Green v. Bimbo Bakeries USA

Filing 55

ORDER by Judge Lucy H. Koh denying 44 Motion for Summary Judgment (lhklc1, COURT STAFF) (Filed on 1/12/2015)

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION

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United States District Court
Northern District of California

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DAN GREEN,

Case No. 13-CV-04414-LHK

Plaintiff,

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ORDER DENYING DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT

v.

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Re: Dkt. No. 48

BIMBO BAKERIES USA,
Defendant.

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Plaintiff Dan Green (“Plaintiff” or “Green”) brings this action against Defendant Bimbo

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Bakeries USA (“Defendant” or “Bimbo Bakeries”). Compl., ECF No. 1. Before the Court is

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Defendant’s motion for summary judgment. (“MSJ”), ECF No. 44. Green opposes the motion.

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(“Opp.”), ECF No. 48. Defendant filed a reply. (“Reply”), ECF No. 52. Having considered the

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submissions of the parties, the record in this case, and the relevant law, the Court hereby DENIES

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Defendant’s motion for summary judgment.

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I.

BACKGROUND

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A.

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On September 14, 1987, Entenmann’s/Orowheat hired Green in Santa Cruz, California as a

Factual Background

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ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

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route sales representative (“RSR”). Compl. ¶ 5. In 2002, Defendant Bimbo Bakeries acquired

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Entenmann’s/Orowheat, and Green became an employee of Bimbo Bakeries. Id. ¶ 6. Green

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continued to work for Defendant until February 22, 2006, when Green left his position at Bimbo

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Bakeries. Id. ¶ 7; Declaration of Ronald D. Arena, ECF No. 44, Exh. A (“Green Depo.”) 28:11–

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13. Green then accepted a position at Svenhards Bakeries. Compl. ¶ 7.

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In mid-March 2006, Plaintiff alleges that Rick Roberts, the District Manager for Bimbo
Bakeries, contacted Plaintiff about returning to work for Defendant. Id. ¶ 7. At that point, Plaintiff

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explained he would only return to Bimbo Bakeries if he would be able to get back his “top

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seniority,” vacations, sick leave bank, and old route. Green Depo. 66:11–15; Declaration of Rick

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Roberts (“Roberts Decl.”), ECF No. 50–1. Following that conversation, Green met with Roberts

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United States District Court
Northern District of California

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and Joe Torrise, the Regional Sales Manager for Bimbo Bakeries to discuss Green’s potential

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return. Compl. ¶ 7. According to Plaintiff, Torrise agreed that Plaintiff would return to work for

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Bimbo Bakeries with Plaintiff’s previous seniority, on the condition that Green’s co-workers

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agreed to this status. Id. ¶ 7. Plaintiff further alleges that Torrise represented that Green’s

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departure from Bimbo Bakeries would be “considered a leave of absence” rather than a resignation

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in order to restore Green’s seniority. Id. ¶ 7. Following this meeting, Torrise held a meeting with

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the employees who would be affected by Green’s return to Bimbo Bakeries. Id. ¶ 9. The

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employees “unanimously approved” Plaintiff’s “return and reinstatement to his prior seniority

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status.” Id. Plaintiff agreed to return to Bimbo Bakeries based on Torrise’s and Roberts’

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representations regarding his seniority and vacation. Id. ¶ 10.

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In March 2007 and January 2011, Defendant Bimbo Bakeries laid off employees at the

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Santa Cruz depot where Green worked. Id. ¶ 12. Under the collective bargaining agreement

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(“CBA”), Defendant was required to follow a seniority-based rule in determining layoffs, e.g, “last

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person hired, first person fired.” Declaration of Melvin Barnett in support of Defendant’s motion

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for summary judgment, ECF No. 44-3, Exh. A (“CBA”), § 7. The CBA provides that Bimbo

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Bakeries shall post a “seniority list” twice a year. Id. Once seniority is acquired after certain

