Judge: Lynne M. Hobbs, Case: 23STCV02678, Date: 2025-03-04 Tentative Ruling

Case Number: 23STCV02678    Hearing Date: March 4, 2025    Dept: 61

RACHAEL BURKHOLDER vs HOUSE NINJA, et al.

Tentative

Defendants Brett Marz and Ramit Varma’s Motion for Summary Judgment is GRANTED as to Brett Marz, and DENIED as to Ramit Varma.

Moving party to provide notice.

Analysis:

I.  OBJECTIONS

Plaintiff Rachel Burkholder (Plaintiff) objects to evidence submitted by Defendants Ramit Varma and Brett Marz (Defendants) in their motion for summary judgment. Plaintiff only offers two objections to evidentiary materials, which are directed to the notice of Defendant House Ninja’s bankruptcy and her subsequent dismissal, and are OVERRULED. Her remaining objections are directed to items in Defendants’ separate statement and arguments in their memorandum, which are also OVERRULED as not being the proper subject for objection. (CRC Rule 3.1350, subd. (d).)

Defendants offer objections to matters submitted by Plaintiff in opposition. A number of these objections are directed to portions of Plaintiff’s declaration in which she pivots from describing the objective behavior of Defendants, to her interpretation of that behavior as targeting her for her pregnancy and upcoming maternity leave. These objections — Objections No. 4, 5, 11, 12, 14, and 16, where the testimony offers only Plaintiff’s subjective interpretation of bias without an objective basis provided therewith — are SUSTAINED, as they are speculative. Defendants’ remaining objections are OVERRULED.

II. SUMMARY JUDGMENT

A party may move for summary judgment “if it is contended that the action has no merit or that there is no defense to the action or proceeding.” (Code Civ. Proc. § 437c, subd. (a).) “[I]f 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,” the moving party will be entitled to summary judgment. (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment. (Code Civ. Proc. § 437c, subd. (f)(2).) 

The moving party bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact, and if he does so, the burden shifts to the opposing party to make a prima facie showing of the existence of a triable issue of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850; accord Code Civ. Proc. § 437c, subd. (p)(2).) 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. (Aguilar, supra, 25 Cal.4th at 850.) The plaintiff may not rely upon the mere 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 that cause of action or a defense thereto. (Ibid.) To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

Defendants Ramit Varma and Brett Marz (Defendants) move for summary judgment on Plaintiff Rachel Burkholder’s sole remaining claim of FEHA hostile work environment based on pregnancy. Defendants argue that, as to each of them, Plaintiff has no evidence to show either that they harassed her based on her pregnancy, or that the harassment was sufficiently severe or pervasive to create liability as to either of them. (Motion at pp. 13–20.) Defendants argue that their conduct evinces only frustration with Plaintiff’s inability to keep their business in working order during her tenure as CEO, and as such constitutes only personnel management activity. (Ibid.)

The evidence presented is as follows. Plaintiff was hired as CEO of House Ninja on June 7, 2021. (Plaintiff’s Separate Statement of Undisputed Facts (PUMF) No. 14.) Defendant Marz runs the company, and both he and Varma have substantial investments therein, although the extent of Varma’ s leadership role is disputed. (PUMF No. 2–4.) Plaintiff had previously been hired as a consultant for House Ninja while she was pregnant with her first child in the fall of 2020. (PUMF No. 6.)

On September 1, 2022, Plaintiff announced to Marz and Varma that she was pregnant with her second child. (PUMF No. 30.) During this meeting, they also discussed House Ninja’s income, cash on hand, and cash-burn rate, which indicated that the company had enough cash to continue operating for 16 months, and would require fundraising in the coming year. (PUMF No. 28–29.) Plaintiff testified that this meeting represented a turning point in her relationship with Defendants, who afterward became much more demanding and critical of her performance. (Burkholder Decl. ¶¶ 14, 17.) Marz and Varma, meanwhile, contend their frustration was directed toward the company’s poor performance and dire financial circumstances, not Plaintiff’s pregnancy. (Varma Decl. ¶ 8; Marz Decl. ¶¶ 9, 12.)

