Barr v. Laboratory Corporation of America Holdings

District Court, S.D. California·Decided August 30, 2021·No. 3:19-cv-01887·Unknown

Opinion

1 2 3 4 5 6 7 8 11 NANCY BARR, Case No.: 19-cv-1887-MMA (MDD) 12 ORDER GRANTING IN PART AND 13 Plaintiff, DENYING IN PART DEFENDANT’S v. MOTION FOR SUMMARY LABORATORY CORPORATION OF 15 AMERICA HOLDINGS, et al., [Doc. No. 26] 16 Defendants. 17

18 19 Plaintiff Nancy Barr (“Plaintiff”) brings this action against Laboratory Corporation 20 of America Holdings (“Defendant” or “Labcorp”) asserting California state law 21 employment claims as well as violations of California Labor Code § 1102.5 and 22 California Health and Safety Code § 1278.5. See Doc. No. 1. Labcorp moves for 23 summary judgment in its entirety. See Doc. No. 26. Plaintiff filed an opposition, to 24 which Labcorp replied. See Doc. Nos. 32, 43.1 The Court found this matter suitable for 25 determination on the papers and without oral argument pursuant to Civil Local Rule 26

27 1 In response to the Court’s order on Plaintiff’s motions to seal, see Doc. No. 44, Plaintiff refiled her 28 1 7.1.d.1. See Doc. No. 31. For the reasons set forth below, the Court GRANTS IN 2 PART and DENIES IN PART Labcorp’s motion for summary judgment. 3 I. BACKGROUND2 4 Plaintiff is a licensed medical doctor. See Doc. No. 47-5 (“Pl. Decl.”) at ¶ 1. In 5 2014, she began providing pathology services to Labcorp at its San Diego laboratory (the 6 “San Diego Lab”). See Doc. No. 26-1 (“Separate Statement of Undisputed Material 7 Facts” or “SS”) at No. 1.3 Labcorp operates a network of clinical laboratories that 8 provide testing and diagnostic services. See SS at No. 2. From 2014 to 2016, Plaintiff 9 was contracted to work for Labcorp through a third-party medical group, Affiliated 10 Pathologists Medical Group, Inc (“APMG”). See SS at No. 3. After APMG dissolved, 11 Plaintiff and five other pathologists formed Southern California Pathology Medical 12 Group (“SCPMG”). See SS at No. 4. On April 1, 2016, Labcorp and SCPMG entered 13 into a services agreement. See id. One year later, SCPMG disbanded, and Plaintiff 14 individually entered into a one-year Pathology Services Agreement with Labcorp (the 15 “Agreement”). See SS at No. 5. The Agreement was for one year—set to expire on April 16 1, 2018—and called for 30-days’ termination notice. See SS at No. 5; Doc. No. 26-3 17 (“Kondon Decl.”) at Ex. F. The Agreement provided an automatic one-year renewal at 18

19 2 These material facts are taken from Defendant’s Separate Statement of Undisputed Material Facts and 20 Plaintiff’s responses thereto, as well as the supporting declarations and exhibits. Facts that are immaterial or not genuinely disputed for purposes of resolving the current motion are not included in 21 this recitation. To the extent any such facts are nevertheless relevant to the Court’s analysis, they are 22 discussed as appropriate, infra. 3 In response to Defendant’s Separate Statement of Undisputed Material Facts, see Doc. No. 26-1, 23 Plaintiff filed a “Separate Statement of Disputed Material Facts, see Doc. No. 47-1 (“Plaintiff’s Responding Statement” or “PRS”). Plaintiff’s responsive document is three hundred pages long. 24 Importantly, nearly every disputing response is merely a recitation of portions of the body of Plaintiff’s 25 opposition. Moreover, many of her explanations are largely irrelevant. For example, she disputes the statement that “Engle conducted a review of the pathologists’ productivity and the distribution of cases 26 among them,” SS No. 11, on the basis that she was terminated in retaliation and not for business needs, see PRS at No. 11. This, of course, is not a relevant or valid basis for disputing a fact concerning Sonya 27 Engle’s investigation, which does not mention Plaintiff’s termination. Accordingly, to the extent Plaintiff purports to dispute a statement but does not provide a relevant basis for doing so, the Court 28 1 the end of the term unless expressly terminated. See id. The parties dispute whether the 2 Agreement conferred on Plaintiff employee or independent contractor status. See Doc. 3 No. 26 at 9 n.1. 4 A. Specimen Mix-Up 5 On April 30, 2018, Plaintiff notified her supervisor, Melissa Thompson 6 (“Thompson”), of a potential “specimen mix-up.” SS at No. 16. Sometime prior, 7 Plaintiff became aware of inconsistent diagnoses for a specific patient—JZ. See SS at 8 No. 16. In late March 2018, Plaintiff reported that JZ’s pap smear was “abnormal” and 9 “suspicious for squamous cell carcinoma.” SS at No. 17. However, a subsequent biopsy 10 and second procedure of JZ’s tissue revealed only normal cells. See SS at No. 18; 11 Kondon Decl. at Exs. I, J. Following this inconsistency, JZ’s original pap smear was 12 reprocessed and came back “negative” or “normal.” SS at No. 19. 13 Thompson subsequently investigated the discrepancy and in May 2018, concluded 14 that it was the result of instrument processing error. See SS at Nos. 20, 22. Plaintiff 15 disputes that Thompson conducted a thorough investigation and asserts that the specimen 16 mix-up was not due to instrument processing error but instead “human or operator error 17 resulting in somebody else’s PAP smear being mislabeled as JZ’s.”4 PRS at No. 20. 18 Thompson did not report the specimen mix-up to anyone above her in management, 19 including Sonya Engle. See SS at No. 23. 20 B. Engle’s Investigation 21 In 2018, Labcorp’s Vice President and General Manager for Southern California 22 Sonya Engle (“Engle”) began investigating Labcorp’s productivity and was charged with 23 review and optimization of the contract pathologists at the Southern California facilities, 24 25 4 As explained, the parties dispute whether the inconsistent diagnosis was the result of human or 26 instrument processing error. For the sake of consistency, the Court refers to the event as the “specimen mix-up” but does not find that it was in fact the result of human error. Whether the inconsistency was 27 due to simple machine malfunction, as Labcorp contends, or human error subsequently followed by a cover-up, as Plaintiff maintains, is irrelevant. Only Plaintiff’s beliefs and resulting complaints are 28 1 which included the San Diego Lab. See Doc. No. 26-6 (“Engle Decl.”) at ¶ 4; see also SS 2 at Nos. 9–11. 3 In March 2018, upon reviewing the San Diego Lab’s productivity, Engle 4 concluded that it was contracting with two more pathologists than the workload justified. 5 See SS at No. 12. Engle’s investigation also revealed an imbalance in the distribution of 6 cases. See SS at No. 12. While pathologists are tasked with analyzing both cytology and 7 biopsy specimens, Engle found that Plaintiff read almost exclusively cytology cases in 8 2017, and that she read more pap smears than the other pathologists. See SS at Nos. 6–7. 9 Accordingly, Engle determined that with two fewer pathologists, the lab would 10 work most efficiently with all cases evenly distributed. See SS at No. 14. Because 11 Plaintiff was an “outlier among the pathologists,” Engle recommended that Plaintiff be 12 one of the pathologists terminated. SS at No. 13. 13 Plaintiff disputes that the workload at the San Diego Lab justified terminations and 14 that the lab would be more effective with an even distribution of cytology cases. See, 15 e.g., Pl. Decl. at ¶¶ 51–55. She also disputes that it was Engle’s decision to terminate 16 her. See Doc. No. 47-3 (“Sottile Decl.”) Ex. B at 351:15–21 (“Miss Engle said the 17 decision was entirely Melissa’s decision . . . .”). 18 C. First Notice of Termination and Follow-Up Meetings 19 On June 29, 2018, Engle and Thompson met with Plaintiff to deliver her a notice 20 of termination. See SS at No. 24. The parties dispute what was said during that meeting. 21 See, e.g., Sottile Decl. at Ex. B at 351:15–21. Nonetheless, it is undisputed that during 22 the meeting Plaintiff indicated that she had quality assurance concerns and requested a 23 follow-up meeting. See SS at No. 24. At that time, Engle withdrew the notice of 24 termination and scheduled a second meeting. See SS at No.

