Summary
finding that two similar acts - employee terminations - could not be joined under Rule 20, in part, because they occurred in different locations and at different times
Summary of this case from In re Outlaw Lab., LP Litig.Opinion
Case No. C-04-02673 RMW, [Re Docket No. 3, 13, 17, 22].
November 18, 2004
William A. Sokol, Anne I. Yen, Weinberg, Roger Rosenfeld, Oakland, CA, Counsel for Defendant.
Stanley G. Hilton, Law Offices of Stanley G. Hilton, San Jose, CA, Counsel for Plaintiff.
ORDER DENYING PLAINTIFF'S MOTION FOR LEAVE TO AMEND, GRANTING IN PART DEFENDANTS' MOTIONS TO DISMISS, AND REMANDING ACTION TO STATE COURT
Plaintiff's motion for leave to amend and two motions to dismiss brought by defendants were heard on November 5, 2004. Plaintiff opposes dismissal of the first cause of action, but does not oppose dismissal of the second and third causes of action. Defendants opposes plaintiff's motion for leave to amend. For the reasons set forth below, the court: (1) grants defendants' motion to dismiss plaintiff's second and third causes of action; (2) denies plaintiff's motion for leave to add RICO claims and co-plaintiff Lavallee as futile; and (3) grants defendants' motion to strike immaterial clauses in the complaint. On the court's own motion, this case is remanded to state court. Any remaining issues, including defendants' motion to dismiss plaintiff's first cause of action, should be resolved in state court.
I. BACKGROUND
Plaintiff Elisabeth Herrick ("Herrick") began working for defendants South Bay Labor Council ("South Bay") and Working Partnerships USA ("Working Partnerships") as an Office Manager on August 13, 2001. Am. Compl. ¶ 7. Defendant South Bay is an organization that provides resources and support to local unions, and defendant Working Partnerships is a non-profit organization that provides labor advocacy, economic research and public education to the community. Plaintiff alleges that defendants are alter egos of each other. Am. Compl. ¶ 2.A. Termination of Employment and Alleged Improper Conduct
Plaintiff states that in February 2002, she was demoted from the position of Office Manager to the position of IT Project Manager after she complained to her supervisors about the use of union and company credit cards for personal use, the embezzlement of union and other funds, and other unspecified fraudulent accounting activities. Following the demotion, plaintiff alleges that on June 21, 2002, defendants wrongfully terminated her employment in retaliation for her "whistle blowing," and in violation of California public policy.
Plaintiff brings claims for wrongful termination, breach of contract, breach of the covenant of good faith and fair dealing, and fraud and deceit. Plaintiff moves to add a fifth cause of action for Racketeer Influenced and Corrupt Organizations Act ("RICO") violations, and to add a co-plaintiff, Geraldine Lavallee ("Lavallee"). Lavallee's claims arise from the termination of her temporary employment from Working Partnerships Staffing Services, which does not appear to have any affiliation with South Bay. In addition, Herrick's employment was terminated in June 2002, while Lavallee's employment was terminated in July 2003.
Plaintiff also makes passing reference in the briefing papers to adding a sixth cause of action for job discrimination with the Equal Employment Opportunity Commission ("EEOC") through the California Department of Fair Employment and Housing ("DFEH").
B. Procedural History
On July 6, 2004, defendants moved to dismiss plaintiff's second and third causes of action, and to strike immaterial matter from the complaint, arguing that Herrick's employment is governed by the terms of a collective bargaining agreement between South Bay and the International Association of Machinists and Aerospace Workers District Lodge No. 190, Local Lodge 1101. Plaintiff filed an opposition on August 20, 2004 ("Pl.'s Opp'n First Mot. Dismiss"), wherein she stated that she would be willing to dismiss the second and third causes of action in order to remand the case to state court.
Pl.'s Opp'n and Pl.'s Am. Opp'n referred to collectively as "Aug. 20 Oppositions."
In the two oppositions filed by plaintiff on August 20 ("August 20 Oppositions"), plaintiff also argued that she was not part of a union, as alleged by defendants. Plaintiff alleges instead that defendants "fraudulently forced [her] into pretending to be a member of the aerospace workers and engineers union (`AWU') . . . when in fact she was just an office worker/accountant . . ." (Pl.'s Opp'n First Mot. Dismiss at 2; Pl.'s Am. Opp'n First Mot. Dismiss at 2). This appears to be plaintiff's basis for adding a RICO claim.
In addition, plaintiff argues that her first cause of action for wrongful termination in violation of public policy was not time-barred due to delayed discovery. This equitable tolling argument relates to her alleged fraudulent membership in the front labor union. The fraudulent activities recited in the complaint under plaintiff's wrongful termination claim, on the other hand, are related to plaintiff's alleged whistle blowing activities.
Based on plaintiff's equitable tolling arguments, defendants filed a second motion on September 1, 2004 seeking dismissal of plaintiff's first cause of action for wrongful termination ("Defs.'s Second Mot. Dismiss"). Defendants argue that if Herrick was not aware of alleged accounting misconduct during her employment with defendants, she cannot allege wrongful termination as a whistle blower.
On October 1, 2004 plaintiff moved for leave to amend her complaint, adding Lavallee and a RICO claim.
II. ANALYSIS
A. Defendants' Motions to Dismiss
1. Preemption
In their first motion to dismiss, defendants argue that plaintiff's second and third causes of action are preempted by federal labor law, § 301 of the Labor Management Relations Act. As plaintiff does not oppose this part of defendants' motion, the second and third causes of action for breach of contract and breach of the covenant of good faith and fair dealing are dismissed.
