Tamar Kasbarian v. Equinox Holdings, Inc.

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUN 25 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
TAMAR KASBARIAN, No. 16-56798
Plaintiff-Appellant, D.C. No.
2:16-cv-01795-MWF-JC
v.
EQUINOX HOLDINGS, INC.; et al., MEMORANDUM*
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Michael W. Fitzgerald, District Judge, Presiding
Argued and Submitted June 4, 2018
Pasadena, California
Before: FISHER and OWENS, Circuit Judges, and MOLLOY,** District Judge.
Tamar Kasbarian (“Kasbarian”) appeals the district court’s grant of
summary judgment on her claims for retaliation, breach of contract, defamation,
and intentional infliction of emotional distress against her former employer,
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Donald W. Molloy, United States District Judge for
the District of Montana, sitting by designation.
Equinox Holdings, Inc. (“Equinox”). We have jurisdiction pursuant to 28 U.S.C.
§ 1291, and we affirm in part, reverse in part, and remand.
Summary judgment is appropriate “if the movant shows that 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). “[I]n ruling on a motion for summary
judgment, the evidence of the nonmovant is to be believed, and all justifiable
inferences are to be drawn in his favor.” Tolan v. Cotton, 134 S. Ct. 1861, 1863
(2014) (per curiam) (internal quotation marks, alteration, and citation omitted).
1. The district court did not err when it dismissed defendants Equinox Fitness
Marina Del Rey, Inc. and Equinox Fitness Sepulveda, Inc. as “sham defendants” to
be ignored for the purposes of assessing diversity jurisdiction. See Weeping
Hollow Ave. Trust v. Spencer, 831 F.3d 1110, 1113 (9th Cir. 2016). Equinox
specifically stated which entities it sought to have dismissed and explained that
neither had been Kasbarian’s employer during any relevant period. Kasbarian
produced no evidence to the contrary.
2. The district court correctly granted summary judgment as to Kasbarian’s
breach of contract claims because, assuming Kasbarian was terminated via
constructive discharge, she was an at-will employee. Equinox’s letter extending
Kasbarian an offer of employment, the Equinox employee handbook, and the
Equinox confidentiality and non-solicitation agreement all provided Kasbarian’s
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employment was “at will.” See Freund v. Nycomed Amersham, 347 F.3d 752, 758
(9th Cir. 2003) (“Unless the parties contract otherwise, employment relationships
in California are ordinarily ‘at will,’ meaning that an employer can discharge an
employee for any reason.” (citing Cal. Lab. Code § 2922)). While “disclaimer
language in an employee handbook or policy manual does not necessarily mean an
employee is employed at will . . . neither can such [] provision[s] be ignored in
determining whether the parties’ conduct was intended, and reasonably understood,
to create binding limits on an employer’s statutory right to terminate the
relationship at will.” Guz v. Bechtel Nat’l Inc., 8 P.3d 1089, 1103–04 (Cal. 2000).
Though Kasbarian claims her highly accomplished, nearly five year tenure at
Equinox created a cause requirement, that evidence does not create a dispute of
material fact in light of the parties’ express understanding that Kasbarian’s
employment was at will. Id. at 1100–02.
3. The district court did not err when it granted summary judgment on
Kasbarian’s claim for intentional infliction of emotional distress (“IIED”). An
IIED claim requires extreme or outrageous conduct by the defendant, meaning that
conduct “exceeds all bounds of decency usually tolerated by a decent society, and
is of a nature which is especially calculated to cause, and does cause, mental
distress.” Fisher v. San Pedro Peninsula Hosp., 262 Cal. Rptr. 842, 857 (Ct. App.
1989). Although Kasbarian has adduced evidence that she was treated poorly—
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suspended, transferred, and called names—no reasonable factfinder could conclude
that conduct was extreme or outrageous. See id. (“Liability does not extend to
mere insults, indignities, threats, annoyances, petty oppressions, or other
trivialities.”).
