Marcie Hamilton v. JUUL Labs, Inc., 3:20-cv-03710

Background

Plaintiff Marcie Hamilton (and co-plaintiff Jim Isaacson) are former Juul employees who bring a PAGA action on behalf of >3,000 aggrieved employees alleging Juul’s confidentiality and communications rules unlawfully suppress protected speech and whistleblowing.
Three employer documents are central: a broad NDA (with non-disparagement and a covenant to sign a Termination Certificate), a Termination Certificate requiring lifelong confidentiality, and Severance/Release Agreements conditioning continued pay/vesting on signing releases.
Plaintiffs allege Juul enforced an External Communications Policy (ECP) and a "culture of concealment": training employees to avoid or conceal communications with regulators, restricting press/social media/political engagement, and retaliating against internal disclosures.
Procedural posture: after an initial 12(b)(6) ruling applying Edwards v. Arthur Andersen, Plaintiffs amended their complaint adding claims under multiple Labor Code provisions (including §§1101–1102, 1102.5, 232, 232.5, 432.5, 96(k), 98.6). Juul moved to dismiss and to strike portions of the FAC.
Court outcome: denied dismissal as to Claims 1 (§1102.5), 2 (§§96(k), 98.6), 4 (§232.5), 5–6 (§432.5 and UCL predicate), and 7 (§§1101,1102); granted dismissal with prejudice of Claim 3 (§§232,1197.5(k)); denied motion to strike concealment allegations but struck certain attorney-revision allegations.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether NDA and related documents unlawfully bar whistleblowing (Cal. Lab. Code §1102.5)	NDA and Term. Cert. (and Juul practice) prohibit disclosures to regulators or internal investigators and were used to retaliate	Edwards presumption: contracts should be read to incorporate statutory protections; NDA can be construed narrowly to avoid illegality	Plaintiffs plausibly rebut Edwards with factual allegations of a "culture of concealment"; §1102.5 claim survives dismissal
Whether ECP/policies unlawfully restrict political activity and lawful nonworking conduct (Cal. Lab. Code §§1101,1102,96(k),98.6)	ECP treats virtually any company-related communication as a "Company Communication," requires prior approval, and is applied to personal/out-of-work speech about causes/candidates	Juul disputes existence/scope of an unlawful company policy and cites carveouts; argues limited application	Court finds ECP + alleged practices plausibly restrain political activity and nonworking lawful conduct; claims survive
Whether handbook/policies bar wage discussions (Cal. Lab. Code §§232,1197.5(k))	Handbook language made wages/policies confidential, so employees were barred from discussing wages	Juul shows the version with that language predates the PAGA limitations period and was not in the produced handbook	Court holds wage-disclosure claim time-barred and DISMISSES Claim 3 with prejudice
Whether Juul’s policies/practices unlawfully punish internal reports about working conditions (Cal. Lab. Code §232.5)	Plaintiffs made internal disclosures to supervisors and suffered adverse action; NDA/ECP used to silence them	Juul relies on Edwards and challenges sufficiency	Court finds factual allegations plausibly show retaliation for internal reports and that Edwards can be rebutted; §232.5 claim survives
Motion to strike: concealment and counsel-revision allegations	Plaintiffs allege Juul withheld handbook/discovery and concealed evidence; also allege counsel proposed severance revisions	Juul moves to strike as immaterial or scandalous	Court DENIES strike of concealment/discovery allegations; GRANTS strike of counsel-revision allegations

Key Cases Cited

Edwards v. Arthur Andersen LLP, 44 Cal.4th 937 (Cal. 2008) (contracts ordinarily construed to preserve statutory protections; but factual allegations may rebut savings construction)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (Iqbal pleading standard on plausibility)
Grinzi v. San Diego Hospice Corp., 120 Cal. App. 4th 72 (Cal. Ct. App. 2004) (limits on private-employer liability for nonworking-hours lawful conduct absent Labor Code protection)
Ferrick v. Santa Clara Univ., 231 Cal. App. 4th 1337 (Cal. Ct. App. 2014) (internal disclosures about wrongdoing can be protected under §232.5)
Gay Law Students Ass'n v. Pac. Tel. & Tel. Co., 24 Cal.3d 458 (Cal. 1979) (definition of "political activity" extends beyond partisan conduct)
Lockheed Aircraft Corp. v. Superior Court, 28 Cal.2d 481 (Cal. 1946) (definition of a company "policy")