Jimenez v. U.S. Continental Marketing, Inc. ( 2019 )

Filed 10/17/19
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
ELVIA VELASCO JIMENEZ, D075532
Plaintiff and Appellant,
v. (Super. Ct. No. RIC1604613)
U.S. CONTINENTAL MARKETING, INC.
et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Riverside County,
Daniel A. Ottolia, Judge. Affirmed in part; reversed in part and remanded with
directions.
Levin & Nalbandyan, A. Jacob Nalbandyan and Charles L. Shute, Jr., for Plaintiff
and Appellant.
Littler Mendelson, Uliana Kozeychuk and Philip L. Ross, for Defendants and
Respondents.
Elvia Velasco Jimenez asserted claims under the Fair Employment and Housing
Act (FEHA) (Gov. Code, § 12900 et seq.)1 against her contracting employer2 U.S.
Continental Marketing Inc. (USCM), a manufacturing company that negotiated with
Jimenez's direct employer Ameritemps, Inc. (Ameritemps), a temporary-staffing agency,
for her employment.3 Jimenez's claims required a threshold showing that USCM was her
employer. Disputing that assertion at trial, USCM framed the inquiry as a contest of
relative influence between the direct and contracting employers, asking the jury during
closing arguments, "Did [USCM] have control over plaintiff more than the temp
agency?" (Italics added.) The jury agreed with USCM and returned a special verdict
finding that USCM was not Jimenez's employer. Jimenez moved for a new trial,
unsuccessfully, and judgment was entered in favor of USCM. On appeal, Jimenez argues
that there is insufficient evidence to support the special verdict finding and asks that we
reverse the judgment.
1 All statutory references are to the Government Code unless otherwise indicated.
2 Because the nomenclature of temporary-staffing varies in the caselaw, we specify
our terms here. As used in this opinion, a "temporary-staffing agency" is an entity that
hires individuals who are placed with third-party entities for temporary or long-term
work. Individuals hired by the temporary-staffing agency for this purpose are "direct
employees" of the temporary-staffing agency and "temporary employees" of the third-
party entities, which we refer to as "contracting employers." "Employee" refers to direct
and/or temporary employees. Likewise, "employer" refers to direct or contracting
employers. Here, Ameritemps is a temporary-staffing agency and direct employer of
Jimenez; USCM is a contracting employer of Jimenez; and Jimenez is a direct employee
of Ameritemps and temporary employee of USCM.
3 Jimenez also asserted these claims against Nelson Cuellar, a direct employee of
USCM with whom she worked.
2
To evaluate whether an entity is an employer for FEHA purposes, courts consider
the totality of circumstances and analyze several factors, principal among them the extent
of direction and control possessed and/or exercised by the employer over the employee.
(Vernon v. State of California (2004) 116 Cal. App. 4th 114, 118 (Vernon).) In the
particular case of temporary-staffing, factors under the contractual control of the
temporary-staffing agency (such as hiring, payment, benefits, and timesheets being
handled by a temporary-staffing agency) are not given any weight in determining the
employment relationship with respect to the contracting employer. (See Bradley v.
Department of Corrections & Rehab. (2008) 158 Cal. App. 4th 1612, 1619 (Bradley).)
The inquiry with respect to the contracting employer is considered individually, not in
relation to that of the direct employer. (See ibid.) There is no contest of relative
influence as framed by USCM in its closing argument.
The facts relevant to the specific and narrow question presented here are not in
dispute. Just like in Bradley, the contracting employer here did not hire the temporary
employee, pay her, provide her benefits, or track her time—all of which, according to
USCM, amounts to substantial evidence in support of the jury's finding. (See Bradley,
supra, 158 Cal.App.4th at pp. 1623–1624.) But because those factors are outside the
scope of the terms and conditions of the temporary employee's employment with the
contracting employer, they do not bear on the issue. As the Bradley court helpfully
explained, "[t]he key is that liability is predicated on the allegations of harassment or
discrimination involving the terms, conditions, or privileges of employment under the
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control of the employer, and that the employment relationship exists for FEHA purposes
within the context of the control retained." (Id. at p. 1629.)
