United States District Court, N.D. California
March 8, 2004.
JERRY H. LOVE, Plaintiff
MOTION INDUSTRIES, INC., a Corporation, and DOES 1 through 50, Inclusive, Defendant
The opinion of the court was delivered by: MARTIN JENKINS, District Judge
ORDER GRANTING DEFENDANT'S
MOTION FOR SUMMARY JUDGMENT
This case arises from the employment relationship between Plaintiff
Jerry H. Love and his employer, Defendant Motion Industries. Plaintiff's
complaint alleges eight causes of action ranging from wrongful
termination in violation of California's whistle-blower protection law to
intentional infliction of emotional distress. Defendant here moves for
summary judgment on all claims. For the reasons that follow, the Court
grants Defendant's motion in its entirety.
Defendant is a company engaged in the wholesale distribution of
industrial bearings as well as fluid, mechanical, electrical and power
transmission components. Declaration of Dave Sharp ("Sharp Decl.") at
¶ 5. Plaintiff met with Dave Sharp, Manager of Defendant's Menlo Park
Branch, during January 2000 to discuss possible employment as an Outside
Sales Person with
Defendant. During the meeting, Plaintiff told Sharp that he wanted
to be compensated in the amount of $43,000 per year. Deposition of Jerry
H. Love ("Love Dep.") at 54. According to Plaintiff, Sharp told him that
after one year his pay would shift from a guaranteed salary to a straight
commission based on 15% of gross profits. Love Dep. at 58.
On February 3, 2000, Plaintiff began his employment with Defendant. On
the same day, he completed and signed an Application for Employment that
stated in pertinent part:
In consideration of my employment, I agree to
conform to the rules and regulations of the
Company and my employment and compensation can be
terminated with or without cause, and with or
without notice, at any time, at the option of
either myself or the Company. I understand that no
manager or representative of the Company other
than the President or Vice President of the
Company has the authority to enter into any
agreement for employment for any specified period
of time, or make any agreement contrary to the
Defendant's Motion for Summary Judgment ("Mot."), Ex. B. Plaintiff
also received an employee handbook in connection with his employment
which included the following text:
[M]y employment is on an at-will basis. That is,
notice of termination/resignation may be given by
either party at any time and for any reason. This
disclaimer constitutes the complete understanding
concerning my employment terms with the Company.
No officer or representative of the Company has
any authority to enter into any agreement of
employment for any specified period or time or to
make any agreements, express or implied, that is
contrary to the foregoing unless it is reduced to
writing and signed by the President of the
Id. Plaintiff signed a document acknowledging that he
received the handbook and agreed to abide by the provisions therein. Love
Dep. at 68-69.
As an Outside Sales Person with Defendant, Plaintiff's responsibilities
included maintaining existing accounts and developing new businesses
within a geographical territory, generating sales at the branch,
developing new customers, reviewing account information for his customers
to ensure that pricing and coding on their accounts was adequate, and
participating in branch sales meetings. Love Dep. at 71-73. Sharp was
Plaintiff's immediate supervisor throughout his employment with
Defendant. Plaintiff alleges that on his first day, Sharp explained that
his annual salary would be only $42,000 but that Plaintiff would receive
an expense account to make up the $1,000 difference to reach the $43,000
Plaintiff had requested. Plaintiff agreed.*fn1 Love Dep. at 88.
an expense account for Plaintiff when he began his employment. Love
Dep. at 141.
On November 29, 2000, Plaintiff and Sharp prepared a written
Performance Evaluation positively evaluating Plaintiffs performance. In
connection with Plaintiff's evaluation, Sharp and Plaintiff discussed
areas of Plaintiff's performance where Plaintiff thought he could
improve. Love Dep. at 79-83; Mot., Ex. 7.
On January 3, 2001, Sharp sent Plaintiff a written memo citing concerns
over Plaintiff's decreased sales for the fourth consecutive month. Love
Dep. at 109-13; Mot., Ex. 12. According to Sharp, Plaintiff did not
usually achieve one-half of the sales of Steve Hood, the only other
outside salesperson in the office. Sharp Decl. at ¶ 17. After
Plaintiff responded to Sharp's call for a plan to "save" him, Sharp
required Plaintiff to complete Weekly Call Reports regarding customers he
called upon during the week. Love Dep. at 130-31.
