Randall Miller v. Kowa American Corp et al

Filing 36

MINUTES OF DEFENDANT'S MOTION FOR SUMMARY JUDGMENT OR, IN THE ALTERNATIVE, PARTIAL SUMMARY JUDGMENT 22 Hearing held before Judge Christina A. Snyder. In accordance with the foregoing, defendant's motion for summary judgment is here DEN IED IN PART and GRANTED IN PART. The motion is GRANTED with respect to claim number five, plaintiff's battery claim, and DENIED with respect to the remaining claims and punitive damages. IT IS SO ORDERED. Court Reporter: Katie Thibodeaux. (lom) Modified on 8/23/2016 (lom).

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Title

RANDALL MILLER v. KOWA AMERICAN CORP.

Present: The Honorable

Date

‘O’

August 22, 2016

CHRISTINA A. SNYDER

Catherine Jeang
Deputy Clerk

Katie Thibodeaux
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Michael Faber

Daniel Gonzalez

Proceedings:

I.

DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR,
IN THE ALTERNATIVE, PARTIAL SUMMARY JUDGMENT

INTRODUCTION

On May 12, 2015, Randall Miller (“plaintiff”) filed the instant action in Los
Angeles Superior Court against KOWA American Corp. (“KAC” or “defendant”). Ex. 1,
Dkt. 2. On July 27, 2015, defendant timely removed this case to federal court, asserting
diversity jurisdiction. Dkt 1. The operative First Amended Complaint (“FAC”) was filed
on January 12, 2016, and asserts five claims against defendant: (1) sexual harassment in
violation of public policy, pursuant to Cal. Gov. Code § 12940; (2) failure to prevent
sexual harassment; (3) retaliation; (4) constructive wrongful termination; and (5) battery.
In addition to other damages, plaintiff seeks punitive damages. FAC ¶ 12. Plaintiff’s
claims derive from a December 2013 incident in Japan wherein Atsuteru Shimizu
repeatedly grabbed plaintiff’s genitals. Plaintiff complained to KAC about the
unwelcome touching and KAC allegedly retaliated against plaintiff for his complaint.
On June, 29, 2016, defendant filed the instant motion for summary judgment or, in
the alternative, partial summary judgment, regarding all of plaintiff’s claims and alleged
entitlement to punitive damages. Dkt. 22 (“Motion”). Plaintiff filed his opposition to the
motion (“Opp’n”) on July 22, 2016, Dkt. 28-29, and defendant filed a reply on August 1,
2016, Dkt. 30.
On August 22, 2016, the Court provided the parties with a tentative order and held
oral argument on the instant motion. Having carefully considered the parties’ arguments,
the Court finds and concludes as follows.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Title

RANDALL MILLER v. KOWA AMERICAN CORP.

II.

Date

‘O’

August 22, 2016

BACKGROUND
Except where noted, the following facts are undisputed.

Plaintiff was employed by Kowa Optimed, Inc. (“KOMI”) in December 2013.
Defendant’s Proposed Reply Statement of Uncontroverted Facts (“Reply SUF”), at No. 1.
Plaintiff first joined KOMI on or about July 17, 2013. Id. at No. 2. On October 1, 2014,
KOMI merged into KAC, which continued to employ plaintiff as a National Sales
Manager whose salary included commissions from sales. Id.
Defendant, KAC, is affiliated with Kowa Company Ltd. (“KCL”). The parties
dispute the nature of the relationship between these two corporate entities. Kai Clarke,
president of KOMI from May to October 2013, testified during his deposition that KCL
had “100 percent” authority over the way KOMI operated its business. Clarke Depo., pg.
13:24-14:18. Clarke referred to KCL as “Kowa Japan.” Id. at 10:22-24. Clarke further
stated that he understood himself to be an employee of both KCL and KOMI, despite
holding a title as President of KOMI. Id. at 12:2-3. Reid Anthony replaced Clarke as
president of KAC after its merger with KOMI. During his deposition, he acknowledged
his understanding that bonuses and raises for KAC employees required approval from
KCL. Anthony Depo., pg. 96:14 - 97:22.
In December 2013, plaintiff made a business trip to Japan for five days. Id. at No.
6. During the trip, plaintiff met Atsuteru Shimizu. Id. at No. 8. Plaintiff alleges Shimizu
was a “managerial employee,” Id. at No. 57, although defendant objects to plaintiff’s
evidence of that fact, Reply Statement of Uncontroverted Facts (“RS”) at No. 57. The
parties also dispute whether or not Shimizu was then an employee of KAC or both KCL
and KAC (at that time KOMI) or neither. Reply SUF at No. 9. The two men discussed
their families and life in Japan. Id. at No. 8. Plaintiff had no difficulties with Shimizu
until the two attended a company Christmas party at the end of the trip. Id. at No. 8;
Miller Depo., pg 217:7-9.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Date

Title

‘O’

August 22, 2016

RANDALL MILLER v. KOWA AMERICAN CORP.