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22 23 5 There is evidence that there was a prior follow-up meeting on July 13, 2018, between Plaintiff and Engle, wherein Engle communicated the same regarding her investigation. See Pl. Decl. at ¶ 92. While 24 it is unclear if this fact is disputed, it is immaterial to Plaintiff’s claims. 25 6 Plaintiff does not dispute that the meeting and complaints all took place on August 16, 2018. See PRS at Nos. 30, 31. That said, Plaintiff via her declaration asserts that these events took place on August 15, 26 2018. See Pl. Decl. at ¶¶ 121, 123. This discrepancy is immaterial. 7 Following her termination, in October 2018, Plaintiff made formal, written complaints to CMS and the 27 College of American Pathologists. See SS at Nos. 35–36. These events are irrelevant. Plaintiff does not assert them as protected activities and surely activities taken after her termination cannot logically 28 2 “A party may move for summary judgment, identifying each claim or defense—or 3 the part of each claim or defense—on which summary judgment is sought. The court 4 shall grant summary judgment if the movant shows that there is no genuine dispute as to 5 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. 6 P. 56(a). The party seeking summary judgment bears the initial burden of establishing 7 the basis of its motion and of identifying the portions of the declarations, pleadings, and 8 discovery that demonstrate absence of a genuine issue of material fact. See Celotex Corp. 9 v. Catrett, 477 U.S. 317, 323 (1986). The moving party has “the burden of showing the 10 absence of a genuine issue as to any material fact, and for these purposes the material it 11 lodged must be viewed in the light most favorable to the opposing party.” Adickes v. S. 12 H. Kress & Co., 398 U.S. 144, 157 (1970). A fact is material if it could affect the 13 “outcome of the suit” under applicable law. Anderson v. Liberty Lobby, Inc., 477 U.S. 14 242, 248 (1986). A dispute about a material fact is genuine if there is sufficient evidence 15 for a reasonable jury to return a verdict for the non-moving party. See id. 16 If the moving party meets its burden, the nonmoving party must go beyond the 17 pleadings and, by its own evidence or by citing appropriate materials in the record, show 18 by sufficient evidence that there is a genuine dispute for trial. See Celotex, 477 U.S. at 19 324. The nonmoving party “must do more than simply show that there is some 20 metaphysical doubt as to the material facts . . ..” Matsushita Elec. Indus. Co. v. Zenith 21 Radio Corp., 475 U.S. 574, 587 (1986). A “scintilla of evidence” in support of the 22 nonmoving party’s position is insufficient; rather, “there must be evidence on which the 23 jury could reasonably find for the [nonmoving party].” Anderson, 477 U.S. at 252. 24 Moreover, “a party cannot manufacture a genuine issue of material fact merely by 25 making assertions in its legal memoranda.” S.A. Empresa de Viacao Aerea Rio 26 Grandense v. Walter Kidde & Co., Inc., 690 F.2d 1235, 1238 (9th Cir. 1982). 27 28 2 In support of her opposition, Plaintiff submitted a declaration. See Pl. Decl. 3 Labcorp subsequently filed fourteen evidentiary objections. See Doc. No. 43-1.8 4 Labcorp objects to fourteen statements as improper opinion and legal conclusion, lacking 5 foundation, and inadmissible hearsay. Plaintiff did not oppose or otherwise respond to 6 Labcorp’s evidentiary objections. 7 Labcorp objects to five statements (in whole or in part) on the basis that they are 8 inadmissible hearsay. However, even if the statements do contain hearsay, they “are 9 admissible for summary judgment purposes because they ‘could be presented in an 10 admissible form at trial.’” Fonseca v. Sysco Food Servs. of Ariz., Inc., 374 F.3d 840, 846 11 (9th Cir. 2004) (quoting Fraser v. Goodale, 342 F.3d 1032, 1037 (9th Cir. 2003), cert. 12 denied sub nom. United States Bancorp v. Fraser, 124 S. Ct. 1663 (2004)); see also 13 Hughes v. United States, 953 F.2d 531, 543 (9th Cir. 1992). Accordingly, the Court 14 OVERRULES the fourth, sixth, ninth, thirteenth, and fourteenth objections to 15 Paragraphs 51, 77, 109, and 131 the extent they are based upon Federal Rule of Evidence 16 802. 17 Turning to the improper opinion, lack of foundation, and personal knowledge 18 objections. Rule 56 requires that, before evidence can be considered on summary 19 judgment, a proper foundation must be laid. See Bias v. Moynihan, 508 F.3d 1212, 1224 20 (9th Cir. 2007). Declarations submitted in support of, or in opposition to, a motion for 21 summary judgment therefore “must be made on personal knowledge, set out facts that 22 would be admissible in evidence, and show that the affiant or declarant is competent to 23 testify on the matters stated.” Fed. R. Civ. P. 56(c)(4). The personal knowledge 24

