Case Number: BC501692    Hearing Date: October 06, 2014    Dept: 56

Case Name: Yabumoto v. Fung & CCS
Case No.: BC501692
Matter: Motion for Summary Judgment/Adjudication

Tentative Ruling: Summary judgment is denied;
Summary adjudication granted in part.

Plaintiff Keith Yabumoto filed this action against Defendants Peter Fung MD and Comprehensive Cardiovascular Specialists Inc., alleging causes of action for (1) FEHA association discrimination, (2) FEHA retaliation, (3) FEHA failure to prevent, (4) violation of privacy, (5) wrongful termination, (6) breach of contract and (7) breach of implied covenant. Defendants move for summary judgment/adjudication.

Objections –
Defendants have objected to portions of Plaintiff’s opposition separate statement. All objections are overruled as improper. They are not directed to specific evidence as required by CRC 3.1354, and they are essentially argument that Plaintiff’s evidence does not support the assertions in his opposition statement.

Background –
Plaintiff is a medical doctor, specializing in the field of cardiology. CCS is a medical corporation with three equal shareholders: Peter Fung. Michael Yeh and Rex Liu. Fung is the president and CEO of CCS and the senior-most person responsible for managing the medical corporation.

CCS entered into a written employment contract with Plaintiff. The contract provided for employment for a two year term beginning 9/1/2009, subject to extension by written agreement of the parties. The contract provided that Plaintiff could be considered for shareholder status at the end of the second year.

Plaintiff worked for CCS as a staff cardiologist through the specified term. The parties did not agree to a written extension of the contract in 9/2011, but Plaintiff continued working for CCS under the same terms. In 2/2012 CCS gave Plaintiff a written contract to become a shareholder of the medical corporation. Plaintiff did not sign the contract but the parties began the steps for him to become a shareholder, such as withholding money for the required capital buy-in.

In 6/2012 Plaintiff began dating Debra Lai, who had been employed by CCS as a nurse from 3/2011 through 5/2012. Plaintiff learned that Lai was also dating Fung and that the relationship between Lai and Fung had existed throughout the time that Lai had been an employee of CCS.

When Fung and Plaintiff learned that they were both vying for the affections of the same woman, their relationship rapidly deteriorated. In 7/2012 Plaintiff was asked to resign from employment and he refused to do so; in 7/2012 Fung began criticizing Plaintiff’s performance; in 9/2012 Plaintiff’s shareholder offer was withdrawn; in 9/2012 Plaintiff was offered a new employment contract with reduced terms, to which Plaintiff did not respond; in 10/2012 Plaintiff was told that his employment would be terminated if he did not agree to the new terms that had been proposed; and on 11/30/2012 Plaintiff’s employment was terminated after he had not accepted the new terms of employment.

Individual Liability –
Fung moves for summary adjudication of all causes of action except the 4th COA for violation of privacy. Fung’s motion is made on the ground that he cannot be personally liable for the FEHA and contract claims because he was not Plaintiff’s employer. Plaintiff does not oppose this aspect of the motion (Opp. at p. 20). Summary adjudication is therefore granted in favor of Fung on all causes of action except the 4th COA.

FEHA Discrimination (1st COA) –
Plaintiff’s 1st cause of action alleges discrimination based upon association. Plaintiff has argued that CCS took adverse action against him because of his association with Lai, whom Plaintiff believed to be a victim of sexual harassment by Fung.

GC §12926(o) states that discrimination based on race, sex, age and other protected categories “includes a perception that the person has any of those characteristics or that the person is associated with a person who has, or is perceived to have, any of those characteristics.” Accord 2 CCR §7287.9.

Plaintiff’s construction of this provision is tortured. He has not presented any authority which would extend FEHA protection to a plaintiff who is dating a former employee whom the plaintiff believes to have been a victim of sexual harassment. This is not the kind of association discrimination contemplated by §12926(o).

Summary adjudication is granted for the 1st COA.

FEHA Retaliation (2d COA) –
Plaintiff’s 2nd cause of action alleges unlawful retaliation. GC §12940(h) makes it illegal for an employer to discriminate against an employee who has “opposed any practices forbidden under this part.” A retaliation claim requires proof that the plaintiff opposed illegal practices by the defendant, the defendant subjected the plaintiff to an adverse employment action, and the plaintiff’s opposition was a substantial motivating reason for the defendant’s adverse action. See Yanowitz v. L’Oreal USA (2005) 36 Cal.4th 1028, 1042; CACI 2025.

CCS has argued that there is no evidence that Fung sexually harassed Lai, citing Lai’s statement that Fung did not make any unwanted sexual advances toward her and she never complained about his conduct. But there is certainly evidence which suggests a contrary conclusion: Fung was Lai’s supervisor, and their relationship existed before, during and after her employment with CCS; Lai told Plaintiff details about her relationship with Fung; and Plaintiff learned about a physical confrontation between Lai and Fung over Lai’s cell phone, which was anything but consensual. It is well-settled that “[a]n employee is protected against retaliation if the employee reasonably and in good faith believed that what he or she was opposing constituted unlawful employer conduct such as sexual harassment or sexual discrimination.” Miller v. Dept. Corrections (2005) 36 Cal.4th 446, 473.

