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Oster v. Caithness Corp.

United States District Court, N.D. California

August 30, 2017

CAITHNESS CORPORATION, et al., Defendants.


          William H. Orrick United States District Judge.


         Plaintiff Katherine Oster alleges that she is entitled to, but was denied, the opportunity to invest in an energy project that she helped develop and finalize while working at her former employer, Caithness Corporation (“Caithness”). She brings a number of claims, including (1) breach of an oral contract; (2) breach of an implied contract; (3) breach of the implied covenant of good faith and fair dealing; (4) false promise; (5) misrepresentation; (6) promissory estoppel; and (7) retaliation. The defendants move for summary judgment because, among other reasons: Oster's contract and contract-dependent claims fail because she has not demonstrated the existence of a valid contract; her fraud and misrepresentation claims fail because she has not demonstrated that she relied on any misrepresentations; her promissory estoppel claim fails because she has not demonstrated that she relied on any promise; and, her retaliation claim fails because she had not demonstrated that she engaged in any “protected activity.” I agree that Oster has failed to demonstrate a material issue of fact with regard to these necessary elements of her claims. Defendants' motion for summary judgment is GRANTED.[1]


         A. The Job Offer

         Caithness Corporation, based in New York, develops and operates renewable and traditional energy generation projects and energy storage projects. In 2012, Caithness's President, Leslie Gelber, was looking to hire someone based on the west coast with experience in renewable energy sources and storage. Def. Ex. 6, Gelber Depo at 19:10-11, 26:5-12 (Dkt. No. 54-8). Oster had spent her career involved in the development of power projects and sustainable energy generation. Pl. Ex. 7 (Dkt. No. 57-9). She worked as a director or manager at various energy companies, spearheading the development and acquisition of power plants and solar, biomass, and biofuel technologies. Id.

         On October 15, 2012, Caithness approached Oster regarding a position as “Vice President - Development” at Caithness. Oster Decl. ¶ 2 (Dkt. No. 58-4). At the time, Oster was employed by First Solar, Inc. as a Director and its Vice President of Latin America Business Development. Pl. Ex. 9, Oster Depo at 53:14-21, 55:4-7 (Dkt. No. 57-11). Before accepting Caithness's offer, Oster indicated that she was interested in becoming a partner at Caithness. Id. at 27:4-11; Pl. Ex. 3, Gelber Depo at 34:2-35:5, 41:3-13 (Dkt. No. 58-8). Gelber told her that it was not possible for her to become a partner immediately and that he would have to get to know her better before that was an option. Pl. Ex. 3, Gelber Depo at 34:2-11. However, he did indicate that there would be potential for her to become an investor on the projects she worked on. Def. Ex. 1, Oster Depo at 28:12-29:7; Pl. Ex. 1, Bishop Depo at 36:13-37:17 (Dkt. No. 58-31).

         On October 25, 2012 Oster accepted the employment offer and signed an Employment Agreement. Def. Ex. 17 (Dkt. No. 54-19). The Employment Agreement outlined that Oster would receive an annual salary and an annual target performance bonus, as well as other job benefits. Id. It stated that she was an at-will employee and that “[a]lthough your job duties, title, compensation and benefits . . . may change from time to time, the ‘at will' nature of your employment may only be changed in a document signed by you and the President.” Id. The Employment Agreement contained an integration clause that read: “This letter sets forth the terms of employment with Caithness and supersedes any prior representations or agreements, whether written or oral.” Id. It did not mention or state that she would have the opportunity or right to invest in any energy projects that she helped develop for Caithness. Id.

         B. WestGen

         In December of 2013, Oster helped lead a bid for a project known as WestGen with the company Southern California Edison. Oster Decl. ¶ 3; Pl. Ex. 11 (Dkt. No. 58-25). “WestGen” is a Caithness entity that was bidding on energy storage and gas-fired generation projects. Pl. Ex. 3, Gelber Depo at 48:8-24. Oster was listed as a “key member of the WestGen Development Team” in documents sent to Edison. Oster Decl. ¶ 3. In December, 2013, Caithness offered Oster the opportunity to invest in a 1% equity share of WestGen. Id. ¶ 4. It appears that, at that time, she was not told any of the details of the investment deal beyond that she would get a 1% interest in WestGen. Nor was she given any paperwork regarding the WestGen equity interest. Id. Instead, she was told that “the paperwork was not going to be done right away” but that “[i]t would be done if [Caithness] won the bid” on the project. Pl. Ex. 9, Oster Depo at 76:14-15.

