Carbajal v. Hayes Management Services, Inc.

Filing 149

MEMORANDUM DECISION AND ORDER. Plaintiff Maria Angelica Angie Carbajals Motion for Summary Judgment Regarding Hayes Managements Counterclaims (Dkt. 130 ) is GRANTED. Defendant Chris Hayes Motion to Bifurcate (Dkt. 129 ) is DENIED. Signed by Judge B Lynn Winmill. (alw)

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UNITED STATES DISTRICT COURT
IN THE DISTRICT OF IDAHO
MARIA ANGELICA “ANGIE”
CARBAJAL,
Plaintiff,

Case No. 4:19-cv-00287-BLW

v.
HAYES MANAGEMENT SERVICE,
INC.; HAYES TAX & ACCOUNTING
SERVICES, INC.; and CHRIS HAYES,

MEMORANDUM DECISION
AND ORDER

Defendants.
HAYES MANAGEMENT SERVICE,
INC.,
Counter-claimant,
vs.
MARIA ANGELICA “ANGIE”
CARBAJAL,
Counter-respondent.

INTRODUCTION
Carbajal filed this action against her former employer, Defendant Hayes
Management Service, Inc., alleging claims for hostile work environment and
retaliation in violation of Title VII and the Idaho Human Rights Act. Carbajal later
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amended her complaint to add as defendants Chris Hayes, Hayes Management’s
president and owner, and Hayes Management Services, Inc., which purchased
Hayes Management’s assets during the pendency of this litigation, as well as to
add a claim for constructive trust against all defendants. Defendant Hayes
Management also asserts counterclaims against Carbajal for breach of an oral,
“undocumented” employment agreement, tortious interference with prospective
economic advantage, and punitive damages. Carbajal alleges the counterclaims are
frivolous and were only filed to retaliate against her.
Before the Court are Defendant Chris Hayes’ Motion to Bifurcate, joined by
Defendant Hayes Management, Inc. (Dkt. 129) and Plaintiff Maria Angelica
“Angie” Carbajal’s Motion for Summary Judgment Regarding Hayes
Management’s Counterclaims (Dkt. 130). The Court has determined oral argument
would not significantly assist the decisional process and will decide the motion
without a hearing. For the reason discussed below, the Court grants Carbajal’s
motion for summary judgment on Hayes Management’s counterclaims and denies
Hayes’ Motion to Bifurcate.
MOTION FOR SUMMARY JUDGMENT
Carbajal worked for Hayes Management from January 2012 until August
2017, when she was terminated. Compl. ¶¶ 8, 28, Dkt. 1. She alleges that Hayes
Management’s president and owner, Chris Hayes, subjected her to unwanted

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sexual comments and other conduct, creating a hostile work environment. Id. ¶¶
39, 40. She further alleges that Hayes retaliated against her for reporting the sexual
harassment and hostile work environment during her employment with Hayes
Management and for filing this lawsuit. Id. ¶¶ 49-51.
After Carbajal filed her original complaint, Hayes Management answered
Carbajal’s complaint and filed three counterclaims: (1) Count One, Breach of
Terms of Employment, of Covant [sic] Not to Compete and of Implied Covenant
of Good Faith and Fair Dealing; (2) Count Two, Tortious Interference with
Prospective Economic Advantage; and (3) Count Three, Punitive Damages for
Oppressive, Malicious and Outrageous Conduct. Carbajal seeks summary
judgment on all three claims, arguing the claims lack any legal or factual basis.
1. Legal Standard
Summary judgment is appropriate where a party can show that, as to any
claim or defense, “there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). One of
the principal purposes of the summary judgment “is to isolate and dispose of
factually unsupported claims . . . .” Celotex Corp. v. Catrett, 477 U.S. 317, 323–24
(1986). It is “not a disfavored procedural shortcut,” but is instead the “principal
tool[ ] by which factually insufficient claims or defenses [can] be isolated and
prevented from going to trial with the attendant unwarranted consumption of

