THOMAS M. WHITE, Plaintiff and Respondent, v. ULTRAMAR, INC., Defendant and Appellant, 21 Cal. 4th 563

Opinion CHIN, J. We granted review to resolve a conflict in the Courts of Appeal over how to define the statutory term “managing agent” for determining corporate punitive damage liability under Civil Code

section 3294, subdivision (b). Some courts, including the Court of Appeal in this case, broadly define the term to include supervisory employees who have limited decision-making authority, but possess the ability to hire and fire company employees. (See, e.g., Stephens v. Coldwell Banker Commercial Group, Inc. (1988) 199 Cal.App.3d 1394, 1404 [245 Cal.Rptr. 606] (Stephens).) Others limit the term’s application to those employees who exercise substantial discretion in their decisionmaking so that their decisions ultimatély determine corporate policy. (See, e.g., Kelly-Zurian v.

Wohl Shoe Co. (1994) 22 Cal.App.4th 397, 421-422 [27 Cal.Rptr.2d 457] (Kelly-Zurian).) We disagree with the Court of Appeal’s conclusion that the mere ability to hire and fire employees renders a supervisory employee a managing agent under

section 3294, subdivision (b). Instead, we conclude the Legislature intended the term “managing agent” to include only those corporate employees who exercise substantial independent authority and judgment in their corporate decisionmaking so that their decisions ultimately determine corporate policy. The scope of a corporate employee’s discretion and authority under our test is therefore a question of fact for decision on a case-by-case basis. As noted, we disagree with the Court of Appeal to the extent its decision conflicts with our construction of “managing agent” under

section 3294, subdivision (b). Nonetheless, we affirm its judgment in plaintiff’s favor after concluding that Lorraine Salla, defendant’s zone manager and the employee who fired plaintiff, was a managing agent under the statute. A. Facts Plaintiff Thomas M. White (plaintiff) worked in a convenience store owned by Ultramar, Inc. (Ultramar). He was promoted to assistant manager in November 1992. The store manager, Russ Gossman, who hired plaintiff, told him employees could ignore the company’s written drink policy that they could have free fountain sodas and coffee, but only if they used their own cups.

The policy required employees to pay for their drinks if they used company cups. The store manager who replaced Gossman, Larry Asemka, also told plaintiff that he did not follow the store’s written drink policy. Asemka was later fired. He asked plaintiff to testify at his unemployment benefits hearing, and plaintiff agreed to do so. The hearing was in the morning; plaintiff’s shift at the store did not begin until the afternoon. On the morning of the hearing, plaintiff went to the store to pick up another employee, Ernest Fimbres, who had also agreed to testify at the hearing.

Plaintiff, who was not on duty at the time, entered the store and drew a soda from the soda fountain; Fimbres also took a drink from the fountain. Neither plaintiff nor Fimbres paid for the sodas even though they used company cups in violation of the company’s written drink policy. Plaintiff testified at trial that the new store manager, Thomas McKinney, saw him take the soda, that he asked plaintiff to begin his shift earlier in the day, that plaintiff agreed to do so, and that he said nothing else as plaintiff and Fimbres left the store without paying for their drinks.

McKinney testified that he told plaintiff and Fimbres they were supposed to pay for the drinks. He called Salla and asked her permission to fire them when they did not. According to McKinney, Salla told him she would consult with the company’s human resources department before taking any action against the employees. Plaintiff, Salla, and Fimbres testified at Asemka’s unemployment hearing. When plaintiff went to work after the hearing, McKinney told him he was suspended and ordered him to wait outside the store until Salla arrived.

According to plaintiff, when Salla arrived, she told him he “kn[e]w better ' than to do something like that against [her].” Plaintiff told her she could not fire him for testifying at Asemka’s hearing; she replied she was firing him for stealing soda. Fimbres was also fired. Salla testified at trial that she fired plaintiff for refusing to pay for a drink. The store was equipped with a videotaping system designed to operate 24 hours a day.

On the day Salla fired plaintiff, however, there was a gap of several minutes in the tape; the missing tape covered the time period when plaintiff and Fimbres got drinks in the store and McKinney, the manager, purportedly told them they had to pay. Plaintiff sued Ultramar, claiming, inter alia,. that he was wrongfully terminated in retaliation for testifying at the unemployment hearing, a violation of company policy and public policy under Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167 [164 Cal.Rptr. 839, 610 P.2d 1330, 9 A.L.R.4th 314] (Tameny).

