Roadrunner Intermodal Services, LLC v. T.G.S. Transportation, Inc.

MOTION FOR SUMMARY JUDGMENT

E.D. Cal.February 19, 2019

Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA ROADRUNNER INTERMODAL SERVICES, LLC, a Delaware limited liability company, Plaintiff, v. T.G.S. TRANSPORTATION, INC., a California corporation, and DOES 1-10, Defendants. CASE NO. 1:17-cv-01056-DAD-BAM (Consolidated with Case No. Case No. 1:17-cv- 01207-DAD-BAM) ROADRUNNER INTERMODAL SERVICES LLC’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS JEFFREY COX, Plaintiff, v. ROADRUNNER INTERMODAL SERVICES, LLC, et al., Defendant(s). Date: March 19, 2019 Time: 9:30 a.m. Dept: Courtroom 5, 7th Floor ROADRUNNER INTERMODAL SERVICES, LLC, a Delaware limited liability company, Defendant and Counter- Plaintiff, v. JEFFREY COX, Plaintiff and Counter- Defendant. James M. Nelson – SBN 116442 Kurt A. Kappes – SBN 146384 Michael D. Lane – SBN 239517 Michelle L. DuCharme – SBN 285572 GREENBERG TRAURIG, LLP 1201 K Street, Suite 1100 Sacramento, CA 95814-3938 Telephone: (916) 442-1111 Facsimile: (916) 448-1709 nelsonj@gtlaw.com kappesk@gtlaw.com lanemd@gtlaw.com ducharmem@gtlaw.com Attorneys for ROADRUNNER INTERMODAL SERVICES, LLC and CENTRAL CAL TRANSPORTATION, LLC Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 1 of 26 i Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS I. INTRODUCTION ...........................................................................................................................1 II. FACTUAL BACKGROUND ..........................................................................................................2 A. THE STOCK PURCHASE AGREEMENT ........................................................................2 B. COX’S EMPLOYMENT WITH ROADRUNNER BEGINS .............................................3 C. COX BEGINS COMPLAINING ABOUT THE EARN-OUT ACCOUNTING ................3 D. THE EARN-OUT PERIOD ENDED DECEMBER 31, 2016.............................................4 E. THE FIRST QUARTER OF 2017 AND THE NEED FOR SIGNIFICANT COST SAVINGS ............................................................................................................................4 F. THE TERMINATION .........................................................................................................5 III. LEGAL STANDARD ......................................................................................................................5 IV. ARGUMENT ...................................................................................................................................6 A. COX’S CLAIMS OF RETALIATION IN VIOLATION OF LABOR CODE SECTION 1102.5 FAIL AS A MATTER OF LAW BECAUSE ROADRUNNER HAD LEGITIMATE, BUSINESS REASONS FOR HIS TRANSFER AND TERMINATION ..................................................................................................................6 1. Relevant Legal Framework ......................................................................................7 2. Roadrunner Did Not Retaliate With Regard to Cox’s December 31, 2016 Change in Responsibilities .......................................................................................7 a. The email and letter are not protected activity because they fail to disclose a violation of any federal or state statute, rule, or regulation, and because Cox did not have a reasonable belief that Roadrunner Intermodal had engaged in illegal conduct. .............................7 b. Cox’s transfer from Vice President of Operations to Director of Sales is not an adverse employment action because he was transferred to a comparable position. ...........................................................9 c. Roadrunner had a legitimate, nonretaliatory reason for transferring Cox .............................................................................................................10 3. Termination Was Not the Result of Retaliation .....................................................10 B. COX’S THIRD CLAIM FOR TERMINATION IN VIOLATION OF PUBLIC POLICY FAILS AS A MATTER OF LAW BECAUSE THE UNDISPUTED FACTS ESTABLISH A LEGITIMATE, NONRETALIATORY BUSINESS DECISION FOR COX’S TERMINATION AND THERE IS NO EVIDENCE OF PRETEXT TO PRECLUDE SUMMARY JUDGMENT ..................................................11 C. COX’S FOURTH AND FIFTH CLAIMS FOR LIBEL AND SLANDER FAIL AS A MATTER OF LAW BECAUSE THE PUBLICATIONS ARE EITHER PRIVILEGED, DO NOT CONSTITUTE DEFAMATION, OR FALL OUTSIDE THE SCOPE OF ROADRUNNER’S AUTHORITY........................................................13 Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 2 of 26 ii Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 D. COX’S SIXTH CLAIM FOR FAILURE TO PAY WAGES DUE AT TERMINATION FAILS AS A MATTER OF LAW BECAUSE COX WAS FULLY COMPENSATED FOR THE WORK HE PERFORMED ..................................16 E. COX’S SEVENTH CLAIM FOR INTENTIONAL INTERFERENCE WITH PROSPECTIVE BUSINESS ADVANTAGE FAILS AS A MATTER OF LAW BECAUSE THERE WAS NO ACTUAL DISRUPTION OF COX’S RELATIONSHIP WITH TGS OR HARM TO HIM ........................................................17 F. COX’S EIGHTH CLAIM FOR FAILURE TO PROVIDE AN ACCURATE ITEMIZED WAGE STATEMENT FAILS AS A MATTER OF LAW BECAUSE COX CANNOT SHOW THAT ANY ERROR IN THE FINAL STATEMENT WAS INTENTIONAL .......................................................................................................18 V. CONCLUSION ..............................................................................................................................19 Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 3 of 26 iii Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page(s) Cases Adams v. Sup. Ct. of Santa Clara Cty., 2 Cal. App. 4th 521 (Cal. Ct. App. 1992) ............................................................................................14 Akers v. Cty. Of San Diego, 95 Cal. App. 4th 1441 (Cal. Ct. App. 2002) ........................................................................................10 Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ...............................................................................................................................6 Bhan v. NME Hosps., Inc., 929 F.2d 1404 (9th Cir. 1991) ...............................................................................................................6 Cansino v. Bank of Am., 224 Cal. App. 4th 1462 (Cal. Ct. App. 2014) ......................................................................................15 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ...............................................................................................................................6 Cruey v. Gannett Co. 64 Cal. App. 4th 356 (Cal. Ct. App. 1998) ..........................................................................................14 Davaris v. Cubaleski, 12 Cal. App. 4th 1583 (Cal. Ct. App. 1993) ........................................................................................15 Della Pena v. Toyota Motor Sales, USA, 11 Cal. 4th 376 (Cal. 1995) ..................................................................................................................18 Diaz v. Grill Concepts Servs., 23 Cal. App. 5th 859 (Cal. Ct. App. 2018) ..........................................................................................16 Edgerly v. City of Oakland, 211 Cal. App. 4th 1191 (Cal. Ct. App. 2012) ........................................................................................8 Erhart v. Bofl Holding, Inc., 269 F. Supp. 3d 1059 (S.D. Cal. 2017) ................................................................................................15 Foley v. Interactive Data Corp., 47 Cal. 3d 654 (Cal. 1988) (en banc) ...................................................................................................12 Green v. Ralee Engineering Co., 19 Cal. 4th 66 (Cal. 1998) ....................................................................................................................11 Jennings v. Marralle, 8 Cal. 4th 121 (Cal. 1994) ....................................................................................................................11 Kaiser Cement Corp. v. Fisbach & Moore, Inc., 793 F.3d 1100 (9th Cir. 1986) ...............................................................................................................6 Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134 (Cal. 2004) ................................................................................................................18 Love v. Motion Indus., Inc., 309 F. Supp. 2d 1128 (N.D. Cal. 2004) .................................................................................................8 Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 4 of 26 iv Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Lundquist v. Reusser, 7 Cal. 4th 1193 (Cal. 1994) ..................................................................................................................14 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) ...............................................................................................................................6 Mazzola v. Feinstein 154 Cal. App. 3d 305 (Cal. Ct. App. 1984) .........................................................................................15 McDonnell Douglas Corporation v. Green, 411 U.S. 792 (1973) ...............................................................................................................................7 Mokler v. Cty. Of Orange, 157 Cal. App. 4th 121 (Cal. Ct. App. 2007) ..........................................................................................8 Morgan v. Regents of the Univ. of Cal., 88 Cal. App. 4th 528 (Cal. Ct. App. 2000) ............................................................................................7 Nguyen v. Proton Tech. Corp., 69 Cal. App. 4th 140 (Cal. Ct. App. 1999) ..........................................................................................15 Nw. Motorcycle Ass’n v. US. Dep’t of Agric., 18 F.3d 1468 (9th Cir. 1994) .................................................................................................................6 Orr v Bank of Am., 285 F.3d 764 (9th Cir. 2002) .................................................................................................................6 Patten v. Grant Joint Union High Sch. Dist., 134 Cal. App. 4th 1378 (Cal. Ct. App. 2005) ..............................................................................7, 9, 10 Settimo Associates v. Environ Sys., Inc., 14 Cal. App. 4th 842 (Cal. Ct. App. 1993) ..........................................................................................17 Smith v. Maldonado, 72 Cal. App. 4th 637 (Cal. Ct. App. 1999) ..........................................................................................14 Stevenson v. Superior Court, 16 Cal. 4th 880 (Cal. 1997) ............................................................................................................11, 12 Turner v. Anheuser-Busch, Inc., 7 Cal. 4th 1238 (Cal. 1994) ............................................................................................................11, 12 Wise v. Thrifty Payless, Inc., 83 Cal. App. 4th 1296 (Cal. Ct. App. 2000) ........................................................................................14 Yanowitz v. L’Oreal USA, Inc., 36 Cal. 4th 1028 (Cal. 2005) ............................................................................................................7, 10 Youst v. Longo, 43 Cal. 3d 64 (Cal. 1987) .....................................................................................................................18 Zoslaw v. MCA Distrib. Corp., 693 F.2d 870 (9th Cir. 1982) .................................................................................................................6 Statutes Cal. Civ. Code § 44 ....................................................................................................................................14 Cal. Civ. Code § 45 ....................................................................................................................................14 Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 5 of 26 v Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Cal. Civ. Code §§ 45, 46 ............................................................................................................................14 Cal. Civ. Code § 46 ....................................................................................................................................14 Cal. Civil Code § 47(b) ..............................................................................................................................14 Cal. Code Regs. tit. 8, § 13520 ..................................................................................................................16 Cal. Code Regs. tit. 8 § 13520(a) ...............................................................................................................16 Cal. Labor Code § 203(a) ...........................................................................................................................16 Cal. Labor Code § 226(a) ...........................................................................................................................19 Cal. Labor Code § 226(e)(1) ......................................................................................................................19 Cal. Labor Code § 230.8(a)(1) ...................................................................................................................17 Cal. Labor Code § 230.8(b)(1) ...................................................................................................................17 Cal. Labor Code § 1102.5 ......................................................................................................................7, 10 Other Authorities Fed. R. Civ. P. 56(a) ....................................................................................................................................6 Fed. R. Civ. P. 56(g) ....................................................................................................................................6 Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 6 of 26 1 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION At some stage, no matter how carefully pleaded a complaint is, the claims it presents cannot survive a collision with the undisputed facts. That time is at hand. As explained below, the employment claims—whether attached to the state court complaint and now dismissed there or used as a second front here—are a distraction devoid of merit and designed to allow for an ex post facto, erroneous retelling of the sale of Central Cal Transportation. Jeffrey Cox (“Cox”) was at one time a co-owner of Central Cal Transportation (“Central Cal”). Most people who sell a business do not bring employment claims against the buyer; yet, Roadrunner Intermodal Services LLC (“Roadrunner”), the buyer of Central Cal, is now here, defending itself against baseless allegations arising from Cox’s employment with it. Similarly, most sellers who expect to keep working at their company during an earn-out period and after the sale of their company have a written employment agreement specifying the duration of their employment (and perhaps ensuring the inclusion of severance provisions in said agreement). Yet, Cox failed to ensure that this sort of employment agreement with Roadrunner was established at the time of the sale, even in spite of Cox’s representation by counsel in negotiating the transaction. The facts underlying the sale of Central Cal should be undisputed—Cox was approached with a purchase offer by Roadrunner and, with advice of counsel, entered into a sale agreement in large part because of its Earn-Out bonus provision. This Earn-Out bonus provision generally provided that if certain profitability targets were met for Central Cal, Cox and the other seller (David Chidester) would receive additional payments. During the Earn-Out period, Cox was to remain in operational control of Central Cal as its chief of operations at a negotiated salary much higher than many executives at Roadrunner were paid. There was no employment contract nor were there any severance terms negotiated. However, there did exist alternative dispute