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probationary periods, “seniority shall be effective from the original date of hire” and “shall be

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terminated by” discharge for cause, resignation, and unapproved leaves of absence longer than six

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months unless for bona fide illness. Id. Green alleges that from his return to Defendant’s employ

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in 2006 to his layoff in January 2013, Bimbo Bakeries posted seniority lists reflecting his 1987

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seniority. Compl. ¶ 11. During both the March 2007 and January 2011 layoffs, Green retained his

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position, consistent with his 1987 seniority. Id.
On November 27, 2012, Brad Sebring, the business agent for the Teamsters Union local

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912, contacted Green to inform him that Defendant’s human resources department had changed

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Green’s “hire” date. Id.¶ 14. Sebring had received a payroll authorization form reflecting a new

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Northern District of California

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seniority date of April 3, 2006. Declaration of Brad Sebring (“Sebring Decl.”), ECF No. 51, ¶ 8.

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This was the first time Sebring learned of Green’s departure from Bimbo Bakeries in February

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2006 and subsequent return. Id. ¶¶ 7–8. Plaintiff contacted management to dispute the new hire

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date, but was unsuccessful in amending the date.

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In December 2012, Defendant announced layoffs of over 100 employees would take place

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in 2013. Compl. ¶ 15. On January 5, 2013, Defendant laid off Green. Id. Had Green’s previous

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seniority date of September 14, 1987 been used, Green would not have been laid off in January

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2013. Id.; see also MSJ at 6.

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B.

Procedural Background

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Plaintiff filed his Complaint on September 24, 2013. ECF No. 1. Defendant filed an answer

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on December 31, 2013. ECF No. 11. On June 2, 2014, Defendant filed a motion for leave to

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amend its answer, which Plaintiff opposed. ECF Nos. 29, 33. The Court granted Defendant’s

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motion to amend its answer on July 7, 2014. ECF No. 39. Defendant filed its amended answer on

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July 8, 2014. ECF No. 40.

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Defendant filed the instant motion for summary judgment and/or summary adjudication on

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September 29, 2014. ECF No. 44. Plaintiff filed his opposition on October 14, 2014. ECF No. 48.

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Defendant filed a reply on October 21, 2014. ECF No. 52.

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II.

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Legal Standard
Summary judgment is appropriate if, viewing the evidence and drawing all reasonable

inferences in the light most favorable to the nonmoving party, there are no genuine issues of

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material fact, and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a);

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Celotex Corp. v. Catrett, 477 U.S. 317, 321 (1986). At the summary judgment stage, the Court

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“does not assess credibility or weigh the evidence, but simply determines whether there is a

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genuine factual issue for trial.” House v. Bell, 547 U.S. 518, 559–60 (2006). A fact is “material” if

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it “might affect the outcome of the suit under the governing law,” Anderson v. Liberty Lobby, Inc.,

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Northern District of California

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477 U.S. 242, 248 (1986), and a dispute as to a material fact is “genuine” if there is sufficient

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evidence for a reasonable trier of fact to decide in favor of the nonmoving party, id. “If the

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evidence is merely colorable, or is not significantly probative, summary judgment may be

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granted.” Id.

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The moving party bears the initial burden of identifying those portions of the pleadings,

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discovery, and affidavits that demonstrate the absence of a genuine issue of material fact. Celotex

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Corp., 477 U.S. at 323. Where the moving party will have the burden of proof on an issue at trial,

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it must affirmatively demonstrate that no reasonable trier of fact could find other than for the

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moving party, but on an issue for which the opposing party will have the burden of proof at trial,

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the party moving for summary judgment need only point out “that there is an absence of evidence

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to support the nonmoving party’s case.” Id. at 325; accord Soremekun v. Thrifty Payless, Inc., 509

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F.3d 978, 984 (9th Cir. 2007). Once the moving party meets its initial burden, the nonmoving

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party must set forth, by affidavit or as otherwise provided in Rule 56, “specific facts showing that

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there is a genuine issue for trial.” Anderson, 477 U.S. at 250.