The jury awarded him $42,000 in compensatory damages and $300,000 in punitive damages. As to the punitive damages question, the jury was instructed under BAJI No. 14.74, which provides that “[a]n employee acts in a managerial capacity where the degree of discretion permitted the employee in making decisions is such that the employee’s decisions will ultimately determine the business policy of the employer.” The jury awarded plaintiff punitive damages after finding “by clear and convincing evidence that [Ultramar] was guilty of malice, oppression or fraud” for firing plaintiff.

However, the jury was not asked to specify which Ultramar employee it found to be a managing agent. After trial, the judge granted plaintiff’s motion for prevailing-party attorney fees under Labor Code

section 218.5 and awarded him approximately $70,000 in addition to the compensatory and punitive damages awards. Ultramar appealed. The Court of Appeal reversed the attorney fee award, but otherwise affirmed the judgment in plaintiff’s favor on his Tameny claim. The court also upheld the punitive damages award against Ultramar on the ground that Salla was a managing agent under

section 3294, subdivision (b), because she was the supervisor who ultimately fired him. We granted Ultramar’s petition for review, and limited our review to the punitive damages question and the construction of “managing agent” under

section 3294, subdivision (b). B. Background Before its 1980 amendment,

section 3294 provided: “In an action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, express or implied, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” (Stats. 1905, ch. 463, § 1, p. 621.) The statute was originally enacted in 1872, with minor amendments in 1901 and 1905. Courts interpreted

section 3294 to mean that a California corporation was liable for punitive damages only if the corporation itself, acting through those who managed its general affairs, engaged in the requisite oppression, fraud, or malice. Although a corporation could be liable for compensatory damages for an employee’s tort under the respondeat superior doctrine, the corporation was not responsible for punitive damages where it neither personally directed nor ratified the wrongful act.

As stated in an early case, “The entire basis of the doctrine of vindictive [punitive] damages is that the person, himself, who is sued has been guilty of recklessness or wickedness which amounts to a criminality that should be punished for the good of society, and as a warning to the individual; but to award such damages against the master for the criminality of the servant is to punish a man for that of which he is not guilty.” (Warner v. Southern Pacific Co. (1896) 113 Cal. 105, 112 [45 P. 187], original italics; see also Lowe v. Yolo County etc.

Water Co. (1910) 157 Cal. 503, 511-512 [108 P. 297] [affirming punitive damages award against water company for withholding irrigation water, after noting the company’s president and general manager, who acted on behalf of the board of directors, jointly made the wrongful and oppressive decision]; Hartman v. Shell Oil Co. (1977) 68 Cal.App.3d 240, 248-250 [137 Cal.Rptr. 244] [upholding punitive damage award after finding the wrong was authorized at the level of responsible corporate management]; Gordon v. Industrial Acc.

Com. (1926) 199 Cal. 420, 426-427 [249 P. 849, 58 A.L.R. 1374] [noting that statutes governing corporations define the term “managing agent” as one who has discretionary powers of direction and control over corporate business]; Towt v.

Pope (1959) 168 Cal.App.2d 520, 528-529 [336 P.2d 276] [in workers’ compensation liability action, distinguishing “executive officials, presidents, vice-presidents, and managing agents” of corporation from superintendents, foremen, and “those immediately in control and management of the particular employee, his work and his place of employment”].) In 1979, this court looked to the Restatement Second of Torts

section 909 to determine when a corporate insurer might be liable for punitive damages based on its agent’s wrongful denial of policy benefits. (Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 822-823 [169 Cal.Rptr. 691, 620 P.2d 141] (Egan)] see Hale v. Farmers Ins. Exch. (1974) 42 Cal.App.3d 681 [117 Cal.Rptr. 146], disapproved on other grounds in Egan, supra, 24 Cal.3d at p. 822, fn. 5.) The tentative draft of the Restatement provided that punitive damages were allowed if “(

a) the principal authorized the doing and the manner of the act, or [ft (

b) the agent was unfit and the principal was reckless in employing him, or [ft (

c) the agent was employed in a managerial capacity and was acting in the scope of employment, or [ft (

d) the principal or a managerial agent of the principal ratified or approved the act.” (Rest.2d Torts (Tent. Draft No. 19, Mar. 30, 1973) § 909, p. 85.) (The current version of the Restatement Second of Torts

section 909 differs primarily in its substitution of “principal or a managerial agent” wherever “principal” appeared in the section’s tentative draft.) Comment b to

section 909 of the Restatement Second of Torts stated the rationale behind imposing punitive damages liability on employers when their employees engaged in wrongful conduct: “The rule stated in this