At some point during the Christmas party, Shimizu grabbed plaintiff’s testicles for
“at least a couple of seconds”1 in such a manner that plaintiff believed Shimizu intended
to bond with him. Id. at No. 12. Plaintiff has testified that Shimizu grinned and said,
“Hey, big boy.” Plaintiff Depo., pg. 110:1-6. Furthermore, plaintiff testified that he was
“upset, distraught, shocked.” Id. at pg. 117:18-21. Thereafter, Shimizu, plaintiff, and
others walked to a bar. Reply SUF at No. 13. While waiting to enter the bar, Shimizu
grabbed plaintiff’s genitals again for a briefer period and plaintiff was able to fend him
off. Id. at No. 13. At that time plaintiff testified that he told Shimizu, “Don’t touch me.”
Plaintiff Depo., pg. 118:13-23. Nonetheless, Shimizu grabbed plaintiff’s testicles a third
time, at which point plaintiff viewed the touching as sexual harassment. Reply SUF at
No. 14. At least one other employee observed Shimizu’s behavior when it occurred and
told plaintiff, “don’t tell anybody.” Reply SUF at No. 16. Plaintiff alleges no other
offensive touching by Shimizu.
Plaintiff cannot recall precisely when he first reported the incident in Japan to
KAC, but he believes he complained of the incident in March 2014. Id. at Nos. 18-19.
On May 27, 2014, plaintiff made a written complaint regarding Shimizu’s touching. Id.
at No. 21. After his written complaint, KAC undertook a thorough investigation,
including following up with potential witnesses. Id. at No. 23. Anthony was also
notified of plaintiff’s complaint. Id. at No. 23. As a result of plaintiff’s complaint,
Shimizu received harassment and sensitivity training. Id. at No. 24. The parties dispute
the adequacy of this response and its timing. Id. at No. 58. In September 2014, plaintiff
received an update on KAC’s investigative and remedial actions to date and decided to
lodge a formal sexual harassment complaint, which he completed on or about September
19, 2014. Id. at Nos. 26-27.
Soon thereafter, plaintiff requested authorization to travel to the East Coast to see
clients and his request was denied. Id. at No. 40. The parties dispute whether this denial
was motivated by retaliatory animus. Id. Although plaintiff had East Coast clients at that
time, the company planned to divide national sales into regions in the near future such

1

The parties dispute whether this touching was “only a ‘couple seconds,” or “at
least a couple of seconds.” Id. at No. 12. However, the evidence cited by defendant for
the nature and length of contact states “at least a couple of seconds.” Plaintiff Depo., pg.
11:7-8.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Date

Title

‘O’

August 22, 2016

RANDALL MILLER v. KOWA AMERICAN CORP.

that plaintiff would not service East Coast clients. Miller Depo., pg. 210:19-211:8.
Plaintiff claims that he was also excluded from various meetings, including, a product
meeting in October or November 2014, staff meetings in October or November 2014, and
one or two forecast meetings sometime in October or November 2014. Id. at Nos. 41-43.
Plaintiff claims, and the defendant disputes, that he was excluded from meetings and
isolated in retaliation for his filing of a formal sexual harassment complaint. Id. at No.
59. The parties dispute the motive for why plaintiff may have been excluded from
meetings. Id. at Nos. 41-43.
On October 15, 2014, plaintiff informed KAC, through Leigh Reagan, that he
would seek counseling for the events in Japan. Id. at No. 35. Reagan, KAC’s head of
human resources (“HR”) contacted KAC’s worker’s compensation provider in order to
obtain medical and psychological care requested by plaintiff. Id. at No. 36. Plaintiff
resigned his employment in January 2015. Id. at No. 51. Plaintiff asserts, and defendant
disputes, that his resignation was compelled by defendant’s retaliation and isolation of
plaintiff for his complaints of sexual harassment. Id. at No. 60.
III.

LEGAL STANDARD

Summary judgment is appropriate where “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). The moving party bears the initial burden of identifying relevant portions of the
record that demonstrate the absence of a fact or facts necessary for one or more essential
elements of each claim upon which the moving party seeks judgment. See Celotex Corp.
v. Catrett, 477 U.S. 317, 323 (1986).
If the moving party meets its initial burden, the opposing party must then set out
specific facts showing a genuine issue for trial in order to defeat the motion. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); see also Fed. R. Civ. P. 56(c), (e). The
nonmoving party must not simply rely on the pleadings and must do more than make
“conclusory allegations [in] an affidavit.” Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871,
888 (1990); see also Celotex, 477 U.S. at 324. Summary judgment must be granted for
the moving party if the nonmoving party “fails to make a showing sufficient to establish
the existence of an element essential to that party’s case, and on which that party will
bear the burden of proof at trial.” Id. at 322; see also Abromson v. Am. Pac. Corp., 114
F.3d 898, 902 (9th Cir. 1997).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Date

Title

‘O’

August 22, 2016

RANDALL MILLER v. KOWA AMERICAN CORP.

In light of the facts presented by the nonmoving party, along with any undisputed
facts, the Court must decide whether the moving party is entitled to judgment as a matter
of law. See T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 631 &
n.3 (9th Cir. 1987). When deciding a motion for summary judgment, “the inferences to
be drawn from the underlying facts . . . must be viewed in the light most favorable to the
party opposing the motion.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986) (citation omitted); Valley Nat’l Bank of Ariz. v. A.E. Rouse & Co., 121
F.3d 1332, 1335 (9th Cir. 1997). Summary judgment for the moving party is proper
when a rational trier of fact would not be able to find for the nonmoving party on the
claims at issue. See Matsushita, 475 U.S. at 587.
IV.

