Snap! Mobile, Inc. v. Croghan, No. 5:2018cv04686 - Document 45 (N.D. Cal. 2019)

Court Description: ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 32 .(lhklc1, COURT STAFF) (Filed on 2/22/2019)

Download PDF

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION United States District Court Northern District of California 11 12 SNAP! MOBILE, INC., 13 Plaintiff, Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS v. 14 15 PAUL CROGHAN, Defendant. 16 Re: Dkt. No. 32 17 Before the Court is Plaintiff Snap! Mobile, Inc.’s (“Snap”) motion to strike the affirmative 18 19 defenses and to dismiss the counterclaims set forth in Defendant Paul Croghan’s (“Croghan”) First 20 Amended Answer. ECF No. 32 (“Mot.”). Having considered the submissions of the parties, the 21 relevant law, and the record in this case, the Court GRANTS IN PART with prejudice, GRANTS 22 IN PART without prejudice, and DENIES IN PART Snap’s motion to strike. The Court also 23 GRANTS without prejudice Snap’s motion to dismiss Croghan’s counterclaims. 24 I. BACKGROUND 25 A. Factual Background 26 Snap is a Delaware corporation with its principal place of business in Seattle, Washington. 27 28 1 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS United States District Court Northern District of California 1 ECF No. 1 (“Compl.”) ¶ 1. Snap developed an online donation platform to assist sports teams, 2 coaches, and teachers to raise money through online donation campaigns. Id. ¶ 7. Snap makes its 3 online donation platform available to teams, coaches, and teachers through its employees, 4 including Snap’s sales representatives. Id. ¶ 12. 5 Snap’s complaint focuses on Snap’s relationship with Defendant Croghan, a Santa Cruz, 6 California resident who worked for Snap as an independent contractor starting in May 2014, and 7 as an employee starting in July 2017 when Croghan signed a Sales Representative Agreement. Id. 8 ¶¶ 2, 14–16. In the Sales Representative Agreement, Croghan promised not to use, disclose, or 9 otherwise misappropriate Snap’s confidential, proprietary, or trade secret information. Id. ¶ 32. 10 According to Snap, Croghan quit suddenly on June 1, 2018, and commenced a relationship with a 11 company that is attempting, with Croghan’s assistance, to copy Snap’s fundraising tools and 12 approaches and to misappropriate Snap’s trade secret information. Id. ¶¶ 30–57. 13 Croghan’s allegations in the First Amended Answer (“FAA”) focus on the alleged bad 14 conduct of Snap in its capacity as Croghan’s employer. For instance, Croghan alleges that Snap 15 unilaterally converted Croghan from an independent contractor to an employee and that Croghan 16 was threatened with termination if he did not sign the Sales Representative Agreement (the 17 “Agreement”) that governed the terms of his employment with Snap. ECF No. 27 (“FAA”) at 17, 18 28, ¶ 32. Croghan alleges that at the time, Croghan was suffering immense emotional distress 19 because of a rare chromosomal abnormality that required his daughter, born June 3, 2017, to 20 remain hospitalized for the entire duration of her seven months of life. Id. at 17. Croghan further 21 alleges that the Agreement contained invalid and unconscionable terms, including a provision that 22 Snap is free to terminate Croghan’s employment at will, but that Croghan must provide ten days’ 23 notice before he could terminate the employment relationship. Id. Croghan alleges that Snap failed 24 to perform as required under the Agreement by failing to provide Croghan with the promised 25 promotion. Id. 26 27 28 Croghan further alleges that despite his change to employee status in 2017, Croghan 2 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS United States District Court Northern District of California 1 continued to perform the same job duties he had performed as an independent contractor. Id. at 28 2 ¶ 34. Croghan alleges that Snap exercised control over Croghan at all times, including during his 3 tenure as an independent contractor. Id. at 26–28, ¶¶ 9–27. During the period Croghan was 4 classified as an independent contractor, Croghan alleges that he paid all of his own business 5 expenses, was not provided compliant meal or rest periods, and was not paid minimum wages for 6 all hours worked or overtime. Id. at 29–30, ¶¶ 39–43. Snap also failed to record Croghan’s hours 7 worked, failed to provide him accurate wage statements, failed to maintain accurate payroll 8 records, and failed to pay Croghan all compensation due at termination. Id. at 29, ¶¶ 44–47. 9 Croghan further alleges that in addition to violating California’s wage and hour laws, Snap failed 10 to provide Croghan with a leave of absence to be with his daughter in the hospital. Id. at 31, ¶¶ 11 50–53. 12 B. Procedural History 13 After Croghan ended his employment with Snap on June 1, 2018, Snap initiated the instant 14 action against Croghan on August 3, 2018. See Compl. Snap brought five claims against Croghan: 15 (1) trade secret misappropriation pursuant to the Defend Trade Secrets Act (“DTSA”); (2) trade 16 secret misappropriation pursuant to the California Uniform Trade Secrets Act (“CUTSA”); (3) 17 Breach of Contract; (4) Breach of Duty of Loyalty; and (5) violation of California Penal Code 18 § 502. Compl. ¶¶ 58–98. Croghan filed his Answer on August 28, 2018. ECF No. 15. 19 On October 2, 2018, after meeting and conferring, the parties filed a stipulation for 20 Croghan to amend his answer and counterclaims by October 12, 2018, ECF No. 25, which the 21 Court granted, ECF No. 26. On October 12, 2018, Croghan filed his First Amended Answer 22 (“FAA”). See FAA. In his FAA, Croghan included a “general denial” of the complaint stating that 23 “[t]o the extent that any allegations in the Complaint have not been specifically admitted or 24 denied, they are hereby denied.” Id. at 15. Croghan also asserted that “by alleging the Affirmative 25 Defenses set forth below, Croghan does not agree or concede that he bears the burden of proof or 26 the burden of persuasion on any of these issues, whether in whole or in part.” Id. at 15. 27 28 3 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS Croghan asserted sixteen affirmative defenses, which Croghan titled as follows: (1) Failure 1 2 to Mitigate; (2) Actions of Plaintiff and Third Parties; (3) Consent; (4) Offset; (5) Waiver, 3 Relinquishment, Abandonment, and Estoppel; (6) Spoliation; (7) Unjust Enrichment; (8) Failure to 4 Perform; (9) Excuse; (10) Unclean Hands; (11) Contractual Bar; (12) Invalidity and 5 Unenforceability; (13) No Fiduciary Duty; (14) Employee Safe Harbor; (15) Permission; and (16) 6 Additional Defenses. Id. at 16–25. Croghan also brought ten counterclaims: (1) violation of California Labor Code § 2802 United States District Court Northern District of California 7 8 (“Unreimbursed Business Expenses”); (2) violation of California Labor Code §§ 226.7 and 512, 9 and IWC Wage Order No. 4 (“Missed Meal Period”); (3) violation of California Labor Code §§ 10 226.7, and IWC Wage Order No. 4 (“Missed Rest Period”); (4) violation of California Labor Code 11 §§ 1182.11, 1182.12, and 1197, and IWC Wage Order No. 4 (“Failure to Pay Minimum Wage”); 12 (5) violation of California Labor Code § 510, and IWC Wage Order No. 4 (“Failure to Pay 13 Overtime”); (6) violation of California Labor Code § 226, and IWC Wage Order No. 4 14 (“Employee Itemized Wage Statement”); (7) violation of California Labor Code § 1174, and IWC 15 Wage Order No. 4 (“Payroll Records”); (8) violation of California Labor Code §§ 201–02 16 (“Compensation Upon Termination”); (9) violations of the Family and Medical Leave Act 17 (“FMLA”), 29 U.S.C. § 2601, and the California Family Rights Act (“CFRA”), California 18 Government Code § 12945.2; and (10) violation of California’s Unfair Competition Law 19 (“UCL”), Cal. Bus. & Prof. Code § 17200, et seq. Id. at 32–40. On October 29, 2018, Snap filed the instant motion to strike the affirmative defenses and to 20 21 dismiss the counterclaims set forth in Croghan’s FAA. See Mot. at 32. Croghan opposed on 22 November 13, 2018. ECF No. 34 (“Opp’n”). Snap replied on November 20, 2018. ECF No. 39 23 (“Reply”). 24 II. LEGAL STANDARD 25 A. Affirmative Defenses 26 Federal Rule of Civil Procedure 8(b)(1) requires a party to “state in short and plain terms 27 28 4 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS United States District Court Northern District of California 1 its defenses to each claim asserted against it.” Rule 8(c) similarly requires that a party 2 “affirmatively state any avoidance or affirmative defense.” The United States Supreme Court in 3 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), 4 set a heightened “plausibility” pleading standard for complaints. This Court, as well as the vast 5 majority of district courts, has held that the heightened pleading standard for complaints 6 articulated in Twombly and extended to all civil complaints in Iqbal applies to affirmative 7 defenses. See Perez v. Gordon & Wong Law Group, P.C., No. 11-CV-03323-LHK, 2012 WL 8 1029425, at *8 (N.D. Cal. March 26, 2012) (collecting cases). “This standard ‘serve[s] to weed out 9 the boilerplate listing of affirmative defenses which is commonplace in most defendants’ 10 pleadings where many of the defenses alleged are irrelevant to the claims 11 asserted.’” Id. (quoting Barnes v. AT&T Pension Benefit Plan-Nonbargained Program, 718 F. 12 Supp. 2d 1167, 1172 (N.D. Cal. 2010)). “This standard is also consistent with Iqbal’s admonition 13 that fair notice pleading under Rule 8 is not intended to give parties free license to engage in 14 unfounded fishing expeditions on matters for which they bear the burden of proof at trial.” Id. 15 (citing Iqbal, 556 U.S. at 678–79). Therefore, “[w]hile a defense need not include extensive 16 factual allegations in order to give fair notice, bare statements reciting mere legal conclusions may 17 not be sufficient.” Id. (internal quotation marks omitted). In order to satisfy Rule 8, “a defendant’s 18 pleading of affirmative defenses must put a plaintiff on notice of the underlying factual bases of 19 the defense.” Id. at *8 (citing Dion v. Fulton Friedman & Gullace LLP, No. 11-2727 SC, 2012 20 WL 160221, at *2 (N.D. Cal. Jan.17, 2012)). 