Melman v. PDF Solutions















Filed 3/22/13 Melman v. PDF Solutions CA6











>NOT TO BE PUBLISHED IN OFFICIAL REPORTS

>





California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.







IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA



SIXTH
APPELLATE DISTRICT




>

PHILIP STEVEN MELMAN, Plaintiff and Appellant, v. PDF SOLUTIONS, INC., et al., Defendants and Respondents.

H037703 (Santa Clara County Super. Ct. No. CV158798)

>I.
INTRODUCTION

Appellant
Philip Steven Melman was employed by respondent PDF Solutions, Inc. (PDF) from
1998 until 2009, when he was terminated during a reduction in force from his
position as vice president of investor relations and strategic
initiatives. Melman filed a wrongful
termination action against PDF and its chief executive officer (CEO),
respondent John Kibarian (hereafter, sometimes collectively PDF), alleging that
PDF’s decision to terminate him was based upon his physical disability. His complaint included two causes of action
for disability discrimination in violation of the Fair Employment and Housing
Act (FEHA) (Gov. Code, § 12940 et seq.),href="#_ftn1" name="_ftnref1" title="">[1]
as well as causes of action for “failure to prevent discrimination,” fraud,
breach of contract, breach of the implied covenant of good faith and fair
dealing, and wrongful discharge in violation of public policy.

PDF moved
for summary judgment on the ground that the undisputed facts showed that
Melman’s employment agreement provided that his employment was at-will and he
was terminated for a nondiscriminatory reason:
his position was eliminated for legitimate business reasons during a
reduction in force. The trial court
granted the summary judgment motion, finding that Melman had failed to present
evidence that created a triable issue of fact as to whether PDF’s reasons for
his termination were pretextual or PDF had acted with discriminatory
intent. The trial court also found as a
matter of law that even assuming the at-will provision in Melman’s written
employment agreement was modified by Kibarian’s later oral statement that
Melman could have the vice president position for as long as he wanted it,
there was good cause for his termination due to PDF’s financial condition.

On appeal,
Melman contends that the trial court erred because Kibarian promised that
Melman could have the vice president position for as long as he wanted it in
exchange for stepping down from his prior position as chief financial officer
(CFO). Melman also argues that the
evidence shows that PDF used the reduction in force as a pretext and therefore
a triable issue of fact exists as to whether PDF terminated his employment due
to his physical disability. For the
reasons stated below, we determine as a matter of law that (1) the at-will
provision in Melman’s employment agreement was not modified by Kibarian’s later
oral promise of continued employment; and (2) PDF met its burden on summary
judgment to show legitimate, nondiscriminatory reasons for terminating his
at-will employment. (>Guz v. Bechtel National, Inc. (2000) 24
Cal.4th 317, 357 (Guz).) We also determine that Melman produced no
evidence from which it could be reasonably inferred that PDF terminated his
employment on the basis of his physical disability. (Id.
at p. 360.) Therefore, we will affirm
the judgment in PDF’s favor.

>II.
FACTUAL BACKGROUND

Our factual
summary is drawn from the parties’ separate statements of fact and the evidence
they submitted in connection with PDF’s motion for summary judgment.

A. The
Employment Agreement

Melman was
employed as the CFO of PDF between 1998 and 2006. He executed an employment agreement dated July 9, 1998, that included the
following at-will provision: “At-Will
Employment. By signing below, you acknowledge that
your employment at the Company is for an unspecified duration, and neither this
letter nor your acceptance thereof constitutes a contract of employment. You acknowledge that your employment will be
on an ‘at-will’ basis, which means that the employment relationship may
be terminated by you or the Company at any time for any reason or no reason,
without further obligation or liability.”

The July 9,
1998 agreement also included the following clause regarding modifications: “This letter, together with the
Confidentiality Agreement, set forth the terms of your employment with the
Company and supersedes any prior representations or any agreements, whether
written or oral. This letter may not be
modified or amended except by a written agreement, signed by the Company and by
you.”

Melman’s
employment agreement was amended twice, on December 29, 2008, and March 18,
2009. Melman executed both amendments,
which included revisions only to the severance pay and benefits
provisions. The December 29, 2008
amendment expressly stated, “Except as otherwise amended in this letter
agreement, the Offer Letter remains in full force and effect.” The March 18, 2009 amendment similarly
stated, “All other terms of the Amended Offer remain unchanged.”

B. Melman’s
Employment History with PDF

In 1999,
Melman learned that he had multiple sclerosis.
He continued to be employed as the CFO of PDF, where his achievements
included taking the company public with an initial public offering in
2001. In approximately 2002, Melman told
Kibarian, PDF’s CEO, that he had multiple sclerosis. In July 2005 Melman informed Kibarian that
his multiple sclerosis was getting worse and he was not sure how long he could
do his job. By that time, Melman had
hired Keith Jones as his “number 2” in PDF’s finance department with the idea
that Jones would be his replacement.

Sometime in
2005, Jones accepted an offer of employment from another company. Melman encouraged Jones to retract his
acceptance and remain at PDF. In
September or October of 2005, Melman proposed to Kibarian that Jones assume
Melman’s position as CFO. Melman’s
decision to step down as CFO was “purely voluntary.” Melman sent an email to Kibarian in October
2005 stating, “Basically, I need to hire my replacement with the idea that
he/she does [Keith Jones’s] job until we can transition smoothly—considering my
health recently, I figure . . . 1 year.
I just can’t keep up the pace I’ve kept for the last 30 years. I need to slow down.”

PDF offered
the CFO position to Jones, which he accepted on October 12, 2005. Melman then discussed the creation of his new
title and position with Kibarian. Melman
recalled, as stated in his declaration, that “[w]e both knew I would continue
doing much of the same work I was doing but the goal was to also mentor Jones,
make him a success, help Wall Street understand there was no problem in
finance, and create a title that would cover a lot of territory. We picked VP of Investor Relations and
Strategic Initiatives to cover all bases.”
In his newly created position of vice president of investor relations
and strategic initiatives, effective January 2006, Melman received an increase
in his annual salary from $200,000 to $205,000.
Later, Melman began to worry about his “quick decision to give up” the
CFO position and his ability to find a comparable position if “something went
sideways at PDF.”

