Keenan v. Cox Communications et al, No. 3:2018cv00129 - Document 46 (S.D. Cal. 2019)

Court Description: ORDER Granting 33 Defendants' Motion for Summary Judgment. The Court grants Defendants' motion for summary judgment as to all claims. The Court directs the Clerk of Court to enter judgment accordingly and close the case. Signed by Judge Michael M. Anello on 7/22/2019. (rmc)

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Keenan v. Cox Communications et al Doc. 46 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 10 11 12 13 14 15 16 SOUTHERN DISTRICT OF CALIFORNIA Case No.: 18cv129-MMA (LL) LONNIE KEENAN, ORDER GRANTING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT Plaintiff, v. COX COMMUNICATIONS CALIFORNIA, LLC, et al., [Doc. No. 33] Defendants. 17 18 19 20 Plaintiff Lonnie Keenan (“Plaintiff”) brings this action against his former employer 21 Cox Communications California, LLC (“Cox”) and his former supervisor Daniel 22 Martinez (“Martinez”) (collectively “Defendants”), alleging violations of California’s 23 Labor Code, breach of contract, and wrongful termination. See Doc. No. 12. Defendants 24 move for summary judgment as to all claims. See Doc. No. 33. Plaintiff filed an 25 opposition, to which Defendants replied. See Doc. Nos. 37, 38, 40, 43. The Court found 26 the matter suitable for determination on the papers and without oral argument pursuant to 27 Civil Local Rule 7.1.d.1. See Doc. No. 39. For the reasons set forth below, the Court 28 GRANTS Defendants’ motion. -1- 18cv129-MMA (LL) Dockets.Justia.com 1 BACKGROUND1 2 This action arises out of events related to Plaintiff’s relocation from Florida to 3 California for purposes of employment as a Sales Account Executive (“SAE”) at Cox in 4 San Diego. Prior to his move to California, Plaintiff was employed as a sales 5 representative by Comcast in Florida. In May 2015, Evan Park (“Park”) contacted 6 Plaintiff about a potential management position at Cox. Park had supervised Plaintiff for 7 a period of years at Comcast prior to Park’s own move out West to take a management 8 position at Cox in San Diego. Plaintiff applied but was not selected for a management 9 position. 10 Based on Plaintiff’s continued interest, in August 2015, Park contacted Plaintiff 11 regarding another management opportunity at Cox. On August 31, 2015, Plaintiff 12 contacted Daniel Martinez, the Director for Enterprise Sales for Cox in San Diego, 13 regarding the opportunity. Plaintiff interviewed with Martinez via conference call but 14 was not selected for the position. Park then contacted Plaintiff regarding a possible 15 position at Cox on Park’s sales team. In September 2015, Plaintiff, Martinez, and Park 16 discussed via conference call the possibility of Plaintiff accepting an SAE position at 17 Cox. Plaintiff alleges that Martinez promised Plaintiff 20-25 “protected” accounts, to 18 which only Plaintiff could sell. Martinez denies making any such statement or promise. 19 Plaintiff claims that his understanding after speaking with Park and Martinez was that the 20 promised accounts would ensure Plaintiff’s ability to attain the necessary sales quota each 21 month and generate substantial commissions. 22 According to Park, he made the decision to hire Plaintiff as an SAE with 23 Martinez’s support. On or about September 18, 2015, Martinez sent Plaintiff the offer 24 letter and encouraged him to accept. The offer letter indicated that Plaintiff would earn a 25 base salary of $90,000 annually and guaranteed commission payments for the first six 26 27 28 1 These material facts are taken from parties’ separate statements and responses thereto, as well as the supporting declarations and exhibits. Where a material fact is in dispute, it will be so noted. Particular disputed material facts that are not recited in this section may be discussed infra. Facts that are immaterial for purposes of resolving the current motion are not included in this recitation. -2- 18cv129-MMA (LL) 1 months of his employment (considered a “ramp-up” period). The offer letter further 2 indicated Plaintiff’s eligibility “to participate in a commission plan, to be reviewed with 3 you at the start of your employment,” with details and documentation to be provided by 4 Plaintiff’s “new leader.” Def. Ex. 6. The offer letter also specified that Plaintiff’s 5 “employment with the Company will be ‘at will’” and subject to termination “at any 6 time, for any reason, with or without cause.” Id. Plaintiff accepted the position and 7 relocated to San Diego. 8 Plaintiff started his new job at Cox on or about October 12, 2015. Approximately 9 two weeks after his first day at the company, Plaintiff received a written copy of Cox’s 10 2015 Sales Compensation Plan. Plaintiff testified during his deposition that he recalls 11 receiving and reading the document. The Compensation Plan set forth the terms and 12 conditions of earning commissions on sales subsequent to Plaintiff’s six-month “ramp 13 up” period. This included a “decelerator” provision such that “commission calculations 14 will be accelerated or decelerated based on the Performance Modifier matrix.” Def. Ex. 9 15 at 73.2 Plaintiff alleges that Martinez failed to inform him of the decelerator provision 16 prior to Plaintiff accepting the offer of employment with Cox. Plaintiff also received and 17 signed Cox’s 2015 San Diego Rules of Engagement, which provided in pertinent part that 18 the “Sales Director will be the final arbiter of ownership of accounts and customers.” 19 Def. Ex. 11 at 317. 20 Sometime around the start of Plaintiff’s employment at Cox, Park provided 21 Plaintiff with a list of the 20-25 “protected” accounts previously assigned to Cox 22 employee, Adrian Callaghan. Park Depo. at 83.3 Both Plaintiff and Park understood that 23 these accounts would be assigned to Plaintiff going forward. In November 2015, 24 Plaintiff discovered that other sales representatives had sold to certain accounts on the list 25 despite their allegedly protected status. In early 2016, other sales representatives 26 2 27 Citations to Defendants’ documentary exhibits refer to the Bates numbering located at the bottom right-hand corner of each document. 