Judge: Daniel S. Murphy, Case: 21STCV04680, Date: 2023-04-05 Tentative Ruling

Case Number: 21STCV04680    Hearing Date: April 5, 2023    Dept: 32

BACKGROUND

            Plaintiff Ana Lopez initiated this employment discrimination action on June 15, 2021. The operative First Amended Complaint, filed June 15, 2021, asserts violations of FEHA, CFRA, and wrongful termination against Defendants Molina Dental, Inc. (Molina) and MMCHR, Inc. (MMC).

            Plaintiff worked as an insurance biller at Molina. Plaintiff took a leave of absence allegedly due to stress caused by a hostile work environment. Molina was purportedly unable to accommodate continuous extensions of Plaintiff’s leave and terminated Plaintiff. MMC is a human resource company retained by Molina to handle HR matters.

On December 9, 2022, MMC filed the instant motion for summary judgment, arguing that it is not Plaintiff’s employer and therefore cannot be liable to Plaintiff.  

LEGAL STANDARD

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Code of Civil Procedure section 437c, subdivision (c) “requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382.)

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (Code Civ. Proc., § 437c, subd. (p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

EVIDENTIARY OBJECTIONS

            Both parties’ objections are overruled.

DISCUSSION

I. Whether MMC Can be Considered Plaintiff’s Employer

In determining whether an entity is an “employer” for purposes of liability for unlawful employment practices, courts “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.” (Vernon v. State of California (2004) 116 Cal.App.4th 114, 124.) “[T]he precise contours of an employment relationship can only be established by a careful factual inquiry.” (Id. at p. 125.) There is “no magic formula for determining whether the requisite employment relationship exists.” (Bradley v. Department of Corrections & Rehabilitation (2008) 158 Cal.App.4th 1612, 1626.)

            MMC argues that it is not Plaintiff’s employer as a matter of law for the following reasons: MMC did not direct or oversee any part of Plaintiff’s work and did not subject Plaintiff to any adverse employment action (UF 20); MMC did not make decisions about what Plaintiff worked on or assign her any job duties or responsibilities (UF 15, 29); and Molina Dental alone made the decisions regarding what assignments, duties, and job title Plaintiff took at Molina Dental (UF 29). In other words, MMC argues that it did not “control[] the plaintiff’s performance of employment duties.” (See Vernon, supra, 116 Cal.App.4th at p. 124.)

            MMC’s position is belied by the very contract it relies on. The service contract between MMC and Molina provides that “Client shall remain the employer of the Staff Members except that MMC shall maintain administrative employer status to the extent required by law in order for MMC to provide its services.” (Def.’s Ex. 1, § 2.) Under the agreement, MMC retains responsibility and liability for the covered Staff Members. (Id., § 1.) MMC is unable to explain what “administrative employer” means and simply ignores that language even though it cites to that provision multiple times. (See Plntf.’s Resp. to UF 4.) The contract also provides that MMC retains necessary authority to: assign or reassign staff members; set rate of pay for staff members; pay staff members from its own accounts; and hire and terminate staff members. (Def.’s Ex. 1, § 3(L).) Ultimately, the contract between Molina and MMC identifies both as an employer of some kind and appears to give MMC employer authority, thus raising a triable issue.

            The surrounding facts also raise a triable issue about MMC’s involvement. In opposition, Plaintiff points out that MMC does not merely provide payroll and tangential administrative services. Rather, MMC drafted Molina’s employee handbook, trained Molina employees, acted as liaison for accommodation and leave requests, advised Molina on employment law matters, and recommended Plaintiff’s termination. (AF 5, 7, 9, 10, 12, 15, 17, 18.)

            This case is distinguishable from cases where a defendant was found not to be an employer as a matter of law. In Vernon, “Appellant was directly employed for over 20 years solely by the City, with no direct interference or participation by the State in the employment relationship.” (Vernon, supra, 116 Cal.App.4th at p. 127.) “[T]he State played no role in appellant’s job training, direction, supervision, compensation, or evaluation.” (Id. at p. 128.) Thus, the City was the employer and not the State. In Patterson v. Domino's Pizza, LLC (2014) 60 Cal.4th 474, 478-79, “the franchisee made day-to-day decisions involving the hiring, supervision, and disciplining of his employees. Plaintiff herself testified that after the franchisee hired her, she followed his policy, and reported the alleged sexual harassment to him.” Furthermore, “[t]he uncontradicted evidence showed that the franchisee imposed discipline consistent with his own personnel policies [and] declined to follow the ad hoc advice of the franchisor's representative . . . .” (Id. at p. 479.) The contract between the franchisor and franchisee provided that the employees at the franchisee store were employees of the franchisee only, and the franchisor disclaimed any responsibility as to the store employees. (Id. at p. 500.) Therefore, the franchisee (local store) was the employer, not the franchisor (Domino’s).  

