Judge Gail Killefer, Case Number: 20STCP01958, Date: 2024-12-10 Tentative Ruling

On June 19, 2020, Petitioners Derek Hay (“Hay”) and Direct Models, Inc. d/b/a LA Direct Models (“Direct Models”)(collectively referred to as “Hay Defendants”) filed this appeal pursuant to Labor Code §1700.44 from the California Labor Commissioner’s Determination on Controversy issued in Jane DOEs 1-5 v. Derek Hay, et al. (“Labor Commission Action”) on June 15, 2020. Hay is the owner and Chief Executive Officer of Direct Models, a talent agency that provides representation to artists in the adult entertainment industry. Direct Models entered into agreements to represent Respondents Jane DOEs 1-5 between 2015 to 2017.

Labor Commission Action. On June 19, 2018, Jane DOEs 1-5 (collectively, “DOEs”) filed a Petition to Determine Controversey against Hay Defendants with the Labor Commissioner alleging multiple violations of the Talent Agencies Act (“TAA”), breaches of fiduciary duty and breach of contract. Respondents filed a First Amended Petition to Determine Controversy (“FAP”) on October 1, 2018 alleging twelve causes of action for (1) violation of Labor Code §1700.23; (2) fraud; (3) violation of Labor Code §1700.31; (4) violation of Labor Code §1700.33; (5) violation of Labor Code §1700.24; (6) breach of fiduciary duty (Count 1); (7) breach of fiduciary duty (Count 2); (8) breach of fiduciary duty (Count 3); (9) violation of Labor Code §1700.40; (10) breach of contract; (11) unfair business practices; (12) license revocation per Labor Code §§1700.21(a), (b) and 1700.22.

On June 15, 2020, the Labor Commissioner issued a Determination of Controversy on the first through tenth causes of action of the FAP. The Labor Commissioner found in DOEs’ favor on the following causes of action: (1) the third cause of action of violation of Labor Code §1700.31; (2) the fourth cause of action for violation of Labor Code §1700.33; (3) the fifth cause of action for violation of Labor Code §1700.24; (4) the sixth cause of action for breach of fiduciary duty (Count 1); (5) the eighth cause of action for breach of fiduciary duty (Count 3); (6) the ninth cause of action for violation of Labor Code §1700.40; and (7) the tenth cause of action for breach of contract. The Labor Commissioner found DOEs had failed to satisfy their burden on the first cause of action for violation of Labor Code §1700.23 and the second cause of action for fraud.

The Labor Commissioner issued an order (1) voiding and terminating the Agency Contracts between Hay Defendants and DOEs; (2) payment of booking fees, kill fees, flight charges, registration fees and other fees that Hay Defendants charged each DOE in violation of Labor Code §1700.2, 1700.24 and 1700.40; (3) disgorging all commissions received by Hay for the period of June 19, 2017 to June 19, 2018; (4) ordering Hay Defendants to provide DOEs with an accounting of those commissions they received during the period of June 19, 2017 to June 19, 2018; and (5) ordering Hay Defendants to pay DOEs attorney’s fees and costs.

Criminal Action. On March 2, 2020, a criminal complaint was filed in Los Angeles County (Action number BA484102) by the Office of the Attorney General, charging defendants, including Hay, with two counts of felony pandering in violation of Penal Code §266i(a)(1)(the “Criminal Action”).

Appeal. On June 19, 2020, Hay Defendants filed the instant appeal of the Labor Commissioner’s Determination of Controversy pursuant to Labor Code §1700.44. Hay Defendants’ motion for judgment on the pleadings of the eleventh cause of action for unfair business practice was granted on October 24, 2022. This Appeal seeks trial de novo of the following causes of action alleged in the FAP: (1) violation of Labor Code §1700.23; (2) fraud; (3) violation of Labor Code §1700.31; (4) violation of Labor Code §1700.33; (5) violation of Labor Code §1700.24; (6) breach of fiduciary duty (Count 1); (7) breach of fiduciary duty (Count 2); (8) breach of fiduciary duty (Count 3); (9) violation of Labor Code §1700.40; (10) breach of contract.

On March 9, 2023, the court denied DOEs’ Motion for Summary Adjudication of the first, third through sixth, ninth, tenth and eleventh causes of action of their FAP. The Court noted that judgment on the pleadings had already been granted as to the eleventh cause of action. The court denied the motion as to the remaining causes of action on grounds that triable issues of fact remained as to each cause of action.

DOEs move to correct all documents filed in this case, including the Notice of Appeal, to reflect Derek Hay’s name change to Andrew Gallagher in Nevada. DOEs fail to cite any authority for the requested relief prior to entry of judgment. DOEs concerns’ that Derek Hay may be attempting to escape liability by changing his name can be addressed post-judgment by adding Andrew Gallager to the judgment as an aka. California courts have inherent power to enforce their judgments and statutory power to compel obedience to their judgments, orders and process, and this power includes amending the name of the judgment debtor if the judgment debtor changes his name. (CCP §§ 128(a)(4), 177.) On reply, DOEs cite to Thomason v. L.C. Roney & Co. (1952) 112 Cal.App.2d 420, 427 as authority for their motion. However, Thomason addressed whether a judgment could be amended to reflect the true name of a judgment debtor. (Id. (“Since the court had jurisdiction over the defendant, it had jurisdiction to make its judgment reflect the defendant's true name.”) DOEs’ concerns regarding Hay’s name change are more properly addressed at the time of entry of judgment or post-judgment0. DOEs’ Motion Ordering Petitioner’s Name to Be Corrected is denied.