21 B. Motion to Strike 22 Federal Rule of Civil Procedure 12(f) permits a court to “strike from a pleading an 23 insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” A Rule 24 12(f) motion to strike serves “to avoid the expenditure of time and money that must arise from 25 litigating spurious issues by dispensing with those issues prior to trial.” SidneyVinstein v. A.H. 26 Robins Co., 697 F.2d 880, 885 (9th Cir. 1983); see also Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 27 28 5 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS United States District Court Northern District of California 1 1527 (9th Cir. 1993), rev’d on other grounds, 510 U.S. 517 (1994). A defense may be stricken as 2 insufficient if it fails to give plaintiff “fair notice” of the defense. Wyshak v. City Nat’l Bank, 607 3 F.2d 824, 827 (9th Cir. 1979); see generally Fed. R. Civ. P. 8. A court may also strike from an 4 answer matter that is immaterial, i.e., “that which has no essential or important relationship to the 5 claim for relief or the defenses being plead,” or matter that is impertinent, i.e., that which does not 6 pertain, and is not necessary, to the issues in question. Fantasy, 984 F.2d at 1527. Motions to 7 strike are generally disfavored and “should not be granted unless the matter to be stricken clearly 8 could have no possible bearing on the subject of the litigation” or “unless prejudice would result to 9 the moving party from denial of the motion.” Platte Anchor Bolt, Inc. v. IHI, Inc., 352 F. Supp. 2d 10 1048, 1057 (N.D. Cal. 2004) (citations omitted). “If there is any doubt whether the portion to be 11 stricken might bear on an issue in the litigation, the court should deny the motion.” Id. (citations 12 omitted). “With a motion to strike, just as with a motion to dismiss, the court should view the 13 pleading in the light most favorable to the nonmoving party.” Id. “Ultimately, whether to grant a 14 motion to strike lies within the sound discretion of the district court.” Cruz v. Bank of N.Y. Mellon, 15 2012 WL 2838957, at *2 (N.D. Cal. July 10, 2012) (citing Whittlestone, Inc. v. Handi–Craft Co., 16 618 F.3d 970, 973 (9th Cir. 2010)). 17 C. Motion to Dismiss 18 A motion to dismiss a counterclaim brought pursuant to Federal Rule of Civil Procedure 19 12(b)(6) is evaluated under the same standard as a motion to dismiss a plaintiff’s complaint. See, 20 e.g., Boon Rawd Trading Inter’l v. Paleewong Trading Co., 688 F. Supp. 2d 940, 947 (N.D. Cal. 21 2010). Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to include “a 22 short and plain statement of the claim showing that the pleader is entitled to relief.” A complaint 23 that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil Procedure 24 12(b)(6). The United States Supreme Court has held that Rule 8(a) requires a plaintiff to plead 25 “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A 26 claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw 27 28 6 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS United States District Court Northern District of California 1 the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 2 678. “The plausibility standard is not akin to a probability requirement, but it asks for more than a 3 sheer possibility that a defendant has acted unlawfully.” Id. (internal quotation marks omitted). 4 For purposes of ruling on a Rule 12(b)(6) motion, a court “accept[s] factual allegations in the 5 complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving 6 party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). 7 The Court, however, need not accept as true allegations contradicted by judicially 8 noticeable facts, see Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000), and it “may look 9 beyond the plaintiff’s complaint to matters of public record” without converting the Rule 12(b)(6) 10 motion into a motion for summary judgment, Shaw v. Hahn, 56 F.3d 1128, 1129 n.1 (9th Cir. 11 1995). Nor must the Court “assume the truth of legal conclusions merely because they are cast in 12 the form of factual allegations.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (per 13 curiam) (internal quotation marks omitted). Mere “conclusory allegations of law and unwarranted 14 inferences are insufficient to defeat a motion to dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183 15 (9th Cir. 2004). “A copy of a written instrument that is an exhibit to a pleading is a part of the 16 pleading for all purposes.” Fed. R. Civ. P. 10(c). Thus, the Court “may treat such a document as 17 part of the complaint, and thus may assume that its contents are true for purposes of a motion to 18 dismiss.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). 19 D. Leave Amend 20 If the Court determines that the complaint should be dismissed, it must then decide 21 whether to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave 22 to amend “should be freely granted when justice so requires,” bearing in mind that “the underlying 23 purpose of Rule 15 . . . [is] to facilitate decision on the merits, rather than on the pleadings or 24 technicalities.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc). When dismissing a 25 complaint for failure to state a claim, “a district court should grant leave to amend even if no 26 request to amend the pleading was made, unless it determines that the pleading could not possibly 27 28 7 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS United States District Court Northern District of California 1 be cured by the allegation of other facts.” Id. at 1130 (quoting Doe v. United States, 58 F.3d 494, 2 497 (9th Cir. 1995)). Nonetheless, a court may in its discretion “deny leave to amend due to 3 ‘undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure 4 deficiencies by amendments previously allowed, undue prejudice to the opposing party. . . , [and] 5 futility of amendment.’” Leadsinger, Inc. v. BMG Music Pub., 512 F.3d 522, 532 (9th Cir. 2008) 6 (alterations in original) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). 7 III. DISCUSSION 8 A. Snap’s Motion to Strike 9 Snap moves to strike Croghan’s general denial and assertion in Croghan’s FAA that a 10 defendant does not bear the burden of proof on affirmative defenses. Mot. at 6–7. Snap also moves 11 to strike fifteen of the sixteen affirmative defenses in Croghan’s FAA. See Mot. at 7–13. The 12 Court will address Snap’s motion to strike the general denial and burden assertion, as well as each 13 affirmative defense in turn. For the reasons given below, the Court GRANTS IN PART with 14 prejudice, GRANTS IN PART without prejudice, and DENIES IN PART Snap’s motion to strike. 15 1. General Denial 16 Snap argues first that the Court should strike Croghan’s general denial, which states—after 17 Croghan specifically admitted or denied each of the allegations of the complaint—that “Croghan 18 generally denies any liability to [Snap]. To the extent that any allegations in the Complaint have 19 not been specifically admitted or denied, they are hereby denied.” FAA at 15. Snap challenges this 20 general denial as being noncompliant with Federal Rule of Civil Procedure 8(b)(3). Rule 8(b)(3) 21 provides that “[a] party that does not intend to deny all the allegations must either specifically 22 deny designated allegations or generally deny all except those specifically admitted.” 23 The Court finds that Croghan’s general denial is proper. Croghan’s general denial alerted 24 Snap that any allegation not specifically admitted is denied, which is compliant with Rule 8(b)(3). 25 It is of no consequence under Rule 8(b)(3) that Croghan also specifically responded to each 26 allegation. See, e.g., Vreeland v. First Savings Bank, No. 15-CV-0993 LAM/SMV, 2016 WL 27 28 8 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 3460761, at *2 (D.N.M. Feb. 5, 2016) (“Further, the fact that FSB also responded to each 2 allegation does not negate the effect of the general denial.”); Northern New Mexicans Protecting 3 Land Water and Rights v. United States, No. CIV 15-0559 JB/LF, 2015 WL 8329509, at *11 4 (D.N.M. Dec. 4, 2015) (“Here, not only do the Defendants specifically respond to each allegation, 5 but they also include a general denial in accordance with [R]ule 8(b)(3).”). The Court therefore 6 DENIES Snap’s motion to strike Croghan’s general denial. 