Thomas Atencio v. Tunecore, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: January 12, 2021
• Docket: 19-55814
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JAN 12 2021 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

THOMAS ATENCIO, an adult individual; No. 19-55814 GIAN CATERINE, an adult individual, also known as John Cate, D.C. No. 2:16-cv-01925-DMG-MRW Plaintiffs-Appellants,

v. MEMORANDUM*

TUNECORE, INC., a corporation,

Defendant-Appellee.

THOMAS ATENCIO, an adult individual; No. 19-55901 GIAN CATERINE, an adult individual, also known as John Cate, D.C. No. Plaintiffs-Appellees, 2:16-cv-01925-DMG-MRW

v.

Defendant-Appellant.

Appeal from the United States District Court for the Central District of California Dolly M. Gee, District Judge, Presiding

Argued and Submitted November 16, 2020

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Pasadena, California

Before: RAWLINSON and HUNSAKER, Circuit Judges, and ENGLAND,** Senior District Judge.

Thomas Atencio and Gian Caterine (Plaintiffs), founders of TuneCore, Inc.,

received stock-option agreements in exchange for their services to TuneCore. After

unsuccessfully exercising their options, Plaintiffs sued TuneCore alleging it

breached the stock-option agreements and was illegally withholding Plaintiffs’

wages by not allowing them to exercise their options. Following trial, the jury

awarded Plaintiffs the value of their stock options. Both Plaintiffs and TuneCore

appealed. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

Wages. We review de novo the district court’s dismissal of Plaintiffs’ wage

claims under Federal Rule of Civil Procedure 12(b)(6). Curtis v. Irwin Indus., Inc.,

913 F.3d 1146, 1151 (9th Cir. 2019). Plaintiffs argue that under the law of the states

where they reside, California and Massachusetts, the stock-option agreements are

wages.1 The stock-option agreements, however, have New York choice-of-law

** The Honorable Morrison C. England, Jr., United States Senior District Judge for the Eastern District of California, sitting by designation. 1 While TuneCore arguably forfeited the right to assert that New York law was applicable under a choice-of-law analysis by never raising the issue to the district court, that forfeiture was waived by Plaintiffs on appeal. Norwood v. Vance, 591 F.3d 1062, 1068 (9th Cir. 2010) (holding that a party can “waive waiver” by not raising it on appeal).

2 provisions. In this diversity case, we use California’s choice-of-law rules to

determine what law applies. Mortensen v. Bresnan Commc’ns, LLC, 722 F.3d 1151,

1161 (9th Cir. 2013).

Under California law, the New York choice-of-law provisions control unless

Plaintiffs show that application of New York law will be contrary to a fundamental

policy of either California or Massachusetts and that those states have a greater

material interest in the matter than New York. See Wash. Mut. Bank, FA v. Superior

Ct., 24 Cal. 4th 906, 916 (2001). Although California and Massachusetts may have

a fundamental policy to regulate labor that occurs within their borders, Plaintiffs

failed to show that either of these jurisdictions have a greater material interest than

New York in this case. See id. at 917 (explaining the burden is on the party

challenging the contractual choice-of-law provision). Consequently, New York law

governs Plaintiffs’ claims, and, as the parties concede, stock options are not “wages”

under New York law. Gilman v. Marsh & McLennan Cos., 868 F. Supp. 2d 118, 135

(S.D.N.Y. 2012); Guiry v. Goldman, Sachs & Co., 814 N.Y.S.2d 617, 618–19 (N.Y.

App. Div. 2006).

Judicial Admission. In their operative complaint, Plaintiffs alleged that

Atencio was entitled to $49,103.36 in damages and Caterine was entitled to

$196,816.68. Plaintiffs’ “[f]actual assertions in [their] pleadings . . . are considered

judicial admissions conclusively binding on” them unless they amend their

3 pleadings. Am. Title Ins. v. Lacelaw Corp., 861 F.2d 224, 226 (9th Cir. 1988). The

district court permissibly concluded that Plaintiffs did not diligently seek leave to

amend their complaint. In re W. States Wholesale Nat. Gas Antitrust Litig., 715 F.3d

716, 737 (9th Cir. 2013) (noting that Federal Rule of Civil Procedure 16’s “good

cause” requirement primarily considers a party’s diligence). Therefore, Plaintiffs are

bound by their original damages allegations. Id.

Summary Judgment. TuneCore contends that the district court erred in

denying its motion for summary judgment on the breach-of-contract and quantum-

meruit claims. This argument “fails at the outset” because these claims were

presented to and decided by the jury at trial. Cheffins v. Stewart, 825 F.3d 588, 596–

97 (9th Cir. 2016) (citation omitted).

Waiver. We review de novo the district court’s denial of TuneCore’s motion

for judgment as a matter of law against the jury’s finding that Caterine did not waive

his stock-option rights. Harper v. City of Los Angeles, 533 F.3d 1010, 1021 (9th Cir.

2008). Construing the evidence in the light most favorable to Caterine, id., the

district court did not err because none of Caterine’s statements in his emails to

TuneCore evidenced a clear waiver of his option rights, see Fundamental Portfolio

Advisors, Inc. v. Tocqueville Asset Mgmt., L.P., 817 N.Y.S.2d 606, 611 (N.Y. 2006),

and the jury’s conclusion was not unreasonable, Zhang v. Am. Gem Seafoods, Inc.,

4 339 F.3d 1020, 1038 (9th Cir. 2003) (“We must accept any reasonable interpretation

of the jury’s actions.”).

Jury Instruction. Finally, TuneCore seeks remand for a new trial and argues

the trial court should be directed to provide a different jury instruction regarding

waiver. Because a new trial is not warranted, we need not reach this jury instruction

argument. Regardless, it was not reversible error for the district court to reject

TuneCore’s requested waiver instruction because the given instruction fairly and

correctly covered the elements of waiver. Dang v. Cross, 422 F.3d 800, 805 (9th Cir.

2005) (“In evaluating jury instructions, prejudicial error results when, looking to the

instructions as a whole, the substance of the applicable law was [not] fairly and

correctly covered.” (modification in original) (citation omitted)).

AFFIRMED.