28 3 Citations to deposition transcripts refer to the pagination assigned by the document’s creator. -3- 18cv129-MMA (LL) 1 2 continued to sell to the protected accounts. After the ramp-up period ended in April 2016, Plaintiff failed to meet Cox’s 3 required 100% quota attainment for twelve consecutive months. In September 2016, 4 Plaintiff was asked to review and sign Cox’s Standards of Performance. The document 5 outlined the company’s expectations of its sales representatives and the performance 6 review process for employees who failed to meet those expectations. In January 2017, 7 consistent with Cox’s Standards of Performance, Plaintiff was placed on a Performance 8 Improvement Plan (“PIP”). Two additional SAEs on Park’s team were also placed on 9 PIPs. Park presented Plaintiff with a Documented Verbal Warning stating that through 10 December 31, 2016, Plaintiff’s six-month rolling quota average was only 36% and failure 11 to improve would result in further corrective action. 12 In February 2017, Plaintiff received a Written Warning from Park stating that 13 Plaintiff’s six-month rolling quota average had decreased to 29%. Plaintiff received 14 another Written Warning from Park in March 2017 stating that his six-month rolling 15 quota average had increased to 31%. Cox management granted Plaintiff an “exception” 16 under his PIP because Plaintiff appeared to be taking the necessary steps to increase his 17 sales. Park Depo. at 178. The following month, Park presented Plaintiff with a Final 18 Written Warning stating that Plaintiff’s six-month rolling quota average had decreased to 19 27%. In May 2017, Cox management, including Martinez and Park, reviewed the 20 performance of employees on PIPs and determined that Plaintiff’s employment should be 21 terminated. On May 18, 2017, Plaintiff received notice that his employment was being 22 terminated effective immediately. 23 On December 15, 2017, Plaintiff commenced this action against Cox and Martinez. 24 See Doc. No. 1-2. Plaintiff’s First Amended Complaint is the operative pleading and sets 25 forth a cause of action against both Cox and Martinez under California Labor Code 26 section 970, which proscribes misrepresenting a job to induce a person’s relocation for 27 employment. See Doc. No. 12. Plaintiff brings additional claims against Cox pursuant to 28 California Labor Code section 2751, for failure to provide a signed written commission -4- 18cv129-MMA (LL) 1 agreement prior to his hire, and common law claims for breach of an implied-in-fact 2 contract, breach of the covenant of good faith and fair dealing, and wrongful termination 3 in violation of public policy. See id. Defendants move for summary judgment as to all 4 claims. See Doc. No. 33. 5 6 LEGAL STANDARD “A party may move for summary judgment, identifying each claim or defense – or 7 the part of each claim or defense – on which summary judgment is sought. The court 8 shall grant summary judgment if the movant shows that there is no genuine dispute as to 9 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. 10 P. 56(a). A fact is material if it could affect the outcome of the suit under applicable law. 11 See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). A dispute about a 12 material fact is genuine if there is sufficient evidence for a reasonable jury to return a 13 verdict for the non-moving party. Id. at 248. 14 The party seeking summary judgment bears the initial burden of establishing the 15 basis of its motion and of identifying the portions of the declarations, pleadings, and 16 discovery that demonstrate absence of a genuine issue of material fact. See Celotex Corp. 17 v. Catrett, 477 U.S. 317, 323 (1986). If the moving party does not bear the burden of 18 proof at trial, he may discharge his burden of showing no genuine issue of material fact 19 remains by demonstrating that “there is an absence of evidence to support the nonmoving 20 party’s case.” Id. at 325. The burden then shifts to the opposing party to provide 21 admissible evidence beyond the pleadings to show that summary judgment is not 22 appropriate. Id. at 324. The party opposing summary judgment cannot “rest upon the 23 mere allegations or denials of [its] pleading but must instead produce evidence that sets 24 forth specific facts showing that there is a genuine issue for trial.” Estate of Tucker v. 25 Interscope Records, 515 F.3d 1019, 1030 (9th Cir.), cert. denied, 555 U.S. 827 (2008) 26 (internal quotation marks omitted). 27 28 “In judging evidence at the summary judgment stage, the court does not make credibility determinations or weigh conflicting evidence. Rather, it draws all inferences -5- 18cv129-MMA (LL) 1 in the light most favorable to the nonmoving party.” Soremekun v. Thrifty Payless, Inc., 2 509 F.3d 978, 984 (9th Cir. 2007). 3 4 5 EVIDENTIARY OBJECTIONS As an initial matter, the parties object to various items of evidence. The Court considers each party’s objections in turn. 6 1. Plaintiff’s Objections 7 Plaintiff objects to paragraphs 4, 5, and 9 of the declaration submitted by Martinez 8 in support of Defendants’ motion for summary judgment. Plaintiff also objects to 9 Defendants’ Exhibit 4, a May 12, 2015 email from Park to Mark Salkeld, a Cox 10 employee, and Martinez, as well as Defendants’ Exhibit 5, a June 11, 2015 email from 11 Plaintiff to Martinez. With respect to Martinez’s declaration, Plaintiff asserts that 12 Martinez references evidence in the identified paragraphs not previously produced during 13 discovery, including the emails to which Plaintiff objects. Plaintiff argues that these 14 portions of Martinez’s declaration and the emails should be excluded. Defendants 15 respond that Martinez’s declaration properly elaborates upon subjects raised during his 16 deposition and neither the portions of his declaration nor the emails should be excluded. 