Section results from the reasons for awarding punitive damages, which make it improper ordinarily to award punitive damages against one who himself is personally innocent and therefore liable only vicariously. It is, however, within the general spirit of the rule to make liable an employer who has recklessly employed or retained a servant or employee who was known to be vicious, if the harm resulted from that characteristic. . . .

Nor is it unjust that a person on whose account another has acted should be responsible for an outrageous act for which he otherwise would not be if, with full knowledge of the act and the way in which it was done, he ratifies it, or, in cases in which he would be liable for the act but not subject to punitive damages, he expresses approval of it. . . .

In these cases, punitive damages are granted primarily because of the principal’s own wrongful conduct, [ft Although there has been no fault on the part of a corporation or other employer, if a person acting in a managerial capacity either does an outrageous act or approves of the act by a subordinate, the imposition of punitive damages upon the employer serves as a deterrent to the employment of unfit persons for important positions.” (Rest.2d Torts, § 909, com. b, p. 468.) Egan involved a bad faith claim against an insurer for breach of the covenant of good faith and fair dealing based on the failure of two employees to investigate adequately a claim before denying insurance coverage.

The court concluded that, under the Restatement, an insurer’s liability for punitive damages should not turn on any official title, but on whether either of its two employees acted in a “managerial capacity,” depending on the “degree of discretion the employees possess in making decisions that will ultimately determine corporate policy.” (Egan, supra, 24 Cal.3d at pp. 822-823.) Egan observed that a corporate defendant should not be able to shield itself “ ‘from liability by giving an employee a nonmanagerial title and relegating to him crucial policy decisions.’ ” (Id. at p. 823.) In concluding the insurer’s employees worked in a managerial capacity, Egan emphasized that the employees exercised substantial discretionary authority over decisions that resulted in an “ad hoc formulation of policy,” and their actions could be imputed to the employer. (Id. at p. 823.) Following Egan, supra, 24 Cal.3d 809, we revisited the punitive damages question in a case involving an engineer’s claim that the managers of a large international corporation treated him maliciously. (Agarwal v.

Johnson (1979) 25 Cal.3d 932, 952 [160 Cal.Rptr. 141, 603 P.2d 58] (Agarwal).) Again, we applied Egan's test to conclude that the managers who fired the plaintiff were vested with a degree of discretion over decisions that would ultimately determine corporate policy. This discretion, we concluded, was sufficient to support imposing punitive damages against the corporation under former

section 3294. (Agarwal, supra, 25 Cal.3d at p. 952.) C.

Section 3294, Subdivision (b), and Legislative Intent After Egan, supra, 24 Cal.3d 809, and Agarwal, supra, 25 Cal.3d 932, the Legislature drafted Senate Bill No. 1989 (1979-1980 Reg. Sess.) to codify and refine further the requirements for employer punitive damages liability. The new amendment added subdivision (

b) to

section 3294. (Stats. 1980, ch. 1242, § 1, p. 4217.) Following subsequent minor amendments, the statute now states in pertinent part: “An employer shall not be liable for [punitive] damages pursuant to subdivision (a), based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice.

With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.” (§ 3294, subd. (b), italics added.) The drafters’ goals were to avoid imposing punitive damages on employers who were merely negligent or reckless and to distinguish ordinary respondeat superior liability from corporate liability for punitive damages. (See Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128, 1150-1151 [74 Cal.Rptr.2d 510]; see also College Hospital, Inc. v.

Superior Court (1994) 8 Cal.4th 704, 712-713 [34 Cal.Rptr.2d 898, 882 P.2d 894] [noting that, after 1979, the Legislature limited circumstances under which an employer could be held liable for punitive damages].)

