Farmers Insurance Group v. County of Santa Clara (11 Cal. 4th 992, 1995)

Opinion

BAXTER, J.

This case presents the issue whether, under the Tort Claims Act (Gov. Code, §§ 825-825.6, 995-996.6), the County of Santa Clara (the County) must indemnify one of its deputy sheriffs and pay his costs for defending against a sexual harassment lawsuit where the evidence is undisputed that the deputy sheriff lewdly propositioned and offensively touched other deputy sheriffs working at the county jail. We conclude the answer is no. Under the Tort Claims Act, a public entity is required to pay claims and defense costs arising out of a civil lawsuit only where the employee proves that the act or omission giving rise to an injury occurred in “the scope of his or her employment as an employee of the public entity.” (Gov. Code, §§ 825, subd. (a), 825.2, subd. (b), 995; see Gov. Code, § 995.2.) Since the deliberate targeting of an individual employee by another employee for inappropriate touching and requests for sexual favors is not a risk that may fairly be regarded as typical of or broadly incidental to the operation of a county jail, such conduct must be deemed to fall outside the scope of a deputy sheriff’s employment. Consequently, the County is not obligated to indemnify the sexual harasser or his private insurer. We therefore reverse the contrary judgment of the Court of Appeal, and remand the matter with directions to vacate the judgment and to enter judgment in favor of the County.

I. Factual and Procedural Background

In 1980, the County promulgated a policy prohibiting sexual harassment in the workplace. At the time of the events underlying this action, the policy provided in pertinent part: “[S]exual harassment constitutes sex discrimination which is prohibited. [^Q Sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitute sexual harassment when: FID 1. Submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment; FU 2. Submission to or rejection of such conduct by an individual is used or is threatened to be used as the basis for employment decisions affecting such individual, or; [D 3. Such conduct has the purpose or effect of interfering with any individual’s work performance or creating an intimidating, hostile, or offensive working environment.” The Santa Clara County Sheriff’s Department distributed this written policy to its employees and instructed them to study it. The policy was then discussed with employees.

In 1981, the County hired Cynthia Bates and Toni Daugherty as deputy sheriffs in the sheriff’s department.

Between April 1983 and December 1983, Bates and Deputy Sheriff Craig Nelson worked in the North County jail. While there, Nelson made lewd, suggestive and sexually offensive comments to Bates. He asked her about her sex life and made repeated comments about oral sex. Nelson also touched Bates on her legs and thighs.

Between February and June 1984, Bates and Nelson worked in the main jail together. Nelson, who was Bates’s “training officer” during this time, was responsible for evaluating Bates’s progress as a trainee and for informing his supervisors when he thought she was completely trained. At the main jail, Nelson exhibited the following conduct toward Bates: (1) he would stick out his tongue, make gestures with it and say that he “was good at eating pussy and that he knows [Bates] would enjoy it”; (2) he would come up behind Bates and whisper that he would like to take her “to the hot tubs and eat pussy and he’d love to find out what it was like if [Bates] gave him a blow job with [her] braces on”; (3) he commented that he would like to “butt fuck [another female deputy sheriff] and then pull out and come all over her face”; and (4) he told Bates: “I bet you’d like me to fuck you in the butt, I’d bet you’d love that.” Nelson also touched Bates on the back and front of her thighs three or more times. On several occasions he told Bates that in order to “get off training,” she would have to “give him head.” Nelson has admitted that he did and said these things.

Also in 1984, Nelson grabbed or slapped Toni Daugherty on the buttocks. Daugherty objected immediately when Nelson touched her, and he did not touch her again. Nelson called Daugherty the next day and asked about the “red marks [he] put on [her] ass.” After Daugherty reported Nelson’s behavior and the sheriff’s department began an internal investigation, she began receiving obscene phone calls at home from Nelson.

When Bates and Daugherty reported Nelson’s conduct to a captain in the sheriff’s department, he instructed them to report the incidents to the internal affairs division.

Another deputy sheriff, Zana Murphy, later reported that Nelson had made lewd and sexually suggestive comments to her as well. In particular, Nelson had discussed oral sex and sodomy with Murphy and wanted to know if she was a “swallower or a spitter.”

