Di Ferdinando v. Intrexon Corporation et al, No. 3:2016cv01826 - Document 10 (S.D. Cal. 2016)

Court Description: ORDER Granting Defendant's 3 Motion to Dismiss. Plaintiffs Complaint is Dismissed in its entirety. The Court grants Plaintiff leave to file an amended complaint with respect to her first and fourth causes of action. If Plaintiff chooses to do so, the amended complaint must be filed within 30 days of the entry of this Order. Failure to do so will result in the entry of a final judgment of dismissal. Signed by Judge Barry Ted Moskowitz on 11/28/2016. (rlu)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 DANA M. DI FERDINANDO, Case No.: 16-cv-01826-BTMJMA Plaintiff, 12 13 v. 14 INTREXON CORPORATION, and DOES 1-100, 15 ORDER GRANTING DEFENDANT'S MOTION TO DISMISS Defendant. 16 17 18 Defendant Intrexon Corporation (“Defendant”) has filed a motion to dismiss 19 Plaintiff Dana M. Di Ferdinando’s (“Plaintiff”) Complaint pursuant to Fed. R. Civ. P. 20 12(b)(6) for failure to state a claim. For the reasons discussed below, Defendant’s 21 motion is GRANTED. 22 23 I. BACKGROUND On March 22, 2016, Plaintiff commenced this action in state court. On July 24 15, 2016, Defendant removed the action. Plaintiff asserts the following claims 25 under California law: (1) breach of implied covenant of good faith and fair 26 dealing; (2) common counts; (3) wrongful termination; (4) fraud; and (5) tortious 27 breach of implied covenant of good faith. 28 According to the Complaint, on October 3, 2013, Defendant offered Plaintiff 1 16-cv-01826-BTM-JMA 1 employment as Chief Information Officer in its Operations Division. (Compl. at 2 4). Plaintiff accepted the offer and both parties signed an employment 3 agreement which set forth the terms of the employment and compensation. 4 (Compl. Ex. A). In particular, the employment agreement provides that Plaintiff: 5 will be eligible for a stock option grant of 65,000 shares of Intrexon’s common stock, which will vest in increments of 25% per year, over a fouryear period from the date of grant. Your grant option is subject to the execution of a Stock Option Agreement by and between you and the Company. 6 7 8 9 (Compl. Ex. A. at 1). It further states that: 10 [b]y signing this letter below, you acknowledge and agree that your employment with Intrexon is considered ‘at will,’ meaning it is for an unspecified period of time and that the employment relationship may be ended by you or by the Company at any time, with or without cause. 11 12 13 14 (Compl. Ex. A. at 2). Plaintiff began working on November 18, 2013. (Compl. at 4). On 15 16 17 18 19 20 21 22 23 December 17, 2013, both parties executed a stock option agreement for 65,000 shares—it was made pursuant and subject to the provisions of the 2013 Omnibus Incentive Plan1 (“option plan”)2. (Compl. Ex. B at 1). The stock option agreement detailed several vesting options, including a vesting option in the event that Defendant terminated Plaintiff without cause. (Compl. Ex. B. ¶ 2(b)(iv)). It specifically stated that the stock option would “become exercisable in full . . . in the event the Participant’s employment with the Company and its Affiliates is terminated by the Company or any Affiliate involuntarily and without 24 25 26 27 28 While not attached to Plaintiff’s pleadings, because Plaintiff’s claims are supported by the Stock Option agreement, which in turn is subject to the terms of the Option Plan, and its authenticity is not questioned by either party, the Court may take its contents into consideration. See Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). 2 Section 21.02 of the Option Plan contains an amendment of awards clause, which states: “[t]he Committee may amend any outstanding Awards to the extent it deems appropriate; provided, however, that no amendment to an outstanding Award may adversely impair the rights of a Participant without the Participant’s consent.” (Decl. Supp. Def.’s Mot. Dismiss, Ex. 1 at 49). 1 2 16-cv-01826-BTM-JMA 1 cause.” Id. The stock option agreement also included a provision reiterating that 2 there was no right to continued employment.3 (Compl. Ex. B. ¶ 13). 