Memorandum Points and Authorities

Cal. Super. - 6th Dist.August 16, 2018

HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 Daniel F. Pyne III (State Bar No. 131955) Karen Reinhold (State Bar No. 104817) Shirley E. Jackson (State Bar No. 205872) HOPKINS & CARLEY A Law Corporation 70 South First Street San Jose, California 95113-2406 mailing address: Post Office Box 1469 San Jose, CA 95109-1469 Telephone: (408) 286-9800 Facsimile: (408) 998-4790 Attorneys for Plaintiff Megan Devlin-Preiksa SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SANTA CLARA MEGAN DEVLIN-PREIKSA, Plaintiff, v. THE BAY CLUBS COMPANY, LLC, MATTHEW STEVENS, MARK KOORENNY, and DOES 1 through 25, inclusive, Defendants. CASE NO. 18-CV-333382 MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA Date: December 20, 2018 Time: 9:00 a.m. Dept.: 19 Complaint filed: May 9, 2018 Trial date: TBD Electronically Filed by Superior Court of CA, County of Santa Clara, on 12/7/2018 4:06 PM Reviewed By: A. Floresca Case #18CV333382 Envelope: 2256158 18CV333382 Santa Clara - Civil A. Floresca HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE PALO ALTO TABLE OF CONTENTS Page - 2 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 .............................................................................................................. 6 II. LEGAL ARGUMENT ........................................................................................................ 6 A. The Court Should Sustain a Demurrer Only When the Complaint is Fatally Defective on Its Face ............................................................................................... 6 B. The Complaint Sufficiently States Claims for Harassment and for Failure to Prevent Harassment ............................................................................................ 7 C. The Eighth Cause of Action States a Viable claim for Defamation Against Defendant Koorenny ............................................................................................... 9 1. The complaint alleges facts sufficient to constitute a cause of action ........ 9 2. The litigation privilege does not apply to statements made during the course of a private employer’s investigation of a workplace harassment complaint ................................................................................ 11 a. The complaint does not allege facts reflecting that the statements in question were made in anticipation of litigation ........................................................................................ 11 b. Courts have refused to apply the litigation privilege to statements made during workplace investigations ........................ 11 3. The common interest privilege does not apply because the complaint alleges that defendant Koorenny acted with malice ................. 13 4. Any perceived defects in the eighth cause of action can be cured through amendment ................................................................................... 14 D. The Court Should Also Overrule Defendant Koorenny’s Demurrer to the Sixth Cause of Action for Interference with Economic Advantage ...................... 14 1. The complaint alleges independently actionable conduct ......................... 14 2. Koorenny is a “stranger” to the plaintiff’s employment relationship with The Bay Club .................................................................................... 15 3. Any perceived defects in the sixth cause of action can be cured through amendment ................................................................................... 18 E. Defendant Koorenny’s Demurrer to the Fifth Cause of Action for Negligence Also Fails .......................................................................................... 18 III. CONCLUSION ................................................................................................................. 20 HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE PALO ALTO TABLE OF AUTHORITIES Page - 3 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 Cases Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232 .............................................................................................................11 Asahi Kasei Pharma Corp. v. Actelion Ltd. (2013) 222 Cal.App.4th 945 .........................................................................................15, 16, 18 Aubry v. Tri-City Hospital District (1992) 2 Cal.4th 962 ...................................................................................................................6 Blank v. Kirwan (1985) 39 Cal.3d 311 ..................................................................................................................6 CKE Restaurants, Inc. v. Moore (2008) 159 Cal.App.4th 262 .....................................................................................................12 Comstock v. Aber (2012) 212 Cal.App.4th 934 .....................................................................................................12 Cruey v. Gannett (1998) 64 Cal.App.4th 356 .......................................................................................................12 Digerati Holdings, LLC v. Young Money Entertainment, LLC (2011) 194 Cal.App.4th 873 .....................................................................................................12 Goonewardene v. ADP, LLC (2016) 5 Cal.App.5th 154, 179 .................................................................................................19 Hughes v. Pair (2009) 46 Cal.4th 1035 ...............................................................................................................7 Kashian v. Harriman (2002) 98 Cal.App.4th 892 .......................................................................................................13 Kasparian v. County of Los Angeles (1995) 38 Cal.App.4th 242 .................................................................................................17, 18 Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134 .............................................................................................................14 Ludgate Insurance Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592 .......................................................................................................10 HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE PALO ALTO TABLE OF AUTHORITIES (continued) Page - 4 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 Lyle v. Warner Bros. Television Productions (2006) 38 Cal.4th 264 .................................................................................................................7 McDonald v. Superior Court (1986) 180 Cal.App.3d 297 .........................................................................................................7 Mintz v. Blue Cross of California (2009) 172 Cal.App.4th 1594 .............................................................................................16, 17 Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243 .......................................................................................................7 Neville v. Chudacoff (2008) 160 Cal.App.4th 1255 ...................................................................................................12 Okun v. Superior Court (1981) 29 Cal.3d 442 ............................................................................................................9, 10 Olaes v. Nationwide Mutual Insurance Co. (2006) 135 Cal.App.4th 1501 ...................................................................................................12 Optional Capital, Inc. v. Das Corp. (2014) 222 Cal.App.4th 1388 ...................................................................................................11 Osornio v. Weingarten (2004) 124 Cal.App.4th 304 .....................................................................................................19 Perez v. Golden Empire Transit District (2012) 209 Cal.App.4th 1228 .....................................................................................................6 Popescu v. Apple, Inc. (2016) 1 Cal.App.5th 39, 55 .....................................................................................................17 Redfearn v. Trader Joe’s Company (2018) 20 Cal.App.5th 989, 1007 .........................................................................................9, 11 Schick v. Lerner (1987) 193 Cal.App.3d 1321 .....................................................................................................17 Stevens v. Superior Court (1999) 75 Cal.App.4th 594 .........................................................................................................6 Wellpoint Health Networks, Inc. v. Superior Court (1997) 59 Cal.App.4th 110 .................................................................................................13, 16 HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE PALO ALTO TABLE OF AUTHORITIES (continued) Page - 5 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 Woods v. Fox Broadcasting Sub. Inc. (2005) 129 Cal.App.4th 347 .........................................................................................15, 16, 18 Statutes Civ. Code § 47(b) ............................................................................................................................12 Civ. Code § 47(c) ............................................................................................................................13 Code Civ. Proc. § 426.16 ................................................................................................................12 Code Civ. Proc. § 430.030 ................................................................................................................6 Code Civ. Proc. § 430.070 ................................................................................................................6 Gov’t Code § 12923(e) .....................................................................................................................7 Gov’t Code § 12940(j)(i) ................................................................................................................16 Other Authorities 5 Witkin, Summary of Cal. Law (11th ed. 2017) Torts, 651, p. 892 ..............................................10 California Civil Jury Instructions (“CACI”) No. 1704 .....................................................................9 DFEH Workplace Harassment Prevention Guide ...........................................................................19 HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 6 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 This case arises from The Bay Club’s decision to terminate the employment of plaintiff Megan Devlin-Preiska after Ms. Devlin-Preiksa and one of her colleagues made complaints of harassment and discrimination against The Bay Club’s President and Chief Executive Officer, defendant Matthew Stevens. The Bay Club directed defendant Mark Koorenny to investigate those complaints, and defendant Koorenny thereafter assisted The Bay Club in contriving a pretextual and knowingly false basis for terminating the plaintiff’s employment. Contrary to the defendants’ contention, the plaintiff is not suing the defendants for reaching an incorrect but good faith conclusion following Koorenny’s investigation of the complaints. Instead, Ms. Devlin-Preiska is suing the defendants because they concocted and implemented a plan to terminate her employment in retaliation for her complaints. Because the plaintiff’s complaint states viable causes of action for harassment, failure to prevent harassment, defamation, interference with economic relations, and negligence, the Court