7 2. Burden Assertion 8 Snap second argues that the Court should strike Croghan’s statement in the FAA that “by United States District Court Northern District of California 9 alleging the Affirmative Defenses set forth below, Croghan does not agree or concede that he 10 bears the burden of proof or the burden of persuasion on any of these issues, whether in whole or 11 in part.” Mot. at 7 (citing FAA at 15). Croghan responds that he agrees that he bears the burden of 12 proof on his affirmative defenses at trial. See Opp’n at 5–6; see also, e.g., Perez v. Gordon & 13 Wong Law Grp., P.C., No. 11-CV-03323-LHK, 2012 WL 1029425, at *7 (N.D. Cal. Mar. 26, 14 2012) (“The defendant bears the burden of proof on an affirmative defense, in the same way that 15 the plaintiff bears the burden of proof on a claim for relief.”). Croghan clarifies that he meant that 16 to the extent some of the defenses are actually denials1 of elements of Snap’s claims, Snap will 17 continue to bear the burden of proof. However, as it is written, Croghan’s burden statement does 18 not make this point clear. Therefore, the Court GRANTS Snap’s motion to strike with leave to 19 amend so that Croghan can clarify exactly what he means by his burden paragraph. 20 3. Affirmative Defense #1: Failure to Mitigate 21 Snap argues third that the Court should strike Croghan’s first affirmative defense entitled 22 “Failure to Mitigate” for being factually insufficient pursuant to Twombly/Iqbal. Mot. at 7–8. 23 Croghan responds that “[c]ourts have typically held that a generalized statement meets defendant’s 24 pleading burden with respect to the affirmative defense of damage mitigation.” Opp’n at 6–7 25 26 27 28 1 As discussed below, the Court construes some of the affirmative defenses as denials. See Section III.A.5. 9 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 (quoting Nomadix, Inc. v. Guest-Tek Interactive Entertainment LTD, No. CV 16-08033-AB 2 (FFMx), 2017 WL 7275391, at *7 (C.D. Cal. Nov. 30, 2017)); see also Horton v. NeoStrata Co., 3 Inc., No. 3:16-CV-02189-AJB-JLB, 2017 WL 2721977, at *12 (S.D. Cal. Jun. 22, 2017) 4 (“[W]here discovery has barely begun, the failure to mitigate defense is sufficiently pled without 5 additional facts.”). The Court finds that Croghan’s mitigation defense is insufficiently pled. Although a United States District Court Northern District of California 6 7 generalized statement may be sufficient for purposes of pleading a mitigation defense, the Court 8 agrees with Snap that Croghan fails to make even a generalized statement that Snap failed to 9 mitigate. Indeed, Croghan’s factual assertions, as alleged, have nothing to do with mitigation. 10 Croghan says only that paragraphs 41–43 of the complaint, which discuss Croghan having taken 11 the Branham High School football client from Snap, are erroneous because the YouTube video 12 that Snap references in support of its allegation is “of the Santa Clara High School Football Team, 13 which is still a customer of Snap.” FAA at 16. Second, Croghan alleges that the complaint “fails to 14 allege as to how Snap has been damaged by Croghan’s legitimate de-duplication efforts of 15 Campaign Data.” Id. Third, Croghan alleges that “[d]iscovery in this matter has not yet begun,” 16 and therefore “Croghan reserves all rights to introduce other evidence and testimony gathered 17 throughout this case.” Id. Because none of these allegations relate to mitigation, the Court finds 18 Croghan’s mitigation defense insufficient, and therefore GRANTS Snap’s motion to strike this 19 defense. However, because granting Croghan an additional opportunity to amend would not be 20 futile, cause undue delay, or unduly prejudice Snap, and because Croghan has not acted in bad 21 faith, the Court grants leave to amend. See Leadsinger, Inc., 512 F.3d at 532. 22 4. Affirmative Defense #2: Actions of Plaintiff and Third Parties 23 Snap argues next that the Court should strike Croghan’s second affirmative defense 24 entitled “Actions of Plaintiff and Third Parties,” which is focused on comparative fault,2 because it 25 26 27 28 “The terms contributory negligence, comparative negligence, and comparative fault describe the same affirmative defense. California courts typically use the terms comparative fault and comparative negligence as synonyms, often using the term contributory negligence as well.” 10 2 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 is not a defense to any of Snap’s claims, including the breach of contract claim and the trade secret 2 misappropriation claims. Mot at 8. The Court declines to strike Croghan’s second defense. United States District Court Northern District of California 3 As an initial matter, the case that Snap cites, Ansari v. Electronic Document Processing, 4 Inc., does not support Snap’s argument. See Mot. at 8 (citing No. 5:12-CV-01245-LHK, 2012 WL 5 3945482, at *6 (N.D. Cal. Sept. 10, 2012)). In that case, this Court explicitly stated that because it 6 found that the comparative negligence defense was insufficiently pled, it would decline to decide 7 whether the defense was immaterial. 2012 WL 3945482, at *6. Moreover, the Court is persuaded 8 by the case law cited by Croghan that Croghan may be able to assert this defense as a defense to 9 Snap’s breach of contract. See, e.g., Straub, 201 WL 1965621, at *3 (denying a motion to strike 10 the comparative fault affirmative defense asserted against a breach of contract claim). Therefore, 11 viewing the allegations in the FAA in the light most favorable to Croghan, the Court concludes 12 that Snap has failed to establish that Croghan’s second affirmative defense is clearly insufficient as 13 a matter of law. See Platte Anchor Bolt, Inc., 352 F. Supp. 2d at 1057 (noting that motions to 14 strike are disfavored and “should not be granted unless the matter to be stricken clearly could have 15 no possible bearing on the subject of the litigation”). Further, the Court concludes that Snap has 16 failed to demonstrate that a comparative fault defense has no possible bearing on the subject 17 matter of this litigation, or that it will suffer prejudice if the motion to strike is not granted. See id. 18 (“If there is any doubt whether the portion to be stricken might bear on an issue in the litigation, 19 the court should deny the motion.”). Accordingly, Snap’s motion to strike Croghan’s second 20 affirmative defense is DENIED. 21 5. Affirmative Defense #3: Consent 22 Next, Snap argues that Croghan’s third affirmative defense of consent is not an affirmative 23 defense, but rather a denial of the elements of Snap’s trade secret misappropriation claims. Mot. at 24 8–9. Croghan does not dispute that its third affirmative defense of consent constitutes a denial of 25 26 27 28 F.D.I.C. v. Straub, No. 11-03295 SBA, 2012 WL 1965621, at *2, n.1 (N.D. Cal. May 31, 2012) (citing Sagadin v. Ripper, 175 Cal. App. 3d 1141, 1161 n.8 (1985)). 11 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 Snap’s trade secret misappropriation claims (both DTSA and CUTSA). Opp’n at 8. However, 2 Croghan argues that the Court should deny Snap’s motion to strike this affirmative defense and 3 instead construe Croghan’s consent defense as a denial as to the DTSA and CUTSA claims. Id. at 4 5. United States District Court Northern District of California 5 The Court DENIES Snap’s motion to strike the consent defense and construes the defense 6 as a denial. “The few authorities to address the subject have held that denials that are improperly 7 pled as defenses should not be stricken.” Smith v. Wal-Mart Stores, No. C 06-2069 SBA, 2006 8 WL 2711468, at *9 (N.D. Cal. Sept. 20, 2006). Rather, “[t]he federal courts have accepted the 9 notion of treating a specific denial that has been improperly denominated as an affirmative defense 10 as though it was correctly labeled.” Id. at *9–10 (“[A] defendant occasionally may label his 11 negative averment as an affirmative defense rather than a specific denial. . . . If plaintiff has been 12 given ‘plain notice’ of the matters to be litigated which is all the federal pleading rules require, he 13 should be put to this proof irrespective of any error by defendant regarding terminology.” (quoting 14 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1269 (2d ed. 1990))); 15 see also Gilmore v. Liberty Life Assurance Co. of Boston, No. C 13-0178 PJH, 2013 WL 16 12147724, at *1 (N.D. Cal. Apr. 19, 2013) (denying motion to strike affirmative defenses that “as 17 a technical matter” were “not proper affirmative defenses, and instead [were] mere denials of 18 liability,” because “no prejudice would result from allowing the defenses to remain as pled”). 19 Here, Snap itself acknowledges that it understands Croghan’s consent defense applies to 20 the DTSA and CUTSA trade secret misappropriation claims. Therefore, Snap has been given plain 21 notice of the matters to be litigated, and there is therefore no prejudice to Snap if this Court 22 construes Croghan’s third defense as a denial of the DTSA and CUTSA claims. Accordingly, the 23 Court DENIES Snap’s motion to strike the consent defense to the extent Croghan’s third defense 24 applies to the DTSA and CUTSA claims. However, the Court agrees with Snap that the FAA 25 discusses consent as a defense only to the trade secret misappropriation claims. Therefore, the 26 Court GRANTS Snap’s motion to strike to the extent Croghan is attempting to bring the consent 27 28 12 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS United States District Court Northern District of California 1 defense against Snap’s other claims. Because granting Croghan an additional opportunity to 2 amend would not be futile, cause undue delay, or unduly prejudice Snap, and because Croghan has 3 not acted in bad faith, the Court grants leave to amend. See Leadsinger, Inc., 512 F.3d at 532. 