2013-00147015-CU-DF

Luis Franco vs. Farmers Rice Cooperative

Nature of Proceeding: Hearing on Demurrer

Filed By: Silva, Aaron B.

Defendants Farmers Rice Cooperative and Greg Huwes’ demurrer to Plaintiffs Luis
Franco and Eddy Marrtinez’ second amended complaint (“SAC”) is ruled upon as
follows.

Defendants’ requests for judicial notice are granted.

The Court did not consider the declaration submitted by Plaintiffs in connection with
their opposition. When ruling on a demurrer or motion to strike, “a court cannot
consider…the substance of declarations, matter not subject to judicial notice, or
documents judicially noticed but not accepted for the truth of their contents.” (
Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)

In this action, Plaintiff Luis Franco alleges that he worked for FRC until March 2012 when he was accused of a violation of “keying” his supervisor’s vehicle and
terminated. He alleges that his supervisor fabricated this claim and used the
allegations to retaliate against him for making safety complaints. Plaintiff Martinez
alleges that he was subpoenaed to testify at Franco’s arbitration hearing regarding the
“keying” and provided testimony that was favorable to Franco. He alleges that he was
demoted from his supervisor position as a result of this testimony.

First through Sixth and Ninth Causes of Action

The demurrer is sustained with leave to amend. Plaintiffs concede that the
amendments made to these causes of action exceeded the scope of the Court’s grant
of leave to amend when it sustained Defendants’ demurrer to the first amended
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complaint. (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4 1018, 1023;
People ex rel. Dept. Pub. Wks. V. Clausen (1967) 248 Cal.App.2d 770, 785.) In Harris,
the Court of Appeal explained that plaintiffs are not permitted to add new causes of
action that were not asserted in prior complaints as that exceeded the scope of the
court’s order granting leave to amend the original complaint. Harris v. Wachovia
Mortg., FSB, at p. 1023. Indeed, the Court’s order granted leave to amend to allow
Plaintiff Martinez to allege “a Tameny claim for wrongful termination in violation of
public policy regarding truthful testimony.” (Defs’ RJN, Exh. 2.) However, the Court
will allow leave to amend to allow Plaintiffs to file an amended complaint including
these inappropriately added causes of action, except as to the Ninth Cause of Action,
which as seen below, is preempted. Indeed, the improperly added amendments are
based on the same set of operative facts as the original complaint. Defendants are
incorrect when they assert that a demurrer must in all cases be sustained without
leave to amend in these circumstances. The Court retains the discretion to allow leave
to amend and does so here.

Seventh, Eighth and Ninth Causes of Action (Plaintiff Martinez only)

Defendants argue that these three causes of action are preempted by the National
Labor Relations Act (“NLRA”) 29 U.S.C. § 151 et seq. and within the National Labor
Relations Board’s (“NLRB”) primary jurisdiction.

A claim is preempted by the NLRA where the alleged conduct is arguably prohibited or
protected by Section 7 or 8 of the NLRA. (San Diego Bldg. Trades Council v. Garmon
(1959) 359 U.S. 236.) To make this determination, the court must ask “whether the
controversy presented to the state court is identical to…or different from…that which
could have been, but was not, presented to the Labor Board.” (Sears, Roebuck & Co.
v. San Diego County Dist. Council of Carpenters (1978) 436 U.S. 180, 197.)