Shortly after the September 1, 2022 meeting, Plaintiff travelled to Uganda to conduct charity work for approximately ten days, working remotely for House Ninja, and returned ill. (PUMF No. 37–40.) Plaintiff worked through her illness and did not take time off. (Burkholder Decl. ¶ 16.) At the end of September, Plaintiff had a call with Varma, which she characterized as very negative, in contrast with the positive feedback he had offered before. (Opposition Exh. 48 at p. 316.) Then, Marz told Plaintiff that they were frustrated with her because she wasn’t doing everything they asked as soon as they asked it. (Opposition Exh. 48 at p. 326.)

On October 24, 2022, Varma and Marz had a call with Plaintiff, in which both Varma and Marz told Plaintiff that she did not have experience, did not know what she was doing, and that they were more experienced than she was. (Opposition Exh. 48 at pp. 326–327.) Plaintiff characterized Varma as “snapping and getting angry at all of it.” (Opposition Exh. 48 at p. 327.) At one point Varma, reacting to a screen-share glitch, declared the meeting a waste of his time and threatened to cancel the call. (Burkholder Decl. ¶¶ 18–19.)

Plaintiff testifies that during this time, Marz and Varma began to text her day and night, and make increasing demands of her that they had not previously, such as requiring that she fly out to Texas on a late-night flight for a series of in-person meetings. (Burkholder Decl. ¶¶ 19–20.) In November 2022, Plaintiff contracted COVID-19. (PUMF No. 50.) Though Plaintiff continued to work (Burkholder Decl. ¶ 21), Marz cancelled and rescheduled a strategy conference to accommodate her illness. (PUMF No. 52.) The meeting was held on November 29, 2022. (PUMF No. 58.) At this November meeting, Plaintiff contends that Varma told Plaintiff that “the timing of my pregnancy and upcoming delivery was bad for the company, emphasizing that I would be unavailable to lead fundraising.” (Burkholder Decl. ¶ 27; Opposition Exh. 49 at p. 368.) As of this date, given the company’s cash on hand and burn rate, Defendants contend that House Ninja could operate for only seven more months. (PUMF No. 61.) Varma and Marz contend they left this meeting very concerned for the company. (Varma Decl. ¶ 8; Marz Decl. ¶ 17.) Plaintiff, however, contends that the situation was not so dire, in part because the company had a contract for an additional $300,000 in funding due soon. Burkholder Decl. ¶ 28.)

Plaintiff contends that during this time, Marz and Varma harassed her with needless requests for information that they already had access to. (Burkholder Decl. ¶ 30.) Plaintiff contends the difficulty was compounded by Marz and Varma’s contradictory demands. (Burkholder Decl. ¶ 37.) This pattern continued through Christmas Eve and Christmas day. (Opposition Exh. 50 at pp. 506–507.) Marz at one point acknowledged to Plaintiff that he and Varma had been “creating chaos” for Plaintiff with their conflicting directives. (Opposition Exh. 48 at p. 159.) On December 27, 2022, Varma sent Plaintiff an email. Initially complimentary, the email transitioned to its main point, which was criticism of Plaintiff’s conduct as a CEO. Varma stated:

Until this past summer, I found you highly available for discussion and highly responsive to requests for information, etc. Even in July when you were firing Corey, we were able to have effective conversations about the operations and strategy of the business. At some point, however, I found your responsiveness and follow through to take a precipitous decline. It seems to have started around when you went to Uganda, but for the last several months, it has not seemed like House Ninja is your top priority. (Opposition Exh. 35.)

