Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 PAUL A. LAPCHAK, an individual, Case No.: 24-CV-143 JLS (DDL)

12 Plaintiff, ORDER GRANTING IN PART AND 13 v. DENYING IN PART DEFENDANT’S MOTION TO DISMISS THIRD 14 PARADIGM BIOPHARMACEUTICALS AMENDED COMPLAINT (USA), INC., a Delaware corporation; and 15 DONNA SKERRETT, an individual, (ECF No. 27) 16 Defendants. 17 18 Presently before the Court is Defendant Paradigm Biopharmaceuticals (USA), Inc.’s 19 (“Paradigm”) Motion to Dismiss Plaintiff’s Third Amended Complaint’s Second and Third 20 Causes of Action (“Mot.,” ECF No. 27) and Memorandum of Points and Authorities in 21 Support Thereof (“Mem.,” ECF No. 27-1). Plaintiff Paul A. Lapchak (“Plaintiff”) filed an 22 Opposition to the Motion (“Opp’n,” ECF No. 28), to which Paradigm submitted a Reply 23 (“Reply,” ECF No. 30). The Court took this matter under submission without oral 24 argument pursuant to Civil Local Rule 7.1(d)(1) on October 23, 2025. ECF No. 29. Having 25 carefully considered the Parties’ arguments, Plaintiff’s Third Amended Complaint 26 (“TAC,” ECF No. 24), and the law, the Court GRANTS IN PART and DENIES IN 27 PART Paradigm’s Motion to Dismiss. 28 / / / 1 BACKGROUND 2 I. Procedural Background 3 Plaintiff initiated this action by filing a Complaint against Paradigm and Donna 4 Skerrett (“Skerrett”) on January 22, 2024. See ECF No. 1. Plaintiff filed his First Amended 5 Complaint on March 28, 2024, alleging four causes of action: (1) breach of contract against 6 all Defendants; (2) breach of fiduciary duties against Skerrett; (3) violation of “California 7 Whistleblower Statute” against all Defendants; and (4) violations of “California 8 Employment Law” against all Defendants. ECF No. 4 (“FAC”). Defendants then moved 9 to dismiss Plaintiff’s Second, Third, and Fourth Causes of Action for failure to state a claim 10 upon which relief can be granted. See generally ECF No. 9. 11 On February 7, 2025, the Court granted Defendants’ Motion and dismissed 12 Plaintiff’s Second, Third, and Fourth Causes of Action without prejudice and with leave to 13 amend. See ECF No. 15 (“FAC Order”) at 18–19. 14 On April 29, 2025, Plaintiff filed a Second Amended Complaint (“SAC,” ECF 15 No. 18). The SAC alleged seven causes of action: (1) breach of contract against both 16 Defendants; (2) violation of “California Whistleblower Statute” against both Defendants; 17 (3) violation of California Labor Code § 204 against Paradigm; (4) violation of California 18 Labor Code § 203 against Paradigm; (5) violation of California Labor Code § 226 against 19 Paradigm; (6) retaliation in violation of public policy against Paradigm; and (7) retaliation 20 under California Labor Code § 98.6 against Paradigm. See generally SAC. Defendants 21 then moved to dismiss the SAC’s First Cause of Action as to Skerrett and Second Cause 22 of Action as to both Defendants. See generally ECF No. 19. 23 On August 5, 2025, the Court granted Defendants’ Motion. ECF No. 23 (“SAC 24 Order”). The Court dismissed the First Cause of Action as to Skerrett without prejudice 25 and with leave to amend. See SAC Order at 12–13. The Court dismissed the Second Cause 26 of Action as to Skerrett with prejudice and without leave to amend. Id. The Court also 27 dismissed the Second Cause of Action as to Paradigm, to the extent premised on California 28 Labor Code § 1102.5(b) and (c), without prejudice and with leave to amend. Id. 1 On August 26, 2025, Plaintiff filed a Third Amended Complaint (“TAC,” ECF 2 No. 24). The TAC again alleges seven causes of action: (1) breach of contract against 3 Paradigm; (2) violation of “California Whistleblower Statute” against Paradigm; (3) 4 violation of California Labor Code § 204 against Paradigm; (4) violation of California 5 Labor Code § 203 against Paradigm; (5) violation of California Labor Code § 226 against 6 Paradigm; (6) retaliation in violation of public policy against Paradigm; and (7) retaliation 7 under California Labor Code § 98.6 against Paradigm. See generally TAC. 8 On September 23, 2025, Paradigm filed the present Motion to Dismiss the TAC’s 9 Second Cause of Action, to the extent premised on California Labor Code § 1102.5(b) and 10 (c), and Third Cause of Action for violation of California Labor Code § 204. See Mot. On 11 October 16, 2025, Plaintiff filed an Opposition. See Opp’n. On October 23, 2025, 12 Paradigm filed its Reply. See Reply. 