MERIBEAR PRODUCTIONS INC VS BRETT BAER

Tentative Rulings

Case Number: VC065653    Hearing Date: March 23, 2021    Dept: C

MERIBEAR PRODUCTIONS INC v. BAER

CASE NO.: VC065653

HEARING: 3/21/21 @ 1:30 PM

#9 Add-On

TENTATIVE ORDER

Cross-Defendants Meribear Production, Inc. and Meridith Baer’s motion for summary adjudication is GRANTED as to the 2^nd – 4^th, 14^th, and 23^rd causes of action (brought by Caleb), the 15^th – 22^nd causes of action (brought by Jaime and Brett), and the 5^th – 6^th, and 8^th – 10^th causes of action. Motion for summary adjudication is DENIED as to the 4^th cause of action (brought by Brett and Jaime), the 5^th – 6^th and 8^th – 9^th causes of action (brought by Caleb), and the 2^nd – 3^rd, 5^th - 7^th, and 11^th – 13^th causes of action.

As triable issues exist, motion for summary judgment on the Cross-Complaint is DENIED.

Moving Parties to give NOTICE.

Cross-Defendants Meribear Production, Inc. and Meridith Baer moves for summary judgment or, in the alternative, summary adjudication pursuant to CCP § 437c.

Evidentiary Objections

MBH’s objections to Brett Baer’s declaration is overruled.

Procedural History

Plaintiff Meribear Productions dba Meridith Baer Home (“MBH”) alleges that Defendant Brett Baer was the President of MBH during the course of thefts, wrongful conduct, and unfair competition. Over 125,000 items of MBH Staging Property with an estimated value of $5 million were wrongly taken from MBH and used by Defendants to build their separate business. Brett Baer was the founder, controlling principal of and agent of Defendant City Lights Staging and Defendant Showroom Interiors, LLC dba Vesta Home, both of which competed with MBH. All Defendants competed with MBH by theft, use of staging property, misappropriation of trade secrets, and wrongful conduct. The operative Fourth Amended Complaint, filed on 3/1/19, asserts causes of action for:

1. Conversion

2-4. Breaches of Fiduciary Duty

5. Breach of Contract

6. Unfair Competition – B&P Code § 17200

7. Civil Conspiracy

8. Money Had and Received

9. Violation of CC § 3426 Uniform Trade Secrets Act

10. Violation of Penal Code § 496 Recovery or Concealing Stolen Property

11. Violation of Penal Code § 502

On 5/29/18, Cross-Complainants filed a Fourth Amended Cross-Complaint, asserting causes of action for:

1. Rescission of Settlement Agreement

2. Wrongful Termination

3. Retaliation

4. IIED

5. Failure to Pay Minimum Wages

6. Failure to Pay Overtime

7. Failure to Provide Accurate Wage Statements

8. Waiting Time Penalties

9. Failure to Provide Breaks

10. Disability Discrimination

11. Failure to Accommodate

12. Failure to Engage in the Interactive Process

13. Sexual Harassment & Discrimination

14. Stalking

15. Breach of Contract

16. Breach of the Implied Covenant of Good Faith and Fair Dealing

17. Declaratory Relief

18. Removal of Director

19. Fraud

20. Breach of Fiduciary Duty – Individual

21. Breach of Fiduciary Duty – Derivative

22. Accounting

23. Violation of B&P Code § 17200

Standard

A defendant moving for summary judgment/adjudication has met its burden of showing a cause of action has no merit if the defendant can show one or more elements of the plaintiff’s cause of action cannot be established. Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. (CCP § 437c(p)(2).)

Cross-Defendants Meribear Production, Inc. and Meridith Baer (“MBH”) moves for summary adjudication of the following causes of action:

5^th – 9^th Causes of Action

MBH contends the 5^th – 9^th causes of action for violation of wage and hour laws fail because Defendants are exempt executive employees. (Cross-Defendant’s Separate Statement (XDSS 116-185.)

The court finds that MBH failed to meet its initial burden of production as to the 7^th cause of action for Failure to Provide Accurate Wage Statements. None of the facts cited in XDSS 130-143 have anything to do with providing wage statements.

Accordingly, summary adjudication of the 7^th cause of action is DENIED.

Under California law, an employee is exempt from wage and hours requirements if the employer can affirmatively prove that the employee qualifies for a statutory exemption, including persons “employed in an administrative, executive, or professional capacity.” (Lab. Code §§ 510, 515(a), 8 CCR § 11010.) As an affirmative defense, the employer bears the burden of proving that an employee is “exempt” from the statutory wage and overtime provisions. (Bargas v. Rite Aid Corporation (C.D. Cal. 2017) 245 F.Supp.3d 1191, 1210.) hose duties and responsibilities involve the management of the enterprise in which he/she is employed or of a customarily recognized department or subdivision thereof, who customarily and regularly directs the work of two or more other employees therein; and ho has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight. (Lab. Code 515(a); 8 CCR § 11040(1)(A)(1).)

As to the 5^th – 6^th, and 8^th – 9^th causes of action, Cross-Complainants do not dispute that they were salaried employees. (Undisputed XDSS 119.) They do not dispute that they were Executive Officers with administrative authority. (XDSS 85.) Ex. 8 shows that as of 6/17/14, Caleb was CFO, Brett was President and CFO, and Jaime was Secretary; Jaime and Brett were also Directors of the company. Exs. 13 and 21 show that Brett’s salary was $360,000, Caleb’s salary was $150,000, and Jaime’s salary was $110,000. Ex. 13 also shows that MBH financed Brett’s car at $88,000, Caleb’s car at $93,000, and Jaime’s car at $88,000. The evidence shows that each of the Defendants had duties and responsibilities involving management or the general business operations of MBH or a subdivision thereof.