In a follow up call on December 29, 2022, to discuss the points raised in the email with Varma, Plaintiff attempted to defend her prioritization of the company, at which point Varma became upset. (Opposition Exh. 48 at pp. 160–161.) He told her that she was wasting his time by being defensive, and for the next hour criticized Plaintiff in strident tones, at times using profanity, telling her that she was wasting his fucking time, was not a good CEO, and that although Marz was telling him that she worked 70 to 75 hour weeks, he “didn’t know what the fuck [she] was doing.” (Opposition Exh. 48 at pp. 161, 203–204; Burkholder Decl. ¶ 36.) Varma demanded that Plaintiff begin sending him screenshots of her calendar (Ibid.), although Plaintiff contends that Varma and Marz had always had access to her calendar through her work email account. (Opposition Exh. 48 at pp. 215–216.)

Plaintiff in her declaration states that Marz and Varma’s conduct became worse after this call, as their micromanagement became more intense, with constant conflicting instructions, and each demanding separate weekly reports and directing Plaintiff to focus on different strategic priorities, insisting that their individual requests took priority over the other’s. (Burkholder Decl. ¶ 37.) Plaintiff at this point believed that Varma was attempting to force her resignation. (Opposition Exh. 48 at pp. 235.) Varma had previously told Plaintiff that getting someone to resign was his “preferred way to fire someone.” (Opposition Exh. 49 at p. 323.)

Plaintiff had another video meeting with Varma on January 17, 2023 regarding the company’s finances. (Opposition Exh. 48 at p. 146, 150–151.) Varma’s tone was aggressive and profane, telling Plaintiff, “I don’t know what the fuck you have been doing with your time. . . . [T]his is a fucking disaster.” (Id. at p. 149.) He stated he did not know what Plaintiff had been doing with her time “because you haven’t fucking been sending me your calendar screenshots.” (Ibid.) When Marz joined the call, Varma asked him if he was aware how much money the company had in the bank, at which point Marz informed that he knew because Plaintiff had kept them both informed. (Opposition Exh. 48 at p. 150–151.) Plaintiff described Varma’s demeanor on the call as volatile and aggressive, and her hands were shaking throughout the call. (Ibid.) The meeting concluded with Varma demanding that Plaintiff present him with a new spending and cost-cutting plan. (Opposition Exh. 48 at p. 151.)

On January 25, 2023, Marz received an email from the company’s director of operations, Nevine Pinglay, who outlined issues with Plaintiff’s leadership, including a lack of receptivity to feedback and a lack of response to pressing technical emergencies, which gave the impression that she was “completely overwhelmed.” (Marz Decl. Exh. P.) Marz and Varma had a Zoom call with Plaintiff on January 26, 2023, in which they informed her that they had lost confidence in her leadership and told her that the CEO position was not a good fit for her. (Opposition Exh. 48 at pp. 166–167.) Varma stated that Plaintiff would soon be going out and that the company would need a change in any event, which Plaintiff took as a reference to her pregnancy and upcoming maternity leave. (Opposition Exh. 48 at p. 116; Burkholder Decl. ¶ 39.) The call became heated as Plaintiff sought clarification from Varma as to what precisely his position was regarding Plaintiff’s continued employment with the company. (Opposition Exh.48 at pp. 113–115; Exh 38.)

Plaintiff states that she began to feel like she was having a panic attack, and raised the issue of Defendants’ changed posture toward her since she had announced her pregnancy. (Opposition Exh. 48 at pp. 115–116.) She asked that the call be ended. (Ibid.) Although Defendants did not specifically tell Plaintiff that her employment was terminated, Plaintiff took the discussion as an invitation to resign. (Opposition Exh. 48 at pp. 113–116.) Plaintiff at this time was nearly eight months pregnant. (Burkholder Decl. ¶ 39.)

