BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
SB 367
Senator Negrete-McLeod
As Amended August 31, 2009
Hearing Date: September 8, 2009
Civil Code
GMO:jd
PURSUANT TO SENATE RULE 29.10
SUBJECT
Unruh Civil Rights Act: Discrimination: Consumer Discounts
DESCRIPTION
This bill would clarify that the Unruh Civil Rights Act, which
prohibits discrimination on the basis of sex, race, color,
religion, ancestry, national origin, disability, or medical
condition, and prohibits other forms of arbitrary discrimination
in business establishments, does not impose liability when a
business offers or confers a discount or other benefit to a
consumer or prospective consumer because the consumer or
prospective consumer has suffered loss of employment or
reduction of wages.
This bill is an urgency measure.
BACKGROUND
SB 367 responds to recent reports of threatened legal action
against businesses that offered discounted goods or services to
state workers who had been furloughed. The media reports of
threatened legal action include one against the Ikea store in
West Sacramento, which served free breakfasts to furloughed
state of California employees on specified Fridays, another
against a ski resort that offered discounted lift tickets to
workers who showed state IDs, and several actions targeting
carmakers who have advertised plans to aid customers who lose
their jobs. (The Recorder, July 8, 2009.)
(more)
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This bill intends to clarify that a discount or other privilege
or advantage benefiting a consumer who has suffered a loss of
employment or reduction in wages is not arbitrary discrimination
in violation of the Unruh Civil Rights Act, regardless of
whether the consumer was an employee in the private or public
sector.
The contents of SB 367 relating to trusts and estates that were
heard and passed by this committee on May 5, 2009, have been
amended out of the bill. SB 367 is now in this committee
pursuant to Senate Rule 29.10.
CHANGES TO EXISTING LAW
Existing law , the Unruh Civil Rights Act, provides that all
persons within the jurisdiction of this state are free and
equal, and, regardless of their sex, race, color, religion,
national origin, ancestry, disability, or medical condition, are
entitled to full and equal accommodations, advantages,
facilities, privileges, or services in all business
establishments of every kind. (Civ. Code Sec. 51.)
Existing case law has extended the application of the Unruh
Civil Rights Act to other forms of arbitrary discrimination by
business establishments. (See, e.g., Stoumen v. Reilly (1951) 37
Cal.2d 713, 715-716; In re Cox (1970) 3 Cal.3d 205; Hubert v.
Williams (1982) 133 Cal.App.3d, Supp.1, 5; Harris v. Capital
Growth Investors XIV (1991) 52 Cal.3d 1142; and Marina Point,
Ltd. v. Wolfson (1982) 30 Cal.3d 721.)
This bill would provide that any discount or other benefit
offered to or conferred on a consumer or prospective consumer by
a business because the consumer or prospective consumer has
suffered the loss or reduction of employment or reduction of
wages would not be considered an arbitrary discrimination in
violation of the Unruh Civil Rights Act.
This bill contains an urgency clause.
COMMENT
1. Need for the bill
The author states:
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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 is not considered arbitrary discrimination under
the Unruh Civil Rights Act.
2. Protection against arbitrary discrimination extended by the
courts
In case after case, the California Supreme Court has rejected
the argument that the ban on discrimination under the Unruh
Civil Rights Act (Unruh Act or Act) reaches only the specific
characteristics or classifications enumerated in Civil Code
Section 51. In fact, the Court has made it abundantly clear
that the Unruh Act also prohibits other arbitrary
discrimination, such as discrimination based on sexual
orientation, physical appearance, and family status. (See
Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142,
delineating a three-part test for cognizable Unruh Act
violations; Marina Point, Ltd. v. Wolfson (1982) 30 Cal.3d 721,
to protect families who were denied housing because they had
minor children; In re Cox (1970) 3 Cal.3d 205, violation to deny
services to a customer because his companion has an
unconventional appearance; Isbister v. Boys' Club of Santa Cruz,
Inc. (1985) 40 Cal.3d 72, to defend girls denied access to a
boys-only club based solely on their gender.)
In Harris, the California State Supreme Court enumerated a three
part test for determining whether a claim not enumerated in the
statute or previously added by judicial construction should be
cognizable under the Unruh Act. Courts must take into account:
1) the language of the statute; 2) the legitimate business
interest of the defendants; and 3) the consequences of allowing
the new discrimination claim. The sponsor of SB 367, the
Consumer Attorneys of California (CAOC), contends that if the
Harris test were applied in court to the business practice of
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providing discounts or special prices to those suffering from
loss or reduced employment, it would fail the test (and thus not
be considered a violation of the Act) because of the legitimate
business interest and of the significant consequences of
allowing this kind of benefit to be considered a violation.
