Holland et al v. The Related Companies, Inc. et al, No. 4:2015cv03220 - Document 227 (N.D. Cal. 2017)

Court Description: ORDER GRANTING, IN PART, AND DENYING, IN PART, 98 Defendants' Motion for Summary Adjudication of Punitive Damages Claim; GRANTING 196 Defendants' Motion in Limine No. 1 to Bifurcate Punitive Damages & Exclude Evidence of Financial Condition; and GRANTING, IN PART, 199 Defendants' Motion in Limine No. 4. Signed by Judge Jeffrey S. White on July 20, 2017. (jswlc3S, COURT STAFF) (Filed on 7/20/2017)

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Holland et al v. The Related Companies, Inc. et al Doc. 227 1 2 3 NOT FOR CITATION 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 Plaintiffs, 8 9 10 United States District Court Northern District of California 11 Case No. 15-cv-03220-JSW PETER HOLLAND, et al., ORDER GRANTING, IN PART, AND DENYING, IN PART, MOTION FOR SUMMARY ADJUDICATION OF ISSUE RE PUNITIVE DAMAGES; GRANTING DEFENDANTS MOTION IN LIMNINE NO. 1; AND GRANTING, IN PART, DEFENDANTS’ MOTION IN LIMINE NO. 4. v. THE RELATED COMPANIES, INC., et al., Defendants. 12 Re: Dkt. Nos. 98, 196, 199 13 14 15 On July 11, 2016, the Court granted, in part, the motion for partial summary judgment filed 16 by Defendants, Related Management Company L.P. (“RMC”) and Third and Mission Associates 17 LLC (“TMA”) (collectively “Defendants”). The Court deferred ruling on the issue of whether 18 Plaintiffs are entitled to punitive damages, and it ordered supplemental briefing on the issue. The 19 parties have made efforts to settle this matter short of trial but, to date, those efforts have not 20 succeeded. For the following reasons, the Court GRANTS, IN PART, AND DENIES, IN PART, 21 Defendants’ motion for summary adjudication. 22 On July 17, 2017, Defendants filed a motion in limine to bifurcate the issue of punitive 23 damages (“first motion in limine). Plaintiffs do not oppose that motion. In light of the Court’s 24 ruling on Defendants’ motion for summary adjudication on punitive damages, the Court GRANTS 25 Defendants’ first motion in limine. 26 Defendants also filed a motion in limine to exclude, inter alia, evidence regarding a 27 lawsuit filed in the United States District Court for the Southern District of New York and a 28 1 Dockets.Justia.com 1 Consent Decree entered in that case (“fourth motion in limine). For the reasons set forth below, 2 the Court GRANTS, IN PART, Defendants’ fourth motion in limine. If the parties are unable to 3 resolve this matter at the settlement conference scheduled for July 24, 2017, the Court will address 4 the remaining issues in that motion at the pre-trial conference. BACKGROUND 5 In November 2008, Plaintiffs, Peter Holland (“Mr. Holland”) and Kristin Holland (“Mrs. 7 Holland”) (collectively “Plaintiffs”) leased unit 7C in The Paramount apartment complex (“The 8 Paramount”). Unit 7C is a 630 square foot studio apartment. (Declaration of Deborah Lunn 9 (“Lunn Decl.”), ¶ 3.) In December 2014, Plaintiffs renewed their lease for a period of one year. 10 (See First Amended Complaint (“FAC”), ¶¶ 6, 9-10, 12; RMC Amended Answer to FAC (“RMC 11 United States District Court Northern District of California 6 Answer”) ¶¶ 1, 6, 9-10, 12; TMA Amended Answer to FAC (“TMA Answer”) ¶¶ 1, 6, 9-10, 12; 12 see also Lunn Decl., ¶ 3.) The Paramount is a residential apartment complex owned by TMA and 13 operated by RMC. (FAC ¶¶ 6-7; RMC Answer ¶¶ 6-7; TMA Answer ¶¶ 6-7; Declaration of 14 Warren Loy (“Loy Decl.”), ¶ 2; see also Lunn Decl., ¶ 2.) 15 In January 2015, Defendants sent a notice to The Paramount’s residents that the building’s 16 amenities space, which was located on the floor below Plaintiffs’ apartment, would be renovated. 17 That project commenced in March 2015. (RMC Answer ¶¶ 13, 15; TMA Answer ¶¶ 13, 15; 18 Declaration of Connie Cortese (“Cortese Decl.”), ¶ 2; Lunn Decl., ¶ 5.) 19 Mr. Holland suffers from Post-Traumatic Stress Disorder (“PTSD”). On March 12, 2015, 20 Mr. Holland called Connie Cortese, one of The Paramount’s leasing agents, to inquire how long 21 the noise from construction would continue. (Cortese Decl., ¶ 3; Declaration Celia McGuinness 22 (“McGuiness Decl.”), ¶ 7, Ex. 5.) In an email to Jessie Leite (“Mr. Leite”), The Paramount’s 23 resident manager at the time, Ms. Cortese stated that “I know you have spoken with his wife 24 numerous times about this remodel. … Their biggest issue is how long this noise is going to last. 25 As you know he is a vet and a lawyer, he doesn’t want to go there but will if needed.” (Cortese 26 Decl., ¶ 3, Ex. A.) Ms. Cortese attests that she directed Mr. Leite to provide Plaintiffs with 27 information about the construction schedule and attests that Mr. Leite told her he complied with 28 that request. (Id., ¶ 3.) 