Relevant California authority has found that a supervisor’s state court claims were
preempted by the NLRA where he alleged that he was subject to adverse employment
action by his employer after testifying adversely to the employer in an arbitration where
he was required to testify. (Ruscigno v. American National Can Company, Inc. (2000)
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84 Cal.App.4 112.) The supervisor asserted a Tameny wrongful termination claim,
IIED/NEID claims, and a breach of implied employment contract. The court of appeal
affirmed a trial court order which sustained a demurrer without leave to amend, finding
that the action arguably involved an unfair labor practice, because it involved
allegations that the employer terminated the supervisor for testifying adversely to the
employer during an arbitration conducted pursuant to a collective bargaining contract.
(Id. at 119-120.) Ruscigno concluded that such conduct arguably involved conduct prohibited by Section 7 or 8 of the NLRA because “the discharge of supervisors is
unlawful when it interferes with the right of the employees to exercise their rights under
section 7 of the Act, as when they give testimony adverse to their employers’ interest
…” (Ruscigno, supra, at 120 [quoting Parker-Robb Chevrolet, Inc. and Automobile
Salesman’s Union (1982) 262 NLRB 402, 404] [emphasis in original].) Ruscigno found
that not only were the supervisor’s tort claims covered by the NLRA, but the breach of
contract claims were as well given that “the evidence in the state court [for the contract
claim] would not be distinctly different than the evidence that would be presented to
the NLRB [regarding the tort claims]. Indeed, it would be the same and it implicates
sections 7 and 8 of the National Labor Relations Act.” (Id., at 128 [emphasis in
original].) Case law has also found that state court Tameny claims and Labor Code §§
1101/1102 claims alleging that an employer retaliated by terminating an employee for
testifying before the State Public Utilities Commission and initiating a class action
lawsuit against his employer, both in his capacity as a union official were preempted by
the NLRA. (Rodriguez v. Yellow Cab Cooperative, Inc. (1988) 206 Cal.App.3d 668.)
The court held that the plaintiff’s tort and statutory claims were preempted by the
NLRA because assuming he was terminated “in retribution for his testimony before the
PUC or his participation in the lawsuit, he would prove respondent committed what is
arguably an unfair labor practice.” (Id. at 678.)

Plaintiff Martinez’ causes of action fall squarely within the holdings of Ruscigno and
Rodriguez. Indeed, he alleged that he testified in an arbitration held pursuant to a
collective bargaining agreement related to Franco’s termination. He alleged that he
appeared at the arbitration pursuant to a subpoena which was issued pursuant to the
“general custom and practice of the manner in which labor arbitrations would proceed.”
He alleged that the testified against the wishes of FRC, which was seeking to
wrongfully terminate Franco. (SAC ¶¶ 58, 59.) He alleges that at the conclusion of the
arbitration he was accused of violating FRC’s rules with regard to giving testimony at
the arbitration and as a result was demoted from his supervisor position. (SAC ¶ 60.)
He alleges that the demotion was “done in retaliation for MARTINEZ having given
truthful testimony adverse to the wrongful and illegal interest of FRC in seeking to
achieve an illegal termination of FRANCO.” (SAC ¶ 61.) These allegations, contained
in Martinez’ Tameny claim, are incorporated into, and indeed also form the basis for,
his Labor Code § 230 claim and IIED claims. (SAC ¶¶ 71, 76 [alleging that his
demotion was “done in retaliation for…having given adverse testimony to the wrongful
interests of FRC” and that he was “willfully and wrongfully disciplined…due to his
truthful and honest testimony at a labor arbitration where he testified under compulsion
of subpoena.”].) These allegations are analogous to the facts in Ruscigno, and
assuming them to be true [Facts alleged in the complaint are assumed for the
purposes of the demurrer to be true. Serrano v. Priest (1971) 5 Cal.3d 584, 591.],
Martinez has essentially alleged violations of the NLRA because “the discharge of
supervisors is unlawful when it interferes with the right of the employees to exercise
their rights under section 7 of the Act, as when they give testimony adverse to their
employers’ interest.” (Ruscigno, supra, at 120.)

Plaintiff’s argument that his allegations are distinguishable because he alleged that he
was required by subpoena to testify at Franco’s arbitration hearing is rejected and
unpersuasive. Whether required by subpoena or not, the allegations that he was
retaliated against because he testified at the arbitration involve a situation where the
alleged conduct by FRC arguably violated the NLRA. The authorities discussed above
are clear that the causes of action are preempted by the NLRA because of the alleged
unfair labor practice that occurred as a result of Martinez’ participation in the labor
arbitration. “The nature of the events giving rise to that grievance proceeding were of
no consequence.” (Ruscigno, surpa, at 122.) As a result, Defendants’ demurrer to
Plaintiff Martinez’s seventh, eight, and ninth causes of action are sustained without
leave to amend on the basis that they are preempted by the NLRA. Leave to amend is
not given as there is no reasonable possibility that Martinez could plead around this
defect. A demurrer must be sustained without leave to amend absent a showing of a
reasonable
possibility the defect can be cured by amendment. The burden of proving such
reasonable possibility is squarely on the complainant

