Judge: Andrew E. Cooper, Case: 21CHCV00638, Date: 2023-05-24 Tentative Ruling

Case Number: 21CHCV00638    Hearing Date: May 24, 2023    Dept: F51

DEMURRER WITH MOTION TO STRIKE

Demurrer with Motion to Strike filed: 1/3/23

MOVING PARTY: Plaintiff/Cross-Defendant Blk International, LLC (“BLK”); Cross-Defendant Sara Bergstein; and Cross-Defendant David Bergstein (collectively, “Cross-Defendants”)

RESPONDING PARTY: Defendant/Cross-Complainant Vivian Tomik (“Tomik”)

NOTICE: OK

RELIEF REQUESTED: Cross-Defendants demur to the first, second, fifth, and seventh causes of action in Tomik’s Second Amended Cross-Complaint (“SAXC”).

TENTATIVE RULING: The demurrer is overruled. The motion to strike is denied. Cross-Defendants to file their answers to Cross-Complainant’s Second Amended Cross-Complaint within 30 days.

BACKGROUND

This action arises out of an agreement entered between BLK and Tomik for consulting services. Tomik alleges that on 8/25/20, BLK tendered her an offer letter of employment, stating that she would “be responsible for managing W Promote [a third-party web-marketing agency] and their affiliate efforts, managing our in-house affiliates along with building out CJ [a third party software service] affiliate program.” (SAXC ¶ 10.)

Tomik accepted BLK’s offer of employment, and alleges that for the duration of her employment, “BLK did not provide Tomik with wage statements or summaries of any kind setting forth her net or gross pay, rate of pay, hours worked, withholdings, company contact information, or any of the other information required by the Labor Code.” (Id. at ¶ 14.) Ultimately, “BLK was unhappy with the results of the affiliate marketing campaign Tomik supervised,” and “accused Tomik of misrepresenting the likely success of the web marketing campaign and refused to pay her $1,050 still owing from Tomik’s third pay period and refused to pay any of the $4,500 still owing on Tomik’s fourth and last pay period.” (Id. at ¶¶ 16–17.)

On 8/1/21, BLK filed its original complaint against Tomik, alleging the following causes of action: (1) Fraud in the Inducement; and (2) Breach of Written Contract. On 3/1/22, BLK filed its first amended complaint (“FAC”), alleging against Tomik the same causes of action.

On 4/6/22, Tomik filed her original cross-complaint against Cross-Defendants, alleging the following causes of action: (1) Misclassification as an Independent Contractor; (2) Unpaid Wages; (3) Wait Time Penalties; (4) Failure to Provide Wage Statements; (5) Failure to Provide Withholdings; (6) Breach of Contract Pursuant to Offer; and (7) Violation of Business and Professions Code § 17200. On 7/22/22, Tomik filed her first amended cross-complaint (“FAXC”), alleging against Cross-Defendants the same causes of action. On 8/25/22, BLK filed its answer thereto.

On 11/16/22, pursuant to stipulation by the parties, Tomik filed her SAXC against Cross-Defendants, alleging the same seven causes of action. On 1/3/23, Cross-Defendants filed the instant demurrer with motion to strike. On 2/9/23, Tomik filed her oppositions thereto. No reply has been filed to date.

DEMURRER

Meet-and-Confer 

Here, Cross-Defendants’ counsel declares that on 11/30/22, he sent meet and confer correspondence to Tomik’s attorney, who responded on 12/1/22 indicating that Cross-Defendants should proceed with the instant motion. (Decl. of Timothy D. McGonigle, ¶¶ 9–10.) Therefore, counsel has satisfied the preliminary meet and confer requirements of Code of Civil Procedure section 430.41, subdivision (a).

Legal Standard 

As a general matter, a party may respond to a pleading against it by demurrer based on any single or combination of eight enumerated grounds, including that “the pleading does not state facts sufficient to constitute a cause of action” and is uncertain, meaning “ambiguous and unintelligible.” (Code Civ. Proc., § 430.10, subds. (e) and (f).)

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 the evidence or facts alleged.” (E-Fab, Inc.¿v.¿Accountants, Inc. Servs.¿(2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Ibid.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda¿(2007) 147 Cal.App.4th 740, 747.)

Here, Cross-Defendants demur¿to¿the first, second, fifth, and seventh causes of action alleged in Tomik’s FAXC alleging they are uncertain and fail to allege facts sufficient to¿state¿a cause of action against cross-defendants Sara and David Bergstein.

Uncertainty

Generally speaking, “demurrers for uncertainty are disfavored and thus are strictly construed because ambiguities can reasonably be clarified under modern rules of discovery. Such demurrers are granted only if the pleading is so incomprehensible that defendant cannot reasonably respond.” (Cal.Jur.3d § 137.) “Where the complaint contains substantive factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty should be overruled or plaintiff given leave to amend.” (Williams v. Beechnut Nutrition Corp. (2011) 185 Cal.App.3d 135, 139 fn.2.)

