Judge: Alison Mackenzie, Case: 23STCV05253, Date: 2024-02-08 Tentative Ruling
Case Number: 23STCV05253 Hearing Date: March 14, 2024 Dept: 55
NATURE OF PROCEEDINGS:
Demurrer With Motion to Strike of Defendants ADC, Boltier R&D, and Hun Choe
to Plaintiffs’ First Amended Complaint.
BACKGROUND
In this case, MIKA YAMAMORI and JOHNNY PHAM (“Plaintiffs”),
as self-represented litigants, allege wage and hour violations against ADC
ENERGY, INC.; BOLTIER R& D, INC.; and HUN YONG CHOE (“Defendants). The
causes of action in the First Amended Complaint (“FAC”) are: 1. Unlawful
Business Practices (Bus. & Prof. Code 17200 et. seq.); 2. Failure to Pay Minimum
Wage; 3. Failure to Provide Meal Breaks; 4. Failure to Provide Rest Periods; 5.
Labor Code Section 203 Wages; 6. Labor Code 226 Damages; and 7. Wrongful
Termination in Violation of Public Policy.
Defendants demur to the FAC and move to strike allegations
regarding appointment of a receiver. Plaintiffs oppose as addressed below.
LEGAL STANDARD
Demurrers are to be sustained where a pleading fails
to plead adequately any essential element of the cause of action. Cantu v. Resolution Trust Corp. (1992)
4 Cal.App.4th 857, 879-80.
The grounds for a motion to strike are that the
pleading has irrelevant, false or improper matter, or has not been drawn or
filed in conformity with laws. Code Civ.
Proc., §436.
JUDICIAL NOTICE
Plaintiffs seek judicial notice of four Statements of
Information filed with the Secretary of State regarding Defendant Choe’s status
as an officer and director of Defendant ADC Energy and Defendant Boltier, and screen
shots from the Secretary of State website regarding the corporate status of ADC
and Boltier. The Court takes judicial notice of these documents, though not the
truth of the matters asserted therein. Arce ex rel. Arce v. Kaiser Found.
Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482.)
ANALYSIS
Demurrer
Whether Plaintiffs’ First-Through-Seventh
Causes of Action Fail to State Causes of Action Against Every Defendant.
Defendants contend that all of Plaintiffs’ claims fail
to adequately allege that all the Defendants are employers of Plaintiffs.
Various Labor Code provisions, including Section 1194
(re paying overtime and minimum wages), the definition of “employment”
(including an entity or individual that “‘employs or exercises control over the
wages, hours, or working conditions of any person’”), is based upon common law,
and the Industrial Welfare Commission’s wage-orders. (Martinez v. Combs
(2010) 49 Cal.4th 35, 65-67. See also Reynolds
v. Bement (2005) 36 Cal.4th 1075, 1085, 1088 (“the IWC since 1947
has defined ‘employer’ to include an individual who ‘exercises control over the
wages, hours, or working conditions of any person.’” (quoting Wage Order No. 9,
subd. 2(F)), abrogated on other
grounds by Martinez v. Combs (2010) 49 Cal.4th 35, 50.) The factors for determining an
employer-employee relationship for purposes of the wage provisions in the
California Labor Code wage statutes come from the wage order of the Industrial
Welfare Commission that governs the subject industry, which may be to exercise
of control over wages, hours or working conditions; to suffer or permit to
work; or to engage and create a common-law employment relationship. (Futrell
v. Payday Cal., Inc. (2010) 190 Cal.App.4th 1419, 1429, 1434.) As to some Labor
Code statutory sections, “the common law test for employment applies to define
“employee.” (Arnold v. Mutual of Omaha Ins. Co. (2011) 202 Cal.App.4th
580, 588 (Section 2802 requires employers to indemnify employees for all
necessary expenditures or losses incurred in discharge of duties).)
Labor Code Section 558.1 provides for potential
liability of an owner, director, officer, or managing agent of the employer,
with respect to specified sections. Section 2750 provides: “The contract of
employment is a contract by which one, who is called the employer, engages
another, who is called the employee, to do something for the benefit of the
employer or a third person.” However, that
section does not state that a contract is the only way to be deemed an
employer. Section 2810.3 addresses a labor contractor that supplies with or
without a contract a client employer with workers.
The FAC repeatedly alleges factors to support that all
defendants are employers. (FAC, ¶¶ 1
(“CHOE [ ] were officers, directors, managing agents, and shareholders of
Boltier, and exercised direct or indirect control over the working conditions
of the Plaintiffs, suffered, permitted, or otherwise caused Plaintiffs to
engage in the work duties outlined herein. Said Defendants and each of them
were therefore Plaintiffs' employers, joint employers,…”), 9 (“said
Defendants,… directly or indirectly controlled or affected the working
conditions of Plaintiffs so as to make each of said Defendants employers and liable
as employers and/ or joint employers under the statutory provisions set forth
herein.”), and 14 (“Plaintiffs allege they were employed by all defendants,
including but not limited to ADC Energy, Inc, Boltier R&D, Inc., and Hun
Yong Choe jointly and severally. All Defendants controlled Plaintiffs hours,
wages, and working conditions. Plaintiffs allege that CHOE was acting as
officer and director of both corporate entities and himself, when ordering
plaintiffs to do work for which they were not paid.”)).