3 On March 28, 2014, Defendant presented Plaintiff with a modified stock 4 option agreement which no longer included the provision that allowed for full 5 vesting upon a termination without cause. (Compl. Ex. C). Plaintiff initially 6 refused to sign the modified stock option agreement and complained to the CFO 7 and General Counsel. (Compl. at 5). She was told that she was one of two hold 8 outs and that she had no choice but to sign the modified agreement. Id. Plaintiff 9 signed the agreement on March 28, 2014. Id. On July 21, 2015, Defendant terminated Plaintiff’s employment without 10 11 cause. (Compl. at 5). 12 II. DISCUSSION 13 A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) should 14 be granted only where a plaintiff's complaint lacks a "cognizable legal theory" or 15 sufficient facts to support a legal claim. Balistreri v. Pacifica Police Dept., 901 16 F.2d 696, 699 (9th Cir. 1988). When reviewing a motion to dismiss, the 17 allegations of material fact in plaintiff’s complaint are taken as true and construed 18 in the light most favorable to the plaintiff. Parks Sch. of Bus., Inc. v. Symington, 19 51 F.3d 1480, 1484 (9th Cir. 1995). In deciding a motion to dismiss, a court may 20 consider the facts alleged in the complaint, exhibits attached to the complaint, 21 and documents whose authenticity is not questioned and upon which the 22 plaintiff’s complaint necessarily relies on, even if not physically attached to the 23 complaint. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). 24 Although detailed factual allegations are not required, factual allegations 25 26 27 28 Paragraph 13 of the Stock Option Agreement states: “Neither the Plan, the granting of this Option nor any other action taken pursuant to the Plan or this Option constitutes or is evidence of any agreement or understanding, expressed or implied, that the Company or any Affiliate shall retain the Participant as an employee for any period of time or at any particular rate of compensation.” (Compl. Ex. B. ¶ 13). 3 3 16-cv-01826-BTM-JMA 1 “must be enough to raise a right to relief above the speculative level.” Bell 2 Atlantic v. Twombly, 550 U.S. 544, 555 (2007). “A plaintiff’s obligation to prove 3 the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and 4 conclusions, and a formulaic recitation of the elements of a cause of action will 5 not do.” Id. “[W]here the well-pleaded facts do not permit the court to infer more 6 than the mere possibility of misconduct, the complaint has alleged - but it has not 7 show[n] that the pleader is entitled to relief.” Ashcroft v. Iqbal, 565 U.S. 662, 679 8 (2009) (internal quotation marks omitted). Only a complaint that states a 9 plausible claim for relief will survive a motion to dismiss. Id. 10 11 12 13 14 15 16 17 18 19 20 A. Wrongful Termination Defendant moves to dismiss Plaintiff’s third cause of action for wrongful termination on the grounds that her employment was “at-will.” (Def.’s Mem. Supp. Mot. Dismiss at 15). To support its argument Defendant points to the employment agreement—which expressly labels the employment at-will—and the stock option agreement—which expressly states that there is no right to continued employment. (Id.) Notwithstanding these contractual terms, Plaintiff claims that Defendant wrongfully terminated her employment because it breached both an implied contract and the implied covenant of good faith and fair dealing. (Compl. at 9). 21 22 Under California Labor Code § 2922, an employment that has no specified 23 term may be terminated “at the will” of either party. Cal. Lab. Code § 2922. 24 However, an employer does not hold an unfettered right to discharge even an at- 25 will employee. Foley v. Interactive Data Corp., 47 Cal.3d 654, 665 (1988). 26 California has developed three distinct theories upon which an employee can 27 rebut the presumption of an at-will relationship: (1) a wrongful discharge in 28 violation of public policy; (2) an employer’s breach of an implied-in-fact contract 4 16-cv-01826-BTM-JMA 1 to terminate only for good cause; and (3) an employer’s breach of the implied 2 covenant of good faith and fair dealing. Shapiro v. Wells Fargo Realty Advisors, 3 152 Cal. App. 3d 467, 475–76 (1984). Here, Plaintiff’s wrongful termination claim 4 rests on the second and third theories. The Court addresses each argument 5 below. 