PROCEEDING: Motion for An Order Permitting Respondents to File Renewed Motion for Summary Adjudication with Unredacted Exhibits

TENTATIVE: Respondent DOEs’ Motion for An Order Permitting Respondents to File Renewed Motion for Summary Adjudication with Unredacted Exhibits is denied.

On June 19, 2020, Derek Hay (“Hay”) and Direct Models, Inc. d/b/a LA Direct Models (“Direct Models”)(collectively referred to as “Hay Appellants”) filed this appeal pursuant to Labor Code §1700.44 from the California Labor Commissioner’s Determination on Controversy issued in Jane DOEs 1-5 v. Derek Hay, et al. (“Labor Commission Action”) on June 15, 2020. Hay is the owner and Chief Executive Officer of Direct Models, a talent agency that provides representation to artists in the adult entertainment industry. Direct Models entered into agreements to represent Respondents Jane DOEs 1-5 between 2015 to 2017.

Labor Commission Action. On June 19, 2018, Jane DOEs 1-5 (collectively, “DOEs” or “Respondents”) filed a Petition to Determine Controversy against Hay Appellants with the Labor Commissioner alleging multiple violations of the Talent Agencies Act (“TAA”), breaches of fiduciary duty and breach of contract. Respondents filed a First Amended Petition to Determine Controversy (“FAP”) on October 1, 2018 alleging twelve causes of action: (1) violation of Labor Code §1700.23; (2) fraud; (3) violation of Labor Code §1700.31; (4) violation of Labor Code §1700.33; (5) violation of Labor Code §1700.24; (6) breach of fiduciary duty (Count 1); (7) breach of fiduciary duty (Count 2); (8) breach of fiduciary duty (Count 3); (9) violation of Labor Code §1700.40; (10) breach of contract; (11) unfair business practices; and (12) license revocation per Labor Code §§1700.21(a), (b) and 1700.22.

The Labor Commissioner issued an order (1) voiding and terminating the Agency Contracts between Hay Appellants and DOEs; (2) payment of booking fees, kill fees, flight charges, registration fees and other fees that Hay Appellants charged each DOE in violation of Labor Code §1700.2, 1700.24 and 1700.40; (3) disgorging all commissions received by Hay for the period of June 19, 2017 to June 19, 2018; (4) ordering Hay Appellants to provide DOEs with an accounting of those commissions they received during the period of June 19, 2017 to June 19, 2018; and (5) ordering Hay Appellants to pay DOEs attorney’s fees and costs.

Criminal Action. On March 2, 2020, a criminal complaint was filed in Los Angeles County (Action number BA484102) by the Office of the Attorney General, charging Appellants, including Hay, with two counts of felony pandering in violation of Penal Code §266i(a)(1)(the “Criminal Action”).

Appeal. On June 19, 2020, Hay Appellants filed the instant appeal of the Labor Commissioner’s Determination of Controversy pursuant to Labor Code §1700.44. Hay Appellants’ motion for judgment on the pleadings of the eleventh cause of action for unfair business practice was granted on October 24, 2022. This Appeal seeks trial de novo of the following causes of action alleged in the FAP: (1) violation of Labor Code §1700.23; (2) fraud; (3) violation of Labor Code §1700.31; (4) violation of Labor Code §1700.33; (5) violation of Labor Code §1700.24; (6) breach of fiduciary duty (Count 1); (7) breach of fiduciary duty (Count 2); (8) breach of fiduciary duty (Count 3); (9) violation of Labor Code §1700.40; and (10) breach of contract.

MOTION FOR ORDER PERMITTING RESPONDENTS TO FILE RENEWED MSA WITH UNREDACTED EXHIBITS

Any person, not just litigants, can move, apply or petition to unseal any court record; no showing of changed circumstances is necessary on a motion to unseal records. (Cal. Rules of Court, Rules 2.550(c-e), 2.551(h); In re Marriage of Nicholas (2010) 186 Cal. App. 4th 1566, 1574-1576.) Rulings on motions to unseal records do not require express findings of fact by the trial court, although motions to seal require express findings. The trial court makes implied findings when ruling on a motion to unseal. These findings can be inferred from the ruling itself and from other papers and documents before the trial court. (Cal. Rules of Court, Rule 2.55; In re Providian Credit Card Cases (2002) 96 Cal. App. 4th 292, 302.)

Moreover, the Court has continuing jurisdiction to seal or unseal records. “Since orders to seal court records implicate the public's right of access under the First Amendment, they inherently are subject to ongoing judicial scrutiny, including at the trial court level.” (In re: Marriage of Nicholas, supra, 186 Cal.App.4th at 1575. “Due to its temporary nature and its infringement upon the public right to know, a sealing order in a civil case is always subject to continuing review and modification, if not termination, upon changed circumstances.” (Copley Press, Inc. v. Supr. Ct. (1998) 63 Cal.App.4th 367, 374.)

“The burden rests on the party seeking to deny public access to court records to establish compelling reasons why and to what extent the records should be made private. Where the relief extends to sealing permanent court records, the court must be careful to limit its denial of access by narrow and well-defined orders.” (Id.)

