Stephen Rozzo v. Sun Pharmaceutical Industries, Inc.

• Court: District Court, C.D. California
• Decided: March 6, 2024
• Docket: 2:23-cv-07624
• Status: Unknown

Opinion

2 O 3

7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9

10 STEPHEN ROZZO, an individual, Case No.: 2:23-cv-07624-MEMF-AJR

11 Plaintiff, ORDER DENIES MOTION TO DISMISS 12 v. FIRST AMENDED COMPLAINT [ECF NO. 15] 13 SUN PHARMACEUTICAL INDUSTRIES,

INC., a Delaware corporation; and DOES 1-50, 14 inclusive, 15 Defendants. 16 17 18 19 20 Before the Court is the Motion to Dismiss filed by Defendant Sun Pharmaceutical Industries. 21 ECF No. 15. For the reasons stated herein, the Court hereby DENIES the Motion to Dismiss. 22 23 24 25 26 27 28 / / / 1 I. Background 2 A. Factual Background1 3 Plaintiff Stephen Rozzo (“Rozzo”) is a former employee of Defendant Sun Pharmaceutical 4 Industries, Inc. (“Sun Pharma”). FAC ¶ 8. Rozzo worked for Sun Pharma for over six and half years, 5 holding various management positions during his tenure. FAC ¶¶ 8, 9. In 2021, Rozzo, who worked 6 in Sun Pharma’s New Jersey location, sought permission from Sun Pharma to relocate to California. 7 FAC ¶¶ 9, 10. Rozzo’s manager, Ejim Mark (“Mark”) told Rozzo that his request was approved, and 8 Rozzo moved to California. FAC ¶ 10. In March 2022, Mark represented that he was creating a new 9 position for Rozzo within Sun Pharma that would allow Rozzo to work remotely in California 10 permanently. FAC ¶ 12. In December 2022, however, Sun Pharma informed Rozzo that he was to 11 work in person three days per week at the New Jersey facility. FAC ¶ 14. Rozzo could not do so and 12 was subsequently terminated. FAC ¶¶ 14, 14. 13 B. Procedural History 14 Rozzo filed his complaint in the Superior Court of the State of California for the County of 15 Los Angeles on August 9, 2023. ECF No. 1-4 (“Compl.”). Sun Pharma removed the action to this 16 Court on September 13, 2023. See ECF No. 1 (“NOR”). 17 After Sun Pharma moved to dismiss Rozzo’s complaint (ECF No. 10), Rozzo filed his First 18 Amended Complaint. Rozzo’s First Amended Complaint alleges the following claims against Sun 19 Pharma: (1) Violation of California Labor Code section 970 (FAC ¶¶ 22–36); (2) Fraud/Negligent 20 Misrepresentation (FAC ¶¶ 37–52); (3) Discrimination on the Basis of Sex and Age (FAC ¶¶ 53– 21 58); (4) Retaliation (FAC ¶¶ 59–65); (5) Failure to Prevent Discrimination and Retaliation (FAC ¶¶ 22 66–70); (6) Whistleblower Retaliation (FAC ¶¶ 71–79); (7) Wrongful Termination in Violation of 23 Public Policy (FAC ¶¶ 80–87). 24 On October 25, 2023, Sun Pharma filed the instant motion to dismiss. ECF No. 15 (“Motion” 25 or “Mot.”). The Motion is fully briefed. See ECF Nos. 17 (“Opposition” or “Opp’n”), 18 (“Reply). 26