6 1. Implied Contract 7 8 First, Plaintiff argues that that the modified stock option agreement gave 9 rise to an implied contract that the employment relationship would continue for a 10 minimum of four years—the time it would take for Plaintiff’s stock option to fully 11 vest. (Compl. at 8). Plaintiff contends that because the modified stock option 12 agreement eliminated the provision that allowed for full vesting upon a 13 termination without cause, it necessarily created an implied-in-fact contract for 14 continued employment until all of her shares vested. (Id.) 15 In Foley v. Interactive Data Corporation, the California Supreme Court held 16 that an implied-in-fact contract can overcome a presumption of at-will 17 employment upon a showing of contrary evidence. See 47 Cal.3d at 677. 18 Whether the parties’ conduct gave rise to an implied contract is a question of 19 fact. Id. The court in Pugh v. See’s Candies, Incorporation, 116 Cal. App. 3d 20 311, 327 (1981), identified several factors that may bear on the existence of an 21 implied-in-fact agreement, including “the personnel policies or practices of the 22 employer, the employee’s longevity of service, actions or communications by the 23 employer reflecting assurances of continued employment, and the practices of 24 the industry in which the employee is engaged.” However, where there is an 25 express contract that insists on the employee’s at will status, the Pugh factors 26 27 28 5 16-cv-01826-BTM-JMA 1 have no relevance4. See Halvorsen v. Aramark Unif. Servs., Inc., 65 Cal. App. 2 4th 1383, 1388 (1998); see also Shapiro v. Wells Fargo Realty Advisors, 152 3 Cal. App. 3d at 482. 4 5 6 7 8 9 10 11 In Shapiro v. Wells Fargo Realty Advisors, the court held that a stock option agreement, that defined an employment relationship as at-will, prevailed over a finding of an implied-in-fact contract. See 152 Cal. App. 3d at 482. The court distinguished the case from Pugh, noting that in Pugh, there was no contract which expressly defined the employment relationship. Id. In Shapiro, however, the plaintiff signed a stock option agreement that expressly reserved the defendant’s right to discharge the plaintiff at any time for any reason whatsoever, with or without cause. Id. In light of the agreement, the court held 12 that “[t]here [could not] be a valid express contract and an implied contract, each 13 embracing the same subject, but requiring different results.” Id. Therefore, the 14 plaintiff’s allegations of an implied-in-fact contract for continued employment 15 could not rebut his status as an at-will employee. Id. 16 Here, Plaintiff signed an employment agreement that expressly defined the 17 18 employment status as at-will. After starting employment, she also signed two 19 stock option agreements which reiterated that there was no right to continued 20 employment. If the Court were to find an implied-in-fact contract, its subject 21 matter would be in direct conflict with the written agreements. Given the express 22 23 24 25 26 27 4 While generally an at-will provision in an express written agreement signed by the employee cannot be overcome by proof of an implied-in-fact contract, this doctrine does not preclude a modification of an express agreement by a subsequent express agreement—written or oral—not to terminate except for good cause. The modification must be supported by new consideration, but an employee's continued service is sufficient consideration for an employer's new promise. See Halvorsen, 65 Cal. App. 4th at 1389. Plaintiff, however, does not allege a modification to the express agreements. 28 6 16-cv-01826-BTM-JMA 1 contractual provisions, Plaintiff’s claim of an implied contract for continued 2 employment cannot rebut her status as an at-will employee. 3 4 5 6 7 8 9 10 11 12 13 Moreover, Plaintiff also claims that, prior to signing the modified stock option agreement, she had a reasonable expectation of continued employment based on Defendant’s acts and conduct. (Compl. at 8). However, Plaintiff fails to support such conclusory allegations with facts. She makes no reference to any of the Pugh factors, and only generally refers to Defendant’s “acts and conduct.” (Id.) Notwithstanding the lack of factual support, the Court finds that Plaintiff could not have reasonably relied on any implied promise by Defendant which contradicts the provisions contained in both the employment agreement and original stock option agreement. Consequently, Plaintiff’s claim for wrongful termination based on a theory of an implied-in-fact contract fails as a matter of law. 14 15 2. Implied Covenant of Good Faith and Fair Dealing Claim 16 Alternatively, Plaintiff bases her claim for wrongful termination on the 17 Defendant’s alleged breach of the implied covenant of good faith and fair dealing. 