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III.

DISCUSSION
In the instant action, Plaintiff brings causes of action based on alleged intentional

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misrepresentations, negligent misrepresentations, violations of California Business and

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Professions Code § 17200 for unfair business practices, promissory estoppel, and equitable

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estoppel. The gravamen of Plaintiff’s Complaint is that he relied on misrepresentations made by

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Defendant’s agents and employees regarding Plaintiff’s seniority in deciding to return to Bimbo

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Bakeries and leave his position at Svenhards Bakeries.

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Defendant contends that regardless of the accuracy or veracity of Plaintiff’s allegations, all
of Plaintiff’s state law claims are preempted by § 301 of the Labor Management Relations Act
(“LMRA”). More specifically, Defendant argues that under Ninth Circuit precedent, any alleged

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United States District Court
Northern District of California

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oral or written agreement that deviates from the terms of a CBA are preempted. Defendant further

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argues that resolution of Plaintiff’s lawsuit requires the application and interpretation of the CBA,

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triggering preemption under § 301. In the alternative, Defendant contends that Plaintiff cannot

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state a cause of action for fraud, and that any claims not preempted by § 301 of the LMRA are

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preempted by California’s Workers’ Compensation Act.

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The Court begins by addressing the threshold issue of whether Plaintiff’s claims are

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preempted by § 301 of the LMRA. The Court then addresses the remainder of Defendant’s

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arguments.

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A.

Section 301 of the LMRA

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On its face, § 301 is a jurisdictional statute which provides that “[s]uits for violation of

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contracts between an employer and a labor organization representing employees in an industry

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affecting commerce as defined in this chapter . . . may be brought in any district court of the

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United States having jurisdiction of the parties.” 29 U.S.C. § 185(a). Construing § 301 broadly, the

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Supreme Court has held that § 301 preempts certain state law claims and authorizes federal courts

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to develop a federal common law of collective bargaining agreement interpretation. See, e.g.,

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Local 174, Teamsters of Am. v. Lucas Flour Co., 369 U.S. 95, 103–04 (1962). Over the last fifty

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years, the Supreme Court and Ninth Circuit have clarified the scope of § 301 preemption to be

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“complete,” and have commanded that § 301 must cover “most state-law actions that require

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interpretation of labor agreements.” Balcorta v. Twentieth Century-Fox Film Corp., 208 F.3d

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1102, 1108 (9th Cir. 2000) (internal citation omitted); see also Allis-Chalmers Corp. v. Lueck, 471

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U.S. 202, 210–11 (1985). As the Ninth Circuit has explained, the “complete preemption” of § 301

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serves the dual purposes of uniformity in the interpretation of collective bargaining agreements

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and promotion of the federal policy favoring arbitration of labor disputes, “because it prevents

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parties from evad[ing] the requirements of § 301 by relabeling their contract claims as claims for

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tortious breach of contract.” Balcorta, 208 F.3d at 1108 (international quotation marks omitted).

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Northern District of California

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As a general matter, § 301 will completely preempt a plaintiff’s state law claims where (1)

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the claims are not based on a right independent of the collective bargaining agreement or (2)

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adjudication of the claim “necessarily requires the [C]ourt to interpret an existing provision of a

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[collective bargaining agreement] that can reasonably be said to be relevant to the resolution of the

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dispute.” Cramer v. Consol. Freightways, Inc., 255 F.3d 683, 690, 692–93 (9th Cir. 2001) (en

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banc). Under the first prong, whether a right is “independent” of a collective bargaining agreement

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does not depend on whether the claim arises from “precisely the same set of facts” as a potential

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claim pursuant to a CBA dispute resolution process, but rather whether the “legal character” of the

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claim is such that the right exists separate and apart from any provision in the CBA. Id. at 690

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(citing Livadas v. Bradshaw, 512 U.S. 107, 122–24 (1994)). Under the second prong, the “need to

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interpret the CBA must inhere in the nature of the plaintiff’s claim.” Cramer, 255 F.3d at 691.

