The opinion of the court was delivered by: Oliver W. Wanger United States District Judge
SCHEDULING CONFERENCE ORDER Discovery Cut-Off: 3/5/10 Non-Dispositive Motion Filing Deadline: 3/19/10 Dispositive Motion Filing Deadline: 4/5/10
I. Date of Scheduling Conference. February 4, 2009.
3/17/10 10:00 Ctrm. 7 Settlement Conference Date:
Pre-Trial Conference Date: 7/12/10 11:00 Ctrm. 3 Trial Date: 8/21/10 9:00 Ctrm. 3 (JT-10 days)
III. Summary of Pleadings. Plaintiffs' Summary
1. Ken Shirley worked for LJS for approximately 23 years, working his way up from cook to Area Coach/Area District Manager in charge of fourteen stores between Modesto and Bakersfield. Just prior to his termination, Plaintiff Ken Shirley was on approved leave while recovering from knee surgery due to a non-work related injury. While off work, Plaintiff Ken Shirley's supervisor, Region Coach, Darren McGilbray, and the managers of two stores within Plaintiff Ken Shirley's district, shared his duties and responsibilities.
2. Amparo Lara worked for LJS for almost 10 years, working her way up from cook to Store Manager. Plaintiff Ken Shirley promoted her to manager of the Porterville store in 2004. In late April 2006, Plaintiff Amparo Lara became ill and needed some time off from work to recover. During Plaintiff Amparo Lara's absence, Ken Shirley placed Team Leader, Noemi Ledesma, in charge of the Porterville store because of her previous performance as Acting Manager.
3. Both Plaintiff Ken Shirley and Plaintiff Amparo Lara were superior performers; rising through the ranks and turning around their stores.
4. Prior to Plaintiff Amparo Lara's illness, she and Plaintiff Ken Shirley had identified difficulties with the way the bank processed the Porterville store's deposits. Plaintiff Amparo Lara and Plaintiff Ken Shirley had requested, but had not yet been granted permission to change banks because of these difficulties.
5. While both Plaintiff Ken Shirley and Plaintiff Amparo Lara were off work, the acting manager of the Porterville store (#5245), Noemi Ledesma, began embezzling money. Although both of the people covering for Plaintiff Ken Shirley received multiple e-mails from the Cash Handling Department indicating that deposits may not have been made by the Porterville store, neither of them acted upon this information. After receiving the e-mails from the Cash Handling Department for several days, and while still off work, Plaintiff Ken Shirley, who had also been receiving the e-mails at home, began forwarding the e-mails to the Porterville store. Each time, Plaintiff Ken Shirley received credible assurance that the difficulty was the same problem identified by Plaintiff Ken Shirley and Plaintiff Amparo Lara before they took their leaves. While still off work, Plaintiff Ken Shirley even directed one of the people covering for him to go to the Porterville store. That person did not discover any embezzlement or other wrongdoing.
6. On his first day back to work, Plaintiff Ken Shirley went to the Porterville store himself, and discovered that the daily deposit log had not been completed for the previous two weeks. Plaintiff Ken Shirley reviewed the proper procedure for completion of the deposit log with Ms. Ledesma and instructed her to have the log updated by the time Plaintiff Amparo Lara was to returned to work eight days later.
7. On Plaintiff Amparo Lara's first day back to work, Ms. Ledesma still had not updated the deposit log. Therefore, Plaintiff Ken Shirley and Plaintiff Amparo Lara reconstructed the Bank Deposit Log and were able to account for all deposits except for seven missing deposits totaling $9,792.99. They quickly determined that Ms. Ledesma had stolen the missing money. Immediately after Ms. Ledesma was terminated, LJS turned on Plaintiffs over things that took place while they were off work on approved leave and others were supposed to be covering their responsibilities.
Facts for Plaintiff Ken Shirley
8. Ken Shirley worked for LJS for approximately 23 years, working his way up from cook to Area Coach/Area District Manager in charge of fourteen stores between Modesto and Bakersfield. Just prior to his termination, Plaintiff Ken Shirley was on approved leave while recovering from knee surgery due to a non-work related injury. While off work, Plaintiff Ken Shirley's supervisor, Region Coach, Darren McGilbray, and the managers of two stores within Plaintiff Ken Shirley's district shared his duties and responsibilities.