18 (Compl. at 9). 19 The covenant of good faith and fair dealing, implied by law in every 20 contract, “exists merely to prevent one contracting party from unfairly frustrating 21 the other party’s right to receive the benefits of the agreement actually made.” 22 Guz v. Bechtel Nat’l, Inc., 24 Cal.4th 317, 349 (2000). The implied covenant, 23 however, cannot impose substantive duties or limits on the contracting parties 24 beyond those incorporated in the specific terms of their agreement. Id. at 349– 25 50. The California Supreme Court has held that breach of the implied covenant 26 cannot logically be based on a claim that the discharge was made without good 27 cause because an at-will employment imposes no such duty. Id. Similarly, an 28 employee cannot complain that an arbitrary dismissal deprived her of the benefit 7 16-cv-01826-BTM-JMA 1 of continued employment because an at-will agreement never provided for such 2 a benefit. Id. Here, Plaintiff alleges that Defendant’s termination of her employment 3 4 without cause breached the implied covenant because it deprived her of 5 “compensation and continued employment, bonuses, salary, wages, and other 6 benefits she would have received during her employ with Defendants [sic].” 7 (Compl. at 7). As stated by the California Supreme Court, Plaintiff cannot 8 logically base her claim on the deprivation of continued employment because the 9 at-will status of her employment guarantees no such benefit. See Guz, 24 10 Cal.4th at 350. In fact, Plaintiff signed both stock option agreements, which 11 expressly disclaimed any right to continued employment. Thus, Plaintiff’s claim 12 also fails under this theory as a matter of law. Accordingly, Defendant’s motion to dismiss Plaintiff’s claim for wrongful 13 14 termination is GRANTED. 15 16 17 B. Breach of Implied Covenant of Good Faith and Fair Dealing Defendant also moves to dismiss Plaintiff’s first claim, an independent 18 cause of action for breach of the implied covenant of good faith and fair dealing. 19 Plaintiff appears to base this claim on two grounds. First, Plaintiff repeats her 20 argument that Defendant violated the implied covenant by depriving her of the 21 benefit of continued employment. (Compl. at 5). As discussed above, the 22 implied covenant cannot impose obligations on contracting parties outside the 23 scope of what they agreed upon. See Guz, 24 Cal.4th at 349–50. In light of her 24 at-will employment status, Plaintiff’s claim for breach of implied covenant 25 regarding the deprivation of continued employment fails. 26 Second, Plaintiff argues that Defendant breached the implied covenant by 27 presenting her with a modified stock option agreement that deprived her of the 28 ability to exercise her right to the 65,000 shares upon termination without cause. 8 16-cv-01826-BTM-JMA 1 (Compl. at 5). The implied covenant of good faith and fair dealing prohibits 2 parties from doing anything that will injure the right of the other to receive the 3 benefits of the agreement. Foley v. U.S. Paving Co., 262 Cal. App. 2d 499, 505 4 (1968). Plaintiff argues that Defendant unlawfully interfered with her contractual 5 rights when it presented her with a modified stock option agreement and: (1) 6 provided no consideration to support the modification; and (2) forced her to sign 7 the modified stock option agreement while under economic duress. (Compl. at 8 5). 9 10 1. Consideration With regard to the lack of consideration claim, Defendant argues that there 11 was no need for separate consideration to modify the terms of the stock option 12 agreement because the option plan “expressly provided that the terms of the 13 agreement could be modified, even to the detriment of the employee, upon ‘the 14 Participant’s consent.’” (Def.’s Mem. Supp. Mot. Dismiss at 7 n.5). A written 15 contract may expressly provide for its own modification. Busch v. Globe 16 Industries, 200 Cal. App. 2d 315, 320 (1962). Generally, a modification must be 17 supported by additional consideration to be enforceable. Cal. Civ. Code § 1698. 