David Couch v. Morgan Stanley & Co. Inc.; Morgan Stanley Smith Barney, LLC

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DAVID COUCH,
Plaintiff-Appellant,
v.
MORGAN STANLEY & CO. INC.;
MORGAN STANLEY SMITH BARNEY,
LLC,
Defendants-Appellees.
No. 15-16749
D.C. No. 1:14 cv-00010-LJO-JLT
MEMORANDUM*
Appeal from the United States District Court
for the Eastern District of California
Lawrence J. O’Neill, Chief District Judge, Presiding
Argued and Submitted June 17, 2016
San Francisco, California
Before: SCHROEDER, TASHIMA, and OWENS, Circuit Judges.
David Couch appeals the district court’s order granting summary judgment
to Morgan Stanley & Co. Inc. and Morgan Stanley Smith Barney, LLC (together,
“Morgan Stanley”). We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
FILED
JUL 21 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.

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From September 2007 to January 2013, Couch was employed as a Morgan
Stanley Financial Advisor (“FA”), a position that Morgan Stanley treats as full-
time. Morgan Stanley employees may not engage in certain activities outside the
scope of their employment, including serving on a municipal board, without prior
written approval. Before Couch began working at Morgan Stanley, Morgan
Stanley approved Couch’s outside activity request to “run[ ] for and potentially
serv[e]” on the Kern County Board of Supervisors (the “Board”).
In 2011, Couch began campaigning to be elected to the Board. In February
2012, Couch submitted a formal outside activity request to serve on the Board,
which stated that the Supervisor position paid $100,000 a year and required 35
hours per week, 25 of them during business hours. Couch’s request triggered
concerns by Morgan Stanley’s Human Resources and Legal Departments that
Couch would be unable to devote sufficient time to his clients as an FA and that
there might be a conflict of interest between Morgan Stanley and Kern County, a
Morgan Stanley client.
Couch was elected to the Board on June 6, 2012. One month before Couch
was to be sworn in, Morgan Stanley informed Couch that he needed to choose
between the FA and Board positions. In late December 2012, Couch indicated that
he would remain as an FA with Morgan Stanley. However, less than two weeks
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later, Couch was sworn in as a Supervisor. Upon learning that Couch had taken
the elected position, Morgan Stanley reiterated that Couch could not maintain both
jobs. After Couch failed to indicate whether he would step down from either
position, Morgan Stanley terminated Couch’s employment in January 2013.
Couch sued Morgan Stanley for violations of California Labor Code §§ 98.6,
1101(a), and 1102, and for intentional and negligent interference with existing and
prospective economic relationships. Morgan Stanley moved for summary
judgment, and the district court granted the motion. Couch appealed.
We review de novo a district court’s grant of summary judgment. Lopez v.
Smith, 203 F.3d 1122, 1131 (9th Cir. 2000) (en banc). We must “determine
whether, viewing the evidence in the light most favorable to the nonmoving party,
there are any genuine issues of material fact and whether the district court correctly
applied the relevant substantive law.” Id. (citation omitted).
Sections 1101 and 1102 of the California Labor Code prohibit employers
from interfering with “the fundamental right of employees in general to engage in
political activity.” Gay Law Students Ass’n v. Pac. Tel. & Tel. Co., 595 P.2d 592,
610 (Cal. 1979) (citations omitted). The parties dispute whether an employer
violates §§ 1101(a) and 1102 by firing an employee who engages in political
activity, regardless of the employer’s motivation, or only if the employer had a
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political reason for terminating the employee.1 Where, as here, the state supreme
court has not squarely addressed the issue of state law, “a federal court is obligated
to follow the decisions of the state’s intermediate appellate courts” unless there is
“convincing evidence that the state supreme court would decide [the issue]
differently.” Ryman v. Sears, Roebuck & Co., 505 F.3d 993, 995 (9th Cir. 2007)
(citation omitted).
Two California Court of Appeal decisions have held that liability under §§
1101(a) and 1102 is triggered only if an employer fires an employee based on a
political motive. In Ali v. L.A. Focus Publ’n, 5 Cal. Rptr. 3d 791 (Ct. App. 2003),
the court reversed the grant of summary judgment to a newspaper that fired its
editor after he criticized a congresswoman on a local radio show. Id. at 793, 799.
The court explained that §§ 1101 and 1102 reflect “[t]he public policy prohibiting
employers from terminating an employee for engaging in political activity.” Id. at
1 Section 1101(titled “Political activities of employees; prohibition of
prevention or control by employer”) states in part, “No employer shall make,
adopt, or enforce any rule, regulation, or policy [f]orbidding or preventing
employees from engaging or participating in politics or from becoming candidates
for public office.” Cal. Labor Code § 1101(a). Section 1102 (titled “Coercion or
influence of political activities of employees”) states, “No employer shall coerce or
influence or attempt to coerce or influence his employees through or by means of
threat of discharge or loss of employment to adopt or follow or refrain from
adopting or following any particular course or line of political action or political
activity.” Cal. Labor Code § 1102.
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798. Because the editor alleged he was fired “not because the content of his
articles contravened the editorial policies or standards of the newspaper, but
because outside of the workplace he publicly criticized an influential public
official” the court concluded that it was error to grant summary judgment to the
employer. Id. at 799. Similarly, in an unpublished decision, the Court of Appeal
held that an employer violates §§ 1101 and 1102 only if it terminates an employee
for a political reason, as opposed to a legitimate non-political reason. Nava v.
Safeway Inc., No. F063775, 2013 WL 3961328, at *7-8, (Cal. Ct. App. Jul. 31,
2013) (unpublished) (holding that a former Safeway employee, who claimed he
was fired for objecting to Safeway’s political agenda by removing a “Gay/Lesbian
Pride Month” poster from the break room, adequately alleged violations of §§ 1101
and 1102).2
The district court thus correctly granted summary judgment to Morgan
Stanley on Couch’s claims under §§ 1101(a) and 1102. Even viewing the facts in
the light most favorable to Couch, Morgan Stanley fired Couch for a legitimate,
apolitical reason: Couch could not work as both a full-time FA and a full-time
2 We “may consider unpublished state decisions, even though such
opinions have no precedential value.” Emp’rs Ins. of Wausau v. Granite State Ins.
Co., 330 F.3d 1214, 1220 n.8 (9th Cir. 2003) (citing Nunez v. City of San Diego,
114 F.3d 935, 943 n.4 (9th Cir. 1997)).
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Supervisor. The Supervisor position was a full-time position that required 25
hours per week during business hours and another 10 hours outside of business
hours. Morgan Stanley likewise treats the FA position as a full-time position.
Couch’s observation that some FAs work from home or that no one monitored
whether Couch was in the office does not negate the fact that the FA position was
considered full-time or that Morgan Stanley did not believe Couch could devote
sufficient time to his clients while simultaneously employed as a full-time
Supervisor.
Because Morgan Stanley fired Couch for a legitimate, non-political reason,
the district court did not err in granting summary judgment to Morgan Stanley on
Couch’s claims under §§ 1101(a) and 1102. Further, because Couch’s tortious
interference claims and § 98.6 claim are based on Morgan Stanley’s alleged
violation of §§ 1101(a) and 1102, the district court also correctly granted summary
judgment to Morgan Stanley on those derivative claims.
AFFIRMED.
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