2 On April 1, 2015, Mr. Holland spoke with Tanya Noeggerath Brown by telephone about 1 2 the construction noise. (Declaration of Lyn Agre dated June 17, 2016 (“6/17/16 Agre Decl.”), ¶ 6, 3 Ex. E (Email String at Related 000139).) On that same day, Ms. Brown sent an email to Richard 4 Crane, an RMC District Manager, and Tom Kearns, an RMC Vice President of Leasing, and 5 reported that Mr. Holland offered three options to address the noise issue, which he stated was 6 triggering his PTSD: “(1) Rent concession; (2) Move to comparable apartment with the same rent 7 that he is paying now; or (3) Seek legal counsel.” (6/17/16 Agre Decl., ¶ 3, Ex. D; see also id., 8 Ex. B (Deposition of Tanya Noeggerath Brown (“Brown Depo.”) at 50:24-52:14, 125:23-172:1).) 9 In the email to Mr. Crane and Mr. Kearns, Ms. Brown stated that she advised Mr. Holland 10 United States District Court Northern District of California 11 12 13 14 15 that we do not have a comparable apartment to move him and his family into. He said that was unacceptable. I asked him to come up with a number for rent concession. He said he needed to think about it. … I will follow up tomorrow. He kept saying how unfortunate this was and that it was the landlord’s responsibility to provide the right of quiet enjoyment to the residents and this was not happening. This may need to go further than me. Let me know what you think. I will circle back when I get a number from him. 16 (6/17/16 Agre Decl., ¶ 5, Ex. D.) Ms. Brown testified that she believed she reviewed the 17 inventory of available apartments at the time she was speaking with Mr. Holland, and that she 18 believed when she said “comparable” she meant similar square footage to their current unit. 19 (6/17/16 Agre Decl., Ex. B (Brown Depo. at 128:19-130:10).) 20 Ms. Brown testified that Mr. Holland told her the noise was causing him pain and stated 21 she believed him. (McGuiness Decl., Ex. A (Brown Depo. at 84:2-14).) Ms. Brown testified 22 Defendants did not offer a rent concession, because they “were trying to find a solution to get him 23 away from the noise.” (6/17/16 Agre Decl., Ex. B (Brown Depo. at 51:20-52:22).) There is 24 evidence in the record that suggests the noise from the construction could be heard on the upper 25 floors of The Paramount. (See 6/17/16 Agre Decl., Ex. E (Email string at Related 000138), Ex. F 26 (Deposition of Deborah Lunn (“Lunn Depo.”) at 253:18-25.) 27 On April 8, 2015, Mr. Holland sent an email to Ms. Brown and stated: 28 3 1 Essentially, I offered to move my family within the building to another unit of comparable square footage, paying our current rate of rent, for a time and on terms to be further negotiated. We would then agree to hold Related harmless for all damages. You informed me that Related corporation rejected this offer. You also informed me of their unacceptable accord and satisfaction counter-offer. … I must now revoke any and all offers, stated or implied, made to resolve this situation. Please let me know if you are prepared to accept service of process on behalf of Related [C]orporation. 2 3 4 5 6 (6/17/16 Agre Decl., Ex. C; McGuiness Decl, Ex. 8.) On April 10, 2015, in response to Ms. 7 Brown’s offer to put him in touch with their legal counsel, Mr. Holland sent an email and stated he 8 could “think of no good reason to speak to opposing counsel now. … I made you a good-faith 9 offer of compromise that was both fair and reasonable. Your employer immediately rejected it out 10 of hand[.] … Negotiations have, therefore, concluded.” (6/17/16 Agre Decl., Ex. C.) On April 10, 2015, Ms. Lunn sent an email to Leslie Torres in RMC’s New York United States District Court Northern District of California 11 12 compliance office and notified Sherry Scurfeld, RMC’s Fair Housing officer, of Plaintiffs’ 13 complaints. (Lunn Decl., ¶ 6, Ex. A; see also McGuinness Decl., Ex. 11.) Ms. Torres forwarded 14 the email to Ms. Scurfeld. (McGuiness Decl., Ex. 11.) Ms. Lunn advised Ms. Torres that they 15 offered Plaintiffs: a $2000.00 rent concession; release from their lease with no-penalty and up to 16 $2,000.00 in moving expenses; and provision of a hotel room in the vicinity from Monday through 17 Friday “until the end of April when the demo will be complete that he could work from and bring 18 his daughter with him.” (Lunn Decl., ¶ 6, Ex. A.)1 Ms. Lunn stated that Plaintiffs wanted “a 19 comparable apartment for the same [rental] rate ... (large studio for $2,795),” and she advised Ms. 20 Torres that “there are only 1BRs available starting at $3,825.” (Id.) Ms. Lunn then asked: “Please 21 advise if there is anything else that you feel we should be offering him?” (Id.) 22 Defendants have a written policy entitled “Processing Requests for Reasonable 23 Accommodations and Modifications Under the Fair Housing Act” (hereinafter “FHA Policy”). 24 25 26 27 28 1 It is undisputed that an offer for a hotel room was made, but the terms of this option are not clear. Further, the record suggests that Mr. Holland did not consider it a viable option. (See, e.g., 6/17/16 Agre Decl., ¶ 2, Ex. A (Deposition of Peter Holland at 287:10-288:5, 297:8-299:24; 6/17/16 Agre Decl., Ex. B (Brown Depo. at 56:8-59:25).) 