ANALYSIS

Defendant here moves for summary judgment with respect to each of plaintiff’s
claims and plaintiff’s recovery of punitive damages. As outlined below, defendant’s
motion is DENIED with respect to claims One through Four and recovery of punitive
damages. Defendant’s motion is GRANTED with respect to claim Five for Battery.
A.

Claim One - Sexual Harassment.

Genuine material issues of disputed fact persist with respect to plaintiff’s claim of
sexual harassment. Defendant argues that plaintiff’s sexual harassment claim must fail
because, as a matter of law, Shimizu was not a KAC employee and because, even if he
were, no rational trier of fact could deem the acts in question sufficiently serious or
pervasive to create a hostile work environment.2 The Court is not persuaded by either
contention.

2

The defendant also contends that plaintiff has not presented admissible evidence
that Shimizu was employed by KCL, let alone KAC. On a motion for summary
judgment, the defendant has the burden to present undisputed facts that entitle it to
judgment as a matter of law. Defendant has not done so with respect to Shimizu’s
employer. Furthermore, having reviewed the evidence presented by both sides and taking
it in the light most favorable to plaintiff with regard to Shimizu’s employment, the Court
finds a material issue of disputed fact.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Title

RANDALL MILLER v. KOWA AMERICAN CORP.
1.

Date

‘O’

August 22, 2016

Integrated Enterprise.

Plaintiff argues that KAC may be liable for harassment by a KCL employee in
Japan if the two companies are an “integrated enterprise,” such that they should be treated
as a single employer. To determine if two corporations should be treated as a single
employer with respect to the California Fair Employment and Housing Act (“FEHA”),
California courts have adopted the four factor test used in federal actions under Title VII
of the 1964 Federal Civil Rights Act. Laird v. Capital Cities/ABC, Inc., 68 Cal. App. 4th
727, 737 (1998). Under the test, courts determine: (1) the extent the corporations’
operations interrelate, (2) whether the corporations share common management, (3)
whether there is centralized control of labor relations, and (4) whether the corporations
are under common ownership or financial control. Id. Although there is a “strong
presumption” that a subsidary company’s employees are not employees of the parent
company, Id. (citing Frank v. U.S. West, Inc., 3 F.3d 1357, 1362 (10th Cir. 1993)), the
test is designed such that the definition of “employer” will be liberally construed, Id. at
738 (citing Baker v. Stuart Broadcasting Co., 560 F.2d 389, 391-392 (8th Cir. 1977)).
Although courts consider all four factors, common ownership or control is never enough
to establish two companies are a single enterprise and centralized control of labor
relations is the most important single factor. Id. at 738. The critical question is, “‘[w]hat
entity made the final decisions regarding employment matters related to the person
claiming discrimination?’” Id. (quoting Frank v. U.S. West Inc., 3 F.3d 1357, 1363 (10th
Cir. 1993)).
Here, there a material issue of disputed fact as to whether KCL and KAC are
separate enterprises. Regarding the most important factor, centralized control of labor
relations, plaintiff has put forward evidence that KCL had “100 percent” authority over
the way KOMI/KAC operated its business. Clarke Depo., pg. 13:24-14:18. Reid
Anthony, Clarke’s predecessor as president of KOMI testified that, as he understood it,
bonuses and some raises for KAC employees needed approval from KCL. Anthony
Depo., pg. 96:14-97:22. Both Reid Anthony and Leigh Reagan, KAC’s HR manager,
testified that KCL in Japan had to, and did, approve KAC’s response to plaintiff’s sexual
harassment complaint. Anthony depo., pg. 29:21–24; Reagan Depo., pg. 66:23-67:5.
They coordinated their response with employees in Japan through Ohide Iwasa, chairman
of the KAC board. Id. Accordingly, the Court concludes there is a material issue of
disputed fact with respect to whether and how centralized HR management was between
the two companies generally and with respect to plaintiff.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Date

Title

‘O’

August 22, 2016

RANDALL MILLER v. KOWA AMERICAN CORP.

Having found a factual dispute as to the companies’ centralized control of labor
relations, the Court now turns to the remaining three factors. With respect to both the
interrelation of operations and the presence of common management, the Court again
finds evidence creating a material issue of disputed fact. For instance, when asked, “Did
[KCL] have any authority over the way [KOMI] operated its business,” Clarke explained:
[Answer] Absolutely. 100 percent. [KCL] determined. Not only which
products were available to us, at which price they were available, they also
supplied us with resources, both financial, human and - from your prior
question, Jun Hanzawa, at the time when·I was hired, was an employee of
KCL.· He sat on KOMI. ·He was the communication between KOMI and
KCL.· Every·single day, he would send a daily report.
Sometimes I was aware of what he was·discussing.· But most of the
times not, to Japan, to·KCL, and every major thing that we undertook as an
organization was linked to and usually had tacit·agreements or approvals
that had to be put in place for·us to commence.
[Question] Were you directed, in terms of what you were authorized or not
authorized to do, without approval by [KCL]?
...
[Answer] I was directed by Hideki Sakai on a regular basis on what I had to
do. And sometimes by KCL members who were communicating with us,
depending on the issue. We relied 100 percent on KCL to supply us with
product, or the pricing. I may be interfacing with somebody who is giving
me direction, ‘No, we can’t have this,’ or, ‘Yes, we can,’ and the pricing and
so forth.
Clarke Depo., pg. 14:5-15:5.
Turning finally to the issue of financial control, Clarke explained his understanding based
on a document from KCL that “all the actions that [he] could do . . . each necessitated
approval from KCL. And if you see, it’s pretty much everything that I do,” including
every single financial transaction with a bill. Clarke Depo., pg. 17:11-25. The defendant
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Date

