1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 DON CLEVLAND, et al., Case No.: 21cv871 JM (JLB) 12 Plaintiffs, ORDER ON PARTIAL MOTION TO 13 v. DISMISS AND MOTION TO SEAL 14 LUDWIG INSTITUTE FOR CANCER RESEARCH LTD., 15 16 Defendant. 17 18 19 Presently before the court is Defendant Ludwig Institute for Cancer Research 20 Ltd. s ( Ludwig ) Partial Motion to Dismiss (Fed. R. Civ. Proc. 12(B)(6)) Plaintiffs 21 First Amended Complaint (Doc. No. 31) and Plaintiffs Motion to Seal (Doc. No. 35). 22 The motions have been fully briefed and the court finds them suitable for determination 23 on the papers submitted and without oral argument in accordance with Civil Local Rule 24 7.1(d)(1). For the reasons set forth below, the court grants-in-part and denies-in-part 25 Defendant s Partial Motion to Dismiss and denies Plaintiffs Motion to Seal. 26 /// 27 /// 28 /// I I. BACKGROUND 2 A. Procedural Background 3 On May 5, 2021, Plaintiffs Don Cleveland, Arshad Desai, Frank Furnari, Richard 4 Kolodner, Paul Mischel, Karen Oegema, and Bing Ren (“Plaintiffs’’) filed suit against 5 ||Defendant. See Doc. No. 1. (“Compl.”) Plaintiffs’ Complaint asserted six causes of 6 || action arising primarily under labor and employment laws. /d. 7 On July 6, 2021, Defendant filed a Motion to Dismiss. (Doc. No. 14). Plaintiffs 8 || filed a Response (Doc. No. 15), and Defendant subsequently filed a Reply (Doc. No. 16). 9 ||On January 7, 2022, this court denied-in-part and granted-in-part, Defendant’s motion to 10 || dismiss. 11 On March 2, 2022, Plaintiffs filed an Amended Complaint (“FAC”), again, 12 || alleging six causes of action. (Doc. No. 27.) 13 On March 31, 2022, Defendant Ludwig filed its motion for dismissal under Federal 14 || Rule of Civil Procedure 12(b)(6). (Doc. No. 31.) Plaintiffs filed a response in opposition 15 || (Doc. No. 34), and Defendant duly filed its reply (Doc. No. 37). 16 B. Factual Background! 17 The FAC alleges substantially similar allegations to that of the original complaint. 18 || The causes of action arise from Defendant’s employment of Plaintiffs at Defendant’s 19 |lresearch branch (“San Diego Branch”) at the University of California, San Diego 20 || (‘UCSD’) and Defendant’s subsequent decision to close this branch. 21 Specifically, Plaintiffs assert that: Defendant retaliated against Plaintiff Kolodner 22 ||after Kolodner disclosed his belief Defendant’s 2020-2021 budgets were allegedly 23 insufficient to meet Defendant’s various legal obligations (Count I); Defendant retaliated 24 || against all Plaintiffs after each declined to sign the Transition Agreement (Count II); age 25 ©.
27 ||! The Factual Background is derived from Plaintiffs’ FAC. In a Motion to Dismiss, □□□□□□□ allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party.” Thompson v. Davis, 295 F.3d 890, 895 (9th Cir. 2002).
1 || discrimination (Count III); wrongful adverse employment action in violation of public 2 || policy (Count IV); breach of contract and penalties for failure to timely pay wages (Count 3 || V); and unfair competition (Count VI). Jd. {[§| 46-101. 4 1. Defendant’s Affiliation Agreement with UCSD 5 In 1991, Defendant entered into an Affiliation Agreement with UCSD to establish a 6 ||research branch. (Doc. No. 27 (“FAC.”) § 17). The Affiliation Agreement required 7 Defendant to appoint a Branch Director and select employees for the “continuous, active 8 ||conduct of medical research.” Jd. at J] 17, 19-20. 9 2. Plaintiffs’ Employment 10 According to the FAC, Plaintiffs are “leading scientists who have committed their 11 ||/research programs to pursuing breakthroughs in cancer prevention and control.” □□□ at 12 1. Between 1996 and 2016, Plaintiffs each accepted written employment offers from 13 ||Defendant to establish laboratories at Defendant’s San Diego Branch (“Laboratory 14 Support Agreements”). Jd. 7-13, 22. The Laboratory Support Agreements promised 15 || Plaintiffs an annual budget that would include Plaintiffs’ salaries, benefits, and funding 16 || for Plaintiffs’ research. Jd. § 22. Defendant also agreed to pay Plaintiffs at UCSD’s 17 ||salary scale. /d. § 23. In addition, Plaintiffs separately entered employment contracts 18 || with Defendant, under which Plaintiffs were appointed as Defendant’s “Members” for a 19 rolling term of five years. Id. ¥ 25. 20 Defendant’s Member-Track Appointment and Promotion Policy is applicable to each 21 || of the Plaintiffs and states that a “rolling five year appointment” is convertible to a fixed 22 only after review and recommendation by Ludwig’s Scientific Advisory Committee 23 approval by the Ludwig Board of Directors. /d. § 26. This required review process 24 || of Plaintiffs’ rolling terms of employment did not occur. Jd. 25 3. Decision to Close San Diego Branch 26 In a board meeting held In April 2018, Defendant made the decision to close the San 27 || Diego Branch by December 31, 2023. Jd. §§| 3, 30. Minutes from the meeting disclose 28 || that the Branch was viewed as “post mature.” Jd. 4 at 30. Earlier board minutes refer to