9. Plaintiff Ken Shirley was originally hired by LJS in about March 1983 as a cook for the Clovis and Kings Canyon Avenues restaurant in Fresno, California. Because of his superior work performance, he advanced through the ranks, and in about May 1995, LJS promoted him to Area Coach/Area District Manager in charge of fourteen stores between Modesto and Bakersfield. Altogether, Plaintiff Ken Shirley worked for LJS for approximately 23 years and 5 months until LJS unlawfully terminated him. At all relevant times, Plaintiff Ken Shirley's home base restaurant was in the County of Fresno, California. LJS terminated Plaintiff Ken Shirley in the County of Fresno and approximately one quarter of the restaurants he was responsible for were in the County of Fresno.
10. On or about November 26, 2005, Plaintiff Ken Shirley was involved in a non-work related motorcycle accident in which he injured one of his anterior cruciate ligaments (ACL). Approximately one week after the accident, Plaintiff Ken Shirley's doctor told him that he needed surgery, but that he could postpone surgery until it was convenient for work.
11. One of the LJS' business innovations is multi-brand stores including various combinations of Taco Bell, LJS, A&W, Pizza Hut, and Kentucky Fried Chicken. The concept encourages family or group dining because it offers a greater variety of food than a single restaurant. Although LJS staked its future on this concept, Plaintiffs are informed and believe that many of LJS' multi-brand stores were losing money.
12. None of the management staff at any of the multi-brand stores for which Plaintiff Ken Shirley was responsible had any experience in opening a new store, and there was no store where the staff could be trained because the nearest multi-brand LJS and A&W store was in Bakersfield. At about the time of Plaintiff Ken Shirley's accident, LJS was planning to open its first multi-brand store (LJS and A&W) in the Fresno area at Peach and Shaw Avenues in Clovis, California. It was very important to LJS that Plaintiff Ken Shirley be present for the preparation of and the opening of this store. Therefore, for the convenience of his employer, Plaintiff Ken Shirley agreed to postpone his surgery until after the new store opened.
13. On or about January 15, 2006, Store #5245 in Porterville began having difficulties with the bank it was using for cash deposits. These difficulties revolved around the specific way this bank processed deposits. After investigating, Plaintiff Ken Shirley determined that the most expedient solution was to have this store change banks to another bank that would process the deposits in a way that was compatible with LJS cash management procedures.
14. On or about March 22, 2006, Plaintiff Ken Shirley requested approval to allow the Porterville store (#5245) to change banks. As of May 12, 2006, when Plaintiff Ken Shirley took medical leave for his surgery, LJS still had not authorized the change of banks for the Porterville store (#5245).
15. On or about May 3, 2006, shortly after one of the most successful openings in LJS history at the Clovis LJS-A&W store, Plaintiff Ken Shirley's Region Coach, Darren McGilbray, granted Plaintiff Ken Shirley permission to use vacation time for his ACL surgery. They agreed that Plaintiff Ken Shirley would be off work from the day of surgery, May 12, 2006, through June 4, 2006, and he would return to work on Monday, June 5, 2006.
16. They also agreed that while Plaintiff Ken Shirley was off work, Mike Olson, General Manager of the Bakersfield Rosedale Highway store, and Robert Alcala, the General Manager of the Fresno Cedar and Ventura store would assume Plaintiff Ken Shirley's oversight responsibilities, and Mr. McGilbray would oversee Mr. Olson and Mr. Alcala.
17. LJS cash handling policies provided that all Cash Discrepancy Notices for each store in the region (including Porterville Store #5245) were simultaneously e-mailed by the bank each day to three people: (1) Plaintiff Ken Shirley, the Area Coach responsible for the store in question; (2) Mr. McGilbray, the Region Coach responsible for the store in question; and (3) Kevin Rice, LJS Loss Prevention Manager.
18. Plaintiff Ken Shirley's surgery took place as scheduled on May 12, 2006. Since Plaintiff Ken Shirley was on approved medical leave, he was not supposed to have any work responsibilities, and he was confident that Mr. McGilbray, Mr. Rice, Mr. Olson, and Mr. Alcala could handle his job duties while he was on leave.