2. Wrongful termination
As this case is remanded to state court for further proceedings, defendants' motion to dismiss plaintiff's first claim for wrongful termination is more properly addressed to the state court.
B. Leave to Amend
Plaintiff seeks leave to amend under Rule 15 to add a RICO claim, and to join Lavallee. See FED. R. CIV. P. 15(a), 20.
1. RICO
In the August 20 Oppositions, plaintiff states that "a RICO civil action is viable against a corrupt labor organization, such as the one being sued here." (Pl.'s Opp'n First Mot. Dismiss at 7; Pl.'s Am. Opp'n First Mot. Dismiss at 7). Plaintiff also makes a one-sentence reference that "the recent paper shredding incidents only bolster our argument that RICO must be invoked." Id. at 8. In their opposition to plaintiff's motion for leave to amend, defendants argue that plaintiff has no standing to bring a RICO claim because her alleged injury does not stem directly from any racketeering activity. Plaintiff's alleged injury, rather, stems from the termination of her employment. Id. Thus, plaintiff's claim lacks a causal relationship to any alleged RICO violations.
In Reddy v. Litton Industries, 912 F.2d 291 (9th Cir. 1990), the court held that an employee who is wrongfully discharged for refusing to participate in an alleged pattern of racketeering activity lacks standing to sue under § 1962(c). Id. at 294. The court reasoned that plaintiff was harmed by his discharge from employment, not by the pattern of racketeering activity in which defendant was purportedly engaged. Id. at 294. Other circuit courts that have considered this issue have similarly held that an employee who is wrongfully discharged for refusing to participate in an alleged pattern of racketeering lacks standing to sue under the RICO statutes.
See Reddy, 912 F.2d at 294 (citing Burdick v. American Express Co., 865 F.2d 527, 529 (2d Cir. 1989) (employee terminated as a result of his complaints about employer's alleged fraudulent activities had no standing to sue under § 1962(c)); Cullom v. Hibernia Nat'l Bank, 859 F.2d 1211, 1215-16 (5th Cir. 1988) (plaintiff employee's discharge for refusing to participate in a fraudulent bank loan scheme did not satisfy § 1962(c) standing requirement); Nodine v. Textron, Inc., 819 F.2d 347, 349 (1st Cir. 1987) (employee's termination after he reported violations of Canadian customs laws and Foreign Corrupt Practices Act to his superiors did not confer standing under § 1962(c)); Morast v. Lance, 807 F.2d 926, 933 (11th Cir. 1987) (employee discharged for reporting irregular transactions to the Comptroller of the Currency had no standing to sue under the RICO statute)).
Similarly, here Herrick's injuries stem from the termination of her employment, not the purported RICO violations. As a result, it appears that Herrick cannot plead the requisite injury to business or property as a proximate result of the alleged racketeering activity, and any amendment would be futile.
2. Lavallee
Plaintiff seeks leave under Rule 15 to add co-plaintiff, Lavallee. Defendant correctly notes that the proper rule for adding a co-plaintiff is Rule 20. Rule 20(a) imposes two requirements for the permissive joinder of parties: (1) a right to relief must be asserted by, or against, each plaintiff or defendant relating to or arising out of the same transaction or occurrence or series of transactions or occurrences; and (2) some question of law or fact common to all parties must arise in the action. Desert Empire Bank v. Insurance Co. of North America, 623 F.2d 1371, 1375 (1980).
Rule 20 provides, in relevant part:
All persons may join in one action as plaintiffs if they assert any right to relief jointly, severally, or in the alternative in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action.
FED. R. CIV. P. 20(a).
Here, defendants argue that Herrick's motion to add Lavallee as a co-plaintiff does not meet the requirements of the "same transaction and occurrence" test. Specifically, Herrick's employment was terminated in June 2002, while Lavallee's employment was terminated in July 2003. In addition, defendants argue that Lavallee's claims arise from the termination of her temporary employment from Working Partnerships Staffing Services. In contrast, Herrick was employed full-time, not as a temporary employee, in the bargaining unit at South Bay, a different entity. Further, defendants claim that Herrick's employment was governed by the terms of a collective bargaining agreement, while Lavallee's was not. As a result of these differences, defendants contend that different decision-makers were involved in the termination of Herrick's employment versus that of Lavallee's. Thus, it appears that the claims do not originate from the same set of transactions and occurrences.
3. Motion to Strike
Defendants move to strike clauses under Rule 12(f) regarding alleged "discrimination for being a white female" at page 3, line 22 of the complaint, as well as at page 9, line 19 of the complaint. Plaintiff does not oppose the motion. Accordingly, defendants' motion to strike is granted.
C. Remand
"In the usual case in which all federal-law claims are eliminated before trial, the balance of factors . . . will point toward declining to exercise jurisdiction over the remaining state-law claims." Millar, 236 F. Supp. 2d at 1119 (quoting Acri v. Varian Associates, 114 F.3d 999, 1001 (9th Cir. 1997) (citing Carnegie-Mellon v. Cohill, 484 U.S. 343, 350 n. 7 (1988)). As there are no remaining federal claims in this case, the court remands this case to state court on its own cognizance.
III. ORDER
For the foregoing reasons, the court: (1) grants defendants' motion to dismiss plaintiff's second and third causes of action; (2) denies plaintiff's motion for leave to add RICO claims and co-plaintiff Lavallee; and (3) grants defendants' motion to strike immaterial clauses in the complaint. This action is remanded to state court, and any outstanding issues that plaintiff or defendants seek resolution on are more properly addressed to that court.