| || Plaintiffs as being “senior scientists,” noted that Plaintiffs were over the age of 64/65, 2 || discussed succession arrangements, and suggested Plaintiffs’ ages made them “incapable 3 a ‘modern approach’ because they were ‘at the age of 64/65.’” Id. at 931. 4 On or about May 21, 2018, Defendant sent letters to Plaintiffs informing them their 5 ||rolling five-year employment terms were being converted into four- or five-year fixed 6 ||terms, such that each Plaintiff would be terminated prior to the San Diego Branch’s 7 \{closure date. Jd. ¢ 33. The required review process of Plaintiffs’ rolling terms of 8 ||employment did not occur. Id. ¥ 26. 9 Defendant also unilaterally imposed a multi-year budget that was allegedly 10 || insufficient to provide adequate funding for Plaintiffs’ research. Jd. 32. 11 On February 12, 2019, at Defendant’s request, Plaintiffs (except Plaintiff Mischel) 12 attended a meeting with Defendant’s President and CEO, Edward McDermott, and 13 ||Defendant’s Scientific Director, Dr. Chi Van Dang. Id. 99 5, 35. At the meeting, 14 || Defendant presented Plaintiffs with the same reduced budget and made receiving this 15 ||}reduced funding contingent upon Plaintiffs executing a Transition Agreement and 16 || Release (“Transition Agreement’). Jd. 4 36. 17 The Transition Agreement required Plaintiffs to diligently pursue their scientific 18 ||research as Defendant’s employees despite the cut in research funding. /d. 437. The 19 || Transition Agreement also included a unilateral release and non-disparagement clause 20 |/and obligated Plaintiffs to ensure Defendant continued to recetve UCSD’s cooperation. 21 ||/d. At the meeting, McDermott allegedly threatened “consequences” if Plaintiffs did not 22 |/sign the Transition Agreement. /d. 4.5. None of the Plaintiffs agreed to the Transition 23 || Agreement’s terms. Jd. at □ 39. 24 After they declined to sign the Transition Agreement, Plaintiffs allege Defendant 25 ||followed through on its threats and retaliated by further cutting Plaintiffs’ research 26 || budgets for 2020 and 2021. Jd. 441. Beginning July 1, 2019, Defendant also refused to 27 || pay cost of living and merit increases to match the UCSD salary scale. Id. 4 42. 28
On October 31, 2019, Plaintiff Kolodner wrote a letter to McDermott, Notter, and 2 || John Gordon, the Chair of Defendant’s Audit Committee, providing an analysis of why 3 2020-2021 budget was allegedly insufficient to meet Defendant’s legal obligations. 4 || Id. § 43. Kolodner was demoted four days later. Jd. 5 On November 4, 2019, and November 15, 2019, Plaintiffs were told Defendant would 6 ||not fund any research starting in 2020. /d. 4] 44. Defendant further directed Plaintiffs to 7 \|invalidate employment contracts for certain lab personnel. /d. at 4] 44. On May 5, 2021, 8 || Plaintiffs filed complaints with the Department of Fair Employment and Housing and 9 ||received right to sue letters. Jd. § 45. These letters were served on Defendant via 10 || certified mail on the same day they were received. Id. 11 II. LEGAL STANDARD 12 Under Federal Rule of Civil Procedure 12(b)(6), a party may bring a motion to 13 dismiss based on the failure to state a claim upon which relief may be granted. A Rule 14 |} 12(b)(6) motion challenges the sufficiency of a complaint as failing to allege “enough 15 || facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 16 U.S. 544, 570 (2007). Ordinarily, for purposes of ruling on a Rule 12(b)(6) motion, 17 court “accept[s] factual allegations in the complaint as true and construe[s] the 18 || pleadings in the light most favorable to the non-moving party.” Manzarek v. St. Paul 19 || Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But, even under the liberal 20 pleading standard of Rule 8(a)(2), which requires only that a party make “a short and 21 || plain statement of the claim showing that the pleader is entitled to relief,” a “pleading that 22 ||/offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of 23 action will not do.’” Ashcroft v. Igbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 24 ||U.S. at 555). “Determining whether a complaint states a plausible claim for relief ... [is] 25 ||a context-specific task that requires the reviewing court to draw on its judicial experience 26 ||and common sense.” Jd. at 679. 27 28
I If. DISCUSSION 2 Defendant moves to dismiss Plaintiffs’ first, third and fifth claims for failure to 3 || state a claim under Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 31-1). The court 4 || addresses each of the causes of action in turn. > 1. Retaliation in Violation of California Labor Code § 1102.5 (First Cause 6 of Action) 7 In its motion to dismiss, Defendant no longer contests Plaintiffs provided 8 || insufficient specificity as to which statute, rule, or regulation Plaintiff Kolodner believed 9 || was being violated. (Doc. No. 31-1 at 10’). Rather, Defendant contends Plaintiffs’ 10 || amended allegations now “demonstrate a more fundamental flaw.” (Doc. No. 31-1 at 1] 10). Specifically, Defendant argues section 1102.5 does not protect employees from 12 || retaliation when they report information to individuals who were “the ones actually 13 implementing or engaging in the alleged unlawful activity.” /d. In other words, 14 || Defendant argues that Plaintiff Kolodner’s alleged disclosure was not a protected 15 || whistleblower activity. 16 As this court explained previously, California Labor Code § 1102.5(b) is a whistle- 17 |lblower statute that protects employees from retaliation when they have “reasonable 18 || cause to believe” that their employer is in “violation of state or federal statute” or “local, 19 state, or federal rule or regulation.” To state a prima facie case for retaliation in violation 20 || of California Labor Code § 1102.5, a plaintiff must show that: “(1) [he or she] engaged in 21 lla protected activity, (2) [his or her] employer subjected [him or her] to an adverse 22 employment action, and (3) there is a causal link between the two.” Patten v. Grant Joint 23 || Union High Sch. Dist., 134 Cal. App. 4th 1378, 1384 (2005). 24 In the FAC, Plaintiffs allege Kolodner was demoted from his position as a Branch 25 || Director as a consequence of his “disclos[ing]’ to two of Defendant’s board members and 26 27 Document numbers and page references are to those assigned by CM/ECF for the docket entry.