Here, the Court finds that Cross-Defendants’ argument that the SAXC is facially uncertain, because “each of [Tomik’s] allegations generally concern Wage Order No. 7-2001 but do not actually identify which specific provision(s) of the Wage Order were allegedly violated,” lacks merit. (Dem. 7:1–2.) As Tomik observes, “each of the First, Second, and Fifth Causes of Action is pled to include the relevant Labor Code provision.” (Opp. 4:11–12.) The first, second, and fifth causes of action serve to hold Cross-Defendants David and Sara Bergstein liable for violating the Wage Order in addition to the primary purported violation of the applicable Labor Code section. For example, Tomik’s first cause of action alleges: “Cross-Defendants David and Sara Bergstein are managing agents as that term is used in Lab. Code § 558.1, and thus, in addition to their first party liability for violating Lab. Code § 266.8 by willfully misclassifying Tomik, they are also liable as managing agents by violating applicable Wage Orders, specifically No. 7-2001.” (SAXC ¶ 29 [emphasis added].)

In applying the stringent standard for demurrers filed on this ground, the Court finds that Tomik’s SAXC is not “so incomprehensible” that Cross-Defendants cannot respond, especially given the extensive analyses they have offered in attacking the pleading. Even where a complaint is in some respects uncertain, ambiguities can be clarified under modern discovery procedures. (A.J. Fistes Corp. v. GDL Best Contractors, Inc. (2019) 38 Cal.App.5th 677, 695.) Accordingly, the demurrer is overruled on this basis.

Failure to Allege Facts Sufficient to State a Cause of Action

1.      Scope of Labor Code Section 558.1

Cross-Defendants argue, as a general matter, that the Labor Code violations alleged by Tomik are not enumerated under Labor Code section 558.1 “pursuant to which either SARA or DAVID will be recognized as a person acting on behalf of an employer.” (Dem. 9:6–8, 9:13–15, 9:20–23.)

Labor Code section 558.1 provides as follows: “Any 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.” (Lab. Code § 558.1, subd. (a).)

The Court again notes that Tomik’s references to Section 558.1 are in relation to her allegations that Cross-Defendants violated Wage Order No. 7-2001 in addition to each respective primary Labor Code violation. Section 558.1 creates potential liability against an employer for violations of IWC Wage Orders or violations of the Labor Code sections listed therein. (Lab. Code § 558.1, subd. (a).) Therefore, as Tomik observes, Section 558.1 cannot be read as an exclusive list of Labor Code sections for which the violation by employers such as Cross-Defendants may be held liable.

Because Section 558.1 is broad enough and encompasses any violation of “any provision regulating minimum wages or hours and days of work in any order of the Industrial Welfare Commission,” “to the extent Wage Order No. 7-2001 applies here, then so does Section 558.1.” (Id.; Opp. 4:23–24.) It is irrelevant that the specific Labor Code violations alleged by Tomik are not enumerated within Labor Code section 558.1, because those sections impose liability independent of Section 558.1. Section 558.1 is referenced to create additional liability against Cross-Defendants for violating Wage Order No. 7-2001.

Based on the foregoing, the Court overrules Cross-Defendants’ demurrer to Tomik’s first, second, and fifth causes of action on this basis.

2.      Administrative Exception

Cross-Defendants further argue that they cannot be liable for a violation of Wage Order No. 7-2001 based on an exception to the Wage Order, which operates to exclude “administrative, executive, or professional” workers.

In California, the IWC Wage Orders govern minimum wages, maximum hours and overtime pay. Wage Order No. 7-2001 applies to the “mercantile industry,” which includes any business that purchases, sells, leases or distributes goods or commodities at wholesale or retail. (Cal. Code Regs., tit. 8, § 11070, subd. 2(H).) The Administrative Exemption to the Wage Order applies to employees:

“(a) Whose duties and responsibilities involve either:

(i) The performance of office or non-manual work directly related to management policies or general business operations of his/her employer or their employer's customers; or

(ii) The performance of functions in the administration of a school system, or educational establishment or institution, or of a department or subdivision thereof, in work directly related to the academic instruction or training carried on therein; and

(b) Who customarily and regularly exercises discretion and independent judgment; and

(c) Who regularly and directly assists a proprietor, or an employee employed in a bona fide executive or administrative capacity (as such terms are defined for purposes of this section); or

(d) Who performs under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or

(e) Who executes under only general supervision special assignments and tasks; and

(f) Who is primarily engaged in duties that meet the test of the exemption. The activities constituting exempt work and non-exempt work shall be construed in the same manner as such terms are construed in the following regulations under the Fair Labor Standards Act effective as of the date of this order: 29 C.F.R. Sections 541.201-205, 541.207-208, 541.210, and 541.215.” (Id. at subd. 1(A)(2).)

