Shruhan v. Apple Inc.

Background

Donald K. Shruhan, Jr. sued his employer, Apple Inc., alleging six causes of action: age discrimination under California’s Fair Employment and Housing Act; failure to prevent discrimination; retaliation under that Act; retaliation under the California Labor Code; breach of contract; and violations of California’s Unfair Business Practices Act.

Shruhan alleged that Apple did not award him a restricted stock unit refresh grant in 2019 even though he had received positive performance reviews and two significantly younger Senior Directors received grants. He also alleged that Apple later reduced his compensation and threatened to demote him after he complained about age discrimination. His contract claim relied on several alleged agreements or policies, including an implied contract formed by Apple’s written policies, an employment agreement, restricted stock unit refresh grants, and a “Repatriation Agreement.”

Apple moved to dismiss the breach-of-contract claim and to strike portions of the complaint. It also requested a more definite statement. The court took judicial notice of Apple’s offer letters, finding them not reasonably subject to dispute and readily verifiable, but stating that it could not determine whether they were the documents Shruhan called his “Employment Agreement.”

Motion to Dismiss

The court applied the Rule 12(b)(6) standard, which asks whether the complaint alleges enough facts to state a plausible claim for relief. Under California law, a breach-of-contract claim requires allegations showing a contract, the plaintiff’s performance or excuse for nonperformance, the defendant’s breach, and resulting damages.

The court granted Apple’s motion to dismiss the claims based on an “implied-in-fact contract formed by its written policies” and Apple’s “Compensation Policies,” with leave to amend. Shruhan referred to several policies but did not identify which policy Apple allegedly breached. The court also found unclear whether the complaint referred to one compensation policy or several policies and whether the manager compensation guidelines were the same policies.

The court also granted the motion to dismiss the claim based on the “Employment Agreement,” with leave to amend. Shruhan described the agreement only by citing a provision stating that his employment would be governed by California law. His contention that the agreement impliedly included Apple’s compensation policies did not sufficiently allege the existence of contractual terms that would support the claimed breach.

The court granted the motion to dismiss the claim based on the “RSU Refresh Grants,” with leave to amend. Shruhan alleged that Apple could recover unvested restricted stock units only according to “company policy,” but he did not identify which policy was part of the grant or explain the contractual terms that allegedly bound Apple.

As to the “Repatriation Agreement,” the court found that Shruhan sufficiently alleged the agreement’s existence and terms. He alleged that the agreement required Apple to keep him at least at the director level, permit him to work from Arizona, and continue paying him a salary matching his performance as a director-level employee. The court rejected Apple’s arguments that the alleged agreement could not be supported by communications involving supervisors and human resources or that its alleged promise conflicted with an at-will employment provision.

The court nevertheless granted Apple’s motion to dismiss the claim based on the Repatriation Agreement, with leave to amend, because Shruhan had not adequately alleged a breach. He did not allege that failing to give him a merit-pay increase placed his salary below the standard salary for a U.S. director-level employee. He also had not alleged in the complaint that Apple had actually demoted him, although he stated in his opposition that a demotion had occurred after the complaint was filed. The court allowed him to include those additional facts in an amended complaint.

Motion to Strike

The court granted Apple’s request to strike the phrase “among other things” from paragraph 89 because Shruhan consented to that request.

The court denied Apple’s request to strike introductory paragraphs 1 through 8. Those paragraphs discussed historical and background information about age discrimination, including trends involving older workers and alleged conduct or settlements involving other companies. The court found that Apple had not shown undue prejudice and that the material could contribute to understanding the complaint as a whole.

The court also denied Apple’s request to strike Shruhan’s requests for punitive damages. It found the motion procedurally improper and premature at the pleading stage and deferred the question of proper remedies.

Disposition

The court granted Apple’s motion to dismiss the fifth cause of action for breach of contract, with leave to amend. It granted Apple’s motion to strike the phrase “among other things” in paragraph 89 and denied the motion to strike paragraphs 1 through 8 and Shruhan’s requests for punitive damages. The court did not reach Apple’s motion for a more definite statement. It terminated Apple’s earlier motion to dismiss and/or strike as moot because the amended complaint had superseded the original complaint. Shruhan was ordered to file any amended complaint by October 23, 2023.