Jaekel v. Aytu Bioscience, Inc.

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ROBERT DAVID JAEKEL, Plaintiff, v. AYTU BIOSCIENCE, INC., et al., Defendants.

No. 20-cv-00340-TSH

United States District Court, N.D. California

August 10, 2022

ORDER RE: DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

Re: Dkt. No. 31

THOMAS S. HIXSON UNITED STATES MAGISTRATE JUDGE

I. INTRODUCTION

Pending before the Court is a Motion for Summary Judgment or, in the Alternative, for Summary Adjudication (“Motion for Summary Judgment”) filed by Defendants Aytu Bioscience Inc. (“Aytu”), Jarrett Disbrow, and Josh Disbrow (collectively “Defendants”). ECF No. 31. On July 21, 2022, Plaintiff Robert Jaekel filed an Opposition. ECF No. 33. On July 28, 2022, Defendants filed a Reply. ECF No. 34. The Court finds this matter suitable for disposition without oral argument and VACATES the August 11, 2022 hearing. See Civ. L. R. 7-1(b). Having considered the arguments made, the papers submitted in support thereof, and the record in this case, the Court GRANTS IN PART AND DENIES IN PART Defendants' Motion for Summary Judgment.^[1]

II. BACKGROUND^[2]

A. Factual Background

In May 2016, Aytu hired Plaintiff Robert Jaekel as a Sales Manager, which required Jaekel to sell ProstaScint and Natesto drugs in the United States. ECF No. 33-1, P's Reply SUR^[3] Nos. 1, 3, 5. Within a year of his employment, Jaekel became a Regional Area Sales Manager and was responsible for hiring and training. Id. Nos. 5-6.

In October 2017, Jaekel called his manager and expressed concerns over selling expired ProstaScint. ECF No. 33-3, Jaekel Depo. (Exh. A) at 160: 13-25. Jaekel also reported another employee's alleged forgery in late 2017. P's Reply SUR No. 32. On January 1, 2018, Jaekel's role changed from Regional Area Sales Manager to sales manager with no alteration to Jaekel's base salary. Id. No. 17.

After the role change, on approximately August 10, 2018, Jaekel reported an incident involving an employee grabbing the crotch of another employee. ECF Nos. 33-3, Jaekel Depo. (Exh. A) at 171: 4-23; 33-18, Porter August 10, 2018 Email (Exh. P). On October 4, 2019, Jaekel filed a complaint with the Labor Commissioner regarding unpaid mileage, commissions, and stock. P's Reply SUR No. 44. On October 28, 2019, Jaekel's employment with Aytu was terminated. Id. No. 58.

B. Procedural Background

On December 4, 2019, Jaekel filed the instant action against Defendants Aytu, Josh Disbrow, Jarrett Disbrow, Rick Nord, and DOES 1-50 in San Francisco Superior Court. ECF No. 1-5, Complaint (Exh. B). The complaint alleged the following causes of action: 1) Whistleblower Retaliation (against all Defendants), 2) Retaliation (against all Defendants), 3) Failure to Take Steps Necessary to Prevent Sexual Harassment or Retaliation (against Aytu), 4) Retaliation (against Aytu), 5) Wrongful Termination in Violation of Public Policy (against Aytu), 6) Defamation (against Josh Disbrow and Jarrett Disbrow), 7) Intentional Infliction of Emotional Distress (IIED) (against all Defendants), and 8) Failure to Pay All Wages Due to Discharged Employees (against Aytu, Josh Disbrow, and Jarrett Disbrow). Id. ¶¶ 47-100. On January 15, 2020, Defendants removed the action to federal court. ECF No. 1. On April 14, 2022, Jaekel dismissed Defendant Nord from the action. ECF No. 13.

On July 7, 2022, Defendants filed a Motion for Summary Judgment. ECF No. 31. On July 21, 2022, Plaintiff Robert Jaekel filed an Opposition. ECF No. 33. On July 28, 2022, Defendants filed a Reply. ECF No. 34.

III. LEGAL STANDARD

Summary judgment is proper where the pleadings, discovery and affidavits demonstrate that there is “no genuine dispute as to any material fact and [that] the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). The party moving for summary judgment bears the initial burden of identifying those portions of the pleadings, discovery and affidavits that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Material facts are those that may affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

Once the moving party has met its burden, the burden shifts to the non-moving party to “designate ‘specific facts showing that there is a genuine issue for trial.'” Celotex Corp., 477 U.S. at 317. To carry this burden, the non-moving party must “do more than simply show there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The opposing party must set forth specific facts showing that there is some genuine issue for trial in order to defeat the motion. FED. R. CIV. P. 56(e); Anderson, 477 U.S. at 250. “The mere existence of a scintilla of evidence . . . will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmoving party].” Anderson, 477 U.S. at 252.

