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Plaintiffs' Opposition to LSU Motion to Strike

Plaintiffs' Opposition to LSU Motion to Strike

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Richard McCune on behalf of Kaatz et al, Plaintiffs, files this Opposition to LSU's motion to strike Plaintiffs' complaint.
Richard McCune on behalf of Kaatz et al, Plaintiffs, files this Opposition to LSU's motion to strike Plaintiffs' complaint.

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Published by: Jared Wright (Spectrum Magazine) on Oct 25, 2011
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Richard D. McCune, State Bar No. 132124 David C. Wright, State Bar No. 177468 Michele M. Vercoski, State Bar No. 244010 2068 Orange Tree Lane, Suite 216 Redlands, California 92374 Telephone: (909) 557-1250 Facsimile: (909) 557-1275 Attorneys for Plaintiffs
l\tlcCUNEWRIGHT LLP

IN THE SUPERIOR COURT OF CALIFORNIAOCT IN AND FOR THE COUNTY OF RIVE~E",",_,~,_,c
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JEFFRY M. KAATZ, JAMES W. BEACH, and GARY L. BRADLEY, Plaintiffs, v. RICARDO GRAHAM; PACIFIC UNION CONFERENCE OF SEVENTH-DAY ADVENTISTS, a not-for-profit corporation; DANIEL R. JACKSON; LARRY BLACKMER; NORTH AMERICAN DIVISION CORPORATION OF SEVENTH-DAY ADVENTISTS, a not-for-profit corporation; and LA SIERRA UNIVERSITY, a not-for-profit corporation; and DOES 1-100, Defendants.

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Case No.: RIC 1112557 PLAINTIFFS'OPPOSITION TO DEFENDANT LA SIERRA UNIVERSITY'S MOTION TO STRIKE PORTIONS OF PLAINTIFFS' COMPLAINT Hearing Date: October 20, 2011 Hearing Time: 8:30 a.m. Judge: Commissioner Paulette Durand-Barkley Department: 2

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Judge Assigned: Hon. Craig G. Riemer Complaint Filed: July 28, 2011

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Plaintiffs' Opposition to Defendants' Motion to Strike Complaint

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I INTRODUCTION Defendant La Sierra University begins it Memorandum of Points and Authorities in support of it Motion to Strike with the same manufactured refrain that is replete throughout all of its various motions; namely, that Plaintiffs are asking this Court to become involved in deciding how Seventh-day Adventist Church organizations are to be governed, interact, and accomplish their religious mission, in violation of the First Amendment. However, Defendant's relentless repetition of this talking point does not serve to make it any more true. No reasonable and fair reading of Plaintiffs' Complaint can support this characterization of Plaintiffs' allegations. In no way does Plaintiffs' Complaint ask the Court to decide a religious issue. What is abundantly clear from the Complaint, is that Plaintiffs are alleging that they were lifelong employees of La Sierra University who were wrongfully discharged from their employment when they were coerced and forced into signing a resignation letter by Defendant Ricardo Graham, the Board Chair of their employer, La Sierra University, under the threat of public firing and release of a secret and improper recording of Plaintiffs' private conversation that had been recorded by a La Sierra University board member. Plaintiffs allege that the Board Chair's action was improper both for use of the secretly-recorded conversation to coerce Plaintiffs' resignation and because he did not have the authority to seek Plaintiffs' resignations or threaten them with termination. Plaintiffs allege that in so doing, Graham violated multiple procedural and due process protections provided by La Sierra University for its employees in taking those actions. The Board Chair's violations of employee due process and procedural protections included taking unauthorized and unilateral board action; failing to consult or seek board approval; bypassing the President and the La Sierra University administration in making unilateral and unauthorized decisions regarding operations and employment - decisions outside of the board's scope of duty and control; and acting in direct breach of his fiduciary duty to La Sierra University as Board Chair. Plaintiffs allege that not only were the coerced and forced resignation letters not legally binding because of the circumstances under which they were obtained, but to the extent they had any effect, they were withdrawn before the board took action on the resignations and were not therefore legally binding.