The Opposition states that Jaime and Brett were not exempt employees because neither managed employees. (Opposition, 10:16.) However, Disputed XDSS 120 does not provide any evidence to support this argument. Instead, Disputed XDSS 120 cites Caleb Decl., ¶ 3, B. Baer Decl., ¶ 33, and J. Baer Decl., ¶ 4. Brett Baer attests that “I would regularly forgo my salary and money I was owed by Cross-Defendants for months and sometimes years. The money was re-invested in the company to grow the business. (B. Baer Decl., ¶ 33.) However, Brett’s personal decision to forego his own salary does not create a triable issue as to his exempt status. Jaime Baer attests, “I was not an exempt employee. I was a “worker bee” for MBH and never worked at exempt duties for more than 51% of my time.” (J. Baer Decl., ¶ 4.) Jaime’s conclusory statement is made without factual support or foundation. Jaime does not deny that she was an executive officer, i.e. Secretary and Director of the company earning a salary of $110,000.

Accordingly, summary adjudication is GRANTED as to the 5^th – 6^th and 8^th – 9^th causes of action brought by Jaime and Brett Baer. Jaime and Brett failed to produce evidence creating a triable issue as to their alleged non-exempt status.

As to Caleb Morse, it is undisputed that Morse was hired as MBH’s CFO, earning a salary of $150,000. However, the court finds triable issues exist regarding whether Caleb was an employee or a volunteer intern from 3/23/15 – 6/24/15. (Morse Decl., ¶¶ 4-6.)

Thus, summary adjudication of the 5^th – 6^th and 8^th – 9^th causes of action as to Caleb Morse is DENIED.

15^th Cause of Action

MBH moves for summary adjudication of the 15^th cause of action for Breach of Oral Contract. Brett Baer alleges that MBH breached an oral agreement to offer him 30% ownership interest of the company.

MBH submits evidence that Brett knew that Meridith always owned and continues to own 100% of MBH. (XCSS 93.) In opposition, Brett submits his declaration attesting that Meridith intended to sell the company when it was worth a couple of hundred million dollars, and Brett would be entitled to at least 30% of the profits from the sale. (B. Baer Decl., ¶ 28.) He also attaches an email wherein Meridith stated to him, “I can only assume that as the owner of 30% of the company you realize you are in charge of these sorts of situations.” (B. Baer Decl., ¶ 29, Ex. C.)

However, Brett does not address Corp. Code 409(a), which provides that “neither promissory notes of the purchaser (unless adequately secured by collateral other than the shares acquired or unless permitted by Section 408) nor future services shall constitute payment or part payment for shares of the corporation.”

Brett contends that at some point in the future when the company was worth a couple hundred million dollars, then Brett would be entitled to 30%. (B. Baer Decl., ¶ 28.) However, Corp. Code 409(a) specifically provides that any future service performed by Brett shall not constitute payment or part payment for shares. Brett does not address Corp. Code § 409 in his opposition.

Further, the claim violates the statute of frauds because it constitutes an agreement that cannot be performed within a year. (CC § 1624(a)(1).)

Accordingly, summary adjudication of the 15^th cause of action is GRANTED.

16^th – 22^nd Causes of Action

The 16^th – 22^nd causes of action fail because Brett Baer is not a shareholder of the Corporation. Meridith Baer is the founder and sole shareholder of MBH. (XDSS 204.)

Aside from Brett’s belief that he would be entitled to 30% of the company at some point in the future, Brett failed to submit any evidence of his shareholder status with MBH.

Accordingly, summary adjudication of the 16^th – 22^nd causes of action is GRANTED.

2^nd and 3^rd Causes of Action

The 2^nd cause of action for Wrongful Termination and 3^rd cause of action for Retaliation are brought by solely Caleb Morse. Caleb alleges that he was terminated and retaliated against because he complained about and refused to participate in fraud.

MBH contends it had a legitimate, non-discriminatory basis for terminating Caleb. Caleb repeatedly misrepresented his vacation time, and purchased a car with extra upgrades which were not preapproved by Meridith. (XCSS 97-98.)

In opposition, Caleb presents evidence that he accused Meridith of defrauding a client, and MBH retaliated against him by terminating him. (Caleb Decl., ¶¶ 9-24.)

The court finds triable issues exist. Summary adjudication of the 2^nd – 3^rd causes of action is DENIED.

10^th Cause of Action

The 10^th cause of action for Disability Discrimination is brought solely by Jaime Baer.

