No. C 99-00081 CRB
Filed March 1, 1999
MEMORANDUM AND ORDER
This is a breach of contract/employment discrimination lawsuit. Now before the Court is defendant's motion to dismiss or in the alternative for summary judgment. Having carefully considered the papers submitted by the parties, and having had the benefit of oral argument on February 26, 1999, defendant's motion is GRANTED in part and CONTINUED in part.
Plaintiff was employed as a sales person for Bank of America from 1973 until 1992. In 1992, defendant acquired the Bank of America division for which plaintiff worked (payroll services) and she thereafter became an employee of defendant. In July 1997, defendant terminated plaintiff's employment.
Plaintiff filed this lawsuit in state court on December 14, 1998. Plaintiff makes claims for (1) breach of oral/written contract; (2) breach of the implied covenant of good faith and fair dealing; (3) California Fair Employment and Housing Act ("FEHA") age discrimination; (4) FEHA gender discrimination; (5) FEHA retaliation; (6) wrongful termination in violation of public policy; and (7) negligence.
Defendant removed the action to this Court on diversity jurisdiction grounds. Since the notice of removal did not provide any factual support for its claim that the amount in controversy exceeds $75,000.00, the Court issued an order to show cause why this action should not be remanded. Defendant subsequently moved to dismiss, or in the alternative, for summary judgment, on plaintiff's contract claims, wrongful termination in violation of public policy claim, and negligence claim.
I. AMOUNT IN CONTROVERSY
The evidence defendant submitted in response to the Court's order to show cause demonstrates by a preponderance of the evidence that the amount in controversy exceeds $75,000.00. Accordingly, the Court has subject matter jurisdiction of this matter.
II. THE MOTION TO DISMISS OR IN THE ALTERNATIVE FOR SUMMARY JUDGMENT
Defendant moves to dismiss, or in the alternative moves for summary judgment on, the breach of contract, breach of implied covenant, wrongful termination in violation of public policy, and negligence claims.
A. The Negligence Claim
Plaintiff does not dispute dismissal of the negligence claim. See plaintiff's opposition at p. 2. Accordingly, the negligence claim will be dismissed without leave to amend.
B. The Claim for Wrongful Termination in Violation of Public Policy
The statute of limitations for a California wrongful termination in violation of public policy claim is one year. See Barton v. New United Motor Mfg., Inc., 43 Cal.App.4th 1200 (1996). Plaintiff's complaint alleges that she was terminated in July 1997, yet she did not file her lawsuit until December 1998. Defendant contends that plaintiff's claim is therefore barred by the statute of limitations as a matter of law.
Plaintiff responds that the doctrine of "equitable tolling" should toll plaintiff's common law wrongful termination/public policy claim. In particular, she argues that since her wrongful termination claim arises out of the same facts as her FEHA claims it would make no sense for her to file her wrongful termination claim within one year of her termination and then later file her FEHA claim after the administrative process is over and she has been given her right-to-sue notice. She concludes that since her FEHA claim is timely filed her wrongful termination claim should be deemed timely filed as well.
Plaintiff relies on the Ninth Circuit's decision in Salgado v. Atlantic Richfield Co, 823 F.2d 1322 (9th Cir. 1987), and the court's decision inChavira v. Payless Shoe Source, 140 F.R.D. 441 (E.D. Cal. 1991). InSalgado, the Ninth Circuit held that an on-going Equal Employment Opportunity Commission ("EEOC") investigation tolls the statute of limitations on a California FEHA claim since when a charge of discrimination is timely filed concurrently with the EEOC and the Department of Fair Employment and Housing ("DFEH"), the DFEH defers investigation of the complaint to the EEOC. The court concluded that the limitations period to bring an FEHA action would be tolled until the plaintiff receives a right-to-sue letter from the EEOC. The California courts are in accord. See Downs v. Dep't Water and Power, 58 Cal.App.4th 1093 (1997).
