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Company Must Pay $6.2 Million in Civil Penalties—C.A.
Opinion Affirms Award Based on Gender Discrimination, Says Actual Injury Need Not Be Shown
By a MetNews Staff Writer
No actual injury need be established in an action by the Department of Fair Employment and Housing under the Unruh Civil Rights Act, the Court of Appeal for this district declared yesterday, upholding an assessment of civil penalties totaling more than $6.2 million against a finance company that paid more for automobile installment sales contracts purchased from used car dealers where the buyer was a male.
M&N Financing Corporation and its principal, Mahmood Nasiry, were the defendants. They determined that men were less likely to default on their purchase contracts than females and paid one percent less for a contract if the purchaser were a female and half a percent less is a female were a co-borrower.
That, the department insisted, violated Civil Code §51(b)—a part of the for Unruh Act—which provides that “[a]ll 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” and brings into play statutory damages of at least $4,000 per violation under §52(a).
Judge’s Order
Then-Los Angeles Superior Court Judge (now Court of Appeal Justice) John Shepard Wiley Jr. agreed, saying in a July 25, 2017 order:
“The Department now seeks statutory damages for each loan victim. After withdrawing one claim, the Department identifies 1036 individual borrowers and 517 car dealer victims where the principal loan borrower was female. The total number of violations is 1553. The statutory damage sum is $4000….Multiplying 1553 by $4000 yields $6,212,000. The Department also seeks an injunction. This motion is granted.”
The defendants argued on appeal that the judgment is infirm because there was no showing that any female was a “victim” inasmuch as no actual loss was shown.
Kim’s Opinion
Disagreeing, Justice Dorothy Kim wrote:
“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.”
No Involvement
The defendants also argued:
“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 discriminatory 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.”
Kim responded:
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).
The defendants asserted that the damages were unconstitutionally excessive.
Kim declared that the defendants’ level of culpability was high, there was a relationship between the harm and the penalty, statutory penalties are generally not regarded as excessive, and the defendants had the ability to pay.
A cross-appeal by the department contested a judgment on the pleadings granted by Los Angeles Superior Court Judge Amy Hogue on Jan. 15, 2019, in favor of M&N as to three causes of action. Kim’s opinion reverses the judgment to the extent a cause of action was brought on behalf of the finance company’s employees who were allegedly coerced into carrying out unlawful practices.
The jurist reasoned that the employees, themselves, would have standing to sue, and the department therefore has like standing, explaining:
“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.”
The case is Department of Fair Employment and Housing v. M&N Financing Corporation, B298901.
Attorneys on appeal were Susan E. Slager, R. Erandi-Zamora-Graziano, and Brian J. Bilford for the DFRH; Terry Anastassiou of Ropers Majeski, along with Ivan L. Tjoe for M&N Financing Corporation; and Roy G. Weatherup, Caroline E. Chan, and Allison A. Arabian of Lewis Brisbois Bisgaard & Smith for Nasiry.
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