2018-00238858-CU-WT

Karen Freeman vs. Elica Health Centers

Nature of Proceeding: Motion to Strike Punitive Damages

Filed By: Cridland, Graham M.

Defendant Elica Health Centers’ (“EHC”) motion to strike the punitive damages allegations from the complaint is GRANTED, as follows.

Factual Background

This action arises out of plaintiff’s employment with EHC, which terminated plaintiff in October 2017. The complaint purports to assert a total of five separate causes of action (“COA”) for discrimination based on national origin, retaliation in violation of Labor Code §98.6 and §1102.5, defamation, failure to prevent discrimination, and wrongful termination.

Defendant EHC now moves to strike the punitive damages allegations from the complaint on the grounds that plaintiff has failed to plead facts sufficient to establish the requisite malice, fraud or oppression and sufficient to satisfy the requirements of Civil Code §3294(b) (precluding an employer from being liable for punitive damages unless a certain showing is made).

Plaintiff opposes, arguing that the complaint adequately establishes malice and/or oppression particularly on the part of Elizabeth Cassin as well as the Board of Directors inasmuch as the latter failed to investigate plaintiff’s complaints about the “false rumor” of her alleged affair with Mr. McGuire and thereby ratified Cassin’s alleged defamation of plaintiff.

Analysis

The motion to strike will be granted. First, to the extent the punitive damages claim is premised on the complaint’s third COA for defamation, it is deficient since the court

has sustained EHC’s demurrer to the defamation COA for several different reasons.

Second, to the extent the punitive damages claim is premised on the conduct of Ms. Cassin, it is insufficient inasmuch as Paragraph 28 of the complaint describes Ms. Cassin as a “paid business consultant” of EHC, a term antithetical to the notion of Ms. Cassin being an “employee” under the control of EHC and although Ms. Cassin might under certain circumstances be considered an agent of EHC, the complaint does not currently allege facts sufficient to render EHC liable Civil Code §3294(b) based on Ms. Cassin’s conduct.

Third, the opposition’s suggestion that EHC’s Board of Directors effectively ratified Ms. Cassin’s conduct by failing to investigate plaintiff’s complaints about the “false rumor” of her alleged affair with Mr. McGuire does not support punitive damages since a board cannot be reasonably expected to spend its time investigating “false rumors” and such an obligation, if imposed, would have a multitude of adverse consequences on the operations of corporations throughout this state.

Finally, to the extent the punitive damages claim is premised on the republication of Ms. Cassin’s false statement about plaintiff’s alleged affair with Mr. McGuire by otherwise unidentified employees of EHC, the complaint fails to plead facts establishing such republication was motivated by malice and/or oppression. Merely characterizing such conduct as malicious or oppressive is not sufficient basis for seeking punitive damages.

Conclusion

For the reasons explained above, defendant EHC’s motion to strike is granted.

As this is first challenge to the complaint, plaintiff may file and serve an amended complaint no later than 12/31/2018. Although not required by court rule or statute, plaintiff is directed to present a copy of this order when the amended complaint is presented for filing.

Defendant to respond within 30 days if the amended complaint is personally served, 35 days if served by mail.

This minute order is effective immediately. No formal order or other notice is required. (Code Civ. Proc. §1019.5; CRC Rule 3.1312.)

Item 14 2018-00238858-CU-WT

Karen Freeman vs. Elica Health Centers

Nature of Proceeding: Hearing on Demurrer to Complaint

Filed By: Cridland, Graham M.

*** If oral argument is requested, the parties are directed to notify the clerk and opposing counsel at the time of the request which of the issues and causes of action discussed below will be addressed at the hearing. Counsel are also reminded that pursuant to local rules, only limited oral argument is permitted on law and motion matters. ***

Defendant Elica Health Centers’ (“EHC”) demurrer to the complaint is SUSTAINED IN PART and OVERRULED IN PART, as follows.

Factual Background

This action arises out of plaintiff’s employment with EHC, which terminated plaintiff in October 2017. The complaint purports to assert a total of five separate causes of action (“COA”) for discrimination based on national origin, retaliation in violation of Labor Code §98.6 and §1102.5, defamation, failure to prevent discrimination, and wrongful termination.

Defendant EHC now demurs to the first three COA on various grounds cited below.

Plaintiff opposes.

Analysis

National Origin Discrimination. EHC demurs to this COA arguing that plaintiff has failed to plead she is a member of any protected class (i.e., having a particular national origin) but rather has merely alleged she suffered discrimination because she was not of Slavic descent. The opposition insists the complaint’s allegations are sufficient to establish discrimination in violation of the Fair Employment and Housing Act (“FEHA”).