27 1 The following factual background is derived from the allegations in Plaintiff’s First Amended Complaint, ECF No. 12 (“FAC”), unless otherwise indicated. For the purposes of this Motion, the Court treats these 28 factual allegations as true, but at this stage of the litigation, the Court makes no finding on the truth of these 1 On March 5, 2024, the Court deemed this matter appropriate for resolution without oral argument 2 and vacated the hearing. ECF No. 19; see also C.D. Cal. L.R. 7-15. 3 II. Applicable Law 4 Federal Rule of Civil Procedure 12(b)(6) allows an attack on the pleadings for “failure to 5 state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “To survive a motion to 6 dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to 7 relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. 8 Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff 9 pleads factual content that allows the court to draw the reasonable inference that the defendant is 10 liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. 11 The determination of whether a complaint satisfies the plausibility standard is a “context- 12 specific task that requires the reviewing court to draw on its judicial experience and common sense.” 13 Id. at 679. Generally, a court must accept the factual allegations in the pleadings as true and view 14 them in the light most favorable to the plaintiff. Park v. Thompson, 851 F.3d 910, 918 (9th Cir. 15 2017); Lee v. City of Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001). But a court is “not bound to 16 accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678 (quoting 17 Twombly, 550 U.S. at 555). 18 As a general rule, leave to amend a dismissed complaint should be freely granted unless it is 19 clear the complaint could not be saved by any amendment. Fed. R. Civ. P. 15(a); Manzarek v. St. 20 Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). 21 III. Discussion 22 Sun Pharma urges the Court to dismiss Rozzo’s first cause of action for violation of 23 California Labor Code section 970 (hereinafter, “Section 970”) and second cause of action for 24 fraud/negligent misrepresentation. As the Court explains further below, the Court finds that Rozzo 25 has sufficiently pleaded both causes of action. 26 A. Rozzo’s California Labor Code Section 970 Claim is Sufficiently Alleged 27 California Labor Code section 970 provides that: No person . . . shall influence, persuade, or engage any person to change from . . . from 28 1 spoken, written, or advertised in printed form, concerning either: (a) The kind, character, or existence of such work; 2 (b) The length of time such work will last, or the compensation therefor; (c) The sanitary or housing conditions relating to or surrounding the work; 3 (d) The existence or nonexistence of any strike, lockout, or other labor dispute. . . . 4 Cal. Lab. Code § 970. 5 Sun Pharma makes two arguments as to why the Court should dismiss Rozzo’s Section 970 6 claim. First, Sun Pharma argues that Section 970 only applies where the employer induces an 7 employee to move, not where, as here, the employee requests a move. Mot. at 4–5. The Court does 8 not find that either the case law cited by Sun Pharma nor the plain language of the statute support 9 such a narrow reading. While the California Court of Appeal in Tyco did note that Section 970 was 10 enacted to “protect migrant workers from the abuses heaped upon them by unscrupulous employers 11 and potential employers, especially involving false promises made to induce migrant workers to 12 move in the first instance,” Tyco Indus., Inc. v. Superior Court, 164 Cal. App. 3d 148, 155 (1985), 13 the California Court of Appeal did not find that Section 970 was only limited to those situations 14 where the employee had no desire to move. Even if an employee has a desire or a request to move, 15 an employer can still persuade or influence the employee to do so by some misrepresentation, and 16 but for that misrepresentation, the employee would not have otherwise made the move. 17 Sun Pharma’s second argument is that Rozzo has failed to plead that any Sun Pharma agent 18 knowingly made a false representation under one of the required categories enumerated in Section 19 970. Mot. at 5–6; see Tyco Indus., 164 Cal. App. 3d at 156 (noting that a knowingly false 20 representation is required for a Section 970 claim). The Court finds that Rozzo has carried his 21 burden and sufficiently pleaded that Mark’s representations were knowingly false, as Rozzo pleads 22 that “when [Dr.] Mark made the misrepresentations, he knew them to be false.” FAC ¶ 10.2 23 24 / / / 25

