1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Kim Cramton,

Plaintiff,

v. 

Grabbagreen Franchising LLC, et al.,

Defendants.

No. CV-17-04663-PHX-DWL

ORDER 

The parties have filed a series of interrelated motions in this hotly contested 

employment action. (Docs. 142, 143, 200, 206, 220, and 229.) The motions recently 

became fully briefed, and the Court hereby rules as follows.

BACKGROUND

I. The Parties, Claims, And Essential Facts1

From September 2014 through September 2017, Plaintiff Kim Cramton 

(“Cramton”) was affiliated in various capacities with a trio of related entities, Grabbagreen 

Franchising, LLC (“GFL”), Eat Clean Operations, LLC (“ECO”), and Eat Clean Holdings, 

LLC (“ECH”) (collectively, the “Corporate Defendants”). The business purpose of the 

Corporate Defendants, which were owned and/or operated by Keely Newman (“Keely”)

and her spouse, attorney Kelli Newman (“Kelli”), was to oversee the “Grabbagreen”

restaurant franchise, which features healthy fast food and juice. For ease of reference, the 

 

1 The Background section of the order is simply intended to give a broad overview of 

the issues and claims in this case. To the extent material disputes of fact exist, they will be 

addressed in further detail in the Discussion section.
- 2 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Corporate Defendants, Keely, and Kelli will be referred to collectively as “Defendants.” 

On September 25, 2017, Cramton stopped working for Defendants. At the time of 

her departure, Cramton held an 18.6% ownership interest in ECH. However, in October 

2017, Keely purported to exercise a contractual provision that permitted her to repurchase 

Cramton’s ownership interest for $1 if Cramton voluntarily resigned. Later, in November 

2017, Cramton began working for Kahala Brands Ltd. (“Kahala”), where her role was to 

promote the franchising of the “Blimpie” line of sandwich shops. 

Cramton filed this lawsuit in December 2017. The operative 10-count complaint 

(Doc. 88) raises claims that can be grouped into the following four categories:

▪ ADA Claims (Counts 1-3): Cramton contends she became disabled in April 2017, 

after being diagnosed with a brain aneurysm, yet the Corporate Defendants refused her 

request for an accommodation, retaliated against her, and subjected her to emotional abuse. 

Cramton thus contends her seeming resignation on September 25, 2017 was actually a 

constructive discharge. 

▪ Minimum Wage Claim (Count 4): Cramton contends she didn’t receive any 

wages for her work for Defendants throughout 2017, in violation of Arizona’s minimum 

wage statute. Nevertheless, in late 2017, Cramton received a W-2 statement stating GFL 

had paid her $25,000 in wages in 2017. Cramton contends the $25,000 didn’t constitute 

wages (instead, it represented the partial repayment of a loan) and that Defendants 

improperly issued the W-2 in an attempt to evade liability on her wage claim.

▪ Contract Claim (Count 5): Cramton contends she loaned over $66,000 to ECO 

in October 2016, to help fund the acquisition of a Grabbagreen franchise location, but has 

only received partial repayment on the note. 

▪ Tort And Contract Claims (Count 6-10): These claims all arise, in one form or 

another, from a phone call on September 18, 2017 during which Keely allegedly told 

Cramton that a planned sale of Grabbagreen to Kahala had fallen through and that Kahala 

would not be making any future offers. Cramton departed soon after receiving this 

information. In fact, Kahala ended up acquiring Grabbagreen in March 2018 for $2.675 
- 3 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

million, and Cramton contends that Keely’s statement during the phone call was false 

because Keely knew at the time that Kahala remained interested in an acquisition. Cramton 

thus seeks, under a variety of tort and contract theories, the portion of the Kahala 

acquisition proceeds she would have received if she hadn’t left the company in September 

2017.

Defendants deny these allegations and assert an array of counterclaims against 

Cramton. (Doc. 95.) In a nutshell, Defendants contend that Cramton violated a 

confidentiality and non-compete agreement, and engaged in unfair competition, by joining 

Kahala, an alleged competitor in the restaurant franchise industry; violated a contractual 

release of claims by bringing this lawsuit; and wrongfully interfered with their efforts to 

sell Grabbagreen to Kahala, causing the ultimate sale price to be at least $1 million lower 

than it should have been. Defendants’ overarching theory is that Cramton impulsively 

resigned in September 2017, didn’t realize she was forfeiting her 18.6% ownership interest 

by doing so, and concocted this lawsuit in an effort to recoup the $500,000 or so she would 

have earned from the Kahala acquisition if she’d stuck around instead of resigning. (See, 

e.g., Doc. 143 at 5; Doc. 172 at 1.)

One of the key issues in this case is what, exactly, Cramton knew about Kahala’s 

acquisition plans when she resigned. In addition to disputing Cramton’s characterization 

of what Keely said during the fateful phone call on September 18, 2017—according to 

Defendants, Keely merely told Cramton that Kahala had declined to accept a particular

offer and didn’t say the overall deal was dead—Defendants contend that Cramton had 

friends within Grabbagreen and Kahala who were secretly feeding her information about 

Kahala’s plans. (This theory, if true, would undermine Cramton’s suggestion that she 

detrimentally relied on Keely’s purported statement.) In Defendants’ view, the evidence 

of these communications should have been found on Cramton’s company-issued computer 

and cell phone. Unfortunately, around the time of her departure, Cramton brought both 

devices to a third-party data vendor in an attempt to have them “wiped.” Much ink has 

been spilled over what consequences, if any, should flow from that decision.
- 4 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

II. Relevant Procedural Background 

On December 13, 2018, Defendants deposed Cramton. (Doc. 107.) Afterward, 

Defendants filed a motion seeking authorization to conduct three additional hours of 

examination. (Id.) 

On December 28, 2018, the Court issued an order denying Defendants’ request. 

(Doc. 108.)

On February 22, 2019, Defendants filed a motion for reconsideration, arguing, inter 

alia, that Cramton had submitted declarations following her deposition that contradicted 

her deposition testimony and her MIDP disclosures. (Doc. 136.)

On March 1, 2019, Cramton filed a motion for partial summary judgment. (Doc. 

142.) It seeks summary judgment on Count 4 (the minimum wage claim), on Count 5 (the 

breach-of-contract claim pertaining to the promissory note), on whether the Corporate 

Defendants comprise an “integrated enterprise” for purposes of Counts 1-3 (the ADA 

claims), and on all of Defendants’ counterclaims, which Cramton contends were “only 

asserted for purposes of maliciously imposing additional litigation costs against [her].” (Id.

at 2-3.) This motion appeared to become fully briefed on April 16, 2019. (Docs. 158, 171.)

Separately, on March 1, 2019, Defendants filed their own motion for summary 

judgment. (Doc. 143.) It seeks summary judgment on all of Cramton’s claims except 

Count 5 (the breach-of-contract claim pertaining to the promissory note). This motion also 

appeared to become fully briefed on April 16, 2019. (Docs. 159, 172.)

On April 30, 2019, the Court issued an order granting Defendants’ motion for 

reconsideration and authorizing Defendants to re-depose Cramton for three hours on 

certain topics. (Doc. 175.)

On May 21, 2019, the renewed deposition took place. (Doc. 184 at 1.)

On June 3, 2019, and seemingly in response to the testimony she had provided 

during the renewed deposition, Cramton filed a motion to withdraw her “request for 

summary judgment with respect to the amount of damages ($56,499) claimed in support of 

her minimum wage claim.” (Doc. 184.) This unopposed request was later granted. (Doc. 
- 5 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

203 at 1.)

On June 20, 2019, Defendants notified the Court of their desire to file a sanctions 

motion against Cramton based upon her alleged spoliation of evidence. (Doc. 197.) The 

following day, after holding a hearing, the Court authorized Defendants to file such a

motion. (Doc. 195.)

On July 12, 2019, Defendants filed a motion to supplement their summary judgment 

motion, as well as their response to Cramton’s summary judgment motion, to include 

certain admissions Cramton had made during her renewed deposition. (Doc. 200.) That 

motion became fully briefed on July 22, 2019. (Docs. 202, 205.)

On July 22, 2019, Defendants filed their sanctions motion. (Doc. 206.) Among 

other things, it seeks dismissal of most of the counts in Cramton’s complaint. (Id. at 19.) 

That motion appeared to become fully briefed on August 30, 2019. (Docs. 216, 221.)

On July 28, 2019, Cramton submitted an errata sheet concerning the testimony she 

had provided during her renewed deposition. (Doc. 220-1.)

On August 30, 2019, Kelli (who, by this point, had begun representing herself pro 

se, see Doc. 178) filed a motion to strike Cramton’s errata sheet under the theory that the 

proposed changes were not mere errata, but substantive changes intended to bolster her 

litigation position. (Doc. 220.) That motion became fully briefed on September 19, 2019. 

(Docs. 225, 228.) And during oral argument, the remaining Defendants joined Kelli’s

motion.

On November 1, 2019, Cramton filed a motion for leave to file a surreply to 

Defendants’ sanctions motion. (Doc. 229.) That motion became fully briefed on 

November 15, 2019. (Docs. 230, 231, 232.)

On December 10, 2019, the Court issued a tentative ruling addressing the parties’ 

six pending motions. (Doc. 238.)

On December 16, 2019, the Court heard oral argument on the motions. (Doc. 241.)

On December 20, 2019, Cramton submitted a supplemental brief concerning one of 

her ADA claims. (Doc. 243.)
- 6 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

DISCUSSION

Before addressing the parties’ cross-motions for summary judgment, the Court will 

resolve the other pending motions. This approach is necessary because the resolution of 

those motions may narrow, or moot, the summary judgment arguments.

I. Defendants’ Motion To Supplement The Record (Doc. 200)

As noted, Cramton’s initial deposition took place on December 13, 2018, but the 

Court later authorized Defendants to pursue three additional hours of deposition time. 

(Doc. 175.) The renewed deposition took place on May 21, 2019, and Defendants then 

moved to supplement their motion for summary judgment, as well as their response to 

Cramton’s motion for summary judgment, with certain testimony from the May 21 

deposition. (Doc. 200.) Cramton opposes the motion on the ground that Defendants are 

attempting “to supplement the summary judgment record with unrelated information that 

was within their custody and control at the time the summary judgment briefing was filed.” 

(Doc. 202.) Cramton also argues “there is no need to supplement the summary judgment 

record with respect to the number of hours worked claimed because Ms. Cramton already 

moved to withdraw that portion of her summary judgment record. (Doc. #184). That 

motion was unopposed by the Grabbagreen defendants.” (Id.)

Defendants’ motion will be granted. Cramton has not demonstrated that the 

information Defendants seek to add to the record was available to them at the time of the 

initial summary judgment briefing and the Court can decide for itself whether the newly

added information is relevant to its analysis.

II. Defendants’ Motion For Sanctions (Doc. 206)

Defendants move for sanctions due to Cramton’s alleged failure to preserve and 

produce certain electronically stored information (“ESI”)—specifically, text messages and 

voicemails—pertaining to four witnesses: (1) John Wuycheck, a current employee of 

Kahala; (2) Jeff Farnell, a former employee of GFL; (3) Todd Cable, another former 

employee of GFL; and (4) Adrienne Savone, Cramton’s niece. (Doc. 206.) 

...
- 7 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

A. Underlying Facts

1. Cramton’s anticipation of litigation

On multiple occasions between April 2017 and September 2017, Cramton consulted 

with attorneys about matters related to her employment. On April 17, 2017, Cramton spoke 

with an attorney, Grabbagreen’s outside counsel Juliet Peters, about how to request FMLA 

leave from Defendants. (Doc. 199-1 at 29-30.) In response, Ms. Peters advised Cramton 

to “[i]nsulate yourself” by obtaining a doctor’s note and further advised Cramton to speak 

with a different attorney, Catherine Pearson. (Doc. 199-1 at 29-30.) That same day, 

Cramton spoke with Ms. Pearson, who provided advice concerning how to submit a 

reasonable accommodation request to Defendants. (Doc. 199-1 at 27.) Cramton later 

thanked Ms. Peters for referring her to Ms. Pearson, stating: “She’s awesome. . . . She 

gave me some great advice and sent me an email indicating what I might want to say to 

Keely.” (Doc. 199-1 at 30.) 

Next, on June 16, 2017, Cramton told her therapist that, because she was “unsure of 

whether [her] partner/boss will distribute her %,” she “is hiring an employment lawyer.” 

(Doc. 199-1 at 42.) And on June 23, 2017, Cramton consulted with a third attorney, Shelley 

DiGiacomo, and was told to “make notes” of calls with Keely because such notes “may be 

useful to a litigator in the future.” (Doc. 199-1 at 36.) 

On September 19, 2017, Cramton corresponded with Ms. DiGiacomo about how to 

submit a demand to Defendants for repayment of an overdue note and how to obtain one 

month’s worth of severance pay upon resigning. (Doc. 199-1 at 9.) Following this 

discussion, Cramton texted her spouse that “I spoke with my attorney today and I am going 

to quit.” (Doc. 199-1 at 10.) Finally, on September 22, 2017, Ms. DiGiacomo drafted 

Cramton’s resignation letter, which Defendants received on September 24, 2017 and which 

stated that “Ms. Cramton is resigning her position [with GFL] and its related entities 

effective September 25, 2017.” (Doc. 199-1 at 12.) 

2. The company-issued cell phone and computer

While she was employed by Defendants, Cramton used a company-issued cell 
- 8 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

phone and company-issued computer. (Doc. 199-1 at 74.) On September 24, 2017—the 

same day she submitted her resignation letter—Cramton purchased a new cell phone and 

went to the Verizon store to set it up. (Doc. 199-1 at 75-81.) Cramton also brought her 

company-issued cell phone to the store. (Id.) While there, Cramton arranged for a store 

employee to transfer all of the data, pictures, contacts, text messages, and e-mails from the 

old phone to the new phone. (Id. at 80-81.)

On September 25, 2017, the day after receiving Cramton’s resignation letter, 

Defendants sent a response to Ms. DiGiacomo. (Doc. 19-1 at 14-15.) Among other things, 

this letter included a “demand that [Cramton] immediately return all Grabbagreen property 

of any nature whatsoever to Grabbagreen, including . . . the computer [and] cell phone . . . 

. [A]ll data on the cell phone or sent using that company device belongs to Grabbagreen.” 

(Id. at 14.) 

On September 26, 2017, Cramton contacted Carl Wilson, a representative of a 

company called P.C. Guru, to explain that “I’ve left Grabbagreen so I . . . need to reset the 

Mac[intosh computer] I had before I turn it in.” (Doc. 199-1 at 24.)

On September 27, 2017, Cramton met with Mr. Wilson. The invoice from that 

meeting states that Cramton paid $350 for Mr. Wilson to “move data” from her companyissued computer and to “clean up and erase” her company-issued cell phone. (Doc. 199-1 

at 101.) In her declaration (and during her deposition), Cramton explained that she only 

asked Mr. Wilson to save the emails between herself and Keely that were contained on the 

computer, without requesting a backup of the entire hard drive, but Mr. Wilson ended up 

making a complete backup copy (which she didn’t realize until later). (Doc. 199-1 at 39 

¶¶ 10-11; Doc. 216-1 at 45-46.)

That same day, Ms. DiGiacomo sent a response letter to Defendants. (Doc. 199-1 

at 98.) Among other things, this letter promised that Cramton would return her companyissued cell phone and computer by September 29, 2017. (Id.)

3. The ESI-related demands and correspondence

On April 20, 2018, Defendants provided Cramton with their initial disclosure 
- 9 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

pursuant to the Court’s mandatory initial disclosure pilot program (“MIDP”). (Doc. 216-

1 at 60-82.) Defendants’ disclosure identified 23 witnesses as “likely to have discoverable 

information relevant to any party’s claims and defenses.” (Id. at 61-67.) Among the named 

individuals were Wuycheck, who was expected to possess information concerning “[h]is 

conversations with Kim Cramton on September 22, 2017 and at other times related to 

Kahala’s Grabbagreen acquisition” (id. at 62), and Farnell and Cable, former GFL 

employees who were expected to possess information concerning “Cramton’s work 

schedule and her HR role” (id. at 66). Defendants’ MIDP disclosure did not, in contrast, 

identify Savone as a person who likely possessed discoverable information. In addition, 

Defendants’ MIDP disclosure did not specifically state that the text messages on Cramton’s 

cell phone needed to be preserved.

On May 2, 2018, Cramton’s counsel provided Defendants’ counsel with a draft ESI 

agreement. (Doc. 216-1 at 85-97.) Among other things, this draft agreement provided that 

Cramton “do[es] not have a significant volume of ESI relevant to this dispute,” that “[t]he 

bulk of Ms. Cramton’s relevant email correspondence is either in the possession and 

control of Defendants (her former employer) or non-party Kahala Brands (her current 

employer),” that Cramton “has preserved on a hard drive her email correspondence [with 

Keely],” and that Cramton “agrees to turn over this hard drive” but “[a]ll remaining 

production of documents by [Cramton] will proceed through the typical (non-ESI) 

procedures.” (Id. at 92.) It appears that Defendants never responded to this email, so the 

draft ESI agreement was never finalized.

On June 19, 2018, Cramton offered to provide Defendants with all of the emails 

involving Keely that she had saved from her company-issued computer. (Doc. 216-1 at 99 

[“[T]he hard drive is simply a [sic] imaged copy of all of Kim Cramton’s emails with Keely

. . . . We have repeatedly offered to [produce the hard drive], but you have not accepted 

that offer.”].)

On June 20, 2018, Defendants responded by stating that Cramton “has not produced 

anything related to the hard drive that [she] copied and then returned wiped. We are 
- 10 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

requesting that [Cramton] have a forensic person take possession of the hard drive copy 

she made and run a directory of all files on the hard drive. Once we have a copy of the 

directory files, then we can discuss with you what should be produced.” (Doc. 216-1 at 

103.)

On August 8, 2018, Defendants served Cramton with a request for production 

(“RFP”) seeking all communications with Wuycheck, Cable, or Farnell “related to 

Defendants or [Cramton] or the Grabbagreen business . . . from January 2, 2016 to the 

present.” (Doc. 216-1 at 120.) At some unspecified point after receiving this RFP, 

Cramton contends she “produced the texts in her phone with these individuals she could 

locate, regardless of relevance.” (Doc. 216 at 6. See also Doc. 199-1 at 40 ¶ 14 [Cramton’s 

declaration of January 4, 2019, stating “I have produced every text message that I have in 

my personal phone from the recipients that Defendants requested.”].) The parties’ briefs 

do not identify, with precision, how many such texts were produced or the date on which 

the production occurred.

On September 12, 2018, Cramton’s counsel informed Defendants’ counsel that 

“there are many more files on the hard drive that we previously thought, due to the fact that 

backups were performed that Ms. Cramton did not request or anticipate. I personally didn’t 

realize that these backups were on the hard drive before we sent it to our vendor for 

imaging.” (Doc. 216-1 at 110.) Given the volume of documents contained on the hard 

drive, Cramton’s counsel offered to immediately “turn over the entire hard drive to 

[Defendants],” as opposed to reviewing the hard drive and then only producing the subset 

of documents deemed discoverable by Cramton’s counsel. (Id.) The following day, the 

complete hard drive was produced to Defendants. (Doc. 142-7 at 2 [delivery receipt].)

On November 7, 2018, Defendants served Cramton with an RFP seeking all 

communications with Savone “related to Defendants or [Cramton] or the Grabbagreen 

business . . . from January 2, 2016 to the present.” (Doc. 216-1 at 124-25.) Cramton 

contends she responded to this request by “produc[ing] every text message . . . in [her] 

personal phone” with Savone. (Doc. 199-1 at 40 ¶ 14.)
- 11 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

That same day, Defendants served a Rule 45 subpoena on Savone seeking all of her 

communications “concerning or relating to Keely Newman, Kell[i] Newman, Kim 

Cramton, [Cramton’s spouse], and/or the Grabbagreen companies . . . from January 1, 2016 

to the present.” (Doc. 216-1 at 127-32.) In response, Savone apparently “produced some 

texts with Cramton and [Cramton’s spouse].” (Doc. 216 at 5.)