         Oster never signed any paperwork regarding the WestGen project and Caithness did not win the bid. Notwithstanding that fact, an April 17, 2014 application filed by Caithness and WestGen for a Minority and Women-owned Business Enterprise certification, signed under penalty of perjury, reports that Oster held a 1% interest in WestGen. Pl. Ex. 11.

         C. Moxie Freedom Project

         In late 2014, one of Oster's former colleagues offered her, and her employer Caithness, the opportunity to join a natural gas power plant project that was in development called the “Moxie Freedom Project.” Pl. Ex. 3, Gelber Depo at 86:14-16; Def. Ex. 12, Answer ¶ 28 (Dkt. No. 54-14). During the months of negotiations, Gelber mentioned to Oster that she would have an opportunity to invest in the Moxie Freedom Project. Pl. Ex. 9, Oster Depo at 109:5-110:10. For example, in early 2015 Oster, Gelber, and Scott Taylor, the CFO of Moxie, attended a meeting to finalize the term sheet for the Moxie project. Id. Gelber told Taylor and Oster that Oster would have an equity interest in the project. Id. at 114:8-18.

         On May 13, 2015 Caithness sent Oster a more robust draft employment agreement than the one she had originally signed. Def. Ex. 18 (Dkt. No. 54-20); Def. Ex. 19 (Dkt. No. 55-8). This new employment agreement included the requirement that Oster “identify for the sole benefit of Caithness Energy . . . any business opportunities whatsoever.” Id. It also included a non-compete provision, a provision requiring arbitration in New York, and stated that “each party and its counsel have reviewed and revised this Agreement” so “the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed[.]” Id. § 4(c) and § 8(e). Oster carefully reviewed the document and sent it to an attorney friend of hers. Pl. Ex. 9, Oster Depo at 119:25-120:7.

         On May 14, 2015, Caithness sent Oster paperwork regarding her equity interest in both the Moxie Freedom Project and the WestGen investment project, including both a draft loan agreement and an interest transfer agreement. Def. Ex. 20 (Dkt. No. 54-22). These documents laid out the general terms of the investment agreement Caithness was offering to Oster. They provided that Oster could invest 1% of the capital Caithness Energy was investing in these projects in exchange for 1% of the return and Caithness Energy would loan Oster the 1% commitment in a non-recourse loan with a 10% interest rate. Pl. Ex. 16 (Dkt. No. 58-20); Def. Ex. 21 (Dkt. No. 55-9); Pl. Ex. 19 (Dkt. No. 58-18); Def. Ex. 23 (Dkt No. 55-10). They also stated that she would only receive payouts from distributions after interest on the loan had been paid and that the loan would be collateralized against Oster's interests in other Caithness Energy projects that she might have or later acquire.

         D. Oster Attempts to Negotiate

         Oster had questions and concerns about the employment agreement and the investment documents and did not sign them. Def. Ex. 10, Request for Admission (“RFA”) 31 (Dkt. No. 54-12); Pl. Ex. 9, Oster Depo at 122:8-14. Instead, she approached one of Caithness's Senior Vice Presidents, Mr. Casale, to discuss and attempt to negotiate some of the terms of the agreements. Def. Ex. 10, RFA 32-34; Pl. Ex. 9, Oster Depo at 115:17-118:9, 122:8-12. Oster was particularly concerned that the 10% interest rate in the loan agreement was too high and discussed this issue with Casale. Oster Decl. ¶ 9; Pl. Ex. 9, Oster Depo at 124:23-125:22. She mentioned that she might take out an equity line on her house in lieu of accepting the 10% interest rate in the loan agreement. Pl. Ex. 5, Casale Depo at 26:5-15 (Dkt. No. 57-7); Oster Decl. ¶ 6.

         Casale told Oster that she did not need to accept the loan to invest in the Caithness projects, but that if she took a loan, the 10% interest rate was non-negotiable. Pl. Ex. 9, Oster Depo at 118:25-119:5. He explained that the terms of the investment “were not open to negotiation” because they were part of the terms of a separate agreement among Caithness's three controlling families. Def. Ex. 4, Bishop Depo at 48:1-24 (Dkt. No. 54-6). He told her that she should speak to Gelber if she had concerns with the terms. Pl. Ex. 9, Oster Depo at 117:2-14; Pl. Ex. 5, Casale Depo at 32:5-33:14.

