Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-01808/USCOURTS-casd-3_09-cv-01808-0/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

GARRY McCULLOUGH,

Plaintiff,

CASE NO. 09cv1808-WQH-NLS

ORDER

vs.

LENNAR CORPORATION, a

corporation, and DOES 1 through 100,

inclusive,

Defendant.

HAYES, Judge:

The matter before the Court is the Motion to Dismiss the Complaint Or, in the

Alternative, Motion to Strike First Amended Complaint (“Motion to Dismiss”), filed by

Defendant, Lennar Corporation (“Lennar”). (Doc. # 11).

I. Background

On June 30, 2009, Plaintiff initiated this action by filing a Complaint in the San Diego

County Superior Court, seeking to recover damages against his former employer, Lennar.

(Doc. # 1, Ex. B).

On August 20, 2009, Lennar removed the action to this Court. (Doc. # 1). Lennar

alleges that this Court has diversity jurisdiction because there is complete diversity between

the parties (Plaintiff is a California citizen and Lennar is a Delaware corporation with a

principal place of business in Florida) and the amount in controversy exceeds $75,000. See

28 U.S.C. § 1332(a).

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On September 14, 2009, Plaintiff filed a First Amended Complaint. (Doc. # 8).

A. Allegations of the First Amended Complaint

In May of 2004, Plaintiff was hired by Lennar, a corporation engaged in the business

of home construction. Plaintiff’s job title was “Area Manager,” and he was hired to work on

Lennar’s residential housing development projects. (Doc. # 8 ¶ 4). Plaintiff’s job was “to see

to it that the projects were constructed as required by the contracts up to the completion of the

housing pads.” Id. “Lennar agreed to pay [Plaintiff] compensation comprised of a base annual

salary of $95,000.00 plus a 25% performance incentive (this performance incentive was

referred to within the company as a ‘bonus’ although it was not discretionary). If [Plaintiff]

achieved his performance goals then the 25% performance incentive was earned and payable.”

Id. Plaintiff agreed to leave his then-current employment (where he “earned over $95,000.00

per year”) and accept the Lennar employment because, with the 25% performance incentive,

he would earn more money. Id. “Without the performance incentive, [Plaintiff] would have

earned less than at his prior job and would not have accepted employment with Lennar.” Id.

“[Plaintiff] was paid as Lennar had agreed he would be paid, his base $95K per year plus the

25% performance compensation until Lennar fired [Plaintiff].” (Doc. # 8 ¶ 7). “[Plaintiff] was

very good at his job and received numerous accolades from his superiors including

acknowledgments that he had saved the company millions of dollars. [Plaintiff] at all times

performed his job satisfactorily.” Id.

“On or about May 16, 2008, Lennar department Vice President, Mike Farley..., removed

[Plaintiff] from his job. [Plaintiff]’s job was given to his assistant, Jaime Hernandez. Mr.

Hernandez was far less qualified to the job if he was qualified at all.” (Doc. # 8 ¶ 8). At the

time he was terminated, Plaintiff was 53 years old and “suffered from congestive heart failure

and diabetes.” (Doc. # 8 ¶ 10). “Hernandez was approximately 20 years younger [than

Plaintiff] and had no disabilities.” (Doc. # 8 ¶ 8). “[Plaintiff] protested his termination and

inquired how could Lennar keep Hernandez and let [Plaintiff] go. Mr. Farley responded: “We

have to. He is half the price and half your age.” (Doc. # 8 ¶ 9). 

“Farley told [Plaintiff] that they were laying off a lot of people in the department, but

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only [Plaintiff] was actually terminated.... The actual and verifiable reason for [Plaintiff]’s

termination were his age and medical condition.... The stated reasons for his termination are

nothing but pretextual.” (Doc. # 8 ¶ 10). “Lennar failed and refused to pay [Plaintiff] his

earned performance incentive compensation at the time he was terminated or at any time since.

All other Lennar employees in [Plaintiff]’s department were paid their performance incentives.