In the context of summary judgment an employer may satisfy its initial burden of proving a cause of action has no merit by showing either that one or more elements of the prima facie case “is lacking, or that the adverse employment action was based on legitimate nondiscriminatory factors.” (Cucuzza v. City of Santa Clara (2002) 104 Cal.App.4th 1031, 1038; see Guz v. Bechtel National, Inc., 24 Cal.4th at pp. 356-357; Sada v. Robert F. Kennedy Medical Center (1997) 56 Cal.App.4th 138, 150.) “[A]n employer is entitled to summary judgment if, considering the employer’s innocent explanation for its actions, the evidence as a whole is insufficient to permit a rational inference that the employer’s actual motive was discriminatory.” (Guz, at p. 361; see also Kelly v. Stamps.com Inc. (2005) 135 Cal.App.4th 1088, 1097-1098 - if a defendant employer’s motion for summary judgment “relies in whole or in part on a showing of nondiscriminatory reasons for the [adverse employment action], the employer satisfies its burden as moving party if it presents evidence of such nondiscriminatory reasons that would permit a trier of fact to find, more likely than not, that they were the basis for the [adverse action]. To defeat the motion, the employee then must adduce or point to evidence raising a triable issue, that would permit a trier of fact to find by a preponderance that intentional discrimination occurred”.) “‘Circumstantial evidence of “‘pretense’ must be ‘specific’ and ‘substantial’ in order to create a triable issue with respect to whether the employer intended to discriminate” on an improper basis.’” (Batarse v. Service Employees Internat. Union, Local 1000 (2012) 209 Cal.App.4th 820, 834.)

If the employer meets this initial burden, to avoid summary judgment the employee must produce “substantial evidence that the employer's stated nondiscriminatory reason for the adverse action was untrue or pretextual, or evidence the employer acted with a discriminatory animus, or a combination of the two, such that a reasonable trier of fact could conclude the employer engaged in intentional discrimination.” (Hersant v. California Dept. of Social Services (1997) 57 Cal.App.4th 997, 1004–1005.)

A plaintiff's “suspicions of improper motives... based primarily on conjecture and speculation” are clearly not sufficient to raise a triable issue of fact to withstand summary judgment. (Kerr v. Rose (1990) 216 Cal.App.3d 1551, 1564.) Summary judgment for the employer should be granted where, “given the strength of the employer's showing of innocent reasons, any countervailing circumstantial evidence of discriminatory motive, even if it may technically constitute a prima facie case, is too weak to raise a rational inference that discrimination occurred.” (Guz v. Bechtel Nat'l, Inc., supra, 24 Cal.4th at 362.)

However, evidence showing facts inconsistent with the employer's claimed reasons tends to prove the employer's discriminatory intent. E.g., where the employer claims lay-offs were for economic reasons, evidence that only persons over a certain age were laid off raises an inference of age discrimination. (Martin v. Lockheed Missiles & Space Co. (1994) 29 Cal.App.4th 1718, 1735.) “Pretext” does not require proof that discrimination was the only reason for the employer’s action. It is enough that it was a determinative factor—i.e., that the action would not have been taken “but for” the discriminatory intent. (See Ewing v. Gill Industries, Inc. (1992) 3 Cal.App.4th 601, 612.) An employee may also avoid summary judgment by attacking the credibility of the employer's declarations; i.e., by demonstrating “such weaknesses, implausibility, inconsistencies, incoherencies, or contradictions in the employer's proffered legitimate reasons for its action that a reasonable factfinder could rationally find them unworthy of credence” and hence infer discriminatory intent. (Hersant v. California Dept. of Social Services, supra, 57 Cal.App.4th at 1005.)

FEHA prohibits an employer from taking any adverse action against a protected individual based on his or her race, religious creed, color, national origin, ancestry, physical or mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, sexual orientation, age (if 40 or over), or pregnancy, childbirth, breastfeeding or related medical conditions of any female employee. (Gov.C. §§ 12926(q)(1), 12940(a)-(b),(k), 12944(a), 12945; see also 2 Cal.C.Regs. § 7287.9 et seq.)

To establish a prima facie case of disability discrimination, a plaintiff must show that: (1) he suffers from a disability or was regarded as suffering from a disability, (2) he is qualified to perform his job, and, (3) he has suffered an adverse employment action because of his disability. (Faust v. California Portland Cement Co. (2007) 150 Cal.App.4th 864, 886.)

The following actions, if taken because of a protected characteristic, will constitute an unlawful employment practice: refusing to hire or employ; refusing to select for a training program leading to employment; discharging from employment or from a training program leading to employment; and discriminating in compensation or terms, conditions or privileges of employment. (Gov.C. § 12940(a).) The prohibition against discrimination in “terms, conditions, or privileges of employment” (Gov.C. § 12940(a)) is commonly referred to as a prohibition on “adverse employment action.” (See Horsford v. Board of Trustees of Calif. State Univ. (2005) 132 Cal.App.4th 359, 373.) To be actionable under § 12940 (a), the adverse treatment must be “reasonably likely to impair a reasonable employee's job performance or prospects for advancement” ... as distinguished from minor or relatively trivial actions that are likely to do no more than displease. (Id. at 373.)

MBH presents evidence of its legitimate, non-discriminatory basis for terminating Jaime. MBH company policy requires employees to disclose any situation where an actual or potential conflict may exist. (XCSS 27.) Among the examples of potential conflict situations identified in the MBH Employee Handbook are owning or having a significant financial interest in, or other relationship with, and MBH competitor, customer, or supplier, engaging in self-employment in competition with MBH; and using MBH assets or labor for personal use. (XCSS 28.) On May 17, 2010, Jaime signed a form acknowledging that she was familiar with the policies outlined in the MBH Employee Handbook, which governed her employment. (XCSS 48.) On or about April 29, 2011, while employed full-time at MBH, Brett established City Lights Staging, Inc., and identified himself as CEO and Jaime as Secretary and CFO. (XCSS 49-51.) City Lights engaged in “home decorating,” and was referred business by Brett when the job was not suitable for MBH. (XCSS 53.) Jaime improperly arranged for Caleb to receive a check for 3 weeks of vacation time without Meridith’s authorization. (XCSS 66.)