Copley Press involved a news publication’s motion to unseal court records in a highly publicized case involving the sexual assault of the minor plaintiff by fellow students at school. The underlying litigation between the plaintiff and the school district was ultimately settled and the action was dismissed. A nonparty news publication asked the trial court to unseal the records pertaining to the settlement amount and the trial court denied the request based on the overriding privacy interest of the minor. The Court of Appeals reversed on grounds that the minor’s privacy interest in the settlement amount did not override the interest of the public’s First Amendment right to access court records. (Id. at 374-376.)

Respondent DOEs ask that the Court unseal the following records, which they have submitted in support of the Renewed MSA:

· Ex. 36: A transcript of a WhatsApp voicemail Hay left for Cunningham regarding DOE 4 (obtained by Attorney General (“AG”))

· Ex. 43: The Forensic Expert’s report including findings and printouts extracted from Petitioners’

· Quickbooks files that pertain to Respondents. (Quickbook documents produced by Hay Appellants, as extracted and summarized by DOEs’ forensic accounting expert (“QB”))

· Ex. 61: A transcript of a WhatsApp voicemail Hay left for Cunningham. (AG)

· Ex. 63: WhatsApp messages between Cunningham and an individual associated with Petitioners and their counsel discussing evidence relevant to this case. (AG)

· Ex. 92: A transcript of a WhatsApp voicemail Hay left for Cunningham regarding DOE 2 (AG)

DOEs argue there is no overriding interest that overcomes the right of public access to these records, which DOEs rely upon to obtain summary adjudication. DOEs argue the accounting records establish that Hay Appellants charged unapproved unlawful booking fees, kill fees, travel convenience fees and photo fees, as well as Hay Appellants’ perjury and altering of financial evidence. DOEs argue there is no overriding interest in private communications between individuals.

In response, Hay Appellants argue four of the exhibits obtained by the Attorney General are subject to both the Criminal Case Protective Order of March 14, 2022, and the Protective Order issued by this court on November 21, 2023. Hay Appellants argue the Attorney General has not been given notice of this motion. Hay Appellants ask that the Court deny or defer this motion as to the four exhibits obtained from the AG in criminal discovery, Exhibits 36, 61, 63, and 92.

The record before the court reflects that there are three protective orders. The first was signed on March 14, 2022, in this court by Judge Burdge instructing that any documents designated as “CONFIDENTIAL INFORMATION” be lodged with the clerk. (Mot., Ex. 1, at p. 3.) The second was signed on March 21, 2023, in this court and ordered “AG MATERIALS shall be filed with the clerk in an envelope” designating the materials enclosed as confidential. (Mot. Ex. 2, at p. 16.) The March 21, 2023, Protective Order references the third protective order, meaning the Criminal Case Protective Order issued by Judge White. Specifically, the March 21, 2023, Protective Order states:

Whereas a Stipulated Protective Order pertaining to materials produced by the AG’s office in the criminal proceeding against Petitioner Derek Hay and co-defendants Karin Michmichian and Dwight Cunningham was entered by Judge White in Dept. 50 on March 30, 2022 (the “SPO”); and, Whereas Respondents’ counsel sought modification of Judge White’s Order; and, on June 28, 2023, Judge White GRANTED Petitioners’ Motion to Modify the SPO. The written Order of 9/21/23, provided that the “Protective Order issued on March 30, 2022 shall not prohibit” [this Court] from “issuing those Discovery Orders ... as to the use of those materials in [this] Civil Trial”; and, also Ordered that Counsel to whom such materials are provided “shall be governed by the provisions of the existing Protective Order”; and . . .

2) In addition to the terms of the SPO in place in the Criminal Case, the AG MATERIALS shall be subject to the following access and disclosure limitations in this civil proceeding . . .

The March 21, 2023, Protective Order specifies that it is subject to the terms of the Criminal Case Protective Order, whose specific terms are unknown to this court as Parties failed to attach the Criminal Case Protective Order. Moreover, the Criminal Protective Order appears to have been modified by Judge White to permit this court to issue “Discovery Orders” but no other matters outside discovery as those “shall be governed by the provisions of the existing [Criminal] Protective Order.” (Ex. 2, at p. 15.)

Therefore, the court is uncertain that it has the power to seal and unseal records because Judge White’s Criminal Protective Order restricted this court’s authority to issuing Discovery Orders, and rules governing the sealing of records outside Discovery Orders. “The sealed records rules ‘do not apply to discovery motions and records filed or lodged in connection with discovery motions or proceedings. However, the rules do apply to discovery materials that are used at trial or submitted as a basis for adjudication of matters other than discovery motions or proceedings.’ [Citation.]” (In re Marriage of Tamir (2021) 72 Cal.App.5th 1068, 1085.)

In addition, there appears to be no order ordering the AG Materials be filed under sealed as the protective orders issued by this court instructed the Parties to lodge the documents with the clerk conditionally under seal. (CRC, rule 2.551.) “Rule 2.551(b)(3) governs the procedure for a party that files, in an adjudicatory proceeding, records that were subject to a confidentiality agreement or protective order, but does not intend to request the sealing of such records. Such party must notify the party that produced the records that the records will be placed in the public files unless the producing party brings a motion to seal within 10 days (or duly authorized extension) of receiving such notice. (Rule 2.551(b)(3)(A)(iii), (B).)” (Savaglio v. Wal-Mart Stores, Inc. (2007) 149 Cal.App.4th 588, 601 [italics original].)

