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Quinlan v. Power-One, Inc.

United States District Court, Ninth Circuit

January 14, 2014

JAMES QUINLAN, Plaintiff,
v.
POWER-ONE, INC., a Delaware corporation, and STEVE HOGGE, an individual, Defendants.

ORDER GRANTING DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS AS TO PLAINTIFF'S SECOND CAUSE OF ACTION

LUCY H. KOH, District Judge.

Before the Court is Power-One, Inc. and Steve Hogge's (collectively, "Defendants" or "Power-One") Motion for Judgment on the Pleadings on Plaintiff's Second Cause of Action. ECF No. 13. Plaintiff James Quinlan ("Quinlan" or "Plaintiff") opposes the Motion, ECF No. 14, and Defendants replied, ECF No. 15. Pursuant to Civil Local Rule 7-1(b), the Court finds this matter appropriate for resolution without oral argument and hereby VACATES the Hearing scheduled for January 16, 2014, at 1:30 p.m. ECF No. 13. The Court also CONTINUES the Case Management Conference set for January 16, 2014 to April 23, 2014, at 2:00 p.m. Having considered the submissions of the parties and the relevant law, the Court hereby GRANTS Defendants' Motion for Judgment on the Pleadings as to Plaintiff's second cause of action. The Court GRANTS Plaintiff leave to amend within 21 days of the date of this Order.

I. BACKGROUND

A. Factual Allegations

The following facts are taken from the original complaint and are assumed to be true for purposes of the instant motion. In April 2010, Plaintiff James Quinlan was employed as Vice President of Power Conversion Sales for Power-One. ("Compl.") ECF No. 1 ¶ 6. Quinlan was hired into the Power Solutions division of Power-One. Id. ¶ 3. Defendant Steve Hogge ("Hogge") was president of Power Solutions, and was Quinlan's direct supervisor. Id. ¶¶ 3, 7.

At all times, Power-One had a class of securities registered under Section 12 of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a et seq. Id. ¶ 8. The Sarbanes-Oxley Act of 2002, 15 U.S.C. §§ 7241 et seq., required Power-One to regularly submit reports to the federal government containing certain financial information, including any material changes in its financial condition. Id.

Later in 2010, Power-One was split into two divisions. Id. ¶ 9. Plaintiff's title changed to Vice President of Strategic Sales in the newly created Power Sources division. Id. Hogge remained Quinlan's supervisor. Id. Unlike other business units in the division, Quinlan's business unit grew in 2010, 2011, and 2012. Id. ¶ 11. In 2012, Quinlan's unit showed positive revenue and showed positive indications of future growth prospects. Id. Two other business units in the division, led by Ed Carter ("Carter"), experienced falling sales. Id.

As Vice President of Strategic Sales, Quinlan was responsible for making quarterly Sarbanes-Oxley audits on behalf of Power-One. Id. ¶ 11. On multiple occasions commencing in October 2010, Hogge allegedly instructed Quinlan that he was not to include any negative findings in any of the Sarbanes-Oxley audits. Id . ¶ 12. Hogge told Quinlan that he should "know nothing" and "see nothing" when it came to the audits. Id. Hogge reminded Quinlan of these instructions in a conference call with other Power-One employees in July 2011. Id.

Quinlan made a total of nine quarterly Sarbanes-Oxley audits on behalf of Power-One. Id. ¶ 13. In the first eight audits, Quinlan reported no negative findings, as instructed by Hogge. Id. However, in the July 2012 audit, Quinlan refused to omit negative material facts about Power-One's financial condition, and reported four negative items. Id.

In August 2012, Hogge announced a reorganization of the Power Sources division. Carter was made Vice President of Sales. Id. ¶ 14. Quinlan was demoted and thereafter reported to Carter. Id. As a result of the reorganization, Carter, not Quinlan, would be responsible for conducting the quarterly audits. Id. Quinlan complained about the reorganization and demotion to Hogge and others. Id. Finally, on August 14, 2012, Power-One terminated Quinlan's employment. Id . ¶ 15. Hogge stated to Quinlan that his termination was "for cause." Id.

B. Procedural History

On July 16, 2013, Plaintiff filed a Complaint alleging that he was fired in retaliation for his refusal to falsify Sarbines-Oxley audits and reports, in violation of: (1) Section 806 of the Sarbanes-Oxley Act, 18 U.S.C. § 1514A; and (2) California Labor Code Section 1102.5(c). Defendants filed the instant Motion for Judgment on the Pleadings on Plaintiff's Second Cause of Action on August 30, 2013. ("Mot.") ECF No. 13. Plaintiff filed his Opposition on September 13, 2013, ("Opp'n") ECF No. 14, and Defendants filed a Reply on September 20, 2013, ("Reply") ECF No. 15.

II. LEGAL STANDARDS

A. Motion for Judgment on the Pleadings ...


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