4 1 (Loy Decl., ¶ 6, Ex. A (excerpt of FHA Policy); McGuinness Decl., ¶ 13, Ex. 12.)2 Defendants’ 2 FHA Policy states: 3 An understanding of the scope of the Act is necessary to assure compliance, particularly in the area of reasonable accommodations and modifications. The following procedures have been developed to facilitate the handling of requests. Following these procedures consistently is imperative to assure our compliance with the regulations and to avoid any potentially discriminatory actions. Each employee is required to be familiar with the procedures and to understand and carry out his/her responsibility in the process, whether by directing residents/applications or employees to the appropriate resource on staff or by carrying out the process. 4 5 6 7 8 9 (FHA Policy at 1.) Based on the terms of the FHA Policy, it appears that site and regional staff would have authority to grant some requests for accommodations. However, “[s]ite and regional 11 United States District Court Northern District of California 10 staff are not authorized to deny or modify any request. All recommendations to deny or to 12 modify requests must be forwarded for review by Compliance and/or the Fair Housing Office or a 13 designee.” (Id. at 2 (emphasis in original); see also id. at 5, 7.) 14 In May 2015, the parties exchanged demand letters. (Lunn Decl., ¶¶ 8-9, Exs. B-C.) On 15 July 10, 2015, Plaintiffs filed their complaint and alleged Defendants violated, inter alia: (1) the 16 Fair Housing Amendments Act, 42 U.S.C. sections 3601, et seq. (the “FHAA Claim”); (2) 17 California’s Fair Employment and Housing Act, Government Code sections 12926, et seq. (the 18 “FEHA Claim”); and (3) California’s Disabled Persons Act, Civil Code sections 54, et seq.. Plaintiffs also filed a motion for a preliminary injunction. (Docket No. 4.) On July 23, 19 20 2015, the Court granted Plaintiffs’ motion for a preliminary injunction, and it ordered Defendants 21 to “make a reasonable accommodation to Plaintiffs by moving them to an upper apartment in their 22 building, free of construction noise, for the duration of their lease at their current rental rate.” The 23 Court also ordered Defendants to pay “the reasonable costs of such relocation.” (Docket No. 31, 24 Order Granting Motion for Preliminary Injunction at 5:25-6:2.) Defendants moved Plaintiffs, in 25 compliance with the Court’s Order, and Plaintiffs moved out of The Paramount in December 26 2015. (Lunn Decl., ¶ 3.) 27 2 28 Further citations to the FHA Policy are from the copy attached to the McGuiness Declaration. 5 The Court will address additional facts as necessary in its analysis. 1 ANALYSIS 2 3 4 A. Legal Standards Applicable to Motions for Summary Judgment. A principal purpose of the summary judgment procedure is to identify and dispose of 5 factually unsupported claims. Celotex Corp. v. Cattrett, 477 U.S. 317, 323-24 (1986). Summary 6 judgment, or partial summary judgment, is proper “if the movant shows that there is no genuine 7 dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. 8 Civ. P. 56(a). “In considering a motion for summary judgment, the court may not weigh the 9 evidence or make credibility determinations, and is required to draw all inferences in a light most 10 United States District Court Northern District of California 11 favorable to the non-moving party.” Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). The party moving for summary judgment bears the initial burden of identifying those 12 portions of the pleadings, discovery, and affidavits that demonstrate the absence of a genuine issue 13 of material fact. Celotex, 477 U.S. at 323; see also Fed. R. Civ. P. 56(c). An issue of fact is 14 “genuine” only if there is sufficient evidence for a reasonable fact finder to find for the non- 15 moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). A fact is “material” 16 if it may affect the outcome of the case. Id. at 248. If the party moving for summary judgment 17 does not have the ultimate burden of persuasion at trial, that party must produce evidence which 18 either negates an essential element of the non-moving party’s claims or that party must show that 19 the non-moving party does not have enough evidence of an essential element to carry its ultimate 20 burden of persuasion at trial. Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 21 (9th Cir. 2000). 22 Once the moving party meets its initial burden, the non-moving party must “identify with 23 reasonable particularity the evidence that precludes summary judgment.” Keenan v. Allan, 91 24 F.3d 1275, 1279 (9th Cir. 1996); see also Fed. R. Civ. 56(e). In addition, the party seeking to 25 establish a genuine issue of material fact must take care to point a court to the evidence precluding 26 summary judgment. A court is “‘not required to comb the record to find some reason to deny a 27 motion for summary judgment.’” Carmen v. San Francisco Unified School Dist., 237 F.3d 1026, 28 1029 (9th Cir. 2001) (quoting Forsberg v. Pacific Northwest Bell Telephone Co., 840 F.2d 1409, 6 1 1418 (9th Cir. 1988)). If the non-moving party fails to point to evidence precluding summary 2 judgment, the moving party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 323. 