Chang v. Cashman ( 2024 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 STACY CHANG, Case No. 22-cv-02010-AMO 8 Plaintiff, ORDER RE MOTION FOR SUMMARY 9 v. JUDGMENT AND ALTERNATIVE MOTION FOR PARTIAL SUMMARY 10 CARLOS CASHMAN, et al., JUDGMENT 11 Defendants. Re: Dkt. No. 132 12 13 In this employment action arising out of an alleged failed joint investment venture, 14 Plaintiff Stacy Chang sues Defendants Carlos Cashman, Arrowside Capital, LLC, Arrowside Fund 15 GP, LLC, Arrowside Ventures, LLC, Cashman Family Investments II LLC, and Perseverus LLC1 16 (collectively, “Defendants”) for (1) fraudulent inducement, (2) negligent misrepresentation, 17 (3) misrepresentations in violation of California Labor Code § 970, (4) breach of contract, 18 (5) promissory estoppel, (6) unjust enrichment, (7) failure to pay wages upon separation of 19 employment in violation of California Labor Code §§ 201, 202, and 2926, (8) violation of 20 California Business and Professions Code § 17200 (the “UCL”), and (9) failure to reimburse 21 expenses and losses in violation of California Labor Code § 2802. ECF 109 (“SAC”) ¶¶ 87-144. 22 In connection with her Labor Code claims, Chang also seeks related statutory penalties under 23 Sections 203, 210, and 972 and civil penalties under the Private Attorneys General Act of 2004, 24 California Labor Code §§ 2698, et seq. (“PAGA”). Id. ¶¶ 108, 111, 130-131, 133, 144. 25 Defendants move for summary judgment, arguing that all of Chang’s causes of action fail. 26 ECF 132-1 (“MSJ”) at 6. Alternatively, Defendants seek partial summary judgment on two issues 27 1 specific to two of Chang’s Labor Code claims: first, that even if Chang prevailed on the merits of 2 her seventh cause of action for failure to pay wages upon separation, she would not be entitled to 3 penalties under Labor Code §§ 203 and 210; second, that even if Chang prevailed on her UCL 4 claim, she is not entitled to attorney’s fees. Id. Chang opposes and raises objections to 5 Defendants’ reply evidence. ECF 146-1 (“Opp.”); ECF 158 (“Objs.”). 6 A. Legal Standard 7 A party may move for summary judgment on a “claim or defense” or “part of [a] claim or 8 defense.” Fed. R. Civ. P. 56(a). Summary judgment is appropriate when there is no genuine 9 dispute as to any material fact, and the moving party is entitled to judgment as a matter of law. Id. 10 The party seeking summary judgment bears the initial burden of informing the court of the basis 11 for its motion and identifying those portions of the pleadings and discovery responses that 12 demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 13 317, 323 (1986). Material facts are those that might affect the outcome of the case. Anderson v. 14 Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is “genuine” if there 15 is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. Id. 16 Where the moving party will have the burden of proof at trial, it must affirmatively 17 demonstrate that no reasonable trier of fact could find other than for the moving party. 18 Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). On an issue where the 19 nonmoving party will bear the burden of proof at trial, the moving party may carry its initial 20 burden of production by submitting admissible “evidence negating an essential element of the 21 nonmoving party’s case,” or by showing, “after suitable discovery,” that the “nonmoving party 22 does not have enough evidence of an essential element of its claim or defense to carry its ultimate 23 burden of persuasion at trial.” Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 24 1099, 1106 (9th Cir. 2000); see also Celotex, 477 U.S. at 325 (moving party can prevail merely by 25 pointing out to the district court that there is an absence of evidence to support the nonmoving 26 party’s case). 27 When the moving party has carried its burden, the nonmoving party must respond with 1 56(c), (e). But disputed facts must be material – the existence of only “some alleged factual 2 dispute between the parties will not defeat an otherwise properly supported motion for summary 3 judgment[.]” Anderson, 477 U.S. at 247-48. When deciding a summary judgment motion, a court 4 must view the evidence in the light most favorable to the non-moving party and draw all 5 justifiable inferences in its favor. Id. at 255; Hunt v. City of Los Angeles, 638 F.3d 703, 709 (9th 6 Cir. 2011). However, when a non-moving party fails to produce evidence rebutting the moving 7 party’s showing, then an order for summary adjudication is proper. Nissan Fire, 210 F.3d at 1103 8 (“If the nonmoving party fails to produce enough evidence to create a genuine issue of material 9 fact, the moving party wins the motion for summary judgment.”). The court’s function on a 10 summary judgment motion is not to make credibility determinations or weigh conflicting evidence 11 with respect to a disputed material fact. See T.W. Elec. Serv., Inc., v. Pac. Elec. Contractors 12 Ass’n, 809 F.2d 626, 630 (9th Cir. 1987). 13 B. Analysis 14 With the above framework in mind, the Court first addresses Chang’s objections to 15 portions of Defendants’ reply before turning to the merits of Defendants’ summary judgment 16 motion. 17 1. Objections to Reply Evidence 18 When a party “raises a new argument or presents new evidence in a reply brief, a court 19 may consider these matters only if the adverse party is given an opportunity to respond.” Banga v. 20 First USA, NA, 29 F. Supp. 3d 1270, 1276 (N.D. Cal. 2014) (citations omitted). However, 21 “ ‘[e]vidence submitted in direct response to evidence raised in [the preceding brief] . . . is not 22 new.’ ” In re Cathode Ray Tube (CRT) Antitrust Litig., No. C-07-5944 JST, 2016 WL 11505721, 23 at *3 (N.D. Cal. Mar. 9, 2016) (quoting In re ConAgra Foods, Inc., 90 F. Supp. 3d 919, 955 (C.D. 24 Cal. 2015) (modifications in original)). “Moreover, when new evidence is presented to the court 25 ‘[t]he opportunity for rebuttal . . . need not be in writing; an opportunity for oral rebuttal may be 26 sufficient.’ ” Id. (quoting Gray v. Cnty. of Riverside, No. EDCV 13-00444-VAP (OPx), 2014 WL 27 5304915, at *15 n.7 (C.D. Cal. Sept. 2, 2014)). 1 file a sur-reply in response.2 Objs. at 1. She contends that “[w]hile Defendants did not include a 2 new affidavit or cite documents not previously identified as part of their Reply, they make several 3 factual assertions without any citations that are equivalent of presenting new evidence.” Id. at 2. 4 Chang describes the unsupported factual assertions as pertaining to two topics: first, whether Tom 5 Copeman, who initially approached Chang about working with Defendants, could legally act on 6 Cashman’s behalf and, if so, when any such agency relationship arose; second, whether Chang 7 expected remuneration for her work and qualifies as an employee under California law. See id. 8 Chang’s objections are OVERRULED for two reasons. First, the arguments Defendants 9 raise on reply are not “new.” See In re Cathode Ray Tube (CRT) Antitrust Litig., 2016 WL 10 11505721, at *3. Defendants’ assertions about whether Copeman had authority to act on 11 Cashman’s behalf respond to Chang’s own unsupported contention that “Defendants do not 12 dispute that Cashman is responsible for Copeman’s actions. . . .” Opp. at 22 n.5. Similarly, 13 Defendants’ contentions that Chang does not meet the definition of an employee respond to her 14 arguments that she does. See id. at 26-27. 15 Second, in asserting her objections, Chang ignores that Rule 56 does not permit parties to 16 rely on bare assertions at the summary judgment stage. Rule 56(c)(1) provides that: 17 A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: 18 (A) citing to particular parts of materials in the record, 19 including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for 20 purposes of the motion only), admissions, interrogatory answers, or other materials; or 21 (B) showing that the materials cited do not establish the 22 absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact. 23 Fed. R. Civ. P. 56(c)(1). In keeping with this directive, the Court does not credit unsupported 24 25 2 The Court notes that Chang’s request for a sur-reply is procedurally improper. One of the cases Chang cites in her objections – Reyes v. Fed. Express Corp., No. 23-CV-00693-AMO, 2023 WL 26 4183473, at *5 (N.D. Cal. June 23, 2023) – makes it clear that an administrative motion pursuant to Civil Local Rule 7-11 is the proper vehicle for seeking leave to file a sur-reply. Chang has not 27 done so here, and her request for a sur-reply, even if properly directed at “new” arguments, would 1 assertions of fact in ruling on the pending motion for summary judgment. Nor does the Court 2 credit the evidentiary citations Chang offers with her objections to rebut the unsupported 3 assertions she challenges. See Objs. at 3-4. For this reason, Chang’s objections are moot. 4 Having resolved Chang’s evidentiary objections, the Court now turns to the merits of 5 Defendants’ motion. Because each side proffers its own version of the relevant facts, the Court 6 focuses on the specific facts that, in the context of each cause of action Chang asserts, either 7 present a genuine dispute of material fact that precludes summary judgment in Defendants’ favor 8 or entitle Defendants to judgment as a matter of law. The Court begins with Chang’s first cause of 9 action. 10 2. Fraudulent Inducement 11 Chang’s first cause of action is for fraudulent inducement. SAC ¶¶ 87-94. To prevail on 12 this claim, Chang must prove the following elements: “(a) misrepresentation (false representation, 13 concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., 14 to induce reliance; (d) justifiable reliance; and (e) resulting damage.” Lazar v. Superior Ct., 12 15 Cal. 4th 631, 638 (1996) (citations omitted). 16 Defendants argue that Chang fails to satisfy each of these elements. MSJ at 19-21. First, 17 they contend that Chang has failed to “demonstrate that any misrepresentations were made about 18 the prospect of a partnership position at a venture fund because the parties knew that any potential 19 partnership position was contingent on a venture fund being raised, which was never guaranteed.” 20 Id. at 19. Next, Defendants argue that even if such misrepresentations were made, “there is simply 21 no evidence that the offer was a misrepresentation with the requisite level of intent . . . . ” Id. 22 Defendants further contend that Chang cannot demonstrate Defendants intended to induce reliance 23 or that such any reliance by Chang was reasonable. Id. at 17, 20. Finally, Defendants argue that 24 Chang cannot show damages.3 Id. at 20. 25 3 Defendants mount an across-the-board challenge to damages, arguing that, as to all claims, 26 Chang has suffered no damages. MSJ at 21. This argument is not persuasive. At oral argument, Defendants conceded that “it’s essentially a damages issue more than a summary judgment issue.” 27 The Court therefore leaves it to the jury to determine what amount of damages, if any, Chang has 1 Chang sets forth the following contrary facts in her declaration.4 With respect to the 2 representations made, she declares that “Thomas Copeman directly promised [her] a partnership 3 position in the venture capital arm of the Arrowside investment platform over Zoom in June 4 2021.” ECF 147-1 (“Chang Decl.”) ¶ 8. That promise “was reiterated and much of the fund 5 operations agreed upon at the September 22, 2021 in-person meeting,” at which Copeman, 6 Cashman, and Chang were present. Id. She “was to be compensated with salary and carry.” Id. 7 Chang “agreed to take the partnership position at Arrowside at the September 22, 2021 meeting.” 