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Where the meaning of a contract term is undisputed, “the fact that a CBA will be consulted in the

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course of state law litigation does not require preemption.” Ward v. Circus Circus Casinos, Inc.,

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473 F.3d 994, 998 (9th Cir. 2007). Rather, the “determinative question is whether the state law

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factual inquiry . . . turn[s] on the meaning of any provision of the collective-bargaining

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agreement.” Id. (internal quotation marks omitted). Finally, a defense based on a CBA is

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insufficient to require preemption. Cramer, 255 F.3d at 690; see also Ward, 473 F.3d at 998.

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In the instant litigation, Defendant contends that Plaintiff’s state law claims are

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completely preempted under § 301 for two reasons. First, Defendant cites three Ninth Circuit cases

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for the proposition that “any alleged oral or written agreement that deviates from the terms of an

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applicable term of the CBA is preempted.” MSJ at 2. Defendant relies on Young v. Anthony’s Fish

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Grotto, 830 F.2d 993 (9th Cir. 1987); Stallcop v. Kaiser Foundation Hospitals, 820 F.2d 1044 (9th

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Cir. 1987); and Chmiel v. Beverly-Wilshire Hotel Company, 873 F.2d 1283 (9th Cir. 1988).

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Second, Defendant contends that Plaintiff’s claims fall under the second prong of the § 301 test,
because Plaintiff’s claims require interpretation of the CBA. As an initial matter, the Court rejects

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Northern District of California

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Defendant’s overly broad interpretation of Young, Stallcop, and Chmiel. Moreover, for the reasons

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stated below, the Court finds these cases inapposite and concludes that Plaintiff’s claims do not

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require “interpretation” of the CBA as required for § 301 preemption.

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First, Young and Chmiel are factually distinguishable. In Young and Chmiel, the plaintiffs

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brought breach of contract claims based on alleged oral agreements. Those oral agreements, which

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allegedly existed separately from the applicable CBAs, directly conflicted with explicit provisions

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of the CBA. In Young, the plaintiff alleged that the defendant made an oral promise that the

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plaintiff could only be terminated for cause, but that the defendant wrongfully terminated the

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plaintiff on her first day of employment. 830 F.2d at 996. Under the relevant CBA, however, the

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defendant had the right to terminate any employee during the first thirty days of employment

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without cause. Id. Any adjudication of the Young plaintiff’s breach of contract claims would have

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created a direct conflict between an express term of the CBA and a term of the alleged oral

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agreement. See, e.g., Boccignone v. Sutter Healthcare, No. C 07-06243 CRB, 2008 WL 786908, at

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*2 (N.D. Cal. Mar. 20, 2008) (discussing Young).

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Similarly, in Chmiel, the relevant CBA provided that certain employees, of which plaintiff

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was one, could be terminated without cause during a designated probationary period. 873 F.2d at

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1284. The defendant terminated Chmiel within that probationary period, and Chmiel alleged the

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existence of an “independent agreement” that he could only be terminated for cause. Id. at 1285.

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As in Young, the alleged oral agreement was explicitly inconsistent with an express term of the

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written CBA. To decide whether the oral agreement had been breached would have necessarily

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required that the Court interpret the CBA. Hence, those breach of oral contract claims were

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preempted under § 301. Here, in contrast, Plaintiff has alleged no breach of contract claims.