1 || Defendant’s President and CEO that Defendant’s 2020-2021 budget ‘“‘was insufficient to 2 ||meet [Defendant’s] legal obligations[.]” FAC at 9] 47-48. Plaintiffs allege that the 3 || decision to terminate them was made by the Board and Defendant’s President and CEO. 4 a. Person with authority 5 The court begins by looking at to whom Kolodner made the disclosures. 6 For an activity to be afforded the protections of section 1102.5, a disclosure must 7 |\|be made “to a person with authority over the employee or another employee who has the 8 || authority to investigate, discover, or correct the violation or non-compliance.” CAL. LAB. 9 || CODE § 1102.5(b). See Smiley v. Hologic, Inc. Case No. 16CV158-WQH-MDD, 2017 10 ||} WL 1354787, at *10 (S.D. Cal. Apr. 12, 2017) (‘To constitute a protected activity 11 pursuant to section 1102.5, the disclosure must be ‘to a person with authority over the 12 ||employee or another employee who has the authority to investigate, discover, or correct 13 || the violation or non-compliance.””). 14 Here, it is undisputed that Kolodner wrote to three people asking them to 15 ||investigate his concerns, namely: (1) the President and CEO (Ed McDermott), (2) the 16 ||Chairman of the Board (John Notter), and (3) the Chair of the Audit Committee (John 17 ||Gordon). FAC § 6. These individuals ordinarily qualify as persons of authority as 18 || described by section 1102.5. See, e.g., Roadrunner Int’l Servs., LLC v. T.G.S. Transp., 19 2019 WL 3946895, at *7 (E.D. Cal. Aug. 21, 2019) (finding communications 20 |/ outlining alleged financial inaccuracies that were sent to company executives, who the 21 || whistleblower believed had violated the law or who had both the authority over the 22 || whistleblower and the ability to control and correct the potential violations of law that the 23 || whistleblower had raised, were enough to show whistleblower engaged in protected 24 || activity within the meaning of section 1102.5(b)); Thomas v. Starz Entm't LLC, No. 2:15- 25 || cv-09239-CAS(AFMx), 2016 WL 5421992, at *8 (C.D. Cal. Sept. 26, 2016) (concluding 26 || that plaintiff adequately alleged that he engaged in a protected activity because he made a 27 || disclosure to a person with authority to investigate the violation). 28
l Defendant does not appear to seriously dispute Messrs. McDermott, Notter, and 2 ||Gordon were “persons of authority.” (See Doc. Nos. 31-1; 37). Notably, Defendant’s 3 |}own Whistleblower Policy also provides that “non-compliance with legal and regulatory 4 ||requirements” and “questionable accounting practices” should be reported to an 5 ||immediate supervisor, the Director of the reporting person’s Branch, the Vice President 6 ||of Human Resources, or the Chair of the Audit Committee of the Institute’s Board of 7 ||Directors. (See Doc. No. 34.2 at 3 4 2.1, 2.2.°) 8 For pleading purposes, the court, therefore, accepts the premise that Messrs. 9 ||McDermott, Notter, and Gordon are “persons of authority” under section 1102.5. 10 b. Protected Whistleblower Activity 11 Having established that the individuals to whom Kolodner made the disclosure 12 || would qualify as persons of authority, the court turns to whether the disclosure should be 13 || afforded the protections of section 1102.5. Not surprisingly, the parties dispute whether 14 || Kolodner’s actions constitute protected whistleblower activity. They also take differing 15 || positions on the applicability of the California Court of Appeal’s decision, Mize-Kurzman 16 ||v. Marin Community College District, 202 Cal. App. 4th 832 (2012), the seminal case 17 || setting forth what constitutes a protected activity under Section 1102.5. 18 At the time Mize-Kurzman was decided, “section 1102.5(b) did not provide 19 protections for employees who report internally within a company or organization.” 20 || Smiley, 2017 WL 1354787, at *10. In Mize-Kurzman, the court held “the report of 21 oo 22 113 Th its opposition, Plaintiffs ask the court to take judicial notice of: Exhibit 1, Ludwig 23 Institute for Cancer Research Ltd., Whistleblower Policy (Doc. No. 34-1). Plaintiffs move for judicial notice under Federal Rule of Evidence 201 because the document is capable of accurate and ready determination by resorting to resources whose accuracy 25 ||cannot reasonably be questioned. See Fed. R. Evid. 201(b)(2). Defendant did not oppose the request for judicial notice. Accordingly, the court GRANTS □□□□□□□□□□□ 6 request and takes judicial notice of Exhibit 1, (Doc. No. 34-2.) See e.g., Cartwright v. 27 || Univ. of Cal., No. 2:05-cv-2439-MCE-KJM, 2006 U.S. Dist. LEXIS 91275, at *22 n.11 (E.D. Cal. Dec. 18, 2006) (granting unopposed request to take judicial notice of internal grievance procedure).