Here, the court has not ordered that the AG Materials be filed under seal. Instead, the court instructed the parties to file the documents conditionally under seal pursuant to a protective order. The court cannot order the unsealing of documents conditionally under seal, when no sealing order exists. “A record must not be filed under seal without a court order.” (CRC, rule 2.551(a).) “The court must not permit a record to be filed under seal based solely on the agreement or stipulation of the parties.” (Ibid.) The court may only order that a record be filed under seal if all the conditions outlined in CRC rule 2.550(d) are met. No such showing has been made and no order to seal exists.

Lastly, the Hay Appellants assert that the DOEs were required to provide notice to the Attorney General and the Criminal Court of this Motion. However, the Hay Appellants fail to specify which protective order mandates such notice and have not cited the specific provision. Therefore, the court cannot find that notice to the Attorney General and the Criminal Court was required.

Respondent DOEs’ Motion for An Order Permitting Respondents to File Renewed Motion for Summary Adjudication with Unredacted Exhibits is denied.

TENTATIVE: DOEs 1-5’s Renewed Motion for Summary Adjudication is GRANTED as to the first cause of action for violation of Labor Code §1700.24, the fourth cause of action for violation of Labor Code §1700.33, the fifth cause of action for violation of Labor Code §1700.24 and the sixth cause of action for breach of fiduciary duty and DENIED as to the third cause of action for violation of Labor Code §1700.31, and the tenth cause of action for breach of contract. Summary adjudication of the ninth cause of action is granted as to DOES 2 and 5 and is otherwise denied as to DOES 1, 3, and 4.

Labor Commission Action: On June 19, 2018, Jane DOEs 1-5 (collectively, “DOEs”) filed a Petition to Determine Controversy against Hay Appellants with the Labor Commissioner alleging multiple violations of the Talent Agencies Act (“TAA”), breaches of fiduciary duty, and breach of contract. Respondents filed a First Amended Petition to Determine Controversy (“FAP”) on October 1, 2018, alleging twelve causes of action: (1) violation of Labor Code §1700.23; (2) fraud; (3) violation of Labor Code §1700.31; (4) violation of Labor Code §1700.33; (5) violation of Labor Code §1700.24; (6) breach of fiduciary duty (Count 1); (7) breach of fiduciary duty (Count 2); (8) breach of fiduciary duty (Count 3); (9) violation of Labor Code §1700.40; (10) breach of contract; (11) unfair business practices; (12) license revocation per Labor Code §§1700.21(a), (b) and 1700.22.

The Labor Commissioner issued an order (1) voiding and terminating the Agency Contracts between Hay Appellants and DOEs; (2) payment of booking fees, kill fees, flight charges, registration fees and other fees that Hay Appellants charged each DOE in violation of Labor Code §1700.2, 1700.24 and 1700.40; (3) disgorging all commissions received by Hay for the period of June 19, 2017 to June 19, 2018; (4) ordering Hay Appellants to provide DOEs with an accounting of those commissions they received during the period of June 19, 2017, to June 19, 2018; and (5) ordering Hay Appellants to pay DOEs attorney’s fees and costs.

Criminal Action: On March 2, 2020, a criminal complaint was filed in Los Angeles County (Action number BA484102) by the Office of the Attorney General, charging Appellants, including Hay, with two counts of felony pandering in violation of Penal Code § 266i(a)(1)(the “Criminal Action”).

Appeal: On June 19, 2020, Hay Appellants filed the instant appeal of the Labor Commissioner’s Determination of Controversy pursuant to Labor Code §1700.44. Hay Appellants’ motion for judgment on the pleadings of the eleventh cause of action for unfair business practice was granted on October 24, 2022. This Appeal seeks trial de novo of the following causes of action alleged in the FAP: (1) violation of Labor Code §1700.23; (2) fraud; (3) violation of Labor Code §1700.31; (4) violation of Labor Code §1700.33; (5) violation of Labor Code §1700.24; (6) breach of fiduciary duty (Count 1); (7) breach of fiduciary duty (Count 2); (8) breach of fiduciary duty (Count 3); (9) violation of Labor Code §1700.40; (10) breach of contract.

A: Provisions of the California TAA, Labor Code §1700, et seq.; and Title 8 of the California Code of Regulations, § 12000 et seq.

B: Prostitution is dangerous to DOEs’ health, safety and welfare and that prostitution is and inherently dangerous

DENIED pursuant to Evidence Code §§451(f) and 452(g). These are neither facts that are universally known under Evidence Code §451(f) and or indisputable facts capable of immediate and accurate determination under Evidence Code §452(g). As to the illegality of prostitution, such an issue should have been briefed and/or the Penal Code provisions criminalizing prostitution should have been submitted for judicial notice.

GRANTED pursuant to Evidence Code §452(d) as “records of (1) any court of this state…”

C(2): Labor Commissioner Decisions in (1) In the Matter of the Statement of Issues against Direct Models, Inc.; (2) Jane Does 1-5 v. Hay; (3) Direct Models, Inc. v. Adams; (4) Szarko v. Direct Models; and (5) Jane Doe aka/pka Nicole Doshi v. Twice Baked Media dba Motley Models

GRANTED pursuant to Evidence Code §451(a) as decisional authority of this state.

D: Contents of Direct Models, Inc.’s and The Luxury Companion’s Websites on Archive.org

DENIED pursuant to Evidence Code §452(g). The websites are not “facts and propositions that are not reasonably subject to disputed and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy,” such as “facts which are accepted as established by experts and specialists in the natural, physical and social sciences, if those facts are of such wide acceptance that to submit them to the jury would be to risk irrational findings.” (Legislative Comment, Evid. C. §452.)