8 Id. ¶ 10. 9 During that meeting, Cashman also “assured [Chang] the fund would be raised and 10 promised anchor funding, with the only contingency being that his anchor funding was reliant on 11 his anticipated secondaries transaction in connection with the Series D funding found for his 12 company, Thrasio.” Id. ¶ 9. According to Chang, Cashman received funds from that transaction 13 “a few weeks later as anticipated.” Id. 14 This, combined with the examples Chang raised during oral argument, including the 15 December 16, 2021 email in which Cashman tells Copeman that he failed to communicate to 16 Chang that the potential venture was not set in stone, instead pitching it to Chang as “her next 17 thing[;]” communications in which Cashman held Chang out as a partner in Arrowside; and the 18 November 11, 2021 text in which Chang informs Copeman that she is resigning, to which 19 Copeman responds with enthusiasm – present a genuine dispute for trial. “Intent is ‘always a 20 question of fact’ under California law[,]” see Copart, Inc. v. Sparta Consulting, Inc., 277 F. Supp. 21 3d 1127, 1151 (E.D. Cal. 2017), and Chang has presented sufficient evidence from which a jury 22 23 damages based on the statement that she was not leaving anything on the table by leaving Founder’s Fund, that is disputed. In her declaration, Chang states: “I did not tell Defendants I was 24 leaving no money on the table when I resigned from Founders Fund to join Arrowside.” Chang Decl. ¶ 6. 25 4 The Court rejects Defendants’ contention that Chang’s declaration is a sham affidavit that must 26 be disregarded. See Yeager v. Bowlin, 693 F.3d 1076, 1080 (9th Cir. 2012) (instructing that “the sham affidavit rule should be applied with caution because it is in tension with the principle that 27 the court is not to make credibility determinations when granting or denying summary 1 may find that Defendants acted with intent to defraud. See, e.g., Swafford v. IBM Corp., 408 F. 2 Supp. 3d. 1131, 1146 (N.D. Cal. 2019) (finding a genuine dispute of material fact as to whether 3 the defendant made certain representations about its compensation structure with the intent to 4 defraud where circumstantial evidence showed that defendant would not be able to recruit sales 5 representations if the defendants had been truthful about capping commission). The 6 reasonableness of Chang’s reliance is also a matter reserved for the jury. See id. at 1146. 7 Accordingly, Defendants’ motion for summary judgment is DENIED as to Chang’s first cause of 8 action for fraudulent inducement. 9 3. Negligent Misrepresentation 10 Chang’s second cause of action is for negligent misrepresentation. SAC ¶¶ 95-102. To 11 prevail on this claim, Chang must prove: “ ‘(1) a misrepresentation of a past or existing material 12 fact, (2) without reasonable grounds for believing it to be true, (3) with intent to induce another’s 13 reliance on the fact misrepresented, (4) ignorance of the truth and justifiable reliance thereon by 14 the party to whom the misrepresentation was directed, and (5) damages.’ ” Colgate v. JUUL Labs, 15 Inc., 345 F. Supp. 3d 1178, 1195 (N.D. Cal. 2018) (quoting Fox v. Pollack, 181 Cal. App. 3d 954, 16 962 (1986)). 17 As they did in connection with Chang’s fraudulent inducement claim, Defendants argue 18 that Chang cannot establish any of the above elements. MSJ at 17-21. The negligent 19 misrepresentation claim survives for the same reason the fraudulent inducement claim does. Even 20 if a jury does not find that Defendants acted with the scienter required for a fraudulent inducement 21 claim, the record in this case, and the December 16 email in particular, may lead a reasonable jury 22 to conclude that Defendants nonetheless made misrepresentations without reasonable grounds for 23 believing them to be true. See Golden Gate Way, LLC v. Enercon Servs., Inc., 572 F. Supp. 3d 24 797, 827 (N.D. Cal. 2021) (explaining that “[t]he elements of a negligent misrepresentation . . . are 25 the same as those of actual fraud, except that there is no scienter requirement[]”). Accordingly, 26 Defendants’ motion for summary judgment is DENIED as to Chang’s second cause of action for 27 negligent misrepresentation. 1 4. Labor Code § 970 2 Chang’s third cause of action is for misrepresentations made in violation of California 3 Labor Code § 970. SAC ¶¶ 103-111. In connection with the alleged violation, Chang seeks 4 double damages under Labor Code § 972 and civil penalties under PAGA.5 SAC ¶¶ 110-111. 5 Section 970 prohibits individuals from “directly or indirectly . . . influenc[ing], 6 persuad[ing], or engag[ing] any person to change from . . . any place outside to any place within 7 the State, . . . for the purpose of working in any branch of labor, through or by means of 8 knowingly false representations, whether spoken, written, or advertised in printed form[.]” 9 S.S. v. Ali, No. 3:23-CV-05074-JSC, 2024 WL 150728, at *9 (N.D. Cal. Jan. 11, 2024) (quoting 10 Cal. Lab. Code § 970). 11 Defendants argue that they are entitled to summary judgment on Chang’s Section 970 12 claim for two reasons. MSJ at 19-20. First, Chang cannot establish that the requisite 13 misrepresentation was made. Id. at 19. Second, Chang cannot show that she was required to 14 relocate her residence. Id. 15 In opposition, Chang offers no evidence of any relocation of residence. See generally Opp. 16 Instead, she contends: 17 Defendants induced Plaintiff to temporarily change her location by traveling from San Francisco to other places in California, Boston, 18 and New York on behalf of Arrowside. MSJ at 8, 15. That Plaintiff combined certain trips for Arrowside with personal meetings does 19 not negate the fact that Defendants induced her to travel. For example, when Defendants informed Plaintiff of her ouster, Plaintiff 20 was in New York to meet with potential LP investors on behalf of Arrowside, a trip Copeman approved and encouraged. Ex. VV. 21 22 5 “PAGA provides for civil penalties for various Labor Code violations and authorizes ‘aggrieved employees, acting as private attorneys general, to recover [those] penalties.’ ” Estrada v. Royalty 23 Carpet Mills, Inc., 15 Cal. 5th 582, 598-99 (2024) (quoting Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal. 4th 348, 379 (2014), abrogated in part on other grounds by Viking River Cruises, 24 Inc. v. Moriana, 596 U.S. 639 (2022)) (modifications in original). Those penalties are “$100 for any initial violation, and $200 for each subsequent violation per pay period.” Taylor v. Interstate 25 Grp., LLC, No. 15-CV-05462-YGR, 2016 WL 861020, at *5 (N.D. Cal. Mar. 7, 2016) (citing Cal. Lab. Code § 2699(f)(2)). The “penalties recovered on a PAGA claim are split between the state 26 and aggrieved employees.” Estrada, 15 Cal. 5th at 599. “[I]f the representative plaintiff prevails, the aggrieved employees are statutorily entitled to 25% of the civil penalties recovered,” plus 27 reasonable attorney’s fees and costs, and the state labor law enforcement agency “is entitled to 1 Opp. at 30. 2 The type of temporary business travel Chang describes is not sufficient to establish a 3 violation of Section 970 as a matter of law. The California Supreme Court has explained that the 4 statute covers “temporary as well as permanent relocation of residence, as contrasted with a mere 5 change in the site of employment.” See Collins v. Rocha, 7 Cal. 3d 232, 239 (1972) (emphasis 6 added). Absent evidence of such a relocation, Chang’s Section 970 claim is not viable. 7 See Asnaashari v. PNY Techs., Inc., No. C 13-1308 PJH, 2013 WL 2403605, at *2 (N.D. Cal. May 8 31, 2013) (applying Collins and granting motion to dismiss because “even if for a short duration, 9 section 970 still requires a relocation of residence, and not merely a site visit[]”); see also Stevens 10 v. Thomas Keller Rest. Grp., No. C-09-0622 EMC, 2009 WL 3841879, at *3 (N.D. Cal. Nov. 17, 11 2009) (stating, in deciding a motion to dismiss, that the purpose of Section 970 “is protecting 12 employees who have been induced to move[]”) (internal quotations omitted). 13 The sole case Chang cites in support of a contrary conclusion – Miller v. Unified Sci., LLC, 14 No. 3:19-cv-02004-BEN-DEB, 2020 WL 6161634 (S.D. Cal. Oct. 20, 2020) – is both 15 procedurally and factually inapposite. In that case, the plaintiff’s claim under Section 970 16 survived the defendants’ motion to dismiss. Id. at *4-5. The plaintiff plausibly alleged that 17 although he was hired to fill a position based in California, he was induced to go to Wisconsin for 18 a project then told he would have to stay there because the position in California was no longer 19 available. Id. Chang has brought forth no comparable facts here. 20 For the reasons explained above, Defendants’ motion for summary judgment is 21 GRANTED as to Chang’s third cause of action for violation of California Labor Code § 970. 22 5. Breach of Contract 23 Chang’s fourth cause of action is for breach of contract. SAC ¶¶ 112-116. To prevail on 24 this claim, Chang must prove: “(1) existence of the contract; (2) plaintiff’s performance or excuse 25 for nonperformance; (3) defendant’s breach; and (4) damages to plaintiff as a result of the breach.” 26 CDF Firefighters v. Maldonado, 158 Cal. App. 4th 1226, 1239 (2008) (citation omitted). 27 Defendants argue that Chang’s breach of contract claim fails because she cannot 1 contingencies and ambiguities,” and that essential terms – such as the fund’s carry structure and 2 salary – “were not agreed upon.” MSJ at 15-16. 3 Chang offers contrary evidence. According to her declaration, she was promised a 4 partnership position in Arrowside in September 2021, and she accepted. Chang Decl. ¶¶ 8, 10. 5 The only contingency was that Cashman’s anchor funding was dependent on a transaction 6 involving one of his company’s. Id. ¶ 9. That transaction proceeded as planned, and Cashman 7 received the funds as anticipated. Id. At deposition, Chang testified that Cashman approved a 8 salary of $225,000 and carried interest of 25%, along with the fund’s structure. Chang Dep. 9 128:8-12; 154:8-156:17; see also Chang Decl. ¶ 8 (promised compensation included salary and 10 carry). 11 It is not for the Court to weigh this conflicting evidence but for the jury to determine which 12 account to believe. Accordingly, Defendants’ motion for summary judgment is DENIED as to 13 Chang’s fourth cause of action for breach of contract. 14 6. Promissory Estoppel 15 Chang’s fifth cause of action is for promissory estoppel. SAC ¶¶ 117-120. To recover 16 under a theory of promissory estoppel, Chang must prove the following elements: “(1) a promise 17 clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; 18 (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel 19 must be injured by [such] reliance.” Flintco Pac., Inc. v. TEC Mgmt. Consultants, Inc., 1 Cal. 20 App. 5th 727, 734 (2016) (citations omitted; modification in original). 21 Defendants argue that Chang cannot establish that there was a clear and unambiguous 22 promise, that Chang reasonably relied on such a promise, or that she suffered damages as a result. 23 MSJ at 15-16, 17, 21. Defendants point to Copeman’s deposition testimony in support. He 24 testified that he, Chang, and Cashman “started looking at deals together in the summer of 2021 25 while everybody had their day jobs exploring the possibility of what-ifs and raising a fund and 26 seeing if the group – the collective enjoyed working together.” ECF 132-2 (“Manousos Decl.”) 27 ¶ 5; ECF 132-4 (“Copeman Dep.”) at 10:15-20. He also testified that he could “recall and say 1 couldn’t “recall anything specifically, everybody sitting around a group and discussing those 2 || things specifically.” Id. at 16:20-17:9. 