Geary v. Parexel International Corporation et al, No. 5:2019cv07322 - Document 133 (N.D. Cal. 2022)
Court Description: Order Granting With Leave to Amend 122 Motion to Dismiss. Amended Complaint due by 4/8/2022. Signed by Judge Edward J. Davila on 3/18/2022. (ejdlc1, COURT STAFF) (Filed on 3/18/2022)Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 WILLIAM JOHN GEARY, 8 Plaintiff, 9 v. 10 PAREXEL INTERNATIONAL CORPORATION, et al., United States District Court Northern District of California 11 12 Case No. 5:19-cv-07322-EJD ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND Re: Dkt. No. 122 Defendants. 13 Plaintiff William John Geary III, proceeding pro se, brings this action against Defendant 14 15 Parexel International Corporation (“Parexel”) and its individual officers, executives, and directors 16 (collectively, “the Individual Defendants”), asserting the following claims: (1) retaliation in 17 violation of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), 18 U.S.C. § 1514A against all 18 Defendants; (2) retaliation in violation of the Dodd-Frank Wall Street Reform and Consumer 19 Protection Act (“Dodd-Frank”), 15 U.S.C. § 78u-6 against all Defendants; (3) retaliation through 20 wrongful termination in violation of California Labor Code § 1102.5 against Parexel1; and (4) 21 wrongful termination in violation of public policy against all Defendants. Compl., Dkt. No. 1. 22 Defendants now move to dismiss the complaint under Federal Rules of Civil Procedure 12(b)(1) 23 and (6). Defs.’ Not. of Mot. and Mot. to Dismiss Plf.’s Compl. Pursuant to F.R.C.P. 12(b)(1) and 24 25 26 27 28 In the text of the Complaint, Geary lists both the third and fourth claim as “wrongful termination in violation of public policy,” but on the caption of the Complaint, he describes his third claim as retaliation under California Labor Code § 1102.5 and the fourth claim as wrongful termination in violation of public policy. 1 Case No.: 5:19-cv-07322-EJD ORDER GRANTING MOT. TO DISMISS W/ LEAVE TO AMEND 1 1 F.R.C.P. 12(b)(6) (“Mot.”), Dkt. No. 122. The Court finds the motion appropriate for decision 2 without oral argument pursuant to Civil Local Rule 7-1(b). Having considered the parties’ written 3 submissions, the Court GRANTS the motion with leave to amend. 4 I. Parexel is a clinical research service company headquartered in Waltham, Massachusetts, 5 United States District Court Northern District of California BACKGROUND 6 with approximately 18,600 employees across 52 countries. Compl. ¶ 13. The Individual 7 Defendants consist of: Parexel co-founder, Chairman of the Board of Directors, and Chief 8 Executive Officer Josef H. von Rickenbach; President, Chief Operating Officer, and Director 9 Mark A. Goldberg, M.D.; Senior Vice President, Clinical Research Services and Director Roland 10 Andersson, Ph.D.; Senior Vice President, Chief Financial Officer, and Director Ingo Bank; Senior 11 Vice President, General Counsel, Secretary, and Director Douglas A. Batt; Parexel Informatics 12 President and Parexel Director Xavier Flinois; Senior Vice President, Clinical Research Services 13 and Director Gadi Saarony; Senior Vice President, Chief Administrative Officer, and Director Ulf 14 Schneider, Ph.D.; Senior Vice President, Clinical Research Services and Director Thomas 15 Senderovitz, M.D.; Director A. Dana Callow, Jr.; Director Patrick J. Fortune, Ph.D.; Director 16 Maykin Ho, Ph.D.; Director Eduard E. Holdener, M.D.; Director Christopher J. Lindop; Director 17 Richard L. Love; and Director Ellen M. Zane.2 Id. ¶¶ 14-15. Geary is a resident of San Jose, California. Id. ¶ 13. In February 2014, Parexel hired 18 19 Geary to work from home as a Sr. Project Leader. Id. ¶ 8. In that role, Geary was responsible for 20 calculating and reporting accrual of recognized revenue and attesting to accuracy of expenses prior 21 to submitting them to clients for reimbursement. Id. ¶ 11. 