Paparella v. Plume Design, Inc.

Background

Michael Paparella sued his former employer, Plume Design, Inc., asserting nine claims under California law. The claims arose from his October 2021 termination and allegations that Plume failed to pay commissions and other compensation connected to transactions he closed. Paparella was a resident of Maricopa County, Arizona, and alleged that he performed services for Plume in Arizona. Plume’s principal place of business was in Santa Clara County, California.

Paparella asserted three claims under the California Fair Employment and Housing Act (FEHA), based on age discrimination, age harassment, and failure to prevent discrimination and harassment. He also asserted claims under California Labor Code sections 203 and 210, along with common-law claims for breach of written contract, illegal forfeiture, wrongful termination, and accounting. Plume moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), arguing that California law did not apply to Paparella’s claims.

Court’s Analysis

The court held that Paparella had not pleaded enough facts showing that the FEHA claims had a sufficient connection to California. He did not allege that he worked in California, and the complaint did not identify where the relevant decision-makers were located, where the discriminatory conduct occurred, where Paparella was terminated, or who made the termination decision. The court dismissed the three FEHA claims with leave to amend.

The court reached the same conclusion for the California Labor Code claims. Applying the rule that a worker’s principal place of work must be in California for the relevant wage provisions to apply, the court noted that Paparella had not alleged that he spent any time working in California. The Labor Code claims were dismissed with leave to amend.

The court treated the contract-based claims differently. Paparella’s Proprietary Information and Inventions Agreement contained a California choice-of-law provision, and the court found that the agreement was incorporated into the employment agreement. The court concluded that California law applied to Paparella’s breach-of-contract claim. It also concluded that the claim sought compensation allegedly owed under the contracts, rather than statutory remedies under California’s wage laws, so the claim did not raise the same application-of-California-law problem. The court therefore allowed the breach-of-written-contract claim to proceed.

The court likewise allowed the illegal-forfeiture claim to proceed because Paparella characterized it as based on ambiguous or unconscionable contract provisions rather than California employment statutes. The court found that this contract-based claim did not present the extraterritoriality issue raised by Plume.

The court dismissed the common-law wrongful-termination claim with leave to amend. It explained that the claim failed to the extent it depended on the FEHA or Labor Code theories, because Paparella had not shown the required connection to California.

Finally, the court concluded that the accounting request was more accurately understood as a remedy than as an independent cause of action. It dismissed the accounting claim without leave to amend, but without prejudice to Paparella seeking an accounting remedy in connection with his breach-of-contract or illegal-forfeiture claims.

Disposition

The court granted in part and denied in part Plume’s motion to dismiss. It dismissed Paparella’s FEHA claims, California Labor Code claims, and common-law wrongful-termination claim with leave to amend. It dismissed the accounting claim without leave to amend but without prejudice to seeking an accounting remedy alongside the contractual claims. It denied Plume’s motion to dismiss the first cause of action for breach of written contract and the second cause of action for illegal forfeiture. Paparella was permitted to file an amended complaint by August 8, 2022.