Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-03387/USCOURTS-cand-5_05-cv-03387-1/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 28:1441 Petition for Removal

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 This disposition is not designated for publication and may not be cited.

Case No. C 05-3387 JF

ORDER DENYING IBM’S MOTION TO DISMISS

(JFLC1)

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

MARY HELEN WOODSON,

 Plaintiff,

 v.

INTERNATIONAL BUSINESS MACHINES,

INC.,

 Defendant.

Case Number C 05-3387 JF

ORDER1 DENYING IBM’S MOTION

TO DISMISS

[re: docket no. 22]

Defendant International Business Machines, Inc. (“IBM”) moves to dismiss the second

amended complaint (“SAC”) of Plaintiff Mary Helen Woodson (“Woodson”) for failure to state a

claim upon which relief may be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6). 

The Court has considered the briefing of the parties and the oral arguments presented at the

hearing on April 28, 2006. For the reasons discussed below, the motion will be denied.

I. BACKGROUND

Woodson filed the complaint in this action in the Santa Clara Superior Court on May 10,

2005, and filed a first amended complaint (“FAC”) on July 8, 2005. On the basis of diversity

Case 5:05-cv-03387-JF Document 34 Filed 05/02/06 Page 1 of 11
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Case No. C 05-3387 JF

ORDER DENYING IBM’S MOTION TO DISMISS

(JFLC1)

jurisdiction, IBM removed the action to this Court on August 19, 2005. On November 8, 2005,

this Court granted IBM’s motion to dismiss for failure to state a claim upon which relief may be

granted. Woodson’s claim for religious discrimination was dismissed without leave to amend

because Woodson conceded that this claim was time-barred. Woodson’s claims for age and

disability discrimination were dismissed with leave to amend because Woodson did not allege

any facts demonstrating how her transfer to a new position resulted in a substantial adverse

change in the terms and conditions of her employment. Woodson’s claim for breach of contract

was dismissed with leave to amend because Woodson did not allege how her transfer within the

company breached any of the employment terms recited in the FAC. Woodson’s claim for

breach of implied covenant, which asserted that IBM’s breach of contract was in bad faith, was

dismissed because Woodson failed to allege adequately a breach of contract.

On December 5, 2005, Woodson filed a second amended complaint (“SAC”), in which

she alleges the following. Woodson was hired by IBM as an Advisory Software Engineer in

November 2000, at which time she had thirteen years of prior employment with IBM. SAC at ¶

3. She always received positive performance reviews. Id. On June 24, 2002, her position was

eliminated and she was informed that her employment would be terminated unless she found

another position at IBM within thirty days. Id. at ¶ 4. At this time, Woodson was 57 years old

and was disabled by back problems that had developed after an auto accident. Id. at ¶¶ 5-6, 24. 

Her co-workers and her supervisor were aware of these back problems. Id. at ¶ 24. 

Woodson’s position was the only position eliminated in her department, Department

M72. Id. at ¶ 9. She was told that the decision to eliminate her position was based upon

performance and skills. Id. at ¶ 8. However, she alleges that the elimination of her position was

merely a pretext, and that IBM in fact was motivated by age and disability discrimination. Id. at

¶¶ 39 and 48. Woodson believes that she was the oldest or one of the oldest employees and the

only disabled employee of Department M72 when she was terminated. Id. at ¶¶ 9-10. She

alleges that younger employees and employees without disabilities, with less skill and

experience, were retained. Id. at ¶ 40.

Before she was terminated, Woodson worked as a member of the DFSORT work group

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Case No. C 05-3387 JF

ORDER DENYING IBM’S MOTION TO DISMISS

(JFLC1)

and as a Level 3 support person for DFSORT. Id. at ¶ 15. After she was terminated, she found a

new position as a Level 2 support person in Department L55, for DFSORT and MVS Utilities. 

Id. at ¶ 18. Woodson alleges that the transition from a Level 3 position to a Level 2 position

constituted a demotion. Id. at ¶ 38. Instead of assisting Level 2 support with complicated

problems, as she has as Level 3 support, she was working as Level 2 support herself. Id. at ¶ 19. 