Chavira extended Salgado to toll the statute of limitations on a common law emotional distress claim while the DFEH is investigating a plaintiff's FEHA claims. No California state court, however, has followedChavira, and a court in this district recently rejected its reasoning and conclusion. In Estes v. Alliedsignal, Inc., 1998 WL 814638 (N.D. Cal. Nov. 12, 1998), the court concluded that the reasoning of Salgado did not apply to the facts of Chavira or the facts in Estes. In particular, the court concluded that Salgado's tolling rule was based on the fact that the state FEHA claim "allowed for the same procedures and remedies as plaintiff's Title VII claim," id. at * 11, but that a similarity of procedures and remedies does not exist for a FEHA claim and a common law emotional distress claim. The court also relied on the Supreme Court's decision in Johnson v. Railway Express Agency. Inc., 421 U.S. 454 (1975), in which the Court held that the filing of a discrimination charge with the EEOC does not toll the statute of limitations for a related section 1981 claim because the two claims provide for separate and independent legal remedies. Id. at 460-61; see also Estes at * 11 (discussing Johnson).
The Court concludes that as a matter of law equitable tolling does not apply here. First, plaintiff has failed to cite any California case which suggests that the California courts would recognize equitable tolling under such circumstances. Indeed, the California Supreme Court has explained that the common law tort claim of wrongful termination for violation of public policy is an alternative to a statutory FEHA claim.Rojo v. Kliger, 52 Cal.3d 65 (1990). Moreover, the California Supreme Court advised that a plaintiff can pursue both a wrongful termination tort claim and a FEHA claim by "amending his or her complaint to join the FEHA cause of action once the [DFEH] has issued a right-to-sue letter."Id. at 88. Since the Supreme Court of California does not believe a plaintiff is put in a difficult position by having to file her common law wrongful termination claim before being issued a right-to-sue letter on her FEHA claims, it is unlikely the California courts would rule that equitable tolling would apply so that a plaintiff would not have to file the wrongful termination claim first.
Second, the Estes court's reasoning as to why the Ninth Circuit's decision in Salgado does not apply to toll a common law claim that is related to a FEHA claim is persuasive. Plaintiff's reliance on Downs v. Downs v. Dep't Water and Power, 58 Cal.App.4th 1093 (1997) is misplaced.Downs, like Salgado, holds only that a FEHA claim is tolled pending an EEOC investigation and thus is not controlling for the reasons stated above and by the court in Estes. Accordingly, plaintiff's wrongful termination in violation of public policy claim will be dismissed without leave to amend on the ground that it is barred by the statute of limitations.
C. Breach of Contract and Breach of Implied Covenant Claims
Plaintiff's contract claim alleges that through assurances, policies, practices and custom, there arose between plaintiff and defendant an implied agreement that she would not be terminated without just cause and that defendant breached this implied contract by terminating her employment without just cause in July 1997.
Defendant moves to dismiss, or in the alternative moves for summary judgment on, this contract claim on the ground that at the time defendant purchased plaintiff's Bank of America division, plaintiff signed an employment offer letter in which she expressly acknowledges that she is an employee-at-will. Since defendant relies on a letter which is not attached to the complaint, the Court will treat its motion as a motion for summary judgment. See Anderson v. Angelone, 86 F.3d 932, 934 (9th Cir. 1996). Plaintiff had notice that defendant's motion might be treated as such since defendant moved in the alternative for summary judgment and plaintiff submitted a declaration and other evidence in opposition to defendant's motion.
The offer letter states that defendant is offering plaintiff employment with defendant "on the terms and conditions described" in the letter. Among the terms is the following:
Your employment will be "at will." As an "at will" employee, either you or [defendant] can terminate the employment relationship at any time and for any reason, with or without advance notice or cause. Over the course of your employment, other terms and conditions of your employment may change, but the "at will" relationship will not change.
Offer letter at 2. Defendant contends that since plaintiff had an express at-will agreement, her breach of contract claim alleging an implied agreement that she would be terminated only upon just cause must fail as a matter of law.
Under California law, an implied-in-fact employment agreement may not contradict the express terms of an at-will agreement. See, e.g., Halverson v. Aramark Uniform Services, 65 Cal.App.4th 1383 (1998). This legal principle appears to dispose of plaintiff's claim that she had an implied-in-fact agreement that she would not be terminated without just cause. Plaintiff nonetheless responds that she should be allowed to conduct discovery on her breach of contract claims.