4. Nor did the district court err by granting summary judgment as to
Kasbarian’s claim for defamation. To prevail on a claim of defamation, Kasbarian
must prove “(a) a publication that is (b) false, (c) defamatory, and (d) unprivileged,
and that (e) has a natural tendency to injure or that causes special damage.” Taus
v. Loftus, 151 P.3d 1185, 1209 (Cal. 2007) (internal quotation marks omitted).
“Because the statement must contain a provable falsehood, courts distinguish
between statements of fact and statements of opinion for purposes of defamation
liability.” Summit Bank v. Rogers, 142 Cal. Rptr. 3d 40, 59 (Ct. App. 2012). “To
determine whether a statement implies a factual assertion, we examine the totality
of the circumstances in which it was made.” Lieberman v. Fieger, 338 F.3d 1076,
1079–80 (9th Cir. 2003) (internal quotation marks omitted). Viewed in the light
most favorable to Kasbarian, the facts here would not allow a reasonable fact
finder to determine the statements made about Kasbarian were false so as to
support a claim for defamation.
5. The district court erred, however, when it granted summary judgment on
Kasbarian’s retaliation claims. “When a plaintiff alleges retaliatory employment
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termination . . . as a claim for wrongful employment termination in violation of
public policy, and the defendant seeks summary judgment, California follows the
burden shifting analysis of McDonnell Douglas Corp. v. Green, 411 U.S. 792
(1973), to determine whether there are triable issues of fact for resolution by a
jury.” Loggins v. Kaiser Permanente Int’l, 60 Cal. Rptr. 3d 45, 50–51 (Ct. App.
2007). So too where a plaintiff alleges retaliation in violation of California Labor
Code § 1102.5(b). See Taswell v. Regents of the Univ. of Cal., 232 Cal. Rptr. 3d
628, 645–46 (Ct. App. 2018) (applying, but not discussing, burden shifting test).
At step one, the plaintiff must make a prima facie case by showing “(1) he or she
engaged in a ‘protected activity,’ (2) the employer subjected the employee to an
adverse employment action, and (3) a causal link existed between the protected
activity and the employer’s action.” Yanowitz v. L’Oreal USA, Inc., 116 P.3d
1123, 1130 (Cal. 2005). “If the employee successfully establishes these elements
and thereby shows a prima facie case exists, the burden shifts to the employer to
provide evidence that there was a legitimate, nonretaliatory reason for the adverse
employment action.” Loggins, 60 Cal. Rptr. 3d at 51. If the employer provides a
legitimate reason for the adverse employment action, “the burden shifts back to the
employee to provide substantial responsive evidence that the employer’s proffered
reasons were untrue or pretextual.” Id. (internal quotation marks omitted).
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Kasbarian has established a prima facie case of retaliation. First, a jury
could find Kasbarian engaged in protected activity when she informed Equinox
about the potentially fraudulent membership charges. She “ha[d] reasonable cause
to believe that the information disclose[d] a violation of state or federal statute, or a
violation of or noncompliance with a local, state, or federal rule or regulation.”
Cal. Lab. Code § 1102.5(b). Kasbarian’s concern about charging a guest’s card for
a membership the guest did not approve is sufficient without pointing to a
particular statute or law. See Patten v. Grant Joint Union High Sch. Dist., 37 Cal.
Rptr. 3d 113, 118 (Ct. App. 2005) (holding plaintiff engaged in protected activity
when she reported activity she thought was illegal).
Second, a jury could find Kasbarian suffered an adverse employment action
when Equinox reassigned her to the Marina Del Rey location. That assignment
“materially affect[ed] the terms, conditions, or privileges of employment.”
Yanowitz, 116 P.3d at 1137. While the reduction in commissions was not unique
to Kasbarian, as the West L.A. club systematically restructured its bonus system to
correct for a payroll error, Kasbarian’s forced reassignment moved her individually
to a less prestigious club for a significantly lower hourly wage ($9.00 per hour
instead of $19.23 per hour). See Patten, 37 Cal. Rptr. 3d at 120–22 (holding that
transfer of an administrator from one school to another, although considered a
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“lateral transfer” by the school district, “raised a triable issue of material fact
regarding adverse employment action”).