should overrule the demurrer in its entirety. II. LEGAL ARGUMENT A. The Court Should Sustain a Demurrer Only When the Complaint is Fatally Defective on Its Face. When ruling on a demurrer, the Court must accept the allegations in the complaint as true (Aubry v. Tri-City Hospital District (1992) 2 Cal.4th 962, 966), and must construe the complaint liberally with a view to substantial justice between the parties. Perez v. Golden Empire Transit District (2012) 209 Cal.App.4th 1228, 1238 (where allegations are subject to differing interpretations, the court must draw “inferences favorable to the plaintiff, not the defendant”). Unless the complaint is fatally defective on its face or by virtue of matters subject to judicial notice, the Court should overrule the demurrer. Code of Civil Procedure sections 430.030 and 430.070; Blank v. Kirwan (1985) 39 Cal.3d 311, 318. If the Court sustains a demurrer, it should be liberal in permitting the plaintiff an opportunity to amend the complaint and cure any defects that exist. Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601. Indeed, in the case of an original complaint, as is now before HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 7 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 the Court, denial of leave to amend constitutes an abuse of discretion unless it is apparent from the face of the complaint that the pleading contains defects not capable of being cured. McDonald v. Superior Court (1986) 180 Cal.App.3d 297, 303-04. B. The Complaint Sufficiently States Claims for Harassment and for Failure to Prevent Harassment. In demurring to the plaintiff’s first and third causes of action, the defendants argue that the complaint fails to state facts sufficient to state a cause of action for harassment because the harassment was not allegedly not severe or pervasive. The Bay Club further argues that the claim for failure to prevent harassment similarly fails because it is dependent upon a viable claim for harassment. Both arguments fail, however, and the Court should overrule the demurrer. In order to state a cause of action for harassment, a plaintiff must plead, among other things, that the harassment was “severe enough or sufficiently pervasive to alter the conditions of employment and create a work environment that qualifies as hostile or abusive to employees.” Hughes v. Pair (2009) 46 Cal.4th 1035. The standard is “severe” or “pervasive,” not both, and the level of severity or pervasiveness required is “ordinarily one of fact.” See id.; Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 264. The harassing conduct may be aimed directly against the plaintiff or, alternatively, aimed at others if it permeates her direct work environment. See Lyle v. Warner Bros. Television Productions (2006) 38 Cal.4th 264, 284-285. Government Code section 12923(e), which will become operative on January 1, 2019, reflects the Legislature’s intention regarding the standard of pleading and proof required in harassment cases. Subsection (e) provides: Harassment cases are rarely appropriate for disposition on summary judgment. In that regard, the Legislature affirms the decision in Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243 and its observation that hostile working environment cases involve issues “not determinable on paper.” (emphasis added) In the case at bar, the plaintiff has sufficiently alleged facts demonstrating a hostile work environment between the fall of 2016 and March 2018, both in terms of conduct aimed directly at her and conduct that permeated her direct work environment. (See Complaint, paragraphs 11 through 36.) The defendants argue in their opening brief that the plaintiff alleges only five HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 8 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 remarks by defendant Stevens over an eight month period, but their contention is simply false. (See defendants’ opening brief at page 11, lines 2 through 3.) The complaint describes five specific examples of harassment in greater detail, but it mentions an ongoing pattern of almost continuous harassment during the relevant period. For instance, the complaint alleges that defendant Stevens threatened between October 2016 and April 2017 that senior executives, including herself would be “replaced with younger employees” and “commented frequently that he could hire two recent college graduates for the same amount that The Bay Club paid just one of its older managers. (See Complaint, paragraphs 11 [emphasis added], 13, and 17.) The complaint also includes allegations that defendant Stevens actually replaced multiple “older, senior executives and managers with younger employees” and “criticized and berated older managers without justification almost daily, reducing many to tears, and frequently suggested that they lacked job security and might be replaced soon. (Id., paragraphs 12, 13, and 15 [emphasis added]). Between October and April 2017 alone, defendant Stevens allegedly “routinely lashed out at Ms. Devlin-Preiska and other [older] employees … often in a harsh, public and demeaning manner” and on “numerous occasions … threatened to terminate their employment and replace them with a ‘Cornell grad.’” (Id., paragraph 13 [emphasis added].) Defendant Stevens’ harassment was so severe and pervasive that it ultimately caused her to experience severe health issues and to request a leave of absence. (Id., paragraphs 18 and 19.) Even after the plaintiff returned from her leave of absence, defendant Stevens’ harassing and intimidating conduct continued. (Id., paragraphs 27-34.) The allegations in the complaint are more than sufficient to rise to the level of severe or pervasive conduct to state a claim for hostile work environment harassment. Because the plaintiff has sufficiently stated a claim for harassment, her claim against The Bay Club for failure to prevent harassment similarly does not fail. The court should therefore overrule the demurrer as to both causes of action. If the Court for any reason believes that the plaintiff has failed to state facts sufficient to constitute a cause of action, however, the plaintiff requests leave to file a First Amended Complaint setting forth additional facts to cure the perceived defects. / / / HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 9 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 C. The Eighth Cause of Action States a Viable Claim for Defamation Against Defendant Koorenny. In support of his demurrer to the plaintiff’s cause of action for defamation, defendant Koorenny argues that the complaint fails to state facts sufficient to constitute a cause of action, and that the claim is barred by the litigation and common interest privileges. Each of his arguments fails. 