A: Documents, Reports and Records furnished by DLSE to Counsel during Discovery

B: DOEs 1-5 v. Direct Models & Derek Hay Petition to Determine Controversy and First Amended Petition to Determine Controversy

GRANTED as these documents are part of the administrative record of the Labor Commissioner’s records, as well as this Court’s records.

C: Interview transcripts of DOEs with Labor Commissioner, Attorney General and their Counsel

F: Determinations on Petitions to Determine Controversy before Labor Commissioner

DENIED as Hay Appellants fail to establish those are judicially noticeable under EC §§451 or 452.

I. Legal Standard[1]

“A plaintiff or cross-complainant has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. Once the plaintiff or cross-complainant has met that burden, the burden shifts to the defendant or cross-defendant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (CCP §437c(p)(1).)

“A party is entitled to summary judgment only if it meets its initial burden of showing there are no triable issues of fact and the moving party is entitled to judgment as a matter of law. This is true even if the opposing party fails to file any opposition. The court's assessment of whether the moving party has carried its burden—and therefore caused a shift—occurs before the court's evaluation of the opposing party's papers. Therefore, the burden on the motion does not initially shift as a result of what is, or is not, contained in the opposing papers.” (Mosley v. Pacific Specialty Insurance Company (2020) 49 Cal.App.5th 417, 434–435 (landlord’s failure to address issue of whether they were aware of their tenant’s marijuana growing operation was not grounds to grant summary judgment where moving party failed to satisfy its initial burden as to the issue); Thatcher v. Lucky Stores, Inc. (2000) 79 Cal.App.4th 1081, 1086-1087 (court cannot grant summary judgment based merely on lack of opposition; court must first determine if the moving party has satisfied its burden).)

In addition, the evidence and affidavits of the moving party are construed strictly, while those of the opponent are liberally read. (Government Employees Ins. Co. v. Sup. Ct. (2000) 79 Cal.App.4th 95, 100.) “All doubts as to the propriety of granting the motion (whether there is any issue of material fact [Code of Civil Procedure] § 437c) are to be resolved in favor of the party opposing the motion (i.e., a denial of summary judgment).” (Hamburg v. Wal-Mart Stores, Inc. (2004) 116 Cal.App.4th 497, 502.)

DOEs object to the Hay Appellants’ Separate Statement on grounds that it was untimely filed and served. Hay Appellants’ Separate Statement was untimely filed but DOEs responded to the merits of the motion and the substance of the Separate Statement. The untimeliness objection is overruled.

III. Discussion

This court denied Respondent DOEs’ motion for summary adjudication as to the first, third, fourth, fifth, sixth, ninth, tenth, and eleventh causes on March 9, 2023. DOEs have now filed a renewed motion for summary adjudication based on newly discovered facts and circumstances. (CCP, § 437c(f)(2). Those four circumstances are:

1) Appellant Derek Hay has pleaded guilty to two felony counts in the criminal case People v. Michmichian, Cunningham and Hay (Superior Court Case # BA498396) (the “Criminal Case”) related to the allegations contained in DOES pleadings; one count of conspiracy to commit pandering by procurement; and one count of perjury.

2) Respondent DOEs obtained over 160,000 pages of evidence - including texts, WhatsApp messages and voice mail messages between Derek Hay and his co-conspirators that conclusively establish numerous relevant facts.

3) A final decision was rendered in In the Matter of the Statement of Issues against Direct Models, Inc. (2022) SC 6641 (OAH # 2019070942) (“Statement of Issues” or “S/I”) attached hereto as Exhibit 2 - which included numerous dispositive findings of fact and conclusions of law that are directly relevant to several of DOEs’ causes of action. As the action is final and Appellants’ challenge has been dismissed, DOEs assert the findings of fact and law are final, and collateral estoppel precludes Appellants from challenging them here

4) The Labor Commission decided Jane Doe aka/pka Nicole Doshi v. Twice Baked Media dba Motley Models, (2024) TAC 52887 (“Doshi”) attached hereto as Exhibit 3 to this Motion. While the decision is not binding, DOEs assert the Labor Commissioner’s express overruling of a line of cases on which Appellants rely on is instructive in regards to this Motion.

Hay Appellants do not challenge DOEs bases for seeking a renewed motion for summary adjudication. As the court is satisfied that DOEs have presented a sufficient basis for a renewed motion, the court considers the Motion on the merits.

A. Standard of Review for Claims for Violation of the TAA

The purpose of the Talent Agencies Act (“TAA”) is “remedial; its purpose is to protect artists seeking professional employment from the abuses of talent agencies.” (Styne v. Stevens (2001) 26 Cal.4th 42, 50.) The current TAA applies to both talent managers and agents. (Marathon Entertainment, Inc. v. Blasi (2008) 42 Cal.4th 974, 980.) Under the TAA, “no person shall engage in or carry on the occupation of a talent agency without first procuring a license therefor from the Labor Commissioner.” (Lab. Code, §1700.5.) A “talent agency” means “a person or corporation who engages in the occupation of procuring, offering, promising, or attempting to procure employment or engagements for an artist….” (Lab. Code, §1700.4(a).) The term “artist” includes “models.” (Id. at subd. (b).)