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Plaintiffs' Opposition to Defendants' Motion to Strike Complaint

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To the extent the board could act on the resignations, the board's action was procedurally deficient and substantively illegal because of undue influence exerted on the board members by outside entities and interests that mandated board members to violate their fiduciary duties of loyalty and interest to La Sierra University. This is not a case of religious freedom; it is a case of corporate malfeasance, breach of contract, and breach of the duty of good faith and fair dealing. Contrary to Defendant's unfounded assertions, it simply does not implicate First Amendment protection of religious freedom.
In conjunction with a demurrer, Defendant La Sierra University has filed a motion to strike no

fewer than 73 different portions of Plaintiffs' Complaint "on the grounds that said allegations are irrelevant, false, or improper matter within the meaning of Code of Civil Procedure section 436." (Def.'s Mot. to Strike, at p. 7:5-6.) Nowhere in Defendant's motion does it make any attempt to identify which ground(s) apply to each of the 73 objections. However, in its supporting Memorandum of Points and Authorities, Defendant appears to argue 5 general bases for its motion to strike: 1) punitive damages cannot be sought against the religiously-affiliated corporations; 2) the First Amendment bars civil courts from interfering in church governance; 3) unspecific allegations are irrelevant or conclusory; 4) money damages are not available under Business & Professions Code section 17200; and 5) there is no basis for recovery of attorney's fees. As the following will explain in greater detail, each of Defendant's contentions is without merit, with the exception of their contention that money damages are not available under Business & Professions Code section 17200.

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ARG~NT Plaintiffs Do Not Seek Punitive Damages Against the Not-for-Profit Religious Corporations as Is Made Clear in the Prayer for Relief Defendant argues that Plaintiffs have not obtained a court order allowing them to claim punitive damages against the Church. However, Plaintiffs do not dispute that punitive damages against a religious corporation shall not be included in the complaint unless the court first enters an order allowin

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Plaintiffs' Opposition to Defendants' Motion to Strike Complaint

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such a pleading. That is precisely why Plaintiffs, in their prayer for relief, demand punitive damages "against all liable Defendants in their individual capacity." (Complaint, Prayer for Relief, qr d.).

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B.

The First Amendment Duty

Does not Bar Plaintiffs'

Cause of Action for Breach of Fiduciary

Defendant La Sierra University next contends that Plaintiffs' cause of action for breach of fiduciary duty cannot lie because such an inquiry requires the Court to evaluate how the religious institutions can best govern themselves. (Defs.' Mot. to Strike, 9:17-19.) However, as discussed more fully in Plaintiffs' Oppositions to Defendants' Demurrers, as well as in Plaintiffs' Opposition to Defendants' Request for Judicial Notice, this is not an issue of religion. Notwithstanding Defendant's

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gratuitous spin of the facts to the contrary, Plaintiffs' Complaint is one which seeks redress for wrongful termination, breach of contract, and breach of fiduciary duty, and not for a determination of religious issues or governance. Defendant's inherently factual claim that a religious issue is at the center of this lawsuit is a pretext for their unlawful actions for the wrongful employment practices at issue. Defendant cites numerous cases for the proposition that case law prohibits courts from exercisin jurisdiction over church governance issues. Significantly, however, in every one of those cases, the question was whether duly authorized action taken by a religious organization was subject to review by the courts. None of those cases involved allegations that the action taken by the religious organization was made in violation of its own policies or procedures or was carried out by persons not authorized to make such decisions or take such action. In its rush to characterize the instant case as an assault on the First Amendment guarantee of religious freedom, Defendant simply ignores the fact that Plaintiffs are not claiming that their termination was unconstitutional, but rather, that their termination was carried out in violation of Defendant's own policies through a person without the authority to take such action. Defendants cite Higgins v. Maher (1989) 210 Cal. App. 3d 1168, for the proposition that courts cannot intrude into a religious organization's religious or ecclesiastical decisions. (Defs.' Mot. to Srike, 9:5-9). However, Higgins involved a challenge to a clergy employment decisions - a narrow class of case subject to a unique and absolute prohibition of review by civil authorities. (See, Higgins, supra, 210 Cal. App. 3d at 1173 ("[t]he authorities are next to unanimous in concluding that civil courts may not involve themselves in reviewing the termination of clergy for theological or disciplinary reasons").)

