Case Name: Veena Ramachandran v. Blue Star Infotech America, Inc., et al.
Case No.: 2016-CV-294989

Demurrer to the Second Amended Complaint by defendants Blue Star Infotech America, Inc. and Infogain Corporation

Factual and Procedural Background

This is a wrongful termination case. Plaintiff Veena Ramachandran (“Plaintiff”) was employed by defendant Blue Star Infotech America, Inc. (“Blue Star”) as a sales manager beginning in December 1999. (Second Amended Complaint [“SAC”] at ¶ 6.) As a sales manager, Plaintiff earned approximately $80,000 per year in salary and commissions. (Ibid.) Under Blue Star’s policies and practices, Plaintiff’s entitlement to a sales commission became vested when Blue Star billed a customer for a sale placed by Plaintiff. (Id. at ¶ 8.)

On June 26, 2001, Plaintiff filed a complaint with the Labor Commissioner alleging that Blue Star had underpaid her commissions that had become vested during the 2000-2001 fiscal year ending on March 31, 2001 (“Wage Claim”). (SAC at ¶ 9.) On July 17, 2001, the Labor Commissioner notified Blue Star of Plaintiff’s Wage Claim. (Id. at ¶ 10.) In response to Plaintiff’s Wage Claim, Blue Star retaliated against her and initiated a campaign to bring her employment to an early end. (Ibid.) Blue Star allegedly did so by either pressuring Plaintiff into resigning or by creating apparently legitimate grounds for discharging her. (Ibid.) For example, Blue Star issued a memo to Plaintiff that falsely accused her of rudely grabbing business paperwork from a Blue Star manager, and recited that said memo would be placed in her personnel file. (Id. at subd. (f).) Blue Star terminated Plaintiff’s employment on September 5, 2001. (Id. at ¶¶ 6, 13.)

On September 10, 2001, Plaintiff filed a timely complaint (“Retaliation Complaint”) with the State Labor Commissioner in which Plaintiff alleged that Blue Star terminated her employment in retaliation for filing the Wage Claim. (SAC at ¶ 11, subd. (a).) In response, Blue Star stated that it terminated Plaintiff not because of the Wage Claim, but rather because of her rejection of the Revised Payment Plan. (Id., subd. (b).) On May 21, 2004, the Labor Commissioner determined that Blue Star had not violated the law in terminating Plaintiff. (Id., subd. (c).) The Department of Labor Standards Enforcement (“DSLE”) concluded that Blue Star terminated Plaintiff because she refused to sign the Revised Compensation Plan, and that her refusal was predicated on her belief that the Bad Debt Formula contained in the Revised Compensation Plan was unlawful. (Ibid.)

On June 1, 2004, Plaintiff timely appealed the decision to the Department of Industrial Relations (“DIR”). (SAC at ¶ 11, subd. (d).) On August 6, 2007, the DIR Director ruled on the appeal by ordering the Labor Commissioner to reinvestigate the Retaliation Complaint. (Id., subd. (e).) Thereafter, the Labor Commissioner reinvestigated the Retaliation Complaint, and, on December 22, 2014, determined that Blue Star had violated Labor Code section 98.6 by terminating Plaintiff in retaliation of her protected conduct, namely her refusal to sign the Revised Compensation Plan because it contained an unlawful Bad Debt Formula. (Ibid.) Thus, the Labor Commissioner ordered Blue Star to pay Plaintiff her post-termination lost earnings plus interest in a total sum exceeding $100,000. (Ibid.)

On January 12, 2015, Blue Star timely issued a fourteen page letter to the DLSE Director to appeal from the 2014 Determination. (SAC at ¶ 11, subd. (h).) On June 2, 2015, the DLSE Director issued a decision upholding the 2014 Determination. (Id., subd. (i).) Thereafter, Blue Star failed and refused to pay Plaintiff pursuant to the 2014 Determination. (Id., subd. (j).)