18 However, “when a modification is in accordance with a provision of a contract 19 authorizing and setting forth a method for its revision,” there is no alteration to 20 begin with. Busch, 200 Cal. App. 2d at 320; see also Fennie v. E-Fuel Corp., No. 21 5:13-cv-04687-PSG, 2014 WL 1494370, at *3 (N.D. Cal. April 16, 2014) (holding 22 that no consideration was required to modify the maturity date of a promissory 23 note where the note itself contemplated such amendment). Here, the stock 24 option agreement was subject to the provisions of the option plan—which 25 expressly provides for a modification of the awards. So as long as the 26 modification of awards was made pursuant to the provision, no separate 27 consideration was required. 28 Moreover, under California law, the offer of pension plans and stock 9 16-cv-01826-BTM-JMA 1 options constitutes an offer for a unilateral contract. See Newberger v. Rifkind, 2 28 Cal. App. 3d 1070, 1076 (1972). Whether the benefit is offered as an 3 incentive to attract or retain employees, “[c]onsideration is inherent where stock 4 options are granted to employees and the employee continues employment.” Id. 5 at 1073. In Asmus v. Pacific Bell, 23 Cal.4th 1 (2000), the California Supreme 6 Court addressed this exact issue. Pacific Bell, the defendant, unilaterally 7 terminated its “Management Employee Security Policy,” which was the 8 company’s written policy to reassign or retrain its managers instead of laying 9 them off. Id. at 7. Pacific Bell subsequently formed a new layoff policy, and a 10 group of employees filed suit for breach of contract. Id.at 7–8. On a certified 11 question from the Ninth Circuit, the California Supreme Court held that Pacific 12 Bell was within its rights when it terminated the policy and replaced it with the 13 new layoff policy because it provided reasonable notice to the affected 14 employees and did not interfere with the employees vested benefits. Id. at 14. In 15 rejecting the plaintiff’s argument that the new policy was unenforceable for lack of 16 consideration, the court held: 17 18 19 20 21 22 The general rule governing the proper termination of unilateral contracts is that once the promisor determines after a reasonable time that it will terminate or modify the contract, and provides employees with reasonable notice of the change, additional consideration is not required. . . . Just as employers must accept the employee’s continued employment as consideration for the original terms, employees must be bound by amendments to those terms, with the availability of continuing employment serving as adequate consideration from the employer. 23 Id. at 14–15. Here, Defendant decided to modify the stock option agreement 24 three months after presenting Plaintiff with the original agreement. The 25 modification eliminated the accelerated vesting option that was available upon 26 termination without cause. It did not interfere with any vested benefits as the 27 modification occurred in March of 2014—nearly eight months before the first 28 10 16-cv-01826-BTM-JMA 1 twenty-five percent of the shares became exercisable5. Thus, the consideration 2 was the availability of continued employment. 3 Additionally, Plaintiff consented to the modification by signing the modified 4 stock option agreement and continuing to work for Defendant for another 16 5 months before being terminated. See Asmus, 23 Cal.4th at 15 (“Continuing to 6 work after the policy termination and subsequent modification constitutes 7 acceptance of the new employment terms.”). 8 As such, Plaintiff’s claim fails on the issue of consideration. 9 2. Voluntary Consent 10 Plaintiff also asserts that Defendant coerced, unduly influenced and 11 pressured her into signing the modified stock option agreement. (Compl. at 5). 12 In her opposition to Defendant’s motion to dismiss, she clarifies that she was 13 under economic duress when she signed the modified agreement. (Pl.’s Opp’n 14 at 7). Plaintiff here fails to state sufficient facts to support a cognizable legal 15 theory. 