Later that day, Marz sent Plaintiff an email stating that he regretted the direction the meeting had taken, and although Varma had stated that he had lost confidence in her as CEO, they had not discussed the termination of her employment. (Motion Exh. Q.) Varma and Marz sent several emails to Plaintiff over the following days, to which she did not respond, except to state in an email dated January 30, 2023, that she was unwell and needed a few days off. (Varma Decl. ¶¶ 12–13; Marz Decl. ¶¶ 23–27.) Plaintiff sent Marz her resignation on February 7, 2024. (Burkholder Decl. ¶ 28.)

“To establish a prima facie case of harassment, [a plaintiff] must show that (1) she is a member of a protected class; (2) she was subjected to unwelcome harassment; (3) the harassment was based on her protected status; (4) the harassment unreasonably interfered with her work performance by creating an intimidating, hostile, or offensive work environment; and (5) defendants are liable for the harassment.” (Galvan v. Dameron Hospital Assn. (2019) 37 Cal.App.5th 549, 563.)

“[H]arassment consists of a type of conduct not necessary for performance of a supervisory job. Instead, harassment consists of conduct outside the scope of necessary job performance, conduct presumably engaged in for personal gratification, because of meanness or bigotry, or for other personal motives. Harassment is not conduct of a type necessary for management of the employer's business or performance of the supervisory employee's job.” (Reno v. Baird (1998) 18 Cal.4th 640, 645–646.) For harassment to be actionable, it must be so severe or pervasive as to alter the conditions of employment and create an abusive working environment. ((See Guthrey v. State of California (1998) 63 Cal.App.4th 1108, 1122.) “FEHA is “not a ‘civility code’ and [is] not designed to rid the workplace of vulgarity.” (Lyle v. Warner Brothers Television Productions (2006) 38 Cal.4th 264, 295.)

Under this authority, Defendants argue that the conduct outlined above does not constitute actionable harassment, because Plaintiff possesses no evidence that Defendants acted based on her pregnancy, because their actions took the form of management of Plaintiff’s work activity and critical review thereof, and because in any event it consisted of mere vulgarity. (Motion at pp. 13–20.)

The case of Roby v. McKesson Corp. (2009) 47, Cal.4th 686, is instructive. There, the court of appeal overturned a jury verdict in favor of a FEHA plaintiff’s harassment claim, reasoning that the “sharp distinction” between interpersonal harassment activity and “personnel management” actions “barred a plaintiff from using personnel management actions as evidence in support of a harassment claim.” (Roby, supra, 47 Cal.4th at p. 700.) The California Supreme Court reversed that determination, holding that, while “harassment often does not involve any official exercise of delegated power on behalf of the employer,” such actions could form the evidentiary basis for a harassment claim, because such actions could contribute to a hostile “social environment” in which the “workplace becomes intolerable because the harassment (whether verbal, physical, or visual) communicates an offensive message to the harassed employee.” (Id. at p. 706.) Personnel management actions could “constitute[] he evidentiary basis of the harassment cause of action, because the supervisor used those official actions as his means of conveying his offensive message.” (Id. at p. 708.) The Court assessed the facts of the case and concluded that the plaintiff, Roby, had sufficient evidence to support their harassment claim against their supervisor, Schoener:

Here, the evidence is ample to support the jury's harassment verdict. The evidence included not only Schoener's rude comments and behavior, which occurred on a daily basis, but also Schoener's shunning of Roby during weekly staff meetings, Schoener's belittling of Roby's job, and Schoener's reprimands of Roby in front of Roby's coworkers. This evidence was sufficient to allow the jury to conclude that the hostility was pervasive and effectively changed the conditions of Roby's employment. [Citation]

Moreover, the jury could infer, based on the discrimination evidence, that supervisor Schoener's hostility was “because of ... [Roby's] medical condition.” (§ 12940, subd. (j)(1), italics added.) Specifically, the jury could draw this inference from the evidence that Schoener—who knew about Roby's medical condition—applied employer McKesson's attendance policy without making any accommodation or even inquiring if an accommodation was possible. The jury could also draw this inference from the degrading manner in which Schoener would announce to the office that Roby was “absent again” and from the demeaning comments, gestures, and facial expressions Schoener made in response to Roby's body odor and arm sores. Viewed together, the evidence is sufficient to support the jury's conclusion that Schoener harassed Roby in violation of the FEHA.

