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Diorio v. Coca-Cola Co.

February 24, 2009

MICHAEL DIORIO, AN INDIVIDUAL, PLAINTIFF,
v.
COCA-COLA COMPANY, A DELAWARE CORPORATION; ENERGY BRANDS, INC., A NEW YORK CORPORATION, D/B/A GLACEAU, DEFENDANTS.



The opinion of the court was delivered by: Marilyn L. Huff, District Judge United States District Court

ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

Plaintiff Michael Diorio ("Diorio") filed a complaint against his former employer Defendant Energy Brands, Inc. ("EBI") and against EBI's purchaser, Defendant Coca-Cola Company ("Coke") on March 5, 2008. (Doc. No. 1, Compl.) On January 25, 2009, Defendants filed a motion for summary judgment. (Doc. No. 20.) Plaintiff filed a response in opposition on February 9, 2009. (Doc. Nos. 24--27.) Defendants filed a reply on February 13, 2009. The Court held a hearing on the matter on February 23, 2009. L. Michael Wilson appeared on behalf of Diorio. Christopher Carton, Bradley Gunning, and Joseph De Salvo appeared on behalf of EBI and Coke.

For the reasons set forth below, the Court grants Defendants' motion.

Background

Plaintiff filed this action arising out of a dispute over stock options granted in an employment agreement for: (1) breach of contract; (2) quasi contract-unjust enrichment; (3) negligent misrepresentation; (4) promissory estoppel; (5) breach of implied covenant of good faith and fair dealing; (6) fraud deceit-concealment/intentional misrepresentation; (7) negligence; and (8) violation of California Business & Professions Code § 17200. (Compl.) Defendants move for summary judgment on all of Plaintiff's causes of action. (Doc. No. 20.)

Defendants contend that all of Plaintiff's causes of action are barred by the applicable statutes of limitations because Diorio's causes of action accrued in 2000. (Doc. No. 20 at 3--6.) EBI granted Diorio an option to purchase 5,000 shares of stock at $2.50 per share upon signing of a one page job offer letter ("Offer Letter") in April 2000. (Id. Ex. I.) Diorio was told when he left the company in October 2000 that he would not get any stock options. (Id.) Plaintiff contends that the statute of limitations has not run because his causes of action did not accrue until he unsuccessfully attempted to exercise the options seven years after he left the company and EBI denied his claim. (Doc. No. 24 at 6.)

Defendants alternatively argue that Plaintiff's causes of action based upon the written agreement of the Offer Letter must fail because the options granted to Plaintiff expired before Plaintiff attempted to exercise in 2007. (Doc. No. 20 at 6--7.) Defendants assert that EBI's 1999 Employee Stock Option Plan (the "Plan") supplied the terms of the options granted to Plaintiff in the Offer Letter and that the Plan provides that options terminate upon the termination of employment and otherwise terminate in five years from the date of the grant. (Id.) Plaintiff argues that he never knew about the 1999 Plan until 2007 and because the Offer Letter is silent as to the time in which to exercise, he had a reasonable time to do so. (Doc. No. 24 at 6--7, 13.) Defendants reply that even if the 1999 Plan does not control and Plaintiff had a reasonable time to exercise, his attempt to exercise in 2007 was not within a reasonable time and the options had expired. (Doc. No. 29 at 8--9.)

Defendants also contend that even if Plaintiff had valid options in 2007, Plaintiff's causes of action based on the written Offer Letter fail because the Merger Plan between EBI and Coke cancelled all EBI stock on June 7, 2007, and Plaintiff did not attempt to exercise his option to buy stock until June 8, 2007. (Doc. No. 20 at 13--15.) Defendants similarly assert that the Merger Plan precludes Plaintiff's claim for a cash payout because his Offer Letter is not one of the listed Company Equity Plans in the Merger Plan giving rise to a right to a cash payout. (Doc. No. 20 at 8--9.) Plaintiff argues that he had valid options in 2007 and that they did not cease to exist after the merger because all of EBI's liabilities became Coke's liabilities. (Doc. No. 24 at 19--20.)

Discussion

I. Summary Judgment - Legal Standard

Federal Rule of Civil Procedure 56 governs summary judgment. Section (b) provides that "a party against whom relief is sought may move at any time, with or without supporting affidavits, for summary judgment on all or part of the claim." FED. R. CIV. P. 56(b). A motion for summary judgment should not be granted unless the pleadings, affidavits and evidence on file present "no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). "Summary judgment should be granted where the evidence is such that it would require a directed verdict for the moving party." Anderson v. Liberty Lobby Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Thus, "Rule 56(c) mandates the entry of summary judgment ... against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

A. Statute of Limitations and Time to Exercise

Defendants contend that the applicable statutes of limitations for all of Plaintiff's causes of action bars his suit and entitles them to summary judgment and additionally that the time to exercise any options granted to Diorio has expired. (Doc. No. 20 at 3--7.) Under California law, an action must be commenced within the prescribed limitations period "after the cause of action shall have accrued." CAL. CODE CIV. PROC. § 312. A cause of action accrues when the wrongful act is done and the consequent liability arises. Norgart v. Upjohn Co., 21 Cal.4th 383, 397 (1999). Under the discovery rule, a cause of action accrues when the plaintiff has reason to believe he or she has been wronged. Jolly v. Eli Lilly & Co., 44 Cal.3d 1103, 1110 (1988).

1. Breach of Contract, Quasi Contract-Unjust Enrichment, Promissory Estoppel, Breach of the Implied Covenant of Good ...


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