After Esther Kim began working for Konad, a company that sells and distributes nail art kits, Dong Whang, the CEO and sole shareholder, began a pattern of sexually harassing her.  Kim was in her early twenties, while Whang was nearly sixty years old.  He made frequent sexual comments to Kim, including asking Kim about sexual activities with her boyfriend and whether she used sex toys.  He stared at her breasts and legs on a daily basis, gave her long hugs, patted her buttocks, and asked her to sit in his lap.  Kim's co-worker testified that Whang often talked "about [Kim] and sex in the same breath," and referred to Kim as a slut.  Kim eventually found the environment so stressful that she wrote to Whang in 2010 and said that she would not be returning to work.  Whang fired her by telling her to "take her last paycheck and go and make a lot of love with her boyfriend."   

Kim filed suit against Konad and Whang alleging sexual harassment (quid pro quo and hostile work environment), retaliation in violation of the FEHA and wrongful termination in violation of public policy.  Konad and Whang (Defendants) included in their answer the affirmative defense that Kim failed to exhaust her administrative remedies as required by the FEHA.  Defendants did not file a demurrer, motion for summary judgment, or any dispositive motions.  They did not raise their affirmative defense of failure to exhaust administrative remedies at any point leading up to the bench trial.  At trial, defense counsel led Kim to admit that she had not produced any documents filed with a government agency that alleged sexual harassment.  After this testimony, Kim's attorney offered into evidence a document from the Department of Fair Housing and Employment (DFEH) to Kim entitled "Notice of Case Closure," which he described as the "right to sue notice that was obtained prior to filing this lawsuit."  

At the close of trial, the judge issued a proposed statement of decision in which he found in Kim's favor.  Defendants objected on the grounds that the court lacked jurisdiction because Kim failed to exhaust her administrative remedies.  The court entered judgment in Kim's favor and awarded her $60,000 in damages.  Defendants moved to set aside the judgment, again arguing that Kim failed to exhaust her administrative remedies.  In response, Kim submitted the verified administrative complaints she had filed against both Konad and Whang before she filed suit.  The court denied the motion to set aside the verdict, and Defendants appealed.  The Court of Appeal affirmed.

It is the employee's burden to prove that she timely exhausted her administrative remedies by filing a DFEH complaint and receiving a right-to-sue letter.  However, this issue is usually resolved before trial through dispositive motions and the law is unclear about what happens if the issue is ignored until after the FEHA claims have been submitted to the factfinder for a final decision.  Defendants argued that the trial court's decision was void because Kim did not introduce evidence of the verified DFEH complaints during trial, and therefore the trial court lacked subject matter jurisdiction to decide the case. 

The Court of Appeal rejected this argument.  It noted that courts have generally held that the administrative exhaustion requirement does not affect a court's subject matter jurisdiction, and a defendant waives the affirmative defense by failing to raise it in a timely manner.  Because Defendants did not request dismissal of the FEHA causes of action based on Kim's failure to exhaust administrative remedies before the case was submitted for decision, they waived the defense.  Further, even if a court cannot exercise jurisdiction over a FEHA case in which the plaintiff has not exhausted her administrative remedies, the Court held that in this case, the evidence demonstrated that Kim did in fact exhaust her administrative remedies.  

Note: 

Prior to bringing a lawsuit under the Fair Employment and Housing Act (FEHA), an individual must exhaust his or her administrative remedies with the Department of Fair Employment and Housing.  This usually means the individual must file a claim with the Department and receive a right to sue letter prior to filing a lawsuit.  An individual's failure to properly exhaust administrative remedies can provide a powerful defense for employers opposing discrimination or harassment claims, but such arguments must be made early in the life of a lawsuit.  Here, defense counsel did not address failure to exhaust administrative remedies until well after the case proceeded to trial, thus the Court had little trouble dismissing these arguments.  In any event, there was evidence that Kim did exhaust her administrative remedies as evidenced by the right to sue notice her attorney produced at trial. 

Kim v. Konad USA Distribution, Inc. (2014) 226 Cal.App.4th 1336 [172 Cal.Rptr.3d 686].