Judge: Daniel M. Crowley, Case: 22SMCV00023, Date: 2023-05-02 Tentative Ruling
Case Number: 22SMCV00023 Hearing Date: May 2, 2023 Dept: 207
Background
Plaintiff and Cross-Defendant Thrive Psychology Group, Inc.
(“Thrive”) brings this action against Linda Baggett (“Baggett”) stemming from
Baggett’s prior employment as a psychologist with Thrive, a therapy and
counseling practice focusing on women’s wellness. Thrive alleges Baggett
breached the terms of her employment agreement and improperly solicited its
clients to depart Thrive and instead seek treatment with Baggett at a private
practice she planned to start after resigning from Thrive. Baggett has filed a
Cross-Complaint against Thrive, alleging causes of action for wrongful
termination, unfair competition, defamation, declaratory judgment, and Labor
Code violations concerning the payment of wages and reimbursements. Baggett now
moves for summary judgment or adjudication of all the causes of action asserted
against her in Thrive’s Complaint, as well as to Thrive’s claim for punitive
damages. She also moves for summary adjudication as to the causes of action in
her Cross-Complaint for failure to reimburse necessary business expenses,
failure to timely pay wages on termination, and declaratory judgment. Thrive
opposes Baggett’s motion.
Legal Standard
Motions for summary judgment are governed by Code Civ. Proc. §
437c, which allows a party to “move for summary judgment in an action or
proceeding if it is contended that the action has no merit or that there is no
defense to the action or proceeding.” (C.C.P. § 437c(a)(1).) The function of a
motion for summary judgment or adjudication is to allow a determination as to
whether an opposing party cannot show evidentiary support for a pleading or
claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001)
25 Cal.4th 826, 843.) Code Civ. Proc. § 437c(c) “requires the trial judge to
grant summary judgment if all the evidence submitted, and ‘all inferences
reasonably deducible from the evidence’ and uncontradicted by other inferences
or evidence, show that there is no triable issue as to any material fact and
that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7
Cal.App.4th 1110, 1119.) “The function of the pleadings in a motion for summary
judgment is to delimit the scope of the issues; the function of the affidavits
or declarations is to disclose whether there is any triable issue of fact
within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima
(1991) 231 Cal. App. 3d 367, 381-382.) Courts “liberally construe the evidence
in support of the party opposing summary judgment and resolve doubts concerning
the evidence in favor of that party.” (Dore
v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)
As to each
claim as framed by the complaint, the defendant moving for summary judgment
must satisfy the initial burden of proof by presenting facts to negate an
essential element, or to establish a defense. (C.C.P. § 437c(p)(2); Scalf v. D. B. Log Homes, Inc. (2005)
128 Cal.App.4th 1510, 1520.) Courts “liberally construe the evidence in support
of the party opposing summary judgment and resolve doubts concerning the
evidence in favor of that party.” (Dore
v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.) Once the defendant
has met that burden, the burden shifts to the plaintiff to show that a triable
issue of one or more material facts exists as to that cause of action or a
defense thereto. To establish a triable issue of material fact, the party
opposing the motion must produce substantial responsive evidence. (C.C.P. §
437c(p)(2); Sangster v. Paetkau
(1998) 68 Cal.App.4th 151, 166.)
A party may move for summary adjudication as to one or more
causes of action, affirmative defenses, claims for damages, or issues of duty
if that party contends there is no merit to the cause of action, defense, or
claim for damages, or there is no duty owed. (See CCP §437c(f)(1).) “A motion
for summary adjudication shall be granted only if it completely disposes of a
cause of action, an affirmative defense, a claim for damages, or an issue of
duty.” (Ibid.) A party moving for summary
adjudication bears the burden of persuasion that there are no triable issues of
material facts. Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826,
850.
When
moving for summary judgment or adjudication, “A plaintiff or cross-complainant has met
his or her burden of showing that there is no defense to a cause of action if
that party has proved each element of the cause of action entitling the party
to judgment on the cause of action. Once the plaintiff or cross-complainant has
met that burden, the burden shifts to the defendant or cross-defendant to show
that a triable issue of one or more material facts exists as to the cause of
action or a defense thereto. The defendant or cross-defendant shall not rely
upon the allegations or denials of its pleadings to show that a triable issue
of material fact exists but, instead, shall set forth the specific facts
showing that a triable issue of material fact exists as to the cause of action
or a defense thereto.” (C.C.P. § 437c(p)(1).)
In analyzing motions for summary
adjudication, the court must “view the evidence in the light most favorable to
the opposing party and accept all inferences reasonably drawn therefrom.” (Hinesley v. Oakshade Town
Center (2005) 135 Cal.App.4th 289, 294; Dore v. Arnold Worldwide, Inc.
