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Penate v. Wyndham Worldwide Operations, Inc.

United States District Court, C.D. California

July 11, 2016





         This is a whistleblower-retaliation action. Plaintiffs Valerie Penate and Rhonda Hamilton allege that their employer, Defendant Wyndham Worldwide Operations, Inc., wrongfully discharged them for complaining about unlawful sales practices within the company. Defendant moves to dismiss the complaint, or in the alternative, for summary judgment based on the fact that it did not employ Plaintiffs. For the reasons discussed below, the Court DENIES the Motion.[1]


         Defendant allegedly employed Plaintiff Valerie Penate as a program support specialist between April 2013 and October 2014. (First Am. Compl. ¶ 9, ECF No. 15.) During this time, Penate was told to treat certain customers more favorably than other customers, and that she “reasonably believed [this] to be a fraudulent and illegal sales practice.” (Id. ¶ 10.) Penate relayed this belief to her supervisor, and refused to engage in the practice. (Id.) Penate was later terminated, allegedly based on her reporting this illegal activity to her supervisor. (Id. ¶ 11.)

         Defendant allegedly also employed Plaintiff Rhonda Hamilton as a frontline member services representative between February 2010 and November 2012. (Id. ¶ 12.) Hamilton learned that Defendant was directing its employees to use fraudulent and deceptive sales tactics to sell timeshares to customers, including misrepresenting the costs and benefits of timeshare ownership. (Id. ¶ 13.) Employees who used these tactics were treated (and compensated) better than those who did not. (Id. ¶ 14.) After Hamilton complained to her supervisor about both the illegal sales tactics and the disparate treatment and compensation, she was suspended. (Id. ¶¶ 14-17.) Hamilton then sent a letter to Defendant complaining that her suspension was retaliatory. (Id. ¶ 18.) Defendant failed to respond, and Hamilton alleges that she was “constructively terminated” from her job thereafter. (Id. ¶¶ 18-19.)

         On November 28, 2015, Plaintiffs filed their Complaint. (ECF No. 1.) On March 30, 2016, Plaintiffs filed a First Amended Complaint (“FAC”), in which they assert three claims against Defendant: (1) violation of the Dodd-Frank Act; (2) fraud; and (3) negligent hiring, supervision, and retention. (ECF No. 15.) Shortly before appearing in the case, Defendant informed Plaintiffs’ counsel that it was not Plaintiffs’ employer, and that the entity that employed Plaintiffs was Wyndham Vacation Ownership. (Kapur Decl. ¶¶ 3-7, ECF No. 20-2.) Despite this fact, Plaintiffs’ counsel refused to dismiss Defendant. (Id.) On May 11, 2016, Defendant filed the instant Motion. (ECF No. 20.) Plaintiffs timely opposed, and Defendant timely replied. (ECF Nos. 25, 26.) That Motion is now before the Court for consideration.


         A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable legal theory or insufficient facts pleaded to support an otherwise cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). To survive a dismissal motion, a complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)-a short and plain statement of the claim. Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). In making this determination, however, the court’s review is limited to the pleadings, any documents incorporated by reference in the complaint, and any matters of which the Court may take judicial notice. Lee v. City of L.A., 250 F.3d 668, 688-89 (9th Cir. 2001).

         “If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56.” Fed.R.Civ.P. 12(d). In general, submitting a declaration in support of a motion under Rule 12(b)(6) will trigger this rule. Anderson v. Angelone, 86 F.3d 932, 934 (9th Cir. 1996); see also, e.g., Cycle Barn, Inc. v. Arctic Cat Sales Inc., 701 F.Supp.2d 1197, 1203 (W.D. Wash. 2010); Chung v. Strategic Decisions Grp., No. CIV.08-1480-ST, 2009 WL 1117492, at *2 (D. Or. Apr. 23, 2009).

         Summary judgment should be granted if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The moving party bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Once the moving party has met its burden, the nonmoving party must go beyond the pleadings and identify specific facts through admissible evidence that show a genuine dispute for trial. Id.; Fed.R.Civ.P. 56(c).

         A disputed fact is “material” where the resolution of that fact might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1968). Conclusory or speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment. Thornhill’s Publ’g Co. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). Moreover, there must be more than a mere scintilla of contradictory evidence. Addisu v. Fred Meyer, 198 F.3d 1130, 1134 (9th Cir. 2000). Where the moving and nonmoving parties’ versions of events differ, courts are required to view the facts and draw reasonable inferences in the light most favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 378 (2007). A court may not weigh conflicting evidence or make credibility determinations. Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007).


         Defendant’s entire Motion rests on the declaration of an employee stating that Defendant did not employ either Penate or Hamilton. (Lee Decl. ¶¶ 3-4; Mot. 4.) Despite Defendant’s unsupported arguments to the contrary (Mot. 4 n.1), the Court clearly cannot consider such a declaration on a motion to dismiss, e.g., Anderson, 86 F.3d at 934; Cycle Barn, Inc., 701 F.Supp.2d at 1203; Chung, 2009 WL 1117492, at *2, and thus ...

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