United States District Court, N.D. California
ORDER RE: MOTION TO DISMISS RE: DKT. NO. 20
MARIA-ELENA JAMES United States Magistrate Judge
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.
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.
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.
Bankruptcy Proceedings & Settlement
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
RJN, Ex. 2 (Settlement Agreement) at Ex. A ¶ 11(a)
(emphasis added). 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
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.
The Instant Proceeding
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.
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 ...