Judge: Bruce G. Iwasaki, Case: 22STCV09782, Date: 2022-08-23 Tentative Ruling

Case Number: 22STCV09782    Hearing Date: August 23, 2022    Dept: 58

Judge Bruce G. Iwasaki

Hearing Date:             August 23, 2022

Case Name:                Seung Woon Baek, et al. v. Hunmil Corp., et al.

Case No.:                    22STCV09782

Motion:                       Motion to Strike

Moving Party:             Defendants Hunmil Corp. dba Jeong Yuk Jeom, and Jae Yong Son

Opposing Party:          Plaintiffs Seung Woon Baek; Dabin Chun; Seung Ho Jang; and So Eun Kim

Background

            This is an employment action.  Seung Woon Baek, Dabin Chun, Seung Ho Jang, and So Eun Kim (Plaintiffs) sued Hunmil Corp. dba Jeong Yuk Jeom, and Jae Yong Son (Defendants) for numerous Labor Code violations, retaliation, wrongful termination, and unfair competition.  The Complaint alleges that Plaintiffs were servers at Defendants’ restaurant.  Defendants allegedly failed to comply with numerous laws such as not providing overtime pay and exposed Plaintiffs to customers who did not verify their COVID-19 vaccination status. 

            Defendants now move to strike two sections of the Complaint: (1) Paragraphs 8, 9, and 10 that allege alter ego liability against Defendants and (2) Paragraph 11 that alleges Labor Code section 558.1 allows for employees to bring wage and hour claims against corporate owners or managing agents individually.

            The declaration of Mr. Park indicates adequate compliance with the meet and confer requirement.  (Park Decl., ¶¶ 2-4.)

            Defendants requests judicial notice of Hunmil Corp.’s page on the California Secretary of State website.  The request is granted.  (Evid. Code, § 452, subd. (c).) 

Legal Standard

         “The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out 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.”¿ (Code Civ. Proc., § 436.)  The grounds for a motion to strike must “appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.”¿ (Code Civ. Proc., § 437.)¿¿¿

Discussion

            Defendants contend that there are insufficient facts for alter ego liability.  Specifically, they argue there are no facts to show that a “fraud or injustice would result” nor do Plaintiffs sufficiently allege a “unity of interest.”  As to Paragraph 11, Defendants argue that Plaintiffs do not allege claims for minimum wage violation with respect to Labor Code section 558.1. 

            Plaintiffs oppose.  They assert there is a “unity of interest” because Jae Yong Son is alleged to be the owner of Hunmil Corp. and that the corporate defendants are mere shells.  They also argue that they sufficiently allege violations of Labor Code sections 203, 226, 226.7 and 1194 to satisfy section 558.1.  

            Defendants replied, reiterating that the allegations are mere conclusions.  They point to the Secretary of State webpage to support their position that the corporation is not a shell.

The Complaint sufficiently alleges alter ego liability.

            “ ‘To recover on an alter ego theory, a plaintiff need not use the words “alter ego,” but must allege sufficient facts to show a unity of interest and ownership, and an unjust result if the corporation is treated as the sole actor.’ ” (A.J. Fistes Corp. v. GDL Best Contractors, Inc. (2019) 38 Cal.App.5th 677, 696.)  It is sufficient for plaintiff to allege that an individual dominated and controlled the company, there was unity of interest and ownership, the company was a “mere shell and conduit” for the individual’s affairs, the company was inadequately capitalized and failed to abide by corporate formalities, the individual used the company’s assets as her own, and recognizing the separate existence of defendants would promote injustice.  (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 235.)

            Specific factual allegations are not required.  (Id. at p. 236 [“[Plaintiff] was required to allege only ‘ultimate rather than evidentiary facts’ ”].)  Furthermore, “ ‘less particularity [of pleading] is required where the defendant may be assumed to possess knowledge of the facts at least equal, if not superior, to that possessed by the plaintiff,’ which certainly is the case here.”  (Ibid.)

            Here, Paragraph 10 of the Complaint alleged that Jae Yong Son, individually, “holds substantial interest in corporate defendant and should therefore be deemed to be corporate defendant’s alter ego.”  The Complaint asserts that Defendant Hunmil Corp. is “a mere shell and naked framework” for which Jae Yong Son uses as a “conduit for the conduct of his personal business and/or property affairs and/or obligor for the assumption of obligations and/or liabilities incapable of performance by said corporate and/or entity defendant, which are the obligations and liabilities of individual defendant.”  (Complaint, ¶ 10.)  In addition, Plaintiffs assert that “if the acts are treated as those of one of the Defendants alone, an inequitable result will follow.”  (Id. at ¶ 9.)

            Defendants argue that there are no facts to support the allegation that the company “would not be able to meet its liabilities if Plaintiff were to prevail.”  In addition, they contend that because Plaintiffs were servers at the restaurant, they “could not have known and does not now know about the corporate defendant’s private financial information.”  However, these are all factual issues not appropriate on demurrer.  (Associated Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825, 837.)  Although conclusory, alleging “ ‘ultimate rather than evidentiary facts’ ” is sufficient at the pleading stage.  (Rutherford Holdings, LLC v. Plaza Del Rey, supra, 223 Cal.App.4th at p. 236.)

            Defendants’ reference to the corporation’s Secretary of State page is improper.  “While courts may take judicial notice of public records, they do not take notice of the truth of matters stated therein.”  (Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375.)  Defendants attempt to argue the merits of the alter ego theory by asserting Hunmil Corp. “has been actively engaged in business since 2018” and is therefore not a “mere shell or naked framework,” but this too is a factual inquiry inappropriate on a challenge to the pleadings. 

            Therefore, the Motion to Strike is denied as to Paragraphs 8, 9, and 10.

Labor Code section 558.1 is appropriately stated.

            Labor Code section 558.1, subdivision (a) states “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.”  In other words, a person acting on behalf of an employer who violates these enumerated provisions can also be held liable as if he or she were the employer.  (Seviour-Iloff v. LaPaille (2022) 80 Cal.App.5th 427, 443 [“section 558.1 must be interpreted as allowing for a private right of action”].)

            Here, Plaintiff alleges violations of Labor Code sections 203, 226, 226.7, and 1194 against all Defendants.  (Complaint, ¶ 33, 36, 48, 54.)  Defendant Jae Yong Son is alleged to be the “owner, officer and director of JYJ.”  (Id. at ¶ 6.)

            Defendants’ argument that the Complaint fails to allege claims for minimum wage or that “Mr. Son violated any provision regulating hours and days of work in any order of the Industrial Welfare Commission” is unpersuasive.  The statute is written in the disjunctive and allows for a private right of action in violations of provisions regulating minimum wage, or hours and days of work in an order of the Industrial Welfare Commission, or violations of Sections 203, 226, 226.7, 1193.6, 1194, or 2802.  Accordingly, the motion to strike is denied as to Paragraph 11.

Conclusion

            The Court denies the Motion to Strike in its entirety.