Judge: David Sotelo, Case: 21STCV41934, Date: 2022-08-25 Tentative Ruling
Case Number: 21STCV41934 Hearing Date: August 25, 2022 Dept: 40
MOVING PARTY: Defendant Ray Sik Yun.
Plaintiff Carlos Navarro sues his former employers (Defendants
Yunmin Corporation doing business as Miracle Market (“Miracle”) and Roseyun Corporation
doing business as DND Market (“DND Market”) and Miracle and DND Market’s alleged
owner and operator (Defendant Ray Sik Yun; “Yun”), on the grounds that Miracle and
DND engaged in conduct supporting thirteen FEHA or Labor Code based causes of action.
Yun is tied to all 13 causes of action via alter ego allegations rather than conduct
he himself engaged in.
Because the Complaint’s causes of action fail to
sufficiently plead that Defendant Yun either directly employed Navarro or that
Yun is indirectly liable (either by statute or alter ego liability) for
Plaintiff Navarro’s alleged FEHA and Labor Code injuries, the Court SUSTAINS
Yun’s Demurrer.
In March 2019, Navarro was hired by Miracle and Roseyun Corporation
doing business as DND as a general laborer. Throughout his employment Navarro worked
at the two stores, along with another store believed to be owned and operated by
Miracle and DND known as Victoria’s Market. Navarro also alleges that Miracle has
also operated under the name “Liquorama Market.”
Navarro now sues Yunmin, DND Market, and their owner Yun for
several statutory and tortious violations, alleging direct violations of Navarro’s
Fair Employment and Housing (“FEHA”) and Labor Code rights by Yunmin and DND Market,
as well as liability to Yun via alter ego allegations as follows:
Between March 2019 through at January 2020, Navarro was repeatedly
sexually harassed and assaulted by his supervisor who he knew as “Mr. Choi” and
who Plaintiff believes is a relative of DND Market and Miracle’s owners (including
Yun). The assault and harassment occurred most often in Victoria’s Market because
Navarro often worked there with Mr. Choi. Navarro alleges that throughout his employment
with Yunmin and DND Markets, Mr. Choi would repeatedly grope Navarro’s genitals
and buttocks and attempt to kiss Navarro. On one occasion, while Navarro was working
at Liquorama, Mr. Choi grabbed Navarro’s hand and forced it onto Mr. Choi’s penis.
Navarro did not report the alleged abuse for fear of retaliation.
Though Navarro worked a minimum of 45 hours per week, he was
often paid through personnel checks, where 34 hours were paid by one of the defendant
entities and the remaining hours were paid by another defendant entity, resulting
in Navarro being denied earned overtime wages. Further, per the Complaint’s allegations:
Navarro was also denied uninterrupted meal and rest breaks throughout his employment
with Miracle and DND Markets; if Navarro was asked to clock-out for lunch, his meal
periods would be interrupted in almost every instance and Navarro would be required
to work through his meal periods due to the demands of management; Navarro was denied
rest periods throughout his employment by Defendants; Navarro was also denied premium
pay for missed meal and rest breaks; Navarro has been paid only a fraction of the
wages he has earned to date; and despite a request from counsel on July 16, 2020,
the Defendants have ignored a request from Navarro for personnel and payroll records.
In or around October 2019, Navarro injured his arm, shoulder,
and hand while at work. Shortly thereafter, in or around January 2020, Navarro suffered
another accident while at work, when he was hit by a metal door and informed his
supervisors at Miracle and DND Market that he had been injured. Navarro requested
medical attention and was scolded by his supervisor as result of his request for
medical attention. When Miracle and DND Market declined to assist him, Navarro informed
his supervisors that it was illegal to deny him access to medical care for his work
injuries and Plaintiff thereafter opened a workers’ compensation claim and received
medical attention.
On or about February 5, 2020, Navarro was given light duty restrictions
relative to his injury, recommending that Navarro not lift greater than 10 pounds,
as well as other related restrictions. Navarro immediately provided his restrictions
note to his employers, with the note indicating that Navarro’s restrictions would
be removed by March 18, 2020. Rather than attempt to accommodate, alleges Navarro,
his employment was summarily terminated. At the time, Navarro believes light duty
jobs were available at the various markets, like cashier and maintenance duties.