Under the Federal Rules of Civil Procedure, "if a party opposing summary judgment demonstrates a need for further discovery in order to obtain facts essential to justify the party's opposition, the trial court may deny the motion for summary judgment or continue the hearing to allow for such discovery. In making a Rule 56(f) motion, a party opposing summary judgment `must make clear what information is sought and how it would preclude summary judgment.'" Margolis v. Ryan, 140 F.3d 850, 853 (9th Cir. 1998) (citation omitted). The Court will consider each of plaintiff's arguments to determine if she should be afforded the opportunity to conduct discovery.
Plaintiff first argues that she should be entitled to conduct discovery generally on the offer letter and the circumstances giving rise to her implied-in-fact agreement because the offer letter itself is inconsistent. In particular, she alleges that it provides that plaintiff's length of service with Bank of America will be adopted by defendant so that she is "not deprived of benefits attributable to [her] length of service." (Offer letter at p. 1.) As further evidence of its inconsistency she points to the fact that several months after the offer letter was executed by plaintiff, defendant's Chairman wrote to defendant's employees and stated that defendant's career record is different from the rest of the business world:
Around 20% of us get promoted every year. [Defendant's] average annual salary increases are clearly higher than national averages. And then there's job security. Compare [defendant's] overall employment record with the many unfortunate and significant staff reductions m corporate U.S.
Thus, reasons plaintiff, there is a factual dispute as to whether plaintiff was an at-will employee.
As a matter of law, the executed offer letter unambiguously provides that plaintiff is an at-will employee. The phrase relied upon by plaintiff is taken out of context. Read in context, it is apparent as a matter of law that it refers to fringe benefits, not to other benefits such as just cause termination which directly contradict the terms of the offer letter. Accordingly, no parole evidence is admissible and discovery on the meaning of the offer letter could not as a matter of law defeat defendant's motion for summary judgment.
The Chairman's statement is similarly unhelpful to plaintiff Such a statement cannot as a matter of law create an implied in fact agreement in light of the expressed unambiguous at-will agreement. See Halverson, 65 Cal.App.4th 1383.
Plaintiff next argues that the offer letter is not an integrated agreement and therefore plaintiff should be given the opportunity to submit evidence that she had another implied agreement — the agreement not to terminate without just cause. This argument is foreclosed by California law and therefore discovery will not defeat summary judgment. See Cruey v. Gannett Co., Inc., 64 Cal.App.4th 356, 362 (1998) (holding that "[w]hen an employment agreement has both express and implied terms which are contradictory, the express terms control" even if "the written terms are not contained in an integrated employment contact").
Plaintiff's argument that she did not receive consideration for her agreement is frivolous. Plaintiff received her job. In any event, plaintiff has not articulated what discovery she requires to prove that she did not receive consideration.
Finally, plaintiff argues that she signed the offer letter under duress. She declares that Bank of America told her that if she did not take a position with defendant she would not be entitled to her Bank of America 60-week severance package. Defendant responds that if true, any duress was caused by Bank of America not defendant. Of course, defendant may have encouraged Bank of America to take that position and plaintiff cannot know what defendant's role if any was without discovery. Accordingly, the Court will continue the summary judgment motion on the breach of contract claims to permit plaintiff to conduct discovery on her duress attack on the validity of her at-will agreement.
For the foregoing reasons, defendant's motion to dismiss the negligence and wrongful termination in violation of public policy claims is GRANTED without leave to amend. Defendant's motion for summary judgment on the breach of contract and breach of implied covenant claims is CONTINUED to permit plaintiff to conduct discovery limited to her duress challenge to the validity of her at-will agreement. The parties are directed to cooperate on the exchange of discovery relevant to this limited issue. Any discovery disputes shall be adjudicated by a Magistrate Judge in accordance with the Court's standing order. Plaintiff shall file her supplemental opposition together with any additional evidence by April 10, 1999. Defendant's reply, if any, shall be filed by April 17, 1999. The Court will thereafter take the continued motion for summary judgment under submission. By this order the Court does not intend to stay discovery on plaintiff's other claims in this lawsuit which were not challenged by defendant's motion.