Title

‘O’

August 22, 2016

RANDALL MILLER v. KOWA AMERICAN CORP.

has not presented undisputed facts showing none of the four factors apply to the
relationship between KCL and KAC.
Defendant objects to the portions of Clarke’s and Anthony’s depositions discussed
above as lacking foundation and being outside the witnesses’ personal knowledge. The
Court disagrees. “Evidence to prove personal knowledge may consist of the witness’s
own testimony.” Fed. R. Evid. 602. Adequate foundation was laid that these two
witnesses were presidents of KOMI and KAC respectively and testified as to their
respective experiences and understanding of KCL’s authority over matters under their
respective purviews. Clarke testified that a KOMI board member was the go-between for
KOMI and KCL, through whom he communicated to Japan because “every major thing
that we undertook had tacit agreements or approvals that had to be put in place.” Clarke
Depo., pg. 14:5-18. Similarly, Anthony communicated to Japan through Iwasa. Anthony
Depo., pg. 29:21-24. Furthermore, each witness offered facts supporting their
understanding of the corporate relationship, such that neither could be deemed merely
conclusory or vague. Finally, each witness’s testimony was rationally based on their
perception of the relationship between the companies, rather than a specialized legal
opinion such that it would run afoul of Federal Rule of Evidence 701 limiting lay witness
opinions.
Viewing the evidence in the light most favorable to the plaintiff, the Court finds
that a material issue of disputed fact exists as to whether KAC and KCL were a single
enterprise. Under these circumstances, the Court cannot conclude as a matter of law that
KAC did not employ Shimizu as a single employer with KCL.
2.

Hostile Work Environment.

Defendant next argues that the undisputed facts of Shimizu’s conduct do not, as a
matter of law, establish sexual harassment that is adequately serious or pervasive to
create a hostile work environment. Almost all of the material facts related to Shimizu’s
conduct are undisputed. Reply SUF at Nos. 12-16. Plaintiff responds that the undisputed
facts are serious enough to create a material issue of disputed fact as to whether
Shimizu’s conduct could, standing alone, create a hostile work environment. The Court
agrees with plaintiff.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Date

Title

‘O’

August 22, 2016

RANDALL MILLER v. KOWA AMERICAN CORP.

“The prohibition of harassment . . . forbids only behavior so objectively offensive
as to alter the ‘conditions' of the victim's employment.” Singleton v. U.S. Gypsum Co.,
140 Cal. App. 4th 1547, 1563 (2006) (citing Oncale v. Sundowner Offshore Services,
Inc., 523 U.S. 75, 81-82 (1998). The plaintiff claims he faced a hostile work
environment. Such a claim requires proof that, “the defendant's conduct would have
interfered with a reasonable employee's work performance and would have seriously
affected the psychological well-being of a reasonable employee and that [the employee]
was actually offended.” Fisher v. San Pedro Peninsula Hosp., 214 Cal. App. 3d 590,
609–10 (Ct. App. 1989). The severity and pervasiveness are evaluated from the victim’s
perspective, Ellison v. Brady, 924 F.2d 872, 878 (9th Cir. 1991), and in light of the
totality of the circumstances, Harris v. Forklift Sys., Inc., 510 U.S. 17, 23 (1993).
Furthermore, the required showing of the conduct’s seriousness, “varies inversely with
the pervasiveness or frequency of the conduct.” Ellison v. Brady, 924 F.2d 872, 878 (9th
Cir. 1991). Courts rarely find that a single instance of sexual harassment rises to the level
of creating a hostile work environment, however, the inquiry turns on the seriousness of
the harassment and the perpetrators work-relationship to the plaintiff. Brooks v. City of
San Mateo, 229 F.3d 917, 927 n.9 (9th Cir. 2000) (“a sexual assault by a supervisor, even
on a single occasion, may well be sufficiently severe so as to alter the conditions of
employment”). For a single instance of sexual harassment to suffice, “the incident must
be extremely severe.” Id. at 926.
There is no distinct line at which a single incident is insufficiently serious to create
a hostile work environment as a matter of law. Some acts clearly satisfy this high bar.
See e.g., Little v. Windermere Relocation, Inc., 301 F.3d 958, 967 (9th Cir. 2002)
(reversing a grant of summary judgment where plaintiff endured three violent rapes in a
single evening). However, the minimum level of seriousness to survive a summary
judgment motion is less obvious. Compare e.g., Berry v. Chicago Transit Auth., 618
F.3d 688, 689 (7th Cir. 2010) (reversing a grant of summary judgment where a male
coworker lifted a woman by her breasts and rubbed her buttocks against his body three
times before dropping her to the ground and pushing her against a fence), with Brooks,
229 F.3d at 921 (affirming the grant of summary judgment for the defendant where a coworker in a single evening touched plaintiff’s stomach; commented on its sexiness and
smoothness; boxed the plaintiff against her workstation; forced his hand underneath her
sweater and bra to fondle her breast; and ceased only when a third coworker interrupted).

