Marcie Hamilton v. JUUL Labs, Inc.

Background

Marcie Hamilton sued her former employer, JUUL Labs, Inc., seeking civil penalties under California’s Private Attorneys General Act (PAGA) and injunctive relief under California’s Unfair Competition Law. The claims concerned JUUL’s alleged confidentiality policies and three employment documents: a nondisclosure agreement, a termination certificate, and a severance agreement. The PAGA lawsuit was brought on behalf of more than 3,000 allegedly aggrieved employees. Jim Isaacson was also identified as a plaintiff in the amended complaint.

Hamilton alleged that JUUL required employees to sign broad confidentiality and non-disparagement provisions, including provisions that applied after employment ended. She and Isaacson also alleged that JUUL instructed employees to limit or conceal communications with regulators, internally reported alleged unlawful conduct, and retaliated against employees who made such reports. The amended complaint included seven claims under various California Labor Code provisions.

In an earlier order, the court dismissed Claims 1 through 4 without prejudice and allowed amendment. The court allowed Claims 5 and 6 to proceed. Hamilton then filed a First Amended Complaint adding Claim 7, which alleged that JUUL unlawfully suppressed employees’ political activities under California Labor Code §§ 1101 and 1102.

Motion to dismiss

JUUL moved to dismiss the amended complaint under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not allege enough facts to state a legally plausible claim. The court accepted the complaint’s factual allegations as true for this motion and interpreted reasonable inferences in the plaintiffs’ favor.

For Claim 1, under California Labor Code § 1102.5(a), the court held that the plaintiffs plausibly alleged that JUUL’s nondisclosure agreement could be interpreted as restricting disclosures about potential violations of law, rather than only protecting proprietary information. The court also found plausible allegations that JUUL’s independent policies and practices prevented employees from sharing information with government investigators and punished internal reports of alleged unlawful conduct. The motion to dismiss Claim 1 was denied.

For Claim 2, under California Labor Code §§ 96(k) and 98.6(a), the court found plausible allegations that JUUL’s External Communications Policy restricted employees’ protected political activity and whistleblowing. The policy required prior approval for communications about JUUL, its products, staff, policies, research, relationships, or competitors, including communications outside the workplace and outside working hours. The motion to dismiss Claim 2 was denied.

For Claim 3, under California Labor Code §§ 232 and 1197.5(k), the court rejected Hamilton’s reliance on language from an earlier version of JUUL’s employee handbook that allegedly restricted discussions about wages and benefits. The court found that the cited language was not in the applicable August 14, 2018 handbook or later versions. Because any claim based on the earlier handbook was outside the one-year period for the PAGA notice, the court granted JUUL’s motion to dismiss Claim 3. The dismissal was with prejudice because the plaintiffs had already been given an opportunity to amend.

For Claim 4, under California Labor Code § 232.5, the court found plausible allegations that JUUL’s nondisclosure agreement and workplace practices restricted internal disclosures about working conditions and punished whistleblowing. The motion to dismiss Claim 4 was denied.

The court also denied the motion to dismiss Claims 5 and 6. Claim 5 alleged a violation of California Labor Code § 432.5, which bars an employer from requiring an employee to agree in writing to a term or condition the employer knows is prohibited by law. Claim 6 was brought under the Unfair Competition Law and was based in part on the alleged Labor Code violations.

For Claim 7, under California Labor Code §§ 1101 and 1102, the court found plausible allegations that JUUL’s External Communications Policy and other practices controlled or restricted employees’ political activities. The court concluded that the alleged restrictions covered communications about political candidates and causes related to vaping and could apply to personal communications outside the workplace. The motion to dismiss Claim 7 was denied.

Motion to strike

JUUL separately moved under Rule 12(f) to strike material from the amended complaint. The court denied the request to strike allegations concerning JUUL’s alleged concealment of evidence, including allegations that Hamilton could not obtain the employee handbook and other policies during discovery. The court found those allegations relevant to how JUUL’s agreements operated in practice and to JUUL’s compliance with discovery obligations.

The court granted JUUL’s request to strike Hamilton’s allegations in paragraphs 78–79 and 109 concerning revisions her counsel proposed to the severance agreement. The court found those proposed revisions had no probative value to the issues before it.

Disposition and classification

The court granted JUUL’s motion to dismiss Claim 3 with prejudice and denied the motion to dismiss Claims 1, 2, 4, 5, 6, and 7. It denied JUUL’s motion to strike the allegations concerning concealment of evidence and granted the motion to strike the allegations concerning proposed severance-agreement revisions. The order disposed of Docket Nos. 33 and 34 and was signed by Judge Edward M. Chen.

This is classified as a procedural order because the court ruled on motions to dismiss under Rule 12(b)(6) and a motion to strike without finally deciding the underlying Labor Code claims on the merits.