17 Although not cited, the Court assumes that Plaintiff requests to exclude this 18 evidence pursuant to Federal Rule of Civil Procedure 37(c)(1), which provides in 19 pertinent part: 20 21 22 23 If a party fails to provide information or identify a witness as Required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless. 24 Fed. R. Civ. P. 37(c)(1). Upon due consideration and review of Martinez’s deposition 25 testimony, the Court SUSTAINS Plaintiff’s objections to paragraph 4 of the Martinez 26 declaration and Defendants’ Exhibit 4. The Court OVERRULES Plaintiff’s objections 27 to paragraphs 5 and 9 of Martinez’s declaration as well as the objection to Defendants’ 28 Exhibit 5. -6- 18cv129-MMA (LL) 1 2. Defendants’ Objections 2 Defendants object to Plaintiff’s Exhibits 4-14, various emails composed by 3 Plaintiff, Park, Martinez, and Lorraine Valencia, and Plaintiff’s Exhibit 15, an excerpt 4 from Cox’s 2015 National Rules of Engagement. Defendants argue that the evidence is 5 not properly authenticated and contains inadmissible hearsay. Defendants’ hearsay 6 objection is not well-taken. The emails are generally admissible as non-hearsay or 7 pursuant to a hearsay exception. See Fed. R. Evid. 801(d)(2), 803. The excerpt is a 8 business record. See Fed. R. Evid. 803(6). Furthermore, the evidence could be presented 9 in an admissible form at trial and thus may be considered by the Court in the summary 10 judgment context. See Fraser v. Goodale, 342 F.3d 1032, 1037 (9th Cir. 2003). 11 With respect to authentication, documents authenticated through personal 12 knowledge must be “attached to an affidavit that meets the requirements of [Federal Rule 13 of Civil Procedure 56(c)] and the affiant must be a person through whom the exhibits 14 could be admitted into evidence.” Orr v. Bank of Am., NT & SA, 285 F.3d 764, 774 (9th 15 Cir. 2002) (quotation omitted). Plaintiff authenticates the emails and the excerpt through 16 the declaration of counsel that the items are true and correct copies of emails produced by 17 Defendants during discovery. See Griffith Decl. ¶ 5. Defendants have not challenged the 18 content of the emails or the accuracy of the email addresses of the senders. Accordingly, 19 the Court finds the declaration of counsel sufficient to authenticate the emails for the 20 present purpose. See Orr, 285 F.3d at 777 n.20 (citing Maljack Prods., Inc. v. 21 GoodTimes Home Video Corp., 81 F.3d 881, 889 n.12 (9th Cir. 1996) (documents 22 produced by a party in discovery were deemed authentic when offered by the party- 23 opponent)). 24 Moreover, Plaintiff’s Exhibit 12 is identical to Defendants’ Exhibit 14, and 25 Plaintiff’s Exhibit 15 is included in Defendants’ Exhibit 12, which were both properly 26 authenticated by the defense. See Woods Decl. ¶ 10 (citing Park Depo.). The Ninth 27 Circuit has held that “when a document has been authenticated by a party, the 28 requirement of authenticity is satisfied as to that document with regards to all parties.” -7- 18cv129-MMA (LL) 1 Orr, 285 F.3d at 776. As such, the Court OVERRULES Defendants’ objections to 2 Plaintiff’s Exhibits 4-15. Defendants also object to Plaintiff’s Exhibit 16, a letter 3 prepared by Kristin Spoon. Plaintiff retained Ms. Spoon to opine on Plaintiff’s economic 4 losses in this case. Because the Court does not rely upon this exhibit in ruling on 5 Defendants’ motion, the objection is moot. 6 7 8 9 10 11 12 13 14 15 DISCUSSION 1. California Labor Code § 970 Plaintiff brings a cause of action against Cox and Martinez for violation of California Labor Code section 970, which provides in relevant part: No person, or agent or officer thereof, directly or indirectly, shall influence, persuade, or engage any person to change from one place to another in this State or from any place outside to any place within the State, or from any place within the State to any place outside, for the purpose of working in any branch of labor, through or by means of knowingly false representations, whether spoken, written, or advertised in printed form, concerning either: The kind, character, or existence of such work; [or] The length of time such work will last, or the compensation therefor . . . 16 17 Cal. Lab. Code § 970(a)-(b). A violation of section 970 is punishable as a criminal 18 misdemeanor. See id. § 971. In addition, Labor Code section 972 provides that “any 19 person, or agent or officer thereof who violates any provision of section 970 is liable to 20 the party aggrieved, in a civil action, for double damages resulting from such 21 misrepresentations.” Id. § 972. 22 Defendants move for summary judgment as to Plaintiff’s claim, arguing that the 23 cause of action is time-barred and thus fails as a matter of law. Defendants urge the 24 application of a one-year statute of limitations, whereas Plaintiff argues that a three-year 25 statute of limitations applies. The parties also dispute the date upon which Plaintiff’s 26 cause of action accrued. If the claim is not barred, Defendants argue that summary 27 judgment is appropriate on the merits. Plaintiff asserts that disputed factual issues 28 regarding Martinez’s alleged misrepresentations precludes judgment as a matter of law. -8- 18cv129-MMA (LL) 1 2 a) Statute of Limitations California provides a one-year statute of limitations for “[a]n action upon a statute 3 for a penalty or forfeiture,” Cal. Civ. Proc. Code § 340(a), and a three-year statute of 4 limitations for “[a]n action upon a liability created by statute, other than a penalty or 5 forfeiture” or “[a]n action for relief on the ground of fraud or mistake.” Id. § 338(a),(d). 6 At issue are both the nature of the civil remedy section 972 provides, as well as the nature 7 of the cause of action under section 970, which together determine the applicable statute 8 of limitations. A survey of the relevant case law reveals that courts have failed to reach a 9 consensus on either issue. 