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Date

Title

‘O’

August 22, 2016

RANDALL MILLER v. KOWA AMERICAN CORP.

The parties dispute where on this continuum of factually distinguishable cases the
present case falls. However, where the severity of the alleged abuse “is questionable, it is
more appropriate to leave the assessment to the fact-finder than for the court to decide the
case on summary judgment.” Davis v. Team Elec. Co., 520 F.3d 1080, 1096 (9th Cir.
2008). Here, it is undisputed that Shimizu grabbed plaintiff’s genitals three separate
times over the course of one evening, shocking the plaintiff, and being fended off each
time. Reply SUF at Nos. 12-15. These incidents occurred in public and in front of
coworkers. Id. at Nos. 13;16. Having observed the incidents, one coworker told plaintiff,
“don’t tell anybody.” Id. at No. 16. Defendant has not presented undisputed facts
showing no reasonable jury could view Shimizu’s conduct as sufficiently serious. The
Court cannot conclude, as a matter of law, that Shimizu’s conduct is not so offensive as
to alter the conditions of the plaintiff’s employment. Accordingly, the Court DENIES
defendant’s motion for summary judgment with respect to plaintiff’s sexual harassment
claim.
B.

Claim Two - Failure to Prevent Sexual Harassment.

Employers are required by California Government Code Section 12940(k) to take
“all reasonable steps necessary to prevent discrimination and harassment from occurring”
in the workplace. The defendant contends that it is entitled to summary judgment with
respect to plaintiff’s failure to prevent sexual harassment claim because Shimizu was not
a KAC employee, KAC took all reasonable steps to prevent the harassment, and the
FEHA does not create a private right of action for failure to prevent sexual harassment.
The Court has already addressed defendant’s argument that Shimizu was not a
KAC employee, finding a material issue of disputed fact as to whether KAC and KCL
were a single employer.
With respect to defendant’s contention that KAC took all reasonable steps to
prevent sexual harassment, the defendant only presents facts (some disputed) purporting
that KAC trained employees on sexual harassment after Shimizu inappropriately touched
plaintiffs genitals. Reply SUF at Nos. 3; 24; 26. However, California Government Code
Section 12940(k), “creates a statutory tort action with the usual tort elements [duty of
care to plaintiff, breach of duty, causation and damages].” Veronese v. Lucasfilm Ltd.,
212 Cal. App. 4th 1, 28 (2012) (citing Trujillo v. North County Transit Dist., 63 Cal.
App. 4th 280, 286 (1998)). Plaintiff’s tort claim for failure to prevent sexual harassment
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Date

Title

‘O’

August 22, 2016

RANDALL MILLER v. KOWA AMERICAN CORP.

derives from Shimizu’s conduct in December 2013. Therefore, the relevant inquiry is the
reasonableness of KAC’s prevention efforts before December 2013. Only actions taken
before Shimizu’s conduct could have prevented it. The only relevant, undisputed fact
regarding the defendant’s actions prior to Shimizu’s conduct is that KOMI had a sexual
harassment policy in its employee manual. Reply SUF at 3. The Court cannot say that
the existence of a policy, standing alone, entitles defendant to summary judgment as a
matter of law. The Court finds a material issue of disputed fact as to whether KAC took
all reasonable steps to prevent sexual harassment.
Finally, turning to defendant’s legal contention that no private right of action for
failure to prevent sexual harassment exists, the Court does not agree. The defendant
bases this contention upon it’s reading of Department of Fair Empployment & Housing v.
Lyddan Law Group, No. 10-04-P, FEHA Precedential Decs. 2010 [2010 CAFEHC
LEXIS 4] (Oct. 21, 2010). Lyddan suggested a private right of action for failure to
prevent harassment or discrimination may not exist absent a finding of harassment or
discrimination. Id. at 35. However, courts since Lyddan have found it inapplicable to
cases where the plaintiff still had a viable sexual harassment or discrimination claim. See
e.g., Ortega v. Univ. of Pac., 2013 WL 6054447, at *4 (E.D. Cal. Nov. 15, 2013)(“Even
assuming that Lyddan is precedential, it does not apply in this case, which presents more
than a ‘stand alone’ claim for failure to prevent discrimination”); Mitchell v. HFS N.
Am., Inc., 2011 WL 2961468, at *7 (E.D. Cal. July 20, 2011) (concluding Lyddan was
inapplicable where “discrimination remains as an underlying basis for the claim”);
Veronese, 212 Cal. App. 4th at 28 (finding error, after Lyddan, where the lower court
failed to instruct the jury on a failure to prevent discrimination claim in a private, civil
suit). Here the Court has found a material issue of disputed fact as to whether sexual
harassment occurred. Where plaintiff’s underlying sexual harassment survives summary
judgment, the Court is not persuaded he has no claim for failure to prevent sexual
harassment.
It appears that plaintiff has a claim, which turns on the reasonableness of
defendant’s efforts at preventing sexual harassment. Accordingly, the Court DENIES
defendant’s motion for summary judgment with respect to plaintiff’s failure to prevent
sexual harassment claim.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Title

RANDALL MILLER v. KOWA AMERICAN CORP.
C.

