Jackson et al v. Farmers Insurance Exchange et al

Filing 62

MEMORANDUM, and ORDER signed by Senior Judge William B. Shubb on 8/24/15 ORDERING that Defendants' MOTION for Summary Judgment 56 is GRANTED. CASE CLOSED. (Mena-Sanchez, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo----

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THOMAS JACKSON, EMMA JACKSON,
TJ AUTO BODY SERVICES, INC.
dba “TJ ENTERPRISES”,
Plaintiffs,

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CIV. NO. 2:14-00250 WBS AC
MEMORANDUM AND ORDER RE: MOTION
FOR SUMMARY JUDGMENT

v.
FARMERS INSURANCE EXCHANGE,
TRUCK INSURANCE EXCHANGE,
BRUCE H. BAILEY, JAMES
GILLIS, and STEVEN EASON,
Defendants.

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----oo0oo---Plaintiffs Thomas and Emma Jackson and TJ Autobody

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Services, Inc. (“TJ”) allege Farmers Insurance Exchange

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(“Farmers”) removed TJ from its “Circle of Dependability” Program

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for discriminatory reasons.

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were Farmers employees during the period relevant to the action.

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Presently before the court is defendants’ motion for summary

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judgment pursuant to Federal Rule of Civil Procedure 56.

The individually named defendants

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I. Factual and Procedural Background

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The Jacksons, who are both black, were the owners of TJ

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until they sold the shop in 2013.

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through February 2012, TJ was a member of Farmers’ “Circle of

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Dependability” (“COD”) Program.

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TJ was on a list of repair shops that Farmers recommends to its

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insureds.

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insureds and the repair shops, providing the insureds with

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quality repair shops and the repair shops with increased business

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From approximately 2003

As a member of the COD Program,

The COD arrangement is mutually beneficial to both the

from referrals.

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TJ and Farmers entered into the COD Services Agreement

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on May 3, 2011, which governed the parties’ relationship

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thereafter.

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agreement required TJ to meet specific quality standards in order

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to remain in the Program.

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termination clause, permitting Farmers to terminate the agreement

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“for convenience and without cause” upon thirty days written

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notice to TJ.

(See Gillis Decl., Ex. A (Docket No. 57-6).)

The

The agreement also contained a

Several COD consultants1 assigned to overseeing TJ’s

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compliance observed that TJ failed to meet several of the quality

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standards set by Farmers.

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discovered that TJ was repairing vehicles over the total loss

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threshold, which is when the cost of repair exceeds the value of

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the vehicle.

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been referred to TJ via the COD Program contacted a COD

For instance, from an audit it was

In summer of 2011, one of TJ’S customers who had

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To enforce the COD quality standards, Farmers uses “COD
consultants” who review monthly metrics, performance criteria,
and repair-cycle turn-around times with COD shop owners.
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consultant to complain about repairs TJ had done on his Lexus.

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During an inspection, Farmers discovered that TJ had charged for

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repairs it never made and foiled several of the repairs it did

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make on the Lexus.

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sold at salvage.

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The vehicle was declared a “total loss” and

Farmers put TJ on a thirty-day suspension from the COD

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Program.

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complained that TJ did not honor a lifetime warranty on his paint

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job, which had begun to peel.

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Following the suspension, another Farmers customer

Thereafter, Farmers made the

decision to permanently remove TJ from the COD Program.

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Plaintiffs allege that Farmers’ proffered reasons for

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removing TJ from the COD Program are pretextual for race

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discrimination.

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contractual duty, breach of contract and implied covenant of good

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faith and fair dealing, plaintiffs brought federal claims for

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interfering with the right to make and enforce contracts in

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violation of 42 U.S.C. § 1981 and conspiracy to deprive someone

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of rights or privileges in violation of 42 U.S.C. § 1985(3).

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Defendants now move for summary judgment on all of plaintiffs’

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claims.

