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Tyan, Inc. v. Garcia

United States District Court, C.D. California

May 2, 2017

TYAN, INC., Plaintiff,
v.
YOVAN GARCIA, Defendant.

          FINDINGS OF FACT AND CONCLUSIONS OF LAW

          MICHAEL W. FITZGERALD United States District Judge

         This matter came on for trial before the Court sitting without a jury on January 10, 2017. Following the presentation of evidence and the parties' closing arguments, the matter was taken under submission.

         Having carefully reviewed the record and the arguments of counsel, as presented at the trial and in their written submissions, the Court now makes the following findings of fact and reaches the following conclusions of law under Rule 52 of the Federal Rules of Civil Procedure. Any finding of fact that constitutes a conclusion of law is also hereby adopted as a conclusion of law, and any conclusion of law that constitutes a finding of fact is also hereby adopted as a finding of fact.

         The following witnesses were called and examined by the parties in the order recited below:

         All testimony was given on January 10, 2017. Joseph S. Fischbach and Andrew Zelus appeared on behalf of Plaintiff Tyan, Inc., d/b/a Security Specialists (“Tyan”) and gave an opening statement. Defendant Yovan Garcia appeared in pro se and gave an opening statement.

         Mr. Fischbach first examined Nick Tsotsikyan, founder, owner, and Director of Operations of Security Specialists. Mr. Tsotsikyan's sworn declaration was submitted in lieu of a full direct examination. Mr. Garcia cross-examined Mr. Tsotsikyan.

         Mr. Fischbach next examined Steve Leon, Operations Manager of Security Specialists. Mr. Leon's sworn declaration was submitted in lieu of a full direct examination. Mr. Garcia cross-examined Mr. Leon.

         Mr. Fischbach recalled Mr. Tsotsikyan for redirect examination. Mr. Garcia recross-examined Mr. Tsotsikyan.

         Mr. Zelus next examined Defendant Yovan Garcia regarding Defense Exhibit A.

         Mr. Zelus then examined Junior Arana, a Patrol Officer for Security Specialists. Mr. Arana's sworn declaration was submitted in lieu of a full direct examination. Mr. Garcia cross-examined Mr. Arana.

         Mr. Zelus examined Ken Hagopian, a principal in Digital Synergy Consulting, Inc., the company that provides IT support for Security Specialists. Mr. Hagopian's sworn declaration was submitted in lieu of a full direct examination. Mr. Garcia cross-examined Mr. Hagopian. Mr. Zelus conducted a redirect examination; Mr. Garcia conducted a recross examination. Mr. Zelus conducted a second redirect examination; Mr. Garcia conducted a short, second recross examination.

         Mr. Zelus next examined Defendant James Caspari, a former Patrol Officer for Security Specialists. Mr. Caspari's sworn declaration was submitted in lieu of a full direct examination. Mr. Garcia cross-examined Mr. Caspari. Mr. Zelus conducted a short redirect examination of Mr. Caspari; and Mr. Garcia conducted a recross examination. Mr. Zelus conducted a second redirect examination of Mr. Caspari; Mr. Garcia conducted a second recross examination.

         Mr. Zelus examined Denis Rybalka, a Field Training Officer for Security Specialists. Mr. Rybalka's sworn declaration was submitted in lieu of a full direct examination. Mr. Garcia cross-examined Mr. Rybalka.

         Mr. Garcia then took the stand and testified in his own defense. Mr. Zelus cross-examined Mr. Garcia.

         Finally, Mr. Fischbach examined Mr. Tsotsikyan a third time, as a rebuttal witness. Mr. Garcia cross-examined Mr. Tsotsikyan.

         At the end of the day, Mr. Fischbach made his closing argument for Plaintiff. Mr. Garcia made his own closing argument.

         I. FINDINGS OF FACT

         A. Background

         1. Nick Tsotsikyan founded Security Specialists, a private security patrol company, in 1999. Since then, Security Specialists has provided security services throughout Southern California.

         2. At some point, Tsotsikyan realized that the typical reporting process used by most security companies could be updated and streamlined with modern technology. Tsotsikyan purchased FileMaker Pro, a software that enables users to develop custom, proprietary databases. Tsotsikyan taught himself to use FileMaker Pro and began to develop a set of custom databases for use by Security Specialists.

