Kolker v. Vnus Medical Technologies Inc. et al

Filing 61

ORDER, Motions terminated: 44 MOTION for Summary Judgment filed by Covidien, Inc.., ORDER REFERRING CASE to Magistrate Judge MAGISTRATE CORLEY for Settlement Case Management Conference set for 4/25/2012 03:00 PM. VIA TELEPHONE. Signed by Judge ARMSTRONG on 1/17/12. (lrc, COURT STAFF) (Filed on 1/17/2012)

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UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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OAKLAND DIVISION

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DAVID KOLKER,

Case No: C 10-00900 SBA

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Plaintiff,
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vs.

ORDER DENYING DEFENDANT’S
MOTION FOR SUMMARY
JUDGMENT

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VNUS MEDICAL TECHNOLOGIES.,

Dkt. 44

13 COVIDIEN, and DOES 1-20,

Defendants.

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Plaintiff David Kolker brings the instant disability discrimination action against

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VNUS Medical Technologies (“VNUS”) and Covidien alleging a single claim for disability

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discrimination under California Fair Employment and Housing Act (“FEHA”), Cal. Gov.

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Code § 12940 et seq. The Court has jurisdiction based on the diversity of the parties. See

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28 U.S.C. § 1332. The parties are presently before the Court on Covidien’s Motion for

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Summary Judgment. Dkt. 44.1 Having read and considered the papers filed in connection

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with this matter and being fully informed, the Court hereby DENIES the motion. The

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Court, in its discretion, finds this matter suitable for resolution without oral argument. Fed.

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R. Civ. P. 78(b); N.D. Cal. Civ. L.R. 7-1(b).

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VNUS merged into Covidien, and no longer exists as a going concern. See 8/2/10
Order at 5-6, Dkt. 17. Thus, the instant motion is brought by Covidien only. However,
unless stated otherwise, all further references to “Defendant” encompass VNUS and
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I.

BACKGROUND

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A.

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In 2000, Plaintiff founded Vein Centers for Excellence (“VCFE”), a practice

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management consulting company for varicose vein removal centers, which he operated on a

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part-time basis. Nader Decl. Ex. A (“Kolker Depo.”) at 52:9-12, 52:20-21, Dkt. 44-2. In

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2004, Plaintiff began working full-time at VCFE as its President. Id. at 50:13-15, 52:9-

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53:20. In 2007, Plaintiff took an unannounced leave from the company. Id. Ex. C

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(“Barnell Depo.”) at 32:8-11, Dkt. 44-5. VCFE learned that Plaintiff’s absence was due to

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“drug problems.” Id. at 29:21-22. The company terminated Plaintiff’s employment

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FACTUAL SUMMARY

sometime in 2007, ostensibly for job abandonment. Id. at 31:14-24, 32:16-18.2

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In December 2007 or January 2008, Plaintiff approached VNUS, through its Chief

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Executive Officer, Brian Farley, with an idea for launching a new subsidiary, to be known

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as Centers for Advanced Vein Care (“CAVC”), similar in operation to VCFE. Kolker

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Decl. ¶ 3. On April 14, 2008, Plaintiff entered into a Consulting Agreement with VNUS to

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develop “a business plan for the creation of a ‘Vein Clinics’ business model to provide

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diagnosis and treatment to patients in the United States.” Consulting Agt. at 6, Nader Decl.

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Ex. 1, Dkt. 44-2. Plaintiff was compensated at a rate of $12,000 every two weeks, and the

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term of the agreement ran from April 14, 2008 until June 29, 2008. Id. at 10. The parties

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later agreed to extend the term of the agreement through the end of August 2008. Kolker

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Depo. at 216:15-18.

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In September 2008, after the expiration of the Consulting Agreement, Plaintiff

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submitted an application for employment with VNUS. Id. at 273:13-274:2 and Ex. 26.