3 B. 4 The Parties’ Requests for Judicial Notice and Evidentiary Issues. Plaintiffs rely, in part, on a lawsuit filed in the United States District Court for the 5 Southern District of New York, United States of America v. Related Companies, et al., No. 14- 6 CV-1826, and a Consent Decree entered in that lawsuit, to support their argument that punitive 7 damages are warranted (the “SDNY Lawsuit”). (Plaintiffs’ Request for Judicial Notice, Exs. A 8 (“SDNY Complaint”), B (Consent Decree).) Although TMA and RMC are not specifically named 9 in the SDNY Lawsuit, it was brought against “Related Companies and its subsidiaries and 10 United States District Court Northern District of California 11 affiliates.” (SDNY Complaint, ¶¶ 1, 12.) The United States alleged that the defendants in that case violated the FHA “by failing to 12 design and construct covered multi-family dwellings and associated places of public 13 accommodations, so as to be accessible to persons with disabilities.” The buildings at issue are 14 located in New York. (SDNY Compl., ¶¶ 1, 16-29; Consent Decree, Appendix E.) The Consent 15 Decree contains the following provisions: 16 17 18 19 20 21 22 23 24 25 26 27 28 The Settling Defendants shall also ensure that they and their employees and agents who have supervisory authority over the design and/or construction of Covered Multifamily Dwellings have a copy of, are familiar with, and personally have reviewed the Fair Housing Accessibility Guidelines, 56 Fed. Reg. 9472 (1991), and the United States Department of Housing and Urban Development, Fair Housing Act Design Manual, A Manual to Assist Builders in Meeting the Accessibility Requirements of the Fair Housing Act (August 1996, Rev. April 1998). The Settling Defendants and their employees and agents whose duties, in whole or in part, involve the management, sale and/or rental of multifamily dwellings at issue in this case shall be informed of those portions of the FHA that relate to accessibility requirements, reasonable accommodations and reasonable modifications. Within ninety (90) days of the date of entry of this Consent Decree, the Settling Defendants and all employees and agents whose duties, in whole or in part, involve or will involve supervision over the development, design and/or construction of multifamily dwellings of the type at issue in this case shall undergo training on the design requirements of the FHA. [Footnote: The educational program provided to employees not engaged in design, construction, or maintenance, such as sales and rental employees, may focus on the portions of the law that relate generally to accessibility requirements as opposed to technical design and construction requirements.]… 7 1 (Consent Decree, ¶¶ 74-75 (emphasis added).) Plaintiffs argue that “Defendants were charged under the Consent Decree with training 2 3 their sales and leasing employees on” their FHA Policy “and the fair housing law, including 4 reasonable accommodations. … Nonetheless the [FHA Policy] was never followed in this case.” 5 (Opp. Br. at 17:6-8.) Defendants argue these documents are not relevant and object to them on 6 that basis. The Court concludes the SDNY Lawsuit and the Consent Decree are not relevant to the 7 issue of whether punitive damages are warranted in this case. Based on a review of the record, the 9 only employee who was subject to the requirements of the training program is Warren Loy, and he 10 has testified he completed the training program and certified that he had done so. (Declaration of 11 United States District Court Northern District of California 8 Lyn R. Agre dated 8/5/16 (“8/5/16 Agre Decl.”), ¶ 18, Ex. 11 (Deposition of Warren Loy, Vol. II 12 (“Loy Depo. Vol. II”) at 480:2-13); Supplemental Declaration of Warren Loy, ¶ 3.) The Court 13 SUSTAINS Defendants’ objections to those documents and will not consider them for purposes of 14 this motion.3 15 Defendants also object to an exhibit attached to the Supplemental Declaration of Steven L. 16 Derby (“Supp. Derby Decl.”), which is a copy of a “Tenant Vacancy spreadsheet” prepared by Mr. 17 Derby. That spreadsheet purports to show “the apartments in [T]he Paramount that were available 18 to rent in April and May, 2015.” (Supp. Derby Decl., ¶ 2, Ex. 1.) According to Mr. Derby, he 19 prepared the spreadsheet from vacancy reports produced by the Defendants, which also are 20 attached to his declaration. (Id., ¶ 2, Ex. 2.) The Court OVERRULES, AS MOOT, Defendants’ 21 objection, because the Court did not rely on Exhibit 1 to resolve the motion. Defendants filed a Supplemental Request for Judicial Notice with their supplemental reply 22 23 brief. The Court did not rely on any of the documents attached to that request. Accordingly, the 24 Court DENIES, AS MOOT, the request to take judicial notice of those documents. 