She also believes that some of the Level 2 support employees resented her for having worked

previously to improve the performance of DFSORT Level 2 support. Id. at ¶ 20. Woodson also

alleges that “[i]t is quite common for developers and Level 3 support people to look down on

Level 2 support people and to regard them as less competent and valuable.” Id. at ¶ 33.

There are numerous ways in which a Level 2 support position is different from a Level 3

support position. While Level 3 support personnel have a great deal of flexibility in their

schedules, Level 2 support personnel are required to be on call during off-shift hours and meet

particular response-time criteria (ranging from one to four hours). Id. at ¶¶ 21-22. The flexibility

that Woodson enjoyed in her previous position allowed her to take advantage of the employee

gym, which was helpful in managing her back pain. Id. at 23-25. Without flexibility in her

schedule as a Level 2 support, Woodson was unable to go to the gym regularly during the

workday, and her back pain increased. Id. at ¶ 26. The earlier morning work hours required of a

Level 2 support also limited Woodson’s ability to take a pain medication that caused sedation. 

Id. at 27. Woodson’s resultant back pain caused her to lie on the floor at work and affected her

work performance. Id. at ¶ 28.

Woodson did not get a pay cut in her new position. Id. at ¶ 31. She alleges that whenever

anyone at IBM begins in a new position, it is required (although there are rare exceptions) that he

or she receive a low performance rating (a “3”). Id. at ¶ 11. Because Woodson hoped to get a

higher performance rating than the usual low rating, she “began working 12-16 hours on many

days in order to reduce the backlog and improve her chances of getting a ‘2’on her first

evaluation in the job.” Id. at ¶ 29. However, Woodson’s first performance review was “the

obligatory ‘3,’” which prevented her from getting the salary increase that she likely would have

received in her previous position and put her at risk in case of a layoff. Id. at ¶¶ 30-32.

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Case No. C 05-3387 JF

ORDER DENYING IBM’S MOTION TO DISMISS

(JFLC1)

Woodson alleges generally that “she has sustained and continues to sustain substantial

losses in earnings and other employment benefits,” and that “she has suffered and continues to

suffer humiliation, emotional distress, and mental and physical pain and anguish.” Id. at ¶¶ 42-

43.

Woodson further alleges that there was an express and implied-in-fact employment

contract between herself and IBM, which included the following terms and conditions:

Plaintiff would be able to continue her employment with Defendant

indefinitely as long as she carried out her duties in a proper and competent

manner;

Plaintiff would not be demoted, discharged, or otherwise disciplined, nor

would Plaintiff’s job functions be reassigned for other than good cause with notice

thereof.

Id. at ¶ 56. She alleges that this contract was evidenced by: (a) IBM’s written personnel policies

and discipline procedures, (b) “[t]he existence of an established policy within [IBM], which was

known to and relied on by Plaintiff,” and (c) oral and written representations by her superiors that

Woodson was doing a satisfactory job. Id. at ¶ 57. Woodson relied on these representations and

thought that her employment was secure. Id.

Finally, Woodson alleges that her employment agreement with IBM contained an implied

covenant of good faith and fair dealing, which “required Defendants to fairly, honestly, and

reasonably perform the terms and conditions of the employment agreement.” Id. at ¶ 63. 

Woodson was in an unequal bargaining position with IBM, and, because her employment was the

basis of her entire livelihood, was vulnerable to IBM. Id. at ¶ 64. Woodson alleges that IBM

breached the implied covenant by, among other things, terminating her in bad faith, knowingly

terminating her without just cause, applying different standards to her than to other employees,

not following written personnel policies, and not placing her in available alternative positions. 

Id. at ¶ 65.

Based upon these allegations, Woodson asserts the following claims: (1) age

discrimination in violation of California’s Fair Employment and Housing Act (“FEHA”), Cal.

Gov’t Code § 12940 et seq.; (2) disability discrimination in violation of FEHA; (3) breach of

employment contract; and (4) breach of the implied covenant of good faith and fair dealing. 

