Department of Fair Employment and Housing v. Silicon Valley Growth Syndicate I

Background

The California Department of Fair Employment and Housing sued several individuals and entities alleged to have been responsible for employing Jane Doe when she was purportedly sexually harassed by her direct supervisor, William McNutt. The defendants included Silicon Valley Growth Syndicate I, L.L.C. (the Syndicate LLC), Silicon Valley Growth Syndicate Fund I, L.P. (the Syndicate Fund), William Bunker, McNutt, and International Direct Mail Consultants, Inc. (IDMC).

The complaint alleged that Doe worked first as an intern and later as Chief of Operations for the Syndicate. It described alleged conduct by McNutt in California and elsewhere, including unwanted sexual touching during a 2017 work-related trip to California. The complaint also alleged that IDMC was Doe’s joint employer with the Syndicate. The defendants disputed aspects of the alleged employment relationships and argued that the case should be transferred or dismissed.

Venue-transfer motion

The defendants sought transfer to the Southern District of California under 28 U.S.C. § 1404(a), which permits transfer for the convenience of the parties and witnesses and in the interest of justice. The court held that venue was proper in the Northern District and considered whether convenience justified a discretionary transfer.

The court gave significant weight to the plaintiff’s choice of forum because the Syndicate was based in Menlo Park or San Francisco during much of the relevant period and the Department conducted its investigation from the Bay Area. The court found that the defendants had not shown that potential witnesses in the Southern District had particularly important evidence. It denied the motion to change venue.

Personal-jurisdiction motions

McNutt withdrew his challenge to personal jurisdiction. The court denied the challenge concerning the Syndicate, explaining that the Syndicate was headquartered in California during the alleged California harassment and during some other alleged misconduct. Those contacts could support general jurisdiction or, if general jurisdiction was unavailable after the Syndicate left California, specific jurisdiction because the claims grew out of work Doe allegedly performed for the Syndicate.

The court also concluded that Bunker was subject to at least personal jurisdiction because the complaint sought to hold him liable as a Syndicate principal and alleged that he was a California resident while the Syndicate was based there. As to IDMC, the court found that the record adequately supported the conclusion that Doe traveled to California at IDMC’s request as its employee and was allegedly harassed there by McNutt, IDMC’s owner. The court therefore denied the personal-jurisdiction dismissal motions.

Second claim for relief

The second claim invoked California Civil Code § 51.9, which can impose liability for sexual harassment in certain business, service, or professional relationships outside ordinary employment relationships. The defendants argued that the complaint improperly relied on the statute’s reference to “investors,” that the 2019 addition of investors could not apply to earlier events, and that the alleged facts described only an employment relationship.

The court found the retroactivity dispute unnecessary to resolve because the complaint did not allege facts showing that the defendants were liable as investors, and the reference to investors was superfluous. The court held that the complaint’s allegations of a business relationship could potentially support liability under § 51.9, even if the employment theory failed. It also held that pleading in the alternative was permissible and that the claim against Bunker, although particularly tenuous, should not be resolved at the pleading stage. The court denied the motion to dismiss the second claim for relief.

Intervention and pseudonym

The court granted Doe’s motion for leave to intervene, while stating that the parties should cooperate to litigate efficiently and avoid unnecessary duplication. The court also granted Doe’s unopposed motion to proceed under the pseudonym she had been using.

Disposition

The court granted the motions for leave to intervene and to proceed under a pseudonym. It denied the motions to transfer venue and to dismiss for lack of personal jurisdiction or inadequate pleading of the second claim for relief. The order addressed whether the case could proceed and did not resolve the ultimate merits of the alleged harassment claims.