United States District Court, E.D. California
ROBERT TERRY, CREST CORPORATION, and CREST IRREVOCABLE BUSINESS TRUST DBA FREEDOM MEDIA, Plaintiffs
v.
REGISTER TAPES UNLIMITED, INC.; EDWARD “DOUG” ENDSLEY; ASHLEY MATE; and DOES 1 through 50, inclusive, Defendants.
MEMORANDUM AND ORDER RE: MOTION TO DISMISS
WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE
Plaintiffs
Robert Terry, Crest Corporation, and Crest Irrevocable
Business Trust DBA Freedom Media brought this breach of
contract and disability discrimination, retaliation, and
harassment case against defendants Register Tapes Unlimited,
Inc. (“RTUI”), Edward “Doug” Endsley,
and Ashley Mate. Endsley and Mate now move to dismiss
Terry’s harassment and hostile work environment claim
for failure to state a claim upon which relief can be granted
pursuant to Federal Rule of Civil Procedure 12(b)(6).
I.
Factual and Procedural Background
RTUI is
a Texas corporation that sells pre-printed advertising space
on the back of receipt tapes at grocery stores. (First Am.
Compl. (“FAC”) ¶¶ 4, 14 (Docket No.
6).) Endsley is RTUI’s President and Mate is its Chief
Operations Officer and both live and work in Texas.
(Id. ¶¶ 5-6.) Terry worked as a sales
manager for RTUI in the Sacramento region and is the sole
owner of Crest Corporation and Crest Irrevocable Business
Trust DBA Freedom Media. (Id. ¶¶ 2-3.)
Because the pending motion to dismiss is limited to
Terry’s harassment and hostile work environment claim
against Endsley and Mate, the court will limit its discussion
to the allegations relevant to that claim and all references
to “plaintiff” are to Terry only.
In
October 2010, plaintiff suffered a traumatic brain injury
from an automobile accident in Alaska while working for RTUI.
(Id. ¶ 29.) Plaintiff informed RTUI that the
brain injury reduced his mental capacity, diminished his
memory and processing speed, and required an accommodation.
(Id. ¶ 31.) Plaintiff also experienced migraine
headaches, low energy, fatigue, and a reduced ability to work
for extended periods as a result of the accident.
(Id. ¶ 29.)
In
2013, RTUI allegedly demoted plaintiff and took away
“the choicest stores in his Sacramento-area
territory” and assigned those stores to another sales
manager. (Id. ¶ 32.) Endsley allegedly
“blasted” plaintiff for the reduction in his
sales and threatened to further decrease his sales territory
even though he allegedly knew that plaintiff’s reduced
sales were because of plaintiff’s disability.
(Id. ¶ 33.) Endsley also allegedly falsely
accused plaintiff of stealing another sales manager’s
accounts and took away commissions plaintiff should have
received from those accounts. (Id. ¶ 34.)
In
March 2014, Mate rejected a ten-year advertising contract
that plaintiff sold and told plaintiff that a contract in
excess of three years was against company policy even though
RTUI allegedly lacked a company policy limiting the duration
of a sales contract and other sales managers had entered into
contracts for longer than three years. (Id. ¶
36.) In about May 2014, Mate “failed to protect
Plaintiff’s interests in his accounts with RTUI”
when he failed to send an email informing other sales
managers that a certain account belonged to plaintiff.
(Id. ¶ 37.) While plaintiff was on medical
leaves of absences, Mate also allegedly instructed other RTUI
employees to contact plaintiff with work-related issues.
(Id. ¶ 40.)
After
amending the Complaint once as a matter of course, plaintiffs
assert ten claims in the FAC: (1) breach of contract against
RTUI; (2) breach of the implied covenant of good faith and
fair dealing against RTUI; (3) disability discrimination in
violation of subsection 12940(a) of California’s Fair
Employment and Housing Act (“FEHA”), Cal.
Gov’t Code §§ 12940-12951, against RTUI; (4)
failure to engage in the interactive process in violation of
subsection 12940(n) of FEHA against RTUI; (5) failure to
accommodate in violation of subsection 12926(m)(1) of FEHA
against RTUI; (6) retaliation in violation of subsection
12940(h) of FEHA against RTUI; (7) harassment and hostile
work environment based on disability in violation of
subsection 12940(j)(1) of FEHA against RTUI, Endsley, and
Mate; (8) failure to prevent discrimination, harassment, and
retaliation in violation of subsection 12940(k) of FEHA
against RTUI; (9) wrongful adverse action in violation of
public policy against RTUI; and (10) failure to pay wages
against RTUI. This Order is limited to Endsley and
Mate’s motion to dismiss plaintiff’s harassment
and hostile work environment claim for failure to state a
claim upon which relief can be granted.