10 Plaintiff contends that the three-year limitations period applies, relying primarily 11 on the district court’s determination in Berdux v. Project Time & Cost, Inc., that “section 12 970 is not a ‘penalty’ for the purposes of determining the relevant statute of limitations” 13 and “therefore [it would] be most appropriate to apply California’s three-year statute of 14 limitations to Berdux’s section 970 claim.” 669 F. Supp. 2d 1094, 1105 (N.D. Cal. 15 2009). The Berdux court focused on the nature of the remedy provided by Labor Code 16 section 972, found that it was not a penalty, and applied a three-year statute of limitations 17 period pursuant to Civil Procedure Code section 338(a), which applies to any “action 18 upon a liability created by statute, other than a penalty or forfeiture.” Id. at 1104 (citing 19 Cal. Civ. Proc. Code § 338(a)). In addition to relying upon the reasoning of Berdux, 20 Plaintiff cites the three-year statute of limitations set forth in Civil Procedure Code 21 section 338(d), which governs any “action for relief on the ground of fraud or mistake.” 22 Cal. Civ. Proc. Code § 338(d). In doing so, Plaintiff focuses on the nature of the cause of 23 action. Plaintiff argues that his Labor Code claim sounds in fraud and it would be 24 inconsistent to apply the shorter statute of limitations set forth in Civil Procedure Code 25 section 340. 26 While it is not obligated to follow state appellate court opinions, the Court notes 27 that California’s courts of appeal generally regard section 970 claims as sounding in 28 fraud. See, e.g., Fittante v. Palm Springs Motors, Inc., 105 Cal. App. 4th 708, 716 (2003) -9- 18cv129-MMA (LL) 1 (referring to section 970 claim as a rule “against fraud and abuse by unscrupulous 2 employers”); Finch v. Brenda Raceway Corp., 22 Cal. App. 4th 547, 554 (1994) (holding 3 that a “violation of section 970 constitutes an intentional misrepresentation”). If a Labor 4 Code section 970 claim sounds in fraud, then Plaintiff’s argument regarding the 5 applicability of the statute of limitations in Civil Procedure Code section 338(d) appears 6 to gain purchase. 7 Defendants dispute the application of section 338(d) to Plaintiff’s claim, focusing 8 on the nature of the remedy provided by Labor Code section 972. Defendants argue that 9 “the statutory scheme established in [Labor Code] Sections 970-972 exists specifically to 10 provide for damages over and above traditional fraud damages in the form of a penalty of 11 ‘double damages’ for certain specified misrepresentations.” Doc. No. 38-1 at 5 12 (emphasis in original).4 Defendants cite to Fenity v. CBS/CTS, Inc., in which the district 13 court expressly declined to adopt Berdux’s rationale and found that “Plaintiff’s decision 14 to sue under § 970 to obtain damages is an ‘action upon a statute for a penalty,’ and 15 confined to a one year statute of limitations.” No. CV 18-1415 SJO, 2018 WL 6164765, 16 at *5 (C.D. Cal. Apr. 16, 2018) (quoting Cal. Civ. Proc. Code § 340(a)). Defendants also 17 rely on the Ninth Circuit’s statement in Aguilera v. Pirelli Armstrong Tire Corp., cited by 18 the court in Fenity, that “statutory claim[s] . . . stemming from § 970 are governed by the 19 one year statute of limitations found in California Code of Civil Procedure § 340.” 223 20 F.3d 1010, 1018 (9th Cir. 2000); Fenity, 2018 WL 6164765, at *4 (citing Aguilera). 21 Plaintiff acknowledges Aguilera but notes that the application of the one-year 22 statute of limitations to claims under Labor Code section 970 was not a disputed issue in 23 that case. The circuit court “assume[d]” that the district court below had properly applied 24 Civil Procedure Code section 340, noting that “the one-year statute of limitations has not 25 been challenged in this appeal.” Aguilera, 223 F.3d at 1018. The lack of analysis 26 notwithstanding, Aguilera appears to be the only binding caselaw directly on point, and 27 28 4 Unless otherwise indicated, see supra, citations to electronically-filed documents refer to the pagination assigned by the CM/ECF system. -10- 18cv129-MMA (LL) 1 2 the court clearly applied the one-year statute of limitations set forth in section 340. Ultimately, the Court agrees with Defendants that the one-year statute of 3 limitations set forth in Civil Procedure Code section 340(a) applies to Plaintiff’s cause of 4 action. Labor Code section 970 does not provide for, or create any substantive right to, 5 civil damages. Labor Code section 972 provides the remedy for a section 970 violation 6 and it does so in the form of a penalty. The California appellate courts have explained 7 that “[g]enerally, section 340, subdivision (a) applies if a civil penalty is mandatory.” 8 Shamsian v. Atl. Richfield Co., 107 Cal. App. 4th 967, 978 (2003) (internal citation 9 omitted). The double damages provision set forth in Labor Code section 972 is 10 indisputably mandatory. See Cal. Lab. Code § 972 (“any person . . . who violates any 11 provision of section 970 is liable . . . for double damages.”) (emphasis added); see also 12 Prudential Home Mortg. Co. v. Superior Court, 66 Cal. App. 4th 1236, 1242 (1998) 13 (“Case law has consistently applied the one-year limitations period to statutes that 14 provide for recovery of actual damages and a mandatory additional penalty.”). “In 15 addition, ‘the settled rule in California is that statutes which provide for recovery of 16 damages additional to actual losses incurred, such as double or treble damages, are 17 considered penal in nature [citations], and thus governed by the one-year period of 18 limitations stated in section 340, subdivision [(a)].’” Shamsian, 107 Cal. App. 4th at 978 19 (quoting G.H.I.I. v. MTS, Inc., 147 Cal. App. 3d 256, 277 (1983)). 