Marcie Hamilton v. Juul Labs, Inc.

Northern District of California, cand-3:2020-cv-03710

OPPOSITION/RESPONSE (re 34 MOTION to Strike 32 Amended Complaint Portions of Plaintiff's First Amended Complaint) filed by Marcie Hamilton.

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CHRIS BAKER, State Bar No. 181557 1 cbaker@bakerlp.com DEBORAH SCHWARTZ, State Bar No. 208934 2 dschwartz@bakerlp.com 3 BAKER CURTIS & SCHWARTZ, P.C. 1 California Street, Suite 1250 4 San Francisco, CA 94111 Telephone: (415) 433-1064 5 Fax: (415) 366-2525 6 Attorneys for Plaintiff 7 MARCIE HAMILTON 8 9 UNITED STATES DISTRICT COURT 10 FOR THE NORTHERN DISTRICT OF CALIFORNIA 11 SAN FRANCISCO DIVISION 12 13 MARCIE HAMILTON, Case No. 3:20-CV-3710-EMC 14 Plaintiff, PLAINTIFF MARCIE HAMILTON'S OPPOSITION TO MOTION TO STRIKE 15 vs. 16 Date: January 7, 2021 JUUL LABS, INC., Time: 1:30 p.m. 17 Dept: Courtroom 5, 17th Floor Defendant. Judge: Honorable Edward M. Chen 18 19 20 21 I. INTRODUCTION 22 JUUL's motion to strike is, in some ways, just a continuation of its motion to dismiss. It 23 makes two main arguments: First, Plaintiff cannot allege extrinsic evidence related to the proper 24 interpretation of JUUL's agreements in accordance with this Court's September 11, 2020 Order 25 and Edwards v. Arthur Anderson, 44 Cal.4th 937 (2008); and second, Plaintiff cannot allege facts 26 concerning JUUL's refusal to produce records and evidence as required by the Labor Code and 27 General Order No. 71 because JUUL denies it has done anything wrong. 28 The motion to strike should be denied. PLAINTIFF'S OPPOSITION TO JUUL MOTION TO STRIKE / CASE NO. 3:20-CV-3710-EMC 1 II. FACTS 2 A. Contract Negotiations Are Extrinsic Evidence and Cannot Be Struck 3 The Edwards rule of contract interpretation only applies to ambiguous agreements. 4 Edwards, 44 Cal.4th at 945. In its September 11 Order, this Court found JUUL's NDA, 5 Termination Certificate, and Release Agreement ambiguous. It therefore applied Edwards, in the 6 absence of extrinsic evidence, to interpret them as "lawful, valid, and capable of being carried 7 into effect." (Dkt # 23, pp. 9-10). The Court stated: "The contracts do not, at least facially under 8 Edwards, bar whistleblowing or making other disclosures protected by law. . . . Ms. Hamilton 9 argues that in an amended pleading, she can provide factual allegations beyond a facial challenge 10 to these agreements which may shed light on the proper interpretation of these contracts, similar 11 to the reason the Edwards court remanded the case to develop the factual record. . . . The Court 12 therefore dismisses Ms. Hamilton's claims without prejudice; she shall have leave to amend to 13 the extent she can plead factual allegations that demonstrate the contracts should be interpreted as 14 prohibiting her from whistleblowing, engaging in otherwise lawful conduct during non-working 15 hours, disclosing her wages and working conditions, or violating other Labor Code [provisions]." 16 (Dkt # 23, pp. 11) (underlines added). 17 Contract negotiations are extrinsic evidence that can shed light on the proper 18 interpretation of an ambiguous contract. E.g., Miller v. Glen Miller Productions Inc., 454 F.3d 19 975 (9th Cir. 2006). Paragraphs 78-79, and 109 detail contract negotiations. 20 Plaintiff's counsel proposed changes to JUUL's standard release agreement "to ensure it is 21 legal and consistent with the most current commercial standards." (1AC ¶ 78). She sought to 22 delete the release language stating: (1) "that Hamilton must agree that "he/she has not, and will 23 not, at any time hereafter, commence, maintain, prosecute, participate in, or assist with (unless 24 compelled by legal process or court order) any action or proceeding of any kind, judicial or 25 administrative, whether on behalf of EMPLOYEE or a third party, in any court, agency, or 26 investigative or administrative body against any Releasee with respect to any act, omission, 27 practice, conduct, event or any other matter occurring up to and including the date on which 28 EMPLOYEE signs this Agreement;" and (2) the blanket non-disparagement provision. (1AC ¶ -2- PLAINTIFF'S OPPOSITION TO JUUL MOTION TO STRIKE / CASE NO. 3:20-CV-3710-EMC 1 78.a and d.) This language, on its face, violates Labor Code § 1102.5, Government Code § 2 12964.5, and many other laws (including PAGA itself). 