resolution (“ADR”) provisions as to disputes about the Earn-Out provision as well as a non-competition agreement, which are both common components in the sale of businesses. As the Earn-Out period came to an end in December 2016, Cox desired to continue earning the higher than normal salary he had earned in his role as chief of operations at Central Cal. Initially, that was made possible by peeling away his operations responsibilities and leaving him in a sales role. That Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 7 of 26 2 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 effectively created a job (which had not previously existed) just for him. However, the first quarter of 2017 was financially bad for Central Cal and Roadrunner’s CEO concluded that significant cuts were necessary and would require layoffs. It was then that Cox’s exceptional salary became a factor for serious consideration—it would require termination of multiple Central Cal employees who never had an ownership interest in the company to achieve the same cost savings that could be achieved by eliminating the position Cox held. Given this analysis, Roadrunner ended its relationship with Cox. As the court is generally aware, there is a dispute as to whether the profitability targets in the underlying agreement were met. Originally, many of the employment claims here were attached to a state court case that challenged the Earn-Out calculations. That lawsuit was inconsistent with the ADR provisions in the parties’ Stock Purchase Agreement (“SPA”), which a superior court judge in Los Angeles County enforced. That matter is currently in a form of ADR. Cox, following his termination, engaged in open competition with Central Cal that led to a claim against Cox’s new employer and eventually against Cox for violation of the non-competition agreement and abuse of Central Cal’s trade secrets. That litigation was filed in this Court. Cox responded by filing a new set of employment claims here, in turn dismissing those in the Los Angeles County case. Eventually, the two cases were consolidated in the present action. Despite all its discovery issues, this remains at its core a relatively uncomplicated employment law case. As it turns out, it is also devoid of merit. Whatever else may be said of the disputes between Cox, his new employer, and Central Cal, what cannot be said is that there is any sort of valid employment claim here. As the case proceeds toward trial, it is time to narrow the issues. II. FACTUAL BACKGROUND A. The Stock Purchase Agreement In 1995, Central Cal was created by Cox’s father and his father’s business partner, David Chidester. (RR Statement of Undisputed Facts (“SUF”) 1.) Cox’s father eventually transferred his ownership to Cox, and eventually Cox determined it was time to sell the family business. (RR SUF 2.) As a result, discussions with Roadrunner ensued and Cox and Chidester entered into a Stock Purchase Agreement on November 2, 2012. (RR SUF 3.) While Cox acknowledged that the sale of Central Cal was not negotiated, he failed to indicate why he did not simply reject the transaction given the seeming Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 8 of 26 3 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 one-sided nature of it. (RR SUF 4.) As payment for the shares and the Entities’ assets, Roadrunner agreed to pay $3,850,000 less debt at closing and plus or minus available cash, depending on the balance at closing (defined in the SPA as the “Purchase Price”). (RR SUF 5.) Frankly, there was so much debt that Cox and Chidester each received only approximately $110,000. (RR SUF 6.) It was always intended that the real money would flow from the Earn-Out bonus if in fact the agreed upon targets were met. (RR SUF 7.) If they were met, the maximum Earn-Out bonus would have been as much as $4,000,000. (Id.) No Earn-Out bonus would be due for any of the years 2013, 2014, 2015, or 2016 unless the EBITDA in the year in question exceeded $1.4 million. (Id.) Roadrunner agreed that during those years Cox would remain in operational control of Central Cal. (RR SUF 8.) Moreover, the structure of the Earn-Out Bonus was such that if the $1.4 million target was met, Cox and his then-partner Chidester would receive $750,000 plus 75% of the amount that company performance exceeded the EBITDA1 target. (Id.) B. Cox’s Employment With Roadrunner Begins Once the SPA was finalized in November 2012, Cox started work for the then Roadrunner controlled Central Cal.2 Cox retained the title of Vice-President of Operations of the post-transaction Central Cal. (RR SUF 9-10.) Cox also negotiated an extremely high salary for himself that could be justified only because of the deal. This made him one of the highest paid employees of Roadrunner. (RR SUF 11.) He did not negotiate an exception to California Labor Code Section 2922’s presumption of at- will employment, nor did he negotiate a severance arrangement (even though represented by counsel). C. Cox Begins Complaining About the Earn-Out Accounting As early as 2013, Cox began claiming that he noticed accounting irregularities and started to complain to Roadrunner’s entire upper management. (RR SUF 13.) He continued his informal complaints into early 2016. (RR SUF 15.) Then, on Tuesday, September 20, 2016, Cox sent an email to Judy Vijums, Peter Ambruster, and Ben Kirkland, executives at Roadrunner, requesting a complete accounting for Central Cal for fiscal years 2012 through the present. (RR SUF 16.) In addition, on 1 “EBIDTA” is an acronym for “Earnings Before Interest, Taxes, Depreciation and Amortization.” 2 Although Chidester sued for wrongful termination in Los Angeles County Superior Court, his deposition testimony here was unequivocal that he never worked for Central Cal post-closing though he did receive some payments. Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 9 of 26 4 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 November 10, 2016, counsel for Cox followed up by sending the same three executives as well as general counsel for Roadrunner, Bob Milane, a letter demanding an accounting and the financials for Central Cal for fiscal years 2012 through the present. (RR SUF 17.) The purpose of both the email and letter was to obtain an accounting of the Earn-Out calculations for Central Cal in order to determine if Cox qualified for a bonus. Notwithstanding these complaints from Cox and his counsel, no adverse employment action is alleged to have occurred between 2013 and 2016. In other words, no retaliation is alleged for three years following the start of Cox’s reports of alleged irregularities in Roadrunner’s accounting of Central Cal’s financials. In November 2016 and in an unrelated event Cox seeks to capitalize on now, Roadrunner because aware of irregularities in its financial reporting at the parent company level. (RR SUF 18.) There is no evidence that any of the irregularities related to Central Cal. There is also no reason to believe any of the irregularities had anything to do with Central Cal or understated its profitability. D. The Earn-Out Period Ended December 31, 2016 As the fourth and final year of the Earn-Out period came to a close, Cox initiated discussions about continuing on with Central Cal with Roadrunner Intermodal CEO Ben Kirkland. Roadrunner Intermodal was a subsidiary of Roadrunner transportation. There was no need to leave Cox in operational control of Central Cal and his salary could not be justified in that manner. Frankly, the easy thing to do would have been to recognize that when a founder sells a company at some point his utility to the operation ends. Notwithstanding the complaints, Roadrunner President Ben Kirkland thought shifting Cox into a sales role played more to his strengths and might be a way to justify the compensation. (RR SUF 20-21.) By contrast, Cox believes his email and letter dated September 20, 2016, and November 10, 2016, respectively, and which sought an accounting of the earn-out calculations for Central Cal to determine if he qualified for a bonus, were the cause of this transfer and constituted a demotion. Yet, Cox’s exceptional salary remained the same E. The First Quarter of 2017 and the Need for Significant Cost Savings The first quarter of 2017 was not kind to Central Cal. (RR SUF 22.) Revenue was well below expectations, and costs also running high. Roadrunner’s President determined layoffs were needed and he evaluated how to implement them. (RR SUF 23.) It was at that point that several factors coincided. Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 10 of 26 5 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 First, the Central Cal transaction was a full four years in the past. Second, Cox’s salary was significantly higher than other peers’ salaries and so much so that it would have required termination of two to three employees to match the cost savings that would have resulted from eliminating Cox’s position. (RR SUF 25.) It was also true that the position Cox held in 2017 was created for him and had not existed beforehand. It was on the basis of cost considerations that Mr. Kirkland decided to eliminate Cox position and terminate his employment. (RR SUF 25-26.) F. The Termination Ben Kirkland flew out from Atlanta, Georgia to Fresno (with Cox’s final paycheck) to terminate Cox’s employment. Cox, however had a school event the day of the termination which Kirkland was unaware of, and so Cox was not present at Central Cal when the day began. (RR SUF 27), what Cox did not do was record the planned partial day off in the time system. (RR SUF 29.) Consistent with Central Cal policy, he should have scheduled this as paid time off. (Id.) Because he had not done so and because Kirkland had already printed off Cox’s final paycheck, the time off Cox took for the school event was not charged to his PTO balance, yielding the inevitable conclusion that Cox was overpaid not underpaid. (RR SUF 30.) Following the termination, Cox went straight to his lawyer’s office to plot his next move and pointed out a typo on the payday statement that he did not raise with Kirkland going so far as to say to his lawyer, “[H]ere’s an issue with the paystub that I’m sure they’re unaware of.” (RR SUF 35.) After the termination, Nicole Goodwin, counsel for Roadrunner, sent Cox a letter regarding his non-competition agreement with Roadrunner. (RR SUF 36.) In that letter, she indicated that it was her client’s position that Cox was contractually prohibited from attempting to employ an employee of Roadrunner, inducing any of Roadrunner’s employees to leave the employ of Roadrunner, soliciting any customers of Roadrunner until December 31, 2017. (Id.) III. LEGAL STANDARD The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court. See Nw. Motorcycle Ass’n v. US. Dep’t of Agric., 18 F.3d 1468, 1471 (9th Cir. 1994). Summary judgment is appropriate when the pleadings, the discovery and disclosure materials on file, and any affidavits “show there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986). Moreover, Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 11 of 26 6 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Rule 56 provides that a party may move for summary judgment in part as to a claim or a defense. Fed R. Civ. P. 56(a). Even if “the court does not grant all the relief requested by the motion, [the court] may enter an order stating any material fact—including an item of damages or other relief—that is not genuinely in dispute” and may treat that fact as established in the case. Fed. R. Civ. P. 56(g). The moving party bears the burden of showing that there are no genuine issues of material fact. Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir. 1982). A moving party may do this by “showing—that is, pointing out to the district court—that there is an absence of evidence to support” an essential element or claim of the plaintiff’s case. See Celotex, 477 U.S. at 325 (internal quotation marks omitted). In evaluating a summary judgment motion, a court views all facts and draws all inferences in the light most favorable to the nonmoving party. Kaiser Cement Corp. v. Fisbach & Moore, Inc., 793 F.3d 1100, 1103 (9th Cir. 1986). Once the moving party satisfies the requirements of Rule 56, the burden shifts to the party resisting the motion to “set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). The nonmoving party “may not rely on denials in the pleadings but must produce specific evidence, through affidavits or admissible discovery material to show that the dispute exists,” Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991), and “must do more than simply show that there is some metaphysical doubt as to the material facts,” Orr v Bank of Am., 285 F.3d 764, 783 (9th Cir. 2002) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). In other words, a mere “scintilla of evidence” produced by the nonmoving party in support of its position is insufficient. Anderson, 477 U.S. at 252. IV. ARGUMENT A. Cox’s Claims of Retaliation in Violation of Labor Code Section 1102.5 Fail as a Matter of Law Because Roadrunner Had Legitimate, Business Reasons for His Transfer and Termination Cox brings two claims under the whistleblower protection provision of California Labor Code Section 1102.5, arguing that he was demoted by being transferred from his role as Vice President of Operations of Central Cal to sales and separately that he was terminated because he engaged in protected activity. Roadrunner moves for summary judgment on both claims. Cox has no evidence to show that Roadrunner did not have a legitimate, nonretaliatory reason for transferring Cox from his role as Vice President of Operations to the sales team or for terminating Cox. Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 12 of 26 7 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. Relevant Legal Framework Here, Cox lacks any direct evidence of retaliation; therefore, the burden-shifting framework of McDonnell Douglas Corporation v. Green, 411 U.S. 792 (1973), governs his whistleblower retaliation claims. See Morgan v. Regents of the Univ. of Cal., 88 Cal. App. 4th 52, 67–68 (Cal. Ct. App. 2000) (finding that where there is direct evidence of retaliation, the burden shifting analysis does not apply and the “defendant can avoid liability only by proving the plaintiff would have been subjected to the same employment decision without reference to the unlawful factor”). The McDonnell Douglas framework is comprised of three components. At the first step, the plaintiff must establish a prima facie case of retaliation by showing that “(1) he or she engaged in a protected activity, (2) the employer subjected the employee to an adverse employment action, and (3) a causal link existed between the protected activity and the employer’s action.” Yanowitz v. L’Oreal USA, Inc., 36 Cal. 4th 1028, 1042 (Cal. 2005) (internal quotation marks and citations omitted). Once the employee establishes a prima facie case of retaliation, the burden shifts to the employer to offer a legitimate, nonretaliatory reason for the adverse employment action. Morgan, 88 Cal. App. 4th at 68. If the court finds that the employer has presented such a reason, the burden shifts back to the employee to prove intentional retaliation, i.e., that the proffered reason for the adverse employment action is pretextual. Id; see also Patten v. Grant Joint Union High Sch. Dist., 134 Cal. App. 4th 1378, 1384 (Cal. Ct. App. 2005). 2. Roadrunner Did Not Retaliate With Regard to Cox’s December 31, 2016 Change in Responsibilities In Claim One, Cox contends he suffered an adverse employment action on December 31, 2016, when he was removed from his role as Vice President of Central Cal Transportation and placed on the sales team at Roadrunner, and that this adverse employment action was taken because of his email and letter dated September 20, 2016 and November 10, 2016, respectively, and which sought an accounting of the Earn-Out calculations for Central Cal Transportation to determine if he qualified for a bonus. (RR SUF 18.) Cox’s first claim fails for several reasons. a. The email and letter are not protected activity because they fail to disclose a violation of any federal or state statute, rule, or regulation, and because Cox did not have a reasonable belief that Roadrunner Intermodal had engaged in illegal conduct. Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 13 of 26 8 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 “An employee engages in protected activity when she discloses . . . reasonably based suspicions of illegal activity.” Mokler v. Cty. Of Orange, 157 Cal. App. 4th 121, 138 (Cal. Ct. App. 2007) (quotation, marks and citation omitted). In other words, section 1102.5 “requires that . . . the activity disclosed by an employee must violate a federal or state law, rule, or regulation.” Edgerly v. City of Oakland, 211 Cal. App. 4th 1191, 1199 (Cal. Ct. App. 2012) (quotation marks and citations omitted). To establish a reasonably based suspicion of illegal activity, the employee must actually articulate some legal foundation for his suspicion—some statute, rule, or regulation that was violated by the disclosed conduct. See Love v. Motion Indus., Inc., 309 F. Supp. 2d 1128, 1135 (N.D. Cal. 2004) (concluding that without citing to “any statute, rule or regulation that may have been violated by the disclosed conduct,” the plaintiff lacked “any foundation for the reasonableness of his belief”). Cox’s September 20, 2016 email Roadrunner does not articulate a specific statute, rule, or regulation that he believed Roadrunner violated. (ECF No. 98-2 at 2-3.) Instead, the email made a solitary and vague reference to the company’s self-disclosed SEC filings. (Id. at 2 (stating that the “information reported in the SEC filings runs contrary to the explanations and financial” that Cox received).) Similarly, Cox’s counsel’s November 10, 2016 letter to Roadrunner claims that the company reported inaccurate profits, and that this false reporting somehow “calls into question Roadrunner’s . . . SEC filings.” (Id. at 6.) What it does not say is that it understated profits which in turn may have impacted the Earn-Out Bonus. As a matter of law, this is insufficient to establish that the email or letter constitute protected activity because no specific federal regulation is cited in either document, Cox is reacting to a Roadrunner very public disclosure and there is no clear articulation of a violation of the law. Moreover, Cox’s purported basis for his belief that the SEC filings were inaccurate is not reasonable. First, Cox’s counsel indicated in his November 10, 2016 letter that Cox had been informed by “credible sources” that the company falsely reported profits during certain fiscal years, yet fails to indicate who these sources were or how those sources reached their conclusion. (ECF No. 98-2 at 6.) Second, the publicly available numbers Cox supposedly relied upon to form his belief applied to Roadrunner, the parent company in its entirety, while the Earn-Out calculations Cox applied to Central Cal only. (See id. at 2 (Cox indicating in his Tuesday, September 20, 2016 email to Roadrunner that he Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 14 of 26 9 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 noticed inaccuracies in the accounting and financial for Central Cal and that this is based in part on Roadrunner’s SEC filings not squaring with the numbers for Central Cal).) Roadrunner is a large organization with dozens of subsidiaries. It is unreasonable to believe Roadrunner’s publicly disclosed financials indicate with any particularly the accuracy of Central Cal’s numbers. Moreover, the financial irregularities Cox claims to have begun to notice in 2013 related to (1) interest being charged on his Earn-Out (which he had yet to receive), (2) Cox personally charged for trucks that were not at his terminal, and (3) Central Cal being charged for trucks that it had paid off in the purchase. (RR SUF 14.) The nature of these beliefs have nothing to do with whistleblowing or the violation of SEC regulations. At best, these beliefs formed Cox’s basis for contesting the financial information provided to him in order to qualify for a bonus, which was the sole motivation for the September 20, 2016 email and November 10, 2016 letter. Thus, even accepting Cox’s allegations as true, he has failed to demonstrate that he had sufficient information to form a reasonable belief that any potentially inaccurate financial information regarding Central Cal that Roadrunner disclosed was a violation of state or federal law. b. Cox’s transfer from Vice President of Operations to Director of Sales is not an adverse employment action because he was transferred to a comparable position. An “adverse employment action” in the context of section 1102.5(b) is viewed the same as it is under the Fair Employment and Housing Act (“FEHA”). Patten, 134 Cal. App. 4th at 1381. The proper standard for determining whether something constitutes an “adverse employment action” is the materiality test, which requires that an employer’s action substantially and detrimentally affect the terms and conditions of employment and includes “the entire spectrum of employment actions that are reasonably likely to adversely and materially affect an employee’s job performance or opportunity for advancement in his or her career.” Akers v. Cty. Of San Diego, 95 Cal. App. 4th 1441, 1454–57 (Cal. Ct. App. 2002); Yanowitz, 36 Cal. 4th at 1052. This spectrum runs the gamut from ultimate employment decisions such as hiring, firing, and demotion to actions reasonably likely to deter employees from engaging in protected activities. Patten, 134 Cal. App. 4th at 1387; Akers, 95 Cal. App. at 1454-55. “This range of definitions reflects the competing interest in defining adverse employment action: on the one hand, guarding against both judicial micromanagement of business practices and frivolous suits over Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 15 of 26 10 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 insignificant slights; on the other, discouraging employees from whistleblowing through employer retaliation.” Patten, 134 Cal. App. 4th at 1387. Here, Cox’s title change and change in the types of things he was accountable for does not constitute an adverse employment action, as the transfer to from Vice President of operations to Director of Sales at Roadrunner was a “transfer into a comparable position.” Akers, 95 Cal. App. 4th at 1457. Moreover, there was no change in his level of compensation. c. Roadrunner had a legitimate, nonretaliatory reason for transferring Cox Even assuming Cox demonstrates that the 2016 email and letter constitute protected activity and that his transfer to the Director of Sales position is an adverse employment action within the meaning of section 1102.5, Roadrunner had legitimate, nonretaliatory reasons for moving Cox to the Sales Department. Specifically: (1) to ease personnel tensions caused by his high salary; and (2) to allow Cox to maintain his employment while justifying his high salary. (RR SUF 21.) Rather than transferring Cox to a new position, Roadrunner could have ended Cox’s employment at the end of the Earn-Out period without paying severance or any other additional compensation because none was negotiated as part of the sale of Central Cal. Yet, Roadrunner continued its relationship with Cox by offering him the new position as Director of Sales with the same degree of compensation. Therefore, Roadrunner asks that the Court enter summary judgment in its favor as to Cox’s first claim. 