Judge: Christopher K. Lui, Case: 20STCV25810, Date: 2023-11-14 Tentative Ruling

Case Number: 20STCV25810    Hearing Date: November 14, 2023    Dept: 76

Pursuant to California Rule of Court 3.1308(a)(1), the Court does not desire oral argument on the motion addressed herein.  Counsel must contact the staff in Department 76 to inform the Court whether they wish to submit on the tentative, or to argue the matter.  As required by Rule 3.1308(a), any party seeking oral argument must notify ALL OTHER PARTIES and the staff of Department 76 of their intent to appear and argue.

Notice to Department 76 may be sent by email to smcdept76@lacourt.org or telephonically at 213-830-0776.

Per Rule of Court 3.1308, if notice of intention to appear is not given, the Court may adopt the tentative ruling as the final ruling.

            Plaintiff alleges that she suffered sexual harassment by Defendant Tingen, resulting in Plaintiff’s constructive discharge. Plaintiff also alleges wage and hour violations.

Defendants Nicole Edelman, Power Level Productions, LLC and Ian Tingen move for summary judgment or, in the alternative, summary adjudication..

TENTATIVE RULING 

Defendant Nicole Edelmann’s motion for summary judgment is DENIED. 

            The motion for summary adjudication as to Issue No. 1 re: the first cause of action as to all Defendants is GRANTED. Issue No. 2 re: the first cause of action is MOOT.  Defendant Edelmann’s motion for summary adjudication is DENIED as to Issue No. 3 re: the second cause of action, Issue No. 4 re: the third cause of action, Issue No. 5 re: the fourth cause of action, and Issue No. 6 re: the fifth cause of action.

ANALYSIS

Motion For Summary Judgment

            For the reasons discussed below, Defendant Edelmann has not demonstrated that she is entitled to judgment as to all causes of action. As such, Defendant Edelmann’s motion for summary judgment is DENIED.

            The Court will proceed to address the alternative motion for summary adjudication below.

Motion For Summary Adjudication

Issue No. 1: Defendant Edelmann is entitled to judgment as a matter of law as to the first cause of action in Plaintiff's Complaint for Willful Misclassification because she has no personal liability for any alleged wrongdoing.

            Given the ruling on Issue No. 2, Issue No. 1 is MOOT.

Issue No. 2: Defendants are all entitled to judgment as a matter of law as to the first cause of action in Plaintiff's Complaint for Misclassification in Violation of Labor Code section 226.8 because no private claim exists under this Labor Code Section.

Employees misclassified as independent contractors sue for relief directly under section 226.8. (Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 89-90.)

            Plaintiff concedes on this cause of action. (Opp., Page 4, fn 1.)

            The motion for summary adjudication as to Issue No. 1 re: the first cause of action is GRANTED as to all Defendants.

Issue No. 3: Defendant Edelmann is entitled to judgment as a matter of law as to the second cause of action in Plaintiff's Complaint for Failure to Pay Earned Wages because she has no personal liability for any alleged wrongdoing.

            Defendant Edelman argues that she cannot be held individually liable for violations of Labor Code, § 558.1 because she played no role in the alleged misclassification of Plaintiff.

            Labor Code, § 558.1 provides:

(a) 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.

(b) For purposes of this section, the 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.

(c) Nothing in this section shall be construed to limit the definition of employer under existing law.

     (Lab. Code § 558.1.)

Only one published California case has addressed what acts are sufficient for a finding of personal liability under section 558.1. In Usher v. White (2021) 64 Cal.App.5th 883 [279 Cal. Rptr. 3d 281], our colleagues  in Division One of the Fourth District considered whether personal liability could be imposed on a corporate officer who assisted with administrative and banking tasks but had no role in day-to-day operations or employment policies. After reviewing recent federal district court decisions, which generally had found an individual could not be liable under section 558.1 simply by virtue of his or her status as an owner, director or officer but must have been “‘personally involved’ in the alleged violations” or “engaged in ‘individual wrongdoing’” (Usher, at pp. 895–896),11 the Usher court concluded, “[T]o be held liable under section 558.1, an ‘owner’ … 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 ‘owner’ may be deemed to have contributed to, and thus for purposes of this statute, ‘cause[d]’ a violation.” (Id. at pp. 896–897.) The court further cautioned that whether an individual could be liable under section 558.1 “cannot be determined by any bright-line rule, as this inquiry requires an examination of the particular facts in light of the conduct, or lack thereof, attributable to the [individual].” (Id. at p. 897.) Turning to the case before it, the court held the individual defendant was not liable because the undisputed facts showed she had not participated in the relevant employment decisions. (Ibid. [“Shirley was never consulted about, or provided any guidance regarding, the classification of service technicians; played no role in the hiring of technicians; did not create, draft or contribute to the content of any of the independent contractor agreements utilized by White Communications; and did not sign any such agreements on behalf of the company”].)

We agree generally with Usher and the federal cases it cited that, in order to “cause” a violation of the Labor Code, an individual 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. [bold emphasis added].)

            Defendant argues as follows:

Defendant Edelmann did not "violate" or "cause to be violated" the Labor Code statutes asserted in causes of action one through five in the Complaint.  Defendant Edelmann did not: determine the compensation structure or payment plan for any employees or independent contractors on behalf of Power Level, including Plaintiff (UMF, ¶ 21); prepare or issue any schedules to any employees or independent contractors on behalf of Power Level, including Plaintiff (UMF, ¶ 22); have any involvement in any terms and conditions of any employees or independent contractors on behalf of Power Level, including Plaintiff (UMF, ¶ 23); monitor, direct or supervise any employees or independent contractors on behalf

of Power Level, including Plaintiff (UMF, ¶ 24); prepare or process any checks or other payments made on behalf of Power Level to Plaintiff or to anyone else (UMF, ¶ 26).  

Defendant Edelmann was not involved in:  any employment decisions made with respect to any Power Level employees (UMF, ¶ 27); engaging the services of anyone with respect to Power Level, including any independent contractors (UMF, ¶ 28); the creation and/or implementation of any policies relating to anyone who performed services for Power Level, either employees or independent contractors (UMF, ¶ 29); any decisions made regarding any employees hired or any contractors who were engaged at Power Level (UMF, ¶ 30); overseeing and/or implementing wage and hour protocol, including determining scheduling, monitoring meal periods and rest breaks, or monitoring payroll (UMF, ¶ 31.)

Defendant Edelmann had no involvement in or control over Plaintiff with regards to Power Level, including with respect to her commencing work with Power Level (UMF, ¶ 10); she did not participate in the decision to classify Plaintiff as an independent contractor, nor did she consult with any person in that regard (UMF, ¶ 12); she did not draft, nor contribute to the drafting of, any documentation, contracts, or communications regarding Plaintiff's independent contractor status (UMF, ¶ 13); she made no decisions regarding any terms and conditions of Plaintiff's work with Power Level.  Nor did she personally pay or control the pay of Plaintiff in connection with services she provided to Power Level, or personally employ or engage her.  (UMF, ¶¶ 15, 18.)

Plaintiff's deposition testimony and that of Defendant Ian Tingen is entirely corroborative of the foregoing facts.  (UMF Nos. 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 48, 49, 50, 51, 52, 53, 54, 55).

Given the foregoing, Plaintiff cannot prove Defendant Edelmann “violated" or "caused to be violated" any of the statutory provisions alleged in the Complaint. (Usher, 64 Cal.App.5th at 886, 897;

Atempa, 27 Cal.App.5th at 817 [sustaining finding of personal liability of a corporate officer based on the "unchallenged evidentiary showing" and related findings as to the officer's participation in the violation of the wage laws].)

            Plaintiff argues as follows:

As was the situation in Espinoza, here, Defendant Edelman has also at all times been the sole owner and manager/member of Power Level Productions, LLC.  CEO Tingen testified that he was the one that made the decision regarding classification of employees, and that at some point, he realized that there may be an issue with how the individuals at Power Level were classified, that when he reflected back on it, he realized he may have misclassified them. Given that Tingen was the CEO and the one who directly determined the classification of individuals, and given that he reported to Defendant Edelmann and that Edelmann at all times had authority over him and was the only individual who could override Tingen, it follows that Defendant Edelmann can be held personally liable because she oversaw the individual who was directly responsible for the Labor Code violations with respect to Plaintiff.  And, while Defendant Edelmann did not author the employee handbook or any of the policies therein regarding payment of wages or employee status, she was part of the initial group discussion advocating for implementation of an employee handbook, and once it was drafted, she received a copy of it, read it, and if there had been any policies or procedures which she had concerns on, she testified that she would have voiced them to Tingen, and that she ultimately had authority to change the policies or procedures in the handbook if she wanted to.

Moreover, given the inconsistencies and contradictions between Defendant Edelmann’s Declaration in support of Defendants’ MSJ and Defendant Edelmann’s subsequent deposition testimony, there are certainly issues as to credibility, and the matter should be permitted to go to a jury for determination of the credibility of the parties based on live testimony and the ability to weigh all of the evidence, which cannot be done on the papers here, which on their face show the existence of triable issues of material fact. 

            Plaintiff presents a comparison of the contradiction between Edelmann’s Declaration in support of the motion, versus her deposition testimony, as follows:

            The evidence cited by Plaintiff at the bolded portions of the Edelmann deposition are sufficient to raise a triable issue of material act as to whether Defendant Edelmann had some oversight of the company’s operations or some influence on corporate policy that resulted in Plaintiff being classified as an independent contractor rather than an employee.

The trial court may not weigh the evidence in the manner of a fact finder to determine whose version is more likely true. (Citation omitted.) Nor may the trial court grant summary judgment based on the court's evaluation of credibility. (Citation omitted.) Nor may the trial court grant summary judgment for a defendant based simply on its opinion that plaintiff's claims are "implausible," if a reasonable factfinder could find for plaintiff on the evidence presented. (Citation omitted.)

The court must consider not only the bare evidence, but also the reasonable inferences deducible from the evidence (citation omitted), and determine whether the evidence is sufficient to support a potential judgment in favor of the opposing party. (Citations omitted.)

(Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 840.)

As such, the motion for summary adjudication as to Issue No. 3 re: the second cause of action is DENIED.

Issue No. 4: Defendant Edelmann is entitled to judgment as a matter of law as to the third cause of action in Plaintiff's Complaint for Failure to Pay Overtime Wages because she has no personal liability for any alleged wrongdoing.

            For the reasons discussed above re: Issue No. 3, the motion for summary adjudication as to Issue No. 4 re: the third cause of action is DENIED.

Issue No. 5: Defendant Edelmann is entitled to judgment as a matter of law as to thefourth cause of action in Plaintiff's Complaint for Waiting Time Penalties because she has no personal liability for any alleged wrongdoing.

            For the reasons discussed above re: Issue No. 3, the motion for summary adjudication as to Issue No. 5 re: the fourth cause of action is DENIED.

Issue No. 6: Defendant Edelmann is entitled to judgment as a matter of law as to the fifth cause of action in Plaintiff's Complaint for Failure to Provide Accurate, Itemized Wage Statements because she has no personal liability for any alleged wrongdoing.

            For the reasons discussed above re: Issue No. 3, the motion for summary adjudication as to Issue No. 6 re: the fifth cause of action is DENIED.