25 // 26 3 27 28 The Court GRANTS, IN PART, Defendants’ fourth motion in limine for the reasons set forth above. The Court also concludes that any probative value that this evidence may have is “substantially outweighed by a danger of … unfair prejudice [and] confusing the issues.” Fed. R. Evid. 403. 8 1 C. Legal Standards for An Award of Punitive Damages. Plaintiffs ask for punitive damages on their FHAA and FEHA claims. “[I]f the court finds 3 that a discriminatory housing practice has occurred …, the court may award to the plaintiff actual 4 and punitive damages[.]” 42 U.S.C. § 3613(c)(1). In order to obtain punitive damages, a plaintiff 5 must show that “a defendant’s conduct is shown to be motivated by evil motive or intent, or [that] 6 it involves reckless or callous indifference to the federally protected rights of others.” Fair 7 Housing of Marin v. Coombs, 285 F.3d 899, 906 (9th Cir. 2002) (citing Smith v. Wade, 461 U.S. 8 30, 56 (1983)); see also Kolstad v. American Dental Association, 527 U.S. 526, 529-30 (1999) 9 (under Title VII of Civil Rights Act and the Americans with Disabilities Act, punitive damages are 10 “limited … to cases in which the employer has engaged in intentional discrimination and has done 11 United States District Court Northern District of California 2 so with malice or with reckless indifference to the federally protected rights of an aggrieved 12 individual”) (internal quotations and citations omitted). Plaintiffs must prove they are entitled to 13 punitive damages by a preponderance of the evidence. See, e.g., In Re Exxon Valdez, 270 F.3d 14 1215, 1232 (9th Cir. 1999); Stender v. Lucky Stores, Inc., 803 F. Supp. 259, 324 (N.D. Cal. 1992). 15 As set forth in Kolstad, the focus for punitive damages is on a defendant’s state of mind. 16 See, e.g., Kolstad, 527 U.S. at 533, 535. “The terms ‘malice’ or ‘reckless indifference’ pertain to 17 the [defendant’s] knowledge that it may be acting in violation of federal law, not its awareness that 18 it is engaging in discrimination.” Kolstad, 528 U.S. at 535. “[E]gregious or outrageous acts may 19 serve as evidence of the requisite mental state,” but that type of conduct is not required to support 20 an award of punitive damages. Id. A plaintiff may also be awarded punitive damages, based on a 21 showing that a defendant was recklessly or callously indifferent to his or her rights. Thus, a 22 plaintiff may obtain punitive damages if he or she can demonstrate the defendant “discriminate[d] 23 in the face of a perceived risk that its actions [would] violate federal law[.]” Id. at 536. Punitive 24 damages would not appropriate if a defendant is “unaware of the relevant federal law” or 25 “discriminates with the distinct belief that [the] discrimination is lawful.” Id. at 536-37. 26 27 28 Under California law, a plaintiff may obtain punitive damages if he or she can prove “by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or 9 1 malice[.]” Cal. Civ. Code § 3294(a). The “clear and convincing” standard means “a finding of 2 high probability … so clear as to leave no substantial doubt; sufficiently strong to commend that 3 unhesitating assent of every reasonable mind.” Scott v. Phoenix Sch., Inc., 175 Cal. App. 4th 702, 4 715 (2009) (internal quotations and citations omitted). 5 (1) “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. 6 7 (2) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights. 8 9 (3) “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury. 10 United States District Court Northern District of California 11 12 Cal. Civ. Code § 3294(c). 13 D. The Court Grants, in Part, and Denies, in Part, Defendants’ Motion. 14 1. 15 Plaintiffs seek to hold corporate defendants liable for punitive damages. In Kolstad, the Liability of Corporate Defendants. 16 Supreme Court noted that, with an exception discussed below, general principles of agency would 17 apply to determine if a principal could be held liable for punitive damages. Kolstad, 527 U.S. at 18 540-46; see also California Housing Rights Center v. Krug, 564 F. Supp. 2d 1138, 1153 (C.D. 19 Cal. 2007) (when a defendant’s employees are allegedly responsible for the discrimination under 20 the FHA, “[t]he owner’s direct participation in the discriminatory practice is not necessary; 21 punitive damages may be awarded where the owner ignored its duties under the law or otherwise 22 engaged in knowledgeable inaction”). 23 Under California law, 24 25 26 27 An employer shall not be liable for damages pursuant to subdivision (a), based upon acts of an employee of the employer, unless the employer … authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act 28 10 1 of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation. 