As neither side has identified any controlling authority which is dispositive of this obscure issue, the court will look to well-established pleading rules and finds that under current California law all statutory COA like one brought under the FEHA must be pleaded with factual particularity, showing every fact essential to the existence of liability under the relevant statute(s). (See, Covenant Care, Inc. v. Superior Court (Inclan) (2004) 32 Cal.4th 771, 790 (citing Lopez v. Southern Cal. Rapid Trans. Dist. (1985) 40 Cal.3d 780, 795) (emphasis added).) Since the complaint does not currently allege plaintiff is associated with any particular national origin (regardless of whether that national origin is considered a “minority” or not), it does not affirmatively plead facts necessary to show she possesses any characteristic which is “protected” under the FEHA. Accordingly, the demurrer to the First COA will be sustained.

Retaliation Under Labor Code §98.6 and §1102.5. Relying on Patten v. Grant Joint Union School Dist. (2005) 134 Cal.App.4th 1378, defendant EHC contends this COA is flawed because it does not allege that the person who made the decision to terminate plaintiff was aware the latter had engaged in conduct protected under the two cited Labor Code provisions.

Although there can be no dispute that plaintiff must to prevail on this COA prove the causal link between her protected activity and her termination, EHC has not cited and this court is not aware of any authority which requires a plaintiff alleging a retaliation COA to plead the decision-maker’s knowledge of the underlying protected activity. Such a pleading requirement would effectively preclude an employee for alleging a retaliation claim if the identity of the decision-maker were unknown and regardless, the Patten decision on which EHC relies is inapposite since the question presented there was whether summary judgment was properly granted and since the Court of Appeal had no occasion to consider what must be pled in the complaint to allege a retaliation COA. Therefore, the demurrer to the Second COA must be overruled.

Defamation. According to EHC, this COA (which is directed solely against EHC rather

than any individual) fails to “identify specific facts about defamation,…set forth a publication which is defamatory on its face,…identify an employee…[acting] in the scope of their employment and…each instance of discrimination [sic]…”

The court will sustain the demurrer to the defamation COA which appears to allege on its face the publication of a variety of “false and defamatory statements…to third persons” (Compl., ¶¶82, 84-93) but the only one specifically described is referenced in Paragraph 83, stating that these “false and defamatory statements included [but are not necessarily limited to] accusations that Plaintiff and…EHC CEO Kenneth McGuire[] engaged in a romantic affair.” Although the opposition maintains the complaint adequately pleads a claim for defamation per se to the extent it alleges publication of false statements about plaintiff having an affair with a married man, the complaint nowhere appears to assert that Mr. McGuire was married and as such, the allegations do not on their face necessarily establish any statement suggesting plaintiff (admittedly single) was in an extramarital affair.

Moreover, under current California law, a plaintiff alleging defamation must specifically identify, if not plead verbatim, the words giving rise to the claim (see, e.g., ZL Technologies, Inc. v. Does 1-7 (Glassdoor, Inc.) (2017) 13 Cal.App.5th 603, 616; Glassdoor, Inc. v. Superior Court (2017) 9 Cal.App.5th 623, 635), a standard which is particularly relevant here inasmuch as the defamation claim is by its own terms not necessarily limited to the alleged “accusations” that plaintiff was in a relationship with Mr. McGuire.

Additionally, the defamation COA fails to identify a single employee EHC who is alleged to have published the “false and defamatory statement” accusing plaintiff of having a “romantic affair” with Mr. McGuire and as such, the COA fails to plead facts demonstrating a valid theory of liability against EHC for defamation. That the complaint may elsewhere allege that Elizabeth Cassin made a false statement about plaintiff’s “romantic affair” with Mr. McGuire does not necessarily save the defamation claim since Paragraph 28 of the complaint describes Ms. Cassin as a “paid business consultant” of EHC, a term antithetical to the notion of Ms. Cassin being an “employee” under the control of EHC and although Ms. Cassin might under certain circumstances be considered an agent of EHC, the complaint does not currently allege facts sufficient to establish EHC’s vicarious liability for her alleged intentional tort which has no apparent connection with her stated role as a “paid business consultant.”

Conclusion

For the reasons explained above, defendant EHC’s demurrer to the complaint is sustained as to the First and Third COA.

As this is first challenge to the complaint, plaintiff may file and serve an amended complaint no later than 12/31/2018. Although not required by court rule or statute, plaintiff is directed to present a copy of this order when the amended complaint is presented for filing.

Defendant to respond within 30 days if the amended complaint is personally served, 35 days if served by mail.

This minute order is effective immediately. No formal order or other notice is required. (Code Civ. Proc. §1019.5; CRC Rule 3.1312.)