(2006) 39 Cal.4th 384, 389 (Courts “liberally construe the evidence in support
of the party opposing summary judgment and resolve doubts concerning the
evidence in favor of that party”).) A motion for summary adjudication must be
denied where the moving party's evidence does not prove all material facts,
even in the absence of any opposition (Leyva v. Sup. Ct. (1985) 164
Cal.App.3d 462, 475) or where the opposition is weak (Salasguevara v.
Wyeth Labs., Inc. (1990) 222 Cal.App.3d 379, 384, 387).
Analysis
1. Triable
Issues of Material Fact Exist as to Whether Baggett Breached the Trade Secret Protection
and Fair Competition Agreement (Thrive’s Cause of Action for Breach of Contract)
Thrive’s cause of action for breach
of contract is based on Baggett’s alleged breach of the Trade Secret Protection
and Fair Competition Agreement attached as Exhibit 1 to Thrive’s Complaint. (Complaint
at ¶¶39-42.) Baggett argues this agreement cannot form the basis of a claim for
breach of contract because it was entered into between the parties several months
after she began working for Thrive and was not supported by any new consideration.
The parties agree Baggett’s employment at Thrive was on an at-will basis and she
continued in her employment after signing the trade secret agreement.
“[I]t is settled that an employer may
unilaterally alter the terms of an employment agreement” as long as “the alteration does not violate
a statute or breach an implied or express contractual agreement.”
(Schachter v. Citigroup, Inc. (2009) 47 Cal.4th 610, 619 [citing DiGiacinto
v. Ameriko-Omserv Corp. (1997) 59 Cal.App.4th 629 and Scott v. Pacific Gas
& Electric Co. (1995) 11 Cal.4th 454].) “The at-will presumption authorizing an employer to
discharge or demote an employee similarly and necessarily authorizes an employer
to unilaterally alter the terms of employment.” (Id.) Accordingly, an “employee
who continues in the employ of the employer after the employer has given notice
of changed terms or conditions of employment has accepted the changed terms and
conditions.” (DiGiacinto, supra, 59 Cal.App.4th at 637.) Baggett has not demonstrated the
trade secret agreement violated any statute or breached an implied or express contractual
agreement. As such, Thrive was free to impose the restrictions of the agreement
on Baggett without offering her further consideration beyond continued employment
at Thrive. Baggett’s signature on the agreement and continuation of her employment
with Thrive afterward indicates her acceptance of these additional terms. On such
facts, the agreement is not void for lack of consideration as a matter of law.
Baggett also claims Thrive cannot establish a claim for breaching
this agreement because the agreement only prohibits her from disclosing confidential
and/or trade secret information to third-parties, which she never did. However,
as Thrive points out, the agreement also restricted Baggett from using Thrive’s
confidential information absent specific authorization from Thrive to do so. Specifically,
the agreement states “While Employee is employed by the Company, and after such
employment ends for any reason, Employee will not reproduce, publish, disclose,
use, reveal, show, transmit, or otherwise communicate to any person or entity any
Confidential Information, including Company trade secrets, unless specifically authorized
by the Company to do so.” (Ex. A to Ruan Decl. at §III.A.1.) The Thrive
employee handbook, which Baggett agreed to abide by, further prohibited Baggett
from using client phone numbers, emails, or other contact information to
recruit clients to her own practice before or after leaving Thrive. (Ex. 1 to
Crosman Decl. at 41:22-42:16.) It thus appears the agreement restricted Baggett
from disclosing confidential information to third parties and prohibited her
from using that confidential information in ways which were not authorized by
Thrive.
In her reply brief, Baggett argues for the first time that
patient contact information cannot be considered a trade secret. “[P]oints raised for the first time in a reply brief will
ordinarily not be considered, because such consideration would deprive respondent
of an opportunity to counter the argument. [Citations.]” (Jay v. Mahaffey
(2013) 128 Cal.App.4th 1522, 1538.) This is particularly true, where, as here,
the reply brief was untimely filed. (See CRC, rule 3.1300(d) [giving
Court discretion to not consider late filings in ruling on motion].) Baggett’s argument is belied by a plain reading of the
contract, which extends protections beyond trade secrets to “confidential
information” which is defined by the agreement itself. “Confidential
Information” is defined by the parties’ agreement to “include the Company’s
protectable trade secrets as defined under California law, as well as any other
information or material … that Company receives under conditions of
confidentiality, including but not limited to confidential client lists….”
Baggett’s reply concedes patient information was provided to Thrive under
conditions of confidentiality, and thus the information was plainly covered by
the agreement even if it does not meet the legal definition of a trade secret.