At the time he was fired, the other employees showed [Plaintiff] their bonus checks.” (Doc.

# 8 ¶ 11).

The First Amended Complaint alleges five causes of action: (1) “discrimination in

violation of [California] Government Code § 12940 (age and disability)” (Doc. # 8 at 4); (2)

wrongful termination in violation of public policy; (3) failure to pay overtime compensation;

(4) unfair competition; and (5) unjust enrichment.

B. Motion to Dismiss

On September 28, 2009, Lennar filed the Motion to Dismiss the First Amended

Complaint. (Doc. # 11). Lennar moves for the dismissal of all claims, except Plaintiff’s age

discrimination claim in the First Cause of Action. On October 19, 2009, Plaintiff filed an

opposition to the Motion to Dismiss. (Doc. # 12). On October 26, 2009, Lennar filed a reply.

(Doc. # 14).

II. Discussion

A. Standard of Review

Federal Rule of Civil Procedure 12(b)(6) permits dismissal for “failure to state a claim

upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Dismissal under Rule 12(b)(6)

is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support

a cognizable legal theory. See Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir.

1990). To sufficiently state a claim to relief and survive a Rule 12(b)(6) motion, a complaint

“does not need detailed factual allegations” but the “[f]actual allegations must be enough to

raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,

555 (2007). When considering a motion to dismiss, a court must accept as true all

“well-pleaded factual allegations.” Ashcroft v. Iqbal, --- U.S. ---, 129 S. Ct. 1937, 1950

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 The letter states: “Following the plan’s guidelines, you will be eligible to participate

in the bonus program for fiscal year 2005, payable April 15, 2006.” (Welke Decl., Ex. A, Doc.

# 11-5).

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(2009). “In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual

content, and reasonable inferences from that content, must be plausibly suggestive of a claim

entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009)

(quotations omitted).

B. Request for Judicial Notice

Lennar requests that the Court take judicial notice of the following documents: a June

15, 2005 letter from Lennar offering employment to Plaintiff;1

 a document entitled “Lennar

Corporation 2005 Target Business Opportunity”; a document entitled “Lennar Corporation

2007 Target Business Opportunity”; Lennar’s 2008 Form 10-K, filed with the Securities and

Exchange Commission; and an order granting a motion to dismiss in Harrington v. Lennar

Corp., CV 09-446 (C.D. Cal., Sept. 16, 2009). (Doc. # 11-2).

“A district court ruling on a motion to dismiss may consider documents ‘whose contents

are alleged in a complaint and whose authenticity no party questions, but which are not

physically attached to the [plaintiff’s] pleading.’” Parrino v. FHP, Inc., 146 F.3d 699, 705-06

(9th Cir. 1998) (quoting Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994)). Also, “a district

court ruling on a motion to dismiss may consider a document the authenticity of which is not

contested, and upon which the plaintiff’s complaint necessarily relies.” Id. at 706.

Plaintiff contests Lennar’s contention that Plaintiff’s employment was subject to the

terms stated in the June 15, 2005 offer letter, the “2005 Target Business Opportunity,” and the

“2007 Target Business Opportunity.” Plaintiff alleges:

Lennar agreed to pay [Plaintiff] compensation comprised of a base annual salary

of $95,000.00 plus a 25% performance incentive (this performance incentive

was referred to within the company as a ‘bonus’ although it was not

discretionary). If [Plaintiff] achieved his performance goals then the 25%

performance incentive was earned and payable.... Plaintiff was interviewed and

hired by Lennar’s Senior Area Manager, Mark Porter.... Lennar gave [Plaintiff]

a so-called offer letter and asked him to sign it. Porter told [Plaintiff] that the

offer letter was not his employment contract and that an employment contract

would be prepared with the agreed terms of employment, specifically the

compensation terms included. [Plaintiff] was told that the offer letter was

necessary for the Human Resources Dept. to start an employee file for him. An

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employment contract was prepared, however, [Plaintiff] does not have a copy

of that contract. [Plaintiff]’s 25% performance incentive was in lieu of and

greater than Lennar’s standard ‘Target Business Opportunity’ schedules.