On February 8, 2001, Plaintiff received a written warning for failure
to comply with organizational requirements, including failure to produce
name and address information on his top ten accounts. Love Dep. at
129-30; Mot., Ex. 16. Sharp outlined the behavior he expected of
Plaintiff, including listing certain information regarding his top
accounts, and he cautioned, "this is a minimum requirement needed for
continued employment." Mot., Ex. 16. Plaintiff received a second written
warning on March 1, 2001, for failure to comply with organizational
requirements. Love Dep. at 131-32; Mot., Ex. 18. Both warnings cited
termination as a potential consequence for not correcting the underlying
problems necessitating the warnings, and Plaintiff acknowledged receipt
of both warnings by signing them. Love Dep. at 130-32; Mot. Ex. 16, 18.
On April 1, 2001, Plaintiff was removed from guaranteed salary and
placed on straight commission. Plaintiff's sales figures for the month of
April entitled him to receive less than the previously guaranteed salary
of $3,500 per month. Sharp Decl. at ¶ 28; Love Dep. at 135-36. Sharp
discussed Plaintiff's poor performance with him on May 21, 2001, and
decided to terminate him. According to Sharp, he terminated Plaintiff
because he was not satisfied with Plaintiff's response that his sales
would be up by the end of the year. Sharp Decl. at ¶ 33; Deposition
of Dave Sharp
("Sharp Dep.") at 129. On May 24, Sharp notified Plaintiff he was
being terminated for poor performance. Sharp Decl. at ¶ 33; Love Dep.
Plaintiff offers a concurrent story line that he alleges renders much
of the preceding pretextual and meaningless. According to Plaintiff, the
problems with Plaintiff's performance were simply "trumped up"charges
developed in retaliation for what follows.
Shortly before Plaintiff was hired, Defendant was invited to review bid
specifications and b on the supply of spherical ball bearings for the San
Francisco. Oakland Bay Bridge West Bay Suspension Towers Project ("Towers
Project"). Love Decl. at ¶ 6. While reviewing specifications for the
bearings, Plaintiff and David Winke*fn2 developed concerns regarding the
"corrosiveness fact in a sea-salt-air climate, the potential for slippage
of the bearings called for by the bid, and the ability of the ball
bearings to support certain weight loads over time." Love Decl. at ¶
6. Plaintiff present the discovered safety concerns to his co-workers and
superiors, including at times in front of Sharp Love Decl. at ¶ 8;
Deposition of Steve Hood at 54, 57. Plaintiff submitted a competitive bid
on behalf of Defendant to supply spherical ball bearings for the Towers
Project. Love Decl. at ¶ 7; Plaintiff's Opposition to Defendant's
Motion for Summary Judgment ("Opp."), Ex. F.
In December 2000, due to Defendant's inaction in the face of his
concerns, Plaintiff told Sharp that he was going to inform the media of
the safety issues he uncovered with Winkel. Love Decl. at ¶ 9-10.
After discussing the issue with Defendant's regional manager, Charlie
Davis, Sharp later told Plaintiff he did not want the media to be
contacted. By that time, Plaintiff had already contacted a Chronicle
reporter. Love Decl. at ¶ 11; Sharp Dep. at 134-37. Plaintiff
contacted then-State Representative Jackie Speier's office in March 2001
to request her office initiate a governmental investigation into the
potential safety hazards on the Towers Project.*fn3 Love Dep. at 151.
When Plaintiff described his contact with Speier's office on May 9,
Sharp told him to "find
another cross to carry."*fn4 Plaintiff was terminated on May 21, 2001.
Summary judgment is appropriate if there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a matter of
law. F.R.C.P. 56(c). The moving party bears the initial burden of
establishing that there is no genuine issue of material fact. Id.;
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). If the moving
party does not bear the burden of proof at trial, the initial burden of
showing that no genuine issue of material fact remains may be discharged
by demonstrating that "there is an absence of evidence to support the
non-moving party's case." Id. at 325. The moving party is not
required to produce evidence showing the absence of genuine issues of
material fact. See Lujan v. National Wildlife Federation,
497 U.S. 871, 885 (1990). Nor must the moving party support his or her own
motion with evidence negating the non-moving party's claim. See
After the moving party makes a properly supported motion, the
responding party must present specific facts showing that contradiction
is possible. British Airways Board v. Boeing Co., 585 F.2d 946,
950-52 (9th Cir. 1978). It is not enough for the responding party to
point to the mere allegations or denials contained in the pleadings.
Instead, it must set forth, by affidavit or other admissible evidence,
specific facts demonstrating the existence of an actual issue for trial.
The evidence must be more than a mere "scintilla;" the responding party
must show that the trier of fact could reasonably find in its favor.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
However, in reviewing a motion for summary judgment, the Court does not
make credibility determinations with respect to evidence offered, and is
required to draw all inferences in the light most favorable to the
non-moving party. See T. W. Electrical Service, Inc. v. Pacific
Electrical Contractors Association, 809 F.2d 626, 630-31 (9th Cir.