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Plaintiff has brought no claims that require the Court to adjudicate the enforceability of an

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agreement that directly conflicts with an express provision of the CBA. See Boccignone, 2008 WL

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Northern District of California

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786908, at *2.
Second, insofar as Defendant relies on Young, Chmiel, and Stallcop for the proposition that

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any claim, including fraud claims, based on an agreement separate from a CBA must be

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preempted if the agreement deviates from the CBA, the Court is unpersuaded. As discussed below,

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Defendant’s overly broad interpretation of these cases is inconsistent with United States Supreme

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Court and Ninth Circuit case law on the scope of § 301 preemption. Moreover, the Court is not

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convinced that these cases remain good law if construed as broadly as Defendant advocates. All

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three cases cite and rely on language from Olguin v. Inspiration Consolidated Copper Co., 740

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F.2d 1468, 1474 (9th Cir. 1984), which held that “any independent agreement of employment

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could be effective only as part of the collective bargaining agreement,” and must therefore be

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subject to § 301 preemption. Relying on this language, the Young, Chmiel, and Stallcop courts

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held that the alleged “independent” oral agreements implicated the CBAs with little additional

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analysis.

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As another court in this District has recognized, the holding in Olguin is consistent with

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United States Supreme Court cases requiring “interpretation” of a CBA to trigger § 301

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preemption, because the CBA in Olguin “expressly provided that it was the sole agreement

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between the employer and employees.” Walton v. UTV of San Francisco, Inc. 776 F. Supp. 1399,

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1402 (N.D. Cal. 1991). As a result, any alleged independent agreement would necessarily require

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interpretation of the exclusive CBA. To construe and apply that holding to cases where the CBA

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did not expressly provide that it was the sole agreement between the employer and employee

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would render superfluous the § 301 preemption analysis mandated by the Supreme Court and

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Ninth Circuit. Under Defendant’s proposed rule, every separate agreement would automatically be

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subject to § 301 preemption without further analysis, and there would be no need to determine

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whether the state law claim implicated a right independent of the CBA or whether the claim

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necessarily required the Court to interpret a provision of the CBA. See, e.g., Cramer, 255 F.3d at

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690–93; Lingle v. Norge Division of Magic Chef, Inc., 486 U.S. 399, 407–09 (1988) (holding that

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Northern District of California

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state law tort claims can exist “independently” of CBAs for § 301 preemption purposes).

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In its most recent en banc case addressing § 301 preemption, the Ninth Circuit elaborated

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on the scope of § 301 preemption. See Cramer, 255 F.3d at 689–93. In Cramer, the Ninth Circuit

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distilled the relevant Supreme Court and Ninth Circuit cases as limiting the scope of § 301

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preemption to instances where a plaintiff’s claims are “founded directly on rights created by [a

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CBA], and also claims substantially dependent on analysis of a [CBA].” Id. at 689 (internal

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quotation marks omitted). Notwithstanding this Court’s reservations about the continued

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applicability of Young, Stallcop, and Chmiel, these cases can fit within this framework as instances

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where adjudication of the plaintiffs’ claims would have substantially depended on the CBAs

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because those claims directly conflicted with the terms of the CBAs. The Court declines to read

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Young, Stallcop, and Chmiel as creating an entirely separate category of state law claims subject to

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§ 301 preemption based purely on the mere existence of an alleged agreement separate from the

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CBA.

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The Court finds further support for the conclusion that Young, Stallcop, and Chmiel turned

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on direct conflicts with the terms of the CBAs in Niehaus v. Greyhound Lines, Inc., 173 F.3d 1207

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(9th Cir. 1999). In Niehaus, the plaintiff alleged the existence of additional oral agreements that

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were separate and apart from the CBA. Id. at 1211. More specifically, the Niehaus plaintiff alleged

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that the defendant unions had agreed to cooperate with his change in position from management to

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working level and reinstate his membership in the unions. Id. The plaintiff further alleged that the

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unions fraudulently and negligently misrepresented whether the plaintiff could be discharged as a

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result of leaving management status to rejoin the union. Id. at 1212. The Ninth Circuit concluded

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the plaintiff’s contract and fraud claims were not preempted by § 301. In discussing the contract

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claims, the Niehaus court held that “[w]hile these claims may give rise to contract defenses which

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reference the [CBA], when the meaning of the terms of a [CBA] are not disputed, the mere fact

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that a [CBA] will be consulted in the course of state law litigation does not require preemption.”