13 II. Third Amended Complaint: Plaintiff’s Allegations 14 Plaintiff Paul Lapchak, a San Diego resident, is a renowned scientist with a Ph.D. in 15 Pharmacology. TAC ¶¶ 1, 8. Plaintiff was hired by Paradigm, a Delaware corporation that 16 develops and sells drug formulas, to be its executive, holding the title of “Global Head of 17 Translational Development,” on or about October 7, 2022. Id. ¶¶ 2, 9, 11. Plaintiff and 18 Paradigm entered into a contract, the “Employment Agreement,” which required Paradigm 19 to provide certain financial compensation and Paradigm shares to Plaintiff as part of the 20 employment inducement. Id. ¶¶ 35, 36. Plaintiff was an executive for approximately 12 21 months, and his last performance evaluation indicated he “exceeded on all measures of 22 performance.” Id. ¶ 10. 23 Paradigm develops pentosan polysulfate sodium (“PPS”) under the name “Zilosul®” 24 to treat osteoarthritis. Id. ¶ 11. Plaintiff alleges Paradigm’s statements show Zilosul was 25 intended for commercial use, and not research use. Id. Plaintiff further alleges that because 26 Zilosul had not previously been sold for this use, it was a “new drug” subject to 21 U.S.C. 27 § 355. Id. ¶ 14. Plaintiff cites § 355(a), § 355(b)(1)(A)(i), and § 355(e), alleging those 28 provisions require approval before a new drug is introduced into interstate commerce, 1 reports showing whether the drug is safe for use, and withdrawal or suspension of approval 2 where scientific data show the drug is unsafe. Id. ¶¶ 14, 26. 3 On or about October 2, 2023, via Paradigm company email, Plaintiff reported that 4 Zilosul exhibited high levels of drug toxicity to Michael Sheehan, Michael Imperiale, Kate 5 Larsen, Karla Knower, and Skerrett, all Paradigm employees and executives. Id. ¶ 12. 6 Plaintiff alleges this email placed Paradigm on notice of unsafe levels of drug toxicity 7 beyond No Observed Adverse Effect Levels (“NOAEL”). Id. Plaintiff further alleges 8 Michael Imperiale, Paradigm’s Global Head of Drug Safety and MPS, responded on 9 October 4, 2023, that the NOAEL was “concerning” and asked Plaintiff to set up a meeting 10 to discuss the data and next steps. Id. ¶ 13. Plaintiff alleges he was concerned Zilosul 11 could not be used at a dose high enough to effectuate its intended use in humans and, for 12 that reason, the drug failed to comply with § 355’s safety requirements for new drugs. Id. 13 ¶ 17. 14 On or about October 3, 2023, Paradigm sent Plaintiff a new employment agreement 15 that had not been negotiated with him, and which “materially altered several aspects of the 16 parties’ agreed-upon contractual relationship,” which Plaintiff alleges was to his financial 17 detriment. Id. ¶ 18. On or about October 10, 2023, Plaintiff protested the changes and 18 stated he would not enter into the new agreement. Id. ¶ 19. Plaintiff alleges he also 19 informed Skerrett, whom he identifies as his supervisor and Paradigm’s CMO and Board 20 member, that Paradigm had not paid him the shares he was owed and asked Skerrett to 21 share his concerns with the Board. Id. ¶¶ 3, 19. 22 Plaintiff is a shareholder in Paradigm and alleges that shares promised to him have 23 not been timely provided, as set forth in his Employment Agreement. Id. ¶¶ 19, 22, 24. 