# Dept. of Fair Employment and Housing v. M&N Financing Corp.

> California Court of Appeal · September 27, 2021

URL: https://www.frixlaw.com/law-library/cases/4995040

## Case

- **Court:** California Court of Appeal
- **Decided:** September 27, 2021
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

Filed 9/27/21
CERTIFIED FOR PARTIAL PUBLICATION *

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

DEPARTMENT OF FAIR B298901
EMPLOYMENT AND
HOUSING, (Los Angeles County
Super. Ct. No. BC591206)
Plaintiff and Appellant,

v.

M&N FINANCING
CORPORATION et al.,

Defendants and
Appellants.

APPEALS from a judgment of the Superior Court of Los
Angeles County, John Shepard Wiley and Amy D. Hogue, Judges.
Affirmed in part; reversed in part.
Xavier Becerra and Rob Bonta, Attorneys General,
Matthew Rodriguez, Acting Attorney General, Michael L.
Newman, Senior Assistant Attorney General, Susan E. Slager, R.

* Pursuant to California Rules of Court, rule 8.1110, this
opinion is certified for publication with the exception of part
III.A.
Erandi-Zamora-Graziano, and Brian J. Bilford, Deputy Attorneys
General, for Plaintiff and Appellant.
Ivan L. Tjoe; Ropers Majeski and Terry Anastassiou for
Defendant and Appellant M&N Financing Corporation.
Lewis Brisbois Bisgaard & Smith, Roy G. Weatherup,
Caroline E. Chan, and Allison A. Arabian for Defendant and
Appellant Mahmood Nasiry.

_________________________________________

I. INTRODUCTION

Defendants M&N Financing Corporation (M&N) and
Mahmood Nasiry operated a business that purchased retail
installment sales contracts (contracts) from used car dealerships.
In deciding how much to pay for the contracts, defendants used a
formula that considered the gender of the car purchaser.
Specifically, defendants would pay more for a contract with a
male purchaser than for a contract with a female purchaser or
female coborrower (collectively, female borrowers).
The Department of Fair Employment and Housing (the
Department) filed a complaint that alleged numerous causes of
action. The Department moved for summary adjudication. The
trial court entered judgment in favor of the Department on the
first and second causes of action, which alleged violations of the
Unruh Civil Rights Act (Civ. Code, § 51) and Civil Code section
51.5, and assessed over $6 million in statutory damages pursuant
to Civil Code section 52, subdivision (a). The court dismissed the
fifth, sixth, and seventh causes of action, which alleged violations

2
of Government Code 1 section 12940, subdivisions (i) and (k) of the
Fair Employment and Housing Act (FEHA) (§ 12900 et seq.).
Defendants appeal and the Department cross-appeals. We hold
that the court erred in dismissing the fifth cause of action. We
otherwise affirm.

II. BACKGROUND

A. Factual Background 2

Nasiry is the owner of M&N, a California corporation that
purchased contracts from used car dealerships and thereafter
serviced them by collecting monthly installment payments from
the car purchasers and contacting those purchasers who failed to
make payments.
In deciding whether and how much to bid on a contract,
M&N utilized a risk assessment spreadsheet (spreadsheet) that
Nasiry created in 2012. Based on Nasiry’s 10 years of experience
with loan defaults, he believed that there was “a greater risk of
default for female borrowers.” Thus, Nasiry included the gender
of the used car purchaser as one of the 18 to 20 specific factors on
the spreadsheet. For gender, M&N employees, at Nasiry’s

1 Further statutory references are to the Government Code
unless otherwise indicated.

2 “In performing our review, we view the evidence in a light
favorable to the losing party . . . , liberally construing [the]
evidentiary submission while strictly scrutinizing the moving
party’s own showing and resolving any evidentiary doubts or
ambiguities in the losing party’s favor.” (Serri v. Santa Clara
University (2014) 226 Cal.App.4th 830, 859 (Serri).)

3
direction, assessed one point for a contract with a female
purchaser, zero points for a contract with a male purchaser, and
a half-point for a contract with a female coborrower. Each point
on the spreadsheet corresponded to a percentage point so that
M&N would pay a car dealership one percent less for a contract
with a female purchaser and half a percent less for a contract
with a female coborrower than it would pay for a contract with a
male purchaser.
M&N purchased approximately half of the contracts that it
reviewed. From October 17, 2012, to July 2, 2014, M&N
purchased 1,037 contracts with female borrowers from 517 car
dealerships.
In 2014, the Department initiated an investigation of
M&N’s business practices, following which M&N ceased to use
gender as a factor in its spreadsheet.