In Long v. Valentino (1999) 216 Cal.App. 3d, 1287, the appellate
court even recognized occupational status as a protected class:
"[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.) The Ninth
Circuit has also recognized the reach of the Unruh Act in
McCalden v. California Library Ass'n (9th Cir. 1990) 955 F.2d
1214, 1221, where it noted that protected classes under the
Unruh Act have been broadly defined to include "students,
families with children, welfare recipients, and occupational
groups." And, more recently, in Sisemore v. Master Financial,
Inc. (2007) 151 Cal.App.4th 1386, the court concluded that a
family day care operator denied a mortgage on that basis stated
a viable cause of action for occupational status discrimination.
In fact, the courts have interpreted the categories or classes
enumerated in the Unruh Act to be "illustrative" rather than
"restrictive," and this is borne by the intent language adopted
by the Legislature in reorganizing and consolidating various
civil rights statutes in 2005 (AB 1400, Laird, Ch. 420, Stats.
2005).
This bill would clarify that a discount, benefit, or other
privilege or advantage given by a business to a consumer who has
suffered a loss of income due to loss or reduction of employment
or reduction of wages, is not arbitrary discrimination in
violation of the Unruh Act.
3. Relevant arguments
This bill is sponsored by the Consumer Attorneys of California
(CAOC). The CAOC believes clarifying the application of the
Unruh Civil Rights Act to legitimate business activities
identified in the media as the target of litigation is necessary
in order to preserve the integrity of the Act and to continue to
protect countless Californians from suffering true arbitrary
discrimination. "The Act provides that all persons are entitled
to equal treatment by business establishments regardless of
their 'sex, race, color, religion, ancestry, national origin,
disability, medical condition, marital status, or sexual
orientation.' Cal. Civ. Code Sec. 51. In its correct
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application, the Act has ensured that Californians do not suffer
arbitrary discrimination on the basis of the enumerated personal
characteristics in the Act, as well as some other judicially
expanded categories. The expansion of the act by the judiciary
has included only personal characteristics. Hessians Motorcycle
Club v. J.C. Flanagans, 86 Cal.App.4th 833, 836 (2001)."
The CAOC also contends that even if the type of discrimination
claim addressed by this bill were found to satisfy the Harris
test (see Comment 2 above), it is unlikely that it would be held
to be an "arbitrary class based generalization" as required
under Pizarro v. Lamb's Players Theatre (2006) 135 Cal.App.4th
1171, 1174. The sponsor however supports clarifying the law, to
address any misconceived belief of some that offering these
types of discounts or benefits are a violation of the Unruh
Civil Rights Act. "Businesses providing discounts to groups who
are suffering economically are not arbitrarily discriminating
against consumers. In contrast, these discounts apply across
the board to persons of all personal characteristics (race, sex,
color, religion, etc.) and 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 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."
In support of SB 367, the California Chamber of Commerce
states," [w]e believe it is imperative that these businesses are
protected from unwarranted lawsuits brought by lawyers
inappropriately seeking 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
because it would clarify retailers' ability to offer discounts
and specials (e.g., the "Furlough Friday" special discount or
special price) 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
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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."
Although not opposed to SB 367, the attorney who had written a
letter to Squaw Valley Ski Lift challenging the "Furlough
Friday" discounted tickets for state workers promotion,
suggested elimination of "arbitrary discrimination" in all types
of business-offered discounts, such as "Ladies' Night"
promotions, so that "Men's Night" or other group night or day
activities at discounted rates may also escape characterization
as arbitrary discrimination. It should be noted that a bona
fide business reason or interest could overcome a charge of
"arbitrary discrimination" against a business promotional
scheme.
4. Urgency measure
The bill was most recently amended to add an urgency clause,
making it effective immediately upon passage and the Governor's
signature. The rationale provided for the urgency mirrors the
arguments presented by the sponsor and the author of the bill,
i.e., that the economic condition of the state and the loss or
imminent loss of employment by tens of thousands of Californians
constitute the necessity to support businesses that are
providing discounts to those suffering from loss or reduction of
employment by clarifying such discounts are not in violation of
the Unruh Civil Rights Act.
Support : California Chamber of Commerce; California Retailers'
Association
Opposition : None Known
HISTORY
Source : Consumer Attorneys of California (CAOC)
Related Pending Legislation : None Known
Prior Legislation : None Known
Prior Vote :
SB 367 (Negrete-McLeod)
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Previous votes in the Senate not relevant
Assembly Judiciary (Ayes 10, Noes 0)
Assembly Floor (Ayes 78, Noes 0)
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