1 ||information that was already known did not constitute a protected disclosure.” 202 Cal. 2 || App. 4th at 858. In so holding, the court looked to the “ordinarily understood □□□□□□□□ 3 ||of the term “disclosure,” which the court read to mean: “to reveal something that was 4 || hidden and not known.” /d. Looking to the plain language of the statute, the court held 5 there was “no reason to believe” the term “disclosure” was being “used in anything other 6 || than their ordinary sense”—which the court read as “to reveal something that was hidden 7 not known.” Jd. at 858-59. 8 Finally, the court found its interpretation was “consistent with those cases holding 9 ||that the employee’s report to the employee’s supervisor about the supervisor’s own 10 |} wrongdoing is not a ‘disclosure’ and is not protected whistleblowing activity, because the 11 ||}employer already knows about his or her wrongdoing.” Jd. at 859. This was because 12 || “criticism delivered directly to the wrongdoers does not further the purpose of either the 13 ||[federal or California] whistleblower laws to encourage disclosure of wrongdoing to 14 || persons who may be in a position to act to remedy it.” Jd. 15 In 2013, section 1102.5(b) was amended to read: 16 An employer, or any person acting on behalf of the employer, 7 shall not retaliate against an employee for disclosing information, or because the employer believes that the 18 employee disclosed or may disclose information, to a 19 government or law enforcement agency, fo a person with authority over the employee or another employee who has the 20 authority to investigate, discover, or correct the violation or noncompliance, or for providing information to, or testifying 21 before, any public body conducting an investigation, hearing, or 22 inquiry, if the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a 23 violation of or noncompliance with a local, state, or federal rule 24 or regulation, regardless of whether disclosing the information 25 is part of the employee's job duties. 26 || CAL. LAB. CODE § 1102.5 (West) (emphasis added). 27 Although Plaintiffs contend the Mize-Kurzman decision is outdated law, post- 28 ||amendment courts have consistently continued to read the term “disclosure” in the same
1 ||manner as the Mize-Kurzman court. See People v. Kolla’s Inc., No. G057831, 2021 WL 2 || 1851487, at *9 (Cal. Ct. App. May 10, 2021), review granted (Sept. 1, 2021) □□□□□□ do 3 ||not think Mize-Kurzman's interpretation of section 1102.5 is outdated or unreasonable.”’); 4 || Hager v. Cty. of L.A., 228 Cal. App. 4th 1538, 1550 (2014) (“[W]e accept the dictionary 5 definition of ‘disclosure’ as used by the court in Mize-Kurzman[.|”); see also e.g., 6 || Trujillo v. Skaled Consulting, LLC, No. 21CV1106-CAB-BGS, 2021 WL 4150380, at *3 7 \\(S.D. Cal. Sept. 13, 2021) (adopting definition of “disclosure” set forth in Mize- 8 || Kurzman); Killgore v. Specpro Pro. Servs., LLC, No. 5:18-CV-03413-EJD, 2019 WL 9 ||6911975, at *9 (N.D. Cal. Dec. 19, 2019) (“Hager and Mize-Kurzman [|both concern 10 ||situations where an employee discloses a legal violation to someone who does not 11 || already know about it. A contrary finding would make the whistleblower statute limitless 12 || and render the ‘disclosure’ requirement meaningless.”) (emphasis in original); Thomas v. 13 || Starz Entm’t LLC, No. 2:15-cv-09239-CAS(AFMx), 2016 U.S. Dist. LEXIS 93177, at 14 (C.D. Cal. July 11, 2016) (“[T]he Court here accordingly reads the term ‘disclosure’ 15 ||1n the same manner as the Court of Appeal in Mize-Kurzman and Hager.”). 16 Thus, “a complaint about illegal conduct made to a supervisor who engages in the 17 ||misconduct is not a “disclosure” and is not protected whistleblowing activity, as the 18 || recipient already knows about his or her own wrongdoing.” Trujillo, 2021 WL 4150380, 19 *3 (citing Mize-Kurzman v. Marin Cmty. Coll. Dist., 202 Cal. App. 4th 832, 859 20 ||(2012)). 21 Here, Defendant contends that because Kolodner simply reported the alleged 22 ||“unlawful conduct to the supervisors (and only those supervisors) who were responsible 23 || for the very conduct about which he had complained,” (Doc. No. 31-1 at 11), this did not 24 constitute protected whistleblower activity. The court is not persuaded. The FAC 25 explicitly identifies McDermott as presenting Kolodner with a “tapering research 26 || budget,” (see FAC J§ 35, 36), and multi-year reduced research budget to Plaintiffs at a 27 February 12, 2019, meeting, (id. at §§] 30, 36). However, the FAC only alleges that the 28 Board made the overall decision to close the San Diego Branch, (id 4] 30, 36), and no 10
1 || facts are pled regarding what Messrs. Notter and Gordon’s roles were in the day-to-day 2 ||operations of the San Diego Branch, including passing the 2020 and 2021 budgets, 3 ||compliance with wage laws, and compliance with federal regulations relating to National 4 ||Institute of Health grants. In other words, there is nothing in the FAC alleging that 5 ||Messrs. Notter and Gordon knew of the alleged wrongdoing — i.e., if Kolodner was 6 || complaining about what they already knew. 7 For pleading purposes only, the court, infers that neither Notter nor Gordan were 8 aware of the alleged protected disclosures, and, therefore, the complaint Kolodner made 9 ||to them was a protected disclosure. See Retail Prop. Tr. v. United Bhd. of Carpenters & 10 || Joiners of Am., 768 F.3d 938, 945 (9th Cir. 2014) (in reviewing a motion to dismiss, the 11 |}court must “draw all reasonable inferences in favor of the nonmoving □□□□□□□□□ 12 ||Accordingly, Defendant’s motion to dismiss Plaintiffs’ First Cause of Action is 13 || DENIED‘.
15 16 4 The court is also not persuaded by Plaintiffs’ procedural argument that Defendant is barred from attacking Plaintiffs’ section 1120.5 claim on any basis that was not already 17 ||raised in Defendant’s First Motion to Dismiss. (Doc. No. 34 at 14). Plaintiffs cite to 18 Federal Rule of Civil Procedure 12(g)(2) in support, which states that: “[e]xcept as provided in Rule 12(h)(2) or (3), a party that makes a motion under this rule must not 19 ||make another motion under this rule raising a defense or objection that was available to 30 the party but omitted from its earlier motion.”