16 A plaintiff pleading economic duress bears the burden of showing that the 17 defendant committed a “wrongful act” that is sufficiently coercive “to cause a 18 reasonably prudent person faced with no reasonable alternative to succumb to 19 the perpetrator’s pressure.” Rich & Whillock, Inc. v. Ashton Development, Inc., 20 157 Cal. App. 3d 1154, 1158 (1984); see also Osanitsch v. Marconi PLC, No. CV 21 05-3988, 2009 WL 5125821, at *5 (N.D. Cal. Dec. 21, 2009) (finding that “the fact 22 that a plaintiff feels economic pressure to sign an agreement does not raise any 23 inferences about a defendant’s conduct, much less their wrongful conduct.”). As 24 a threshold matter, “[t]he assertion of a claim known to be false or a bad faith 25 threat to breach a contract or to withhold a payment may constitute a wrongful 26 27 28 5 It is worth noting that what Plaintiff seeks to enforce is a provision allowing for the acceleration of the vesting of stock options; not a provision that directly interferes with already vested benefits. 11 16-cv-01826-BTM-JMA 1 act for purposes of the economic duress doctrine.” Rich & Whillock, Inc., 157 2 Cal. App. 3d at 1159. 3 At the outset, Plaintiff fails to state enough facts to demonstrate wrongful 4 conduct. The only facts she alleges to support her claim are that when she 5 refused to sign the modified stock option agreement and complained to the CFO 6 and General Counsel, she was “told that she was one of two hold outs and that 7 she had no choice but to sign” it. (Compl. at 5). The Court does not find that 8 such facts are sufficient to support her claim of economic duress. Accordingly, Defendant’s motion to dismiss Plaintiff’s independent claim for 9 10 breach of implied covenant of good faith and fair dealing is GRANTED. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 C. Common Counts Claim Defendant seeks to dismiss Plaintiff second cause of action—a common count based on the work she rendered during her employment. Under California common law, “[a] common count is not a specific cause of action. . . ; rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness[.]” McBride v. Boughton, 123 Cal. App. 4th 379, 394 (2004). To be entitled to a common count, a plaintiff must show: “(1) indebtedness in a certain sum, (2) the consideration, i.e. goods sold, work done, etc., and (3) nonpayment.” Farmers Ins. Exchange v. Zerin, 53 Cal. App. 4th 445, 460 (1997). However, when a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count fails if the underlying cause of action fails. See McBride, 123 Cal. App. 4th at 395; see also Zumbrun v. Univ. of S. Cal., 25 Cal. App. 3d 1, 14 (1972). Here, Plaintiff states in her Complaint that she seeks relief for the services she provided to Defendant “under her employment agreement as set forth in her first cause of action for Breach of Implied Covenant of Good Faith and Fair 12 16-cv-01826-BTM-JMA 1 Dealing.” (Compl. at 6). Her common count claim therefore seeks the same 2 relief and is based on the same facts as the underling breach of implied covenant 3 claim. As discussed above, that claim fails, and as a result, the common count 4 necessarily fails. 5 Moreover, in her opposition, Plaintiff clarifies that she seeks to recover 6 “severance in an amount that would compensate her for her loss of salary . . . 7 from the date of termination . . . to the time in which the original 65000 shares of 8 stock would have vested,” as well as the fair market value of the shares had they 9 completely vested. (Pl.’s Opp. at 14). The count for services is appropriate 10 where the defendant is indebted to the plaintiff in a certain sum for work or labor 11 done or services performed for the defendant. See Haggerty v. Warner, 115 Cal. 12 App. 2d 468, 475 (1953). Here, it does not appear that Plaintiff seeks to recover 13 for the work she performed while employed by Defendant, but rather, for what 14 she could have earned had she never been terminated. The basis of her claim is 15 therefore at odds with the purpose of a common law common count. Therefore, Defendant’s motion to dismiss Plaintiff’s common counts claim 16 17 is GRANTED. 18 19 20 21 22 D. Fraud Claim Defendant also moves to dismiss Plaintiff’s fourth claim of fraud, arguing that her allegations are purely conclusory. (Def.’s Mot. To Dismiss, Dkt. 3 at 17). In order to establish a prima facie case for fraud, a plaintiff must show: (1) a 23 misrepresentation; (2) scienter; (3) intent to defraud; (4) justifiable reliance; and 24 (5) damages. Lazar v. Superior Court, 12 Cal.4th 631, 638 (1996). Under the 25 Federal Rules of Civil Procedure, a plaintiff alleging fraud or mistake must plead 26 “with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. 