Glen Kelley v. Fundomate, Inc.
2:22-cv-05814
| C.D. Cal. | Mar 31, 2025Background
- Kelley (President/COO) joined Fundomate in May 2020 under an Offer Letter and an Addendum that reduced his first six months’ pay to $93,750 with a promised true-up to $350,000 for year one, eligibility for benefits (including health insurance), remote work from Reno “as necessary,” and 5% equity vesting after 12 months.
- The Addendum and an email exchange (Sept. 17, 2020) memorialized a promised 1.5% bonus if Kelley sourced a warehouse credit facility exceeding $25 million; Kelley sourced a Revere Bank facility that closed as a $25 million committed line.
- During employment Schapiro (CEO) allegedly pressured Kelley about Jewish rituals (tefillin, bar mitzvah), discouraged remote work, refused to provide health insurance, and later issued novel performance “goals” before terminating Kelley in November 2020 (just before the salary true-up period).
- Kelley produced printed/screen photographs of the bonus emails; defendants contested authenticity and submitted a forensics search that did not locate the messages in Kelley’s account. The court admitted the printout and found the emails authentic.
- Claims tried to the bench included breach of contract, fraudulent inducement (promissory fraud), FEHA religious discrimination/harassment, failure to prevent harassment, wrongful termination, Labor Code §203 waiting-time penalties, and punitive damages.
- After trial the court found Fundomate, Inc. liable for breach of contract (unpaid PTO), Fundomate and Schapiro liable for fraudulent inducement, Fundomate liable for religious harassment and failure to prevent harassment, awarded emotional-distress and punitive damages, and awarded waiting-time penalties and prejudgment interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Alter ego liability of Fundomate, LLC | Both entities should be treated as one so Kelley can recover from LLC too | No evidence of unity of interest or inequitable result; entities distinct | Fundomate, LLC not liable; plaintiff failed to prove alter ego |
| Breach of contract — unpaid PTO, benefits, remote work, equity, bonuses | Offer Letter/Addendum created enforceable rights: PTO, benefits, remote work, true-up salary, and bonus for sourcing >$25M | Some terms vague; discretionary bonus; equity not vested; salary for first six months paid | Fundomate breached by failing to pay accrued PTO and by failing to provide promised benefits and remote-work as required, but only unpaid PTO was awarded ($5,048.08); bonus not owed because line closed at $25M (not >$25M) |
| Fraudulent inducement (false promises) | Schapiro promised remote work and health insurance to induce Kelley to join, but never intended to perform | Promises were not fraudulent or were too indefinite; plaintiff failed to prove damages | Fundomate and Schapiro liable for promissory fraud; court awarded $100,000 noneconomic damages (no economic damages) |
| FEHA religious discrimination vs harassment | Termination and compensation denial were motivated by religion | Termination was for legitimate business reasons; compensation issue not religion-motivated | No liability for religious discrimination; Fundomate liable for religious harassment (hostile work environment) and awarded $100,000 noneconomic damages |
| Failure to prevent harassment (FEHA) | Employer failed to take all reasonable steps to prevent religious harassment | Employer had defenses; steps taken were sufficient | Fundomate liable for failure to prevent harassment but no additional damages awarded (duplicative) |
| Waiting-time penalties (Cal. Lab. Code §203) | Employer willfully failed to pay wages due at termination (accrued PTO) | Employer disputed willfulness | Fundomate willfully failed to pay final wages; §203 penalty awarded (30 days) = $21,634.62; prejudgment interest on PTO $2,205.94 |
| Punitive damages | Schapiro’s and Fundomate’s conduct was oppressive/fraudulent/malicious warranting punitive damages | Contend awards should be limited or denied | Court awarded punitive damages: $200,000 (fraud) against Schapiro/Fundomate and $200,000 (malice) against Fundomate for harassment/failure to prevent; awards found proportional to net worth |
Key Cases Cited
- Mesler v. Bragg Mgmt. Co., 39 Cal.3d 290 (1985) (alter-ego doctrine and single-enterprise rule)
- Larez v. City of Los Angeles, 946 F.2d 630 (9th Cir. 1991) (limitations on treating reporters’ paraphrases as party admissions/hearsay concerns)
- City Sols., Inc. v. Clear Channel Commc'ns, Inc., 242 F. Supp. 2d 720 (N.D. Cal. 2003) (fraud damages: distinction between out-of-pocket and benefit-of-the-bargain)
- All. Mortg. Co. v. Rothwell, 10 Cal.4th 1226 (1995) (explains out-of-pocket vs benefit-of-the-bargain measures for fraud)
- Lazar v. Superior Court, 12 Cal.4th 631 (1996) (promissory fraud context and damages discussion)
- Roby v. McKesson Corp., 47 Cal.4th 686 (2009) (FEHA harassment and damages principles)
- Singh v. Southland Stone, U.S.A., Inc., 186 Cal. App. 4th 338 (2010) (waiting-time penalties and vacation pay as wages)
- Michelson v. Hamada, 29 Cal. App. 4th 1566 (1994) (guidance on punitive damages proportionality and consideration of defendant’s net worth)
- Casa Herrera, Inc. v. Beydoun, 32 Cal.4th 336 (2004) (parol evidence admissible to interpret ambiguous contract terms)