Undisputed evidence demonstrates that USCM exercised considerable direction
and control over Jimenez under the terms, conditions, and privileges of her employment.
(See Bradley, supra, 158 Cal.App.4th at 1629.) And although the parties contest the
characterization of Jimenez's termination, the appropriate inquiry in the temporary-
staffing context is whether the contracting employer terminated the employee's services
for the contracting employer (which USCM did), not whether the contracting employer
terminated her employment with her direct employer (which USCM did not do). (See
ibid.)
Accordingly, without expressing any opinion as to the ultimate merit of Jimenez's
claims, we reverse the judgment as to three of those claims and, for reasons explained
below, affirm the judgment as to one. As to the three remaining, we remand for a new
trial at which the jury should be instructed that USCM was Jimenez's employer.
FACTUAL AND PROCEDURAL BACKGROUND
A. Foundational Facts4
The relevant facts are neither complicated nor disputed. USCM, a manufacturing
company that makes shoe care products, relies on temporary employees for much of its
workforce and contracts for employees' services with Ameritemps. Jimenez worked for
4 Our discussion focuses on the facts directly relevant to the specific legal issue
presented—whether USCM was Jimenez's employer—and omits the facts underlying
Jimenez's claims against USCM and Cuellar.
4
USCM as either a direct or temporary employee for five years before her employment
was terminated. At that point, she was performing a supervisory role as a line lead in
USCM's production department, overseeing as many as thirty colleagues, including both
temporary and direct employees of USCM. Jimenez's supervisor was a direct USCM
employee.
Jimenez, like USCM's other temporary employees, was placed with USCM at
Ameritemps' direction. Ameritemps pays these individuals for the services they perform
for their contracting employer, as well as any associated benefits. It also tracks the
employees' time by using a clock that it provides. USCM maintains the ability to
terminate the services of any of its temporary employees, which it exercises in the same
circumstances in which it would terminate the employment of a direct employee. USCM
cannot, however, terminate Ameritemps' employment relationship with Ameritemps'
employees.
The relationship between USCM and Ameritemps includes a history of temporary
employees becoming direct USCM employees and vice versa, sometimes multiple times.
Direct and temporary employees work alongside each other at USCM's production area
using equipment provided by USCM, and they are both sent to the same USCM clinic for
on-the-job injuries. Additionally, temporary and direct employees supervise and train
(and, in turn, are supervised and trained by) both temporary and direct employees.
Likewise, USCM's employee handbook and accompanying policies apply to all
employees, including both direct and temporary employees. In other words, in terms of
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the day-to-day work experience with USCM, there is virtually no difference between
direct and temporary employees.
Pursuant to applicable company disciplinary procedures, USCM investigated
Jimenez as a result of bullying complaints made against her. It concluded that Jimenez
had violated the company's antibullying policy and issued a warning (through a direct
USCM employee) pursuant to its progressive disciplinary process that calls for initially
coaching underperforming workers, then retraining them, and if ultimately unsuccessful,
terminating their employment.
During this same time period, Jimenez raised allegations of harassment against her
coworker Nelson Cuellar, first to USCM and then to Ameritemps. USCM and
Ameritemps investigated and held meetings with Jimenez, Cuellar, and several other
employees. They concluded that the allegations could not be corroborated and decided
against disciplining Cuellar or Jimenez.
USCM later terminated Jimenez's services. Jimenez was made aware of USCM's
decision through a USCM employee and was escorted from the building by USCM
personnel. Shortly thereafter, Ameritemps also terminated Jimenez's employment.
B. Procedural Overview
In April 2016, Jimenez filed a complaint against USCM and Cuellar, alleging five
causes of action under FEHA5 and a sixth claim under the common law for wrongful
5 Jimenez alleged (1) a hostile work environment based on sex; (2) failure to
prevent harassment; (3) sex and gender discrimination; (4) failure to prevent
discrimination; and (5) retaliation.