25 26 8 Labcorp objected to Plaintiff’s originally filed declaration, which the Court has since struck from the record. See Doc. No. 44. Accordingly, Labcorp’s evidentiary objections are moot. Plaintiff then refiled 27 her declaration, see Pl. Decl., and Labcorp did not lodge new objections. However, because the refiled declaration is identical to the previously filed one, the Court will nonetheless address Labcorp’s 28 1 requirement in Rule 56(e) can be met by inference. See Barthelemy v. Air Lines Pilots 2 Ass’n, 897 F.2d 999, 1018 (9th Cir. 1990). 3 Labcorp objects to Paragraph 8, asserting that it is improper opinion and legal 4 conclusion. To the extent Plaintiff offers this statement as evidence of the legal 5 conclusion that Plaintiff was an employee of Labcorp, as opposed to an independent 6 contractor, the Court SUSTAINS the objection. Plaintiff cannot testify via declaration to 7 such a legal determination regarding her disputed employment status. 8 Labcorp objects to Paragraph 39. In Paragraph 39, Plaintiff proffers that she 9 discovered that Thompson made several errors including falsifying and failing to 10 properly document data. Labcorp asserts this statement is improper lay opinion and that 11 Plaintiff has no personal knowledge. However, the paragraph plainly contains no 12 information outside of an ordinary lay person observation. Moreover, the Court can infer 13 Plaintiff’s personal knowledge from her over 30 years of experience and four years of 14 working at Labcorp, as well as via other statements in her declaration. See, e.g., Pl. Decl. 15 at ¶¶ 38, 40. Accordingly the Court OVERRULES Labcorp’s objections to Paragraph 16 39. 17 Labcorp objects to Paragraphs 49 and 53, wherein Plaintiff states that another 18 pathologist, Dr. Williams, also reviewed nearly exclusively (some 90% of) cytology 19 specimens. Labcorp objects on the bases that these statements lack foundation and 20 personal knowledge. The Court can reasonably infer that Plaintiff had personal 21 knowledge of her colleagues’ caseloads. Accordingly, the Court OVERRULES the 22 objections to Paragraphs 49 and 53. 23 In Paragraph 54, Plaintiff disputes Engle’s assertion that it would be more effective 24 to evenly distribute cytology specimens. Labcorp asserts that Plaintiff lacks the personal 25 knowledge and foundation to make this statement. The Court can infer Plaintiff’s 26 knowledge of her colleague’s qualifications. Moreover, Plaintiff can opine on the 27 effectiveness of Engle’s proposed distribution. Accordingly, the Court OVERRULES 28 Labcorp’s objections to Paragraph 54. The Court notes, however, that it does not accept 1 this statement for the fact that Engle’s proposed distribution was objectively ineffective 2 or incorrect. 3 Labcorp objects to Paragraphs 65, 66, 103, 104, and 105. These paragraphs go to 4 the heart of this case. Through these paragraphs, Plaintiff details how a specimen mix up 5 occurred, resulting in a patient receiving a false positive report of cancer. Contrary to 6 Labcorp’s assertions, Plaintiff has set forth sufficient facts to establish her knowledge of 7 these events. Plaintiff was directly responsible for reviewing the specimens in question. 8 See, e.g., Pl. Decl. at ¶ 58. Moreover, the Court, in weighing the evidence on summary 9 judgment, does not accept any statements in Plaintiff’s declaration for the truth that a 10 specimen mix-up in fact occurred because it is irrelevant. Instead, it is sufficient that 11 Plaintiff believed the error was due to a specimen mix-up, as opposed to instrument error 12 as Labcorp maintains, and complained about it. Accordingly, the Court OVERRULES 13 the objections to Paragraphs 65, 66, 103, 104, and 105. 14 As to Paragraph 77, to the extent Plaintiff claims that Thompson previously 15 “ignored the law,” Pl. Decl. at ¶ 77, the Court SUSTAINS the objection. There is no 16 basis for the legal conclusion that Thompson had previously broken any laws. That said, 17 the Court OVERRULES the remaining objections and accepts this statement for the fact 18 that Plaintiff believed Thompson had made prior errors leading her to be concerned that a 19 proper investigation was not undertaken. 21 Defendant moves for summary judgment in its entirety. Accordingly, the Court 22 addresses each of Plaintiff’s claims in turn. 23 A. California Labor Code Section 1102.5(b) 24 California Labor Code § 1102.5(b) provides that an employer shall not retaliate 25 against an employee for disclosing information that the employee has reasonable cause to 26 believe constitutes a violation of state or federal statute, or a violation of or non- 27 compliance with a local, state, or federal rule or regulation. See Cal. Labor Code 28 § 1102.5(b). Accordingly, a claim under section 1102.5(b) can only be brought by an 1 employee against their employer. See, e.g., Bennett v. Rancho Cal. Water Dist., 248 Cal. 2 Rptr. 3d 21, 31 (Ct. App. 2019) (explaining that a “prerequisite to asserting a violation of 3 Labor Code section 1102.5 is the existence of an employer-employee relationship at the 4 time the allegedly retaliatory action occurred”) (internal citation and quotation marks 5 omitted). 6 Labcorp concedes for the sole purpose of summary judgment that Plaintiff can 7 proceed under § 1102.5(b) and “reserves” the right to argue that Plaintiff was an 8 independent contractor, should the merits of the claim survive summary judgment.9 Doc. 9 No. 26 at 17 n.2.10 Instead, Labcorp argues that Plaintiff’s claim fails because she cannot 10 meet her prima facie burden, or alternatively, cannot overcome Labcorp’s legitimate, 11 nondiscriminatory reason for terminating her contract. See id. at 10, 14. 12 The parties agree that the burden-shifting framework from McDonnell Douglas 13 Corp. v. Green, 411 U.S. 792 (1973), applies to Plaintiff’s section 1102.5 claim. See 14 Doc. Nos. 26 at 18, 47 at 21. Under the McDonnell framework, Plaintiff must make a 15 prima facie case of retaliation, at which point the burden shifts to Labcorp to articulate a 16 legitimate, nondiscriminatory reason for its employment actions. See McDonnell, 411 17 U.S. at 802–04. Then, in order to survive summary judgment, Plaintiff must produce 18 evidence that Labcorp’s “proffered nondiscriminatory reason is merely a pretext for 19 [retaliation].” Pham v. Bd. of Regents of the Univ. of Cal., No. 19-16541, 2021 U.S. App. 20 LEXIS 14905, at *2 (9th Cir. May 19, 2021) (quoting Weil v. Citizens Telecom Servs. 21

