Galeotti v. Int'l Union of Operating Eng'rs Local No. 3

48 Cal.App.5th 850

262 Cal.Rptr.3d 378

John GALEOTTI, Plaintiff and Appellant,

v.INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL NO. 3 et al., Defendants and Respondents.

A157785

Court of Appeal, First District, Division 5, California.

Filed May 6, 2020

Certified for Partial Publication.^*

Law Office of Kevin C. Bedolla and Kevin Bedolla ; Law offices of Brian Kreger and Brian S. Kreger for Plaintiff and Appellant.

Schwartz, Steinsapir, Dohrmann & Sommers, Michael Four and Henry M. Willis, Los Angeles, for the Defendants and Respondents.

NEEDHAM, J.

John Galeotti appeals from a judgment of dismissal entered after the court sustained respondents’ demurrer to his second amended complaint without leave to amend. He contends his second amended complaint stated causes of action for wrongful termination in violation of public policy and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO; 18 U.S.C. § 1961 et seq . ). He further contends his first amended complaint stated a cause of action for interference with prospective economic advantage against the individual respondents. We agree that his second amended complaint states causes of action and reverse the judgment.

In the published portion of our opinion, we conclude that a threat to terminate employment can provide a basis for an extortion claim, and, for this and other reasons, the allegations of the second amended complaint stated a cause of action for wrongful termination in violation of public policy. In the unpublished portion of our opinion, we conclude the second amended complaint stated RICO claims but the first amended complaint did not state a cause of action for interference with prospective economic advantage.

I. FACTS AND PROCEDURAL HISTORY

In July 2018, Galeotti filed a complaint against respondent International Union of Operating Ecngineers Union Local # 3 (Local 3) and three of its union leaders, respondents Russell Burns, Dan Reding, and Dave Harrison (individual respondents). In essence, Galeotti alleged that the individual respondents required union employees to pay them money to keep their jobs, lied about the reason for collecting the money, and caused Local 3 to terminate Galeotti’s employment when he failed to pay the full amount demanded. Galeotti purported to allege causes of action for wrongful discharge in violation of public policy and interference with prospective economic advantage. After respondents filed a demurrer to the complaint, Galeotti filed a first amended complaint.

Galeotti’s first amended complaint sought damages again for wrongful discharge in violation of public policy and interference with prospective economic advantage, and added claims for a RICO violation and conspiracy to violate RICO.

Respondents filed a demurrer to the first amended complaint, contending that all the claims were preempted by the Labor-Management Reporting and Disclosure Act of 1959 ( 29 U.S.C. § 401 ), the claim against individual respondents for interference with prospective economic advantage was meritless also because the individual respondents were privileged to cause the discharge, and the RICO and conspiracy claims were not supported by the allegations of the pleading.

The court overruled the demurrer as to the claim for wrongful discharge in violation of public policy, sustained it without leave to amend as to the claim for interference with prospective economic advantage, and sustained it with leave to amend as to the RICO claims, noting that Galeotti had not alleged at least two predicate unlawful acts.

Galeotti’s second amended complaint omitted the claim for prospective economic advantage but again purported to allege causes of action for termination in violation of public policy, a RICO violation, and conspiracy to commit a RICO violation. Because the second amended complaint is the operative pleading for most purposes of this appeal, we set forth its allegations in greater detail.

According to the second amended complaint, Galeotti was employed by Local 3 from September 2005 until June 2018, most recently as a non-managerial "Business Agent" assigned to assist the union by, for example, helping members obtain the benefit of their collective bargaining agreements. Burns and Reding were officers, directors or other "leaders" of the union.

In 2006, Burns and Reding formed a political organization called "The Gold Ticket" to conduct a political campaign to replace the incumbent officers and directors of Local 3 with their slate of candidates. In 2006, The Gold Ticket won a three-year term.

In 2009, 2012, 2015, and 2018, Burns and Reding (and also Harrison in 2018) allegedly caused a flyer to be distributed to union employees stating an amount employees were allegedly required to "donate" to The Gold Ticket, for the purported purpose of funding the reelection campaign of Burns, Reding, and other members of The Gold Ticket. Galeotti alleges on information and belief, however, that the true purpose of the collection was to enrich Burns and Reding. According to Galeotti’s pleading, union employees "understood that payment of the money to The Gold Ticket election campaign was required for them to keep their job."