These injury allegations support Navarro’s claims of a medical condition having
a serious impairment limiting a major life activity for Navarro.
Pursuant to these facts, Navarro’s Complaint alleges thirteen
(13) causes of action collectively against Yunmin, DND Market, and Yun:
(1) Discrimination (Govt. Code § 12940(a));
(2) Failure to Accommodate (Gov. Code § 12940(m));
(3) Failure to Engage in the Interactive Process (Govt. Code
§ 12940(n));
(4) Retaliation (Govt. Code § 12940(h));
(5) Harassment based on Sex (Gov’t Code § 12940 (k));
(6) Retaliation (Labor Code § 1102.5);
(7) Unpaid Wages (Labor Code § 201);
(8) Unpaid Overtime Wages (Labor Code §§ 510, 1194);
(9) Failure to Provide Meal Periods (Labor Code §§ 226.7 and
512);
(10) Failure to Provide Rest Periods (Labor Code § 226.7);
(11) Failure to Provide Accurate Itemized Wage Statements (Labor
Code § 226);
(12) Waiting Time Penalties (Labor Code § 203); and
(13) Failure to Produce Personnel and Payroll Records (Labor
Code § 1198.5)
Defendant Yun now demurs to the Complaint’s thirteen (13) causes
of action on the grounds that they are not sufficiently pleaded within the meaning
of Code of Civil Procedure section 430.10, subdivision (e) because: (1) the Complaint’s
causes of action cannot be alleged against an individual defendant like Yun under
FEHA or the Labor Code; (2) the Complaint’s alter allegations are devoid of evidentiary
facts and amount to nothing more than factual conclusions. Plaintiff Navarro filed
an Opposition to the Demurrer on August 5, 2022, and Yun filed a Reply on August
17, 2022.
Preliminary Consideration
While the Demurrer fails to advance reasons why the Thirteenth
Cause of Action is not sufficiently pleaded (see Demurrer 9:3-14:5), the Demurrer
appears to have done so by mistake (see Demurrer, 7:4-6 [single reference in Demurrer
to thirteen causes of action]) and the Reply addresses this deficiency (Reply, 2
n. 1 [noting Yun’s failure to include records cause of action but arguing that the
Labor Code defenses on insufficient facts toward alter ego and Labor Code section
558.1 allegations].) The Court finds this oversight is minor and sufficiently explains
the failure to raise this point for the first time on motion, for which reason the
Court allows this argument on Reply subject to further argumentation at hearing
or briefing by Navarro. (Neighbours v. Buzz Oates Enterprises (1990) 217
Cal.App.3d 325, 334 n. 8 [While points raised in a reply brief for the first time
will ordinarily not be considered, such points may be considered if good reason
is shown for failure to present them before].)
Legal Standard – Sufficiency
A demurrer for sufficiency tests whether the complaint states
a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747; see Code
Civ. Proc., § 430.10, subd. (e).) “To survive a [general] demurrer, the complaint
need only allege facts sufficient to state a cause of action; each evidentiary fact
that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A.
v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) In testing
the sufficiency of the cause of action, the demurrer admits the truth of all material
facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th
962, 966-67.) A demurrer, however, “does not admit contentions, deductions or conclusions
of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)
First through Fourth Causes of Action [Discrimination, Failure
to Accommodate, Failure to Engage in the Interactive Process, and Retaliation (in
Violation of FEHA)]: SUSTAINED, With Leave.
Yun demurs to the Complaint’s First to Fourth causes of action
on the grounds that these FEHA claims are alleged Yun in his individual capacity,
and that he, as an individual defendant, cannot be sued under FEHA on these grounds.
(Demurrer, 9:12-15.) Yun cites to Jones v. The Lodge at Torrey Pines Partnership
and Reno v. Baird for this proposition, arguing that both cases respectively
show that individual employees cannot be liable for retaliation or discrimination
pursuant to FEHA. (Demurrer, 9:15-17.)