At an
executive staff meeting held in mid-December 2005, Kibarian announced Melman’s
transition from CFO to vice president of investor relations and strategic
initiatives. Melman recalls, as he noted
in his declaration, that Kibarian stated during the meeting that “[Melman] can
have this position for as long as he wants it.”
Upon hearing Kibarian’s statement, Melman “was touched and immediately
relieved of [his] concerns.” In his
deposition testimony, Melman admitted that he had agreed to make the transition
from CFO to vice president before Kibarian stated at the executive staff
meeting that Melman could have the vice president position for as long as he
wanted it, and he did not rely upon Kibarian’s statement in deciding to step
down as CFO.

On December
19, 2005, Kibarian sent an email to all PDF employees announcing the
appointment of Jones as CFO and Melman’s appointment as vice president of
investor relations and strategic initiatives.
In the email, Kibarian complimented Melman for “being more public about
his personal situation and . . . signal[ing] to the investor community that
this change [was] solely due to a medical situation.” Melman did not believe there was anything
discriminatory about Kibarian’s December 2005 email. In February 2006 Melman sent an email to
Kibarian in which he stated that, “You, the Board and the company have been
very supportive of my personal health situation . . . .” PDF had accommodated Melman’s health
situation by, among other things, setting up a home office for him. Melman acknowledges that “PDF provided him
with reasonable accommodations . . . at least until September 21, 2008, if not
April 14, 2009.”

In 2007 and
2008, as Kibarian stated in his deposition testimony, members of PDF’s board of
directors expressed concerns about Melman’s effectiveness as vice president of
investor relations and strategic initiatives.
In particular, the board was concerned about Melman’s ability to
communicate effectively with investors and his involvement in certain financial
tasks although he was not in the finance department and did not report to the
CFO. Melman was aware, as he
acknowledged in his deposition testimony, that the board had communicated
through Kibarian or Jones that his presentations to investors were not “good
enough.”

By February
2008, Melman knew that PDF’s stock price was dropping. As the stock price continued to drop between
February 2008 and April 2008 and the company was about to lay off employees,
Melman communicated to Kibarian his desire that executive pay and compensation
be increased. Melman was particularly
concerned that Jones would leave the company, although Jones had never told
Melman that he would leave if he did not get a pay increase. Jones later met with Kibarian and told him that
Melman did not speak for him.
Additionally, during an April 2008 meeting with Kibarian, Melman
suggested that one of the options for PDF’s future was to sell the company.

Kibarian
began to lose confidence in Melman as a result of Melman’s statements in April
2008, which he perceived as “motivated by greed and avarice.” At that time, Melman also had business
disagreements with some board members and company executives.

Melman
stated in his deposition testimony that he was not subjected to any discriminatory
treatment before July 2008, when PDF hired Joy Leo as chief administrative
officer (CAO). Although PDF had
announced that Leo’s responsibilities included investor relations, Melman
continued to report to Kibarian. Melman
believed that Leo had a board-driven agenda that put his position at risk,
along with the positions of Jones and another executive, David Joseph. Jones later told Melman that Leo had asked
Jones if a “restructuring accrual” had been established to “deal with Melman’s
termination.”

According
to Melman, 80 percent of his work in the vice president position was finance
and 20 percent was investor relations.
Between January 2008 and the end of June 2008, Melman spent about
80 hours per quarter on investor relations work. From July 2008 to December 2008, Melman spent
less time on investor relations, approximately 40 hours per quarter. In September 2008, the president of PDF’s
Japanese subsidiary raised an issue regarding the accuracy of the timecard
irregularity reports for which Melman was responsible. At the end of September 2008, Steve
Heinrichs, a board member and chair of the audit committee, instructed Jones to
remove Melman’s finance-related duties and to have those duties performed in the
finance department.

After PDF’s
controller left in September 2008, Jones, who had continued in the CFO
position, recommended that Melman be given the controller position and that he
report to Jones. Leo, the CAO, did not
accept the recommendation because she felt that board member Heinrichs would
object, and Melman was not appointed to the controller position.

C. Termination
of Melman’s Employment

PDF’s first reduction in force
took place in April 2008. The second
reduction in force began in the fall of 2008.
By the end of 2009, PDF had laid off 103 employees and reduced its
“global headcount” by approximately 25 percent.

In December 2008, Kibarian and
Melman had a meeting in which Melman offered to “relieve the pressure on
[Kibarian] to cut some costs” by contracting to work through 2010 at a reduced
salary in exchange for an increase in his PDF stock options from 150,000 to
400,000. Kibarian then delegated the
negotiations with Melman to Leo. On
January 12, 2009, Leo told Melman that his proposal was not acceptable and that
he would be laid off. Kibarian told
Melman in February 2009 that PDF could no longer afford the position of vice
president of investor relations.

In March
2009, Kibarian offered Melman employment through December 31, 2009, at his
current salary plus 30,000 shares of PDF.
Melman did not respond to the offer.
Thereafter, on April 14, 2009, PDF notified Melman that his position of
vice president of investor relations and strategic initiatives was being
eliminated as part of a reduction in force and his employment would be
terminated as of April 28, 2009. At
Melman’s request, Kibarian extended his termination date to May 15, 2009, so
that Melman could take a preplanned family vacation. Kibarian also told Melman that
“ ‘between the time you come back from your vacation and May 15, I’d like
to negotiate an arrangement with you that’s satisfactory.’ ”

The record
reflects that no further negotiations between PDF and Melman took place. After his termination date was extended,
Melman complained to Jones that he “was suffering from disability
discrimination at the hands of [board member] Steve Heinrichs and others.” PDF hired an independent investigator to
investigate Melman’s claims of disability discrimination. Melman refused to meet with the
investigator. After the investigation
was concluded, PDF determined that Melman’s complaint of disability
discrimination had no basis and formally terminated his employment effective
September 2, 2009.