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Northern District of California

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As to the fraud claims, the Ninth Circuit in Niehaus affirmed the district court’s

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determination that “resolution of Niehaus’ tort claims requires a determination of whether Niehaus

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knew about the . . . [CBA], not an interpretation of the [CBA].” Id. at 1211–12. Unlike in Young,

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Stallcop, and Chmiel, where the direct conflicts between the separate agreements and CBAs

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required interpretation of the CBAs, in Niehaus, an agreement creating additional rights separate

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and apart from the CBA was insufficient to trigger preemption. Moreover, as discussed below, at

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least one other Ninth Circuit case has similarly limited the scope of Young, Stallcop, Chmiel, and

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their progeny.

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Consequently, the Court finds that the fact that Plaintiff’s state law fraud claims rely on the

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existence of an alleged oral agreement separate from the CBA does not necessarily require

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preemption under § 301. In Beals v. Kiewit Pacific Co., Inc., 114 F.3d 892 (9th Cir. 1997), the

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Ninth Circuit held that while a plaintiff’s breach of contract claim was preempted under § 301, his

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negligent misrepresentation claim was not subject to preemption. In Beals, the plaintiff alleged

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both breach of contract and negligent misrepresentation claims based on oral representations and a

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written agreement that deviated from the terms of the relevant CBA. Id. at 894. Beals alleged that

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the defendant had negligently misrepresented under what circumstances he could be terminated.

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Id. To prove negligent misrepresentation, Beals had to show that the defendant had failed to

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exercise reasonable care in communicating false information to Beals, and that Beals justifiably

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relied on that information. Id. at 895. It was undisputed that the defendant had the right to

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terminate Beals at any time under the CBA, but that was immaterial to adjudicating the issues of

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whether the defendant had failed to exercise reasonable care or whether Beals could have

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reasonably relied on defendant’s misrepresentations. Id. Importantly, the Beals court distinguished

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Stallcop and Young as cases where there were disputed CBA terms at issue, triggering § 301

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preemption. Id.

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In the instant case, the Court finds Beals to be instructive. Here, adjudication of Plaintiff’s

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Northern District of California

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state law claims do not require interpretation of the CBA. Whether Bimbo Bakeries’ agents or

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employees intentionally or negligently misrepresented the terms under which Green could or

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would return to Bimbo Bakeries does not require the Court to construe or interpret any provision

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of the CBA. Defendant’s mere pointing to the seniority and vacation terms of the CBA is

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insufficient, as those provisions are clear and, more importantly, undisputed. See Cramer, 255

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F.3d at 691 (“[A]lleging a hypothetical connection between the claim and the terms of the CBA is

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not enough to preempt the claim . . . .”). Plaintiff does not dispute the meaning or applicability of

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the seniority, vacation, or layoff provisions, but rather Plaintiff alleges that Defendant either

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knowingly or negligently misrepresented the conditions under which Plaintiff could or would

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return to Bimbo Bakeries’ employ. That the Court may have “to look at” terms of the CBA in

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evaluating Plaintiff’s claims is insufficient: “in the context of § 301 complete preemption, the term

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‘interpret’ is defined narrowly—it means something more than ‘consider,’ ‘refer to,’ or ‘apply.’”

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Balcorta, 208 F.3d at 1108.

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Simply put, Defendant has failed to show that Plaintiff’s claims require the Court to

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construe or interpret any terms of the CBA. While Defendant asserts that “seniority” has different

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meanings in various sections of the CBA, Defendant fails to identify any instances where the

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meaning of “seniority” is in dispute for purposes of Plaintiff’s claims. Defendant also argues that

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Plaintiff’s claims implicate the rights of other union members because another employee would

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have been laid off in Plaintiff’s stead. Defendant fails to explain the relevance of this hypothetical.