Finally, on November 7, 2018, Defendants also served a Rule 45 subpoena on 

Farnell seeking, inter alia, all “text messages . . . you had with Kim Cramton from April 

1, 2017 to the present date.” (Doc. 216-1 at 133-39.) On December 5, 2018, Farnell 

responded to the subpoena by stating that “I have searched my personal email account and 

text messages between the dates of December 1, 2016 and today” and “I have no 

communications with [Cramton] . . . regarding the relationship between [Cramton] and 

Keely or the lawsuit between [Keely and Cramton].” (Doc. 216-1 at 141-42.)

4. The depositions

As noted, Defendants’ motion for sanctions focuses on Cramton’s alleged failure to 

preserve ESI pertaining to four witnesses: Wuycheck, Farnell, Cable, and Savone.

Defendants did not depose three of those witnesses. They never noticed the 

depositions of Cable and Savone. As for Farnell, although Defendants initially noticed his 

deposition for December 2018, they informed Cramton a few days beforehand that they 

wished to “temporarily vacat[e] the deposition[] of . . . Farnell until we can get the 

document production issues resolved” (Doc. 216-1 at 162) and never rescheduled it.

Wuycheck testified during his deposition that he received a text message from 

Cramton on September 22, 2017. (Doc. 199-1 at 85-86.) In Defendants’ view, this was a 

critical text message because of its timing—it was sent four days after the disputed phone 

call between Keely and Cramton and two days before Cramton submitted her resignation 

letter. (Doc. 206 at 10-11; see also Doc. 220 at 3-4 [Defendants’ argument that “Cramton 

could not reasonably or justifiably rely on a statement purportedly made by Keely Newman 

on the September 18, 2017 call given Cramton’s demonstrated ability to get information 

directly from other sources, specifically her direct back channel communications with 
- 12 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Kahala’s lead contact Wuycheck”].)

On May 20, 2019, Defendants disclosed the text message logs for Cramton’s 

company-issued cell phone. (Doc. 216-2 at 3.) Cramton contends (Doc. 216 at 9-10)—

and Defendants initially didn’t dispute2—that these logs show that Cramton and Wuycheck 

engaged in a single, two-minute-long phone call on September 22, 2017 but didn’t 

exchange any text messages on that date.

On May 21, 2019, Cramton sat for her renewed deposition. During this session, 

Cramton initially denied ever communicating via text with Wuycheck. (Doc. 199-1 at 84 

[“I don’t think I even had individual text messages with John Wuycheck.”].) However, 

after being shown Wuycheck’s deposition transcript, Cramton stated that she did recall 

texting Wuycheck on September 22, 2017, and further stated that the text merely stated 

that “I wanted to talk to him.” (Doc. 199-1 at 88.) 

On June 11, 2019, Cramton’s counsel informed Defendants’ counsel via email that 

Cramton’s deposition testimony on this point was inaccurate. (Doc. 216-4 at 2 [“Ms. 

Cramton believes, after further reflection, that her communication with Mr. Wuycheck on 

the date in question was by voicemail, not by text message.”].) And in an errata sheet 

submitted on July 28, 2019—which is the subject of a motion to strike that is addressed in 

Part IV below—Cramton sought to change her deposition testimony on this point to reflect 

that “I believe it was a call not a text.” (Doc. 220-1 at 2.) 

B. Analysis

Defendants seek sanctions against Cramton pursuant to Rules 37(e)(1) and (e)(2) of 

the Federal Rules of Civil Procedure. (Doc. 206 at 2.) 

Rule 37(e) was “completely rewritten” in 2015 to “provide[] a nationally uniform 

standard for when courts can give an adverse inference instruction, or impose equally or 

more severe sanctions, to remedy the loss of ESI.” See generally S. Gensler, 1 Federal 

 

2

In their reply, Defendants didn’t dispute the factual accuracy of Cramton’s 

characterization of the phone records—they simply argued it would be unfair to allow 

Cramton to change her sworn testimony “based on her and her attorneys[’] review of 

AT&T records.” (Doc. 221 at 8.) However, in later filings and during oral argument, 

Defendants sought to develop different arguments. See Part II.B.1.a below. 
- 13 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Rules of Civil Procedure, Rules and Commentary, Rule 37, at 1070 (2018). The text of 

Rule 37(e) now provides:

If electronically stored information that should have been preserved in the 

anticipation or conduct of litigation is lost because a party failed to take 

reasonable steps to preserve it, and it cannot be restored or replaced through 

additional discovery, the court:

(1) upon finding prejudice to another party from loss of the 

information, may order measures no greater than necessary to cure the 

prejudice; or 

(2) only upon finding that the party acted with the intent to deprive 

another party of the information’s use in the litigation may: 

(A) presume that the lost information was unfavorable to the 

party;

(B) instruct the jury that it may or must presume the 

information was unfavorable to the party; or

(C) dismiss the action or enter a default judgment.

Id.

A party seeking sanctions under Rule 37(e) has a threshold duty to show that the 

ESI at issue was, in fact, lost or destroyed. Id., advisory committee note to 2015 

amendment (“The new rule applies only . . . when [ESI] is lost.”). If such a showing has 

been made, the court then must determine whether “(1) [the opposing party] failed to 

preserve . . . ESI ‘that should have been preserved’ in anticipation or conduct of litigation; 

(2) the information was lost because [the opposing party] failed to take reasonable steps to 

preserve it; (3) the ESI cannot be restored or replaced through additional discovery; and 

(4) the [party seeking sanctions] was prejudiced by the loss.” Fed. Trade Comm’n v. 

DirecTV, Inc., 2016 WL 7386133, *3 (N.D. Cal. 2016).

1. Threshold issue: was any ESI lost?

Although Defendants place heavy emphasis on the fact that Cramton arranged to 

have her company-issued computer and cell phone “wiped” before returning them, Rule 

37(e) doesn’t authorize sanctions against litigants who attempt, without success, to delete 

ESI. See Gensler, supra, at 1071 (“The requirement that information be lost means that 

Rule 37(e) does not address cases where intentional spoliators fail to achieve their intended 
- 14 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

purpose.”). Here, Mr. Wilson (the computer technician from P.C. Guru) made a backup of 

Cramton’s hard drive, even though she hadn’t requested one, and Cramton produced that 

hard drive to Defendants after it was discovered midway through this case. Moreover, the 

evidence shows that Cramton attempted to transfer the complete contents of her companyissued cell phone onto her new cell phone, and Cramton stated in her declaration that she 

has produced all of the texts with Wuycheck, Farnell, Cable, and Savone that were saved 

onto her new phone.3 Thus, unless Defendants can show that some text messages were lost 

during the hard drive backup process and/or that Cramton’s claims about her efforts to 

retrieve and produce text messages from her phone are inaccurate, Rule 37(e) sanctions are 

unavailable.

a. Defendants’ evolving theories

The process of assessing how much (if any) ESI is missing has been complicated by 

the fact that Defendants’ theories and allegations on this issue have changed over time. In 

their motion, although Defendants complained generally about the loss of “relevant 

evidence” (Doc. 206 at 6-8), they ultimately focused on Cramton’s communications with 

four witnesses—Wuycheck, Farnell, Cable, and Savone—and purported to identify a 

specific number of missing ESI communications pertaining to each witness (id. at 10-15). 

Defendants also explained they were relying primarily on two techniques—“independent 

forensic analysis4and a painstaking review of cell phone records” (id. at i)—to prove these 

communications were missing. 

As discussed in Part II.B.1.b below, Defendants’ initial effortsto prove the existence 

 

3 Cramton similarly testified during her renewed deposition that she didn’t delete any 

texts from Farnell, Cable, or Savone at any point in 2017. (Doc. 216-1 at 50-52.) However, 

Cramton later submitted an errata sheet—which is the subject of a motion to strike—stating 

that she may have deleted some text messages from Farnell and Cable unrelated to the case. 

(Doc. 216-1 at 58.)

4 Defendants retained an expert, John Forames, to conduct a forensic examination of 

the backup hard drive from Cramton’s work-issued computer. Although Mr. Forames was 

able to recover certain other forms of ESI from the backup drive, he was unable to recover 

any text messages from between December 2, 2016 and April 5, 2017, or from after August 

12, 2017. (Doc. 199-1 at 105 ¶ 12.) As for the period between April 6, 2017 and August 

12, 2017, Mr. Forames was apparently able to recover 329 text messages between Cramton 

and Farnell. (Doc. 206 at 11 n.4.) 
- 15 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

of missing ESI largely fell flat because Cramton was able, upon receipt of Defendants’ 

motion, to belatedly locate and produce many of the allegedly missing text messages. As 

a result, Defendants argued for the first time, in a footnote in their reply brief, that they 

could actually prove the existence of missing text messages in a different way—by 

proffering a declaration from Kelli (who acknowledged during oral argument that she is 

not a computer expert) to establish that certain types of text messages sent on an iPhone 

never show up in the monthly call logs. (Doc. 221 at 10 n.5, citing Doc. 221-1 at 62 ¶¶ 31-

32.)5 Additionally, although Defendants didn’t include a request for an evidentiary hearing 

in their motion, they made such a request in their reply (Doc. 221 at 2) and renewed that 

request during oral argument. 

The Court will not consider the new arguments raised for the first time in 

Defendants’ reply and will decline to hold an evidentiary hearing. It is hornbook law “that 

issues cannot be raised for the first time in a reply brief.” Gadda v. State Bar of Cal., 511 

F.3d 933, 937 n.2 (9th Cir. 2007). Moreover, in this case, the Court specifically instructed 

Defendants, during a pre-motion hearing (Doc. 195), that their motion should focus “very 

specifically” on what ESI was allegedly deleted. After Defendants filed their motion, 

which appeared to identify with precision the universe of allegedly missing ESI, Cramton 

expended substantial time and resources responding to those arguments and showing that 

much of the missing material wasn’t, in fact, missing. It would be improper under these

circumstances to allow Defendants to belatedly raise new claims and theories in their reply 

to Cramton’s response. As one court put it: “Barring extraordinary circumstances, both 

the opposing party and the court are entitled to rely on the movant’s opening brief as a 

conclusive statement of its position on the claims targeted by the motion. Both efficiency, 

and fairness to one’s adversary, militate in favor of requiring a movant’s opening brief to 

 

5 Defendants also filed later briefs, in support of different motions, elaborating upon 

this theory. (Doc. 228 at 2 n.1 [“Text messages identified in cell phone records like the 

AT&T records in this case, only capture and list SMS and MMS text messages. Several 

key parties have iPhones or used the iMessage app including Cramton, Wuycheck, Farnell 

and Juliet Peters. AT&T records do not contain logs of iMessages which are text messages 

in blue bubbles.”].) 
- 16 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

identify with certainty all the arguments and evidence which the movant believes supports 

his position.” International-Matex Tank Terminals-Illinois v. Chemical Bank, 2009 WL 

2423756, *7 (S.D. Ill. 2009).

This is, in some respects, an unsatisfying outcome because it remains possible that 

key ESI may be missing. Additionally, Cramton is not blameless in this affair because her 

decision to attempt to wipe her company-issued devices was the catalyst for all of the 

spoliation-related litigation that has ensued. Nevertheless, the Court does not have the time 

or resources to allow Defendants to keep advancing new claims and theories in successive 

briefs and hearings until one eventually prevails. It was incumbent upon Defendants 

(particularly under the procedural circumstances of this case) to raise all of their best 

arguments in their initial motion and the Court will accordingly limit its consideration to 

the arguments contained therein. 

b. The allegedly missing ESI

▪ Wuycheck. Defendants’ motion asserts there is one missing Wuycheck text 

message, which was sent on September 22, 2017. (Doc. 206 at 10-11.) The sole evidence 

identified in the motion to prove the existence of this missing message is Wuycheck’s and 

Cramton’s deposition testimony. (Id.) 

This argument is unavailing. Although Wuycheck stated during his deposition that 

he texted with Cramton on September 22, 2017, and although Cramton initially gave 

similar testimony during her deposition, the phone records state the only communication 

between Wuycheck and Cramton on that date was a phone call. Accordingly, Cramton has 

now corrected her deposition testimony to reflect that the September 22, 2017

communication with Wuycheck wasn’t a text. The Court thus concludes that Wuycheck 

and Cramton likely misspoke during their depositions when describing the September 22, 

2017 communication as a text, that the communication was likely a phone call, and that 

Defendants therefore haven’t proved that any ESI related to Wuycheck has been lost.

▪ Farnell. Defendants’ motion contendsthere are 738 missing Farnell text messages

and three missing Farnell voicemail messages. (Doc. 206 at 14-15.) The motion uses two 
- 17 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

different methods to calculate these figures. First, Defendants rely on extrapolation—they 

contend that because their forensic expert was able to recover 329 Farnell text messages 

from Cramton’s backup hard drive, which spanned a roughly four-month period in mid2017, this shows that Cramton and Farnell “averaged 82 texts per month” and that the duo 

therefore probably exchanged 738 additional text messages during “the remaining 9 

months in the relevant period of this lawsuit.” (Id. at 14 n.4.)6 Second, Defendants also 

contend the phone records from Cramton’s company-issued cell phone show she 

exchanged eight text messages with Farnell between August 18, 2017 and September 24, 

2017, which have never been produced, and that the phone records from the personal cell 

phone Cramton obtained after leaving the company show that she deleted three voicemails 

from Farnell between September 25, 2017 and December 14, 2017, which also haven’t 

been produced. (Doc. 206-1 at 28.)7

In her response, Cramton argues that Defendants’ extrapolation theory is 

“completely speculative” and that they have identified, at most, eight text messages that 

weren’t originally produced. (Doc. 216 at 11-12.) She further contends she was able to 

locate seven of those messages after receiving Defendants’ motion, which are enclosed as 

exhibits to her response (Doc. 216-4 at 14-48), and argues the only reason she had trouble 

identifying them earlier was because they are group texts with multiple recipients 

(including, on one occasion, Keely). (Doc. 216 at 11.) As for the three missing voicemails, 

Cramton acknowledges she hasn’t been able to recover them but contends that “voicemails 

often must be deleted by the user to keep the mailbox from filling up” and that the three 

voicemails at issue were “received long before [Cramton] was ever on notice that she might 

have an obligation to preserve such messages.” (Doc. 216 at 12 n.11.)

 

6

It should be noted that the summary chart provided as an attachment to Defendants’ 

motion states that 305 text messages with Farnell were recovered from Cramton’s backup 

hard drive. (Doc. 206-1 at 28.) Defendants don’t explain the seeming discrepancy between 

this figure and the 329 figure discussed in their motion. 

7 Although the exhibit to Defendants’ motion also identifies two voicemail messages 

from Farnell that were allegedly destroyed by Cramton’s spouse (Doc. 206-1 at 28), 

Defendants do not develop any argument or cite any authority suggesting that a party may 

be sanctioned under Rule 37(e) based on the conduct of a third party.
- 18 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The Court agrees with Cramton that Defendants’ extrapolation theory is too 

speculative to prove the existence of any missing text messages. Also, Defendants’ 

summary of the phone records revealed the existence of only eight missing text messages, 

and seven of those messages have now been located and produced. Accordingly, 

Defendants have only proved the existence of one lost Farnell text message (dated August 

29, 2017) and three lost Farnell voicemail messages. 

▪ Cable. Defendants’ motion contends there are 32 missing Cable text messages. 

(Doc. 206 at 15.) They derive this figure through subtraction—specifically, they contend 

that Cramton’s phone records show she exchanged 58 texts with Cable from May 3, 2017 

through September 24, 2017, but she only produced 26 such messages during discovery, 

so the remaining 32 must have been improperly deleted. (Id.)

In her response, Cramton argues that three of the “missing” text messages were 

group texts involving herself, Farrell, and Cable that have now been located and produced; 

that Defendants already had six of the “missing” text messages (which are Bates stamped) 

at the time they filed their motion; that she was able to locate an additional 14 texts 

involving Cable after Defendants filed their motion; and that “[o]f the remaining nine texts 

that Cramton could not locate, seven come from a series of texts between 8:46am and 

8:58am on June 28, 2017” and the “two remaining texts [were on] 8:44pm and 9:06pm on 

July 26, 2017.” (Doc. 216 at 14.)

The Court thus concludes that Defendants have only proved the existence of nine 

lost Cable text messages, all of which were sent in June or July 2017.

▪ Savone: Defendants’ motion contends there are 444 missing Savone text 

messages. (Doc. 206 at 16-18.) To support this figure, Defendants rely on a pair of 

summary charts attached as Exhibits AA and BB to their motion (Doc. 206-1 at 39-69), 

which purportedly show that although Cramton produced an unspecified number of her 

text messages with Savone, “at least 444 text messages with Savone are missing from 

within the text strings [Cramton] produced.” (Doc. 206 at 16-17, emphasis in original.)

In her response, Cramton argues the summary charts are “a defendant-prepared 
- 19 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

document for which no underlying AT&T documents or any other evidentiary support has 

been produced,” that the chart appearing at Exhibit AA reflects the existence of only 270 

missing text messages, not 444, and that Defendants assured her “that Exhibit BB is merely 

a breakdown of [Exhibit] AA by month.” (Doc. 216 at 14 & n.4.) Cramton further 

contends that, of the 270 messages identified in Exhibit AA, only 41 were sent between 

her phone number and Savone’s number. (Id.) Cramton also contends she wasn’t required 

to preserve those 41 messages because they were from February and March 2017 (well 

before litigation was anticipated) and that she also wasn’t required to produce those text 

messages in response to Defendants’ RFP, because it only sought the Cramton/Savone text 

messages that touched upon certain subject areas and many of the 41 text messages didn’t 

address those subjects. (Id. at 14-15.) Finally, Cramton contends that, notwithstanding all 

of that, she was able to locate 34 of the 41 purportedly missing messages after receiving 

Defendants’ motion and none of them has any relevance to this litigation. (Id. at 15.)

In their reply, Defendants begin by noting that Cramton only analyzed the missing 

text messages identified in their first summary chart, Exhibit AA (see Doc. 206-1 at 39-

46), and ignored their second summary chart, Exhibit BB (see Doc. 206-1 at 47-69). (Doc. 

221 at 9.) Thus, although Defendants don’t dispute Cramton’s contention that Exhibit AA 

only reveals the existence of 41 missing text messages and that 34 of those text messages 

had now been recovered, they contend these figures are “deliberately misleading” because 

they are “based on the reading of only one exhibit.” (Id.)

8

 In a different brief, Defendants 

calculate the total number of missing Savone texts (i.e., the seven in Exhibit AA that 

Cramton still hasn’t been able to identify, plus all of the texts identified as “missing” in 

Exhibit BB) as around 187. (Doc. 228 at 3.) Finally, and more broadly, Defendants argue 

that Cramton violated the discovery rules by “silently” withholding or redacting some of 

the Savone text messages on relevance grounds without disclosing that she was doing so. 

 

8

In a different brief, submitted weeks after the briefing on the sanctions motion was 

completed, Defendants belatedly attempted to dispute Cramton’s contention that their first 

summary chart only identified 41 missing Savone texts. (Doc. 228 at 3.) The Court will 

not consider this argument because of its untimeliness.
- 20 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

(Doc. 221 at 9.) 

The omissions in both parties’ briefs concerning the Savone text messages create an 

odd record. On the one hand, Cramton has persuasively demonstrated (and Defendants 

don’t seem to seriously dispute) that the number of purportedly missing text messages 

identified in Exhibit AA is overstated and that this chart reveals, at most, the existence of 

only seven missing messages. On the other hand, even though Exhibit BB may be marred 

by some of the same errors of overinclusion that Defendants made when creating Exhibit 

AA, Cramton didn’t address Exhibit BB in her response. Accordingly, the Court will 

simply accept, for present purposes, that Exhibit BB is accurate.9 Thus, the Court will 

assume that Defendants have proved the existence of a total of 187 missing Savone text 

messages.