22 In August 2014, Geary was assigned to be the Sr. Project Leader for Parexel client 23 Pharmacyclics, Inc. (“PCYC”). Id. ¶¶ 9, 19. He says he was selected to “rescue a failing project” 24 (the “PCYC Project”). Id. ¶ 19. Upon assuming leadership of the PCYC Project, Geary “reported 25 26 27 28 2 Parexel notes that only one of the Individual Defendants remains employed at or in service as a Director. Mot. at 11 n.4. Case No.: 5:19-cv-07322-EJD ORDER GRANTING MOT. TO DISMISS W/ LEAVE TO AMEND 2 1 up the hierarchy that [the] PCYC Project had serious, pre-existing issues of controls related to 2 revenue recognition and client approval of monthly invoices for payment.” Id. Specifically, for 3 the 18 months prior, PCYC had refused to authorize monthly invoices that Geary’s immediate 4 supervisor, Sr. Director Joy Yucaitis, had submitted to PCYC. Id. ¶ 20. PCYC demanded that 5 Yucaitis be removed from the PCYC Project, leading to Geary’s assignment. Id. ¶ 21. Geary says 6 that as soon as he joined the PCYC Project, he began experiencing “pressure and pre-emptive 7 retaliation to influence PCYC to authorized overstated invoices.” Id. ¶ 23. 8 United States District Court Northern District of California 9 On November 5, 2014, Geary reported errors in Parexel’s revenue recognition for the PCYC Project “due to a lack of internal controls in revenue recognition.” Id. ¶ 24. Parexel 10 subsequently reversed $162,000 in revenue recognition. Id. ¶ 25. Shortly thereafter, beginning in 11 December 2014, Geary says that he “began receiving intense abuse, threats and coercion to ‘use 12 your credibility to influence with PCYC’ representatives” to obtain PCYC’s authorization for 13 overstated monthly invoices. Id. ¶ 26. On January 29, 2015, Geary alleges that Yucaitis publicly 14 verbally abused him at an off-site business meeting and ordered him to remove his clothing and 15 don another man’s clothing instead. Id. ¶ 28. On February 5, 2015, Geary was placed on a 16 Performance Improvement Plan (“PIP”) because he “had damaged his working relationship with 17 the Parexel Finance department.” Id. ¶ 29. The PIP stated, “Specifically, he must make progress 18 in mending fences with finance.” Id. 19 In March 2015, Geary was assigned to be the Sr. Project Leader for another Parexel client, 20 GlaxoSmithKline (“GSK”), on the “GSK Project.” Id. ¶¶ 30-31. Geary alleges that Parexel 21 finance representatives directed him to “manufacture accrual and recognize” $400,000 in revenue 22 for the GSK Project for the month of March, despite the fact that the GSK Project had been active 23 for less than 30 days, no work had been started on the project, and no revenue had accrued. Id. ¶¶ 24 32-33. According to Geary, his supervisor “made it clear to him that he was ‘expected to conform 25 to revenue projections’ and authorize the $400K revenue recognition.” Id. ¶ 34. Despite being on 26 a PIP and under a threat of termination, Geary refused to fabricate the revenue. Id. ¶¶ 34-35. 27 28 On April 9, 2015, Geary reported what he believes was wire fraud, investor fraud, and Case No.: 5:19-cv-07322-EJD ORDER GRANTING MOT. TO DISMISS W/ LEAVE TO AMEND 3 1 violations of the Physicians Payment Sunshine Act through the Parexel hierarchy. Id. ¶ 36. He 2 believed that emailing manufactured financial reports to a client in order to obtain authorization 3 for payment of invoices constituted wire fraud. Id. ¶ 37. Geary also believed that manufacturing 4 revenue accrual constituted investor fraud. Id. ¶ 38. 5 6 his observations to the Securities and Exchange Commission (“SEC”) in May 2018. Id. ¶ 50. 7 During May and June 2015, Geary says he was pressured to sign a non-disclosure agreement but 8 refused. Id. ¶ 41. On June 30, 2015, Parexel terminated Geary’s employment, which he believes 9 was because he “refused to be complicit in wrongdoing.” Id. ¶ 42. 