6
termination in violation of public policy.6 Prior to trial, the court granted summary
adjudication as to the discrimination-related third and fourth causes of action. The case
proceeded to trial on the four remaining claims, with the jury returning a verdict in favor
of USCM and Cuellar.
Across all claims, the jury made five special verdict findings. On the two special
verdict forms for the hostile-work-environment-based-on-sex claim,7 it responded "No"
(by a nine to three margin) to the question, "Was Elvia Velasco Jimenez an employee of
U.S. Continental Marketing, Inc.?" On the verdict form for the retaliation claim, the jury
responded "No" (by a nine to three margin) to the question, "Was Elvia Velasco Jimenez
employed by U.S. Continental Marketing, Inc.?" Likewise, on the verdict form for the
wrongful discharge in violation of public policy claim, the jury responded "No" (by a
nine to three margin) to the question, "Was Elvia Velasco Jimenez employed by U.S.
Continental Marketing, Inc.?" Finally, with respect to the alleged failure to prevent
harassment or retaliation, the jury responded "No" (by an 11 to one margin) to the
question, "Did U.S. Continental Marketing, Inc. fail to take all reasonable steps to
prevent the harassment or retaliation?"
After the verdicts, Jimenez filed a motion for a new trial, arguing that the jury's
finding—that USCM was not Jimenez's employer—was contrary to law. Opposing the
6 Jimenez initially named Ameritemps as a defendant but later dismissed it from the
action.
7 Two forms were used to distinguish between the entity and individual defendants.
7
motion, USCM pointed to six facts that it believed showed USCM was not Jimenez's
employer. Specifically, USCM asserted that: (1) "[USCM] did not hire [Jimenez]"; (2)
"[Jimenez's] paychecks came from Ameritemps, not [USCM]"; (3) "[USCM] did not
exercise any control over the decision to terminate [Jimenez]"; (4) "[Jimenez's]
termination letter came from her employer, Ameritemps, on their letterhead, not from
[USCM]"; (5) "there were two separate sets of time clocks at [USCM] premises, one for
the employees and one for the temps, which clock was installed and monitored by
Ameritemps"; and (6) "when asked questions about her most recent job, [Jimenez]
testified about her most recent job that she was placed as a janitor at Target by her actual
employer, and did not claim that Target was her employer (as she did with [USCM])."
The court denied the motion, and judgment was entered in favor of USCM and Cuellar.
DISCUSSION
A. Standard of Review
The facts bearing on the specific question presented here are not in dispute.
Instead, the parties contest the characterization and legal significance of these facts with
respect to whether, under the relevant statutes and regulations, USCM may be held to be
Jimenez's employer. (See § 12940, subd. (j).) We therefore review the question under a
de novo standard, which applies to interpretations of statutes and to mixed questions of
law and fact when legal issues predominate. (See Bradley, supra, 158 Cal.App.4th at
pp. 1623–1624; Crocker Nat'l Bank v. City and County of San Francisco (1989) 49
Cal. 3d 881, 888.)
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B. The Employment Relationship for FEHA Purposes in the Temporary-Staffing
Context
FEHA's purpose is to protect and safeguard the right and opportunity of all
persons to seek and hold employment free from discrimination. (See Brown v. Superior
Court (1984) 37 Cal. 3d 477, 485.) To this end, FEHA makes it unlawful for an employer
to harass or retaliate against an employee. (See § 12940.) To be entitled to relief for
allegations of harassment and retaliation, a FEHA claimant must first demonstrate an
employment relationship with his or her alleged employer. (See Bradley, supra, 158
Cal.App.4th at pp. 1623–1624.)