B. Pleadings

The Department filed its initial complaint in 2015. On
February 16, 2016, the Department filed the operative second
amended complaint, alleging in the first and second causes of
action violations of Civil Code sections 51 and 51.5 and section
12948. 3 In lieu of actual damages, the Department sought the

3 The Department alleged nine causes of action against
defendants and eventually voluntarily dismissed the third,
fourth, eighth, and ninth causes of action with prejudice. On
January 15, 2019, the trial court granted M&N’s motion for
judgment on the pleadings and dismissed the fifth, sixth, and
seventh causes of action. We discuss the fifth, sixth, and seventh
causes of action below when we address the Department’s cross-
appeal.

4
statutory minimum penalty of $4,000 per violation, and also
sought injunctive relief.
On July 25, 2016, the Department filed a motion for
summary adjudication on the first and second causes of action.
On September 14, 2016, the trial court granted summary
adjudication on the first and second causes of action, ruling that
defendants’ conduct violated Civil Code sections 51 and 51.5 as a
matter of law.
On November 4, 2016, the Department filed a motion for an
injunction and monetary relief in the amount of $6,216,000, the
statutory minimum penalty for 1,554 violations 4 of Civil Code
sections 51 and 51.5. On July 25, 2017, the trial court granted
the motion, issuing an injunction and awarding statutory
damages in the amount of $6,212,000.
On May 24, 2019, the trial court entered judgment. The
Department and defendants appealed.

III. DISCUSSION

A. Defendants’ Appeal

1. Applicable Law

“A grant of summary adjudication is appropriate if there
are no triable issues of material fact and the moving party is
entitled to judgment as a matter of law. [Citations.] A plaintiff

4 The number of violations was the sum of the total number
of contracts defendants purchased with female borrowers and the
number of car dealerships from whom they purchased such
contracts.

5
moving for summary adjudication meets its burden if it proves
each element of the cause of action. [Citation.] ‘[I]f a plaintiff
who would bear the burden of proof by a preponderance of
evidence at trial moves for summary judgment, he must present
evidence that would require a reasonable trier of fact to find any
underlying material fact more likely than not—otherwise, he
would not be entitled to judgment as a matter of law, but would
have to present his evidence to a trier of fact.’ [Citation.] If the
plaintiff meets its burden, the defendant must set forth specific
facts showing a triable issue of material facts exist.” (Quidel
Corporation v. Superior Court of San Diego County (2020) 57
Cal.App.5th 155, 163–164; see Code Civ. Proc., § 437c, subd.
(p)(1).) “The trial court’s ruling on a motion for summary
adjudication, like that on a motion for summary judgment, is
subject to this court’s independent review.” (Serri, supra, 226
Cal.App.4th at p. 858.)
The Unruh Civil Rights Act (Unruh Act) provides: “All
persons within the jurisdiction of this state are free and equal,
and no matter what their sex . . . are entitled to the full and equal
accommodations, advantages, facilities, privileges, or services in
all business establishments of every kind whatsoever.” (Civ.
Code, § 51, subd. (b).) 5 “The [Unruh] Act, like the common law
principles upon which it was partially based, imposes a
compulsory duty upon business establishments to serve all
persons without arbitrary discrimination. [Citations.]”
(Angelucci v. Century Supper Club (2007) 41 Cal.4th 160, 167
(Angelucci).) “The [Unruh] Act is to be given liberal construction

5 “‘Sex’ also includes, but is not limited to, a person’s gender.
‘Gender’ means sex, and includes a person’s gender identity and
gender expression.” (Civ. Code, § 51, subd. (e)(5).)

