NATURE OF PROCEEDINGS: Hearing on Defendant's Demurrer

 

Defendant's Demurrer is sustained in part and overruled in part.

 

BACKGROUND

Plaintiff Scott Eric Rosenstiel filed this action against Musclehead, Inc., Gold's Gym Franchising, LLC, Gold's Gym California, LLC, Ben Anzalado, Keaneua Johnson, and Does 1-100 (Defendants), alleging that his gym membership was canceled after an encounter with an employee who disproved of his interracial relationship.

The causes of action are: (1) Violations of The Ralph Act, Civil Code section 51.7 and the Unruh Act Civil Code sections 51, et seq.; (2) Violation of Corporations Code section 18320; (3) Unjust Enrichment; and (4) Restitution for violation of the Unfair Competition Law (UCL), Business and Professions Code sections 17200, et seq.

Defendant Muslehead, Inc. (Defendant) filed a Demurrer. Plaintiff filed an Opposition.

 

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 each of Plaintiff’s causes of actions.

I. Civil Rights Violations

A. Unruh Civil Rights Act

Defendant argues that Plaintiff fails to plead facts required to state a violation of Civil Code section 51.

Unruh Civil Rights Act, Civil Code section 51, provides in relevant part, “All persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, sexual orientation, citizenship, primary language, or immigration status are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever.” In 2024, the legislature amended section 51 to expressly state, “[s]ex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, sexual orientation, citizenship, primary language, or immigration status” includes … [a] perception that the person is associated with a person who has, or is perceived to have, any particular characteristic or characteristics, or any combination of characteristics, within the listed categories. Civ. Code § 51, subd. (7). The amendment of Section 51 of the Civil Code by this act does not constitute a change in, but is declaratory of, existing law. In doing so, the Legislature expressly noted that “[the amendments to Section 51 of the Civil Code … do not constitute a change in, or diminishment of, existing protections and obligations, but are declaratory of existing law.” Stats. ch. 779, § 1, subd. (e).

The elements of a claim for violation of the Unruh Civil Rights Act are (1) defendant is a business establishment, (2) defendant intentionally denied plaintiff accommodations, advantages, privileges, facilities, or services, (3) defendant was motivated to do so based on its perception that plaintiff belonged to a statutorily defined group, (4) plaintiff was harmed, and (5) defendant's conduct was a substantial factor in causing plaintiff's harm. See Civ. Code, § 51; In re Cox (1970) 3 Cal.3d 205, 216.

Defendant argues that Plaintiff has failed to allege facts showing that Defendants were motivated because of his status in a statutorily defined group.

Plaintiff alleges that on August 6, 2022, he and his Hispanic girlfriend visited the Glendale Gold’s Gym. Compl. ¶ 12. Plaintiff alleges that Doe I imposed a more rigorous check-in process than usual when checking in his girlfriend. Compl. ¶ 12. Plaintiff further alleges that Doe I refused to allow his girlfriend to use the hydro massage chair and insisted that Plaintiff produce his check-in card despite having previously looked up his membership without it. Compl. ¶ 13. Plaintiff alleges that Doe I and Doe II, who identified himself as the manager, offered inconsistent explanations for the policy, with Doe I saying it was a recent change and Doe II saying that the rule had always been in effect. Ibid. When Plaintiff pushed back, Doe II admitted that he was just backing up the other employee. Ibid. Doe II accused Plaintiff of being rude and threatened to terminate his membership for rudeness. Ibid. When Plaintiff argued he couldn’t do that, Doe II threatening to call security, who “will ask him to leave.” Plaintiff replied, “They can ask, but the answer is ‘no.’…You don’t seem to understand how a contract works. I have prepaid to be here and I have the right to be here.” Ibid. When Doe II threatened to call the police, Plaintiff reiterated, “I have the right to be here as I have a pre-paid membership.” Ibid. Plaintiff then returned to the locker room, showered, and left. Ibid.

Plaintiff attended the downtown Gold’s Gym club on August 7,  9, and 11, 2022. Compl. ¶ 15. When he and his girlfriend attempted to enter on August 13, he was told that his membership had been terminated due to the incident on August 6. Ibid. Plaintiff alleges that employee, defendant Keaneua Johnson repeatedly threatened to assault Plaintiff unless he left. Ibid. He further alleges that Johnson “moved to assault Plaintiff,” but another employee stopped him. Ibid.

Plaintiff alleges that his treatment by Doe I was because Doe I, a Hispanic man, resented Plaintiff for dating a Hispanic woman. Compl. ¶ 14 Additionally, Plaintiff alleges that Johnson’s threats of violence were based on racial and ethnic animus against Plaintiff and his girlfriend. Compl. ¶ 16. The only basis for this belief, offered in the Complaint, is that Doe I had flirted with his girlfriend, she turned down his flirtations, and his girlfriend told him that it is common for Hispanic males to resent non-Hispanic males in romantic relationships with Hispanic women. These speculative and conclusory allegations are not factual allegations entitled to a presumption of truth on demurrer. Limited only to the allegations of what the employees did and said, Plaintiff has failed to allege, even circumstantially, that these actions were motivated by racial animus.