Defendants’ alter-ego liability for wages is also
alleged adequately. (FAC ¶ 11 (“individual defendants were the alter egos of
the entities).) “A determination that a person is the alter ego of a
corporation does not make the alter ego an employer. Rather it makes the alter
ego liable for the obligations of the corporation.” (Leek v. Cooper
(2011) 194 Cal.App.4th 399, 409.)
Further, none of the alleged causes of action are
based upon only limited statutory sections, which means that allegation sufficiency
under any section survives. (FAC, ¶ 12 (“pursuant to all applicable provisions
of the Labor Code, Industrial Welfare Commission Order and/or other
statutes….”).) Hence, allegations of Defendants being any certain type of
employer are not necessarily required, because procedurally demurrers do not
lie to parts of claims that are otherwise sufficient. (Poizner v. Fremont
General Corp. (2007) 148 Cal.App.4th 97, 119 (“A demurrer
must dispose of an entire cause of action to be sustained.”).)
Additionally, there is no requirement to specify with
certainty which Defendant paid wages, because global allegations accusing all
defendants are permissible. (E.g., Lee
v. Escrow Consultants, Inc. (1989) 210 Cal. App. 3d 915, 925). Also,
uncertainty is a disfavored ground and discovery is prescribed for getting
allegation details. “[S]pecific dates
and details . . . are properly addressed during discovery, not on demurrer.”
(People v. Highland Fed. Sav. & Loan (1993) 14 Cal. App. 4th 1692,
1716.)
Therefore, the demurrer is overruled as to the issue
of sufficient pleading employer-related liability regarding each defendant.
Whether
the Claim for Wrongful Termination Is Sufficiently Alleged.
According to the Defendants, “[t]he FAC fails to state
a claim against ADC Energy, Inc. as they are not an employer of Plaintiffs and
did not terminate Plaintiffs.” (Demurrer, 10:18-19.) Plaintiffs rebut by stating that employer
status is alleged in support of the wrongful termination cause of action, and further
Labor Code Section 98.6 imposes liability against any “person” for wrongful
termination. (Opposition, 8:22-24.)
A "common law ... cause of action for wrongful
termination in violation of public policy lies only against an employer,"
and not employees. (Miklosy v. Regents of the Univ. of Cal. (2008) 44
Cal.4th 876, 900.) Furthermore, employment termination related to failure to
pay wages relates to public policy. (E.g. Gould v. Maryland Sound
Industries, Inc. (1995) 31 Cal.App.4th 1137, 1148 (holding that employment
termination to avoid paying owed wages violates
fundamental public policy); Davis
v. Farmers Ins. Exch. (2016) 245 Cal.App.4th 1302, 1331 (“Full and prompt payment of wages due an
employee ‘is a fundamental public policy of this state.’ ”)
Because Plaintiffs sufficiently allege
employer-related liability as to each Defendant (as analyzed above), it follows
that wrongful termination is properly pled as to each based upon wage-related
public policies. In addition, the demurrer cannot inject facts that are
contrary to the pleading allegations, such that certain defendants were not
employers. “‘[D]efendants cannot set forth allegations of fact in their
demurrers which, if true, would defeat plaintiff's complaint.’” (Gould v.
Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1144.)
Thus, the demurrer is overruled as to the claim for
wrongful termination.
Motion
to Strike
Plaintiffs seek the appointment of a receiver of
Defendants’ business. Defendants argue that the FAC does not contain facts to
support the remedy of a receiver as required by Code of Civil Procedure Section
564(b)(3).
“The appointment of a receiver rests largely in the
discretion of the trial court,…” (Dea v. Economou (1990) 224 Cal.App.3d
1466, 1484.) “Business and Professions Code section 17203 provides: ‘Any person
who engages, has engaged, or proposes to engage in unfair competition may be
enjoined in any court of competent jurisdiction. The court may make such orders
or judgments, including the appointment of a receiver , as may be necessary to
prevent the use or employment by any person of any practice which constitutes
unfair competition, as defined in this chapter, or as may be necessary to
restore to any person in interest any money or property, real or personal,
which may have been acquired by means of such unfair competition....’ ” (Hambrick v. Healthcare Partners Med.
Grp., Inc. (2015) 238 Cal.App.4th 124, 155.)
Here, the pleading sufficiently alleges that a
receiver is justified to restore wages unfairly acquired by means of unfair
competition. (E.g., FAC, ¶¶ 19 and 25 (“Plaintiffs also request the
installation of a receiver to maintain custodial responsibility of the amount
due….”).
Hence, the motion to strike is denied.
CONCLUSION
The Court overrules the demurrer and denies the motion
to strike. Defendants have twenty days to file an answer.