2. Duty to preserve

To summarize, Defendants have not proved the existence of any lost Wuycheck text 

messages but have proved the existence of one lost Farnell text message, three lost Farnell 

voicemails, and nine lost Cable text messages. Additionally, the Court assumes that 187 

Savone text messages are missing. Thus, the next step under Rule 37(e) is to determine 

whether Cramton had a duty to preserve those materials. Id. (sanctions available if the lost 

ESI “should have been preserved in the anticipation or conduct of litigation”).

a. The reasonable foreseeability of litigation

As the Ninth Circuit has explained, parties “engage in spoliation of documents as a 

matter of law only if they had ‘some notice that the documents were potentially relevant’ 

to the litigation before they were destroyed.” United States v. Kitsap Physicians Serv., 314 

F.3d 995, 1001 (9th Cir. 2002) (citation omitted). “This is an objective standard, asking 

not whether the party in fact reasonably foresaw litigation, but whether a reasonable party 

 

9 The Court disagrees with Defendants’ assertion that Cramton engaged in discoveryrelated misconduct by declining to produce text messages with Savone that she concluded, 

after review, were irrelevant. Defendants’ position seems to be that, under the MIDP, 

Cramton was automatically required to produce all non-privileged text messages with 

relevant witnesses, irrespective of their relevance. (Doc. 221 at 9.) But the applicable 

provision of the MIDP only compels the production of information a party “believe[s] may 

be relevant to any party’s claims or defenses.” D. Ariz. G.O. 17-08(B)(3). 
- 21 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

in the same factual circumstances would have reasonably foreseen litigation.” Waymo LLC 

v. Uber Techs., Inc., 2018 WL 646701, *14 (N.D. Cal. 2018) (quotation omitted). 

As discussed in Part II.A.1 above, litigation was clearly on Cramton’s mind at the 

time she submitted her resignation letter on September 24, 2017. By that time, she had 

been consulting with several different attorneys about possible litigation against 

Defendants and had even been told by one of those attorneys to start documenting her 

interactions with Keely because her notes might have future value “to a litigator.” 

Accordingly, Cramton had a duty to take reasonable steps to preserve ESI pertaining to her 

potential claims against Defendants by mid-September 2017. Thus, she cannot avoid 

liability for the loss of the three Farnell voicemails (which she received between September 

25, 2017 and December 2017) solely on the ground that litigation wasn’t reasonably 

anticipated at the time she received and deleted them.

The Court reaches the same conclusion regarding the missing Cable text messages, 

which were sent on June 28, 2017 and July 26, 2017, and the missing Farnell text message, 

which was sent on August 29, 2017. All of those communications occurred after Cramton 

had been advised by Ms. DiGiacomo on June 23, 2017 to start documenting her interactions 

with Keely. Accordingly, Cramton cannot avoid liability for the loss of the Cable and 

Farnell text messages solely on the ground that litigation wasn’t reasonably anticipated at 

the time those messages were sent, received, and/or lost.

The analysis concerning the missing Savone text messages is more nuanced. On 

the one hand, all seven of the missing messages identified in Exhibit AA were exchanged 

in February or March 2017, and the first six pages of Exhibit BB (Doc. 206-1 at 48-53) 

identify text messages sent between December 2016 and early March 2017. This was 

before litigation was reasonably anticipated by Cramton—indeed, the first interactions 

proffered by Defendants to show that Cramton was gearing up for litigation (her 

discussions with Ms. Peters and Ms. Pearson about how to submit FMLA and reasonable

accommodation requests) didn’t occur until April 2017. Thus, Defendants cannot seek 

sanctions against Cramton under Rule 37(e) based on those missing texts. See Fed. R. Civ. 
- 22 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

P. 37(e), advisory committee note to 2015 amendment (“The rule does not apply when 

information is lost before a duty to preserve arises.”). 

On the other hand, the remaining pages of Exhibit BB (Doc. 206-1 at 54-69) purport 

to identify text messages exchanged by Cramton and Savone between mid-March 2017 

and September 2017. Litigation may have been reasonably anticipated by Cramton at the

time of some or all of those communications.

b. The reasonable foreseeability that communications with 

Farnell, Cable, and Savone might be relevant

The duty-to-preserve analysis as to Farnell, Cable, and Savone also has a different 

dimension. It’s not enough that litigation was generally being anticipated by Cramton at 

the time those communications took place and were lost. Instead, the Court also must 

assess whether Cramton should have reasonably anticipated that her communications with 

those particular individuals might be relevant to the anticipated litigation. See Fed. R. Civ. 

P. 37(e), advisory committee note to 2015 amendment (“Courts should consider the extent 

to which a party was on notice that litigation was likely and that the information would be 

relevant. . . . [T]he scope of information that should be preserved may remain uncertain. 

It is important not to be blinded to this reality by hindsight arising from familiarity with an 

action as it is actually filed.”) (emphasis added). 

The Court concludes it wasn’t reasonably foreseeable to Cramton in June and July 

2017 that her text messages with Cable might be relevant in a future lawsuit. None of 

Cramton’s affirmative claims against Defendants have anything to do with Cable—he was 

merely a co-worker and had no involvement in responding to her medical-related needs 

and issues, choosing whether to pay her wages, or structuring her promissory note with 

ECO. Additionally, the text messages at issue were sent months before the Kahala deal 

even became an issue. Tellingly, Defendants didn’t even bother to notice Cable’s 

deposition in this case, and their sole argument why Cable might have relevant information 

is that the GFL office in which Cramton and Cable both worked was small and Cramton 

didn’t have many other co-workers. (Doc. 206 at 15.)
- 23 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Similarly, it wouldn’t have been reasonably foreseeable to Cramton during the later 

stages of 2017 or early 2018 that her communications with Savone might be relevant. 

Savone wasn’t affiliated with Grabbagreen in any capacity—she is Cramton’s niece—and 

Defendants didn’t list Savone as a potential witness in their initial MIDP disclosure, which 

was prepared in April 2018. (Doc. 216-1 at 60-82.)

In contrast, it should have been foreseeable to Cramton that her communications 

with Farnell might be relevant in a future lawsuit. Those communications took place later 

than the Cable communications (the Farnell text message was sent on August 29, 2017 and 

the three voicemails were sent between September 25, 2017 and December 2017), at a time 

when the prospects for litigation were far more imminent. Additionally, Defendants have 

submitted evidence that Cramton’s spouse may have referred to Farnell as Cramton’s 

“mole” within Grabbagreen. (Doc. 206-1 at 30.) This distinguishes Farnell from Cable, 

who was a mere co-worker. 

3. Reasonable steps to preserve

Because Defendants have demonstrated the loss of one Farnell text message and 

three Farnell voicemail messages, and the Court has further determined that Cramton had 

a duty to preserve those materials, the next step under Rule 37(e) is to assess whether the 

loss occurred “because [Cramton] failed to take reasonable steps to preserve [them].” Id. 

The answer to this question is yes. This isn’t a case where the materials were lost 

due to reasons outside Cramton’s control. Id., advisory committee note to 2015 

amendment (“[T]he rule . . . is inapplicable when the loss of information occurs despite the 

party’s reasonable steps to preserve. For example, . . . information the party has preserved 

may be destroyed by events outside the party’s control—the computer room may be 

flooded, a ‘cloud’ service may fail, a malign software attack may disrupt a storage system, 

and so on.”). To the contrary, although Cramton did take steps to preserve text messages 

that might be relevant to this case—she asked the employee at the Verizon store to transfer 

all of the text messages from her old phone to her new phone—it is unclear why the August 

29, 2017 text with Farnell was lost despite this transfer effort. The most likely explanation 
- 24 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

is that she deleted this particular text message at some point, which is inconsistent with a 

reasonable attempt to preserve data.

Similarly, with respect to the three Farnell voicemails, Cramton seems to 

acknowledge she purposefully deleted them, and her proffered justification for doing so—

that she received them “long before [she] was ever on notice that she might have an 

obligation to preserve such messages” (Doc. 216 at 12 n.2)—is unpersuasive in light of the 

Court’s earlier conclusion that Cramton reasonably should have known by mid-September 

2017 that her communications with Farnell might be relevant to a future lawsuit.

4. Replaceability

The next question under Rule 37(e) is whether the lost discovery “can[] be restored 

or replaced through additional discovery.” Id. 

None of the missing Farnell materials can be restored or replaced. As noted, 

Defendants issued a Rule 45 subpoena to Farnell, but he responded by stating that he didn’t 

have any responsive text messages with Cramton. Thus, there doesn’t appear to be any 

way to recover the missing message. And as for the missing voicemails, Farnell wouldn’t 

have any way of producing them (voicemails don’t remain on the sender’s phone) and 

Cramton acknowledged in her response that she “cannot recover the three voicemails.” 

(Doc. 216 at 12.)

5. Prejudice

Under Rule 37(e)(1), the next inquiry—in a case where ESI was lost, even though 

it should have been preserved, and cannot be replaced—is to assess whether the opposing 

party suffered “prejudice . . . from the loss of the information.” Id. The advisory committee 

notes to the 2015 amendment recognize that this “may be a difficult task,” that it

“necessarily [requires] an evaluation of the information’s importance in the litigation,” and 

that “[t]he rule leaves judges with discretion to determine how best to assess prejudice in 

particular cases.” Id.

Defendants contend the loss of Farnell-related ESI was prejudicial because “it is 

highly likely that the missing texts and voicemail messages discuss Defendant’s [sic] 
- 25 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

confidential business activities, which [Cramton] provided to Kahala” and/or because “it 

is likely that [Cramton’s] text messages with Farnell: 1) disclose who she was working for 

at any given time and; 2) her true reasons for resigning (i.e., [Cramton] was not abused, 

but was tired of the burden of being an owner and wanted a regular salary).” (Doc. 206 at 

15.) 

There are a variety of problems with this argument. The first is timing. The sole 

missing Farnell text message was sent on August 29, 2017. This was several weeks before 

the Kahala issues arose, nearly a month before Cramton resigned, and about two months 

before Cramton started working for Kahala. It doesn’t make sense that a text message sent 

on this date would reveal that Cramton was secretly feeding confidential information to 

Kahala or reveal Cramton’s “true reasons” for resigning. Conversely, although it’s 

theoretically possible the three missing Farnell voicemails (all of which were sent after 

Cramton resigned) might touch upon these topics, there’s no reason to suspect they would 

touch upon the number of hours Cramton was working for Defendants before she resigned. 

The second problem with Defendants’ argument is the identity of the sender. The 

text message was sent by Farnell (Doc. 216 at 12) and all three voicemails were similarly 

left by Farnell. It’s illogical to presume that a text message or voicemail from Farnell to 

Cramton would reveal Cramton’s true reasons for resigning or show that Cramton was 

otherwise engaging in misconduct.

The third problem with Defendants’ argument is that, although they may have 

believed at the time they filed their sanctions motion that a large volume of Farnell text 

messages were missing, nearly all of the purportedly missing messages have now been 

located, produced, and attached as an exhibit to Cramton’s motion. These messages reveal 

that Cramton and Farnell’s text communications addressed innocuous subjects such as 

where they were going to lunch. Given Defendants’ failure to demonstrate that any of the 

produced Farnell messages contain damaging information concerning Cramton’s “true” 

reasons for resigning, the Court is unwilling to assume that a single missing message, sent 

by Farnell several weeks before the key events in this case occurred, was somehow the 
- 26 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

long-lost smoking gun.

6. Intent to deprive

As noted, sanctions are available under Rule 37(e)(1) only upon a finding of 

prejudice (which the Court has declined to make here). Alternatively, a court may impose 

sanctions under Rule 37(e)(2) “upon a finding that the [sanctioned] party acted with the 

intent to deprive another party of the information’s use in the litigation.” Id. In that 

scenario, Rule 37(e)(2)(A) provides that the court may “presume that the lost information 

was unfavorable to the party.” Id. 

The Court will decline to impose sanctions under Rule 37(e)(2) because Cramton 

did not act with the intent to deprive Defendants of information. Although Defendants 

initially accused Cramton of purposefully destroying large volumes of ESI—conduct that 

might support a finding of intent to deprive—most of the purportedly missing ESI still 

exists and has now been produced (if belatedly). Additionally, Cramton told the employee 

at the Verizon store to transfer all of the text messages from her old phone onto her new 

phone. Such conduct is inconsistent with an intent to deprive. Finally, although Cramton 

hasn’t provided a particularly good explanation for why she failed to preserve and produce 

the one Farnell text message and the three Farnell voicemails, it’s unlikely (for the reasons 

discussed in Part II.B.5 above) that any of these particular materials contained relevant 

information, and the Court will not infer malicious intent from the loss of a handful of 

likely-irrelevant bits of ESI in a case where a massive amount of ESI has been produced.

7. Conclusion

Cramton’s decision to wipe her company-issued cell phone and computer before 

returning them to Defendants was unfortunate. She knew that litigation was imminent at 

the time and it’s understandable why Defendants would view her conduct with deep 

skepticism. Indeed, the Court shared that skepticism when the spoliation issue first arose. 

Nevertheless, the parties’ briefing reveals that relatively little ESI was actually lost, that 

Cramton didn’t have a duty to preserve much of the missing material, and that Defendants 

suffered little if any prejudice from the loss of the remaining material. Accordingly, 
- 27 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Defendants’ motion for sanctions under Rule 37(e) will be denied. 

III. Cramton’s Motion For Leave To File A Sur-Reply (Doc. 229)

On November 1, 2019—more than two months after Defendants filed a reply in 

support of their motion for sanctions—Cramton filed a motion for leave to file a sur-reply. 

(Doc. 229.) Cramton contends that leave should be granted because (1) she recently 

discovered more of the allegedly missing text messages and (2) Defendants’ reply 

improperly seeks to raise new arguments and evidence that weren’t set forth in the original 

sanctions motion. (Id.) Alternatively, Cramton moves to strike the purportedly new 

evidence and arguments. (Id.) Defendants oppose the motion, arguing that it is a thinly

veiled attempt to reopen discovery and that their reply permissibly responded to the 

arguments contained in Cramton’s response. (Doc. 230.)

Cramton’s motion will be denied as moot. As discussed above, the Court has 

already concluded that Defendants are not entitled to sanctions under Rule 37(e). It’s thus 

unnecessary for Cramton to file a sur-reply intended to identify additional reasons why the 

sanctions motion should be denied.

IV. Motion To Strike Changes To Cramton’s Deposition Testimony (Doc. 220)

As an attachment to her response to Defendants’ motion for sanctions, Cramton 

provided an “errata sheet” in which she identified seven changes or corrections to the 

testimony from her second deposition. (Doc. 216-1 at 58.) For each change/correction, 

the errata sheet provides (1) the page/line number of the testimony at issue, (2) the specific 

change/correction, and (3) the reason for the change/correction. (Id.) 

Kelli now moves to strike the errata sheet under Rule 30(e). (Doc. 220.) Kelli’s 

argument, in a nutshell, is that the errata sheet purports to make substantive changes to the 

answers Cramton provided during her deposition, yet the Ninth Circuit’s decision in 

Hambleton Bros. Lumber Co. v. Balkin Enterprises, Inc., 397 F.3d 1217 (9th Cir. 2005), 

establishes that Rule 30(e) only allows a deponent to correct “typographical errors or actual 

errors in transcription, such a dropping a ‘not,’” and forbids “any change that would alter 

the substance of sworn deposition testimony.” (Id. at 8-9, citation omitted). 
- 28 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Kelli’s argument is unavailing. The starting point for the analysis is, of course, the 

text of Rule 30(e). It provides:

(1) Review; Statement of Changes. On request by the deponent or a party 

before the deposition is completed, the deponent must be allowed 30 days 

after being notified by the officer that the transcript or recording is available 

in which:

(A) to review the transcript or recording; and

(B) if there are changes in form or substance, to sign a statement 

listing the changes and the reasons for making them.

Id. (emphasis added). This language does not support Kelli’s position—it makes clear that 

a party is permitted to make changes to a deposition transcript not just in “form,” but also 

in “substance.” Shinde v. Nithyananda Found., 2015 WL 12746703, *5 (C.D. Cal. 2015) 

(“The plain language of Rule 30(e) places no limitation on the types of changes a deponent 

can make.”). 

Hambleton Brothers is not the contrary. There, the defendants filed a motion for 

summary judgment several weeks after the plaintiff had been deposed. 397 F.3d at 1223-

24. The following month, the plaintiff submitted an errata sheet that identified various 

changes to its deposition testimony. Id. at 1224. These corrections were “extensive,” yet 

the plaintiff “omitted any statement in the deposition errata explaining the corrections.” Id.

at 1224-25. Moreover, “the ‘corrections’ were not corrections at all, but rather purposeful 

rewrites tailored to manufacture an issue of material fact . . . and to avoid a summary 

judgment ruling.” Id. at 1225. The district court struck the errata sheet and the Ninth 

Circuit affirmed, holding that (1) the errata sheet was untimely under Rule 30(e)(1), 

because it was submitted more than 30 days after the plaintiff had been given access to the 

deposition transcript, (2) the plaintiff also failed to comply with Rule 30(e)(1)(B)’s 

requirement that an errata sheet provide a list of reasons for the changes, and (3) the district 

court therefore “did not abuse its discretion in striking the deposition errata because 

Hambleton . . . failed to comply with the procedural dictates of FRCP 30(e).” Id. at 1225-

26 (emphasis added). Additionally, the court observed that although Rule 30(e) authorizes 

corrections in “substance,” “this permission does not properly include changes offered 
- 29 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

solely to create a material factual dispute in a tactical attempt to evade an unfavorable 

summary judgment ruling.” Id. at 1225.

In the Court’s view, there are two key takeaways from Hambleton Brothers. The

first is that the Ninth Circuit’s discussion of what type of substantive changes are 

permissible under Rule 30(e) was arguably dicta—the ultimate holding was that the district 

court hadn’t abused its discretion by striking the errata sheet because the plaintiff failed to 

comply with two different “procedural dictates” of Rule 30(e): the 30-day submission 

window and the requirement that a list of reasons be provided. Id. at 1225-26. Neither of 

those procedural issues, however, is present here—it is undisputed that Cramton submitted 

her errata sheet within the 30-day window and it is undisputed that Cramton provided 

reasons for each of the changes. 

Second, the Court doesn’t interpret the remaining discussion of Rule 30(e) in 

Hambleton Brothers as enacting a hard-and-fast prohibition against any sort of substantive 

change to deposition testimony. The Ninth Circuit stated that a party cannot make 

substantive changes that are offered “solely . . . in a tactical attempt to avoid an unfavorable 

summary judgment” and accepted the district court’s factual determination that, under the 

unique circumstances of that case (which included the plaintiff’s failure to provide any 

explanation for the “extensive” changes), the proposed changes constituted a “‘sham’ 

correction.” Id. at 1225. 

The circumstances of this case are far different. First, Cramton has offered plausible 

reasons why she belatedly realized that some of the testimony she provided during the May 

21 deposition was inaccurate—among other things, she subsequently reviewed phone 

records that suggested her communication with Wuycheck on September 22, 2017 was via 

phone, not via text. In contrast, the plaintiff in Hambleton Brothers didn’t even attempt to 

explain why the changes were being made. Second, Cramton’s changes are relatively 

modest in scope. In contrast, the changes in Hambleton Brothers were “extensive.” And 

third, some of the changes set forth in the errata sheet actually hurt Cramton’s litigation 

position. For example, although she testified during her deposition that she has never 
- 30 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

deleted any text messages from Farnell or Cable (a blanket statement that would be helpful 

in avoiding spoliation sanctions), the errata sheet clarifies that she may have deleted some 

messages from Farnell and Cable that related to personal issues. (Doc. 216-1 at 58.) In 

contrast, the changes in Hambleton Brothers were offered “solely” to create issues of fact 

that would undermine a pending summary judgment motion. 