II.
Analysis
On a
motion to dismiss under Rule 12(b)(6), the court must accept
the allegations in the complaint as true and draw all
reasonable inferences in favor of the plaintiff. Scheuer
v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other
grounds by Davis v. Scherer, 468 U.S. 183 (1984);
Cruz v. Beto, 405 U.S. 319, 322 (1972). To survive a
motion to dismiss, a plaintiff must plead “only enough
facts to state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007). “While a complaint attacked
by a Rule 12(b)(6) motion to dismiss does not need detailed
factual allegations, a plaintiff’s obligation to
provide the ‘grounds’ of his entitle[ment] to
relief’ requires more than labels and conclusions . . .
.” Twombly, 550 U.S. at 555 (alteration in original)
(citations omitted). “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements, do not suffice, ” and “the tenet that
a court must accept as true all of the allegations contained
in a complaint is inapplicable to legal conclusions.”
Iqbal, 556 U.S. at 678.
“The
plausibility standard is not akin to a ‘probability
requirement, ’ but it asks for more than a sheer
possibility that a defendant has acted unlawfully.”
Id. “Where a complaint pleads facts that are
merely consistent with a defendant’s liability, it
stops short of the line between possibility and plausibility
of entitlement to relief.” Id. (internal
quotation marks and citation omitted). “A claim has
facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Id.
FEHA
makes it unlawful for “an employer . . . or any other
person, because of . . . disability . . . to harass an
employee.” Cal. Gov’t Code § 12940(j)(1). To
establish a prima facie case for a harassment and hostile
work environment claim under FEHA, the plaintiff must show he
was subjected to conduct or comments that were “(1)
unwelcome; (2) because of [his disability]; and (3)
sufficiently severe or pervasive to alter the conditions of
[his] employment and create an abusive work
environment.” Lyle v. Warner Bros. Television
Prods., 38 Cal.4th 264, 279 (2006) (internal quotation
marks and citations omitted). “‘[M]erely
offensive’ comments in the workplace are not
actionable, ” because the conduct must be “severe
or pervasive enough to create an objectively hostile or
abusive work environment.” Id. at 283; see
also Id. at 284 (“To be actionable, [an]
objectionable environment must be both objectively and
subjectively offensive, one that a reasonable person would
find hostile or abusive, and one that the victim in fact did
perceive to be so.” (internal quotation marks and
citation omitted)).
In
Reno v. Baird, the California Supreme Court
distinguished between the type of conduct that constitutes
harassment for which an individual employee could be
personally liable from the type of conduct that constitutes
discrimination or retaliation for which only the employer
could be liable. 18 Cal.4th 640 (1998); see also Jones v.
Lodge at Torrey Pines P’ship, 42 Cal.4th 1158,
1173 (2008) (holding that only the employer can be liable for
retaliation under FEHA). Harassment “consists of a type
of conduct not necessary for performance of a supervisory
job” and is “presumably engaged in for personal
gratification, because of meanness or bigotry, or for other
personal motives.” Reno, 18 Cal.4th at 645-46 (internal
quotation marks and citation omitted). The use of
“slurs or derogatory drawings, [] physically
interfer[ing] with freedom of movement, [and] engag[ing] in
unwanted sexual advances” are examples of conduct that
is “avoidable and unnecessary to job performance”
and could amount to harassment. Id. at 646 (internal
quotation marks and citation omitted).
On the
other hand, “[m]aking a personnel decision is conduct
of a type fundamentally different from the type of conduct
that constitutes harassment” and may give rise to only
a discrimination claim against the employer. Id.
(internal quotation marks and citation omitted). Under this
limitation, “commonly necessary personnel management
actions such as hiring and firing, job or project
assignments, office or work station assignments, promotion or
demotion, performance evaluations, the provision of support,
the assignment or nonassignment of supervisory functions,
deciding who will and who will not attend meetings, deciding
who will be laid off, and the like, do not come within the
meaning of harassment.” Id. at 646-47
(internal quotation marks and citation omitted). Because
making “personnel decisions is an inherent and
unavoidable part of the supervisory function, ” even if
the actions are retrospectively found to be discriminatory,
FEHA limits recourse to a ...