3 Defendants also rely on a portion of Chang’s deposition testimony, quoted below:°® 4 He [Cashman] told me that the -- when we met on September 22nd, 5 he said that the capital that was going to be associated with funding this platform was going to be directly connected from the Series D 6 Thrasio round. And he believed -- I mean, I -- I remember very distinctly, like, nothing is done until it’s done, but we are, like, 99 7 percent there. But he’s like, you understand there’s, like -- you g know, it’s not done until it’s, like, wired. And I was like, got it. 9 Manousos Decl. §] 3; ECF 132-3 (“Chang Dep.”) at 27:5-14. In addition, Defendants point to a 10 || text chain between Chang to Cashman from December 2021: Ping Chelsea and set up time to chat. 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I've been impressed with what you've done. | just 5 ee cee regular fund right now and raising for that. □□ Pietsch] 19 ACER eR CM UMsies Micrsm (sls) RUT ie Rect enn Tali] Elie Rciev mile tay y-t-1 melee elimi ee UT □□ oe) ela cd Cer st=) OOM creer] RUM □□□ UT mae diel (mel Me UT ae | elem 20 12/16/21, 10:04. AM 2 ] CAEL LCae (ele rch 1247/21, 3:35 PM 22 Liked “Thank you for taking the time yesterday, it was much appreciated. 23 1 sane a recap via email and look forward to your thoughts. Thanks: again’ 24 25 26 07 ® Chang disputes whether Defendants characterize her testimony correctly. The Court need not decide which characterization is correct. It is for the jury to decide which version of the disputed 28 events is credible. See Chan v. ArcSoft, Inc., No. 19-CV-05836-JSW, 2023 WL 8260886, at *14 (N.D. Cal. Nov. 29, 2023). 44 1 Manousos Decl. ¶ 21; ECF 132-18 (“December 2021 Chain”) at 2. 2 In response, Chang offers facts from which a reasonable jury could decide in her favor. 3 Chang declares that she was promised a partnership position in Arrowside in September 2021. 4 Chang Decl. ¶ 8. In October 2021, she told Cashman and Copeman that she would be giving 5 notice to her prior employer. Id. ¶ 11. She tendered that notice to her prior employer on 6 November 11, 2021, and her position there ended on November 30, 2021. Id. She would not have 7 left that position “except for a step up to secure position as a partner at a venture capital fund[,]” 8 which she had communicated to Copeman when he first approached her. Id. ¶ 6. 9 Whether Chang’s actions were reasonable given the nature of the promised partnership is 10 for a jury to decide. See Flintco Pac., Inc., 1 Cal. App. 5th at 734 (explaining that “whether the 11 reliance was reasonable is a question of fact unless reasonable minds could reach only one 12 conclusion based on the evidence, in which case the question is one of law[]”). It is also for the 13 jury to decide whether Defendants ever made promise of a partnership position as Chang 14 contends, and if so, whether it was as concrete as Chang believed it to be. See Zetwick v. Cnty. of 15 Yolo, 850 F.3d 436, 441 (9th Cir. 2017) (instructing that “where evidence is genuinely disputed on 16 a particular issue – such as by conflicting testimony – that issue is inappropriate for resolution on 17 summary judgment[]”) (internal quotations and citation omitted). Accordingly, Defendants’ 18 motion for summary judgment is DENIED as to Chang’s promissory estoppel claim. 19 7. Unjust Enrichment 20 Chang’s sixth cause of action is for unjust enrichment. SAC ¶¶ 121-125. To prevail on 21 this claim, Chang must prove that: “defendant[s] received and unjustly retained a benefit at the 22 [her] expense.” ESG Cap. Partners, LP v. Stratos, 828 F.3d 1023, 1038 (9th Cir. 2016) (citation 23 omitted). 24 /// 25 /// 26 /// 27 /// 1 As to this claim, Defendants argue: 2 Initially, Plaintiff vastly overstates and speculates on the “significant monetary benefit” her efforts conferred upon Defendants. 3 “Arrowside” as allegedly conceptualized was never created, so to the extent Plaintiff alleges that she worked to found “Arrowside,” 4 the efforts were for naught. What remains is only a handful of investments for which Plaintiff provided feedback, and a few 5 investments funded exclusively by Cashman that Plaintiff helped to source. However, those investments in early stage companies (many 6 of which fail) have not realized, and may never realize, any return, much less a significant return to which Plaintiff would have been 7 entitled carry had the venture fund been raised. The retention of such benefits, to the extent they even exist, is clearly not unjust 8 particularly where Cashman made the investments with his own capital – bearing the full risk of the investment – and offered 9 Plaintiff compensation for her time and carry for the deals she was involved with, which she declined. See Ex. E at 227:14-21, 234:9- 10 21; Ex. V at 29:1-11. Plaintiff also cannot demonstrate that either Arrowside Ventures’ or Perseverus’ investments were made due to 11 any unique “investment thesis” created by Plaintiff. Accordingly, Plaintiff cannot state a claim for unjust enrichment. 12 13 MSJ at 22.7 14 These arguments do not establish that, as a matter of law, Defendants received no benefit 15 or that they have not retained a benefit at Chang’s expense. To the contrary, the evidence in the 16 record presents a genuine dispute for trial. Chang declares that “[w]hile working for Arrowside, 17 [she] evaluated and passed on numerous investments on behalf of Cashman and Ventures . . . .” 