For these reasons, the Court concludes that Cramton’s errata sheet isn’t a “sham” 

offered “solely” for tactical reasons, but instead constitutes a permissible effort under Rule 

30(e)(1)(B) to make changes in “form or substance.” Cf. W. Alliance Bank v. Jefferson, 

2015 WL 4932654, *2 (D. Ariz. 2015) (accepting errata sheet, even though it altered the 

substance of deposition testimony concerning a key issue, because the deponent timely 

submitted the errata sheet, explained that the change was justified by his subsequent review 

of underlying documents, and these circumstances showed “that the change in the 

deposition testimony is considered to have been made for a legitimate purpose”). Thus, 

Kelli’s motion to strike will be denied.10 

V. Cross-Motions For Summary Judgment (Docs. 142 and 143)

A. Legal Standard

A party moving for summary judgment “bears the initial responsibility of informing 

the district court of the basis for its motion, and identifying those portions of ‘the pleadings, 

depositions, answers to interrogatories, and admissions on file, together with the affidavits, 

if any,’ which it believes demonstrate the absence of a genuine issue of material fact.” 

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “In order to carry its burden of 

production, the moving party must either produce evidence negating an essential element 

of the nonmoving party’s claim or defense or show that the nonmoving party does not have 

enough evidence of an essential element to carry its ultimate burden of persuasion at trial.” 

Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). “If . . . 

[the] moving party carries its burden of production, the nonmoving party must produce 

 

10 Although the errata sheet will not be stricken, Cramton concedes in her response to 

the motion to strike that the “original answer to deposition question[s] remains part of [the] 

record and can be read at trial.” (Doc. 225 at 4, citation omitted.)
- 31 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

evidence to support its claim or defense.” Id. at 1103. 

“Summary judgment is appropriate when ‘there is no genuine dispute as to any 

material fact and the movant is entitled to judgment as a matter of law.’” Rookaird v. BNSF 

Ry. Co., 908 F.3d 451, 459 (9th Cir. 2018) (quoting Fed. R. Civ. P. 56(a)). “A genuine 

dispute of material fact exists if ‘there is sufficient evidence favoring the nonmoving party 

for a jury to return a verdict for that party.’” United States v. JP Morgan Chase Bank 

Account No. Ending 8215 in Name of Ladislao V. Samaniego, VL: $446,377.36, 835 F.3d 

1159, 1162 (9th Cir. 2016) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-

50 (1986)). The court “must view the evidence in the light most favorable to the 

nonmoving party and draw all reasonable inference in the nonmoving party’s favor.” 

Rookaird, 908 F.3d at 459. Summary judgment is also appropriate against a party who 

“fails to make a showing sufficient to establish the existence of an element essential to that 

party’s case, and on which that party will bear the burden of proof at trial.” Celotex, 477 

U.S. at 322.

B. “Threshold Issues”

Defendants contend that four “[t]hreshold issues merit summary judgment on all or 

some claims.” (Doc. 143 at 4.) These alleged threshold issues are (1) “Cramton released 

all claims against Defendants”; (2) “Keely had an absolute right to buy back Cramton’s

interests on September 14, 2017, before the events alleged under tort Counts IX-X”; (3) 

“Kelli is neither an employer nor proper community property defendant”; and (4) “Cramton 

was not constructively discharged under Counts I-III and VI.” (Id. at 4-9, emphasis 

omitted.) 

Most of these are not, in fact, threshold issues. Instead, they merely constitute 

additional reasons why, in Defendants’ view, some of Cramton’s claims should be rejected. 

Accordingly, the Court will address the first, second, and fourth arguments in the context 

of the specific counts to which they relate. 

The potential exception is the second argument—Kelli’s contention that she is not 

a “proper community property defendant” because (1) the amended complaint doesn’t 
- 32 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

allege community property liability, (2) under Garrett v. Shannon, 476 P.2d 538 (Ariz. Ct. 

App. 1970), “community liability is not presumed under the law for the claims at issue 

here,” and (3) in any event, Kelli and Keely executed a separate property agreement in May 

2014. (Doc. 143 at 6-7.) In her response, Cramton doesn’t address the first or second 

arguments but contends the third argument is unavailing because (1) the separate property 

agreement isn’t part of the summary judgment record, (2) the separate property agreement 

was never recorded, and (3) Kelli signed two documents in 2017 in which she identified 

herself as a “community property” spouse. (Doc. 159 at 8.)

The Court agrees with Defendants that Kelli is not a proper community property 

defendant in this case. The amended complaint doesn’t even allege community property 

liability as to Kelli—she is only named as a defendant in Count IV (and, as discussed 

below, the Court will grant her request for summary judgment on that count). Under 

Arizona law, “[a] creditor must join both spouses as defendants before the creditor may 

obtain and execute a judgment against the community.” Flexmaster Aluminum Awning 

Co. v. Hirschberg, 839 P.2d 1128, 1133 (Ariz. Ct. App. 1992).11 Thus, it is unnecessary 

to decide whether the types of claims at issue in this case would ordinarily give rise to 

community property liability or whether the May 2014 separate property agreement 

between Kelli and Keely (which, contrary to Cramton’s claim, is part of the summary 

judgment record, see Doc. 143-4 at 128-33) would otherwise be sufficient to extinguish 

such liability—because Kelli isn’t properly named as community property defendant in the 

amended complaint, those issues are academic.12

 

11 See also Eng v. Stein, 599 P.2d 796, 798-99 (Ariz. 1979) (vacating judgment entered 

about spouses, where only the husband was named as a defendant in the complaint, and 

emphasizing “‘[t]hat an in personam judgment may not be rendered against one who has 

never been a party to the litigation would seem so obvious that citation of authority should 

be unnecessary’”) (citation omitted); Spindle Inc. v. Voigt, 2014 WL 12856439, *6 (D. 

Ariz. 2014) (“Under Arizona community property law, if a plaintiff does not join a spouse 

to an action on an obligation or debt, then the plaintiff may not recover from the community 

estate.”) (citing A.R.S. § 25-215); Alves v. Emerald Correctional Mgmt. LLC, 2011 WL 

5289771, *1 (D. Ariz. 2011) (same).

12 During oral argument, Kelli asked that a final judgment be entered in her favor under 

Rule 54(b). The Court will deny Kelli’s request (which Cramton opposes) because, having 

taken “into account judicial administrative interests as well as the equities involved,” 

Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 8 (1980), there is a risk that entering a 
- 33 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

C. Counts One, Two, and Three (ADA/ACRA Claims)

Defendants move for summary judgment on Counts One, Two, and Three of 

Cramton’s amended complaint, the ADA/ACRA claims, on four grounds: (1) Cramton 

released those claims pursuant to a “Mutual Releases” provision executed on September 

14, 2017; (2) “Defendants lack the requisite 15 employees”; (3) “Cramton’s aneurysm does 

not qualify as a protectable disability”; and (4) “[t]here are no material adverse employment 

actions or evidence of differential treatment on the basis of Cramton’s disability.” (Doc. 

143 at 9-11.) Cramton, meanwhile, affirmatively moves for summary judgment on whether 

the Corporate Defendants comprise an “integrated enterprise” for purposes of Counts One, 

Two, and Three. (Doc. 142 at 13-14.)

As discussed below, although the Court disagrees with Defendants’ argument 

concerning the “Mutual Releases” provision, it agrees with Defendants that Cramton has 

not established a causal link between the alleged acts of disability-related discrimination, 

retaliation, and lack of accommodation and her resignation in September 2017. 

Accordingly, the Court will grant summary judgment to Defendants on Counts One, Two, 

and Three without resolving the parties’ other arguments.

1. The “Mutual Releases” Provision

On September 14, 2017, Cramton signed a document entitled “Confidential 

Settlement Agreement and Release.” (Doc. 143-4 at 62-68.) The other parties to the 

agreement were Keely and a company called Gulf Girl Squared, Inc. (“GGS”), which is 

not one of the three named Corporate Defendants in this case.

As relevant here, the GGS Release contained a “Mutual Releases” provision that 

provides as follows:

Mutual Releases. Upon execution of this Settlement Agreement, subject to 

the terms, exceptions, and reservations set forth herein, each Party, for 

themselves and their respective heirs, executors, beneficiaries, 

administrators, representatives, servants, successors, assigns, attorneys, 

agents, affiliates, directors, officers, and employees hereby fully and forever 

release, acquit, and discharge each and every other Party, and their respective 

heirs, executors, beneficiaries, administrators, representatives, successors, 

 

Rule 54(b) judgment now would result in overlapping appeals and undue prejudice to 

Cramton. 
- 34 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

assigns, insurers, attorneys, agents, affiliates, past and present shareholders, 

past and present directors, past and present officers, past and present 

employees, servants, from any and all damages, judgments, debts, sums of 

money, accounts, rights, claims, demands, obligations, suits, proceedings, 

warranties, covenants, liabilities, agreements, proofs of claim, promises, 

actions, or causes of action of any nature whatsoever, in law or in equity, 

whether known or unknown, whether presently existing or which may arise 

hereafter, whether or not well founded in fact or law, and whether sounding 

in tort or contract or on any other bases (“Claims”), that such Party ever had, 

now has, or hereafter can, shall, or may have, either for themselves or on 

behalf of others, relating in any manner, directly or indirectly to any matter 

relating to the Corporation, each Party’s past and-current ownership of 

common stock or any other interest in the Corporation, each Party’s 

employment with the Corporation or otherwise related in any way to the 

Dispute (as to each Party, a “Release”). It is expressly understood and agreed 

that each Release includes and shall constitute full, adequate, and complete 

consideration for the release of all claims and injuries, the nature, extent, and 

amount of which are not, and despite reasonable diligence could not now be 

known to the Parties and that the intent and agreement of the Parties is that 

any and all such claims and damages are and shall be released by virtue of 

the foregoing provisions of this Settlement Agreement.

(Id. at 62-63.) The GGS release also contained a “Reliance by Non-Parties” provision that 

provides as follows:

Reliance by Non-Parties. Except as otherwise provided herein, this 

Settlement Agreement is made for the sole benefit of the Parties and their 

respective heirs, executors, beneficiaries, administrators, representatives, 

successors, assigns, insurers, attorneys, agents, affiliates, past and present 

shareholders, past and present directors, past and present officers, past and 

present employees, servants, and no other person or entity shall be entitled 

to rely upon or enforce any provision of this Settlement Agreement.

(Id. at 66.)

Defendants argue that Counts One, Two, and Three13 are barred by the “Mutual 

Releases” provision because they are “claims against GGS affiliates, which relate directly 

or indirectly to GGS.” (Doc. 143 at 4.) They further claim that “Cramton’s ADA/ACRA 

claims (Counts I-III) are founded upon her allegation that Corporate Defendants denied her 

request to work from home,” and “[s]uch an argument could only pertain to GGS, not GFL 

(or Corporate Defendants), because Cramton regularly worked from home as part of her 

 

13 Although the heading in Defendants’ motion suggests they are seeking dismissal of 

all of Cramton’s claims based on the mutual release, the accompanying text clarifies that 

they are only seeking the dismissal of Counts One, Two, and Three on this basis. (Compare

Doc. 143 at 5 [“Cramton released all claims against Defendants”]) with id. at 6 [“Counts IIII fail because they are truly claims against GGS that are barred by the Release.”].) 

Defendants also repeat this clarification in their reply. (Doc. 172 at 1 [“Cramton released 

Counts I-III against Corporate Defendants”].)
- 35 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

employment with GFL.” (Doc. 143 at 5.) In response, Cramton argues these claims are 

not barred by the “Mutual Releases” provision because (1) the amended complaint does

not assert any claims against GGS; (2) her claims do not “fall within the scope” of the 

“Mutual Releases” provision; and (3) “Defendants are not released parties” and therefore 

have no ability to enforce the terms of the GGS release. (Doc. 159 at 21-24.) 

Defendants are not entitled to summary judgment on Counts One, Two, and Three 

based on the GGS release. Even assuming that each Corporate Defendant in this case might 

qualify as an “affiliate” of GGS—meaning that each Corporate Defendant could share in 

GGS’s immunity from future claims—the “Mutual Releases” provision doesn’t cover 

every conceivable type of future lawsuit by Cramton against GGS and its affiliates. 

Instead, it prohibits only future lawsuits that “relat[e] in any manner, directly or indirectly 

to any matter relating to [GGS], each Party’s past and current ownership of common stock 

or any other interest in [GGS], each Party’s employment with [GGS] or otherwise related 

in any way to the Dispute.” (Doc. 143-4 at 62-63.) But Counts One, Two, and Three are 

disability-related claims concerning Cramton’s purported employment by the three 

Corporate Defendants named in the complaint, not GGS. Defendants have failed to show 

how those claims are “directly or indirectly” related to GGS, to Cramton’s former 

ownership of stock in GGS, to Cramton’s former employment by GGS, or to “the Dispute” 

(a term that is undefined in the GGS release but presumably relates to how much money 

Cramton was entitled to receive when the three Grabbagreen franchises owned by GGS 

were sold).14 

2. Causal Link

As noted, the amended complaint asserts three claims under the ADA/ACRA. 

Count One is a claim for “Disability Discrimination”—Cramton alleges that, after she 

became disabled in April 2017, the Corporate Defendants harassed her and forced her to 

work while symptomatic, acts of discrimination that ultimately caused her constructive 

 

14 Because the Court rules on this ground, Cramton’s testimony regarding a document 

stating that GGS was an “affiliate” of GFL (Doc. 201 at 44, 58, 62), which the Court has 

allowed Defendants to add to the record, does not change the Court’s conclusion.
- 36 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

discharge. (Doc. 88 ¶¶ 85-92.) Count Two is a claim for “Retaliation”—Cramton alleges 

that she made an accommodation request after becoming disabled, that the Corporate 

Defendants retaliated against her for making this request by harassing her and forcing her 

to work while under disabling conditions, and that these acts of retaliation caused her 

constructive discharge. (Id.¶¶ 93-101.) Finally, Count Three is a claim for “Failure to 

Accommodate”—Cramton alleges that she made two accommodation requests after 

becoming disabled (“a short leave of absence with non-stressful interactions, and, later, to 

work from home”), that the Corporate Defendants denied these requests, and that “[a]s a 

result of the Corporate Defendants’ failure to accommodate, Cramton ultimately lost her 

job and related wages, lost her ownership interest and her right to a payout in the event of 

a buyout, and lost her benefits.” (Id.¶¶ 102-110.)

It is helpful to begin with this summary of the amended complaint because it shows 

that, although Counts One, Two, and Three assert different theories of liability under the 

ADA and ACRA, all three claims fundamentally turn on the allegation that the Corporate 

Defendants’ improper response to Cramton’s disability (whether that response took the 

form of discrimination, retaliation, or a lack of accommodation) was a causal factor that 

led Cramton to stop working for the Corporate Defendants in September 2017 (and, in turn, 

caused her to miss out on the Kahala payout). Given this backdrop, the Corporate 

Defendants argued in their summary judgment motion that “Cramton cannot prevail on 

Counts I-III because there is no evidence of actions or conduct by Defendants that would 

qualify as a material adverse employment action as required by disability discrimination or 

retaliation under the ADA and ACRA. . . . This is particularly true in the context of Counts 

I-III considering that Cramton was fully recovered from her alleged disability at least four 

months before she resigned.” (Doc. 143 at 10.) Notably, in her response, Cramton didn’t 

dispute that, as a legal matter, she needed to show a causal link between her disability (or 

the Corporate Defendants’ response to it) and her resignation. (Doc. 159 at 11-12.) She 

also didn’t suggest that Counts One, Two, and Three needed to be analyzed separately. 

(Id.) Instead, she argued that summary judgment should be denied across the board 
- 37 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

because she had been subjected to two different adverse employment actions as a result of 

her disability: (1) a constructive discharge in September 2017 and (2) Defendants’ failure 

to pay her wages throughout 2017. (Id.) 

Cramton’s argument lacks merit because the causal link—the “because of”—is 

missing. To prevail on a disability discrimination claim under the ADA, “a plaintiff must 

prove that he is a qualified individual with a disability who suffered an adverse 

employment action because of his disability.” Sanders v. Arneson Prod., Inc., 91 F.3d 

1351, 1353 (9th Cir. 1996).15 Similarly, “[t]o establish a prima facie case of retaliation 

under the ADA, an employee must show that: (1) he or she engaged in a protected activity; 

(2) suffered an adverse employment action; and (3) there was a causal link between the 

two.” Pardi v. Kaiser Found. Hosps., 389 F.3d 840, 849 (9th Cir. 2004). Finally, “[t]o 

establish a prima facie case for failure to accommodate under the ADA, [a plaintiff] must 

show that ‘(1) [s]he is disabled within the meaning of the ADA; (2) [s]he is a qualified 

individual able to perform the essential functions of the job with reasonable 

accommodation; and (3) [s]he suffered an adverse employment action because of [her] 

disability.’” Samper v. Providence St. Vincent Med. Ctr., 675 F.3d 1233, 1237 (9th Cir. 

2012) (citation omitted). See also Marquez v. Glendale Union High Sch. Dist., 2018 WL 

4899603, *21 (D. Ariz. 2018) (to succeed on claim based on retaliation for requesting an 

accommodation, “[p]laintiff must establish a link between her alleged request for a 

reasonable accommodation and her termination”). Thus, Counts One, Two, and Three each 

require Cramton to prove she suffered an adverse employment action “because of”

disability-related misconduct.

16

 

15 In the Ninth Circuit, “ADA discrimination claims under Title I must be evaluated 

under a but-for causation standard.” Murray v. Mayo Clinic, 934 F.3d 1101, 1107 (9th Cir. 

2019). 

16

“Because there is limited Arizona case law regarding discrimination under ACRA 

and ACRA is modeled after federal discrimination statues, Arizona courts look to federal 

law analyzing discrimination claims as persuasive authority.” Downey v. Gen. Mills, Inc., 

2005 WL 3312766, *6 n.5 (D. Ariz. 2005). See also Coleman v. City of Tucson, 2008 WL 

5134346, *5 (D. Ariz. 2008) (“ACRA is modeled after and virtually identical to the 

ADA.”). Thus, with the exception of one distinction that is discussed in Part V.F below, 

the Court analyzes the ADA and ACRA claims together.
- 38 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

No reasonable juror could conclude that the requisite “because of” link exists with 

respect to the two adverse employment actions identified in Cramton’s response. First, it 

is true that a constructive discharge can constitute an adverse employment action for ADA 

purposes. See, e.g., Penn. State Police v. Suders, 542 U.S. 129, 141 (2004) (“Under the 

constructive discharge doctrine, an employee’s reasonable decision to resign because of 

unendurable working conditions is assimilated to a formal discharge for remedial 

purposes.”); Soga v. Kleinhans, 2016 WL 4192411, *10 (E.D. Cal. 2016) (“A plaintiff can 

also establish adverse employment action by showing she was constructively 

discharged.”). However, “constructive discharge occurs when the working conditions 

deteriorate, as a result of discrimination, to the point that they become ‘sufficiently 

extraordinary and egregious to overcome the normal motivation of a competent, diligent, 

and reasonable employee to remain on the job to earn a livelihood and to serve his or her 

employer.’” Brooks v. City of San Mateo, 229 F.3d 917, 930 (9th Cir. 2000) (citation 

omitted) (emphasis added). “In order to survive summary judgment on a constructive 

discharge claim, a plaintiff ‘must show there are triable issues of fact as to whether ‘a 

reasonable person in [his] position would have felt that [he] was forced to quit because of

intolerable and discriminatory working conditions.’” Hardage v. CBS Broad., Inc., 427 

F.3d 1177, 1184 (9th Cir. 2005) (citation omitted) (emphasis added). Although “[t]he 

determination whether conditions were so intolerable and discriminatory as to justify a 

reasonable employee’s decision to resign is normally a factual question left to the trier of 

fact, . . . to establish that he was constructively discharged, a plaintiff must at least show 

some aggravating factors, such as a continuous pattern of discriminatory treatment.” 

