Davis v. Inmar, Inc.

Background

Catherine “Cassie” Davis and Julia Rhodes sued their former employer, Inmar, Inc., under Federal Rule of Civil Procedure 12(b)(6). That rule permits dismissal when a complaint does not allege enough facts to support a legally recognized claim. The court treated the complaint’s factual allegations as true for purposes of the motion and viewed them favorably to the plaintiffs.

The plaintiffs alleged that they worked for Inmar in California after Inmar acquired YouTech. Both held vice-president positions at YouTech and alleged that Inmar assigned them lower-level titles after the acquisition. They also described a male-dominated workplace, alleged that women were paid less or denied promotions, and claimed that they were terminated after raising concerns about gender discrimination and other workplace practices.

Inmar reduced the plaintiffs’ salaries by 25 percent in March 2020. The plaintiffs were terminated effective April 16, 2020, and received accrued vacation pay calculated using their reduced final paychecks. The complaint asserted claims under California’s Fair Employment and Housing Act, the California and federal Equal Pay Acts, California public-policy law, California’s fraud rules, and California Labor Code section 201 and related provisions concerning payment of wages at termination.

Rulings

Claims allowed to proceed

The court denied the motion to dismiss the plaintiffs’ Fair Employment and Housing Act claims. It rejected Inmar’s argument that the statute could not apply because the alleged wrongdoing occurred outside California, explaining that the plaintiffs alleged they were employed and subjected to the challenged conduct while working in California.

The court also denied dismissal of the retaliation claim. Although some alleged adverse actions occurred before the plaintiffs engaged in protected activity, the complaint alleged that the plaintiffs were terminated after reporting discrimination. The court found that the timing of the terminations and allegations about pretext—including different treatment of male colleagues, layoffs allegedly targeting high-earning women, the hiring of a male executive, and a statement that layoffs had been planned before the pandemic—were sufficient at the pleading stage.

The court denied dismissal of the claim concerning accrued vacation pay. The plaintiffs alleged that the temporary salary reduction occurred shortly before their terminations and was lifted about two months later. The court concluded that the complaint could support an argument that their legally relevant final rate of pay was the rate before the temporary reduction.

Claims dismissed with leave to amend

The court granted the motion to dismiss Davis’s state and federal equal-pay claims. Davis alleged that at least one male colleague performed substantially similar work and was paid more, but the court found that she did not plead facts showing that the jobs required substantially equal skill, effort, and responsibility and were performed under similar working conditions. The court also found that the complaint did not adequately explain the use of only one male comparator. These claims were dismissed with leave to amend.

The court granted dismissal of the fraud claim. The complaint alleged several statements that the plaintiffs said were false, including a statement that salary reductions would prevent layoffs. But the court found that the complaint did not adequately allege reliance and resulting harm, identify who made the salary-reduction statement, or allege that the speaker had authority to speak for Inmar. The fraud claim was dismissed with leave to amend.

Disposition

The court ordered that Inmar’s motion to dismiss was granted in part and denied in part. The fifth, sixth, and seventh claims for relief were dismissed with leave to amend. The plaintiffs could file a first amended complaint within 21 days of the order, and no new parties or claims could be added without prior court permission.