The Fair Employment and Housing Act (FEHA) provides that it is
unlawful employment practice is for an employer, organization, or person, etc.,
to engage in specified kinds of discrimination. (Civ. Code, § 12940, subd. (a);
Jones v. The Lodge at Torrey Pines Partnership (2008) 42 Cal.App.4th 1158,
1161 (“Jones”); see Complaint, First Cause of Action.)
FEHA also creates statutory relief for a claim for failure to
accommodate a disability, which requires a showing that the plaintiff had a disability,
and that the defendant employer or other entity was aware of his alleged disability
and failed to make a reasonable accommodation for them. (Gov. Code, § 12940, subd.
(m); see Complaint, Second Cause of Action.) FEHA also prohibits failures to engage
in a good faith interactive process to accommodate a disability, which requires
a showing that that the plaintiff suffered from a disability, that the defendant
employer or other entity was aware of the alleged disabilities, and that the employer
or other entity failed to engage in a good faith process to identify reasonable
accommodations for the plaintiff. (See Gov. Code, § 12940, subd. (n); see
Complaint, Third Cause of Action.)
FEHA also prohibits that employers, organizations, or person,
etc., may not discriminate against an employee for opposing prohibited acts under
FEHA, filed a complaint pursuant thereto, or participated in a relevant proceeding,
i.e., retaliation. (Civ. Code, § 12940, subd. (a); Jones, supra, 42
Cal.App.4th at pp. 1161-62); see Complaint, Fourth Cause of Action.)
All these statutory sections require that the party defendant
to the action be an employer. Case law also makes clear that individual employees
cannot be liable for FEHA discrimination (Reno v. Baird (1998) 18 Cal.4th
640, 655 (“Reno v. Baird”)) or FEHA retaliation (Jones, supra,
42 Cal.App.4th at pp. 1161-62).
The Complaint alleges only that Miracle and DND Markets employed
Navarro. (Complaint, ¶¶ 23-24.) Nowhere does the Complaint allege that Yun was a
direct employer of Navarro. (See Complaint generally.) Though the Complaint that
Miracle and DND Markets are mere alter egos of Yun (Complaint, ¶¶ 10-22), these
allegations are not sufficiently pleaded and do not survive demur. (See Alter
Ego discussion infra.) There are thus no pleaded allegations in the Complaint
that can extend legal liability to Yun over FEHA Discrimination, Failure to Prevent
or Engage, or Retaliation claims because the Complaint fails to pleads that Yun
was Navarro’s employer for FEHA purposes or any theory of liability extending
Miracle’s or DND Markets’ liability to Yun.
Fifth Cause of Action [Sexual Harassment (in violation of
FEHA)]: SUSTAINED, With Leave.
On demur, Yun argues the Complaint’s Fifth cause of action
for FEHA harassment fails to state a cause of action against Yun because the
claim does not plead that Yun personally harassed Navarro, but rather, that
supervisor Mr. Choi engaged in the harassing conduct. (Demurrer, 9:18-22; see
Complaint, ¶¶ 75-76.) The Court agrees.
Government Code section 12940, subdivision (j)(1) prohibits harassment
based on a protected characteristic, such as sexual orientation. (See
Complaint, ¶ 75 [Plaintiff Navarro identifies as a homosexual individual].) While
a single incident of harassment may be enough to constitute a hostile work
environment if it “unreasonably interfered with the plaintiff’s work
performance or created an intimidating, hostile, or offensive working
environment” (Gov. Code, § 12923, subd. (b)), and while the Complaint alleges
what a factfinder could determine to be (if properly supported by evidence)
harassing conduct by Mr. Choi against Plaintiff Navarro (Complaint, ¶¶ 32-36,
73-76), such sexual harassment allegations are not made in the Complaint
against Defendant Yun.
Neither does the Opposition point to any other allegation of
harassment by Yun against Navarro, instead focusing his FEHA discussion on
alter ego allegations made in the Complaint as a vehicle for extending
liability to Yun. (Opp’n, 6:1-10:28.) Neither do the Complaint’s alter ego
allegations (Complaint, ¶¶ 10-22) support liability to Yun on the Complaint’s
Harassment claim because the alter ego allegations are not sufficiently
pleaded. (See Alter Ego discussion infra.) There is thus no factual
ground pleaded in the Complaint supporting a harassment claim against Yun.