Section 3294 is no longer silent on who may be responsible for imputing punitive damages to a corporate employer. For corporate punitive damages liability,

section 3294, subdivision (b), requires that the wrongful act giving rise to the exemplary damages be committed by an “officer, director, or managing agent.” Under general settled canons of statutory construction, we ascertain the Legislature’s intent in order to effectuate the law’s purpose. (Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1386 [241 Cal.Rptr. 67, 743 P.2d 1323].) We must look to the statute’s words and give them their “usual and ordinary meaning.” (DaFonte v. Up-Right, Inc. (1992) 2 Cal.4th 593, 601 [7 Cal.Rptr.2d 238, 828 P.2d 140].) “The statute’s plain meaning controls the court’s

interpretation unless its words are ambiguous. If the plain language of a statute is unambiguous, no court need, or should, go beyond that pure expression of legislative intent.” (Kobzoff v. Los Angeles County Harbor/UCLA Medical Center (1998) 19 Cal.4th 851, 861 [80 Cal.Rptr.2d 803, 968 P.2d 514].) Because

section 3294, subdivision (b), does not specifically define the term “managing agent,” we turn to expressions of legislative intent to construe it in the statute’s relative context. In addition to these general principles, a specific rule of statutory

interpretation is especially applicable to our task. That is, when the Legislature amends a statute, we presume it was fully aware of the prior judicial construction. (See Palos Verdes Faculty Assn. v. Palos Verdes Peninsula Unified Sch. Dist. (1978) 21 Cal.3d 650, 659 [147 Cal.Rptr. 359, 580 P.2d 1155] (Palos Verdes).) Using these interpretive rules to guide us, we believe that in amending

section 3294, the Legislature intended (like Egan, supra, 24 Cal.3d at p. 823) to limit corporate punitive damage liability to those employees who exercise substantial independent authority and judgment over decisions that ultimately determine corporate policy. Our view finds support in a principle which “seeks to ascertain common characteristics among things of the same kind, class, or nature when they are cataloged in legislative enactments.” (Harris v.

Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1159 [278 Cal.Rptr. 614, 805 P.2d 873] [describing the ejusdem generis principle].) The principle requires that when we interpret general statutory terms following the listing of specific classes of persons or things, we must construe the terms as applying to persons or things of the same general nature or class as those listed.

The rule “ ' “is based on the obvious reason that if the [writer] had intended the general words to be used in their unrestricted sense, [he or she] would not have mentioned the particular things or classes of things which would in that event become mere surplusage.” ’ ” (Id. at p. 1160.) Using the doctrine to aid our

interpretation of “managing agent,” we note that

section 3294, subdivision (b), placed that term next to the terms “officer” and “director,” intending that a managing agent be more than a mere supervisory employee. The managing agent must be someone who exercises substantial discretionary authority over decisions that ultimately determine corporate policy. Thus, by selecting the term “managing agent,” and placing it in the same category as “officer” and “director,” the Legislature intended to limit the class of employees whose exercise of discretion could result in a corporate employer’s liability for punitive damages. Our

interpretation of the Legislature’s intent in adopting

section 3294, subdivision (b), is shared by Kelly-Zurian, supra, 22 Cal.App.4th 397. Kelly-Zurian held that supervisory employees are not managing agents under

section 3294, subdivision (b), unless they in fact exercise substantial discretion in their decisionmaking capability. (Kelly-Zurian, supra, 22 Cal.App.4th at p. 421.) In Kelly-Zurian, a sexual harassment action that resulted in a plaintiff’s verdict for compensatory damages, the Court of Appeal held that the plaintiff was not entitled to punitive damages because evidence was lacking that her supervisor was a managing agent under

section 3294, subdivision (b), even though he was a company administrator who had direct authority over her employment responsibilities. (Kelly-Zurian, supra, 22 Cal.App.4th at pp. 421-422.) Kelly-Zurian based its decision on the plaintiff’s failure to present evidence showing her supervisor was engaged in policymaking, whereas the defendant corporation presented substantial evidence to the contrary. (Kelly-Zurian, supra, 22 Cal.App.4th at p. 422.) For its reasoning, Kelly-Zurian relied on Egan’s observation that “ ‘[t]he determination whether employees act in a managerial capacity [i.e., are managing agents] does not necessarily hinge on their “level” in the corporate hierarchy.

