1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 NORTHERN DISTRICT OF CALIFORNIA 8 MUSTAFA ABDALLAH, 9 Case No. 25-cv-04314-JCS Plaintiff, 10 v. ORDER GRANTING MOTION TO 11 DISMISS WITH LEAVE TO AMEND XYBION CORPORATION, 12 Re: Dkt. No. 6 Defendant. 13

14 15 I. INTRODUCTION 16 Plaintiff Mustafa Abdallah brings this employment discrimination case against his former 17 employer, Xybion Corporation (“Xybion”), asserting that he was discriminated against based on 18 his race and religion, including when Xybion terminated him. He further alleges that his 19 termination was in retaliation for protesting Xybion’s unlawful acts. Xybion brings a Motion to 20 Dismiss (“Motion”) seeking dismissal of all of Plaintiff’s claims pursuant to Rule 12(b)(6) of the 21 Federal Rules of Civil Procedure for failure to state a claim. The Court finds that the Motion is 22 suitable for determination without oral argument and therefore vacates the motion hearing set for 23 August 13, 2025 pursuant to Civil Local Rule 7-1(b). The Case Management Conference set for 24 the same date is continued to October 29, 2025 at 2:00 p.m. by Zoom webinar (id. 161 926 0804, 25 password 050855). For the reasons stated below, the Motion is GRANTED.1 26 27 1 II. BACKGROUND 2 A. The Complaint 3 Plaintiff’s employment with Xybion began around May 2022. Compl. ¶ 11. His position 4 was Executive Director, Quality/Compliance Services, and his duties “included sales, managing 5 quality control for Defendant’s clients, participating in project work for clients, and advising 6 clients.” Id. He also managed a team of 5-10 consultants. Id. He worked remotely, most recently 7 from Fremont, California. Id. 8 Plaintiff’s sales duties “often entailed selling [Xybion’s] clients and prospective clients on 9 retaining [Xybion’s] services for their quality and compliance consulting needs[,]” which included 10 “bringing in remote and/or onsite project managers and validation engineers for limited periods of 11 time during the duration of their projects.” Id. ¶ 12. “Once Plaintiff secured a client’s 12 agreement to utilize [Xybion] for these personnel needs, Plaintiff worked with [Xybion’s] Human 13 Resources/Recruitment department to secure the necessary personnel.” Id. ¶ 13. 14 “Plaintiff is an Arab American man of Palestinian descent.” Id. ¶ 14. “Plaintiff also 15 practices Islam and identifies as a Muslim.” Id. Plaintiff’s supervisor, Kamal Biswas is “Indian” 16 and he is not Muslim. Id.¶ 15. Plaintiff alleges that Xybion “employs disproportionately few 17 individuals of Arab American and Muslim backgrounds, and disproportionately high numbers of 18 individuals with Indian and non-Muslim backgrounds.” Id. According to Plaintiff, Xybion 19 “discriminated against [him] based on [his] racial background, Arab, and his religion, Islam.” Id. 20 ¶ 16. He further alleges that Xybion “negligently and intentionally failed to stop the 21 discrimination.” Id. In particular, Plaintiff alleges that Xybion discriminated against him by 22 “regularly imposing sales expectations upon Plaintiff that were higher than the sales expectations 23 placed upon Plaintiff’s colleagues who performed the same or similar work.” Id. ¶ 17. Although 24 “Plaintiff requested an explanation from Mr. Biswas regarding his higher sales expectations, . . . 25 Mr. Biswas did not specify any legitimate reason or justification for the discriminatory 26 expectations.” Id. Plaintiff also alleges that Xybion discriminated against him by “eventually 27 terminating his employment.” Id. ¶ 18. 1 duties competently and professionally.” Id. ¶ 19. Plaintiff further alleges that he “was often the 2 top or one of the top performers in sales revenue amongst his [Xybion] colleagues . . . .” 