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Upon receiving Plaintiff’s job application, VNUS commenced background and reference

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checks, which were completed around October 2008. Id. Ex. B (“Farley Decl.”) at 33:18-

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Plaintiff states that since September 2007, he has been in recovery from alcohol
and drug abuse and began in-patient treatment at that time. Kolker Decl. ¶ 2, Dkt. 49-1. It
is unclear from the record whether Plaintiff was receiving treatment prior to or at the time
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24, 46:7-9, Dkt. 44-4. As a result of that investigation, Farley learned that Plaintiff had

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“abandoned” his job at VCFE and that he had been “in recovery.” Id. at 46:4-19.

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According to Farley, Plaintiff’s unexplained absence from work raised a “big red

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flag” for him regarding whether to hire Plaintiff as an employee. Id. and 47:14-25. Thus,

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in light of what he had learned regarding the circumstances surrounding Plaintiff’s

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departure from VCFE, coupled with his concerns regarding Plaintiff’s performance under

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the Consulting Agreement, Farley decided not to offer Plaintiff a job as an employee. Id. at

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47:14-25. Nonetheless, Farley believed that “offering him a consultant opportunity was a

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good alternative for [Plaintiff] and for [VNUS] to see if it could work out.” Id. To that

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end, on October 16, 2008, Farley offered Plaintiff another Consulting Agreement (“Second

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Consulting Agreement”) directly with CAVC. Id. Ex. A, Ex. 34.

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Under the terms of the Second Consulting Agreement, Plaintiff was paid $22,400

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per month ($268,800 annualized), plus a $50,000 bonus upon achievement of specific

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milestones. Id. at 7. The term of the Second Consulting Agreement ran from October 20,

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2008 until October 19, 2009. Id. at 11. In addition, the agreement stated that only upon

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completion of the specified services under the agreement would the parties discuss

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“potential employment with the Company.” Id. at 1. There is no waiver or release of

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claims set forth anywhere in the agreement.

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During the term of Plaintiff’s Second Consulting Agreement, VNUS merged into

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Covidien. Farley Depo. at 89:17-24. Covidien decided to eliminate CAVC based on legal

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risks associated with its operations. Kolker Depo. at 104:18-105:1, 108:20-24.

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Accordingly, Plaintiff’s agreement with CAVC concluded under the terms of the

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agreement. Plaintiff did not apply for a position with Covidien. Id. at 111:19-21.

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B.

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On December 1, 2009, Plaintiff filed a Complaint for Damages against VNUS and

PROCEDURAL HISTORY

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Covidien in Santa Clara County Superior Court. Dkt. 1, Ex. A. His Complaint alleges a

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single cause of action for violation of the FEHA based on VNUS’ failure to hire him

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allegedly on the basis of his disability, i.e., being in recovery for alcohol and substance
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abuse. Compl. ¶¶ 13-16. VNUS and Covidien removed the action on the basis of diversity

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jurisdiction. Dkt. 1. The action was originally assigned to the Honorable Jeremy Fogel.

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On September 28, 2011, the Clerk reassigned the action to the undersigned following Judge

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Fogel’s departure from this District. Dkt. 40. Thereafter, Defendant Covidien filed the

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instant motion for summary judgment. Dkt. 44. The motion has been fully briefed and is

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now ripe for adjudication. Dkt. 49, 53.

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II.

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LEGAL STANDARD
Federal Rule of Civil Procedure 56 provides that a party may move for summary

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judgment on some or all of the claims or defenses presented in an action. Fed. R. Civ. P.

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56(a)(1). “The court shall grant summary judgment if the movant shows that there is no

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genuine dispute as to any material fact and the movant is entitled to judgment as a matter of

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law.” Id.; see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The movant

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bears the initial burden of demonstrating the basis for the motion and identifying the

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portions of the pleadings, depositions, answers to interrogatories, affidavits, and admissions

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on file that establish the absence of a triable issue of material fact. Celotex Corp. v. Catrett,

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477 U.S. 317, 323 (1986); Fed. R. Civ. P. 56(c)(1)(A) (requiring citation to “particular parts

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of materials in the record”). If the moving party meets this initial burden, the burden then

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shifts to the non-moving party to present specific facts showing that there is a genuine issue

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for trial. See Celotex, 477 U.S. at 324; Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,

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475 U.S. 574, 586-87 (1986).

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“On a motion for summary judgment, ‘facts must be viewed in the light most

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favorable to the nonmoving party only if there is a ‘genuine’ dispute as to those facts.’”