22 23 9 The Court initially ordered supplemental briefing on the issue of Plaintiff’s classification as an employee versus independent contractor. See Doc. No. 48. The Court’s reference to Borello in that 24 Order is not an indication of the Court’s opinion that the Borello test is the applicable standard. The 25 Court is aware that the parties disagree on several legal issues, including the proper test, whether California Labor Code § 2775(b)(1) applies, and whether Plaintiff was prohibited from being an 26 employee under California law, see Cal. Labor Code § 2775(b)(2)–(3). The parties do appear to agree, however, that the question of Plaintiff’s status is a mixed one of law and fact. See generally Doc. Nos. 27 49, 51. Accordingly, the parties should be prepared that the Court will address and resolve this issue prior to trial, during the motions in limine stage. 28 1 Co., LLC, 922 F.3d 993, 1002 (9th Cir. 2019)). 2 a. Plaintiff’s Prima Facie Burden 3 In order to plead a prima facie case of retaliation, a plaintiff must show that: 4 (1) she engaged in a protected activity; (2) her employer subjected her to an adverse 5 employment action; and (3) there is a causal link between the protected action and the 6 adverse action. See Patten v. Grant Joint Union High Sch. Dist., 37 Cal. Rptr. 3d 113, 7 117 (Ct. App. 2005); see also Tam v. Qualcomm, Inc., 300 F. Supp. 3d 1130, 1148 (S.D. 8 Cal. 2018). “The employee must have an actual belief that the employer’s actions were 9 unlawful and the employee’s belief, even if mistaken, must be reasonable.” Tam, 300 F. 10 Supp. 3d at 1148 (citing Carter v. Escondido Union High Sch. Dist., 56 Cal. Rptr. 3d 262, 11 270 (Ct. App. 2007)). 12 Labcorp does not argue that Plaintiff fails to establish the first two elements. To be 13 sure, Plaintiff provides evidence that she undertook the following protected activities: 14 (1) Plaintiff reported to management that Thompson failed to include various errors in the 15 Clinical Lab Improvement Act (“CLIA”) report, see Pl. Decl. at ¶¶ 38, 40; (2) Plaintiff 16 reported to management that Thompson falsified data on other mandatory reports, see id. 17 at ¶¶ 39, 40; (3) Plaintiff reported other pathologists’ mistakes to Thompson, who did not 18 report or correct them, see id.; (4) Plaintiff reported the specimen mix-up to management, 19 see id. at ¶ 72; (5) Plaintiff reported the specimen mix-up to Engle, see id. at ¶ 91; (6) 20 Plaintiff made a complaint to Labcorp’s internal hotline, see id. at ¶ 121; and (7) Plaintiff 21 made a complaint to CMS, see id. at ¶ 120. Moreover, it is undisputed that Labcorp 22 terminated Plaintiff. See e.g., Kondon Decl. at Ex. M. 23 Instead, Defendant argues that Plaintiff cannot establish the third element— 24 causation—because: (1) the majority of the protected activities took place after Labcorp’s 25 first notice of termination; and (2) Engle—the decision maker with respect to her 26 termination—was unaware that Plaintiff had undertaken these activities prior to her initial 27 decision to terminate her. See Doc. No. 26 at 11, 14. 28 Beginning with the former, Labcorp’s timing attack on causation is tainted by the 1 assumption that the subject retaliatory action is the first notice of termination. However, 2 the first notice of termination—which was admittedly withdrawn—does not constitute an 3 adverse employment action as a matter of law. See Nunez v. City of L.A., 147 F.3d 867, 4 875 (9th Cir. 1998) (explaining that a mere threat of termination is not an adverse 5 employment action); see also Helgeson v. Am. Int’l Grp., Inc., 44 F. Supp. 2d 1091, 6 1098–99 (S.D. Cal. 1999) (“Defendants’ mere threat to lay-off plaintiff cannot be an 7 adverse employment action, especially when the threat is immediately rescinded. A 8 temporally limited threat to take action is not the equivalent of taking that action.”); Van 9 v. Language Line Servs., No. 14-CV-03791-LHK, 2016 U.S. Dist. LEXIS 73510, at *65 10 (N.D. Cal. June 6, 2016) (explaining that, “[t]o be actionable, an adverse employment 11 action must ‘materially affect the terms and conditions of employment.’”) (quoting 12 Yanowitz v. L’Oreal USA, Inc., 32 Cal. Rptr. 3d 436, 453 (2005)). Instead, “to be 13 actionable, the retaliation must result in a substantial adverse change in the terms and 14 conditions of the plaintiff's employment.” Akers v. Cty. of San Diego, 116 Cal. Rptr. 2d 15 602, 612 (Ct. App. 2002). Accordingly, the Court concludes as a matter of law that the 16 adverse employment action in question is limited to Plaintiff’s second notice of 17 termination, which took place on September 7, 2018. See Kondon Decl. at Ex. M. 18 With that in mind, the Court turns to the timing of the protected activities. It 19 appears undisputed that Plaintiff’s complaints to management regarding the reporting 20 errors—by both Thompson and other pathologists—took place in 2017. See, e.g., Pl. 21 Decl. at ¶¶ 38, 40 (“In late 2017, I had a meeting with Bob Fogerson where we talked 22 about these issues”). Moreover, it is undisputed that Plaintiff reported the specimen mix- 23 up to Thompson on April 30, 2018. See SS at No. 16. It is further undisputed that 24 Plaintiff reported Thompson’s report falsifications and the specimen mix-up to Engle on 25 July 2, 2018, see SS at Nos. 26, 27, and that Plaintiff made the internal hotline and CMA 26 complaints on August 16, 2018, see SS at No. 31. All of these activities took place prior 27 to September 7, 2018. Accordingly, the Court DENIES Labcorp’s motion for summary 28 judgment on this basis. 1 Turning to Labcorp’s second argument, Labcorp asserts that Engle was the sole 2 decision-maker responsible for Plaintiff’s termination and that, because she was unaware 3 of many of the protected activities, they cannot be causally linked to Plaintiff’s 4 termination. However, according to Plaintiff, Thompson made the decision to terminate 5 her. Plaintiff testified that