20 With respect to the nature of the cause of action, even if Labor Code section 970 21 sounds in common law fraud, it is a separate statutory creation that applies to a specific 22 type of misrepresentation that the California legislature determined to be particularly 23 odious and therefore worthy of a specific penalty. See Mercuro v. Superior Court, 96 24 Cal. App. 4th 167, 180 (2002) (“Labor Code section 970 also has a public purpose: to 25 protect the community from the harm inflicted when a fraudulently induced employment 26 ceases and the former employee is left in the community without roots or resources and 27 becomes a charge on the community.”). To give section 970 teeth, the California 28 legislature promulgated section 972 and its double damages provision. This goes beyond -11- 18cv129-MMA (LL) 1 the actual damages available for a fraud claim and is necessarily punitive in nature. See, 2 e.g., Hendrickson v. Ogden Aviation Food Servs., No. C-94-4463 MHP, 1996 U.S. Dist. 3 LEXIS 2115, 1996 WL 40194, at *2 n.1 (N.D. Cal. Jan. 8, 1996) (“California Labor 4 Code [§] 972, which contains the civil penalties for a violation of [§] 970, provides for 5 double damages, precluding punitive damages.”) (emphasis added); George v. Kasaine, 6 No. CV 14-02863-AB (MRWx), 2015 U.S. Dist. LEXIS 188128, at *26 (C.D. Cal. May 7 5, 2015) (referring to double damages under California Labor Code § 972 as “a penal 8 damage”). 9 In sum, Plaintiff did not bring a common law fraud action against Defendants. 10 Rather, he elected to pursue “an action upon a statute for a penalty.” Cal. Civ. Proc. 11 Code 340(a) (emphasis added). Recovery on Plaintiff’s section 970 claim would 12 constitute a penalty. Accordingly, a one-year statute of limitations applies. 13 14 b) Accrual of Plaintiff’s Section 970 Claim The date upon which Plaintiff’s section 970 claim accrued determines whether the 15 claim is barred by the one-year statute of limitations. See Cal. Civ. Proc. Code § 312 16 (“Civil actions, without exception, can only be commenced within the periods prescribed 17 in this title, after the cause of action shall have accrued . . . .”). Defendants argue that 18 Plaintiff’s claim accrued, at the latest, during the first quarter of 2016, by which time 19 Plaintiff knew about the decelerator provision in the commission plan, knew the 20 Callaghan accounts were being poached by his sales colleagues, and should have known 21 that Martinez was not going to assign the protected accounts to him. 22 In response, Plaintiff cites to Civil Procedure Code section 338(d), which provides 23 that a fraud “cause of action . . . is not deemed to have accrued until the discovery, by the 24 aggrieved party, of the facts constituting the fraud or mistake.” Id § 338(d). Plaintiff 25 asserts that the date he discovered the facts constituting fraud are in dispute and must be 26 determined by a jury. Plaintiff also proffers that the facts will demonstrate that Martinez 27 “perpetuated his fraud by not refuting his misrepresentations about protected accounts,” 28 up until and including the date Cox terminated Plaintiff’s employment. Doc. No. 37 at 1, -12- 18cv129-MMA (LL) 1 11. Thus, Plaintiff seems to suggest that because the misrepresentations continued 2 throughout his tenure at Cox, his cause of action did not accrue until Cox terminated his 3 employment. 4 “As a general rule, under California law the default accrual rule is the ‘last element 5 rule,’ where a claim accrues ‘when [it] is complete with all of its elements’ – those 6 elements being wrongdoing, harm, and causation.” Ryan v. Microsoft Corp., 147 F. 7 Supp. 3d 868, 880 (N.D. Cal. 2015) (quoting Pooshs v. Philip Morris USA, Inc., 51 Cal. 8 4th 788, 797 (2011)). Consistent with this general common law rule, the Ninth Circuit 9 has reasoned that a claim under Labor Code section 970 “is established when a 10 misrepresentation is knowingly made with the intent to induce reliance, and justifiable 11 reliance results, causing plaintiff damage.’” Funk v. Sperry Corp., 842 F.2d 1129, 1133 12 (9th Cir. 1988) (citing Glovatorium, Inc. v. NCR Corp., 684 F.2d 658, 660 (9th Cir. 13 1982)). 14 The general accrual rule is qualified under certain circumstances by the discovery 15 rule. “Under California’s discovery rule, a cause of action does not accrue, for purposes 16 of the statute of limitations, until the plaintiff discovers, or has reason to discover, that he 17 has been wrongfully injured.” Hendrix v. Novartis Pharm. Corp., 975 F. Supp. 2d 1100, 18 1106 (C.D. Cal. 2013) (citing Jolly v. Eli Lilly & Co., 44 Cal.3d 1103, 1110-11) (1988)). 19 “[I]n order to employ the discovery rule to delay accrual of a cause of action, a potential 20 plaintiff who suspects that an injury has been wrongfully caused must conduct a 21 reasonable investigation of all potential causes of that injury. If such an investigation 22 would have disclosed a factual basis for a cause of action, the statute of limitations begins 23 to run on that cause of action when the investigation would have brought such 24 information to light.” Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 808-09 (2005). 25 When intentional misrepresentations are an essential element, the discovery rule 26 may delay the cause of action’s accrual until “the plaintiff learned that the representation 27 was false.” Brandon G. v. Gray, 111 Cal. App. 4th 29, 35 (2003) (citing Magpali v. 28 Farmers Group, Inc., 48 Cal. App. 4th 471, 484 (1996)). Such was the case in Aguilera, -13- 18cv129-MMA (LL) 1 supra. The Ninth Circuit analyzed the accrual of the plaintiffs’ Labor Code section 970 2 claim and held “the appellants’ discharge date in September 1995 was the relevant 3 accrual date for statute of limitations purposes.” Aguilera, 223 F.3d at 1018. The nature 4 of the alleged misrepresentation in Aguilera involved the permanency of the plaintiffs’ 5 employment and thus implicated Labor Code section 970’s prohibition on inducing an 6 individual to relocate based on a false statement regarding “‘the length of time such work 7 will last.’” Id. (quoting Cal. Lab. Code § 970). The plaintiffs did not learn of, nor have 8 reason to suspect, the alleged falsity of the representation until the defendant terminated 9 their employment approximately one year later due to declining earnings. As such, the 10 11 plaintiffs’ cause of action did not accrue until that time. Here, any attempt to link the termination of Plaintiff’s employment with the 12 accrual of his section 970 cause of action fails. Plaintiff’s claim does not arise out of a 13 promise of permanent or long term employment. Nor could it based on Plaintiff’s status 14 as an “at will” employee. Instead, Plaintiff’s claim rests on purported misrepresentations 15 made by Martinez regarding the nature of Cox’s commission plan (and the related failure 16 to disclose the inclusion of a decelerator provision), and the assignment to Plaintiff of 17 protected accounts (and Plaintiff’s related ability to meet his sales quota each month and 18 earn the commission-enhanced salary allegedly promised). 