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Conjecture regarding the secondary effects of a plaintiff’s claims is insufficient to warrant

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preemption under § 301. See Cramer, 255 F.3d at 691–92. The Court concludes that Plaintiff’s

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claims are not preempted under § 301 of the LMRA.

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The Court therefore denies Defendant’s motion for summary judgment on § 301
preemption grounds.
B.

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Northern District of California

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Fraud Claims

Defendant also argues that all of Plaintiff’s causes for action require Plaintiff to show that

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the alleged misrepresentations were false at the time they were made. MSJ at 14 (citing Engalla v.

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Permanente Medical Grp., Inc., 15 Cal. 4th 951, 974 (1997); Judicial Council of Cal. Civ. Jury

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Instructions, Nos. 1900, 1903 (2014); Cal. Civ. Code §§ 1572, 1709, 1710). Plaintiff does not

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dispute that he must show that Defendant’s agents knew or should have known that the

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representations were false at the time they were made. See Opp. at 6–9. Instead, Plaintiff contends

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there is a genuine factual issue for trial. The Court agrees.

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Plaintiff cites sufficient evidence to raise a genuine issue of fact as to Defendant’s alleged

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knowledge of falsity at the time of the representations. More specifically, Plaintiff relies on Rick

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Roberts’ declaration, the District Manager at the time, for Roberts’ statement that Joseph Torrise,

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the Regional Sales Manager, “told Mr. Green the Company would classify Mr. Green’s departure

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from the Company as a leave of absence.” Roberts Decl. at 2. According to Roberts, Torrise failed

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to disclose that human resources had directed Torrise to only rehire Plaintiff with Plaintiff’s

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previous vacation weeks and not Plaintiff’s previous seniority. Id. Plaintiff further notes that

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Torrise himself admits that he had actual knowledge that Plaintiff “would not be able to retain his

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seniority for any other purpose” than vacation. Declaration of Joe Torrise, ECF No. 44-2, ¶ 3. In

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his deposition, Torrise acknowledges he knew that Plaintiff wanted to “get all of his seniority

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back.” Duckworth Decl., Exh. 2 (Torrise Deposition), ECF No. 50, 29:6–8. Moreover, there are

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stark inconsistences between Torrise’s statements and those of Green and Roberts regarding the

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occurrence of certain meetings and the content of those meetings. See, e.g., Torrise Deposition

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37:14–15; Roberts Decl. at 2. Based on this evidence, the Court concludes that there is a genuine

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dispute as to whether Torrise knowingly or negligently made representations regarding Green’s

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seniority that Torrise knew were false at the time. See Anderson, 477 U.S. at 248. Defendant’s

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citations to inconclusive statements by Plaintiff during his deposition are insufficient to show that

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there is an “absence of evidence” supporting Plaintiff’s fraud claims.
The Court therefore denies Defendant’s motion for summary judgment on Plaintiff’s fraud

United States District Court
Northern District of California

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claims as there is a genuine issue of material fact.
California Workers’ Compensation Act

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C.

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Finally, Defendant argues that Plaintiff’s claims are also preempted by the California

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Workers’ Compensation Act. The Court concludes that Plaintiff’s claims are not subject to the

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exclusive remedy rule under the Workers’ Compensation Act and are therefore not preempted.
There is a two-step inquiry to determine whether there is preemption under the California

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Workers’ Compensation Act. First, the court was must determine whether the plaintiff’s injury

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arises in and out of the course of employment. See Shoemaker v. Myers, 52 Cal. 3d 1, 15 (1990).

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Second, “if the injuries did arise out of and in the course of employment, the exclusive remedy

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provisions apply notwithstanding that the injury resulted from the intentional conduct of the

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employer, and even though the employer’s conduct might be characterized as egregious,” unless

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the employer stepped out of its proper role or engaged in conduct of questionable relationship to

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the employment. See id.; see also Lenk v. Total-Western, Inc., 89 Cal. App. 4th 959, 970 (Ct. App.