         On June 24 and 25, Oster met with Gelber to discuss the terms of her potential investment in the Moxie project. Pl. Ex. 9, Oster Depo at 115:5-116:7, 117:7-16, 122:17-124:3. Oster had still not signed the Loan Agreement or Interest Transfer Agreement because she wanted to see if there “was any potential to up-front” her 1% interest.” Id. at 122:10-14. Oster raised her concerns with the 10% interest rate with Gelber; queried whether she could be paid up front on part of the investment, instead of over the life of the project; and asked if she could get a $1.5 million special bonus and a comparable year-end bonus. Def. Ex. 6, Gelber Depo at 69:15-70:11, 71:12-22; Pl. Ex. 9, Oster Depo at 115:17-118:9. During these conversations, she presented Gelber with various projections of how she believed the Moxie project would pay out to demonstrate that she would not see a return on her investment for a number of years. Pl. Ex. 9, Oster Depo at 125:8-22, 143:2-6. Gelber rejected Oster's requests to modify the agreements. Id. at 123:14-124:3.

         On June 26, Oster spoke with Casale about finalizing her paperwork to memorialize her 1% equity interest in the Moxie Freedom Project. Id. at 141:20-25. Casale told Oster that Gelber had told him to put her paperwork “on hold” and make it his “lowest priority.” Id. at 122:1-7. He told her “Les [Gelber] says don't finalize them. We can't finalize them.” Id. at 122:10-14.

         Concluding that Gelber was upset with her, Oster called him to apologize. Id. at 141:20-25. Gelber told her she was a difficult partner and questioned her math skills, noting that he thought her projections for how long it would take her to see returns on the Moxie investment seemed inaccurate. Id. at 141:16-144:19. Gelber felt that the models she had used to project the Moxie project's returns misrepresented and devalued the project. Id. at 142:10-23. He told her that if she was at a public company she would have been fired for misrepresenting what the project was worth. Id. at 142:2-4. Oster declares that Gelber was clearly agitated but never told her that her “right to have a 1% equity investment in the Moxie Freedom Project had been rescinded.” Oster Decl. ¶ 8. Gelber remembers the conversation differently, claiming that he told Oster twice that her equity interest was off the table. Pl. Ex. 3, Gelber Depo at 152:10-21, 209:7-20. If he did affirmatively rescind Oster's offer to invest in the Moxie project, he did not memorialize that rescission in any document.

         On June 29, 2015, Oster spoke with McNamara, another Vice-president at Caithness, who advised her not to approach Gelber about her equity interest. Pl. Ex. 9, Oster Depo at 146:1-12. When Oster asked him if Gelber would “make good on his promise” regarding her equity interest McNamara said “[Y]es, just keep your head down, and [] do your work.” Id.

         Over the next few months, Oster worked with Gelber to finalize and close the Moxie project for Caithness. The topic of Oster's potential equity interest in the project was largely ignored. At some point in August, 2015, Gelber told Oster, in the course of a discussion about how to approach equity investors, that Moxie was her “investment as well.” Oster Decl. ¶ 13; Pl. Ex. 9, Oster Depo at 109:5-18. In early November, days before the Moxie project closed, Gelber brought up the agreement again, telling Oster, “[W]e got to sign our agreement [] and I'm going to get that to you.” Pl. Ex. 9, Oster Depo at 153:16-24. He told Oster that “it was a better deal for [her]” and that she was “going to be happy with the agreement.” Id. at 161:19-162:17. Caithness closed the Moxie Freedom Project deal on November 10, 2015. Def. Ex. 8, Heath Depo at 41:6-9 (Dkt. No. 54-10).

         Following the close of the Moxie project, Gelber asked Casale to work with legal counsel for Caithness to prepare a “special bonus payment” for Oster in lieu of her 1% equity interest. Pl. Ex. 3, Gelber Depo at 113:3-116:25. Casale told Oster that they were going to be sending her a letter agreement that would “have the one percent, but it was going to be paid out differently.” Pl. Ex. 9, Oster Depo at 162:11-17. On December 2, 2015, Caithness sent Oster an alternative letter agreement through which Oster would not invest in the project, but during her employment with Caithness would have “the right to receive . . . in cash an amount equal to 1% of amounts that [Caithness Energy] has chosen, in its discretion, to distribute to Moxie Members.” Def. Ex. 27 (Dkt. No. 54-28). This income distribution would become wholly discretionary if Oster left Caithness, an arrangement that Caithness says was necessary to prevent Oster from being subject to significant tax penalties. Id.; Def. Ex. 5, Casale Depo at 64:16-22 (Dkt. No. 54-7). On December 3, 2015, Oster rejected this offer and asserted that she was entitled to an investment opportunity. Def. Ex. 28 (Dkt. No. 54-29).

