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Brandt v. Verizon Communications, Inc.

United States District Court, N.D. California, San Jose Division

August 29, 2019

NICHOLAS BRANDT, et al., Plaintiffs,



         Plaintiffs Nicholas Brandt and Gregory James assert the following claims against defendants Verizon Communications, Inc. (“Verizon”) and MCI Communications Services, Inc. (“MCI”) for: (1) intentional concealment and misrepresentation, (2) promissory fraud, (3) negligent misrepresentation, (4) violation of California Labor Code § 970 (misrepresentation); (5) promissory estoppel, and (6) declaratory judgment that the general releases that plaintiffs signed are unenforceable under California Civil Code § 1668. Dkt. No. 29. Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, defendants move to dismiss all of plaintiffs' claims in the first amended complaint (“FAC”) as barred by release agreements plaintiffs signed. Dkt. No. 30. The Court heard oral argument on defendants' motion on August 13, 2019. Dkt. No. 35.

         This Court has jurisdiction over this diversity action pursuant to 28 U.S.C. § 1332. Dkt. No. 29 ¶¶ 8-12, 13. Having considered the parties' briefs and the arguments made at the hearing, the Court grants the motion to dismiss without leave to amend.

         I. BACKGROUND

         A. Factual Background

         Plaintiffs are residents of California and Arizona and former employees of defendants.[1] Dkt. No. 29 ¶¶ 8-9. Defendants are Delaware corporations that do business and maintain offices in California. Id. ¶¶ 10-11. MCI is a subsidiary of Verizon[2] and was plaintiffs' direct employer. Id. ¶ 11.

         In January 2014, Verizon announced the acquisition of Intel Media, Inc. (“Intel Media”). At that time, Mr. Brandt and Mr. James had worked for Intel Media for approximately 18.5 years and 21 years, respectively. Id. ¶¶ 2, 19, 28. Following the announcement of the acquisition, on January 24, 2014, plaintiffs attended a meeting hosted by Verizon human resources representatives. Id. ¶¶ 20-26. At the meeting, the representatives explained Verizon's severance benefit. Id. ¶ 25. Specifically, the Verizon representatives stated that the severance benefit would equal two weeks of compensation at the employee's ending pay-rate for each year of service. Id. The representatives stated that Intel Media employees who chose to work for Verizon would receive full credit under Verizon's severance program for the years they had worked for Intel Media in addition to years worked for Verizon. Id. During the presentation, the Verizon representatives did not mention any cap on the number of service years that would be used to calculate the severance benefit. Id. ¶ 26.

         This severance benefit was a material factor in plaintiffs' decisions to accept employment with Verizon following the acquisition. Id. ¶ 31. In particular, Mr. Brandt says that he expressly relied on information about calculation of the severance benefit and even expressly confirmed that information with Verizon before accepting employment. Id. ¶ 32. He emailed Verizon representatives-including those that hosted the January 24 presentation-to confirm that his 18.5[3] years of service at Intel Media would transfer to Verizon, and that the severance benefit was calculated at two weeks per year of service. Id. ¶¶ 33-38; see also id., Ex. A at 2. In response, Verizon representatives stated that “[s]ervice credited by Intel as of the Closing date will generally be recognized by Verizon for purposes of eligibility to participate in, vesting and benefit accrual under the following Verizon benefit plans and programs [including] Severance.” Id., Ex. A at 2. Verizon's representatives also stated, “The Verizon severance plan offers a severance payment of two weeks of total target compensation (base pay STI) for every year of service, a prorated STI payment, COBRA subsidy for the terms of the severance and outplacement services.” Id., Ex. A at 1. The emails from Verizon representatives did not mention a cap on service years. Id. ¶¶ 4, 38. Shortly before their deadline to accept Verizon's offer of employment, plaintiffs received an email that included a link to the Verizon Severance Plan (“the severance plan”). Id. ¶ 40. Plaintiffs did not read the severance plan. Id. ¶ 41.

         Ultimately, plaintiffs accepted positions with Verizon. Mr. Brandt was required to relocate from Oregon to California, leaving behind his network of family and friends and other professional opportunities in Oregon. Id. ¶ 32. Mr. James remained in Arizona. Id. ¶ 9.

         In March 2017, Verizon terminated plaintiffs' employment. Id. ¶ 6. In connection with the termination, Verizon advised plaintiffs that their severance benefits were capped at 17.5 years of service under the severance plan. Id. Verizon declined to increase the amount of severance offered. Id. As a condition of receiving their severance payments, Verizon required plaintiffs to sign a general release and waiver of claims (“the severance release”), including a waiver under California Civil Code § 1542. Id. ¶ 76. Each plaintiff signed a severance release, which they say they were forced to do based on economic duress. Id. ¶ 6; see also Id. ¶ 79.

         The FAC is not entirely clear regarding what followed, but at some point, plaintiffs engaged legal counsel who attempted to negotiate with Verizon on their behalf regarding severance payments. Id. ¶ 77. Plaintiffs submitted claims to Verizon and filed appeals as required by Verizon's internal dispute resolution process, but Verizon declined to pay any severance benefit beyond the 17.5-year cap. Id. ¶ 6. Mr. James alleges that he is owed a further $63, 924.47 in severance pay, and Mr. Brandt alleges that he is owed a further $24, 621.69 in severance pay. Id. ¶¶ 87-88.

         B. Procedural Background

         Plaintiffs filed this action on December 17, 2018. Dkt. No. 1. On May 15, 2019, the Court granted defendants' motion to dismiss pursuant to Rule 12(b)(6), finding that plaintiffs' claims for breach of contract and promissory estoppel were preempted under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1144(a), and that the remaining claims were barred by the severance releases. Dkt. No. 27. The Court granted plaintiffs leave to amend. Id. at 11-13. Plaintiffs filed the FAC on May 28, 2019, which is the operative complaint and the subject of defendants' second motion to dismiss. Dkt. No. 29.


         “A 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)). When determining whether a claim has been stated, a court accepts as true all well-pled factual allegations and construes them in the light most favorable to the plaintiff. Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). 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)). A claim is facially plausible when it “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         A court generally may not consider any material beyond the pleadings when ruling on a Rule 12(b)(6) motion. If matters outside the pleadings are considered, “the motion must be treated as one for summary judgment under Rule 56.” Fed.R.Civ.P. 12(d). However, a court may consider matters that are “capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Roca v. Wells Fargo Bank, N.A., No. 15-cv-02147- KAW, 2016 WL 368153, at *3 (N.D. Cal. Feb. 1, 2016) (quoting Fed.R.Evid. 201(b)). Documents appended to the complaint, incorporated by reference in the complaint, or which properly are the subject of judicial notice may be considered along with the complaint when deciding a Rule 12(b)(6) motion. Khoja v. Orexigen Therapeutics, 899 F.3d 988, 998 (9th Cir. 2018); see also Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990).


         A. Plaintiffs' ...

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