On October 2, 2015, the Labor Commissioner filed a complaint against Blue Star entitled Julie Su, California State Labor Commissioner, etc. v. Blue Star Infotech America, Inc. in Santa Clara County (case no. 2015-1-CV-286484) seeking damages on behalf of Plaintiff in a sum exceeding $100,000 (“Labor Commissioner Lawsuit”). (SAC at ¶ 11, subd. (k).) On January 26, 2016, the Labor Commissioner and Blue Star entered into a written settlement of the Labor Commissioner Lawsuit on the basis that Blue Star would pay the sum of $45,000. (Id., subd. (l).) The settlement acknowledged that Plaintiff was not bound and might thereafter bring her own lawsuit following resolution of the Labor Commissioner’s Lawsuit. (Ibid.)

Plaintiff did not participate in the settlement and objected to the total amount as it did not fully resolve her Retaliation Claim. (SAC at ¶ 11, subd. (m).) Therefore, on January 28, 2016, Plaintiff made an ex parte appearance requesting an order to file a complaint in intervention in the Labor Commissioner’s Lawsuit. (Id., subd. (n).) The court denied the request. (Ibid.)

On February 4, 2016, the Labor Commissioner’s Lawsuit was dismissed pursuant to the settlement. (SAC at ¶ 11, subd. (o).) On February 5, 2014, Plaintiff sought reconsideration of the denial of her ex parte request. (Id., subd. (p).) The court denied the motion for reconsideration on March 29, 2016. (Ibid.)

On May 10, 2016, Plaintiff filed the instant action. The operative SAC alleges a single cause of action for wrongful termination in violation of public policy. Plaintiff alleges that Blue Star terminated her employment in retaliation for her Wage Claim that she had been underpaid commissions during the previous fiscal year, and, in response to Plaintiff’s refusal to agree to an unlawful Revised Compensation Plan that Blue Star presented to her in retaliation for her Wage Claim. (SAC at ¶ 13.)

Currently before the Court is the demurrer to the SAC by defendants Blue Star and Infogain Corporation (collectively, “Defendants”) on grounds that the pleading is barred by the statute of limitations and fails to state a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) Plaintiff filed written opposition. Defendants filed reply papers.

Demurrer to the SAC

Defendants’ Request for Judicial Notice

Defendants request judicial notice of the following documents: (1) Plaintiff’s June 1, 2004 notice of appeal in the DLSE (Exhibit 1); and (2) Blue Star’s written response to Plaintiff’s Retaliation Complaint (Exhibit 2).

“Judicial notice is the recognition and acceptance by the court, for use by the trier of fact or by the court, of the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter.” (Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117.)

Here, Exhibits 1 and 2 are subject to judicial notice as Plaintiff specifically refers to them in support of her SAC. (See Ascherman v. General Reinsurance Corp. (1986) 183 Cal.App.3d 307 [appellate court took judicial notice of reinsurance contract referenced in complaint]; Salvaty v. Falcon Cable Television (1985) 165 Cal.App.3d 798, 800, fn. 1 [“Given the references to the agreement in the complaint, [defendants] were entitled to present the trial court with the complete document.”].) Furthermore, both exhibits are relevant in addressing the statute of limitations argument on demurrer. (See Aquila, Inc. v. Super Ct. (2007) 148 Cal.App.4th 556, 569 [only relevant material is subject to judicial notice].) Finally, Plaintiff does not oppose the request for judicial notice. (See OPP at p. 5, fn. 1.)

Accordingly, Defendants’ request for judicial notice is GRANTED.

Plaintiff’s Request for Judicial Notice

Plaintiff requests judicial notice of the September 17, 2001 DLSE ruling letter addressed to Blue Tech. This letter is subject to judicial notice under Evidence Code section 452, subdivision (c) as an official act of the executive department of California. (See Evid. Code, § 452, subd. (c) [Courts may take judicial notice of “[o]fficial acts of the legislative, executive, and judicial departments of the United States and of any state of the United States.”].) The request also appears relevant to issues raised in the demurrer.

Accordingly, Plaintiff’s request for judicial notice is GRANTED.
Legal Standard

“In reviewing the sufficiency of a complaint against a general demurer, we are guided by long settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially noticed.’” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213–214.)

“The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. The court does not, however, assume the truth of contentions, deductions or conclusions of law. … [I]t is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.” (Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 850.)

Statute of Limitations

Defendants argue that the Complaint is barred by the one-year statute of limitations. In opposition, Plaintiff contends that her wrongful termination claim is preserved under the doctrine of equitable tolling.