24 For example, his “sign-on bonus” of 25,000 shares was due by October 24, 2022, and was 25 not timely provided. Id. ¶ 19. His one-year anniversary 100,000 shares were due October 26 24, 2023, and were also not timely provided. Id. ¶ 22. On October 29, 2023, Paradigm 27 issued a “trading halt” and a “rights offer” or “entitlement offer” to its employees, and 28 Plaintiff timely exercised his entitlement/rights offer as to the missing 125,000 shares of 1 Paradigm stock. Id. ¶ 21. Plaintiff alleges that he has not received the 125,000 shares to 2 which he is entitled, nor other shares to which he alleges he is entitled under a capital raise. 3 Id. ¶¶ 22, 24. 4 Plaintiff further alleges Paradigm failed to pay 401(k) contributions he was owed 5 and reduced his PTO bank without authorization. Id. ¶¶ 40, 43. On October 29, 2023, 6 Plaintiff wrote to Abby MacNish, Paradigm’s CFO and Company Secretary, and copied 7 People and Culture, an internal Paradigm group that reviewed his complaints, about 8 unissued shares, unpaid bonuses, and proposed PTO changes. Id. ¶ 20. On November 1, 9 2023, MacNish wrote to Plaintiff that Paradigm had received Plaintiff’s communication 10 from Skerrett and that People and Culture was reviewing the matter. Id. ¶ 23. 11 On November 1, 2023, at a companywide team meeting, Plaintiff “presented an 12 overview of drug toxicity of Zilosul.” Id. ¶ 25. Then, on November 17, 2023, Plaintiff 13 “presented a PowerPoint deck to Paradigm’s safety officer, director of clinical operations, 14 and head of osteoarthritis summarizing significant multi-organ toxicity of Paradigm’s drug 15 product, PPS or Zilosul.” Id. Plaintiff proceeded to inform the regulatory department of 16 the multi-organ toxicity of the same product. Id. Plaintiff alleges these actions were 17 consistent with his job duties and “exhibit his refusal to continue to push forward Zilosul 18 for its intended use.” Id. 19 Plaintiff alleges that, in retaliation for his actions, Paradigm disabled his access to 20 the workplace computers on November 17, 2023. Id. ¶ 28. After Plaintiff protested, 21 Paradigm purportedly “falsely claimed” Plaintiff was still an employee. Id. ¶ 29. Plaintiff 22 alleges he disclosed all toxicities and submitted related toxicity documents to the Center 23 for Drug Evaluation and Research at the Food and Drug Administration (CDER-FDA) on 24 December 1, 2023, and later disclosed toxicity data and documents to the Therapeutic 25 Goods Administration (TGA) and European Medicines Agency (EMA). Id. ¶ 30. Plaintiff 26 alleges Paradigm formally terminated him on or about January 12, 2024. Id. ¶ 31. 27 / / / 28 / / / 1 LEGAL STANDARD 2 Rule 12(b)(6) permits a party to raise by motion the defense that the complaint 3 “fail[s] to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). The 4 Court evaluates whether a complaint states a cognizable legal theory and sufficient facts in 5 light of Federal Rule of Civil Procedure 8(a), which requires a “short and plain statement 6 of the claim showing that the pleader is entitled to relief.” “[A] plaintiff’s obligation to 7 provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and 8 conclusions, and a formulaic recitation of the elements of a cause of action will not do.” 9 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration in original). 10 To survive a 12(b)(6) motion, then, “a complaint must contain sufficient factual 11 matter . . . to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 12 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). A claim is facially plausible 13 when the facts pled “allow[] the court to draw the reasonable inference that the defendant 14 is liable for the misconduct alleged.” Id. “[W]here the well-pleaded facts do not permit 15 the court to infer more than the mere possibility of misconduct, the complaint has alleged— 16 but it has not ‘show[n]’—‘that the pleader is entitled to relief.’” Id. at 679 (second 17 alteration in original) (quoting Fed. R. Civ. P. 8(a)(2)). 