19 Plaintiff argues that when he “‘discovered’ or ‘suspected’ the fraud is a triable 20 issue of material fact.” Doc. No. 37 at 13. However, Plaintiff’s own allegations, 21 admissions, and undisputed facts belie this assertion. According to Plaintiff, it is 22 undisputed that he “informed Martinez in person that his protected accounts were being 23 sold into within the first two months of employment.” Doc. No. 37-1 at 6 ¶ 25. And 24 Plaintiff does not dispute that “[a]pproximately two weeks after his first day of work, 25 Plaintiff received a copy of the commission plan and the 2015 Sales Compensation Plan 26 Document.” Doc. No. 43 at 18 ¶ 32. As such, it is undisputed that Plaintiff knew within 27 the first several months of employment that the terms of the commission plan differed 28 from his expectations, and Martinez was not following through on assigning Callaghan’s -14- 18cv129-MMA (LL) 1 protected accounts to Plaintiff. 2 Plaintiff argues that “[i]t could take a reasonable employee months if not over a 3 year of working to understand that Defendants never intended to provide the working 4 conditions promised” to him. Doc. No. 37 at 13. Plaintiff misstates the appropriate 5 standard. “A plaintiff need not be aware of the specific ‘facts’ necessary to establish the 6 claim; that is a process contemplated by pretrial discovery. Once the plaintiff has a 7 suspicion of wrongdoing, and therefore an incentive to sue, she must decide whether to 8 file suit or sit on her rights. So long as a suspicion exists, it is clear that the plaintiff must 9 go find the facts; she cannot wait for the facts to find her.” Jolly, 44 Cal. 3d at 1111. In 10 other words, the law does not wait for a plaintiff to be certain of the righteousness of his 11 claim. The salient point was not when Plaintiff ascertained the falsity of Martinez’s 12 representations but rather when Plaintiff first suspected, or had reason to suspect, that the 13 representations were untrue. At that point, Plaintiff had a choice – file suit for a violation 14 of section 970, or “sit” on his statutory rights and let the situation continue to unfold. 15 Plaintiff chose the latter. 16 Plaintiff further asserts that Martinez “perpetuated his fraud,” and therefore 17 Plaintiff believed up until Cox terminated his employment that he might still be assigned 18 the protected accounts and able to attain the required monthly sales quota. Doc. No. 37 at 19 11. However, Plaintiff’s “continuing course of conduct” theory “runs contrary to the 20 fundamental rule that the statute [of limitations] begins to run from the time conduct 21 becomes actionable.” Spellis v. Lawn, 200 Cal. App. 3d 1075, 1080 (1988). The parties 22 do not dispute that Plaintiff received and reviewed Cox’s commission plan in October 23 2015 and learned at that time of the decelerator provision. Upon receipt and review of 24 the commission plan, Plaintiff had reason to suspect that Martinez had misrepresented the 25 plan to him prior to his acceptance of employment at Cox. The parties also do not 26 dispute that as early as November 2015, Plaintiff discovered that other Cox employees 27 had begun to poach the accounts previously assigned to Adrian Callaghan. The parties 28 do not dispute that Park brought the issue to Martinez’s attention shortly thereafter and -15- 18cv129-MMA (LL) 1 Martinez did nothing. Plaintiff then had reason to suspect that Martinez had 2 misrepresented the assignment of the protected accounts to Plaintiff. “[E]very element of 3 the cause of action was in place,” as Plaintiff “had actual knowledge” that the 4 commission plan and assignment of protected accounts were “otherwise than he had been 5 informed.” Magpali, 48 Cal. App. 4th at 484. No reasonable jury would find otherwise. 6 In sum, Plaintiff’s section 970 claim accrued as early as October 2015 but no later 7 than the first few months of 2016. Plaintiff did not file suit until December 2017. 8 Accordingly, Plaintiff’s section 970 claim is barred by the one-year statute of limitations 9 applicable to actions “upon a statute for a penalty.” Cal. Civ. Proc. Code 340(a). 10 11 12 13 14 15 16 17 18 19 2. California Labor Code § 2751 Plaintiff brings a second statutory cause of action against Cox for violation of California Labor Code section 2751, which provides in relevant part: Whenever an employer enters into a contract of employment with an employee for services to be rendered within this state and the contemplated method of payment of the employee involves commissions, the contract shall be in writing and shall set forth the method by which the commissions shall be computed and paid. The employer shall give a signed copy of the contract to every employee who is a party thereto and shall obtain a signed receipt for the contract from each employee. 20 21 Cal. Lab. Code § 2751(a)-(b). Plaintiff claims that “Cox did not furnish a[] [written 22 commission] agreement pursuant to section 2751 at the outset of employment, or 23 ever obtain signed receipt of such, as required, denying Keenan the opportunity to 24 make informed employment decisions and ultimately leading to his termination.” 