Melman
asserts that he was the “only high-ranking PDF executive to be terminated via
reduction in force.” PDF states that
another vice president was terminated in the August 2009 reduction in
force. After Melman’s termination,
another company employee stated in a declaration that she had resigned from PDF
because Leo made derogatory comments about that employee’s race.

>III.
PROCEDURAL BACKGROUND

A. The
Complaint

In December 2009,> Melman filed a verified complaint
naming PDF and Kibarian as defendants.
In the first cause of action for disability discrimination (wrongful
termination) and the second cause of action for disability discrimination
(disparate treatment), Melman alleged that PDF was “substantially motivated by
Melman’s disability when it terminated his employment” in violation of the
FEHA, section 12940 et seq. In the third
cause of action for “failure to prevent discrimination,” Melman alleged that
PDF had “failed to take reasonable steps to prevent PDF directors and officers
from discriminating against [him] because of his disability, causing [him] to
suffer demotion and termination” in violation of section 12940 et seq.

In the
fourth cause of action for fraud, Melman claimed that defendants had “induced
[him] to resign and publicly announce his disabled condition” by declaring that
they intended to provide him with employment “ ‘for as long as he wants to keep
it.’ ” In the fifth cause of action for
breach of contract, Melman alleged that PDF breached the contract created by
its promise to provide him with employment “ ‘for as long as he wants to keep
it’ ” when it terminated his employment in September 2009. The sixth cause of action was for breach of
the implied covenant of good faith and fair dealing.

In the
seventh cause of action for wrongful discharge in violation of public policy,
Melman alleged that PDF’s decision to terminate him was substantially motivated
by his disability and thus constituted a violation of public policy under the
FEHA.

B. The
Motion for Summary Judgment

PDF filed a
motion for summary judgment, or, in the alternative, summary adjudication,
arguing that all of Melman’s claims lacked merit as a matter of law.

In its
points and authorities, PDF argued that the first, second, third and seventh
causes of action, which were all based on Melman’s allegations of disability
discrimination, lacked merit because the evidence showed that he had
voluntarily stepped down from the CFO position; he was terminated from the
position of vice president of investor relations and strategic initiatives for
economic reasons after PDF’s stock price plummeted and the company could no
longer afford a stand-alone position for investor relations; and his finance
duties were transferred due to concerns about finance functions being handled
by a person outside the finance department.

PDF also
argued that Melman had provided no evidence from which it could be reasonably
inferred that the company’s stated reasons for his termination were a pretext
for disability discrimination.
Additionally, PDF argued that since as a matter of law Melman could not
state a claim for disability discrimination, he also could not state a claim
for failure to prevent discrimination.

Alternatively,
PDF argued that Melman’s disability discrimination claims failed because he was
not a qualified disabled person within the meaning of FEHA (since he claimed he
was not able to work due to his disability) and also because he had not timely
served PDF with his Department of Fair Employment and Housing (DFEH) complaint.

As to the
fourth cause of action for fraud, the fifth cause of action for breach of
contract, and the sixth cause of action for breach of the covenant of good
faith and fair dealing, PDF contended that those claims also lacked merit as a
matter of law. PDF maintained that even
assuming that Kibarian had orally promised Melman that he could have the vice
president position for as long as he wanted it, the at-will provision in the
parties’ written integrated employment agreement could not be modified by an
oral statement; the claim for breach of the covenant of good faith and fair dealing
necessarily failed in the absence of a breach of contract; and the fraud claim
failed because Melman did not and could not reasonably rely upon Kibarian’s
oral promise when he voluntarily stepped down from the CFO position.

C. Opposition
to the Motion for Summary Judgment

Melman argued that he had
submitted sufficient admissible evidence to create triable issues of fact that
precluded summary judgment.

Regarding
the causes of action arising from his claim of disability discrimination,
Melman contended that the evidence showed that PDF had targeted Melman for
termination after his public announcement of his disability and the decision to
terminate his employment was substantially motivated by his disability,
particularly since he was the only executive to be terminated “via reduction in
force.” Melman also contended that the
evidence showed that PDF’s reasons for terminating his employment were a
pretext for disability discrimination, since (1) his finance-related tasks were
taken away by board member Heinrichs although the company’s auditors did not
require that those tasks be performed in the finance department; (2) his
timecard reporting irregularities were minor and easily resolved; and (3) Leo
and Kibarian refused to consider him for the controller position for which he
was “eminently qualified” because Heinrichs would be upset.

Additionally,
Melman argued that PDF had failed to accommodate his disability when it refused
to consider him for the controller position and had also failed to engage in a
good faith, interactive process regarding the controller position. Melman claimed that PDF “had a duty to honor
Melman’s request for reassignment when the position of Controller became
available.” Melman also stated that he
timely served his DFEH complaint on PDF’s attorneys during discovery in this
case.

As to the
causes of action for breach of contract and breach of the covenant of good
faith and fair dealing, Melman asserted that a contract was created when he
promised to step down from the CFO position in exchange for Kibarian’s promise
that he would be employed in the vice president position for as long as he
wanted it. According to Melman, he
fulfilled his part of the contract by stepping down and publicly announcing his
disability.

Finally, Melman
argued that his fraud claim has merit because the evidence showed that Kibarian
had fraudulently induced him to step down from the CFO position by promising
that he could stay in the vice president position for as long as he wanted it.

D. The
Trial Court’s Order

In its
order of August 15, 2011, the trial court granted PDF’s motion for summary
judgment.