6 Miss Engle said the decision was entirely Melissa’s decision, and I was very 7 surprised by that. And I kept pressing the two of them, Melissa, Melissa, 8 this was your decision, Melissa? I said did you get input from any other doctors as to your decision to fire me? And Melissa said no, this was 9 entirely my decision. 10 11 Doc. No. 47-3 (“Sottile Decl.”) Ex. B at 351:15–21. Accordingly, there is a genuine 12 issue of material fact whether Engle was the sole decision-maker, or if Thompson was 13 responsible for or otherwise involved in the decision. The Court therefore DENIES 14 Labcorp’s request for summary judgment on this basis. 15 It is undisputed, however, that neither Engle nor Thompson knew of Plaintiff’s 16 internal hotline and CMS complaints prior to the second notice of termination. See SS at 17 No. 34. Accordingly, even accepting Plaintiff’s version of events—that Thompson was 18 responsible for her termination—these activities cannot be causally linked to her 19 termination. The Court therefore finds that Plaintiff fails to meet her prima facie burden 20 as to those two protected activities and GRANTS Labcorp’s motion for summary 21 judgment in this respect. 22 In sum, the Court finds that Plaintiff has met her prima facie burden with respect to 23 the following activities: (1) reporting various reporting errors to management, see Compl. 24 at ¶¶ 28–29; (2) reporting Thompson’s data falsification and errors, see id. at ¶¶ 33–34; 25 (3) reporting other pathologists’ errors to Thompson, see id. at ¶ 37; and (4) reporting the 26 specimen mix-up to management, including Engle, see id. at ¶ 51, 59. 27 b. Labcorp’s Legitimate, Non-Discriminatory Explanation 28 Labcorp proffers that strategic business decisions led to Plaintiff’s termination. As 1 discussed above, according to Engle, the volume of work at the San Diego Lab did not 2 justify the number of pathologists servicing it. See SS at No. 12; Engle Decl. at ¶ 4. 3 After an investigation, Labcorp—Engle specifically—determined that having fewer 4 pathologists with a more even distribution of caseload was the best course for efficiency. 5 See SS at No. 12; Engle Decl. at ¶ 6. Accordingly, after reviewing the pathologists’ case 6 history, Engle determined that Plaintiff’s high volume of cytology specimens warranted 7 termination. See SS at Nos. 13–14; Engle Decl. at ¶ 7. Testimony from other persons at 8 Labcorp, such as Thompson, supports this explanation. See Sottile Decl. at Ex. C at 9 42:18–21. The Court finds that this is a legitimate, non-discriminatory explanation for 10 the decision to terminate Plaintiff, and that Labcorp has therefore met its burden. 11 c. Evidence that Labcorp’s Explanation is Merely Pretextual 12 Having decided that Plaintiff has met her prima facie burden, and Labcorp has met 13 its burden in response, in order to survive summary judgment, Plaintiff must produce 14 evidence that Labcorp’s proffered nondiscriminatory reason for terminating her is merely 15 a pretext for retaliation. See Weil, 922 F.3d at 1002. As the Ninth Circuit in Weil 16 explained, “[v]ery little . . . evidence is necessary to raise a genuine issue of fact 17 regarding an employer’s motive; any indication of discriminatory motive . . . may suffice 18 to raise a question that can only be resolved by a factfinder.” Id. (quoting McGinest v. 19 GTE Serv. Corp., 360 F.3d 1103, 1112 (9th Cir. 2004)). “[A] plaintiff can prove pretext 20 in two ways: (1) indirectly, by showing that the employer’s proffered explanation is 21 ‘unworthy of credence’ because it is internally inconsistent or otherwise not believable, 22 or (2) directly, by showing that unlawful discrimination more likely motivated the 23 employer.” Chuang v. Univ. of Cal. Davis, Bd. of Trustees, 225 F.3d 1115, 1127 (9th 24 Cir. 2000) (quoting Godwin v. Hunt Wesson, Inc., 150 F.3d 1217, 1220 (9th Cir. 1998)). 25 The Court concludes that Plaintiff raises a genuine material issue of fact with 26 respect to whether Labcorp’s explanation is merely a pretext for retaliation. 27 First, Engle testified that she decided to terminate two persons at the San Diego 28 Lab was because the workload did not justify keeping all contracted pathologists. See, 1 e.g., Engle Decl. at ¶ 4 (“This initiative was the result of an imbalance between the 2 number of pathologists actually needed to handle the labs’ cases and the number being 3 contracted by LabCorp at the time.”). However, Plaintiff testified that the San Diego lab 4 was consistently busy. See, e.g., Pl. Decl. at ¶¶ 48, 51. Moreover, according to Plaintiff, 5 a former colleague at Labcorp named Enrico Lopez informed her that immediately after 6 her termination, Labcorp hired two new pathologists. See Pl. Decl. at ¶ 131. Thompson 7 and Dr. Francis Chiricosta also confirmed that that a few months after Plaintiff was 8 terminated, Labcorp hired another pathologist. See Sottile Decl. at Ex. C at 43:22–23; 9 Ex. F at 66:14–24. This certainly raises a factual question regarding the legitimacy of 10 Labcorp’s proffered business needs explanation.11 11 Second, Engle testified that she identified Plaintiff as one of the two contracts to 12 terminate due to Plaintiff’s disproportionate reading of cytology specimens. See Engle 13 Decl. at ¶¶ 6–8. However, Plaintiff testified that another pathologist at Labcorp also 14 reviewed “nearly exclusively Cytology specimens.” See Pl. Decl. at ¶¶ 49, 53. This 15 raises a triable issue as to why Labcorp chose Plaintiff as one of the contracts to 16 terminate. Therefore, Plaintiff has produced evidence sufficient to create a genuine issue 17 of material fact as to whether Labcorp’s explanation for her termination was legitimate or 18 in retaliation. Accordingly, the Court DENIES Labcorp’s motion for summary judgment 19 as to Plaintiff’s retaliation claim. 20 B. California Health and Safety Code Section 1278.5 21 In addition to the whistleblower protection provided by the California Labor Code, 22 California also provides specific protection to health care workers. See Cal. Health & 23 Saf. Code § 1278.5(a). Pursuant to California Health and Safety Code § 1278.5:

24 A health facility shall not discriminate or retaliate, in any manner, against a 25 26 11 Moreover, the Court notes that despite referencing (and introducing as Exhibit A) a “PowerPoint 27 presentation” purportedly reflecting Engle’s investigation and findings, see Engle Decl. at ¶ 6, there is no PowerPoint attached to Engle’s declaration as Exhibit A. Accordingly, there is no documentary 28 1 patient, employee, member of the medical staff, or other health care worker of the health facility because that person has done either of the following: 2 (A) Presented a grievance, complaint, or report to the facility, to an 3 entity or agency responsible for accrediting or evaluating the facility, 4 or the medical staff of the facility, or to any other governmental entity.

5 (B) Has initiated, participated, or cooperated in an investigation or 6 administrative proceeding related to the quality of care, services, or conditions at the facility that is carried out by an entity or agency 7 responsible for accrediting or evaluating the facility or its medical 8 staff, or governmental entity. 9 10 Cal. Health & Saf. Code § 1278.5(b)(1)(A)–(B). A “health facility” is defined as

11 a facility, place, or building that is organized, maintained, and operated for 12 the diagnosis, care, prevention, and treatment of human illness, physical or mental, including convalescence and rehabilitation and including care during 13 and after pregnancy, or for any one or more of these purposes, for one or 14 more persons, to which the persons are admitted for a 24-hour stay or longer.

15 16 Cal. Health & Saf. Code § 1250. 17 Labcorp asserts that it is not a “health facility” as defined by the statute and 18 therefore it is entitled to summary judgment on this claim. Plaintiff argues in response 19 that Labcorp is a health facility because it provides “ancillary services to doctors for the 20 diagnosis, care, prevention, and treatment of human illness, such as cancer etc.” Doc. 21 No. 32 at 30. 22 It is undisputed that Labcorp “operates a network of clinical laboratories” that 23 “provide testing and diagnostic services.” SS at No. 2. Accordingly, it is a facility 24 operated for the diagnosis of human illnesses, as contemplated by the statute. However, 25 it is also undisputed that Labcorp does not admit at least one person for at least 24 hours, 26 see SS at No. 2, as the statute requires, see Cal. Health & Saf. Code § 1250. 27 28 1 Accordingly, the Court finds as a matter of law that Labcorp is not a health facility as 2 defined by the California Health and Safety Code.12 Therefore, because the protection 3 guaranteed by section 1278.5 is only applicable to an employee at a health facility, see 4 Goodin v. Chinese Hosp. Ass’n, Case No. CGC-17-563179, 2019 Cal. Super. LEXIS 5 1389, at *2 (Cal. Super. Ct. Apr. 15, 2019); Blum v. Sequoia Med. Assocs., CIV 526546, 6 2016 Cal. Super. LEXIS 8185, at *4 (Cal. Super. Ct. Feb. 9, 2016), Plaintiff’s claim fails 7 as a matter of law. Accordingly, the Court GRANTS summary judgment in favor of 8 Labcorp as to Plaintiff’s Health and Safety Code § 1278.5 claim. 9 C. Intentional Infliction of Emotional Distress 10 Plaintiff’s third cause of action is for intentional infliction of emotional distress. 11 To prevail on an intentional infliction of emotional distress claim under California law, a 12 plaintiff must establish: “(1) extreme and outrageous conduct by the defendant with the 13 intention of causing, or reckless disregard of the probability of causing, emotional 14 distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual 15 and proximate causation of the emotional distress by the defendant’s outrageous 16 conduct.” Avina v. United States, 681 F.3d 1127, 1131 (9th Cir. 2012) (quoting Hughes 17 v. Pair, 95 Cal. Rptr. 3d 636, 651 (2009)) (internal quotation marks omitted). “A 18 defendant’s conduct is outrageous when it is so extreme as to exceed all bounds of that 19 usually tolerated in a civilized community.” Hughes, 95 Cal. Rptr. 3d at 651 (internal 20 21 12 The only case Plaintiff cites to in support of her position is largely inapposite. In St. Myers v. Dignity 22 Health, 257 Cal. Rptr. 3d 341, 352 (Ct. App. 2019), the Court of Appeal held that a third-party service provider that provided a hospital with “scheduling, patient registration, health information management . 23 . . billing, and collections” but “did not provide medical care” was not a health facility. St. Myers, 257 Cal. Rptr. 3d at 352. Plaintiff argues that contrary to the third-party facility in St. Myers, Labcorp 24 provides ancillary services and therefore is a health facility. But the Court in St. Myers plainly stated 25 that a facility providing ancillary services is not a health facility. See id. Moreover, St. Myers did not address the 24-hour admission requirement, which is Plaintiff’s downfall. 26 Further, a review of California case law reveals no situation wherein a third-party pathology laboratory was deemed a facility under section 1250. To the contrary, even facilities that appear more 27 akin to a traditional hospital have been deemed outside of the definition as a matter of law. See, e.g., Kotler v. Alma Lodge, 74 Cal. Rptr. 2d 721, 730 (Ct. App. 1998) (“a residential care facility which 28 1 citations and quotation marks omitted). 2 In applying this cause of action to the context of personnel management, the 3 California Court of Appeal has held that