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II. Discussion

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In addition to state law claims for breach of

Summary judgment is proper “if the movant shows that

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there is no genuine dispute as to any material fact and the

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movant is entitled to judgment as a matter of law.”

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P. 56(a).

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of the suit, and a genuine issue is one that could permit a

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reasonable jury to enter a verdict in the non-moving party’s

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favor.

Fed. R. Civ.

A material fact is one that could affect the outcome

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
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(1986).

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burden of establishing the absence of a genuine issue of material

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fact and can satisfy this burden by presenting evidence that

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negates an essential element of the non-moving party’s case.

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Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

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Alternatively, the moving party can demonstrate that the non-

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moving party cannot produce evidence to support an essential

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element upon which it will bear the burden of proof at trial.

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Id.

The party moving for summary judgment bears the initial

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Once the moving party meets its initial burden, the

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burden shifts to the non-moving party to “designate ‘specific

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facts showing that there is a genuine issue for trial.’”

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324 (quoting then-Fed. R. Civ. P. 56(e)).

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the non-moving party must “do more than simply show that there is

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some metaphysical doubt as to the material facts.”

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Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

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“The mere existence of a scintilla of evidence . . . will be

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insufficient; there must be evidence on which the jury could

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reasonably find for the [non-moving party].”

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at 252.

Id. at

To carry this burden,

Matsushita

Anderson, 477 U.S.

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In deciding a summary judgment motion, the court must

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view the evidence in the light most favorable to the non-moving

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party and draw all justifiable inferences in its favor.

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255.

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and the drawing of legitimate inferences from the facts are jury

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functions, not those of a judge . . . ruling on a motion for

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summary judgment . . . .”

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Id. at

“Credibility determinations, the weighing of the evidence,

Id.

Plaintiffs’ counsel failed to file a timely opposition
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to defendants’ motion.

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that the deadline had passed, counsel finally informed the court

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on Friday, August 14 that he intended to belatedly file an

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opposition within 24 hours.

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request an extension or continuance of the hearing.

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counsel appeared at the hearing on August 24, 2015 but was not

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entitled to be heard pursuant to Local Rule 230, which provides

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that “[n]o party will be entitled to be heard in opposition to a

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motion at oral arguments if opposition to the motion has not been

After repeated reminders from the clerk

He failed to do so, however, or to
Plaintiffs’

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timely filed by that party.”

The court did not hear from

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defendants and instead the matter was submitted on the briefs.

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“[A] district court has no independent duty to scour

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the record in search of a genuine issue of triable fact” or “to

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undertake a cumbersome review of the record on the [nonmoving

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party’s] behalf.”

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1017 (9th Cir. 2010).

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written opposition to the motion for summary judgment, in

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reviewing the record the court is limited to considering those

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documents referenced by defendants.

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A. Standing to Bring Contract-Based Claims

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Simmons v. Navajo Cnty., Ariz., 609 F.3d 1011,
Because plaintiffs have failed to file a

Plaintiffs previously filed a nearly identical action

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against defendants but voluntarily dismissed it.

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Farmers Ins., Civ. No. 2:12-0120 WBC AC (E.D. Cal. filed Apr. 18,

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2012).

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5 (“Asset Purchase Agreement”) (Docket No. 57-2).)

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subsequently refiled the lawsuit against defendants.

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argue that plaintiffs lack standing to bring this lawsuit because

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plaintiffs assigned their contract rights and related claims

The Jacksons then sold TJ in May 2013.

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See Jackson v.

(Crain Decl. Ex.
Plaintiffs
Defendants

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pursuant to the Asset Purchase Agreement.

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“Once a claim has been assigned, the assignee is the

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owner and has the right to sue on it.

In fact, once the transfer

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has been made, the assignor lacks standing to sue on the claim.”

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Searles Valley Minerals Operations, Inc. v. Ralph M. Parson Serv.