            By contrast, MMC could be considered directly involved in Plaintiff’s work conditions by being the primary liaison for handling accommodation requests and specifically informing Molina that it no longer had to accommodate Plaintiff, which resulted in Plaintiff’s termination. Molina relied on MMC’s knowledge and advice on employment law matters, including discipline of employees. MMC drafted Molina’s employee handbook and trained Molina employees. Thus, it cannot be said as a matter of law that MMC had “no role” in training or supervision. (See Vernon, supra, 116 Cal.App.4th at p. 128.) This case is unlike Patterson, where the franchisee relied on its own policies and disregarded the advice of the Domino’s representative. In this case, MMC drafted Molina’s policies and provided advice to Molina. And unlike the defendant in Patterson, who disclaimed any employment relationship or responsibility for employees, MMC remains as an “administrative employer,” retains liability for covered employees, and retains authority to dictate some terms of employment. (See Def.’s Ex. 1, §§ 1, 2, 3(L).)

Even if MMC did not have final authority to terminate Plaintiff or make decisions regarding Plaintiff’s work conditions, courts do not articulate the standard as dependent on who has direct or final authority. If the test simply depended upon final authority, that would be a bright line formula, which courts have expressly rejected. (See Bradley, supra, 158 Cal.App.4th at p. 1626.) Rather, courts emphasize that there is no bright-line rule and require only that a purported employer “extends a certain degree of control over the plaintiff” as established by the totality of the circumstances. (See Vernon, supra, 116 Cal.App.4th at p. 126.) Based on the facts above, a reasonable jury may find that MMC exercises the requisite degree of control. MMC cites no case where an entity in a similar position—drafting policies, training employees, recommending terminations, and contractually retaining authority over employees—was found not to be an employer as a matter of law.

MMC otherwise relies on a nonbinding federal lower court decision (see Field v. Am. Mortg. Express Corp. (N.D.Cal. Aug. 2, 2011, No. C-09-5972 EMC) 2011 U.S.Dist.LEXIS 84601), or cases involving entities that served as mere payroll providers which primarily discussed control over wages (see Futrell v. Payday California, Inc. (2010) 190 Cal.App.4th 1419; Goonewardene v. ADP, LLC (2016) 5 Cal.App.5th 154). The facts here establish that MMC acted as more than a payroll provider, and control over wages is not the main contention nor the only factor in determining employer status under the totality approach.

In sum, there are triable issues of fact as to whether MMC was Plaintiff’s employer for purposes of liability under the alleged causes of action.

II. Punitive Damages

“In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” (Civ. Code, § 3294, subd. (a).) An employer is not liable for the acts of an employee unless the employer had advance knowledge of the employee’s unfitness, ratified the wrongful conduct, or personally engaged in malicious acts. (Id., subd. (b).) For a corporate employer, this must be true of an officer, director, or managing agent of the corporation. (Ibid.)

“In the usual case, the question of whether the defendant's conduct will support an award of punitive damages is for the trier of fact, since the degree of punishment depends on the peculiar circumstances of each case. But the issue may be resolved on summary judgment, giving due regard to the higher proof standard. While the clear and convincing evidentiary standard is a stringent one, it does not impose on a plaintiff the obligation to prove a case for punitive damages at summary judgment.” (Johnson & Johnson v. Superior Court (2011) 192 Cal.App.4th 757, 762, citations omitted.)

MMC does not cite any evidence that demonstrates as a matter of law that one of its managing agents did not ratify or engage in malice, oppression, or fraud. (See Mtn. 14:27-15:15.) MMC argues that Plaintiff only directly interacted with MMC regarding her leaves of absence and that there is no evidence MMC played any role in deciding to terminate Plaintiff. (Ibid.) How Plaintiff directly interacted with MMC is not dispositive on the issue of punitive damages, and the evidence shows that MMC had a role in Plaintiff’s termination and other work conditions.   

CONCLUSION

            Defendant MMC’s motion for summary judgment is DENIED.