NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS JUN 25 2018

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

TAMAR KASBARIAN, No. 16-56798

Plaintiff-Appellant, D.C. No. 2:16-cv-01795-MWF-JC v.

EQUINOX HOLDINGS, INC.; et al., MEMORANDUM*

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California Michael W. Fitzgerald, District Judge, Presiding

Argued and Submitted June 4, 2018 Pasadena, California

Before: FISHER and OWENS, Circuit Judges, and MOLLOY,** District Judge.

Tamar Kasbarian (“Kasbarian”) appeals the district court’s grant of

summary judgment on her claims for retaliation, breach of contract, defamation,

and intentional infliction of emotional distress against her former employer,

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Donald W. Molloy, United States District Judge for the District of Montana, sitting by designation. Equinox Holdings, Inc. (“Equinox”). We have jurisdiction pursuant to 28 U.S.C.

§ 1291, and we affirm in part, reverse in part, and remand.

Summary judgment is appropriate “if the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a

matter of law.” Fed. R. Civ. P. 56(a). “[I]n ruling on a motion for summary

judgment, the evidence of the nonmovant is to be believed, and all justifiable

inferences are to be drawn in his favor.” Tolan v. Cotton, 134 S. Ct. 1861, 1863

(2014) (per curiam) (internal quotation marks, alteration, and citation omitted).

1. The district court did not err when it dismissed defendants Equinox Fitness

Marina Del Rey, Inc. and Equinox Fitness Sepulveda, Inc. as “sham defendants” to

be ignored for the purposes of assessing diversity jurisdiction. See Weeping

Hollow Ave. Trust v. Spencer, 831 F.3d 1110, 1113 (9th Cir. 2016). Equinox

specifically stated which entities it sought to have dismissed and explained that

neither had been Kasbarian’s employer during any relevant period. Kasbarian

produced no evidence to the contrary.

2. The district court correctly granted summary judgment as to Kasbarian’s

breach of contract claims because, assuming Kasbarian was terminated via

constructive discharge, she was an at-will employee. Equinox’s letter extending

Kasbarian an offer of employment, the Equinox employee handbook, and the

Equinox confidentiality and non-solicitation agreement all provided Kasbarian’s

2 employment was “at will.” See Freund v. Nycomed Amersham, 347 F.3d 752, 758

(9th Cir. 2003) (“Unless the parties contract otherwise, employment relationships

in California are ordinarily ‘at will,’ meaning that an employer can discharge an

employee for any reason.” (citing Cal. Lab. Code § 2922)). While “disclaimer

language in an employee handbook or policy manual does not necessarily mean an

employee is employed at will . . . neither can such [] provision[s] be ignored in

determining whether the parties’ conduct was intended, and reasonably understood,

to create binding limits on an employer’s statutory right to terminate the

relationship at will.” Guz v. Bechtel Nat’l Inc., 8 P.3d 1089, 1103–04 (Cal. 2000).

Though Kasbarian claims her highly accomplished, nearly five year tenure at

Equinox created a cause requirement, that evidence does not create a dispute of

material fact in light of the parties’ express understanding that Kasbarian’s

employment was at will. Id. at 1100–02.

3. The district court did not err when it granted summary judgment on

Kasbarian’s claim for intentional infliction of emotional distress (“IIED”). An

IIED claim requires extreme or outrageous conduct by the defendant, meaning that

conduct “exceeds all bounds of decency usually tolerated by a decent society, and

is of a nature which is especially calculated to cause, and does cause, mental

distress.” Fisher v. San Pedro Peninsula Hosp., 262 Cal. Rptr. 842, 857 (Ct. App.

1989). Although Kasbarian has adduced evidence that she was treated poorly—

3 suspended, transferred, and called names—no reasonable factfinder could conclude

that conduct was extreme or outrageous. See id. (“Liability does not extend to

mere insults, indignities, threats, annoyances, petty oppressions, or other

trivialities.”).

