Judge: Christopher K. Lui, Case: 21STCV37775, Date: 2023-05-23 Tentative Ruling

Case Number: 21STCV37775    Hearing Date: May 23, 2023    Dept: 76

            Defendant Sedgwick Claims Management Services, Inc.’s demurrer to the Third Amended Complaint is SUSTAINED with leave to amend as to the first cause of action and OVERRULED as to the sixth cause of action.

            Plaintiff is given 30 days’ leave to amend.

TENTATIVE RULING

ANALYSIS

Discussion

Request For Judicial Notice

            Defendants request that the Court take judicial notice of the following: (1) Complaint of Edmond Khodaverdi in this action, filed on October 13, 2021 in this action; (2)  First Amended Complaint of Edmond Khodaverdi in this action, filed on April 14, 2022, in this action; (3) Third Amended Complaint of Edmond Khodaverdi in this action, filed on February 16, 2023 in this action.

            Requests Nos. 1 – 3 are GRANTED per Evid. Code, § 452(d)(court records).

Meet and Confer

            The Declaration of George Ordonez reflects that Defendant’s counsel satisfied the meet and confer requirement set forth in Civ. Proc. Code, § 430.41.

Discussion

1.         First Cause of Action (Discrimination Based on Disability—Violation of FEHA).

            Defendant argues that there are insufficient fact pled that Sedwick was an employer of Plaintiff, which is an element of a FEHA discrimination claim. However, the original Complaint alleges that Sedgwick was a third party administrator, which handled the administration of Southwest’s workers’ compensation claims and accommodation program. (Complaint, ¶ 98.) Plaintiff previously alleged in his 1AC that Sedgwick administered both Defendants Workers Compensation Insurance and Reasonable Accommodations program (Complaint and 1AC ¶ 98; RJN, Exs. 1 and 2), but now omits that Sedgwick administered Defendants’ Reasonable Accommodations program (3AC ¶ 99). Defendant argues that these allegations should be considered to avoid a sham pleading.

Plaintiff alleges that Sedwick is a joint employer, and those allegations must be accepted as true. Plaintiff argues that Sedwick may be found to be an employer under the totality of circumstances analysis set forth in Vernon v. State of California (2004) 116 Cal.App.4th 114, 124:

“Of these factors, the extent of the defendant's right to control the means and manner of the workers' performance is the most important.” [Citations Omitted]. In all cases, an “employer must be an individual or entity who extends a certain degree of control over the plaintiff.” [Citation Omitted]. The focus of our evaluation of the right to control the plaintiff's work performance is upon “not only the result but also the means by which the result was accomplished.” [Citation Omitted]. 

     (Id. at 126.)

            Plaintiff argues that he alleges that Sedgwick exerted substantial control over the means and the manner in which Plaintiff performed his job duties. Plaintiff argues that it was Sedgwick that is alleged to have denied plaintiff’s accommodation request of working at the check-in desk numerous times, and forcing Plaintiff to utilize unpaid leaves of absence. In addition, Sedgwick refused to return Plaintiff to work after he provided it a return to work note from his physician, that contained no restrictions whatsoever. By denying these accommodation requests and by refusing to return Plaintiff to work, Sedgwick was literally controlling the manner in which plaintiff performed his job duties. Sedgwick is also alleged to have permitted Plaintiff, on some instances, to be accommodated at the check-in counter. As such Sedgwick controlled when, and where, Plaintiff worked. Further, the 3AC alleges that Sedgwick was responsible for determining whether plaintiff was accommodated, denied his requests for accommodation (thereby terminating him) and was the only entity to which plaintiff could appeal to return to work. As demonstrated based on the above, Sedgwick did exert substantial control over plaintiff’s job performance, the most important factor laid out in the seminal Vernon case. 

            Defendant argues that Plaintiff has not and cannot allege that he was compensated by Sedgwick, which is strong evidence that an employment relationship did not exist, and Plaintiff has not alleged any facts describing any employment relationship between Sedgwick and Plaintiff.