“Since the clear object of the Act is to prevent improper persons from becoming artists' managers and to regulate such activity for the protection of the public, a contract between an unlicensed artists' manager and an artist is void. Contracts otherwise violative of the Act are void. And as to such contracts, artists, being of the class for whose benefit the Act was passed, are not to be ordinarily considered as being in Pari delicto.” (Buchwald v. Supr. Ct. (1967) 254 Cal.App.2d 347, 351.)

“In cases of controversy arising under this chapter, the parties involved shall refer the matters in dispute to the Labor Commissioner, who shall hear and determine the same, subject to an appeal within 10 days after determination, to the superior court where the same shall be heard de novo.” (Lab. Code, §1700.44(a).) “[T]his language, using the mandatory ‘shall,’ grants ‘original and exclusive jurisdiction over issues raising under the Act’ to the Labor Commissioner.” (Villanueva v. Fidelity National Title Co. (2021) 11 Cal.5th 104, 127.) The Labor Commissioner has exclusive jurisdiction to decide the first instance issues arising under the TAA and requires any defense first be heard by the Labor Commissioner before the parties can proceed to court. (Lab. Code, §1744(a); Styne, supra, 26 Cal.4th at p. 42.)

Pursuant to Labor Code §1700.44(a), a Labor Commissioner’s determination under the TAA is subject to “de novo” review in the superior court. Appellants are “entitled to a complete new hearing—a complete new trial—in the superior court that is in no way a review of the prior proceeding. (Buchwald, supra, 8 Cal.3d at p. 502.) The court must make its findings and conclusions on appeal as if “no previous hearing had ever been held,” and no deference whatsoever is to be given to the Labor Commissioner’s determination below. (Id. at 501; Marathon Entertainment, Inc. v. Blasi (2008) 42 Cal.4th 974, 990 (“under the Act’s statutorily guaranteed trial de novo procedure, the Labor Commissioner’s findings carry no weight”).

Under Labor Code §98.2, “[w]ithin 10 days after service of notice of an order, decision, or award the parties may seek review by filing an appeal to the superior court, where the appeal shall be heard de novo.” (Lab. Code, § 98.2, subd. (a).) It therefore appears that where a trial de novo is authorized in the superior court, proceedings are subject to the rules usually applicable to superior court actions. (Sales Dimensions v. Superior Court (1979) 90 Cal.App.3d 757, 761 (whether civil discovery was available in de novo appeal of Labor Commissioner determination was within the court’s discretion.) Furthermore, “an interpretation of [section 98.2] must be arrived at which, if possible, gives effect to both the term ‘review’ and the term ‘de novo.’ (Citations omitted). Since the superior court may hear testimony, including any new evidence, the findings of the Labor Commissioner are entitled to no weight whatsoever, and the proceedings are truly ‘a trial anew in the fullest sense.’” (Id. at p. 763.) The superior court has broad latitude in determining the applicable procedures in such a proceeding, because “no procedures for exercising this jurisdiction are specified.” (Id. at pp. 763-764.)

B. Respondent DOEs Fail to Establish They are Entitled to Summary Adjudication Based on Issue Preclusion

Issue preclusion bars relitigation of the same issues that were argued and decided in the previous action. (DKN Holdings, LLC v. Faerber (2015) 61 Cal.4th 813, 824.) The elements of issue preclusion are “(1) after final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or one in privity with that party. (Id. at p. 825.) “The party asserting collateral estoppel bears a ‘heavy’ burden of proving all of these factors.” (Kemp Bros. Construction, Inc. v. Titan Electric Corp. (2007) 146 Cal.App.4th 1474, 1482.) Issue preclusion applies to final decisions of administrative agencies acting in a judicial or quasi-judicial capacity. (Murray v. Alaska Airlines, Inc. (2010) 232 Cal.App.4th 370, 389.)

The DOEs assert that the issues decided by an Administrative Law Judge “In the Matter of the Statement of Issues Against: Direct Models, Inc. d/b/a LA Direct Models,” Agency Case No. SC 6641 before the Division of Labor Standards Enforcement of the California Department of Industrial Relations 6641 (“Labor Enforcement Case”) as set forth in the decision issued on April 20, 2022 by Administrative Law Judge Eric Sawyer (“Statement of Issues”) (Motion, Ex. 2) were:

1) 1)The Best Practices form (Motion, Ex. 10-13) was a contract which was unapproved and imposed conditions on DOES inconsistent with and/or not provided within the Labor Commissioner's pre-approved form contract, and charged fees not provided for in the pre-approved Schedule of Fees. (Motion, Ex. 2, p. 11, ¶26);

2) Kill Fees taken from DOEs were not authorized by the Agency Contract (Motion, Ex. 5-9) and/or Schedule of Fees (Motion, Ex. 23-27), and were imposed even when a shoot was rejected. (Motion, Ex. 2, p. 19, ¶43 and p. 20, ¶46.)

3) Direct Models charged fees that were not on its Schedule of Fees when it booked travel for its clients. (Motion, Ex. 2, p. 22, ¶51)

4) Hay insisted DOE 5 engage in an act she was extremely uncomfortable performing which was hazardous to her health/ safety, or welfare. (Motion, Ex. 2, p. 28, ¶¶ 67-69.)

5) The Luxury Companion (“TLC”) is owned by Michmichian and Cunningham. Michmichian, Cunningham, and HAY are very good friends, frequently refer business to each other, and their respective companies have a close business relationship. (Motion, Ex. 2, pp. 32-33, ¶83.)

