BILL ANALYSIS
SB 367
Page 1
Date of Hearing: July 9, 2009
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 367 (Negrete McLeod) - As Amended: July 2, 2009
PROPOSED CONSENT (As Proposed to be Amended)
SENATE VOTE : Not Relevant
SUBJECT : DISCRIMINATION: CONSUMER DISCOUNTS
KEY ISSUE : SHOULD DISCRIMINATION LAW BE CLARIFIED TO ENSURE
THAT BUSINESSES CHOOSING TO OFFER A DISCOUNT TO CONSUMERS
BECAUSE THE CONSUMER HAS SUFFERED THE LOSS OR REDUCTION OF
EMPLOYMENT ARE NOT SUED FOR ALLEGED ARBITRARY DISCRIMINATION?
SYNOPSIS
This non-controversial measure clarifies that the Unruh Civil
Rights Act does not impose liability when a business offers or
confers a discount or other benefit to a consumer or prospective
consumer because the consumer has suffered the loss or reduction
of employment or reduction of wages. It is apparently prompted
by recent threats of legal action which, the author and
supporters maintain, are meritless and contrary to the spirit
and purpose of the Unruh Act. The bill has no opposition.
SUMMARY : Clarifies discrimination laws regarding consumer
discounts. Specifically, this bill makes clear that the Unruh
Civil Rights Act does not impose liability when a business
offers or confers a discount or other benefit to a consumer or
prospective consumer because the consumer has suffered the loss
or reduction of employment or reduction of wages.
EXISTING LAW provides, pursuant to the Unruh Act, that all
persons within the jurisdiction of this state are free and
equal, and no matter what their sex, race, color, religion,
ancestry, national origin, disability, or medical condition are
entitled to the full and equal accommodations, advantages,
facilities, privileges, or services in all business
establishments of every kind whatsoever. (Civil Code section
51.) Also prohibits other forms of arbitrary discrimination in
business establishments under the Unruh Act. (E.g., Stoumen v.
Reilly, 37 Cal. 2d 713, 715-16 (1951); In re Cox, 3 Cal.3d 205
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(1970), Hubert v. Williams, 133 Cal.App.3d Supp. 1, 5 (1982);
Rolon v. Kulwitzky, 153 Cal.App.3d 289 (1984); Harris v. Capital
Growth Investors XIV, 52 Cal.3d 1142 (1991); Marina Pint, Ltd.
v. Wolfson, 30 Cal. 3d 721 (1982).)
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
COMMENTS : The author explains the reason for the bill as
follows: "In the current unprecedented economic climate, many
individuals are seeing reductions in pay or loss of employment.
Some private businesses have generously offered these
individuals discounts for services. It has come to my attention
that some of these businesses have been threatened with legal
action under the Unruh Civil Rights Act. This is not the type
of discrimination that the legislature intended the Act to
protect against. SB 367 would clarify that offering discounts
or benefits to individuals that have seen a reduction or
elimination of employment are not considered arbitrary
discrimination under the Unruh Civil Rights Act."
Bill Clarifies Arbitrary Discrimination. While the Unruh Act
contains a list of classes protected against discrimination by
business establishments, the California Supreme Court has
rejected the argument that the Unruh Act's ban on discrimination
reaches only the classifications specified in the Act's text.
(See Harris v. Capital Growth Investors XIV, 52 Cal.3d 1142,
1154-55 (1991).) Instead, the courts have made it clear that
the Unruh Act also prohibits other arbitrary discrimination,
such as sexual orientation, physical appearance, and family
status. The courts have also specifically recognized
occupational status as a protected class. In Long v. Valentino
(1989) 216 Cal.App.3d 1287, the court stated: "[A]n announcement
such as 'You can't eat at my diner because you are a lawyer,
bricklayer, female, or Indian chief' would be actionable under
the Unruh Act." (Long, at 1297; see also McCalden v. California
Library Ass'n (9th Cir. 1990) 955 F.2d 1214, 1221 (noting that
protected classes under the Act have been broadly defined to
include, inter alia, "students, families with children, welfare
recipients, and occupational groups"); Sizemore v Master
Financial, Inc. (2007) 151 Cal. App. 4th 1386.) (denial of
mortgage because the applicant was a family daycare operator
states a viable cause of action for occupational-status
discrimination).)