Thomas v. Douglas, 877 F.2d 1428, 1434 (9th Cir. 1989) (citations and internal quotation 

marks omitted). 

Thus, even assuming that Cramton’s aneurysms constitute a protectable disability 

(which the Court need not decide), and even further assuming that Cramton’s departure on 

September 25, 2017 was a constructive discharge (an assumption that is dubious, as 

discussed in Part V.F below), Cramton has failed to identify any evidence showing her
- 39 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

discharge was because of disability discrimination, because of retaliation flowing from her 

earlier request for a disability-related accommodation, or because of the Corporate 

Defendants’ failure to provide such an accommodation. Cramton contends that “[e]ven 

before [her] medical issues arose, the relationship between her and Keely was ‘toxic.’” 

(Doc. 159 at 4-6.) Although Cramton further contends that Keely’s treatment of her 

“worsened” after her diagnosis (which she received in April 2017), she does not cite any 

evidence, direct or circumstantial, connecting that worsening treatment to her medical 

diagnosis or to any accommodation request. (Id.) Indeed, Cramton admitted during her 

deposition that she was “[n]ot contemplating resigning” on September 14, 2017, and it was 

only the events occurring after that date that led her to depart. (Doc. 173-1 at 96.) There 

is no evidence that any disability-related misconduct occurred during this 11-day period. 

To the contrary, Cramton contends the events during this period that caused her to resign 

were (1) Keely’s disputed statement on September 18, 2017 concerning the status of the 

Kahala deal and (2) Keely’s “ramped up . . . abusive behavior” and “emotional harassment” 

during “the days after the call,” which consisted of strongly worded and intemperate 

criticisms of Cramton’s work performance. (Doc. 159 at 5-6.) There is no nexus between 

this behavior and Cramton’s medical condition.

Cramton also provides no evidence (nor even contends) that Keely treated her any 

differently from anyone else because of her aneurysms. Marziano v. Cty. of Marin, 2010 

WL 3895528, *7 (N.D. Cal. 2010) (“Evidence that similarly situated employees are treated 

more favorably is one way to establish intentional discrimination . . . .”). Cramton relies 

on the fact that constructive discharge is often a factual question for the jury, but here she 

has failed to present any aggravating factors, such as a pattern of discriminatory treatment, 

to support her claim.

Next, as for Cramton’s contention that the Corporate Defendants’ failure to pay her 

wages throughout 2017 constitutes an adverse employment action, this argument overlooks 

that the non-payment began in December 2016, several months before Cramton’s medical 

condition arose. As the Corporate Defendants correctly point out in their reply, “a causal 
- 40 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

connection is not possible if the adverse action predates the alleged protected activity.” 

(Doc. 172 at 9, citing Cohen v. Fred Meyer, Inc., 686 F.2d 793, 797 (9th Cir. 1982)).

Finally, during oral argument, Cramton’s counsel argued for the first time that “it 

would be inappropriate to lump in the dismissal of Count Three with the dismissal of the 

other separate ADA claims” because failure-to-accommodate claims are analytically 

distinct from discrimination and retaliation claims and because a plaintiff asserting a 

failure-to-accommodate claim isn’t required to prove an adverse action: “I understood their 

motion to say there’s no adverse action. And that’s not a requirement of a failure to 

accommodate claim.”

This argument fails for two reasons. First, although Cramton is correct that, in 

general, a failure-to-accommodate claim is analytically distinct from a discrimination or 

retaliation claim,

17 the Ninth Circuit has held that a plaintiff asserting a failure-toaccommodate claim under the ADA still must prove she was subjected to an adverse 

employment action. See, e.g., Samper, 675 F.3d at 1237 (“To establish a prima facie case 

for failure to accommodate under the ADA, [a plaintiff] must show that . . . [s]he suffered 

an adverse employment action because of [her] disability.’”) (citation omitted); Allen v. 

Pac. Bell, 348 F.3d 1113, 1114 (9th Cir. 2003) (same). See also Exby-Stolley v. Bd. of Cty. 

Comm’rs, Weld Cty., Colo., 906 F.3d 900, 914 (10th Cir. 2018) (identifying the Ninth 

Circuit as one of “several other circuits [that] have explicitly required an adverse 

employment action in failure-to-accommodate cases”). Cramton’s argument to the 

contrary appears to be based on an inaccurate view of the law.18 

 

17 Dunlap v. Liberty Natural Prods., Inc., 878 F.3d 794, 798 (9th Cir. 2017) (“We have 

recognized that a failure-to-accommodate claim ‘is analytically distinct from a claim of 

disparate treatment or impact under the ADA.’”). 

18 After oral argument, the Court solicited supplemental briefing from Cramton 

concerning her position that an adverse action isn’t required in a failure-to-accommodate 

case. (Doc. 242.) The cases cited in Cramton’s resulting brief (Doc. 243) are mostly 

unpublished district court orders. To the extent those orders conflict with Samper and 

Allen, the Court obviously must apply follow binding Ninth Circuit law. Finally, United 

States EEOC v. UPS Supply Chain Solutions, 620 F.3d 1103 (9th Cir. 2010), is 

distinguishable because the plaintiff in that case asserted he had been deprived of specific 

“benefits and privileges of employment” (i.e., understanding and participating in 

mandatory departmental meetings) and specific “job training” opportunities (i.e., the 

opportunity to participate in an online Excel training program available to co-workers) due 
- 41 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Second, and more important, even if it might be theoretically possible for a plaintiff 

to prevail on a failure-to-accommodate claim under the ADA without showing she was 

subjected to an adverse action, that has never been Cramton’s theory of liability in this 

case. Count Three of the amended complaint doesn’t seek nominal damages based on an 

unfulfilled accommodation request in mid-2017—to the contrary, it expressly tethers the 

alleged accommodation failure to Cramton’s departure in September 2017 and only seeks, 

as damages, the wages, benefits, and share of the proceeds from the Kahala deal that 

Cramton would have earned if she’d kept working for the Corporate Defendants through 

2018. (Doc. 88 ¶ 110.) Similarly, in her MIDP disclosures, in response to the question 

requiring her to “[p]rovide a computation of each category of damages claimed by you,” 

Cramton only identified the following two categories of compensatory damages that might 

be relevant to her ADA claims: (1) “[l]ost future wages and benefits as a result of 

Defendants’ constructive discharge of Cramton” and (2) “[l]ost ownership interest in the 

Corporate Defendants as a result of Defendants’ constructive discharge of Cramton, 

approximately $511,500.” (Doc. 143-4 at 74-75.) Thus, Cramton cannot survive summary 

judgment on Count Three by belatedly asserting a new theory of liability (a standalone 

failure to accommodate, unconnected to her resignation in September 2017) that wasn’t 

identified in her amended complaint, in her MIDP disclosures, or in her written response 

to Defendants’ summary judgment motion. 

D. Count Four (Minimum Wage Claim)

The parties cross-move for summary judgment on Count Four, Cramton’s minimum 

wage claim against all five Defendants. 

Cramton contends that she, Keely, and GFL signed a written “consent” agreement

 

to his employer’s failure to provide a reasonable accommodation for his deafness. In other 

words, the plaintiff in that case did attempt to show he had been subjected to various 

adverse actions as a result of the accommodation failure. Cf. Exby-Stolley, 906 F.3d at 911 

(“[O]nce we recognize that to require an adverse employment action is simply to require 

that the discrimination be ‘in regard to job application procedures, the hiring, advancement, 

or discharge of employees, employee compensation, job training, and other terms, 

conditions, and privileges of employment,’ it is evident that the requirement applies to 

every discrimination claim under the ADA, including those based on failure to make 

reasonable accommodations.”) (citation omitted).
- 42 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

on December 31, 2016 under which she prospectively agreed not to receive any wages 

from GFL. (Doc. 142 at 11-12.) Cramton further contends that, although she stopped 

receiving wages after executing this document, Defendants’ accountant later issued a W-2 

stating that she received $25,000 in wages in 2017. (Id.) Cramton contends this document 

is a sham, because it attempts to retroactively recharacterize loan repayment proceeds as 

wages, and argues she is entitled to summary judgment against “Defendants” regardless of 

the W-2’s accuracy because (1) she was entitled to more than $25,000 in wages in 2017 

and (2) she didn’t receive a wage payment every two weeks, as Arizona law requires. (Id.) 

Defendants, meanwhile, argue that (1) ECH, ECO, and Kelli are not liable for 

Cramton’s minimum wage claim because they were not Cramton’s employers and (2) the

claim against the remaining two Defendants, GFL and Keely, “fails as a matter of law 

because [Cramton] received wages far in excess of the statutory minimum rate for all hours 

worked in each of the workweeks during the relevant time period.” (Doc. 143 at 6, 11-12.)

1. Employer

In her motion, Cramton broadly asserts that “Defendants” were her employers 

because she “received W-2 wages from Defendants in prior years.” (Doc. 142 at 11 &

n.11.) But to support that statement, Cramton cites a W-2 from 2016, which identifies only 

one employer: GFL. (Doc. 142-2 at 32.) Similarly, in her reply brief, Cramton refers to 

her “employment agreement as a [GFL] employee.” (Doc. 171 at 3.) 

Nonetheless, Cramton argues in her response to Defendants’ motion that ECH,

ECO, and Kelli were also her “employers.” (Doc. 159 at 8 n.1.) As for the two corporate 

entities, Cramton contends (in a footnote) that they should be considered her employers 

because ECH was GFL’s parent company and because ECO formed part of an “integrated 

enterprise” with the other entities. (Id.) Separately, Cramton contends that Kelli was an 

employer because “[s]he was the General Counsel and Chief Administrative Officer for 

ECH and [GFL],” “performed the functions of those titles, including drafting and 

negotiating legal agreements for the companies’ sale,” and “represented the corporate 

Defendants on their employment issues, including drafting Cramton’s employment 
- 43 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

agreement, responding to EEOC discrimination complaints, and participated in the hiring 

of Cramton.” (Id. at 7-8.)

Under A.R.S. § 23-363(A)(1), “[e]mployers shall pay employees no less than the 

minimum wage, which shall be not less than $10 on or after January 1, 2017.” The term 

“employer” is defined, in relevant part, as “any corporation, proprietorship, partnership, 

joint venture, limited liability company, trust, association, political subdivision of the state, 

individual or other entity acting directly or indirectly in the interest of an employer in 

relation to an employee.” A.R.S. § 23-362(B). 

The parties do not cite any cases interpreting the meaning of “employer” under 

A.R.S. § 23-362. Thus, the Court will look to case law interpreting the meaning of 

“employer” under the FLSA because the two statutes define the term in similar ways.

19

 

“Two or more employers may jointly employ someone for purposes of the FLSA.” 

Bonnette v. California Health & Welfare Agency, 704 F.2d 1465, 1469 (9th Cir. 1983). 

The Ninth Circuit employs the “economic reality” test to determine whether an individual 

or entity constitutes an “employer,” considering “whether the alleged employer (1) had the 

power to hire and fire the employees, (2) supervised and controlled employee work 

schedules or conditions of employment, (3) determined the rate and method of payment, 

and (4) maintained employment records.” Gilbreath v. Cutter Biological, Inc., 931 F.2d 

1320, 1324 (9th Cir. 1991) (citation omitted). “Where an individual exercises ‘control over 

the nature and structure of the employment relationship,’ or ‘economic control’ over the 

relationship, that individual is an employer within the meaning of the Act, and is subject to 

liability.” Boucher v. Shaw, 572 F.3d 1087, 1091 (9th Cir. 2009) (citation omitted).

Cramton has presented very little evidence bearing upon these factors. Indeed, she 

has presented no evidence at all regarding whether ECO and ECH had the power to hire 

 

19 29 U.S.C. § 203(d) (“‘Employer’ includes any person acting directly or indirectly 

in the interest of an employer in relation to an employee . . . .”). Cramton has provided no 

explanation for why she thinks the “integrated enterprise” test under the ADA should be 

used to determine whether an individual or entity constitutes an employer under A.R.S. § 

23-362. Indeed, in other portions of her response to Defendants’ motion, Cramton seems 

to acknowledge that the FLSA is the proper federal analogue. (Doc. 159 at 7 [“Arizona 

has adopted the same employer definition as the Fair Labor Standards Act . . . .”].)
- 44 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

and fire her, supervised and controlled her work schedule or conditions of employment, 

determined her rate and method of payment, or maintained employment records. 

Accordingly, ECO and ECH are entitled to summary judgment on Count Four. 

As for Kelli, Cramton vaguely asserts that she “represented the corporate 

Defendants on their employment issues” (Doc. 159 at 8), but the only evidence Cramton 

properly attaches20 is an email from Kelli to Cramton about an “employment agreement.” 

(Doc. 159-1 at 147). Not only is this email devoid of any context, but it suggests Kelli was 

merely acting as the attorney for the entity that served as Cramton’s actual employer. (Id.

[“As always, I must remind you that I represent the company only and I do not represent 

you individually.”].) Although Cramton has cited a handful of cases in which certain highlevel corporate officers were considered “employers” under the FLSA, she has not cited 

any cases where a corporation’s attorney was considered an “employer.” See generally 

Diaz v. Longcore, 751 Fed. App’x 755, 758-59 (6th Cir. 2018) (acknowledging that “FLSA 

‘employer’ [may extend] liability to individuals who are chief corporate officers of the 

business, have a significant ownership interest in the business, control significant aspects 

of the business’s day-to-day functions, and determine employee salaries and make hiring 

decisions,” but distinguishing those roles from an attorney who merely “act[s] on behalf of 

[a corporate employer] with respect to a legal matter,” even if “that legal matter was a 

lawsuit over an employment dispute”). Thus, Kelli is also entitled to summary judgment 

on Count Four.

2. Wages

Defendants argue that Cramton was paid $25,000 in wages for the 38 weeks she was 

employed in 2017. (Doc. 143 at 11.) In support of this claim, Defendants cite a W-2 from 

 

20 Cramton contends that pages 50-51 and 137 of Kelli’s deposition transcript, which 

were allegedly submitted as part of “Ex. 1” to her response, further support her claim that 

Kelli was acting as an employer (Doc. 159 at 8), but those pages are not included in the 

deposition excerpts that Cramton actually enclosed as Exhibit 1. (Doc. 159-1 at 1-39.) 

Thus, the Court cannot consider the purported contents of those pages. Similarly, Cramton 

contends that pages 48 and 173 of her deposition transcript, which were allegedly 

submitted as part of “Ex. 24” to her response, support her position (Doc. 159 at 8), but 

those pages are not included in the deposition excerpts that Cramton actually enclosed as 

Exhibit 24. (Doc. 173-1 at 73-100.)
- 45 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

GFL showing that Cramton earned wages of $25,000. (Doc. 143-4 at 191.) 

Cramton disagrees, arguing that she and Keely “signed a [GFL] ‘consent’ agreeing 

not to be paid wages going forward,” and therefore “[t]he only wages Cramton received 

were fabricated after this lawsuit was filed in an effort to avoid the minimum wage claim.” 

(Doc. 142 at 11; Doc. 142-6 at 5; Doc. 142-1 at 62-63, 78-79.) She further contends that 

“Defendants cannot show any ties between the supposed wages and Cramton’s work”

(Doc. 171 at 6) and cites deposition testimony in which Defendants’ accountant stated she 

did not know why Keely decided that $25,000 was the amount Cramton should be paid in 

W-2 wages (Doc. 142-3 at 89-90, 93-94). Cramton also cites text messages in which Keely 

told the accountant that the W-2 and pay stubs were not matching up. (Doc. 171 at 6, citing 

Doc. 173-2 at 67.)

The Court will decline to grant summary judgment to Cramton, GFL, or Keely on 

the minimum wage claim. On the one hand, Defendants cite a W-2 showing that Cramton 

received $25,000 in wages in 2017. Because Cramton no longer has any valid evidence in 

the record showing how many hours she worked for GFL in 201721—and thus cannot 

establish she was entitled to more than $25,000 in wages—GFL and Keely would be 

entitled to summary judgment on Count Four if the $25,000 indeed constituted wages. 

Cramton, however, has created a genuine issue of fact concerning the nature of the $25,000.

The term “wages” is defined as “nondiscretionary compensation due an employee in return 

for labor or services rendered by an employee for which the employee has a reasonable 

expectation to be paid whether determined by a time, task, piece, commission or other 

method of calculation.” A.R.S. § 23-350(7). And under A.R.S. § 23-364(D), an 

employer’s failure to “maintain payroll records showing the hours worked for each day 

 

21 Cramton initially submitted a declaration that purported to set forth estimates of 

how many hours she worked in 2017. (Doc. 142-2 at 5 ¶¶ 26-29.) However, Cramton later 

acknowledged that her declaration was inaccurate because it included some hours she had 

worked for an entity that is not a defendant in this case. (Doc. 184.) Defendants’ motion 

to supplement the summary judgment record added the portion of the deposition testimony 

in which Cramton stated she didn’t know how she had apportioned her time between the 

two entities. That testimony does not change the Court’s conclusion on this claim, given 

that it appears undisputed she worked at least some hours for GFL. 
- 46 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

worked, and the wages . . . paid to all employees for a period of four years . . . shall raise a 

rebuttable presumption that the employer did not pay the required minimum wage rate.”

GFL and Keely may be able to overcome this presumption, but at the moment there remains 

a question of fact regarding whether the $25,000 was provided to Cramton “in return for 

labor or services.” A.R.S. § 23-350(7).22 

E. Count Five (Breach Of Promissory Note)

Cramton moves for summary judgment on Count Five, her claim against ECO for 

breach of the promissory note. (Doc. 142 at 10-11.) 

The promissory note was executed on October 27, 2016. (Doc. 142-6 at 2-3.) Under 

its terms, ECO owed Cramton $66,527.00 plus 3.5% annualized interest until the note was 

fully paid. (Id. at 2.) The promissory note doesn’t specify a date by which it must be paid 

off, but it does provide that Cramton may declare the remaining amount immediately due 

or “exercise . . . the rights and remedies given to [her] under applicable law” if ECO 

“becomes insolvent or the subject of a voluntary or involuntary proceeding in bankruptcy, 

reorganization, or creditor composition.” (Id.) The amount paid on the promissory note is 

in dispute, but there is no dispute that the full amount remains unpaid. (Doc. 142-2 at 5 

¶¶ 33-35.)

Defendants contend there has been no breach because “Cramton and Keely agreed 

that ECO would only make payments on the note[] if and only if the store ever generated 

sufficient cash flow to do so (a circumstance that never transpired).” (Doc. 158 at 11-12.) 

However, Defendants do not purport to identify a specific paragraph within the promissory 

note containing such an agreement—they simply provide a non-specific citation to the note 

 

22 Cramton also contends she is “entitled to summary judgment as a matter of law” 

because “[i]t is undisputed that wages were not paid to [her] every two weeks as required.” 

(Doc. 142 at 12, citing Doc. 142-2 at 4 ¶ 24; Doc. 142-3 at 76-77.) Although it is true that 

“Arizona law requires payroll to occur at least twice a month,” Piccioli v. City of Phoenix, 

439 P.3d 830, 835 (Ariz. Ct. App. 2019), Cramton has not brought a claim under the 

applicable statute. See A.R.S. § 23-351(A) (“Each employer in this state shall designate 

two or more days in each month, not more than sixteen days apart, as fixed paydays for 

payment of wages to the employees.”). The amended complaint does not mention A.R.S. 