10 United States District Court Northern District of California On April 24, 2015, Parexel placed Geary on a leave of absence. Id. ¶ 49. Geary reported On November 29, 2015, Geary filed a complaint describing alleged fraud, retaliation, 11 malice, oppression, and racketeering at Parexel to the U.S. Department of Labor’s Occupational 12 Safety and Health Administration (“OSHA”). Id. ¶ 43. During this period, Parexel continued to 13 pressure Geary to sign a non-disclosure agreement. Id. ¶ 44. On May 30, 2016, Geary says that 14 “180 days elapsed without a determination by the Secretary of Labor” on his retaliation complaint. 15 Id. ¶ 45. 16 A year later, on July 12, 2016, Parexel CFO and Defendant Bank resigned, three weeks 17 prior to reporting final year-end corporate results. Id. ¶ 46. On August 30, 2016, Parexel filed a 18 Notification of Late Filing for its Annual Report on Form 10-K for the year ending June 30, 2016. 19 Id. ¶ 47. On September 9, 2016, Independent Registered Public Accounting Firm Ernst & Young 20 LLP reported “material weaknesses in controls related to revenue recognition at its Clinical 21 Research Services reporting segment and approval of invoices for payment” for fiscal years 2014, 22 2015, and 2016. Id. ¶ 48. Geary says that these facts are all consistent with and confirm the fraud 23 that he had reported earlier. Id. 24 On October 24, 2018, OSHA informed Geary that it had completed its investigation of his 25 complaint against Parexel and informed him that he had “30 days from the receipt of these 26 Findings to file objections and to request a hearing before an Administrative Law Judge (ALJ). If 27 no objections are filed, these Findings will become final and not subject to court review.” Dkt. 28 Case No.: 5:19-cv-07322-EJD ORDER GRANTING MOT. TO DISMISS W/ LEAVE TO AMEND 4 1 No. 122-1 at 1–2.3 Geary filed this action on November 7, 2019. Dkt. No. 1. Due to the COVID-19 2 3 pandemic, the U.S. Marshals were unable to serve process on Defendants as they would otherwise 4 typically have done. See Dkt. No. 110. Defendants filed a waiver of service on April 28, 2021. 5 Dkt. No. 118. This motion followed thereafter. Dkt. No. 122. 6 II. 7 A. 8 To contest a plaintiff’s showing of subject matter jurisdiction, a defendant may file a Rule 9 United States District Court Northern District of California LEGAL STANDARD Rule 12(b)(1) 12(b)(1) motion. Fed. R. Civ. P. 12(b)(1). A defendant may challenge jurisdiction “facially” by 10 arguing the complaint “on its face” lacks jurisdiction or “factually” by presenting extrinsic 11 evidence demonstrating the lack of jurisdiction on the facts of the case. Wolfe v. Strankman, 392 12 F.3d 358, 362 (9th Cir. 2004); Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 13 2004). “In a facial attack, the challenger asserts that the allegations contained in a complaint are 14 insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the 15 challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal 16 jurisdiction.” Safe Air for Everyone, 373 F.3d at 1039. In resolving a factual attack on jurisdiction, the Court may review evidence beyond the 17 18 complaint without converting the motion to dismiss into a motion for summary judgment. Id. 19 (citing Savage v. Glendale Union High Sch., Dist. No. 205, Maricopa Cty., 343 F.3d 1036, 1039 20 n.2 (9th Cir. 2003)). While the Court may consider evidence outside of the pleadings to resolve a 21 “factual” Rule 12(b)(1) motion, “a [j]urisdictional finding of genuinely disputed facts is 22 inappropriate when the jurisdictional issue and substantive issues are so intertwined that the 23 24 25 26 27 28 3 Defendants request the Court take judicial notice of the October 24, 2018 OSHA letter and preliminary findings regarding Geary’s SOX complaint. Dkt. No. 122. Geary does not object to the request. See Resp. to Mot. to Dismiss (“Resp.”), Dkt. No. 123. The Court grants Defendants’ request and takes judicial notice of the facts as described above as an administrative record of a U.S. government agency. See Khoja v. Orexigen Therapeutics, 899 F.3d 988, 1001 (9th Cir. 2018) (citing