FEHA does not define "employee," but the administrative agency charged with
interpreting FEHA—the Fair Employment and Housing Council (FEHC)—does define
the term. (See § 12935; see also Bradley, supra, 158 Cal.App.4th at p. 1625.) We give
great weight to an administrative agency's interpretation of its own regulations and the
statutes under which it operates. (Colmenares v. Braemar Country Club, Inc. (2003) 29
Cal. 4th 1019, 1029.) The FEHC defines "employee" as "[a]ny individual under the
direction and control of an employer under any appointment or contract of hire or
apprenticeship, express or implied, oral or written." (Cal. Code of Regs., tit. 2, § 11008,
subd. (c).) FEHA thus requires an employment relationship, but that relationship need
not be direct. (See Vernon, supra, 116 Cal.App.4th at p. 123.) Instead, the employment
relationship must show the employer's exercise of direction and control over the
employee—the common-law "keystone of the employment relationship"—and other
factors outlined in Vernon. (Bradley, supra, 158 Cal.App.4th at pp. 1625−1626; Vernon,
9
at p. 123.) Direction and control may be shown by, among other factors, whether the
employee must obey instructions from the employer and whether "there was a right to
terminate the service at any time." (Bradley, at p. 1625, citing Villanazul v. City of Los
Angeles (1951) 37 Cal. 2d 718, 721.)
The FEHC's regulations further provide that "[a]n individual compensated by a
temporary service agency for work to be performed for an employer contracting with the
temporary service agency may be considered an employee of that employer for such
terms, conditions and privileges of employment under the control of that employer. Such
an individual is an employee of the temporary service agency with regard to such terms,
conditions and privileges of employment under the control of the temporary service
agency." (Cal. Code of Regs., tit. 2, § 11008, subd. (c)(5), italics added.) As the court in
Bradley explained, "[t]his language reflects that the employment relationship for FEHA
purposes must be tied directly to the amount of control exercised over the employee."
(Bradley, supra, 158 Cal.App.4th at pp. 1625–1626.) The court continued, "[t]he key is
that liability is predicated on the allegations of harassment or discrimination involving the
terms, conditions, or privileges of employment under the control of the employer, and
that the employment relationship exists for FEHA purposes within the context of the
control retained." (Id. at p. 1629.) In other words, the direction and control held by a
contracting employer over a temporary employee may not be discounted by the absence
of factors relating to control that are outside of the bounds of the contractual context,
which in the temporary-staffing context typically include the hiring, payment, benefits,
and time-tracking being handled by the temporary-staffing agency. This general
10
principle—that an individual may be held to have more than one employer in the
temporary-staffing context—has "long been recognized . . . for the purposes of applying
state and federal antidiscrimination laws." (Id. at p. 1626, citing Mathieu v. Norrell
Corp. (2004) 115 Cal. App. 4th 1174, 1184.)8
Our analysis is guided significantly by Bradley. There, a social worker in a
temporary employee position with the California Department of Corrections and
Rehabilitation (CDC) brought harassment and retaliation claims under FEHA against the
CDC. (Bradley, supra, 158 Cal.App.4th at pp. 1617–1618.) The jury found for Bradley
on both causes of action, but the court granted CDC's motion for judgment
notwithstanding the verdict as to the retaliation claim, finding that she lacked standing.
(Id. at p. 1618.) The Court of Appeal reversed in relevant part, concluding the social
worker was "an employee within the meaning of the FEHA, even though she [was] not an
8 This principle is sometimes referred to as the joint employer or dual employer
doctrine, which can create confusion. (See Scheidecker v. Arvig Enterprises, Inc.
(D. Minn. 2000) 122 F. Supp. 2d 1031, 1038 [joint employer]; Kowalski v. Shell Oil Co.
(1979) 23 Cal. 3d 168, 174 [in a personal injury context, " '[w]here an employer sends an
employee to work for another person, and both have the right to exercise certain powers
of control over the employee, that employee may be held to have two employers—his
original or "general" employer and a second, the "special" employer' "], citing Riley v.
Southwest Marine, Inc. (1988) 203 Cal. App. 3d 1242, 1247–1248 ["where an employer
lends an employee to another employer and relinquishes to the borrowing employer all
right of control over the employee's activities," a "dual employment" situation is
created].) Although the terms "joint employer" and to a lesser extent "dual employer"
might suggest one employer or employment relationship made up of two or more
constituent parts, the principles relevant here may be more easily understood and applied
by simply discarding the somewhat-dated assumption that an employee typically has, or
ought to have, a single employer. After all, the temporary-staffing context is only one
subset of many possible cases in which an individual may have more than employer.
