Mobley v. Workday, Inc.

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
DEREK L. MOBLEY, et al.,
Plaintiffs,
v.
WORKDAY, INC.,
Defendant.
Case No. 23-cv-00770-RFL
NOTICE OF TENTATIVE OPINION
Re: Dkt. No. 301
A hearing on Workday’s Motion to Dismiss is set for June 15, 2026 at 1:30 p.m. via
Zoom videoconference. Having reviewed the parties’ briefing, the Court would find it useful to
have oral argument as to its tentative opinion that the FEHA applies to the alleged discriminatory
conduct at issue, for the reasons further explained below. In the interest of efficiency, the
hearing will be limited to this issue.
Workday argues that its liability as an agent under the FEHA turns on the liability of its
customers: Essentially, if its employer-customer would be outside of the FEHA’s reach with
respect to a particular employment decision, then Workday is too. (Dkt. No. 301 at 181 (“It is
undisputed that out-of-state plaintiffs could not sue out-of-state employers under the FEHA for
employment decisions made outside of California.”).) However, Workday’s argument appears at
odds with the FEHA’s concept of agency liability, as described by the California Supreme Court
in Raines v. U.S. Healthworks Medical Group, 534 P.3d 40 (Cal. 2023). As Raines explains,
Workday is not subject to derivative liability under the FEHA based on its employer-customer’s
liability; instead, it is directly liable for its “own engagement in FEHA-regulated activities on the
1 Citations to page numbers refer to ECF pagination.
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employer’s behalf.” Id. at 53. As the California Supreme Court explained, its “rule holding that
the business-entity agents of an employer can be held liable for FEHA violations neither
delegates the employer’s FEHA obligations nor abrogates the employer’s FEHA liability. . . . it
[] increases the number of defendants that might share liability for the plaintiff’s damages.” Id.
As the Raines court explains, holding business-entity agents like Workday liable for their
own discriminatory conduct within the scope of the FEHA is consistent with public policy and
the “remedial purposes” of the FEHA. Id. at 52 (citing Cal. Gov’t Code § 12993(a)). First, it
may well be that the employer has no knowledge of the agent’s discriminatory practices.
Second, business-entity agents will frequently provide their services to many employers, opening
the door to systemic industry-wide discriminatory practices. Therefore, it makes sense to impose
liability under California law on the “entity that is most directly responsible for the FEHA
violation,” and “that is in the best position to implement industry-wide policies that will avoid
FEHA violations.” Id.
Workday argues that if its operations in California alone subject it to liability under the
FEHA, this would amount to an impermissibly exterritorial application, converting the California
statute “into a national employment discrimination statute.” (Dkt. No. 313 at 11.) In support,
Workday cites Campbell v. Arco Marine, Inc., where the California Court of Appeals declined to
apply the FEHA to alleged sexual harassment of a non-California resident that had occurred on
the high seas, because there was no evidence that anyone in California had participated in or
ratified the alleged misconduct towards the non-California resident. 50 Cal. Rptr. 2d 626, 631–
32 (Cal. Ct. App. 1996). The Campbell court explained that “the FEHA imposes no residency
requirement on either the employer or the person aggrieved and no limitation based on where the
conduct occurred” but “[a]t some point, a line must be drawn between those situations where the
law applies and those where it does not.” Id. at 632. The Court then held that the FEHA “should
not be construed to apply to non-residents employed outside the state when the tortious conduct
did not occur in California.” Id. at 633. Those principles appear to confirm the FEHA’s
applicability to the alleged conduct here. Plaintiffs allege that Workday designs, develops, and
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operates tools from California that allegedly evaluate, rank, and reject job applications in a
discriminatory fashion on behalf of employers nationwide. That appears to be sufficient to
plausibly allege that Workday engages in tortious discriminatory conduct in California to carry
out duties that it has been delegated by its employer-customers within the meaning of Campbell.
See, e.g., Sims v. Worldpac Inc., No. 12-cv-05275-JSW, 2013 WL 663277, at *3–4 (N.D. Cal.
Feb. 22, 2013) (out-of-state resident stated a claim under the FEHA where decision to terminate
him was allegedly made by an individual working in California).
Workday also argues that the Court should reason by analogy to the choice-of-law
analysis in products liability cases. See Chen v. Los Angeles Truck Centers, LLC, 255 Cal. Rptr.
3d 559 (Ct. App. 2019). Those cases, however, do not shed light on the key issue of the FEHA’s
text, structure, or intent, in interpreting the statute’s reach. The FEHA’s stated purpose is to
“provide effective remedies that will both prevent and deter unlawful employment practices and
redress the adverse effects of those practices on aggrieved persons.” Cal. Gov’t Code § 12920.5
(emphasis added). That reflects an intent to stop wrongful conduct by employers and their
agents, and not just to provide compensation to aggrieved workers.
At the hearing, each side will have an opportunity to address the tentative, with Workday
having the first opportunity to respond. The parties shall not file written responses to this notice.
IT IS SO ORDERED.
Dated: May 27, 2026
RITA F. LIN
United States District Judge
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