1987). Summary judgment is therefore not appropriate "where contradictory
inferences may reasonably be drawn from undisputed evidentiary
facts. . . ." Hollingsworth Solderless Terminal Co. v. Turley,
622 F.2d 1324, 1335 (9th Cir. 1980).
A. Violation of California Labor Code Section 1102.5(b)
California Labor Code Section 1102.5(b) states that an "employer may
not retaliate against an employee for disclosing information to a
government or law enforcement agency, where the employee has reasonable
cause to believe that the information discloses a violation of state or
federal statute, or a violation or noncompliance with a state or federal
rule or regulation." To establish a prima facie case for retaliation
under Section 1102.5, an employee must show (1) that he engaged in
protected activity, (2) that he was thereafter subjected to an adverse
employment action by his employer, and (3) that there was a causal link
between the protected activity and the adverse employment action.
Morgan v. Regents of University of California,
88 Cal.App.4th 52, 69 (1st Dist. 2000).
Plaintiff argues that he engaged in protected activity when he alerted
the Chronicle and State Senator Speier's office of the safety concerns he
believes were uncovered during his review of ball bearing specifications
relating to the Towers Project. He alleges that Defendant retaliated
against him by trumping up poor performance reviews for a period of four
to five months before finally terminating him two weeks after Sharp's
"find another cross to carry" remark.
Even if Plaintiff minimally satisfies the second and third elements of
his prima facie case by establishing an issue of fact as to whether his
termination was causally linked to his disclosure of safety concerns, his
claim fails as a matter of law because he did not engage in any protected
activity. Plaintiff's disclosure does not meet the standard for protected
activity under Section 1102.5(b), because the disclosed activity does not
violate any federal or state statute, rule, or regulation.
Section 1102.5(b) requires the disclosure of a state or federal
violation. Cal. Lab. Code § 1102.5(b). Defendant correctly points out
that Plaintiff has failed to allege any specific federal or state
violation stemming from Plaintiff's safety concerns. Mot. at 14. In his
own testimony, Plaintiff asserts that his safety concerns were based on
specifications originating from California Engineering Modern
Continental, the subcontractor employed by CalTrans on the project. Love
Dep. at 157. Plaintiff has offered no specific facts indicating that
these specifications are grounded
in any state statute, rule, or regulation.
In response, Plaintiff relies on Green v. Ralee Engineering,
19 Cal.4th 66 (1998), to support his assertion that the disclosure
constitutes protected activity because he had "reasonably based
suspicions" of unlawful activity. Opp. at 91. However, Green is
clearly distinguishable on this point. In Green, the plaintiff
was a quality control inspector who claimed his employer, an airline part
manufacturer, wrongfully terminated him in retaliation for his reporting
possible violations of administrative regulations governing airline
safety, which implemented the Federal Aviation Act of 1958.
Green, 19 Cal.4th at 66. The trial court granted summary
judgment in favor of the defendant. The appellate court reversed,
reasoning that whether or not the defendant violated "significant safety
regulations that the FAA promulgated to implement" the Federal Aviation
Act was a factual question for trial. Id. at 86. To survive
summary judgment, the plaintiff was not required to prove an actual
violation as long he reported his "reasonably based suspicions" of the
illegal activity. Id. at 87. Nevertheless, the plaintiff's
suspicions were based on actual federal regulations as required by
Here, Plaintiff does not cite any statute, rule, or regulation that may
have been violated by the disclosed conduct. Rather, he argues simply
that he reasonably believed that the activity violated some unnamed
statute, rule, or regulation. More than three years after Plaintiff
discovered the alleged safety issue he remains unable to state any
statutory or regulatory basis for his claim even when confronted with a
direct challenge on this point by Defendant.*fn5 Plaintiff's silence is
telling and indicates a lack of any foundation for the reasonableness of
his belief. Defendant's Motion for Summary Judgment with respect to
Plaintiff's first cause of action is therefore granted.
B. Wrongful Discharge in Violation of Public Policy
Although at-will employment relationships are generally terminable
at-will, an "employer's right to discharge an at-will employee is subject
to limits that fundamental public policy imposes." Green,
19 Cal.4th at 71. However, Plaintiff must show that the protected public
interests are "tethered to fundamental policies that are delineated in
constitutional or statutory provisions." Id.
Section 1102.5(b) "reflects the broad public policy interest in
encouraging workplace whistle-blowers to report unlawful acts without
fearing retaliation." Id. at 77.
