Implicit Conversions, Inc. v. Stine

Background

Implicit Conversions, Inc. sued its former employees Jacob Stine and Juanita Traver Stine, alleging computer fraud and contract violations. Stine and Traver Stine filed counterclaims against Implicit and its chief executive officer, Robin Lavallee, concerning their terminations and related events.

Stine alleged that he and Lavallee agreed they would be equal within the company and that neither would be the other’s boss. He claimed Lavallee breached that agreement by terminating him. Stine also alleged that Implicit owed him approximately $5,000 in wages at discharge and that Lavallee was personally responsible for a five-day delay in payment under California wage laws. Only Lavallee moved to dismiss Stine’s counterclaims; Implicit did not move to dismiss Stine’s counterclaims against the company.

Traver Stine alleged that Implicit terminated her because of her association with Stine, who was allegedly perceived to have autism. She also alleged that Lavallee and Implicit intruded into her private affairs when Lavallee told employees and an outside vendor that he had called 9-1-1 to conduct a wellness check at the residence she shared with Stine. Both Implicit and Lavallee moved to dismiss Traver Stine’s counterclaims.

Legal standard

The court applied Federal Rule of Civil Procedure 12(b)(6), which requires dismissal when a pleading does not state a legally sufficient claim for relief. At this stage, the court accepts well-pleaded factual allegations as true but does not accept conclusory allegations or unreasonable inferences. A claim must contain enough facts to make liability plausible rather than merely possible.

Stine’s counterclaims

The court granted the motion to dismiss Stine’s breach-of-contract counterclaim. It held that the alleged statement that neither Stine nor Lavallee was the other’s boss was not definite enough to plausibly establish a contract. The statement did not identify the agreement’s limits or either party’s obligations, and the court viewed the alleged conversation as concerning titles rather than creating a binding agreement that prevented Lavallee from terminating Stine.

The court also granted the motion to dismiss Stine’s claim for waiting-time penalties. Although California law can impose personal liability on a company officer who causes wages to be paid late, the court found that Stine did not plead facts showing Lavallee caused the delay. The allegations that Lavallee was the outward-facing chief executive officer and willfully failed to pay wages were too vague or conclusory.

Traver Stine’s counterclaims

The court granted the motion to dismiss Traver Stine’s wrongful-termination claim based on association with a person perceived to have a disability. The court found that the pleaded facts did not plausibly show that Stine’s perceived disability was a substantial factor motivating Implicit’s decision to terminate her. The court emphasized allegations and admissions that her credentials were used to restore Stine’s access to company computer systems and that Stine then used that access to take the systems offline. The court stated that an amended claim would need to address those circumstances and provide specific, nonconclusory facts connecting her termination to Stine’s perceived disability.

The court also granted the motion to dismiss Traver Stine’s intrusion-into-private-affairs claim. To state that tort claim, she needed to allege an intrusion into a private place, conversation, or matter in a way highly offensive to a reasonable person, including a reasonable expectation of privacy. The court found that she did not explain how Lavallee’s statement that he had called the police for a wellness check revealed information from her personnel file or otherwise involved a private matter.

Disposition

The court granted Lavallee’s motion to dismiss Stine’s first and fifth counterclaims and granted the counter-defendants’ motion to dismiss Traver Stine’s counterclaims. Stine and Traver Stine were directed to file any amended counterclaims within 20 days of October 15, 2024.