3 Plaintiff alleges that Xybion staffed client projects largely by retaining “external 4 consultants” for the projects and that it “frequently assigned unqualified and inexperienced 5 consultants to positions in an effort to minimize costs and increase profit margin.” Id. ¶ 20. 6 Plaintiff alleges that he “opposed this practice[,]” which “explicitly contradicted representations 7 Defendant pressured Plaintiff and his colleagues to make to Defendant’s clients regarding the 8 experience, qualifications, and credentials of the assigned personnel.” Id. ¶ 21. Plaintiff alleges 9 that he “frequently expressed disagreement with this practice to Mr. Biswas” and that “Mr. 10 Biswas’ consistent response to Plaintiff was that profit margins were Defendant’s primary concern 11 in [its] personnel placement decisions and that Plaintiff needed to focus his efforts on selling.” Id. 12 According to Plaintiff, Xybion “intentionally” “perpetrated [the] fraudulent practice” of telling 13 clients their needs would be met by “highly-qualified and experience individuals” to secure 14 contracts and then placing “under- qualified and relatively inexperienced consultants and 15 employees” on the projects. Id. ¶ 22. 16 Plaintiff alleges that he “consistently opposed the above-specified practice by engaging in 17 efforts with [Xybion’s] HR/Recruitment Department, and with Mr. Biswas, and others to ensure 18 that the consultants assigned to projects were qualified for their assignments.” Id. ¶ 23. Plaintiff 19 alleges that Xybion “retaliated against [him] based upon [his] opposition to [its] fraudulent 20 practices.” Id. ¶ 24. 21 In late summer or early fall of 2024, “Plaintiff was engaged in discussions with a potential 22 client located in Mumbai, India, a large pharmaceutical company, about performing a data 23 integrity audit on one of their manufacturing facilities.” Id. ¶ 25. According to Plaintiff, “[t]his 24 client was concerned about scrutiny from government agencies, including the Food and Drug 25 Administration.” Id. Plaintiff told the company that Xybion “could deliver to the client qualified 26 and experienced consultants that could fill its needs[]” and was able to secure the company as a 27 client. Id. He also “discussed this sale with Mr. Biswas and specified that it was necessary to hire 1 consultants.” Id. ¶ 26. Nevertheless, Xybion “hired highly unqualified and minimally 2 experienced individuals and assigned them to the Mumbai client.” Id. 3 “Plaintiff travelled to Mumbai with the unqualified consultants in September of 2024 to 4 meet with the client and to potentially begin work for the client.” Id. ¶ 27. He “admonished the 5 consultants in advance of their meeting the client that it was important to be forthright and honest 6 with the client about their qualifications if and when the client asked.” Id. According to Plaintiff, 7 the client did question the consultants “about their experience and qualifications” and “within 48 8 hours the client cancelled the contract with [Xybion], citing the unqualified consultants [Xybion] 9 assigned to the project.” Id. ¶ 28. 10 In February 2025, Plaintiff informed Defendant’s Executive Vice President and 11 CFO, Steven Porfano, that the Mumbai client cancelled the contract because the consultants 12 [Xybion] placed were inadequately experienced for the project.” Id. ¶ 30. “Mr. Porfano 13 responded that he ‘had no idea they terminated because our team was not satisfactory.’” Id. 14 Plaintiff alleges that “[d]ays later, on February 7, 2025, [Xybion] terminated Plaintiff’s 15 employment in retaliation for his opposition to Defendant’s fraudulent practices.” Id. ¶ 31. 