19. Plaintiff Ken Shirley did not have any contact with work for about one week after surgery. Even though Plaintiff Ken Shirley did not believe that he was required to check in or monitor his e-mail since other LJS management were also receiving them, he nonetheless looked at his e-mails on about May 22, 2006, out of a sense of duty to his employer.
20. Approximately one week after Plaintiff Ken Shirley resumed monitoring his e-mail (beginning approximately May 29, 2006), he noticed that the cash department was sending Cash Discrepancy Notices regarding Store #5245 in Porterville. Plaintiff Ken Shirley knew that Mr. McGilbray and Loss Prevention Manager Kevin Rice were also receiving the Cash Discrepancy Notices for Store #5245.
21. At that time, the Restaurant General Manager, Amparo Lara, was also off work on disability leave. She did not have access to any company e-mails while she was off. This store had a history of receiving Cash Discrepancy Notices due to the way the particular bank that store used, was validating the store's deposits. Therefore, Plaintiff Ken Shirley initially assumed that these Cash Discrepancy Notices were a continuation of the same difficulty with the bank, and not a cause for concern that some employee might be embezzling cash. Plaintiff Ken Shirley also believed that Mr. McGilbray and/or Mr. Rice would take care of any discrepancy, and correct any problems regarding Store #5245 and/or the bank, since they both were receiving the same e-mails and they both knew that Plaintiff Ken Shirley was out on medical leave.
22. After receiving Cash Discrepancy Notices for this same store for approximately three days in a row, Plaintiff Ken Shirley began forwarding the cash discrepancy notice e-mails to that store. Each time he forwarded one of these cash discrepancy notice e-mails to Store #5245, the acting manager of that store responded by advising him that there were no discrepancies, and that the cash deposits were being made on time and in the proper manner.
23. Because of the number of Cash Discrepancy Notices Plaintiff Ken Shirley had received regarding Store #5245 and that Plaintiff Amparo Lara was off work at the same time, Plaintiff Ken Shirley telephoned that store on about May 30, 2006, and again on about June 2, 2006. On each occasion, he was reassured by the acting manager, Noemi Ledesma, that all was well with the banking deposits and that the Cash Discrepancy Notices were due to the manner in which the bank, that that particular store used, validated cash deposits.
24. Although Plaintiff Ken Shirley had no solid reason to doubt Ms. Ledesma's response, out of an abundance of caution, on about May 30, 2006, he telephoned Mike Olson, the Rosedale Highway restaurant General Manager, (one of the two individuals covering his responsibilities while he was gone) and asked Mr. Olson to perform a site visit to see if he could determine what, if anything, was wrong at Store #5245. Plaintiff Ken Shirley believes that Mr. Olson performed the requested visit while Plaintiff Ken Shirley was on leave but that Mr. Olson did not ascertain anything wrong with the cash bank deposits at that store.
25. Because of the continuing Cash Discrepancy Notices, Plaintiff Ken Shirley had received regarding Store #5245, and that Plaintiff Amparo Lara was still off work, on Plaintiff Ken Shirley's first day back to work, on or about June 5, 2006, he personally went to Store #5245 in Porterville. During his visit, all three lead personnel then running the store assured him that the deposits were made correctly on time, and that there were no known discrepancies with the bank deposits.
26. However, because the deposit log had not been properly filled out for the previous two weeks or so, it was impossible for him to verify the accuracy of the bank cash deposits. Plaintiff Ken Shirley reviewed the proper procedure for completion of the Deposit Log with Ms. Ledesma and instructed her to have the Deposit Log up to date by the time the Restaurant General Manager, Amparo Lara, returned to work on June 13, 2006, eight days later. Plaintiff Ken Shirley further notified Ms. Ledesma that she, Plaintiff Ken Shirley, and Plaintiff Amparo Lara, would review the updated deposit log on Plaintiff Amparo Lara's first day back to work, June 13, 2006.
27. On or about June 12, 2006, one day prior to Plaintiff Ken Shirley's scheduled meeting with Ms. Amparo and Ms. Ledesma of Store #5245, Plaintiff Ken Shirley received a telephone call from Region Coach/Regional V.P. Darren McGilbray regarding the Cash Discrepancy Notices at Store #5245. Plaintiff Ken Shirley notified Mr. McGilbray of his earlier efforts to resolve this situation and of his meeting scheduled for the following day with Acting Manager Ledesma and returning restaurant General Manager Lara. Mr. McGilbray expressed satisfaction with Plaintiff Ken Shirley's efforts to resolve this situation.