Date

‘O’

August 22, 2016

Claim Three - Retaliation.

California Government Code Section 12940(h) makes it unlawful to “discharge,
expel or otherwise discriminate against any person because that person has . . . filed a
complaint under [the Fair Employment and Housing Act].” California courts employ the
McDonnell Douglas burden-shifting framework in analyzing retaliation claims.
Yanowitz v. L'Oreal USA, Inc., 36 Cal. 4th 1028, 1042 (2005) (citing McDonnell
Douglas Corp. v. Green, 411 U.S. 792, 802-805 (1973)). Thus, a plaintiff claiming
retaliation under FEHA must first establish a prima facie case by showing that “(1) he or
she engaged in a ‘protected activity,’ (2) the employer subjected the employee to an
adverse employment action, and (3) a causal link existed between the protected activity
and the employer's action.” Yanowitz, 36 Cal. 4th at 1042. Once the prima facie case is
established, the burden shifts to the defendant to show a legitimate, nondiscriminatory
reason for the adverse action. Scotch v. Art Inst. of California Orange Cty., Inc., 173 Cal.
App. 4th 986, 1020 (2009). Upon making such a showing, the burden shifts back to the
plaintiff to establish intentional retaliation. Id. at 1021.
Defendant argues that plaintiff’s claim for retaliation must fail because he suffered
no adverse employment consequences and cannot show intentional retaliation. The Court
concludes that there are factual disputes that materially affect each of these contentions.
1.

Plaintiff’s Prima Facie Case.

To show a prima facie case of constructive termination, “plaintiff must, at a
minimum, show the employer took actions from which, if unexplained, it can be inferred
that it is more likely than not that such actions were based on a prohibited discriminatory
criterion.” Scotch v. Art Inst. of California Orange Cty., Inc., 173 Cal. App. 4th 986,
1004 (2009). Furthermore, those actions must have “materially affects the terms,
conditions, or privileges of employment.” Yanowitz, 36 Cal. 4th at 1051. To determine
whether conduct is actionable, the court must consider the totality of the circumstances,
including the, “unique circumstances of the affected employee as well as the workplace
context of the claim.” Id. at 1052. The Yanowitz court explained that, “[s]o long as the
environment would reasonably be perceived, and is perceived, as hostile or abusive, there
is no need for it also to be psychologically injurious. This is not, and by its nature cannot
be, a mathematically precise test.” Id. at 1053. Factors to be considered include the
frequency of the conduct, its severity, whether it is humiliating, whether it interferes with
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Date

Title

‘O’

August 22, 2016

RANDALL MILLER v. KOWA AMERICAN CORP.

work performance, the effect on the employee’s well-being, and whether the plaintiff
actually found the environment abusive. Id.
It is undisputed that in January 2015, prior to resigning, plaintiff received a meritbased pay increase and that he believes KAC was happy with his performance. Reply
SUF at No. 50. Plaintiff contends, and the defendant disputes, that “defendant retaliated
against him by excluding him from meetings, isolating him, and denying him the
opportunity to travel to meet with clients. Id. at No. 59. Plaintiff completed his formal
sexual harassment complaint on or about September 19, 2014. Id. at No. 27. Neither
party disputes that soon thereafter, plaintiff requested authorization to travel to the East
Coast to see clients and his request was denied. Id. at No. 40. Furthermore, it is
undisputed that plaintiff was not invited to a product meeting in October or November
2014, staff meetings in October or November 2014, and one or two forecast meetings
sometime in October or November 2014. Id. at Nos. 41-43. Although plaintiff does not
recall exactly which meetings, he contends that similar exclusion had never happened
before. Plaintiff Depo., pg. 213:20-22. The parties agree that plaintiff was not subject to
a pay cut, that he was never criticized for his job performance, and that his job
performance ratings remained largely the same before and after he complained of
harassment. Reply SUF at Nos. 37-38.
These undisputed facts alone, however, do not resolve whether the “terms,
conditions, or privileges of employment” had been materially affected. The parties
dispute the extent to which plaintiff was isolated, why he was isolated, and the reason he
was denied travel. In his declaration, plaintiff claims that his exclusion from a product
meeting was “vitally important” and that he had never been denied travel before he
lodged his sexual harassment complaint. Miller Decl. ¶15. Yanowitz demands a contextspecific, factual inquiry of all the circumstances of the employer’s acts. Plaintiffs proof
establishes a prima facie case that he was subjected to adverse employment actions and
material issues of disputed fact persist as to the materiality of the employers actions.
Turning to plaintiff’s prima facie evidence of “a causal link existed between the
protected activity and the employer's action,” Yanowitz, 36 Cal. 4th at 1042, the Court
finds the temporal proximity between the undisputed, adverse employment actions and
plaintiff’s formal sexual harassment complaint sufficient to establish a prima facie case.
Plaintiff’s exclusion from vital meetings and inability to travel, if unexplained, create an
inference that KAC’s actions were based on discriminatory intent. Having established a
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Date

Title

‘O’

August 22, 2016

RANDALL MILLER v. KOWA AMERICAN CORP.

prima facie case, the burden then shifts to KAC to offer a legitimate reason for the
adverse employment actions.
2.