Regarding
Melman’s claims of disability discrimination, the trial court found the
following facts were undisputed: (1)
Melman voluntarily stepped down from the CFO position because his health was
deteriorating; (2) after he stepped down, he received a raise; (3) his finance
duties were transferred to the finance department due to legitimate business
concerns in October 2008; and (4) PDF had to lay off approximately 25 percent
of its workforce due to the economic crisis.
Noting that it has been held that a reduction in force is a legitimate
reason to terminate an employee, the trial court ruled that “[i]n light of
Defendants’ evidence, Defendants have met their initial burden of showing that
Plaintiff was laid off for economic reasons and that his responsibilities as
Vice President of Investor Relations and Strategic Initiatives were modified
due to legitimate business concerns.”

The trial
court further found that “there is no evidence with which the jury could draw
an inference that PDF’s decision to terminate Plaintiff or remove his
finance-related duties was based on his disability.” Additionally, the court found that “[t]here
is also no evidence that Plaintiff was not considered for the open Controller
position because of his disability. Plaintiff only provides evidence that he was
not allowed to apply for the Controller position because Heinrichs would be
upset.” The court noted that it has been
held that “[e]ven ‘[a] personal grudge can constitute a “legitimate,
nondiscriminatory reason” for an adverse employment decision.’ [Citation.]”

Having made
these findings, the trial court determined that Melman’s “allegations of
disability discrimination are mere speculation.” The court accordingly found that the
discrimination-related causes of action lacked merit as a matter of law.

The trial
court also determined that the contract causes of action lacked merit as a
matter of law, finding that defendants had shown that the at-will provision in
Melman’s employment agreement could only be modified by a written agreement,
and, in any event, defendants had shown that there was good cause for Melman’s
termination “due to the depressed financial condition of PDF.”

As to the
fraud cause of action, the trial court found that Melman’s claim that he had
relied on Kibarian’s promise of continued employment in deciding to step down
as CFO was not supported by any evidence that Melman had relied on the promise
to his detriment, since he had not provided “any evidence that his
responsibilities were taken away because of his announcement or that he was
terminated because of his announcement.”

The trial
court also made a number of rulings regarding the parties’ evidentiary
objections. The only ruling at issue in
this appeal is the order sustaining PDF’s objection to the handwritten
investigator’s notes submitted by Melman.

Judgment in
PDF’s favor was entered in October 2011 and judgment in Kibarian’s favor was
entered in November 2011. An amended
judgment in PDF’s favor that includes costs was entered in January 2012. Melman filed a timely notice of appeal.

>IV.
DISCUSSION

On
appeal, Melman contends that the trial court erred in granting PDF’s motion for
summary judgment since triable issues of fact exist as to all causes of
action. Before addressing Melman’s
contentions, we will outline the applicable standard of review.>

> A. The
Standard of Review

The
standard of review for an order granting a motion for summary judgment is de
novo. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 860 (Aguilar).) The trial court’s
stated reasons for granting summary judgment are not binding on the reviewing
court, “which reviews the trial court’s ruling, not its rationale. [Citation.]”
(Ramalingam v. Thompson (2007)
151 Cal.App.4th 491, 498.)

In
performing our independent review, we apply the same three-step process as the
trial court. “Because summary judgment
is defined by the material allegations in the pleadings, we first look to the
pleadings to identify the elements of the causes of action for which relief is
sought.” (Baptist v. Robinson
(2006) 143 Cal.App.4th 151, 159 (Baptist).)

“We
then examine the moving party’s motion, including the evidence offered in
support of the motion.” (>Baptist, supra, 143 Cal.App.4th at p. 159.)
A defendant moving for summary judgment has the initial burden of
showing that a cause of action lacks merit because one or more elements of the
cause of action cannot be established or there is a complete defense to that
cause of action. (Code Civ. Proc.,
§ 437c, subd. (o); Aguilar, supra,
25 Cal.4th at p. 850.)

If
the defendant fails to make this initial showing, it is unnecessary to examine
the plaintiff’s opposing evidence and the motion must be denied. However, if the moving papers make a prima
facie showing that justifies a judgment in the defendant’s favor, the burden
shifts to the plaintiff to make a prima facie showing of the existence of a
triable issue of material fact. (Code
Civ. Proc., § 437c, subd. (p)(2); Aguilar,
supra, 25 Cal.4th at p. 849.)

In
determining whether the parties have met their respective burdens, “the court
must ‘consider all of the evidence’ and ‘all’ of the ‘inferences’ reasonably
drawn therefrom [citation], and must view such evidence [citations] and such
inferences [citations], in the light most favorable to the opposing
party.” (Aguilar, supra, 25 Cal.4th at p. 843.) “There is a triable issue of material fact
if, and only if, the evidence would allow a reasonable trier of fact to find
the underlying fact in favor of the party opposing the motion in accordance
with the applicable standard of proof.”
(Id. at p. 850,
fn. omitted.) Thus, a party “
‘cannot avoid summary judgment by asserting facts based on mere speculation and
conjecture, but instead must produce admissible evidence raising a triable
issue of fact. [Citation.]’
[Citation.]” (>Dollinger DeAnza Associates v. Chicago Title
Ins. Co. (2011) 199 Cal.App.4th 1132, 1144-1145.)

B. Causes of
Action Arising from Disability Discrimination

We will begin our independent evaluation of
the merits of PDF’s motion for summary adjudication of the first cause
of action for disability discrimination (wrongful termination), the second
cause of action for disability discrimination (disparate treatment), the third
cause of action for “failure to prevent discrimination,” and the seventh cause
of action for wrongful discharge in violation of public policy, with a brief overview of the legal framework
governing summary adjudication of an employee’s claim for disability
discrimination.

1. The Legal Framework for a Disability
Discrimination Claim

California has adopted
the three-stage, burden-shifting test known as the McDonnell Douglas test (McDonnell
Douglas Corp. v. Green (1973) 411 U.S. 792) for determining the merits of a
discrimination claim, including a claim for disability discrimination. (Guz,
supra, 24 Cal.4th at p. 354; Reid v.
Google, Inc. (2010) 50 Cal.4th 512, 520, fn. 2 (Reid).)