28. Also on June 12, 2006, Plaintiff Ken Shirley spoke with Human Resources Manager, Ipo Hoops, regarding the missing deposits from Store #5245. Mrs. Hoops indicated that she had heard of the missing deposits from McGilbray and was glad Plaintiff Ken Shirley had called her before she called him. Plaintiff Ken Shirley told her he did not think there was an issue, and would notify her of the results of the visit he had scheduled the following day. She was confident in Plaintiff Ken Shirley's abilities and said to let her know if he needed anything from her. Mrs. Hoops and Plaintiff Ken Shirley stayed in contact, weekly at minimum, from this day forward, but she never visited the restaurant herself. Prior to this incident, they had only communicated on a monthly basis. Later that day, Plaintiff Ken Shirley spoke with Loss Prevention Manager, Kevin Rice, about the Cash Discrepancy Notices regarding Store #5245. He too seemed confident in Plaintiff Ken Shirley's approach to the situation.
29. The next day, on or about June 13, 2006, Plaintiff Ken Shirley returned to Store #5245 and discovered that Acting Manager Ledesma had not updated the bank deposit logs as instructed. Therefore, Restaurant General Manager Lara and Plaintiff Ken Shirley reconstructed the Bank Deposit Log and were able to account for all deposits except for seven missing deposits totaling $9,792.99. Throughout the previous day, Plaintiff Ken Shirley had also been in discussion with Loss Prevention Manager, Kevin Rice, regarding this situation. On the same day, while Plaintiff Amparo Lara and Plaintiff Ken Shirley were reconstructing the Bank Deposit Log, Mr. Rice visited Store #5245. Plaintiff Ken Shirley showed Mr. Rice what Plaintiff Amparo Lara and Plaintiff Ken Shirley were doing to resolve the situation. Mr. Rice was comfortable with their efforts.
30. The following day, June 14, 2006, Plaintiff Amparo Lara and Plaintiff Ken Shirley went to the bank to investigate whether they had any record of receiving deposits on the seven days in question. The bank did not. Therefore, Plaintiff Amparo Lara and Plaintiff Ken Shirley began interviewing the three Team Leaders who were responsible for running that store in Plaintiff Amparo Lara's absence. It quickly became apparent that Ms. Ledesma had assumed full responsibility for all bank deposits during Plaintiff Amparo Lara's absence. Ms. Ledesma had instructed the other two Team Leaders not to worry about the bank deposits, saying she would take care of them, or words to that effect.
31. Further, Plaintiff Ken Shirley also telephoned the corporate cash department on several occasions in an effort to ensure that these deposits inadvertently had not been posted to a different restaurant or account. Ultimately, the corporate cash department, Plaintiff Amparo Lara and Plaintiff Ken Shirley were unable to account for any of the seven missing deposits totaling $9,792.99, and it became increasingly likely that Acting Manager Ledesma had embezzled these funds.
32. On or about June 15, 2006, Plaintiff Ken Shirley contacted Loss Prevention Manager, Kevin Rice, and his supervisor, Mr. McGilbray and informed them of his suspicion that Acting Manager Ledesma had taken the missing deposits.
33. Since the first day Plaintiff Ken Shirley spoke with Mr. McGilbray about this issue (June 12, 2006) Plaintiff Ken Shirley was also communicating with the Regional Human Resources Manager, Mrs. Ipo Hoops, about this issue. In confidence and specifically "off the record," Mrs. Hoops repeatedly stated that this issue was not over and that Plaintiff Ken Shirley should not be at all comfortable because his job was in jeopardy because of the missing deposits no matter what Mr. McGilbray told Plaintiff Ken Shirley. Because Mrs. Hoops repeated this warning, Plaintiff Ken Shirley addressed the matter several times with Mr. McGilbray over the remainder of his employment with Yum Brands/Long John Silver's.