3 Plaintiff's counsel also proposed adding language to the definition of "Protected Activity" 4 so that it encompassed activity protected by, among other things, the "Me-Too movement" laws 5 set forth in Government Code §§ 12964.5, CCP § 1001, and Civil Code § 1670.11. (1AC ¶ 78.b.) 6 Finally, Plaintiff's counsel proposed language to allow Plaintiff to engage in protected 7 activity, not just under the release agreement, but also under her NDA. She sought to add 8 language stating neither "Plaintiff's NDA 'nor any other agreement shall be construed as 9 restricting EMPLOYEE's rights under the NLRA, Labor Code §§ 98.6, 232, 232.5, 1102.5, 10 1197.5, SEC rules, or [other laws or rights referenced above]." (1AC ¶ 78.c). 11 JUUL rejected all these changes. (1AC ¶ 79, 109). This is extrinsic evidence that JUUL 12 intended its ambiguous release agreement, Termination Certificate, and NDA to prohibit 13 conducted protected under the Labor Code. It is also evidence that JUUL wants the average 14 employee to at least think the contracts prohibit protected conduct, which is also relevant to the 15 non-contract claims. 16 The Court cannot strike these allegations. They are material and pertinent to Plaintiff's 17 claims and consistent with the Court's September 11 Order granting Plaintiff leave to amend. 18 B. The Concealment of Evidence Allegations Cannot Be Struck Because They Anticipate JUUL's Defenses and Are Relevant to Plaintiff's Claims 19 In the parties' Joint Case Management Statement, JUUL stated: "JLI will not agree to 20 tolling as a mechanism for reviving any time-barred claims or to toll any statute of limitations 21 period that has already expired and expressly preserves all defenses to timeliness, relation back, 22 administrative exhaustion, and standing." (Dkt # 26, p. 5:23-26). JUUL further stated as an issue 23 in this case: "Whether Hamilton's PAGA claim under Labor Code § 432.5. . . relates back to its 24 original PAGA letter submitted by Hamilton on August 14, 2018 and, if it does not, the effect 25 with respect to administrative exhaustion and statute of limitations." (Id. at p. 7:5-9). 26 Plaintiff in the Joint CMC Statement identified as an issue: "To the extent JUUL asserts 27 statute of limitation defenses or other procedural defenses, what is the effect of, among other 28 -3- PLAINTIFF'S OPPOSITION TO JUUL MOTION TO STRIKE / CASE NO. 3:20-CV-3710-EMC 1 things: (a) the parties original tolling agreement; (b) the filing of the original complaint; (c) 2 JUUL's refusal to produce documents as required by the Labor Code; (d) the operation of Labor 3 Code § 2699.3(a)(2)(C); and (e) the relations back and other doctrines, on any such 4 limitations/exhaustion periods." (Id. at p. 6:12-16). 5 On October 29, 2020, the parties filed a Stipulation and Order concerning the filing and 6 briefing schedule for Plaintiff's First Amended Complaint ("1AC)" and any subsequent motion to 7 dismiss. (Dkt # 31). The Stipulation states: "This stipulation and filing of the 1AC is not intended 8 to waive either party's rights, defenses, claims, or arguments with respect to any limitations 9 period, 'relations back,' tolling agreement, equitable tolling, whether a party has standing or is a 10 proper party to this action, or any other claim or defense. . . ." (Id. at 2:20-23). 