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public and private resources.” Id. at 327. “[T]he mere existence of some alleged
factual dispute between the parties will not defeat an otherwise properly supported
motion for summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247–48 (1986). There must be a genuine dispute as to any material fact—a fact
“that may affect the outcome of the case.” Id. at 248.
The evidence must be viewed in the light most favorable to the non-moving
party, and the Court must not make credibility findings. Id. at 255. Direct
testimony of the non-movant must be believed, however implausible. Leslie v.
Grupo ICA, 198 F.3d 1152, 1159 (9th Cir. 1999). On the other hand, the Court is
not required to adopt unreasonable inferences from circumstantial evidence.
McLaughlin v. Liu, 849 F.2d 1205, 1208 (9th Cir. 1988).
The moving party bears the initial burden of demonstrating the absence of a
genuine dispute as to material fact. Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th
Cir. 2001) (en banc). To carry this burden, the moving party need not introduce
any affirmative evidence (such as affidavits or deposition excerpts) but may simply
point out the absence of evidence to support the nonmoving party's case. Fairbank
v. Wunderman Cato Johnson, 212 F.3d 528, 532 (9th Cir. 2000).
This shifts the burden to the non-moving party to produce evidence
sufficient to support a jury verdict in her favor. Devereaux, 263 F.3d at 1076. The
non-moving party must go beyond the pleadings and show “by her [ ] affidavits, or

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by the depositions, answers to interrogatories, or admissions on file” that a genuine
dispute of material fact exists. Celotex, 477 U.S. at 324. However, the Court is “not
required to comb through the record to find some reason to deny a motion for
summary judgment.” Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026,
1029 (9th Cir. 2001) (quotation omitted). Instead, the “party opposing summary
judgment must direct [the Court's] attention to specific triable facts.” Southern
California Gas Co. v. City of Santa Ana, 336 F.3d 885, 889 (9th Cir. 2003).
2. Discussion
A. Breach of Contract
Hayes Management alleges that “Carbajal was privy to an oral
(undocumented) employment contract with Hayes Management,” which terms
Hayes Management alleges include the “HMS General Rules of Conduct” and the
“Hayes Management Services, Inc. Employee Non-Compete Agreement. Hayes
Management further alleges that Carbajal breached this oral, “undocumented”
contract (1) “by enticing clients to stop using the services of Hayes Management,”
(2) “by soliciting clients of Hayes Management to seek the payroll, tax return
preparation, business consulting, etc. services elsewhere,” and (3) by “encouraging
Zak Warran to form Pearl Professional Services, Inc., on September 11, 2017, in
which [Carbajal] has participated since at least September 22, 2017 through
August 31, 2019.” Counterclaim ¶¶ 74-80, Dkt. 4.

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Under Idaho law, “[t]he elements for a claim for breach of contract are: (a)
the existence of the contract, (b) the breach of the contract, (c) the breach caused
damages, and (d) the amount of those damages.” Mosell Equities, LLC v. Berryhill
& Co., 297 P.3d 232, 241 (Idaho 2013). Hayes Management carries the burden of
proving the existence of a contract and the fact of its breach. O'Dell v. Basabe, 810
P.2d 1082, 1099 (Idaho 1991). Yet, Hayes Management has submitted no evidence
establishing the existence of the “oral (undocumented) contract” with Carbajal or
that she breached the alleged agreement. In fact, Hayes Management submitted no
evidence at all in support of its breach of contract claim but instead only addresses
Carbajal’s legal challenges to its claims – as if Carbajal had merely filed a motion
to dismiss, and Hayes Management could rest merely on its pleadings. But it
cannot.
Federal Rule of Civil Procedure 56(d) requires parties to support their
factual positions concerning a motion for summary judgment by citing evidence in
the record: “[a] party asserting a fact that cannot be or is genuinely disputed must
support the assertion by: (A) citing to particular parts of the materials in the record,
including depositions, documents, electronically stored information, affidavits or
declarations, stipulations (including those made for purposes of the motion only),
admissions, interrogatory answers, or other materials; or (B) showing that the
materials cited do not establish the absence or presence of a genuine dispute, or