§ 23-351(A), see Doc. 88 at 12-13, and a claim under that statute is separate from a claim 

for failure to pay the minimum wage under A.R.S. § 23-363(A)(1). A violation of the 

former is not necessarily a violation of the latter. 
- 47 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

itself (Doc. 158 at 12, citing Doc. 158-1 at 303-04)—and the Court hasn’t been able to 

identify any language within the note suggesting that payment to Cramton would only 

become due if and when the store achieved a certain level of success. Defendants also 

argue in a footnote that “the note’s default provision identifying ECO’s insolvency as an 

event of default was never triggered because ECO was presumed insolvent when the parties 

executed the note.” (Id. at 12 n.7.) 

In her reply, Cramton argues that ECO admitted to insolvency in its response, 

making payment under the note immediately due under the terms of the agreement. (Doc. 

171 at 7.) Cramton also argues that Kelli’s September 25, 2017 letter, in which she stated 

that Cramton “will be paid as previously understood by the parties, i.e., at the time of a sale 

of the business,” means that payment was due when ECO was sold to Kahala in February 

2018. (Id., citing Doc. 142-6 at 8.)

The parties’ arguments somewhat miss the mark. Under Arizona law, “[a] promise 

or order is ‘payable on demand’ if it . . . [d]oes not state any time of payment.” A.R.S. 

§ 47-3108(A)(2). A promise or order is only “‘payable at a definite time’ if it is payable 

on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or 

at a time or times readily ascertainable at the time the promise or order is issued.” A.R.S. 

§ 47-3108(B). The promissory note at issue here does not state a time of payment and does 

not indicate that it is payable on elapse of a definite period of time, at a fixed date, or upon 

the contingency Defendants claim. Accordingly, under Arizona law, the promissory note 

was payable on demand. Cramton made that demand in her resignation letter dated 

September 22, 2017. (Doc. 173-1 at 188.) Because ECO has failed to fully repay the 

promissory note, the Court grants summary judgment to Cramton on her claim for breach 

of the note.23

F. Count Six (Breach Of The Operating Agreement)

Section 9.3(b) of the ECH Operating Agreement provided that if Cramton 

“voluntarily tender[ed] resignation of employment for any reason within the first five years 

 

23 This ruling is only with respect to liability. The damages remain disputed.
- 48 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

of the Effective Date hereof with the Company or any of its subsidiaries or Affiliates, . . . 

Keely Newman . . . shall have the right but not the obligation to purchase from [Cramton], 

and [Cramton] shall be obligated to sell to Keely Newman . . . , all or any portion of the 

Units then owned by [Cramton] for $1.00.” (Doc. 159-1 at 98.) Accordingly, following 

Cramton’s departure on September 25, 2017, Keely purported to exercise her rights under 

Section 9.3(b) of the Operating Agreement to purchase Cramton’s 18.6% ownership 

interest in ECH for $1.

In Count Six of the amended complaint, Cramton argues that ECH and Keely 

violated the Operating Agreement through this maneuver. Specifically, Cramton contends 

that (1) because she was constructively discharged, her departure was effectively a 

termination without cause, (2) Section 9.3(b) of the Operating Agreement was therefore 

inapplicable, because it only deals with voluntary resignations, (3) Keely and ECH instead 

were required to comply with Sections 9.2 and 10.1 of the Operating Agreement, which 

deal with the repurchase of shares held by an employee who has been terminated without 

cause, and (4) under those provisions, Keely was required to pay “fair market value” for 

her shares, not $1. (Doc. 88 at 13-14.)

Defendants move for summary judgment on Count Six on the grounds that (1) 

Cramton was not constructively discharged and (2) “the express, unambiguous terms of the 

Operating Agreement . . . make it clear that there is no buy out obligation imposed upon 

any party under any circumstances.” (Doc. 143 at 7-9, 12-13.) In response, Cramton 

argues she was constructively discharged and, because of this, “[u]nder the terms of the 

ECH Operating Agreement, once Keely chose to buy out Cramton’s units in ECH, she had 

to pay fair market value.” (Doc. 159 at 4-6, 9-10, 12-14, emphasis omitted.) 

Defendants are entitled to summary judgment on Count Six because no reasonable 

juror could find that Cramton was constructively discharged. As an initial matter, because 

Count Six is a breach of contract claim brought under Arizona law, the question whether

Cramton was constructively discharged is governed by Arizona’s constructive discharge 

statute. See A.R.S. § 23-1502(A) (“In any action under the statutes of this state or under 
- 49 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

common law, constructive discharge may only be established by . . . .”).24 Under that 

statute, an individual bringing a constructive discharge claim for “objectively difficult or 

unpleasant working conditions” must provide at least 15 days’ notice to the employer of 

her intended resignation. Id. § 23-1502(A)(1). The 15-day notice requirement is 

inapplicable only where (1) the individual has “[e]vidence of outrageous conduct by the 

employer or a managing agent of the employer, including sexual assault, threats of violence 

directed at the employee, a continuous pattern of discriminatory harassment by the 

employer or by a managing agent of the employer or other similar kinds of conduct” or (2) 

“the employer fails to provide written notice to its employees of the requirements of” the 

constructive discharge statute. Id. § 23-1502(A)(2), (E). 

Here, Cramton acknowledges she didn’t provide 15 days’ notice before resigning 

but contends that both exceptions are satisfied. This argument is unavailing. First, the 

evidence proffered by Cramton, even when viewed in the light most favorable to her, does 

not show she was subjected to “outrageous conduct” that was akin to “sexual assault,”

“threats of violence,” or a “continuous pattern of discriminatory harassment.” There has 

been no suggestion that Cramton was exposed to sexual assault or other forms of physical 

violence while working for Defendants and, as discussed in Part V.C above, Cramton has 

not shown any nexus between her departure and her medical condition. 

Tellingly, Cramton admitted she “was not even contemplating resigning” on 

September 14, 2017 (Doc. 173-1 at 96), and the conduct to which she was exposed during 

the ensuing 11-day period—intemperate, belittling comments and interruptions during 

vacation—falls far short of establishing “outrageous conduct” for purposes of the 

constructive-discharge statute. See, e.g., Civil Rights Div. of Ariz. Dept. of Law v. Vernick 

Plumbing and Heating Co., 643 P.2d 1054, 1056–57 (Ariz. Ct. App. 1982) (finding no 

constructive discharge when employee was screamed at by her supervisor, perceived a 

“great deal of tension in the air,” had her desk given to a new employee, and received no 

 

24 In contrast, A.R.S. § 23-1502 does not control whether Cramton was constructively 

discharged for purposes of the ADA claims asserted in Counts One, Two, and Three.
- 50 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

further assignments). Cf. Poland v. Chertoff, 494 F.3d 1174, 1184 (9th Cir. 2007) (“We 

set the bar high for a claim of constructive discharge because federal antidiscrimination 

policies are better served when the employee and employer attack discrimination within 

their existing employment relationship, rather than when the employee walks away and 

then later litigates whether his employment situation was intolerable.”). Additionally, 

Cramton offered in her resignation letter to continue working for Defendants for another

30 days if they paid her a consulting fee. (Doc. 173-1 at 188.) This offer is impossible to 

reconcile with the notion that Cramton was being exposed to “outrageous” conditions akin 

to sexual assault that would cause any reasonable person to immediately quit. French v. 

Eagle Nursing Home, Inc., 973 F. Supp. 870, 877-78 (D. Minn. 1997) (“Even more 

damaging to French’s constructive discharge claim is her request to return to work at Eagle 

on a part-time or on-call basis after her suspension and subsequent termination. It strains 

credulity that French would wish to return voluntarily to a work environment that was so 

intolerable that she was compelled to resign.”).

Second, Cramton has also failed to create a triable issue of fact as to whether 

Defendants failed to post the written notices required by A.R.S. § 23-1502(E). Although 

Cramton asserts that the required “posters were missing at two of the Grabbagreen 

corporate stores” (Doc. 159 at 10), the document that Cramton provides in support of this 

assertion tells a different story. That document is a January 30, 2018 email from a GFL 

employee (Farnell) to Keely. (Doc. 173-2 at 74.) The title of the email is “labor law 

posters.” (Id.) In the body of the email, Farnell reports that although he “recall[s] them 

[the labor law posters] being in place when ownership was transferred,” some of the posters 

were not in place when he conducted an inspection of three former Grabbagreen locations 

in January 2018. (Id.) Farnell’s email, in other words, suggests the required posters were

in place during Cramton’s period of employment and were only removed by the stores’ 

new owners after she resigned. 

In sum, Cramton was not constructively discharged under A.R.S. § 23-1502. Thus, 

she cannot argue that Keely and ECH breached the Operating Agreement by repurchasing 
- 51 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

her shares under Section 9.3 (which addresses the repurchase of shares from employees 

who have voluntarily resigned) instead of repurchasing her shares under Section 9.2 (which 

addresses the repurchase of shares from employees who have been terminated without 

cause). 

G. Count Seven (Violation Of The Implied Covenant)

Count Seven of the amended complaint also arises from the Operating Agreement. 

In this count, Cramton contends the Operating Agreement contains an implied covenant of 

good faith and fair dealing which Keely and ECH violated in various ways, including by 

failing to “provide her with truthful information regarding the prospective sale of [ECH] 

so that Cramton could adequately protect her membership interest,” “by making the 

material misrepresentation to Cramton that . . . Kahala had declined to make an offer to 

purchase [ECH],” and “by creating such an abusive working environment that any 

reasonable person in Cramton’s position would have been compelled to resign.” (Doc. 88 

¶¶ 131-37.)

Defendants argue they are entitled to summary judgment on Count Seven because 

none of these theories “relates to an express provision in the Operating Agreement or a 

benefit that flows from the Operating Agreement.” (Doc. 143 at 22-24.) In response, 

Cramton argues that (1) the Operating Agreement contains provisions contemplating the 

sale of the company and (2) her claim is “directed to both the implied covenant inherent in 

Cramton’s employment contract and the Operating Agreement.” (Doc. 159 at 14-15.) 

As an initial matter, the Court rejects Cramton’s argument that Count Seven may be 

based on an implied covenant arising from her employment contract. Count Seven of the 

amended complaint doesn’t mention her employment contract—it only mentions the 

Operating Agreement (Doc. 88 ¶¶ 131-37)

25—and Cramton didn’t include her employment 

contract as an exhibit to her response. Accordingly, the Court will consider Cramton’s 

implied-covenant claim only as it relates to the Operating Agreement.

 

25 Additionally, although paragraph 131 of the amended complaint incorporates by 

reference all of the earlier paragraphs in the amended complaint, the term “employment 

contract” doesn’t appear in any of the earlier paragraphs.
- 52 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

On the merits, “Arizona law implies a covenant of good faith and fair dealing in 

every contract.” Wells Fargo Bank v. Arizona Laborers, Teamsters & Cement Masons 

Local No. 395 Pension Tr. Fund, 38 P.3d 12, 28 (Ariz. 2002). “The implied covenant of 

good faith and fair dealing prohibits a party from doing anything to prevent other parties 

to the contract from receiving the benefits and entitlements of the agreement.” Id. See also

Rawlings v. Apodaca, 726 P.2d 565, 569 (Ariz. 1986) (“The essence of th[e] duty [of good 

faith and fair dealing] is that neither party will act to impair the right of the other to receive 

the benefits which flow from their agreement or contractual relationship.”). A party also 

may breach the implied covenant by “exercis[ing] discretion retained or unforeclosed under 

a contract in such a way as to deny the other a reasonably expected benefit of the bargain.” 

Beaudry v. Ins. Co. of the W., 50 P.3d 836, 841 (Ariz. Ct. App. 2002) (citation omitted).

As noted, Count Seven is premised on allegations that Keely (1) provided Cramton 

with false information about (or failed to provide Cramton with truthful information about) 

the status of the Kahala deal and/or (2) created an abusive working relationship. The latter 

allegation cannot give rise to liability under an implied-duty theory because the Operating 

Agreement does not contain any provisions governing Cramton’s conditions of 

employment. Thus, it cannot give rise to any reasonable expectations concerning such 

conditions. 11333 Inc. v. Certain Underwrtiers at Lloyd’s, London, 261 F. Supp. 3d 1003,

1024 (D. Ariz. 2017) (“The implied covenant of good faith and fair dealing is not a vehicle 

for creating contractual terms that the parties did not otherwise agree to; it protects the 

existing terms from subversion.”). 

The allegations concerning the Kahala deal present a closer call. As discussed in 

Part V.F above, Sections 9.2 and 9.3 of the ECH Operating Agreement create two different 

sets of procedures for repurchasing the shares of a member who has separated from the 

company. Section 9.2, which applies when a member is terminated without cause, gives 

Keely the right to repurchase the member’s shares at a fair market price and allows the 

member to retain the shares if this option isn’t exercised. Section 9.3, in contrast, 

essentially requires a member who has voluntarily resigned to surrender her shares to Keely 
- 53 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

for $1. From Cramton’s perspective, one of the benefits that arguably flowed from these 

provisions was reassurance that she would profit from any increase in the value of her 

18.6% ownership interest so long as she didn’t voluntarily resign—if she left under other 

circumstances outside her control, she’d either get bought out by Keely at a fair market 

price or be allowed to keep the shares. Thus, contrary to Defendants’ argument, Count 

Seven—which can be construed as alleging that Keely duped Cramton into voluntarily 

resigning by giving her false information about the status of the Kahala deal—arguably 

does “relate[] to an express provision in the Operating Agreement or a benefit that flows 

from the Operating Agreement.” (Doc. 143 at 22.)26 

The Court reiterates that the validity of Count Seven presents a close call. Neither 

party has cited an Arizona case with remotely similar facts and the parties’ briefing on 

Count Seven is superficial. Ultimately, because Defendants are the movants and bear the 

burden of establishing an entitlement to summary judgment, their motion as to Count Seven 

will be denied.

H. Count Eight (Tortious Breach Of The Implied Covenant)

Count Eight of the amended complaint is similar to, and builds upon, Count Seven. 

Here, Cramton alleges that, because she had a “special relationship” with Keely by virtue 

of her possession of a membership interest in ECH, the alleged breach of the implied 

covenant described in Count Seven was also “tortious.” (Doc. 88 ¶¶ 138-45.)

Defendants move for summary judgment on Count Eight on two grounds: (1) it is 

barred by the economic loss rule (“ELR”), and (2) the Operating Agreement “does not 

create the required ‘special relationship’ among the parties.” (Doc. 143 at 13-14, 24-25.) 

In response, Cramton argues that (1) because Arizona courts have ruled that the ELR 

doesn’t apply to claims for fraud or negligent misrepresentation, the Court should infer that 

 

26 Defendants’ contention that “Cramton has not alleged that ECH and Keely breached 

the implied covenant . . . with respect to §§ 9.3(a) and 9.2” (Doc. 143 at 23) is inaccurate. 

Although Count Seven doesn’t contain any express references to Sections 9.2 and 9.3 of 

the Operating Agreement, it also doesn’t disclaim any reliance on them. (Doc. 88 ¶¶ 131-

37.) Additionally, Count Seven contains a paragraph incorporating by reference all of the 

earlier paragraphs in the amended complaint (id. ¶ 131) and some of those earlier 

paragraphs refer to Sections 9.2 and 9.3 (see, e.g., id. ¶¶ 82-83).
- 54 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the “same logic” precludes its application to claims for tortious breach of the implied 

covenant, and (2) a “special relationship” arose both because Keely owed fiduciary duties 

to her and because she was an employee of ECH. (Doc. 159 at 18-19.)

The Court need not decide whether the ELR applies in this scenario because 

Cramton has failed to establish the existence of the necessary “special relationship.” 

Burkons v. Ticor Title Ins. Co. of Cal., 813 P.2d 710, 720 (Ariz. 1991) (“[T]he remedy for 

breach of this implied covenant is ordinarily by action on the contract, but in certain 

circumstances, the breach of the implied covenant may provide the basis for imposing tort 

damages. These principles are not confined to insurance contracts but apply to contracts 

in which there is a special relationship between the parties arising from elements of public 

interest, adhesion, and fiduciary responsibility.”). Although Cramton contends that Keely 

owed fiduciary duties to her under the Operating Agreement, the document says the exact 

opposite—it contains a clause (Section 16.11) providing that, except for circumstances not 

present here, “[t]he Members agree that there shall be no applicable fiduciary duties or 

obligations for the Members, Managers or the Advisory Managers of the Company.” (Doc. 

143-2 at 62.)27 And as for Cramton’s contention that she was an employee of ECH, this 

claim is inaccurate, as discussed in Section V.D.1 above.

28

...

...

 

27 Although Cramton has cited Arizona cases suggesting that a manager who possesses 

“significant ownership and control” over a company may owe fiduciary duties to the 

company and its members (Doc. 159 at 16), those cases didn’t involve an operating 

agreement (such as the Operating Agreement in this case) in which the members expressly 

disclaimed the existence of any fiduciary duties.

28 Additionally, the Court is skeptical of Cramton’s claim that all employee/employer 

relationships qualify as “special relationships” for purposes of a claim for tortious breach 

of the implied covenant. The only case Cramton cites in support of this claim, Bogue v. 

Better-Bilt Aluminum Co., 875 P.2d 1327 (Ariz. Ct. App. 1994), addressed an entirely 

different issue—whether employees and employers have the sort of “special relationship” 

that would require the employer, under general principles of negligence law, to “take 

affirmative precaution for the aid or protection of another.” Id. at 1339. Burkons, in 

contrast, identified three specific types of “special relationships” that must exist to support 

a claim for tortious breach of the implied covenant (“there [must be] special relationship 

between the parties arising from elements of public interest, adhesion, and fiduciary 

responsibility”), and this list doesn’t include employee/employer relationships. 813 P.2d 

at 720. 
- 55 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

I. Counts Nine and Ten (Negligent Misrepresentation and Fraud)

In Counts Nine and Ten of the amended complaint, Cramton asserts claims for 

negligent misrepresentation and fraud. (Doc. 88 ¶¶ 146-62.) Both claims arise from the 

conversation on September 18, 2017 during which Keely allegedly told Cramton “that 

Kahala was no longer interested in acquiring [ECH].” (Id. ¶¶ 147, 153.) Cramton contends 

she detrimentally relied on this inaccurate statement by resigning (and, in Count Ten, 

further contends that Keely knew the statement was inaccurate and acted with the intent of 

duping Cramton into resigning). 

Defendants seek summary judgment on Counts Nine and Ten for a host of reasons, 

some of which apply to both claims and some of which are claim-specific. 

a. Arguments that apply to both Count Nine and Count Ten

Defendants raise five summary judgment arguments that apply equally to Counts 

Nine and Ten: (1) “Keely’s present-tense representation—that Kahala rejected the deal 

then before it—is true”; (2) “Keely made no representation about future deals”; (3) 

“Cramton’s alleged reliance was not justified”; (4) Counts Nine and Ten are barred by the 

ELR; and (5) because Cramton’s resignation from GGS on September 14, 2017 gave Keely 

the option, under Section 9.3 of the Operating Agreement, to repurchase Cramton’s shares 

for $1, Cramton cannot have been damaged by any subsequent misrepresentations. (Doc.

143 at 5, 13-17, 20-22.) 