In opposition, Jaime presents evidence that she suffered from PTSD caused by Meridith. (J. Baer Decl., ¶ 15.) Jaime informed Meridith that she was taking Xanax to manage her anxiety and requested that Meridith not talk about Caleb with her because that was raising her anxiety. (Id.) Despite the requests, Meridith sent Jaime a drunk email accusing Caleb of fraud and lying for financial gain. (Id. at ¶ 16-17.)

The court finds that Jaime failed to produce “substantial evidence” that MBH’s reason was “pretextual, or evidence the employer acted with a discriminatory animus, or a combination of the two, such that a reasonable trier of fact could conclude the employer engaged in intentional discrimination.” (Hersant v. California Dept. of Social Services (1997) 57 Cal.App.4th 997, 1004–1005.) There is no evidence that Jaime was terminated because of her disability, or there was any discriminatory animus because of Jaime’s disability.

Summary adjudication of the 10^th cause of action is GRANTED.

11^th and 12^th Causes of Action

The 11^th cause of action for failure to accommodate and the 12^th cause of action for Failure to Engage in the Interactive Process is brought solely by Jaime Baer.

A failure to accommodate claim requires that “(1) the plaintiff has a disability under the FEHA, (2) the plaintiff is qualified to perform the essential functions of the position, and (3) the employer failed to reasonably accommodate the plaintiff's disability.” (Scotch v. Art Institute of California (2009) 173 Cal.App.4th 986, 1009-1010.) A leave of absence “may be a reasonable accommodation provided that the leave is likely to be effective in allowing the employee to return to work at the end of the leave.” (2 CCR § 11068 - “An employer, however, is not required to provide an indefinite leave of absence as a reasonable accommodation”; Hanson v. Lucky Stores, Inc., 74 Cal.App.4th at 226-27.) An employee cannot seek an accommodation in an effort to avoid the consequences of his misconduct or poor attendance. (Brundage v. Hahn (1997) 57 Cal.App.4th 228, 239-240.)

Similarly, a claim for failure to engage in the interactive process requires a “timely, good faith, interactive process with the employee or applicant to determine effective reasonable accommodations, if any, in response to a request for reasonable accommodation by an employee or applicant with a known physical or mental disability or known medical condition.” (Gov. Code § 12940(n).) “This section imposes liability only if a reasonable accommodation was possible.” (Neufeld, 2016 WL 815649, at *5.) “The employee must initiate the process unless the disability and resulting limitations are obvious.” (Scotch, 173 Cal.App.4th at 1013-14 - Neither party has a “right to obstruct the process”; Swanson v. Morongo Unified School Dist. (2014) 232 Cal.App.4th 954, 971.)

Triable issues exist. Jaime asked Meridith to stop talking about Caleb because that causes her anxiety. Despite the request, Meridith sent Jaime a drunk email accusing Caleb of fraud and lying for financial gain. (J. Baer Delc., ¶ 16-22.)

Summary adjudication of the 11^th and 12 cause of action is DENIED.

13^th cause of action

The 13^th cause of action for sexual harassment and discrimination is brought solely by Brett Baer.

In order to establish a prima facie case of harassment, a plaintiff must demonstrate that: (1) plaintiff belongs to a protected group; (2) plaintiff was subject to unwelcome harassment; (3) the harassment complained of was based on [a protected category]; (4) the harassment complained of was sufficiently pervasive so as to alter the conditions of employment and create an abusive working environment; and (5) respondeat superior. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 608.)

An employer is liable for harassment of an employee by another employee if the employer knew or should have known of the harassment and failed to take immediate and appropriate corrective action. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 606.)

The court finds triable issues exist. Brett Baer produces evidence that Meridith inferred that he was gay and purportedly “outed” him to his father and uncle. She called him a fag, and would make inappropriate comments about his supposed inability to perform as a man and would all him “limp dick,” and commented about his relationship with his wife in a derogatory manner. (B. Baer Decl., ¶¶ 3-11.)

Summary adjudication of the 13^th cause of action is DENIED.

4^th cause of action

IIED: The elements are: (1) outrageous conduct by the defendant; (2) intention to cause or reckless disregard of the probability of causing emotional distress; (3) severe emotional suffering; and (4) actual and proximate causation of the emotional distress. (Cole v. Fair Oaks Fire Protection Dist. (1987) 43 Cal. 3d 148, 155 n.7.)

The court finds triable issues exist regarding whether MBH subjected Brett and Jaime to outrageous conduct. (B. Baer Decl., ¶¶ 3-11; J. Baer Delc., ¶ 16-22.)

Accordingly, summary adjudication of the 4^th cause of action is DENIED as to Brett and Jaime.

The court finds Caleb Morse failed to produce evidence of outrageous conduct directed at him. Caleb’s termination is an employment action, and is not outrageous conduct. Accordingly, summary adjudication of the 4^th cause of action is GRANTED as to Caleb.

23^rd Cause of Action

The 23^rd cause of action for Violation of B&P Code § 17200 alleges that MBH violated the Labor Codes and engaged in unfair employment practices.

Since triable issues exist regarding the 7^th, and 11^th - 13^th cause of action and the 5^th – 9^th causes of action as to Caleb, triable issues exist regarding whether MBH violated B&P Code § 17200.