21 || While some federal courts have applied Federal Rule of Civil Procedure 12(g)(2)’s limitations strictly, “the federal district courts of California have not taken this □□□□□□□□□□ Moreno v. Castlerock Farming & Transp. Inc., No. 1:12-CV-0556 AWI JLT, 2022 WL 23 || 902597, at *4 (E.D. Cal. Mar. 28, 2022) (collecting cases); see e.g., In re WellPoint, Inc. Out-Of-Network “UCR” Rates Litig., 903 F. Supp. 2d 880, 893 (C.D. Cal. 2012) (“Courts in this Circuit .. . have permitted defendants moving to dismiss an amended 25 ||complaint to make arguments previously made and to raise new arguments that were previously available.”); Hamana v. Kholi, No. 10CV1630 BTM BGS, 2011 WL 5077614, at *1 (S.D. Cal. Oct. 25, 2011) (“Under Fed. R. Civ. P. 12(g)(2), a defendant 27 move to dismiss an amended complaint for failure to state a claim based on arguments not raised in its first motion to dismiss.”’). 11
1 2. Age Discrimination under the FEHA (Third Cause of Action) 2 Defendant moves for dismissal of the Plaintiffs’ age discrimination claims, once 3 ||again arguing that Plaintiffs have not pled any facts explaining what the term “post- 4 mature” means or how the usage of this term can support an inference of discriminatory 5 || motive directed at Plaintiffs. (Doc. No. 31-1 at 6, 12-14.) 6 As the court explained previously, the FEHA makes it unlawful for an employer, 7 \|because of “age . . . to discharge [a] person from employment... or to discriminate 8 || against [a] person in compensation or in terms, conditions, or privileges of employment.” 9 || Cal. Gov’t Code § 12940(a). 10 Generally, to establish a prima facie case of age discrimination under the FEHA, a 11 || plaintiff must provide evidence that: “(1) he [or she] was a member of a protected class, 12 ||(2) he [or she] was qualified for the position .. . sought or was performing competently in 13 ||the position .. . held, (3) he [or she] suffered an adverse employment action, such as 14 termination, demotion, or denial of an available job, and (4) some other circumstance 15 suggests discriminatory motive.” Guz v. Bechtel Nat’l, Inc., 24 Cal. 4th 317, 355 (2000). 16 “The specific elements of a prima facie case may vary depending on the particular facts.” 17 || 7d. at 355. 18 Here, Plaintiffs allege that they were all 40 years or older when they were 19 |linformed, in 2018, that Defendant was seeking to convert their rolling employment 20 || appointments to fixed terms. FAC § 64. As evidence of discriminatory motive, Plaintiffs 21 || allege that in a 2018 Board meeting, Defendant’s Board “cited” the San Diego Branch as 22 ||being “viewed negatively as ‘post-mature.’” FAC 4 65. Since the Branch consists 23 || entirely of Plaintiffs, Plaintiffs further allege: 24 [t]he statement, thus was directed to and described Plaintiffs, and in 5 particular the leaders of the Branch, Doctors Kolodner and Cleveland, and the fact that they were over forty years old, which the Board deemed 26 undesirable, and which, on information and belief formed a material basis 27 || ——w—_— 28 12
1 for the decision to close the Branch and therefor was also a material basis for terminating Plaintiffs rolling appointments. 3 As further evidence of discriminatory intent, Plaintiffs point to earlier statements 4 |;made at board meetings. In December 2013, a board member discussed the need for 5 || “succession arrangements” at the Branch because senior scientists, including Plaintiffs 6 || Cleveland and Kolodner, were “older than 60 years of age and therefore not expected to 7 the Branch Director in ten years’ time.” /d. Additionally, in December 2014, during a g || discussion about whether Defendant’s lease for the Branch at UCSD should be extended, g ||a board member stated that three members of the Branch (which included Plaintiffs 10 ||Cleveland and Kolodner) were “all at the age of 64/65” and “that the Institute had the 1] |} Opportunity to redirect “into a modern LICR Branch.’” /d. Plaintiffs allege this statement 12 ||Shows discriminatory bias because it contrasts the preferred “modern” approach with that 13 Plaintiffs, “whom the Board member suggested were incapable of a ‘modern’ 14 |}approach solely because they were ‘at the age of 64/65,’ and no other reason.” Id. 15 || Plaintiffs also maintain that Defendant, as illustrated by the statements of its board 16 ||members, viewed the age of the Plaintiffs, and particularly Cleveland and Kolodner, to be 17 || an impairment and “had designs to terminate Plaintiffs’ rolling term appointments so that 1g || they could hire younger scientists to take their places.” Jd. 19 Defendant argues the comments made by the board members were too temporally 209 ||remote to support an inference of discriminatory intent. (Doc. No. 31-1 at 14.) It is true 91 “[i]Jsolated and stray remarks are insufficient to establish discrimination without 32 other indicia of discriminatory intent.” Sneddon v. ABF Freight Sys., 489 F. Supp. 2d 93 || 1124, 1130 (S.D. Cal. 2007). Nevertheless, as Plaintiffs note, the earlier comments made 34 Defendant’s board members do not “form the basis” of Plaintiffs’ discrimination 25 ||claim. /d. at 20. Instead, Plaintiffs provide these comments as context to show how the 26 ||term “post-mature” was used in 2018 and as evidence that Defendant’s Board already 27 || considered Plaintiffs’ age to be problematic in 2014. at 20. 28 13
