Legal Question in Business Law in California

While what you describe sounds incredibly unfair, most employees in California are considered "at will". In the absence of an illegal reason such as racial or religious discrimination, most private employers can transfer, demote or terminate any employee at their discretion for almost any reason.

The reason for your demotion is also not entirely clear from you post. I cannot tell if you were demoted because of this issue or if your employer had another reason for the move and this was just a coincidence.

Probably none, that I can think of, even if you could connect the two sets of facts, since employment does not guarantee continuity of employed status, rate of pay, duties, etc.

It is often said that you can fire (or demote) an employee for a good reason, or for no reason at all, but you cannot fire (or demote) an employee for a bad reason. In this old saying, the phrase "a bad reason" has a fairly narrow meaning. Bad reasons include prejudice against a protected class (based on age, gender, race, religion, etc.), whistle-blowing, participation in union organizing, and a few others.

An employer's right to demote or fire may also be limited by a personal employment contract or the coverage of a collective-bargaining agreement, which does not seem to be the case here.