6
with a view to effectuating its purposes.” (Koire v. Metro Car
Wash (1985) 40 Cal.3d 24, 28 (Koire); accord, White v. Square,
Inc. (2019) 7 Cal.5th 1019, 1025 (White).)
Civil Code section 51.5, subdivision (a) further provides:
“No business establishment of any kind whatsoever shall
discriminate against . . . or refuse to buy from, [or] contract with
. . . any person . . . on account of any characteristic listed or
defined in subdivision (b) or (e) of [Civil Code] [s]ection 51 . . . or
because the person is associated with a person who has, or is
perceived to have, any of those characteristics.” Thus, Civil Code
section 51.5 proscribes not only direct discrimination based on
sex but also discrimination against an entity “on account of its
association with women.” (See Rotary Club of Duarte v. Board of
Directors (1986) 178 Cal.App.3d 1035, 1061 (Rotary Club of
Duarte).) Additionally, “the analysis under Civil Code section
51.5 is the same as the analysis” under the Unruh Act. (Semler
v. General Electric Capital Corp. (2011) 196 Cal.App.4th 1380,
1404.)

2. Analysis

Here, defendants do not contest that they used gender in
setting the price they paid for contracts or that they paid less for
contracts with female borrowers than for contracts with male
purchasers. We have little trouble concluding that such conduct
constitutes sex discrimination within the meaning of Civil Code
sections 51 and 51.5 against female borrowers (Angelucci, supra,
41 Cal.4th at p. 174) and against the car dealerships who
associated with them (Rotary Club of Duarte, supra, 178
Cal.App.3d at p. 1061).

7
Rather than dispute the lack of a triable issue of material
fact regarding the nature of their business practice, defendants
contend that the judgment against them must be vacated
because: (1) the Department did not have standing to sue; (2) the
female borrowers and car dealerships did not suffer an injury;
and (3) the female borrowers were not “clients, patrons, or
customers of . . . defendants” within the meaning of the Unruh
Act. Nasiry additionally argues that (1) he cannot be individually
liable for M&N’s conduct because he did not know that his
conduct was illegal; (2) defendants’ conduct was authorized by
Civil Code section 51.6, subdivision (c); and (3) the amount of
statutory damages is unconstitutionally excessive. We consider
each of defendants’ arguments below.

a. Standing

The Department is authorized pursuant to sections 12920
and 12930, subdivision (f)(2) to prosecute violations of Civil Code
sections 51 and 51.5. (See also § 12948 [“It is an unlawful
practice under this part for a person to deny or to aid, incite, or
conspire in the denial of the rights created by Section 51 [or] 51.5
. . . of the Civil Code”].) The Department is also authorized to
bring a civil action on behalf of aggrieved parties (§§ 12930, subd.
(h), 12965, subd. (a)), including a class or group (§ 12961).
Defendants contend that because there is no evidence that
any female borrower or car dealership filed a complaint with the
Department, the Department lacked standing to sue. In
defendants’ view, section 12961 conditions the Department’s
filing of a complaint upon receipt of an individual verified
complaint. We disagree. Section 12961 provides, in pertinent

8
part: “Where an unlawful practice alleged in a verified complaint
adversely affects, in a similar manner, a group or class of persons
of which the aggrieved person filing the complaint is a member,
or where such an unlawful practice raises questions of law or fact
which are common to such a group or class, the aggrieved person
or the director may file the complaint on behalf and as
representative of such a group or class.” (Italics added.) Thus,
section 12961, by its plain terms, does not require the filing of a
complaint by an aggrieved person prior to the Department’s
initiation of a lawsuit. (See also § 12960, subd. (c) [“The director
or the director’s authorized representative may in like manner,
on that person’s own motion, make, sign, and file a complaint”].)
Defendants also assert that because they ceased their
discriminatory practice, the Department lacked standing under
section 12965, subdivision (a) to pursue its civil action for
statutory damages and injunctive relief. Defendants, however,
cite no authority for the proposition that Civil Code sections 51
and 51.5 claims cannot be filed against defendants who cease
their discriminatory conduct after the initiation of a
governmental investigation, and we are aware of none. The
statutory damages that the trial court assessed under Civil Code
section 52, subdivision (a) were for violations that predated
defendants’ removal of gender as a factor on their spreadsheets.
Further, “there is no hard-and-fast rule that a party’s
discontinuance of illegal behavior makes injunctive relief against
him or her unavailable.” (Robinson v. U-Haul Co. of California
(2016) 4 Cal.App.5th 304, 315.) Thus, the Department had
standing to bring the civil action here.

