The opinion of the court was delivered by: David O. Carter United States District Judge
ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE PARTIAL SUMMARY JUDGMENT
Before the Court is a Motion for Summary Judgment, or in the alternative, Partial Summary Judgment. (Dkt. 18.) After considering the moving, opposing and replying papers thereon, and for the reasons stated below, the Court hereby DENIES the Motion.
Plaintiffs Mark Willig ("Willig") and Cynthia French ("French") filed this case against Exiqon, Inc. ("Defendant") in the Orange County Superior Court, alleging claims for: (1) breach of severance agreement, (2) violation of California Labor Code § 201, and (3) penalties under California Labor Code § 203. On March 11, 2011, Defendant removed the case to federal court based on diversity jurisdiction.
Defendant Exiqon, Inc. is a wholly-owned subsidiary of the Danish company Exiqon A/S. Exiqon, Inc. was created as part of Exiqon A/S's "process of establishing a sales force in the United States." (Johnson Decl., Ex. 4 at 31.) Accordingn to Exiqon, Inc.'s President, Lars Kongsbak ("Kongsbak"), Exiqon, Inc.'s ambition to establish a sales force in the United States failed because they ran out of money. (Johnson Decl., Ex. 4 at 31, Kongsbak Depo. Tr. at 21:6-11.) Kongsbak is also the President/CEO and Managing Director of Exiqon A/S and was the President of Oncotech before it went out of business. (Kongsbak Decl. ¶ 1.) Exiqon, Inc. is the only named Defendant in this case.
Exiqon A/S, Exiqon, Inc.'s parent company, "is a biotechnology business whose core business is to develop, manufacture and market products for molecular biology analysis." (French Decl., Ex. 15 at 21.) Exiqon A/S "market[s] [its] products and services for nucleic acid analyses worldwide directly from [its] headquarters in Denmark and [its] sales organization in the United States . . . ." (Id. at 22.) Exiqon A/S's customers include "molecular biologists in the pharmaceutical, diagnostic and agrotechnology industries, and academic institutions in the field of molecular biology. (Id.) These customers perform research into diseases such as cancer and metabolic disease, among other things. (Id.) Exiqon A/S's products measure "very precise and sensitive" changes in gene activity and can be used to analyze mRNA and miRNA. (Id.)
On January 28, 2008, Exiqon A/S announced that it would acquire Oncotech, Inc. ("Oncotech") (which later operated as Exiqon Diagnostics, Inc.) as a wholly-owned subsidiary. (Id. at 21.) Oncotech sold an extreme drug resistance ("EDR") cell-based test used to identify tumors and how resistant they are toward different types of chemotherapy. (Johnson Decl., Ex. 4 at 32.) Oncotech went out of business in 2010.
B. Plaintiff Willig's Employment
Willig alleges that he entered into an employment agreement with both Exiqon, Inc. and Oncotech,*fn1 as set forth in a letter dated October 28, 2009. (Compl. ¶ 6.) On December 2, 2009, the agreement was amended to include a Severance and Retention Pay provision. (Id. ¶ 7.) On February 2, 2010, the agreement was again amended through modification to the severance provision. (Id. ¶ 8.) On June 4, 2010, Willig was laid off, not terminated for cause, but no severance was paid. (Id. ¶¶ 22-24.)
Willig's employment agreement indicates that he was hired as "Chief Commercial Officer with Oncotech, Inc." (Chang Decl., Ex. 2 at 33.) The duties of this position include, "(i) management of the sales and marketing teams at Oncotech, Exiqon A/S and Exiqon Inc. within the company's current two financial segments, (ii) development and implementation of Exiqon's strategy for how to market and sell Exiqon Life Sciences' research products and Exiqon diagnostics (Oncotech's) diagnostic products . . . ." (Id.) The offer letter also states that Willig's salary would be reviewed annually by "the Company," which was defined in the agreement to mean Oncotech.*fn2 Under the agreement, Willig was eligible to participate in "the Company's annual incentive program" which has its terms and conditions set "purely at the discretion of Exiqon A/S' board of Directors." (Id.) It also discusses participation in an equity award program which awards Exiqon A/S stock purely at the Board's discretion. (Id. at 34.) The letter is signed by Kongsback as "CEO of Exiqon A/S." (Id. at 35.)
Willig's employment agreement was amended as of December 7, 2008 to include a new provision regarding severance pay. (Chang Decl., Ex. 3 at 36.) Under the amendment, the Company (again defined as Oncotech) agreed to pay twelve months of severance pay if Willig was terminated without cause. Cause was defined as conduct conflicting with the business interests of Oncotech or Exiqon A/S, or unethical, dishonest or illegal activity materially adverse to Oncotech or Exiqon A/S, among other similar examples. (Id.) Significantly, repeated violation of Oncotech or Exiqon A/S policies or procedures and failure to comply with directions given by the Board of Directors or CEO of Exiqon A/S also constituted "cause." (Id. at 37.) The amendment concluded by stating, "this amendment, together with the offer letter of 28 October 2009 will constitute the complete agreement between you and the Company regarding employment matters reference [sic] herein." (Id.)
As of December 30, 2009, the severance provision was replaced with a new severance provision. (Chang Decl., Ex. 4 at 38.) The terms were similar to the first severance provision, but they recognized that Willig might participate in a buyout of the Oncotech assets, which may conflict with Exiqon A/S's business interests, but would not constitute "cause" for termination. (Id. at 39.) Willig was paid a retention bonus of three months' salary and his future severance was limited to nine months' salary.
