Judge Alison Mackenzie, Case Number: 24STCV11892, Date: 2024-12-13 Tentative Ruling

Judge: Alison Mackenzie, Case: 24STCV11892, Date: 2024-12-13 Tentative Ruling

Case Number: 24STCV11892 Hearing Date: December 13, 2024 Dept: 55

NATURE OF PROCEEDINGS: Hearing on Defendants' Demurrer

Defendants' Demurrer is overruled.

BACKGROUND

Plaintiff Sakari Singleton filed this action against his former employer, Air Tutors LLC, its CEO, Hasan Ali, and doe defendants 1 to 20, alleging various Labor Code violations.

The causes of action are: (1) Wrongful Termination; (2) Failure to Pay Minimum Wages in Violation of Labor Code Sections 1194, 1194.2, 1197, and IWC Wage Order No. 5; (3) Failure to Furnish Wage and Hour Statements; (4) Failure to Maintain Payroll Records; (5) Failure to Pay Meal and Rest Period Compensation; (6) Failure to Pay Wages in a Timely Manner; (7) Failure to Pay Overtime Compensation; (8) Waiting Time Penalties; (9) Unfair Competition; (10) Hostile Work Environment in Violation of Government Code Sections 12040 et seq.; (11) Failure to Prevent Hostile Work Harassment in violation of FEHA; (12) Retaliation in Violation of Labor Code Section 1102.5; and (13) For Civil Penalties Under the Labor Code Private Attorney General Act.

Defendant Ali (“Defendant”) filed a Demurrer. Plaintiff filed an Opposition.

REQUEST FOR JUDICIAL NOTICE

Defendant requests the Court take judicial notice of a complaint and attachments filed in this case. The request for judicial notice is granted.

LEGAL STANDARD

When considering demurrers, courts read the allegations liberally and in context. Wilson v. Transit Authority of City of Sacramento (1962) 199 Cal.App.2d 716, 720-21. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994. “A demurrer tests the pleading alone, and not on the evidence or facts alleged.” E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315. As such, courts assume the truth of the complaint’s properly pleaded or implied factual allegations. Ibid. However, it does not accept as true deductions, contentions, or conclusions of law or fact. Stonehouse Homes LLC v. City of Sierra Madre (2008) 167 Cal.App.4th 531, 538.

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 (court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”); Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 (“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”). The burden is on the complainant to show the Court that a pleading can be amended successfully. Blank v. Kirwan (1985) 39 Cal.3d 311, 318.

ANALYSIS

Defendant demurs to causes of action two through eight. Defendant argues that as a corporate employee, he is not liable for these wage and hour violations because he is not an “employer” under the law.

The Industrial Welfare Commission (IWC) defines “employer” as “any person … who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person. Cal. Code Regs., tit. 8, § 11140, subd. 2(F). In Martinez v. Combs (2010) 49 Cal.4th 35 (Martinez), the California Supreme Court held that in an action for unpaid wages under Labor Code section 1194, “the IWC's definition of ‘employer’ does not impose liability on individual corporate agents acting within the scope of their agency.” Martinez, supra, 49 Cal.4th at p. 66.

However, Labor Code section 558.1, subdivision (a) provides that “[a]ny employer or other person acting on behalf of an employer, who violates, or causes to be violated, any provision regulating minimum wages or hours and days of work in any order of the Industrial Welfare Commission, or violates, or causes to be violated, Sections 203, 226, 226.7, 1193.6, 1194, or 2802, may be held liable as the employer for such violation.” Such “‘other person acting on behalf of an employer’ is limited to a natural person who is an owner, director, officer, or managing agent of the employer….” Lab. Code section 558.1, subd. (b). Section 558.1 allows for a private right of action. Seviour-Iloff v. LaPaille (2022) 80 Cal.App.5th 427, 443.

While Plaintiff alleges Defendant was Plaintiff’s employer in the Complaint, that is a legal conclusion, and the Court does not assume it is true in ruling on the Demurrer. See Complaint at ¶ 6. In the Opposition, Plaintiff does not argue that Defendant was his employer, but rather that he is an “other person acting on behalf of an employer” who is an “owner, director, officer or managing agent of the employer.” As such, Plaintiff argues Defendant is liable under Labor Code section 558.1.

To plead a cause of action under Labor Code section 558.1, a plaintiff must allege that the defendant violated, or caused to be violated, an IWC order or Labor Code sections 203, 226, 226.7, 1193.6, 1194, or 2802 (“enumerated provisions”). In Usher v. White (2021) 64 Cal.App.5th 883, 896 (Usher), the Court held “‘violates, or causes to be violated’ in section 558.1, subdivision (a) have an ordinary meaning.” Additionally, the court held that an owner violates or causes to be violated “if, when acting on behalf of an employer the ‘owner’ has personal involvement in the enumerated violations in section 558.1; or, absent personal involvement, has sufficient participation in the activities of the employer—including, for example, over those responsible for the alleged wage and hour violations—such that the ‘owner’ may be deemed to have contributed to, and thus have ‘cause[d]’ such violations.” Usher, supra, (2021) 64 Cal.App.5th at p. 886. In Usher, the court held that an owner was not liable, where the undisputed facts showed she did not participate in the decision of the company to classify plaintiffs as independent contractors improperly. Id. at p. 897. Additionally, the owner proffered evidence showing her involvement in the operation and management of the company was extremely limited. Ibid.

Here, Plaintiff alleges that Defendant was the Founder and Chief Executive Officer of Air Tutors LLC and that he “had ultimate authority as it related to many decisions, including corporate policymaking, paying employees' wages, and the hiring and firing of employees.” Complaint ¶ 27. Additionally, Plaintiff alleges Defendant was the “primary, if not sole decision maker and author of its corporate policies as to [wages, overtime, meal periods and rest breaks, wage statements, and determinations of employees’ exempt or non-exempt status].” Defendant argues that this is insufficient because Plaintiff does not allege how Defendant “personally caused or contributed to the alleged Labor Code violations. Reply at p. 3: 22. However, while “personal involvement in the enumerated violation” is one way to establish liability, it is not the only way. Usher, supra, (2021) 64 Cal.App.5th at p. 886. As the court explained in Usher, liability may also be established when the defendant has “sufficient participation in the activities of the employer—including, for example, over those responsible for the alleged wage and hour violations—such that the ‘owner’ may be deemed to have contributed to, and thus have ‘cause[d]’ such violations.” As alleged, Defendant was CEO, with direct control over corporate policies and employees, and the primary or sole author of the allegedly violative policies. Compl. at ¶¶ 7, 27. At the pleading stage, that is sufficient to show that he caused the violations.

CONCLUSION

The demurrer is overruled. Defendant has 20 days to answer.