         3. Eventually, Tsotsikyan developed a unique set of forms and databases that, in his opinion, set Security Specialists apart from the competition. Each patrol car is equipped with a laptop computer, from which Patrol Officers can access Security Specialists' central database over the internet. Patrol Officers can then generate their daily reports as they patrol. The reports are emailed or faxed directly to clients as a .pdf. In an industry where carbon copy reports are still common, Tsotsikyan believes that his custom forms helped Security Specialists to distinguish itself from its competitors.

         4. Tsotsikyan also used FileMaker Pro to develop databases to store confidential client information and employee records. All of Security Specialists' databases were protected by username and password. Only administrators - i.e., Steve Leon and Tsotsikyan - were authorized to edit the reporting software and access the confidential client and employee databases.

         5. Tsotsikyan averred that he spent 5, 000 hours over the course of 15 years developing the forms and databases that Security Specialists uses. In 2009-2010, Tsotsikyan hired Dina Torok, a certified FileMaker developer, to help him continue developing the custom files. Torok charged $170 per hour, and Tsotsikyan believes that this is a fair hourly rate.

         B. Inconsistencies in Garcia's Payroll Records

         6. Yovan Garcia began working for Security Specialists as a Patrol Officer sometime in or around 2012.

         7. On July 24, 2014, Steve Leon noticed something odd about Garcia's payroll records. Although Garcia's schedule reflected that he had worked typical eight-hour days during the previous two-week pay period, the payroll program indicated that Garcia had worked twelve hours per day, and thus was owed 40 hours of overtime pay.

         8. At first, Leon thought that perhaps the payroll program was not adding properly. Then, he noticed that someone had tampered with the program's “Lunch” field. Four hours had been added into the lunch field each day, which accounted for the unexplained extra 40 hours of overtime in Garcia's records. The hours had been entered in black text on a black background, in one-point font. As a result, the alterations to Garcia's hours would not have been noticeable to the casual observer. The alterations resulted in Garcia's being paid wages for overtime that, presumably, he did not work.

         9. His curiosity piqued, Leon pulled the paystub server log, which tracks all attempts to log into the payroll database. The paystub server log was admitted into evidence as Exhibit 3. The log indicated that just the night before, on July 23, 2014 at about 9:00 p.m., someone logged into the payroll program from Garcia's patrol laptop. The individual used an administrative username and password. As a Patrol Officer, Garcia was not authorized to access the payroll database and was never given the username or password.

         10. Leon eventually figured out that Garcia's hours had been artificially inflated since at least January 2014. Garcia's paystubs for each of those pay periods, along with his corresponding schedule for that pay period, was admitted into evidence as Exhibit 2.

         11. As an example of how Garcia's hours were altered, in the first pay period of the year, Garcia's paystub shows that he worked 80 hours of regular scheduled time, 20.5 hours of overtime, and 8 hours of holiday time. Garcia's schedule for that same period shows that he only actually worked 80 hours of regular scheduled time (including one 8hour day of holiday time) and three hours of overtime. The discrepancy meant that Garcia was overpaid by $371.67 that month.

         12. Garcia's hours were similarly inflated for each subsequent pay period. No other employee's records reflected a similar discrepancy. Leon testified that, as a Patrol Officer, Garcia was not authorized to access or alter the scheduler program, and was never given the supervisor password that would have allowed him to do so.

         13. Leon testified competently and knowledgeably about this incident. The Court credits his testimony.

         14. Leon discussed the issue with Tsotsikyan. He then tried to call Garcia to ask him about the discrepancy. Leon left a message asking Garcia to come into the office for a meeting, but Garcia never arrived. Instead, Garcia called someone he considered to be a friend at Security Specialists, long-time employee Denis Rybalka, and asked to meet.

         15. Rybalka had the day off, and had spent the day washing his car. He tried to avoid Garcia's calls. Rybalka had just finished hand waxing his car when he received yet another call from Garcia, and finally decided to answer.

         16. Garcia was in a panic. He was speaking “gibberish, ” and was talking too fast for Rybalka to follow. Rybalka thought he heard Garcia say, “they found out;” Garcia was worried that he had been fired. Garcia asked to meet because he didn't feel like he could talk about what had happened over the phone.

