Judge: Alison Mackenzie, Case: 24STCV20221, Date: 2024-10-22 Tentative Ruling



Case Number: 24STCV20221    Hearing Date: October 22, 2024    Dept: 55

NATURE OF PROCEEDINGS: Hearing on Defendant's Demurrer – without Motion to Strike

 

Defendant's Demurrer is sustained with leave to amend. 

                       

BACKGROUND

Plaintiff Robert Bagley (Plaintiff) brings this action against his former employer, the California Institute of Technology (Defendant), alleging that it failed to indemnify him for costs he incurred defending a sexual harassment lawsuit from one of his subordinates.  

The causes of action are: (1) Statutory Indemnity Pursuant to Labor Code Section 2802; (2) Willful Misclassification; (3) Failure to Pay Minimum, Overtime And Premium Wages; (4) Meal Break Violations; (5) Rest Break Violations; (6) Failure to Reimburse for Business Related Expenses; (7) Failure to Timely Pay Wages; (8) Failure to Provide Accurate, Itemized Wage Statements; (9) Waiting Time Penalties; (10) Unfair Business Practices; (11) FEHA Discrimination; (12) FEHA Retaliation; (13) Failure to Prevent Discrimination/Retaliation; (14) Retaliation In Violation Of Labor Code Section 1102.5; and (15) Constructive Wrongful Termination In Violation Of Public Policy.

 

The motion now before the Court is Defendant's demurrer.

 

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.

 

REQUESTS FOR JUDICIAL NOTICE

1. The Court grants Plaintiff’s RJN and takes judicial notice of the docket and dismissal of the Superior Court of California, County of Los Angeles, Francisco Luna v. California Institute of Technology, et al., Case Number 23STCV19123.

2. The Court grants Defendant’s RJN and takes judicial notice of the complaint in Francisco Luna v. California Institute of Technology, et al.

 

ANALYSIS

Demurrer

Defendant demurs to the first cause of action for indemnity under Labor Code section 2802 subdivision (a) because Plaintiff fails to plead facts sufficient to show that his legal expenses were incurred within the scope of employment. 

“The elements of a section 2802, subdivision (a) cause of action, as delineated by the statutory language, are: (1) the employee made expenditures or incurred losses; (2) the expenditures or losses were incurred in direct consequence of the employee's discharge of his or her duties, or obedience to the directions of the employer; and (3) the expenditures or losses were necessary. The second element, at issue here, is met if ‘the conduct defended against was within the course and scope of employment.’” Cassady v. Morgan, Lewis & Bockius LLP (2006) 145 Cal.App.4th 220, 230 (Cassady) (quoting Jacobus v. Krambo Corp. (2000) 78 Cal.App.4th 1096, 1101 (Jacobus)). “[T]he employee has the burden to prove the conduct on which he or she was sued arose in the course and scope of the employment.”  Id. at p. 224-25.

An employer must indemnify an employee for legal defense costs “if the employee was sued for acts within the scope of his employment.” Jacobus, supra, 78 Cal.App.4th at p.1100.  “[W]hether an employee's acts are within the scope of employment is ordinarily a question of fact, but the issue may be determined as a question of law when the material facts are undisputed and no conflicting inferences are possible.” Id. at p. 1103.

An employee’s acts of sexual harassment are outside of the scope of employment, even when the acts occurred during work hours on the employer's premises. See Farmers Ins. Group, supra, 11 Cal. 4th 992. However, sexually explicit workplace communications that do not constitute sexual harassment may be within the scope of employment. See Jacobus, supra, 78 Cal.App.4th at p. 1103-4 (noting “social interactions among employees, including sharing of private or personal information, are broadly incidental to the enterprise of an employer” and “the risk that one worker may accuse another of sexual harassment to deflect an adverse performance review is a risk inherent in employment”).

