Schouker v. Swarm Industries, Inc. dba Polyswarm

Background

Patricia Schouker alleged 12 causes of action against Swarm Industries, Inc., referred to in the opinion as PolySwarm, and its CEO, Steven Bassi, Jr. She alleged that PolySwarm hired her in July 2021 as Director of Business Development and Strategy and promoted her in July 2022 to Vice President of Alliance and Strategic Partnership. She alleged that the promotion was memorialized in an email providing for commissions of 10% on direct deals and 5% on partner deals.

Schouker alleged that her supervisor, Steve Laskowski, subjected her to gender-based harassment, undermined her authority, assigned her demeaning tasks, made sexist comments, treated her more harshly than male colleagues, and reduced her commission structure from 5–10% to 0.7% in January 2024. She also alleged that she experienced high blood pressure, panic attacks, and chest pains and that defendants did not provide meaningful accommodations. PolySwarm fired her in August 2024, allegedly claiming that she had violated confidentiality policies by forwarding emails to her personal account.

Schouker also alleged that she raised concerns about products being promoted based on features that did not exist and about PolySwarm’s alleged relationship with prohibited foreign entities. In particular, she alleged that she told Bassi that PolySwarm’s ecosystem included an engine developed by Kaspersky and that Bassi nevertheless submitted forms to the Department of Homeland Security falsely affirming that PolySwarm had no connections to prohibited foreign entities.

Rule 8 ruling

The defendants argued that the entire complaint should be dismissed as an improper “shotgun pleading,” meaning a complaint so broad or confusing that a defendant cannot adequately respond. The court denied that request. Although the complaint incorporated common factual allegations into each count, the court found that headings and the allegations tied to each claim gave defendants adequate notice. The court also noted that the defendants’ motion showed they could identify the factual basis for the individual claims.

Rule 12(b)(6) rulings

A Rule 12(b)(6) motion asks whether a complaint states a legally recognized claim supported by enough factual allegations. The court ruled on the counts as follows:

Counts One and Two: Gender discrimination under Title VII and FEHA

The court denied the motion to dismiss these claims. It found Schouker plausibly alleged that she was qualified for her position, experienced adverse employment actions, and was treated less favorably than male colleagues. The alleged adverse actions included termination, reduced and reassigned responsibilities, a commission reduction, unfavorable assignments, and gender-based harassment.

Counts Three and Five: Disability discrimination and disability-based harassment under FEHA

The court granted the motion to dismiss these claims. It found that Schouker’s allegations about health-related issues, high blood pressure, panic attacks, and chest pains did not plausibly show that she had a disability under the California Fair Employment and Housing Act or that those conditions limited a major life activity. Because the disability allegations were insufficient, the disability-based harassment claim also failed.

Count Four: Gender harassment under FEHA

The court denied the motion to dismiss Count Four against PolySwarm. It found that allegations about sexist comments, profanity, humiliating assignments, interference with client calls, and treatment that differed from the treatment of male colleagues plausibly supported a gender-harassment claim.

The court granted the motion to dismiss Count Four against Bassi in his personal capacity. Schouker argued that Bassi could be personally liable under the alter-ego doctrine, which can allow a corporation’s separate legal identity to be disregarded in certain circumstances. The court found that she had not alleged enough facts to plausibly show the required unity between Bassi and PolySwarm or an inequitable result if PolySwarm alone were treated as responsible.

Count Six: Failure to prevent discrimination and harassment under FEHA

The court denied the motion to dismiss Count Six. Because Schouker plausibly alleged gender discrimination and harassment, and defendants offered no other argument against this claim’s sufficiency, the court allowed it to proceed.

Count Seven: FEHA retaliation

The court granted the motion to dismiss Count Seven. The court found that the complaint did not provide enough timing information about when Schouker complained about gender or disability discrimination. Without clearer timing, the court could not determine whether the alleged complaints were sufficiently connected to the reduction in her role, commission reduction, and termination to support an inference of retaliation. The court also declined to consider arguments about accommodation requests and medical leave because those allegations were raised in briefing rather than the complaint.

Counts Eight and Nine: Intentional and negligent infliction of emotional distress

The court granted the motion to dismiss both emotional-distress claims. For intentional infliction of emotional distress, the court found that the complaint did not identify specific conduct that was extreme and outrageous or explain which defendant was responsible for which conduct. For negligent infliction of emotional distress, the court found that Schouker did not identify the conduct supporting the claim and did not plausibly allege a special duty owed to her.

Count Ten: Breach of contract

The court granted the motion to dismiss Count Ten. Schouker alleged that PolySwarm breached an email-based commission agreement by reducing her commissions from 5–10% to 0.7%. The court held that the email did not guarantee that the commission structure would continue for a specific period or indefinitely. Under the precedent discussed by the court, an employer may change employment terms after reasonable notice, and an employee who continues working after receiving notice accepts the changed terms. Schouker continued working for PolySwarm through August 2024 after the January 2024 commission reduction.

Count Eleven: Declaratory judgment

The court granted the motion to dismiss Count Eleven. Schouker sought a declaration that she had not violated confidentiality, loyalty, or related statutory duties. The court found that this request sought a remedy for past conduct rather than a declaration addressing a sufficiently immediate future controversy.

Count Twelve: California Labor Code whistleblower retaliation

The court denied the motion to dismiss Count Twelve. Schouker alleged that she reported to Bassi her reasonable suspicion that PolySwarm was violating federal law concerning prohibited Kaspersky products in connection with a Department of Homeland Security contract. She also alleged a series of adverse actions after that report, including a commission reduction, exclusion from contract-renewal discussions, reassignment of the DHS account, and termination. The court found those allegations plausibly supported whistleblower retaliation.

Disposition

The court granted defendants’ motion to dismiss disability discrimination (Count Three), disability-based hostile-work-environment harassment (Count Five), FEHA retaliation (Count Seven), intentional infliction of emotional distress (Count Eight), negligent infliction of emotional distress (Count Nine), breach of contract (Count Ten), and declaratory judgment (Count Eleven), with leave to amend. The court denied the motion to dismiss gender discrimination under Title VII and FEHA (Counts One and Two), gender-based hostile-work-environment harassment against PolySwarm (Count Four), failure to prevent discrimination and harassment (Count Six), and California whistleblower retaliation (Count Twelve). The court also granted the motion to dismiss Count Four against Bassi in his personal capacity.

An amended complaint attempting to replead the dismissed claims was due by April 18, 2025. If no amended complaint was filed, the case was to proceed on the claims that were not dismissed. The order stated that no new defendants or claims could be added without the court’s prior permission.