18 When reviewing a motion to dismiss under Rule 12(b)(6), the Court applies its 19 “judicial experience and common sense.” Id. (citation omitted). Further, “a district court 20 must accept as true all facts alleged in the complaint” and “draw all reasonable inferences 21 in favor of the plaintiff.” Wi-LAN Inc. v. LG Elecs., Inc., 382 F. Supp. 3d 1012, 1020 (S.D. 22 Cal. 2019) (citing Retail Prop. Tr. v. United Bhd. of Carpenters & Joiners of Am., 768 F.3d 23 938, 945 (9th Cir. 2014)). Where a complaint does not survive 12(b)(6) review, the Court 24 will grant leave to amend unless it determines that no modified contention “consistent with 25 the challenged pleading . . . could cure the deficiency.” DeSoto v. Yellow Freight Sys., 26 Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well 27 Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). 28 / / / 1 ANALYSIS 2 Paradigm argues Plaintiff’s Second and Third Causes of Action fail to state claims 3 upon which relief can be granted and should be dismissed with prejudice pursuant to 4 Federal Rule of Civil Procedural 12(b)(6). See Mem. at 1. The Court addresses each 5 argument in turn. 6 I. Second Cause of Action 7 Plaintiff’s Second Cause of Action alleges Paradigm violated the California 8 Whistleblower Statute, specifically California Labor Code Sections 1102.5(b) and 9 1102.5(c). TAC ¶¶ 49–64. Paradigm contends Plaintiff still has not pled sufficient facts 10 to state a claim under either subsection, despite the Court’s prior orders granting leave to 11 amend. See Mem. at 4–7. The Court will take each argument in turn. 12 A. Alleged Violations of Section 1102.5(b) 13 “[T]o plead a prima facie case of retaliation [under Section 1102.5(b)], a plaintiff 14 must show that []he engaged in a protected activity, h[is] employer subjected h[im] to an 15 adverse employment action, and there is a causal link between the protected action and the 16 adverse action.” Tam v. Qualcomm, Inc., 300 F. Supp. 3d 1130, 1148 (S.D. Cal. 2018) 17 (citing Patten v. Grant Joint Union High Sch. Dist., 134 Cal. App. 4th 1378, 1384 (2005)). 18 The employee’s belief that the employer’s conduct was unlawful “may be mistaken,” but 19 it “must be reasonable.” Id. (citing Carter v. Escondido Union High Sch. Dist., 148 Cal. 20 App. 4th 922, 933–34 (2007)). 21 To satisfy the protected-activity element, however, a plaintiff cannot rest on a 22 generalized invocation of an entire statutory scheme; he must identify the specific statute, 23 rule, or regulation he reasonably believed the employer was violating. See La v. San Mateo 24 Cnty. Transit Dist., No. 14-CV-01768-WHO, 2014 WL 4632224, at *6 (N.D. Cal. Sept. 25 16, 2014) (holding the plaintiff’s “citation to a whole statutory framework” did not properly 26 state a claim under Section 1102.5); Clevland v. Ludwing Inst. Cancer Rsch. Ltd., No. 21- 27 CV-871 JM (JLB), 2022 WL 80265, at *4 (S.D. Cal. Jan. 7, 2022) (dismissing a claim 28 under Section 1102.5 because plaintiff’s belief that the defendant violated “some provision 1 of 2 CFR Part 200” failed to give the defendant fair notice); Chan v. Canadian Standards 2 Ass’n, No. SACV 19-2162-JVS (JDE), 2020 WL 2496174, at *2 (C.D. Cal. Mar. 16, 2020) 3 (“A plaintiff must be able to identify a specific state or federal statute, rule, or regulation 4 which he believed was being violated.” (emphasis added)). 5 Paradigm contends Plaintiff’s Section 1102.5(b) claim remains deficient for two 6 reasons. First, Paradigm argues Plaintiff still relies on an entire statutory framework rather 7 than a specific statute, rule, or regulation he reasonably believed Paradigm violated. 