l Here, the court finds Plaintiffs have alleged additional material facts as sufficient 2 evidence of discriminatory motive. Although the remarks were made at board meetings 3 2013 and 2014, they were, arguably, ageist, and could plausibly provide context for 4 || what Defendant meant by the term “post-mature.” Further, Plaintiffs proffer that “they 5 ||could additionally plead that the [April 2018 minutes] reflect that the comment directed 6 ||to Plaintiffs’ post-maturity was made twice as a basis for closing and prematurely 7 winding down the Branch,” once by Dang, and once by board member, Hellman. See 8 ||Doc. No. 36 at 21°. Later, Dang was a signatory on the letters to Plaintiffs purporting to 9 || convert their terms. (FAC 4¥ 33, 40.) 10 Put another way, as alleged, the Board Minutes in 2013, 2014, and 2018, show that 11 |}on more than one occasion, comments were made that referenced Plaintiffs’ age, from 12 ||which a plausible inference can be made that Defendant considered Plaintiffs ages 13 “undesirable.” As the Ninth Circuit has held, “very little such evidence is necessary to 14 a genuine issue of fact regarding an employer’s motive[.]” Schnidrig v. Columbia 15 || Mach., 80 F.3d 1406, 1409 (9th Cir. 1996) (quoting Lowe v. City of Monrovia, 775 F.2d 16 1009 (9th Cir. 1985)). Instead, “any indication of discriminatory motive ... may 17 suffice to raise a question that can only be resolved by a factfinder.”). Jd.; see also 18 || Sandell v. Taylor-Listug, Inc., 188 Cal. App. 4th 297, 310 (2010) (‘The prima facie 19 || burden is light; the evidence necessary to sustain the burden 1s minimal.”). 20 Further, Plaintiffs’ FAC raises questions as to whether Defendant’s inconsistent 21 ||actions in converting Plaintiffs’ rolling employment terms were a pretext for age 22 discrimination. See FAC 4] 33, 66. Specifically, it is alleged Plaintiffs were originally || 24 Ils On April 18, 2022, along with their opposition to the motion to dismiss, Plaintiffs 25 |{concurrently filed an Application to File under Seal, (Doc. No. 35.) In the motion, Plaintiffs state that they are filing the application solely to ensure compliance with the Paragraph 7 of the limited protective order in place in this case. (/d. at 3.) Plaintiffs 27 ||maintain that the information described in the opposition does not relate to third-party scientists, financial audits, or proprietary research. (/d. at 4.) The court agrees. Plaintiffs’ Application is, therefore, DENIED. 14
1 |}informed their rolling terms were being converted to fixed terms under Section 6.6 of 2 Defendant’s Member-Track Appointment and Promotion Policy (“Member Policy”). Jd. 3 66. However, under Section 6.6, before Plaintiffs’ rolling term could be so 4 ||converted, Plaintiffs were entitled to receive individual reviews and recommendations 5 ||from the Scientific Advisory Committee. Jd. No reviews occurred. Jd. Instead, 6 || Plaintiffs allege they then received “amended” letters converting their rolling terms to 7 || fixed terms under Section 7 of the Member Policy. /d. However, Plaintiffs allege such a 8 || conversion would also be inappropriate under Section 7, because Section 7 only provides 9 ||for termination at the time a Branch is closed. /d. Given the lack of any “credible 10 || grounds or cause” provided by Defendant, Plaintiffs allege “the adverse actions taken by 11 ||[Defendant] against Plaintiffs in converting their rolling term appointments to a fixed 12 was motivated by a wrongful discriminatory purpose.” Jd. 13 For purposes of the motion to dismiss, these allegations plausibly allege a 14 |/discriminatory motive. Accordingly, Defendant’s motion to dismiss Plaintiffs’ Third 15 || Cause of Action is DENIED. 16 3. Breach of Contract and Penalties for Failure to Timely Pay Wages 17 (Fifth Cause of Action) 18 Defendant moves for dismissal of this cause of action, arguing (1) Plaintiffs have 19 |/restyled it as a breach of contract claim without permission; and (2) the claim is 20 || precluded because it constitutes claim splitting. (Doc. No. 31-1 at 14-18.) In opposition, 21 || Plaintiffs argue that nothing in the court’s earlier order limited the theory on which they 22 ||could amend the fifth cause of action, Defendant is precluded from asserting claim 23 || splitting, and that the claim has been adequately alleged. (Doc. No. 34 at 23-29.) 24 a. Claim Splitting 25 Because this is a diversity action, state law controls whether the earlier filed, 26 || Cleveland v. Ludwig Institute for Cancer Research Limited, No. 3:19-cv-021410JM-JLB 27 ||(S.D. Cal.) (hereinafter “Ludwig I’), has a preclusive effect on Plaintiffs’ claim for 28 breach of contract and failure to pay timely wages in this action, (hereinafter “Ludwig 15
1 Jacobs v. CBS Broad., Inc., 291 F.3d 1173, 1177 (9th Cir. 2002); see also Pardo v. 2 || Olson & Sons, Inc., 40 F.3d 1063, 1066 (9th Cir.1994) (“Because this is a diversity case, 3 ||we apply the collateral estoppel rules of the forum state....”). “California law [] 4 determines the res judicata effect of a prior federal court judgment by applying federal 5 ||standards.” Constantini v. Trans World Airlines, 681 F.2d 1199, 1201 (9th Cir. 1982). 6 Accordingly, this court will apply federal standards to this inquiry as directed by 7 || California law. 8 Generally, Plaintiffs “have no right to maintain two separate actions involving the 9 ||same subject matter at the same time in the same court and against the same defendant.” 10 || Mendoza v. Amalgamated Transit Union Int’l, 30 F.4th 879, 886 (9th Cir. 2022) (internal 11 || quotations and citations omitted). The test used for claim preclusion is “borrow[ed]” to 12 || determine if “improper claim-splitting is present.” J/d. Thus, the court examines if the 13 || second suit involves: (1) the same causes of action as the first; and (2) the same parties or 14 || their privies.” Jd. (citing Adams v. Cal. Dep’t of Health Servs., 487 F.3d 684, 688 (9th 15 || Cir. 2007) (overruled on other grounds). 16 Determining if two suits involve the same causes of action requires consideration 17 || of four factors, namely: 18 (1) whether rights or interests established in the prior judgment would be 19 destroyed or impaired by prosecution of the second action; (2) whether substantially the same evidence is presented in the two actions; (3) whether 20 the two suits involve infringement of the same right; and (4) whether the two 41 suits arise out of the same transactional nucleus of facts. 22 || Mendoza, 30 F 4th at 887 (citation omitted). The fourth factor is the “most important” 23 || factor. Id. 24 In Ludwig I, Plaintiffs asserted a breach of contract claim premised on Defendant’s 25 |lalleged failure to provide salaries and benefits as set forth in the Laboratory Support 26 || Agreements between the parties. (See Second Amended Complaint “SAC”, Doc. No. 26, 27 217-303 in Ludwig I). There, as of July 1, 2019, a failure to pay “cost of living 28 increases and merit increases ... required by the obligation to match member/faculty 16