“At trial, the >McDonnell Douglas test places on the
plaintiff the initial burden to establish a prima facie case of
discrimination.” (Guz, supra, 24 Cal.4th at
p. 354.) In general, the elements of a
prima facie case of discrimination are (1) the plaintiff was a member of a
protected class; (2) the plaintiff was qualified for the position sought or
performed competently; (3) the plaintiff suffered an adverse employment action,
such as termination; and (4) “some other circumstance suggests discriminatory
motive. [Citations.]” (Id. at
p. 355.) “If, at trial, the plaintiff
establishes a prima facie case, a presumption of discrimination arises. [Citations.]”
(Ibid.)

If the plaintiff makes
the required prima facie showing at trial, the burden shifts to the employer to
produce admissible evidence sufficient to show a legitimate, nondiscriminatory
reason for the adverse employment action.
(Guz, supra, 24 Cal.4th at pp. 355-356.)
“If the employer meets this burden, the employee then must show that the
employer’s reasons are pretexts for discrimination, or produce other evidence
of intentional discrimination.
[Citation.]” (>Reid, supra, 50 Cal.4th at p. 520, fn. 2.)

With respect to summary
adjudication of a discrimination claim, this court has stated that an employer
seeking summary judgment in a discrimination case may meet its burden by
showing that one or more of the elements of a prima facie case are lacking or
that the adverse employment action was based on a legitimate, nondiscriminatory
reason. (Cucuzza v. City of Santa Clara (2002) 104 Cal.App.4th 1031, 1038 (>Cucuzza).)

If the employer meets
its initial burden in moving for summary judgment, the burden then shifts to
the employee to “demonstrate a triable issue by producing substantial evidence
that the employer’s stated reasons were untrue or pretextual, or that the
employer acted with a discriminatory animus,
such that a reasonable trier of fact could conclude that the employer engaged
in intentional discrimination or other unlawful action. [Citations.]”
(Cucuzza, supra, 104 Cal.App.4th at p. 1038.)

In Guz, the California Supreme Court emphasized that “the great weight
of federal and California authority holds that an 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,
supra, 24 Cal.4th at p. 361, fn.
omitted.) “[A]n inference is reasonable
if, and only if, it implies the unlawful motive is more likely than defendant’s
proffered explanation. [Citation.]” (Cucuzza,
supra, 104 Cal.App.4th at p.
1038.) Speculation regarding the
employer’s unlawful motive in terminating the employee is insufficient to raise
a triable question of fact regarding whether the employer’s explanation was
pretextual or false. (>Martin v. Lockheed Missiles & Space Co. (1994)
29 Cal.App.4th 1718, 1735 (Martin).)

Having reviewed the
legal framework for summary adjudication of an employee’s claim of disability
discrimination and the applicable standard of review, we turn to our evaluation
of PDF’s motion for summary adjudication of the causes of action arising from
Melman’s claim of disability discrimination.

2. Analysis

To determine whether PDF met its initial burden to show on
undisputed facts that the termination of Melman’s employment was based on a legitimate, nondiscriminatory
reason (Cucuzza, supra, 104 Cal.App.4th at p. 1038), we first examine the undisputed
material facts, as presented in PDF’s motion for summary judgment, as follows.

In 2002, Melman told
Kibarian, PDF’s CEO, that he had multiple sclerosis. Melman
voluntarily stepped down from the CFO position in 2005 after informing Kibarian
that his multiple sclerosis was getting worse and he was not sure how long he
could do his job. Melman and Kibarian
together created a new position for Melman of vice president of investor
relations and strategic initiatives, effective January 2006.

In 2007 and 2008, board
members had become concerned about Melman’s effectiveness as vice president of
investor relations. PDF’s stock price
began to decline in 2008 and the company started laying off employees. During that time period, Melman nevertheless
asked for increases in executive pay and compensation and suggested that the
company be sold. Kibarian then began to
lose confidence in Melman due to his perceived greed.

Melman admits that PDF
accommodated him by setting up his home office and he was not subjected to any
discriminatory treatment before July 2008.
In September 2008, there was an issue with time card irregularities for
which Melman was responsible. Also in
September 2008, board member Heinrichs instructed that Melman’s finance-related
tasks be removed and performed in the finance department.

PDF conducted reductions
in force beginning in 2008 that ultimately reduced the company’s workforce by
25 percent. In December 2008, Melman
voluntarily began negotiations with PDF to end his employment in exchange for
an increase in his PDF stock options.
Those negotiations failed and Kibarian told Melman in February 2009 that
PDF could no longer afford his vice president position. Melman did not respond to Kibarian’s March
2009 offer of employment through December 31, 2009, at his current salary plus
30,000 shares of PDF. PDF then notified
Melman that his vice president position was being eliminated as part of a
reduction in force and his employment would be terminated in April 2009.

At Melman’s request,
Kibarian extended Melman’s termination date to May 15, 2009. Melman then complained that he was suffering
from disability discrimination and PDF hired an independent investigator to
investigate his claims. As a result of
the investigation, PDF concluded that Melman’s claims of disability discrimination
had no basis and terminated his employment as of September 2, 2009.

Based
on these undisputed facts, we find that PDF’s nondiscriminatory business reason
for eliminating Melman’s position as vice president of investor relations and
strategic initiatives and terminating his employment during a reduction in
force of 25 percent of the company’s employees “was creditable on its
face.” (Guz, supra, 24 Cal.4th at
p. 357.) Melman therefore “had the
burden to rebut this facially
dispositive showing by pointing to evidence which nonetheless raises a rational
inference that intentional discrimination occurred. [Citation.]”
(Ibid.)