“ ‘Because the FEHA is remedial legislation, which declares “[t]he opportunity to seek, obtain and hold employment without discrimination” to be a civil right (§ 12921), and expresses a legislative policy that it is necessary to protect and safeguard that right (§ 12920), the court must construe the FEHA broadly, not … restrictively. Section 12993, subdivision (a) directs: “The provisions of this part shall be construed liberally for the accomplishment of the purposes thereof.” If there is ambiguity that is not resolved by the legislative history of the FEHA or other extrinsic sources, we are required to construe the FEHA so as to facilitate the exercise of jurisdiction by the [Fair Employment and Housing Commission]. [Citation.]’ [Citation.]” (Citation omitted.)

“The FEHA, however, prohibits only ‘an employer’ from engaging in improper discrimination. (§ 12940, subd. (a).)” (Citation omitted.) The FEHA predicates potential “liability on the status of the defendant as an ‘employer.’ (§ 12926.)” (Citation omitted.) The fundamental foundation for liability is the “existence of an employment relationship between the one who discriminates against another and that other who finds himself the victim of that discrimination.” (Citation omitted.) FEHA requires “some connection with an employment relationship,” although the connection “need not necessarily be direct.” (Citation omitted.) “If there is no proscribed ‘employment practice,’ the FEHA does not apply.” (Citation omitted.)

Also, for purposes of imposition of liability for unlawful employment practices, “[t]he FEHA provides limited definitions of the terms ‘employee’ and ‘employer.’ (§ 12926, subds. (c) & (d).)” (Citation [*124] omitted.) The FEHA defines an employer “as follows: ‘ “Employer” includes any person regularly employing five or more persons, or any person acting as an agent of an employer, directly or indirectly, the state or any political civil subdivision of the state, and cities, except as follows: [¶] “Employer” does not include a religious association or corporation not organized for private profit.’ (§ 12926, subd. (d).) The first paragraph of section 12926, subdivision (d) does provide some definition of an employer. But the second paragraph of section 12926, subdivision (d) provides a description of what is not an employer. Beyond these limited definitions, the FEHA does not define an employer, employee, or what constitutes employment. In order to recover under the discrimination in employment provisions of the FEHA, the aggrieved plaintiff must be an employee.” (Citations omitted.)

Appellant is an employee, but not of the State, either directly or indirectly. Although the statutes provide only a nominal definition of “employer,” and the cases have defined the term with “magnificent circularity,” pursuant to the allegations of appellant’s first amended complaint the State does not fall within the scope of the definition under any recognized test or standards. (Citations omitted.) The various designated tests adopted by the courts to determine the existence of an employer/employee relationship have articulated many of the same or similar governing standards, and have “ ‘little discernible difference’ ” between them. (Citations omitted.) The common and prevailing principle espoused in all of the tests directs us to consider the “totality of circumstances” that reflect upon the nature of the work relationship of the parties, with emphasis upon the extent to which the defendant controls the plaintiff’s performance of employment duties. (Citations omitted.)  “There is [*125]  no magic formula for determining whether an organization is a joint employer. Rather, the court must analyze ‘myriad facts surrounding the employment relationship in question.’ [Citation.] No one factor is decisive. [Citation.]” (Citations omitted.) “[T]he precise contours of an employment relationship can only be established by a careful factual inquiry.” (Citation omitted.)

Factors to be taken into account in assessing the relationship of the parties include payment of salary or other employment benefits and Social Security taxes, the ownership of the equipment necessary to performance of the job, the location where the work is performed, the obligation of the defendant to train the employee, the authority of the defendant to hire, transfer, promote, discipline or discharge the employee, the authority to establish work schedules and assignments, the defendant’s discretion to determine the amount of compensation earned by the employee, the skill required of the work performed and the extent to which it is done under the direction of a supervisor, whether the work is part of the defendant’s regular business operations, the skill required in the particular occupation, the duration of the relationship of the parties, and the duration of the plaintiff’s employment. (Citations omitted) “ ‘Generally, … the individual factors cannot be applied mechanically as separate tests; they are intertwined and their weight depends often on particular combinations.’ [Citation.]” (Citation omitted.)

