State High Court Further Limits Power of Civil Rights Agency

The state Supreme Court, again sharply limiting the power of the state’s civil rights agency, ruled Thursday that it may not award money damages for emotional distress suffered by victims of housing discrimination.

The justices held 5 to 2 that while the Fair Employment and Housing Commission may compensate victims for out-of-pocket expenses, it may not order unlimited compensatory damages for humiliation, embarrassment and other emotional injury. That is a function for the judiciary and under the state Constitution it may not be performed by administrative bodies such as the FEHC, the court said.

The court, in an opinion by Justice Edward A. Panelli, said that awarding such damages was “not reasonably necessary” to the commission’s central purpose, which is enforcing anti-discrimination law in streamlined, non-judicial proceedings.

The justices also limited to $1,000 per victim the punitive damages the FEHC may award for a “single course of discriminatory conduct,” even if there were multiple acts of bias against that victim by a landlord.

The court set the restrictions as it overturned all but a small portion of a damage award of more than $90,000 to Robert Cannon, an unmarried black man the commission had found was improperly denied an apartment rental by a Contra Costa County landlord because of his race and marital status.

Justice Joyce L. Kennard, joined by Justice Allen E. Broussard, issued a pointed dissent, saying that the ruling would prevent state civil rights legislation from achieving its “paramount goal,” curbing housing discrimination.

“The majority destroys vital components of a carefully structured statutory system, setting that system up to fail,” Kennard wrote.

Thursday’s ruling still leaves bias victims free to file civil court suits seeking unlimited damages. A commission attorney noted that going to court is more costly and time-consuming than seeking help from the FEHC. A lawyer for the apartment complex countered that attorneys invariably take good cases on a contingency fee basis.

The decision was the third time the high court has restricted the authority of the civil rights agency since conservatives gained a majority after Chief Justice Rose Elizabeth Bird and two other liberals were defeated in a 1986 election.

The court, under Chief Justice Malcolm M. Lucas, held in 1987 that the commission could not order punitive damages against employers for job discrimination. Last year, the justices barred the agency from awarding damages for emotional distress to employment bias victims.

Legislation has been introduced in Sacramento to overturn the effects of those two rulings. Thursday’s ruling, based partially on the state Constitution, will be legally more difficult to overcome with legislation, lawyers said.

James F. Miller, staff attorney for the commission, said the latest decision “deals a body blow” to the enforcement of fair housing laws. “A great number of housing discrimination cases we see involve serious emotional injury,” he said. “The inability to remedy that puts a serious hole in our enforcement authority.”

William H. Staples of Walnut Creek, the attorney for the apartment house operators, said he was “extremely gratified” by the ruling. “This agency has been turning from its proper function to one of going out and looking for discrimination,” he said. “They’ve had their wings clipped a little bit.”

Staples said the commission’s finding of discrimination and its damage award against the apartment owners were “capricious.” The agency also had improperly sidestepped the $1,000 statutory limit on punitive damages by assessing $1,000 against the operators for each of 35 apartments it rented to others while Cannon’s rental application was pending, he said.

The case arose when Cannon filed a complaint in 1982 with the Fair Employment and Housing Department charging the 418-unit Walnut Creek Manor with discrimination. The department investigated and concluded that the operators had repeatedly lied to Cannon, denying him an apartment for over two years while renting to 35 others who were not black.

The commission awarded Cannon $90,635 in compensatory and punitive damages, plus $2,724.50 for attorneys fees and the cost of his rent and utilities above what he would have paid at Walnut Creek Manor.

Being denied the apartment had a “profound effect” on his self-esteem and caused him “considerable pain, humiliation and embarrassment,” adversely affecting his friendship with other residents of the apartment complex, the commission said.