4 6. Affirmative Defense #4: Offset 5 Snap next argues that the Court should strike Croghan’s fourth affirmative defense for 6 offset, which states that “Croghan is entitled to offset and recoup against any judgment that may 7 be entered for Snap by all obligations of Snap owing to Croghan,” because it is not a defense and 8 is repetitive of the counterclaims. Mot. at 9. Snap provides no legal support for its argument. 9 Croghan responds with authority stating that offset is an affirmative defense and can be raised as 10 an affirmative defense even if it repeats allegations in the counterclaim. See Opp’n at 8–9; see, 11 e.g., Jacobson v. Persolve, LLC, No. 14-CV-00735-LHK, 2014 WL 4090809, at *9 (N.D. Cal. 12 Aug. 19, 2014) (denying motion to strike offset defense); Rahman v. San Diego Accounts Service, 13 16-CV-2061-JLS (KSC), 2017 WL 1387206, at *4 (S.D. Cal. Apr. 18, 2017) (“Defendant 14 specifically argues that ‘any recovery’ should be offset by ‘the amount owed to Defendant 15 resulting from the valid medical debt from which this dispute arose.’ . . . The Court concludes that 16 this is sufficient to plausibly state an affirmative defense for offset.” (emphasis omitted)); 17 SuperMedia LLC v. Law Firm of Asherson, No. LA CV12-03834 JAK (RZx), 2013 WL 12114831 18 (C.D. Cal. Mar. 6, 2013) (“The motion to strike the seventh (‘Offset’) affirmative defense is 19 denied. Although this defense repeats allegations in the counterclaim, it may also be raised as an 20 affirmative defense.”). 21 Therefore, viewing the allegations in the FAA in the light most favorable to Croghan, the 22 Court concludes that Snap has failed to establish that Croghan’s fourth affirmative defense should 23 be stricken, or that Snap will suffer prejudice if the motion to strike is not granted. See Platte 24 Anchor Bolt, Inc., 352 F. Supp. 2d at 1057 (noting that motions to strike are disfavored and that 25 “[i]f there is any doubt whether the portion to be stricken might bear on an issue in the litigation, 26 the court should deny the motion.”). Accordingly, Snap’s motion to strike Croghan’s fourth 27 28 13 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS United States District Court Northern District of California 1 affirmative defense is DENIED. 2 7. Affirmative Defense #5: Waiver, Relinquishment, Abandonment, and Estoppel 3 Snap argues that the Court should strike Croghan’s fifth affirmative defense of waiver, 4 relinquishment, abandonment, and estoppel because Croghan’s affirmative defense is factually 5 insufficient. Mot. at 9–10. Snap also argues that Croghan’s fifth affirmative defense is not an 6 affirmative defense, but rather a denial of the elements of Snap’s trade secret misappropriation 7 claims. Reply at 4. 8 The Court disagrees. First, Croghan’s allegations are sufficient. Croghan alleges that any 9 trade secret protection has been waived by Snap’s disclosure of Snap’s TSI program to Croghan 10 and other employees without any non-disclosure agreement. Second, both parties appear to agree 11 these allegations negate the DTSA and CUTSA claims. Therefore, the Court construes Croghan’s 12 fifth affirmative defense as a denial of the DTSA and CUTSA claims. “The few authorities to 13 address the subject have held that denials that are improperly pled as defenses should not be 14 stricken.” Smith, 2006 WL 2711468, at *9. Rather, “[t]he federal courts have accepted the notion 15 of treating a specific denial that has been improperly denominated as an affirmative defense as 16 though it was correctly labeled.” Id. at *9–10; see also Gilmore, 2013 WL 12147724, at *1 17 (denying motion to strike affirmative defenses that “as a technical matter” were “not proper 18 affirmative defenses, and instead [were] mere denials of liability,” because “no prejudice would 19 result from allowing the defenses to remain as pled”). Accordingly, the Court DENIES Snap’s 20 motion to strike the fifth affirmative defense. 21 8. Affirmative Defense #6: Spoliation 22 Snap argues that the Court should strike Croghan’s sixth affirmative defense of spoliation 23 because it is not a defense. Mot. at 10. Snap provides no legal support for its argument. Therefore, 24 viewing the allegations in the FAA in the light most favorable to Croghan, the Court concludes 25 that Snap has failed to establish that Croghan’s sixth affirmative defense should be stricken, or 26 that Snap will suffer prejudice if the motion to strike is not granted. See Platte Anchor Bolt, Inc., 27 28 14 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 352 F. Supp. 2d at 1057 (noting that motions to strike are disfavored and that “[i]f there is any 2 doubt whether the portion to be stricken might bear on an issue in the litigation, the court should 3 deny the motion.”). Indeed, Croghan’s defense makes clear that Croghan is asserting that Snap 4 altered or damaged evidence related to the Campaign Data table to bolster Snap’s own assertion 5 that Croghan had deleted certain Campaign Data from Snap’s network. Accordingly, Snap’s 6 motion to strike Croghan’s sixth affirmative defense is DENIED. 7 9. Affirmative Defense #7: Unjust Enrichment 8 Snap argues that the Court should strike Croghan’s seventh affirmative defense of unjust United States District Court Northern District of California 9 enrichment because unjust enrichment is a claim, not an affirmative defense. Mot. at 10. Snap also 10 argues that the FAA’s description of unjust enrichment is redundant and “parrots the 11 counterclaims.” Reply at 4–5. Snap cites no legal authority in support of its argument. Croghan 12 responds with authority denying a motion to strike the affirmative defense of unjust enrichment. 13 See Opp’n at 10–11; see, e.g., Kuang Xuan Liu v. Win Woo Trading, LLC, No. 14-CV-02639- 14 KAW, 2014 WL 7140514, at *3 (N.D. Cal. Dec. 12, 2014) (“Defendants’ sixth affirmative 15 defense is that unjust enrichment bars some or all of Plaintiffs’ claims, because, should they 16 recover, they would receive a higher hourly wage then they were paid . . . Thus, the Court declines 17 to strike the sixth affirmative defense.”). 18 Therefore, viewing the allegations in the FAA in the light most favorable to Croghan, the 19 Court concludes that Snap has failed to establish that Croghan’s seventh affirmative defense 20 should be stricken, or that Snap will suffer prejudice if the motion to strike is not granted. See 21 Platte Anchor Bolt, Inc., 352 F. Supp. 2d at 1057 (noting that motions to strike are disfavored and 22 that “[i]f there is any doubt whether the portion to be stricken might bear on an issue in the 23 litigation, the court should deny the motion.”). Accordingly, Snap’s motion to strike Croghan’s 24 seventh affirmative defense is DENIED. 25 10. Affirmative Defense #8: Failure to Perform 26 Snap argues that the Court should strike Croghan’s eighth affirmative defense—failure to 27 28 15 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 perform—for being implausible and insufficient under Twombly/Iqbal. Mot. at 10–11. 2 Specifically, Snap takes issue with the fact that Croghan’s affirmative defense asserts that Snap 3 failed to perform under the Sales Representative Agreement by not giving Croghan a promotion 4 because, according to Snap, that is not a plausible reading of the Agreement. Reply at 8–9. United States District Court Northern District of California 5 The Court disagrees. The language of the Sales Representative Agreement provides that 6 the “Employee is commencing employment with and/or being promoted by the Employer. See 7 Compl., Ex. 1 (emphasis added). Snap’s reading of this text ignores the “and/or being promoted by 8 the Employer” language, which, understood by its plain meaning, means that it is plausible that 9 the Sales Representative Agreement between Snap and Croghan could have been promising a 10 promotion in addition to commencing employment. Moreover, any ambiguity should be construed 11 in favor of Croghan, the employee. See, e.g., Sandquist v. Lebo Automative, Inc., 1 Cal. 5th 233, 12 (2016) (“[W]here, as here, the written agreement has been prepared entirely by the employer, it is 13 a ‘well established rule of construction’ that any ambiguities must be construed against the 14 drafting employer and in favor of the nondrafting employee.”). 15 Accordingly, the Court DENIES Snap’s motion to strike Croghan’s failure to perform 16 defense because it is appropriately asserted against Snap’s breach of contract claim. However, the 17 Court agrees with Snap that the failure to perform defense does not apply to the trade secrets 18 misappropriation or California Penal Code claims. Therefore, the Court GRANTS Snap’s motion 19 to strike to the extent Croghan is attempting to bring the failure to perform defense against those 20 claims. Because granting Croghan an additional opportunity to amend would not be futile, cause 21 undue delay, or unduly prejudice Snap, and because Croghan has not acted in bad faith, the Court 22 grants leave to amend. See Leadsinger, Inc., 512 F.3d at 532. 