Lapping v. Wydham Vacation Ownership, Inc.

Background

Christopher Lapping sued Wyndham Vacation Ownership, Inc. (WVO), Wyndham Worldwide Corporation, Derek Milholland, and Matthew Muro over events arising from his employment and termination. The claims were based on California law, and federal jurisdiction was based on the parties’ diversity of citizenship. Wyndham Worldwide Corporation was dismissed by agreement. The court previously granted Muro’s motion for summary judgment. The remaining moving defendants were WVO and Milholland.

Lapping worked for WVO as a sales representative, later became a front-line sales manager, and transferred to the company’s Donatello property in San Francisco. He complained about Muro’s management practices and alleged that Muro encouraged misleading or unlawful sales practices, mistreated employees, and misused company resources. Lapping sent a written complaint to WVO on February 13, 2017.

Before that complaint, WVO had begun arranging an investigation by the law firm Baker Hostetler into complaints about the Donatello management team. Baker investigated complaints about sales practices and employee treatment, concluded that the most serious violations involved Lapping, Muro, and another employee, and recommended terminating Lapping. WVO terminated Lapping on March 22, 2017, and also terminated Muro.

Lapping asserted claims for wrongful termination in violation of public policy, retaliation under California Labor Code section 1102.5, violation of California’s Unfair Competition Law, fraud, and negligent hiring, retention, or supervision. The fraud claim was asserted against all defendants; the other claims were asserted only against WVO.

Summary-Judgment Standard

Summary judgment is appropriate when the evidence shows no genuine dispute over a fact that could affect the outcome and the moving party is entitled to judgment as a matter of law. The court must view the evidence favorably to the party opposing the motion, but that party must provide meaningful evidence from which a reasonable jury could rule in its favor.

Wrongful-Termination and Retaliation Claims

Lapping argued that WVO fired him for reporting conduct he believed was illegal. WVO argued that it fired him because of misconduct identified in Baker’s investigation.

The court applied the burden-shifting framework used for these California employment claims. Under that framework, an employee must first show protected activity, an adverse employment action, and a causal connection between them. The employer must then provide a legitimate, nonretaliatory reason, after which the employee must present evidence that the reason was pretextual—a false reason used to hide retaliation.

The court held that the timing of Lapping’s complaint and termination was enough to create a factual issue about causation. However, timing alone was not enough to show pretext. Lapping argued that he was treated as a scapegoat while WVO tolerated similar conduct by Muro and failed to act against Milholland.

The court found that Milholland was not similarly situated to Lapping, as Lapping conceded at the hearing. As to Muro, the court found that Lapping lacked sufficient evidence that WVO had treated Muro more favorably when faced with similar complaints. One earlier complaint primarily concerned another employee, and evidence about a second complaint lacked information about when it was made, what it alleged, and whether the allegations were substantiated. The court therefore granted summary judgment to WVO on the wrongful-termination and section 1102.5 retaliation claims.

Fraud Claim

Lapping claimed that WVO and its representatives falsely promised that he would work under lawful conditions and would not be required to violate laws or regulations. He relied on WVO’s Code of Conduct and statements by company officers about company policies.

The court held that Lapping offered no evidence of an actionable factual misrepresentation. WVO’s Code of Conduct expressed aspirational commitments about lawful and ethical conduct; it did not represent that every employee would always comply with every law. The court also held that reiterating those commitments did not amount to a factual misrepresentation. The court granted defendants’ motion on the fraud claim.

Negligent Hiring, Retention, and Supervision

Lapping claimed that WVO negligently supervised Muro and Milholland and failed to investigate or prevent their unlawful conduct. The court held that Lapping’s evidence was insufficient to allow a reasonable jury to find that WVO negligently retained or supervised either person. His evidence about prior complaints against Muro was inadequate, and he cited no material facts supporting his claim concerning Milholland. The court entered judgment for defendants on this claim.

Unfair-Competition Claim

Lapping’s claim under California’s Unfair Competition Law depended on his wrongful-termination and fraud claims. Because those underlying claims failed, the court held that the derivative unfair-competition claim also failed.

Disposition

Judge Donna Ryu granted defendants’ motion for summary judgment in its entirety. The court directed the Clerk to enter judgment for defendants and against Lapping and to close the case.