26 2 Sun Pharma also argues that Rozzo kept his job for one year following relocation, and that as such, Sun 27 Pharma’s alleged promise that Rozzo could work remotely is not a misrepresentation because it was true. Mot. at 6. That is not necessarily so, as Rozzo does not allege that he was told he could keep his job for a 28 year. Instead, the FAC alleges that Rozzo was under the impression that he could relocate permanently. FAC 1 B. Rozzo’s Fraud/Negligent Misrepresentation Claims are Sufficiently Alleged i. Rozzo’s fraud claim meets the Rule 9(b) standard 2 The elements of fraud are: “(1) a knowingly false representation by the defendant; (2) an 3 intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting 4 damages.” Serv. By Medallion, Inc. v. Clorox Co., 44 Cal. App. 4th 1807, 1816 (1996). Under Rule 5 9(b), a party alleging a claim for fraud or mistake “must state with particularity the circumstances 6 constituting fraud or mistake.” Fed. R. Civ. P. 9(b). To plead with particularity, a plaintiff must 7 include “the who, what, when, where, and how of the misconduct charged.” Vess v. Ciba–Geigy 8 Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (internal quotation marks omitted). Fraudulent 9 concealment and omission claims are subject to Federal Rule of Civil Procedure 9(b). Kearns v. 10 Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009). 11 Here, Rozzo alleges that in or about August 2021 (when, where) Mark (who) told (how) 12 Rozzo that his request to relocate to California while continuing in his role with Sun Pharma was 13 approved (what). FAC ¶ 10. Rozzo further alleges that in March 2022 (when, where) Mark (who) 14 told (how) Rozzo that Mark was in the process of creating a new position for Rozzo that would 15 allow him to work remotely from California permanently (what). FAC ¶ 12. As such, Rozzo’s 16 allegations are not vague or conclusory, nor do they leave Sun Pharma guessing as to the factual 17 basis for Rozzo’s claim. See Mot. at 8. Sun Pharma further argues that the statements concerning the 18 new position are not misrepresentations because (1) Rozzo fails to allege that Mark knew the 19 statement was false when he made it and (2) the statements were made after Rozzo’s relocation. This 20 is not so. First, Rozzo does allege that Mark knew the statements were false at the time they were 21 made—see FAC ¶ 43 (“When Defendants made the representations alleged herein, they knew or 22 should have known them to be false. . . .”). Second, although Rozzo had already relocated at the time 23 of the second misrepresentation, Rozzo alleges that the misrepresentation induced him to stay in 24 25 26 27 28 1 California, incurring additional expenses he would not have incurred had he known that Sun Pharma 2 wanted him to return to working in person in New Jersey. FAC ¶ 12.3 3 ii. Rozzo’s Negligent Misrepresentation claim is based on past or present material facts 4 The elements of negligent misrepresentation are: “(1) a misrepresentation of a past or 5 existing material fact, (2) without reasonable grounds for believing it to be true, (3) with intent to 6 induce another's reliance on the fact misrepresented, (4) ignorance of the truth and justifiable 7 reliance thereon by the party to whom the misrepresentation was directed, and (5) damages.” B.L.M. 8 v. Sabo & Deitsch, 55 Cal. App. 4th 823, 834 (1997) (internal quotation marks omitted). 9 Sun Pharma first argues that Rozzo fails to meet the Rule 9(b) standard. As the Court found 10 above, Rozzo pleaded his allegations with sufficient particularity. 11 Sun Pharma next argues that Rozzo’s negligent misrepresentation claim must be dismissed 12 because such a claim must be based on past or existing facts, not predictions or statements as to 13 future events or actions. Here, the critical misrepresentations appear to be that Rozzo could relocate 14 to California while working for Sun Pharma and that Sun Pharma was creating a position for Rozzo 15 that would enable him to work remotely permanently. Although statements as to future actions are 16 generally not actionable, “broken promises of future conduct” may be actionable where the promisor 17 “made [the promise] without any intention of performing it.” Tarmann v. State Farm Mut. Auto. Ins. 18 Co., 2 Cal. App. 4th 153, 159 (1991). However, such promises are actionable as intentional 19 misrepresentations, not negligent misrepresentations—that is, there is no negligent false promise. Id. 20 Both of the critical alleged misrepresentations are actionable as misrepresentations of 21 existing material fact. The periodic reassurances that Rozzo could continue working remotely from 22 California were statements of existing material facts. Similarly, the representation that Sun Pharma 23 “was creating” a position for Rozzo that would enable him to permanently relocate to California was 24 25

26 3 Sun Pharma also argues that the second misrepresentation undermines Rozzo’s claims because it is a “clear 27 admission” that Rozzo was aware that his remote position was not permanent. Mot. at 8. The Court does not find that this wholly undermines Rozzo’s claims, as Rozzo alleges that Mark reassured Rozzo periodically 28 that he could continue working remotely and does not allege that Mark or any Sun Pharma employee ever 1 | also a statement of existing material fact—drawing all reasonable inferences in Rozzo’s favor, this 2 || was a statement that Mark was in the process of creating such a position, not—as Sun Pharma 3 || asserts—only a promise to do something in the future.t Accordingly, the Court finds that Rozzo has 4 | sufficiently pleaded a claim of negligent misrepresentation based upon both sets of 5 || misrepresentations. 6 IV. Conclusion 7 For the foregoing reasons, the Court DENIES the Motion to Dismiss. 8 9 IT IS SO ORDERED. 10 11 Dated: March 6, 2024 12 MAAME EWUSI-MENSAH FRIMPONG 13 United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 4 The FAC reads as follows: Dr. Mark was supportive of the decision to relocate and repeatedly misrepresented that Mr. 2% Rozzo could relocate, influenced, and authorized the relocation. In March 2022, Dr. Mark further misrepresented that he was creating a new Associate Vice-President of Clinical 27 Development position for Mr. Rozzo which would allow Mr. Rozzo to work remotely in California permanently. Mr. Rozzo would not have continued to reside in California, incur 28 additional expenses including purchases and leases but for Dr. Mark’s misrepresentations. FAC, ¥ 12 (emphasis added).