23 11. Affirmative Defense #9: Excuse 24 Snap next argues that the Court should strike Croghan’s ninth affirmative defense of 25 excuse because excuse is not a defense. Mot. at 11. Snap provides no legal authority in support of 26 its argument. Croghan responds that excuse is a defense to a breach of contract. See Opp’n at 12; 27 28 16 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 see, e.g., FNBN Rescon I, LLC v. Citrus El Dorado, LLC, 725 F. App’x 448, 451 (9th Cir. 2018) 2 (“Under California law, if one contracting party prevents the other from performing a condition 3 precedent, the party is subject to the condition is excused from performing it.” (citing Parsons v. 4 Bristol Dev. Co., 62 Cal. 2d 861, 868–69 (1965) and City of Hollister v. Monterey Ins. Co., 165 5 Cal. App. 4th 455, 490 (2008)). United States District Court Northern District of California 6 Viewing the allegations in the FAA in the light most favorable to Croghan, the Court 7 concludes that Snap has failed to establish that Croghan’s ninth affirmative defense should be 8 stricken, or that Snap will suffer prejudice if the motion to strike is not granted. See Platte Anchor 9 Bolt, Inc., 352 F. Supp. 2d at 1057 (noting that motions to strike are disfavored and that “[i]f there 10 is any doubt whether the portion to be stricken might bear on an issue in the litigation, the court 11 should deny the motion.”). Accordingly, the Court DENIES Snap’s motion to strike the excuse 12 defense to the extent Croghan’s ninth defense applies to the breach of contract claim. However, 13 the Court agrees with Snap that the FAA discusses consent as a defense only to the breach of 14 contract claim. Therefore, the Court GRANTS Snap’s motion to strike to the extent Croghan is 15 attempting to bring the excuse defense against Snap’s other claims. Because granting Croghan an 16 additional opportunity to amend would not be futile, cause undue delay, or unduly prejudice Snap, 17 and because Croghan has not acted in bad faith, the Court grants leave to amend. See Leadsinger, 18 Inc., 512 F.3d at 532. 19 12. Affirmative Defense #10: Unclean Hands 20 Snap argues that the Court should strike Croghan’s tenth affirmative defense for unclean 21 hands because it is repetitive of the counterclaims and—as Snap has already argued—is based on 22 reading of the Sales Representative Agreement as having promised Croghan a promotion. The 23 Court rejects Snap’s argument with regards to the Sales Representative Agreement for the reasons 24 given in Section III.A.8. See also, e.g., Adler v. Fed. Rep. of Nigeria, 219 F.3d 869, 877 (9th Cir. 25 2000) (“In California, the unclean hands doctrine applies not only to equitable claims, but also to 26 legal ones.”); Infor Global Solutions (Michigan), Inc. v. St. Paul Fire & Marine Ins. Co., No. C 27 28 17 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 08-02621 JW, 2009 WL 5909255, at *2 (N.D. Cal. Oct. 21, 2009) (“Defendant may properly 2 assert the affirmative defense of unclean hands in this [breach of contract] action.”); Meggitt 3 (Orange County), Inc. v. Yongshong, No. SA CV 13-0239-DOC (DFMx), 2015 WL 12743862, at 4 *2–3 (C.D. Cal. Feb. 12, 2015) (denying motion to strike affirmative defense of unclean hands in 5 trade secret misappropriation action). United States District Court Northern District of California 6 As for Snap’s position that Croghan’s unclean hands defense is redundant, Snap provides 7 no case law in support of its argument that the Court must strike the unclean hands defense. 8 Therefore, viewing the allegations in the FAA in the light most favorable to Croghan, the Court 9 concludes that Snap has failed to establish that Croghan’s tenth affirmative defense should be 10 stricken, or that Snap will suffer prejudice if the motion to strike is not granted. See Platte Anchor 11 Bolt, Inc., 352 F. Supp. 2d at 1057 (noting that motions to strike are disfavored and that “[i]f there 12 is any doubt whether the portion to be stricken might bear on an issue in the litigation, the court 13 should deny the motion.”). Accordingly, Snap’s motion to strike Croghan’s tenth affirmative 14 defense is DENIED. 15 13. Affirmative Defense #11: Contractual Bar 16 Snap next challenges Croghan’s eleventh affirmative defense, which alleges that “Snap is 17 contractually barred from recovering any incidental, consequential, special, punitive, or other 18 indirect damages from Croghan . . . [because] the Agreement is a contractual bar to the tort claims 19 asserted against Croghan for the same conduct as the alleged cause of action for Breach of 20 Contract.” Mot. at 11–12 (citing FAA at 23). In other words, Croghan’s affirmative defense 21 invokes the economic loss doctrine and the fact that Snap may not bring a tort claim for a risk that 22 has been allocated by a contract. See, e.g., BNSF Ry. Co. v. San Joaquin Valley R. Co., No. 1:08- 23 CV-01086-AWI-SMS, 2011 WL 3328398, at *5 (E.D. Cal. Aug. 2, 2011) (“A person may not 24 ordinarily recover in tort for the breach of duties that merely restate contractual obligations”) 25 (citing California law); see also Erlich v. Menezes, 21 Cal. 4th 545, 552 (1999) (“[C]ourts will 26 generally enforce the breach of a contractual promise through contract law, except when the 27 28 18 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 actions that constitute the breach violate a social policy that merits the imposition of tort 2 remedies.” (citation omitted)). 3 The Court DENIES Snap’s motion to strike the eleventh affirmative defense. Both parties 4 appear to agree that this affirmative defense may apply to the breach of the duty of loyalty claim. 5 See Mot. at 12; see also Opp’n at 13. Snap has provided no further argument or authority as to 6 why the Court should strike this affirmative defense. Moreover, Croghan has cited to case law 7 supporting an economic loss doctrine affirmative defense to breach of duty of loyalty claims. See, 8 e.g., AMN Healthcare, Inc. v. Aya Healthcare Servs., Inc., 28 Cal. App. 5th 923, 941 (2018) 9 (“AMN’s attempt to turn a garden-variety contract cause of action against Wallace into a tort- United States District Court Northern District of California 10 based breach of duty of loyalty cause of action fails as a matter of law.”). 11 14. Affirmative Defense #12: Invalidity and Unenforceability 12 Snap argues the Court should strike Croghan’s twelfth affirmative defense—invalidity and 13 unenforceability3 of the Sales Representative Agreement—because it is repetitive of the 14 counterclaims and because the Sales Representative Agreement has a severability clause, so 15 therefore “it is implausible that partial invalidity would invalidate the entire contract.” Mot. at 12. 16 Snap provides no authority in support of its position. Croghan responds that he has plausibly pled 17 invalidity and unenforceability and cites to Armendariz v. Foundation Health Psychcare Servs., 18 Inc., 24 Cal. 4th 83, 114 (2000), in support. Opp’n at 14. In Armendariz, the Supreme Court of California explained that “unconscionability has both 19 20 a procedural and a substantive element, the former focusing on oppression or surprise due to 21 unequal bargaining power, the latter on overly harsh or one-sided results.” 24 Cal. 4th at 114 22 (quotation marks and citation omitted). Applying those principles, the California Supreme Court 23 found that the procedural element of unconscionability was met when the agreement at issue was 24 “imposed on the employees as a condition of employment and there was no opportunity to 25 26 27 28 The parties use the terms “invalidity,” “unenforceability,” and “unconscionability” interchangeably. 19 3 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 negotiate.” Id. at 114–15. The California Supreme Court further held that the substantive element 2 of unconscionability was met where there was a lack of mutuality in the obligations of the 3 employees and the employer. Id. at 115–18. United States District Court Northern District of California 4 Here, based on the Armendariz case, the Court finds that Croghan has plausibly pled 5 invalidity. First, Croghan has plausibly pled the procedural element because Croghan alleges that 6 the Sales Representative Agreement was imposed on Croghan by way of threat. See FAA at 23 7 (“Snap pressured Croghan to sign the alleged Employment Agreement in July 2017, even going so 8 far as to threaten to terminate Croghan if he did not sign the Employment Agreement.”). Second, 9 Croghan has plausibly pled the substantive element of overly harsh or one-sided results because he 10 has alleged a lack of mutuality in his and Snap’s obligations. See id. (“Moreover, the Employment 11 Agreement contains invalid and/or unconscionable terms, including the provision that Snap is free 12 to terminate Croghan’s employment at-will, with or without cause, but that Croghan must provide 13 ten days’ notice before he can terminate the employment relationship.”). Therefore, Croghan has 14 plausibly pled invalidity and unenforceability. 15 As to Snap’s argument that the Sales Representative Agreement has a severability clause 16 and therefore “it is implausible that partial invalidity would invalidate the entire contract,” Snap 17 has failed to provide any further argument or legal authority to support this argument. Nor has 18 Snap explained why this argument means that the Court must strike Croghan’s defense. Moreover, 19 as the California Supreme Court in Armendariz explained, even if the contract has a severability 20 clause, the court has “some discretion as to whether to sever or restrict the unconscionable 21 provision or whether to refuse to enforce the entire agreement.” 