1 ||salaries to the relevant UCSD salary scales” is alleged. /d. 138. Here, Plaintiffs are 2 alleging that “Plaintiffs would be paid at the salary scale that would be applied by 3 || UCSD,” and “duly increase[d] Plaintiffs’ salaries for cost of living increases and/or merit 4 ||increases annually pursuant to UCSD’s salary scales, until starting in and around July 1, 5 ||2019,” (Doc. No. 27 at § 76). Thus, both claims call for a determination of the same or 6 substantially related questions of law and would entail duplication of evidence. Finally, 7 cases involve the same nucleus of facts 1.e., the budgeting decisions made regarding 8 ||the Branch, from which Plaintiffs’ salaries were paid, the alleged breach of the contracts 9 ||and Defendant’s ultimate decision to close the Branch. (Compare Doc. No. 27 with SAC, 10 || Doc. No. 26, in Ludwig I). Noone disputes that both suits involve the same parties. 11 In opposition, Plaintiffs argue that claim splitting does not apply to events 12 || occurring after the filing of Ludwig 1. Specifically, Plaintiffs contend that their failure to 13 || pay timely wages accrues anew every month under California Labor Code section 210, 14 therefore, Plaintiffs can pursue their statutory wage claim from November 8, 2019, 15 || forward, the day after Ludwig 1 was commenced. (Doc. No. 34 at 29.) Not so. The 16 || filing of the Amended Complaint in Ludwig I on July 8, 2020, determines the scope of 17 || the litigation. See L.A. Branch NAACP y. L.A. Unified Sch. Dist., 750 F.2d 731, 739 (9th 18 1984) (holding that the operative complaint frames the scope of the pleading which 19 be barred by res judicata, unless a supplemental pleading is filed bringing in events 20 || outside the scope). At the time Plaintiffs filed the Amended Complaint in Ludwig [, they 21 ||knew that failure to pay timely wages under the California Labor Code was part of the 22 breach of employment contract dispute between the parties; thus, Plaintiffs should have 23 ||raised anything they had to say about the claim at that time. See Brodheim v. Cry, 24 F.3d 1262, 1268 (9th Cir. 2009) (“If two actions involve the same injury to the 25 || plaintiff and the same wrong by the defendant, then the same primary right is at stake 26 if in the second suit the plaintiff pleads different theories of recovery, seeks 27 || different forms of relief and/or adds new facts supporting recovery.”). Additionally, 28 Plaintiffs seek substantially the same relief in both actions—compensatory damages, 17
1 |}exemplary damages or civil penalties, pre-judgment interest, and attorney’s fees and 2 || costs. 3 Accordingly, to the extent that Plaintiffs are seeking to litigate a breach of contract 4 penalties for failure to timely pay wages claim under California Labor Code section 5 ||210, the court finds that any claim brought before July 8, 2020, constitutes claim- 6 splitting. However, to the extent that Plaintiffs seek to litigate events arising after the 7 || filing of the Amended Complaint, the California Labor Code section 210 claim can be 8 || pursued in the instant action. 9 Ordinarily, this would be the end of the court’s analysis but, since Defendant 10 || previously argued against the joinder of the two lawsuits, the court will turn to Plaintiffs’ 11 ||judicial estoppel argument. 12 b. Judicial Estoppel 13 Plaintiffs argue that Defendant is estopped from asserting Plaintiffs’ wage claim 14 || would constitute claim splitting because it previously argued in opposition to Plaintiffs’ 15 motion to consolidate this case with Ludwig I that the two cases should maintain their 16 separate nature. (Doc. No. 34 at 27.) 17 Judicial estoppel is an equitable doctrine, the purpose of which “is to protect the 18 ||integrity of the judicial process by prohibiting parties from deliberately changing 19 ||positions according to the exigencies of the moment.” New Hampshire v. Maine, 20 ||532 U.S. 742, 749-750 (2001) (citation and internal quotation marks omitted). 21 Three factors may be examined by courts in determining whether to apply the 22 || doctrine of judicial estoppel: (1) whether the party's later position was inconsistent with 23 |/its initial position; (2) whether the party successfully persuaded the court to accept its 24 ||earlier position so that judicial acceptance of an inconsistent position in a later 25 proceeding would create the perception that either the first or the second court was 26 misled; and (3) whether the party would derive an unfair advantage or impose an unfair 27 || detriment on the opposing party if not estopped from asserting the inconsistent position. 28 || New Hampshire, 532 U.S at 750-51. 18