27 P. 9(b). Although malice, intent, knowledge, and other conditions of a person’s 28 mind may be alleged generally, a plaintiff alleging fraud must still allege facts 13 16-cv-01826-BTM-JMA 1 from which it can be inferred that the defendant’s representations or assurances 2 were false when made. See, e.g., Eclectic Props. E., LLC v. Marcus & Millichap 3 Co., 751 F.3d 990 (9th Cir. 2014) (holding that the complaint’s factual allegations 4 did not support a plausible inference that the defendants had the required 5 specific intent to defraud). Thus, to satisfy the heightened pleading standard, a 6 plaintiff must “state the time, place, and specific content of the false 7 representations as well as the identities of the parties to the misrepresentations.” 8 Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2004). 9 Upon a review of the Complaint, the Court agrees with Defendant and finds 10 that Plaintiff’s claim lacks the required specificity. Plaintiff alleges that Defendant 11 “intended to defraud Plaintiff by actively recruiting her and promising employment 12 benefits and stock options that they never intended to honor and made 13 representations of material fact that Plaintiff would rely on to join Defendants [sic] 14 as an employee.” (Compl. at 10). However, Plaintiff never elaborates on the 15 content of any particular misrepresentation, where or when it was made, or by 16 whom it was made. Alleging that Defendant never intended to honor the 17 employment or stock option agreement, in absence of any supporting facts, is not 18 enough to satisfy the heightened pleading standard. See Epstein v. Washington 19 Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1996) (“[C]onclusory allegations of law 20 and unwarranted inferences are insufficient to defeat a motion to dismiss for 21 failure to state a claim.”). Consequently, Defendant’s motion to dismiss Plaintiff’s fraud claim is 22 23 GRANTED. 24 25 E. Tortious Breach of Implied Covenant of Good Faith 26 Lastly, Defendant seeks to dismiss Plaintiff’s tortious breach of the implied 27 covenant of good faith claim. Plaintiff urges the Court to apply tort principles in a 28 contract action. (Compl. at 12). Defendant argues that under California law, a 14 16-cv-01826-BTM-JMA 1 tort claim is not available in an employment context. (Def.’s Mot. Dismiss at 21). 2 The remedy for breach of the implied covenant of good faith and fair 3 dealing in a contract has been generally limited to contract damages rather than 4 tort remedies. See Foley, 47 Cal.3d at 693. California has carved out an 5 exception to this general rule in the context of insurance contracts. See id. In 6 Foley v. Interactive Data Corporation, the California Supreme Court refused to 7 expand this exception and restricted relief to contract damages in employment 8 contract cases. Id. Plaintiff’s action deals solely with an employment contract, 9 and as such, Plaintiff’s claim fails as a matter of law. 10 Moreover, Plaintiff argues in her opposition that because Defendant acted 11 intentionally, maliciously, and fraudulently in terminating her employment, tort 12 damages are warranted. Even assuming arguendo that Defendant acted with 13 malice, she is nevertheless limited to contract damages. See Foley, 47 Cal.3d at 14 699 (“[i]n traditional contract law, the motive of the breaching party generally has 15 no bearing on the scope of damages that the injured party may recover for the 16 breach of the implied covenant; the remedies are limited to contract damages.”). 17 Accordingly, Defendant’s motion to dismiss Plaintiff’s fifth claim for tortious 18 breach of the implied covenant is GRANTED. 19 // 20 // 21 // 22 // 23 // 24 // 25 // 26 // 27 // 28 // 15 16-cv-01826-BTM-JMA 1 2 III. CONCLUSION For the reasons discussed above, Defendant’s motion to dismiss is 3 GRANTED. Plaintiff’s Complaint is DISMISSED in its entirety. The Court grants 4 Plaintiff leave to file an amended complaint with respect to her first and fourth 5 causes of action. If Plaintiff chooses to do so, the amended complaint must be 6 filed within 30 days of the entry of this Order. Failure to do so will result in the 7 entry of a final judgment of dismissal. 8 9 10 IT IS SO ORDERED. Dated: November 28, 2016 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16 16-cv-01826-BTM-JMA

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