In addition, the demurrer to the eighth cause of action for violation of Labor Code §
230 (previously the seventh cause of action in the first amended complaint) must be
sustained for the additional reason that, regardless of whether the claim is preempted
by the NLRA, Plaintiff has, as was the case in the previous pleading, still failed to state
a cause of action for a violation of Labor Code § 230. As the Court ruled on the
previous demurrer in finding that Martinez’s allegations that testifying truthfully at an
arbitration hearing was insufficient, “the statutory purpose of Labor Code, sec. 230
appears to be to protect an employee testifying in a domestic violence action, not in a
contractual arbitration regarding employment.” (Defs’ RJN, Exhs. 2, 3.) Plaintiff has
left the cause of action unchanged and consequently, the demurrer is sustained
without leave to amend as the Court has already found that the conduct at issue was
not protected by Labor Code § 230. Martinez fails to address this argument. In sum,
Defendants’ demurrer to Plaintiff Martinez’s seventh, eighth, and ninth causes of action
are sustained without leave to amend.

In opposition, Plaintiff requests leave to amend to make certain corrections to the
existing seventh and eighth causes of action and to assert new causes of action for
breach of an implied employment contract and breach of the duty of good faith and fair
dealing which he argues would not be pre-empted by the NLRA. First, the Court notes
that the request to amend in an opposition to the demurrer is procedurally improper
and should be the subject of a separate noticed motion to amend. In any event, the
Court denies the request as to the seventh and eighth causes of action as the
demurrer to those causes of action were sustained without leave to amend on the
basis that they are preempted by the NLRA and the corrections in no way avoid
preemption. In addition, the Court denies leave to amend to allow Plaintiff Martinez to
allege causes of action for breach of an implied employment contract and breach of
the duty of good faith and fair dealing. While Plaintiff argues that pursuant to,
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Kelecheva v. Multivision Cable T.V. Corp. (1993) 16 Cal.App.4 521, 531-532, these
causes of action may not be preempted by the NLRA, he is incorrect. Indeed, as seen
from Ruscigno, where, as here, the plaintiff alleges that he was subjected to adverse
employment action for testifying at a labor arbitration, implied breach of an implied
employment contract and breach of the duty of good faith and fair dealing are indeed
preempted by the NLRA. Distinguishing Kelecheva, Ruscigno found that if the plaintiff
proved a prima facie case for an implied employment contract, the burden would shift
to the defendant to show good cause for termination which would “surely be
challenged as pretextual by plaintiff with evidence that his termination was retaliatory
for his testimony in the [labor] arbitration. Therefore, unlike the court in Kelecheva, we
cannot conclude that “[t]he controversy before the state court on plaintiff’s claim for
breach of the covenant of good faith and fair dealing would also be distinctly different
from the litigation of an unfair labor practice charge that might have been, but was not,
presented to the NLRB.” [citation omitted] Nor may we conclude, based on the record
before us, that plaintiff would “not be required to prove that defendant, in fact, discharged him for reasons that would violate federal or state labor law.” [citation
omitted]. Without evidence that his termination was based on his testifying in the
[labor] arbitration, he simply cannot challenge defendant’s showing of “good cause”…It
is unrealistic to assume that plaintiff would forego the introduction of such critical
evidence to counter defendant’s presumed excuse that plaintiff was terminated [for
legitimate reasons]. In other words, the evidence in the state court would not be
distinctly different than the evidence that would be presented to the NLRB. It would be
the same and it implicates sections 7 and 8 of the NLRA. Therefore, plaintiff’s claim is
perforce preempted by the NLRB.” (Ruscigno, supra, at 127-128 [emphasis in
original].) The situation is no different here with Plaintiff Martinez’ proposed causes of
action. Indeed, Defendants would attempt to present evidence that Martinez was
terminated for good cause which Martinez would have to counter was pretext and he
was really terminated for testifying at Franco’s labor arbitration. These claims would
be preempted and thus leave to amend is not given.