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that an adverse party cannot produce admissible evidence to support the fact.” Fed.
R. Civ. P. 56(d). “If a party fails to properly support an assertion of fact or fails to
properly address another party’s assertion of fact as required by Rule 56(c),” Rule
56(e) empowers the Court to simply deem facts not addressed or supported
undisputed and grant summary judgment if, considering those undisputed facts, the
movant is entitled to it. Fed. R. Civ. P. 56(e)(2) & (3).
Here, Hayes Management has failed to submit any evidence to support its
allegations that an oral contract existed or that Carbajal “entic[ed] clients to stop
using the services of Hayes Management,” or that she “solicited” Hayes
Management’s clients to seek payroll or other services “elsewhere,” or that she
encouraged Zak Warran to form Pearl Professional Services, Inc. By contrast,
Carbajal has submitted evidence in support of her motion for summary judgment
affirmatively disputing the allegations. Thus, even assuming such conduct would
constitute a breach of the alleged employment agreement, Hayes Management has
failed to raise a genuine dispute of material fact; as a result, the Court grants
summary judgment on Hayes Management’s counterclaim for breach of the
employment agreement against Carbajal to the extent they rest on these allegations.
To the extent Hayes Management suggests that Carbajal’s taking a position
with Pearl Professional Services – a fact she does not dispute – constitutes a breach
of the alleged covenants not to compete, this claim also fails because Hayes

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Management fails to identify any contractual term that Carbajal breached. The
alleged “Non-Compete Agreement” (again assuming it’s enforceable) specifically
states that “[Hayes Management] does not intend to prevent anyone working with
the same type of business for another employer.” Dkt. 6-3 at 1. Instead, the
agreement says that its “directive…is to stop a former employee of [Hayes
Management] from starting their own business, whether as a sole proprietor,
shareholder in a corporation or partner/member in a partnership or Limited
Liability Company from immediately competing with [Hayes Management] and/or
trying to solicit [Hayes Management] customers. Id. Hayes Management, however,
fails to allege or submit evidence that Carbajal started a competing business but
only that she “participated” in one. Such conduct does not violate the terms of the
alleged noncompete. This claim will therefore be dismissed as well.
B. Breach of the Covenant of Good Faith and Fair Dealing
As part of its breach of contract claim, Hayes Management alleges that
Carbajal breached the covenant of good faith and fair dealing. Idaho law
recognizes a cause of action for breach of an implied covenant of good faith and
fair dealing. Jenkins v. Boise Cascade Corp., 108 P.3d 380, 389 (2005). Such a
covenant is found in all employment agreements, including employment at-will
relationships. Id. at 389–90. The covenant requires the parties to perform, in good
faith, the obligations required by their agreement. Fox v. Mountain W. Elec., 52

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P.3d 848, 855–56 (2002). An action by one party that violates, qualifies or
significantly impairs any benefit or right of the other party under an employment
contract whether express or implied, violates the covenant. Jenkins, 141 Idaho at
243, 108 P.3d at 390.
In this case, Hayes Management, yet again, has failed to submit any
evidence showing that it did not receive the benefits and rights granted to it under
any alleged employment contract with Carbajal. Since Hayes Management fails to
show that Carbajal impaired any rights or benefits to it under the alleged terms of
employment, Hayes Management has no claim for breach of the covenant of good
faith and fair dealing. See Cantwell v. City of Boise, 191 P.3d 205, 214 (2008).
C. Tortious Interference with Prospective Economic Advantage
Hayes Management’s claim for tortious interference with contract also fails.
The elements of such a claim are: (1) The existence of a valid economic
expectancy; (2) knowledge of the expectancy on the part of the interferer; (3)
intentional interference inducing termination of the expectancy; (4) the interference
was wrongful by some measure beyond the fact of the interference itself (i.e. that
the defendant interfered for an improper purpose or improper means); and (5)
resulting damage to the plaintiff whose expectancy has been disrupted. Highland
Enterprises, Inc. v. Barker, 986 P.2d 996, 1004 (1999).