9
b. Injury

Defendants next assert that their business practice, even if
discriminatory, did not cause any injury and cite White, supra, 7
Cal.5th 1019 in support. In White, our Supreme Court held:
“[W]e have acknowledged that ‘“a plaintiff cannot sue for
discrimination in the abstract, but must actually suffer the
discriminatory conduct.”’ (Angelucci, supra, 41 Cal.4th at p. 175.)
‘In essence, an individual plaintiff has standing under the
[Unruh] Act if he or she has been the victim of the defendant’s
discriminatory act.’ (Ibid. [‘plaintiff must be able to allege
injury—that is, some “invasion of the plaintiff’s legally protected
interests”’].)” (White, supra, 7 Cal.5th at p. 1025.)
We reject defendants’ characterization of the discrimination
here as “abstract.” When bidding on and purchasing contracts,
defendants paid less for those with female purchasers and female
borrowers and did so based solely on gender. Such conduct
constitutes an invasion of the female borrowers’ legally protected
interest to be free from arbitrary sex discrimination, by rendering
their contracts less valuable than those with male purchasers,
and violates the car dealerships’ rights of association with female
borrowers by lowering the price they were able to obtain for
contracts with such borrowers.
Having demonstrated that defendants’ conduct was directly
discriminatory to these victims, the Department was not
additionally required to demonstrate actual injury because it
sought only statutory minimum damages. “[T]he [Unruh] Act
renders ‘arbitrary sex discrimination by businesses . . . per se
injurious.’ (Koire, supra, 40 Cal.3d at p. 33.) . . . ‘[Civil Code]
[s]ection 51 provides that all patrons are entitled to equal

10
treatment. [Civil Code] [s]ection 52 provides for minimum
statutory damages . . . for every violation of [Civil Code] section
51, regardless of the plaintiff’s actual damages.’ ([Koire, supra,
50 Cal.3d at p. 33, fn. omitted].)” (Angelucci, supra, 41 Cal.4th at
p. 174.)

c. Civil Code sections 51 and 51.5 apply to
defendants’ conduct

Defendants next assert that they did not discriminate
within the meaning of Civil Code sections 51 and 51.5 because
they did not negotiate the terms of the contracts with any female
borrowers. According to defendants, “Unruh Act liability
requires a finding that the allegedly discriminated-against party
either did business with, or was denied the opportunity to do
business with, the alleged discriminator on the basis of unlawful
discrimination. In this case, there is no evidence that the used
car [purchasers] had any part in the only transaction about which
discrimination is alleged—M&N’s bidding for existing finance
contracts.” To the extent defendants contend that the Unruh Act
prohibits only the denial of the opportunity to do business, “[t]he
scope of the statute clearly is not limited to exclusionary
practices. The Legislature’s choice of terms evidences concern
not only with access to business establishments, but with equal
treatment of patrons in all aspects of the business.” (Koire, supra,
40 Cal.3d at p. 29, italics added.) Here, the car dealerships
conducted business with defendants by offering and selling
contracts to them. Further, after defendants purchased contracts
with female borrowers, they proceeded to service such contracts,
which rendered female borrowers patrons of defendants.

11
Accordingly, defendants’ business practices fall within the scope
of conduct proscribed by Civil Code sections 51 and 51.5.

d. Nasiry’s knowledge of unlawfulness

Nasiry contends he cannot be found individually liable
because he did not believe that M&N’s conduct violated the
Unruh Act. We disagree. Nasiry created the spreadsheet used
by M&N to engage in discriminatory practices and ordered its
use. He therefore is responsible for the violations of Civil Code
sections 51 and 51.5. To the extent Alch v. Superior Court (2004)
122 Cal.App.4th 339, 389, cited by defendants, suggests that an
individual can only be liable for discrimination if he knows that
his conduct violates a statute, we disagree, as Civil Code sections
51 and 51.5 do not require that a discriminator know that he is in
violation of a statute. (See Hale v. Morgan (1978) 22 Cal.3d 388,
396 [“‘It is an emphatic postulate of both civil and penal law that
ignorance of a law is no excuse for a violation thereof’”].)

e. Civil Code section 51.6

Nasiry additionally asserts that his conduct was authorized
by Civil Code section 51.6, known as the Gender Tax Repeal Act
of 1995, and which provides, in pertinent part: “(b) No business
establishment of any kind whatsoever may discriminate, with
respect to the price charged for services of similar or like kind,
against a person because of the person’s gender. [¶] (c) Nothing
in subdivision (b) prohibits price differences based specifically
upon the amount of time, difficulty, or cost of providing the
services.” (Civ. Code, § 51.6, subds. (b) and (c).)