2 3 Cal. Civ. Code § 3294(b); see also Weeks v. Baker & McKenzie, 63 Cal. App. 4th 1128, 1151 4 (1998).4 5 It is undisputed that the employees involved in the decision making process in response to 6 Plaintiffs’ request for accommodation were Ms. Lunn, Ms. Torres, Mr. Crane, Ms. Scurfeld, Tami 7 Veikos, Ms. Brown, Mr. Kearns and Mr. Loy, all of whom are, or were, employees of RMC. In 8 addition, Ms. Cortese, and Mr. Leite are, or were, employees of RMC. (See Loy Decl., ¶¶ 3-4; 9 Lunn Decl., ¶ 1; Cortese Decl., ¶ 1; Supp. Derby Decl., ¶ 9, Ex. 9 (Defendants’ Supplemental 10 Response to Plaintiffs’ Interrogatory No. 5).) It is undisputed that TMA has no employees. Plaintiffs argue both TMA and RMC are liable for punitive damages. Neither Plaintiffs United States District Court Northern District of California 11 12 nor Defendants distinguish between the two entities in their briefs. “Ordinarily, a corporation is 13 regarded as a legal entity, separate and distinct from its stockholders, officers and directors, with 14 separate and distinct liabilities and obligations.” Sonora Diamond Corp. v. Superior Court, 83 15 Cal. App. 4th 523, 538 (2000). TMA has not argued it could not be subject to punitive damages 16 based on the conduct of RMC employees and officers. Therefore, the Court concludes it has not 17 met its burden to show it cannot be held vicariously liable for punitive damages. Although Ms. Cortese, Mr. Leite, and Ms. Lunn are not officers, directors or managing 18 19 agents of RMC, it is undisputed that Ms. Scurfeld, who made the final decision on Plaintiffs’ 20 request for accommodation, is an officer of RMC. It also is undisputed that Mr. Kearns and Mr. 21 Crane, who were involved in the decision making process, are officers of RMC. In addition, there 22 is evidence that Ms. Scurfeld was aware of the discussions between Plaintiffs, Mr. Kearns, Mr. 23 Crane, and other employees at The Paramount. (See, e.g., Supp. Derby Decl., Exs. 3, 5.) Accordingly, the Court finds that Plaintiffs have put forth sufficient evidence for a 24 25 4 26 27 28 The term “managing agent,” means a corporate employee who “exercises substantial independent authority and judgment in [his or her] corporate decisionmaking so that [his or her] decisions ultimately determine corporate policy.” White v. Ultramar, Inc., 21 Cal. 4th 563, 566-67 (1999). 11 1 reasonable jury to conclude the Defendants could be held liable for punitive damages, if there is 2 sufficient evidence for a reasonable jury to conclude that the individuals at issue acted with the 3 requisite state of mind. 4 2. 5 Plaintiffs argue that there is sufficient evidence in the record to show Defendants either The FHAA Claim. 6 acted egregiously or with reckless disregard that their conduct would violate the FHAA. 7 Defendants, in turn, argue that the evidence demonstrates they did not act with the requisite state 8 of mind. Defendants also argue that the FHA Policy and the efforts to comply with that policy 9 would preclude an award of punitive damages. Under Kolstad, if a defendant discriminates “in the face of a perceived risk that its actions 10 United States District Court Northern District of California 11 will violate federal law” it may be held liable for punitive damages.” Kolstad, 527 U.S. at 536. 12 The Ninth Circuit has interpreted Kolstad to allow for punitive damages upon a showing of 13 intentional discrimination. See Passantino v. Johnson & Johnson, Co., 212 F.3d 493, 515 (9th 14 Cir. 2000).5 However, there are some “instances in which intentional discrimination d[oes] not 15 give rise to punitive damages liability.” Passantino, 212 F.3d at 515. For example, as set forth in 16 Kolstad, a defendant “may not be vicariously liable for the discriminatory … decisions of 17 managerial agents where those decisions are contrary to the [corporate defendant’s] good-faith 18 efforts to comply with” federal law. Kolstad, 527 U.S. at 545 (internal quotations and citation 19 omitted); see also id. at 544 (“Where an employer has undertaken … good faith efforts at Title VII 20 compliance, it demonstrates that it never acted in reckless disregard of federally protected rights”) 21 (internal quotations, citations, and brackets omitted). By virtue of their FHA Policy, it is undisputed that Defendants were aware of the FHAA’s 22 23 legal requirements. Defendants argue that the FHA Policy demonstrates that they did not act in 24 reckless disregard of Plaintiffs’ rights under the FHAA. “[I]t is well-established that it is 25 5 26 27 28 Defendants argue that a showing of intentional discrimination is not sufficient, citing Elsayed Mukhtar v. California State University Hayward, 299 F.3d 1053, 1068 n.15 (9th Cir. 2002), overruled on other grounds by Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457, 467 (9th Cir. 2014). This Court does not find a conflict between Passantino and Elsayed Mukhtar, because both rely on Kolstad’s reckless indifference standard, which requires an inquiry into a defendant’s awareness that it may be acting in violation of federal law. 12 1 insufficient for a [defendant] simply to have in place [anti-discrimination] policies; it must also 2 implement them.” Swinton v. Potomac Corp., 270 F.3d 794, 811 (9th Cir. 2001). Defendants’ 3 FHA Policy sets forth the procedures that are to be followed and forms that should be used when a 4 resident or applicant makes a request for accommodation and states that “following these 5 procedures consistently is imperative[.]” (FHA Policy at 2-6; see also Supp. Derby Decl., ¶ 12, 6 Ex. 12 (FHA Policy and forms).) It is undisputed that Defendants did not provide Plaintiffs either 7 a copy of the “Fair Housing Accommodation Request Form” at the time they made their requests. 