16 According to Plaintiff, Xybion’s termination of his employment “was also predicated upon the 17 Company’s discriminatory animus against Plaintiff, a Muslim Arab American.” Id. 18 Based on these factual allegations, Plaintiff asserts the following claims: 1) discrimination 19 based on race in violation of California’s Fair Employment and Housing Act (“FEHA”), Cal. 20 Gov’t Code § 12940(a) (Claim One); 2) discrimination based on religion in violation of FEHA, 21 Cal. Gov’t Code § 12940(a) (Claim Two); 3) failure to prevent discrimination and retaliation in 22 violation of FEHA, Cal. Gov’t Code § 12940(j), (k) (Claim Three); 4) retaliation for opposing an 23 unlawful act in violation of California Government Code § 1102.5 (Claim Four); and 5) wrongful 24 termination in violation of public policy based on discrimination in violation of FEHA and 25 whistleblower retaliation under Section 1102.5 (Claim Five). 26 B. Contentions of the Parties 27 In the Motion, Xybion asserts that all of Plaintiff’s FEHA claims (Claims One through 1 were motivating factors for his termination. Xybion argues further that Plaintiff’s retaliation claim 2 under Section 1102.5 (Claim Four) must also be dismissed because Plaintiff does not identify any 3 federal or state law, rule, or regulation that he believed Xybion was violating or allege facts 4 showing that he opposed Xybion’s unlawful conduct. Finally, Xybion argues that Plaintiff’s claim 5 for wrongful termination in violation of public policy must be dismissed because that claim must 6 be “tethered” to a fundamental policy established by a constitutional, statutory or regulatory 7 provision and Plaintiff, having failed to state a claim under FEHA and Section 1102.5, also fails to 8 state a claim for wrongful termination in violation of public policy. 9 In his Opposition, Plaintiff rejects Xybion’s contention that he has not plausibly alleged 10 that he was discriminated against based on his race and religion, pointing to the allegation in his 11 complaint that Xybion imposed higher sales quotas on him than on other similarly situated 12 employees. With respect to the Section 1102.5 retaliation claim, Plaintiff asserts that he 13 adequately alleged that he disclosed and refused to participate in Xybion’s unlawful conduct. He 14 also argues that he sufficiently alleged a violation of a statute or rule because it is sufficient to 15 allege opposition to a fraudulent business practice to state a claim under Section 1102.5. Because 16 his FEHA and Section 1102.5 claims are adequately pled, Plaintiff contends, he has also 17 adequately pled his claim for wrongful termination in violation of public policy. 18 In its Reply, Xybion rejects Plaintiff’s reliance on the allegation in the complaint that 19 higher sales quotas were imposed upon him than were imposed on other employees to establish a 20 discriminatory motive with respect to his FEHA claims. It argues that Plaintiff’s allegation about 21 the higher sales quota is insufficient because it is conclusory and fails to identify the race or 22 religion of the employees who were given lower quotas. It further contends this allegation falls 23 short because Plaintiff does not allege that Plaintiff failed to meet these higher quotas or that he 24 was terminated on that basis, instead alleging that Plaintiff was a top performer with respect to 25 sales. Xybion reiterates its challenges to the Section 1102.5 claim, arguing that the claim fails 26 because Plaintiff does not allege any facts showing that he disclosed or refused to participate in 27 illegal activity. Xybion argues further, as it did in the Motion, that a section 1102.5 claim requires 1 Plaintiff has not done. 2 III. ANALYSIS 3 A. Legal Standards Under Rule 12(b)(6) 4 A complaint may be dismissed under Rule 12(b)(6) of the Federal Rules of Civil Procedure 5 for failure to state a claim on which relief can be granted. “The purpose of a motion to dismiss 6 under Rule 12(b)(6) is to test the legal sufficiency of the complaint.” N. Star Int’l v. Ariz. Corp. 7 Comm’n,