United States v. Ritchie, 342 F.3d 903, 907–09 (9th Cir. 2003)); United States v. 14.02 Acres of Land More or Less in Fresno Cty., 547 F. 3d 943, 955 (9th Cir. 2008). Case No.: 5:19-cv-07322-EJD ORDER GRANTING MOT. TO DISMISS W/ LEAVE TO AMEND 5 United States District Court Northern District of California 1 question of jurisdiction is dependent on the resolution of factual issues going to the merits of an 2 action.” Safe Air for Everyone, 373 F.3d at 1039 n.3 (citing Sun Valley Gasoline, Inc. v. Ernst 3 Enters., Inc., 711 F.2d 138, 140 (9th Cir. 1983)) (internal quotation marks omitted). 4 B. 5 Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with enough Rule 12(b)(6) 6 specificity to “give the defendant fair notice of what the . . . claim is and the grounds upon which 7 it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). A 8 complaint which falls short of the Rule 8(a) standard may therefore be dismissed if it fails to state 9 a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). “Dismissal under Rule 10 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts 11 to support a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 12 1104 (9th Cir. 2008). When deciding whether to grant a motion to dismiss, the Court must accept 13 as true all “well pleaded factual allegations” and determine whether the allegations “plausibly give 14 rise to an entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). The Court must also 15 construe the alleged facts in the light most favorable to the plaintiff. Love v. United States, 915 16 F.2d 1242, 1245 (9th Cir. 1989). While a complaint need not contain detailed factual allegations, 17 it “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is 18 plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp., 550 U.S. at 570). 19 A court generally may not consider any material beyond the pleadings when ruling on a 20 Rule 12(b)(6) motion. If matters outside the pleadings are considered, “the motion must be treated 21 as one for summary judgment under Rule 56.” Fed. R. Civ. P. 12(d). However, documents 22 appended to the complaint, incorporated by reference in the complaint, or which properly are the 23 subject of judicial notice may be considered along with the complaint when deciding a Rule 24 12(b)(6) motion. Khoja v. Orexigen Therapeutics, 899 F.3d 988, 998 (9th Cir. 2018); see also Hal 25 Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). 26 Likewise, a court may consider matters that are “capable of accurate and ready determination by 27 resort to sources whose accuracy cannot reasonably be questioned.” Roca v. Wells Fargo Bank, 28 Case No.: 5:19-cv-07322-EJD ORDER GRANTING MOT. TO DISMISS W/ LEAVE TO AMEND 6 United States District Court Northern District of California 1 N.A., No. 15-cv-02147-KAW, 2016 WL 368153, at *3 (N.D. Cal. Feb. 1, 2016) (quoting Fed. R. 2 Evid. 201(b)). 3 III. DISCUSSION 4 A. 5 “To safeguard investors in public companies and restore trust in the financial markets Sarbanes-Oxley Claim 6 following the collapse of Enron Corporation, Congress enacted the Sarbanes-Oxley Act of 2002, 7 116 Stat. 745.” Lawson v. FMR LLC, 571 U.S. 429, 432 (2014) (citing S. Rep. No. 107-146, pp. 8 2–11 (2002)). One of the measures enacted in Sarbanes-Oxley to achieve these goals was the 9 protection of whistleblowers. Id. In particular, Sarbanes-Oxley provides that “no [publicly 10 traded] company . . . or any officer, employee, contractor, subcontractor, or agent of such 11 company” may retaliate against an employee for “provid[ing] information, caus[ing] information 12 to be provided, or otherwise assist[ing] in an investigation” of conduct that the employee 13 reasonably believes is a violation of securities law or the SEC’s rules where “the information or 14 assistance is provided to or the investigation is conducted by,” among others, “a person with 15 supervisory authority over the employee (or such other person working for the employer who has 16 the authority to investigate, discover, or terminate misconduct).” 