Thrive has presented evidence indicating Baggett used Thrive’s
confidential, password-protected electronic client files to call her patients to
inform them of her departure even though she knew she did not have authorization
from Thrive to do so. (UMF No. 96.) The Court finds a triable issue of material
fact exists as to whether her use of Thrive’s client files in this manner constituted
a breach of the trade secret agreement. Baggett’s motion for summary adjudication
on this claim is DENIED. As Baggett’s motion for summary judgment requires a showing
that no triable issue of material fact exists as to any of Thrive’s claims against
her, the motion for summary judgment is DENIED as well.
2. Triable
Issues of Material Fact Exist as to Whether Baggett Is Liable for Thrive’s Cause
of Action for Tortious Interference with Contract
Thrive alleges it has a contractual
relationship with its clients. In moving for summary adjudication of this cause
of action, Baggett argues Thrive has admitted it has no such contractual relationships.
However, the evidence does not support this conclusion. Baggett relies entirely
on the deposition testimony of Camilo Ruan. (UMF No. 32.) This deposition testimony
shows only that Thrive did not have contracts which obligated patients to continue
to seek treatment with Thrive and instead Mr. Ruan agreed patients were free to
seek treatment from any therapist of their choosing. But this fails to establish
Thrive had no contractual relationship with its clients.
Baggett also argues she cannot be held
liable for tortious interference because Thrive admitted in deposition testimony
that it has no evidence she ever made negative statements about Thrive to her patients
or ever provided her contact information to them. Baggett thus claims this cause
of action must fail because Thrive was not present when she had the conversations
with her patients which forms the basis of this claim, and thus does not know what
was said during those calls. (UMF No. 18.)
A claim for tortious interference with
contract does not require a showing that the defendant acted with the express purpose
of interfering with a contract. As the California Supreme Court explained,
liability can also attach when a defendant “does not act for the purpose of interfering
with the contract or desire it but knows that the interference is certain or substantially
certain to occur as a result of his action. The rule applies, in other words, to
an interference that is incidental to the actor's independent purpose and desire
but known to him to be a necessary consequence of his action.” (Quelimane Co.
v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 56.) Baggett maintains she
only informed her patients of her departure from Thrive and did not solicit them
to leave Thrive and follow her to her new private practice. However, under Quelimane,
such conduct may nonetheless be sufficient to state a claim for tortious interference
if it was certain or substantially certain that her actions would cause patients
to stop seeking treatment at Thrive. The Court thus cannot say as a matter of law
that Thrive’s cause of action for tortious interference with contract must fail
because Baggett only informed her patients she was leaving without actively disparaging
Thrive or expressly soliciting them. Baggett’s motion for summary adjudication of
this claim is DENIED.
3. Triable
Issues of Material Fact Exist as to Whether Baggett Is Liable for Thrive’s Cause
of Action for Tortious Interference with Prospective Economic Advantage
Baggett raises similar arguments with
respect to Thrive’s claim for tortious interference with prospective economic advantage,
adding that to state such a claim Thrive must additionally show she engaged in conduct
that was wrongful by some legal measure other than the fact of the interference
itself.” (Delia Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th
376, 393.) Baggett argues Thrive cannot demonstrate her conduct was otherwise wrongful.
As set forth above, a triable issue of material fact exists as to whether Baggett
breached her contract with Thrive by using Thrive’s confidential information to
call her patients without Thrive’s authorization to do so. As such, a triable issue
of material fact exists as to whether her conduct was “wrongful by some legal measure”
as required to establish a claim for tortious interference with prospective economic
advantage. Her motion for summary adjudication on this cause of action is thus DENIED.
4. Triable
Issues of Material Fact Exist as to Whether Baggett Breached Her Duty of Loyalty
to Thrive
“The elements of a cause of action
for breach of a duty of loyalty, by analogy to a claim for breach of fiduciary duty,
are as follows: (1) the existence of a relationship giving rise to a duty of loyalty;
(2) one or more breaches of that duty; and (3) damage proximately caused by that
breach.” (Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 410.)
Baggett argues
Thrive’s cause of action for breach of the duty of loyalty must fail because
she did not owe Thrive a fiduciary duty. Generally,
“employment-type relationships are not fiduciary relationships.” (O'Byrne v.
Santa Monica-UCLA Medical Center (2001) 94 Cal.App.4th 797, 811 [citations omitted].)
However, employees nonetheless owe employers an undivided duty of loyalty during
their employment. “‘While California law does permit an employee to seek other employment
and even to make some “preparations to compete” before resigning [citation], California
law does not authorize an employee to transfer his loyalty to a competitor. During
the term of employment, an employer is entitled to its employees’” undivided loyalty.”