4 [m]anaging personnel is not outrageous conduct beyond the bounds of 5 human decency, but rather conduct essential to the welfare and prosperity of society. A simple pleading of personnel management activity is insufficient 6 to support a claim of intentional infliction of emotional distress, even if 7 improper motivation is alleged. If personnel management decisions are improperly motivated, the remedy is a suit against the employer for 8 discrimination. 9 10 See Janken v. GM Hughes Elecs., 53 Cal. Rptr. 2d 741, 756 (Ct. App. 1996). 11 Labcorp argues that Plaintiff did not endure any “extreme or outrageous conduct” 12 that “exceeds all bounds of decency.” Doc. No. 26 at 26. As an initial matter, the Court 13 agrees that Plaintiff’s allegations that Thompson “t[old] Plaintiff not to interact with the 14 cytotechnologists or the staff at the lab; frequently yell[ed] at plaintiff; deliberately 15 decreas[ed] plaintiff’s workload which resulted in a cut in pay; t[old] Plaintiff that she 16 was now ‘going to be proctored’ and that she would no longer be allowed to do certain 17 cases,” Compl. at ¶ 40, even if true, do not rise to the level of extreme and outrageous 18 required for redress and thus are not the kind of actions that support an intentional 19 infliction of emotional distress claim. Accordingly, to the extent Plaintiff bases her claim 20 on these actions, the Court GRANTS Labcorp’s motion. 21 Plaintiff does not appear to base her claim on these actions, however. Instead, 22 Plaintiff argues that there is a triable issue of fact whether her termination—“for illegal 23 reasons and then lying to cover it up”—was extreme and outrageous. Doc. No. 32 at 30. 24 The law is clear that termination without more is insufficient for an intentional 25 infliction of emotional distress claim. See e.g., Unterberger v. Red Bull N. Am., Inc., 75 26 Cal. Rptr. 3d 368, 376 (Ct. App. 2008). Termination may be considered outrageous 27 depending on the surrounding circumstances. See Maffei v. Allstate Cal. Ins. Co., 412 F. 28 Supp. 2d 1049, 1057 n.4 (E.D. Cal. 2006). For example, Alcorn v. Anbro Engineering, 1 Inc., 86 Cal. Rptr. 88 (1970), an African American employee was permitted to pursue an 2 intentional infliction of emotional distress claim because he was fired in a despicable 3 manner when his supervisor did so while shouting various racial epithets. 86 Cal. Rptr. 4 88 at 91. 5 Unlike the circumstances in Alcorn, Plaintiff’s only added circumstance is 6 Labcorp’s allegedly illegal motive and cover-up. This is insufficient. The cases Plaintiff 7 relies on are largely inapposite. See id. at 92 n.5 (explaining that “liability ‘does not 8 extend to mere insults, indignities, threats, annoyances, petty oppressions, or other 9 trivialities’”); Myers v. Trendwest Resorts, Inc., 56 Cal. Rptr. 3d 501 (Ct. App. 2007); 10 Renteria v. Cty. of Orange, 82 Cal. App. 3d 833, 842 (1978); Schneider v. TRW, Inc., 938 11 F.2d 986, 992–93 (9th Cir. 1991). Moreover, Plaintiff fails to address the line of 12 California cases making clear that “personnel management activity is insufficient to 13 support a claim of intentional infliction of emotional distress, even if improper motivation 14 is alleged.” Janken, 53 Cal. Rptr. 2d at 756. (emphasis added). Further,

15 In evaluating whether the defendant’s conduct was outrageous, it is ‘not 16 enough that the defendant has acted with an intent which is tortious or even criminal, or that he has intended to inflict emotional distress, or even that his 17 conduct has been characterized by “malice,” or a degree of aggravation 18 which would entitle the plaintiff to punitive damages for another tort. 19 20 Helgeson, 44 F. Supp. 2d at 1095 (quoting Cochran v. Cochran, 76 Cal. Rptr. 2d 540, 21 545 (Ct. App. 1998)). 22 Accordingly, while there may be a triable issue of fact as to the motive behind 23 Plaintiff’s termination, the issue is irrelevant to her intentional infliction of emotional 24 distress claim because under California law, improper or even illegal motives do not 25 make a termination extreme or outrageous. Instead, Plaintiff may seek redress under the 26 statutory retaliation provisions, see Janken, 53 Cal. Rptr. 2d at 756, which she does. The 27 Court therefore finds that Plaintiff’s intentional infliction of emotional distress claim 28 premised on her allegedly unlawful termination fails as a matter of law. See id.; see also 1 Walker v. Boeing Corp., 218 F. Supp. 2d 1177, 1186 (C.D. Cal. 2002) (“Terminating an 2 employee for improper or discriminatory reasons, like many other adverse personnel 3 management decisions, is insufficiently extreme or outrageous to give rise to a claim for 4 intentional infliction of emotional distress.”); Helgeson, 44 F. Supp. 2d at 1095 5 (“Performance reviews, counseling sessions, lay-off decisions, and work assignments are 6 all decisions that businesses make every day. . . . Even if these decisions were improperly 7 motivated, they fall far short of the necessary standard of outrageous conduct beyond all 8 bounds of decency.”). Accordingly, the Court GRANTS summary judgment in 9 Labcorp’s favor as to Plaintiff’s intentional infliction of emotional distress claim. 10 D. Breach of the Implied Covenant of Good Faith and Fair Dealing 11 Fourth, Plaintiff brings a claim against Labcorp for breach of the implied covenant 12 of good faith and fair dealing. Pursuant to California law, “[t]here is an implied covenant 13 of good faith and fair dealing in every contract that neither party will do anything which 14 will injure the right of the other to receive the benefits of the agreement.” 3500 15 Sepulveda, Ltd. Liab. Co. v. Macy’s W. Stores, Inc., 980 F.3d 1317, 1324 (9th Cir. 2020) 16 (quoting Foley v. Interactive Data Corp., 254 Cal. Rptr. 211, 228 (1988)) (internal 17 quotation marks omitted). However, “California does not recognize a tort action for 18 breach of the implied covenant of good faith and fair dealing in an employment 19 relationship.” Schneider, 938 F.2d at 991 (citing Foley, 254 Cal. Rptr. at 234–35). 20 “Because the implied covenant protects only the parties’ right to receive the benefit of 21 their agreement, and, in an at-will relationship there is no agreement to terminate only for 22 good cause, the implied covenant standing alone cannot be read to impose such a duty.” 23 Schneider, 938 F.2d at 991 (quoting Foley, 254 Cal. Rptr. at 238 n.39). 24 Plaintiff’s claim is largely premised on the argument that Labcorp’s decision to 25 terminate her was in bad faith and thus a breach of the implied covenant. See Compl. at ¶ 26 206; see also Doc. No. 47 at 31. In order for her termination to provide the basis for this 27 claim, however, Plaintiff must identify a contractual provision in the Agreement that was 28 1 frustrated by the allegedly bad faith termination—i.e., that the Agreement provided for 2 for-cause termination. 3 The distinction between for-cause and at-will employment in the context of a good 4 faith and fair dealing claim is an important one. “California law clearly states that the 5 implied covenant of good faith and fair dealing cannot be invoked to prevent a court from 6 enforcing the terms of an at will employment contract.” Friend v. United 7 Techs./Hamilton Standard, No. 92-55864, 1994 U.S. App. LEXIS 9427, at *10 (9th Cir. 8 Apr. 21, 1994). Moreover,

