Estrada v. Wal-Mart Stores, Inc.

MARIA ESTRADA, Plaintiff, v. WAL-MART STORES, INC., Defendant.

Case No. 16-cv-04091-LB

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA San Francisco Division

October 6, 2016

ORDER GRANTING IN PART AND DENYING IN PART THE DEFENDANT'S MOTION TO DISMISS

Re: ECF No. 14

INTRODUCTION

In this employment case, Maria Estrada sued her former employer, Wal-Mart, for wrongful termination and related torts.¹ Ms. Estrada alleges that Wal-Mart Market Asset Protection Manager Jason Darham wrongfully accused her of embezzling $4,000, falsely imprisoned her during a related interrogation, and fraudulently induced her to sign a form acknowledging that she owed Wal-Mart $900.² After she signed the form, and allegedly because she signed it, Wal-Mart fired her for "Gross Misconduct — Integrity Issue."³ As a result, Ms. Estrada brings claims for falseimprisonment, fraud, wrongful termination, intentional infliction of emotional distress, defamation, and rescission.⁴

Wal-Mart now moves to dismiss Ms. Estrada's First Amended Complaint ("FAC") under Federal Rule of Civil Procedure 12(b)(6).⁵ The court can decide this matter without oral argument and so it vacated the hearing. See N.D. Cal. Civ. L.R. 7-1(b). The court grants in part Wal-Mart's motion and dismisses Ms. Estrada's claims for wrongful termination and defamation but grants leave to amend. Her other claims survive Wal-Mart's challenges.

STATEMENT

Ms. Estrada was a Wal-Mart cashier between November 2004 and December 2015.⁶ On her last day — the day Wal-Mart terminated her employment — she was summoned to a back office.⁷ Ms. Estrada "did not know why she was being summoned, and she did not consent to being interrogated."⁸ Yet Market Asset Protection Manager Jason Darham nevertheless interrogated her for approximately one hour.⁹

The interrogation took place "behind a closed door," and Mr. Darham "accused [Ms. Estrada] of embezzling $4,000."¹⁰ Ms. Estrada had "never embezzled any amount at all," though, and Mr. Darham allegedly "knew, or should have known, that [the accusation] was false."¹¹ Mr. Darham also "told [her] that he had been investigating her for some time and that he knew that she was stealing."¹² This claim, Ms. Estrada maintains, was also false.¹³ She "denied stealing $4,000 or any amount whatsoever."¹⁴

But Mr. Darham "threatened to call the police if she did not confess [to embezzling the funds], and when she refused to do so, he left the room, apparently to call the police."¹⁵ When he returned, he closed the interrogation-room door and presented Ms. Estrada with a "filled-out 'Reimbursement Acknowledgment Form.'"¹⁶ The form obligated Ms. Estrada to pay Wal-Mart $900.¹⁷ Mr. Darham told her "that she had to sign the Form if she wanted to leave the room."¹⁸ Ms. Estrada, "reasonably believ[ing] that [Mr.] Darham honestly thought that she had been stealing," feared losing her job and being arrested "if she did not do as [he] demanded."¹⁹ She accordingly signed the form "so that she would be allowed to leave," though she did not read it.²⁰

After she signed the form, Wal-Mart discharged Ms. Estrada for "Gross Misconduct — Integrity Issue."²¹ Ms. Estrada then sued in California state court and Wal-Mart removed the case.²² She asserts six claims: (1) false imprisonment; (2) fraud; (3) wrongful termination; (4) intentional infliction of emotional distress; (5) defamation; and (6) rescission of the Reimbursement Acknowledgment Form.²³ Wal-Mart moves to dismiss claims one through five under Federal Rule of Civil Procedure 12(b)(6).²⁴

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GOVERNING LAW

1. Motion to Dismiss for Failure to State a Claim Under Rule 12(b)(6)

Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed because of a "failure to state a claim upon which relief can be granted." A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient facts alleged under a cognizable legal theory. Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001).

A complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief to give the defendant "fair notice" of what the claims are and the grounds upon which they rest. See Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A complaint does not need detailed factual allegations, but "a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a claim for relief above the speculative level . . . ." Twombly, 550 U.S. at 555 (internal citations omitted).

To survive a motion to dismiss, a complaint must contain sufficient factual allegations, accepted as true, "'to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556). "Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of 'entitlement to relief.''" Id. (quoting Twombly, 550 U.S. at 557).

2. Pleading Fraud with Particularity Under Rule 9(b)

When fraud—or a claim sounding in fraud—is alleged, a plaintiff "must state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b); Kearns v. Ford MotorCo., 567 F.3d 1120, 1124 (9th Cir. 2009). "Averments of fraud must be accompanied by 'the who, what, when, where, and how' of the misconduct charged." Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). "[A] plaintiff must set forth more than the neutral facts necessary to identify the transaction. The plaintiff must set forth what is false or misleading about a statement, and why it is false." Id. (quoting Decker v. GlenFed, Inc., 42 F.3d 1541, 1548 (9th Cir. 1994) (superseded by statute on other grounds)). Rule 9(b)'s heightened pleading requirement serves three purposes: "[1)] to provide defendants with adequate notice to allow them to defend the charge and deter plaintiffs from the filing of complaints as a pretext for the discovery of unknown wrongs; [2)] to protect those whose reputation would be harmed as a result of being subject to fraud charges; and [3)] to prohibit plaintiffs from unilaterally imposing upon the court, the parties[,] and society enormous social and economic costs absent some factual basis." Kearns, 567 F.3d at 1125 (citations and internal quotations and alterations omitted)).

3. Leave to Amend

If a court dismisses a complaint, it should give leave to amend unless the "the pleading could not possibly be cured by the allegation of other facts." Cook, Perkiss and Liehe, Inc. v. Northern California Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990).

ANALYSIS

1. The Litigation Privilege Does Not Bar Ms. Estrada's Claims

Wal-Mart asserts that all of Ms. Estrada's tort claims are barred by the absolute litigation privilege under California Civil Code section 47(b).²⁵

"Section 47 establishes a privilege that bars liability in tort for the making of certain statements." Hagberg v. Cal. Fed. Bank FSB, 32 Cal. 4th 350, 360 (2004). Under section 47(b), the privilege bars all tort claims (except malicious prosecution) for communications made "[i]nany (1) legislative proceeding, (2) judicial proceeding, (3) in any other official proceeding authorized by law, or (4) in the initiation or course of any other proceeding authorized by law and reviewable pursuant to [statutes governing writs of mandate]." Id. (quoting Cal. Civ. Code § 47(b)). To be privileged, a communication must be "(1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action." Silberg v. Anderson, 50 Cal. 3d 205, 212 (1990).

Although the statute does not mention pre-litigation communications, "courts have applied the judicial privilege to certain discrete categories of communications made in advance of actual litigation." Edwards v. Centex Real Estate Corp., 53 Cal. App. 4th 15, 30 (1997). The privilege has, for example, "long been applied to communications or complaints by citizens to public officials or authorities charged with investigating, prosecuting or remedying alleged wrongdoing." Id.; see Hagberg, 32 Cal. 4th at 370, 376 (applying the privilege to a call made to the police). To determine whether to apply the privilege to pre-litigation communications, courts have considered four factors: (1) "the communication must have been made preliminary to a proposed judicial or quasi-judicial proceeding"; (2) "the verbal proposal of litigation must be made in good faith"; (3) "the contemplated litigation must be imminent"; and (4) "the litigation must be proposed in order to obtain access to the courts for the purpose of resolving the dispute." Edwards, 53 Cal. App. 4th at 34-35 (emphasis in original). A good faith proposal of litigation would be privileged, but not a threat of suit used "merely [as] a negotiating tactic and not a serious proposal made in good faith contemplation of going to court." Id. at 35. "Good faith" contemplation of is a question of fact. Id. at 35 n.10.

Here, Wal-Mart's contention is this: Ms. Estrada's tort claims are based on Mr. Darham's allegedly false report to the police that she embezzled $4,000.²⁶...