Summary adjudication of the 23^rd cause of action is DENIED.

Severance Agreement

MBH contends the Severance Agreement is not subject to rescission, and therefore, the 2^nd - 9^th, 14^th, and 23^rd causes of action fail.

Caleb does not dispute that he signed a Separation Agreement on 11/16/15, which included a provision waiving his rights to any “further claims.” (XCSS 64-65.)

However, triable issues exist regarding whether Caleb knew he had Labor Code claims at the time of his severance such that there was "a bona fide dispute" regarding the amount of wages that they were owed at the time Plaintiffs signed the general releases. (See persuasive authority Kluss v. Credit Exch. Corp. (2011) U.S. Distr. LEXIS 15501 at 19-20.)

Thus triable issues exist regarding whether Caleb may rescind the Separation Agreement, and therefore, summary adjudication of Caleb’s Labor Code claims (5^th – 9^th causes of action) is DENIED.

As to the remaining claims, although Caleb contends that the Separation Agreement was a contract of adhesion, his declaration does not give rise to a triable issue that the contract was unconscionable. Caleb declares that COO Joe Asher told him that Meridith would “not disparage me to my future employer and future family,” and added the following provision to the contract: “The Company agrees that none of its officers or directors, while acting in such capacity, will make, or cause to be made, any written or oral statements about you that may disparage, criticize of injure you.” (Caleb Decl., ¶ 22.) The court finds that the addition of this term does not create a triable issue that the contract is unconscionable. In fact, the provision protects Caleb. Caleb is highly educated and a graduate of Stanford University. He is a CFO, and knowledgeable about business affairs, as evidenced by Ex. B to Caleb’s declaration. He had stated, “I would love to help on closing the financing for this and getting MBH’s proformas (balance sheet, income statement and cash flow statement) in order, and these are the things that I’m actually really good at” and “did this for Green Dot when we were raising money as a $300 million business and when we were preparing to raise money via the IPO a few years later (when we had grown to be a company worth $1 billion). I also led this for the company I work for… who had raised $7 million and was looking to raise an additional $10 to $14 million.” (Id. at Ex. B.) The court finds that Caleb failed to produce evidence that would create a triable issue as to the unconscionability of the contract. Accordingly, summary adjudication of the 2^nd – 4^th, 14^th, and 23^rd causes of action is GRANTED because Caleb waived his rights to further claims.

Case Number: VC065653    Hearing Date: March 16, 2021    Dept: C

MERIBEAR PRODUCTIONS INC v. BAER

CASE NO.: VC065653

HEARING: 3/16/21 @ 1:30 PM

#4

TENTATIVE ORDER

I. Cross-Defendants Meribear Production, Inc. and Meridith Baer’s motion for summary judgment or, in the alternative, summary adjudication is CONTINUED to Tuesday, 3/23/21 at 1:30 p.m. in Dept. C.

II. Defendants Showroom Interiors, LLC and Showroom, Inc.’s motion for summary adjudication is GRANTED as to Issues 6 and 8, and DENIED as to Issues 1-5, and 7. Because triable issues exist, motion for summary judgment is DENIED.

Plaintiff to give NOTICE.

I. Meribear Productions, Inc. and Merideth Baer’s MSJ/MSA

Cross-Defendants Meribear Production, Inc. and Meridith Baer’s motion for summary judgment or, in the alternative, summary adjudication is CONTINUED to Tuesday, 3/23/21 at 1:30 PM in Dept. C.

On 3/9/21, the court took the Discovery Referee’s Report and Recommendation under submission, and will render a ruling on Cross-Defendant’s MSJ/MSA after the Court rules on the Report.

I. Showroom Interiors, LLC and Showroom, Inc.’s MSJ/MSA

Defendants Showroom Interiors, LLC and Showroom, Inc. (collectively “Showroom”) move for summary judgment, or in the alternative, summary adjudication pursuant to CCP § 437c.

Plaintiff Meribear Productions dba Meridith Baer Home (“MBH”) alleges that Defendant Brett Baer was the President of MBH during the course of thefts, wrongful conduct, and unfair competition. Over 125,000 items of MBH Staging Property with an estimated value of $5 million were wrongly taken from MBH and used by Defendants to build their separate business. Brett Baer was the founder, controlling principal of and agent of Defendant City Lights Staging and Defendant Showroom Interiors, LLC dba Vesta Home, both of which competed with MBH. All Defendants competed with MBH by theft, use of staging property, misappropriation of trade secrets, and wrongful conduct. The Fourth Amended Complaint, filed on 3/1/19, asserts causes of action for:

1. Conversion

2-4. Breaches of Fiduciary Duty

5. Breach of Contract

6. Unfair Competition – B&P Code § 17200

7. Civil Conspiracy

8. Money Had and Received

9. Violation of CC § 3426 Uniform Trade Secrets Act

10. Violation of Penal Code § 496 Recovery or Concealing Stolen Property

11. Violation of Penal Code § 502

Initially, the court notes that the Issues referenced in the Notice did not correspond with the Issues referenced in the separate statement. The court attempted to address the issues as referenced in the Notice, below.

ISSUE 1 (See Notice, 2:17-20)

(erroneously labeled as Issue 2 in the separate statement)

Showroom contends the 9^th cause of action for violation of CC § 3426 fails because Plaintiff cannot establish the existence of trade secret.