 [*126]  “Of these factors, the extent of the defendant’s right to control the means and manner of the workers’ performance is the most important.” (Citations omitted.) In all cases, an “employer must be an individual or entity who extends a certain degree of control over the plaintiff.” (Citation omitted.) The focus of our evaluation of the right to control the plaintiff’s work performance is upon “not only the result but also the means by which the result was accomplished.” (Citation omitted.) And particularly, the inquiry considers the level of control an organization asserts over an individual’s access to employment opportunities. (Citations omitted.) Further, “the control an organization asserts must be ‘significant,’ [citation], and there must be a ‘sufficient indicia of an interrelationship … to justify the belief on the part of an aggrieved employee that the [alleged co-employer] is jointly responsible for the acts of the immediate employer.’ [Citations.]” (Citations omitted.) In determining liability under the FEHA, we look “ ‘to the degree an entity or person significantly affects access to employment’ … .” (Citation omitted.)

(Vernon v. State of Cal. (2004) 116 Cal. App. 4th 114, 123-26.)

            Here, Plaintiff fails to allege any facts which address the factors enunciated in Vernon as indicative of an employer relationship with Plaintiff. The only fact pled against demurring Defendant Sedgwick is that it is Defendant Southwest Airlines’ third party Workers Compensation administrator, would not allow Plaintiff to return to work because he was deemed to have permanent restrictions that could not be accommodated. (3AC, ¶ 22.)

            Plaintiff does not need discovery to be able to allege facts addressing the factors enunciated in Vernon, because Plaintiff would already know who paid him, who controlled the means by which he performed his work duties, and whether he dealt with Sedgwick in any other capacity than as a Workers Compensation administrator.

            As to Plaintiff’s conclusory allegation that he was employed with “Defendants,” (3AC, ¶ 8), “[a]lthough a court must on demurrer accept as true properly pleaded facts, a demurrer does not admit contentions or conclusions of law or fact.” (Freeman v. San Diego Assn. of Realtors (1999) 77 Cal.App.4th 171, 185.)

            This ground for demurrer is successful. The demurrer to the first cause of action is SUSTAINED with leave to amend.

2.         Sixth Cause of Action (Aiding and Abetting).

            The sixth cause of action alleges that Sedgwick aided and abetted conduct which violated the FEHA. (3AC, ¶ 96.)

Defendant argues that a third party administrator, such as Plaintiff previously alleged Defendant Sedgwick to be, who serves as an agent to the employer, cannot be liable under a cause of action for aiding and abetting conduct forbidden by the FEHA Government Code Section 12940(i). (See Reno v. Baird (1998) 18 Cal.4th 640; Jones v. Lodge at Torrey Pines P'ship, (2008) 42 Cal.4th 1158, 1160.)

Plaintiff alleges that he is free to plead contradictory facts in the 3AC that Sedgwick was an agent, a third party administrator and/or was a co-employer.

Plaintiff also alleges that Sedgwick was acting outside of the scope of the authority as agent and to advance its own interests, thereby avoiding application of the agent’s immunity rule.

The 3AC alleges as follows:

98. Sedgwick knew, or should have known, that the other Defendants’ conduct constituted a breach of duty under the FEHA because they formed a “partnership” with the other Defendants to establish management responses for all disability-related claims and absences. Sedgwick holds itself out as possessing special knowledge and expertise in the administration of all disability-related issues, including reasonable accommodations, medical leave of absence, and other rights and obligations under the ADA, FEHA, FMLA, and CFRA.

99. On information and belief, Sedgwick participated in, and aided and abetted in the commission of, these violations of the FEHA.  For example, Sedgwick administered Defendants’ “Workers Compensation Insurance” program, and distributed confidential information about Plaintiff’s disability to Defendants’ supervisors and Human Resources and other departments. Sedgwick knew, or should have known, that Plaintiff was entitled to reasonable accommodations for Plaintiff’s disabilities, including being accommodated at the Boarding Gate, and failed to provide the reasonable accommodation and interactive process for which it was responsible. On information and belief, Sedgwick knew that its information sharing practices violated the FEHA and other state laws and regulations.

100. Sedgwick knowingly gave substantial assistance or encouragement to the other Defendants in their breaches of duty under the FEHA. In addition, Sedgwick’s own conduct constituted a breach of duty to Plaintiff.

101. At the time that Sedgwick directed, informed, commanded, and/or aided and abetted SWA in refusing to accommodate Plaintiff, they were acting outside the course and scope of any agency relationship between the Defendants, if such agency relationship did in fact exist.