For his public policy claim, Plaintiff relies solely on the interests
protected by Section 1102.5(b). For the reasons discussed above,
Plaintiff's Section 1102.5(b) retaliation claim fails as a matter of law.
Therefore, Plaintiff's public policy claim has no basis in any statutory
violation and necessarily fails as well. See, e.g., Rivera v.
AMTRAK, 331 F.3d 1074, 1079-80 (9th Cir. 2003) (employee could not
show wrongful termination in violation of public policy under Section
1102.5(b) where he failed to establish that he disclosed unlawful
activity by his employer to a law enforcement or government agency).
Accordingly, Defendant's Motion for Summary Judgment on this claim is
C. Breach of Contract
Plaintiff contends that Defendant breached their employment contract
both by refusing to pay Plaintiff the allegedly agreed upon annual salary
of $43,000 and by terminating him without good cause. According to
Plaintiff, Sharp explained on Plaintiff's first day that he could pay
Plaintiff only $3,500 per month for a total of $42,000 per year but would
make up the difference through an expense account. Plaintiff further
alleges that Sharp told him that as long as he performed his work
satisfactorily, he would remain employed with Defendant. Defendant
disputes this account of the conversation. However, on summary judgment
this Court is required to draw all inferences in the light most favorable
to the non-moving party.
For a prima facie case of breach of contract, Plaintiff must establish:
(1) a contract; (2) Plaintiff's performance or excuse of performance; (3)
Defendant's breach; and (4) resulting damages. Reichert v. General
Insurance, 68 Cal.2d 822, 830 (1968). A plaintiff fails to state a
breach of contract claim where the employer's stated guidelines for
employment contract formation are not followed. Logan v. San
Francisco. Federal Savings & Loan Association, 1998 WL 397911 at
8 (N.D. Cal. 1998). The Logan court granted Defendant's summary
judgment motion, reasoning that no contract could be established from an
oral agreement where the savings association's charter required that "all
employment contracts shall be in writing and shall be approved
specifically by an associations' board of directors." Id.
Here, Plaintiff is similarly unable to establish any employment
contract through his purported oral agreements with Sharp, because
Defendant's employment guidelines clearly state that all employment
contracts require written authorization from the President or Vice
President and Sharp is neither.*fn6 Plaintiff had notice of this
requirement when he signed Defendant's employment application just below
the following text:
I understand that no manager or representative of
the Company other than the President or Vice
President of the Company has the authority to
enter into any agreement for employment for any
specified period of time, or make any agreement
contrary to the foregoing.
Mot., Ex. B. Plaintiff does not dispute that he signed this
application. Therefore, as in Logan, Plaintiff is unable to
raise a material issue of fact regarding the existence of an employment
contract with Defendant and cannot state a claim for breach of contract
regarding unpaid wages.
Plaintiff also argues that his termination represented a breach of
contract because he alleges that he was terminated without cause. As
discussed above, Plaintiff cannot establish any employment contract
between himself and Defendant. Nevertheless, under certain circumstances,
the presumption of at-will employment status "may be overcome by evidence
of contrary intent." Foley v. Interactive Data Corp.,
47 Cal.3d 654, 677 (1988). In Foley, the California Supreme Court reversed
the dismissal of the plaintiff's claim where the plaintiff alleged that
the defendant maintained written guidelines that required good cause for
termination. Id. at 675.
In his response to Defendant's motion, Plaintiff argues "that a `for
cause' term was implied by the repeated assurances that he would remain
employed so long as he continued to perform satisfactorily." Opp. at 14.
However, Plaintiff has admitted that his employment was at-will. Love
Dep. at 158. Additionally, in stark contrast to Foley, Plaintiff
signed an employment application which stated that he would be employed
at-will, and he acknowledged receiving and understanding Defendant's
employee handbook which similarly stated his at-will status.*fn7
Accordingly, Plaintiff is
unable to establish an implied contract to be terminated only for
cause, and Defendant's Motion for Summary Judgment on this claim is
D. Breach of the Implied Covenant of Good faith and Fair
The implied covenant of good faith is inherent in every contract.
Logan, 1998 WL 397911 at 8. Since "the covenant of good faith
and fair dealing cannot impose substantive terms and conditions beyond
those to which the contract parties actually agreed," where no employment
contract can be established, a plaintiff cannot maintain a cause of
action for breach of the covenant of good faith and fair dealing.
Lappin v. Laidlaw Transit Inc., 179 F. Supp.2d 1111, 1122 (N.D.
Because, as explained above, Plaintiff is unable to establish any
employment contract with Defendant, Plaintiff's implied covenant of good
faith and fair dealing claim necessarily fails.
