Case Name: Nicole Paulk, PhD v. Mark Kay, MD, et al.
Case No.: 18CV330285

I. Factual and Procedural Background

This is an employment retaliation action filed by plaintiff Nicole K. Paulk, Ph.D. (“Plaintiff”) against defendants Board of Trustees of the Leland Stanford Junior University and Mark A. Kay, M.D. (“Kay”) (collectively “Defendants”).

As alleged in the Complaint, around June 2012, Plaintiff began working for Stanford University as a postdoctoral fellow in the pediatric department of its medical school. (Complaint, ¶ 3.) Plaintiff performed gene therapy research in Kay’s lab, first under his supervision and later under his mentorship. (Ibid.)

In June 2014 and March 2016, Plaintiff was awarded two grants from the National Institutes of Health (“NIH”), which is part of the U.S. Department of Health and Human Services. (Id. at ¶ 12.) As a condition of receiving the grants, Plaintiff was required to comply with NIH policies and federal regulations designed to minimize the tainting of research results by the financial interests of a researcher or one of his or her collaborators or consultants. (Id. at ¶ 14.)

In April 2015, Plaintiff first became concerned that Kay’s financial conflicts of interests were obstructing her research, in violation of both Stanford University’s internal policies and the federal regulations governing her NIH postdoctoral fellowship. (Id. at ¶ 16.) Her concerns arose out of the fact that, in addition to working as a university faculty member, Kay also had significant financial interests in several private companies involved in the field of gene therapy and was becoming increasingly resistant to Plaintiff investigating areas of gene therapy that potentially conflicted with his business interests. (Id. at ¶¶ 15, 17.) Among other things, Kay began demanding that Plaintiff show him all her research data and provide him with electronic copies thereof, despite the fact he had been very hands-off in the preceding four years of her research with him; requested that she distribute patented technology she co-invented to an individual that had cofounded a private gene therapy company with him; asked Plaintiff to leave out data that was unfavorable to one of his patented technologies in a gene therapy manuscript she was working on; and requested that Plaintiff change wording in that same manuscript to suggest that some of the data, which was beneficial to his interests, was more favorable than it was. (Id. at ¶¶ 17, 20-24.)

Plaintiff repeatedly resisted Kay’s requests and also raised her concerns about his financial conflicts of interest to numerous Stanford employees, including the Pediatrics Clinical Division Manager, the School of Medicine Ombudsman, the Chair of the Department of Pediatrics, and a senior faculty member participating in her research. (Id. at ¶¶ 19, 23.) Stanford, however, did not take any action to investigate these concerns and, in one instance, reprimanded Plaintiff for going behind Kay’s back. (Id. at ¶¶ 19, 22-24.)

Around February or March 2017, Plaintiff began acquiring functional research data that could prove damaging to Kay’s financial interests because it suggested that a method championed by one of his companies could be both ineffective and potentially harmful to patients. (Id. at ¶ 25.) As her results began to take shape, Plaintiff contacted the department chair and expressed her concerns about retaliation. (Ibid.) The chair’s only response was to instruct Plaintiff to go to human resources. (Ibid.)

On May 9, 2017, Plaintiff attended a gene therapy conference where she gave a presentation with data from her research. (Id. at ¶ 26.) In both presentations, Plaintiff discussed the correlative relationships suggested by her data. (Id. at ¶ 27.) Several conference attendees, including an employee of Kay’s company, reacted angrily to the contents of Plaintiff’s presentation. (Id. at ¶ 28.) After the conference, Plaintiff returned to Stanford and worked for a few days before taking a planned two-week vacation. (Id. at ¶ 29.) On June 21, 2017, five days after her return, Kay fired her. (Ibid.) This is despite the fact that, during her employment, Plaintiff had no record of discipline, no complaints regarding her performance, and extremely positive letters of recommendation. (Ibid.)

Plaintiff’s Complaint asserts causes of action for retaliation in violation of Labor Code section 1102.5, defamation, and wrongful termination in violation of public policy.

Currently before the Court is Defendants’ motion to strike portions of the Complaint, which Plaintiff opposes.

II. Merits of the Motion

Defendants move to strike allegations relating to Plaintiff’s entitlement to civil penalties under Labor Code section 2699 (“Section 2699”) subdivision (f) of the Private Attorney Generals Act (“PAGA”), including the prayer for such penalties. Their motion is made on the grounds Plaintiff’s request for such penalties is improper and not drawn in conformity with the law of this state. (See Code Civ. Proc., § 436, subds. (a)-(b).)