18 U.S.C. § 1514A(a)(1)(C). 17 Under Sarbanes-Oxley, an aggrieved whistleblower can initiate an administrative action by 18 filing a complaint with the Secretary of Labor, which must be filed “not later than 180 days after 19 the date on which the violation occurs, or after the date on which the employee became aware of 20 the violation.” Id. § 1514A(b)(1)(A), (2)(D). In addition, “if the Secretary has not issued a final 21 decision within 180 days of the filing of the complaint and there is no showing that such delay is 22 due to the bad faith of the claimant,” the claimant make bring an action seeking de novo review in 23 federal district court. Id. § 1514A(b)(1)(B). 24 Any administrative action brought under § 1514A(b)(1)(A) is governed by the rules and 25 procedures set out in 49 U.S.C. § 41212(b). Id. § 1514A(b)(2)(A). Section 41212(b) states in 26 relevant part: 27 28 Not later than 60 days after the date of receipt of a complaint . . . the Case No.: 5:19-cv-07322-EJD ORDER GRANTING MOT. TO DISMISS W/ LEAVE TO AMEND 7 2 Secretary of Labor shall conduct an investigation and determine whether there is reasonable cause to believe that the complaint has merit and notify, in writing, the complainant and the person alleged to have committed a violation . . . of the Secretary’s findings. 3 The Secretary may also include a preliminary order based on the findings.4 49 U.S.C. § 41212(b). 4 Within 30 days of notification of the findings, either party can appeal the findings or preliminary 5 order by “fil[ing] objections to the findings or preliminary order, or both, and request[ing] a 6 hearing on the record.” 49 U.S.C. § 41212(b)(2)(A); see also 29 C.F.R. § 1980.106(a). If no party 7 requests a hearing within the 30-day period, “the preliminary order shall be deemed a final order 8 that is not subject to judicial review.” 49 U.S.C. § 41212(b)(2)(A); see also 29 C.F.R. § 9 1980.106(a) (“If no timely objection is filed with respect to either the findings or preliminary United States District Court Northern District of California 1 10 order, the findings and/or preliminary order will become the final decision of the Secretary, not 11 subject to judicial review.”). 12 Defendants contend that Geary did not file a timely objection to the Secretary’s 13 preliminary findings or request a hearing before an ALJ. Mot. at 6–8. Defendants say that the 14 preliminary findings thus became a final order that is not subject to judicial review, and therefore 15 the Court should dismiss Geary’s Sarbanes-Oxley claim with prejudice because of his failure to 16 exhaust administrative remedies. In his response, Geary does not dispute that he failed to submit objections or request a 17 18 hearing from an ALJ by the 30-day deadline. Instead, he argues that his claim may proceed under 19 18 U.S.C. § 1514A(b)(1)(B) because 180 days lapsed without a final decision from the Secretary, 20 and that delay was not due to any bad faith on Geary’s part. Resp. at 2. Geary does not address 21 the requirements of 49 U.S.C. § 41212 or any of the regulations described above. The Southern District of New York’s decision in Lebron v. American International Group, 22 23 Inc. is instructive. No. 09 Civ. 4285(SAS), 2009 WL 3364039 (S.D.N.Y. Oct. 19, 2009). There, 24 the Sarbanes-Oxley whistleblower plaintiff filed her complaint with OSHA, which issued 25 26 27 28 4 Under the administrative regulations promulgated by the Department of Labor, the Secretary may delegate these duties to the Assistant Secretary. See 29 C.F.R. §§ 1980.104, 1980.105. Case No.: 5:19-cv-07322-EJD ORDER GRANTING MOT. TO DISMISS W/ LEAVE TO AMEND 8 1 preliminary findings. However, the plaintiff did not send a copy of her objections and request for 2 a hearing to the ALJ as required, and she took no other steps to appeal the preliminary findings 3 and order. Id. at *2. The Southern District of New York