Defendants Burden to Offer Legitimate Reason for Adverse
Employment Actions.

The defendant argues that plaintiff was not permitted to travel to the East Coast
because he “would not longer be servicing East Coast clients.” Reply SUF at 40. The
plaintiff testified that at the time he requested authorization to travel, he was still
servicing East Coast clients, but the company planned to divide national sales into
regions in the months to follow. Miller Depo., pg. 210:19-211:8. The Court is satisfied
that an impending change in clients is a legitimate reason not to permit further travel to
visit those clients. However, plaintiff complains of more than his inability to travel to the
East Coast. It is undisputed that the plaintiff was suddenly excluded from meetings and a
trade show. Reply SUF at Nos. 39; 41-43. The defendant does not offer, nor can the
Court discern, a legitimate reason why plaintiff was excluded. Accordingly, the Court
concludes that the defendant has failed to offer a legitimate reason for those actions, such
that the burden would shift back to the plaintiff.
3.

Plaintiff’s Burden to Show the Offered Reason is Pretextual.

To the extent that the defendant has offered a legitimate reason for one of its
adverse actions, the Court concludes there is still a material issue of disputed fact. Once
the employer offers a legitimate reason, shifting the burden back to the employee:
the employee then must adduce or point to evidence raising a triable issue,
that would permit a trier of fact to find by a preponderance that intentional
discrimination occurred. In determining whether these burdens were met,
we must view the evidence in the light most favorable to plaintiff, as the
nonmoving party, liberally construing [his] evidence while strictly
scrutinizing defendants’. Scotch v. Art Inst. of California Orange Cty., Inc.,
173 Cal. App. 4th 986 (2009) (citations omitted).
Plaintiff avers that the timing of the adverse employment actions is sufficient
circumstantial evidence of discrimination rather than simply a change in client regions.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Date

Title

‘O’

August 22, 2016

RANDALL MILLER v. KOWA AMERICAN CORP.

“Temporal proximity between protected activity and an adverse employment action can
by itself constitute sufficient circumstantial evidence of retaliation in some cases.” Bell
v. Clackamas Cty., 341 F.3d 858, 865 (9th Cir. 2003). However, adverse employment
action must be “very close” in time to plaintiff’s complaints for there to be an inference
of intent. Clark Cty. Sch. Dist. v. Breeden, 532 U.S. 268, 273 (2001).
In its argument that the proximity of plaintiff’s isolation and his complaint are too
remote from one another, the defendant relies on a number of cases where three to five
months was found to be too long to infer retaliatory intent; however, those cases have
little bearing here. Here, it is undisputed that plaintiff’s first, written complaint occurred
in May 2014.3 Reply SUF at No. 21. Contrary to defendant’s contention that the
temporal clock necessarily commenced in May 2014, plaintiff did not file a formal
complaint until September 19, 2014. Id. at No. 27. Plaintiff complains of adverse
employment actions occurring in October and November 2014. Viewed in the light most
favorable to plaintiff, the undisputed timing of plaintiff’s complaint and the rejection of
his request to travel satisfies his burden to show a material issue of disputed fact.
Having found material issues of disputed fact regarding the defendant’s adverse
actions and facts supporting an inference of retaliatory intent, the Court DENIES
defendant’s motion for summary judgment with respect to plaintiff’s retaliation claim.
D.

Claim Four - Constructive Termination.

To establish constructive termination, an employee must prove that (1) he was
subjected to intolerable or aggravating working conditions, (2) the employer “either
intentionally created or knowingly permitted” such working conditions, and (3) “that a
reasonable person in the employee's position would be compelled to resign.” Turner v.
Anheuser-Busch, Inc., 7 Cal.4th 1238, 1251 (1994); Garamendi v. Golden Eagle Ins. Co.,
128 Cal.App.4th 452, 471-72 (2005). “The determination whether conditions were so
intolerable and discriminatory as to justify a reasonable employee's decision to resign is
normally a factual question left to the trier of fact.” Thomas v. Douglas, 877 F.2d 1428,
1434 (9th Cir. 1989). The requisite intent exists where the employer knew about the

3

The parties dispute whether KAC knew earlier and whether plaintiff complained
in March 2014.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Date

Title

‘O’

August 22, 2016

RANDALL MILLER v. KOWA AMERICAN CORP.

working conditions and failed to remedy them or “deliberately create[d] the intolerable
working conditions.” Turner, 7 Cal. 4th at 1249–50. The defendant contends that
plaintiff’s working conditions were tolerable as a matter of law and that plaintiff failed to
notify anyone in a position of authority about the intolerable working conditions.
A.

Intolerable Conditions.