4. Nor did the district court err by granting summary judgment as to

Kasbarian’s claim for defamation. To prevail on a claim of defamation, Kasbarian

must prove “(a) a publication that is (b) false, (c) defamatory, and (d) unprivileged,

and that (e) has a natural tendency to injure or that causes special damage.” Taus

v. Loftus, 151 P.3d 1185, 1209 (Cal. 2007) (internal quotation marks omitted).

“Because the statement must contain a provable falsehood, courts distinguish

between statements of fact and statements of opinion for purposes of defamation

liability.” Summit Bank v. Rogers, 142 Cal. Rptr. 3d 40, 59 (Ct. App. 2012). “To

determine whether a statement implies a factual assertion, we examine the totality

of the circumstances in which it was made.” Lieberman v. Fieger, 338 F.3d 1076,

1079–80 (9th Cir. 2003) (internal quotation marks omitted). Viewed in the light

most favorable to Kasbarian, the facts here would not allow a reasonable fact

finder to determine the statements made about Kasbarian were false so as to

support a claim for defamation.

5. The district court erred, however, when it granted summary judgment on

Kasbarian’s retaliation claims. “When a plaintiff alleges retaliatory employment

4 termination . . . as a claim for wrongful employment termination in violation of

public policy, and the defendant seeks summary judgment, California follows the

burden shifting analysis of McDonnell Douglas Corp. v. Green, 411 U.S. 792

(1973), to determine whether there are triable issues of fact for resolution by a

jury.” Loggins v. Kaiser Permanente Int’l, 60 Cal. Rptr. 3d 45, 50–51 (Ct. App.

2007). So too where a plaintiff alleges retaliation in violation of California Labor

Code § 1102.5(b). See Taswell v. Regents of the Univ. of Cal., 232 Cal. Rptr. 3d

628, 645–46 (Ct. App. 2018) (applying, but not discussing, burden shifting test).

At step one, the plaintiff must make a prima facie case by showing “(1) he or she

engaged in a ‘protected activity,’ (2) the employer subjected the employee to an

adverse employment action, and (3) a causal link existed between the protected

activity and the employer’s action.” Yanowitz v. L’Oreal USA, Inc., 116 P.3d

1123, 1130 (Cal. 2005). “If the employee successfully establishes these elements

and thereby shows a prima facie case exists, the burden shifts to the employer to

provide evidence that there was a legitimate, nonretaliatory reason for the adverse

employment action.” Loggins, 60 Cal. Rptr. 3d at 51. If the employer provides a

legitimate reason for the adverse employment action, “the burden shifts back to the

employee to provide substantial responsive evidence that the employer’s proffered

reasons were untrue or pretextual.” Id. (internal quotation marks omitted).

5 Kasbarian has established a prima facie case of retaliation. First, a jury

could find Kasbarian engaged in protected activity when she informed Equinox

about the potentially fraudulent membership charges. She “ha[d] reasonable cause

to believe that the information disclose[d] a violation of state or federal statute, or a

violation of or noncompliance with a local, state, or federal rule or regulation.”

Cal. Lab. Code § 1102.5(b). Kasbarian’s concern about charging a guest’s card for

a membership the guest did not approve is sufficient without pointing to a

particular statute or law. See Patten v. Grant Joint Union High Sch. Dist., 37 Cal.

Rptr. 3d 113, 118 (Ct. App. 2005) (holding plaintiff engaged in protected activity

when she reported activity she thought was illegal).

Second, a jury could find Kasbarian suffered an adverse employment action

when Equinox reassigned her to the Marina Del Rey location. That assignment

“materially affect[ed] the terms, conditions, or privileges of employment.”

Yanowitz, 116 P.3d at 1137. While the reduction in commissions was not unique

to Kasbarian, as the West L.A. club systematically restructured its bonus system to

correct for a payroll error, Kasbarian’s forced reassignment moved her individually

to a less prestigious club for a significantly lower hourly wage ($9.00 per hour

instead of $19.23 per hour). See Patten, 37 Cal. Rptr. 3d at 120–22 (holding that

transfer of an administrator from one school to another, although considered a

6 “lateral transfer” by the school district, “raised a triable issue of material fact

regarding adverse employment action”).