34. On June 19, 2006, Plaintiff Ken Shirley's supervisor, Mr. McGilbray, was in the Sacramento, California, office for meetings unrelated to the missing deposits. On that same day, Plaintiff Ken Shirley was also in the Sacramento, California, office for a meeting unrelated to the missing deposits. Plaintiff Ken Shirley approached Mr. McGilbray between meetings. He did not raise the missing deposits from Store #5245. When Plaintiff Ken Shirley raised the issue of the missing deposits, Mr. McGilbray assured Plaintiff Ken Shirley that based on Plaintiff Ken Shirley's actions and thorough follow-through on this matter, that Plaintiff Ken Shirley was fine and not in jeopardy of termination over this issue. Mr. McGilbray returned to Kansas with no further investigation or discussion of this issue.
35. As a regular part of Plaintiff Ken Shirley's weekly routine, he had one-on-one telephone conversations with Mr. McGilbray on Tuesdays. During these weekly conversations, Mr. McGilbray never brought up the issue of the missing deposits from Store #5245. Therefore, Plaintiff Ken Shirley regularly brought up the issue of the missing deposits, as the warnings from Mrs. Hoops continued. Mr. McGilbray assured Plaintiff Ken Shirley that this issue was not a threat to Plaintiff Ken Shirley's job security.
36. On or about June 26, 2007, Loss Prevention Manager, Kevin Rice, called a meeting to meet in Porterville to terminate Noemi Ledesma for failure to secure company funds. On June 27, 2007, with the approval of Human Resources Manager, Ipo Hoops, Mr. Rice and Plaintiff Ken Shirley terminated Ms. Ledesma. After terminating Ms. Ledesma, Mr. Rice turned his interrogation toward Plaintiff Ken Shirley and his business practices. It was apparent he was not going to take the matter to the police as they had previously discussed. He asked Plaintiff Ken Shirley questions regarding how Plaintiff Ken Shirley trained his team on cash procedures, how he followed up on their training, and what they could do as a region to ensure this would not recur, as Plaintiff Ken Shirley was the second of three Area Coaches that had multiple deposits disappear while Mr. McGilbray was their Region Coach. Plaintiff Ken Shirley was concerned about cash handling from the initial training of all members of management and the commitment to daily follow-up.
37. On or about July 13, 2006, Plaintiff Ken Shirley drove to Las Vegas, Nevada, for his mid-year review with Mr. McGilbray. Since Plaintiff Ken Shirley had been receiving conflicting messages from his immediate supervisor and human resources for several months, Plaintiff Ken Shirley looked forward to the opportunity to discuss his performance and to obtain a written performance evaluation.
38. LJS uses a Balanced Score Card (BSC) to grade the performance of all operations staff from Assistant Restaurant Managers to the President of LJS. Plaintiff Ken Shirley received a rating of 3.3 out of 5.0, which is "On Target." Mr. McGilbray's Region BSC rating was 2.1 or "Below Target." LJS's BSC rating was 2.5. Significantly, Mr. McGilbray awarded Plaintiff Ken Shirley 4.15 out of 5.0 for leadership and he indicated that Plaintiff Ken Shirley had no significant areas in need of improvement. As the conversation around Plaintiff Ken Shirley's evaluation began to wrap-up he changed gears and began to speak of his up coming two week vacation to Switzerland. Mr. McGilbray was planning to leave Monday, July 17, 2006, and return on Monday, July 31, 2006.
39. Plaintiff Ken Shirley was one of ten Area Coaches who reported directly to Mr. McGilbray. Because of Plaintiff Ken Shirley's superior performance, LJS selected Plaintiff Ken Shirley to run the region while Mr. McGilbray was out of the country in July 2006. Plaintiff Ken Shirley believes Mr. McGilbray selected him to run the region in his absence, and that he did so with the approval of at least one level of management above him. Between the time LJS selected Plaintiff Ken Shirley to fill in for Mr. McGilbray and the time of Mr. McGilbray's departure, Plaintiff Ken Shirley spoke with LJS President, Andy Rosen, who confirmed that he was aware of the fact that Plaintiff Ken Shirley was filling-in for Mr. McGilbray during McGilbray's vacation.
40. Plaintiff Ken Shirley's additional responsibilities included, but were not limited to: running the region conference calls for Mr. McGilbray's nine other Area Coaches and 66 restaurants; leading the weekly multi-brand conference calls (a duty that Mr. McGilbray and Plaintiff Ken Shirley had shared for some months); presenting the region profit and loss statement for period 7 to LJS Head Coach (Vice President) and seven other Region Coaches; and handle whatever daily issues that arose.