[Citation.]’” (Angbelica Textile Services, Inc. v. Park (2013) 220 Cal.App.4th
495, 509.) “[A]n employer has the right to
expect the undivided loyalty of its employees. The duty
of loyalty is breached, and may give rise to a cause of action
in the employer, when the employee takes action which is inimical to the best interests
of the employer.” (Stokes v. Dole Nut Co. (1995) 41
Cal.App.4th 285, 295.) Thus, a fiduciary relationship is not necessary for
Thrive to pursue a claim against Baggett for breach of the duty of loyalty.
Baggett also
claims she cannot be held liable for breach of her duty of loyalty to Thrive
because she has a higher duty to her patients and was acting in their interest.
Baggett does not provide any legal authority for this assertion. “Assertions unsupported by legal authority are
presumed to lack merit.” (Atchley v. City of Fresno (1984) 151 Cal.App.3d
635, In Re Marriage of Nichols (1994) 27 Cal.App.4th 661, 673; Utz v.
Aureguy (1952) 109 Cal.App.2d 803, 807.) Baggett has also not shown the
interests of her patients necessitated the actions she is alleged to have
taken. The evidence before the Court indicates Baggett informed Thrive she
would accept the second of the two offboarding options presented to her; that
is, that she would continue to see the patients she saw through Thrive based on
a part-time employment agreement with Thrive, and signed an agreement to that
effect even though she had no intention of abiding by that agreement. (Camilo
Ruan Decl. at ¶6.) After giving Thrive the impression she would continue
treating Thrive clients as a part-time Thrive employee, she waited until after
close of business on Friday to begin calling her patients, even though she knew
she did not have Thrive’s approval to do so. Those calls continued into
Saturday. Baggett did not document these calls in Thrive’s patient record
system. (Id. at ¶9.) Baggett offers no explanation as to how such
conduct benefited her patients.
Baggett argues she engaged in this conduct because she could not otherwise,
under the two offboarding options, inform her patients that she was leaving
Thrive. But Baggett readily admits Thrive subsequently sent her patients an
“email that parroted what Dr. Baggett had told the patients in person – that
they could transition to a Thrive therapist, that they could go see a different
therapist outside of Thrive, or that they could stop going to therapy.” (Motion
at 3.) On summary judgment or summary adjudication, all inferences must be
drawn in the light most favorable to the non-moving party. On such facts, a
reasonable jury could infer Baggett’s conduct was motivated by economic
self-interest and was not necessary to further the best interests of her
patients. For these reasons, Baggett’s motion for summary adjudication on this
cause of action is DENIED.
5. Thrive’s Claim
for Relief under the Faithless Servant Doctrine Is Permissible
The “faithless servant doctrine”
provides that employees who violate their duty of loyalty in the performance of
their employment forfeit the right to compensation for such work. As Baggett
points out, there is no caselaw from California Courts adopting, recognizing,
or even mentioning the “faithless servant doctrine.” Thrive argues California
Courts have nonetheless adopted the basic principle of the doctrine, even if
they have not done so by name. Thrive points to J. C. Peacock, Inc. v. Hasko
(1961) 196 Cal. App. 2d 353 in which the Court held “[A]n employee who violates
the[ ] fundamental duties of loyalty cannot recover even for the services he
has rendered.” (Id. at 358.) Thrive also cites two unpublished decisions
from federal district courts in California, ChromaDex, Inc. v. Elysium
Health, Inc. (C.D. Cal. Jan. 16, 2020) No. SACV 16-2277-CJC (DFMx), 2020 WL
1279236, and Skyline Advanced Tech. Servs. v. Shafer (N.D. Cal. Dec. 14,
2021) No. 18-CV-06641-CRB, 2021 WL 5908387. Neither case recognizes the
faithless servant doctrine as giving rise to a standalone cause of action—indeed
they do not mention the doctrine by name either—rather they recognize
disgorgement of wages can be a remedy available for a breach of the duty of
loyalty. (ChromaDex, 2020 WL 1279236 at *18; Skyline, 2021 WL
5908387 at *9.)
Thrive’s claim under the faithless
servant doctrine is not a separate cause of action but is instead a claim for
damages in connection with its cause of action for breach of the duty of
loyalty. Code Civ. Proc. § 437c(f)(1) permits a party to move for summary
adjudication of causes of action, affirmative defenses, issues of duties, or
claims for damages “as specified in Section 3294 of the Civil Code.” (C.C.P. §
437c(f)(1).) Civil Code section 3294 concerns claims for punitive damages.
Thus, a motion for summary adjudication under section 437c(f)(1) may only
challenge a claim for punitive damages, not any claim for damages, such as
Thrive’s claim for disgorgement of wages paid to Baggett. Under Code Civ. Proc.
