Judge Bruce G. Iwasaki

Department 58

Hearing Date: August 8, 2022

Case Name: Lauren Saucedo v. WCPS Holdings, et al.

Case No.: 22STCV11005

Matter: Demurrer

Moving Party: Defendants WCPS Holdings, Mia Melle, and Damien Melle

Responding Party: Plaintiff Lauren Saucedo

Tentative Ruling: The Demurrer is overruled. Defendants’ Answer shall be served and filed within 20 days.

In this employment case, the Defendants demur to Plaintiff’s claims for retaliation and wrongful termination. The issues are what constitutes a “disclosure” for retaliation purposes, and whether the employee-employer relationship can be evaluated on demurrer. The Court finds that at the pleading stage, the allegations are sufficient and overrules the demurrer.

Background

Plaintiff Lauren Saucedo sued her employer, Defendants WCPS Holdings, Inc., Mia Melle, and Damien Melle for whistleblower retaliation, wrongful termination in violation of public policy, and numerous Labor Code violations including failure to pay wages owed.

Plaintiff alleges that she began work as a Client Support Specialist with Defendants in May 2021. After Plaintiff obtained her real estate license in September, Defendants allegedly expanded her job responsibilities and required that she performed certain tasks “off the clock.” (Complaint, ¶ 12.) Plaintiff protested the changes and was then allegedly terminated.

Defendants demur to the second cause of action for unlawful retaliation in violation of Labor Code section 1102.5, and the third cause of action for wrongful termination in violation of public policy. As to the unlawful retaliation, Defendants argue that Plaintiff did not disclose “any information that was hidden and not known.” Defendants further argue that there is no employment relationship because Plaintiff was an independent contractor.

Plaintiff opposes the demurrer. She contends that Defendants relied on a case that analyzed the prior version of section 1102.5 and disclosure of wage violations do not constitute “publicly known facts.” She also argues that the Court cannot consider external evidence of the independent contractor agreement at the pleading stage. Defendants did not reply.

Defendants’ counsel averred that she telephonically conferred with Plaintiff’s counsel. This satisfies the meet-and-confer requirement. (Voorhees Decl., ¶ 2.)

Plaintiff requests judicial notice of two demurrers that Defendants reportedly filed. The Court grants the request as to Exhibit 2 only, which is the same document that was filed in this case on June 9, 2022, and also contained exhibits. (Evid. Code § 452, subd. (e).) Otherwise, the demurrer in Exhibit 1 was not filed with the Court and has no date stamp.

Legal Standard

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

Discussion

Whether the disclosure of information constitutes “publicly known facts” for purposes of Labor Code section 1102.5 is not appropriately decided on a demurrer.

Defendants assert that the second claim for whistleblower retaliation fails because Plaintiff disclosed the “alleged wrongdoing directly to the Defendants, the alleged wrongdoer” and the information was not “hidden and not known.”

To support a claim for whistleblower retaliation, plaintiff must show “by a preponderance of the evidence that an activity proscribed by Section 1102.5 was a contributing factor in the alleged prohibited action against the employee.”

Under Labor Code section 1102.5, subdivision (b), protected activity is defined as “disclosing information, or [when] the employer believes that the employee disclosed or may disclose information, to a government or law enforcement agency, to a person with authority over the employee or another employee who has the authority to investigate, discover, or correct the violation or noncompliance, or for providing information to, or testifying before, any public body conducting an investigation, hearing, or inquiry, if the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation, regardless of whether disclosing the information is part of the employee's job duties.”

Defendants rely on a federal case, Guthmann v. Classic Residence Management Limited Partnership (N.D.Cal. July 14, 2017 No. 16-CV-02680-LHK) 2017 U.S.Dist. Lexis 109845, which cited to Mize-Kurzman v. Marin Community College Dist. (2012) 202 Cal.App.4th 832, 858, for the proposition that “disclosure” means to “ ‘reveal something that was hidden and not known.’ ” Neither case is applicable.

Neither case was decided at the pleading stage. The federal district court in Guthmann was evaluating a motion for summary judgment. The California Court of Appeal in Mize-Kurman was an appeal from a jury verdict where the issue of whether publicly known facts were protected arose in the context of a challenge to jury instructions. (Mize-Kurman, supra, 202 Cal.App.4th at p. 866.) On a demurrer, the Court decides only whether a complaint is sufficiently pled. (Berryman v. Merit Property Management, Inc. (2007) 152 Cal.App.4th 1544, 1556 [“questions of fact . . . cannot be decided on demurrer”].)