24 Cal. 4th at 122–25. 22 Accordingly, the Court rejects Snap’s argument and DENIES Snap’s motion to strike the twelfth 23 affirmative defense. 24 15. Affirmative Defense #13: No Fiduciary Duty 25 Snap argues that Croghan’s thirteenth affirmative defense of no fiduciary duty is not an 26 27 28 affirmative defense, but rather a denial of the elements of Snap’s breach of duty of loyalty claim. 20 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS United States District Court Northern District of California 1 Mot. at 12. The Court construes Croghan’s thirteenth affirmative defense as a denial of the breach 2 of the duty of loyalty claim. “The few authorities to address the subject have held that denials that 3 are improperly pled as defenses should not be stricken.” Smith, 2006 WL 2711468, at *9. Rather, 4 “[t]he federal courts have accepted the notion of treating a specific denial that has been improperly 5 denominated as an affirmative defense as though it was correctly labeled.” Id. at *9–10; see also 6 Gilmore, 2013 WL 12147724, at *1 (denying motion to strike affirmative defenses that “as a 7 technical matter” were “not proper affirmative defenses, and instead [were] mere denials of 8 liability,” because “no prejudice would result from allowing the defenses to remain as pled”). 9 Here, Snap itself acknowledges that it understands Croghan’s permission defense applies to the 10 breach of duty of loyalty claim. Therefore, Snap has been given plain notice of the matters to be 11 litigated, and there is no prejudice to Snap if this Court construes Croghan’s thirteenth affirmative 12 defense as a denial of the breach of duty of loyalty claim. Accordingly, the Court DENIES Snap’s 13 motion to strike the thirteenth defense. 14 16. Affirmative Defense #15: Permission 15 Snap argues that Croghan’s fifteenth affirmative defense asserting “permission” is not an 16 affirmative defense, but rather a denial or an argument that Snap will not meet its burden of proof. 17 Mot. at 12; Reply at 4. The Court follows the authority that holds that denials improperly pled as 18 defenses should not be stricken. The Court instead construes Croghan’s fifteenth affirmative 19 defense as a denial of Snap’s violation of California Penal Code § 502 claim. See Smith, 2006 WL 20 2711468, at *9–10 (“The federal courts have accepted the notion of treating a specific denial that 21 has been improperly denominated as an affirmative defense as though it was correctly labeled.”); 22 see also Gilmore, 2013 WL 12147724, at *1 (denying motion to strike affirmative defenses that 23 “as a technical matter” were “not proper affirmative defenses, and instead [were] mere denials of 24 liability,” because “no prejudice would result from allowing the defenses to remain as pled”). 25 Here, Croghan’s affirmative defense specifically states that it applies to the California Penal Code 26 § 502 claim. Therefore, Snap has been given plain notice of the matters to be litigated. Further, 27 28 21 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS United States District Court Northern District of California 1 Snap has provided no explanation of how it would be prejudiced if this Court construes Croghan’s 2 fifteenth affirmative defense as a denial of the California Penal Code § 502 claim. Accordingly, 3 the Court DENIES Snap’s motion to strike the fifteenth defense. 4 17. Affirmative Defense #16: Additional Defenses 5 Finally, Snap argues that the Court should strike Croghan’s sixteenth affirmative defense, 6 which asserts that Croghan “may have other separate and additional defenses of which it is 7 presently unaware,” and that Croghan therefore “hereby reserves the right to assert such additional 8 defenses as discovery warrants.” Mot. at 12–13. Croghan does not respond. See Opp’n. The Court 9 GRANTS Snap’s motion to strike Croghan’s “additional defenses” defense with prejudice. See, 10 e.g., Solis v. Zenith Capital, LLC, No. C 08-4854-PJH, 2009 WL 1324051 (N.D. Cal. May 8, 11 2009) (“An attempt to reserve affirmative defenses for a future date is not a proper affirmative 12 defense in itself.”). 13 B. Snap’s Motion to Dismiss 14 Snap also moves to dismiss seven of the ten counterclaims set forth in Croghan’s FAA. 15 The Court addresses Snap’s motion to dismiss as to each counterclaim below. For the reasons 16 given below, the Court GRANTS without prejudice Snap’s motion to dismiss Croghan’s 17 counterclaims. 18 1. Counterclaim #1: Unreimbursed Business Expenses 19 Croghan’s first counterclaim asserts a right to recover for Snap’s violations of California 20 Labor Code § 2802, which provides that Snap was required to reimburse Croghan’s business 21 related expenses during Croghan’s employment with Snap. See FAA at 32. Specifically, California 22 Labor Code § 2802 provides: 23 24 25 26 27 28 An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful. Snap argues that Croghan’s § 2802 allegations are insufficient because Croghan does not 22 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 allege that Snap knew or should have known that Croghan incurred the business expenses. See 2 Mot. at 13; see, e.g., Suart v. RadioShack Corp., 641 F. Supp. 2d 901, 904 (N.D. Cal. 2009) 3 (“[F]or purposes of § 2802, before an employer’s duty to reimburse is triggered, it must either 4 know or have reason to know that the employee has incurred an expense.”); Brecher v. Citigroup 5 Global Markets, Inc., No. 3:09-CV-1344 AJB (MDD), 2011 WL 3475299, at *8 (S.D. Cal. Aug. 6 8, 2011) (“Without more, the statement that ‘necessary expenditures’ were made without 7 reimbursement is precisely the type of bare assertion and conclusory statement that the Supreme 8 Court has held insufficient to survive a motion to dismiss.”). United States District Court Northern District of California 9 Croghan responds that Snap did have knowledge because “Snap knew Croghan was 10 working from home, Snap knew that Croghan used a cell phone for business purposes and was 11 required to do so[,] and Snap knew it did not reimburse Croghan.” Opp’n at 17. Croghan states 12 that “Snap also knew that sales incentives, such a pizza parties for sports teams Snap was 13 fundraising for, were being paid for by Croghan but they did not reimburse him for these sales 14 incentives.” Id. 15 However, Croghan’s factual assertions in response appear only in the opposition and not in 16 the FAA, and therefore these assertions do not save the deficiencies in the FAA. See, e.g., Broam 17 v. Bogan, 320 F.3d 1023, 1026 n.2 (9th Cir. 2003) (“In determining the propriety of a Rule 18 12(b)(6) dismissal, a court may not look beyond the complaint to a plaintiff's moving papers, such 19 as a memorandum in opposition to a defendant's motion to dismiss.” (emphasis in original) 20 (citation omitted)). Accordingly, the Court GRANTS Snap’s motion to dismiss Croghan’s first 21 counterclaim. Because granting Croghan an additional opportunity to amend would not be futile, 22 cause undue delay, or unduly prejudice Snap, and because Croghan has not acted in bad faith, the 23 Court grants Croghan leave to amend to cure this and any other deficiencies in his first 24 counterclaim. See Leadsinger, Inc., 512 F.3d at 532; see also Broam, 320 F.3d at 1026 n.2 (“Facts 25 raised for the first time in plaintiff’s opposition papers should be considered by the court in 26 determining whether to grant leave to amend or to dismiss the complaint with or without 27 28 23 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 2 2. Counterclaims #2 and #3: Missed Meal and Rest Periods 3 Croghan’s second and third counterclaims assert a right to recover for violations of 4 California Labor Code §§ 226.7 and 512. FAA at 32–33. California law requires employers to 5 provide meal periods and to authorize and permit their employees to take rest breaks. Specifically, 6 California Labor Code § 512 provides that “[a]n employer may not employ an employee for a 7 work period of more than five hours per day without providing the employee with a meal period of 8 not less than 30 minutes.” Section 226.7 provides that “[a]n employer shall not require an 9 employee to work during a meal or rest or recovery period.” Cal. Lab. Code § 226.7. 