(Doc. # 8 ¶ 4-5). Plaintiff alleges: “[Plaintiff] was paid as Lennar had agreed he would be

paid, his base $95K per year plus the 25% performance compensation until Lennar fired

[Plaintiff]. [Plaintiff] was not paid under the standard ‘Target Business Opportunity’

schedules.” (Doc. # 8 ¶ 7).

When considering a Motion to Dismiss, the Court is obligated to accept as true all nonconclusory factual allegations. See Iqbal, 129 S. Ct. at 1950. Plaintiff has adequately alleged

that his employment with Lennar was not subject to the terms of the June 15, 2005 offer letter,

the “2005 Target Business Opportunity,” and the “2007 Target Business Opportunity.”

Viewing Plaintiff’s allegations as true, these documents are irrelevant. The Request for

Judicial Notice of these documents is denied.

The relevance of the Lennar Form 10-K and the order granting a motion to dismiss in

Harrington v. Lennar Corp. is dependant upon the relevance of the “2005 Target Business

Opportunity” and the “2007 Target Business Opportunity.” Accordingly, the Request for

Judicial Notice is denied in its entirety.

C. Disability Discrimination

“California uses the three-stage burden-shifting test established by the United States

Supreme Court for trying claims of discrimination based on a theory of disparate treatment.”

Scotch v. Art Inst. of Cal.-Orange County, Inc., 173 Cal. App. 4th 986, 1004 (2009) (citing Guz

v. Bechtel Nat’l, Inc., 24 Cal. 4th 317, 354 (2000); McDonnell Douglas Corp. v. Green, 411

U.S. 792 (1973)). Under the “McDonnell Douglas test,” the plaintiff has the initial burden of

establishing a prima facie case of discrimination. Guz, 24 Cal. 4th at 354. A prima facie case

generally means the plaintiff must show that “(1) he was a member of a protected class, (2) he

was qualified for the position he ... was performing competently in the position he held, (3) he

suffered an adverse employment action, such as termination..., and (4) some other

circumstance suggests discriminatory motive.” Id. at 355. “For example, in the seminal case

of McDonnell Douglas, the court found that one rejected for a job opening could establish a

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prima facie case of race discrimination by showing that (1) he or she was a member of a racial

minority, (2) he or she applied and was qualified for an available job, (3) he or she was

rejected, and (4) the position thereafter remained open and the employer continued to seek

applications from persons with similar qualifications.” Id. at 355 n.21 (citing McDonnell

Douglas, 411 U.S. at 802). Similarly, to establish a prima facie case of age discrimination, a

plaintiff must show he was: “(1) a member of a protected class...; (2) performing his job in a

satisfactory manner; (3) discharged; and (4) replaced by a substantially younger employee with

equal or inferior qualifications.” Wallis v. J.R. Simplot Co. 26 F.3d 885, 891 (9th Cir. 1994)

(citation omitted); see also DeLuca v. Winer Indus., 53 F.3d 793, 797 (7th Cir. 1995) (same,

in disability discrimination case).

The First Amended Complaint alleges: (a) Plaintiff was disabled (“Because of [his

congestive heart failure], [Plaintiff] had to carefully pace himself so as to avoid shortness of

breath and to avoid debilitating fatigue. [Plaintiff] also had diabetes that required him to

frequently check his blood sugar and inject himself with insulin. [Plaintiff]’s diabetes also

required that he have ready access to food and the ability to carefully schedule his eating

during the day.”); (b) Plaintiff informed his supervisor of his disabilities; (c) Plaintiff was

performing his job in a satisfactory manner (“[Plaintiff] was very good at his job and received

numerous accolades from his superiors including acknowledgments that he had saved the

company millions of dollars.”); (d) Plaintiff was discharged; and (e) Plaintiff was replaced by

a “far less qualified person” with “no disabilities.” (Doc. # 8 ¶¶ 7-8, 14-15). These allegations

are sufficient to state a prima facie case of disability discrimination. The Motion to Dismiss

the First Cause of Action is denied.