§ 437c(t) “a party may move for summary adjudication of a legal issue or a
claim for damages other than punitive damages” only if certain prerequisites
are met. (C.C.P. § 437c(t).) These requirements include the filing of a joint
stipulation by the parties whose claims are put at issue by the motion. (C.C.P.
§ 437c(t)(1).) This stipulation must be filed before the motion for summary
adjudication is filed and must include a “A declaration from each stipulating
party that the motion will further the interest of judicial economy by
decreasing trial time or significantly increasing the likelihood of
settlement.” (C.C.P. § 437c(t)(1)(A)(ii).) The Court must then determine
whether to permit the filing or not. (C.C.P. § 437c(t)(2).) No such stipulation
has been filed in this action, and thus the Court cannot summarily adjudicate
Thrive’s right to disgorgement in connection with its claim for breach of the
duty of loyalty. Baggett’s motion for summary adjudication of this claim is
thus DENIED.
6. Baggett Is
Entitled to Summary Adjudication as to Thrive’s Cause of Action for Violation of
Penal Code § 502
Penal Code section 502 provides that
“the owner or lessee of the computer, computer system, computer network, computer
program, or data who suffers damage or loss by reason of a violation of any provisions
of subdivision (c) may bring a civil action against the violator for compensatory
damages and injunctive relief or other equitable relief.” (Pen. Code, § 502(e)(1).)
Thrive alleges in the Complaint that Baggett violated Penal Code Section 502(c)(1),
(2), (3) and (7). Subsection (c) provides, in relevant part, as follows:
Except as provided
in subdivision (h), any person who commits any of the following acts is guilty of
a public offense:
(1) Knowingly
access and without permission alters, damages, deletes, destroys, or otherwise uses
any data, computer, computer system, or computer network in order to either (A)
devise or execute any scheme or artifice to defraud, deceive, or extort, or (B)
wrongfully control or obtain money, property, or data.
(2) Knowingly
accesses and without permission takes, copies, or makes use of any data from a computer,
computer system, or computer network, or takes or copies any supporting documentation,
whether existing or residing internal or external to a computer, computer system,
or computer network.
(3) Knowingly
and without permission uses or causes to be used computer services.
***
(7) Knowingly
and without permission accesses or causes to be accessed any computer, computer
system, or computer network.
(Id., § 502(c).)
Baggett argues under Chrisman
v. City of Los Angeles (2007) 155 Cal.App.4th 29, there can be no liability
under Penal Code § 502 for an individual who is authorized to access a computer
system but does so for unauthorized purposes. In Chrismas, the Court noted
section 502 “defines ‘access’ in terms redolent of ‘hacking’ or breaking into a
computer.” (Id. at 34.) “Underscoring that ‘accessing’ a computer’s ‘logical,
arithmetical, or memory function’ is different from the ordinary, everyday use of
a computer to which people are accustomed when they speak of ‘using’ a computer,
another subdivision criminalizes ‘us[ing] or causfing] to be used computer services’
without permission.” (Id. at 34 [citing Pen. Code § 502(c)(3)].) Based on
this definition, the Court of Appeal found a police officer who logged into a police
database to satisfy personal curiosity did not violate the statute because the police
officer “was entitled to access those resources.” (Id. at 35.)
Thrive concedes the application of
Chrisman to these facts would preclude any liability against Baggett
under section 502. Thrive instead claims that Chrisman “reflects a
minority view among California courts” and urges the Court to find Baggett can
be held liable under section 502 for accessing Thrive’s system for an
unauthorized purpose. (Opp. at 15.) The only California case cited by Thrive is
Gilbert v. City of Sunnyvale (2005) 130 Cal.App.4th 1264. In Gilbert
a police officer was terminated from his employment. In the course of an
investigation into an alleged prostitution business, the officer was observed
improperly accessing DMV records for personal reasons while on duty. The
officer alleged his termination for accessing the DMV records was pretextual
and claimed he had actually been terminated based on the department’s
investigation into the alleged prostitution business. The officer claimed his
due process rights had been violated and he had been denied the opportunity to
respond to these allegations because the department did not comply with Government
Code section 3303(g) by making records of that investigation available to him.
The Court in Gilbert mentioned section 502 once in dicta, noting
“Knowingly accessing and without permission making use
of any data from a computer system is a crime” and that the officer “bore the burden
of pleading and proving that his suspected involvement in the hostess bar scandal
was the real reason for the intended disciplinary action, as opposed to the Department’s
stated reasons.” (Id. at 1281.) The Gilbert Court was not called
on to determine whether the officer could be held civilly liable under section
502, nor did it offer any guidance on the interpretation of the term “access”
as used in the statute.