         17. Rybalka hung up and immediately called Leon. Leon asked Rybalka to meet with Garcia - and to record the conversation for Security Specialists' benefit. Rybalka had worked at Security Specialists for more than a decade, and he was intensely loyal to the company and to Leon in particular. Rybalka set his cell phone to record and drove his freshly waxed car to a nearby McDonald's to meet with Garcia.

         18. The audio recording that Rybalka made was admitted, along with a transcript, as Exhibit 4. Rybalka spoke slowly and clearly while testifying. He did not hesitate to answer questions and appeared confident in his answers. Based on his manner when testifying and other factors, the Court credits Rybalka's testimony.

         19. During the meeting, Garcia told Rybalka that Garcia suspected Leon wanted to meet with him because he had been receiving inflated paychecks for the past few months. Garcia told Rybalka the following story:

         20. Garcia began by explaining that he has some skill with computers. A few months prior, someone from Security Specialists' competitor, PTS Security Services (“PTS”), had asked him to come take a look at a broken laptop. While working on the computer, Garcia noticed a file labelled “Security Specialists.” Curious, he opened the file, only to find what he recognized to be confidential client records. Garcia saved the file to his own device, deleted it from the laptop, and said nothing to his contact at PTS.

         21. A little while later, Richard Balint, a former employee of Security Specialists and current employee of PTS, contacted Garcia. Balint told Garcia that he knew Garcia had seen the “Security Specialists” file on the laptop. He asked Garcia not to say anything to his employer about the file - and promised that Garcia would be well compensated for staying quiet. Garcia said nothing, and soon after started receiving the inflated paychecks.

         22. Rybalka tried to convince Garcia to tell his story to Leon. Rybalka emphasized to Garcia that accepting the extra money had been wrong; but said that he believed Garcia that it was PTS who inflated the paychecks. Rybalka thought that if Garcia would only explain what happened to Leon, Garcia would be able to keep his job.

         23. Garcia was reluctant. He was afraid, he said. He had a family and was worried for their safety. Besides, Garcia did not like Leon and thought that he and Tsotsikyan would probably just try to blame the whole thing on Garcia. Instead, Garcia wanted Rybalka to tell Leon and Tsotsikyan what had happened. Garcia thought that the two higher-ups would be more receptive to his story if they heard it from Rybalka first.

         24. Eventually, Rybalka convinced Garcia to meet with Leon and Tsotsikyan. Rybalka arranged the meeting.

         25. Leon, Tsotsikyan, Rybalka, and Garcia all met later that evening at a North Hollywood gas station. This time, it was Leon who recorded the conversation. The audio recording and a transcript were admitted as Exhibit 6.

         26. At the gas station, Leon aggressively confronted Garcia about the inflated paychecks. Garcia told the assembled men his story about fixing the laptop for PTS and the offered reward in exchange for his silence about the Security Specialists file. Garcia explained that he thought there was a “mole” inside the company who was altering his hours. Over and over, Garcia repeated that he had only acted to protect the company and his friends who worked there.

         27. Leon immediately started pressing Garcia for names. He and Tsotsikyan thought that even if Garcia did not have the administrative password, he must know who did. At first Garcia was reluctant to name any names, citing a vague fear for his family's safety. Eventually, after being assured that the company would not press charges against him for the inflated paychecks - or even ask for the money back - Garcia talked. By the end of the meeting Garcia named several Security Specialists employees who he claimed were agents of PTS. All of them were subsequently fired.

         28. Leon also confronted Garcia about the entries in the paystub server log indicating that Garcia logged into the management system from his patrol laptop the night before Leon discovered the inflated wages. Garcia denied having used the administrator password to log in.

         29. Garcia also emailed the client information that he said he found in the Security Specialists file to Leon. The email contained a spreadsheet with entries for several clients, and included their phone numbers, addresses, as well as other confidential information. The attachment was admitted as Exhibit 7 at trial. Leon testified that Garcia was never authorized to access this sort of client information, nor did Security Specialists ever give Garcia a username or password that would have allowed him to access this information.

         C. Garcia ...


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