Here, Cross-Defendants argue that “there are no allegations in the SACC to the effect that TOMIK does not fall within any applicable exception,” and “given the management duties which TOMIK alleges she was hired to perform, it is arguable that Wage Order 7-2001 does not even apply to her.” (Dem. 8:10–11.) Tomik argues in opposition that the first element of the Administrative Exception is not met here, because “the SAXC makes clear …Tomik’s duties did not include work related to management policies or general business operations, nor performance of functions in the administration of a school system. … Thus, she does not qualify under the Administrative Exemption.” (Opp. 1:18–23; Cal. Code Regs., tit. 8, § 11070, subd. 1(A)(2)(a).)

The Court agrees, as Tomik has pled that she was hired to “be responsible for managing W Promote [a third-party web-marketing agency] and their affiliate efforts, managing [BLK’s] in-house affiliates along with building out CJ [a third party software service] affiliate program.” (SAXC ¶ 10.) Therefore, as Tomik asserts, “the SAXC does not state facts that place Tomik within the Administrative Exemption. Rather, it states Tomik was hired as a part-time salaried employee to supervise the efforts of a third-party web marketing agency—not any internal employees or personnel.” (Opp. 3:32 – 4:1.)

Based on the foregoing, the Court finds that Tomik has not alleged facts that would place her within the Administrative Exception from Wage Order No. 7-2001. Therefore, the Court overrules Cross-Defendants’ demurrer to Tomik’s first, second, and fifth causes of action on this basis.

3.      Unfair Business Practices

The Court notes that although the Notice of Demurrer states that Cross-Defendants demur to Tomik’s seventh cause of action for unfair business practices, Cross-Defendants fail to address that cause of action within the body of the demurrer. Accordingly, the demurrer to Tomik’s seventh cause of action for unfair business practices is overruled.

MOTION TO STRIKE 

The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436, subd. (a).) The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Id., § 436, subd. (b).) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id., § 437.)¿Here, Cross-Defendants move to strike references to punitive damages from Tomik’s SAXC. 

Meet and Confer¿ 

As previously noted, counsel has satisfied the preliminary meet and confer requirements of Code of Civil Procedure section 435.5, subdivision (a).

Punitive Damages

Punitive damages may be recovered upon a proper showing of malice, fraud, or oppression by clear and convincing evidence. (Civ. Code § 3294, subd. (a).) “Malice” is defined as conduct intended to cause injury to a person or despicable conduct carried on with a willful and conscious disregard for the rights or safety of others. (Id. at subd. (c); Turman v. Turning Point of Cent. Cal., Inc. (2010) 191 Cal.App.4th 53, 63.) “Oppression” means despicable conduct subjecting a person to cruel and unjust hardship, in conscious disregard of the person’s rights. (Ibid.) “Fraud” is an intentional misrepresentation, deceit, or concealment of a material fact known by defendant, with intent to deprive a person of property, rights or otherwise cause injury. (Ibid.)

Punitive damages must be supported by factual allegations. Conclusory allegations, devoid of any factual assertions, are insufficient to support a conclusion that parties acted with oppression, fraud or malice. (Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1042; Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598, 643.) 

Here, Cross-Defendants argue that “TOMIK has only provided conclusory statements that Cross-Defendants actions were willful, fraudulent, oppressive, malicious, and despicable. Said allegations appear to be based solely on a past alleged history of SARA and DAVID – which is wholly irrelevant here. … There is no permissible reasonable inference by the Court of malice or intent to do harm based on the allegations as they are pled.” (MTS 6:22–7:3.)

In opposition, Tomik argues that the SAXC “alleges Cross-Defendants intentionally misclassified Tomik, and refused to pay her salary, even after termination, and their … conduct was intentional, unjustified, and part of a pattern and practice of stiffing people.” (MTS Opp. 2:16–18.) In the SAXC, Tomik alleges that Cross-Defendants’ actions warrant recovery of punitive damages as they relate to her first, second, and third causes of action. (SAXC ¶¶ 30, 41, 46.) Under these causes of action, Tomik alleges, inter alia, that “BLK has wrongfully withheld Tomik’s wages, asserting they did not have to pay her as a contractor, because they were unhappy with the results of a web marketing campaign she supervised, even though the Offer Letter makes no mention of Tomik’s compensation being tied to the company’s performance.” (Id. at ¶ 28.)

Based on the foregoing, the Court finds that Tomik has sufficiently alleged facts to support her prayer for punitive damages under the “malice” and “fraud” prongs of Civil Code section 3294. The issue of whether Cross-Defendants intended to cause injury or defraud Tomik is a question of fact that the Court declines to address at the demurrer stage. Accordingly, the Court denies Cross-Defendants’ motion to strike paragraphs 30, 41, 46, and page 8, line 12, of Tomik’s SAXC. 

CONCLUSION

The demurrer is overruled. The motion to strike is denied. Cross-Defendants to file their answers to Cross-Complainant’s Second Amended Cross-Complaint within 30 days.