18 Chang Decl. ¶ 12. She “spent more than 400 hours working for Arrowside in 2021.” Id. She also 19 worked on economic models for Arrowside, which she sent to Cashman at his request (made 20 during an email exchange) after the venture fell apart in December 2021. December 2021 Text 21 Chain at 2. In that same exchange, Cashman told Chang that he had been “impressed with what 22 [Chang had] done.” Id. A reasonable jury may conclude that the work Chang performed 23 conferred a benefit on Defendants and that by failing to compensate Chang for that work, they 24 have unjustly retained a benefit at her expense. Accordingly, Defendants’ motion for summary 25 judgment is DENIED as to Chang’s sixth cause of action for unjust enrichment. 26 /// 27 1 8. Failure to Pay Wages Upon Separation 2 Chang’s seventh cause of action is for failure to pay all wages due upon separation of 3 employment, in violation of California Labor Code §§ 201, 202, and 2926. SAC ¶¶ 126-133. 4 Chang also seeks statutory penalties under Labor Code §§ 203 and 210 and civil penalties under 5 PAGA. Id. ¶¶ 130, 131, 133. The Court first addresses the parties’ arguments with respect to the 6 underlying wage claim before turning to their arguments about related penalties. 7 a. Whether Chang was an employee 8 Defendants first argue that Chang cannot establish that she was their employee. MSJ at 9 16-17. They contend: 10 [T]here was no understanding between the parties that an employment relationship was being created (and, indeed, Plaintiff 11 retained her job at FF for virtually the entire time), there was no written employment agreement, no agreement about salaries and the 12 fund carry structure, and the parties were not anywhere near close to raising the fund for which she purportedly would have worked. 13 14 MSJ at 17. In support of this argument, Defendants point to portions of Chang’s deposition 15 testimony, which confirms that there never was “any kind of written employment agreement with 16 Arrowside Ventures” and that, by December 10, 2021, there was no final written agreement 17 reached “as to what the carry structure would be overall for Arrowside Ventures[.]” Manousos 18 Decl. ¶ 3; Chang Dep. at 25:5-8, 31:7-13. Defendants also point to a draft budget Cashman 19 redlined, presumably to show that relevant documents had not been finalized. Manousos 20 Decl. ¶ 15; ECF 132-12 (“Redlined Budget”). Defendants further rely on the opinion of their 21 industry expert, Jim Timmins, who opines that the parties did not have the foundational 22 documents necessary to approach institutional investors for funding for their venture. Manousos 23 Decl. ¶ 12; ECF 132-9 at 24, 28-31. 24 Defendants also argue, without citation to the record or any legal authority, that they “did 25 not employ or exercise control over [Chang’s] wages, hours, or working conditions.” MSJ at 17. 26 They describe Chang’s “efforts to participate in the potential raising of a fund” as being “done in 27 the spirit of entrepreneurship and a potential business partnership, as happens all of the time in the 1 during her free time while she maintained full-time employment.” Id. 2 Defendants’ arguments fail. “[T]he ABC test remains the operative test for determining 3 whether a worker is an employee for purposes of the Labor Code, the Unemployment Insurance 4 Code, and all wage orders.” Becerra v. McClatchy Co., 69 Cal. App. 5th 913, 935 (2021) 5 (citations omitted). That test is codified in Labor Code § 2775, which provides, in part: 6 (b)(1) For purposes of this code and the Unemployment 7 Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services 8 for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all 9 of the following conditions are satisfied: (A) The person is free from the control and direction of the 10 hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact. 11 (B) The person performs work that is outside the usual course of the hiring entity’s business. 12 (C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that 13 involved in the work performed. 14 Cal. Lab. Code § 2775(b)(1). “The ABC test places the burden on the hiring entity to establish 15 that a worker is an independent contractor, and the hiring entity’s failure to establish any one of 16 the ABC factors will be sufficient in itself to establish that the worker is an employee . . . .” Olson 17 v. California, 104 F.4th 66, 73 (9th Cir. 2024), cert. denied, --- S.Ct. ----, 2024 WL 4486406 (U.S. 18 Oct. 15, 2024). 19 Defendants’ arguments, which are devoid of legal authority or citation to the record, do not 20 satisfy this burden. Accordingly, because Defendants seek summary judgment on Chang’s claim 21 under California Labor Code §§ 201, 202, and 2926 on the basis that Chang has not shown she is 22 an employee, their motion is DENIED. 23 Having denied Defendants’ motion for summary judgment as to Chang’s wage claim, the 24 Court now turns to Defendants’ alternative motion for partial summary judgment on the issue of 25 whether Chang would be entitled to recover waiting time penalties under Labor Code § 203 and 26 statutory penalties under Labor Code § 210 if she prevailed on her underlying claim. The Court 27 addresses each issue in turn. 1 b. Penalties under Labor Code § 203 2 California Labor Code § 203 states: 3 If an employer willfully fails to pay, without abatement or reduction, in accordance with Sections 201, 201.3, 201.5, 201.6, 201.8, 201.9, 4 202, and 205.5, any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the 5 due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 6 days. 7 Cal. Lab. Code § 203(a). The provision allows the court to: 8 award an employee who is discharged or who quits a penalty equal to up to 30 days’ worth of the employee’s wages if an employer 9 willfully fails to pay the employee his full wages immediately (if discharged) or within 72 hours (if he or she quits). It is called a 10 waiting time penalty because it is awarded for effectively making the employee wait for his or her final paycheck. A waiting time 11 penalty may be awarded when the final paycheck is for less than the applicable wage – whether it be the minimum wage, a prevailing 12 wage, or a living wage. 13 Diaz v. Grill Concepts Services, Inc., 23 Cal. App. 5th 859, 867 (2018) (internal quotations, 14 citations, and modifications omitted). “Under long established law, an employer cannot incur civil 15 or criminal penalties for the willful nonpayment of wages when the employer reasonably and in 16 good faith disputes that wages are due.” Naranjo v. Spectrum Sec. Servs., Inc., 15 Cal. 5th 1056, 17 1065 (2024) (citations omitted). 