8 Second, Paradigm argues Plaintiff still fails to plead causation because the TAC obscures 9 both to whom Plaintiff reported misconduct and who took the adverse action. Mem. at 5– 10 6. The Court addresses each in turn. 11 1. Specific Statutory Predicate 12 In the SAC Order, the Court dismissed Plaintiff’s Section 1102.5(b) claim, to the 13 extent it was premised on his “drug-toxicity” disclosures, because Plaintiff referred only 14 generally to the Food, Drug, and Cosmetic Act (“FDCA”), 21 U.S.C. § 301 et seq., and 15 alleged in conclusory terms that a drug must be safe and effective before marketing. SAC 16 Order at 8–9. Those allegations, the Court held, were too general to put Paradigm on notice 17 of the violation Plaintiff believed had occurred. Id. 18 The TAC cures that defect. Plaintiff now identifies specific provisions of the FDCA, 19 21 U.S.C. §§ 355(a), 355(b)(1)(A)(i), and 355(e), and ties them to a factual allegation: that 20 Zilosul, a “new drug” not previously sold for its intended use in humans, could not be 21 administered at a dose high enough to be safe for its intended treatment of osteoarthritis, 22 such that “the drug failed to comply with 21 U.S.C. § 355.” TAC ¶¶ 14, 17, 26.1 Unlike 23 the SAC’s undifferentiated reference to the FDCA, these allegations identify the statute 24 and subsections Plaintiff believed Paradigm’s conduct implicated and connected them to 25 the toxicity Plaintiff disclosed. These allegations are sufficiently specific at the pleading 26 27 1 The Court considers the incorporated allegations identifying 21 U.S.C. §§ 355(a), 355(b)(1)(A)(i), and 28 355(e), because the Second Cause of Action incorporates the foregoing paragraphs as permitted by Rule 1 stage. 2 Paradigm’s remaining objection goes to the merits of Plaintiff’s belief, not its 3 sufficiency. Paradigm argues 21 U.S.C. § 355 governs the approval and introduction of 4 “New Drugs” into interstate commerce, and that Plaintiff never alleges he reported an 5 unlawful sale or marketing of Zilosul. Reply at 4. But Section 1102.5(b) does not require 6 Plaintiff to plead an actual statutory violation; rather, Plaintiff must plausibly allege that 7 he disclosed information he reasonably believed revealed a violation of, or noncompliance 8 with, a federal statute, rule, or regulation. “Under the statute, the relevant inquiry is not 9 whether the conduct ‘actually violated’ any specific statute or regulation, but whether the 10 plaintiff ‘reasonably believed that there was a violation of a statute, rule, or regulation’ at 11 the time it was reported.” Killgore v. SpecPro Pro. Servs., LLC, 51 F. 4th 973, 988 (9th 12 Cir. 2022) (quoting Nejadian v. Cnty. of L.A., 40 Cal. App. 5th 703, 719 (2019)); Tam, 300 13 F. Supp. 3d at 1148 (“The employee must have an actual belief that the employer’s actions 14 were unlawful and the employee’s belief, even if mistaken, must be reasonable.” (citing 15 Carter, 148 Cal. App. 4th at 933–34)). 16 The Court finds that Plaintiff has plausibly alleged a reasonable belief that Paradigm 17 acted unlawfully in pushing forward a new drug too toxic for trials to continue, and that 18 continuing further trials of the “demonstrably unsafe” drug would itself be unlawful. TAC 19 ¶ 57. Paradigm’s own conduct supports the reasonableness of Plaintiff’s belief, as 20 Paradigm described the toxicity findings as “concerning” and required Plaintiff to present 21 the findings to Paradigm’s Global Head of Drug Safety. TAC, Ex. 3. Because pleading a 22 Section 1102.5(b) claim turns on the reasonableness of Plaintiff’s belief rather than an 23 actual FDCA violation, Paradigm’s argument on this point does not warrant dismissal. 