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official employee of the state for civil service and benefit purposes." (Id. at pp. 1617,
1629.)
Much like the circumstances here, Bradley was not hired by the CDC, did not
receive her payments or benefits from the CDC, and instead "worked at the facility as a
contract worker pursuant to a contract negotiated between CDC and the [temporary-
staffing agency]," which "contracted with Bradley to work at and provide services to the
facility." (Bradley, supra, 158 Cal.App.4th at p. 1618.) Additionally, Bradley's time was
managed by the temporary-staffing agency through timesheets. (Ibid.) In this way, the
scenario was typical of the temporary-staffing context, such that the "CDC use[d]
contract workers on a regular basis when needed to supplement regular staff." (Ibid.)
Yet the court found that such factors did not affect the employment relationship between
Bradley and CDC for FEHA purposes, instead focusing on the exercise of direction and
control within the context of the terms, conditions, or privileges of Bradley's employment
with CDC. (Id. at pp. 1629–1631.) Thus framed, the court found significant evidence of
direction and control and reinstated the jury verdict on the retaliation claim. (Id. at
pp. 1629–1631, 1635.)
C. There Is Insufficient Evidence to Support a Finding that Jimenez Was Not an
Employee of USCM for Purposes of FEHA.
With respect to the issue presented here—whether USCM is Jimenez's employer
for the purposes of FEHA—Jimenez argues that "no evidence even arguably relevant to
the issue supports the jury's verdict." USCM maintains substantial evidence supports the
jury's finding, reciting many of the same facts presented in opposition to Jimenez's new
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trial motion. Specifically, (1) USCM did not hire Jimenez, who was instead placed at
USCM by Ameritemps; (2) USCM did not track Jimenez's time; (3) USCM did not pay
or provide benefits to Jimenez; and (4) "it was Ameritemps who terminated Jimenez, not
[USCM]." USCM identifies no other evidence rebutting Jimenez's evidence of an
employment relationship or otherwise tending to show that USCM was not Jimenez's
employer.
Under FEHA, the first three of USCM's factual bases are not entitled to any
weight, as they do not bear on USCM's control over Jimenez's work performance. (See
Bradley, supra, 58 Cal.App.4th at pp. 1625−1626 & fn. 2.) The termination of
employment may be considered, but only within the specific employment relationship at
issue. (See id. at pp. 1625, 1629.) In other words, the relevant question here is whether
USCM terminated Jimenez's relationship with USCM, not whether USCM terminated
Jimenez's relationship with Ameritemps. Although the parties dispute the characterization
and import of the facts surrounding Jimenez's termination, they do not contest that
USCM terminated Jimenez's services with USCM. We accordingly can identify no
substantial evidence to support the jury's special verdict finding that USCM was not
Jimenez's employer.
On the other side of the ledger, considerable evidence shows that USCM exercised
direction and control over Jimenez's employment. Jimenez worked in a supervisory role
as a line lead in USCM's production department with responsibility for thirty colleagues,
including temporary and direct employees of USCM, and she reported to a USCM
employee. She was subject to USCM's employee handbook and benefitted from USCM's
13
mandatory in-house training and the availability of USCM's clinic used by direct and
temporary employees for any on-the-job injuries. She was subject to USCM's
disciplinary policies, and was in fact investigated by USCM as a result of bullying
complaints made against her. After concluding that Jimenez had violated USCM's
antibullying policy, USCM issued a warning (through a direct USCM employee)
pursuant to its progressive disciplinary policy. USCM investigated the harassment
allegations that Jimenez raised and could have disciplined her as a result of the
investigation, though it declined to exercise this power. And Jimenez worked in a system
in which direct USCM employees supervise and train (and are supervised and trained by)
temporary employees.
USCM argues that the absence of some facts that may be relevant should weigh in
its favor, noting, for example, that no evidence was introduced to demonstrate ownership
of the equipment provided by USCM for its temporary employees to utilize on its
property during their employment. But FEHA does not require that a claimant present
evidence related to every possible factor that might bear on the question of an
employment relationship, and the absence of some indicia of employment does not affect
Jimenez's extensive showing of an employment relationship with respect to USCM under
FEHA.