1. The complaint alleges facts sufficient to constitute a cause of action. In order to state a cause of action for defamation, a plaintiff must allege that (a) the defendant made a statement to a third party, (b) the third party reasonably understood the statement to relate to the plaintiff, (c) the third party understood the statement to be defamatory, and (d) the defendant failed to use reasonable care to determine the truth or falsity of the statement. See California Civil Jury Instructions (“CACI”) No. 1704. Defendant Koorenny argues that the cause of action is defective because it does not “identify specifically what was said, to whom these statements were made and understood their defamatory meaning, how those statements were specifically made, where they were made, when these statements were allegedly made or were discovered by Plaintiff.” (See defendant’s opening brief, page 12, lines 8 through 12.) The defendant’s argument misconstrues the law, however. Under California law, plaintiffs are not required to allege the exact words or circumstances of the statements in question in order to state a cause of action for defamation. Instead, in keeping with the concept of notice pleading, they are required only to allege the basic substance of the defamatory statement. See Okun v. Superior Court (1981) 29 Cal.3d 442, 458 (concluding that “slander can be charged by alleging the substance of the defamatory statement”). The complaint alleges that The Bay Club terminated the plaintiff’s employment on March 17, 2018 due to her alleged dishonesty in describing defendant Stevens’ intimidating and harassing statement, as reported to The Bay Club by defendant Koorenny following his interview of the plaintiff four days earlier. (See Complaint, paragraphs 35, 36 and 89.) Statements attacking the honesty of an employee tend to endanger her position, as it certainly did here for the plaintiff, and are actionable as defamation per se. See Redfearn v. Trader Joe’s Company (2018) 20 HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 10 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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.App.5th 989, 1007 (“an attack on the honesty of an employee or business person endangers his or her position, and is actionable per se”) (quoting 5 Witkin, Summary of Cal. Law (11th ed. 2017) Torts, 651, p. 892). By alleging the substance of the defamatory statements, the plaintiff has stated facts sufficient to constitute cause of action. In the case at bar, the plaintiff was not present when the defamatory statements in question were made. As a result, defendant Koorenny’s knowledge regarding the precise time and place at which his statements were made are likely superior to the plaintiff’s own knowledge. In such circumstances, even less specificity in pleading is required as long as the pleading provides the defendant with sufficient notice of the claim to enable preparation of a defense. See Okun, supra, 29 Cal.3d at 458 (citations omitted); see also Ludgate Insurance Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 608 (“less particularity is required where the defendant may be assumed to have knowledge of the facts equal to that possessed by the plaintiff”). The complaint at bar pleads facts which are more than sufficient to provide the defendant with notice of the claim being made, the standard required by Okun, supra, 29 Cal.3d at 458. It alleges that defendant Koorenny made defamatory statements to “persons employed by or affiliated with The Bay Club.” (See Complaint, paragraph 89.) It alleges that defendant Koorenny characterized the plaintiff as “dishonest and untruthful during his investigation of her complaint.” (See Complaint, paragraph 89.) The complaint also alleges that the defamatory statements were “false” and “tended to injure the plaintiff in her occupation and expose her to contempt, ridicule or shame, and discouraged others from associating with her.” (See Complaint, paragraphs 89 and 90.) Defendant Koorenny presumably has engaged in a limited number of conversations regarding his investigation findings during the short four day period that transpired between his interview of the plaintiff on March 13, 2018 and The Bay Club’s termination of the plaintiff on March 17, 2018, so it should not be difficult for him to identify and understand the statements which are the subject of the plaintiff’s claim. (See Complaint, paragraphs 35 and 36.) The allegations in the complaint are more than sufficient to provide defendant Koorenny with notice of the substance and surrounding circumstances of the defamatory statements and / / / HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 11 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 enable him to prepare his defense and, thus, the eighth cause of action sets forth facts sufficient to constitute a cause of action for defamation. 