Judge Barbara M. Scheper, Case 21STCV10252 2023-03-13 Tentative Ruling

Judge: Barbara M. Scheper, Case: 21STCV10252, Date: 2023-03-13 Tentative Ruling

Case Number: 21STCV10252 Hearing Date: March 13, 2023 Dept: 30

Dept. 30

Calendar No.

Lee vs. KTL Mart, Inc., et. al., Case No. 21STCV10252

Tentative Ruling re: Defendant’s Demurrer to Second Amended Complaint

Defendant Krissy Lee (Lee) demurs to the seventh through thirteenth causes of action in the Second Amended Complaint (SAC) of Plaintiff Kai Kyungdon Lee (Plaintiff). The demurrer is overruled. Defendant is ordered to answer within ten (10) days of today’s date.

In reviewing the legal sufficiency of a complaint against a demurrer, a court will treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions, or conclusions of law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank); C & H Foods Co. v. Hartford Ins. Co. (1984) 163 Cal.App.3d 1055, 1062.) It is well settled that a “demurrer lies only for defects appearing on the face of the complaint[.]” (Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601.) “The rules by which the sufficiency of a complaint is tested against a general demurrer are well settled. We not only treat the demurrer as admitting all material facts properly pleaded, but also give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Guclimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38 (internal quotes omitted).) For purposes of ruling on a demurrer, the complaint must be construed liberally by drawing reasonable inferences from the facts pleaded. (Wilner v. Sunset Life Ins. Co. (2000) 78 Cal.App.4th 952, 958.)

When ruling on a demurrer, the Court may only consider the complaint’s allegations or matters which may be judicially noticed. (Blank, supra, 39 Cal.3d at 318.) The Court may not consider any other extrinsic evidence or judge the credibility of the allegations plead or the difficulty a plaintiff may have in proving his allegations. (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.) A demurrer is properly sustained only when the complaint, liberally construed, fails to state facts sufficient to constitute any cause of action. (Kramer v. Intuit Inc. (2004) 121 Cal.App.4th 574, 578.)

Plaintiff’s claims in this action arise from his alleged employment as a cook with Defendant KTL Mart, Inc. (KTL Mart) in Santa Monica, California. (SAC ¶ 14.) Plaintiff alleges that Defendants committed a number of violations under FEHA and the Labor Code, including failure to accommodate, failure pay overtime and minimum wage, failure to provide meal and rest breaks, and retaliation. (SAC ¶¶ 15-30.) Lee is alleged to be the sole owner, officer, director, and managing agent of KTL Mart, and was Plaintiff’s supervisor. (SAC ¶ 26.)

Plaintiff’s seventh through thirteenth causes of action, asserted against Lee individually, are for Labor Code violations relating to overtime and minimum wages, meal and rest period, wage statements, and reimbursement of business expenses. The Court finds that the SAC alleges sufficient facts to support individual liability against Lee for these claims under Labor Code § 558.1.

Under Labor Code § 558.1, subd. (a), an “other person acting on behalf of an employer” who causes a violation of an Industrial Welfare Commission minimum wage regulation or of Labor Code Sections 203, 226, 226.7, 1193.6, 1194, or 2802 may be held individually liable as the employer for that violation. (Usher v. White (2021) 64 Cal.App.5th 883, 894; Espinoza v. Hepta Run, Inc. (2022) 74 Cal.App.5th 44, 59.) “[T]he term ‘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, and the term ‘managing agent’ has the same meaning as in subdivision (b) of Section 3294 of the Civil Code.” (Lab. Code, § 558.1, subd. (b).)

To be held personally liable as an “other person acting on behalf of an employer,” the individual defendant “must either have been personally involved in the purported violation of one or more of the enumerated provisions; or, absent such personal involvement, had sufficient participation in the activities of the employer, including, for example, over those responsible for the alleged wage and hour violations, such that the [defendant] may be deemed to have contributed to, and thus for purposes of this statute, ‘cause[d]’ a violation.” (Usher v. White (2021) 64 Cal.App.5th 883, 896–897.) The defendant “must have engaged in some affirmative action beyond his or her status as an owner, officer or director of the corporation. However, that does not necessarily mean the individual must have had involvement in the day-to-day operations of the company, nor is it required the individual authored the challenged employment policies or specifically approved their implementation. But to be held personally liable he or she must have had some oversight of the company's operations or some influence on corporate policy that resulted in Labor Code violations.” (Espinoza v. Hepta Run, Inc. (2022) 74 Cal.App.5th 44, 59.)

The Court previously granted Defendants’ motion for judgment on the pleadings against Plaintiff’s Section 558.1 claims after finding that Plaintiff failed to plead facts showing that the individual defendants “engaged in some affirmative action beyond his or her status as an owner, officer or director of the corporation.” (Espinoza, 74 Cal.App.5th at 59.) In support of Lee’s individual liability, Plaintiff has added the allegation that Lee, “as the sole owner, officer, director, and managing agent of [KTL Mart], set and enforced the company’s policy of misclassifying Plaintiff, paying him a flat monthly salary, failing to pay minimum wages, violating meal/rest breaks, failing to provide accurate itemized statements, failing to reimburse business-related expenses, and failing to pay final full wages at separation.” (SAC ¶ 26.) Lee’s alleged role in setting KTL Mart’s policies, in addition to her position as KTL Mart’s sole owner and Plaintiff’s supervisor, are sufficient to show that Lee “had some oversight of the company's operations or some influence on corporate policy that resulted in Labor Code violations.” (Espinoza, 74 Cal.App.5th at 59-60 [“The record in the present case amply supported the trial court's finding Tseng ‘caused’ the Labor Code violations within the meaning of section 558.1. It was undisputed Tseng was the sole owner and president of both [companies]…”].)