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Co., 191 Cal. App. 4th 1394, 1402 (4th Dist. 2011) (citations

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omitted); see Eagle Rock Entm’t, Inc. v. Coming Home Prods.,

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Inc., Civ. No. 2:03-00571, 2003 WL 25781234, at *2 (C.D. Cal.

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Dec. 12, 2003) (“‘An assignor may not maintain an action upon a

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claim after making an absolute assignment of it to another; his

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right to demand performance is extinguished, the assignee

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acquiring such right.’” (citing McCown v. Spencer, 8 Cal. App. 3d

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216, 225 (2d Dist. 1970))).

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“To be effective, an assignment must include

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manifestation to another person by the owner of his intention to

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transfer the right, without further action, to such other person

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or to a third person.”

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Inc. v. ICI Paints N. Am., Inc., 2008 WL 2724876, Civ. No. 1:07-

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01614, at *6 (E.D. Cal. July 11, 2008).

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Barrier Specialty Roofing & Coatings,

On May 18, 2013, the Jacksons sold TJ to Brian von
Tress.

The contracting parties agreed that the

assets of the Business include[d], but [were] not
limited to, any equipment, trade fixtures, leasehold,
leasehold improvements, accounts receivable, contract
rights, business records . . . software and software
licenses,
other
licenses,
franchises,
goodwill,
covenant not to compete, trade secrets, patents,
intellectual property, trade name, customer lists,
telephone and fax numbers, web sites, email addresses,
inventory and backlog.
(Asset Purchase Agreement (emphasis added).)
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The agreement

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explicitly excluded bank accounts, deposits, cash, and financial

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records from the assets being sold.

(Id.)

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By the plain meaning of the Asset Purchase Agreement,

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TJ sold its contract rights to Tress, which would have included

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any existing contract rights related to TJ’s COD arrangement with

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Farmers.

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among the assets specifically excluded from the sale.

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the unequivocal language used in the agreement, the parties

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appear to have manifested an intention to transfer TJ’s rights

TJ’s contract rights regarding the COD Program were not

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regarding all of its contracts.

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The court finds no basis for adopting an alternative

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Because of

interpretation of the agreement.

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Barrier, 2008 WL 2724876, at *6.

Accordingly, plaintiffs may not maintain their state

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law contract claims against Farmers.

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Agreement, Tress acquired the right to bring those claims on

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behalf of his purchased business.

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225.

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Through the Asset Purchase

See McCown, 8 Cal. App. at

A party bringing a § 1981 claim is also required to

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have rights under the existing or proposed contract in question.

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The Supreme Court held that “a plaintiff cannot state a claim

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under § 1981 unless he has (or would have) rights under the

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existing (or proposed) contract that he wishes to make and

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enforce.”

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(2006).

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proposed by the respondent, where “[a]ny person who is an ‘actual

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target’ of discrimination, and who loses some benefit that would

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otherwise have inured to him had a contract not been impaired,

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may bring a suit.”

Domino’s Pizza, Inc. v. McDonald, 546 U.S. 470, 479-80

The Court rejected a broader test for § 1981 standing

Id. at 478.

The Court observed that this “is
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just the statutory construction we have always rejected.”

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TJ sold its “contract rights” to Tress and has no

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existing right under the COD agreement.

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have rights under the COD agreement, even if they were the

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“actual target” of discrimination, because the agreement was

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between TJ and Farmers.

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plaintiffs, purchased the right to bring a § 1981 claim, arguing

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that TJ’s contract with Farmers was impaired by race

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discrimination.

See id. at 478.

Neither do the Jacksons

Tress, and not

See McCown, 8 Cal. App. at 225.

Plaintiffs

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therefore also lack standing to bring their § 1981 claim.

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B. Conspiracy Claim under 42 U.S.C. § 1985(3)

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Subsection 1985(3) prohibits two or more persons from

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conspiring to deprive any person or class of persons of the equal

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protection of the laws.