2. The litigation privilege does not apply to statements made during the course of a private employer’s investigation of a workplace harassment complaint. Koorenny next argues that the eighth cause of action is barred by the litigation privilege. As the defendants state in their opening brief, the litigation privilege applies to communications (a) occurring in judicial or quasi-judicial proceedings, (b) by litigants or other participants authorized by law, (c) to achieve the objects of the litigation, and (d) that have some connection or logical relation to the action. Optional Capital, Inc. v. Das Corp. (2014) 222 Cal.App.4th 1388, 1404. The Court should sustain a demurrer based on the litigation privilege only if the facts alleged on the face of the complaint demonstrate the applicability of the privilege. See Redfearn, supra, 20 Cal.App.5th at 1007. a. The complaint does not allege facts reflecting that the statements in question were made in anticipation of litigation. In his opening brief, defendant Koorenny contends that his statements are subject to the litigation privilege because they “were made in anticipation of litigation (i.e., the instant lawsuit filed by Plaintiff and the potential lawsuit by Plaintiff and the potential lawsuit by anther co- worker Ms. Graf).” (See defendant’s opening brief, page 13, lines 21 through 22.) Although the litigation privilege can apply to communications occurring prior to a judicial proceeding, pre- litigation communication is privileged only when it relates to litigation that is under serious consideration. Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1251. The complaint, however, contains no facts suggesting that the plaintiff or the defendants anticipated litigation at the time defendant Koorenny made the statements in question. Because facts demonstrating the applicability of the litigation privilege do not appear on the face of the complaint, the Court must overrule the demurrer. Redfearn, supra, 20 Cal.App.5th at 1007. b. Courts have refused to apply the litigation privilege to statements made during workplace investigations. In keeping with the concept that the litigation privilege applies to statements made during HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 12 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 litigation or in anticipation of litigation, courts have considered and rejected the proposition that statements made during the course of a private employer’s investigation of a work place harassment complaint, like those at issue in this case, fall within the ambit of the litigation privilege. See Cruey v. Gannett (1998) 64 Cal.App.4th 356, 368-69 (complaint to human resources was not a pre-litigation communication made with some relationship to an anticipated lawsuit such as to bring it within the litigation privilege) and Olaes v. Nationwide Mutual Insurance Co. (2006) 135 Cal.App.4th 1501, 1508-1510 (communication occurring during a human resources investigation did not fall within the litigation privilege). The statements at issue were made in the context of a workplace investigation and without anticipation of litigation, so they are not subject to the litigation privilege. The defendant cites Comstock v. Aber (2012) 212 Cal.App.4th 934 for the proposition that the litigation privilege applies to statements made during investigations of harassment complaints. In Aber, however, the court affirmed the dismissal of a cross-complaint under Code of Civil Procedure section 426.16, not under Civil Code section 47(b), so the court’s discussion of the litigation privilege is dicta. Moreover, the cases cited in Aber as support for the ruling involved express threats of litigation that would naturally call the litigation privilege into play. See Neville v. Chudacoff (2008) 160 Cal.App.4th 1255, 1266 (letter threatening litigation); CKE Restaurants, Inc. v. Moore (2008) 159 Cal.App.4th 262, 271 (statements reflected in notice of intent to sue under Proposition 65); Digerati Holdings, LLC v. Young Money Entertainment, LLC (2011) 194 Cal.App.4th 873, 887 (letter threatening litigation). No threats of litigation are before the Court on this demurrer. In arguing that his statements should be protected by the litigation privilege, defendant Koorenny seeks to have it both ways. He contends that his statements to The Bay Club should fall within the litigation privilege and the attorney-client privilege because he serves as the Company’s attorney (see defendant’s opening brief, pages 12 and 13), yet he also portrays himself as an impartial investigator focused on gathering facts and reporting his findings (defendant’s opening brief, page 7), rather than an advocate seeking to protect the interests of his client without regard for the validity of the complaint in question. The law does not permit a HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 13 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 defendant to “have his cake and eat it too” in the manner Koorenny argues. If an employer seeks to prove that it responded appropriately to a complaint of workplace harassment by conducting a thorough and impartial investigation, as The Bay Club does in this case, the employer waives the application of the attorney-client privilege. See Wellpoint Health Networks, Inc. v. Superior Court (1997) 59 Cal.App.4th 110, 128. Koorenny cannot claim that he functioned as an impartial investigator of the plaintiff’s complaints and claim the protections available to an attorney/advocate at the same time. 3. The common interest privilege does not apply because the complaint alleges that defendant Koorenny acted with malice. In his final argument regarding the eighth cause of action, defendant Koorenny contends that the so-called “common interest” privilege set forth in Civil Code section 47(c) bars the plaintiff’s claim. Civil Code section 47(c) provides, in pertinent part, that the common interest privilege applies to “a communication, without malice, to a person interested