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Hayes Management alleges that it had a “valid economic expectancy from
the productivity of its staff,” as well as a “valid economic expectancy from the sale
of its payroll business (including clientele), then pending.” It further alleges that
Carbajal, aware of these “expectancies,” “intentionally acted to sow seeds of
discontent and discord among the other, remaining staff members of Hayes
Management since at least August 2017, in order to exact the vengeance that she
stated on August 31, 2017,” and that she solicited payroll clients from Hayes
Management. Counterclaim ¶¶ 86-95. But, even assuming that Hayes Management
has stated a valid economic expectancy that would support a claim for tortious
interference with prospective economic advantage (which is seriously
questionable), it again submits no evidence to support this claim or to refute the
evidence submitted by Carbajal. Nothing in the record supports Hayes
Management’s assertion that Carbajal did anything to intentionally “sow seeds of
discontent and discord” among the other Hayes Management staff members or that
Carbajal “spirited away payroll clients from Hayes Management in August 2017
and the 24 ensuing months.” Hayes Management therefore fails to raise a genuine
issue of material fact on this claim as well.
3. Punitive Damages
The Court will also grant summary judgment on Hayes Management’s
“claim” for punitive damages because there is no legal basis for as a stand-alone

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punitive damages claim: “A prayer for punitive damages is not a stand-alone cause
of action, but flows from an underlying cause of action, such as a breach of
contract or a tort, when the conduct of a party meets the threshold level of being
oppressive and outrageous.” Boise Tower Associates LLC v. Washington Capital
Joint Master Trust, Case No. CV-03-141-S-MHW, 2006 WL 1749656, at *12 (D.
Idaho June 22, 2006). Furthermore, under Idaho law, “a party cannot make a claim
for punitive damages in its prayer for relief; rather, the claim must be made by a
pretrial motion to amend.” Doe v. Cutter Biological, a Div. of Miles Inc., 844 F.
Supp. 602, 609 (D. Idaho 1994) (citing Idaho Code § 6–1604(2) (1990)). The claim
for punitive damages is therefore dismissed.
MOTION TO BIFURCATE
1. Background
Nearly three years ago, in February 2020, Hayes Management filed a
renewed motion for summary judgment, seeking dismissal of Carbajal’s Title VII
claims on the grounds that Hayes Management did not have 15 “employees” for 20
or more weeks in 2015 or 2016 and therefore did not meet the definition of an
“employer” under Title VII. The Court denied the summary judgment motion in a
decision entered on June 4, 2020, finding genuine issues of material fact precluded
summary judgment on the issue. Since the Court’s denial of the summary judgment
motion, Carbajal amended her complaint to add as defendants Chris Hayes based

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on alter-ego liability and Hayes Management Services, Inc., which purchased
Hayes Management’s assets during the pendency of this litigation, based on
successor liability, as well as a claim for constructive trust against all defendants.
Chris Hayes, with Hayes Management’s concurrence, now asks the Court to
bifurcate the issues at trial, such that the issue of whether Hayes Management
meets the definition of “employer” under Title VII is tried first—before the jury
hears any other evidence related to Carbajal’s hostile work environment and
retaliation claims, as well as the ancillary claims for alter-ego liability, successor
liability, and constructive trust.
2. Legal Standard
In the normal course of litigation, all claims and issues in a civil action are
presented for resolution in one trial. Rule 42(b), however, empowers courts to
bifurcate a trial for any one of the following reasons: (1) “convenience”; (2) “to
avoid prejudice”; or (3) “to expedite and economize.” Fed.R.Civ.P. 42(b). Under
this rule, a district court has broad discretion to determine whether bifurcation is
appropriate. Sadid v. Idaho State Univ., No. 4:11-CV-00103-BLW, 2013 WL
6073634, at *1 (D. Idaho Nov. 18, 2013) (citing Zivkovic v. S. Cal. Edison Co.,
302 F.3d 1080, 1088 (9th Cir. 2002)). “Absent some experience demonstrating the
worth of bifurcation, separation of issues for trial is not to be routinely ordered.”