Where leave was given (in connection with the first through sixth causes of action),
Plaintiffs may file and serve an amended complaint no later than May 9, 2014.
Defendants shall file and serve their responses within 10 days thereafter, 15 days if
the amended complaint is served by mail. (Although not required by any statute or
rule of court, Plaintiffs are requested to attach a copy of the instant minute order to the
amended complaint to facilitate the filing of the pleading.)

This minute order is effective immediately. No formal order pursuant to CRC rule
3.1312 or other notice is required.

Item 10 2013-00147015-CU-DF

Luis Franco vs. Farmers Rice Cooperative

Nature of Proceeding: Motion to Strike

Filed By: Silva, Aaron B.

Defendant Farmers Rice Cooperative and Greg Huwes’ motion to strike portions of
Plaintiffs Luis Franco and Eddy Martinez’ second amended complaint (“SAC”) is ruled
upon as follows.

Defendants’ requests for judicial notice are granted.

The Court did not consider the declaration submitted by Plaintiffs in connection with
their opposition. When ruling on a demurrer or motion to strike, “a court cannot
consider…the substance of declarations, matter not subject to judicial notice, or
documents judicially noticed but not accepted for the truth of their contents.” (
Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)

In this action, Plaintiff Luis Franco alleges that he worked for FRC until March 2012
when he was accused of a violation of “keying” his supervisor’s vehicle and
terminated. He alleges that his supervisor fabricated this claim and used the
allegations to retaliate against him for making safety complaints. Plaintiff Martinez
alleges that he was subpoenaed to testify at Franco’s arbitration hearing regarding the
“keying” and provided testimony that was favorable to Franco. He alleges that he was
demoted from his supervisor position as a result of this testimony. Defendants’ move to strike numerous allegations in the SAC which they argue
exceeded the scope of the Court’s grant of leave to amend when it sustained their
demurrer to the first amended complaint, and also moves to strike additional
allegations on the basis that they are irrelevant.

With respect to the allegations identified in the notice of motion and specifically
discussed at pages 11:23-13:16 of Defendants’ memorandum of points and
authorities, the motion is granted. Plaintiffs concede that the amendments made to
these causes of action exceeded the scope of the Court’s grant of leave to amend
when it sustained Defendants’ demurrer to the first amended complaint. (Harris v.
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Wachovia Mortgage, FSB (2010) 185 Cal.App.4 1018, 1023; People ex rel. Dept.
Pub. Wks. V. Clausen (1967) 248 Cal.App.2d 770, 785.) Indeed, the Court’s order
granted leave to amend to allow Plaintiff Martinez to allege “a Tameny claim for
wrongful termination in violation of public policy regarding truthful testimony.” (Defs’
RJN, Exh. 2.) However, leave to amend was granted in connection with the Court’s
ruling on Defendants’ demurrer, except as to the allegations related to the ninth cause
of action. Thus, the motion to strike as to these allegations is granted with leave to
amend except as to the allegations asserted in connection with the Ninth Cause of
action as to which leave to amend is denied.

The remainder of the motion deals solely with allegations set forth in Plaintiff
Martinez’s eight cause of action for wrongful termination. However, as seen from the
Court’s ruling on Defendants’ demurrer, Defendants’ demurrer was sustained without
leave to amend as to the eighth cause of action. The motion to strike these allegations
is therefore moot.

Finally, the motion to strike Plaintiff Franco’s demand for FMLA attorneys’ fees is
granted. As the Court ruled on Defendants’ motion to strike with respect to the first
amended complaint, this demand was irrelevant because Franco has not asserted any
claim under the FMLA. However, he retained the demand when he filed the SAC.
This demand is stricken from the SAC and shall not included in any subsequent
amended pleading.

The minute order is effective immediately. No formal order pursuant to CRC Rule
3.1312 or other notice is required.