18 Defendants argue that such a good faith dispute exists here because “there was no 19 employment relationship between Defendants and [Chang], which is supported by the lack of an 20 employment agreement, [Chang’s] full-time employment during nearly the entirety of the period 21 relevant to this Action, and [Chang’s] acknowledgment that there was never a commitment to 22 raising a fund in which she might be a partner.” MSJ at 25. In their reply, Defendants add that 23 “there is no dispute that the compensation Plaintiff claims she is owed is subject to a good faith 24 legal and factual dispute. . . . There is substantial evidence in this case that Plaintiff did not, and 25 has never, met the legal definition of an employee, or, an individual providing services for 26 remuneration to an entity or individual.” ECF 155 (“Reply”) at 14-15. 27 These arguments fail. Defendants’ assertion that a good faith dispute exists is insufficient. 1 defense that triggers the good faith exception. Otherwise, the vast majority of defendants would 2 escape liability for waiting time penalties, simply by disputing the facts.” Cuc Dang v. Sutter’s 3 Place, Inc., No. C-10-02181 RMW, 2012 WL 2977223, at *7 (N.D. Cal. July 19, 2012). 4 Moreover, the evidence in the record undermines Defendants’ contention. Plaintiffs point to a 5 December 16, 2021 email, in which Cashman tells Copeman, “I feel like we made a commitment 6 to Stacy, she banked on that, and we should stand by it. So please figure something out here.” 7 ECF 148 (“Zitrin Decl.”) ¶ 27; ECF 149-19 (“Dec. 16 Email.”) at 2. At deposition, Cashman also 8 testified that he approved a proposal to Chang that provided three months of backpay. Manousos 9 Decl. ¶ 10; ECF 132-7 (“Cashman Dep.”) at 22:9-21. In a text exchange from December 2021, 10 Cashman also told Chang that he would make sure she was part of all the deals she had 11 participated in. December 2021 Chain at 2. 12 Viewing this evidence in the light most favorable to Chang, a jury could conclude that 13 there was no good faith dispute as to whether Defendants owed Chang her wages and as a result, 14 that she should recover waiting time penalties under Section 203. See Danko v. O’Reilly, No. 15 CGC-09-495203, 2012 WL 3279431 (Cal. Super. Apr. 12, 2012) (finding that the defendant’s 16 acknowledgment that the plaintiff was entitled to a bonus raised a trial issue on whether the 17 plaintiff was entitled to waiting time penalties). Accordingly, Defendants’ motion for partial 18 summary judgment as to Chang’s potential entitlement to waiting time penalties under Section 203 19 is DENIED. 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 1 2 c. Penalties under California Labor Code § 210 3 California Labor Code § 210 provides that: 4 (a) In addition to, and entirely independent and apart from, any other penalty provided in this article, every person who fails to pay the 5 wages of each employee as provided in Sections 201.3, 204, 204b, 204.1, 204.2, 204.11, 205, 205.5, and 1197.5, shall be subject to a 6 penalty as follows: 7 (1) For any initial violation, one hundred dollars ($100) for each failure to pay each employee. 8 (2) For each subsequent violation, or any willful or intentional 9 violation, two hundred dollars ($200) for each failure to pay each employee, plus 25 percent of the amount unlawfully withheld. 10 (b) The penalty shall either be recovered by the employee as a 11 statutory penalty pursuant to Section 98 or by the Labor Commissioner as a civil penalty through the issuance of a citation or 12 pursuant to Section 98.3. The procedures for issuing, contesting, and enforcing judgments for citations issued by the Labor Commissioner 13 under this section shall be the same as those set forth in subdivisions (b) through (k), inclusive, of Section 1197.1. 14 (c) An employee is only entitled to either recover the statutory 15 penalty provided for in this section or to enforce a civil penalty as set forth in subdivision (a) of Section 2699, but not both, for the 16 same violation. 17 Cal. Lab. Code § 210. 18 Defendants argue that Chang is not entitled to penalties under Section 210 for two reasons. 19 MSJ at 26. First, they argue that penalties under the statute are only recoverable by the Labor 20 Commissioner. Id. at 26. Second, they argue that Chang “does not allege in her Complaint that 21 she falls under any of these categories, and the record evidence demonstrates that she is not.” Id. 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 1 In opposition, Chang seeks to avoid summary judgment on this issue by referencing 2 matters not previously raised in the case or those which Defendants do not challenge. Opp. at 22. 3 She asserts: 4 Plaintiff is of the class of employees protected by California Labor Code Section 210. That provision provides for penalties for 5 violations of certain Labor Code provisions, including Section 204. MSJ at 21. In turn, Labor Code Section 204(a) applies to the 6 salaries of executives of employers, like Defendants, covered by the Fair Labor Standards Act, which must be paid monthly. Id.; see also 7 On-Line Power, Inc. v. Mazur, 149 Cal. App. 4th 1079, 1086, 57 8 Cal. Rptr. 3d 698, 702 (2007) (“section 204 . . . permits payment of wages on a monthly basis to executive, administrative, and 9 professional employees”). While Plaintiff’s salary was supposed to be retroactive to December 1, Exs. FF, WW, it was never paid, 10 which qualifies as a violation of Section 204(a). 