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The Legislature recently reaffirmed this longstanding rule in AB
1400 (Laird) of 2005, stating
"In keeping with that history and the legislative history of the
Unruh Civil Rights Act, California courts have interpreted the
categories enumerated in the act to be illustrative rather than
restrictive. It is the intent of the Legislature that these
enumerated bases shall continue to be
construed as illustrative rather than restrictive." (Ch. 420,
Stats 2005.)
According to press accounts, a number of businesses,
particularly in the Sacramento region, have offered free food,
cheap ski lift tickets and other discounts to furloughed
workers. "The West Sacramento Ikea, for instance, served free
breakfasts to furloughed California employees on specified
Fridays. At least one ski resort offered discounted lift
tickets to workers who showed state IDs. Several carmakers
nationwide have advertised plans to aid customers who lose their
jobs." (The Recorder, "Unruh Update Would Target Furlough
Deals," July 8, 2009.) Reportedly some of these businesses have
been threatened with suit. This bill would clarify that a
discount or other privilege or advantage benefiting a consumer
who has suffered the loss or reduction of employment or
reduction of wages is not arbitrary discrimination in violation
the Unruh Act, regardless of whether the recipients were private
or public sector workers.
ARGUMENTS IN SUPPORT : Consumer Attorneys of California (CAOC)
is the sponsor of the bill. It argues that the Unruh Act is a
valuable tool for protecting Californians and remedying true
injuries. According to CAOC, certain businesses have recently
been threatened with legal action for providing discounts to
groups of employees who have suffered reductions in employment.
The threats allege that these discounts are in violation of the
Unruh Act. CAOC does not believe that this is a correct
application of the Unruh Civil Rights Act. CAOC wishes to
preserve the integrity of the Act and believes this piece of
legislation will help accomplish this goal. Over the years,
California's great Civil Rights statute has been interpreted by
the courts to protect countless Californians from suffering true
arbitrary discrimination. Because there is a legitimate
business interest and the consequences of allowing this kind of
benefit to be considered a violation are enormous, CAOC does not
believe this type of discount would violate the Unruh Act.
However, to the extent that some believe that offering these
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types of discounts are a violation of the act, CAOC argues that
the law should be clarified. Businesses providing discounts to
groups who are suffering economically are not arbitrarily
discriminating against consumers, CAOC states. These discounts
further the good public policy of providing a benefit to a group
of people who would not otherwise be able to afford certain
services. Furthermore, these discounts help stimulate an
incredibly depressed economy. Unemployment levels are at record
highs and many other Californians are facing forced loss or
reductions in employment. For example, starting in July, more
than 200,000 state workers will be forced to take three unpaid
days off per month. Those businesses who wish to lend a helping
hand should be commended.
The California Chamber of Commerce likewise supports the bill to
protect businesses from meritless lawsuits, allowing them to
continue offering discounts and other incentives to consumers
negatively affected by these challenging economic times without
the fear of litigation.
"We believe it is imperative that these businesses are protected
from unwarranted lawsuits brought by lawyers inappropriately
seeking to benefit from the generosity and compassion of
businesses in this economic downturn. This bill will simply
clarify current law, establishing that it is not a violation of
the Unruh Civil Rights Act when a business provides discounts to
people who have suffered a loss or reduction in employment."
The California Retailers Association (CRA) also supports SB 367,
stating that it "seeks to clarify current law regarding
retailers' ability to offer discounts and specials (i.e.
Furlough Friday specials) to customers who have experienced a
loss or reduction in employment. Current law prohibits
discrimination based on a number of factors and SB 367 states
that discounts or promotions offered to those customers do not
constitute discrimination. Given the tough economic climate,
California retailers are looking for new ways to provide
customers with discounts and incentives and this legislation is
needed to protect them from the threat of frivolous and costly
litigation."
Author's Clarifying Amendment . In order to better express the
intent of the bill, the author properly proposes to rephrase the
bill as follows:
51.13. Any discount or other benefit offered to or conferred on
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a customer consumer or prospective consumer by a business
because the customer consumer has suffered the loss
or reduction of employment or reduction of wages shall not be
considered an arbitrary discrimination in violation of Section
51.
REGISTERED SUPPORT / OPPOSITION :
Support
Consumer Attorneys of California (sponsor)
California Chamber of Commerce
California Retailers Association
Opposition
None on file
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334