E. Intentional Infliction of Emotional Distress
In his fifth cause of action, Plaintiff alleges that Defendant
intentionally inflicted emotional distress by terminating him in
retaliation for his disclosing safety concerns about the Towers Project.
Defendant argues this claim is barred by the exclusivity provisions of
California's workers compensation laws because Defendant's alleged
misconduct arose from "actions which are a normal part of the employment
relationship." Logan, 1998 WL 397911 at 5; see also
Cal. Lab. Code § 3600(a). Plaintiff contends that his termination was
not a normal part of the employment relationship because it "resulted
from an animus that violates the fundamental policy of this state."
Gantt v. Sentry Insurance, 1 Cal.4th 1083, 1100(1992).
Assuming arguendo that the claim is not preempted, Plaintiff, however,
still cannot establish a prima facie case for severe emotional distress.
The prima facie case requires a showing of: (1) extreme and outrageous
conduct by the defendant with intent to cause, or reckless disregard for
the probability of causing, emotional distress; (2) severe or extreme
emotional distress; and (3) that the emotional distress was actually and
proximately caused by defendant's outrageous conduct. Lappin,
179 F. Supp.2d at 1126.
Even if Plaintiff could establish the necessary intent and causation
elements, he has not
presented factual evidence supporting a finding of severe
distress. The Ninth Circuit has described severe emotional distress as
"emotional distress of such substantial quantity or enduring quality that
no reasonable man in a civilized society should be expected to endure
it." Simo v. Union of Needletrades, 322 F.3d 602, 622 (9th Cir.
2003) (quoting Kiseskey v. Carpenters' Trust for Southern
California, 144 Cal.App.3d 222, 231 (2nd Dist. 1983)). Claiming to
be tense, nervous, and emotionally hurt does not satisfy this standard.
Id. Allegations of severe distress may also fail when they lack
any evidentiary support from medical professionals. Lappin,
179 F. Supp.2d at 1126-27.
In his deposition, Plaintiff described his emotional distress by citing
seemingly minor changes in his eating, drinking, and sleeping habits,
such as the inability to eat a full meal at times. According to
Plaintiff, his wife claimed his eating and drinking habits had "changed a
little bit." Plaintiff admits that he did not seek any medical attention
for his distress. Love Dep. at 161-62. These allegations fall far short
of the high standard of severe emotional distress required to establish a
prima facie case of intentional infliction of emotional distress.
Therefore, Defendant prevails on this claim as a matter of law.
F. Negligence and Negligent Supervision
Plaintiff's sixth and seventh causes of action for negligence and
negligent supervision also fail because Plaintiff does not even address,
much less establish, the prima facie elements of these claims. Plaintiff
submits no evidence indicating why Defendant owed him a duty, what the
duty was, how Defendant breached the duty or how any breach caused
damages to him. See Richardson v. Reliance National Indemnity
Co., 2000 WL 284211 at 13 (N.D. Cal. 2000). Accordingly, Defendant's
motion for summary judgment on these claims is granted.
G. Fraudulent Misrepresentation
In his final cause of action, Plaintiff claims fraudulent
misrepresentation by alleging that Sharp promised to pay him $43,000 per
year but proceeded to pay him only $42,000. To establish a prima facie
case of fraudulent misrepresentation, Plaintiff must show: (1) a
misrepresentation by Defendant; (2) Defendant's knowledge of its falsity;
(3) Defendant's intent to defraud; (4) Plaintiff's justifiable reliance;
and (5) damages. Conrad v. Bank of America, 45 Cal.App.4th 133
(3d Dist. 1996). Furthermore, the intent to defraud must arise at the
time the promise is made. Id.
Plaintiff fails to allege any specific facts implicating any actual
misrepresentation on the part of Defendant. Plaintiff argues that he
entered into an oral agreement with Sharp whereby Defendant would pay him
$42,000 per year in salary and compensate him $1,000 through an expense
account. Plaintiff does not dispute that he received the $42,000 per year
salary or that he received the expense account. He tenders no specific
facts explaining any inability to use the expense account for its express
purpose. Therefore, Plaintiff is unable to establish the alleged
In addition, Defendant pointed out in its motion that Plaintiff had no
evidence that Sharp had any intent to defraud him. Plaintiff failed in
his opposition brief to set forth competent evidence to support this
aspect of his claim. For these reasons, Defendant is entitled to judgment
as a matter of law on this claim.
For the foregoing reasons, the Court GRANTS Defendant's
Motion for Summary Judgment in its entirety.
IT IS SO ORDERED.