USCM additionally contends that Jimenez misreads Bradley and improperly
attempts to extend the joint employer doctrine such that "every time a staffing agency
sends a worker to one of its clients, that client is a joint employer." It goes on to claim
that any such argument is barred by the invited error doctrine because Jimenez agreed to
14
submit the "employer" question to the jury with an instruction telling jurors they "may"
find a joint employer relationship—not that they "must." (See Transport Ins. Co. v. TIG
Ins. Co. (2012) 202 Cal. App. 4th 984, 1000.)
Contrary to USCM's contention, we do not read Jimenez to argue on appeal that a
jury "must" necessarily find an employment relationship as to all direct and contracting
employers in the temporary-staffing context (described by the jury instruction as "[w]here
an employer sends an employee to do work for another company, and both have the right
to exercise certain powers of control over the employee"). It is true that in the trial court
Jimenez advocated for a legal conclusion broader than ours here. She contended that
"there can never be a scenario where a staffing agency sends an employee to work for a
client, yet a jury finds no employment between the worker and the client." We do not
read the FEHA statutes, the FEHC's regulations, Bradley, or other relevant caselaw to
establish such a bright-line rule, and we do not adopt one here. Instead, we consider the
totality of circumstances through the lens of a temporary staffing dynamic or other
contractual framework, which means simply calibrating the analysis of relevant factors
like the extent of direction and control to reflect the particular employment context.
Consequently, where a FEHA claimant presents substantial evidence of an employment
relationship that is rebutted only by direction and control evidence outside the bounds of
the contractual context (such as in a temporary-staffing situation where hiring, payment,
benefits, and time-tracking are handled by a temporary-staffing agency), the claimant has
demonstrated an employment relationship for FEHA purposes. Accordingly, there is no
issue of invited error.
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D. Jimenez's Common Law Claim
The parties do not address the distinction between Jimenez's FEHA claims and her
common law claim for wrongful discharge in violation of public policy with respect to
Jimenez's employment relationship with USCM. But as discussed in Bradley, the
principles supporting the primacy of the direction and control factor under FEHA are
firmly rooted in the common law. (See Bradley, supra, 58 Cal.App.4th at pp. 1626–1628
[finding an employment relationship under either FEHA or the common law]; see also
Tameny v. Atlantic Richfield Co. (1980) 27 Cal. 3d 167, 170; Casella v. SouthWest Dealer
Services, Inc. (2007) 157 Cal. App. 4th 1127, 1138–1139.) Accordingly, for the same
reasons discussed above with respect to the FEHA claims, we likewise find that USCM
was Jimenez's employer for the purposes of her common law claim.
E. Jimenez's FEHA Claim for Failure to Prevent Harassment or Retaliation
On all claims but one, the jury's special verdict findings were limited to the
question of the employment relationship between Jimenez and USCM. But with respect
to Jimenez's failure-to-prevent claim, for reasons that are not entirely clear the jury was
not asked about the employment relationship and instead proceeded to the merits. It
found, by an 11 to one margin, that USCM did not "fail to take all reasonable steps to
prevent the harassment or retaliation." Neither Jimenez nor USCM challenges the jury's
finding or otherwise addresses the matter in their briefing. Accordingly, we affirm the
judgment as to this individual claim.
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DISPOSITION
The judgment with respect to Jimenez's FEHA failure-to-prevent claim is affirmed
(second cause of action). In all other respects the judgment is reversed and the case is
remanded to the superior court for a new trial on Jimenez's two FEHA claims for a
hostile work environment based on sex and retaliation (first & fifth causes of action), as
well as her common law claim for wrongful termination in violation of public policy
(sixth cause of action). As to each of those claims, the jury should be instructed on retrial
that USCM was Jimenez's employer. Jimenez shall recover her costs on appeal.
DATO, J.
WE CONCUR:
McCONNELL, P. J.
AARON, J.
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