8 It also is undisputed that Defendants did not provide Plaintiffs with the “Resident Grievance 9 Procedure – Fair Housing” form once Defendants denied the request. (See Supp. Derby Decl., Ex. 12 at ECF pp. 15, 25.)6 The record suggests that Defendants did not use many of the other forms 11 United States District Court Northern District of California 10 referenced in the FHA Policy in response to Plaintiffs’ requests. (Supp. Derby Decl., Ex. 13 12 (Deposition of Warren Loy, Vol. II (“Loy Depo. Vol. II”) at 414:4-417:13, 421:16-19, 422:4- 13 425:15).) However, Mr. Loy testified that Defendants may not use the forms in situations where it 14 15 could be construed as a “burden or harassment to the person asking to go back and say, ‘Can you 16 complete this form? Can we verify this?’” Mr. Loy also testified that Plaintiffs’ situation 17 presented one of those circumstances. He also acknowledged that some of the forms were internal 18 and would not require further information from Plaintiffs. (Id., Loy Depo. Vol. II at 425:16- 19 426:11, 427:2-20, 430:17-433:14; see also Declaration of Lyn Agre in Support of Reply (“Agre 20 Reply Decl.”), ¶ 3, Ex. 2 (Loy Depo. Vol. II at 425:16-426:11).) It is not this Court’s task to 21 evaluate the credibility Mr. Loy’s testimony on this point. Defendants did not offer to move Plaintiffs to a different apartment at their current rental 22 23 rate, as Plaintiffs requested.7 In his deposition, Mr. Loy testified that Defendants were concerned 24 that if they offered that as a solution and then raised the rent at the end of the lease term, the rent 25 26 27 6 The Court finds no evidence in the existing record to support Plaintiffs’ assertion that Defendants “concealed” the grievance procedure from Plaintiffs. 7 28 The Court also concludes that there are genuine disputes about whether there were “comparable” apartments available. 13 1 increase could be viewed as retaliatory. (Supp. Derby Decl., Ex. 6 (Loy Depo Vol. I at 349:6-25).) 2 Mr. Loy also testified, in his opinion, it would not have posed an undue financial burden to move 3 Plaintiffs to a higher floor and absorb a $600 rent differential for their lease term. (Id. 387:13-25.) 4 During her deposition, Ms. Brown testified that she could not think of a reason not to offer 5 Plaintiffs a one bedroom. However, she also consistently testified that the decision was not hers to 6 make. (Derby Supp. Decl., Ex. 7 (Brown Depo. at 213:5-218:10).) 7 There is evidence to suggest that RMC employees took the situation seriously and, in their 8 view, were going “out of [their] way” to get Plaintiffs away from the construction noise. (See, 9 e.g., 6/17/16 Agre Decl., Ex. B, (Brown Depo. at 50:11-51:3, 86:19-87:18; 144:13-145:21, 182:224); McGuiness Decl., Ex. 1 (Brown Depo. at 40:20-21).) However, in early April, Mr. Kearns 11 United States District Court Northern District of California 10 sent an email that said “Tell Peter we stopped for him;).” (McGuiness Decl., Ex. 10.) That 12 statement was in a response to an email from Mr. Crane alerting Mr. Kearns to the fact that 13 construction had stopped for the day and that Mr. Leite was going to be contacting nearby hotels 14 to “work on a monthly rate for Mr. Holland.” (Id.) Although a reasonable jury might find this 15 statement was an isolated, off-hand comment made amidst good faith efforts to accommodate 16 Plaintiffs’ needs, that jury also could find the statement supports a conclusion that Defendants 17 were aware of but acted with “callous indifference” to Plaintiffs’ rights under the FHAA. 18 In the Passantino case, there was evidence presented at trial that the defendant downgraded 19 the plaintiff’s “promotability status” and demoted her after she complained about gender 20 discrimination. There also was evidence that the defendants’ employees misrepresented the 21 classification of certain jobs and lied about their actions to cover up a campaign against plaintiff. 22 Passantino, 212 F.3d at 516. The court concluded that “[t]hese actions,” as well as similar actions 23 against one of the plaintiff’s co-workers, “are sufficient to permit a jury to conclude that 24 [defendant] could not have reasonably believed that its conduct was lawful,” and supported 25 punitive damages. Id. 26 In Fair Housing of Marin, the court also considered whether there was sufficient evidence 27 to uphold an award of punitive damages. In that case, the plaintiff sent African-American and 28 Caucasian “testers” to try and lease apartments from the defendant and found the defendant treated 14 1 the African-American testers less favorably. 