24 2. Causal Link 25 The Court previously dismissed Plaintiff’s Section 1102.5(b) claim in part because 26 Plaintiff failed to identify to whom he complained or to allege that “the individuals 27 responsible for terminating his employment had any reason to know” of his reports of 28 protected activity. SAC Order at 10. “Plaintiff must plead a causal link between [his] 1 disclosure of what [he] had reasonable cause to believe constituted Defendants’ illegal 2 conduct, and Defendants’ adverse actions.” Dowell v. Contra Costa Cnty., 928 F. Supp. 3 2d 1137, 1156 (N.D. Cal. 2013). “Causation may be inferred from circumstantial evidence, 4 including ‘the employer’s knowledge that the [employee] engaged in protected activities 5 and the proximity in time between the protected action and allegedly retaliatory 6 employment decision.’” Id. (quoting Morgan v. Regents of Univ. of Cal., 88 Cal. App. 4th 7 52, 69 (2000)). “The employer’s awareness is an essential component of the causal link.” 8 Id. 9 The TAC now alleges facts supporting Paradigm’s awareness of Plaintiff’s reports. 10 Plaintiff alleges that, on October 2, 2023, he reported Zilosul’s toxicity by company email 11 to five named Paradigm employees and executives, Michael Sheehan, Michael Imperiale, 12 Kate Larsen, Karla Knower, and Donna Skerrett. TAC ¶ 12. Plaintiff further alleges he 13 raised toxicity concerns at a companywide meeting on November 1, 2023, and at a 14 presentation before Paradigm’s safety officer, director of clinical operations, and head of 15 osteoarthritis on November 17, 2023. Id. ¶¶ 25, 58. As to his compensation-related 16 complaints, Plaintiff alleges he wrote to Paradigm’s CFO and Company Secretary, Abby 17 MacNish, on October 29, 2023, and that MacNish acknowledged in writing that Paradigm 18 received his complaints. Id. ¶ 20, 23. 19 The Court acknowledges that the TAC does not identify the specific individual who 20 disabled Plaintiff’s computer access or made the final termination decision, and that its 21 interchangeable use of “Defendant” and “Paradigm” is not a model of clarity. But the 22 claim is asserted against Paradigm, Plaintiff’s employer, and the knowledge of Plaintiff’s 23 supervisors and managerial employees is imputed to Paradigm for purposes of the casual- 24 link inquiry. See Wysinger v. Auto. Club of S. Cal., 157 Cal. App. 4th 413, 420–21 (2007) 25 (holding that an employer “generally can be held liable for the retaliatory actions of its 26 supervisors” and that a supervisor’s motive is imputed to the corporate employer) (citing 27 Reeves v. Safeway Stores, Inc., 121 Cal. App. 4th 95, 109 (2004)). At the pleading stage, 28 that knowledge, coupled with retaliatory timing, suffices to allege a causal link. See 1 Hawkins v. City of Los Angeles, 40 Cal. App. 5th 384, 394 (2019) (“Circumstantial 2 evidence such as proximity in time between protected activity and alleged retaliation may 3 establish a causal link.”) (citing Morgan, Cal. App. 4th at 69). 4 The TAC alleges such timing: Paradigm purportedly disabled Plaintiff’s computer 5 access on November 17, 2023, the same day as his toxicity presentation, and formally 6 terminated Plaintiff on January 12, 2024. Id. ¶¶ 28, 31. Plaintiff further alleges he had 7 recently received a positive performance review and an offer of a new employment 8 agreement. Id. ¶ 62. Taken together, Plaintiff’s allegations of protected reports followed 9 closely by disabling his workplace computer access, and within roughly two months by his 10 formal termination, sufficiently plead a causal link. TAC ¶¶ 56, 58, 59, 60; see Hawkins, 11 40 Cal. App. 5th at 394 (affirming Section 1102.5 verdict where a few months separated 12 plaintiffs’ protected activity from their terminations and a “pattern of conduct consistent 13 with a retaliatory intent” reinforced the causal link). 14 Accordingly, the Court DENIES Paradigm’s Motion to Dismiss Plaintiff’s Second 15 Cause of Action to the extent premised on Section 1102.5(b). 