6) Hay Appellants’ staff knew Direct Model’s clients referred to TLC for escort work were being referred to engage in prostitution. (Motion, Ex. 2, p. 34, ¶85.)

7) Hay Appellants could have ascertained upon reasonable inquiry that Hay’s referral of clients to TLC for escorting would be hazardous to the involved clients' health, safety, or welfare. Hay knew TLC was engaged in prostitution, and that referring his clients to TLC was referring them to a business that engaged in prostitution. (Motion, Ex. 2, p. 37, ¶96.)

8) Hay used Direct Models to extract $4330 in rent and security deposits from funds held in DOE 4's trust account. (Motion, Ex. 2 at 40 ¶¶ 105, 106; 41 ¶ 109.)

9) Hay facilitated DOE 4's involvement in escorting for TLC. (Motion, Ex. 2 at p. 34, ¶¶ 86, 87.)

10) Regardless of industry standards, Direct Models was still required to comply with the Labor Code and its regulations, which prohibit assessing fees not approved by the Labor Commissioner. (Motion, Ex. 2, p. 21, ¶ 47.)

In addition to listing the issues in the Renewed Motion (Motion, p. 12), the Respondent DOEs also highlight in yellow the portions of the Statement of Issues they maintain have a preclusive effect in this action. (Motion, Ex. 2.)

The Respondent DOEs did not include any of the ten issues or the highlighted issues as material facts in their separate statement, nor is the Statement of Issues cited as evidence in support of the material facts that would correspond to the identified issues. “In motions for summary judgment or adjudication, ‘“all material facts must be set forth in the separate statement. ‘This is the Golden Rule of Summary Adjudication: if it is not set forth in the separate statement, it does not exist.’” [Citation.] Thus, when the ‘fact” is not mentioned in the separate statement, it is irrelevant that such fact might be buried in the mound of paperwork filed with the court, because the statutory purposes are not furthered by unhighlighted facts.’ [Citations]” (Los Angeles Unified School District v. Torres Construction Corp. (2020) 57 Cal.App.5th 480, 492–493.)

In this manner, the DOEs task the court with parsing through Exhibit 2 to determine which facts establish an element of a cause of action in the FAC, negate an affirmative defense, or establish duty. The court declines to do so. “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (CCP, § 437c(f)(1).) The DOEs also fail to tie each identified issue to a specific cause of action or element of that cause of action either in the separate statement or the moving papers. The court is “not required to examine undeveloped claims or make plaintiff’s arguments for him.” (Hester v. Public Storage (2020) 49 Cal.App.5th 668, 681.)

The court has discretion to deny a motion where the moving party fails to relate law to the facts of the case. (Quantum Cooking Concepts, Inc. v LV Assocs., Inc. (2011) 197 Cal.App.4th 927, 931, 933.) The court has “no obligation to undertake its own search of the record backwards and forwards to try to figure out how the law applies to the facts of the case.” (Id. at p. 934.) As the Quantum Court pointed out, California Rules of Court 3.1113(b) “rests on a policy-based allocation of resources, preventing the trial court from being cast as a tacit advocate for the moving party's theories by freeing it from any obligation to comb the record and the law for factual and legal support that a party has failed to identify or provide.” (Id.) Neither Hay Appellants nor the court should be required to guess as to the causes of action or elements to which each precluded issue applies.

Furthermore, the Respondent DOEs fail to show that the Labor Enforcement Case has a preclusive effect on this action. “For an administrative decision to have collateral estoppel effect, it and its prior proceedings must possess a judicial character. [Citation.] Indicia of proceedings undertaken in a judicial capacity include a hearing before an impartial decision maker; testimony given under oath or affirmation; a party's ability to subpoena, call, examine, and cross-examine witnesses, to introduce documentary evidence, and to make oral and written argument; the taking of a record of the proceeding; and a written statement of reasons for the decision.” (Pacific Lumber Co. v. State Water Resources Control Bd. (2006) 37 Cal.4th 921, 944.) Respondent DOEs fail to address how the Labor Enforcement Case possesses a judicial character that would permit this court to find that the Administrative Law Judge’s findings on certain issues have a preclusive effect on this action.

i. Appellant Hay’s Guilty Plea is Admissible Without Resort to Issue Preclusion

Appellant Hay argues issue preclusion does not apply to his guilty plea in the Criminal Action. As to Hay’s guilty plea, DOEs have failed to establish that the “actually litigated” element of issue preclusion has been satisfied. “When a plea of guilty has been entered in the prior action, no issues have been ‘drawn into controversy’ by a ‘full presentation’ of the case. It may reflect only a compromise or a belief that paying a fine is more advantageous than litigation. Considerations of fairness to civil litigants and regard for the expeditious administration of criminal justice combine to prohibit the application of collateral estoppel against a party who, having pleaded guilty to a criminal charge, seeks for the first time to litigate his cause in a civil action.” (Teitelbaum Furs, Inc. v. Dominion Ins. Co. (1962) 58 Cal.2d 601, 605–606.)

However, Hays’ guilty plea is admissible without resort to issue preclusion. “A plea of guilty entered by a defendant in a criminal proceeding constitutes an admission of guilt and, if material, evidence thereof is admissible in a subsequent civil trial.” (Mooren v. King (1960) 182 Cal.App.2d 546, 551.) A plea of guilty is admissible in a subsequent civil action on the independent ground that it is an admission. (Teitelbaum Furs, Inc., supra, 58 Cal.2d at p. 605.)