12
Civil Code section 51.6, subdivision (c) thus excludes price
differences from liability under the Gender Tax Repeal Act of
1995. The Department, however, did not allege a violation of that
act and indeed the Department is not authorized to prosecute
violations of Civil Code section 51.6. (See §§ 12930, 12948.)
Section 51.6, subdivision (c), by its express terms, does not
immunize otherwise unlawful sex discrimination under Civil
Code sections 51 and 51.5. Accordingly, we reject Nasiry’s
argument.

f. Excessive damages

Nasiry also argues that $6,212,000 in statutory damages is
unconstitutional as an excessive fine. In analyzing whether the
damages here were unconstitutionally excessive, we consider the
four factors enumerated in United States v. Bajakajian (1998)
524 U.S. 321 (Bajakajian): “(1) the defendant’s culpability;
(2) the relationship between the harm and the penalty; (3) the
penalties imposed in similar statutes; and (4) the defendant’s
ability to pay.” (People ex rel. Lockyer v. R.J. Reynolds Tobacco
Co. (2005) 37 Cal.4th 707, 728.) “‘We review de novo whether a
fine is constitutionally excessive and therefore violates the
Eighth Amendment’s Excessive Fines Clause.’ [Citations.]
“[F]actual findings made by the district courts in conducting the
excessiveness inquiry, of course, must be accepted unless clearly
erroneous.’ [Citation.]” (Sweeney v. California Regional Water
Quality Control Bd. (2021) 61 Cal.App.5th 1093, 1136–1137.)
“We review the ‘underlying factual findings . . . for substantial
evidence, viewing the record in the light most favorable to the

13
ruling.’” (Lent v. California Coastal Com. (2021) 62 Cal.App.5th
812, 857.)
Our review of the four Bajakajian factors demonstrates
that the statutory damages were not excessive. First, defendants’
level of culpability supports the imposition of a heavy fine:
defendants were perpetrators of sex discrimination who
maintained that their unequal treatment of female borrowers
was justified by the higher likelihood that women would default
on their loans. Second, the relationship between the harm and
the penalty is strong: defendants harmed female borrowers and
the car dealerships that entered into contracts with them, and
were fined for each discriminatory transaction. (See White,
supra, 7 Cal.5th at p. 1025 [“The purpose of the [Unruh] Act is to
create and preserve ‘a nondiscriminatory environment in
California business establishments by “banishing” or
“eradicating” arbitrary, invidious discrimination by such
establishments’”].) As to the third factor, although defendants do
not identify similar statutes, a statutory minimum penalty for
each violation is generally not unconstitutional. (See Ojavan
Investors, Inc. v. California Coastal Com. (1997) 54 Cal.App.4th
373, 397 [“‘Within the civil penalty context, . . . a provision
authorizing the imposition of a minimum civil penalty per
violation, with each day constituting a separate violation, could
not because of its civil character be subject to challenge under the
constitutional provisions prohibiting excessive fines’”].)
Finally, the record supports an inference that defendants
were able to pay the damages. Carl Saba, a forensic accountant
hired by the Department, opined that based on his review of
defendants’ financial information, defendants had the ability to
pay “either a significant portion of, or all of . . . [a] $7.2 million

14
judgment in favor of [the Department. . . .]” Saba noted that
M&N’s cash balance for fiscal years 2012 and 2013 totaled $5.98
million and $9.12 million, respectively, and, based on his
evaluation of M&N’s operating expenses, he believed that the
excess cash balance would be between $4.4 million and $7.5
million. Further, Saba identified two residential properties that
Nasiry appeared to have obtained, debt-free, in 2015 and 2017,
for $3.150 million and $1.725 million. Finally, Saba opined that,
based on his review of financial statements, if M&N continued to
perform services required over the term of the remaining
contracts beyond 2013, “it would earn between another $10.71
and $9.1 million in contracts receivable respectively.”
We therefore hold the trial court properly granted
summary adjudication on the Department’s first and second
causes of action against defendants.