(9th Cir. 1983). Generally, a plaintiff’s burden at the pleading stage 8 is relatively light. Rule 8(a) of the Federal Rules of Civil Procedure states that a “pleading which 9 sets forth a claim for relief . . . shall contain . . . a short and plain statement of the claim showing 10 that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a). 11 In ruling on a motion to dismiss under Rule 12(b)(6), the court analyzes the complaint and 12 takes “all allegations of material fact as true and construe[s] them in the light most favorable to the 13 non-moving party.” Parks Sch. of Bus. v. Symington,

(9th Cir. 1995). 14 Dismissal may be based on a lack of a cognizable legal theory or on the absence of facts that 15 would support a valid theory. Balistreri v. Pacifica Police Dep’t,

(9th Cir. 16 1990). A complaint must “contain either direct or inferential allegations respecting all the material 17 elements necessary to sustain recovery under some viable legal theory.” Bell Atl. Corp. v. 18 Twombly,

(2007) (citing Car Carriers, Inc. v. Ford Motor Co.,

, 19 1106 (7th Cir. 1984)). “A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation 20 of the elements of a cause of action will not do.’” Ashcroft v. Iqbal,

(2009) 21 (quoting Twombly,

). “[C]ourts ‘are not bound to accept as true a legal conclusion 22 couched as a factual allegation.’” Twombly,

(quoting Papasan v. Allain,

265, 286 (1986)). “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of 24 ‘further factual enhancement.’” Iqbal,

(quoting Twombly,

) 25 (alteration in original). Rather, the claim must be “‘plausible on its face,’” meaning that the 26 plaintiff must plead sufficient factual allegations to “allow[] the court to draw the reasonable 27 inference that the defendant is liable for the misconduct alleged.”

(quoting Twombly,

B. Whether FEHA Claims Are Sufficiently Pled 2 To establish a prima facie case of discrimination under FEHA, a plaintiff must show that: 3 “(1) he is a member of a protected class; (2) he was qualified for his position; (3) he experienced 4 an adverse employment action; and (4) similarly situated individuals outside his protected class 5 were treated more favorably, or other circumstances surrounding the adverse employment action 6 give rise to an inference of discrimination.” Fonseca v. Sysco Food Servs. of Arizona, Inc., 374

(9th Cir. 2004) (internal quotations and citations omitted) (prima facie elements of 8 Title VII discrimination claim); see also Metoyer v. Chassman,

(9th Cir. 2007) 9 (“California courts apply the Title VII framework to claims brought under FEHA.”). Thus, to 10 survive a motion to dismiss under Rule 12(b)(6), a plaintiff must plausibly allege these elements. 11 Xybion argues that the fourth element of Plaintiff’s discrimination claims (Claims One and Two) 12 is not adequately alleged and therefore, that all three of his FEHA claims must be dismissed for 13 failure to state a claim. The Court agrees. 14 As a preliminary matter, Xybion does not challenge Plaintiff’s allegations with respect to 15 the first three elements of his FEHA discrimination claims, which the Court finds to be sufficient. 16 First, Plaintiff has alleged that he is a member of a protected class by alleging that he is an “Arab 17 American man of Palestinian descent” and “identifies as Muslim.” Compl. ¶ 14. Second, Plaintiff 18 alleges that he “performed his duties competently and professionally” and “was often the top or 19 one of the top performers in sales revenue amongst his colleagues.” Id. ¶ 19. These allegations 20 raise a plausible inference with respect to the second element of Plaintiff’s FEHA discrimination 21 claim that he was qualified for his position. Third, Plaintiff has alleged two adverse employment 22 actions, namely, that he was subjected to a higher sales quota than similarly situated coworkers 23 and that he was terminated. Id. ¶¶ 17-18; see also Opposition at 5 (“Here, Plaintiff alleges two 24 adverse employment actions, 1) termination and 2) Defendant’s imposition of sales expectations 25 upon Plaintiff that were higher than the sales expectations placed upon similarly situated 26 colleagues that were neither Muslim or of Arab descent.”). 27 As to the fourth element, Plaintiff relies on the allegations in paragraph 17 of his complaint 1 alleges that Xybion “impos[ed] sales expectations upon Plaintiff that were higher than the sales 2 expectations placed upon Plaintiff’s colleagues who performed the same or similar work.” Compl. 3 ¶ 17. In order to establish that the fourth element of the prima facie case is met, however, Plaintiff 4 must show that other employees outside of the protected class were treated more favorably than 5 Plaintiff. Plaintiff does not allege that the colleagues whose sales quotas were lower than his were 6 either non-Arab or non-Muslim and therefore outside of the protected class. Furthermore, 7 although Xybion allegedly “employs disproportionately few individuals of Arab American and 8 Muslim backgrounds[,]” Plaintiff does not allege that he was the only Arab American or Muslim 9 employee. Consequently, it cannot be inferred that the colleagues with lower sales quotes 10 referenced in the complaint were either non-Arab or non-Muslim. Because Plaintiff has not 11 adequately alleged discrimination under FEHA (Claims One and Two), he also does not state a 12 claim for failure to prevent discrimination or retaliation (Claim Three). Nor can he state a claim 13 for wrongful discrimination in violation of public policy (Claim Five) based on his FEHA claims. 14 C. Whether Retaliation under Section 1102.5 is Sufficiently Pled 15 “Section 1102.5 provides whistleblower protections to employees who disclose 16 wrongdoing to authorities.” Lawson v. PPG Architectural Finishes, Inc.,