Rather, the critical inquiry is the degree of discretion the employees possess in making decisions that will ultimately determine corporate policy.’ (Egan[,] supra, 24 Cal.3d at pp. 822-823.)” (Kelly-Zurian, supra, 22 Cal.App.4th at p. 421.) Kelly-Zurian specifically observed that the evidence showed the supervisor “had immediate and direct control over [the plaintiff] with the responsibility for supervising her performance.

However, the fact [the plaintiff] reported to [her supervisor] and that he had the authority to terminate her merely reflected] [he] was [her] supervisor, not that he was a managing agent.” (Id. at pp. 421-422, original italics.) The court emphasized that the supervisor had no authority to establish or change the company’s business policies. That authority rested in the parent company in another state. (Id. at p. 422.) The court also considered that the main office was in charge of business operations; it set business policies and guidelines and performed employee reviews.

Moreover, the supervisor could not set the plaintiff’s salary or approve a raise for her without the main office’s authorization. (Ibid.) All of the factors considered in Kelly-Zurian were part of the managing agent equation, although not an exclusive list. They were important in determining whether the supervisor was a managing agent whose conduct could justify awarding punitive damages against his employer.

The Court of Appeal rejected Kelly-Zurian’s approach to the “managing agent” question, erroneously concluding that “Egan expressly rejected a narrow construction of the term ‘managing agent’ for purposes of determining liability for punitive damages.” Instead, the Court of Appeal followed the more recent Stephens decision (Stephens, supra, 199 Cal.App.3d 1394). Stephens concluded that a district supervisor of a national property management firm was a managing agent within the meaning of

section 3294, subdivision (b), because he “had immediate and direct control over the decision to demote plaintiff, and he was directly responsible for evaluating plaintiff’s performance.” (Stephens, supra, 199 Cal.App.3d at p. 1404.) In rejecting Kelly-Zurian’s reasoning, and defining managing agent to include essentially all supervisory employees who possess the ability to hire and fire workers, the Court of Appeal concluded that Salla was a managing agent for

section 3294 purposes'because she “had supervisory control over [plaintiff’s] employment and had the most immediate control over the decision to fire him.” In so doing, the Court of Appeal implicitly held that the language of

section 3294, subdivision (b), is broad enough to render all corporate agents potentially responsible for punitive damage liability. Of note, however, is the fact that the court specifically did not address whether Salla exercised substantial discretionary authority over decisions that ultimately determine corporate policy. The Court of Appeal’s overly broad

interpretation of the term “managing agent” effectively abrogates the statute’s “officer, director, or managing agent” requirement. As amicus curiae Beverly Enterprises-Califomia, Inc., appearing on Ultramar’s behalf, explains, in the overwhelming majority of employment cases, the wrongdoer, by definition, had supervisory authority over the plaintiff.

A rule defining managing agent as any supervisor who can hire or fire employees, but who does not have substantial authority over decisions that ultimately determine corporate policy, effectively allows punitive damage liability without proof of anything more than simple tort liability, which we have long recognized is insufficient. (Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 922 [148 Cal.Rptr. 389, 582 P.2d 980] (Neal); Taylor v.

Superior Court (1979) 24 Cal.3d 890, 894 [157 Cal.Rptr. 693, 598 P.2d 854] [something more than mere commission of a tort is always required for punitive damage liability].) If we equate mere supervisory status with managing agent status, we will create a rule where corporate employers are liable for punitive damages in most employment cases. Such a rule would ignore Egan’s sound reasoning, defeat the Legislature’s intent to discourage corporate acts of oppression, fraud, or malice under

section 3294, subdivision (b), and end our emphasis on the limited role and deterrent purpose of punitive damages awards: “to punish wrongdoers and thereby deter the commission of wrongful acts.” (Neal, supra, 21 Cal.3d at p. 928, fn. 13; see also Adams v. Murakami (1991) 54 Cal.3d 105, 110 [284 Cal.Rptr. 318, 813 P.2d 1348] [“[T]he quintessence of punitive damages is to deter future misconduct by the defendant . . . .”].) It might also discourage employers from making good faith efforts to enforce policies that forbid discrimination or retaliation. (See Kolstad v.

