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Khan v. Infor (US) Inc.

United States District Court, C.D. California, Southern Division

July 13, 2016

HARRIS KHAN, Plaintiff
INFOR (US) INC, and CHRIS MCDADE, Defendants.




         Plaintiff Harris Khan brings this action against Defendants Infor (US) Inc. ("Infor") and Chris McDade ("McDade") for retaliation, California Labor Code violations, wrongful termination in violation of public policy, and defamation. (See Dkt. 14 ["First Amended Compl." ("FAC")].) Two motions are before the Court: Khan's motion to remand and Infor's motion to dismiss. (Dkt. 15; Dkt. 16.) For the following reasons, Khan's motion to remand is GRANTED, and Infor's motion to dismiss is



         According to the allegations of the FAC, Khan was hired by Infor's predecessor, a company called Lawson, in June 2011. (FAC ¶ 12.) Following Lawson's acquisition by Infor, Khan was promoted to "Vice President in charge of the Office of the Chief Financial Officer." (Id. ¶ 14.) Khan's compensation-and, evidently, the compensation of his subordinates-was based on both salary and commission, and accordingly, Khan's superiors would create "metrics" which he and his group would be required to meet in order to participate in certain revenue sharing and commission plans. (Id. ¶ 15.) Khan's superiors would initially relate the metrics orally and then follow up with a written compensation plan which, Khan says, would often not reflect the oral promises. (Id. ¶ 16.)

         Over time, Khan began to suspect that the discrepancies between the oral commitments and written compensation plans were actually part of a process designed to boost the company's profits. Management, Khan says, would promise commissions and then fail to pay them, artificially inflating Infor's profits ahead of a public offering. (FAC ¶¶ 18-20.) When confronted, management would insist that commissions were discretionary and did not have to be paid at all. (Id. ¶ 20.)

         Eventually, Khan went to Defendant McDade, Infor's Director of Finance, to investigate how relevant metrics and quotas were being determined. (FAC ¶ 21.) Rather than assist in Khan's investigation, McDade began to tell others that Khan was "ineffective in his work" and that he was "consistently berating the Finance Department with improper inquiries and questions related to compensation issues." (Id.) Khan says that McDade's comments "expressly and impliedly stated that [he] was not performing his job duties effectively" and that he was "a poor employee more concerned with ‘rocking the boat'" than doing his job. (Id.) Khan also alleges that McDade's comments were known to and encouraged by Infor's Vice President of Finance and Compensation, Erica Bellavia. (Id. ¶ 22.)

         Commission problems continued. Khan alleges that commissions were "reserved" on Infor's financial statements but then never paid to the employees who earned them. (FAC ¶ 23.) And multiple levels of management were aware of the discrepancies between the commissions Infor said they were paying and the commissions they actually paid. (Id. ¶ 24.) Khan continued to make "numerous complaints and inquiries" on behalf of himself, his peers, and his subordinates, to no avail. (Id. ¶ 25.)

         In June 2014, Khan was assigned a smaller role within Infor, and in November 2014, he received a new compensation plan, which he found unsatisfactory. (FAC ¶¶ 26- 28.) Khan complained about the plan to his superiors and requested that it be recalculated as a "bookings plan." (Id. ¶ 28.) His superiors agreed that he merited a different plan, but it was not until Khan "reached out to Human Resources to launch a formal complaint" that the superiors produced a "bookings plan" for Khan. (Id. ¶ 29.) Khan was forced to accept the plan without viewing it, and when he was made aware of its terms, he found that they differed substantially from his expectations. (Id.)

         Subsequently, Khan made a complaint on behalf of a co-worker, who Khan believed had been shorted approximately $267, 000.00 in commissions. (Id. ¶ 34.) An individual retained by Infor to investigate the matter contacted Khan and told him that commission plans were not binding on Infor. (Id. ¶ 35.) Two days later, Khan was terminated by Infor, purportedly because of a "restructuring." (Id. ¶ 36.) He alleges that his termination was actually retaliation for his consistent complaints about Infor's commission scheme, which he believes was illegally withholding wages from Infor's employees. He also alleges that McDade specifically retaliated against him by repeatedly "denigrating and admonishing him, " often in front of his peers, to "stop questioning the logic" of the metrics. (Id. ¶ 53.) McDade's comments, Khan says, were relayed to his superiors who terminated him. (Id. ¶ 54.)

         Based on these allegations, Khan filed a state court complaint in February 2016. (Dkt. 1-1.) The original complaint alleged six employment-related causes of action against Infor and a single cause of action for defamation against McDade. (Id.) Infor removed to this Court in April, asserting diversity jurisdiction. (Dkt. 1.) Infor, a citizen of Delaware and New York, acknowledged that McDade and Khan are both California residents, but argued that McDade had been fraudulently joined, that Khan had wholly failed to state a claim against her, and therefore that diversity jurisdiction actually existed. (See id.)

         McDade subsequently moved to dismiss the defamation claim against her. (Dkt. 10.) On May 9, 2016, the Court granted Infor's motion. (Id.) It explained that Khan's complaint did not allege any defamatory statements within the applicable statute of limitations, and added that the complaint did not adequately allege that a conditional privilege did not apply. (See Dkt. 13 at 4-7.) These defects meant that Khan had wholly failed to state a claim against McDade and that such failure was "obvious according to the settled rules of the state." (Id. at 7 (quoting Hunter v. Philip Morris USA, 582 F.3d 1039, 1043 (9th Cir. 2009).) Accordingly, the Court concluded, McDade had been fraudulently joined and grounds for removal actually existed.

         The Court granted Khan leave to amend his complaint, and on May 31, 2016, Khan filed his FAC. The FAC asserts two claims against McDade: the claim for defamation, which Khan has now bolstered with some additional allegations, and a claim for retaliation under California Labor Code § 1102.5. (See generally FAC.) Khan then moved to remand, believing that diversity jurisdiction no ...

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