, 709 17 (2022). As relevant here, Section 1102.5 prohibits retaliation against an employee for: 1) 18 “disclosing information . . . . to a person with authority over the employee or another employee 19 who has the authority to investigate, discover, or correct the violation or noncompliance . . . if the 20 employee has reasonable cause to believe that the information discloses a violation of state or 21 federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation, 22 regardless of whether disclosing the information is part of the employee's job duties” (§ 1102.5, 23 subd. (b))[;] and 2) “refusing to participate in an activity that would result in a violation of state or 24 federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation” 25 (§ 1102.5(c)). Xybion contends Plaintiff has not sufficiently alleged that he “disclos[ed] 26 information” under subdivision b or that he “refused to participate in” illegal activity under 27 subdivision c. It further contends the Section 1102.5 claim is insufficiently pled because he does 1 Court finds the first argument unpersuasive but agrees with the second argument. 2 The Court finds that Plaintiff adequately alleges that he disclosed the practice he believed 3 to be unlawful for the purposes of subdivision (b) based on his allegation that he “frequently 4 expressed disagreement [with the practice of hiring unqualified consultants while pressuring 5 Plaintiff to represent to potential clients that their projects would be staffed by qualified 6 consultants] to Mr. Biswas[,]” who was Plaintiff’s supervisor. Compl. ¶ 21. Drawing all 7 reasonable inferences in Plaintiff’s favor, the Court also finds that Plaintiff adequately alleged that 8 he refused to participate in illegal activity, under subdivision (c), by instructing consultants hired 9 for the Mumbai project who Plaintiff believed were unqualified to disclose their qualifications 10 truthfully to the client when asked. Compl. ¶ 27. While not explicitly stated, it is reasonable to 11 infer based on the facts alleged that Plaintiff was expected by Xybion to present the consultants 12 that had been hired for the project as being qualified, consistent with the representations Plaintiff 13 was “pressured” to make in his sales pitches, but he refused to do so. Compl. ¶ 22. 14 On the other hand, Plaintiff’s claim is insufficiently alleged to the extent that he does not 15 identify in the complaint the specific law or rule he believed was being violated by Xybion’s 16 practice of promising to staff projects with highly qualified consultants and then hiring unqualified 17 consultants. “Although there is some split of authority, the majority of courts require plaintiffs 18 bringing section 1102.5(b) claims to allege the specific rule, regulation or statute they reasonably 19 believed had been violated, and the factual basis for their reasonable belief.” La v. San Mateo 20 Cnty. Transit Dist., No. 14-CV-01768-WHO,

, at *5 (N.D. Cal. Sept. 16, 2014) 21 (citing cases). While Plaintiff identifies in his Opposition brief various state and federal statutes 22 prohibiting false advertising and other deceptive or fraudulent conduct, see Opposition at 7, those 23 statutes are not referenced in the Complaint and therefore the Court may not consider them in 24 determining whether Plaintiff’s Section 1102.5 claim is adequately alleged. Accordingly, the 25 Court finds that Plaintiff’s claims under Section 1102.5 fail to state a claim under Rule 12(b)(6). 26 For the same reasons, Plaintiff cannot state a claim for wrongful termination in violation of public 27 policy based on his Section 1102.5 claim. 1 IV. CONCLUSION 2 For the reasons stated above, the Motion is GRANTED and all of Plaintiffs claims are 3 || dismissed. Because Plaintiff may be able to cure the defects discussed above, Plaintiff is given 4 || leave to file an amended complaint, which must be filed by September 4, 2025. 5 IT IS SO ORDERED. 6 7 Dated: August 4, 2025 J PH C. SPERO 9 nited States Magistrate Judge 10 11 12

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