American Dental Assn., supra, 527 U.S. at pp. 539-540 [119 S.Ct. at pp. 2126-2127] [employer may not be liable for managerial agents’ discriminatory employment decisions that are contrary to employer’s good faith efforts to comply with title VII of Civil Rights Act of 1964].) Other Court of Appeal cases have also rejected a broad

interpretation of the managing agent term. Like Kelly-Zurian, supra, 22 Cal.App.4th at page 421, these cases have interpreted

section 3294, subdivision (b), and Egan, supra, 24 Cal.3d at pages 822-823, to permit imposition of punitive damages on an employer who has vested the offending employee with substantial discretionary authority over decisions that ultimately determine corporate policy. (See, e.g., Hobbs v. Bateman Eichler, Hill Richards, Inc. (1985) 164 Cal.App.3d 174, 193 [210 Cal.Rptr. 387] [substantial evidence that office manager “possessed that broad degree of discretion in decision making which determined [the employer’s] corporate policy”]; Siva v.

General Tire & Rubber Co. (1983) 146 Cal.App.3d 152, 159 [194 Cal.Rptr. 51] [no punitive damages when evidence did not support claim that management employees had discretion to exceed corporation’s written standards for repairs].) In addition, the Ninth Circuit Court of Appeals supports the

interpretation we adopt. (See, e.g., Glovatorium, Inc. v. NCR Corp. (9th Cir. 1982) 684 F.2d 658, 661 [holding that “[t]he key inquiry in the determination of whether an employee is a managing agent is ‘the degree of discretion the employees possess in making decisions that will ultimately determine corporate policy’ ”].) The legislative history of

section 3294, subdivision (b), is also consistent with our construction of “managing agent” and our view that the Legislature intended to limit application of

section 3294 to employees who in fact exercise substantial authority over decisions that ultimately determine corporate policy. The bill amending

section 3294 was revised several times before the Legislature settled on its final version. (Stats. 1980, ch. 1242, § 1, p. 4217.) As amended by the Senate, the bill provided that “. . . the advance knowledge, ratification, or act of oppression, fraud, or malice must be on the part of a senior executive officer or officers of the corporation in order for it to be liable for [punitive] damages.” (Sen. Amend, to Sen. Bill No. 1989 (1979-1980 Reg.

Sess.) May 6, 1980.) The Legislature also inserted the term “conscious disregard” in place of the Restatement’s “reckless,” so that an employer could not be found liable merely for recklessly failing to research a potential employee’s background. (See Conf. Amend, to Sen. Bill No. 1989 (1979-1980 Reg.

Sess.) Aug. 31, 1980 (Sen.), Aug. 27, 1980 (Assem.); Rest.2d Torts, § 909, p. 467.) The Assembly amended the bill, changing the phrase “senior executive officer or officers” to “agent . . . employed in a managerial capacity,” potentially allowing a plaintiff to impute punitive damages to the corporation if the corporate employee “was employed in a managerial capacity” or “[t]he principal or a managerial agent of the principal ratified or approved the act.” (Assem. Amend, to Sen. Bill. No. 1989 (1979-1980 Reg.

Sess.) July 2, 1980.) But the Legislature rejected the Assembly’s attempt to return to the Restatement language. Before the Legislature enacted Senate Bill No. 1989 in late August 1980, a joint conference committee amended the bill to substitute “officer, director, or managing agent” for “agent. . . employed in a managerial capacity.” (Conf. Amend, to Sen. Bill No. 1989 (1979-1980 Reg. Sess.), supra.) We therefore conclude that in amending

section 3294, subdivision (b), the Legislature intended that principal liability for punitive damages not depend on employees’ managerial level, but on the extent to which they exercise substantial discretionary authority over decisions that ultimately determine corporate policy. Thus, supervisors who have broad discretionary powers and exercise substantial discretionary authority in the corporation could be managing agents.