As a preliminary matter, the ground of failure to draw or file a pleading in conformity with the law only authorizes striking a pleading due to improprieties in its form or the procedures pursuant to which it was filed. (Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 528.) Here, Defendants advance no arguments corresponding with this ground. Thus, the only appropriate basis for their motion to strike is that the material is improper.

Defendants assert Plaintiff cannot seek civil penalties under Section 2699 because an action filed under the PAGA is representative and cannot be brought on an individual basis. In support, they point to the fact Section 2699 governs “civil action[s] brought by an aggrieved employee on behalf of himself or herself and other current or former employees pursuant to the procedures specified in Section 2699.3.” (Lab. Code, § 2699, subd. (a), emphasis added.) They also rely on numerous cases, including Reyes v. Macy’s, Inc. (2011) 202 Cal.App.4th 1119, Tanguilig v. Bloomingdale’s, Inc. (2016) 5 Cal.App.5th 665, and Khan v. Dunn-Edwards Corp. (2018) 19 Cal.App.5th 804, for the proposition that a PAGA action may only be brought as a representative claim. Defendants’ argument is persuasive.

The PAGA was enacted in 2003 due to the Legislature’s recognition that labor laws were not being effectively enforced because inadequate funding had resulted in lower staffing levels for labor law enforcement agencies; the Legislature found it was “in the public interest to allow aggrieved employees, acting as private attorneys general, to recover civil penalties for Labor Code violations[.]” (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 379.) To that end, Section 2699 provides in pertinent part that “any provision of this code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency…may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees[.]” (Lab. Code, § 2699, subd. (a), emphasis added.)

Numerous courts have stated that, under Section 2699, “[a] plaintiff asserting a PAGA claim may not bring the claim simply on his or her own behalf but must bring it as a representative action and include ‘other current or former employees.’” (Reyes, supra, 202 Cal.App.4th at 835-36; see also Khan, supra, 19 Cal.App.5th at 810, fn. 1 [suits under the PAGA must be brought as representative actions]; Rope v. Auto-Chlor Sys. of Washington, Inc. (2013) 220 Cal.App.4th 635, 651, fn. 7, overturned on other grounds due to legislative action [same]; Tanguilig v. Bloomingdale’s, Inc. (2015) 5 Cal.App.5th 665, 676 [observing that permitting the pursuit of only individual penalties would seem at odds with PAGA’s objective of providing a law enforcement action to protect the public versus benefiting private parties].) As the Reyes court observed, the use of the word “and” in Section 2699 indicates the PAGA does not enable a single aggrieved employee to litigate his or her claims; instead, under this statute, violations of the Labor Code must be enforced collectively. (Id. at 1123-24.)

Here, Plaintiff’s Complaint is brought solely in her capacity as an individual and there are no allegations regarding Labor Code violations committed against other current or former employees at Stanford. As such, her action is not a representative claim and she is not entitled to civil penalties under the PAGA.

Plaintiff’s arguments in opposition do not compel a contrary conclusion. They largely consist of bald assertions without meaningful explanation or legal support.

First, Plaintiff argues that the purpose of Labor Code section 1102.5 (“Section 1102.5”), the retaliation statute under which her first cause of action is brought, is to protect the general public as much as it is to protect the individual employee. She does not further elaborate or otherwise explain how this fact demonstrates that a PAGA claim may be brought in an individual as opposed to a representative capacity. As such, the Court cannot discern the import of her argument, particularly given the otherwise clear language of the statute.

Second, Plaintiff contends that under Labor Code section 2699.5 , the Legislature provided that PAGA penalties are available for all violations of Section 1102.5. She concludes “[t]he inclusion of Section 1102.5 in its entirety in Section 2699.5 suggests that the Legislature intended that all subsections of that provision be subject to private enforcement under PAGA.” (Opp. at p. 11:7-9.) This assertion is not well-taken. It is patently unclear to the Court how the fact Section 2699.5 references Section 1102.5 in its entirety demonstrates a PAGA action may be brought by an individual.

Third, Plaintiff advances a series of arguments aimed at undercutting Defendants’ reliance on authorities stating a PAGA action must be representative.