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2001).

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Case No.:13-CV-04414-LHK
ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

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The parties dispute whether Plaintiff’s injury arises in and out of the course of

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employment. Defendant relies on Spratley v. Winchell Donut House, Inc., 188 Cal. App. 3d 1408,

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1416 (Ct. App. 1987), where the California Court of Appeal held that the plaintiff’s claims that the

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employer fraudulently concealed unsafe working conditions to induce the plaintiff’s employment

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were preempted under the Workers’ Compensation Act. However, Spratley is factually

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distinguishable. In Spratley, the defendant misrepresented the safety of the work site, resulting in

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the plaintiff being assaulted by a third party. Id. The Spratley court noted that employers have a

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duty to provide safe places of employment, and that the Workers’ Compensation Act not only

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included compensation for injuries arising out of unsafe work place conditions, but also
specifically contemplated enhanced compensation in cases involving serious and willful employer

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Northern District of California

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misconduct. Id. at 1411. As a result, the court concluded the plaintiff could not circumvent the

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exclusive remedy rule in light of the nature and cause of her injuries. Id.; see also Lenk, 89 Cal.

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App. 4th at 973. Here, however, Plaintiff was not injured as a result of an unsafe work place

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condition, but rather as a result of Defendant’s alleged misrepresentations regarding the terms

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under which Plaintiff would return to Defendant’s employ.

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The Court finds that Plaintiff’s claims are more akin to the fraudulent inducement claims at

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issue in Lenk v. Total-Western, Inc. In Lenk, another California Court of Appeal held that an

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employer’s misrepresentations intended to induce the plaintiff to become an employee were “not a

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normal part of the employment relationship or a risk reasonably encompassed within the

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compensation bargain.” 89 Cal. App. 4th at 972. The employer in Lenk misrepresented the

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financial stability of the company, the company’s plans to relocate, and the terms of the plaintiff’s

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future promotions. Id. at 973. The Lenk court distinguished Spratley as being particularly animated

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by workplace safety, which “is clearly an issue contemplated by the workers’ compensation

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statutory scheme . . . [and] a normal part of the employment relationship and a risk reasonably

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encompassed within the compensation bargain.” Id. Here, even if Defendant is correct that

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Case No.:13-CV-04414-LHK
ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

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Plaintiff’s emotional distress damages arise, at least in part, based on his termination, the Court

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concludes that the second step of the exclusive remedy rule defeats preemption.

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Misrepresentations about whether Bimbo Bakeries could or would return Defendant to his prior

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seniority are not a “normal part of the employment relationship or a risk reasonably encompassed

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within the compensation bargain.” See id.; see also Lazar v. Superior Court, 12 Cal. 4th 631

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(1996) (holding that misrepresentations designed to induce employment may support recovery of

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tort damages outside of Workers’ Compensation Act); Finch v. Brenda Raceway Corp., 22 Cal.

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App. 4th 547 (Ct. App. 1994) (same). As the Lenk court put it, one would “hope” that fraudulent

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misrepresentations to induce employment would not be a normal part of the employment

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relationship. 89 Cal. App. 4th at 793.
In sum, the Court concludes that Defendant stepped outside of its proper role when it

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Northern District of California

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allegedly made fraudulent representations to induce Green to return to Defendant’s employ. As

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such, Plaintiff’s claims are not subject to the exclusive remedy rule under the California Workers’

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Compensation Act.

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IV.

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CONCLUSION
For the reasons stated above, the Court DENIES Defendant’s motion for summary

judgment.

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IT IS SO ORDERED.

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Dated: January 12, 2015

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______________________________________
LUCY H. KOH
United States District Judge

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Case No.:13-CV-04414-LHK
ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT