Judge Bruce G. Iwasaki

Department 58

Hearing Date: March 27, 2024

Case Name: Crouse v. eAccidents, APC

Case No.: 23STCV23905

Matter: Demurrer

Moving Party: Defendants Tal Hassid, Avi Muhtar, and Jeff Goldstein

Responding Party: Plaintiff Daryl Crouse

Tentative Ruling: The Demurrer to the first, second, and third causes of action in the First Amended Complaint is sustained without leave to amend.

This action arises from an employment dispute. Plaintiff Daryl G. Crouse (Plaintiff or Crouse) alleges he was discriminated against and ultimately terminated from his position as an attorney at Defendant eAccidents, APC (Defendant or eAccidents) based on his religion and for reporting Defendant Avi E. Muhtar’s harassing behavior.

On October 2, 2023, Plaintiff filed a Complaint for (1.) wrongful termination, (2.) retaliation under Labor Code section 1102.5, (3.) religious discrimination, (4.) failure to pay wages and commissions under Labor Code section 201 and 202, and (5.) waiting time penalties under Labor Code section 203. A First Amended Complaint (FAC) was filed on October 3, 2023, alleging the same causes of action.

On November 2, 2023, Defendant/Cross-Complainant eAccidents filed a Cross-Complaint for (1.) breach of contract, (2.) breach of duty of loyalty, (3.) trespass, and (4.) trespass to chattels.

On December 4, 2023, Cross-Defendant Crouse filed a demurrer to the Cross-Complaint. The Court sustained in part and overruled in part.

On January 18, 2024, Defendants Tal Hassid, Avi Muhtar, and Jeff Goldstein filed a demurrer to the FAC. Plaintiff Daryl Crouse filed an opposition.

The demurrer is sustained in its entirety without leave to amend.

Legal Standard for Demurrers

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

Individual Defendants demur to the first through third causes of action on the grounds that each cause of action fails to state a claim against them.

The Complaint alleges a first cause of action for wrongful termination in violation of public policy against Defendant eAccidents, Defendant Hassid, and Defendant Goldstein, a second cause of action for retaliation in violation of California Labor Code section 1102.5 against Defendant eAccidents, Defendant Hassid, and Defendant Goldstein, and a third cause of action for religious discrimination in violation of FEHA against all Defendants.

The demurrer argues individual Defendants are not liable for discrimination under the FEHA as matter of law. This argument is well taken. By its own terms, Government Code section 12940, subdivision (a), only prohibits discrimination by “an employer.” Interpreting this provision, our Supreme Court has held that individual supervisory employees who do not qualify as “employers” within the meaning of Government Code section 12926, subdivision (d), may not be sued under FEHA for alleged discriminatory acts. (Reno v. Baird (1998) 18 Cal.4th 640, 644 [“FEHA, however, prohibits only ‘an employer’ from engaging in improper discrimination”]; Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1160.)

Further, “[a]s a matter of law, only an employer can be liable for the tort of wrongful discharge in violation of public policy.” (Khajavi v. Feather River Anesthesia Medica Group (2000) 84 Cal.App.4th 32, 53.)

In opposition, Plaintiff argues that “[i]t is through discovery that Plaintiff seeks to unveil any improper conduct or misuse of the corporate form that would justify piercing the corporate veil.” (Opp. 2:9-11.) The opposition argument essentially concedes that the allegations in the FAC are insufficient. Thus, the demurrer to the first and third causes of action are sustained.

The demurrer also makes a similar argument with respect to the second cause of action for violation of Labor Code section 1102.5.

To establish a prima facie case of retaliation, a plaintiff must show (1) he engaged in a protected activity, (2) he was subject to an adverse employment action, and (3) there is a causal link between the two. (See, e.g., Patten v. Grant Joint Union High School Dist. (2005) 134 Cal.App.4th 1378, 1384.) With respect to the second element, the current version of Labor Code section 1102.5, subdivision (c), prohibits retaliation by “[a]n employer, or any person acting on behalf of the employer.”

The demurrer argues that the FAC fails to allege an employer-employee relationship between Plaintiff and either Defendant Hassid or Goldstein. The demurrer specifically notes that Defendants Hassid and Goldstein “were the only attorneys in the firm.” (FAC ¶ 8.) However, this allegation satisfies the requirement that demurring Defendants were “person[s] acting on behalf of the employer.” Thus, the demurrer on this ground fails.

However, Defendants additionally argue that the FAC fails to allege any protected activity as contemplated by Labor Code section 1102.5.

Section 1102.5 prohibits retaliatory employment action against a whistleblower. Specifically, an employer is prohibited from retaliating against an employee for disclosing information when “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.” (Lab. Code, § 1102.5, subd. (b).)

Here, the FAC alleges that the purported protected activity in which he engaged was: “reporting Muhtar’s misconduct, including but not limited to demeaning Plaintiff in front of staff, filing incorrect federal court documents, and making a veiled threat regarding office hierarchy.” (FAC ¶ 23.) None of these things constitute the unlawful conduct required. The demurrer also argues that Plaintiff has pleaded no fact to support his claim that he had a “reasonable belief” that Defendants Muhtar’s conduct constituted illegal activity.

The opposition does not address this cause of action at all. The demurrer to this cause of action is well taken.

Conclusion

The demurrer to the first, second, and third causes of action in the FAC is sustained. Plaintiff shall not have leave to amend.