State Department of Health Services v. Superior Court (2003) 31 Cal. 4th 1026

Facts: State employee filed an action under Fair Employment and Housing Act (FEHA) against employer for sexual harassment by her supervisor. Employee reported the harassment to another supervisor. That supervisor conveyed the allegations to DHS's Office of Civil Rights, which investigated the allegations and concluded that there was sexual harassment.

Analysis: The court reached this conclusion not by adopting the agency principles; rather, the court analyzed the language and legislative history of the FEHA provision at issue. The Court contrasted the strict liability standard against the negligence standard the legislature adopted for harassment by non-supervisory co-workers. The Court confirmed that an employer is strictly liable under the FEHA for sexual harassment by a supervisor. However, strict liability doesn't mean absolute liability. Plaintiff's own conduct could limit the amount of damages recoverable or even bar recovery completely. The avoidable consequences doctrine (sometimes mislabeled as a duty to mitigate) prevents victims of wrong doing from recovering damages that the victim could have avoided by reasonable effort or expenditure.

Holding: Employer strictly liable for supervisor harassment by not for damages that Plaintiff could have avoided by reporting harassment.