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Felix Luu v. Luu's Brothers Corp


February 8, 2012


(Super. Ct. No. 34-2009-00055011-CU-WT-GDS)

The opinion of the court was delivered by: Butz , J.

Luu v. Luu's Brothers



California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

The trial court sustained a demurrer without leave to amend as to the first two causes of action of the complaint (granting leave to amend the third). Plaintiff Felix Luu (Felix)*fn1 appeals from the subsequent order sustaining a demurrer to the amended third cause of action without leave to amend and dismissing the action.*fn2

In his opening brief, Felix limits the scope of his appeal to the trial court's dismissal of the action against defendant Luu's (sic) Brothers Corp. (hereafter defendant corporation), and only to the cause of action for plaintiff's termination in violation of public policy from his employment with A & A Supermarket (the supermarket; defendant corporation's nom de l'entreprise)--the second cause of action.*fn3 We shall reverse the judgment of dismissal as to defendant corporation and the second cause of action.


We assume the truth of well-pleaded factual allegations of the complaint. (Fogarty v. City of Chico (2007) 148 Cal.App.4th 537, 540 (Fogarty).) As we have denied Felix's request for judicial notice of allegations in what he terms a related action, we disregard his reference to them in his brief.

The pertinent allegations are few. Felix had been the general manager of the supermarket since 1996. In April 2008, Thanh Luu (Thanh) (a member of defendant corporation's board of directors, who are apparently all members of Felix's family) assaulted Felix's ex-wife in the store. Felix assisted the victim in contacting the police and prosecuting Thanh to "assur[e] that justice was done."

In May 2008, Duc C. Luu (Duc) (another board member) cut connections in the supermarket computer in an attempt to block Felix from seeing company accounting data. Duc also changed the lock on Felix's office, directed him to leave the premises, and ordered him not to return. On the same day, the corporate board voted to dismiss Felix from his employment. In fall 2007 and June 2008, Felix made unsuccessful requests for copies of corporate records, alleging that he had been attempting to investigate Duc's "conversion of funds" and the proper allocation of dividends to shareholders of four family-owned corporations (which include defendant corporation). He was offered access to look at the records but not copy them.

In sustaining the demurrer to the second cause of action without leave to amend, the trial court noted that Felix was asserting his termination was in retaliation for asserting his rights under Corporations Code section 1601 and assisting in the prosecution of a criminal offense. It ruled "Plaintiff has not alleged that he was required as an employee to do anything illegal . . . or that he was prevented from doing something he had a legal duty to do. [¶] . . . Plaintiff has not identified any constitutional provision, statute[,] or rule that would provide the requisite public policy."


On appeal, we review a trial court's ruling on a demurrer de novo. (Fogarty, supra, 148 Cal.App.4th at p. 542.) As for the denial of leave to amend, we determine whether there is any reasonable probability that the plaintiff can state a cause of action. (Lund v. California State Employees Assn. (1990) 222 Cal.App.3d 174, 182.)

An employment relationship of indefinite duration normally is terminable at the will of either party, but an employer can incur liability in tort for dismissing an employee in violation of public policy. The public policy must be tethered to a specific constitutional, statutory, or regulatory source. Further, the public policy must inure to the benefit of the public at large (and not merely the private interest of the employer and employee), and represent a fundamental interest that is well established at the time of the dismissal (the latter two criteria serving to give an employer notice of its existence). Circumstances in which a retaliatory dismissal violates public policy fall into four general categories where the employee has: (1) refused to violate a statute; (2) performed a statutory obligation; (3) exercised a constitutional or statutory right or privilege; or (4) reported a violation of a statute that has public importance. (Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 72, 75-76 (Green); Gantt v. Sentry Insurance (1992) 1 Cal.4th 1083, 1090-1091, 1095; Scott v. Phoenix Schools, Inc. (2009) 175 Cal.App.4th 702, 708-709, 713.)

The trial court's ruling did not take into account the fourth category above--reported a violation of a statute that has public importance--perhaps because the briefing of the parties in the trial court did not address it. On appeal, however, the parties address two cases in which this issue arises.