D. Wrongful Termination in Violation of Public Policy

A cause of action for wrongful termination in violation of public policy is a recognized

exception to the employment at will doctrine. See Green v. Ralee Eng’g Co., 19 Cal. 4th 66,

75 (1998). Wrongful termination from employment is tortious when the termination occurs

in violation of a fundamental public policy. See Gantt v. Sentry Ins., 1 Cal. 4th 1083, 1090

(1992). The California Court of Appeals has held that “if [the employer] discharged [the

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employee] in order to avoid paying him the commissions, vacation pay, and other amounts he

had earned, it violated a fundamental public policy of this state.” Gould v. Maryland Sound

Indus., Inc., 31 Cal. App. 4th 1137, 1148 (1995) (citing Cal. Labor Code § 216).

Plaintiff’s Second Cause of Action alleges: “Lennar terminated [Plaintiff]’s

employment, in part, in order to avoid paying him compensation rightfully due him that he had

earned. The earned compensation owed to Plaintiff was in excess of $20,000.00.” (Doc. # 8

¶ 19). Plaintiff alleges that he “fulfilled the requirements and had earned and was entitled to

his 25% performance incentive. Lennar failed and refused to pay [Plaintiff] his earned

performance incentive compensation at the time he was terminated or at any time since.”

(Doc. # 8 ¶ 11). Plaintiff alleges that his supervisor said Lennar was replacing Plaintiff with

a less-qualified individual because, in part, the less-qualified individual was “half the price”

of Plaintiff. (Doc. # 8 ¶ 9).

The First Amended Complaint adequately alleges that Lennar agreed to pay Plaintiff

a “25% performance incentive,” which had been earned as of the date of his termination.

Viewing all inferences in Plaintiff’s favor, the statement by Plaintiff’s supervisor indicating

that Plaintiff was being terminated for financial reasons could be construed to mean that

Lennar terminated Plaintiff in part to avoid paying Plaintiff the earned “performance incentive

[which] was in lieu of and greater than Lennar’s standard ‘Target Business Opportunity’

schedules.” (Doc. # 8 ¶ 5). The Motion to Dismiss the Second Cause of Action is denied.

E. Failure to Pay Overtime Compensation

Plaintiff’s Third Cause of Action alleges that “Plaintiff is entitled to overtime

compensation for all hours he worked in excess of 40 hours per week under the California

Labor Code § 1194 and the Federal Fair Labor Standards Act.” (Doc. # 8 ¶ 25). In support

of this Cause of Action, Plaintiff alleges: 

More than 50% of plaintiff’s time was at the work sites and hands-on production

work. Plaintiff was required to fill out a time card each week of his

employment. Plaintiff worked between 60-70 hours per week for all

non-vacation weeks he was employed by Lennar. Although Lennar paid

plaintiff on a salary basis, Lennar told plaintiff that he had to fill out a time card

every week. Lennar told plaintiff that he had to record only 40 hours per week

on the time card, i.e. plaintiff was required to submit a false time card each

week.... At the termination of Plaintiff’s employment contract, ... Lennar failed

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 The Third Cause of Action is entitled: “breach of employment contract–failure to pay

wages.” (Doc. # 8 at 6). The allegations of the Third Cause of Action relate to a claim for

overtime compensation, rather than a claim for breach of contract. “[M]islabeling a cause of

action is not fatal to the complaint, so long as the necessary facts of that claim are properly

pled.” Mauro v. Gen. Motors Corp., No. Civ. 07-892, 2008 WL 2775004, at *6 (E.D. Cal.,

July 15, 2008) (citations omitted).

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to pay Plaintiff a part of the compensation he was owed, specifically the

difference between the amount actually paid and the amount owed.... Plaintiff

was told that he was a salaried employee exempt from the overtime laws when

he was hired. Lennar has never stated what exemption they claimed applied.