25 Doc. No. 12 ¶ 24. 26 Cox moves for summary judgment on this claim, arguing that the statute does not 27 require an employer to provide a prospective employee with a written commission 28 agreement, and there is no dispute that Cox in fact provided Plaintiff with a written -16- 18cv129-MMA (LL) 1 commission plan after he was hired. Cox also argues that it had a policy and practice of 2 providing signed copies and retaining receipts, and Plaintiff is unable to prove that Cox 3 failed to follow its established procedure in his case. Cox moves for summary judgment 4 on the additional ground that the California Labor Code no longer provides a civil private 5 right of action for violations of section 2751.5 6 Prior to 2012, a violation of section 2751 resulted in a penalty pursuant to section 7 2752, which provided for treble damages in a civil action. See Cal. Lab. Code, former § 8 2752, added by Stats. 1963, ch. 1088, § 2, p. 2549, repealed by Stats. 2011, ch. 556, § 3, 9 No. 9 West’s Cal. Legis. Service, p. 5179. In 2011, the California legislature repealed 10 section 2752 of the Labor Code. See id. Courts have disagreed on the effect of the 11 repeal. Compare Belderol v. Glob. Tel*Link, No. CV 13-05440 SJO (MANx), 2013 U.S. 12 Dist. LEXIS 203022, at *13 (C.D. Cal. Oct. 15, 2013) (“a claim under Section 2751 can 13 be brought even without Section 2752”), with Beard v. IBM, No. C 18-06783 WHA, 14 2019 U.S. Dist. LEXIS 60302, at *15 (N.D. Cal. Apr. 7, 2019) (holding that subsequent 15 to the repeal of section 2752 “the Labor Code no longer provides a private right of action 16 for a violation of Section 2751.”). 17 The Court need look no further than the Labor Code itself to resolve the issue. 18 Because section 2751 does not contain its own civil penalty provision, and section 2752 19 has been repealed, a plaintiff may seek to recover the “default” penalties set forth in 20 section 2699(f) in a representative capacity pursuant to the Private Attorneys General Act 21 (“PAGA”) of 2004, Cal. Lab. Code §§ 2698-2699.6. See, e.g., Piccarreto v. Presstek, 22 LLC, No. CV 16-1862 DMG (JCx), 2017 U.S. Dist. LEXIS 137255, at *16 (C.D. Cal. 23 Aug. 23, 2017) (awarding PAGA’s default penalties based on violation of section 2751). 24 As such, any monetary remedy for violation of section 2751 is available only in the form 25 of penalties under PAGA. In this case, Plaintiff has not brought a PAGA claim against 26 27 28 5 Although the Court is generally not inclined to consider new arguments raised for the first time in a party’s reply brief, see Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007), it may do so “when the issue presented is purely one of law.” Bolker v. Commissioner, 760 F.2d 1039, 1042 (9th Cir. 1985). -17- 18cv129-MMA (LL) 1 Cox.6 Summary judgment is therefore appropriate. 2 3. Breach of Contract 3 Plaintiff brings a breach of contract claim against Cox based on a purported 4 implied-in-fact contract regarding the terms, conditions, and length of his employment. 5 See Doc. No. 12 at 10 ¶¶ 33-35. Cox moves for summary judgment, arguing that 6 Plaintiff’s claim fails as a matter of law based on the existence of an express at-will 7 agreement between the parties. 8 9 “[T]he issue of the existence of an implied-in-fact contract . . . may appropriately be resolved as a matter of law given the undisputed facts of a particular case.” Eisenberg 10 v. Alameda Newspapers, Inc., 74 Cal. App. 4th 1359, 1386-87 (1999). In this case, it is 11 undisputed that Plaintiff accepted a written offer of at-will employment which detailed 12 his salary, signing bonus, initial commission payments, and eligibility to participate in a 13 commission plan. See Def. Exs. 6, 7. It is similarly undisputed that Plaintiff 14 acknowledged receiving Cox’s written Sales Compensation Plan and Rules of 15 Engagement shortly after beginning his term of employment. See Def. Exs. 9, 11. 16 Together, these documents set forth the express terms and conditions of Plaintiff’s 17 employment. “There cannot be a valid express contract and an implied contract, each 18 embracing the same subject, but requiring different results.” Shapiro v. Wells Fargo 19 Realty Advisors, 152 Cal. App. 3d 467, 482 (1984). 20 Martinez’s alleged misrepresentations are legally insufficient to create an implied- 21 in-fact contract at odds with the express terms and conditions of Plaintiff’s employment. 22 “Employers frequently boast of good benefits, competitive salaries, excellent working 23 conditions and the like. To anoint such puffing language with contractual import would 24 open the door to a plethora of specious litigation and constitute a severe and unwarranted 25 intrusion on the ability of business enterprises to manage internal affairs.” Ladas v. Cal. 26 State Auto. Ass’n, 19 Cal. App. 4th 761, 772 (1993). As such, Plaintiff “has failed to 27 28 6 Moreover, any such claim would be barred by the applicable one-year statute of limitations. See Cal. Lab. Code § 340(a). -18- 18cv129-MMA (LL) 1 demonstrate there [i]s any triable issue of material fact to support his claim of an implied- 2 in-fact contract.” Eisenberg, 74 Cal. App. 4th at 1390. 3 Plaintiff’s breach of contract claim fails as a matter of law, as does his claim that 4 Cox breached an implied covenant of good faith and fair dealing arising out of any such 5 contract. See, e.g., Gould v. Md. Sound Indus., Inc., 31 Cal. App. 4th 1137, 1152 (1995) 6 (“Because Gould has failed to state a cause of action for breach of an implied-in-fact 7 agreement not to terminate him except for good cause, it necessarily follows he cannot 8 state a cause of action for breach of the implied covenant of good faith and fair dealing 9 on the ground that he was terminated without good cause.”). Accordingly, summary 10 11 12 judgment in favor of Cox is appropriate as to both claims. 