3. Termination Was Not the Result of Retaliation In his second claim for retaliation under Labor Code section 1102.5, Cox contends that he was terminated on May 31, 2017, because of: (1) his email and letter; (2) his and Chidester’s lawsuit against Roadrunner, which was initiated on February 16, 2017; and (3) his engagement in mediation with Roadrunner on May 5, 2017. (ECF No. 98 ¶¶ 79-80.) Cox cannot establish a prima facie case of retaliation; even so, Cox’s second claim of retaliation still fails because Roadrunner had a legitimate, nonretaliatory reason for terminating Cox at that time. Roadrunner terminated Cox for economic reasons—specifically, Cox’s salary was far higher than any other sales representative and the company was trying to cut costs. (RR SUF 11, 22-24.) Beginning in April 2017, Roadrunner began implementing cutbacks. (RR SUF 24.) In his termination Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 16 of 26 11 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 letter to Cox, Kirkland stated that “[i]n light of challenging revenue and freight load results and forecasts, [Roadrunner has] examined operations across Intermodal and are making expense reductions including personnel, and your position will be eliminated.” (RR SUF 26.) Cox has no evidence to show that Roadrunner’s legitimate business reason for terminating Cox is not worthy of credence. Therefore, Roadrunner asks that the Court enter summary judgment in its favor as to Cox’s second claim. B. Cox’s Third Claim for Termination in Violation of Public Policy Fails As a Matter of Law Because The Undisputed Facts Establish a Legitimate, Nonretaliatory Business Decision for Cox’s Termination and There is No Evidence of Pretext to Preclude Summary Judgment “The tort of wrongful discharge is not a vehicle for enforcement of an employer’s internal policies or the provisions of its agreements with others. [The plaintiff’s] failure to identify a statutory or constitutional policy that would be thwarted by his alleged discharge dooms his cause of action.” Turner, 7 Cal. 4th at 1257. In Jennings v. Marralle, 8 Cal. 4th 121 (Cal. 1994), the California Supreme Court narrowly defined what sources will provide a fundamental public policy that limits an employer’s ability to discharge an at-will employee. The Court in Green v. Ralee Engineering Co., 19 Cal. 4th 66 (Cal. 1998), re-affirmed that “[i]n the context of a tort claim for wrongful discharge, tethering public policy to specific constitutional or statutory provisions serves not only to avoid judicial interference with the legislative domain, but also to ensure that employers have adequate notice of the conduct that will subject them to tort liability to the employees they discharge.” Id. at 79 (quoting Stevenson v. Superior Court, 16 Cal. 4th 880, 889 (Cal. 1997)) (internal quotation marks omitted)). For a claim of wrongful termination in violation of public policy to be actionable, the policy must be supported by or tethered to a constitutional provision or statute. Stevenson v. Sup. Ct., 16 Cal. 4th 880, 890 (Cal. 1997). In addition, the policy must be: (a) public, in that it inures to the benefit of the public at large rather than to any particular employer or employee; (b) well established at the time of the employee’s discharge; and (c) “substantial and fundamental.” Here, Cox points to no constitutional provision or statute supporting his claim. Nor can he because his complaints concerned his private disagreements about (a) the EBITDA bonuses and (b) the quality of the data he received relating to the calculation of Earn-Outs under the SPA. (See ECF No. 98 ¶ 85.) In other words, what is clear here is that Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 17 of 26 12 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Cox’s gripe is personal and flows from his belief that Roadrunner mistreated him and breached the SPA. That is not the stuff of wrongful termination in violation of public policy claims. The California Supreme Court makes clear that where a plaintiff fails “to identify a statutory or constitutional policy that would be thwarted by his alleged discharge” this “dooms his cause of action.” Turner v. Anheuser- Busch, Inc., 7 Cal. 4th 1238, 1257 (Cal. 1994). As such, Cox’s claim is doomed.” Foley v. Interactive Data Corp., 47 Cal. 3d 654, 712 n.11 (Cal. 1988) (en banc). Second, even assuming Roadrunner terminated Cox for parroting purported accounting inaccuracies in Roadrunner’s or Central Cal’s financials that had already been disclosed, this clearly involves a private dispute between the buyer and seller of a business and does not affect the public whatsoever. Cox’s complaints concerned his private disagreements with Roadrunner about (a) the EBITDA bonuses, and (b) the quality of the data he received relating to the calculation of Earn-Outs under the SPA. In other words, Cox’s gripe was personal and flowed from his belief that as the Buyer in the transaction, Roadrunner, had breached the Agreement, which is beyond the purview and the purpose of this sort of claim. See Foley, 47 Cal. 3d at 670-71 (“When the duty of an employee to disclose information to his employer serves only the private interest of the employer, the rationale underlying [this] cause of action is not implicated.”) Finally, without any constitutional provision or statute specified, Cox cannot establish the final elements for this cause of action, i.e., that some policy allegedly violated by his termination was firmly established or fundamental at the time of his termination. Roadrunner therefore asks the Court to enter summary judgment in its favor on Cox’s third claim. Cox insists the temporal proximity between his May 31, 2017 termination and his earlier complaints and participation in mediation establishes wrongful termination. But his proffered causal link conflicts with his testimony that he started complaining as early as 2013 when he claims he noticed irregularities and started to complain to Roadrunner’s upper management. (RR SUF 13.) He continued his complaints into early 2016. (RR SUF 15.) And no adverse employment action is alleged to have occurred between 2013 and 2016, notwithstanding these complaints. It is undisputed that on or about September 20, 2016 Cox formally challenged the accuracy of various financial documents. (RR SUF 16.) No adverse employment action was taken at that time. Cox directed his counsel to send a demand letter regarding the accounting on November 10, 2016. (RR SUF 17.) Again, no adverse employment Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 18 of 26 13 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 action occurred during the month of November. At best, Cox’s argument amounts to the timing of his participation in mediation on May 5, 2017 led to his retaliatory termination on May 31, 2017. This is not enough to defeat summary judgment when the evidence establishes a legitimate business reason for the adverse employment action. As for Cox’s termination, Mr. Kirkland made the nonretaliatory business decision himself and it was based on the fact that the company needed to cut costs and Cox’s salary was one of the company’s highest. (RR SUF 21-25.) This fact was known to Cox well before his participation in the mediation on May 5, 2017. It is undisputed that Cox was well aware that there was a business concern about him being more highly compensated than other employees in November 2012. (RR SUF 11.) At that time, he was asked to take a $200,000 annual salary over a $250,000 annual salary because “it would be hard for [Kirkland] to justify paying [Cox] the 250 . . . because [he] would be higher than the officers that resided in Georgia.” Id. Thus, this legitimate business decision, while difficult for Mr. Kirkland to make, was in the best interests of the company in light of its financial position at the time. It also begs the question of how many other employee’s jobs Cox believes should have been sacrificed to achieve the same cost savings as the elimination of his very highly compensated position. In light of the legitimate business reason for Cox’s termination, there is no causal link between Cox’s inquiries about his earn-out numbers, which is unrelated to his employment, or participation in mediation and the legitimate employment decisions to terminate Cox because of the company’s economic condition at the time. Indeed, Mr. Kirkland’s testimony establishes that the decision to change Cox’s position in January 2017 came well after Cox’s “inquiries” in 2016 and were causally linked to conversations Mr. Kirkland had with Cox. C. Cox’s Fourth and Fifth Claims for Libel and Slander Fail As a Matter of Law Because The Publications are Either Privileged, Do Not Constitute Defamation, or Fall Outside the Scope of Roadrunner’s Authority In Cox’s fourth and fifth claims, he alleges that he was defamed (1) when an attorney for Roadrunner, Nicole Goodwin, indicated in a demand letter to TGS that Cox was subject to a non- compete provision under the SPA and (2) when individuals in Roadrunner management made statements about future litigation against Cox and lending Cox money for this litigation. (ECF No. 98 ¶ 100.) Both claims fail as a matter of law for the reasons set forth below. Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 19 of 26 14 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In California, defamation is an invasion of the “interest of reputation” and manifests as the tort of libel or that of slander. Cal. Civ. Code § 44. These torts involve an intentional publication that is false, defamatory, and unprivileged, and that has a natural tendency to injure or that causes special damage. Id. §§ 45, 46; see Smith v. Maldonado, 72 Cal. App. 4th 637, 645 (Cal. Ct. App. 1999). Libel describes publications in the form of a “writing, printing, picture, effigy, or other fixed representation to the eye.” Cal. Civ. Code § 45. On the other hand, slander is generally restricted to oral statements and gestures. Id. § 46. Common to both torts is the requirement that the communication be unprivileged, and California law recognizes that two types of communications are privileged—those that are absolutely privileged and those that are either qualifiedly or conditionally privileged. Cruey v. Gannett Co. 64 Cal. App. 4th 356, 367 (Cal. Ct. App. 1998). If a communication is absolutely privileged, there is no liability even if the defamatory communication is made with actual malice. Id. However, if the privilege is only conditional or qualified, a finding of malice will prevent the communication from being found to be privileged. Id.; see also Lundquist v. Reusser, 7 Cal. 4th 1193, 1206 n.12 (Cal. 1994). Any doubt about whether the privilege applies is resolved in favor of applying it. Adams v. Sup. Ct. of Santa Clara Cty., 2 Cal. App. 4th 521, 529 (Cal. Ct. App. 1992). Here, two absolute privileges prevent Cox from succeeding on his first claim of libel regarding Goodwin’s demand letter to TGS. First, California Civil Code § 47(b) defines what is commonly known as the litigation privilege, which is an absolute privilege. Wise v. Thrifty Payless, Inc., 83 Cal. App. 4th 1296, 1302 (Cal. Ct. App. 2000). Second, Section 47(c) codifies the common law privilege of common interest and protects communications made in good faith on a subject in which the speaker and hearer shared an interest or duty. The Goodwin demand letter satisfies the requirements of both privileges. Generally, demand letters of the sort Goodwin sent are within the scope of the litigation privilege unless they contain factually incorrect information that has no logical relation to the aims of the litigation. See Nguyen v. Proton Tech. Corp., 69 Cal. App. 4th 140, 149 (Cal. Ct. App. 1999). Here, Goodwin’s letter indicated that Roadrunner believed Cox to be in violation of the terms of the Agreement, a litigation position it still maintains. Similarly, the letter included an opinion that accurately stated facts, i.e., that the Agreement contains non-competition, non-solicitation, and confidentiality clauses. (RR SUF 36.) Even if neither privilege applies, Cox has no evidence that he suffered harm to his reputation as a result Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 20 of 26 15 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 of the letter’s statements, as he was hired still by hired by TGS on July 3, 2017. (RR SUF 37.) Cox also contends that Roadrunner committed slander twice when, on or about July 7, 2017: (a) the Vice President of Operations informed Grace Castaneda and Ashley Grijalva that Roadrunner was planning to sue Cox and TGS, that Cox and TGS would have to spend a lot of money thereby becoming insolvent, and that Cox and TGS would fire Castaneda and Grijalva (ECF No. 98 ¶ 99); and (b) the Terminal Manager told Castaneda that he loaned $50,000.00 to Cox (id. ¶ 100). As for (a), these statements concerned predictions regarding future events and are therefore not actionable. See Cansino v. Bank of Am., 224 Cal. App. 4th 1462, 1469 (Cal. Ct. App. 2014) (“Statements or predictions regarding future events are mere opinions and therefore not actionable.”). In any event, it is undisputed that Roadrunner brought suit against Cox and TGS, making the first part of the statement true and therefore not slanderous. As for (b), the Terminal Manager’s alleged statement regarding a loan to Cox was not made within the scope of his employment because the statement was made after Cox had been terminated and “can, by no stretch, be deemed to have occurred in . . . the scope of [his] employment.” Davaris v. Cubaleski, 12 Cal. App. 4th 1583, 1591 (Cal. Ct. App. 1993); see also Erhart v. Bofl Holding, Inc., 269 F. Supp. 3d 1059, 1082 n.7 (S.D. Cal. 2017) (stating that defamatory statements made after the plaintiff was fired were not within the scope of his employment). Moreover, “an employee is acting in the course and scope of his employment when he is engaged in work he was employed to perform, or when the act is an incident to his duty and was performed for the benefit of his employer and not to serve his own purposes or convenience.” Mazzola v. Feinstein 154 Cal. App. 3d 305, 311 (Cal. Ct. App. 1984) (internal quotation marks and alteration omitted). Cox has no evidence that, even assuming the Terminal Manager made this statement, that the Manager made the statement on behalf of Roadrunner; in fact, the Manager stated that he personally lent Cox money, which has nothing to do with Roadrunner or the Manager’s work for Roadrunner. Instead, it relates to the Manager’s personal relationship with Cox. While Cox alleges the Manager made this statement to “put [Cox] in a negative light by creating the false appearance that Plaintiff would not last long in his new job” because he was borrowing money from the Manager (ECF No. 98 ¶ 100), this is an unreasonable inference to draw from such a statement, and the Court need not draw the same inference. In fact, if anything, the statement suggests the litigation Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 21 of 26 16 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 would be expensive and the Manager would lend money to Cox because of their relationship and/or because he believed Cox to have a strong case against Roadrunner. D. Cox’s Sixth Claim for Failure to Pay Wages Due at Termination Fails As a Matter of Law Because Cox was Fully Compensated for the Work He Performed In his sixth claim for relief, Cox alleges that he received no pay for his final day of work on May 31, 2017. (ECF No. 98 ¶ 112.) This claim fails as a matter of law California Labor Code Section 203 makes it unlawful for an employer to willfully fail to pay an employee “who is discharged or who quits.” Cal. Labor Code § 203(a). A “willful failure to pay wages” within the meaning of this section occurs “when an employer intentionally fails to pay wages to an employee when those wages are due.” Cal. Code Regs. tit. 8, § 13520. “The failure to pay is willful if the employer knows what it is doing and intends to do what it is doing.” Diaz v. Grill Concepts Servs., 23 Cal. App. 5th 859, 868 (Cal. Ct. App. 2018) (internal quotation marks and alterations omitted). Moreover, an employer’s failure to pay is not willful if the failure is due to the employer’s “good faith mistaken belief that wages are not owed” and this belief is grounded in a good faith dispute. Id. (internal quotation marks omitted). A good faith dispute exists where the “employer presents a defense, based in law or in fact which, if successful, would preclude any recovery on the part of the employee,” and such a dispute may exist when the employer’s defense is ultimately unsuccessful so long as the employer reasonably believed himself to have evidence to support his position. Id. (citing Cal. Code Regs. tit. 8 § 13520(a)). To begin, Cox has no evidence that demonstrates Roadrunner’s failure to pay wages for the morning of May 31, 2017, is willful. Second, the law does not require an employer to compensate an exempt employee for any time where that employee chose to respond to emails during his time off. For employers with at least 25 employees, California law permits employees up to 40 hours off within a 12- month period to participate in their children’s school activities. Cal. Labor Code § 230.8(a)(1). When taking this time off, the employee may utilize his existing vacation, personal leave, or compensatory time off or he may utilize such time off without any pay. Id. at (b)(1). Here, Cox unilaterally took time off on the morning