Stovall v. Align Technology, Inc.

Background

Kristan Stovall, a former Align Technology employee, sued Align after the company terminated her employment. The opinion states that Stovall worked for Align outside California and that she alleged discrimination based on gender and age, retaliation, breach of contract, breach of the implied covenant of good faith and fair dealing, and wrongful termination in violation of public policy.

According to the allegations summarized in the opinion, Stovall took maternity leave and later complained that her new manager treated her differently from male coworkers. She also took disability leave. After she returned, she was placed on a performance improvement plan and was terminated on July 10, 2018. The termination decision was made by the manager and Align’s human-resources director, who directed, oversaw, and approved the decision from California.

The First Amended Complaint asserted eight causes of action: sex discrimination under Title VII; age discrimination under the Age Discrimination in Employment Act; Title VII retaliation; breach of contract; breach of the implied covenant of good faith and fair dealing; sex discrimination under the California Fair Employment and Housing Act; age discrimination under that Act; and wrongful termination in violation of public policy.

Motion to Dismiss

Align asked the court to dismiss the fourth through eighth causes of action. Align argued that California law could not apply to alleged wrongful conduct involving employment outside California. Stovall agreed that the fourth and fifth causes of action should be dismissed, but argued that the sixth through eighth claims could proceed because Align directed and controlled employment activities from its California headquarters and some relevant conduct occurred there.

Applying the standard for a motion to dismiss for failure to state a claim, the court accepted well-pleaded allegations as true and considered whether they plausibly supported relief. The court explained that California’s employment-discrimination law generally does not apply to nonresidents working outside California when the relevant wrongful conduct did not occur in California.

The court nevertheless found Stovall’s allegations sufficient at the pleading stage. Although most of the alleged discriminatory conduct occurred outside California, Stovall specifically identified the California-based human-resources director and alleged that he directed, oversaw, and approved the termination and participated in the call notifying her. The court described the allegations as thin but sufficient to state cognizable California-law claims.

Jury Demand

Align also moved to strike Stovall’s jury demand, arguing that she had not timely demanded a jury trial after the case was removed to federal court. Stovall did not dispute that she failed to make a proper timely demand. She asked for relief under Federal Rule of Civil Procedure 39(b), arguing that she had followed California procedures, that her original complaint did not include the federal claims, that she later included jury-demand language in other filings, that Align would not be prejudiced, and that she had not knowingly or voluntarily waived a jury trial.

The court held that Ninth Circuit precedent did not allow relief when the failure to make a timely demand resulted from oversight, inadvertence, or a good-faith mistake of law. Because Stovall acknowledged that there may have been a mistake, the court concluded that it could not grant her request.

Disposition

The court granted Align’s motion to dismiss as to the fourth cause of action for breach of contract and the fifth cause of action for breach of the implied covenant of good faith and fair dealing, and denied the motion in all other respects. The court granted Align’s motion to strike Stovall’s jury demand and denied Stovall’s motion for relief under Rule 39(b). The court ordered Stovall to file and serve a Second Amended Complaint consistent with the order by January 31, 2020.