur-
vive the term of any MOU). The Retirees argue that they do
not have to identify specific terms in the MOUs for purposes
of a Rule 12(c) motion, and that the “durational” terms are
merely generic statements that should not be considered for
purposes of reviewing a Rule 12(c) motion. Retirees’ argu-
ments are without merit. While the Court must accept as true
the facts pled by the nonmovant Retirees, the Retirees have
failed to plead facts that suggest that the County promised, in
the MOUs or otherwise, to maintain the Grant as it existed on
the Retirees’ respective dates of retirement. The Retirees also
argue that the durational clause in the MOUs is not an indica-
tion of when the terms of the MOUs expire. That may be so,
but the durational clause surely cannot be the source of a
claim that the benefits survive indefinitely.
[9] The question remains whether the Retirees should be
granted leave to amend their Complaint to set forth facts
establishing their claimed right to receive the Grant in perpe-
tuity. Dismissal without leave to amend is appropriate only
when the Court is satisfied that an amendment could not cure
the deficiency. See Eminence Capital, 316 F.3d at 1052.
Because there are MOUs adopted by the Board of Supervisors
in resolutions, the terms of which are not all before the Court,
we find that the Retirees should be given an opportunity to
amend their Complaint to set out specifically the terms of
those MOUs on which their claim is predicated.
4
For example, one MOU states: “This Memorandum of Understanding
sets forth the terms of agreement reached . . . for the period beginning July
23, 1993 through June 23, 1994.”
6836 HARRIS v. ORANGE
D. Retirees’ Appeal of the District Court’s Dismissal of the
FEHA Claim
The district court dismissed the Retirees’ FEHA claim for
failure to exhaust administrative remedies. The Retirees argue
that the single filing rule permits them to “piggyback” on the
timely filed administrative complaint of James McConnell,
one of the named plaintiffs. We agree.
A plaintiff asserting claims of discrimination pursuant to
the FEHA must exhaust the statute’s administrative remedies
before filing a lawsuit. Rojo v. Kliger, 801 P.2d 373, 384 (Cal.
1990) (“exhaustion of the FEHA administrative remedy is a
precondition to bringing a civil suit on a statutory cause of
action”) (emphasis omitted). This requirement applies to class
actions as well. Cal. Gov’t Code § 12961; Holloway v. Best
Buy Co., No. C-05-5056 PJH, 2009 U.S. Dist. LEXIS 50994,
at *15, 26-27 (N.D. Cal. May 28, 2009). For purposes of the
FEHA, administrative remedies are exhausted by the filing of
an administrative complaint with the Department of Fair
Employment and Housing (“DFEH”) and obtaining from the
DFEH a notice of right to sue. Okoli v. Lockheed Technical
Operations Co., 43 Cal. Rptr. 2d 57, 61 (Cal. Ct. App. 1995).
Here, James McConnell timely filed a complaint of dis-
crimination with DFEH, stating:
For 23 years the county maintained one set of health
care plans for active and retired employees, and
charged premiums for coverage under those plans
based on a combined pool of all active and retired
employees. Beginning in 2008 the county removed
retired employees from the plans and ‘split the pool,’
for the express purpose of eliminating ‘older, less
healthy’ participants from the plans. The premiums
for retired employees rose dramatically as a result,
including my own premiums, which increased by
hundreds of dollars per month.
HARRIS v. ORANGE 6837
Mr. McConnell received a right to sue letter from the agency
on the same day, and the County was served with the adminis-
trative complaint and the letter on or about January 21, 2009.
[10] In the absence of any state authority on the issue of
whether the single filing rule applies to FEHA claims, we
look to Title VII and ADEA cases in other federal circuits.
See State Dep’t of Health Servs. v. Superior Court, 79 P.3d
556, 562 (Cal. 2003) (stating that “California courts often
look to Title VII in interpreting the FEHA”); E.E.O.C. v. NCL
America Inc., 504 F. Supp. 2d 1008, 1012 (D. Hawaii 2007)
(citing authority that Hawaii courts find federal precedent
under Title VII and other similar laws persuasive in interpret-
ing Hawaii’s age discrimination statute). In Title VII and
ADEA cases, federal courts have found that so long as one
plaintiff timely files an administrative complaint, a class of
similarly-situated plaintiffs may “piggyback” on that com-
plaint, thereby satisfying the exhaustion requirement. See
Bean v. Crocker Nat’l Bank, 600 F.2d 754, 759 (9th Cir.