“Statute of limitations is the collective term applied to acts or parts of acts that prescribe the periods beyond which a plaintiff may not bring a cause of action.” (V.C. v. Los Angeles Unified School Dist. (2006) 139 Cal.App.4th 499, 509.) “A plaintiff must bring a claim within the limitations period after accrual of the cause of action. In other words, statutes of limitation do not begin to run until a cause of action accrues. Generally speaking, a cause of action accrues at the time when the cause of action is complete with all of its elements.” (Id. at pp. 509-510 [internal citations and quotation marks omitted].)
“A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. In order for the bar…to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” (Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42 [citation omitted].)

“The equitable tolling of statutes of limitations is a judicially created, nonstatutory doctrine. [Citations.] It is ‘designed to prevent unjust and technical forfeitures of the right to a trial on the merits when the purpose of the statute of limitations –timely notice to the defendant of the plaintiff’s claims—has been satisfied.’ [Citation.] Where applicable, the doctrine will ‘suspend or extend a statute of limitations as necessary to ensure fundamental practicality and fairness.’ [Citation.]” (McDonald v. Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, 99.)

“Three factors determine whether the statute of limitations is equitably tolled in a particular case: (1) timely notice to defendant in filing the first claim; (2) lack of prejudice to defendants in gathering evidence to defend against the second claim; and (3) good faith and reasonable conduct by plaintiffs in filing the second claim.” (Tarkington v. California Unemployment Ins. Appeals Bd. (2009) 172 Cal.App.4th 1494, 1503.)

As a threshold matter, Defendants argue that the doctrine of equitable tolling is inapplicable in this action. In support, Defendants rely on Mathieu v. Norrell Corp. (2004) 115 Cal.App.4th 1174 where the Court of Appeal granted the motion for summary adjudication on the claim for wrongful termination in violation of public policy. The plaintiff did not dispute that the claim was filed beyond the applicable statute of limitations. (Id. at p. 1189.) Rather, plaintiff argued that the limitations period was tolled as she pursued her claim with the Department of Fair Employment and Housing (“DFEH”). (Ibid.) The appellate court, however, did not extend equitable tolling to permit “a plaintiff to delay filing a common law tort action” of wrongful termination in violation of public policy while pursuing a Fair Employment and Housing Act (“FEHA”) administrative claim. (Id. at pp. 1189-1190.) The court recognized that “the putative plaintiff is not in any way disadvantaged by having to file his or her nonstatutory claims before receiving a right-to-sue letter from the DFEH and, therefore, there is no basis for recognizing equitable tolling in this situation.” (Id. at p. 1189; see also Rojo v. Kliger (1990) 52 Cal.3d 65, 88 [exhaustion of the FEHA administrative remedy is not required before filing a civil action for damages alleging nonstatutory causes of action].) Thus, Defendants contend that Plaintiff’s administrative action on her statutory claims with the DLSE does not toll her wrongful discharge claim in the civil case.

In opposition, Plaintiff argues that Mathieu should be limited to its facts as it applies only to DFEH proceedings. While this action does not involve DFEH proceedings, Mathieu is nonetheless persuasive as this case also concerns pursuit of an administrative remedy prior to filing a wrongful discharge claim. For this reason, Plaintiff’s reliance on McDonald is misplaced as the California Supreme Court held in that case that a statutory claim under FEHA was tolled when “an employee voluntarily pursues an internal administrative remedy.” (McDonald v. Antelope Valley Community College Dist., supra, 45 Cal.4th at p. 96.) Here, Plaintiff does not seek to toll a statutory claim, but instead a common law tort action for wrongful discharge. As stated above, this was the claim that was at issue in Mathieu, which held that equitable tolling was not available while a plaintiff pursued voluntary administrative relief. (Mathieu v. Norrell Corp., supra, 115 Cal.App.4th at pp. 1189-1190.) Therefore, Mathieu compels a finding that the doctrine of equitable tolling is not applicable and thus Plaintiff’s wrongful discharge claim is time-barred.

Accordingly, Defendants’ demurrer to the Complaint is SUSTAINED WITHOUT LEAVE TO AMEND on the ground that the pleading is barred by the statute of limitations. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading].) Given this ruling, the Court declines to address whether Plaintiff has stated a valid cause of action for wrongful termination in violation of public policy.