considered the question of whether 4 preliminary findings and orders that are not appealed within 30 days become final and not subject 5 to judicial review if the Secretary failed to issue a final order within 180 days of the filing of the 6 complaint. Id. at *5–6. The Lebron court concluded that 7 12 section 42121(b)’s prohibition on judicial review of final orders must be read as a limit on Congress’s grant of jurisdiction to the district courts under section 1514A. Under this reading, if the Secretary does not issue a final order within 180 days of the filing of the administrative complaint, the complainant has thirty days from receiving a preliminary order to either file a claim in a district court or appeal the preliminary order to the ALJ and thereby preserve the option to file a district court claim at a later time. If the complainant, like Lebron, takes no action within thirty days, the preliminary order becomes final and the district court no longer has jurisdiction to review the claims de novo. 13 Id. at *6. The material facts of Lebron are indistinguishable from Geary’s situation: he did not act 14 on the preliminary findings and order within the 30-day time limit, and the preliminary order 15 became final and unreviewable. Geary does not address Lebron in his opposition. 8 9 10 United States District Court Northern District of California 11 16 Geary asserts that “the Defendants[] made glaring misrepresentations during OSHA’s 17 investigation” that “functionally interfered with the investigation at OSHA and is retaliatory.” 18 Resp. at 7. He provides no details on what those purported misrepresentations consisted of. 19 Regardless, the substantive findings resulting from the OSHA investigation are not the key issue 20 here on a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction. What is of 21 significance is that Geary did not timely object to OSHA’s preliminary findings and seek a hearing 22 before the ALJ, and that inaction is fatal to his claim now. 23 24 Accordingly, the Court finds that it lacks subject matter jurisdiction over Geary’s Sarbanes-Oxley claim and must dismiss it with prejudice, as leave to amend would be futile. 25 B. 26 In 2010, Congress established a new whistleblower protection scheme under the Dodd- Dodd-Frank Claim 27 Frank Act. See 15 U.S.C. § 78u-6. Dodd-Frank defines a “whistleblower” as “any individual who 28 Case No.: 5:19-cv-07322-EJD ORDER GRANTING MOT. TO DISMISS W/ LEAVE TO AMEND 9 United States District Court Northern District of California 1 provides . . . information relating to a violation of the securities laws to the Commission, in a 2 manner established, by rule or regulation, by the Commission.” Id. § 78u-6(a)(6). Dodd-Frank’s 3 anti-retaliation provision forbids an “employer” from retaliating against a whistleblower not only 4 for “providing information to the Commission” or “initiating, testifying in, or assisting in any 5 investigation or judicial or administrative action of the Commission based upon or related to such 6 information” but also for “making disclosures that are required or protected under the Sarbanes- 7 Oxley Act of 2002 (15 U.S.C. [§§] 7201 et seq.), this chapter, including section 78j-1(m) of this 8 title, section 1513(e) of Title 18, and any other law, rule, or regulation subject to the jurisdiction of 9 the Commission.” Id. § 78u–6(h)(1)(A)(i)-(iii). Unlike Sarbanes-Oxley, Dodd-Frank does not 10 require a whistleblower to exhaust administrative remedies before bringing suit in federal court. 11 Wadler v. Bio-Rad Labs., Inc., 141 F. Supp. 3d 1005, 1015 (N.D. Cal. 2015). The statute of 12 limitations for bringing a Dodd-Frank retaliation claim is six to ten years. Id.; 15 U.S.C. § 78u- 13 6(h)(1)(iii). 