Gilbert does not support Thrive’s argument that Chrisman is
the minority view of California Courts, nor is it authority for the
interpretation of section 502. (State Farm Fire & Casualty Co. v. Pietak
(2001) 90 Cal.App.4th 600, 614 [“Cases are not authority for propositions not considered
therein.”].) Thrive also cites to the Ninth Circuit case United States v.
Christensen (9th Cir. 2015) 828 F.3d 763. In Christensen, the Ninth Circuit
held that the term “access” as used in section 502 “‘includes logging into a database
with a valid password and subsequently taking, copying, or using the information
in the database improperly.’” (Id. at 789.) In reaching this conclusion,
the Court distinguished Chrisman, noting that the interpretation set forth
by Chrisman rendered redundant the words “without permission” as used in the
statute. (Ibid.)
“Under the doctrine of stare decisis,
all tribunals exercising inferior jurisdiction are required to follow decisions
of courts exercising superior jurisdiction.” (Auto Equity Sales. Inc. v. Superior
Court of Santa Clara County (1962) 57 Cal.2d 450, 455.) Because Chrisman
was decided by the California Court of Appeal, the Court must follow its instructions
and construe section 502’s term “access” as meaning something “redolent of ‘hacking.’”
The Ninth Circuit’s decision in Christensen is not binding on this
Court.
The Court finds Baggett has shown
Thrive cannot establish liability against her under Penal Code § 502 and her
motion for summary adjudication of this cause of action is GRANTED.
7. Triable
Issues of Material Fact Exist as to Whether Baggett Violated Business & Professions
Code § 17200
California’s Unfair Competition Law
(“UCL”), codified at Business and Professions Code section 17200 et seq.,
prohibits “any unlawful, unfair, or fraudulent business act or practice.” (Bus.
& Prof. Code § 17200; see Clark v. Superior Court (2010) 50 Cal.4th
605, 610.) A UCL plaintiff must plead and prove the defendant engaged in a
business practice which was either unlawful (i.e., is forbidden by law) or
unfair (i.e., harm to victim outweighs any benefit) or fraudulent (i.e., is
likely to deceive members of the public). (Albillo v. Intermodal Container
Services, Inc. (2003) 114 Cal.App.4th 190, 206.) “An unlawful business
practice or act within the meaning of the UCL is an act or practice, committed
pursuant to business activity, that is at the same time forbidden by law.” (Bernardo
v. Planned Parenthood Federation of America (2004) 115 Cal.App.4th 322,
351.)
As the Court has found a triable issue
of fact exists as to whether Baggett acted unlawfully in connection with
several causes of action set forth above, the Court finds a triable issue of
material fact remains as to Thrive’s claim under Business & Professions
Code § 17200. Baggett’s motion for summary adjudication of this claim is
therefore DENIED.
8. Thrive’s Claim
for Punitive Damages Is Permissible
A recovery of punitive damages under Civil Code § 3294
requires “clear and convincing evidence that the defendant has been guilty of
oppression, fraud or malice.” Although “the ‘clear and convincing’
evidentiary standard is a stringent one, it does not impose on a plaintiff the
obligation to ‘prove’ a case for punitive damages at summary judgment.” (Spinks
v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004,
1053.) Further, summary judgment “on the issue of punitive damages is proper”
only “when no reasonable jury could find the plaintiff’s evidence to be clear
and convincing proof of malice, fraud or oppression.” (Id.)
Civ. Code, § 3294 defines malice as: “conduct which is
intended by the defendant to cause injury to the plaintiff or despicable
conduct which is carried on by the defendant with a willful and conscious disregard
of the rights or safety of others.” Oppression is defined as: “despicable
conduct that subjects a person to cruel and unjust hardship in conscious
disregard of that person's rights.” (C.C.P. § 3294). And fraud is defined as:
“an intentional misrepresentation, deceit, or concealment of a material fact
known to the defendant with the intention on the part of the defendant of
thereby depriving a person of property or legal rights or otherwise causing
injury.” (C.C.P. § 3294).
Baggett alleges there is no
evidence that she “acted with any malice, oppression, or fraud” and thus Thrive
cannot establish a claim for punitive damages against her. The Court finds a
reasonable jury could find she acted with fraud under section 3294 in falsely
representing she agreed to the second offboarding option provided to her even
though she had no intention of doing so, and making clandestine efforts to use
Thrive’s confidential information to contact her patients and advise them of
her departure knowing she was not authorized by Thrive to use its information
in that manner. Accordingly, Baggett’s motion for summary adjudication of
Thrive’s claim for punitive damages is DENIED.