Here, Plaintiff previously worked as a head chef at Caltech and was sued by Francisco Luna, a cook he supervised, for sexual harassment. Defendants RJN, Ex. 1 ¶ 11. Plaintiff fails to allege facts showing this suit was for acts within the scope of his employment. In the Complaint, Plaintiff states he was “discharging his duties in the scope of employment at all relevant times alleged herein” and “Mr. Luna sued Plaintiff in direct consequence of the discharge of Plaintiff’s duties in the course and scope of his employment with Caltech.” Complaint ¶¶ 28, 29. However, these are legal conclusions not entitled to a presumption of truth. Moreover, while Plaintiff alleges Defendant’s investigation concluded his conduct did not meet the definition of unlawful harassment, nowhere in the complaint does Plaintiff deny Luna’s allegations. Compl. ¶15. Because the Complaint does not allege facts supporting a finding that Plaintiff was sued for conduct within the scope of employment, the demurrer is sustained.

Leave to Amend

Defendant argues that Plaintiff cannot cure the defect because, as a matter of law, the alleged acts of sexual harassment were not within the scope of employment.

In determining whether the employee’s acts are within the scope of employment, “[t]he test is not what the third person ‘alleges’ but what were the facts.” Douglas v. Los Angeles Herald-Examiner (1975) 50 Cal.App.3d 449, 463 (Douglas). “Douglas stands for the prosaic proposition that a trier of fact called upon to determine whether conduct was actually within the scope of employment must make a factual finding rather than simply treating the allegations in the third party complaint as true.” Cassady, supra, 145 Cal.App.4th at p. 242.

In Douglas, a newspaper reporter was sued over a series of articles he had written, allegedly using documents that had been illegally obtained. Douglas, supra, 50 Cal.App.3d at p. 455. After the newspaper refused to defend the action, the reporter obtained his own counsel, and the claims against him were ultimately dismissed with prejudice. Id. at p. 453, 461 In the reporter’s subsequent suit for indemnification, the trial court held for the newspaper, reasoning, “if [the reporter] did what [the plaintiff] alleged that he did, it would have been outside the scope of his employment.” Id. at p. 464. The appellate court reversed and remanded, holding that the trial court should have made a finding regarding the truth of the reporter's allegation that the acts for which he was sued were undertaken at the direction of the newspaper. Id. at pp. 457, 463.

The Court takes judicial notice of the fact that the allegations included that Plaintiff “forcibly touched and grabbed [Luna], made sexual inquiries directed at him and others, and otherwise forced [Luna] to endure a sexually charged work environment.” RJN, Ex.1 ¶ 1. While the Court agrees that, if true, these acts constitute sexual harassment and, as such, are outside of the scope of employment, Defendant misstates the standard applied on demurrer.  As the Douglas court explained, “[t]he test is not what the third person ‘alleges’ but what were the facts.” Douglas, supra, 50 Cal.App.3d at p. 463.

The sexual harassment suit against Plaintiff concluded with a voluntary dismissal with prejudice. Plaintiff’s RJN, Ex. A. Therefore, there has not yet been any adjudication of whether Plaintiff sexually harassed his subordinate. Defendant correctly notes a judicial determination is required before section 2802 liability applies but mistakenly argues that the underlying sexual harassment suit is the only venue for such an adjudication. Reply at p. 4. On the contrary, whether Plaintiff committed the alleged sexual harassment is a factual question to be determined by the finder of fact in the present action. See Douglas, supra, 50 Cal.App.3d at pp. 463-64; Jacobus, supra, 78 Cal.App.4th at p.,1103. Accordingly, the Court finds that there is a reasonable possibility Plaintiff may cure the defect and grants leave to amend. 

 

CONCLUSION

Defendant's Demurrer as to the indemnity claim is sustained with leave to amend. Defendant to give notice.  Plaintiff shall have 14 days from service of the Court’s ruling to file and serve an amended complaint.  Defendant shall then have 20 days to respond to the amended complaint.