B. Ralph Civil Rights Act

“The Ralph Act, codified in Civil Code section 51.7, provides: ‘All persons within the jurisdiction of this state have the right to be free from any violence, or intimidation by threat of violence, committed against their persons or property because of political affiliation, or on account of any characteristic listed or defined in subdivision (b) or (e) of [Civil Code s]ection 51, or position in a labor dispute, or because another person perceives them to have one or more of those characteristics. The identification in this subdivision of particular bases of discrimination is illustrative rather than restrictive.” Austin B. v. Escondido Union School Dist. (2007) 149 Cal.App.4th 860, 880.

The elements of a claim brought under section 51.7 are (1) the defendant threatened or committed violent acts against the plaintiff; (2) the defendant was motivated by his perception of race [or other enumerated characteristic]; (3) the plaintiff was harmed; and (4) the defendant's conduct was a substantial factor in causing the plaintiff's harm. Id. at pp. 880-81.

As with the Unruh Civil Rights Act, Plaintiff’s conclusory allegations of racial animus are insufficient to show defendants were motivated by their perception of Plaintiff or his girlfriend’s race. Accordingly, the demurrer to the first cause of action is sustained with leave to amend.

II. Corp Code § 18320

Corporations Code section 18320 provides procedures for expulsion or suspension of membership in an unincorporated association. It applies only if “membership in an unincorporated association includes a property right or if expulsion or suspension of a member would affect an important, substantial economic interest….” Corp. Code, § 18320, subd. (a). “‘Unincorporated association’” means an unincorporated group of two or more persons joined by mutual consent for a common lawful purpose, whether organized for profit or not.” Corp. Code, § 18035. Additionally, Corporations Code section 18055 provides that Title 3 (Corporations Code sections 18000-24007) does not apply to corporations or limited liability companies.

Here, Plaintiff fails to allege that any of the defendants are unincorporated associations. Moreover, Plaintiff identifies defendants Musclehead, Inc., Gold’s Gym California, LLC, Gold’s Gym Franchising, LLC as a corporation and limited liability companies, respectively. In his opposition, Plaintiff argues that section 18320 applies to corporations as well as unincorporated associations. Opp. at p. 8. However, that argument is contradicted by the plain text of the statute and that of Corporations Code section 18035, which states, “[t]his title does not apply to any of the following persons: [¶] (a) A corporation….” The cases cited by Plaintiff all predate section 18320, which was passed in 2005 and became effective in 2006. See 2005 Stats. ch. 116. Accordingly, the Court sustains the demurrer to the second cause of action with leave to amend.

III. Unjust Enrichment

Defendant argues that Plaintiff fails to state a cause of action for unjust enrichment.

“The elements of a cause of action for unjust enrichment are simply stated as ‘receipt of a benefit and unjust retention of the benefit at the expense of another.’” Professional Tax Appeal v. Kennedy-Wilson Holdings, Inc. (2018) 29 Cal.App.5th 230, 238 (quoting Lectrodryer v. Seoulbank (2000) 77 Cal.App.4th 723, 726.) “‘The term “benefit” denotes any form of advantage.’” Ibid. (quoting Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 51). “‘[T]he benefit that is the basis of a restitution claim may take any form, direct or indirect. It may consist of services as well as property. A saved expenditure or a discharged obligation is no less beneficial to the recipient than a direct transfer.’” Ibid. (quoting Rest.3d Restitution and Unjust Enrichment, § 1, com. d, p. 7.)

Defendant argues that Plaintiff has already been refunded his unused membership fees. However, as alleged in the Complaint, no refund was provided. Compl. ¶ 27. Accordingly, the Court overrules the demurrer as to the third cause of action.

IV. Unfair Competition Law

“Unfair competition under the UCL includes ‘any unlawful, unfair or fraudulent business act or practice.’” Jackson v. Lara (2024) 100 Cal.App.5th 337, 346 (quoting Bus. & Prof. Code, § 17200. “[A] plaintiff alleging an unfair business practice must show the defendant's conduct is tethered to an[] underlying constitutional, statutory or regulatory provision, or that it threatens an incipient violation of an antitrust law, or violates the policy or spirit of an antitrust law.” Id. at p. 347 (citations omitted) (internal quotation marks omitted). “An ‘unlawful’ business activity includes ‘anything that can properly be called a business practice and that at the same time is forbidden by law.’” Smith v. State Farm Mut. Auto. Ins. Co., 93 Cal.App.4th 700, 717-718 (2001). Section 17200 “borrows” from violations of other laws and “treats them as ‘unlawful’ practices independently actionable under the unfair competition law.” Id. at 718.

“A plaintiff alleging unfair business practice under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation.” Khoury v. Maly’s of California, Inc. 14 Cal.App.4th 612, 619 (1993).

To establish standing under the UCL, a plaintiff must (1) establish a loss or deprivation of money sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that the economic injury was the result of, i.e., caused by, the unfair business practice that is the gravamen of the claim. See Kwikset Corp. v. Superior Court (Benson) (2011) 51 Cal. 4th 310, 337.

Because Plaintiff fails to properly allege any constitutional, statutory, or regulatory provisions that Defendants violated, he must show that their conduct “threatens an incipient violation of an antitrust law, or violates the policy or spirit of an antitrust law.”  See Jackson, supra,100 Cal.App.5th 337, 346. None of Defendants’ alleged conduct concerns antitrust law; therefore, the Court sustains the demurrer with leave to amend.

 

CONCLUSION

Defendant's Demurrer is overruled as to count III and sustained as to counts I, II, and IV. Plaintiff has twenty days leave to amend.