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Id. (quoting Fed.R.Civ.P. 42(b) (advisory committee notes to the 1966 amendment)
(cleaned up).
The party seeking bifurcation bears the burden of convincing the Court to
exercise its discretion. Does I-XIX v. Boy Scouts of Am., No. 1:13-CV-00275BLW, 2019 WL 914130, at *1 (D. Idaho Feb. 25, 2019). Factors to consider are
whether separate trials would expedite disposition, conserve judicial resources,
avoid prejudice, and avoid duplication of evidence. See Thorndike ex rel.
Thorndike v. Daimlerchrysler Corp., 220 F.R.D. 6, 7-8 (D. Me. 2004).
3. Discussion
Hayes argues that bifurcation would avoid undue prejudice and promote
judicial economy without causing undue delay as Carbajal can simply pursue her
hostile work environment and retaliation claims under the IHRA in a state forum if
the jury finds that Hayes Management does not meet the definition of an employer
under Title VII. The Court disagrees.
“[B]ifurcation may well be warranted when resolution of a single issue may
be dispositive of the entire case,” Sadid, 2013 WL 6073634, at *1; see also Jinro
Am. Inc. v. Secure Invs., Inc., 266 F.3d 993, 998 (9th Cir.), opinion amended on
denial of reh'g, 272 F.3d 1289 (9th Cir. 2001) (“Under Rule 42(b), the district
court has broad discretion to bifurcate a trial to permit deferral of costly and
possibly unnecessary proceedings pending resolution of potentially dispositive

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preliminary issues.”). Such is not the case here, however. Even if Carbajal fails to
establish that Hayes Management qualifies as an “employer” under Title VII, her
nearly identical hostile work environment and retaliation claims under the IHRA
would still need to be resolved.
Hayes attempts to gloss over this fact by saying that Carbajal can simply
pursue these claims in a state forum. But the dismissal of all federal claims “does
not divest the district court of its power to exercise supplemental jurisdiction
unless those claims were absolutely devoid of merit or obviously frivolous.” Satey
v. JPMorgan Chase & Co., 521 F.3d 1087, 1091 (9th Cir. 2008). Rather,
supplemental jurisdiction allows “courts to handle cases involving state-law claims
in the way that will best accommodate the values of economy, convenience,
fairness, and comity.” Id. (quoting Carnegie–Mellon Univ. v. Cohill, 484 U.S. 343,
351 (1988)) (internal quotation marks and brackets omitted).
In this case, the Court finds that judicial economy, convenience, fairness,
and comity would be best served if the Court were to retain jurisdiction over the
state law claims even if all the federal claims were dismissed in a bifurcated trial.
This case has been pending for three years. Discovery has been completed on all
claims, and the dispositive motion deadline has passed without Hayes Management
seeking summary judgment on Carbajal’s claims under Title VII. All Carbajal’s
claims will therefore be set for trial, and, apart from the 15-employee requirement

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under Title VII, Carbajal’s state law claims under the IHRA are identical to her
federal law claims – meaning the exact same evidence will support both her Title
VII and IHRA claims. In addition, this case had involved significant pretrial
motion practice, and the Court is quite familiar with the claims and the parties.
Under these circumstances, it would undermine rather than promote the values of
economy, convenience, fairness, and comity to remand this case to state court after
a full trial on the 15-employee requirement.
As the Court would retain jurisdiction over Carbajal’s state law claims
regardless of whether Hayes Management prevailed in a first trial on the 15employee issue, none of the Rule 42(b) factors weigh in favor in bifurcation. At
most, bifurcation may mitigate some prejudice to Hayes Management in that
bifurcation would “allow the jury to determine the 15-employee issue untainted by
evidence the jury might hear later as to the sexual harassment claims,” Hayes Br.,
p. 7, Dkt. 129-1. But this is simply the nature of a case involving sexual
harassment claims, and there is nothing about this case that would otherwise
warrant bifurcation. “Jurors routinely serve as impartial factfinders in cases that
involve sensitive, even life-and-death matters,” and, “[i]n those cases, as in all
cases, juries are presumed to follow the court’s instructions.” CSX Transp., Inc. v.
Hensley, 556 U.S. 838, 841 (2009). This is just another routine case involving
some sensitive issues.

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In short, the Court finds that bifurcation will not further the goals set out in
Rule 42(b). Hayes’ motion will therefore be denied.
ORDER
IT IS ORDERED that:
1. Plaintiff Maria Angelica “Angie” Carbajal’s Motion for Summary
Judgment Regarding Hayes Management’s Counterclaims (Dkt. 130) is
GRANTED.
2. Defendant Chris Hayes’ Motion to Bifurcate (Dkt. 129) is DENIED.

DATED: January 17, 2023
_________________________
B. Lynn Winmill
U.S. District Court Judge

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