16 B. Alleged Violations of Section 1102.5(c) 17 Section 1102.5(c) states that an employer “shall not retaliate against an employee 18 for refusing to participate in an activity that would result in a violation of state or federal 19 statute, or a violation of or noncompliance with a local, state, or federal rule or regulation.” 20 “As with Section 1102.5(b), to establish a prima facie case under Section 1102.5(c), a 21 plaintiff must offer proof that: (1) he engaged in a protected activity[;] (2) the defendant 22 subjected him to adverse employment actions; and (3) that there is a causal link between 23 the two.” Tobin v. City & Cnty. S.F. Police Dep’t, No. 13-CV -1504-MEJ, 2015 WL 24 1885632, at *5 (N.D. Cal. Apr. 24, 2015). 25 The Court previously dismissed Plaintiff’s 1102.5(c) claim because Plaintiff failed 26 to allege who asked him to engage in unlawful conduct, when or how he refused, or how 27 his reports of drug toxicity amounted to a refusal to participate in unlawful activity. SAC 28 Order at 12. Paradigm argues the TAC suffers from the same deficiency. Mem. at 6–7; 1 Reply at 6. Plaintiff responds that the TAC now alleges Paradigm “was asking [Plaintiff] 2 to violate his ethical duties and engage in unlawful activity by continuing to push forward 3 with drug trials of a drug that was demonstrably unsafe.” Opp’n at 8 (citing TAC ¶ 57). 4 The Court agrees with Paradigm that these allegations remain insufficient to show 5 Plaintiff refused to participate in any allegedly unlawful conduct. The TAC does not 6 supply the elements the SAC Order found missing: who asked Plaintiff to continue the 7 allegedly unlawful conduct, or when or how he affirmatively refused to engage in such 8 conduct. SAC Order at 12. Complaints and reports of allegedly unlawful activity, standing 9 alone, do not establish a refusal to participate in such activity. See, e.g., Tobin, 2015 WL 10 1885632, at *5 (“[Plaintiff] merely asserts that he complained about Defendants’ practices 11 and questioned whether they were legal. Without more, Plaintiff’s bare assertion that he 12 refused to further Defendants’ ‘illegal policies’ does not place him within the class of 13 persons that Section 1102.5(c) is designed to protect.”); see also Fernandes v. TW Telecom 14 Holdings Inc., No. 2:13-CV -02221-GEB-CKD, 2013 WL 6583970, at *1, 3–4 (E.D. Cal. 15 Dec. 16, 2013) (dismissing Section 1102.5(c) claim where plaintiff “refus[ed] to ignore” 16 safety and compliance violations, finding that this allegation did not evince refusal to 17 participate in illegal activity); cf. Ferretti v. Pfizer Inc., 855 F. Supp. 2d 1017, 1025–27 18 (N.D. Cal. 2012) (denying dismissal of Section 1102.5(c) claim where plaintiff indicated 19 she would not conduct Phase III of her employer’s product studies and requested a 20 transfer). 21 Accordingly, the Court GRANTS Paradigm’s Motion to Dismiss Plaintiff’s Section 22 1102.5(c) claim and DISMISSES such claim WITHOUT PREJUDICE and WITH 23 LEAVE TO AMEND.2 24 / / / 25 / / / 26 27 28 2 The Court reaches the same conclusion as to curability. SAC Order at 12. Plaintiff is cautioned that 1 II. Third Cause of Action 2 Plaintiff’s Third Cause of Action alleges Paradigm violated California Labor Code 3 Section 204 by failing to timely pay wages. TAC ¶¶ 65–77. Paradigm contends Plaintiff 4 cannot raise a legally cognizable cause of action for untimely payment of wages pursuant 5 to Section 204, as there is no private right of action. Mem. at 7–8. 