After interviewing witnesses, an investigator at the sheriff’s department submitted a detailed report which sustained the allegations of sexual harassment against Nelson. Based on this report, the sheriff’s department suspended Nelson without pay for 14 days. Nelson appealed the discipline pursuant to a collective bargaining agreement, and an arbitrator reduced the suspension to two days.

Additionally, the female deputies complained about alleged harassment by Sergeant David Pascual. They also charged that Lieutenants Larry Kelly and Ernie Ruch and others failed to act timely in investigating the complaints or in taking remedial action to halt the harassment. The County investigated these allegations and concluded there was insufficient evidence to support them.

In 1987, Bates, Daugherty and Murphy sued Nelson, the County and others in the federal district court in San Francisco, alleging, among other things, that Nelson had sexually harassed them in violation of title VII of the Civil Rights Act of 1964 (Title VII) (42 U.S.C. § 2000e-2) and the Fair Employment and Housing Act (FEHA) (Gov. Code, § 12940, subd. (h)). After being served in the federal action, Nelson requested the County to defend and indemnify him pursuant to sections 825 and 995 of the Government Code. The County refused, taking the position that Nelson acted outside the scope of employment when sexually harassing the three deputies.

Nelson was able to obtain counsel paid for by his homeowners insurance carrier, Farmers Insurance Group (Farmers).

Shortly before trial in the federal action, the federal district court dismissed Murphy’s claims against Nelson as time-barred. On the date set for trial, Nelson settled with Bates and Daugherty for $150,000 and was dismissed from the action. The district court, on Nelson’s motion and without objection .by the County, found that the settlement was made in good faith pursuant to Code of Civil Procedure section 877.6. The settlement amount was paid by Farmers.

The sexual harassment claims against the County and the other individual defendants proceeded to a jury trial, and the jury received instructions on the legal standards applicable to employer liability under FEHA and those applicable to constructive discharge. No instructions pertaining to the doctrine of respondeat superior or vicarious liability were given. The jury was directed to award damages, if any, separately against the County and the remaining individual defendants.

The jury found in favor of the female deputies. On the verdict form, the jury answered yes to a question asking if “any plaintiff’ was “a victim of sexual discrimination, sexual harassment, or retaliation in violation of California Government Code § 12,940 [szc]?” The jury also specified on the verdict form that the County had constructively discharged Bates. The jury awarded damages against the County in the amount of $400,000 to Bates, $183,000 to Daugherty and $1.6 million to Murphy.

In June 1991, after their government claims were rejected, Farmers and Nelson filed the instant action seeking indemnity from the County and others for the amount Farmers had paid in settlement and in defense of the federal action. The parties filed cross-motions for summary judgment or summary adjudication, directed primarily to the issue of whether Nelson was acting within the scope of his employment when he sexually harassed the female deputy sheriffs. The trial court granted the County’s motion and denied that of Nelson and Farmers, finding that Nelson’s conduct was outside the scope of his employment as a matter of law. The court determined that the case was distinguishable from Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202 [285 Cal.Rptr. 99, 814 P.2d 1341] (Mary M.), which held that a city may be vicariously liable for the rape of a motorist committed by an on-duty police officer.

The Court of Appeal reversed. After noting that all of Nelson’s misconduct occurred on the jail premises while the deputies were in uniform and on duty, and that Nelson had authority over Bates and could give direct orders that she had to obey, the court held that the standard for scope of employment had been met. The court concluded that Nelson’s conduct was not so unusual or startling that it would be unfair to include the loss as a cost of the employer’s doing business, and that the authority of a training officer over a subordinate in the employment situation is like that of a police officer over a citizen. The Court of Appeal directed the trial court to vacate the order granting the County’s motion for summary judgment and to enter a new order granting the motion of Nelson and Farmers for summary judgment. We granted the County’s petition for review.