10 United States District Court Northern District of California prejudice.”). Snap argues that Croghan’s meal and rest period allegations are insufficient because the 11 FAA never alleges that Snap controlled Croghan’s daily work hours. Mot. at 14. Snap argues this 12 is problematic because the pleadings make clear that Croghan was a salesman who traveled for 13 work and worked out of his home, so “even if Croghan ended up working several hours in a row 14 without a break, there is no allegation upon which Snap can plausibly be blamed for that 15 schedule.” Id. Snap also argues that “[t]he FAA never alleges that Snap told Croghan what time of 16 day to be on the road, what time of day to meet a client, what time of day to sit at his desk at 17 home, or whether he was allowed to pause between these activities.” Id. 18 The Court agrees with Snap that Croghan’s allegations are insufficient. Croghan’s FAA is 19 devoid of allegations that sufficiently allege that Snap knew or should have known what hours 20 Croghan was working or when he was taking breaks. Further, as currently alleged, Croghan’s 21 second and third counterclaims fail to specify how exactly Croghan was subject to the control of 22 Snap. Failure to allege what Snap knew or should have known as well as how Croghan was 23 subject to the control of Snap, particularly where the pleadings suggest that Croghan was a 24 salesman who traveled by car for work off-site from Snap, renders Croghan’s second and third 25 counterclaims insufficient. See Brinker Restaurant Crop. v. Superior Court, 53 Cal. 4th 1004, 26 1051–52 (2012) (explaining that for rest periods “[l]iability is contingent on proof [the employer] 27 28 24 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 knew or should have known off-the-clock work was occurring.”); Arredondo v. Delano Farms 2 Co., 301 F.R.D. 493, 523 (E.D. Cal. 2014) (“[A]n employer is deemed to have suffered or 3 permitted an employee to work if it knew or should have known that its employees were working 4 off-the-clock.” (citation and marks omitted)); Morillion v. Royal Packing Co., 22 Cal. 4th 575, 5 582 (2000) (explaining that “hours worked” is “the time during which an employee is subject to 6 the control of an employer, and includes all the time the employee is suffered or permitted to 7 work, whether or not required to do so.” (emphasis added)). United States District Court Northern District of California 8 Accordingly, the Court GRANTS Snap’s motion to dismiss Croghan’s second and third 9 counterclaims. However, because granting Croghan an additional opportunity to amend would not 10 be futile, cause undue delay, or unduly prejudice Snap, and because Croghan has not acted in bad 11 faith, the Court grants Croghan leave to amend. See Leadsinger, Inc., 512 F.3d at 532. 12 3. Counterclaims #4 and #5: Failure to Pay Minimum Wage and Overtime 13 Croghan’s fourth and fifth counterclaims assert a right to recover for violations of 14 California Labor Code §§ 1182.11, 1182.12, 1197, and 510 because there were hours where 15 Croghan worked and was not paid by Snap, and because Snap failed to pay overtime. FAA at 34– 16 35. Snap argues that Croghan’s allegations supporting his fourth and fifth counterclaims are 17 insufficient because they present only generalized allegations of violations of minimum wage and 18 overtime laws. Mot. at 15. The Court agrees. 19 20 21 22 23 24 25 26 27 28 Both parties cite to Landers v. Quality Communications, Inc., 771 F.3d 638 (9th Cir. 2014). See Mot. at 15; Opp’n at 20–21. In that case, the employee-plaintiffs alleged that: [T]he named plaintiff ... [was] entitled to a minimum wage and an overtime hourly wage of time and one-half [his] regular hourly wage for all hours worked in excess of forty hours per week, the named plaintiff ... worked more than 40 hours per week for the defendants, and the defendants willfully failed to make said overtime and/or minimum wage payments. 771 F.3d at 646. The Ninth Circuit found this insufficient to allege minimum wage and overtime claims. Id. The Ninth Circuit explained that “[a]lthough plaintiffs in these types of cases cannot be expected to allege ‘with mathematical precision,’ the amount of overtime compensation owed by 25 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS United States District Court Northern District of California 1 the employer, they should be able to allege facts demonstrating that there was at least one 2 workweek in which they worked in excess of forty hours and were not paid overtime wages.” Id. 3 The Ninth Circuit explained that the Landers plaintiff’s “allegations failed to provide ‘sufficient 4 detail about the length and frequency of [his] unpaid work to support a reasonable inference that 5 [he] worked more than forty hours in a given week.’” Id. (citing Nakahata v. New York- 6 Presbyterian Healthcare Sys., Inc., 723 F.3d 192, 201 (2d Cir. 2013)). 7 Here, Croghan’s allegations suffer from the same deficiencies that the Ninth Circuit 8 discussed in Landers in that Croghan’s allegations do not allege facts demonstrating that there was 9 at least one workweek in which Croghan worked in excess of forty hours and was not paid 10 overtime wages. Moreover, Croghan references the Sales Representative Agreement in his 11 opposition to assert that there is an inference that he worked more than forty hours because the 12 Agreement contemplated that possibility; however, none of those details are specifically alleged in 13 his FAA. Accordingly, the Court GRANTS Snap’s motion to dismiss Croghan’s fourth and fifth 14 counterclaims. However, because granting Croghan an additional opportunity to amend would not 15 be futile, cause undue delay, or unduly prejudice Snap, and because Croghan has not acted in bad 16 faith, the Court grants Croghan leave to amend. See Leadsinger, Inc., 512 F.3d at 532. 17 4. Counterclaim #8: Compensation Upon Termination 18 Croghan’s eighth counterclaim asserts a right to recover for violations of California Labor 19 Code §§ 201–03. FAA at 36–37. California Labor Code § 201 provides that “[i]f an employer 20 discharges an employee, the wages earned and unpaid at the time of discharge are due and payable 21 immediately.” Section 202 provides that “[i]f an employee not having a written contract for a 22 definite period quits his or her employment, his or her wages shall become due and payable not 23 later than 72 hours thereafter.” Section 203 provides that if an employer willfully fails to pay 24 compensation upon discharge, as required by § 201 or § 202, then the employer is liable for 25 waiting time penalties in the form of continued compensation for up to 30 work days. 26 27 28 Snap argues that Croghan’s eighth claim is insufficient because it is derivative and 26 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 dependent on Croghan’s second, third, fourth, and fifth counterclaims. Mot. at 15–16; Reply at 2 11–12. Croghan admits that his eighth counterclaim is derivative of his other claims. See Opp’n at 3 22–23 (“This claim is wholly derivative of Croghan’s underlying substantive wage and hour 4 claims (meal periods, rest break, unpaid minimum wages and unpaid overtime) . . . . If the Court 5 finds these causes of action sufficiently pled, this derivative claim for waiting time penalties also 6 survives.”). United States District Court Northern District of California 7 Because the Court found Croghan’s second, third, fourth, and fifth counterclaims 8 insufficient, and because Croghan admits that his eighth counterclaim is derivative of these claims, 9 the Court GRANTS Snap’s motion to dismiss Croghan’s eighth counterclaim. However, because 10 granting Croghan an additional opportunity to amend would not be futile, cause undue delay, or 11 unduly prejudice Snap, and because Croghan has not acted in bad faith, the Court grants Croghan 12 leave to amend. See Leadsinger, Inc., 512 F.3d at 532. 13 5. Counterclaim #9: CFRA and FMLA 14 Croghan’s ninth counterclaim asserts violations of the California Family Rights Act 15 (“CFRA”), California Government Code § 12945.2, and the Family and Medical Leave Act 16 (“FMLA”), 29 U.S.C. § 2601. FAA 37–38. In order to state a claim for violation of CFRA, 17 Croghan must allege that: “(1) [Snap] was an employer covered by CFRA; (2) [Croghan] was an 18 employee eligible to take CFRA leave; (3) [Croghan] exercised [his] right to take leave for a 19 qualifying CFRA purpose; and (4) [Croghan] suffered an adverse employment action, such as 20 termination, fine, or suspension, because of [his] exercise of [his] right to CFRA leave.” Dudley v. 21 Dep’t of Transp., 90 Cal. App. 4th 255, 261 (2001). Similarly, in order to state a claim for 22 violation of FMLA, [Croghan] must allege that: “(1) he was eligible for the FMLA’s protections, 23 (2) his employer was covered by the FMLA, (3) he was entitled to leave under the FMLA, (4) he 24 provided sufficient notice of his intent to take leave, and (5) his employer denied him FMLA 25 benefits to which he was entitled.” Sanders v. City of Newport, 657 F.3d 772, 778 (9th Cir. 2011). 26 27 28 Snap argues that Croghan’s ninth counterclaim is deficient because (1) Croghan fails to 27 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 allege that Snap employed fifty persons or that the fifty persons worked within 75 miles of 2 Croghan and (2) because Croghan fails to assert that he requested leave or that his request was 3 denied. Mot. at 16–18.4 The Court agrees. The Court examines both of Snap’s arguments below. First, under FMLA, a person is not an “eligible employee” if the employee is “employed at United States District Court Northern District of California 4 5 a worksite at which such employer employees less than 50 employees if the total number of 6 employees employed by the employer within 75 miles of that worksite is less than 50.” 29 U.S.C. 7 § 2611(2)(B); see Larson v. United Natural Foods W. Inc., 518 F. App’x 589, 590 (9th Cir. 2013) 8 (“The FMLA specifically excludes from its coverage an employee at a worksite where the 9 employer has fewer than 50 employees within 75 miles of that location.”). Under the CFRA, an 10 employee is not eligible if the “employer employs less than 50 employees within 75 miles of the 11 worksite where that employee is employed.” Calif. Gov. Code § 12945.2(b). 