Judge Richard S. Whitney, Case 37-2023-00002040-CU-BC-CTL 2023-09-15 Tentative Ruling

Judge: Richard S. Whitney, Case: 37-2023-00002040-CU-BC-CTL, Date: 2023-09-15 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - September 14, 2023

09/15/2023 10:30:00 AM C-68 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Richard S. Whitney

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Civil - Unlimited Breach of Contract/Warranty Demurrer / Motion to Strike 37-2023-00002040-CU-BC-CTL SCHAEBSDAU VS DEXCOM INC [IMAGED] CAUSAL DOCUMENT/DATE FILED:

TENTATIVE RULING: DEFENDANT DEXCOM, INC.'S DEMURRER TO PLAINTIFF'S FIRST AMENDED COMPLAINT ('FAC') is OVERRULED.

Defendant DEXCOM, INC. ('Defendant') asserts that Plaintiff FRED SCHAEBSDAU ('Plaintiff') has failed to allege the existence of a contract between Plaintiff and Defendant (because the alleged contract was with a subsidiary of Defendant) and the statute of limitations would bar any claim of breach of contract. Plaintiff does not deny that the 'MANAGEMENT AGREEMENT' was between Plaintiff and Dexcom Germany GmbH ('Dexcom Germany'); however, Plaintiff asserts that he was a third-party beneficiary of Defendant's 2015 Equity Incentive Plan, which was incorporated into the MANAGEMENT AGREEMENT by reference. Further, Plaintiff asserts that the statute of limitations did not begin to run until the effective date of Plaintiff's termination, which was January 31, 2019, such that Plaintiff timely filed this action within four years of the breach since Defendant refused '[a]t time of Plaintiff's termination... to issue to Plaintiff the 3,000 shares of common stock in Dexcom, Inc. as promised.' (FAC, ¶ 7.) 'Several contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together.' (Civ. Code, § 1642.) ' ' ' 'It is, of course, the law that the parties may incorporate by reference into their contract the terms of some other document. [Citations.] But each case must turn on its facts. [Citation.] For the terms of another document to be incorporated into the document executed by the parties the reference must be clear and unequivocal, the reference must be called to the attention of the other party and he must consent thereto, and the terms of the incorporated document must be known or easily available to the contracting parties.' ' [Citations.]' [Citation.]' (Wolschlager v. Fidelity National Title Ins. Co. (2003) 111 Cal.App.4th 784, 790, 4 Cal.Rptr.3d 179 (Wolschlager ).) (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 66.) Plaintiff attaches the MANAGEMENT AGREEMENT to the FAC, which clearly refers to 'DexCom's 2015 Equity Incentive Plan.' The Court finds the reference to the DexCom's 2015 Equity Incentive Plan is sufficiently clear to find it is incorporated by reference. While Defendant asserts it is improper for Plaintiff to assert the third-party-beneficiary theory at this time given that Plaintiff did not allege the theory, Defendant does not point to any authority that states a plaintiff must state in the pleading that the plaintiff is relying upon the third-party-beneficiary theory. 'The nature and character of a pleading are determined from the allegations. The court is not limited to plaintiffs' theory, but instead must determine Calendar No.: Event ID: TENTATIVE RULINGS

3013429 47 CASE NUMBER: CASE TITLE: SCHAEBSDAU VS DEXCOM INC [IMAGED] 37-2023-00002040-CU-BC-CTL if the factual allegations of the complaint are adequate to state a cause of action under any legal theory.' (Alexandrou v. Alexander (1974) 37 Cal.App.3d 306, 313.) The Court rejects Defendant's argument.

The pivotal question of whether a third party may enforce a contract is 'whether an intent to benefit a third person appears from the terms of the contract.' (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1022.) '[I]t is not enough that the third party would incidentally have benefited from performance.' (Id. [Citation and quotes omitted].) 'On the other hand, 'the third person need not be named or identified individually to be an express beneficiary.' [Citation] 'A third party may enforce a contract where he shows that he is a member of a class of persons for whose benefit it was made.'' (Id. at 1023[Citations omitted].) '[T]here is no requirement that 'both of the contracting parties must intend to benefit the third party....' [Citation] Rather, 'it is sufficient that the promisor must have understood that the promisee had such intent.'' (Id. at 1023[Citations omitted].) The Court finds DexCom's 2015 Equity Incentive Plan intended to benefit a class of persons of which Plaintiff was a member – it was intended 'to provide incentives to attract, retain and motivate eligible persons.' (FAC.) Plaintiff has alleged facts to support that he was an eligible person. (FAC, ¶¶ 5-6, attached Exhibits.) Plaintiff also alleges facts to support that Defendant is bound by the acts of its subsidiaries, including Dexcom Germany, based on the terms in DexCom's 2015 Equity Incentive Plan. (See FAC, attached Exhibits.) Defendant argues that even if a contract has been alleged, Plaintiff's allegations are such that Plaintiff's grant date was in March of 2018, given the quarterly approval schedule identified in section 4.3 of the MANAGEMENT AGREEMENT. Defendant argues that because DexCom's 2015 Equity Incentive Plan provides for a 12 month vesting period Plaintiff's shares would not have vested until March of 2019, which was after Plaintiff's effective termination date and vesting ceases when the employee is terminated. DexCom's 2015 Equity Incentive Plan states 'RSUs are approved quarterly, typically in March, May, August and November, and the grant date is established upon such approval....' (FAC, attached Exhibits [Emphasis added].) Plaintiff does not allege exactly when the grant was approved, only that in May of 2018, he was advised by a licensed attorney and member of Defendant's Board of Directors, John Lister, that 'he had been granted 3,000 shares in' Defendant. (FAC, ¶ 6.) Further, Plaintiff alleges 'Plaintiff was awarded 3,000 shares by the Compensation Committee in January of 2018.' The allegations, as pled, do not indicate that it is impossible for Plaintiff to have been granted stocks that vested by January 31, 2019. Defendant's argument fails.

As to the statute of limitations argument, the Court agrees there are issues of fact as to whether the statute of limitations began to run on January 31, 2019, on the effective date of Plaintiff's termination, such that the action was timely filed. The demurrer is overruled.

Judicial notice of the German judgment is taken to the extent permitted, which does not include the facts asserted nor the translation (as there is no translation certification). (Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117.) The Court takes judicial notice of the fact the judgment exists. The demurrer is overruled.

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