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Case No. C 05-3387 JF

ORDER DENYING IBM’S MOTION TO DISMISS

(JFLC1)

 II. LEGAL STANDARD

“A court may dismiss a complaint only if it is clear that no relief could be granted under

any set of facts that could be proved consistent with the allegations.” Hishon v. King &

Spaulding, 467 U.S. 69, 73 (1984). For purposes of a motion to dismiss, the plaintiff’s

allegations are taken as true, and the Court must construe the complaint in the light most

favorable to the plaintiff. Jenkins v. McKeithen, 395 U.S. 411, 421 (1969). The pleading of a

pro se litigant is held to a less stringent standard than a pleading drafted by an attorney, and is to

be afforded the benefit of any doubt. Haines v. Kerner, 404 U.S. 519, 520 (1972); Karim-Panahi

v. Los Angeles Police Department, 839 F.2d 621, 623 (9th Cir. 1988). Further, a pro se litigant

must be given leave to amend unless it is absolutely clear that the deficiencies of the complaint

could not be cured by amendment. Lucas v. Department of Corrections, 66 F.3d 245, 248 (9th

Cir. 1995). 

III. DISCUSSION

a. Claims 1 and 2: Age and disability discrimination

With respect to the claims for age discrimination and disability discrimination, IBM

argues that Woodson has failed to allege facts demonstrating that she suffered an adverse

employment action. Woodson argues that it is not necessary that she allege an adverse

employment action in order to establish a prima facie case of discrimination under FEHA. 

However, IBM correctly argues that:

To establish a prima facie claim for violation of the California Fair Employment

and Housing Act (FEHA), plaintiff must introduce evidence demonstrating that

he: (1) has a disability, (2) is otherwise qualified for employment, and (3) has

suffered an adverse employment action because of the disability.

Swonke v. Sprint Inc., 327 F.Supp.2d 1128, 1133 (N.D. Cal. 2004) (citing Brundage v. Hahn, 57

Cal.App.4th 228, 236 (1997)). The issue presently before the Court is whether Woodson’s

additional allegations—including, for example, that her work hours became less flexible, that she

lost an opportunity for a pay raise, that the conditions of her work led to increased pain—are

sufficient to establish that Woodson’s intra-company transfer constituted an adverse employment

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 Woodson also argues that IBM has not met its burden under the McDonnell-Douglas

burden-shifting framework. McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). 

However, under that framework, the plaintiff has the initial burden of establishing a prima facie

case of discrimination. Godwin v. Hunt Wesson, Inc., 150 F.3d 1217, 1220 (9th Cir. 1998). 

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Case No. C 05-3387 JF

ORDER DENYING IBM’S MOTION TO DISMISS

(JFLC1)

action.2

While the definition of adverse employment action is not limited to “ultimate” decisions

regarding hiring, firing, demoting or failing to promote, an employment action is actionable only

if it results in “a substantial adverse change in the terms and conditions” of employment. Akers

v. County of San Diego, 95 Cal.App.4th 1441, 1455 (2002); see also Horsford v. Board of

Trustees of California State Univ., 132 Cal.App.4th 359, 373 (2005). “A change that is merely

contrary to the employee’s interests or not to the employee’s liking is insufficient.” Akers, 95

Cal.App.4th at 1455.

In Yanowitz v. L'Oreal USA, Inc., in which the California Supreme Court concluded that

the standard under FEHA for adverse employment actions is the same for retaliatory actions as

for discriminatory actions, the court held:

Minor or relatively trivial adverse actions or conduct by employers or fellow

employees that, from an objective perspective, are reasonably likely to do no more

than anger or upset an employee cannot properly be viewed as materially affecting

the terms, conditions, or privileges of employment and are not actionable, but

adverse treatment that is reasonably likely to impair a reasonable employee’s job

performance or prospects for advancement or promotion falls within the reach of

the antidiscrimination provisions of [FEHA]. 