On appeal,
Melman claims that he met his burden to provide evidence from which it could be
reasonably inferred that PDF intentionally discriminated against him due to his
physical disability, as follows. When
Leo was appointed CAO, she inquired as to whether a “restructuring accrual” had
been established to “deal with Melman’s termination.” Board member Heinrichs removed Melman’s
finance-related duties with the false justification that the company’s auditors
required those duties to be performed in the finance department, and by doing
so, “breached the PDF organizational structure.” Leo, who has a history of discriminatory
conduct and who lacked credibility, “precluded” Melman from applying for the
vacant controller position although he had superior qualifications. Melman also asserts that he was the only
executive to be terminated due to a reduction in force.

Based on this
showing, Melman contends that triable issues of fact exist as to whether PDF
terminated his employment due to disability discrimination, and therefore the
trial court erred in granting summary adjudication of the first and second
causes of action for disability discrimination, the third cause of action for
failure to prevent discrimination, and seventh causes of action for wrongful
discharge in violation of public policy.

We are not
convinced that Melman’s showing is sufficient to create a triable issue of fact
as to whether PDF’s true reason for terminating him was disability
discrimination. The California Supreme
Court instructed in Guz that “summary
judgment for the employer may . . . be appropriate 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, supra, 24 Cal.4th at
p. 362.)

In
Guz, the plaintiff employee alleged
that he had been terminated by his employer due to age discrimination. (Guz,
supra, 24 Cal.4th at p. 357.) The defendant employer, Bechtel National,
Inc. (Bechtel), moved for summary judgment on the ground that Guz was
terminated for reasons unrelated to age bias during a company
reorganization. (Id. at pp. 359-360.)
Although Guz argued that the evidence raised a triable issue of fact as
to whether Bechtel’s proffered reasons for his termination were false, our
Supreme Court determined that “the record contains no direct evidence, and
little if any circumstantial support, for such a finding.” (Id.
at p. 363.) The court concluded, “[i]n
sum, even without considering Bechtel’s explanation, Guz’s evidence raised, at
best, only a weak suspicion that discrimination was a likely basis for his
release. Against that evidence, Bechtel
has presented a plausible, and largely uncontradicted, explanation that it
eliminated [Guz’s business unit], and chose others over Guz, for reasons
unrelated to age. . . .
[¶] Under these circumstances we
conclude, as a matter of law, that Guz has failed to point to evidence raising
a triable issue that Bechtel’s proffered reasons for its actions were a pretext
for prohibited age discrimination.” (>Id. at pp. 369-370; see also >Cucuzza, supra, 104 Cal.App.4th at pp. 1045-1046 [no reasonable fact finder
could infer that the plaintiff employee’s gender was part of the employer’s
decision to hire another for the permanent position she sought].)

The
present case is similar to Guz and >Cucuzza.
PDF presented a plausible and largely uncontradicted explanation for its
termination of Melman’s employment:
(1) Melman’s position of vice president of investor relations and
strategic initiatives, which was specially created for him after he voluntarily
stepped down from the CFO position at his request, was eliminated during a
reduction in force—in which 25 percent of PDF’s workforce was laid off—because
PDF could no longer afford Melman’s position; and (2) Melman was laid off after
the parties’ mutual efforts to negotiate his voluntary departure from the
company had failed. Moreover, as in >Guz, “even without considering [PDF’s]
explanation, [Melman’s] evidence raised, at best, only a weak suspicion that
discrimination was a likely basis for his release.” (Guz,
supra, 24 Cal.4th at pp. 369-370.)

We
recognize that “[i]n discrimination cases, proof of the employer’s reasons for
an adverse action often depends on inferences rather than on direct evidence.” (Cucuzza,
supra, 104 Cal.App.4th at p.
1038.) However, “even though we may
expect a plaintiff to rely on inferences rather than direct evidence to create
a factual dispute on the question of [the employer’s] motive, a material triable
controversy is not established unless the inference is reasonable. And an inference is reasonable if, and only
if, it implies the unlawful motive is more likely than defendant’s proffered
explanation. [Citation.]” (Ibid.)

Here,
Melman’s showing is too weak to support a reasonable inference that it is more
likely that PDF terminated him due to his physical disability, rather than for
PDF’s proffered explanation that he was terminated for business reasons when
his position was eliminated during reduction in force. Although Melman’s evidentiary showing may be
sufficient to draw an inference that board member Heinrichs and CEO Kibarian
were dissatisfied with Melman and wanted him to leave the company, his showing
was insufficient to create more than speculation that they had a discriminatory
motive. As we have noted, speculation
regarding an employer’s motive for terminating an employee is insufficient to
raise a triable issue of fact regarding whether the employer’s showing was pretextual
or false. (Martin, supra, 29 Cal.App.4th
at p. 1735.) And, although Melman asserts that Leo
engaged in racial discrimination, even assuming that an inference of disability
discrimination may be drawn from evidence of racial discrimination, there is no
evidence that Leo authorized the termination of Melman’s employment.

Finally,
Melman argues that a triable issue of material fact exists as to whether “PDF
unlawfully withdrew reasonable accommodations for his disability” when Leo
precluded him from applying for the vacant controller position. We observe that the complaint does not
include a causes of action for failure to accommodate. “ ‘The complaintname="SDU_760"> serves
to delimit the scope of the issues before the court on a motion for summary
judgment [citation], and a party cannot successfully resist summary judgment on
a theory not pleaded.’ [Citation.]” (Bosetti
v. United States Life Ins. Co. in
City of New York (2009) 175 Cal.App.4th 1208, 1225.) Thus, an “appellant may not defeat a summary
judgment motion by producing evidence to support claims that are outside the
issues framed by the pleadings.
[Citations.]” (>Vournas v. Fidelity Nat. Tit. Ins. Co.
(1999) 73 Cal.App.4th 668, 674, fn. 6.)
Even assuming that Melman has sufficiently pleaded a cause of action for
failure to accommodate, we determine that the claim lacks merit as a matter of
law since there is no evidence that Melman ever requested assignment to the
controller position as a reasonable accommodation of his physical
disability. (See Scotch v. Art Institute of California (2009) 173 Cal.App.4th 986,
1013 [burden is on the employee to suggest a reasonable accommodation under
section 12940, subdivision (n)].)