Conversely, supervisors who have no discretionary authority over decisions that ultimately determine corporate policy would not be considered managing agents even though they may have the ability to hire or fire other employees. In order to demonstrate that an employee is a true managing agent under

section 3294, subdivision (b), a plaintiff seeking punitive damages would have to show that the employee exercised substantial discretionary authority over significant aspects of a corporation’s business. D. Was Salla a “Managing Agent"? Although the Court of Appeal did not review her job functions in detail, it concluded that Salla, the zone manager who fired plaintiff, was his supervisor, and was therefore a managing agent under

section 3294, subdivision (b). Under our construction of the term, however, and contrary to the Court of Appeal, Salla’s supervision of plaintiff and her ability to fire him alone were insufficient to make her a managing agent. Nonetheless, viewing all the facts in favor of the trial court judgment, we conclude that Salla was a managing agent as we construe the term. As the zone manager for Ultramar, Salla was responsible for managing eight stores, including two stores in the San Diego area, and at least sixty-five employees.

The individual store managers reported to her, and Salla reported to department heads in the corporation’s retail management department. The supervision of eight retail stores and sixty-five employees is a significant aspect of Ultramar’s business. The testimony of Salla’s superiors establishes that they delegated most, if not all, of the responsibility for running these stores to her. The fact that Salla spoke with other employees and consulted the human resources department before firing plaintiff does not detract from her admitted ability to act independently of those sources.

In sum, Salla exercised substantial discretionary authority over vital aspects of Ultramar’s business that included managing numerous stores on a daily basis and making significant decisions affecting both store and company policy. In firing White for testifying at an unemployment hearing, Salla exercised substantial discretionary authority over decisions that ultimately determined corporate policy in a most crucial aspect of Ultramar’s business. E. Conclusion Salla was a managing agent under

section 3294, subdivision (b), whose conduct could lead to imposing punitive damages on Ultramar. For this reason alone, we affirm the Court of Appeal judgment. George, C. J., Kennard, J., Baxter, J., Werdegar, J., and Brown, J., concurred. A11 statutory references are to the Civil Code unless otherwise noted.

Section 3294 allows a plaintiff to seek punitive damages (as exemplary damages) “for the breach of an obligation not arising from contract” when the plaintiff can show by “clear and convincing evidence” that a defendant “has been guilty of oppression, fraud, or malice.” (§ 3294, subd. (a).) In 1980, the Legislature added subdivision (

b) to

section 3294, to add a special qualification for employer liability for those damages. Subdivision (

b) states, in relevant part, that an employer shall not be liable for punitive damages based on an employee’s acts unless “the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice.” The statute includes an additional qualification for corporate employers, who may not be liable for punitive damages unless “the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice [is] on the part of an officer, director, or managing agent of the corporation.” (§ 3294, subd. (b).) ltramar included a copy of its “Employment Policies and Standards” in an appendix to its Court of Appeal opening brief.

This document specifically informs all employees that the corporation “will not tolerate discriminatory, unequal or improper treatment of others.” The company’s “policy against discrimination and harassment” also forbids employees from discriminating against other employees “in any form,” and “in both employment, action and in every day personal interactions.” We could find no direct reference to unemployment hearings in the manual itself.

Moreover, Ultramar does not argue, and the record does not show, that Salla acted in violation of a specific written policy forbidding retaliation against employees under the circumstances here. We note, however, that Ultramar admitted that it was company policy to contest their terminated employees’ rights to collect unemployment compensation.

Although the issue is not presented here, and we do not address it or offer our view on its merits, in future cases, if a company has a written policy that specifically forbids retaliation against employees who testify at unemployment hearings, it may operate to limit corporate liability for punitive damages, as long as the employer implements the written policy in good faith. (See Kolstad v.

American Dental Assn. (1999) 527 U.S. 526, 541-543 [119 S.Ct. 2118, 2127-2128, 144 L.Ed.2d 494] [existence of written policy forbidding discrimination under title VII of the Civil Rights Act of 1964 (42 U.S.C. § 2000e et seq.) may operate as a bar to punitive damage liability].) On May 26, 1999, we granted Ultramar’s request that we take judicial notice of certain materials from the legislative history of

section 3294, subdivision (b), including committee reports and individual legislators’ (including co-authors’) comments from the Assembly and Senate committee bill files. We disapprove Stephens, supra, 199 Cal.App.3d at page 1404, to the extent it conflicts with our construction of the “managing agent” term. We also note that the Court of Appeal relied on language in Agarwal, supra, 25 Cal.3d at page 952, that arguably implied mere supervisors could be managing agents as long as they have the ability to hire and fire employees. To the extent language in Agarwal could be so construed, we disapprove it.