Forsyth v. HP Inc.

Background

This class action concerns alleged violations of the federal Age Discrimination in Employment Act (ADEA), California’s Fair Employment and Housing Act (FEHA), and other California laws. The lead plaintiffs worked for Hewlett-Packard Co. (HP Co.) and, after HP Co. split into Hewlett Packard Enterprise Company (HPE) and HP Inc. (HPI), worked for and were terminated by one of those entities or HP Co.

The plaintiffs alleged that HP implemented a workforce-restructuring initiative intended to make its workforce younger. They alleged that the HP entities terminated older workers under workforce-reduction plans while hiring younger, early-career employees to replace them. They relied on statements attributed to Meg Whitman, alleged hiring guidance and job advertisements, and allegations that managers were directed to select older, long-term employees for termination. The plaintiffs asserted a nationwide ADEA class and a California class asserting FEHA age-discrimination, public-policy, and unfair-competition claims.

The defendants moved to dismiss the Third Amended Complaint for failure to state a claim and lack of standing. They also asked the court to take judicial notice of several documents.

Judicial Notice

The court granted the request for judicial notice as to two exhibits consisting of HPI and HPE securities filings, but it did not take judicial notice of disputed facts in those filings. The court denied the request as to an exhibit concerning the California Department of Fair Employment and Housing’s records for Kevin Alviso. The court granted a later request concerning Alviso’s charge filed with the Equal Employment Opportunity Commission and an HPI securities filing.

ADEA and FEHA Claims

The court held that the plaintiffs adequately pleaded disparate treatment under the ADEA. Disparate treatment means treating employees less favorably because of a protected characteristic—in this case, age. The court found that the complaint alleged sufficient direct evidence to make it plausible that age was the “but-for” cause of the terminations. The alleged evidence included Whitman’s statements about recruiting young people and reshaping the workforce, alleged instructions to terminate older employees, alleged stereotypes about older workers, and allegations that competent older workers were replaced by younger employees.

Because the court found that the complaint adequately pleaded disparate treatment, it did not reach the plaintiffs’ alternative disparate-impact theory. The court also concluded that the ADEA allegations were sufficient under the FEHA standard. The defendants’ motion to dismiss the ADEA and FEHA claims was therefore DENIED.

Standing and Claims Against the Other HP Entities

The court considered whether each plaintiff could sue an HP entity that did not employ and terminate that plaintiff. The plaintiffs relied on three theories: the integrated-enterprise doctrine, aiding-and-abetting liability, and assumed liability.

The court found the integrated-enterprise allegations insufficient. That doctrine can treat separate companies as one employer, but the complaint did not adequately allege unusually interrelated operations, common management, centralized control of employment decisions, or common ownership or financial control. The use of similar workforce-restructuring processes, terminology, and paperwork, and the allegation that Whitman was involved with both companies, were not enough.

The court also found that the complaint did not adequately plead FEHA aiding-and-abetting liability. It did not specifically allege that each company knew the other company’s conduct was discriminatory and substantially assisted that conduct. The court further found that the relevant employee agreements did not make HPI or HPE liable for the other entity’s or HP Co.’s employee terminations.

The court clarified that employees who worked for and were terminated by HPE could not assert claims against HPI, employees who worked for and were terminated by HPI could not assert claims against HPE, and employees who worked for HP Co. could not assert claims against HPI or HPE. Those employees also could not represent a class asserting such claims. The defendants’ motion to dismiss claims asserted against HPI by non-HPI employees and against HPE by non-HPE employees was GRANTED.

Unfair-Competition Claim

Plaintiffs Vatturi and Alviso asserted a California unfair-competition claim based on the alleged discriminatory practices. The defendants challenged only the claim under the “fraudulent” theory, arguing that the complaint did not provide the required details. The court agreed that the complaint merely mentioned fraud without identifying who committed the alleged misconduct, what occurred, when and where it occurred, or how it was fraudulent. The defendants’ motion to dismiss the fraudulent unfair-competition claim was GRANTED.

Injunctive Relief

The plaintiffs sought an injunction requiring the defendants to stop discriminating against older workers. The court held that the former employees lacked standing to seek prospective injunctive relief because the complaint did not allege that the challenged conduct continued after October 2016, that it continued to affect the plaintiffs, or that any plaintiff was seeking reemployment from the defendants. The defendants’ motion to dismiss the request for injunctive relief was GRANTED.

Leave to Amend and Disposition

The court granted the plaintiffs one more opportunity to amend the complaint, finding that they might be able to cure deficiencies by alleging more specific facts supporting aiding-and-abetting liability and injunctive relief. The court did not authorize new claims or parties without further permission or the parties’ agreement.

Judge Davila’s final order states that the defendants’ motion to dismiss was GRANTED in part and DENIED in part. The plaintiffs could file an amended complaint by July 9, 2020. The opinion does not state that the claims dismissed in this order were dismissed with or without prejudice.