II. Discussion

A. Tort Claims Act

In 1963, the Tort Claims Act was enacted in order to provide a comprehensive codification of the law of governmental liability and immunity in California. (Los Angeles Police Protective League v. City of Los Angeles (1994) 27 Cal.App.4th 168, 174 [32 Cal.Rptr.2d 574].) As part of its overall statutory scheme, the Tort Claims Act provides that in the usual civil case brought against a public employee, a public entity is required to defend the action against its employee (Gov. Code, § 995 et seq.) and to pay any claim or judgment against the employee in favor of the third party plaintiff (§ 825 et seq.). A principal purpose of the indemnification statutes is to assure “the zealous execution of official duties by public employees.” (Johnson v. State of California (1968) 69 Cal.2d 782, 792 [73 Cal.Rptr. 240, 447 P.2d 352].)

The requirements pertaining to a public entity’s duty to defend an employee are set forth at sections 995 through 996.6. Section 995 provides in relevant part that, except as otherwise provided, upon request of an employee, “a public entity shall provide for the defense of any civil action or proceeding brought against him, in his official or individual capacity or both, on account of an act or omission in the scope of his employment as an employee of the public entity.” (Italics added.) Where, as here, the public entity refuses to provide the defense as requested and the employee retains his own counsel to defend the action, the employee “is entitled to recover from the public entity such reasonable attorney’s fees, costs and expenses as are necessarily incurred . . . if the action. . . arose out of an act or omission in the scope of his employment as an employee of the public entity, but he is not entitled to such reimbursement if the public entity establishes (a) that he acted or failed to act because of actual fraud, corruption or actual malice . . . .” (§ 996.4, italics added; see also § 995.2, subd. (a) [a public entity may refuse to provide for the defense of a civil action if it determines that the employee’s act or omission was not within the scope of employment, or that the employee acted or failed to act because of actual fraud, corruption or actual malice, or that the public entity’s defense of the action would create a “specific conflict of interest” as defined therein].)

The provisions relating to a public entity’s duty to provide indemnification are addressed at sections 825 through 825.6. At all relevant times herein, section 825, subdivision (a), provided that if the public entity is requested by an employee to defend a civil action against him “for an injury arising out of an act or omission occurring within the scope of his employment as an employee of the public entity,'” and such request is made in writing not less than 10 days before the day of trial and the employee reasonably cooperates in good faith in the defense, “the public entity shall pay any judgment based thereon or any compromise or settlement of the claim or action to which the public entity has agreed.” (Stats. 1985, ch. 1373, § 1, p. 4875, italics added.) If the public entity does not conduct the defense as requested, and the employee pays the claim or judgment against him, the employee may be entitled to recover such payment from the public entity “only if he establishes that the act or omission upon which the claim or judgment is based occurred within the scope of his employment as an employee of the public entity and the public entity fails to establish that he acted or failed to act because of actual fraud, corruption or actual malice or that he willfully failed or refused to conduct the defense of the claim or action in good faith or to reasonably cooperate in good faith in the defense conducted by the public entity.” (§ 825.2, subd. (b), italics added.)

As these statutory provisions make clear, the burden rests upon the public employee to establish that the act or omission was within the scope of employment. (Los Angeles Police Protective League v. City of Los Angeles, supra, 27 Cal.App.4th at p. 176; Rivas v. City of Kerman (1992) 10 Cal.App.4th 1110, 1118-1119 [13 Cal.Rptr.2d 147].)

In this case, the County is not contending that Nelson acted with “actual fraud, corruption or actual malice” within the meaning of the above statutes. Nor is the County arguing that Nelson failed or refused to cooperate in defense of the action, or that a specific conflict of interest existed. Rather, the County contends it had no statutory duty to defend or indemnify Nelson because his acts of sexual harassment were outside the scope of his employment as a matter of law. For the reasons below, we conclude that the Court of Appeal erred in determining this issue adversely to the County.

B. Scope of Employment

As used in the Tort Claims Act, “[t]he phrase ‘scope of his employment’ is intended to make applicable the general principles that the California courts use to determine whether the particular kind of conduct is to be considered within the scope of employment in cases involving actions by third persons against the employer for the torts of his employee.” (4 Cal. Law Revision Com. Rep. (Dec. 1963) p. 814, fti. 3.)

In Perez v. Van Groningen & Sons, Inc. (1986) 41 Cal.3d 962 [227 Cal.Rptr. 106, 719 P.2d 676] (Perez), we explained scope of employment principles under the respondeat superior doctrine as follows: “[A]n employer is liable for risks ‘arising out of the employment.’ [Citations.] [