therein, (1) by one who is also interested…” As the statute provides, and as defendant Koorenny acknowledges, the privilege applies only to communications made without malice. The complaint not only alleges that defendant Koorenny acted with malice in paragraph 92, it also alleges more specifically in paragraph 37 that defendants Koorenny and The Bay Club strategically chose to characterize inconsistencies between the plaintiff’s account of certain events and the accounts offered by others regarding the same events as misrepresentations and dishonesty by Ms. Graf “in order to create justification for a decision to terminate her employment.” (Emphasis added.) In essence, the complaint thus alleges that defendant Koorenny intentionally contrived a false and pretextual excuse for terminating the plaintiff’s employment without cause, in disregard for truth or harm to the plaintiff. The malice sufficient to defeat application of the common interest privilege includes not only hatred or ill will toward the plaintiff, but also a conscious or reckless disregard for the truth. Kashian v. Harriman (2002) 98 Cal.App.4th 892, 931. The complaint clearly alleges that defendant Koorenny made the alleged defamatory statements with a conscious or reckless HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 14 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 disregard for the truth, with the intent to harm the plaintiff by ending her employment, and thereby alleges malice sufficient to defeat the common interest privilege. 4. Any perceived defects in the eighth cause of action can be cured through amendment. For the reasons explained above, the eighth cause of action sets forth facts sufficient to state a cause of action for defamation against defendant Koorenny. If the Court for any reason believes that the plaintiff has failed to state facts sufficient to constitute a cause of action, or that the litigation privilege or common interest privilege may bar the claim, the plaintiff requests leave to file a First Amended Complaint setting forth additional facts to cure the perceived defects. The plaintiff can, if necessary, plead additional specific facts to elaborate on the defamatory statements, confirm that defendant Koorenny did not make the statements when the plaintiff was seriously contemplating litigation (thereby defeating the litigation privilege), and that he acted with malice (defeating the common interest privilege). D. The Court Should Also Overrule Defendant Koorenny’s Demurrer to the Sixth Cause of Action for Interference with Economic Advantage. In addition to challenging the sufficiency of the allegations in the eight cause of action, defendant Koorenny also demurs to the sixth cause of action for interference with economic advantage. Once again, Koorenny’s arguments lack merit and the Court should overrule his demurrer. 1. The complaint alleges independently actionable conduct. In order to state a cause of action for interference with economic advantage, a plaintiff must plead, among other things, that the defendant engaged in an independently wrongful act- some conduct proscribed by legal authority. Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153. Defendant Koorenny argues that the plaintiff has not alleged an independently wrongful act because, according to him, she has not stated a viable cause of action for defamation. If the Court overrules defendant Koorenny’s demurrer to the eighth cause of action, however, the complaint will undeniably contain allegations of independently wrongful actions by defendant Koorenny. Id. at 1159 (“[A]n act is independently wrongful if it is unlawful, HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 15 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard”). Defendant Koorenny also overlooks the cause of action for negligence which, of course, also represents independently actionable conduct. If the court overrules the demurrers to either the defamation or negligence claims, his argument regarding the existence of independently actionable conduct fails. Defendant Koorenny also attempts to confuse the Court by arguing that the plaintiff is suing him for legal advice that he provided to The Bay Club, and that he cannot be held accountable for his advice. (See defendant’s opening brief, page 16.) The complaint contains no such allegations or claims, however. Instead of suing defendant Koorenny for providing legal advice to The Bay Club as its counsel, the plaintiff is suing defendant Koorenny for statements that he made in his capacity as a supposedly neutral investigator of claims of workplace harassment and retaliation. Defendant Koorenny’s status as The Bay Club’s regular counsel created a conflict of interest that made him ill-suited for his role as neutral investigator, but the conduct at issue is that undertaken as an investigator, not that of an attorney. 2. Koorenny is a “stranger” to the plaintiff’s employment relationship with The Bay Club. Defendant Koorenny next argues that the sixth cause of action is defective because he is supposedly not a “stranger” to the plaintiff’s employment relationship with The Bay Club by virtue of his status as an owner of equity in The Bay Club and the Company’s outside counsel. A defendant is not automatically immune from liability for interference by virtue of his status as an owner, officer, or director of the company whose relationship is the subject of the litigation, however. Woods v. Fox Broadcasting Sub. Inc. (2005) 129 Cal.App.4th 347, 356; see also Asahi Kasei Pharma Corp. v. Actelion Ltd. (2013) 222 Cal.App.4th 945, 962-964. Similar logic dictates that a defendant’s status as counsel to a company should not automatically immunize him from liability for interference. While arguing that he is not a stranger to the plaintiff’s relationship with The Bay Club, defendant Koorenny acknowledges that a plaintiff satisfies