The first two arguments are easily rejected. Counts Nine and Ten are based not only 

on Keely’s statement on September 18, 2017 that the Kahala had rejected a particular offer 

(which Keely acknowledges she made, see Doc. 143 at 15), but also on Keely’s alleged 

statement during the same conversation that the overall deal had fallen through and there 

would be no future offers. (See Doc. 143-4 at 114 [Cramton testifying that “Keely told me 

that the deal fell through. And that I asked if anybody—if, if there was any—going to be 

any more offers. And she said no.”]; id. at 115 [Cramton testifying that Keely told her

“there was [not] any chance there would be any deal”]; Doc. 173-1 at 130 ¶ 13 [Cramton

stating in her declaration: “Keely Newman’s statements to me on September 18, 2017 were 
- 56 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

not limited to the statement that ‘Kahala had rejected the offer to sell ECH’s assets on the 

same terms of the Due North deal.’ She told me that the potential deal with Kahala had 

fallen through and no additional offers would be made. I understood this to mean that all 

negotiations with Kahala were done, not ongoing.”].) Although Defendants contend that 

“Keely told Cramton just the opposite of what Cramton is claiming” (Doc. 143 at 16), the 

evidence they cite in support of this assertion is Keely’s deposition testimony. (Doc. 143-

2 at 90-91.) The Court obviously cannot accept Keely’s disputed testimony on this point, 

and reject Cramton’s, for purposes of summary judgment. There is a genuine issue of fact 

regarding whether Keely made a representation to Cramton about Kahala’s continued 

interest in a deal. 

The third argument—that Cramton’s alleged reliance on this statement was 

unjustified—also requires little discussion. Although Defendants identify several reasons 

(including Cramton’s knowledge that Keely was interested in a quick deal and Cramton’s

potential ability to obtain information about the status of the deal from Wuycheck and 

others) why a fact-finder might ultimately conclude that Cramton’s reliance was 

unreasonable, this is a quintessential jury question. See, e.g., Lerner v. DMB Realty, LLC,

322 P.3d 909, 914 (Ariz. Ct. App. 2014) (“Questions about materiality and reasonable 

reliance . . . usually are for the jury . . . .”); John C. Lincoln Hosp. & Health Corp. v. 

Maricopa Cty., 96 P.3d 530, 535 (Ariz. Ct. App. 2004) (“Questions of . . . reasonable 

reliance[] are fact-intensive inquiries.”).

Defendants’ fourth argument is that Counts Nine and Ten must fail because “[t]he 

economic loss rule has been applied [by Arizona courts] to preclude contract-related fraud 

and misrepresentation claims.” (Doc. 143 at 13-14.) However, in her response, Cramton 

identifies three cases in which courts applying Arizona law concluded the ELR didn’t bar

claims for fraud and/or negligent misrepresentation. (Doc. 159 at 18.)29 As a result, 

 

29 Those three cases are Sitevoice, LLC v. Gyrus Logic, Inc., 2014 WL 4722329 (D. 

Ariz. 2014), KD & KD Enterprises, LLC v. Touch Automation, LLC, 2006 WL 3808257 

(D. Ariz. 2006), and Aventis Techs. Corp. v. JP Morgan Chase Bank, 2004 WL 5137578 

(D. Ariz. 2004).
- 57 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Defendants are forced to acknowledge in their reply that “there does not appear to be an 

absolute rule concerning the ELR’s application to such claims,” but they nevertheless argue 

that, for policy reasons, the rule should apply here. (Doc. 172 at 10-11.)

Defendants have not established that Counts Nine and Ten are barred by the ELR. 

The principal case on which Defendants rely is Cook v. Orkin Exterminating Co., 258 P.3d 

149 (Ariz. Ct. App. 2011). There, the plaintiffs were homeowners who had entered into a 

contract with a termite extermination company. Id. at 150. Under the contract, the 

company “expressly disclaimed” any obligation “to repair damage to the home caused by 

an infestation” and instead “promis[ed] only to apply any necessary additional treatment 

to the Cooks’ house if a termite infestation was found during the relevant time period.” Id. 

Nevertheless, the plaintiffs sought to argue the company “was liable for misrepresentation 

and fraud because it . . . promised them that it would repair any damage to their home and 

furnishings resulting from new termite activity, thereby inducing them to enter the 

Agreement, which they otherwise would not have done.” Id. at 152. The Arizona Court 

of Appeals concluded the ELR barred those claims because the plaintiffs were essentially 

“seeking remedies for purely economic loss from Orkin’s alleged failure to adequately 

perform its promises under the Agreement.” Id. at 153. In reaching this conclusion, the 

court rejected the plaintiffs’ request to adopt a blanket rule that the ELR can never be 

applied to claims for fraud or misrepresentation. Id. at 153 n.6.

This case is easily distinguishable from Cook. Cramton isn’t arguing that 

Defendants induced her to enter into the Operating Agreement by making oral promises 

that contradict the written terms of the Operating Agreement. Nor is she attempting to alter 

the terms of the Operating Agreement by seeking a different remedy for a breach than the 

bargained-for remedy set forth in the Operating Agreement. Instead, Cramton’s theory is 

that, well after the Operating Agreement was executed, Keely duped her into resigning, 

which in turn caused her to forfeit benefits that otherwise would have been available to her 

under the Operating Agreement. There is no policy reason to apply the ELR in this scenario 

because Cramton isn’t seeking to upset the “contractual allocations” of “accident 
- 58 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

deterrence and loss-spreading” that are specified in the Operating Agreement. Cook, 258 

P.3d at 153.30 

Defendants’ final reason why Counts Nine and Ten both fail is that Cramton’s 

resignation from GGS on September 14, 2017 (i.e., four days before the fateful phone call 

on September 18, 2017) gave Keely the option to repurchase Cramton’s shares for $1. 

(Doc. 143 at 5.) In response, Cramton argues that (1) she didn’t actually resign from 

GGS—the release merely states that she sold her membership interest in GGS back to 

Defendants and then released GGS for any related liability—and (2) Defendants never 

disclosed this resignation theory in their MIDP disclosures. (Doc. 159 at 24-25.) Notably, 

Defendants do not address these arguments in their reply. (Doc. 172.)

It is unclear whether Defendants have abandoned this argument but they are not, in 

any event, entitled to summary judgment based upon it. The sole piece of evidence 

identified in their motion as proof that Cramton resigned from GGS is Exhibit 29, the 

“Mutual Releases” document (Doc. 143-4 at 62-68), but that agreement does not say 

anything about resignation.

Thus, Defendants have not identified any valid reason why they are entitled to 

summary judgment on both Counts Nine and Ten.

b. Arguments that apply only to Count Nine

Defendants move for summary judgment on Count Nine, the negligent 

misrepresentation claim, on two additional grounds: (1) there was no duty owed and (2) 

such a claim cannot be premised on a promise of future conduct. (Doc. 143 at 17-18.) 

Neither argument is availing. First, although Defendants point to Arizona cases 

 

30 The other case cited by Defendants, Ader v. Bella Vista Townhomes LLC, 2017 WL 

2494467 (Ariz. Super. 2017), is an unpublished order from an Arizona trial court. It is 

unclear how much persuasive value such a decision should have here. Westlands Water 

Dist. v. Amoco Chemical Co., 953 F.2d 1109, 1111 (9th Cir. 1991) (“In a diversity case, 

where the state’s highest court has not decided an issue, the task of the federal courts is to 

predict how the state high court would resolve it. . . . The decisions of the state’s

intermediate appellate courts are data that a federal court must consider in undertaking this 

analysis.”) (brackets, citations, and internal quotation marks omitted). In any event, the 

portion of the Ader decision addressing the ELR is quite short (id. at *3) and, although 

Ader did appear to involve some sort of “operating agreement,” the case otherwise appears 

to have involved much different facts and allegations than are present here.
- 59 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

decided in 1959 and 1976 in support of their argument that a plaintiff asserting a negligent 

misrepresentation claim must first establish the existence of a legally recognized duty (Doc. 

143 at 17), this overlooks that Arizona subsequently “recognized the tort of negligent 

misrepresentation as defined by Restatement (Second) of Torts § 552(1) (1977).” Haisch 

v. Allstate Ins. Co., 5 P.3d 940, 944 (Ariz. Ct. App. 2000). And Restatement § 552(1)

defines the tort as:

One who, in the course of his business, profession or employment, or in any 

other transaction in which he has a pecuniary interest, supplies false 

information for the guidance of others in their business transactions, is 

subject to liability for pecuniary loss caused to them by their justifiable 

reliance upon the information, if he fails to exercise reasonable care or 

competence in obtaining or communicating the information.

Id. Thus, “[t]he elements of negligent misrepresentation are: (1) the defendant provided 

false information in a business transaction; (2) the defendant intended for the plaintiff to 

rely on the incorrect information or knew that it reasonably would rely; (3) the defendant 

failed to exercise reasonable care in obtaining or communicating the information; (4) the 

plaintiff justifiably relied on the incorrect information; and (5) resulting damage.” KB 

Home Tucson, Inc. v. Charter Oak Fire Ins. Co., 340 P.3d 405, 412 n.7 (Ariz. Ct. App. 

2014). Cramton is not, in other words, required to establish the independent existence of 

some duty owed to her by Keely—so long as the challenged false statement was made in 

the course of “a business transaction,” as it was here, her claim may proceed.

Second, Defendants are correct that, as a legal matter, “[a] promise of future conduct 

is not a statement of fact capable of supporting a claim of negligent misrepresentation.” 

McAlister v. Citibank (Ariz.), a Subsidiary of Citicorp, 829 P.2d 1253, 1261 (Ariz. Ct. App. 

1992). Nevertheless, Keely’s alleged false statements during the September 18, 2017 

phone call could be interpreted by a fact-finder as statements of present fact, as opposed to 

a promise of future conduct. On this point, it is important to be specific. Cramton testified 

at one point during her deposition that “Keely told me that the deal fell through. And that 

I asked if anybody—if, if there was any—going to be any more offers. And she said no.” 

(Doc. 143-4 at 114.) The Court tends to agree with Defendants that this particular snippet 

of testimony concerned a future event—whether Kahala would be making a future offer—
- 60 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

and thus cannot provide the foundation for a negligent misrepresentation claim. However, 

Cramton testified that Keely also stated “there was [not] any chance there would be any 

deal” with Kahala. (Id. at 115.) A fact-finder could view this as a statement of present 

fact—Kahala’s existing interest, at the time the statement was made, in continuing the 

negotiations. 

Thus, Defendants are not entitled to summary judgment on Count Nine. 

c. Arguments that apply only to Count Ten

Defendants move for summary judgment on Count Ten, the fraud count, on the 

additional ground that Cramton hasn’t identified any evidence that Keely knew at the time 

of her challenged statement on September 18, 2017 that a future deal with Kahala remained 

possible, so “Cramton cannot establish Keely’s fraudulent intent to deceive.” (Doc. 143 at 

18-20.) 

In response, Cramton points to, inter alia, (1) a September 19, 2017 email written 

by Kahala’s lead negotiator, which summarized his interaction with Keely the previous day 

as follows: “[W]e also communicated to Keely yesterday that we would not be stepping 

into the [True North] deal, she didn’t seem shocked but wanted to confer with her advisor 

before letting us know if she wants to continue with us” (Doc. 173-2 at 150, italics added); 

and (2) a September 20, 2017 email from Keely in which she instructed an associate to 

“provide a verbal response to Kahala making the following points . . . I would agree to $3.5 

[million] cash . . . . Remind them of the opportunity to pick up a brand for a good price 

early in the healthy food life cycle and in the brand life cycle . . . .” (Doc. 143-4 at 168.) 

Cramton contends these emails show that “Keely knew the deal with Kahala was never 

dead,” so her misrepresentation on this point must have “reflect[ed] intentional deception.” 

(Doc. 159 at 17.) 

This is another instance where genuine issues of fact preclude summary judgment. 

As discussed above, Keely allegedly told Cramton on September 18, 2017 that “there was 

[not] any chance there would be any deal” with Kahala. Yet a reasonable factfinder could 

conclude, based on the emails proffered by Cramton, that Keely did believe at the time that 
- 61 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

there was a chance of a future deal—the Kahala negotiator was under the impression, 

during his meeting with Keely on September 18, 2017, that Keely might “want[] to 

continue with us” and Keely authorized a counteroffer to Kahala within 48 hours of when 

she allegedly told Cramton there was no possibility of a deal. Questions of intent are 

quintessential jury questions and Defendants are not entitled to summary judgment on this 

record. 

J. Counterclaim One (Breach of Contract)

In Counterclaim One, the Corporate Defendants allege that Cramton breached (1) 

certain provisions of the parties’ Confidentiality and Non-Competition Agreement, (2) a 

particular provision of the ECH Operating Agreement governing the return of confidential

information, and (3) the implied covenant of good faith and fair dealing arising from an 

unspecified contract or contracts. (Doc. 95 at 24 ¶¶ 21-25.) 

In her summary judgment motion, Cramton argues the Corporate Defendants cannot 

prevail on this claim because (1) the non-compete provision of the Confidentiality and 

Non-Competition Agreement is unenforceable; (2) the Corporate Defendants have no 

evidence she violated any part of the agreements at issue; and (3) the Corporate Defendants 

do not have any evidence of damages incurred as a result of any alleged breach. (Doc. 142 

at 14-17.) In their response, the Corporate Defendants don’t address the first argument

(enforceability), barely address the third argument (damages), and respond to the second 

argument by contending that Cramton breached the agreements in three ways: (1) failing 

to “surrender company documents and tangible property following her resignation, 

including the data contained on her company cellphone and laptop”; (2) providing 

assistance to Dana Mavros, who was the Corporate Defendants’ consultant, when Mavros 

was attempting to hire ECO employee Laura McCormack (who is also Cramton’s spouse); 

and (3) violating the non-compete provision by working for Kahala. (Doc. 158 at 13-16.)

1. Elements

“[A] breach of contract is a failure, without legal excuse, to perform any promise 

which forms the whole or part of a contract.” Snow v. W. Sav. & Loan Ass’n, 730 P.2d 
- 62 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

204, 210 (Ariz. 1986) (citation omitted). To succeed on a breach of contract claim, a 

plaintiff must prove three elements: (1) the existence of the contract, (2) its breach, and (3)

resulting damages. Thomas v. Montelucia Villas, LLC, 302 P.3d 617, 621 (Ariz. 2013). 

2. Theory One: Failing To Surrender Company Property

As noted, one of the Corporate Defendants’ theories is that Cramton failed to 

surrender certain company documents and property upon her resignation. The relevant 

provision of the Confidentiality and Non-Competition Agreement provides as follows:

Returning the Company Documents and Tangible Property. Upon request of 

the Company and, in any event, upon termination of my Relationship with 

the Company, I will promptly surrender and deliver to the Company (and 

will not keep in my possession or deliver to anyone else) and agree not to use 

any Confidential Information, records, data, notes, reports, proposals, lists, 

correspondence, computer code, specifications, drawings, blueprints, 

sketches, flow diagrams, materials, equipment, devices or any other 

documents or property (including photocopies or other reproductions of any 

of the aforesaid items) of the Company. I also agree to disclose any and all 

passwords used for Company business.

(Doc. 158-1 at 295.) Similarly, the ECH Operating Agreement contains a clause providing 

in relevant part as follows:

Affirmative Covenants. . . . In the event any Member is no longer a member 

of the Company, such member shall neither take nor retain, without prior 

written authorization from the Company, any other Confidential Information, 

or copies thereof, of any kind belonging to the company.

(Doc. 158-2 at 32.)

Because Cramton moved for summary judgment on that ground that the Corporate 

Defendants can’t prove any damages associated with this theory, it was incumbent upon 

the Corporate Defendants to identify some damage-related evidence in their response. 

They failed to do so—although their response asserts they “incurred considerable expense 

in attempting to recover deleted information,” they cite no evidence in support of this 

statement. (Doc. 158 at 15.) Thus, Cramton is entitled to summary judgment on this 

portion of Counterclaim One. See Fed. R. Civ. P. 56(c)(1)(A) (“A party asserting that a 

fact . . . is genuinely disputed must support the assertion by . . . citing to particular parts of 
- 63 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

materials in the record . . . .”); Fed. R. Civ. P. 56(e)(1) (“If a party fails to properly support 

an assertion of fact . . . as required by Rule 56(c), the court may . . . consider the fact 

undisputed for purposes of the motion.”). See also Hastings v. Bank of Am. NA, 2014 WL 

11514488, *4 (D. Ariz. 2014) (where “Plaintiff present[ed] no evidence of any costs 

incurred,” “Defendants [were] . . . entitled to summary judgment on their breach of contract 

claim because Plaintiff [could not] show that she was damaged by any breach that might 

have occurred”).

31

 

3. Theory Two: Soliciting McCormack

The Confidentiality and Non-Competition Agreement also contains a provision that 

prohibits the solicitation of the Corporate Defendants’ employees. It provides as follows:

Non-Solicitation of Employees. I acknowledge the character of the 

Company’s business and the substantial amount of time, money and effort 

that the Company has spent and will spend in recruiting, developing and 

retaining competent employees and contractors, and I agree that I will not 

during the Employee Non-Solicitation Period in the Business Territory, alone 

or with others, directly or indirectly, solicit for employment, hire, or 

engagement, or assist any other entity or person in soliciting for employment, 

hiring, or engagement any employee or contractor who is or who is hereafter 

employed or engaged by the Company or whose employment or engagement 

ended within the six (6) month period immediately preceding the solicitation, 

hire or engagement prohibited by this provision. The Employee NonSolicitation Period shall be tolled while I am in breach hereof.

(Doc. 158-1 at 296.)

The Corporate Defendants argue Cramton breached this provision by “assist[ing] 

third party Dana Mavros ([the Corporate Defendants’] consultant) with soliciting ECO 

employee Laura McCormack (Cramton’s spouse).” (Doc. 158 at 15.) But the only 

 

31 It should be acknowledged that the Corporate Defendants stated, in the last sentence 

of the section of their response concerning the damages issue, that they “intend to file a 

spoliation motion.” (Doc. 158 at 15.) However, the Corporate Defendants did not make a 

request under Rule 56(d) for more time to obtain damages evidence to support their 

counterclaim. Thus, even though the Corporate Defendants did end up filing a spoliation 

motion on July 22, 2019 (Doc. 206)—more than three months after they filed their response 

to Cramton’s summary judgment motion (Doc. 158)—the Court need not consider the 

materials submitted as part of the spoliation briefing for summary judgment purposes. 

Moreover, it is unclear whether the spoliation motion contains an itemization of the costs 

allegedly incurred by the Corporate Defendants when attempting to recover deleted data. 

See Fed. R. Civ. P. 56(c)(3) (“The court need consider only the cited materials . . . .”); 2 

Gensler, supra, at 160 (“The court has no duty to search the record to identify the facts that 

might . . . defeat summary judgment.”).
- 64 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

evidence the Corporate Defendants proffer to support this assertion is a single page 

containing 12 short text messages. (Doc. 158-3 at 33.) Although it is possible to infer that 

the individuals exchanging those text messages were Mavros and Cramton (one of the 

participants is using a phone number described as “Dana’s Super Secret Number” and the 

other participant identifies herself at one point as “Kim”), it is unclear what the parties were 

discussing. The one message in which Mavros states “I wanted to follow up with you and 

Laura regarding following up with my business” is too vague to constitute proof that 

Cramton assisted Mavros in ultimately hiring McCormack.32

The Corporate Defendants’ second theory also fails for the independent reason that 

they have not proffered any evidence showing they suffered damages—although they 

assert the alleged solicitation attempt “damag[ed] Corporate Counterclaimants” (Doc. 158 

at 16), no supporting evidence is identified.

3. Theory Three: Violating Non-Compete By Working At Kahala

The Confidentiality and Non-Competition Agreement contains a “NonCompetition” clause that provides as follows:

Non-Competition. I acknowledge that the Company does business 

throughout the Business Territory and further acknowledge the substantial 

amount of time, money and effort that the Company has spent and will spend 

in building its products, services, employee and customer relationships and 

development of strategically important information, and agree during the 

Non-Competition Period, I will not, alone or with others, directly or 

indirectly, acquire an ownership interest in, manage, operate, be employed 

or engaged by, consult for or otherwise be associated with any business 

engaged in or planning to engage in any business activity (whether or not for 

compensation) within the Restricted Field in the Business Territory, to the 

extent my ownership, management, operation, employment, engagement, 

consultancy or association involves me accessing, using, referring to, or 

drawing upon my knowledge of the Company’s Confidential Information or 

customer relationships. The Non-Competition Period shall be tolled while I 

am in breach hereof.

