Peak v. TigerGraph, Inc.

BRENDON PEAK, Plaintiff, v. TIGERGRAPH, INC., et al., Defendants.

No. 21-cv-02603-PJH

United States District Court, N.D. California

September 7, 2021

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

RE: DKT. NO. 42

PHYLLIS J. HAMILTON UNITED STATES DISTRICT JUDGE

Before the court is defendants' motion to dismiss plaintiff's complaint. The matter is fully briefed and suitable for decision without oral argument. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, and good cause appearing the court hereby rules as follows.

I. BACKGROUND

Plaintiff Brendon Peak is a sales professional who resides in Hingham, Massachusetts. Compl. ¶ 6. Defendants TigerGraph, Inc., and GraphSQL, Inc., both d/b/a TigerGraph (hereinafter referred to together as “TigerGraph”), are foreign corporations, with their principal place of business in Redwood City, California. Compl. ¶ 7. TigerGraph is an Information Technology company which customized its novel graphing and reporting technology and applications for its clients. Compl. ¶ 11. Defendant Dr. Yu Xu is TigerGraph's Chief Executive Officer, and Defendant Todd Blaschka is TigerGraph's Chief Operating Officer. Compl. ¶¶ 87, 91.

In December 2017, TigerGraph recruited Peak to work as a sales manager for the company, offering a base salary plus commission compensation plan. Compl. ¶¶ 10, 12. In January 2018, TigerGraph and Peak entered into a written agreement (the “employment agreement”) consistent with the parties' verbal agreements made during the recruiting process. Compl. ¶ 18. Relevant terms of the employment agreement include: (1) Peak was hired, full-time, as a Regional Sales Director; (2) his compensation consisted of a base-salary plus “variable compensation” in the form of a commission based upon “attainment of annual sales targets”; (3) his employment was “at will” and could be terminated at any time for any reason, with or without cause; (4) disputes regarding Peak's employment would be governed by California law and California courts have exclusive personal jurisdiction in connection with such disputes. Blaschka Dec. (Dkt. 42-1), ¶ 4, Ex. 1 at pp. 6-8; Compl. ¶¶ 15, 16, 18. The paragraph of the employment agreement regarding disputes reads in significant part:

The terms of this letter agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this letter agreement or arising out of, related to, or in any way connected with, this letter agreement, your employment with the Company or any other relationship between you and the Company (the “Disputes”) will be governed by California law, excluding laws relating to conflicts or choice of law. You and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in San Francisco County in connection with any Dispute or any claim related to any Dispute.

Dkt. 42-1 at 8. The parties additionally executed a Sales Compensation Plan (“compensation plan”). Blaschka Dec. (Dkt. 42-1), Exs. 2, 3, 4.^[1] When Peak started at TigerGraph, his commissions were determined by the 2017-18 Sales Compensation Plan. Dkt. 42-1 at 6-8.

In August 2018, Peak began to build a relationship with a potentially lucrative new client. Compl. ¶ 23. Peak shared this information with Blaschka in December 2018. Compl. ¶ 40. Blaschka and Xu then announced a compensation plan for 2019 that dramatically reduced Peak's commissions. Compl. ¶¶ 42-45. In 2019 and 2020, Peak and TigerGraph executed new compensation plans, which superseded the prior ones. Dkt. 42-1 at 15, 21. According to the plans, “Commissions are considered ‘Earned' when the Company receives payment in full from the customer.” Blaschka Dec., Ex. 2, p. 2 “Commissions”; Ex. 3, p. 2-3, “Commissions”; Ex. 4, p. 3 “Commissions” (Dkt. 42-1 at 12-13, 18-19, 25).

Throughout 2019, TigerGraph and the client made plans for a range of projects worth multiple millions of dollars per year. Compl. ¶ 61. By spring of 2020, Peak had set up more than 20 anticipated projects with the client, which would have earned him substantial commissions in 2020. Compl. ¶ 79.

On May 13, 2020, Mr. Peak received from the client approval for the first of 20 anticipated project Statements of Work (“SOWs”) and forwarded the signed SOW to Blaschka for execution. Compl. ¶ 85. On May 14, 2020, TigerGraph informed Peak that he was being laid off due to the financial impact of the Covid-19 pandemic. Compl. ¶ 87. Peak was the only TigerGraph sales representative who was laid off. Compl. ¶ 88. Peak did not receive any commissions for his work with the client. Compl. ¶ 92.