Third, a jury could find a causal link between the adverse employment

action and the protected activity. “For purposes of making a prima facie showing,

the causal link element may be established by an inference derived from

circumstantial evidence.” McRae v. Dep’t of Corr. & Rehab., 48 Cal. Rptr. 3d

313, 321 (Ct. App. 2006). Accordingly, “[a] plaintiff can satisfy his or her initial

burden under the test by producing evidence of nothing more than the employer’s

knowledge that the employee engaged in protected activities and the proximity in

time between the protected action and the allegedly retaliatory employment

decision.” Id. Both Jack Gannon, Regional Vice President, and Brian

Hemedinger, a Regional Director, decided, after the investigation, to transfer

Kasbarian. Kasbarian had, in turn, reported what she believed to be illegal activity

at the West L.A. club to both Gannon and Hemedinger. Gannon and Hemedinger

belittled and insulted Kasbarian in response. Gannon also asked Jim Burger to

investigate the West L.A. club following a customer complaint, and partnered with

Burger in that investigation. Finally, though the adverse employment action did

not immediately follow Kasbarian’s complaints to management, it is proximate

enough in time for a jury to find a causal link.

7 Because Kasbarian has presented a prima facie case, the burden shifts to

Equinox “to provide evidence that there was a legitimate, nonretaliatory reason for

the adverse employment action.” Loggins, 60 Cal. Rptr. 3d at 51. Equinox has

done so here, asserting it reassigned Kasbarian as part of an effort to “create a fresh

culture” after its investigation. Therefore, “the burden shifts back to [Kasbarian] to

provide substantial responsive evidence that [Equinox]’s proffered reasons were

untrue or pretextual.” Id. (internal quotation marks omitted).

Kasbarian’s “burden is to prove, by competent evidence, that [Equinox]’s

proffered justification is a mere pretext; i.e., that the presumptively valid reason for

the employer’s action was in fact a coverup.” McRae, 48 Cal. Rptr. 3d at 321. The

proof and argument she makes here is sufficient to submit the question to a jury.

Kasbarian points to conflicting testimony from Burger and Gannon as to who

initiated the investigation into the West L.A. club. Kasbarian also notes that

Gannon and Hemedinger admitted she did not engage in any terminable conduct.

But another membership advisor, who was also found not to have engaged in any

terminable conduct, was allowed to stay at West L.A. As Kasbarian notes,

allowing another membership advisor to stay cuts against Equinox’s assertion that

it wanted to create a “fresh culture” at the club. Finally, prior to her reassignment,

Kasbarian had received exemplary reviews from management, and was rewarded

with all-expense-paid trips to New York and Miami for four consecutive years.

8 See Flait v. N. Am. Watch Corp., 4 Cal. Rptr. 2d 522, 530 (Ct. App. 1992)

(“Pretext may also be inferred from the timing of the company’s termination

decision, by the identity of the person making the decision, and by the terminated

employee’s job performance before termination.”). Viewed in the light most

favorable to Kasbarian, a reasonable fact finder could conclude that Equinox’s

reason for reassigning Kasbarian to the Marina Del Rey club was pretextual.

In granting summary judgment for Equinox, the district court did not address

whether Kasbarian was constructively discharged. Because constructive discharge

is a materially adverse employment action, Steele v. Youthful Offender Parole Bd.,

76 Cal. Rptr. 3d 632, 642 (Ct. App. 2008), it could pertain both to Kasbarian’s

California Labor Code § 1102.5(b) retaliation claim, as well as her § 1102.5(b) and

§ 923 claims for wrongful termination in violation of public policy. Accordingly,

we reverse as to all three.

6. Because the district court erred by granting summary judgment on

Kasbarian’s retaliation claims, it also erred in denying her request for punitive

damages. See Cal. Civ. Code § 3294(b).

Each party shall bear its own costs on appeal.

The judgment is AFFIRMED as to Claims Three, Four, Five, Eight, and

Nine. The judgment is REVERSED as to Claims One, Six, and Seven, and

REMANDED for further proceedings consistent with the above.

9