With respect to whether or not the conditions were tolerable as a matter of law, the
Court concludes there is a material issue of disputed fact. The defendant’s argument that
work conditions were tolerable relies upon cases where the employees were demoted.
See e.g., Lee v. Bank of Am., 27 Cal. App. 4th 197, 213 (1994); Gibson v. Aro Corp., 32
Cal. App. 4th 1628, 1634 (1995). Plaintiff does not allege, nor does the defendant
contend that plaintiff was demoted. The defendant fails to address the core factual basis
of plaintiff’s constructive discharge claim - the plaintiff’s exclusion from vital meetings
and inability to visit clients. With respect to these conditions, the Court is unpersuaded
that they were tolerable as a matter of law.
B.

Actual Knowledge.

The defendant argues plaintiff was required to tell his employers about the
intolerable conditions he faced at work. In the context of an employee’s unhappy
demotion, the California Supreme Court determined in Turner that, “by requiring
employees to notify someone in a position of authority of their plight, we permit
employers unaware of any wrongdoing to correct a potentially destructive situation.”
Turner, 7 Cal. 4th at 1250 (1994) (emphasis added). Turner and Gibson stand for the
premise that an employer must have actual knowledge of the intolerable conditions rather
than merely constructive knowledge. Id.; Gibson, 32 Cal. App. 4th at 1638.
Furthermore, “the employer must be aware of the impact of the events on the employee.”
Gibson, 32 Cal. App. 4th at 1640. Neither Turner nor Gibson presented a situation where
an employer’s actual knowledge could be proven by means other than notification.
It is the defendant’s burden here to present undisputed facts entitling it to summary
judgment. It is undisputed that plaintiff did not tell management he thought his exclusion
was in retaliation, however, that does not mean KAC did not know about the retaliation,
let alone plaintiff’s work conditions. There is evidence that plaintiff notified
management of the conditions he was facing. For instance, plaintiff testified that he
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Date

Title

‘O’

August 22, 2016

RANDALL MILLER v. KOWA AMERICAN CORP.

raised his inability to attend a trade show with Anthony, his supervisor. Miller Depo., pg.
207:16-224. Plaintiff presents evidence that the company knowingly retaliated against
him. If it did retaliate, a rational trier of fact could also conclude that the company knew
the conditions it intentionally created.
Viewed in the light most favorable to the plaintiff, the Court concludes that there is
a factual dispute as to whether the company had actual knowledge of plaintiff’s work
conditions. The defendant’s motion for summary judgment with respect to plaintiff’s
constructive discharge claim is DENIED.
E.

Claim Five - Battery.

The plaintiff concedes that defendant is entitled to summary judgment with respect
to plaintiff’s battery claim. The defendant’s motion for summary judgment is
GRANTED with respect to this claim.
F.

Punitive Damages.

Lastly, defendant challenges plaintiff’s ability to seek punitive damages. “It is well
established that punitive damages are part of the amount in controversy in a civil action,”
where they are recoverable under one or more of the plaintiff's claims for relief. Gibson v.
Chrysler Corp., 261 F.3d 927, 945 (9th Cir.2001). Plaintiff's action is brought pursuant
to FEHA, under which punitive damages are available. Cal. Gov't Code § 12940. An
employer may be liable for punitive damages where it:
ratified the wrongful conduct for which the damages are awarded or was
personally guilty of oppression, fraud, or malice. With respect to a corporate

4

At oral argument, the defendant questioned the basis for the court’s reliance on
this testimony. While neither party directed the Court’s attention to this particular
testimony, it is included in the Miller deposition submitted to the Court. Dkt. 34. The
fact that plaintiff testified that he protested to Anthony, raises a material issue of disputed
fact with regard to KAC’s knowledge of plaintiff’s work conditions.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:15-cv-05671-CAS (Ex)

Date

Title

‘O’

August 22, 2016

RANDALL MILLER v. KOWA AMERICAN CORP.
employer, the . . . ratification or act of oppression, fraud, or malice must be
on the part of an officer, director, or managing agent of the corporation.
Cal. Civ. Code § 3294.

Plaintiff must demonstrate oppression, fraud, or malice by clear and convincing evidence.
Id.
The defendant argues that punitive damages are unavailable because Shimizu did
not work for the defendant and that the defendant did not ratify his acts. The Court has
already found a factual dispute as to whether Shimizu worked for KAC and KCL as a
single enterprise. The defendant has not put forward undisputed facts showing Shimizu
was not an “officer, director, or managing agent of the corporation.” Nor is the Court
persuaded that no reasonable jury could find Shimizu’s conduct entailed oppression,
fraud, or malice by clear and convincing evidence.5
With respect to punitive damages, the defendant’s motion for summary judgment is
DENIED.
V.

CONCLUSION

In accordance with the foregoing, defendant’s motion for summary judgment is
here DENIED IN PART and GRANTED IN PART. The motion is GRANTED with
respect to claim number five, plaintiff’s battery claim, and DENIED with respect to the
remaining claims and punitive damages.
IT IS SO ORDERED.
00
Initials of Preparer

:

16

CMJ

5

Having found a factual dispute and basis for punitive damages in this case, the
Court does not reach the parties’ other arguments as to whether or not KAC ratified
Shimizu’s conduct. Furthermore, having concluded there is at least one claim under
which plaintiff could still be entitled to punitive damages, the Court reserves ruling on
the availability of punitive damages with respect to each separate claim.
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