9. Baggett Fails
to Establish Elements of Her Cause of Action for Failure to Pay Wages on Termination
Labor Code § 201(a) provides “If an
employer discharges an employee, the wages earned and unpaid at the time of discharge
are due and payable immediately.” Section 203(a) further provides in pertinent
part: “If an employer willfully fails to pay, without abatement or reduction, in
accordance with Sections 201 … any wages of an employee who is discharged or who
quits, the wages of the employee shall continue as a penalty from the due date thereof
at the same rate until paid or until an action therefor is commenced; but the wages
shall not continue for more than 30 days.” “The settled meaning of ‘willful,’ as
used in section 203, is that an employer has intentionally failed or refused to
perform an act which was required to be done. (Barnhill v. Robert Saunders &
Co. (1981) 125 Cal.App.3d 1, 7–8 []; Davis v. Morris (1940) 37 Cal.App.2d
269, 274 [].) ‘[T]he employer's refusal to pay need not be based on a deliberate
evil purpose to defraud workmen of wages which the employer knows to be due.’ (Barnhill,
supra, 125 Cal.App.3d at p. 7 []; Davis v. Morris, supra, 37 Cal.App.2d
at p. 274 [].)” (Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157,
1201.)
Baggett argues Thrive did not
immediately pay her the wages she was due when they terminated her employment.
The only evidence cited in support of this claim is the deposition testimony of
Camilo Ruan. (UMF Nos. 70-71.) Baggett’s separate statement points to “Exhibit
21 Deposition Transcript of Camilo Ruan at 235:7-237:4.” (Id.) Mr. Ruan’s
deposition transcript is attached as Exhibit 19 to Baggett’s moving papers, not
Exhibit 21, and Exhibit 19 is missing pages 235, 236, and 237 from Mr. Ruan’s
deposition transcript. Baggett has thus failed to put forth admissible evidence
in support of her claim that she was not immediately paid as required by
section 201(a). However, the Court notes Thrive does not dispute Baggett’s
claim that she “was not provided her final paycheck at the time of
termination.” (UMF No. 70.)
Thrive argues Baggett has failed
to put forth any evidence showing its failure to pay her immediately upon
termination was willful as required by section 203(a). Thrive attaches a
declaration from Mr. Ruan stating “I understand that Baggett is claiming her
final wages were paid late. However, if these wages were paid later than they
should have been, this was unintentional.” (Ruan Decl. at ¶15.) There is no
evidence before the Court indicating Thrive intentionally withheld or refused
any wage payment to Baggett. This precludes the granting of summary
adjudication in her favor on this claim.
Baggett’s motion on this cause of
action fails for an additional reason: Baggett has not put forth any evidence
establishing the amount of damages she is entitled to on such a claim. Cross-complainants
may not receive summary adjudication of the cause of action in their favor, without
proof of—and an absence of dispute on—both the fact and the amount of damages. The
amount of damages must be free of factual disputes in order to summarily decide
the cause of action in favor of the plaintiff. (See C.C.P. § 437c(p)(1); Pajaro
Valley Water Management Agency v. McGrath (2005) 128 Cal.App.4th 1093, 1106
[“The Agency's damages were, of course, an element of its cause of action.… As a
result, the Agency could not establish a prima facie entitlement to summary judgment
without showing both the fact and the amount of damages”] [italics in
original]; Paramount Petroleum Corp. v. Superior Court (2014) 227 Cal.App.4th
226, 243; Department of Industrial Relations v. UI Video Stores, Inc. (1997)
55 Cal.App.4th 1084, 1097.)
Baggett has not put forth any
evidence as to the amount of damages she is owed in connection with this claim.
Her moving papers do not establish the wages owed to her at the time of
termination, nor has she put forth evidence as to when, if ever, Thrive did pay
her the wages owed to her. Baggett has thus failed to carry her initial burden
to prove “each element of the cause of action entitling the party to judgment
on the cause of action” under Code Civ. Proc. § 437c(p)(1). For these reasons,
Baggett’s motion for summary adjudication on this cause of action is DENIED.
10. Baggett
Fails to Establish Elements of Her Cause of Action for Failure to Reimburse
Baggett has similarly failed to put
forth any evidence establishing the amount of damages she claims she is
entitled to in connection with her cause of action for failure to reimburse
under Labor Code § 2802. Baggett’s motion for summary adjudication on this
claim is thus DENIED for failing to carry her initial burden of production as
to each element of the claim. (C.C.P. § 437c(p)(1).) The Court also notes
Baggett’s separate statement on this claim relies in part on pages 118 and 144
of the deposition of Camilo Ruan (UMF Nos. 73-77), which were not attached to
Baggett’s moving papers.