Third, a jury could find a causal link between the adverse employment
action and the protected activity. “For purposes of making a prima facie showing,
the causal link element may be established by an inference derived from
circumstantial evidence.” McRae v. Dep’t of Corr. & Rehab., 48 Cal. Rptr. 3d
313, 321 (Ct. App. 2006). Accordingly, “[a] plaintiff can satisfy his or her initial
burden under the test by producing evidence of nothing more than the employer’s
knowledge that the employee engaged in protected activities and the proximity in
time between the protected action and the allegedly retaliatory employment
decision.” Id. Both Jack Gannon, Regional Vice President, and Brian
Hemedinger, a Regional Director, decided, after the investigation, to transfer
Kasbarian. Kasbarian had, in turn, reported what she believed to be illegal activity
at the West L.A. club to both Gannon and Hemedinger. Gannon and Hemedinger
belittled and insulted Kasbarian in response. Gannon also asked Jim Burger to
investigate the West L.A. club following a customer complaint, and partnered with
Burger in that investigation. Finally, though the adverse employment action did
not immediately follow Kasbarian’s complaints to management, it is proximate
enough in time for a jury to find a causal link.
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Because Kasbarian has presented a prima facie case, the burden shifts to
Equinox “to provide evidence that there was a legitimate, nonretaliatory reason for
the adverse employment action.” Loggins, 60 Cal. Rptr. 3d at 51. Equinox has
done so here, asserting it reassigned Kasbarian as part of an effort to “create a fresh
culture” after its investigation. Therefore, “the burden shifts back to [Kasbarian] to
provide substantial responsive evidence that [Equinox]’s proffered reasons were
untrue or pretextual.” Id. (internal quotation marks omitted).
Kasbarian’s “burden is to prove, by competent evidence, that [Equinox]’s
proffered justification is a mere pretext; i.e., that the presumptively valid reason for
the employer’s action was in fact a coverup.” McRae, 48 Cal. Rptr. 3d at 321. The
proof and argument she makes here is sufficient to submit the question to a jury.
Kasbarian points to conflicting testimony from Burger and Gannon as to who
initiated the investigation into the West L.A. club. Kasbarian also notes that
Gannon and Hemedinger admitted she did not engage in any terminable conduct.
But another membership advisor, who was also found not to have engaged in any
terminable conduct, was allowed to stay at West L.A. As Kasbarian notes,
allowing another membership advisor to stay cuts against Equinox’s assertion that
it wanted to create a “fresh culture” at the club. Finally, prior to her reassignment,
Kasbarian had received exemplary reviews from management, and was rewarded
with all-expense-paid trips to New York and Miami for four consecutive years.
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See Flait v. N. Am. Watch Corp., 4 Cal. Rptr. 2d 522, 530 (Ct. App. 1992)
(“Pretext may also be inferred from the timing of the company’s termination
decision, by the identity of the person making the decision, and by the terminated
employee’s job performance before termination.”). Viewed in the light most
favorable to Kasbarian, a reasonable fact finder could conclude that Equinox’s
reason for reassigning Kasbarian to the Marina Del Rey club was pretextual.
In granting summary judgment for Equinox, the district court did not address
whether Kasbarian was constructively discharged. Because constructive discharge
is a materially adverse employment action, Steele v. Youthful Offender Parole Bd.,
76 Cal. Rptr. 3d 632, 642 (Ct. App. 2008), it could pertain both to Kasbarian’s
California Labor Code § 1102.5(b) retaliation claim, as well as her § 1102.5(b) and
§ 923 claims for wrongful termination in violation of public policy. Accordingly,
we reverse as to all three.
6. Because the district court erred by granting summary judgment on
Kasbarian’s retaliation claims, it also erred in denying her request for punitive
damages. See Cal. Civ. Code § 3294(b).
Each party shall bear its own costs on appeal.
The judgment is AFFIRMED as to Claims Three, Four, Five, Eight, and
Nine. The judgment is REVERSED as to Claims One, Six, and Seven, and
REMANDED for further proceedings consistent with the above.
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