The issue of whether information constitutes a trade secret is a question of fact. (Thompson v. Impaxx, Inc. (2003) 113 Cal. App. 4th 1425, 1430.) “As reflected in caselaw decided under the California statute, the determination of whether a claim is based on trade secret misappropriation is largely factual.” (K.C. Multimedia, Inc. v. Bank of Am. Tech. & Operations, Inc. (2009) 171 Cal.App. 4th 939, 954.) “Whether a party claiming a trade secret undertook reasonable efforts to maintain secrecy is a question of fact.” (In re Providian Credit Card Cases (2002) 96 Cal. App. 4th 292, 306.)

The court finds triable issues exist regarding whether Plaintiff’s customer vendor and referral information stolen by its former employees and exploited by Vesta constitutes trade secrets. Plaintiff has submitted evidence that it attempted to protect its confidential business information and trade secrets via the MBH Handbook. (See M. Baer Decl., ¶¶ 21-31; J. Asher Decl., ¶¶ 17-21.)

Summary adjudication of Issue 1 is DENIED.

ISSUE 2 (See Notice, 2:21-24)

(erroneously labeled as the first Issue 3 in the separate statement, starting with DSS 43)

Showroom contends the 1^st, 6^th – 8^th, and 10^th causes of action fail because the California Uniform Trade Secrets Act (“CUTSA”) preempts such claims.

However, the CUTSA “does not displace a contract claim ... and does not displace noncontract claims that, although related to a trade secret misappropriation, are independent and based on facts distinct from the facts that support the misappropriation claim.” (Angelica Textile Services, Inc. v. Park (2014) 220 Cal.App.4^th 495, 506 - reversing summary judgment where trial court improperly invoked UTSA preemption to grant summary judgment on the plaintiff’s conversion claims, unfair competition claims and breach of fiduciary claims. See also, Integral Dev. Corp. v. Tolat (9th Cir. 2017) 675 F. App’x 700, 704 - “The plain language of CUTSA also provides that it does not preempt “contractual remedies, whether or not based upon misappropriation of a trade secret.”)

Further, the CUTSA “does not affect ... civil remedies that are not based upon misappropriation of a trade secret.” (CCP § 3426.7(b).) If a breach of fiduciary duty is not “based on the same nucleus of facts as [the] trade secret misappropriation,” CUTSA will not preempt the claim. (See K.C. Multimedia, Inc. v. Bank of Am. Tech. & Operations, Inc. (2009) 171 Cal.App.4th 939); Integral Dev. Corp. v. Tolat (9th Cir. 2017), 675 F. App’x 700, 704.)

Whether the 1^st, 6^th – 8^th, and 10^th causes of action are based upon trade secret misappropriation rather than merely being related to trade secret misappropriation are factual determinations to be made by a jury. (K.C. Multimedia, Inc. v. Bank of Am. Tech. & Operations, Inc. (2009) 171 Cal.App.4th 939, 954.)

Summary adjudication of Issue 2 is DENIED.

ISSUES 3 and 7 (See Notice, 2:25-27 and 3:7-9)

(erroneously labeled as the first Issue 4 in the separate statement, i.e. Defense Separate Statement (DSS) Nos. 49-51)

Showroom contends the 1^st Cause of Action for Conversion and the 10^th Cause of Action for violation of Penal Code §496 fail because there is no evidence that the Showroom Defendants ever converted any personal property of Plaintiff, including MBH’s staging furniture, inventory, credit cards, automobiles, or any personal property. (DSS 49-51.)

In opposition, MBH present evidence that the Showroom Defendants were doing business as Vesta Home. (Buckner Decl., ¶ 12.) Ex. H to the Opposition is a printout of the “About” page of Vesta Home. Brett Baer and Jaime Morse are listed as “Our Founders”. “Brett Baer and Jaime Morse have worked together for over 10 years in the home staging market, working with high end builders, real estate developers, and celebrity clients at leading home staging companies.” (Opposition, Ex. H.) This evidence demonstrates that Brett Baer and Jaime Morse are intricately linked with the Showroom Defendants through Vesta Home.

MBH attests that Brett, Jaime and Caleb either failed to return said computer systems to MBH upon their termination (in the case of Brett and Jaime), or returned the computer systems to MBH after wiping the computer systems clean (in the case of Caleb). (Asher Decl., ¶ 23 and M. Baer Decl., ¶ 32.) Jaime deleted emails without authorization from at least M. Baer’s email account, as well as Ryan Rysyk’s and other MBH personnel email accounts. (M. Baer Decl., ¶ 33.) Jarod Korn, a former MBH employee turned Vesta employee, also had unauthorized access to MBH computer systems when he wiped his computer clean of company information upon his termination prior to returning MBH’s computer system. (Asher Decl., ¶ 24 and M. Baer Decl., ¶ 34.)

Triable issues therefore exist regarding whether Defendants committed conversion of the computer systems through the Baer Defendants. Summary adjudication of Issues 3 and 7 is DENIED.

ISSUE 4 (See Notice, 2:28-1:2)

(erroneously labeled as Issue 5 in Defendant’s separate statement, i.e. DSS 57, and erroneously labeled as Issue 6 in Plaintiff’s separate statement)

Showroom contends the 6^th Cause of Action for Unfair Competition fails because employers are prohibited from imposing any restraint on rights of employees to engage in their chosen trade and profession. (Lab. Code § 16600.)