102. Upon information and belief, and based on documents discovered and/or produced during discovery, said agency relationship was limited to acting as SWA Airline’s Third Party Administrator administering Defendants Workers Compensation program only, and did not extend to administering SWA reasonable accommodation or interactive process programs.

103. When, on or about July 7, 2021, Plaintiff provided to Defendants his return to work notice without restrictions, seeking to be returned to work, Sedgwick, in informing, commanding, explaining, or directing SWA to refuse to return Plaintiff to work, exceeded the course and scope of any agency relationship between the Defendants, if such agency relationship did in fact exist, which agency relationship, upon information and belief, was limited to acting as SWA’s Third Party Administrator administering Defendants Workers Compensation program. When presented with the information and request to return Plaintiff to work, Sedgwick knew, or should have known, that the decision, and/or suggestion, direction, command, or providing explanation exceeded the course and scope of their agency relationship with SWA and in addition, that SWA was violating the FEHA when it refused to return Plaintiff to work and/or refusing to accommodate Plaintiff’s disability.

104. Accordingly, at least for some, if not the majority of, time Sedgwick interacted with SWA and/or Plaintiff, they were not acting as SWA agent but were instead exceeding the course and scope of the agency relationship.

105. On information and belief, Sedgwick, and/or its employees, took the aforementioned actions in order to advance their/its own personal interests, including bonus and/or incentive pay, to meet certain quotas and targets which would raise their stature in the eyes of Sedgwick and/or SWA and lead to increased compensation, accolades, and other individual financial gain for Sedgwick and/or its employees.

Here, the allegation that Sedgwick was acting as Southwest Airlines’ third party administrator implies a contractual relationship between the two. This may or may not give rise to an agency relationship, depending on the facts and evidence to be produced. A contractor may be liable for aiding and abetting an employer’s violation:

As the writers point out, their aiding and abetting claims are based upon allegations that each agency assisted each employer in carrying out a systemic policy of age discrimination in hiring against older writers as a class. FEHA makes it an unlawful practice for “ any person to aid, abet, incite, compel, or coerce the doing of any of the acts forbidden under this part, or to attempt to do so.” (Gov. Code, § 12940, subd. (i).) A talent agency would be liable for aiding and abetting an employer's violation of FEHA if the agency knew the employer's conduct violated FEHA and gave “substantial assistance or encouragement to the [employer] to so act … .” ( Fiol v. Doellstedt (1996) 50 Cal.App.4th 1318, 1325 [58 Cal. Rptr. 2d 308].) 

(Alch v. Superior Court (2004) 122 Cal. App. 4th 339, 389.)

Defendant argues that the agent’s immunity rule applies to aiding and abetting claims. This is true. (Fiol v. Doellstedt (1996) 50 Cal.App.4th 1318, 1326.)  However, for purposes of demurrer, it cannot be said that an agency relationship exists as a matter of law such that the agent’s immunity rule applies.

Appellant concedes that it is an independent contractor. However, as independent contractor and agent are not mutually exclusive legal categories, our inquiry does not end here. (Citation omitted.) In Meyer Bros. it was held an independent contractor is also an agent when it contracts to act on behalf of a "principal" and is subject to the "principal's" control except with respect to the "agent's" physical conduct. ( Id. at p. 138.)

     (APSB Bancorp v. Thorton Grant (1994) 26 Cal.App.4th 926, 930.)

Moreover, Plaintiff alleges that Sedgwick was acting outside of the agency relationship because “said agency relationship was limited to acting as SWA Airline’s Third Party Administrator administering Defendants Workers Compensation program only, and did not extend to administering SWA reasonable accommodation or interactive process programs.” (3AC, ¶ 103.) If so, then the agent’s immunity rule would not apply.

“[A]gents and employees cannot conspire with their principal or employer where they act on its behalf, ‘ “and not as individuals for their individual advantage.” ’ (Citations omitted.) But agents can “be subject to ‘conspiracy liability for conduct which the agents carry out “as individuals for their individual advantage” and not solely on behalf of the principal [citation].’ ” (Citations omitted.)

(People ex rel. Herrera v. Stender (2012) 212 Cal.App.4th 614, 638-39.)

            On demurrer, Defendant’s argument is not persuasive.

            The demurrer to the sixth cause of action is OVERRULED.

            Plaintiff is given 30 days’ leave to amend.