of May 31, 2017 to attend his daughter’s kindergarten graduation, which began at 8 a.m. and lasted about an hour. (RR SUF 27.) Cox informed Jeff Hershey the night before that he would Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 22 of 26 17 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 be attending the graduation and would be in late, and there was no expectation that he would work during the time he attended the graduation as it was clear he was not “on the clock” for that time. (RR SUF 28.) Cox did not submit a formal request in order to utilize paid time off. (RR SUF 26.) As a result, this time off was Cox’s own choice to conduct any work during that short period of time on the morning of May 31, 2017. Roadrunner did not need to compensate Cox for any of the time Cox spent responding to emails on that morning while he was out of the office. Thus, Cox’s final pay statement was accurate because it compensated him for the one day he actually worked (May 30, 2017) during the pay period of May 28 to June 10, 2017. Upon arriving at work the morning of May 31, Cox was immediately terminated. (RR SUF 27, 35.) Moreover, because the final check was prepared without knowledge that Cox was taking chargeable time off, the final check over paid for accrued but unused time off. Roadrunner therefore asks the Court to enter summary judgment in its favor on this claim. E. Cox’s Seventh Claim for Intentional Interference with Prospective Business Advantage Fails as a Matter of Law Because There was No Actual Disruption of Cox’s Relationship with TGS or Harm to Him “The tort of intentional or negligent interference with prospective economic advantage imposes liability for improper methods of disrupting or diverting the business relationship of another which fall outside the boundaries of fair competition.” Settimo Associates v. Environ Sys., Inc., 14 Cal. App. 4th 842, 845 (Cal. Ct. App. 1993). “The five elements for intentional interference with prospective economic advantage are: (1) [a]n economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant.” Youst v. Longo, 43 Cal. 3d 64, 71 n.6 (Cal. 1987). Specific intent is not required, and a plaintiff may “plead that the defendant knew that the interference was certain or substantially certain to occur as a result of its action.” Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1153 (Cal. 2004). Cox has no evidence to establish the fourth or fifth elements of the tort of intentional interference with prospective business advantage. Cox alleges that he had prior dealings with TGS on the matter of “[a] probable future economic benefit to Plaintiff as TGS indicated a desire to employ Plaintiff.” (ECF Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 23 of 26 18 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 No. 98 ¶ 118-119.) He further alleges that Roadrunner knew of this relationship as manifested by Roadrunner’s July 11, 2017 correspondence to TGS through their agent Nicole Goodwin, in which they demanded the termination of any economic relationship with TGS. (Id.) Cox claims the letter was sent “with a clear intent at actual disruption of the economic relationship between TGS and Plaintiff by threatening to sue TGS and Plaintiff if they hired Plaintiff.” (Id.) Notwithstanding these contentions, Cox has no evidence demonstrating that this letter actually disrupted the relationship between Cox and TGS or establishing that he suffered any economic harm as a result of this letter. In fact, the letter did not ultimately affect TGS’s desire to hire Cox as he began his employment with TGS on July 3, 2017, and remains employed by TGS. Cox also cannot establish the third element of this tort, which requires that the interference be wrongful based on some legal measure other than the fact of the interference itself. Della Pena v. Toyota Motor Sales, USA, 11 Cal. 4th 376, 393 (Cal. 1995). Here, the letter was sent based on Roadrunner’s good faith belief that Cox was in violation of various provisions of the Agreement, including the non- compete provision, and Cox is unable to point to any legal measure that would make it wrongful to defend one’s rights pursuant to a contract. Therefore, Roadrunner asks that the Court enter summary judgment in its favor on Cox’s seventh claim. F. Cox’s Eighth Claim for Failure to Provide an Accurate Itemized Wage Statement Fails as a Matter of Law Because Cox Cannot Show that Any Error in the Final Statement Was Intentional Cox alleges that Roadrunner intentionally and willfully failed to provide him with a complete and accurate wage statement by failing to accurately report his gross wages earned, his total hours worked, his net wages earned, or all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by Cox. (ECF No. 98 ¶ 127.) Based on the allegations in the FAC, Roadrunner assumes this claim applies only to Cox’s final wage statement. This claim fails as a matter of law because the errors in this statement were unintentional. Under California Labor Code Section 226(a), employers must provide employees with “an accurate itemized statement in writing” showing, inter alia, “total hours worked” and “all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 24 of 26 19 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 hourly rate.” Cal. Labor Code § 226(a). This statement must show “(1) gross wages earned, (2) total hours worked by the employee, . . . (3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis, (4) all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item, (5) net wages earned, (6) the inclusive dates of the period for which the employee is paid, (7) the name of the employee and only the last four digits of his or her social security number or an employee identification number other than a social security number, (8) the name and address of the legal entity that is the employer and . . . (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee.” Cal. Labor Code § 226(a). To recover for an employer’s failure to comply with the requirements of section 226(a), the employee must demonstrate that the employer’s failure to comply was knowing and intentional. Cal. Labor Code § 226(e)(1). The only error in Cox’s final pay statement is that it lists his salary hours for the pay period of May 28, 2017, to June 10, 2017, as 72 hours rather than 8 hours. But the amount of pay is correct and reflects 8 hours of pay at Cox’s hourly rate of $96.16. At Cox’s depo, he admitted that when he took his final paystub to his attorney, he indicated there was a problem with his paystub that Roadrunner was not even aware of. (RR SUF 35.) This unequivocally establishes that any errors in the final pay statement were inadvertent and not knowing or intentional as is required by section 226. Labor Code Section 226(e)(1) requires both an injury and a knowing and intentional violation of 226(a) before any penalty is due. Here, following his termination, Cox went straight to his lawyer’s office and, among other things, noted a typo on his final pay check. (RR SUF 35.) This demonstrates that he was neither confused nor misled about the final paycheck or pay day statement and sustained no prejudice or injury in fact. V. CONCLUSION For the foregoing reasons, Roadrunner Intermodal Services LLC asks that the Court enter summary judgment in its favor as to its claims against Cox. Dated: February 19, 2019 GREENBERG TRAURIG, LLP Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 25 of 26 20 Case No. 1:17-cv-01056-DAD-BAM ROADRUNNER’S MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION AS TO PLAINTIFF JEFFREY COX’S CLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 By: /s/James M. Nelson James M. Nelson Kurt A. Kappes Michael D. Lane Michelle L. DuCharme Attorneys for Roadrunner Intermodal Services, LLC and Central Cal Transportation, LLC MEET AND CONFER CERTIFICATION Counsel for Defendant Roadrunner sent a letter to counsel for Cox on August 31, 2018, identifying the claims for which it planned to seek summary judgment and the legal bases for doing so. Cox did not respond to this letter. Thus, Roadrunner’s efforts to meet and confer on the matters addressed in this motion were exhausted. Case 1:17-cv-01056-DAD-BAM Document 175 Filed 02/19/19 Page 26 of 26