(Doc. 158-1 at 296.) “Restricted Field” is defined as “the business of creating, 

manufacturing, producing and marketing healthy fast food + juice.” (Id. at 294.) “Business 

 

32 The Corporate Defendants also cite an email in which McCormack states she is 

resigning from Grabbagreen (Doc. 158-3 at 35) and a contractor agreement between 

McCormack and an LLC that appears to be affiliated with Mavros (id. at 37-49). Although 

these documents suggest that McCormack ended up working for Mavros, they do not shed 

any light on whether Cramton helped solicit McCormack to make the switch.
- 65 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Territory” is defined as: 

locations where Company has restaurants or franchisees or where it has 

definite plans in which to expand, unless a court determines that geographic 

scope is unenforceable under applicable law because it is too broad, in which 

case the Business Territory shall be confined to a 5 mile radius from the 

locations where I actually provided services for Company or about which I 

know confidential information. If a court determines that a 5 mile radius is 

unenforceable under applicable law because it is too far, the Business 

Territory shall be the greatest distance that the court determines is reasonable 

under the circumstances: three (3) miles; or one and a half (1.5) miles.

(Id. at 293.) 

Cramton argues that (1) this provision is unenforceable and (2) in any event, she has 

not breached it. (Doc. 142 at 14; Doc. 171 at 11.) In response, the Corporate Defendants 

do not address the enforceability argument but contend that Cramton breached the 

provision by “working at [Kahala] as Director of Franchise Development, selling all 

Kahala Brand concepts, including Grabbagreen competitors.” (Doc. 158 at 15-16.) 

Further, they claim she breached the provision by “[taking] the lead on franchising the 

Grabbagreen Brand for Kahala” “after Kahala acquired the Grabbagreen Brand.” (Id.) As 

such, they argue, “[d]uring the non-compete period, Cramton began doing the same work 

for Kahala that she had done for GFL, requiring her to rely upon her knowledge of GFL’s 

Confidential Information.” (Id.) Their only argument about damages is that Cramton’s 

conduct “damage[ed] Corporate [Defendants] by, among other things, interfering with the 

Kahala deal . . . resulting in a dramatically reduced purchase price.” (Id.) 

This claim fails for an array of reasons. First, the Corporate Defendants did not 

respond to Cramton’s argument that the non-compete clause is unenforceable. The usual 

rule is that “[t]he burden is on the employer to prove the extent of its protectable interests, 

and if it cannot, the entire [non-compete] covenant will be deemed unenforceable.” 

Compass Bank v. Hartley, 430 F. Supp. 2d 973, 979 (D. Ariz. 2006). The Corporate 

Defendants’ failure to address this issue suggests they have abandoned it. See, e.g., Jenkins 

v. Cty. of Riverside, 398 F.3d 1093, 1095 n.4 (9th Cir. 2005) (“[Plaintiff] abandoned her 

other two claims by not raising them in opposition to the [defendant’s] motion for summary 

judgment.”); Bolbol v. City of Daly City, 754 F. Supp. 2d 1095, 1115 (N.D. Cal. 2010)
- 66 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

(“[P]laintiff fails to address this issue in her opposition brief and apparently concedes that 

she may not proceed on this claim. Accordingly, the court grants summary judgment in 

favor of defendants as to this claim.”).

Second, even assuming the provision is theoretically enforceable, it only prohibits

Cramton from “directly or indirectly, acquir[ing] an ownership interest in, manag[ing], 

operat[ing], be[ing] employed or engaged by, consult[ing] for or otherwise be[ing]

associated with any business engaged in or planning to engage in any business activity 

(whether or not for compensation) within the Restricted Field in the Business Territory.”

(Doc. 158-1 at 296, emphasis added.) The Corporate Defendants have failed to present 

any evidence that Kahala was “engaged in or planning to engage in any business activity

. . . within the Restricted Field in the Business Territory.” The Corporate Defendants list 

some brands controlled by Kahala that are allegedly “competitive with Grabbagreen” (Doc. 

158 at 16), but their only evidence pertaining to those brands is a hearsay printout of a 

website and that printout does not, in any event, establish that those brands were engaging 

in business activity within the Restricted Field and/or were located in the Business 

Territory. 

Third, the Corporate Defendants also fail to present any evidence showing that any 

work Cramton did for Kahala “involve[d] [her] accessing, using, referring to, or drawing 

upon [her] knowledge of the Company’s Confidential Information or customer 

relationships.” (Doc. 158-1 at 296.) 

Fourth, the Corporate Defendants present no evidence of damages associated with 

Cramton’s alleged breach of the non-compete provision. The only injury they allege in 

connection with this provision is “interfer[ence] with the Kahala deal . . . resulting in a 

dramatically reduced purchase price” (Doc. 158 at 16), but as will be discussed in Part V.M 

below, the Corporate Defendants have no evidence Cramton interfered with the Kahala 

deal. And, to the extent the claim is based on Cramton making efforts to franchise the 

Grabbagreen brand for Kahala after Kahala acquired Grabbagreen, it is unclear how the 

Corporate Defendants could have been damaged by such post-acquisition conduct.
- 67 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4. Implied Covenant 

As noted, the Corporate Defendants’ answer seems to allege that Counterclaim One 

is based not only on certain specific clauses within the Confidentiality and Non-Compete 

Agreement and the ECH Operating Agreement, but also upon “the implied covenant of 

good faith and fair dealing.” (Doc. 95 at 24 ¶ 23.) In her summary judgment motion, 

Cramton identifies an array of reasons why any such claim must fail,

33

 and the Corporate 

Defendants do not address these arguments in their response. Thus, the Court concludes 

the Corporate Defendants have abandoned their implied-covenant claim, at least as it 

pertains to Counterclaim One. Jenkins, 398 F.3d at 1095 n.4; Bolbol, 754 F. Supp. 2d at 

1115. 

K. Counterclaim Two (Unfair Competition)

In Counterclaim Two, the Corporate Defendants assert a claim for unfair 

competition. (Doc. 95 at 25 ¶¶ 26-31.) The gist of this claim is that the “actions” of 

Cramton described in their answer “comprise business conduct that is contrary to honest 

practices in commercial matters.” (Id. ¶ 27.)

Cramton moves for summary judgment on Counterclaim Two on the grounds that 

(1) the ELR bars the Corporate Defendants “from seeking to assert through tort what they 

have already contracted for” and (2) “[the Corporate Defendants] have failed to disclose 

any evidence establishing legally wrongful conduct by Cramton or resulting damages.” 

(Doc. 142 at 23-24.)

In response, the Corporate Defendants focus solely on whether the claim is barred 

by the ELR. (Doc. 158 at 20-21.) Specifically, they contend that the claim “arises out of 

Cramton’s misuse of confidential information acquired during the course of her 

relationship with [the Corporate Defendants] to advance a rival business interest,” that this 

 

33 Specifically, Cramton argues that (1) the “implied-covenant claims are simply a rehashing of the breach of contract claims”; (2) “Cramton’s alleged ‘bad faith’ is simply not 

actionable”; (3) “there is no ‘right or privacy’ inherent in the parties’ business contracts 

that would prohibit Cramton from truthfully informing friends or colleagues of Newman’s 

medical condition”; and (4) “[the Corporate Defendants] have failed to disclose any 

evidence that would support common-law defamation.” (Doc. 142 at 21-23.)
- 68 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

particular contingency wasn’t the subject of discussion when the Operating Agreement was 

being negotiated, and that there is thus “no risk of undermining the policy concerns of 

contract law by allowing [this] tort claim against Cramton.” (Id.)

The Court need not decide whether Counterclaim Two is barred by the ELR because 

the Corporate Defendants have provided no evidence supporting this claim and no 

explanation of the basis for this claim. To the extent Arizona even recognizes a cause of 

action for unfair competition,

34

“[t]he general purpose of the doctrine is to prevent business 

conduct that is ‘contrary to honest practice in industrial or commercial matters.’” Fairway 

Constructors, Inc. v. Ahern, 970 P.2d 954, 956 (Ariz. Ct. App. 1998) (citation omitted). 

As such, “[t]he doctrine encompasses several tort theories, such as trademark infringement, 

false advertising, ‘palming off,’ and misappropriation.” Id. Here, the Corporate 

Defendants do not seem to be arguing that Cramton is liable for trademark infringement, 

false advertising, palming off, or misappropriation. Their response does not include any 

explanation concerning why Cramton might be liable for unfair competition and does not 

provide any evidence in support of any theory of liability for this claim. It is not the Court’s 

job to manufacture the claim for the Corporate Defendants. 

Additionally, the Corporate Defendants’ sole theory of damages related to this 

claim—that Cramton’s alleged misuse of confidential information “dimish[ed] the sale 

value of [the Corporate Defendants’] assets” (Doc. 158 at 21)—is marred by a total absence 

of evidentiary support. See Part V.M infra.

Accordingly, the Court grants summary judgment to Cramton on Counterclaim 

Two.

L. Counterclaims Three and Five (GGS Release)

Cramton moves for summary judgment on Counterclaims Three and Five, to the 

extent those claims are premised on alleged breaches of express provisions within the GGS 

Release, on the grounds that (1) “the alleged breaches are outside the scope of the Release

 

34 See Orca Commc’ns Unlimited, LLC v. Noder, 337 P.3d 545, 547 (Ariz. 2014)

(“[W]e do not decide here whether Arizona common law recognizes a claim for unfair 

competition . . . .”).
- 69 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

and entirely unsupported by the evidence” and (2) Defendants cannot show associated 

damages. (Doc. 142 at 19-21.) Cramton also argues that Counterclaim Three fails because 

“Kelli Newman, ECO, ECH, and GFL are not parties to the [GGS release] and they are not 

third-party beneficiaries of the [GGS] Release, so there is no way they can sue for breach.” 

(Id. at 18-19.)

In their response (Doc. 158 at 16-20), Defendants seem to contend that 

Counterclaims Three and Five are premised on breaches of (1) the “Mutual Releases”

provision of the GGS Release (discussed above) and (2) the “Non-Disparagement”

provision of the GGS Release, which provides as follows:

The Parties agree not to make any negative or disparaging comments, 

whether written or oral, in any form whatsoever (whether via social media, 

the internet, or otherwise), about each other, the Corporation or Grabbagreen 

to the public, any member of the public, the press, actual or potential business 

partners or associates, or any others. This prohibition includes, but is not 

limited to, statements regarding the claims, demands, allegations, assertions, 

arguments, and outcome of the any dispute between or among the Parties, as 

well as any statements regarding the Parties’ business conduct, business 

practices, quality of goods or services, Grabbagreen or work performed.

(Doc. 143-4 at 64.)

With this understanding in mind, Counterclaims Three and Five fail for two 

reasons.35 First, this Court has already found (see Part V.C.1 above) that Cramton did not 

violate the “Mutual Releases” provision by suing Defendants in this case. Second, 

Defendants do not provide any evidence of damages associated with the alleged breach of 

the “Non-Disparagement” provision. In conclusory fashion, they assert in their response 

that Cramton’s breach of this provision “damag[ed] Keely and Kelli’s reputations,” but 

they provide no support for this proposition and no evidence of any damages that have

resulted. (Doc. 158 at 20.)36

Cramton also moves for summary judgment on Counterclaims Three and Five, to 

the extent those claims are premised on the implied covenant of good faith and fair dealing, 

 

35 The Court need not decide whether ECO, ECH, and GFL have standing to bring 

such a claim. 

36 Defendants also do not explain how damage to Kelli’s reputation would constitute 

a breach of the “Non-Disparagement” provision, given that Kelli was not a party to the 

GGS Release.
- 70 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

for the same reasons she sought summary judgment on the implied-covenant theory 

undergirding Counterclaim One. (Doc. 142 at 21-23.) Because the Corporate Defendants 

do not address those arguments in their response, the Court construes their silence as 

abandonment and thus grants summary judgment to Cramton to the extent Counterclaims 

Three and Five are premised on breach of the implied covenant of good faith and fair 

dealing. Jenkins, 398 F.3d at 1095 n.4; Bolbol, 754 F. Supp. 2d at 1115.

M. Counterclaim Four (Wrongful Interference)

In Counterclaim Four, the Corporate Defendants assert a claim for wrongful 

interference with business expectations. (Doc. 95 at 26-27 ¶¶ 38-44.) The theory 

underlying this claim is that Cramton engaged in various forms of misconduct—including 

disparaging them and sharing proprietary information with Kahala—that reduced the 

ultimate sale price to Kahala by at least $1 million. (Id. ¶¶ 42-43.) 

Cramton moves for summary judgment on Counterclaim Four on the grounds that 

(1) the Corporate Defendants “have not produced any evidence that Due North or Kahala 

reduced their purchase price based on any actions by Cramton”; and (2) “[t]here is no 

evidence of any interference by Cramton.” (Doc. 142 at 24.)37 In support of these 

arguments, Cramton proffers direct evidence (both from herself and from two Kahala 

representatives) that she didn’t interfere with the Kahala/Grabbagreen deal and that Kahala 

formulated its purchase price for Grabbagreen without her input.

In response, the Corporate Defendants argue that a collection of circumstantial 

evidence “raises obvious questions as to whether there was a causal relationship between 

Cramton’s breach of confidentiality and the substantial reduction in Kahala’s purchase 

price.” (Doc. 158 at 21-25.) The proffered circumstantial evidence includes:

 

37 The elements of intentional interference with a business relationship are: “(1) [t]he 

existence of valid contractual relationship or business expectancy; (2) knowledge of the 

relationship or expectancy on the part of the interferor; (3) intentional interference inducing 

or causing a breach or termination of the relationship or expectancy; and (4) resultant 

damage to the party whose relationship or expectancy has been disrupted.” Antwerp 

Diamond Exch. of Am., Inc. v. Better Bus. Bureau of Maricopa Cty., Inc., 637 P.2d 733, 

739-40 (Ariz. 1981) (citations omitted). Thus, Cramton’s summary judgment arguments 

concern the third and fourth elements.
- 71 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Cramton’s resignation; her longstanding friendship with Kahala’s lead 

negotiator, Wuycheck; Cramton informing Wuycheck of her resignation less 

than 24 hours after submitting her resignation to Keely; her inflammatory 

pre-litigation claims against [the Corporate Defendants]; her immediate 

employment with Grabbagreen’s competitor and suitor, Kahala; her calls and 

meetings with Wuycheck during discussions and then negotiations with 

Kahala, both before and after she resigned; the fact that Wuycheck and 

Kahala never disclosed to Grabbagreen that it hired Cramton; Cramton’s 

documented hostility and retaliatory spirit toward Keely and Kelli; 

Cramton’s regular contact with a Grabbagreen insider (described by her 

spouse as her inside “mole”) for months following her resignation; Kahala’s 

substantially reduced LOI, which was submitted 10 days after Cramton 

began working for Kahala; followed by this lawsuit, which was filed two 

weeks later.

(Id. at 24-25, citation omitted.) The Corporate Defendants do not, however, present any 

direct evidence demonstrating interference.

In light of the plethora of direct evidence of non-interference presented by Cramton, 

and the weakness of the circumstantial evidence proffered by the Corporate Defendants, 

no factfinder could reasonably conclude that Cramton interfered with the Kahala deal. 

Hanon v. Dataproducts Corp., 976 F.2d 497, 507 (9th Cir. 1992) (at summary judgment, 

court “must treat . . . direct evidence as if it were true” but is “entitled to consider the 

plausibility and reasonableness of inferences arising from . . . circumstantial evidence”); 

Travers v. Sullivan, 801 F. Supp. 394, 397-98 (E.D. Wash. 1992) (“[W]hen the only 

evidence offered in opposition to the motion for summary judgment is circumstantial 

evidence, then the court may inquire into the plausibility of inferences drawn from that 

evidence.”). 

Indeed, Cramton stated in her declaration that, “[b]ecause [she] previously worked 

at Grabbagreen, [she] was screened off of any discussions regarding Grabagreen, and was 

not privy to any of the negotiations between Kahala and Grabbagreen.” (Doc. 142-2 at 6 

¶ 46.) Wuycheck, Kahala’s Senior Vice President of Development, similarly testified in 

his deposition that he and Cramton “always ha[d] been very careful” and “early on 

established rules that [they] weren’t going to talk about Grabbagreen.” (Doc. 142-6 at 63-

64.) He further testified that he didn’t recall discussing Grabbagreen with Cramton 

between the time of Kahala’s first offer and the lowered second offer. (Id. at 66.) He also 

testified about various contemporaneous emails he had sent Cramton in which he expressly 
- 72 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

indicated that he didn’t want her to disclose any information about Grabbagreen that hadn’t 

already been disclosed through the purchase process. (Id. at 68, 71-72.) And Jeff Smit, 

Kahala’s Chief Operating Officer, testified he was not aware of Cramton having any 

communications with the negotiation team about the Grabbagreen acquisition. (Id. at 83-

84.) Smit further testified that the $500,000 reduction in price was not “influenced in any 

way, shape or form by Kim Cramton” and that, instead, Kahala lowered the purchase price 

because, “through due diligence, [Kahala] discovered that three out of the four corporate 

stores were sold,” which reduced the value of the company and the price Kahala was 

willing to pay. (Id. at 85-86, 91.) 

Given all of this, the mere fact that Cramton was engaging in conversations with 

Wuycheck and working for Kahala while the deal was being negotiated doesn’t, without 

more, create a genuine issue of fact regarding whether Cramton interfered with the deal. 

To conclude otherwise would subvert Rule 56 by allowing a party to avoid summary 

judgment based on mere speculation and conjecture. Cf. Owens v. Lighthouse Counseling 

Ctr., Inc., 2009 WL 1204359, *11 (M.D. Ala. 2009) (granting summary judgment on 

tortious interference claim, where a third party submitted a declaration averring that the 

defendant did not do “anything that contributed to my decision regarding [the plaintiff’s] 

discharge,” because the plaintiff’s testimony “that ‘she feels’ like [the defendant] interfered 

with her employment” was “conjecture or speculation [that cannot] satisfy the plaintiff’s 

burden to offer sufficient facts to defeat a defendant’s properly supported summary 

judgment motion”). See generally Summers v. Teichert & Son, Inc., 127 F.3d 1150, 1152

(9th Cir. 1997) (“[A] mere ‘scintilla’ of evidence will not be sufficient to defeat a properly 

supported motion for summary judgment; rather, the nonmoving party must introduce 

some ‘significant probative evidence tending to support the complaint.’ Summary 

judgment may be granted if ‘the evidence is merely colorable . . . or is not significantly 

probative.’”) (citations omitted).

The Court, thus, grants summary judgment to Cramton on Counterclaim Four.

***
- 73 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Accordingly, IT IS ORDERED that:

(1) Defendants’ motion to supplement the record (Doc. 200) is granted;

(2) Defendants’ motion for sanctions (Doc. 206) is denied;

(3) Cramton’s motion for leave to file a sur-reply (Doc. 229) is denied as moot;

(4) Kelli’s motion to strike changes to Cramton’s deposition testimony (Doc. 

220) is denied;

(5) Cramton’s motion for summary judgment (Doc. 142) is granted in part and 

denied in part;

(6) Defendants’ motion for summary judgment (Doc. 143) is granted in part

and denied in part; 

(7) Based on the aforementioned rulings, the following claims and 

counterclaims, or portions thereof, are no longer pending: all claims against Kelli pursued 

under a community property theory; Counts One, Two, and Three; Count Four (as to ECO, 

ECH, and Kelli); Count Five (as to liability); Counts Six and Eight; and Counterclaims 

One, Two, Three, Four, and Five; and

(8) Based on the aforementioned rulings, the following claims (or portions 

thereof) remain pending: Count Four (as to Keely and GFL); Count Five (as to damages); 

and Counts Seven, Nine, and Ten.

Dated this 23rd day of December, 2019.