11. Baggett
Has Not Established Cause of Action for Declaratory Relief
“To qualify for declaratory relief, a party would have to
demonstrate its action presented two essential elements: (1) a proper subject
of declaratory relief, and (2) an actual controversy involving justiciable
questions relating to the party’s rights or obligations.” (Jolley v. Chase
Home Fin., LLC (2013) 213 Cal.App.4th 872, 909 [quotation marks and
brackets omitted].) “[T]here is no basis for declaratory relief where only past
wrongs are involved.” (Osseous Tech. of Am., Inc. v. DiscoveryOrtho Partners
LLC (2010) 191 Cal.App.4th 357, 366 [quotation marks omitted].) As the
Court explained in Otay Land Co. v. Royal Indemnity Co. (2008) 169
Cal.App.4th 556:
[U]nder California rules, an actual
controversy that is currently active is required for such relief to be issued,
and both standing and ripeness are appropriate criteria in that determination.
[Citation.] One cannot analyze requested declaratory relief without evaluating
the nature of the rights and duties that the plaintiff is asserting, which must
follow some recognized or cognizable legal theories that are related to
subjects and requests for relief that are properly before the court.
Moreover, under Code of Civil
Procedure section 1061, “[t]he court may refuse to exercise the power granted
by this chapter in any case where its declaration or determination is not
necessary or proper at the time under all the circumstances.” This is a
discretionary determination, subject to reversal only if that discretion is
abused. [Citation.] The courts do not issue advisory opinions about the rights
and duties of the parties under particular agreements, if no actual,
justiciable controversy has yet developed.
(Id. at 563.)
Baggett seeks a judicial determination that Thrive’s
offboarding policy is void and unenforceable because it contains provisions
which she claims are illegal non-compete and non-solicitation provisions.
(Motion at 20.) The Court finds Baggett has failed to show an actual,
justiciable controversy exists as to the enforceability of Thrive’s offboarding
policy. The offboarding policy gives departing employees three options: (1) if
an employee will no longer be providing therapy services after leading Thrive’s
employment or will no longer be treating Thrive clients, they can work with
Thrive to develop a transition plan for their patients, (2) they can continue
to treat Thrive’s clients as a part-time Thrive employee and split the client
fee with Thrive, or (3) they can refuse to participate in either option and
face termination of their employment, after which Thrive will handle client
transition internally without the employee’s involvement.
While Baggett initially indicated she was choosing the second
of those options, Thrive ultimately terminated her for failing to comply with
the requirements of that second option. (Ex. 5 to Cooper Decl. [stating any
violations of the offboarding policy “will result in immediate termination[]
and client transition by Thrive’s Clinical Director”].) Baggett claims the
terms of the offboarding policy nonetheless continue to bind her after her
termination, but provides no evidence, argument, or authority in support of
this proposition. The offboarding policy itself is silent as to whether an
employee continues to be bound by the terms of the policy when they are
terminated for failing to comply with it. The Court also notes Thrive’s
Complaint in this action does not seek to enforce any non-solicitation or
non-competition provisions against her, nor does it seek to impose liability on
her for any actions she took after the termination of her employment with
Thrive. Baggett has thus not shown an actual justiciable controversy currently
exists as to any non-compete or non-solicitation provisions of the offboarding
policy.
Baggett argues the provisions of
the offboarding policy “are being used to terrorize Thrive employees and to
support the false claims in Thrive’s Board Complaints. (UMF 9.)” (Motion at
20.) UMF No. 9, cited by Baggett, does not contain any evidence supporting this
assertion and instead focuses on the offboarding policy sent to Baggett when
she gave notice of her own resignation. UMF No. 83 purports to offer
evidentiary support for this assertion, relying solely on pages 168, 173-174,
198. 265, 269-270, and 283 of the deposition testimony of Mr. Ruan. (UMF No.
83.) Pages 168 and 173 do not reference the offboarding policy or any provision
thereof and instead state that an ethics complaint was filed against Baggett
eight or nine months after an unspecified letter was sent, and the instant
lawsuit was filed against her two or three months after the sending of that
unidentified letter. Page 174 says 12 people signed this letter and Mr. Ruan
did not know how many of those people subsequently had ethics complaints filed
against them by Mrs. Ruan. Page 198 indicates the 12 people who signed the
letter no longer work at Thrive and some of them have had ethics complaints
filed against them by Mrs. Ruan. Pages 265, 269-270, and 283 were not attached
as exhibits to Baggett’s motion and thus are not before the Court for
consideration. There is thus no evidence before the Court indicating the
offboarding policy is currently being used to “terrorize” Thrive employees.
Baggett’s motion for summary
adjudication on her claim for declaratory relief is DENIED.
Conclusion
Baggett’s motion for summary adjudication is GRANTED as to
Thrive’s sixth cause of action for violation of Penal Code § 502 and is
otherwise DENIED.