On July 6, 2020, after Peak threatened litigation, TigerGraph filed a declaratory judgment action in the Superior Court of California, County of San Francisco, seeking a determination that no future commissions were owed to Peak. Case no. 4:20-cv-5489-PJH Dkt. 1-1. Peak removed that case to this court on August 6, 2020, and then filed a motion to dismiss the complaint for lack of personal jurisdiction, improper venue, and forum non conveniens, or, in the alternative, to transfer the case to the district court for the District of Massachusetts. Case no. 4:20-cv-5489-PJH, Dkt. 9. The court denied that motion on October 21, 2020. Case no. 4:20-cv-5489-PJH, Dkt. 16.

On August 8, 2020, Peak filed this separate action in the U.S. District Court for the District of Massachusetts. Compl. ¶ 1. Defendants then filed a motion to transfer venue, which sought to bring the case to this court based on the forum-selection clause in Peak's employment agreement. Dkt. 14. The District Court for the District of Massachusetts, Judge I. Talwani presiding, granted defendants' motion on April 9, 2021. Dkt. 28. Following transfer and a case management conference in 4:20-cv-5489-PJH, the court related the two cases on June 28, 2021. Dkt. 41. The instant motion was filed July 22, 2021, and thereafter fully briefed. Dkt. 42, 43, 45.

II. DISCUSSION

Peak's complaint against TigerGraph alleges the following claims:

● Count I - Breach of Contract/Covenant of Good Faith and Fair Dealing (Peak vs. TigerGraph);

● Count II - Intentional Interference with Contractual Relations (Peak vs. Blaschka);

● Count III - Intentional Interference with Contractual Relations (Peak v. Yu Xu);

● Count IV - Civil Conspiracy (Peak v. all defendants);

● Count V - Violation of the Massachusetts Wage Act in violation of M.G.L. Chapter 149, §§ 148, 150 (Peak v. TigerGraph);

● Count VI - Violation of the Massachusetts Wage Act in violation of M.G.L. Chapter 149, §§ 148, 150 (Peak v. Todd Blaschka); and

● Count VII - Violation of the Massachusetts Wage Act in violation of M.G.L. Chapter 149, §§ 148, 150 (Peak v. Yu Xu).

Defendants now move to dismiss the entirety of Peak's complaint. Dkt. 42.

A. Legal Standard

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests for the legal sufficiency of the claims alleged in the complaint. Ileto v. Glock, 349 F.3d 1191, 1199-1200 (9th Cir. 2003). Under Federal Rule of Civil Procedure 8, which requires that a complaint include a “short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), a complaint may be dismissed under Rule 12(b)(6) if the plaintiff fails to state a cognizable legal theory, or has not alleged sufficient facts to support a cognizable legal theory. Somers v. Apple, Inc., 729 F.3d 953, 959 (9th Cir. 2013).

While the court is to accept as true all the factual allegations in the complaint, legally conclusory statements, not supported by actual factual allegations, need not be accepted. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). The complaint must proffer sufficient facts to state a claim for relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 558-59 (2007) (citations and quotations omitted).

“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.” Iqbal, 556 U.S. at 678 (citation omitted). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-that the pleader is entitled to relief.” Id. at 679. Where dismissal is warranted, it is generally without prejudice, unless it is clear the complaint cannot be saved by any amendment. Sparling v. Daou, 411 F.3d 1006, 1013 (9th Cir. 2005).

“Although generally the scope of review on a motion to dismiss for failure to state a claim is limited to the Complaint, a court may consider evidence on which the complaint necessarily relies if: (1) the complaint refers to the document; (2) the document is central to the plaintiffs' claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion.” Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010) (internal quotation marks and citations omitted); see also Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). The court may “treat such a document as ‘part of the complaint, and thus may assume that its contents are true for purposes of a motion to dismiss under Rule 12(b)(6).'” Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006) (quoting United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003)). Moreover, the court “need not accept as true allegations contradicting documents that are referenced in the complaint.” Lazy Y Ranch Ltd. v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).

B. Analysis

1. Incorporation by Reference

“Courts regularly decline to consider declarations and exhibits submitted in support of or opposition to a motion to dismiss . . . if they constitute evidence not...