11 Plaintiff alleges that JUUL concealed evidence relevant to this case by not providing 12 records and other documents (like its "Culture & Policy Handbook" and the release agreement 13 originally signed by Isaacson) in violation of, first Labor Code requirements, and then this 14 Court's General Order No. 71. (1AC ¶¶ 93-103). The allegations are material to legal and 15 equitable issues such as the proper limitations period for Plaintiff's PAGA claims, the scope of 16 Plaintiff's PAGA notices, whether any claims are time-barred, equitable tolling, and the relation 17 back doctrine. A plaintiff's attempts to obtain evidence, and a defendant's refusal to produce 18 evidence, are material to these issues. Equitable tolling, for example, rests on consideration of a 19 non-exhaustive list of factors, including "evidence of improper purpose on the part of the 20 defendant" or "the defendant's actual or constructive knowledge of the deceptive nature of its 21 conduct." O'Donnell v. Vencor, Inc., 465 F.3d 1065, 1067 (9th Cir. 2006). Equitable tolling also 22 applies when there is timely notice, and a lack of prejudice, to the defendant, and reasonable and 23 good faith conduct on the part of the plaintiff. Butler v. National Community Renaissance of 24 California, 766 F.3d 1191, 1204 (9th Cir. 2014). 25 In this light, Plaintiff's allegations concerning her efforts to obtain evidence of JUUL's 26 unlawful practices, and JUUL's refusal to provide such evidence, are material to the defenses that 27 JUUL states it intends to assert. They cannot be struck. JUUL's citation to Malek v. Green, 2018 28 WL 2431437, *20 (N.D. Cal. May 30, 2018) is unpersuasive. There is no reasoning in Malek, -4- PLAINTIFF'S OPPOSITION TO JUUL MOTION TO STRIKE / CASE NO. 3:20-CV-3710-EMC 1 and the allegation struck as "immaterial and impertinent" concerned "pre-suit discovery 2 requests." Here, Plaintiff's allegations are material and pertinent, and JUUL's statutory 3 obligation to provide employment documents under the Labor Code is not a pre-suit discovery 4 request. Nor, for that matter, is JUUL's obligation to comply with General Order No. 71 after the 5 lawsuit is filed. 6 Regardless, this Court should not – through a motion to strike – enter an advisory opinion 7 as to JUUL's obligations to produce specific employment documents and other evidence pursuant 8 to the Labor Code and General Order No. 71. Plaintiff notes that JUUL's motion to dismiss does 9 not seek the dismissal of any claims on statute of limitations, no-relation-back, administrative 10 exhaustion under PAGA, or other related grounds. Given Plaintiff's allegations about JUUL's 11 concealment of evidence and other matters, JUUL may abandon these defenses altogether. 12 Unless it does, the allegations must stand. The Court should not address JUUL's compliance (or 13 lack thereof) with Labor Code §§ 226(b), 432, 1198.5, and General Order No. 71 in a vacuum, 14 divorced from any motion concerning their applicability to JUUL's defenses and other issues in 15 this case. 16 Plaintiff, obviously, disagrees with JUUL's argument as to JUUL's Labor Code and Order 17 No. 71 obligations. Among other things, Labor Code § 226(b) is not limited to paystubs (1AC ¶ 18 96), and the written policies and other documents acknowledged and reviewed during the course 19 of employment do concern employee performance and grievances. JUUL implicitly concedes 20 this fact because it produced the reports evidencing Plaintiff and Isaacson's review and 21 acknowledgement of the policies, but refused to produce the policies themselves. (1AC ¶¶ 101- 22 102). General Order No. 71, by its plain terms, applies to Plaintiff's claims. (1AC ¶ 97). This is 23 not a class action, and Plaintiff has alleged adverse actions. 24 That said, and again, the Court need not, and should not, address the meaning and 25 applicability of these statutes and the Court's General Order because it is unnecessary to do so. 26 There is no question that Plaintiff's allegations, as set forth in paragraphs 93-103, are material and 27 pertinent to the claims and defenses at issue in this case. That is all that matters with respect to 28 the present motion. -5- PLAINTIFF'S OPPOSITION TO JUUL MOTION TO STRIKE / CASE NO. 3:20-CV-3710-EMC 1 III. CONCLUSION 2 The motion to strike should be denied. 3 Dated: December 10, 2020 4 BAKER CURTIS & SCHWARTZ, P.C. 5 By:______/s/ Chris Baker________________ 6 Chris Baker Attorneys for Plaintiff 7 MARCIE HAMILTON 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -6- PLAINTIFF'S OPPOSITION TO JUUL MOTION TO STRIKE / CASE NO. 3:20-CV-3710-EMC