B. The Department’s Cross-Appeal

On cross-appeal, the Department contends that the trial
court erred by granting M&N’s motion for judgment on the
pleadings as to its fifth, sixth, and seventh causes of action.

1. Background

“‘“The standard for granting a motion for judgment on the
pleadings is essentially the same as that applicable to a general
demurrer, that is, under the state of the pleadings, together with
matters that may be judicially noticed, it appears that a party is
entitled to judgment as a matter of law.” [Citation.]’” (Southern
California Edison Co. v. City of Victorville (2013) 217 Cal.App.4th

15
218, 227.) We recite the relevant allegations from the second
amended complaint as follows.
When Nasiry created the spreadsheet in 2012, Khayyam
Etemadi, then an M&N employee, told Nasiry that it was illegal
to use gender to assign an additional risk point to women. Nasiry
refused to remove gender as a factor in assessing risk and
asserted that all banks engaged in such conduct. Etemadi
complained again when the spreadsheet was placed on employee
laptops, and again in November 2013. Nasiry refused each time
to remove gender as a factor on the spreadsheet.
After complaining to Nasiry about discrimination in
November 2013, Etemadi collapsed at work and was taken to the
hospital. Etemadi experienced heart palpitations and was
hospitalized overnight.
During the course of Etemadi’s employment with M&N,
Nasiry threatened to “ruin him financially” and directed him to
do his job or be fired, thus coercing him to engage in conduct that
was discriminatory and unlawful.
After Etemadi filed a complaint with the Department,
M&N falsely reported to various credit agencies that Etemadi
had failed to repay a loan from M&N. Etemadi left M&N in
March 2014 due to stress at work.

2. Fifth, Sixth, and Seventh Causes of Action

In the operative complaint, the Department alleged for the
fifth cause of action that M&N “knowingly compelled and coerced
its employees to engage in practices that violated” FEHA and
Civil Code sections 51 and 51.5, in violation of section 12940,
subdivision (i).

16
As to the sixth and seventh causes of action, the
Department alleged, on behalf of all current and former M&N
employees and itself, respectively, that M&N failed to take all
reasonable steps to prevent discrimination from occurring, in
violation of section 12940, subdivision (k).

3. Motion for Judgment on the Pleadings

On October 9, 2018, M&N moved for judgment on the
pleadings as to the fifth, sixth, and seventh causes of action. 6
M&N argued that the fifth through seventh causes of action
failed to state a claim because Etemadi did not exhaust his
administrative remedies. M&N also argued that the sixth and
seventh causes of action failed because the Department did not
allege an employment discrimination cause of action under
FEHA.
On January 15, 2019, the trial court granted M&N’s
motion, ruling that section 12940, subdivision (i) did not apply
because Etemadi and the current and former employees of M&N
were not aggrieved parties under that statute. As to the sixth
and seventh causes of action, the court ruled that section 12940,
subdivision (k) did not impose a duty on employers to prevent
violations of the Unruh Act against nonemployees.

6 Nasiry also moved for judgment on the pleadings. The trial
court denied his motion because he was not a named defendant in
the fifth, sixth, and seventh causes of action.

17
4. FEHA

“In enacting the FEHA, the Legislature spoke at length
about its purposes. Section 12920 states: ‘It is hereby declared
as the public policy of this state that it is necessary to protect and
safeguard the right and opportunity of all persons to seek, obtain,
and hold employment without discrimination or abridgment on
account of race, religious creed, color, national origin, ancestry,
physical disability, mental disability, medical condition, genetic
information, marital status, sex, gender, gender identity, gender
expression, age, or sexual orientation. [¶] It is recognized that
the practice of denying employment opportunity and
discriminating in the terms of employment for these reasons
foments domestic strife and unrest, deprives the state of the
fullest utilization of its capacities for development and
advancement, and substantially and adversely affects the
interests of employees, employers, and the public in general.’
“Section 12920 further declares: ‘It is the purpose of this
part to provide effective remedies that will eliminate these
discriminatory practices.’ And section 12920.5 provides: ‘In
order to eliminate discrimination, it is necessary to provide
effective remedies that will both prevent and deter unlawful
employment practices and redress the adverse effects of those
practices on aggrieved persons.’
“In addition, section 12921, subdivision (a) says: ‘The
opportunity to seek, obtain, and hold employment without
discrimination because of race, religious creed, color, national
origin, ancestry, physical disability, mental disability, medical
condition, genetic information, marital status, sex, gender,
gender identity, gender expression, age, or sexual orientation is