Sixth to Twelfth Causes of Action [Labor Code Violations]:
SUSTAINED, With Leave.
Yun argues that the Sixth and Seventh to Twelfth causes of
action fail because Labor Code violations cannot be maintained against an
individual defendant (Demurrer 9:12-10:2) and because the Complaint fails to
allege statutory sections under which Yun would be liable for Labor Code
violations as Navarro’s employer. (Demurrer, 10:5-9.)
To allege a violation under the Labor Code, Plaintiffs must
show that the defendant is an employer as defined by the Industrial Welfare
Commission’s wage order. (See Martinez v. Combs¿(2010) 49 Cal.4th 35,
52.)
The Complaint fails to allege facts indicating that Yun
employed Navarro. (See Complaint, ¶¶ 23-24.) The Complaint also fails to plead
sufficient facts to establish that Yun used Miracle or DND Markets as his alter
ego. (See Alter Ego discussion infra.) The Complaint’s Labor Code claims
fail as pleaded under these circumstances.
On Opposition, Plaintiff argues that Labor Code section
558.1 extends Labor Code liability to Defendant Yun because “any employer or
other person acting on behalf of an employer who violates or causes to be
violated Labor Code sections 203, 226, 226.7, 1193.6, 1194, or 2802,
may be held liable for such violation” pursuant to Labor
Code section 558.1, subdivision (a). (Opp’n, 11:11-13.)
However, subdivision (a) only extends liability to “An[]
employer or other person acting on behalf of an employer” (Lab. Code, § 558.1,
subd. (a)) and the Complaint fails to allege that Yun was an officer or other
person acting on behalf of Miracle or DND Markets. Indeed, Yun comes up four
times in the Complaint outside of generalized “Defendants” allegations—in
paragraphs six, ten, and eleven—and these paragraphs merely describe Mr. Yun as
a party or lodge alter allegations against his use of Miracle or DND Markets as
alter egos. (See Complaint, ¶¶ 6, 10, 11.) Nowhere does the Complaint elaborate
on how Yun acted as an officer or a representative of Miracle or DND Markets
during Navarro’s time as an employee with the companies. (See Complaint
generally.) Section 558.1 of the Labor Code thus fails to support the Labor
Code claims.
First through Thirteenth Causes of Action [Alter Ego Allegations]:
SUSTAINED, With Leave.
Yun demurs to all thirteen (13) causes of action on the grounds
that the alter ego allegations are insufficient to properly allege this legal theory.
(Demurrer, 10:10-13:2.) More specifically, Yun argues that “Plaintiff has failed
to allege any facts sufficient to support any of these factors to state claim under
an alter ego theory of liability against Defendant Yun” and that all “Plaintiff
has done is to assert conclusory statements of alter-ego, devoid of any factual
support, to add an individual defendant that otherwise would not be subject to Plaintiff[
Navarro]’s claims under California law.” (Demurrer, 12:1-4; see Demurrer, 12:1-13:2.)
“Ordinarily, a corporation is regarded as a legal entity, separate
and distinct from its stockholders, officers and directors, with separate and distinct
liabilities and obligations. [Citations.] A corporate identity may be disregarded—the
‘corporate veil’ pierced—where an abuse of the corporate privilege justifies holding
the equitable ownership of a corporation liable for the actions of the corporation.
[Citation.] Under the alter ego doctrine, then, when the corporate form is used
to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful or
inequitable purpose, the courts will ignore the corporate entity and deem the corporation’s
acts to be those of the persons or organizations actually controlling the corporation,
in most instances the equitable owners. [Citations.]” (Sonora Diamond Corp. v.
Superior Ct. (2000) 83 Cal.App.4th 523, 538.) “A determination that a person
is the alter ego of a corporation does not make the alter ego an employer”; “[r]ather
it makes the alter ego liable for the obligations of the corporation.” (Leek
v. Cooper (2011) 194 Cal.App.4th 399, 410.) This determine is one of fact. (Id.
at p. 418 [citation omitted].)