Plaintiff is unaware of any exemptions that would apply to him.

(Doc. # 8 ¶¶ 23-25).2

California employers are required to pay employees overtime, unless they are exempt.

See Cal. Labor Code §510(a). The California Labor Code provides: “Notwithstanding any

agreement to work for a lesser wage, any employee receiving less than ... the legal overtime

compensation applicable to the employee is entitled to recover in a civil action the unpaid

balance of the full amount of this ... overtime compensation.” Cal. Labor Code § 1194(a). “If

an employee is entitled to overtime pay under California law, the employer may not abrogate

its obligation to pay such compensation by written agreement. Further, absent an explicit wage

agreement, a fixed salary does not serve to compensate an employee for statutory overtime

worked.” Nordquist v. McGraw-Hill Broad. Co., 32 Cal. App. 4th 555, 562 (1995) (citations

omitted). The employer “bear[s] the burden of proving the affirmative defense of plaintiff’s

exemption from overtime.” Gomez v. Lincare, Inc., 173 Cal. App. 4th 508, 515 (2009) (citing

Sav-On Drug Stores, Inc. v. Superior Court, 34 Cal. 4th 319, 338 (2004)). Plaintiff is not

obligated to plead facts showing that he is not exempt. The First Amended Complaint

adequately alleges a claim for failure to pay overtime compensation. The Motion to Dismiss

the Third Cause of Action is denied.

F. Unfair Competition

Plaintiff’s Fourth Cause of Action, for unfair competition, alleges: “Lennar’s failure to

pay overtime wages owed to its employees, including Plaintiff, constitutes an unfair business

practice under Bus. & Prof. Code § 17200 et seq.” (Doc. # 8 ¶ 28). An employee may state

a claim by alleging the employer “violated Business and Professions Code section 17200 et

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 “The state and the federal courts appear to be unclear whether in California a court

may recognize a claim for ‘unjust enrichment’ as a separate cause of action.” Nordberg v.

Trilegiant Corp., 445 F. Supp. 2d 1082, 1100 (N.D. Cal. 2006) (collecting cases). As this issue

has not been raised by the parties, the Court will assume for the purposes of deciding this

motion that there exists a separate cause of action for “unjust enrichment” under California

law.

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seq. by failing to pay them for the hours they actually worked, and by failing to pay them

overtime compensation.” Gomez, 173 Cal. App. 4th at 524; see also Cortez v. Purolator Air

Filtration Prods. Co., 23 Cal. 4th 163, 177 (2000). Because the First Amended Complaint

adequately alleges a claim for failure to pay overtime compensation, the Motion to Dismiss the

Fourth Cause of Action is denied.

G. Unjust Enrichment

Plaintiff’s Fifth Cause of Action, for unjust enrichment, alleges Lennar was unjustly

enriched by failing to pay Plaintiff for “performance incentive compensation” and “overtime

compensation.” (Doc. # 8 ¶ 32). “The elements of an unjust enrichment claim are the ‘receipt

of a benefit and the unjust retention of the benefit at the expense of another.’”3

 Peterson v.

Cellco P’ship, 164 Cal. App. 4th 1583, 1593 (2008) (quoting Lectrodryer v. SeoulBank, 77

Cal. App. 4th 723, 726 (2000)). The First Amended Complaint adequately alleges that

Plaintiff has not been paid for “performance incentive compensation” and overtime

compensation which Plaintiff has earned. (Doc. # 8 ¶¶ 11, 32). This is sufficient to allege that

Lennar received “a benefit and ... unjust[ly] ret[ained] ... the benefit at the expense of

[Plaintiff].” Peterson, 164 Cal. App. 4th at 1593. The Motion to Dismiss the Fifth Cause of

Action is denied.

III. Conclusion

IT IS HEREBY ORDERED that the Motion to Dismiss is DENIED. (Doc. # 11).

DATED: November 10, 2009

WILLIAM Q. HAYES

United States District Judge

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