However, forbidding employees from stealing an employer’s confidential customer information in no way runs afoul of Lab. Code § 16600. (Neville v. Chudacoff (2008) 160 Cal.App.4^th 1255, 1269-70; Robert L. Cloud & Associates, Inc. v. Mikesell (1999 69 Cal.App.4^th 1141, 1150 – “acts of solicitation of the former employer's customers and the misuse of confidential information are acts of unfair competition that may be enjoined”.)

The court finds that triable issues exist regarding whether Showroom, through Vesta and the Baer Defendants, committed unfair competition by using MBH’s confidential trade secrets.

Summary adjudication of Issue 4 is DENIED.

ISSUE 5 (See Notice, 3:3-6)

Showroom contends the 7^th Cause of Action for Civil Conspiracy fails because Plaintiff cannot prove that the Showroom Defendants participated in a conspiracy predicated on the Baers breaching their fiduciary duties as employees of MBH when the Showroom Defendants had not even met the Baer Defendants until long after they had departed MBH.

This issue is not separately referenced in the separate statement, and therefore fails to comply with CRC § 3.1350(d)(A) and (h).

Summary adjudication of Issue 5 is DENIED.

ISSUE 6 (See Notice, 3:10-12)

(erroneously labeled as the first Issue 4 in Defendant’s separate statement, i.e. DSS 54-56, and erroneously labeled as Issue 5 in Plaintiff’s separate statement)

Showroom contends the 8^th Cause of Action for Money Had and Received fails because there is no evidence that the Showroom Defendants held or received any particular funds intended for Plaintiff.

MBH failed to submit any admissible evidence in opposition to DSS 54-56.

Accordingly, summary adjudication of Issue 6 is GRANTED.

ISSUE 8 (See Notice, 3:13-15)

(erroneously labeled as Issue 6 in the separate statement, i.e. DSS 58-59)

Showroom contends that Plaintiff cannot maintain any of its causes of action on successor or alter ego liability theory because Plaintiff has never alleged that Showroom is a successor to Defendant City Lights Staging, Inc.

The court finds that Plaintiff failed to submit evidence that would create a triable issue. See Plaintiff’s response to DSS 58-59.

Summary adjudication of Issue 8 is GRANTED.

Because triable issues exist, motion for summary judgment is DENIED.

Case Number: VC065653    Hearing Date: March 9, 2021    Dept: C

MERIBEAR PRODUCTIONS INC v. BAER

CASE NO.: VC065653

HEARING: 3/9/21 @ 1:30 PM

#7

THE COURT WILL NOT ISSUE A TENTATIVE RULING. THE COURT WILL HEAR FROM THE PARTIES.

Case Number: VC065653    Hearing Date: February 09, 2021    Dept: C

MERIBEAR PRODUCTIONS INC v. BAER

CASE NO.: VC065653

HEARING: 2/9/21 @ 1:30 PM

#6

TENTATIVE ORDER

I. Cross-Defendants Meribear Production, Inc. and Meridith Baer’s motion for summary judgment or, in the alternative, summary adjudication is CONTINUED to Tuesday, 3/16/21 at 1:30 p.m. in Dept. C.

A Hearing on the Discovery Referee’s Report and Recommendation is set for Tuesday, 3/9/21 at 1:30 p.m. in Dept. C.

II. Defendants Showroom Interiors, LLC and Showroom, Inc.’s motion for summary judgment or, in the alternative, for summary adjudication is DENIED.

Plaintiffs to give NOTICE.

I. Meribear Productions, Inc. and Merideth Baer’s MSJ/MSA

Cross-Defendants Meribear Production, Inc. and Meridith Baer’s motion for summary judgment or, in the alternative, summary adjudication is CONTINUED to Tuesday, 3/16/21 at 1:30 PM in Dept. C.

Pursuant to Cross-Complainants’ request, a Hearing on the Discovery Referee’s Report and Recommendation is set for Tuesday, 3/9/21 at 1:30 p.m. in Dept. C.

I. Showroom Interiors, LLC and Showroom, Inc.’s MSJ/MSA

Defendants Showroom Interiors, LLC and Showroom, Inc. (collectively “Showroom”) moves for summary judgment, or in the alternative, summary adjudication pursuant to CCP § 437c.

The Fourth Amended Complaint alleges that Defendant Brett Baer was the President of Meribear Productions, Inc. dba Meridith Baer Home (“MBH”) during the course of thefts, wrongful conduct, and unfair competition. Over 125,000 items of MBH Staging Property with an estimated value of $5 million were wrongly taken from MBH and used by Defendants to build their separate business. Brett Baer was the founder, controlling principal of and agent of Defendant City Lights Staging and Defendant Showroom Interiors, LLC dba Vesta Home, both of which competed with MBH. All Defendants competed with MBH by theft, use of staging property, misappropriation of trade secrets, and wrongful conduct. The Complaint asserts causes of action for:

1. Conversion

2-4. Breaches of Fiduciary Duty

5. Breach of Contract

6. Unfair Competition – B&P Code § 17200

7. Civil Conspiracy

8. Money Had and Received

9. Violation of CC § 3426 Uniform Trade Secrets Act

10. Violation of Penal Code § 496 Recovery or Concealing Stolen Property

11. Violation of Penal Code § 502

“If it appears from the affidavits submitted in opposition to a motion for summary judgment or summary adjudication, or both, that facts essential to justify opposition may exist but cannot, for reasons stated, be presented, the court shall deny the motion.” (CCP § 437c(h).)