         On December 8, 2015, she sent an email reiterating her position that she was entitled to an investment opportunity and asserting that she had been treated “differently from my colleagues.” Def. Ex. 30 (Dkt. No. 54-31). She stated that she was promised a “right to invest in and receive a 1% stake in Moxie” that was “never dependent on my continued employment at Caithness and [] was never discretionary.” Id.

         Following Oster's rejection of the alternative letter offer, Gelber determined that “it would be best to separate Kim Oster from Caithness.” Def. Ex. 6, Gelber Depo at 107:15-108:4. He and Barbara Bishop Gollan decided to terminate Oster and on January 15, 2016, Gollan sent Oster a termination letter. Def. Ex. 32 (Dkt. No. 54-33). Oster responded to this letter on January 26, reiterating her belief that she had been promised an equity interest in the Moxie Freedom Project. Def. Ex. 33 (Dkt. No. 54-34). Gollan replied on February 9, explaining Caithness's position that Oster had never acquired an interest in the Moxie project because, although she had been offered an equity stake on “the same terms offered to partners of the firm, ” she had rejected it. Def. Ex. 34 (Dkt. No. 54-35). This lawsuit followed.


         Summary judgment on a claim or defense is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In order to prevail, a party moving for summary judgment must show the absence of a genuine issue of material fact with respect to an essential element of the non-moving party's claim, or to a defense on which the non-moving party will bear the burden of persuasion at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has made this showing, the burden then shifts to the party opposing summary judgment to identify “specific facts showing there is a genuine issue for trial.” Id. The party opposing summary judgment must then present affirmative evidence from which a jury could return a verdict in that party's favor. Anderson v. Liberty Lobby, 477 U.S. 242, 257 (1986).

         On summary judgment, the Court draws all reasonable factual inferences in favor of the non-movant. Id. at 255. In deciding a motion for summary judgment, “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.” Id. However, conclusory and speculative testimony does not raise genuine issues of fact and is insufficient to defeat summary judgment. See Thornhill Publ'g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979).


         There are seven live claims remaining in this case, but they can be sorted into four groups. The first group contains Count 1: Breach of an oral contract; Count 8: Breach of an implied contract; and Count 9: Breach of the implied covenant of good faith and fair dealing, (collectively the “Contract Claims”). These claims overlap because they all depend on the existence of a valid contract, which defendants claim never existed. The second group contains Count 11: False Promise; and Count 12: Intentional Misrepresentation, (collectively the “Fraud Claims”). The parties agree that these claims rise and fall together as for both Oster must show that she justifiably relied on a misrepresentation, which defendants claim was never made. The third group contains Count 2: Promissory Estoppel. This claims overlaps in certain ways with both the Contract Claims and the Fraud Claims. To succeed on this claim Oster must demonstrate that she reasonably relied on a clear and unequivocal promise, of which defendants assert there is no evidence. The fourth group contains only Count 5: Retaliation in violation of the Fair Employment Housing Act (“FEHA”), (the “Retaliation Claim”). For this claim, Oster must show that she engaged in some protected activity under FEHA and faced some adverse employment action as a result, which defendants contend Oster has not shown. As discussed below, I agree that Oster has failed to create a material issue of fact regarding these necessary elements. As a result, summary judgment in favor of Caithness is appropriate.


         Oster's claims for breach of an oral contract, breach of an implied contract and breach of the implied covenant of good faith and fair dealing all require the existence of a valid contract. Under California law, a breach of contract claim has four elements: (1) that there is a contract between the parties; (2) that the plaintiff performed her contractual obligations or was excused from performance; (3) that the defendant breached its contractual duties; and (4) the plaintiff was damaged. See Reichert v. General Ins. Co., 68 Cal. 2d 822, 830 (1968). The elements of a claim for breach of implied covenant of good faith and fair dealing are similar and also require the existence of a contract. These elements are: “(1) the plaintiff and the defendant entered into a contract; (2) the plaintiff did all or substantially all of the things that the contract required him to do or that he was excused from having to do; (3) all conditions required for the defendant's performance had occurred; (4) the defendant unfairly interfered with the plaintiff's right to receive the benefits of the contract; and (5) the defendant's conduct harmed the plaintiff.” Munson v. Splice Commc'ns, Inc., No. 12-cv-05089-JCS, 2013 WL 6659454, at *21 (N.D. Cal. Dec. 16, 2013. An implied contract is a contract where “the existence and terms [of the contract] are manifested by conduct.” Cal. Civil Code § 1621. “An implied contract consists of ...

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