California Supreme Court Rules on Failure to Promote Employee Statute of Limitations

When a California employer fails to promote a qualified employee based on the employee's refusal to engage in sex with his or her supervisor, the employee may file a quid pro quo sexual harassment claim. There is a one-year statute of limitations for failure to promote claims under the Fair Employment and Housing Act. However, determining when the statute of limitations starts to run can be confusing. In Pollock v. Tri-Modal Distribution Services, Inc., Cal. S. Ct. Case No. S262699, the California Supreme Court reversed the decision of the Court of Appeal, finding that the statute of limitations starts to run on the date that the employee who was passed over either knew or should have known that the employer failed to promote her.

Pamela Pollock was employed by Tri-Modal Distribution Services, Inc., a freight-shipping company, as a customer service representative. In 2014, Pollock entered into a dating relationship with Michael Kelso, who was an executive vice president of the company. Kelso allegedly wanted the relationship to turn sexual, but Pollock refused and ended it in 2016. Pollock was subsequently passed over for several promotions and alleged that Kelso refused to promote her because she had refused his sexual advances. Sometime in March 2017, Kelso offered a promotion to a woman named Letitia Gonzalez over Pollock. The effective date of the promotion was May 1, 2017.

On April 18, 2018, Pollock filed a complaint with the California Department of Fair Employment and Housing or DFEH, alleging that Kelso had engaged in quid pro quo sexual harassment in violation of the Fair Employment and Housing Act or FEHA. Kelso filed a motion for summary judgment, arguing that the statute of limitations had ended in March 2018 and that Pollock's claim was time-barred. The trial court granted the motion for summary judgment, stating that the statute of limitations ran from the date the promotion was given instead of the date that Gonzalez started her new position. Pollock filed an appeal, and the California Court of Appeal affirmed the trial court's decision and awarded the defendants their costs on appeal. Pollock then filed a writ of certiorari to the California Supreme Court, and the court granted review.

Issues: 1) Does the statute of limitations for FEHA failure to promote claims start to run at the time a promotion is given or when the plaintiff first becomes aware of the promotion? 2) Did the Court of Appeal err in granting the defendants' costs on appeal without finding that Pollock's underlying complaint was frivolous?

The Supreme Court granted review to decide whether the lower courts erred by determining that the statute of limitations began running in March 2017 when Gonzalez was offered the promotion instead of on May 1 when she started her new position. It also granted review to determine whether the award of costs by the Court of Appeals was erroneous since the court did not first determine that Pollock's underlying lawsuit was frivolous.

Rules: 1) The statute of limitations starts to run from the date the cause of action accrues. 2) The court may grant costs on appeal at its discretion when it determines that the underlying cause of action was frivolous or unreasonable.

The statute of limitations for FEHA actions is one year from the date the cause of action accrues, which means the date when the discriminatory act occurred. Kelso argued that this meant that Pollock's claim was time-barred since the promotion was given to Gonzalez in March 2017, and Pollock didn't file her lawsuit until April 18, 2018. Pollock argued that the statute of limitations began to run on May 1, 2017, when Gonzalez started her new job following the promotion.

Under the California Rules of Court, rule 8.278, the prevailing party is entitled to its costs on appeal. However, under Section 12965 of the Fair Employment and Housing Act, the court has the discretion to order costs on appeal when it determines that the underlying action was frivolous or unreasonable. For the award of costs on appeal, the California Supreme Court needed to determine which of these rules applied. Kelso argued that rule 8.278 applied, but Pollock argued that section 12965 applied.

The court began by considering the statute of limitations and when it starts to run in a failure to promote claim. It noted that Pollock's claim was filed as a quid pro quo sexual harassment claim instead of a discrimination claim. While FEHA discrimination claims solely focus on the actions of an employer, FEHA harassment claims focus on the actions of both the employer and any other individual.

The court stated that it had to determine when the failure to promote Pollock occurred to determine when the statute of limitations started to run. The Court of Appeal determined that when the act occurred had to mean when Gonzalez was offered the promotion, which was in March 2017. However, the California Supreme Court pointed out that the appellate court's determination did not take into account any notice by the employer to Pollock that the promotion had been offered to Gonzalez instead of Pollock.

The Supreme Court pointed out that this interpretation would mean that an employer could decide against promoting an employee without ever having to tell him or her while later basing the employer's argument that the statute of limitations started to run when the employer offered a promotion to someone else. However, the court pointed out that this reading would run contrary to the intent of section 12960 by making it more practically difficult for an employee to pursue a claim against an employer.

However, the court also found that the date when Gonzalez started working in her new position was also not the date the statute of limitations started to run. Instead, the court stated that it would be the date when Kelso and the company communicated its decision not to promote her to Pollock. The notice from the employer can be actual or constructive and means the date the employee knew or should have known that the employer failed to promote him or her despite his or her qualifications.

Kelso argued that Pollock had the burden of proof to show when she learned that her promotion had been denied, and Pollock argued that it is the employer's burden of proof to show that the failure to promote had been communicated to Pollock. The court pointed out that as an affirmative defense, the statute of limitations defense to a claim places the burden of proof on the defendant. It ruled that Kelso had the burden of proof to show when Pollock had actual or constructive notice of the failure to promote.

The court then looked at the award of costs on appeal. Kelso argued that rule 8.278 applied since it spoke about costs on appeal directly while Section 12965(b) does not expressly state that it applies to costs on appeal and should thus only be read to refer to costs during a trial. However, the Supreme Court stated that it had previously ruled that Section 12965(b) applied to costs on appeal and that it had rejected similar arguments in the past. The Supreme Court held that the Court of Appeal cannot order the plaintiff to pay the defendant's costs on appeal unless it first finds that the underlying action is baseless or frivolous.

The court reversed the lower courts' decisions and remanded the case to the trial court for further proceedings. It also vacated the Court of Appeal's award of costs on appeal.

People who believe their employers have engaged in illegal harassment or discrimination should talk to employment attorneys as soon as possible to avoid potential statute of limitations issues. Contact the law firm of Steven M. Sweat, APC to request a free consultation by calling 866-966-5240.