1979); E.E.O.C. v. Catholic Healthcare W., 530 F. Supp. 2d
1096, 1107 (C.D. Cal. 2008). This single filing rule is based
on the observation that it would be duplicative and wasteful
for complainants with similar grievances to have to file identi-
cal notices of intent to sue with a governmental agency. Bean,
600 F.2d at 760 n.15.
The County argues against the single filing rule by relying
on Inda v. United Air Lines, Inc., 565 F.2d 554 (9th Cir.
1977). The County maintains that an administrative complaint
must say “class action” or “on behalf of others similarly situ-
ated” before it can qualify for the single filing rule. In Inda,
two women sued United Airlines, alleging unlawful employ-
ment practices based on sex. Both filed complaints with the
EEOC, but not within 90 days of the alleged unlawful
employment practice, as required by statute. They argued that
their claims should not be barred for failing to exhaust admin-
istrative remedies, because two other women, who each had
separate lawsuits pending in another federal court, had
6838 HARRIS v. ORANGE
already filed complaints with the EEOC. We held that the fact
that someone else had filed an administrative complaint based
on the same violation did not excuse plaintiffs from filing
their own administrative complaints with the EEOC. Inda,
565 F.2d at 558-59. However, Inda should be limited to its
specific facts—“where a plaintiff sought to rely on an admin-
istrative charge [i.e., complaint] of an individual employee in
a separate action.” E.E.O.C. v. Cal. Psychiatric Transitions,
Inc., 644 F. Supp. 2d 1249, 1265 n.11 (E.D. Cal. 2009);
Dukes v. Wal-Mart Stores Inc., 2002 WL 32769185, at *3-6
(N.D. Cal. Sept. 9, 2002). Here, the other named plaintiffs are
part of the same action asserted by McConnell, and are not
seeking to rely on the administrative complaint of another
retiree in a separate individual lawsuit. Further, Inda does not
expressly say that the words “on behalf of” or “class action,”
as opposed to words expressing the same concept, must be
stated in the administrative complaint for the single filing rule
to apply.
[11] Further, California state law in other contexts suggests
that not all named plaintiffs must exhaust administrative rem-
edies. In Friends of Mammoth v. Board of Supervisors of
Mono Cnty., 502 P.2d 1049, 1062-63 (Cal. 1972), disap-
proved on other grounds by Kowis v. Howard, 838 P.2d 250(Cal. 1992), which involved a putative class action challeng-
ing a local commission’s decision to grant a use permit to a
developer, the named plaintiffs had not exhausted their
administrative remedies, but some members of the putative
class had done so. The California Supreme Court held that the
purposes underlying the exhaustion doctrine had been satis-
fied, and that the action could move forward. The court deter-
mined that requiring named plaintiffs to exhaust their
remedies, when others in the class had already done so, would
serve no useful purpose. See also Leff v. City of Monterey
Park, 267 Cal. Rptr. 343 (Cal. Ct. App. 1990) (finding
exhaustion where only two of the three plaintiffs participated
in the administrative review process, because the two plain-
tiffs who had exhausted their administrative remedies shared
HARRIS v. ORANGE 6839
a common interest with the one who had not). Therefore, we
find that Mr. McConnell’s timely filed administrative com-
plaint is sufficient to establish exhaustion of administrative
remedies for all class members.5
IV. Conclusion
For the reasons stated above, we reverse and remand for
further proceedings consistent with this opinion, and with the
answer provided by the California Supreme Court to the certi-
fied question in the REAOC litigation. A summary of our
decision follows. First, we take judicial notice of the docu-
ments. Second, we REVERSE the district court’s dismissal of
the Retirees’ Subsidy claims and REMAND so that the dis-
trict court may reassess those claims in light of the California
Supreme Court’s opinion, and coordinate those claims with
the REAOC litigation. Third, we REVERSE the district
court’s dismissal of the Retirees’ Grant claims because we
find that the Retirees should be given an opportunity to amend
their Complaint to set out specifically the terms of those
MOUs on which their claim is predicated. Finally, we
REVERSE the district court’s dismissal of the Retirees’
FEHA claim because we find that Mr. McConnell’s timely
filed administrative complaint is sufficient to establish
exhaustion of the administrative remedies for all class mem-
bers.
Should there be another appeal, this panel will retain juris-
diction and will give scheduling priority to the appeal.
REVERSED AND REMANDED.
5
The County argues, as it did below, that the FEHA does not apply to
retired employees. By finding administrative remedies had not been
exhausted, the district court did not have an opportunity to address this
argument. Therefore, we decline to reach this issue.”