her pleading burden by alleging that a defendant “acted to protect his personal interests.” (See the defendants’ opening brief at page 18 HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 16 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 citing Woods, supra, 129 Cal.App.4th 347.) In Woods, supra, 129 Cal.App.4th at 353, a major shareholder allegedly rigged the sale price of a corporation for its own benefit and to the detriment of employee stock option holders, which the court regarded as a sufficient indication that he was a stranger to the relationship for purposes of the interference claim. In the case at bar, the plaintiff contends that defendant Koorenny disrupted her employment relationship with The Bay Club by manipulating the outcome of his workplace investigation of complaints against defendant Stevens. Defendant Koorenny was motivated to do so in order to preserve his own standing with The Bay Club and defendant Stevens, and thereby preserve his source of income to the detriment of the plaintiff. As in Woods, the Court should conclude that the plaintiff has pled her cause of action adequately. Defendant Koorenny misstates the law by arguing that his mere status as an agent of The Bay Club sufficiently supports his demurrer. Courts have long allowed interference claims to be stated against agents of the company. See Asahi Kasei Pharma Corp., supra, 222 Cal.App.4th at 963 (citing Woods, supra, 129 Cal.App.4th at 356). To be immune, corporate agents must plead and prove that they were “acting for and on behalf of” the company with respect to the particular conduct that allegedly interfered with the relationship at issue. See id. at 963-964; see also Mintz v. Blue Cross of California (2009) 172 Cal.App.4th 1594, 1604. Whether or not an agent is a “stranger” to the relationship depends on such factual issues as whether the defendant used improper means and acted to protect company’s best interest. See Asahi Kasei Pharma Corp., supra, 222 Cal.App.4th at 963 (citing Woods, supra, 129 Cal.App.4th at 351). As such, the question of whether a company agent is a “stranger” to the economic relationship at issue is generally not amendable to a determination on demurrer. Id. In the case at bar, the plaintiff sufficiently pled facts alleging that defendant Koorenny was not acting properly to fulfill his duties as an independent investigator for The Bay Club. The plaintiff contends that defendant Koorenny instead acted for his own personal benefit when he improperly manipulated the outcome of the workplace investigation. Defendant Koorenny’s self- serving conduct directly conflicted with The Bay Club’s duty to conduct a fair investigation of the plaintiff’s complaints and take prompt corrective action to end the harassment. See, e.g., HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 17 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 Wellpoint Health Networks, Inc., supra, 59 Cal.App.4th at 128; Gov’t Code § 12940(j)(i). As such, the plaintiff’s interference claim is sufficiently pled, and Koorenny’s argument that he is not a stranger to the plaintiff’s relationship with The Bay Club presents a factual question that is not amendable to resolution on demurrer. None of the defendant’s cited authorities compel a contrary conclusion. For instance, in Mintz v. Blue Cross of California (2009) 172 Cal.App.4th 1594, the public retirement system known as CalPERS contracted to provide health insurance to the plaintiff. Blue Cross served as CalPERS’ claims administrator for the plan. When Blue Cross denied insurance coverage for the plaintiff’s treatment that it deemed “investigational,” the plaintiff filed suit against Blue Cross for tortiously interfering with his contract for health insurance with CalPERS. The Mintz court sustained Blue Cross’ demurrer to the interference claim because Blue Cross was not a stranger to the plaintiff’s contract with CalPERS. See id. at 1603. The decision in Mintz is readily distinguishable from the case at bar, however, in that Blue Cross was expressly identified as the agent for CalPERS in the very contract that formed the basis for the interference claim. In this case here, defendant Koorenny is not alleged to have been named as an agent in any employment contract between the plaintiff and The Bay Club. Nor is defendant Koorenny alleged to have acted on behalf of The Bay Club in furtherance of the employment agreement. See Popescu v. Apple, Inc. (2016) 1 Cal.App.5th 39, 55 (distinguishing Mintz on similar grounds). Instead, the tortious conduct at issue is plainly defendant Koorenny’s statements that he made in his capacity as a neutral and independent investigator, and not his provision of legal advice to The Bay Club as its counsel. Compare Schick v. Lerner (1987) 193 Cal.App.3d 1321, 1329 (defendant attorney not liable for providing legal advice to his client that interfered with the client’s contract with a third party). Defendant Koorenny’s reliance on Kasparian v. County of Los Angeles (1995) 38 Cal.App.4th 242, is also unpersuasive. In Kasparian, the plaintiff limited partner sued a general partnership, two of its other partners, and a county supervisor for interfering with the plaintiff’s settlement negotiations with the general partnership to buy out his partnership interest. The court held that the partnership could not be liable for the interference claim because it was not a HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 18 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 stranger to the relationship. See id. at 262. Without any further discussion, the court summarily included the two individual partner defendants in its holding. See id. at 262, 266. The Kasparian decision has been highly criticized for its absence of analysis concerning the individual partner defendants’ liability and rejected “[t]o the extent Kasparian implicitly holds that the owners of a business entity are automatically deemed to be exempt from interference liability because their economic interest means they are not ‘strangers[]’ ….” Asahi Kasei Pharma Corp., supra, 222 Cal.App.4th at 965. In sum, the plaintiff has sufficiently pled that defendant Koorenny was acting in his personal interest in making the alleged defamatory statements and therefore is a stranger to the plaintiff’s relationship with The Bay Club. See Woods, supra, 129 Cal.App.4th 347. Defendant Koorenny’s defense otherwise is a factual issue that is not subject to a determination on demurrer. See Asahi Kasei Pharma Corp., supra, 222 Cal.App.4th at 963 (citing Woods, supra, 129 Cal.App.4th at 351). 