On information and belief, Galeotti alleged that Burns and Reding ran unopposed and incurred no campaign expenses in 2009, 2012, and 2015. None of the money was returned to union employees in 2009, and only half in 2012 and 2015. In 2018, the election was contested.

"For the 2018 election campaign, [Galeotti] was told that the amount he was required to donate to The Gold Ticket was $1,000 and that refusal to do so would result in his termination. [Galeotti] is informed and believes that the $1,000 donation was required for him to retain his job as a Business Agent." Galeotti could not pay the full $1,000 but "donated $500." In June 2018, Local 3 terminated Galeotti’s employment, allegedly because he "did not contribute the full $1,000 to the political campaign of The Gold Ticket."

The second amended complaint alleged that "[t]he requirement by [the individual respondents] and DOES 1 through 100, inclusive, that employees, including [Galeotti], pay money to enrich [the individual respondents] and DOES 1 through 100, inclusive, with the threat of losing their jobs, was and is the taking of employee’s wages in violation of Labor Code §§ 221 and 224, extortion in violation of Penal Code § 518, and theft by deceit under California Penal Code § 484." Therefore, Galeotti asserted, his termination was in violation of public policy and respondents’ acts violated RICO.

Attached to the second amended complaint was a document entitled "The 2018 Gold Ticket Election," which announced that "The Gold Ticket Team is requesting your support in re-electing our team of candidates" and described the donation as "voluntary."

Respondents filed a demurrer to the second amended complaint on the ground that (1) the claim for wrongful discharge in violation of public policy was meritless because Galeotti had not alleged extortion, violation of Labor Code sections 221 or 224, or violation of Penal Code section 484 ; (2) the wrongful discharge claim as to individual respondents was meritless because officers of an employer cannot be liable for the employer’s wrongful termination of an employee; and (3) the RICO claims were meritless because there was no extortion as a matter of law, Galeotti failed to allege theft by deceit under Penal Code section 484, and a violation of Penal Code section 484 cannot be the basis of a RICO claim.

Galeotti filed an opposition to the demurrer, contending his allegations stated a cause of action.

The court sustained the demurrer to the second amended complaint without leave to amend and dismissed the action with prejudice. This appeal followed.

II. DISCUSSION

In our review of a dismissal entered after the sustaining of a demurrer without leave to amend, we accept as true the plaintiff’s well-pleaded allegations and reasonable inferences therefrom, and we determine de novo whether those facts state a viable cause of action. ( Intengan v. BAC Home Loans Servicing LP (2013) 214 Cal.App.4th 1047, 1052, 154 Cal.Rptr.3d 727.)

As mentioned, Galeotti contends the court erred in sustaining the demurrer to his second amended complaint as to his claims for wrongful termination in violation of public policy, violation of RICO, and conspiracy to violate RICO. He further contends the court erred in sustaining the demurrer to his first amended complaint as to his claim against the individual respondents for interference with prospective advantage. We examine each contention in turn.

A. Wrongful Termination in Violation of Public Policy

To plead a claim for wrongful termination in violation of public policy, a plaintiff must identify a fundamental public policy based on a statutory, constitutional, or regulatory provision. ( Green v. Ralee Engineering Co . (1998) 19 Cal.4th 66, 78-82, 78 Cal.Rptr.2d 16, 960 P.2d 1046 ( Green ); see Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 176, 164 Cal.Rptr. 839, 610 P.2d 1330 ( Tameny ).) More precisely here, the question is whether the second amended complaint alleged facts showing that the termination of Galeotti’s employment was for a reason inconsistent with a fundamental policy delineated in a statutory protection. ( Green, supra , at pp. 71, 79, 78 Cal.Rptr.2d 16, 960 P.2d 1046.)

The second amended complaint asserted that Galeotti was fired for refusing to be a victim of respondents’ purported schemes of extortion ( Pen. Code, §§ 518, 519 ), theft by deceit ( Pen. Code, § 484 ), and unlawful taking of wages ( Labor Code, §§ 221, 224 ).

1. Extortion

Penal Code section 518, subdivision (a) defines extortion as "the obtaining of property or other consideration from another, with his or her consent, or the obtaining of an official act of a public officer, induced by a wrongful use of force or fear, or under color of official right."

Galeotti did not allege that respondents used force...