18
hereby recognized as and declared to be a civil right.’ Section
12993, subdivision (a) instructs that the FEHA ‘shall be
construed liberally for the accomplishment of [its] purposes.’”
(Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 223.)
Relevant here are subdivisions (i) and (k) of section 12940,
which provide: “It is an unlawful employment practice [with
exceptions not applicable here]: [¶] . . . [¶] (i) For any person to
aid, abet, incite, compel, or coerce the doing of any of the acts
forbidden under this part, or to attempt to do so. [¶] . . . [¶]
(k) For an employer . . . to fail to take all reasonable steps
necessary to prevent discrimination and harassment from
occurring.”

5. Analysis

We review a trial court’s decision on a motion for judgment
on the pleadings de novo. (People ex rel. Harris v. Pac Anchor
Transportation, Inc. (2014) 59 Cal.4th 772, 777.) “‘“Our role in
interpreting statutes is to ascertain and effectuate the intended
legislative purpose. [Citations.] We begin with the text,
construing words in their broader statutory context and, where
possible, harmonizing provisions concerning the same subject.”’
[Citation.] In doing so, we give ‘“the words their usual and
ordinary meaning [citation], while construing them in light of the
statute as a whole and the statute’s purpose [citation].”’
[Citation.] Our inquiry ends ‘“[i]f this contextual reading of the
statute’s language reveals no ambiguity . . . .”’ [Citation.]” (Lee v.
Kotyluk (2021) 59 Cal.App.5th 719, 729.)

19
a. Section 12940, subdivision (i)

The trial court ruled, and we agree, that it is unlawful
under section 12940, subdivision (i) for any employer to coerce an
employee to violate Civil Code sections 51 and 51.5. (See
§ 12948.) Nonetheless, the court ruled that Etemadi and former
and current M&N employees were not aggrieved within the
meaning of section 12965, subdivision (a). 7
An “aggrieved” party is a person who has standing to sue.
(See, e.g., § 12965, subd. (a) [“In any civil action, the person
claiming to be aggrieved shall be the real party in interest and
shall have the right to participate as a party and be represented
by that person’s own counsel”]; § 12960, subd. (c) [“Any person
claiming to be aggrieved by an alleged unlawful practice may file
with the department a verified complaint, in writing . . .”].)
“‘To have standing, a party must be beneficially interested
in the controversy; that is, he or she must have “some special
interest to be served or some particular right to be preserved or
protected over and above the interest held in common with the
public at large.” [Citation.] The party must be able to
demonstrate that he or she has some such beneficial interest that
is concrete and actual, and not conjectural or hypothetical.’
[Citation.] [¶] The prerequisites for standing to assert
statutorily[-]based causes of action are determined from the
statutory language, as well as the underlying legislative intent

7 We consider whether the Department can bring suit on
behalf of employees for an alleged violation of section 12940,
subdivision (i). There is no dispute that the Department can sue
on its own behalf. (§ 12930, subd. (f)(1).)

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and the purpose of the statute.” (Boorstein v. CBS Interactive,
Inc. (2013) 222 Cal.App.4th 456, 466.)
We hold that employees who are coerced by their employer
to violate Civil Code sections 51 and 51.5 are “aggrieved” within
the meaning of section 12965, subdivision (a) and have standing
to sue their employer pursuant to section 12940, subdivision (i).
As discussed, “[i]t is an unlawful practice under this part for a
person to deny or to aid, incite, or conspire in the denial of the
rights created by Section[s] 51, 51.5, 51.7, 51.9, 54, 54.1, or 54.2
of the Civil Code.” (§ 12948.) Liability for violations of Civil Code
sections 51 and 51.5 “extends beyond the business establishment
itself to the business establishment’s employees responsible for
the discriminatory conduct.” (North Coast Women’s Care Medical
Group, Inc. v. Superior Court (2008) 44 Cal.4th 1145, 1154.)
Thus, Etemadi and other employees of M&N who were coerced by
M&N into violating Civil Code sections 51 and 51.5 could be
individually liable for sex discrimination. These employees would
necessarily be “aggrieved” by their employer’s unlawful
employment practice as their personal interests would be affected
by their employer’s misconduct. The Department therefore was
authorized to file a civil action on behalf of these employees and
the trial court erred by dismissing the fifth cause of action.

