Thomas Atencio, an adult individual v. TUNECORE, INC., a corporation

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
THOMAS ATENCIO, an adult individual;
GIAN CATERINE, an adult individual, also
known as John Cate,
Plaintiffs-Appellants,
v.
TUNECORE, INC., a corporation,
Defendant-Appellee.
No. 19-55814
D.C. No.
2:16-cv-01925-DMG-MRW
MEMORANDUM*
THOMAS ATENCIO, an adult individual;
GIAN CATERINE, an adult individual, also
known as John Cate,
Plaintiffs-Appellees,
v.
TUNECORE, INC., a corporation,
Defendant-Appellant.
No. 19-55901
D.C. No.
2:16-cv-01925-DMG-MRW
Appeal from the United States District Court
for the Central District of California
Dolly M. Gee, District Judge, Presiding
Argued and Submitted November 16, 2020
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
FILED
JAN 12 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

-- 1 of 5 --

2
Pasadena, California
Before: RAWLINSON and HUNSAKER, Circuit Judges, and ENGLAND,**
Senior District Judge.
Thomas Atencio and Gian Caterine (Plaintiffs), founders of TuneCore, Inc.,
received stock-option agreements in exchange for their services to TuneCore. After
unsuccessfully exercising their options, Plaintiffs sued TuneCore alleging it
breached the stock-option agreements and was illegally withholding Plaintiffs’
wages by not allowing them to exercise their options. Following trial, the jury
awarded Plaintiffs the value of their stock options. Both Plaintiffs and TuneCore
appealed. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
Wages. We review de novo the district court’s dismissal of Plaintiffs’ wage
claims under Federal Rule of Civil Procedure 12(b)(6). Curtis v. Irwin Indus., Inc.,
913 F.3d 1146, 1151 (9th Cir. 2019). Plaintiffs argue that under the law of the states
where they reside, California and Massachusetts, the stock-option agreements are
wages.1 The stock-option agreements, however, have New York choice-of-law
** The Honorable Morrison C. England, Jr., United States Senior District
Judge for the Eastern District of California, sitting by designation.
1 While TuneCore arguably forfeited the right to assert that New York law was
applicable under a choice-of-law analysis by never raising the issue to the district
court, that forfeiture was waived by Plaintiffs on appeal. Norwood v. Vance, 591
F.3d 1062, 1068 (9th Cir. 2010) (holding that a party can “waive waiver” by not
raising it on appeal).

-- 2 of 5 --

3
provisions. In this diversity case, we use California’s choice-of-law rules to
determine what law applies. Mortensen v. Bresnan Commc’ns, LLC, 722 F.3d 1151,
1161 (9th Cir. 2013).
Under California law, the New York choice-of-law provisions control unless
Plaintiffs show that application of New York law will be contrary to a fundamental
policy of either California or Massachusetts and that those states have a greater
material interest in the matter than New York. See Wash. Mut. Bank, FA v. Superior
Ct., 24 Cal. 4th 906, 916 (2001). Although California and Massachusetts may have
a fundamental policy to regulate labor that occurs within their borders, Plaintiffs
failed to show that either of these jurisdictions have a greater material interest than
New York in this case. See id. at 917 (explaining the burden is on the party
challenging the contractual choice-of-law provision). Consequently, New York law
governs Plaintiffs’ claims, and, as the parties concede, stock options are not “wages”
under New York law. Gilman v. Marsh & McLennan Cos., 868 F. Supp. 2d 118, 135
(S.D.N.Y. 2012); Guiry v. Goldman, Sachs & Co., 814 N.Y.S.2d 617, 618–19 (N.Y.
App. Div. 2006).
Judicial Admission. In their operative complaint, Plaintiffs alleged that
Atencio was entitled to $49,103.36 in damages and Caterine was entitled to
$196,816.68. Plaintiffs’ “[f]actual assertions in [their] pleadings . . . are considered
judicial admissions conclusively binding on” them unless they amend their

-- 3 of 5 --

4
pleadings. Am. Title Ins. v. Lacelaw Corp., 861 F.2d 224, 226 (9th Cir. 1988). The
district court permissibly concluded that Plaintiffs did not diligently seek leave to
amend their complaint. In re W. States Wholesale Nat. Gas Antitrust Litig., 715 F.3d
716, 737 (9th Cir. 2013) (noting that Federal Rule of Civil Procedure 16’s “good
cause” requirement primarily considers a party’s diligence). Therefore, Plaintiffs are
bound by their original damages allegations. Id.
Summary Judgment. TuneCore contends that the district court erred in
denying its motion for summary judgment on the breach-of-contract and quantum-
meruit claims. This argument “fails at the outset” because these claims were
presented to and decided by the jury at trial. Cheffins v. Stewart, 825 F.3d 588, 596–
97 (9th Cir. 2016) (citation omitted).
Waiver. We review de novo the district court’s denial of TuneCore’s motion
for judgment as a matter of law against the jury’s finding that Caterine did not waive
his stock-option rights. Harper v. City of Los Angeles, 533 F.3d 1010, 1021 (9th Cir.
2008). Construing the evidence in the light most favorable to Caterine, id., the
district court did not err because none of Caterine’s statements in his emails to
TuneCore evidenced a clear waiver of his option rights, see Fundamental Portfolio
Advisors, Inc. v. Tocqueville Asset Mgmt., L.P., 817 N.Y.S.2d 606, 611 (N.Y. 2006),
and the jury’s conclusion was not unreasonable, Zhang v. Am. Gem Seafoods, Inc.,

-- 4 of 5 --

5
339 F.3d 1020, 1038 (9th Cir. 2003) (“We must accept any reasonable interpretation
of the jury’s actions.”).
Jury Instruction. Finally, TuneCore seeks remand for a new trial and argues
the trial court should be directed to provide a different jury instruction regarding
waiver. Because a new trial is not warranted, we need not reach this jury instruction
argument. Regardless, it was not reversible error for the district court to reject
TuneCore’s requested waiver instruction because the given instruction fairly and
correctly covered the elements of waiver. Dang v. Cross, 422 F.3d 800, 805 (9th Cir.
2005) (“In evaluating jury instructions, prejudicial error results when, looking to the
instructions as a whole, the substance of the applicable law was [not] fairly and
correctly covered.” (modification in original) (citation omitted)).
AFFIRMED.

-- 5 of 5 --