CCS has also argued that Plaintiff never complained to CCS about Fung’s actions toward Lai. There is evidence that upon learning of Fung’s relationship with Lai and their physical confrontation over Lai’s cell phone, Plaintiff repeatedly pressed Fung for a meeting. Shortly thereafter, Fung began criticizing Plaintiff’s work and made changes in Plaintiff’s terms of employment. The evidence supports the conclusion that Fung knew that Plaintiff was concerned about his actions toward Lai, and responded by taking adverse actions toward Plaintiff. While there is conflicting evidence as to whether Plaintiff’s meeting requests were motivated by opposition to sexual harassment or by a desire to eliminate Fung as a competing suitor for Lai, this merely creates a triable issue.

Summary adjudication is denied for the 2nd COA.

FEHA Failure to Prevent (3d COA) –
Plaintiff’s 3rd cause of action for failure to prevent discrimination and retaliation is dependent on the 1st and 2nd COAs. See Trujillo v. North Country Transit (1998) 63 Cal.App.4th 280, 289. Because the 2nd COA survives, summary adjudication is denied for the 3rd COA.

Violation of Privacy (4th COA) –
The 4th cause of action alleges that both CCS and Fung violated Plaintiff’s right to privacy. This requires proof that the plaintiff had a reasonable expectation of privacy, the defendant intentionally intruded into the plaintiff’s private affairs, and the defendant’s intrusion would be highly offensive to a reasonable person. Hill v. NCAA (1994) 7 Cal.4th 1, 39; CACI 1800.

There is evidence that Plaintiff was dating Lai; after Fung learned of this relationship he had a physical confrontation during which he took Lai’s cell phone against her will; Fung searched through Lai’s cell phone and found messages from Plaintiff; and Fung sent Plaintiff text messages from Lai’s phone, in which Fung pretended to be Lai and asked Plaintiff to stop seeing her. This evidence supports triable issues for Plaintiff’s privacy claim. Fung’s unconsented review of Plaintiff’s messages on Lai’s cell phone, and Fung’s phony text messages invaded Plaintiff’s reasonable zone of privacy and are the kind of behavior that would offend a reasonable person.

Citing Capitol City v. Superior Court (1992) 5 Cal.App.4th 1042, 1048, CCS has argued that it cannot be held liable for Fung’s conduct toward Plaintiff because Fung acted for personal reasons and not on behalf of the medical corporation. The dividing line is not that clear. Fung was the CEO and senior-most shareholder of CCS, and there is evidence that Fung made business demands upon Plaintiff (such as insisting that he quit or leave the medical corporation) during his personal interactions with Lai and Plaintiff (such as calling Plaintiff from Lai’s apartment and demanding that he resign immediately); and Fung carried his personal conflict into the business by sending Plaintiff formal demand letters on behalf of CCS on 9/21/2012 and 10/31/2012.

Summary adjudication is denied for the 4th COA.

Wrongful Termination (5th COA) –
The 5th cause of action for wrongful termination in violation of public policy is dependent on the 1st and 2nd COAs. See Shoemaker v. Myers (1990) 52 Cal.3d 1, 24; City of Moorpark v. Superior Court (1998) 18 Cal.4th 1143, 1158-1161. Because the 2nd COA survives, summary adjudication is denied for the 5th COA.

Contract Claims (6th & 7th COAs) –
The 6th (breach of contract) and 7th (breach of the implied covenant of good faith) causes of action are based upon the written shareholder agreement that CCS delivered to Plaintiff in 2/2012. There is evidence that Plaintiff never signed the shareholder agreement but he told the other shareholders that he would do so, they congratulated him on becoming a shareholder, and the parties began the steps for him to become a shareholder, such as withholding money for the required capital buy-in. In 9/2012, after the conflict between Plaintiff and Fung arose, CCS withdrew its shareholder offer.

CCS has argued that Plaintiff cannot recover on his contract claims because he never accepted the shareholder agreement and he did not meet the buy-in requirement by paying the full amount of his capital to CCS. There nevertheless are triable issues as to whether a contract was formed. The parties may agree to a contract “wholly or partly by written or spoken words or other acts.” Merced County Sheriff’s Assn. v. County of Merced (1987) 188 Cal.App.3d 662, 670. And “if the respective parties orally agreed upon all of the terms and conditions of a proposed written agreement with the mutual intention that the oral agreement should thereupon become binding, the mere fact that a formal written agreement to the same effect has not yet been signed does not alter the binding validity of the oral agreement.” Banner Entertainment v. Superior Court (1998) 62 Cal.App.4th 348, 358.

CCS has also argued that summary adjudication should be granted for the 7th COA, because a claim for breach of the implied covenant of good faith only affords contract damages and therefore duplicates the 6th COA. This argument has no merit. While the remedy is the same for the two causes of action, the theory of recovery is different. See Guz v. Bechtel (2000) 24 Cal.4th 317, 353 fn. 18 (“the covenant prevents a party from acting in bad faith to frustrate the contract’s actual benefits”). Plaintiff is entitled to pursue this alternative theory of recovery.

Summary adjudication is denied for the 6th and 7th COAs.

Punitive Damages –
Defendants have argued that Plaintiff cannot establish entitlement to punitive damages by clear and convincing evidence, because there is no evidence of malice, oppression or fraud within the meaning of CC §3294. This argument has no merit. The evidence is sufficient to raise triable issues of fact for the punitive damage claims against CCS and Fung. There is conflicting evidence as to whether Fung acted with malice or oppression in his conduct toward Plaintiff, and it is undisputed that Fung was an officer, director and managing agent of CCS.

Ruling –
For Fung, summary adjudication is granted for all causes of action except the 4th COA. For CCS, summary adjudication is granted for the 1st COA. The motion for summary judgment/adjudication is otherwise denied.