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Ricci v. DeStefano, 129 S.Ct. 2658, 2677 (2009) (quoting in part Scott v. Harris, 550 U.S.

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372, 380 (2007)). “Only disputes over facts that might affect the outcome of the suit under

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the governing law will properly preclude the entry of summary judgment. Factual disputes

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that are irrelevant or unnecessary will not be counted.” Anderson, 477 U.S. at 248. A

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factual disput is genuine if it “properly can be resolved in favor of either party.” Id. at 250.

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Accordingly, a genuine issue for trial exists if the non-movant presents evidence from
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which a reasonable jury, viewing the evidence in the light most favorable to that party,

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could resolve the material issue in his or her favor. Id. “If the evidence is merely

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colorable, or is not significantly probative, summary judgment may be granted.” Id. at 249-

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50 (internal citations omitted). Only admissible evidence may be considered in ruling on a

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motion for summary judgment. Orr v. Bank of Am., 285 F.3d 764, 773 (9th Cir. 2002).

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III.

DISCUSSION

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A.

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The FEHA makes it illegal for an employer “because of the . . . physical

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disability . . . of any person, to refuse to hire or employ the person.” Cal. Gov’t Code

LEGAL FRAMEWORK

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§ 12940(a). Although FEHA does not explicitly protect recovering addicts, the Act states

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that the definition of disability under the ADA applies if it provides “broader protection or

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coverage” than the FEHA’s own definitions. Cal. Gov’t Code § 12926(m). As such, courts

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have construed the FEHA to proscribe discrimination on the basis of prior substance and

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alcohol abuse. See Lopez v. Pacific Maritime Ass’n 657 F.3d 762, 765 (9th Cir. 2011)

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(“The ADA and the FEHA protect people who are recovering or who have recovered from

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a drug addiction[.]”); Gosvener v. Coastal Corp., 51 Cal. App. 4th 805, 813 (1996)

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(“alcoholism could be a covered disability under the FEHA, which incorporates the

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definition of disability listed in the Americans with Disabilities Act of 1990 (42 U.S.C.

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§ 12111)”), disapproved on other grounds by Colmenares v. Braemar Country Club, Inc.,

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29 Cal.4th 1019 (2003).

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Courts typically analyze discrimination claims under the burden shifting framework

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established in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). See Metoyer v.

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Chassman, 504 F.3d 919, 930 (9th Cir. 2007). Under the McDonnell Douglas test, the

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plaintiff must establish a prima facie case of discrimination by showing that: (1) he

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belongs to a protected class; (2) he was qualified for the position; (3) he was subject to an

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adverse employment action; and (4) similarly-situated individuals outside the protected

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class were treated more favorably. See Earl v. Nielsen Media Research, Inc., 658 F.3d

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1108, 1112 (9th Cir. 2011). If the plaintiff establishes the prima facie case of
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discrimination, the burden then shifts to the defendant to articulate a legitimate,

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nondiscriminatory reason for its allegedly discriminatory conduct. Id. If the employer

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articulates a legitimate reason for its action, the employee must show that the proffered

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reason is a pretext for unlawful discrimination. Id.

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Use of the McDonnell Douglas framework is not mandatory. “Instead, ‘when

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responding to a summary judgment motion . . . [the plaintiff] may proceed by using the

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McDonnell Douglas framework, or alternatively, may simply produce direct or

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circumstantial evidence demonstrating that a discriminatory reason more likely than not

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motivated [the employer].” Id. (emphasis added) (quoting in part McGinest v. GTE

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Serv.ice Corp., 360 F.3d 1103, 1122 (9th Cir. 2004)). “When the plaintiff offers direct

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evidence of discriminatory motive, a triable issue as to the actual motivation of the

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employer is created even if the evidence is not substantial.” Goodwin v. Hunt Wesson,

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Inc., 150 F.3d 1217, 1221 (9th Cir. 1998). Indeed, the requisite quantum of evidence is

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“very little.” Id.

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B.

