Khan v. SAP Labs, LLC

Background

Muhammad Khan worked for SAP Labs, LLC, from 2013 until December 1, 2015. He alleged that his former manager, Sanjay Shirole, subjected him to abusive comments and conduct involving his body, sexuality, religion, race, and national origin. Khan also alleged that SAP and its human-resources employee, Jenny Le, failed to address his complaints, placed him on unpaid leave, and took adverse employment actions against him.

Khan filed an administrative complaint with California’s Department of Fair Employment and Housing in March 2017. That complaint named SAP as the only respondent and referred to disability discrimination and retaliation related to medical leave. It did not identify Shirole as a respondent and did not allege discrimination or harassment based on sex, sexual orientation, race, or national origin. The agency issued a right-to-sue letter on July 24, 2017. Khan filed this lawsuit in state court on August 21, 2018, and defendants removed it to federal court.

The first amended complaint asserted 12 state-law claims: six claims under California’s Fair Employment and Housing Act; wrongful termination in violation of public policy; retaliation under California Labor Code section 1102.5; common-law invasion of privacy; violation of the privacy right in the California Constitution; intentional infliction of emotional distress; and retaliation under the Fair Employment and Housing Act. The claims were asserted against SAP, Le, Shirole, or combinations of them as specified in the complaint.

Motion to Remand

The court denied Khan’s motion to remand. It concluded that defendants had shown the requirements for diversity jurisdiction, including that the amount in controversy exceeded $75,000. The court found that SAP was a citizen of Delaware and Pennsylvania because its sole member was a citizen of those states. The court said the record did not establish that Khan was a United States citizen or therefore a California citizen, but concluded that diversity jurisdiction could still exist if Khan were a foreign national. The court also treated Le and Shirole as sham defendants for jurisdictional purposes because Khan could not state claims against them and could not do so through further amendment.

The court separately held that it would retain supplemental jurisdiction over Khan’s state-law claims even if diversity jurisdiction were lacking. The original complaint had included a federal Family and Medical Leave Act claim, and the court found that the federal and state claims arose from related alleged harassment, discrimination, retaliation, and medical conditions. The court concluded that keeping the case in federal court promoted efficiency and avoided further delay.

Motion to Dismiss

The court granted defendants’ Rule 12(b)(6) motion, which tests whether a complaint states a legally sufficient claim. The court ruled that all of Khan’s Fair Employment and Housing Act claims—Claims 1 through 6 and Claim 12—were subject to dismissal because he had not timely exhausted the required administrative remedies. His administrative complaint did not cover claims based on sex, sexual orientation, race, or national origin, and he filed it more than one year after the events supporting his disability-related claims. The court also held that he filed the lawsuit more than one year after the right-to-sue letter.

The court granted dismissal of Claim 7, the wrongful-termination claim, because Khan filed it more than two years after the alleged constructive termination. The court granted dismissal of Claim 8, the Labor Code section 1102.5 whistleblower claim, because Khan did not identify the illegal conduct he reported, to whom he reported it, the adverse employment action, or a causal connection between the report and the action. The court determined that the claim was filed within the applicable three-year limitations period and related back to the original complaint, but its allegations were insufficient.

The court granted dismissal of Claims 9 and 10, the common-law and constitutional privacy claims, because Khan did not provide enough information about the medical records, the alleged disclosure, or the circumstances of the disclosure. The court did not decide whether the alleged conduct was legally justified or protected by California’s litigation privilege. The court granted dismissal of Claim 11, the intentional-infliction-of-emotional-distress claim, because it was filed more than two years after the alleged employment-related conduct. The court did not need to decide whether workers’ compensation exclusivity also barred that claim.

Leave to Amend and Order

The court granted leave to amend only Claims 8, 9, and 10, and only against SAP. It granted the motion to dismiss without leave to amend as to Claims 1 through 7 and 11 through 12. Khan could not reassert any claims against Le or Shirole, reassert SAP claims other than Claims 8 through 10, or add new claims or parties. Any amended complaint had to be given to prison staff for mailing by December 5, 2019.

The court also granted defendants’ request for judicial notice of four public documents and ordered the Clerk to replace the incomplete electronic filing of the first amended complaint with the complete version and exhibits. Judge Elizabeth Labson Freeman signed the order.