Yanowitz v. L’Oreal USA, Inc., 36 Cal.4th 1028, 1050, 1054 (2005). An employer’s actions need

not constitute “one swift blow,” but rather may consist of “a series of subtle, yet damaging,

injuries.” Id. at 1056. The Yanowitz court concluded that the actions directed at Yanowitz

constituted adverse employment action: “Months of unwarranted and public criticism of a

previously honored employee, an implied threat of termination, contacts with subordinates that

only could have the effect of undermining a manager’s effectiveness, and new regulation of the

manner in which the manager oversaw her territory did more than inconvenience Yanowitz. Such

actions, which for purposes of this discussion we must assume were unjustified and were meant

to punish Yanowitz for her failure to carry out her supervisor’s order, placed her career in

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 Because of the similarity between FEHA and Title VII of the federal Civil Rights Act,

California courts “often look to federal decisions interpreting [this statute] for assistance in

interpreting the FEHA.” Reno v. Baird, 18 Cal.4th 640, 647 (1998).

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ORDER DENYING IBM’S MOTION TO DISMISS

(JFLC1)

jeopardy.” Id. at 1060.

A reduction in an employee’s potential for career advancement may constitute an adverse

employment action. Akers, 95 Cal.App.4th at 1456 (“Where an employer reacts to a

discrimination complaint by eliminating a reasonable potential for promotion or materially

delaying the promotion, there is a legally tenable basis for a jury to find the employer

substantially and materially adversely affected the terms and conditions of the plaintiff's

employment.”) (citing Boone v. Goldin, 178 F.3d 253, 255-57 (4th Cir.1999)). In Akers, a deputy

district attorney received “a negative performance review and counseling memorandum—

accusing her of ‘incompetence,’ ‘dishonesty’ and ‘insubordination.’” Id. It was “undisputed that

‘an accusation of dishonesty’ against a prosecutor ‘can be a career ender’ and that a deputy

district attorney’s reputation for honesty is an essential quality of a successful prosecutor.” Id. 

While, “[a]ll agreed [that the plaintiff] was a fine trial attorney capable of handling difficult and

sensitive cases,” her supervisor told her that “she would never again work in the domestic

violence arena—an area in which she excelled—and top management refused to transfer her to

the elder abuse unit.” Id. The plaintiff’s next promotion level “was highly competitive and

largely controlled by the ‘subjective evaluations’ of superiors,” and “there was evidence showing

[she] left the district attorney's office because of the adverse actions taken against her and the

severe damage to her reputation within the office.” Id.

In Boone, the Fourth Circuit held that, “based on our certainty that Congress did not

intend Title VII to provide redress for trivial discomforts endemic to employment,”

“reassignment can only form the basis of a valid Title VII claim if the plaintiff can show that the

reassignment had some significant detrimental effect on her.” Boone, 178 F.3d at 256.3 While “a

change in working conditions may be a factor to consider in assessing whether a reassignment

qualifies as an adverse employment action that could give rise to Title VII liability,” an assertion

that the new position involved work that “was unfamiliar and more stressful” did not rise to the

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(JFLC1)

level of constituting an adverse employment action. Id. 

In a case involving three members of a police department, the California Court of Appeal

found that various modifications of employment constituted adverse employment actions. When

the first member of the department, a police lieutenant, was “removed from his former position

near the top of the department’s chain of command” and then “removed entirely from law

enforcement duties, the objective terms and conditions of employment [had] been adversely

affected.” Horsford, 132 Cal.App.4th at 374. Also, “[w]hen that same veteran police

administrator is transferred to head a department in which he has no training or expertise (and in

which position he was inferably expected to fail), the terms and conditions of employment have

been adversely changed.” Id. Similarly, the second member of the department’s “suspension

from duty for lying on a police report”—which “can destroy a police officer’s career”

—constituted adverse employment action. Id. (specifying that this holding applied “in the

particular factual context of employment as a peace officer”). Additionally, with respect to the

second member of the police department, “reduction in authority and negative performance

reviews also constitute adverse employment action.” Id. The third member of the police

department was “removed from a highly desirable position as the investigative officer for the

department and was placed on administrative leave for a period of months as a result of [the

police chief’s] claim that [he] was mentally unstable.” Id. This, too, was held to constitute

adverse employment action. Id.