Collier v. Superior Court (1991) 228 Cal.App.3d 1117 (Collier) involved a demurrer to a complaint alleging that the plaintiff's dismissal was in retaliation for his investigation of the possible misappropriation of his company's products and his report of his suspicions to his superiors. (Id. at pp. 1120-1121.) Citing the "fundamental public policies embodied in [our] penal statutes" (id. at p. 1121), Collier concluded that the plaintiff's report to his superiors "served not only the interests of his employer, but also the public interest in deterring crime . . . " (id. at p. 1123).*fn4 Collier also invoked Labor Code section 1102.5 as a tether for the public policy at issue; even though on its face the statute directly proscribed retaliation for reporting a violation of the law only to a government or law enforcement agency, "it does evince a strong public interest in encouraging employee reports of illegal activity in the workplace" and it would put employees in an untenable situation if they needed to bypass an initial report to the employer in order to claim the protection of the statute. (Collier, at pp. 1123-1124.) In addition, Collier rejected an argument that the categories of actions that violated public policy were limited to the coercion of the commission of an illegal act or the restraint of the exercise of a right, privilege or obligation. (Id. at pp. 1126-1127.)

More recently, Franklin v. The Monadnock Co. (2007) 151 Cal.App.4th 252 (Franklin) upheld a complaint against demurrer in which the plaintiff alleged a retaliatory dismissal for his report of a co-worker's violent assault to the police and having earlier reported the co-worker's threats to the employer. (Id. at p. 255.) After concluding that the public policy reflected in statutory provisions for workplace safety applied equally to the prevention of workplace violence (id. at pp. 258-260), the court found the reports furthered the public interest in the deterrence of crime (id. at p. 264 [citing Collier]), because the prevention of violent crime in the workplace "is at least as important an interest as the prevention of the types of financial crimes that were at issue in Collier" (Franklin, at p. 265). "And the same policy objectives [protecting a report to an employer] also require that an employee should be free to bring, and not be terminated for bringing, to the attention of the appropriate governmental agencies . . . criminal conduct and credible threats of violence . . . ." (Id. at p. 266.)

Foley, Collier, and Franklin are authority for a cause of action for a wrongful termination of employment in violation of public policy that is in retaliation for reporting of a crime and assisting in its prosecution under the fourth category, because there is a fundamental and well-established public interest in detecting and prosecuting the violation of any criminal statute. "[A] law represents a fundamental public policy when the conduct it proscribes is punishable as a crime" (Jie v. Liang Tai Knitwear Co. (2001) 89 Cal.App.4th 654, 661, fn. 6); "if an employer fires an employee who complains to the authorities about such violation, then the termination is a termination in violation of public policy" (id. at pp. 661-662).

Defendant corporation's efforts to distinguish these holdings is unavailing, and disregards both Labor Code section 1102.5 and Foley's unconditional inclusion of reporting crime as being among the acts that are protected from adverse employment actions. Green's focus on the danger to the public at large of the defective airplane parts (that were the subject of the plaintiff's report to his superiors) does not negate the public's interest in the prosecution of crime. Green rather was broadening the contours of public interest to include the internal report of activity that allegedly violated the public policy contained in federal safety regulations, whether or not the employer violated the regulations. (Green, supra, 19 Cal.4th at pp. 84-87.) And as our summary of its holding above shows, Franklin's primary focus on workplace safety from co-worker violence does not undermine its alternate reflections on the general public policy of deterring crime of all sorts. Finally, while Collier indeed involved the report of suspicions of embezzlement, and defendant corporation here is correct that Felix alleged only an investigation of possible financial malfeasance, this argument does not in any way address the extent to which Collier would protect Felix's assistance in the report and prosecution of the April 2008 assault.

In short, the trial court erred in concluding that the complaint failed to state a cause of action for a termination of employment in violation of public policy for reporting a crime to the police and assisting in its prosecution. (As this is a sufficient basis for reversal, we do not need to consider whether Felix's alleged investigatory efforts of themselves were protected under any public policy from being a basis for termination.) The ability of Felix to prove these allegations is beyond the scope of this appeal. (Nagy v. Nagy (1989) 210 Cal.App.3d 1262, 1267.)


The appeal is dismissed as to all defendants other than Luu's Brothers Corporation (defendant corporation). The judgment of dismissal is reversed in part as to this remaining defendant with directions to enter a new order overruling the demurrer only as to the second cause of action. Felix shall recover his costs of appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2), (3).)

We concur: NICHOLSON , Acting P. J. HOCH , J.

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