United States District Court, N.D. California, San Jose Division
ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND;
VACATING HEARING ON MOTION TO DISMISS; AND CONFIRMING INITIAL
CASE MANAGEMENT DATE OF NOVEMBER 30, 2017 [RE: ECF
LABSON FREEMAN UNITED STATES DISTRICT JUDGE.
Wells Fargo Bank, N.A. (“Wells Fargo”) moves to
dismiss the complaint filed by Plaintiff Ventura Diaz Leon
(“Leon”) under Federal Rule of Civil Procedure
12(b)(6), asserting that all claims are time-barred. The
Court VACATES the hearing set for November 30, 2017 and
GRANTS the motion with leave to amend. The Initial Case
Management Conference set for November 30, 2017 at 11:00 a.m.
remains on calendar.
was employed by Wells Fargo Bank for approximately thirty-six
years, from June 1976 until his termination in October 2012.
Compl. ¶¶ 3-5, ECF 1. At the time of termination,
Leon was a bank manager. Id. ¶ 3. The reason
given for termination was Leon's failure to meet
performance goals. Id. ¶¶ 5-6. However,
Leon alleges that the performance goals in question would
have required him to open an arbitrary number of new
accounts. Id. ¶ 6. Wells Fargo required its
employees to open accounts in addition to its customers'
primary accounts. Id. ¶ 7. Leon contacted Wells
Fargo's ethics hotline to advise that customers were
complaining about receiving credit cards and new accounts
which they had not requested. Id. Leon also
“refused to abuse his customers.” Id.
¶ 13. “He would not open unasked for accounts for
his customers”; “[h]e did not push express send
accounts”; and “[h]e did not obtain credit cards
for customers who he knew would not be able to make the high
interest-rate payments.” Id.
filed suit against Wells Fargo in the Santa Cruz County
Superior Court on April 20, 2017, asserting claims for (1)
breach of employment contract, (2) breach of the implied
covenant of good faith and fair dealing, and (3) wrongful
termination in violation of public policy. Compl., ECF 1.
Wells Fargo removed the action to federal district court on
the basis of diversity of citizenship. Notice of Removal, ECF
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) for failure to state a claim upon which relief can
be granted ‘tests the legal sufficiency of a
claim.'” Conservation Force v. Salazar,
646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro
v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). While a
complaint need not contain detailed factual allegations, it
“must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). Where it is apparent on the face
of the complaint that the limitations period has run, the
defendant may raise a statute of limitations defense in a
Rule 12(b)(6) motion. See Von Saher v. Norton Simon
Museum of Art, 592 F.3d 954, 969 (9th Cir. 2010).
“This is true even though expiration of the limitations
period is an affirmative defense.” Belete v. Oaks
Corner, No. 16-CV-04850-JCS, 2016 WL 6393510, at *4
(N.D. Cal. Oct. 28, 2016).
Fargo argues that all of Leon's claims are time-barred
under the applicable limitations periods. A federal court
sitting in diversity must apply the forum state's choice
of law rules to determine the controlling substantive law,
including the applicable statute of limitations. Johnson
v. Lucent Techs. Inc., 653 F.3d 1000, 1008 (9th Cir.
2011). “Where, as here, parties do not address
choice-of-law issues, California courts presumptively apply
California law.” Id. Under California law,
Leon's claims for breach of contract (Claim 1) and breach
of the implied covenant of good faith and fair dealing (Claim
2) are subject to a four-year limitations period to the
extent they are based on a written contract, see
Cal. Civ. P. Code § 337, or a two-year limitations
period to the extent they are based on an oral contract,
see Cal. Civ. P. Code § 339. His claim for
wrongful termination (Claim 3) is subject to a two-year
limitations period. See Cal. Civ. P. Code §
335.1; Nehrlich v. JLW-TW Corp., No.
15-CV-00521-BAS(BLM), 2016 WL 127584, at *5 (S.D. Cal. Jan.
11, 2016) (“[C]ourts now apply California Code of Civil
Procedure section 335.1, which provides for a two year
statute of limitations, to actions for wrongful termination
against public policy.”).
employment cases, claims for breach of contract, breach of
the implied covenant, and wrongful termination in violation
of public policy generally accrue on the date of termination.
See Romano v. Rockwell Internat., Inc., 14 Cal.4th
479, 490, 503 (1996). Leon alleges that he was terminated on
October 9, 2012, and he did not file suit until four and a
half years later, on April 20, 2017. Accordingly, it appears
on the face of the complaint that all applicable limitations
periods expired before he filed suit. Leon argues that his
claims are timely under the following doctrines: (1) the
delayed discovery rule; (2) equitable estoppel; (3) equitable
tolling; and (4) fraudulent concealment.
important exception to the general rule of accrual is the
‘discovery rule, ' which postpones accrual of a
cause of action until the plaintiff discovers, or has reason
to discover, the cause of action.” Fox v. Ethicon
Endo-Surgery, Inc., 35 Cal.4th 797, 807 (2005).
“In order to adequately allege facts supporting a
theory of delayed discovery, the plaintiff must plead that,
despite diligent investigation of the circumstances of the
injury, he or she could not have reasonably discovered facts
supporting the cause of action within the applicable statute
of limitations period.” Id. at 809. Leon
alleges that he did not understand that he had been
terminated as part of a larger, unlawful scheme until August
and September 2016 when the scope of Wells Fargo's
malfeasance was made public. Compl. ¶¶ 10-12.
allegations regarding the August and September 2016
revelations are insufficient to implicate the delayed
discovery rule in light of his allegations showing that he
knew he had been fired for refusing to “abuse”
his customers. Compl. ¶ 13. The fact that he later
learned that the pressure brought to bear on him to engage in
unethical behavior was part of a broader scheme does not
render his knowledge at the time of termination insufficient
to trigger accrual of his claims. See Barton v. New
United Motor Mfg., Inc., 43 Cal.App.4th 1200, 1209
(1996) (refusing to apply delayed discovery rule where
plaintiff knew that he had “suffered actual and
appreciable harm when he was terminated” and asserted
only that he “did not fully understand ‘the
dimensions' of his wrongful termination” until
years later). The Court notes that the August and September
2016 revelations occurred within the four-year
limitations period and thus could not support delayed accrual
as to his claims based on breach of written contract in any