4. Wrongful Termination Finally, Plaintiff brings a tortious wrongful termination cause of action against 13 Cox. California law recognizes a claim for wrongful termination in violation of a public 14 policy reflected in a statute or constitutional provision. See Tameny v. Atl. Richfield Co., 15 27 Cal. 3d 167, 172 (1980). Here, Plaintiff alleges that he was discharged in violation of 16 the public policies expressed in California Labor Code sections 970 and 2751, as well as 17 the policy against discrimination codified in California Government Code section 12940. 18 Cox moves for summary judgment, arguing that Plaintiff’s Labor Code claims fail as a 19 matter of law and therefore do not establish the predicate public policy violations for a 20 wrongful termination claim. Cox argues that Plaintiff’s claim fails on the basis of the 21 public policy set forth in Government Code section 12940 because it had a legitimate 22 reason for terminating Plaintiff’s employment, and Plaintiff cannot demonstrate that the 23 reason was pretextual. 24 “An employer may not discharge an at will employee for a reason that violates 25 fundamental public policy.” Stevenson v. Sup. Ct. of Los Angeles Cty., 16 Cal. 4th 880, 26 887 (1997). In order to establish a prima facie case of wrongful termination in violation 27 of public policy, a plaintiff must demonstrate: (1) the existence of an employer-employee 28 relationship; (2) a sufficient violation of public policy; and (3) damages. See Holmes v. -19- 18cv129-MMA (LL) 1 2 Gen. Dynamics Corp., 17 Cal. App. 4th 1418, 1426 n.8 (1993). Labor Code section 970 states a fundamental public policy. See Finch, 22 Cal. 3 App. 4th at 554. The Court assumes without deciding that Labor Code section 2751 also 4 sets forth a fundamental public policy. However, Plaintiff does not claim that he was 5 discharged by Cox in violation of the policies embodied by these statutes. Plaintiff 6 argues that he was fraudulently induced to accept a position at Cox and move to 7 California in violation of section 970. Thus, even if Plaintiff’s claim was not barred by 8 the applicable statute of limitations, it would not provide the necessary predicate for a 9 wrongful termination claim. Likewise, even if Plaintiff’s section 2751 claim did not fail 10 as a matter of law, Plaintiff does not claim that Cox terminated his employment in 11 violation of the policy against failing to provide an employee with a signed commission 12 agreement. 13 Government Code section 12940 also states a fundamental public policy against 14 discrimination in the workplace. Plaintiff alleges that Cox terminated his employment on 15 the basis of age, sexual orientation, and/or ethnicity, in violation of public policy. At the 16 summary judgment stage, courts analyze a plaintiff’s discrimination claim using a 17 modified version of the three-step burden-shifting test established in McDonnell Douglas 18 Corp. v. Green, 411 U.S. 792 (1973). Accordingly, “the employer, as the moving party, 19 has the initial burden to present admissible evidence showing either that one or more 20 elements of plaintiff’s prima facie case is lacking or that the adverse employment action 21 was based upon legitimate, nondiscriminatory factors.” Hicks v. KNTV Television, Inc., 22 160 Cal. App. 4th 994, 1003 (2008). 23 Here, Cox has offered a legitimate nondiscriminatory reason for terminating 24 Plaintiff’s employment. It is undisputed that Plaintiff never met his required sales quota. 25 Cox placed Plaintiff on a PIP, granted him extra leeway in the form of an “exception,” 26 and terminated his employment after he failed to achieve the necessary quota to avoid 27 discharge. An employee’s failure to meet performance standards and a company’s loss of 28 confidence in an employee constitute legitimate reasons for dismissal. See Trop v. Sony -20- 18cv129-MMA (LL) 1 Pictures Entertainment Inc., 129 Cal. App. 4th 1133, 1149 (2005); Arteaga v. Brink’s, 2 Inc., 163 Cal. App. 4th 327, 352 (2008). As such, the burden shifts to Plaintiff to 3 “produce ‘specific’ and ‘substantial’ facts to create a triable issue of pretext.” Godwin v. 4 Hunt Wesson, Inc., 150 F.3d 1217, 1222 (9th Cir. 1998). 5 “A plaintiff may raise a triable issue of pretext through comparative evidence that 6 the employer treated . . . similarly situated employees more favorably than the plaintiff.” 7 Earl v. Nielsen Media Research, Inc., 658 F.3d 1108, 1113 (9th Cir. 2011). Here, 8 Plaintiff proffers no such evidence. Plaintiff asserts that certain employees received more 9 favorable treatment but does not demonstrate that those employees were similarly 10 situated. For example, he complains that one employee of a different ethnicity had a 11 lower sales quota. However, Evan Park testified that the employee in question was not 12 similarly situated to Plaintiff. The employee worked on international accounts and had 13 been given a lower quota on that basis. Plaintiff points to Park’s testimony that Plaintiff 14 was held to different sales metrics than other employees, and that Martinez treated 15 Plaintiff “differently,” as creating a genuine issue for trial. However, Park had nothing to 16 say regarding discrimination against Plaintiff based on his age, sexual orientation, or 17 ethnicity. And the record is otherwise devoid of any evidence to support such a claim. 18 In the absence of any evidence to demonstrate a triable issue of fact regarding 19 discrimination on an impermissible basis, Plaintiff’s claim of wrongful termination in 20 violation of the public policy set forth in Government Code section 12940 fails as a 21 matter of law. Accordingly, Cox is entitled to summary judgment in its favor. 22 CONCLUSION 23 Based on the foregoing, the Court GRANTS Defendants’ motion for summary 24 judgment as to all claims. The Court DIRECTS the Clerk of Court to enter judgment 25 accordingly and close the case. 26 IT IS SO ORDERED. DATE: 7/22/19 27 28 _______________________________________ HON. MICHAEL M. ANELLO United States District Judge -21- 18cv129-MMA (LL)

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