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Wojciechowski v. Kohlberg Ventures, LLC

United States District Court, N.D. California

April 11, 2017



          MARIA-ELENA JAMES United States Magistrate Judge


         Pending before the Court is Defendant Kohlberg Ventures, LLC (“Kohlberg”)'s Motion to Dismiss pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6). Plaintiff Peter Wojciechowski (“Plaintiff”) filed an Opposition (Dkt. No. 32) and Kohlberg filed a Reply (Dkt. No. 33). Having considered the parties' positions, the relevant legal authority, and the record in this case, the Court GRANTS Kohlberg's Motion for the following reasons.

         BACKGROUND [1]

         A. Factual Allegations

         Non-party ClearEdge employed Plaintiff as a Configuration Manager. Compl. ¶¶ 1 & 10-11, Dkt. No. 1; see also Id. ¶ 1 n.3 (“‘ClearEdge' or ‘ClearEdge Power' refers to ClearEdge Power, Inc. and ClearEdge Power, LLC and their affiliates and subsidiaries which were colloquially referred to as ClearEdge Power.”). ClearEdge developed fuel cell technology known as proton exchange membrane. Id. ¶ 21. Plaintiff alleges that, for purposes of the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101-2109 (the “WARN Act”), Kohlberg was a single employer with ClearEdge. Id. ¶¶ 1-2. He alleges that Kohlberg, a venture capital firm, invested more than $130 million in ClearEdge between 2004 and 2014. Id. ¶¶ 18-20. He further alleges Kohlberg owned and controlled ClearEdge directly or through subsidiaries or related entities; maintained and operated ClearEdge facilities; and made the decisions that gave rise to the terminations at issue without providing advance written notice. Id. ¶¶ 13-16. ClearEdge relocated its corporate headquarters to offices minutes away from Kohlberg's, and often met with Kohlberg executives at Kohlberg headquarters. Id. ¶¶ 24-25. One of the Kohlberg executives ClearEdge met with was James A. Kohlberg (“Mr. Kohlberg”). Id. ¶ 25. Kohlberg's headquarters provided ClearEdge office space-including an office for ClearEdge's Chief Executive Officer (“CEO”)-and placed the ClearEdge logo besides the Kohlberg logo in the building's entryway. Id. ¶¶ 27-28. Plaintiff alleges Kohlberg and ClearEdge shared common ownership, officers, and directors, and that Kohlberg exercised de facto control over ClearEdge while ClearEdge depended on Kohlberg to operate. Id. ¶¶ 49-75.

         By December 2013, it was apparent ClearEdge's business model had become unsustainable: ClearEdge needed to drastically reduce its costs, overhead, and pricing, and to raise tens of millions of dollars. Id. ¶¶ 30-34. In late 2013 and early 2014, Samsung proposed to purchase ClearEdge fuel cells in a deal expected to generate $50-$100, 000 for ClearEdge. Id. ¶ 35. Kohlberg infused more cash into ClearEdge, conditioned on ClearEdge closing the deal with Samsung. Id. ¶ 36. While Samsung placed its order on March 20, 2014, no work could begin until Samsung obtained approval from a Korean public-private entity development agency; Samsung also required confirmation Kohlberg would continue to provide financial backing to ClearEdge. Id. ¶ 37. Mr. Kohlberg balked at infusing more cash into the company, and when Samsung did not provide certain guarantees, he announced in an email dated March 31, 2014 that ClearEdge was closing; the email was sent without prior board action or meeting, and without knowledge of ClearEdge's CEO. Id. ¶¶ 40-41; see also Id. ¶ 76 (in deciding to stop funding ClearEdge, “Kohlberg acknowledged that he, as the chief of Kohlberg Ventures, was putting an end to ClearEdge”). Understanding the scope of the investment ClearEdge would need to get to profitability, Mr. Kohlberg decided not to provide additional funding. Id. ¶¶ 43-44. On April 16, 2014, ClearEdge received retainer agreements from bankruptcy counsel. Id. ¶ 45. ClearEdge's Board resolved to file for Chapter 11 protection six days later. Id. ¶ 46. ClearEdge's employees were terminated April 25, 2014. Id. ¶ 47. ClearEdge filed its bankruptcy petition on May 1, 2014 in the Northern District of California. Id. ¶ 48.

         B. Bankruptcy Proceedings & Settlement

         Plaintiff on behalf of himself and other similarly situated employees brought an adversary proceeding in the ClearEdge bankruptcy proceedings. Id. ¶ 5. A class was certified; Plaintiff was appointed as class representative and settled the matter with ClearEdge. Id.; see also Opp'n 3. By executing the settlement agreement, Plaintiff and the other class members agreed to

fully and forever release and discharge (i) [ClearEdge] and their respective estates, (ii) each of [their] shareholders, officers, directors, employees, accountants, attorneys, representatives and other agents, and all of their respective predecessors, successors and assigns, excluding any third parties which may or may not be affiliated with [them], including but not limited to, Kohlberg Ventures LLC . . . of and from any and all claims, demands, debts, liabilities, obligations, liens, actions and causes of action, costs, expenses, attorneys' fees and damages of whatever kind and nature, at law, in equity and otherwise, whether known or unknown, anticipated, suspected or disclosed, which the Releasing Parties may now have or hereafter may have against the Released Parties, which relate to or are based on the WARN Action or claim under federal, state or local law or regulation arising out of the termination of the Class members' employment by Defendants, including, but not limited to: (a) all claims asserted or that could have been asserted based on the facts alleged in the WARN Action; (b) the individual WARN Act claims; and (c) any other claims for back pay or benefits based on or arising out of any federal, state or local statute, ordinance or regulation [except for certain specific unreleased rights that are not at issue in this action.]

RJN, Ex. 2 (Settlement Agreement) at Ex. A ¶ 11(a) (emphasis added).[2] As part of the settlement, Plaintiff and the Class received a portion of the WARN Act wages and benefits they contended were due. Id.; Compl. ¶ 5. Kohlberg represents it was not involved in the settlement negotiations in any manner, and Plaintiff does not argue to the contrary.

         The bankruptcy court preliminarily approved the settlement on February 5, 2016, held a fairness hearing on March 17, 2016 to consider approval of the settlement, and finally approved the settlement on April 5, 2016. RJN, Ex. 3 (Final Order) at 2. The bankruptcy court closed the case on July 16, 2016. Id., Ex. 4 at 1.

         C. The Instant Proceeding

         On November 23, 2016, Plaintiff filed this suit against Kohlberg to recover the balance of the Class' WARN Act wages and benefits. Compl. ¶ 6. Plaintiff contends Kohlberg ordered the mass layoff of ClearEdge employees on or about April 25, 2014, which resulted in Plaintiff and other similarly situated employees being terminated. Id. ¶ 1; see also Id. ¶ 3 (“Defendant had funded ClearEdge for ten years but decided to pull its funding and place ClearEdge into immediate bankruptcy accompanied by the layoff of most of ClearEdge's employees”). Plaintiff further contends Kohlberg did not give advance written notice of termination as required by the WARN Act. Id. ¶ 4.


         Rule 8(a) requires that a complaint contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). A complaint must therefore provide a defendant with “fair notice” of the claims against it and the grounds for relief. Bell ...

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