41. After a lengthy conversation about Mr. McGilbray's vacation plans, Plaintiff Ken Shirley turned the conversation back toward the issue of the missing deposits from Store #5245 as it had yet to be resolved. Mr. McGilbray telephoned Loss Prevention Manager, Kevin Rice, and put him on speakerphone to discuss the matter. In this telephone conversation, Plaintiff Ken Shirley learned that nothing had been done or even discussed since the day of Ms. Ledesma's termination June 26, 2006.
42. Significantly, Mr. Rice had not given any of the evidence to the Porterville Police Department as he indicated he would prior to Ms. Ledesma's termination. Further, Mr. Rice told Mr. McGilbray that Store #5245 was following the security procedures to the letter, and had no further issues with late deposits. Immediately after hanging up the phone, Mr. McGilbray stood and paced about the room saying that he would have liked Plaintiff Ken Shirley to have done things differently, but never stated what he would have had Plaintiff Ken Shirley do. He again assured Plaintiff Ken Shirley that his future with LJS was "fine."
43. On Saturday, July 29, 2006, Mr. McGilbray phoned Plaintiff Ken Shirley about 2:00 p.m., asking about the state of the region during his vacation. Plaintiff Ken Shirley told him that one store in Plaintiff Ken Shirley's area had burned due to fryer crumbs left overnight in a garbage can inside the restaurant (exactly in accordance with company security policy) and another store, not in Plaintiff Ken Shirley's area, had to be permanently closed due to neglect of the air conditioners and coolers.
44. Seemingly uninterested by these two major items, and after months of being disinterested in the stolen deposits from Store #5245, Mr. McGilbray quickly turned the conversation to the stolen deposits. Mr. McGilbray informed Plaintiff Ken Shirley that he would fly to California on Monday, July 31, 2006, or Tuesday, August 1, 2006, to meet with terminated Team Leader Ledesma. Plaintiff Ken Shirley asked Mr. McGilbray if he wanted him to arrange a meeting since Ms. Ledesma had been terminated and it would be difficult to arrange a meeting with a previously terminated employee at the last minute. Mr. McGilbray stated that that would not be necessary.
45. On Sunday, July 30, 2006, Plaintiff Ken Shirley received an e-mail from Mr. McGilbray stating that he would fly into Fresno on Monday, July 31, 2006, in the afternoon but was not specific as to his arrival time.
46. On Monday, July 31, 2006, at approximately 4:00 p.m., Plaintiff Ken Shirley received a telephone call from Mr. McGilbray saying he wanted to meet at the burned restaurant at the corner of Blackstone and Herndon, in Fresno, California. Plaintiff Ken Shirley informed Mr. McGilbray that Plaintiff Ken Shirley would meet him there in 20 minutes. Plaintiff Ken Shirley arrived to find Mr. McGilbray and Human Resource Manager, Mrs. Hoops. Plaintiff Ken Shirley asked Mrs. Hoops why she was there and her eyes began to water as she turned away from Plaintiff Ken Shirley.
47. After some small talk, Mr. McGilbray handed Plaintiff Ken Shirley a document stating that Plaintiff Ken Shirley was being placed on administrative leave pending completion of Mr. McGilbray's and Mrs. Hoops' investigation into the stolen deposits at Store #5245 in Porterville, California. Plaintiff Ken Shirley believes that Mr. McGilbray and Mrs. Hoops proceeded directly to Store #5245 in Porterville where they placed Plaintiff Amparo Lara (the store manager who had been on medical leave at the time of the embezzlement) on administrative leave pending completion of the same investigation.
48. The next day, Tuesday, August 1, 2006, Mr. McGilbray and Mrs. Hoops terminated Plaintiff Ken Shirley's employment. Their stated reason for Plaintiff Ken Shirley's termination was "it was discovered that there were several Cash and Security violations that occurred and that Plaintiff Ken Shirley was negligent in failing to stop or correct these discrepancies in an effective manner. These violations include proper, prompt and effective response to Cash Discrepancy Notices and failure to correct Cash handling practices in management at 5245."
49. Also, on August 1, 2006, Mr. McGilbray and Mrs. Hoops terminated Plaintiff Amparo Lara. The stated reason for Plaintiff Amparo ...