C. Plaintiff French's Employment
French alleges that she entered into an employment agreement with both Defendant and Oncotech, as set forth in a letter dated May 25, 2008. (Compl. ¶ 9.) On February 4, 2010, the agreement was amended to include a Severance and Retention Pay provision. (Id. ¶ 10.) On March 12, 2010, the agreement was again amended through modification to the severance provision. (Id. ¶ 11.) On June 4, 2010, French was laid off, not terminated for cause, but no severance was paid. (Id. ¶¶ 29-31.)
French's employment agreement indicates that she was hired as "Chief Sceintific Officer with Oncotech, Inc. ("the Company")." (Chang Decl., Ex. 11 at 79.) French's job responsibilities included "management of the product development teams at Oncotech and Exiqon, development and implementation of Exiqon's product development strategy [to] provide input to clinical trial design and strategies, and secur[ing] compliance to ISO 9001 at Exiqon and CLIA lab regulations at Oncotech," among others. (Id.)
French's employment agreement contained identical language to Willig's agreement regarding Exiqon A/S's incentive program and Exiqon A/S's discretion to allow continued participation. (Id. at 80.) French's agreement also contained the same integration clause. (Id. at 81.)
Like Willig, French's employment agreement was amended to include the first severance provision, as of January 1, 2009. (Chang Decl., Ex. 12 at 82.) The amendment contains the same examples as Willig's regarding termination for "cause," as determined by Oncotech or Exiqon A/S. (Id. at 83.) Just like Willig, French's severance provision was again amended, as of March 12, 2010, to provide a retention bonus of three months' pay and severance pay in the amount of nine months' salary if she was terminated without cause. (Chang Decl. Ex. 13 at 84.)
D. Joint Employment Theory
Plaintiffs' key allegation is that they were employed by both Exiqon, Inc. (i.e., the entity they believe is Exiqon A/S operating in the United States) and Oncotech because both employers exercised control over and directed the work of Plaintiffs. (Id. ¶ 14.) Because neither Plaintiff was terminated for cause, they contend they should have been paid severance by Exiqon in accordance with their respective employment agreements. They also allege that Labor Code § 201 was violated because all wages were not paid immediately upon termination (i.e., severance pay constitutes a type of wages) (id. ¶¶ 34-36), and they are owed penalties under Labor Code § 203 because all wages were not paid within thirty days (id. ¶¶ 44-46).
Summary judgment is proper where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). Summary judgment may be granted where no "reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Material facts are those which, under applicable substantive law, may affect the outcome of the case. Id. In determining whether a genuine issue of material fact exists, the evidence must be construed in the light most favorable to the non-moving party. Nelson v. City of Davis, 571 F.3d 924, 928 (9th Cir. 2009). The Court must not weigh disputed evidence with respect to a disputed material fact, nor should it make credibility determinations regarding statements made in affidavits, answers to interrogatories, admissions, and/or depositions. Id. Those determinations are left for the jury. Id.
On a motion for summary judgment, the moving party "always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the evidence] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the non-movingparty bears the burden of proof at trial, the moving party need only "point out to the district court . . . that there is an absence of evidence to support the nonmoving party's case." Id. at 325. Once the summary judgment proponent has discharged its initial burden, the non-moving party must "go beyond the pleadings and by her own affidavits, or by [other evidence], designate 'specific facts showing that there is a genuine issue for trial.'" Id. at 324 (quoting then-current Fed. R. Civ. P. 56(e)).
A. Evidentiary Objections
Each party filed evidentiary objections to various evidence submitted by the opposing party. As an initial matter, the Court rules on the objections as follows. Plaintiffs' Objections
Objection to the Decl. of Lars Kongsbak
Testimony and Nature of Objection Ruling Plaintiffs object to ¶¶ 3-8 on the grounds that the statements are inadmissible hearsay, lack foundation, and/or contain a legal conclusion.
¶ 3 speaks to Exiqon, Inc.'s corporate status and business. The objection is overruled on all grounds. It is not a legal conclusion and Kongsbak is competent to testify as the CEO.
¶ 4 speaks to Exiqon, Inc.'s status as a subsidiary. The objections are overruled for the same reasons as to ¶ 3.
¶ 5 discussing the acquisition of Oncotech. The objection is overruled because this statement is not hearsay.
¶ 6 discussing Plaintiffs' termination from Oncotech. The objections are overruled for the same reasons as to ¶ 3.
¶ 7 discussing who approved Plaintiffs' wages. The objections are overruled for the same reasons as to ¶ 3.
¶ 8 discussing an email sent to French. The objections are overruled for the same reasons as to ¶ 3.
Objection to the Decl. of Jill Johnson
Testimony and Nature of Objection Ruling Ex. 7 "Building a World Leading Company" PowerPoint presentation.
Defendant objects on the basis that this document has not been authenticated. Fed.
The objection is overruled. The bates stamps show this document was part of Plaintiff's document production and even if the Johnson Declaration does not authenticate this document, evidence that can be properly authenticated at trial may still be admitted on summary judgment. See Fraser v. Goodale, 342 F.3d 1032, 1036 (9th Cir. 2003).
Objection to the Decl. of ...