b. Section 12940, subdivision (k)

The Department also asserts that the trial court erred by
dismissing its sixth and seventh causes of action for violation of
section 12940, subdivision (k). Section 12940, subdivision (k)
proscribes an employer’s failure to take reasonable steps to
prevent discrimination and harassment. Moreover, in order to

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state a claim under section 12940, subdivision (k), a plaintiff
must be able to prevail on an underlying claim of discrimination.
Here, the Department does not allege that M&N discriminated
against or harassed Etemadi and other employees. Rather, the
Department asserts that “discrimination” under subdivision (k)
encompasses violations of various subdivisions of section 12940,
including subdivision (i), and cites in support Taylor v. City of Los
Angeles Dept. of Water & Power (2006) 144 Cal.App.4th 1216,
1239–1240 (Taylor), disapproved on other grounds by Jones v.
Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1162.
In Taylor, the court held that retaliation under section
12940, subdivision (h) is a form of discrimination actionable
under section 12940, subdivision (k). (Taylor, supra, 144
Cal.App.4th at p. 1240.) The court reached this conclusion, in
part, based on the language of subdivision (h), which makes it an
unlawful employment practice “‘[f]or any employer . . . to
discharge, expel, or otherwise discriminate against any person
because the person has opposed any practices forbidden under
this part . . . .’” (Taylor, supra, 144 Cal.App.4th at p. 1237, italics
added.) Thus, an employer who has retaliated against an
employee has necessarily discriminated against that employee
and has failed to prevent discrimination, within the meaning of
section 12940, subdivision (k). (Taylor, supra, 144 Cal.App.4th at
p. 1240.)
Section 12940, subdivision (g) also proscribes as an
unlawful employment practice “[f]or any employer . . . to harass,
discharge, expel, or otherwise discriminate against any person
because the person has made a report pursuant to [s]ection
11161.8 of the Penal Code that prohibits retaliation against

22
hospital employees who report suspected patient abuse by health
facilities or community care facilities.” (Italics added.)
By contrast, section 12940, subdivision (i) does not include
similar language. (See § 12940, subd. (i) [proscribing as unlawful
employment practice “[f]or any person to aid, abet, incite, compel,
or coerce the doing of any of the acts forbidden under this part, or
to attempt to do so”].) Where, as here, “‘the Legislature makes
express statutory distinctions, we must presume it did so
deliberately, giving effect to the distinctions, unless the whole
scheme reveals the distinction is unintended.’” (Metropolitan
Water Dist. v. Superior Court (2004) 32 Cal.4th 491, 502; see also
Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th
53, 59 [“When interpreting statutes, ‘we follow the Legislature’s
intent, as exhibited by the plain meaning of the actual words of
the law . . . . “This court has no power to rewrite the statute so as
to make it conform to a presumed intention which is not
expressed”’”].) We therefore presume that the Legislature
intended the distinction between section 12940, subdivisions (g)
and (h), which include the terms “otherwise discriminate” and
reference other unlawful acts, and subdivision (i), which does not,
and hold that a violation of subdivision (i) is not “discrimination”
within the meaning of section 12940, subdivision (k).
The Department therefore failed to allege facts
demonstrating that defendants violated section 12940,
subdivision (k) and the trial court did not err by dismissing the
sixth and seventh causes of action.

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IV. DISPOSITION

The judgment is reversed as to the dismissal of the fifth
cause of action and the matter is remanded for further
proceedings. The judgment is otherwise affirmed. The
Department is entitled to recover costs pertaining to M&N’s and
Nasiry’s appeals. The parties are to bear their own costs
pertaining to the Department’s appeal.

CERTIFIED FOR PARTIAL PUBLICATION

KIM, J.

We concur:

RUBIN, P. J.

MOOR, J.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4995040. Public record. Not legal advice.