14 The Supreme Court has held that an employee who does not provide information to the 15 SEC before termination does not qualify as a “whistleblower” at the time of the alleged retaliation 16 and is therefore ineligible for relief under § 78u-6(h). Digital Realty Trust, Inc. v. Somers, 138 S. 17 Ct. 767, 778 (2018). Defendants argue that Geary alleges that he did not report any alleged 18 wrongdoing to the SEC until May 2018—three years after his termination. Mot. at 9; see Compl. 19 ¶¶ 1, 40. Thus, Defendants contend that his SEC report could not possibly have served as the 20 basis for his termination. 21 Geary acknowledges that his complaint pleads a report to the SEC in May 2018 but asserts 22 that this was a typographical error and that he actually reported to the SEC in May 2015. Resp. at 23 1, 3. He seeks leave to amend to correct that error. Id. at 1. Based on the timeline of allegations 24 surrounding the erroneous reference to May 2018, the Court accepts Geary’s representation. See 25 Compl. ¶¶ 39-42 (discussing events occurring between April 24, 2015 to June 30, 2015). The 26 Court dismisses the Dodd-Frank claim based on the complaint as currently pled, but grants Geary 27 leave to amend to correct the typographical errors. 28 Case No.: 5:19-cv-07322-EJD ORDER GRANTING MOT. TO DISMISS W/ LEAVE TO AMEND 10 1 C. Wrongful Termination Claims Defendants contend that Geary’s state law claims for wrongful termination in violation of 2 California Labor Code § 1102.5 and common law wrongful termination in violation of public 3 policy are time-barred. Mot. at 10. A claim for wrongful termination in violation of public policy 4 has a limitations period of two years. King v. Praxair Distr., Inc., No. 3:20-cv-07817-JD, 2021 5 WL 3847906, at *2 (N.D. Cal. Aug. 27, 2021) (citing Cal. Civ. Proc. Code § 335.1; Mathieu v. 6 Norrell Corp., 115 Cal. App. 4th 1174, 1189 & n.14 (2004)); see also Prue v. Brady Co./San 7 8 Diego, 242 Cal. App. 4th 1367, 1382 (2015). “Section 1102.5 does not provide its own statute of limitations.” Khan v. SAP Labs, LLC, No. 18-CV-07490-BLF, 2019 WL 5697928, at *13 (N.D. 9 Cal. Nov. 4, 2019) (internal quotation marks and citation omitted). California courts and federal 10 district courts are split on whether a three-year limitations period or a one-year period applies. Id. 11 United States District Court Northern District of California Here, Defendants argue that a three-year period applies, and the Court joins other courts within 12 this District and within the Ninth Circuit in applying a three-year period. Id. (citing cases); Braz v. 13 Delta Air Lines, Inc., No. 18-CV-06162-JST, 2019 WL 202817, at *3 (N.D. Cal. Jan. 15, 2019) 14 Mot. at 10. 15 Wrongful termination claims accrue no later than the date of the allegedly retaliatory 16 termination. Braz, 2019 WL 202817, at *3 (N.D. Cal. Jan. 15, 2019) (section 1102.5 claim); Goel 17 v. Shah, No. C 13-3586 SBA, 2014 WL 460867, at *3 (N.D. Cal. Feb. 3, 2014) (wrongful 18 19 termination in violation of public policy) (citing Romano v. Rockwell Int’l, 14 Cal. 4th 479, 501 (1996)). Accordingly, Geary’s wrongful termination claims accrued on June 30, 2015 when 20 Parexel terminated his employment. Compl. ¶ 42. He was therefore required to file his wrongful 21 termination claims by June 30, 2017 and June 30, 2018, but he did not do so until November 7, 22 2019. Accordingly, these claims are time-barred. 23 24 25 26 Geary argues that he “memorialized a federal action by submitting his complaint to OSHA on 30 Nov 2015, as required by the statute, the case has been pending since that time.” Resp. at 14. He cites the Supreme Court’s decision in Artis v. Dist. of Columbia, 138 S. Ct. 594 (2018) for the proposition that “once a federal action is filed, state law statutes of limitations are tolled and, 27 28 Case No.: 5:19-cv-07322-EJD ORDER GRANTING MOT. TO DISMISS W/ LEAVE TO AMEND 11 1 unless state law provides for a longer tolling period, do not restart until thirty (30) days after the 2 district court’s dismissal of the federal claims.” Resp. at 13–14. Even if that were a correct 3 reading of Artis, the submission of Geary’s complaint to OSHA in 2015 is not the equivalent of 4 filing a lawsuit in federal court. Sarbanes-Oxley’s statutory and regulatory language make the 5 distinction quite clear. See supra Section III.A. 6 United States District Court Northern District of California 7 Accordingly, the Court dismisses both wrongful termination claims without leave to amend because amendment would be futile. 