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Defendant contends that Plaintiff cannot establish a prima facie case of

ANALYSIS

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discrimination under McDonnell Douglas, as a matter of law. Mot. at 12. Plaintiff

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counters that the McDonnel Douglas test is inapt because he has presented direct evidence

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of discriminatory animus. Opp’n at 8. The Supreme Court has recognized that “the

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McDonnell Douglas test is inapplicable where the plaintiff presents direct evidence of

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discrimination.” Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 121 (1985); accord

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Enlow v. Salem–Keizer Yellow Cab Co., 389 F.3d 802, 812 (9th Cir. 2004) (“[w]hen a

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plaintiff alleges disparate treatment based on direct evidence in an ADEA claim, we do not

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apply the burden-shifting analysis set forth in [McDonnell Douglas].”). Therefore, the

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threshold question is whether Plaintiff has presented sufficient, direct evidence of

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discrimination to avoid summary judgment.

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“Direct evidence is evidence which, if believed, proves the fact of discriminatory
animus without inference or presumption. Comments demonstrating discriminatory animus
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may be found to be direct evidence if there is evidence of a causal relationship between the

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comments and the adverse job action at issue.” DeJung v. Super. Ct., 169 Cal. App. 4th

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533, 550 (2008); see Coghlan v. Am. Seafoods Co. LLC, 413 F.3d 1090, 1095 (9th Cir.

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2005) (“Direct evidence typically consists of clearly sexist, racist, or similarly

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discriminatory statements or actions by the employer.”). It is “smoking gun” evidence,

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which is tantamount to an admission by the decision maker that the adverse employment

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decision was based on an impermissible basis. See Heard v. Lockheed Missiles & Space

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Co., 44 Cal. App. 4th 1735, 1748 (1996).

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Here, Plaintiff alleges that Farley specifically told him that he would not hire him

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because of his prior substance abuse. Opp’n at 9. As support, Plaintiff cites his declaration

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filed in support of his opposition to the instant motion in which he states: “During

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discussions about his learning of my substance abuse, Mr. Farley stated that because I was

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in recovery from my past issues with substance abuse, he did not feel that he could provide

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me with employment at that time and instead would only consider offering me another

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consulting agreement.” Kolker Decl. ¶ 9. In addition, Plaintiff points to his deposition

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where he testified that Farley “said that due to their discovery of the substance abuse issue

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and being in recovery, that they were going to offer me a consulting agreement as opposed

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to employment.” Roe Decl. Ex. A (“Kolker Depo.”) at 237:16-19, Dkt. 49-2. Farley’s

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alleged statements constitute direct evidence of discriminatory intent. See, e.g., Godwin,

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150 F.3d at 1221 (manager’s comment that he “‘did not want to have to deal with another

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female’ . . . directly suggests the existence of bias and no inference is necessary to find

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discriminatory animus.”); DeJung, 169 Cal. App. 4th at 550 (citing statement by decision

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maker that “Ted’s a great guy, but we’re looking for someone younger”).

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Defendant contends that the Court should disregard Plaintiff’s declaration on the

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ground that it is self-serving and contradicts his deposition testimony. Reply at 5. “The

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general rule in the Ninth Circuit is that a party cannot create an issue of fact by an affidavit

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contradicting his prior deposition testimony.” See Nelson v. City of Davis, 571 F.3d 924,

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927 (9th Cir. 2009). According to Defendant, Plaintiff allegedly admitted during his
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deposition that he could not recall the “exact words” used by Farley. Reply at 5. The

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excerpts from Plaintiff’s deposition, however, do not support Defendant’s contention. To

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the contrary, Plaintiff testified that Farley specifically stated that they were not offering him

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employment “due to their discovery of the substance abuse issue and being in recovery,”

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and that such statement was an “exact quote” by Farley. Kolker Depo. at 237:15-21.

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Tellingly, Defendant completely ignores this testimony in its Reply.