(Roby, supra, 47 Cal.4th at pp. 710–711.)

The evidence here is of comparable severity and pervasiveness. Plaintiff contends that her relationship with Defendants was positive until her September 1, 2022 announcement of her pregnancy and upcoming maternity leave. Thereafter, she was subject to escalating micromanagement, texts at “all hours of the day and night,” contradictory demands, and reprimands when she failed to communicate information that Plaintiff contends was already in Defendants’ possession. (Burkholder Decl. ¶ 20.) Additionally, Plaintif f testifies that Varma at several points subjected her to lengthy, profane tirades about her incompetence, which were not a feature of their relationship before she announced her pregnancy. Under Roby, these actions can constitute evidence to support a harassment claim if Plaintiff can show the overall effect was to convey a demeaning message about her pregnancy. (Roby, supra, 47 Cal.4th at p. 708.) This ruling is consistent with the directive that, “[h]arassment cases are rarely appropriate for disposition on summary judgment.” (Gov. Code, § 12923, subd. (e).)

Defendants contend that Plaintiff possesses no evidence that these actions were motivated by her pregnancy, rather than their own concerns about the business and her handling thereof. But Defendants present only evidence that the company was not in a sustainable financial place in September 2022 or thereafter. They do not present evidence that this state marked a change from the company’s prior condition, in which both Plaintiff and Defendants characterized their relationship as positive.

Defendants in reply argue that “performance critiques” cannot constitute harassment. (Reply at pp. 12–13.) They are correct, insofar as simple critique, without more, cannot support a harassment claim. But after Roby, it is incorrect to argue that conduct otherwise amounting to harassment becomes shielded from liability merely because it is couched in the language of critique, particularly when the trier of fact has a factual basis for believing the harassment to be motivated by animus toward a protected category.

Here, Plaintiff possesses ample evidence to suggest that Varma’s actions were motivated by her pregnancy. There is her own testimony concerning his change in demeanor following her announcement in September 2022. Varma himself identified this as an inflection point in his regard for Plaintiff’s prioritization of the company, although he identified Plaintiff’s trip to Uganda, occurring near the same time, as the catalyst. (Opposition Exh. 35.) Plaintiff also testifies that Varma complained to Plaintiff about her upcoming maternity leave limiting her ability to conduct fundraising for the company. (Burkholder Decl. ¶ 27; Opposition Exh. 49 at p. 368.) At the meeting where Varma told Plaintiff he had lost confidence in her as CEO, Varma told Plaintiff that they would soon be undergoing a leadership change in any event, which plausibly reads as a reference to Plaintiff’s then-upcoming maternity leave. (Opposition Exh. 48 at p. 116; Burkholder Decl. ¶ 39.) A trier of fact could infer that Varma’s lengthy, demeaning, and profane comments about Plaintiff’s competence, as well as his micromanagement of Plaintiff’s work, were motivated by animus toward her pregnancy. The motion is therefore DENIED as to Defendant Varma. 

However, Defendants are correct that the evidence offered is insufficient to create triable issues of fact as to either the severity or culpability of Marz’s conduct. Plaintiff identifies no references or comments made by Marz about her pregnancy or upcoming leave, and beyond her testimony regarding Marz’s increased “frustration” with her after the announcement of her pregnancy, she identifies no interpersonal hostility from Marz, and insufficient evidence to suggest that any such conduct was rooted in bias directed at her pregnancy. (Burkholder Decl. ¶ 19.) Plaintiff thus has failed to raise triable issues of fact to support her harassment claim against Marz.

Accordingly, the motion is GRANTED as to Defendant Marz, and DENIED as to Defendant Varma.