The court finds that facts essential to justify opposition may exist, but cannot be presented. This Court has ordered the production of evidence on numerous occasions, and the moving party, its affiliates, officers and controlled witnesses have not produced evidence as ordered. (Boesch Decl. filed on 8/7/20, ¶ 5.)

Brett Baer and Jaime Baer have a long history of discovery abuses, which recently culminated in the Discovery Referee’s recommendation to issue terminating sanctions.

The Showroom Defendants contend that they are not the subject of the discovery orders. However, CCP § 437c(h) simply requires that Plaintiff demonstrate that facts essential to oppose the Showroom Defendants’ motion may exist. Plaintiff is not required to show that those facts must come directly from the Showroom Defendants.

Further, the Showroom Defendants contend that they are not affiliated with Brett Baer and Jaime Baer, other than in their roles as employees. However, the Showroom Defendants admit that it was doing business as Vesta Home. (Buckner Decl., ¶ 12.) Ex. H to the Opposition is a printout of the “About” page of Vesta Home. Brett Baer and Jaime Morse are listed as “Our Founders”. “Brett Baer and Jaime Morse have worked together for over 10 years in the home staging market, working with high end builders, real estate developers, and celebrity clients at leading home staging companies.” (Opposition, Ex. H.) This evidence demonstrates that Brett Baer and Jaime Morse are either “founders” or act in capacities other than merely employees of the Showroom Defendants.

Because Brett Baer and Jaime Baer have resisted discovery efforts in this action, it is in the interest of justice to deny summary judgment when facts essential to the opposition may exist. The matter should be tried on the merits.

Accordingly, the motion is DENIED.

Case Number: VC065653    Hearing Date: January 12, 2021    Dept: C

MERIBEAR PRODUCTIONS INC v. BAER

CASE NO.: VC065653

HEARING: 1/12/21 @ 1:30 PM

#11 - Add-On

TENTATIVE ORDER

The court reserves ruling on the motions, and will hear from the parties.

Case Number: VC065653    Hearing Date: December 22, 2020    Dept: C

MERIBEAR PRODUCTIONS, INC. v. BAER

CASE NO.:  VC065653

HEARING:  12/22/2020JUDGE: OLIVIA ROSALES

#5

TENTATIVE ORDER

I. Cross-Defendants MERIBEAR PRODUCTIONS, INC. and MERIDITH BAER’s Motion for Summary Judgment, or alternatively, Summary Adjudication is CONTINUED to Tuesday, January 12, 2021 at 1:30 p.m. in Dept. SE-C.

II. Defendants SHOWROOM INTERIORS, LLC and SHOWROOM, INC.’s Motion for Summary Judgment on Plaintiffs’ Fourth Amended Complaint, or alternatively, for Summary Adjudication is CONTINUED to Tuesday, January 12, 2021 at 1:30 p.m. in Dept. SE-C.

Moving Party(s) to give Notice.

Case Number: VC065653    Hearing Date: November 03, 2020    Dept: C

MERIBEAR PRODUCTIONS INC v. BAER

CASE NO.: VC065653

HEARING: 11/3/20 @ 1:30 PM

[Remote appearances are encouraged and will be given priority.]

#7

TENTATIVE ORDER

I. Plaintiffs/Cross-Defendants Meribear Production, Inc. and Merideth Baer’s motion for specific sanctions for discovery abuse and violations of multiple court orders is DENIED without prejudice.

II. Cross-Defendants Meribear Production, Inc. and Merideth Baer’s motion for summary judgment or, in the alternative, summary adjudication is CONTINUED to Tuesday, 12/22/20 at 1:30 PM in Dept. C.

III. Defendants Showroom Interiors, LLC and Showroom, Inc.’s motion for summary judgment or, in the alternative, for summary adjudication is CONTINUED to Tuesday, 12/22/20 at 1:30 PM in Dept. C.

Plaintiffs to give NOTICE.

I.¿Motion for Sanctions

Plaintiffs/Cross-Defendants Meribear Production, Inc. and Merideth Baer move for terminating sanctions, or alternatively for evidence and issue sanctions.

In opposition, Defendants/Cross-Complainants contend that the motion is a duplication of prior motions directed at the Referee. However, the court finds that the instant motion is not duplicative because it contains new evidence, such as Blum’s forensic audit and findings, and contains new requests for relief, such as issue and evidence sanctions (in addition to terminating sanctions).

Because a Discovery Referee has been appointed in this matter since September 2017, and is familiar with the discovery issues in this case, the court directs Plaintiffs/Cross-Defendants to submit the instant motion with the Discovery Referee, to recommend to this court what further action is necessary to ensure a fair trial.

While the Discovery Referee has taken an “incremental approach” and found that “the history of Defendants’ repeated failures to comply… is well documented” and “monetary sanctions are not likely to be effective,” the Referee declined to impose “sanctions other than terminating sanctions” because that issue was not before the Referee at the time. (2/21/20 Report and Recommendation and 2/28/20 Order.)

Plaintiffs are directed to submit the moving and opposing papers to the Discovery Referee. No further briefing is allowed. The court requests that the Discovery Referee make the appropriate recommendations in light of the new evidence, the fact that trial is fast approaching, and the action is nearing the 5-year mandatory dismissal deadline.

II-III. Motions for Summary Judgment

The motions for summary judgment and/or summary adjudication are CONTINUED to Tuesday, 12/22/20 at 1:30 PM in Dept. C, to allow the Discovery Referee an opportunity to submit its recommendations prior to the hearing.