1 In denying Plaintiffs’ motion for consolidation, this court summarized Defendant’s 2 position as being agreeable to coordinating the two cases, but that Defendant argued 3 || consolidation was premature because the claims in Ludwig I] may be disposed of without 4 || further motion practice and the two cases raised “distinct issues of law and fact.” (See 5 No. 13 at 4, in Ludwig II.) This court went on to note the very different phases of 6 ||the two litigations, the factual similarities before concluding: “Plaintiffs have alleged 7 || different causes of action in these cases, thereby presenting the court with different legal 8 ||questions. The potentially significant legal differences between the two cases also 9 || weighs against premature consolidation.” /d. at 5. Of course, Defendant’s position and 10 court’s conclusion occurred before the FAC in Ludwig IT was filed. Regardless, 11 || Defendant successfully argued against consolidation; thus, it would be unfair if Plaintiffs 12 || were not allowed to pursue the full extent of their breach of contract/wage claim. Cf. 13 || Parklane Hosiery Co. v. Shore, 439 U.S. 322, 328, 99 S. Ct. 645, 58 L.Ed.2d 552 (1979) 14 ||([T]he requirement of determining whether the party against whom an estoppel is 15 ||asserted had a full and fair opportunity to litigate is a most significant safeguard.” 16 || (internal quotation marks omitted)); Ross v. Int'l Bhd. of Elec. Workers, 634 F.2d 453, 17 (9th Cir.1980) (“The question [before applying res judicata to bar the second suit] is 18 ||... whether [plaintiff] had a fair opportunity to litigate that claim before a competent court 19 || prior to bringing it to the court below.”). 20 Consequently, the court is left facing the situation where Plaintiffs: (1) have not 21 ||had a full opportunity to litigate their breach of contract/wage claim; and (2) seek to bring 22 ||a breach of contract/wage claim in a subsequent suit that involves the same or 23 substantially similar facts and events as those alleged in Ludwig J, thus imputing the 24 claim splitting issues discussed above. In light of these novel circumstances, and in an 25 attempt to protect the court from having to expend judicial resources on litigating the 26 || contract/wage claim in a piecemeal fashion, the most equitable solution appears to be for 27 Plaintiffs to be given the opportunity to amend the SAC in Ludwig J to add this claim. 28 || See Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 183, 72 S.Ct. 219, 96 19
1 || L.Ed. 200 (1952) (“Wise judicial administration, giving regard to conservation of judicial 2 ||resources and comprehensive disposition of litigation, does not counsel rigid mechanical 3 solution of such problems.”). See also Adams, 487 F.3d at 688 (the Ninth Circuit stated 4 || that a district court “may exercise its discretion” to dismiss a duplicative later-filed action 5 ||“[a]fter weighing the equities of the case”) (emphasis added); FastVDO LLC v. LG Elecs. 6 || Mobilecomm U.S.A., Inc., Case No.: 16-cv-02499-H-WVG, 2016 WIL 9526400 at *4 7 \|(S.D. Cal. Dec. 13, 2016) (court exercised its discretion and concluded “that the equities 8 || weigh[ed] in favor of allowing the present action to proceed” after defense counsel 9 ||indicated it would oppose plaintiff's motion to amend the complaint in the earlier filed 10 |/action); Fido's Fences, Inc. v. Radio Sys. Corp., 999 F. Supp. 2d 442, 453 (E.D.N.Y. 11 |}2014) (‘A duplicative suit does not, however, necessarily require dismissal of the later- 12 || filed action; such situations ‘do not lend themselves to a rigid test, but require instead that 13 || the district court consider the equities of the situation when exercising its discretion.’’’). 14 Accordingly, the court will exercise its discretion and DISMISSES WITHOUT 15 || PREJUDICE, Plaintiffs’ Breach of Contract and Penalties for Failure to Timely Pay 16 || Wages Claim.° 17 18 |} /// 19, || 20 | 6 Although the court finds it equitable to provide Plaintiffs with an opportunity to seek 21 leave to amend their complaint in Ludwig I, the court takes no position as to the merits of such a motion at this time. Plaintiffs are reminded that if they seek leave to amend at this juncture, they will have to satisfy the more stringent “good cause” standard required 23 ||under Rule 16 as the deadline for amendment has long since passed. AmerisourceBergen Corp. v. Dialysist W., Inc., 465 F.3d 946, 952 (9th Cir. 2006). Plaintiffs would then have to meet the standards under Rule 15 to determine whether the proposed amendment 25 should be allowed. Eckert Cold Storage v. Behl, 943 F. Supp. 1230, 1232 n.3 (E.D. Cal. 1996). The decision on whether to grant a party’s request for leave to amend is within the discretion of this court, /nternational Association of Machinists & Aerospace Workers 27 ||v. Republic Airlines, 761 F.2d 1386, 1390 (9th Cir. 1985), but is “not to be granted automatically,” Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990). 20
IV. CONCLUSION 2 In sum, the court GRANTS-IN-PART and DENIES-IN-PART Defendant’s 3 || Motion to Dismiss as follows: 4 1. Defendant’s Motion to Dismiss Plaintiffs’ First Cause of Action for Retaliation 5 Violation of California Labor Code § 1102.5 is DENIED. 6 2. Defendant’s Motion to Dismiss Plaintiffs’ Third Cause of Action for Age 7 || Discrimination under the FEHA is DENIED. 8 3. Defendant’s Motion to Dismiss Plaintiffs’ Fifth Cause of Action for Breach of 9 ||Contract and Penalties for Failure to Timely Pay Wages is GRANTED WITHOUT 10 || PREJUDICE. Should Plaintiffs elect to file a motion to amend in Ludwig I, they have 11 || up to and including August 3, 2022, to do so. 12 4. Plaintiffs’ Motion to Seal is DENIED. The Clerk of Court shall file the 13 || unredacted version of Plaintiffs’ Opposition on the public docket, currently lodged on the 14 || docket at Document Entry Number 36. 15 IT IS SO ORDERED. 16 || Dated: July 20, 2022 seal Bathe 18 n: Jeffrey. Miller nited States District Judge 19 20 21 22 23 24 25 26 27 28 21