The Court must view the evidence in the light most favorable to the nonmoving party and draw all justifiable inferences in its favor. Id. at 255. “Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.” Id. However, it is not the Court's task to scour the record in search of a genuine issue of triable fact. Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996). The Court “rel[ies] on the nonmoving party to identify with reasonable particularity the evidence that precludes summary judgment.” Id. Thus, the Court “need not examine the entire file for evidence establishing a genuine issue of fact, where the evidence is not set forth in the opposing papers with adequate references so that it could conveniently be found.” Carmen v. S.F. Unified Sch. Dist., 237 F.3d 1026, 1031 (9th Cir. 2001). If the nonmoving party fails to make this showing, “the moving party is entitled to a judgment as a matter of law.” Celotex, 477 U.S. at 323 (internal quotations omitted).

IV. DISCUSSION

Defendants move for summary judgment on all of Jaekel's claims. ECF No. 31. The Court addresses each cause of action accordingly.

A. First Cause of Action: Whistleblower Retaliation (Cal. Lab. Code § 1102.5(b))

“Section 1102.5 provides whistleblower protections to employees who disclose wrongdoing to authorities.” Lawson v. PPG Architectural Finishes, Inc., 12 Cal. 5th 703, 709 (2022). “An employer . . . shall not retaliate against an employee for disclosing information . . . if the employee has reasonable cause to believe that the information discloses 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). To prevail on a claim of whistleblower retaliation, the plaintiff must establish, “by a preponderance of the evidence, that retaliation for an employee's protected activities was a contributing factor in a contested employment action.” Lawson, 12 Cal. 5th at 718 (citing Cal. Lab. Code § 1102.6). “Once the plaintiff has made the required showing, the burden shifts to the employer to demonstrate, by clear and convincing evidence, that it would have taken the action in question for legitimate, independent reasons even had the plaintiff not engaged in protected activity.” Id.

Defendants argue Jaekel fails to demonstrate (1) he engaged in a protected activity, (1) a causal link between Jaekel's complaints and an adverse employment action, and (3) pretext. ECF No 31 at 13-15.

1. Protected Activity

Defendants argue that there is no evidence Jaekel engaged in a protected activity. ECF No. 31 at 14. Jaekel argues his complaints regarding expired ProstaScint, forgery, mileage and commission violations, and sexual assault constitute protected activity. ECF No. 33 at 22.

“An employee engages in protected activity when the employee discloses reasonably based suspicions of illegal activity.” Ross v. County of Riverside, 36 Cal.App. 5th 580, 592 (2019) (simplified). “To have a reasonably based suspicion of illegal activity, the employee must be able to point to some legal foundation for his suspicion-some statute, rule or regulation which may have been violated by the conduct he disclosed.” Id. (citing Fitzgerald v. El Dorado County 94 F.Supp.3d 1155, 1172 (E.D. Cal. 2015)).

Here Jaekel's argues his October 2017 complaints of expired ProstaScint and forgery contributed to his January 1, 2018 demotion to Sales Manager. Jaekel testified that, in October 2017, he saw ProstaScint appear foggy and called his manager to discuss the foggy ProstaScint. ECF No. 33-3 Jaekel Depo. (Exh. A) at 160: 13-25. The manager told Jaekel that the ProstaScint was short dated and Aytu will extend the expiration date for the product. Id. at 161:1-4. Jaekel then questioned whether the company had FDA approval, and the manager told Jaekel “not exactly.” Id. at 161:4-8. Moreover, Jaekel testified that his review of company receipts revealed forgery by another Aytu employee and Jaekel reported the forgery to the Director of Sales Performance. ECF No. 33-3, Jaekel Depo. (Exh. A) at 166:9-25, 167:9-14. Jaekel's suspicions were based on fraud and FFDCA violations. ECF No. 33 at 22. The Court finds this evidence sufficient to establish a genuine dispute over whether Jaekel engaged in a protected activity contributing to his demotion. See Mendiondo v. Centinela Hosp. Medical Center, 521 F.3d 1097 (9th Cir. 2008) (“Mendiondo engaged in protected activity if she reasonably believed that CHMC was possibly committing fraud against the government, and she investigated the possible fraud”); United States v. Porifera Inc., No. 19-cv-765-HSG, 2022 WL 2158967, at *5 (N.D. Cal. June 15, 2022) (finding plaintiff engaged in protected activity where the plaintiff “presented evidence that he...