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Plaintiffs' Opposition to Defendants' Motion to Strike Complaint

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The special treatment accorded clergy employment cases stems from the courts' recognition that "[t]he minister is the chief instrument by which the church seeks to fulfill its purpose." (Higgins, supra at 1174, quoting McClure v. Salvation Army (5th Cir. 1972) 460 F.2d 553 (secular court precluded from applying title VII of the Civil Rights Act to church's alleged wrongful termination of employment).) Accordingly, the courts have come to recognize a "ministerial exception," which prohibits any civil judicial review of the clergy's employment-related claims. Of course, this case does not involve any employment relationship between a minister or priest and a church. Thus, the "ministerial exception" for employment cases discussed in Higgins v. Maher, supra, is irrelevant here. What is relevant is Higgins' express acknowledgment that "[t]he commission of a common law tort in the name of or under the auspices of a church does not lessen its culpability." (Higgins, supra, 210 Cal. App. 3d at 1175, citing Molko v. Holy Spirit Ass'n, supra, 46 Cal.3d at 1114, 1116-1117.) .
Higgins expressly recognizes that civil courts are competent to review tort claims in circumstances like

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these - where they do not involve ministerial employment and can "be segregated and treated separately - as simple civil wrongs." (Id. at 1176; see also, Schmoll v. Chapman Univ. (1990) 70 Cal. App. 4th 1434,1444 n. 9 (distinguishing claim accorded judicial review in Smith v. Fair Employment & Housing
Comm'n, (2001) 12 Cal. 4th 1143, as having "nothing to do with the employment relationship between

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the religious institution and its minister").) Even under Defendant's authorities, adjudication of Plaintiffs' employment tort claims or fiduciary duty claims are not barred by the First Amendment. (See also, Hope Int'l Univ. v. Superior
Court (2004) 119 Cal. App. 4th 719, 736 n. 8 ("[s]ome claims may not, at least on their face, implicate

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church-state entanglement even when they are between parties who clearly are in a clergy-religion relationship, noting that the ministerial exception should hardly protect a bishop who physically assaults a priest and then fires the priest for resisting").) While no bright line rule does or can exist, it is settled that while religious belief is absolutely protected, the protection extended to religiously motivated conduct is not absolute and that even if found to be a religious entity, it may be held liable in tort for secular acts, even for acts that are religiously motivated. (Maiko v. Holy Spirit Association (1988) 46 Ca1.3d 1092, 1112, 1114.) Where the plaintiffs claims are not based on a challenge to church doctrines, teachings or beliefs, but instead seek to hold a

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Plaintiffs' Opposition to Defendants' Motion to Strike Complaint

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religious affiliated University employer liable for their acts, what the trier of fact weighs "is not itself
belief -- it is conduct 'subject to regulation for the protection of society.'" (Id. at 1114, 1117 (emphasis

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in original).) Unlike pure expressions of belief, conduct, even conduct based on religious motives, may be restricted by neutral legislation. (Barr v. United Methodist Church (1979) 90 Cal.App.3d 259,275.) Religious belief, no matter how sincerely held, does not excuse acts that are contrary to otherwise valid, generally applicable and neutral laws. (Catholic Charities of Sacramento, Inc. v. Superior Court
(Department of Managed Health Care) (2004) 32 CalAth 527,549.)

Therefore, any allegations against LSU's board chairman, Defendant Ricardo Graham, for operating under a conflict of interest and to the detriment of LSU, does not require any inquiry from the Court into the religion of the institution. As such, Plaintiffs request that this Court deny Defendants' motion to strike such allegations from the Complaint.