Although
we acknowledge that “sadly, economically dictated reductions in force can and
often do victimize highly qualified and hard-working people” (>Martin, supra, 29 Cal.App.4th at p. 1733), we conclude that in the
absence of a triable issue of material fact regarding whether PDF acted with a
discriminatory motive, the trial court did not err in granting PDF’s motion for
summary adjudication of the
first cause of action for disability discrimination (wrongful termination), the
second cause of action for disability discrimination (disparate treatment), the
third cause of action for “failure to prevent discrimination,” and the seventh
cause of action for wrongful discharge in violation of public policy.

Having
reached this conclusion, we need not address PDF’s contentions that summary
judgment was proper because Melman is not a qualified person under the FEHA and
he failed to timely serve his DFEH complaint.

C. Contract
Causes of Action

In the fifth cause of action for
breach of contract, Melman alleged that PDF breached the contract it had
created by its promise to provide him with employment “ ‘for as long as he
wants to keep it’ ” when it terminated his employment in September 2009. The sixth cause of action asserts breach of
the implied covenant of good faith and fair dealing. Melman contends that the trial court erred in
granting summary adjudication of both causes of action because the evidence
shows that he and Kibarian “entered into an oral agreement, by which Melman
promised to step down as CFO and publicly announce his medical condition to
Wall Street as the cause of the transition, and in return Kibarian promised to employ
Melman in a lower-ranked Vice President position for as long as Melman wanted.”

PDF
responds that as a matter of law, Kibarian’s oral statement could not modify
the at-will provision in Melman’s employment agreement. It is undisputed that Melman’s employment
agreement included the following at-will provision: “At-Will Employment.> By
signing below, you acknowledge that your employment at the Company is for an
unspecified duration, and neither this letter nor your acceptance thereof
constitutes a contract of employment.
You acknowledge that your employment will be on an ‘at-will’
basis, which means that the employment relationship may be terminated by you or
the Company at any time for any reason or no reason, without further obligation
or liability.”

The
California Supreme Court has defined at-will employment: “ ‘An at-will employment may be ended by
either party “at any time without cause,” for any or no reason, and subject to
no procedure except the statutory requirement of notice.’ [Citation.]”
(Dore v. Arnold Worldwide, Inc. (2006)
39 Cal.4th 384, 392.) Where there is a
valid integrated contract creating at-will employment, it cannot be
contradicted or defeated by evidence of an oral agreement purporting to
guarantee employment for a certain period of time or upon the occurrence of
certain conditions. (Starzynski v.
Capital Public Radio, Inc. (2001) 88 Cal.App.4th 33, 37-38 (>Starzynski).) The express at-will provision controls
because there cannot be a valid express contract and an oral side agreement
that each embrace the same subject but require different results. (Ibid.; Camp v. Jeffer, Mangels,
Butler & Marmaro (1995) 35 Cal.App.4th 620, 630; Slivinsky v.
Watkins-Johnson Co. (1990) 221 Cal.App.3d 799, 806 (Slivinsky).)

Melman’s
employment agreement also expressly provided that the agreement could “not be
modified or amended except by a written agreement, signed by the Company and by
you.” This court has ruled that where,
as here, the employment agreement includes an at-will provision and expressly
states that the agreement may be modified only by a formal written agreement,
no contract implied from subsequent oral statements or conduct can modify the
at-will provision. (Haggard v. Kimberly Quality Care, Inc. (1995) 39 Cal.App. 508, 521;
see also Starzynski, supra,
88 Cal.App.4th at p. 38 [supervisor’s oral assurance of continued
employment did not create implied contract in face of written acknowledgment
signed by employee that employment was at-will].) As a matter of law, therefore, Kibarian’s
oral statement that Melman could have the vice president position for as long
as he wanted it did not modify the at-will provision in Melman’s written
employment agreement.href="#_ftn2"
name="_ftnref2" title="">[2]

Melman’s
alternative argument is that PDF is estopped from denying an implied contract
because he “relied on Kibarian’s [oral] promise before abandoning his CFO
position and publicly disclosing his [multiple sclerosis].” We find no merit in this argument because it
is undisputed, as Melman testified in his deposition, that he had agreed to
make the transition from CFO to vice president before Kibarian stated at the
executive staff meeting that Melman could have the vice president position for
as long as he wanted it, and Melman did not rely upon Kibarian’s statement in
deciding to step down as CFO.

Since
we have determined as a matter of law that the at-will provision in Melman’s
employment contract was not modified by Kibarian’s subsequent oral statement
that Melman could have the vice president position for as long as he wanted it,
we also determine that the fifth cause of action for breach of contract lacks
merit as a matter of law and the trial court properly granted summary
adjudication.

For
the same reason, the sixth cause of action for breach of the implied covenant of
good faith and fair dealing also fails as a matter of law. “The covenant is designed to effectuate the
intentions and reasonable expectations of parties reflected by mutual promises
within the contract. [Citation.] Here the parties agreed that their relationship
was terminated at will. Therefore,
‘terminating an employee without good cause does not deprive the employee of
the benefits of the agreement.’
[Citations.]” (>Silivinsky, supra, 221 Cal.App.3d at p. 806.)

> D. Fraud
Cause of Action

Melman
contends that triable questions of material fact preclude summary adjudication
of the fourth cause of action for fraud, in which he alleged that defendants
had fraudulently induced him “to resign and publicly announce his disabled
condition” by declaring that they intended to provide him with employment “
‘for as long as he wants to keep it.’ ”
According to Melman, the evidence shows that Kibarian knew that his
promise that Melman could have the vice president position for as long as he
wanted it was false and Kibarian intended to induce Melman’s reliance on the
false promise of continued employment.