9 With regard to an at-will employment relationship, breach of the implied 10 covenant cannot logically be based on a claim that a discharge was made without good cause. If such an interpretation applied, then all at-will 11 contracts would be transmuted into contracts requiring good cause for 12 termination. . . . Because the implied covenant protects only the parties’ right to receive the benefit of their agreement, and, in an at-will relationship 13 there is no agreement to terminate only for good cause, the implied covenant 14 standing alone cannot be read to impose such a duty.

15 16 De Horney v. Bank of Am. Nat’l Tr. & Sav. Asso., 879 F.2d 459, 466 (9th Cir. 1989) 17 (quoting Foley, 254 Cal. Rptr. at 238 n.39). Accordingly, if Plaintiff’s Agreement was 18 at-will then a bad faith termination cannot frustrate it. 19 Plaintiff holds the burden of proving that Labcorp breached the implied covenant 20 of good faith and fair dealing when it terminated her. As such, in order to avoid 21 summary judgment, Plaintiff must come forward with evidence raising a genuine issue of 22 material fact that her employment was subject to for-cause termination. However, it is 23 undisputed that the Agreement was at-will, see Kondon Decl. at Ex. F, and therefore 24 Labcorp did not need cause to terminate her. Accordingly, Plaintiff’s claim that she was 25 terminated in bad faith fails as a matter of law to establish a claim for breach of the 26 implied covenant of good faith and fair dealing. The Court therefore GRANTS 27 Labcorp’s motion for summary judgment on this basis. 28 1 That said, in opposition Plaintiff argues that Labcorp frustrated her right to 30 2 days’ notice when she was “kicked out” the next business day after receiving the second 3 notice of termination. See Doc. No. 47 at 31. As noted in Section IV.A, it is undisputed 4 that Labcorp ultimately terminated Plaintiff on September 7, 2018.13 See SS at Nos. 32– 5 33. It is further undisputed that the Agreement plainly provides that it may be terminated 6 “[u]pon a thirty (30) day written notice given by either party to the other party . . . .” 7 Kondon Decl. at Ex. F. Plaintiff has come forth with evidence that Labcorp frustrated her 8 entitlement to this term when she “returned to work the following Monday September 9 10th 2018” and her “access card did not work” and the lock to her office had been 10 changed. See Pl. Decl. at ¶ 126. 11 It is unclear, however, whether the first notice of termination—on June 29, 2018— 12 constituted sufficient written notice such that the 30-day notice began to run. 13 Accordingly, the Court DENIES Labcorp’s motion to the extent Plaintiff’s claim is based 14 upon a frustration of the 30-day notice provision in the Agreement. 16 Based on the foregoing, the Court GRANTS IN PART and DENIES IN PART 17 Labcorp’s motion for summary judgment. The Court GRANTS summary judgment in 18 Labcorp’s favor as to Plaintiff’s Cal. Health & Safety Code § 1278.5 and intentional 19 infliction of emotional distress claims. The Court further GRANTS Labcorp summary 20 judgment as to Plaintiff’s implied covenant of good faith and fair dealing claim to the 21 extent it is based upon her termination and DENIES summary judgment to the extent it is 22 based upon a frustration of the 30-day notice provision of the Agreement. Finally, the 23 Court GRANTS summary judgment in Labcorp’s favor as to Plaintiff’s Labor Code 24 retaliation claim to the extent it is based upon Plaintiff’s internal hotline and CMS 25

26 27 13 The Court’s finding in Section IV.A regarding the second notice of termination as the operative termination date is limited to the context of it constituting an adverse employment action under 28 1 || complaints and DENIES the remainder of Labcorp’s request for summary judgment as to 2 || this claim. 3 Plaintiff's remaining claims must proceed to trial. The Court will issue a separate 4 || pretrial scheduling order setting all pertinent deadlines and hearings, including a trial 5 ||date. The Court ORDERS the parties to jointly contact the chambers of the assigned 6 || magistrate judge within five business (5) days of the date this Order is filed, for the 7 || purpose of scheduling a mandatory settlement conference at the convenience of the 8 || magistrate judge. 10 || Dated: August 30, 2021 i Wiathi LIU - / hipllr 12 HON. MICHAEL M. ANELLO 3 United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Barr v. Laboratory Corporation of America Holdings, (S.D. Cal. 2021).

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