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Equally meritless is Defendant’s alternative contention that Plaintiff’s discrimination

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claim is barred by the Second Consulting Agreement. Mot. at 18-20. According to

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Defendant, that agreement shows that the parties had not reached any agreement to hire

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him, and that they would discuss potential employment opportunities only after the

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agreement expired. Id. at 19. It is unclear, however, how the Second Consulting

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Agreement has any bearing on his discrimination claim. Nowhere in the agreement is there

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any waiver or release of claims by Plaintiff against Defendant. To the extent that

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Defendant’s intent in entering into the Second Consulting Agreement was to preclude

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Plaintiff from pursuing an employment-related claim against them, they should have clearly

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stated as such in the agreement. See Paralift, Inc. v. Super. Ct., 23 Cal. App. 4th 748, 755

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(1993) (noting that for a release to be valid, it “must be clear, unambiguous and explicit” in

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expressing the intent of the parties). Moreover, whether or not the parties had reached an

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agreement to hire Plaintiff as an employee is beside the point. Plaintiff is not claiming that

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Defendant breached any contractual agreement to hire him. Rather, he is alleging that

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VNUS refused to offer him employment because of its awareness of his prior alcohol and

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substance abuse problems.

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Next, Defendant expends considerable energy attempting to establish a legitimate,

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non-discriminatory reason for declining to hire Plaintiff; namely, the circumstances of his

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departure from VCFE and their alleged dissatisfaction with his performance under the first

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Consulting Agreement. This showing is germane to the second step of the McDonnell

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Douglas burden shifting analysis, which is inapplicable where, as here, there is direct

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evidence of discriminatory animus. DeJung, 169 Cal. App. 4th at 550 (“there is no need to
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engage in this burden-shifting analysis where there is direct evidence of discriminatory

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animus”) (citing Trop v. Sony Pictures Entm’t, Inc., 129 Cal. App. 4th 1133, 1144 (2005));

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c.f. Mokler v. Cty. of Orange, 157 Cal. App. 4th 121, 138 (2007) (“Where direct evidence

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of retaliation is shown, the burden shifting analysis imposed in circumstantial evidence

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cases does not apply.”).3

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Finally, Defendant argues for the first time in its Reply that it is entitled to summary

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judgment on the ground that Plaintiff cannot establish that he is disabled or regarded as

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disabled. Reply at 7-8. It is improper for a moving party to introduce in a reply brief new

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facts or different legal arguments than those presented in the moving papers. See Coleman

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v. Quaker Oats Co., 232 F.3d 1271, 1289 n.4 (9th Cir. 2000) (“[I]ssues cannot be raised for

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the first time in a reply brief.”); State of Nev. v. Watkins, 914 F.2d 1545, 1560 (9th Cir.

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1990) (“[Parties] cannot raise a new issue for the first time in their reply briefs.”). Thus,

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the Court declines to consider Defendant’s newly-raised contention at this juncture.

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IV.

CONCLUSION

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For the reasons stated above,

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IT IS HEREBY ORDERED THAT:

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Defendant’s Motion for Summary Judgment is DENIED.

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The instant action is REFERRED to Magistrate Judge Jacqueline Corley for a

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mandatory settlement conference to take place within sixty (60) days of the date this Order

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is filed. The date for the settlement conference will be assigned by Magistrate Judge

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Corley.

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In the event the action does not settle, the parties shall appear for a telephonic

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Case Management Conference on April 25, 2012 at 3:00 p.m. Prior to the date scheduled

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for the conference, the parties shall meet and confer and prepare a joint Case Management

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Conference Statement which complies with the Standing Order for All Judges of the

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That aside, if Farley were as concerned about Plaintiff’s skills and performance as
he purported to be, it begs the question of why he decided to reengage him under a Second
28 Consulting Agreement for a term and compensation greater than the first.
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Northern District of California and the Standing Orders of this Court. Plaintiff shall

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assume responsibility for filing the joint statement no less than seven (7) days prior to the

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conference date. Plaintiff’s counsel is to set up the conference call with all the parties on

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the line and call chambers at [phone]. NO PARTY SHALL CONTACT

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CHAMBERS DIRECTLY WITHOUT PRIOR AUTHORIZATION OF THE COURT.

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The motion hearing and Case Management Conference scheduled for January

31, 2012 are VACATED.

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IT IS SO ORDERED.

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This Order terminates Docket 44.

Dated: January 17, 2011

_______________________________
SAUNDRA BROWN ARMSTRONG
United States District Judge

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