285 F.3d at 902, 907. There was also evidence that 2 the defendant knew it was illegal to discriminate on the basis of race but stated that he wanted an 3 all-white building, used “offensive and racially derogatory language when telling several tenants 4 he did not want to rent to African-Americans,” and stated that “he could use the pretext of bad 5 credit to refuse to rent to African-Americans.” Id. at 907. The court found that evidence “met at 6 least the reckless or callous indifference standard for punitive damages[.]” Id.; see also Swinton, 7 270 F.3d at 811 (concluding defendant could not rely on “good faith” defense to avoid punitive 8 damages where “employee … charged with carrying” out the policy “laughed along with” racially 9 disparaging jokes and did nothing to stop them). 10 In contrast, in Kirbyson v. Tesoro Refining and Marketing Co., the court found that an United States District Court Northern District of California 11 email which included an instruction to “find out … how best to move [the plaintiff] out of 12 [defendant’s] organization” was not sufficient to get the issue of punitive damages to a jury. 795 13 F. Supp. 2d 930, 947 (N.D. Cal. 2011). However, the email at issue was the only specific 14 evidence the plaintiff cited to support the claim for punitive damages, and the court noted that 15 when the email exchange was considered in its entirety, it suggested that the defendant was 16 “actively considering whether [it] could accommodate [p]laintiff’s disability.” Id. Thus, the court 17 concluded the email was not sufficient to “support a reasonable inference that [defendant was] 18 acting with knowledge that [it might] be violating federal law.” Id. 19 The Court cannot place the facts of this case in the same category as the facts presented in 20 the Fair Housing of Marin or the Swinton cases. However, there is more evidence to support a 21 claim for punitive damages than was at issue in the Kirbyson case. Furthermore, some of that 22 evidence will require the jury to evaluate defense witnesses’ explanation for their conduct and, 23 accordingly, their states of mind. The Court cannot “weigh the evidence or make credibility 24 determinations, and is required to draw all inferences in a light most favorable to” Plaintiffs. 25 Applying that standard, the Court concludes Plaintiffs have put forth sufficient evidence from a 26 which a reasonable jury could conclude that Defendants, at the very least, acted “in the face of a 27 perceived risk that [their] actions [would] violate federal law[.]” Id. 28 Accordingly, the Court DENIES, IN PART, Defendants’ motion for summary 15 1 adj judication. 2 3. 3 Plaintif rely on th same evid ffs he dence to show that, under California law, Defend w r dants’ The FEHA Claim. A 4 con nduct was malicious, opp m pressive, and fraudule d/or ent. “[A]bse an intent to injure the plaintiff, ent t e 5 ‘malice’ requir more than a ‘willful and consciou disregard of the plain res n a us’ d ntiffs’ intere ests. The 6 add ditional com mponent of ‘d despicable co onduct’ mus be found.” College Ho Inc. v. S st ” osp. Superior 7 Court, 8 Cal. 4th 704, 725 (1994); cf. Cal. Civ. Cod § 3294(c) (definiti of oppression also 4 C de )(2) ion 8 req quires “despi icable condu uct”). The California Su C upreme Cour interprets t term “de rt the espicable” to 9 me “circums ean stances that are ‘base,’ ‘v a vile,’ or ‘con ntemptible.’” Id. ” 10 For pur rposes of this claim, the Court “must view the ev s t vidence presented throug the prism gh United States District Court Northern District of California 11 of the [Plaintiff substant evidentiary burden,” i.e. the clea and convi t ffs’] tive ” ar incing standa ard. 12 Anderson, 477 U.S. at 254. The Court concludes th the evide . that ence describ in the pre bed eceding 13 sec ction does no satisfy tha standard. Accordingly the Court GRANTS, I PART, D ot at y, IN Defendants’ 14 mo otion for sum mmary adjud dication. Plaintiffs will n be entitle to seek pu not ed unitive dama ages on the 15 FE EHA claim. 16 CONCLU USION 17 For the foregoing re easons, the Court GRAN C NTS, IN PAR and DEN RT, NIES, IN PA ART, 18 De efendants’ motion for sum m mmary adjud dication of th issue of p he punitive dam mages. The C Court’s 19 ruling is withou prejudice to Defendan arguing, after the evi ut nts idence has been presente that ed, 20 Pla aintiffs have not put forth sufficient evidence to w h e warrant pun nitive damages on the FH HAA claim. 21 22 23 24 IT IS SO ORDER S RED. Da ated: July 20 2017 0, ___ __________ ___________ __________ ________ JEF FFREY S. W WHITE Un nited States D District Judg ge 25 26 27 28 16 6

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