Assuming that Defendants are conceding that they knew about their alleged Labor Code violations and are arguing that informing the wrongdoer can never constitute a “disclosure,” this argument is unpersuasive. The statute does not restrict to whom the disclosure must be made, as long as the person has “authority over the employee or [is] another employee who has the authority to investigate, discover or correct the violation.” (Lab. Code, § 1102.5, subd. (b).) Under Defendants’ theory that informing the wrongdoer of the violation can never constitute disclosure under section 1102.5, the employer could always claim to have knowledge of the wrongful acts and no disclosure would be protected. (See Hager v. County of Los Angeles (2014) 228 Cal.App.4th 1538, 1550 [distinguishing the Mize-Kurzman Court’s definition of “disclose” because it was not construed in the context of the statute as a whole].) The Court does not agree with that proposition.

The Court finds that the Complaint sufficiently pleads retaliation under section 1102.5. Plaintiff alleges that she informed her manager and the head of human resources that she was not being fairly compensated for work performed off-the-clock in relation to a real estate sale. (Complaint, ¶¶ 15-17.) She was then informed to clock-in for all her work going forward. However, the human resources professional then requested Plaintiff to sign a statement affirming that she voluntarily chose to work off-the-clock in relation to the sale that she was involved in. (Id. at ¶ 18.) Plaintiff refused to sign, and she was terminated the following week. (Id. at ¶¶ 19.)

The demurrer is overruled as to the second cause of action for unlawful retaliation in violation of Labor Code section 1102.5.

The Court cannot consider extrinsic evidence on demurrer and the nature of an employment relationship is a factual question.

Defendants argue that after Plaintiff obtained her real estate license, she separately entered into an independent contractor agreement with Defendants. Therefore, there is no employer-employee relationship.

“ ‘The elements of a claim for wrongful discharge in violation of public policy are (1) an employer-employee relationship, (2) the employer terminated the plaintiffs employment, (3) the termination was substantially motivated by a violation of public policy, and (4) the discharge caused the plaintiff harm.’ ” (Nosal-Tabor v. Sharp Chula Vista Medical Center (2015) 239 Cal.App.4th 1224, 1234-35.)

“A discharge is actionable as against public policy if it violates a policy that is: ‘(1) delineated in either constitutional or statutory provisions; (2) “public” in the sense that it “inures to the benefit of the public” rather than serving merely the interests of the individual; (3) well established at the time of discharge; and (4) “substantial” and “fundamental.” ’ ” (Carter v. Escondido Union High School Dist. (2007) 148 Cal.App.4th 922, 929.) “It is well established that a termination premised on an employee's refusal to violate either a statute or an administrative regulation may support a claim for wrongful termination in violation of public policy.” (Nosal-Tabor v. Sharp Chula Vista Medical Center, supra, 239 Cal.App.4th at p. 1235.)

In support of their argument that Plaintiff was not an employee, Defendants attach a copy of an “Independent Contractor Agreement.” Their demurrer asks that the Court consider this extrinsic evidence. This is improper. First, Defendants fail to authenticate the purported agreement or identify a ground for why the Court may consider it on demurrer. Second, and more fundamentally, a demurrer tests the adequacy of the pleadings, not the sufficiency of evidence. Facts and evidence external to the pleadings and not subject to judicial notice may not be considered. “In reviewing the ruling on a demurrer, a court cannot consider . . . the substance of declarations, matter[s] not subject to judicial notice, or documents judicially noticed but not accepted for the truth of their contents.” (Donabedian v. Mercury Insurance Co. (2004) 116 Cal.App.4th 968, 994.)

Moreover, the determination of whether Plaintiff’s status is that of an employee or independent contractor is an issue of fact. (S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 349.) Defendants have not cited any cases in which a demurrer was sustained because the facts failed to support the claim that a plaintiff was an employee.

Here, the Complaint sufficiently states a cause of action for wrongful termination in violation of public policy. Plaintiff alleges that she was an employee and was terminated for reporting violations of wage-and-hour laws. (Complaint, ¶¶ 23, 25, 43.) The termination caused her “substantial economic injuries/damages” including lost wages and emotional distress. (Id. at ¶¶ 45-46.) Since Plaintiff was allegedly terminated for reporting violations of Labor Code violations, this is sufficient for demurrer purposes. Therefore, the Court overrules the demurrer on the wrongful termination claim.

Conclusion

The Court finds that Plaintiff has sufficiently alleged the second cause of action for whistleblower retaliation and the third cause of action for wrongful termination in violation of public policy. The demurrer is overruled. Defendants shall file and serve their Answer on or before August 29, 2022.