C.

Plaintiffs' Factual Allegations That the Audio Recording of Plaintiffs' Private Conversation in Plaintiff's Home and That Defendants Inappropriately Listened to Such Recording Are Neither Irrelevant Nor Conclusory Defendants argue that the pleadings with respect to the audio recording are irrelevant and

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conc1usionaryand therefore should be stricken from the Complaint. Defendants could not be more wrong about this; it is the receipt and use of the recording that initiated the wrongful terminations by virtue of Defendant Graham's threat to go public with the recordings unless the Plaintiffs signed the resignation letters placed before them. Plaintiffs plead such allegations with specificity and detail as to names of the individuals who received the circulated recording and corresponding transcription, as well as on which date such recordings were received. (See Complaint, 1138-62; 91-105.) In light of the detail with which the circumstances and facts surrounding the recording and distribution of said recording was pleaded, Defendants cannot seriously maintain that the allegations are "irrelevant matter" and "immaterial." Defendants seem to take issue with the words "surreptitious," "inappropriate," and "unauthorized" as those words are used to describe how the oral communications were recorded, received, listened and distributed amongst and by the Defendants. To the extent Defendants were confused as to the common meaning of the terms which it complains are irrelevant or conc1usory,

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Plaintiffs' Oppositionto Defendants'Motionto StrikeComplaint

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Plaintiff uses such terms for their most common meaning: • "Surreptitious" means "done, made, or acquired by stealth." (http://www.merriamwebster.comJdictionary/surreptitious); • "Inappropriate" means "not appropriate; unsuitable." (http://www.merriam-

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webster.comJdictionary/inappropriate?show=O&t=1317927136); • "Unauthorized" means "not endowed with authority." (http://www .thefreedictionary.comJunauthorized). As set out in detail in the Complaint, Plaintiffs did not, at any time herein relevant, authorize the recording of their private conversation, which took place in a private home. (Complaint,

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The

audio recording was circulated among the Defendants without Plaintiffs' knowledge of its existence. (Complaint,

n96-105.)

Again, because Plaintiffs had no knowledge of the existence of the recording

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their private conversation until the time they were individually forced to resign, they could not have authorized the use and distribution of such a recording. In light of the detailed allegations of how, when, what, why, and where the recording took place and the sequences of events that transpired thereafter, Defendants cannot seriously maintain that Plaintiffs state only mere conclusions of law and therefore Defendants' request to strike such allegations must be denied. D.

Business and Professions Code Section 17200 Does not Support a Request for Money Damages
Defendant correctly asserts that Section 17200 does not specifically provide for damages, and

Plaintiffs concede that the damage allegation under the 11th Cause of Action for violation of Section 17200 should be stricken. (Def.'s Motion to Strike, at p. 11.)

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E.

Plaintiffs Have A Proper Basis for Seeking Recovery of Attorneys Fees
Plaintiffs may allege a prayer for attorney fees under the "private attorney general" doctrine,

which is an exception to the general rule that each party must pay his or her own attorney fees.

(See

Gray v. Don Miller & Assocs., Inc. (1984) 35 Ca1.3d 498,505 [198 Cal.Rptr. 551, 554].) This doctrine is codified in Code of Civil Procedure section 1021.5, which provides that an attorney fee award may be entered if the following criteria are met: (1) The action "has resulted in the enforcement of an important right affecting the public interest";

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Plaintiffs' Opposition to Defendants' Motion to Strike Complaint

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(2) "A significant benefit" has been "conferred on the general public or a large class of persons"; (3) "[T]he necessity and financial burden of private enforcement are such as to make the award appropriate"; and (4) The fees "should not in the interest of justice be paid out of the recovery, if any." Here, Plaintiffs have alleged that administrators of Defendant, a large private education institution, have violated fiduciary duties and breached contracts in the unlawful discharge of faculty and other employees. (Complaint at pp. 6, 11, 12, 18,29,61, 112.) Therefore, Plaintiffs seek an

