Housing Discrimination Cases In California
In Walnut Creek Manor v. Fair Employment & Housing Com. (1991) the court recognized "the substantial deleterious effects of housing discrimination, not only on the individual victim, but on society at large." (54 Cal. 3d at p. 273.)
It also observed that the purpose of the Act was to "provide a streamlined and economic procedure for preventing and redressing discrimination in housing as an alternative to the more cumbersome and costly procedure of a civil suit." ( Id. at p. 264.)
In approaching its task -- "to construe and determine the constitutionality of the damages provision of the act" -- the court looked for guidance to McHugh v. Santa Monica Rent Control Bd. (1989) 49 Cal. 3d 348, 261 Cal. Rptr. 318, 777 P.2d 91 (McHugh). (Walnut Creek Manor, supra, 54 Cal. 3d at p. 251.)
In McHugh v. Santa Monica Rent Control Bd. (1989), a case which considered whether a local charter amendment authorizing administrative adjudication of excess rent claims and imposition of treble damages was unconstitutional as in violation of the judicial powers clause, the court articulated the following standard:
"An administrative agency may constitutionally hold hearings, determine facts, apply the law to those facts, and order relief -- including certain types of monetary relief -- so long as (i) such activities are authorized by statute or legislation and are reasonably necessary to effectuate the administrative agency's primary, legitimate regulatory purposes, and (ii) the 'essential' judicial power (i.e., the power to make enforceable, binding judgments) remains ultimately in the courts, through review of agency determinations." (49 Cal. 3d at p. 372.)
The Walnut Creek Manor, supra, court observed that the question before it -- "whether an administrative agency's award of general compensatory damages violates the judicial powers clause" -- had been reserved by McHugh.
The court then stated: "In McHugh . . ., we clearly set out the approach for resolving the issue. In applying the first or substantive prong of the standard, i.e., the 'reasonable necessity/legitimate regulatory purpose' requirements, we first inquire whether the award is authorized by legislation, and is 'reasonably necessary to accomplish the administrative agency's regulatory purposes.'
Next, we must 'closely scrutinize the agency's asserted regulatory purposes in order to ascertain whether the challenged remedial power is merely incidental to a proper, primary regulatory purpose, or whether it is in reality an attempt to transfer determination of traditional common law claims from the courts to a specialized agency whose primary purpose is the processing of such claims." (54 Cal. 3d at p. 256, italics added.)
In further defining the issue before it, the Walnut Creek Manor, supra, court stated:
"That compensatory damages serve to deter discrimination and compensate its victim for the psychic harm flowing from discrimination is not in dispute, nor is it the issue.
Under McHugh . . ., the issue, rather, is whether the award of substantial emotional distress compensatory damages is 'reasonably necessary' to accomplish the commission's legitimate regulatory purposes and 'merely incidental' to its primary regulatory purposes, or in reality transfers to the agency the judicial function of determining traditional common law claims." (54 Cal. 3d at pp. 258-259, 284 Cal. Rptr. 718, 814 P.2d 704.)
The court concluded that the award of damages for out-of-pocket expenditures of the claimant (who also received a $ 1,000 punitive damages award), clearly met the McHugh standard:
The substantive limitations prong was satisfied because:
(1) the award of such damages was authorized by legislation;
(2) an award of such damages was reasonably necessary to effectuate the Commission's statutory purpose of providing effective remedies to eliminate discriminatory practices;
(3) because they are tangible and readily quantifiable, such damages remain incidental to the Commission's primary regulatory purposes of preventing and eliminating housing discrimination and making its victim whole in the context of housing. (Walnut Creek Manor, supra, 54 Cal. 3d at p. 266.)