PDF
responds that Melman cannot establish the elements of a cause of action for
fraud, since, among other things, it is undisputed that Melman did not rely on Kibarian’s
promise when he voluntarily stepped down from the CFO position prior to the
promise being made. We agree.

“
‘The elements of fraud, which give
rise to the tort action for deceit, are (a) misrepresentation (false
representation, concealment, or nondisclosure); (b) knowledge of falsity (or
“scienter”); (c) intent to defraud, i.e., to induce reliance; (d) justifiable
reliance; and (e) resulting damage.’
[Citations.]name="______#HN;F3"> name=B31996039556>[¶] ‘Promissory
fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies
the intention to perform; hence, where a promise is made without such
intention, there is an implied misrepresentation of fact that may be actionable
fraud. [Citations.]” (Lazar
v. Superior Court (1996) 12 Cal.4th 631, 638.) “[P]romissory fraud, like all forms of fraud,
requires a showing of justifiable reliance on the defendant’s
representation. [Citation.]” (Riverisland,
supra, 55 Cal.4th at p. 1183.)

We
determine that Melman cannot demonstrate a triable factual issue regarding the
element of justifiable reliance in his fraud cause of action. In Slivinsky, supra, 221 Cal.App.3d 799,
this court granted the employer’s summary judgment motion in a wrongful
termination action on the basis of a written at-will agreement. In addition to breach of contract and breach
of the implied covenant of good faith and fair dealing, the plaintiff employee
had also alleged fraud. This court found
that the plaintiff’s reliance on the employer’s promises of continuing employment
was “simply not justifiable
because the representations
contradict the parties’
integrated employment name="SR;6102">agreement which provided
that the employment
was at will.name="SR;6112"> [Citations.] Justifiable reliance is a necessary element
of a cause of action for fraud. [Citation.]” (Id. at p. 807; see also Shapiro v.
Wells Fargo Realty Advisors (1984) 152 Cal.App.3d 467, 482 [employee cannot
reasonably rely on promise in conflict with at-will provision], disapproved on
another point in Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 667.)

Similarly,
as a matter of law Melman could not justifiably rely on Kibarian’s oral promise
of continued employment since that promise conflicted with the at-will
provision in his integrated employment agreement. Summary adjudication of the fraud cause of
action was therefore proper.

E. Evidentiary
Ruling

Finally, Melman argues that the
trial court abused its discretion in sustaining PDF’s evidentiary objection to
the independent investigator’s handwritten interview notes, which Melman
asserts shows that several board members wanted to fire him and were therefore
admissible as “nonhearsay statements evidencing the mental state of the
declarants,” as well as party admissions and prior inconsistent statements.

According
to PDF, the trial court properly sustained the evidentiary objection to the
investigator’s notes on the grounds of inadmissible multiple hearsay, lack of
personal knowledge, and lack of authentication.

The
standard of review for for a trial court’s evidentiary rulings is abuse of
discretion. (Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 229, 281.) However, we need not determine whether the
trial court abused its discretion in excluding the investigator’s notes because
Melman has not shown that the claimed error was prejudicial. “ ‘Anyone who seeks an appeal to predicate a
reversal of [a judgment] on error must show that it was prejudicial. (Cal. Const., art. VI, § 13.)’ [Citation.]”
(Carnes v. Superior Court (2005)
126 Cal.App.4th 688, 694 [plaintiff challenging summary judgment failed to show
she was prejudiced by the trial court’s adoption of evidentiaryname="sp_7047_920"> name="citeas((Cite_as:_126_Cal.App.4th_688,_*6">rulings proposed by
defendant’s attorneys].)

According
to Melman, the investigator’s notes include the following statements: “(1) PDF Board Chairman Lucio Lanza, Audit
Chair Steve Heinrichs, and Board Member Albert Yu discussed their desire to
fire Steve Melman at one or more PDF Board meetings. [¶]
(2) Board Member Sue Billat stated that she was bothered by Lanza’s
desire to get rid of Melman, given that Melman had done so much for the company
and had taken so little money out of the company. [¶]
(3) Lanza, specifically, shouted at multiple Board meetings about the
need to get rid of Melman. Although
Lanza also wanted to fire two other employees, Keith Jones and Dave Josephs, he
targeted Melman especially. [¶] (4) Billat did not become aware of how
strongly Lanza wanted Melman out of the company until after Melman publicly
announced that he has Multiple Sclerosis.”
(Fns. omitted.)

Melman
argues that “because these statements demonstrated the discriminatory animus of
PDF decision-makers, [he] should have prevailed on summary judgment.” Assuming, without deciding, that Melman has
accurately paraphrased the handwritten and partially unintelligible handwritten
notes of the investigator, we find that the statements do not serve to create a
triable issue of fact as to whether PDF had a discriminatory motive in
terminating Melman’s employment. As we
have discussed, although Melman’s evidentiary showing may be sufficient to draw
an inference that board members were dissatisfied with Melman and wanted him to
leave the company, his showing was insufficient to create more than speculation
that they had a discriminatory motive. (>Martin, supra, 29 Cal.App.4th at p. 1735.)
Additional evidence that various board members wanted to terminate
Melman’s employment, without more, does not support a reasonable inference that
his termination was motivated by disability discrimination.

We
therefore determine that Melman has not demonstrated prejudicial error because,
even if the investigator’s notes had been admitted into evidence in support of
Melman’s opposition to the motion for summary judgment, the result would be the
same: summary adjudication of the first,
second, third and seventh causes of action arising from disability
discrimination was properly granted.

V. DISPOSITION

The
judgment is affirmed.





___________________________________________

Bamattre-Manoukian, J.











WE CONCUR:









__________________________

ELIA,
ACTING P.J.















__________________________

Márquez,
J.