In Patten v. Grant Joint Union High School Dist., 134 Cal.App.4th 1378, 1381-83

(2005), a school principal sued a school district for retaliation after being transferred from a

large, underperforming middle school, to a smaller middle school with higher achieving students. 

The school district claimed the transfer did not constitute an adverse employment action because

plaintiff was still a principal, her wages, benefits and duties remained the same, and the transfer

allowed her to use her skills in curriculum development. Id. at 1389. The court found that the

transfer constituted a material adverse employment action because plaintiff was a young

principal, with her entire career ahead of her, and the smaller, high achieving school presented

her with less of an opportunity to distinguish herself. Id. 

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Case No. C 05-3387 JF

ORDER DENYING IBM’S MOTION TO DISMISS

(JFLC1)

Construing the allegations in the light most favorable to Woodson, and considering that

Woodson is proceeding pro se, the Court concludes that Woodson’s allegations are just enough

to state a claim that she was subjected to an adverse employment action. While it is possible that

Woodson may not be able to support her allegation with sufficient factual evidence, that is a

question to be decided on summary judgment. Accordingly, the Court will not dismiss

Woodson’s claims for age and disability discrimination.

b. Claims 3 and 4: Breach of contract & Breach of the implied covenant of good faith

and fair dealing

Woodson’s claim for breach of contract alleges that IBM violated the alleged contractual

obligation that “Plaintiff would not be demoted, discharged, or otherwise disciplined, nor would

Plaintiff’s job functions be reassigned for other than good cause with notice thereof.” SAC at ¶

56. Woodson alleges that the transition from a Level 3 position to a Level 2 position constituted

a demotion. Id. at ¶ 38. Again construing the allegations in the light most favorable to

Woodson, and considering that Woodson is proceeding pro se, the Court concludes that

Woodson’s allegations are just enough to state a claim for breach of contract. IBM’s contention

that Woodson was an at-will employee may be revisited on summary judgment. Accordingly, the

Court will not dismiss Woodson’s claim for breach of contract.

Finally, Woodson alleges that her employment agreement with IBM contained an implied

covenant of good faith and fair dealing, which “required Defendants to fairly, honestly, and

reasonably perform the terms and conditions of the employment agreement.” Id. at ¶ 63. Under

California law, every contract contains an implied covenant of good faith and fair dealing. 

Kransco v. American Empire Surplus Lines Ins. Co., 23 Cal.4th 390, 400 (2000). This implied

covenant requires that neither party do anything that will deprive the other of the benefits of the

contract. Id. Woodson alleges that IBM breached the implied covenant by terminating her from

her position as Level 2 support in bad faith and for arbitrary and unfair reasons. Having

concluded that Woodson has stated a claim for breach of contract, the Court will not dismiss

Woodson’s claim for breach of the implied covenant of good faith and fair dealing.

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Case No. C 05-3387 JF

ORDER DENYING IBM’S MOTION TO DISMISS

(JFLC1)

IV. ORDER

Good cause therefore appearing, IT IS HEREBY ORDERED that the motion to dismiss is

DENIED. Defendants shall file their answer within twenty (20) days of the date of this Order.

DATED: May 2, 2006

__________________________________

JEREMY FOGEL

United States District Judge

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Case No. C 05-3387 JF

ORDER DENYING IBM’S MOTION TO DISMISS

(JFLC1)

This Order was served on the following persons:

Plaintiff pro se:

Mary Helen Woodson

475 Milan Drive, #102

San Jose, CA 95134

Counsel for Defendant IBM:

Patrick C. Doolittle & Scott G. Lawson

Quinn Emanuel Urquhart Oliver & Hedges, LLP

50 California Street, 22nd Floor

San Francisco, CA 94111

Case 5:05-cv-03387-JF Document 34 Filed 05/02/06 Page 11 of 11