Plaintiff first points to the fact that the statements regarding the representative nature of PAGA claims in cases such as Tanguilig, supra, and Khan, supra, were made in dicta and were not central to the holdings at issue. This contention lacks merit. Though Plaintiff is correct that the statements regarding the representative nature of PAGA claims in the cases relied upon by Defendants constituted dicta, this fact does not compel the conclusion these statements may not be relied on. It is well-established that, though not binding, observations made by appellate courts may have persuasive effect. (Donorovich-Odonnell v. Harris (2015) 241 Cal.App.4th 1118, 1139; People v. Valencia (2011) 201 Cal.App.4th 922, 929; In re Marriage of Dunmore (1996) 45 Cal.App.4th 1372, 1381.) Here, the Court is persuaded by the statements made by the Tanguilig and Khan courts, which are consistent with the weight of authority stating a PAGA claim must be brought as a representative action (see, e.g., Reyes, supra, 202 Cal.App.4th at 835-36; Rope v. Auto-Chlor Sys. of Washington, Inc., supra, 220 Cal.App.4th at 651, fn. 7) and with the clear language in Section 2699 itself.

Plaintiff then asserts many of the cases discussing this issue involved wage and hour violations of the Labor Code and not violations of Section 1102.5. While true, it is unclear why this fact would demonstrate that PAGA claims under Section 1102.5 can be brought in an individual capacity, particularly when the language under Section 2699 is otherwise unambiguous. Moreover, as Defendants point out in their reply, the conclusions reached by the courts on this subject were not conditioned in any way on the fact the violations at issue were wage and hour violations. (See, e.g., Reyes, supra, 202 Cal.App.4th at 835-36, Tanguilig, supra, 5 Cal.App.5th at 676.)

Finally, Plaintiff observes that retaliation claims brought under subsections (b) and (c) of Section 1102.5 are typically individual claims. Because those subsections prohibit retaliation by an employer against an employee who discloses or refuses to participate in unlawful activity, Plaintiff argues violations of those subdivisions necessarily “turn[] on the reaction of an employer to the conduct by a particular employee under particular circumstances.” (Opp. at p. 14:4-9.) She concludes that limiting use of the PAGA to violations involving other employees “would render [Section 1102.5’s] inclusion in PAGA meaningless.” Further, though Plaintiff acknowledges Section 2699 clearly and unambiguously states that actions for civil penalties under the Labor Code must be brought by an aggrieved employee “on behalf of himself or herself and other current or former employees” (Lab. Code, § 2699, subd. (a)), she asserts there is a latent ambiguity in this statutory language that requires consideration of the PAGA’s legislative history and the goals to be achieved. This argument is not persuasive.

Even assuming Plaintiff were correct that actions based on violations of Section 1102.5, subdivisions (b) and (c) are more likely to arise in an individual context, it is unclear why this fact would render Section 1102.5’s inclusion in the PAGA meaningless. Significantly, Plaintiff does not argue that Section 1102.5 claims can never arise in a representative capacity. And, in this Court’s view, it is entirely conceivable that a situation could arise where multiple employees were retaliated against for their disclosure of or refusal to participate in unlawful activity, thus leading to the possibility of a representative claim. As such, it is not apparent the inclusion of Section 1102.5 in the PAGA is meaningless. (See, e.g., Borikas v. Alameda Unified Sch. Dist. (2013) 214 Cal.App.4th 135, 147 [statutory language is meaningless if it is mere surplusage or inoperative]; Hassan v. Mercy Am. River Hosp. (2003) 31 Cal.4th 709, 716 [same].)

Moreover, though it is true a latent ambiguity may be found to exist in otherwise clear statutory language where a literal interpretation would frustrate the statute’s purpose (Varshock v. Dep’t of Forestry & Fire Prot. (2011) 194 Cal.App.4th 635, 644), it is unclear how the purportedly generally individual nature of Section 1102.5 claims would frustrate the PAGA’s purpose. The PAGA provides that “any provision of [the Labor Code] that provides for a civil penalty” may be recovered through a civil enforcement action. (Lab. Code, § 2699, subd. (a).) The fact actions under one such provision (i.e. Section 1102.5) may, more often than not, be brought in an individual capacity does not compel the conclusion this results in a wholesale frustration of the PAGA’s purpose.

In sum, Plaintiff’s argument she is permitted to bring an individual PAGA claim is not persuasive.

Accordingly, Defendants’ motion to strike allegations relating to PAGA penalties in paragraph 40 and the prayer for such penalties is GRANTED WITHOUT LEAVE TO AMEND.