3. Any perceived defects in the sixth cause of action can be cured through amendment. If the Court believes that the plaintiff has not adequately pled the existence of an independently wrongful act on defendant Koorenny’s behalf, the plaintiff requests leave to amend her causes of action for defamation and/or negligence. If the Court believes that the plaintiff has failed to state facts sufficient to demonstrate that defendant Koorenny acted in his own personal interest and qualifies as a “stranger” to the plaintiff’s relationship with The Bay Club, the plaintiff similarly requests leave to file a First Amended Complaint setting forth additional facts. E. Defendant Koorenny’s Demurrer to the Fifth Cause of Action for Negligence Also Fails In support of his demurrer to the plaintiff’s cause of action for professional negligence, defendant Koorenny argues that the complaint fails to state sufficient facts to show that he owed any duty to the plaintiff. This argument clearly fails. In order to state a cause of action for negligence, a plaintiff must allege: “‘(1) the duty of the professional to use such skill, prudence, and diligence as other members of his profession HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 19 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the professional’s negligence. [Citations.]’” Goonewardene v. ADP, LLC (2016) 5 Cal.App.5th 154, 179 (quoting Osornio v. Weingarten (2004) 124 Cal.App.4th 304, 319). While privity of contract is often required for the existence of a duty of care, a duty of care is owed to a third party not in privity of contract where, as is here, there are special circumstances demonstrating that the transaction was intended to affect the plaintiff, the harm to the plaintiff is foreseeable, the certainty that the plaintiff suffered injury, there is a close connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, and the policy of preventing future harm. See id. at 179-180. In the case at bar, special circumstances clearly demonstrate defendant Koorenny’s duty of care owed to the plaintiff. The plaintiff contends that defendant Koorenny was an experienced professional charged with conducting a workplace investigation. (See Complaint, paragraphs 20, 35 and 71.) The Bay Club retained defendant Koorenny to specifically investigate the plaintiff’s complaint of discrimination and harassment against defendant Stevens. (See Complaint, paragraphs 35 and 71.) As such, defendant Koorenny was obligated to conduct the investigation in a fair and impartial manner. The DFEH Workplace Harassment Prevention Guide elaborates on the duty of impartiality: It is important for the person conducting the investigation to assess whether they have any biases that would interfere with coming to a fair and impartial finding and, if the investigator cannot be neutral, to find someone else to conduct the investigation. Even if investigators determine they can be neutral and impartial, they must evaluate whether their involvement will create the perception of bias. A perception of bias by the investigator will discourage open dialogue with all involved parties. For example, in a case in which the investigator has a personal friendship with the complainant or accused, either actual or perceived, the investigator may need to recuse him- or herself to avoid the appearance of impropriety. It is generally a bad idea to have someone investigate a situation where either the complainant or accused party has more authority in the organization than the investigator.1 1 Department of Fair Employment and Housing Workplace Harassment Prevention Guide for California Employers, page 4, attached as Exhibit A to the Request for Judicial Notice. HOPKINS & CARLEY ATTORNEYS AT LAW SAN JOSE - 20 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF OPPOSITION TO DEFENDANTS’ DEMURRER TO COMPLAINT OF PLAINTIFF MEGAN DEVLIN-PREIKSA 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 Harm to the plaintiff resulting from a biased investigation was manifestly foreseeable and resulted directly from defendant Koorenny’s failure to use reasonable care to investigate her complaint. The plaintiff undoubtedly suffered injury when her employment was terminated based on defendant Koorenny’s malfeasance. (See Complaint, paragraphs 36 and 73.) As such, the plaintiff has sufficiently pled that defendant Koorenny owed her a duty of care. If the Court for any reason believes that the plaintiff has failed to state facts sufficient to constitute a cause of action, however, the plaintiff requests leave to file a First Amended Complaint setting forth additional facts to cure the perceived defects. III. CONCLUSION For all of the foregoing reasons, the plaintiff respectfully requests that the Court overrule the defendants’ demurrer to the first, third, fifth, sixth, and eighth causes of action. Alternatively, if the Court is inclined to grant any of the demurrers for any reason, however, it should grant the plaintiff leave to file a First Amended Complaint within 20 days of its Order thereon. Dated: December 7, 2018 HOPKINS & CARLEY A Law Corporation By: Daniel F. Pyne III Shirley Jackson Attorneys for Plaintiff Megan Devlin-Preiksa 714\3158840.5