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injunction which would enjoin Defendant from acting in violation of fiduciary duties and contractual terms in the treatment of faculty and employees, thereby enforcing a change in Defendant's policy as

affecting all of its employees. (Complaint at pp. 192-199; prayer for relief (a) and (e).) Therefore, Plaintiffs are functioning as a private attorney general in prosecuting this action against Defendant for the violation of fiduciary duties, contract terms and important public rights, and to enforce a change in its practice towards all of its .employees as well as future employees. Therefore, Plaintiffs have sufficiently alleged claims for attorney fees. At any rate, Defendant's challenge to the Complaint's allegations of attorney fees is extremely premature as the determination of any such award under Section 1021.5 depends on the success and significance of the benefits obtained after the conclusion of the litigation and other factual inquiries. (See Conservatorship of Whitley (2010) 50 Ca1.4th 1206, 1214 [241 P.3d 840].) Should Plaintiffs prevail, Plaintiffs bear the burden of proving entitlement to attorney fees after the conclusion of litigation. Consequently, Plaintiffs request that the Court reject Defendant's challenge to the Complaint's attorney fee allegations and permit the litigation to proceed until this issue becomes ripe at the conclusion of the litigation.

III CONCLUSION
For all of the foregoing reasons, Plaintiffs respectfully request that this Court deny Defendant's motion to strike from the Complaint the allegations identified in its motion. Alternatively, Plaintiffs respectfully request leave to amend any causes of action that this Court may find defective. Dated: October 6,2011.
MCCUNEWRIGHT LLP

By:

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Richard D. McCune Attorneys for Plaintiffs
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Plaintiffs' Opposition to Defendants' Motion to Strike Complaint

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PROOF OF SERVICE STATE OF CALIFORNIA COUNTY OF SAN BERNARDINO I am employed in the County of San Bernardino, State of California. I am over the age of 18 years and not a party to the within action; my business address is 2068 Orange Tree Lane, Suite 216, Redlands, California, 92374. On October 6, 2011, I served the foregoing document described as PLAINTIFFS'OPPOSITION TO DEFENDANT LA SIERRA UNIVERSITY'S l\tl0TION TO STRIKE PORTIONS OF PLAINTIFFS' COMPLAINT on the interested parties through their respective attorneys of record in this action, by placing a [gJ true copy or 0 original thereof enclosed in sealed envelopes addressed as follows: Michael W. Connally, Esq. Madonna L. Devling, Esq. Sean Pais an, Esq. LEWIS BRISBOIS BISGAARD & SMITH, LLP 650 Town Center Drive, Suite 1400 Costa Mesa, CA 92626 Phone: 714.545.9200IFax: 714.850.1030 Jon Daggett, Esq. Dean Schirmer, Esq. HIROSHIMA, JACOBS, ROTH & LEWIS 1420 River Park Drive, 2nd Floor Sacramento, CA 95815 Phone: (916) 923-2223IFax: (916) 929-7335 METHOD [] Attorneys for Defendants, La Sierra University, Pacific Union Conference of Seventh-day Adventists, and North American Division Corporation of Seventh-day Adventists

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Attorneys for Defendant, Ricardo Graham

OF SERVICE PURSUANT TO CCP SECTION

1013:

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I am readily familiar with the firm's business practice for collection and processing of correspondence for mailing. Under that practice, I caused such envelopes with postage thereon fully prepaid to be placed in the United States mail at Redlands, California. (BY FACSIMILE) I caused such documents to be transmitted by facsimile to the offices of the addressee(s) to the facsimile number(s) listed above. (BY PERSONAL SERVICE) I caused such envelope(s) to be delivered by hand to the offices of the addresseers). (BY OVERNIGHT DELIVERY) I caused such document to be delivered by overnight delivery to the offices of the addresseets). I declare under penalty of perjury under the la of the State of California that the above is true an Executed on the above-referenced date a ed' ds, Car rnia.
\,.

(BY MAIL)

Proof of Service

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