12 Here, Croghan makes only a conclusory allegation that he “is informed and believes that 13 [Snap] is a covered employer, as that term is defined in 29 U.S.C. § 2601, et seq. and California 14 Government Code § 12945.2.” FAA at 37 ¶ 97. This conclusory allegation fails the Twombly/Iqbal 15 standard because it does not allege that Snap employed fifty people or that the fifty people worked 16 within 75 miles of Croghan. Croghan’s main argument in opposition is that he does not have 17 personal information about Snap’s payroll or the number of employees within 75 miles of the 18 location from which Croghan received his work. Opp’n at 23–24 (“Croghan has pled as much 19 information as he has at the present time.”). Croghan’s lack of personal information does not save 20 him from his pleading deficiencies. Croghan does not need to know the exact numbers and 21 locations of Snap’s employees, but at the very least Croghan must allege a claim sufficient to 22 withstand a motion to dismiss based on information and belief. See, e.g., United States ex rel. 23 Vatan v. QTC Med. Servs. Inc., 721 F. App’x 662, 664 (9th Cir. 2018) (explaining that plaintiff is 24 not prevented “from asserting a claim, based on information and believe sufficient to withstand a 25 26 27 28 Snap further suggests that “the [C]ourt should also strike the numerous references to Mr. Croghan’s child because those events have no possible bearing on this dispute.” Mot. at 18. The Court disagrees and DENIES Snap’s request to strike. 28 4 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 motion to dismiss”). Because Croghan has failed to sufficiently allege that Snap is a covered 2 employer, the Court finds that Croghan’s ninth claim should be dismissed on this ground. United States District Court Northern District of California 3 Second, the Court agrees that Croghan has failed to sufficiently plead notice. “Both the 4 CFRA and the FMLA require the employee to provide notice to the employer of the employee’s 5 intent to take leave.” Alejandro v. St. Micro Electronics, Inc, 129 F. Supp. 3d 898, 913 (N.D. Cal. 6 2015) (citing McDaneld v. E. Mun. Water Dist. Bd., 109 Cal. App. 4th 702, 706 (2003)). To 7 constitute notice under FMLA, “the critical question is whether the information imparted to the 8 employer is sufficient to reasonably apprise it of the employee’s request to take time off for a 9 serious health condition.” Mora v. Chem–Tronics, Inc., 16 F.Supp.2d 1192, 1209 (S.D.Cal.1998) 10 (alterations omitted) (quoting Manuel v. Westlake Polymers Corp., 66 F.3d 758, 764 (5th 11 Cir.1995)). The FMLA “does not require an employee to invoke the language of the statute to gain 12 its protections when notifying her employer of her need for leave for a serious health condition.” 13 Manuel, 66 F.3d at 764. “[F]or employees who make their employers aware that they or a family 14 member suffers from a chronic illness, and subsequently call in sick because of that illness, a 15 generalized notice may suffice.” Mora, 16 F. Supp. 2d at 1210. Similarly, under CFRA, “[t]he 16 employee need not expressly assert rights under CFRA or FMLA, or even mention CFRA or 17 FMLA, to meet the notice requirement; however, the employee must state the reason the leave is 18 needed . . . . The employer should inquire further of the employee if it is necessary to have more 19 information about whether CFRA leave is being sought by the employee and obtain the necessary 20 details of the leave to be taken.” Avila v. Continental Airlines, Inc., 165 Cal. App. 4th 1237 1256 21 (2008). The employer must be on notice that the employee is requesting leave for a “serious health 22 condition that makes the employee unable to perform the functions of the position of that 23 employee.” Gibbs v. Am. Airlines, Inc., 74 Cal. App. 4th 1, 7 (1999). 24 Here, Croghan’s FAA lacks any allegations that Croghan provided notice to his employer 25 by alleging, for example, that he notified Snap of his need to take a leave of absence because of 26 his daughter’s birth and hospitalization. Even if the Court were to accept Croghan’s position that it 27 28 29 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS United States District Court Northern District of California 1 is enough for Croghan to have alleged constructive notice of Croghan’s need for leave, Croghan 2 has only provided one conclusory allegation that “[u]pon information and belief [Snap] was aware 3 of [Croghan’s] need for a leave of absence.” FAA at 38 ¶ 100. Croghan provides no factual 4 allegations supporting this conclusory statement that Snap had constructive notice. Therefore, 5 Croghan’s counterclaim fails under Twombly/Iqbal. 6 Accordingly, the Court GRANTS Snap’s motion to dismiss Croghan’s ninth counterclaim. 7 However, because granting Croghan an additional opportunity to amend would not be futile, cause 8 undue delay, or unduly prejudice Snap, and because Croghan has not acted in bad faith, the Court 9 grants Croghan leave to amend. See Leadsinger, Inc., 512 F.3d at 532. 10 6. Counterclaim #10: UCL 11 Croghan’s tenth counterclaim is for unfair business practices in violation of California’s 12 Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200, et seq. See FAA at 38–40. 13 The UCL creates a cause of action for business practices that are (1) unlawful, (2) unfair, or (3) 14 fraudulent. Each “prong” of the UCL provides a separate and distinct theory of liability. Lozano v. 15 AT & T Wireless Servs., Inc., 504 F.3d 718, 731 (9th Cir. 2007). Croghan’s opposition makes clear 16 that he is only asserting a claim under the “unlawful” prong.5 Opp’n at 24–25. The unlawful prong 17 the UCL prohibits “anything that can properly be called a business practice and that at the same 18 time is forbidden by law.” Cel-Tech Commc’ns., Inc. v. L.A. Cellular Telephone Co., 20 Cal. 4th 19 163, 180 (1999). 20 Snap moves to dismiss Croghan’s tenth counterclaim on the basis that is it derivative of the 21 other labor code violation claims. Mot. at 19–21. Croghan admits that his UCL claim is derivative 22 of his labor code violation claims. See Opp’n at 24–25. Therefore, because Croghan’s UCL claim 23 is derivative of the other claims in the FAA that the Court dismisses in this Order, the derivative 24 UCL claim must also be dismissed. See Avila v. Bank of Am., No. 17-cv-222-HSG, 2017 WL 25 26 27 28 5 Because Croghan clarifies that his UCL claim is based only on the unlawful prong, the Court GRANTS Snap’s motion to dismiss Croghan’s UCL claim to the extent it is based on the unfair and fraudulent prongs. 30 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 4168534, at *5 (N.D. Cal. Sept. 20, 2017) (dismissing UCL claim to the extent it is derivative of 2 other claim dismissed in same order). Accordingly, Snap’s motion is GRANTED. However, 3 because granting Croghan an additional opportunity to amend would not be futile, cause undue 4 delay, or unduly prejudice Snap, and because Croghan has not acted in bad faith, the Court grants 5 Croghan leave to amend. See Leadsinger, Inc., 512 F.3d at 532. 6 IV. 7 For the foregoing reasons, the Court GRANTS IN PART with prejudice, GRANTS IN 8 PART without prejudice, and DENIES IN PART Snap’s motion to strike. Specifically, the Court 9 rules as follows: • The motion to strike the general denial is DENIED; • The motion to strike the burden assertion is GRANTED with leave to amend; • The motion to strike the first affirmative defense is GRANTED with leave to amend; • The motion to strike the second affirmative defense is DENIED; • The motion to strike the third affirmative defense is GRANTED in part with leave to amend and DENIED in part; • The motion to strike the fourth affirmative defense is DENIED; • The motion to strike the fifth affirmative defense is DENIED; • The motion to strike the sixth affirmative defense is DENIED; • The motion to strike the seventh affirmative defense is DENIED; • The motion to strike the eighth affirmative defense is GRANTED in part with leave to amend and DENIED in part; • The motion to strike the ninth affirmative defense is GRANTED in part with leave to amend and DENIED in part; • The motion to strike the tenth affirmative defense is DENIED; • The motion to strike the eleventh affirmative defense is DENIED; • The motion to strike the twelfth affirmative defense is DENIED; • The motion to strike the thirteenth affirmative defense is DENIED; • The motion to strike the fifteenth affirmative defense is DENIED; • The motion to strike the sixteenth affirmative defense is GRANTED with prejudice. 10 11 United States District Court Northern District of California CONCLUSION 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The Court also GRANTS without prejudice Snap’s motion to dismiss Croghan’s first, second, third, fourth, fifth, eighth, ninth, and tenth counterclaims. If Croghan elects to file a second amended answer, Croghan must do so within 30 days of this Order. If Croghan fails to file a second amended answer within 30 days or fails to cure the 31 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS 1 deficiencies identified in this Order, the deficient affirmative defenses will be stricken with 2 prejudice, and the deficient counterclaims will be dismissed with prejudice. Croghan may not add 3 new causes of action or new parties without stipulation or leave of the Court. 4 IT IS SO ORDERED. 5 6 7 8 Dated: February 22, 2019 ______________________________________ LUCY H. KOH United States District Judge 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 32 Case No. 18-CV-04686-LHK ORDER GRANTING IN PART WITH PREJUDICE, GRANTING IN PART WITHOUT PREJUDICE, AND DENYING IN PART MOTION TO STRIKE; GRANTING WITHOUT PREJUDICE MOTION TO DISMISS

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.