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under § 1985(3), a plaintiff must demonstrate a deprivation of a

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right motivated by ‘some racial, or otherwise class-based,

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invidiously discriminatory animus behind the conspirators’

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action.’”

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1056 (9th Cir. 2002) (quoting Sever v. Alaska Pulp Corp., 978

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F.2d 1529, 1536 (9th Cir.1992)).

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“To bring a cause of action successfully

RK Ventures, Inc. v. City of Seattle, 307 F.3d 1045,

“[Section] 1985(3) does not itself create any

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substantive rights; rather, it serves only as a vehicle for

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vindicating federal rights and privileges which have been defined

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elsewhere.”

Brown v. Philip Morris Inc., 250 F. 3d 789, 805 (3d

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Cir. 2001).

When, as here, “the alleged § 1985(3) conspirators

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are private actors, the plaintiff must demonstrate that the

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conspiracy was aimed at rights constitutionally protected against

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private impairment.”

Jimenez v. Wellstar Health System, 596 F.3d
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1304, 1312 (11th Cir. 2010).

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Plaintiffs’ Complaint does not describe with much

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clarity the right upon which their § 1985(3) claim is based, and

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because plaintiffs’ counsel failed to file an opposition to the

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defendants’ motion, the court is offered no further guidance.

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Plaintiffs allege defendants “conspired to create a means by

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which plaintiffs would be impaired in and under their rights

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arising under state and federal constitutions, as well as the

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contracts between Farmers, Truck, and the corporate plaintiffs.”

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(Compl. ¶ 52.)

Plaintiffs therefore appear to base their §

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1985(3) claim, at least in part, on their right to enter into

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contracts.

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Assuming plaintiffs have standing to bring their §

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1985(3) claim based on a violation of § 1981,2 the § 1985(3)

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nevertheless fails for several reasons.

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been conservative in designating which rights litigants may

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enforce against private actors under § 1985(3) . . . .”

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596 F.3d at 1312.

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“conspiracies to violate rights protected under § 1981 are

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insufficient to form the basis of a § 1985(3) claim.”

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Brown v. Philip Morris Inc., 250 F.3d 789, 806 (3d Cir. 2001)

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(“The great weight of precedential authority . . . supports the

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traditional limitation of § 1985(3) to questions of interstate

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travel and involuntary servitude and does not suggest that §§

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1981 or 1982 claims in general may form the basis of a § 1985(3)

“[T]he Supreme Court has

Jimenez,

Consequently, other circuits have held that

Id.; see

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The court need not address whether plaintiffs can
maintain a claim under § 1985(3) based on a violation of § 1981
where they lack standing to bring a claim under § 1981.
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action.”).

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Although the court is unaware of any Ninth Circuit

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authority addressing the issue, the court is inclined to agree

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with “the great weight of authority,” particularly due to the

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Supreme Court’s conservatism regarding conspiracy claims against

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private actors.

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claim on defendants’ violation of § 1981.

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Plaintiffs therefore cannot base their § 1985(3)

Moreover, there is not a scintilla of evidence before

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the court that a conspiracy existed between the named defendants

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to interfere with plaintiffs’ right to enter into a contract due

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to plaintiffs’ race.

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between Gillis, Eason and Bailey . . . indicate that there was a

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concerted effort by these three to remove plaintiffs from the COD

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program” and that those defendants also made “racist comments.”

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(Compl. ¶ 54.)

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required to accept those allegations as true.

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defendants move for summary judgment, and plaintiffs failed to

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come forward with any evidence supporting those allegations or to

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otherwise permit a reasonable trier of fact to draw the inference

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that a conspiracy existed, plaintiffs’ § 1985(3) claim must fail.

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See Anderson, 477 U.S. at 252.

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Plaintiffs allege that “internal emails

Were this a motion to dismiss, the court would be
However, because

IT IS THEREFORE ORDRED that defendants’ motion for

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summary judgment be, and the same hereby is, GRANTED.

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Dated:

August 24, 2015

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