6 Under California law, “a private right of action exists only if the language of the 7 statute or its legislative history clearly indicates the Legislature intended to create such a 8 right.” Johnson v. GMRI, Inc., No. 1:07-CV-00283 OWW SMS, 2007 WL 963209, at *4 9 (E.D. Cal. Mar. 29, 2007) (citing Vikco Ins. Servs., Inc. v. Ohio Indem. Co., 70 Cal. App. 10 4th 55, 62 (1999)). Section 204 establishes timing requirements for wage payments but 11 contains no language creating a private right of action for violations of those timing 12 requirements standing alone. See Countrywide Fin. Corp. v. Bundy, 187 Cal. App. 4th 234, 13 255 (2010). The enforcement mechanism for Section 204 violations appears in Labor Code 14 Section 210, which provides civil penalties for failures to pay wages as required by Section 15 204. Cal. Lab. Code § 210. When an employee seeks to enforce a Section 204 violation, 16 the proper avenue is through an action for unpaid wages or penalties otherwise authorized 17 by statute, not a standalone claim for violation of the timing statute itself. See Johnson v. 18 Hewlett-Packard Co., 809 F. Supp. 2d 1114, 1136 (N.D. Cal. 2011). 19 Plaintiff’s argument that unpaid wages are necessarily untimely does not cure the 20 threshold defect. Opp’n at 9–11. Plaintiff’s Third Cause of Action is pled directly under 21 Section 204. Because Section 204 does not provide a standalone private right of action, 22 Plaintiff fails to state a cognizable claim under that provision. The Court need not reach 23 Paradigm’s alternative arguments that Plaintiff alleges nonpayment rather than untimely 24 payment or that the alleged 401(k) contributions, PTO, and shares are not wages under 25 Section 204. Claims seeking recovery of unpaid wages must proceed, if at all, through a 26 different statutory or contractual vehicle. See Johnson, 809 F. Supp. 2d at 1136 (“The 27 remedy for violation of Section 204 is found in Section 210, which provides that ‘every 28 person who fails to pay the wages of each employee as provided in Section 204 . . . shall 1 be subject to a civil penalty.’”); Clevland, 2022 WL 80265, at *21–23. Because no 2 additional facts can create a private right of action under Section 204, amendment would 3 be futile. 4 Accordingly, the Court GRANTS Paradigm’s Motion to Dismiss Plaintiff’s Third 5 Cause of Action and DISMISSES such claim WITH PREJUDICE and WITHOUT 6 LEAVE TO AMEND. 7 CONCLUSION 8 In light of the foregoing, the Court GRANTS IN PART and DENIES IN PART 9 Paradigm’s Motion to Dismiss Plaintiff’s Third Amended Complaint (ECF No. 27) as 10 follows: 11 1. The Court DENIES Paradigm’s Motion to Dismiss Plaintiff’s Second Cause of 12 Action to the extent premised on California Labor Code Section 1102.5(b). 13 2. The Court GRANTS Paradigm’s Motion to Dismiss Plaintiff’s Second Cause of 14 Action to the extent premised on California Labor Code Section 11025(c). The 15 Section 1102.5(c) claim is DISMISSED WITHOUT PREJUDICE and WITH 16 LEAVE TO AMEND. 17 3. The Court GRANTS Paradigm’s Motion to Dismiss Plaintiff’s Third Cause of 18 Action for violation of California Labor Code Section 204. The Third Cause of 19 Action is DISMISSED WITH PREJUDICE and WITHOUT LEAVE TO 20 AMEND. 21 Within twenty-one (21) days of this Order, Plaintiff either (1) SHALL FILE an 22 amended complaint, or (2) SHALL INDICATE to the Court that it will not do so. Failure 23 to timely select either of the above options may result in the dismissal of all claims for 24 failure to comply with a court order pursuant to Federal Rule of Civil Procedure 41(b). See 25 Applied Underwriters, Inc. v. Lichtenegger, 913 F.3d 884, 890–91 (9th Cir. 2019) 26 (explaining courts may dismiss an action under Rule 41(b) when a plaintiff fails to comply 27 with a court order requiring the filing of an amended complaint). 28 / / / 1 Any amended complaint must be complete in and of itself without reference to 2 || Plaintiff's TAC; claims not realleged in the amended complaint will be considered waived. 3 || See S.D. Cal. CivLR 15.1; Lacey v. Maricopa Cnty., 693 F.3d 896, 928 (9th Cir. 2012) 4 || (noting claims dismissed with leave to amend that are not realleged in an amended pleading 5 be considered waived). 6 IT IS SO ORDERED. 7 ||Dated: July 24, 2026 . tt f te 8 on. Janis L. Sammartino 9 United States District Judge 10 1] 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28