11 Although Defendants also claim that there is no private right 12 of action under these Labor Code provisions, they overlook the fact that Plaintiff has properly asserted a Private Attorneys General Act 13 claim, which allows Plaintiff to recover penalties for Defendants’ Labor Code violations. See Nguyen v. Wells Fargo Bank, 2016 WL 14 5390245, at *10 (N.D. Cal. Sept. 26, 2016) (“a violation of section 15 204 can form the basis for a claim under the UCL or for PAGA penalties”); Amaral v. Cintas Corp. No. 2, 163 Cal. App. 4th 1157, 16 1195 (Cal. Ct. App. 2008) (PAGA allows private recovery of penalties previously unavailable under Section 210). 17 18 Id. 19 Chang’s contentions in opposition are insufficient to defeat Defendants’ motion on the 20 Section 210 issue. First, there is no claim in the complaint under Section 204, which is how 21 Chang seeks to belatedly salvage any entitlement to penalties under Section 210. The Court will 22 not allow Chang to expand the scope of her claims at this late stage. See Clark v. Beard, No. 11- 23 cv-03520-YGR (PR), 2015 WL 4452470, at *4 n.7 (N.D. Cal. July 20, 2015) (“Plaintiff cannot 24 raise new claims [in his summary judgment opposition] that were not previously raised in his 25 amended complaint.”). Second, as confirmed during the hearing, Defendants do not independently 26 move for summary judgment on any civil penalties Chang seeks under PAGA. Accordingly, 27 Defendants’ motion for partial summary judgment on Chang’s potential entitlement to penalties 1 9. UCL 2 Chang’s eighth cause of action is for violations of the unlawful and unfair prongs of the 3 UCL. SAC ¶¶ 134-138. Chang’s UCL claim under the statute’s unlawful prong is based on 4 alleged violations of California Labor Code §§ 201, 202, and 970. Id. ¶¶ 134-136. Chang’s UCL 5 claim under the statute’s unfair prong is based on Defendants “unfairly competing through 6 violations of state law, including Labor Code Sections 201 and 202.” Id. ¶ 136. 7 Because Defendants’ motion for summary judgment fails as to Chang’s claim for unpaid 8 wages, which partially serves as the predicate for Chang’s claim under the UCL’s unlawful prong, 9 Defendants’ motion for summary judgment as to this portion of the UCL claim is DENIED. 10 See Arroyo v. Int’l Paper Co., 611 F. Supp. 3d 824, 846 (N.D. Cal. 2020) (denying motion for 11 summary judgment on UCL claim where underlying statutory claim survived). The motion, 12 however, is GRANTED to the extent Chang relies on an alleged violation of Labor Code § 970 as 13 a predicate. The motion is also GRANTED with respect to Chang’s UCL claim under the 14 statute’s unfair prong. Chang has failed to respond to the arguments Defendants made in their 15 opening brief that the violations on which she relies cannot, as a matter of law, serve as a predicate 16 act under the UCL’s unfair prong. The claim asserted under that theory is therefore abandoned. 17 See Jenkins v. Cnty. of Riverside, 398 F.3d 1093, 1095 n.4 (9th Cir. 2005) (treating two claims as 18 abandoned when the plaintiff failed to address them in opposition to the defendant’s motion for 19 summary judgment). 20 Defendants’ alternative motion for partial summary judgment on the issue of whether 21 Chang can recover attorney’s fees in the event she prevails on her UCL claim is DENIED. 22 Defendants have pointed to no authority in which a court has resolved this seemingly premature 23 issue on a motion for summary judgment, and absent any such authority, the Court declines to 24 reach it now. 25 10. Labor Code § 2802 26 Chang’s ninth cause of action is for failure to reimburse expenses and losses in violation of 27 California Labor Code § 2802. SAC ¶¶ 139-143. She also seeks interest and PAGA penalties in 1 To prevail on this claim, Chang must prove that she: “(1) made expenditures or incurred 2 || losses; (2) the expenditures or losses were incurred in direct consequence of the employee’s 3 discharge of his or her duties, or obedience to the directions of the employer; and (3) the 4 || expenditures or losses were reasonable and necessary.” Arroyo, 611 F. Supp. 3d at 844-45 (citing 5 || McLeod v. Bank of Am., N.A., No. 16-CV-03294-EMC, 2017 WL 6373020, at *5 (N.D. Cal. Dec. 6 13, 2017)). “[A]n employee’s failure to submit a request for retmbursement does not waive his or 7 || her rights under Section 2802.” Jd. “Rather, when the employer knows or has reason to know that 8 the employee has incurred an expense, then it has the duty to exercise due diligence and take any 9 || and all reasonable steps to ensure that the employee is paid for the expense.” Jd. (internal 10 quotation marks, citation, and alteration omitted). 11 As with the seventh cause of action, Defendants seek summary judgment on Chang’s claim 12 || for failure to reimburse expenses and losses on the ground that Chang has failed to establish the 13 requisite employee-employer relationship. MSJ at 16-17. The Court has already addressed 14 || Defendants’ argument on that point, and for the reasons already explained, Defendants’ motion for 3 15 summary judgment on this claim is DENIED. 16 C. Conclusion 3 17 For the reasons set forth above, Defendants’ motion for summary judgment is GRANTED 18 IN PART AND DENIED IN PART. Their alternative motion for partial summary judgment is 19 || also GRANTED IN PART AND DENIED IN PART. 20 IT IS SO ORDERED. 21 Dated: November 15, 2024 22 □□ □ (Mnacel Ido ARACELI MARTINEZ-OLGUIN 24 United States District Judge 25 26 27 28