Two requirements must be met to invoke the alter ego doctrine:
(1) “[T]here must be such a unity of interest and ownership between the corporation
and its equitable owner that the separate personalities of the corporation and the
shareholder do not in reality exist”; and (2) “there must be an inequitable result
if the acts in question are treated as those of the corporation alone.” (Sonora,
supra, 83 Cal.App.4th at p. 538.)
Among the factors to be considered in determining whether a unity
of interest and ownership exists for alter ego purposes, courts consider the (1)
commingling of funds and other assets, (2) the holding out by one entity that it
is liable for the debts of the other, (3) identical equitable ownership in the two
entities, (4) use of the same offices and employees, (5) use of one entity as a
mere shell or conduit for the affairs of the other, (6) inadequate capitalization,
(7) disregard of corporate formalities, (8) lack of segregation of corporate records,
and (9) identical directors and officers. (Sonora, supra, 83 Cal.App.4th
at pp. 538-39.) “No one characteristic governs, but the courts must look at all
the circumstances to determine whether the doctrine should be applied.” (Id.
at p. 539.)
Yun argues that the Complaint completely fails to plead evidentiary
facts supporting unity of interest and ownership, such as commingling of funds,
identical equitable ownership between two entities, same officers and employees,
and use of one entity as the conduit of another. (Demurrer, 12:5-12.)
On Opposition, Navarro points to various portions of the Complaint
to support the various unity of interest factors, including: use of Miracle and
DND Markets as a conduit by Yun (Complaint, ¶¶ 10-13; Opp’n, 7:5-7, 8:2-4); comingling
(Complaint, ¶¶ 14-15, 20; Opp’n, 7:8-10, 8:28-9:3); failure to capitalize both corporations
(Complaint, ¶¶ 17-20; Opp’n, 7:8-10, 8:15-27); identical equitable ownership (Complaint,
¶ 24; Opp’n, 7:10-12, 9:11-19; Opp’n, Chami Decl., Exs. A-B [Statement of Information
showing Defendant Yun’s corporate complete control of DND Market and Yunmin Market
respectively, as registered with the Secretary of State for California]); and injustice
(Complaint, ¶ 21; Opp’n, 7:12-13, 10:9-16; see also Complaint, ¶¶ 13, 20).
The Court’s review of paragraphs 10, 11, 12, 14, 15, 16, 17,
18, 19, 22, and 24 are devoid of evidentiary facts sufficient to support the elements
for FEHA Discrimination, Failure to Accommodate, Failure to Engage in the Interactive
Process, and Retaliation—the Complaint’s first through fourth causes of action.
(See, e.g., Complaint, ¶¶ 10 [“Plaintiff is informed and believes, and based
thereon alleges, that at all times relevant, there existed a unity of interest
and ownership between Defendants Miracle, DND and Mr. Yun, such that any
individuality and separateness between said Defendants has ceased and
Defendants Miracle, DND are the alter ego of Defendant Yun”], 14 [“Plaintiff is
informed and believes, and based thereon alleges, that at all times relevant,
Defendants Yun and DOES 1 through 50 have and continue to treat assets
nominally belonging to Defendants Miracle and DND as their own”].)
While the Opposition includes a Declaration attaching copies
of Secretary of State of California records showing full corporate control of Miracle
and DND Markets and thus possibly supporting identical equitable ownership (Opp’n,
Chami Decl., Exs. A-B), these facts are not alleged in the Complaint (see Complaint,
¶¶ 10-22), attached to the Complaint (see Complaint generally), or subject to judicial
notice (see Opp’n generally). While Complaint does adequately plead injustice (Complaint,
¶¶ 13, 20-21), this one factor alone is insufficient on demur to demonstrate a sufficiently
pleaded alter ego theory against Yun.
Defendant Ray Sik Yun’s Demurrer to Plaintiff’s Complaint is
SUSTAINED in Full, With Leave to Amend, because the Complaint’s causes of
action fail to sufficiently plead that Defendant Yun either directly employed Plaintiff
Navarro or that Yun is indirectly liable (either by statute or alter ego
liability) for Plaintiff Navarro’s alleged FEHA and Labor Code injuries.
Plaintiff Navarro is given TEN (10) DAYS’ LEAVE TO AMEND his
operative pleading.