8 D. 9 Defendants further argue that Geary’s claims against the Individual Defendants cannot Claims Against Individual Defendants 10 proceed because Geary has failed to adequately state a claim against them or because the law does 11 not provide for individual liability. Mot. at 10–12. Because the Court dismisses the Sarbanes- 12 Oxley and wrongful termination claims without leave to amend, it addresses only the Dodd-Frank 13 claim here. 14 Directors may be held individually liable for retaliation under Dodd-Frank. Wadler, 141 F. 15 Supp. 3d at 1022–24. Defendants’ Rule 12(b)(6) motion is based solely on the lack of facts tying 16 any Individual Defendant to Geary’s termination; Defendants do not otherwise contend that the 17 complaint lacks facts supporting all other elements of a claim against Parexel under 15 U.S.C. § 18 78u-6(h)(1)(A). Mot. at 11. Geary agrees that directors may be held individually liable under 19 Sarbanes-Oxley, but he does not address Dodd-Frank or respond to Defendants’ argument 20 regarding insufficient pleading of facts as to the Individual Defendants. See Resp. at 3. 21 The parties do not cite and the Court was unable to find any court decisions addressing 22 Rule 12(b)(6) pleading requirements against individual defendants under Dodd-Frank. 23 Regardless, the complaint does not allege any specific knowledge of or involvement by any of the 24 Individual Defendants in Geary’s allegedly retaliatory termination. The most Geary pleads is that 25 he reported what he believed was fraud “up the corporate hierarchy.” Compl. ¶¶ 1, 36. He does 26 not explain to whom he reported his observations, much less that any of the Individual Defendants 27 were aware of his reports and played a role in the decision to terminate his employment. Iqbal, 28 Case No.: 5:19-cv-07322-EJD ORDER GRANTING MOT. TO DISMISS W/ LEAVE TO AMEND 12 1 556 U.S. at 678 (requiring a complaint to “contain sufficient factual matter, accepted as true, to 2 state a claim to relief that is plausible on its face” (internal quotation marks omitted)). Accordingly, the Court grants the motion to dismiss the Dodd-Frank claim against the 3 4 Individual Defendants. Geary may amend to add specific allegations regarding each Individual 5 Defendant’s knowledge and role in his termination. 6 IV. 7 For the foregoing reasons, the Court GRANTS Defendants’ motion to dismiss, with 8 limited leave to amend only the Dodd-Frank Act claim to address the deficiencies described 9 above. Geary shall file an amended complaint by April 8, 2022. 10 United States District Court Northern District of California CONCLUSION The Court encourages Geary to seek out the assistance of the Federal Pro Se Program, 11 which offers free legal information for pro se litigants. While the Program does not provide legal 12 representation, a licensed attorney may assist Geary with aspects of his case, such as amending his 13 complaint. The Program’s phone number is (408) 297-1480. More information on the Program is 14 available on the Court’s website at https://cand.uscourts.gov/helpcentersj. 15 Geary may also wish to consult a manual the Court has adopted to assist pro se litigants in 16 presenting their case. An online version of the manual, as well as other free information for pro se 17 litigants, is available on the Court’s website at https://cand.uscourts.gov/pro-se. 18 19 IT IS SO ORDERED. Dated: March 18, 2022 20 21 22 EDWARD J. DAVILA United States District Judge 23 24 25 26 27 28 Case No.: 5:19-cv-07322-EJD ORDER GRANTING MOT. TO DISMISS W/ LEAVE TO AMEND 13
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