C. First Cause of Action for Violation of Labor Code §1700.23

Every talent agency shall submit to the Labor Commissioner a form or forms of contract to be utilized by such talent agency in entering into written contracts with artists for the employment of the services of such talent agency by such artists, and secure the approval of the Labor Commissioner thereof. Such approval shall not be withheld as to any proposed form of contract unless such proposed form of contract is unfair, unjust and oppressive to the artist. Each such form of contract, except under the conditions specified in Section 1700.45, shall contain an agreement by the talent agency to refer any controversy between the artist and the talent agency relating to the terms of the contract to the Labor Commissioner for adjustment. There shall be printed on the face of the contract in prominent type the following: “This talent agency is licensed by the Labor Commissioner of the State of California.”

a. DOEs 1-5 Satisfy Their Burden as Moving Parties on the First Cause of Action

DOEs 1-3 and 5 establish (1) that Hay Appellants required DOEs 1-3 and 5 to execute the Agency Agreement, Best Practices Contract, and Model Release Contract as a condition of their representation. (DOEs 1-3 and 5 Declarations, ¶ 3.) (2) The documents were each given to DOEs 1-3 and 5 in a single meeting with each of them (DOE 1-3 and 5 Declarations, ¶ 3.) (3) Hay Appellants enforced the terms of the Best Practices Contract against them (Motion, DOEs 1-5 Decs., ¶7, Exs. 39, 44-47 and 43.) And (4) that the Best Practices Contract and the Model Release Contract were not approved by the Labor Commissioner and did not bear the required Labor Commissioner’s endorsement. (Motion, Exs. 1, 9-12, 33 and 32.)

DOE 4 establishes (1) that Hay Appellants required her to execute the Agency Agreement and the Model Release but not the Best Practices Contract (DOE 4 Dec., ¶3; (2) the documents were sent to her in a single email (DOE 4 Dec., ¶3) and (3) the Hay Appellants enforced the terms of the Best Practices Contract against her even though she had never signed it (DOE 4 Dec., ¶7).

DOEs 1-5 also establish that they were charged agency commissions and fees in the following amounts based on undisputed evidence as part of Hay Appellants’ representation of them as a talent agency: (1) DOE 1--$305 in agency commissions and total fees of $950 (2) DOE 2--$6,217.50 in agency commissions and total fees of $15,093.50; (3) DOE 3--$1,865 in agency commissions and total fees of $4,615; (4) DOE 4--$4,295 in agency commissions and total fees of $14,166.99; and (5) DOE 5--$1,385 in agency commissions and total fees of $4,663. As stated in Marathon Entertainment, the Court has broad powers once a violation of the TAA is found, including voiding the contract, allowing an artist to keep reimbursement payments and denying any recovery by the agency under the agreement. (Lorch Decl., ¶¶ 8, 9, Ex 43 at pp. 1-8.)

DOEs 1-5 satisfy their initial burden on summary adjudication as to the first cause of action. Their evidence establishes that Hay Appellants used “written contracts with artists for the employment of the services of such talent agency by such artists” that were not approved by the Labor Commissioner and in violation of Labor Code §1700.23. Such an agreement is void. (Buchwald, supra, 254 Cal.App.2d at p. 351.) DOEs 1-5 also establish that they were charged fees under these void and illegal agreements.

b. Hay Appellants Fail to Raise a Triable Issue of Material Fact As to the First Cause of Action

Hay Appellants fail to raise a triable issue of fact as to the first cause of action. Hay Appellants argue DOEs failed to submit any evidence in support of their allegation of fraudulent submission (FAP, ¶13), an integrated agreement (FAP, ¶¶13-14), each agreement having a stamp of approval (FAP, ¶15), failure to get approval for the entire agreement (FAP, ¶16), disgorgement based on unlawful representations (¶21) and damages (¶22).

However, none of these allegations are essential elements of a claim for violation of Labor Code §1700.23. A claim for violation of Labor Code §1700.23 only requires that a complainant establish that (1) a talent agency entered into written contracts with artists for the employment of the talent agency’s services by the artists and (2) those written contracts were not submitted to the Labor Commissioner and approved. There is no scienter requirement, nor is the statute limited to integrated agreements.

Hay Appellants also fail to cite any authority holding that damages are an essential element of a claim for violation of Labor Code §1700.23. DOEs may have pled a claim for damages to be proven at trial but what relief they are entitled to in response to Hay Appellants’ violation of Labor Code §1700.23 is entirely within the court’s discretion. As noted in Marathon Entertainment, Inc., the TAA is “silent—completely silent” on the “proper remedy” for violation of the TAA, specifically illegal procurement. (Marathon Entertainment, Inc., supra, 42 Cal.4th at p. 991 [“The Act provides no remedy for its violation…”].) In response to a Petition for Determination of Controversy, Labor Commissioner has the “power to void contracts” and “deny all recovery for services where the Act has been violated.” (Id. at p. 995.) However, while these remedies are available and the Labor Commissioner has the power to grant such remedies, “there is no duty to do so in all instances.” (Ibid.)

DOEs 1-5 also submit evidence of the agency commissions and total fees charged to each of them under the agreements. (Separate Statement, Undisputed Material Fact (“UMF”) Nos. 27-31.) None of these amounts are disputed.

Hay Appellants also do not dispute that (1) the Best Practices Contract and Model Release were (1) never approved by the Labor Commissioner and did not bear the required endorsement by the Labor Commissioner (Hay Dec., ¶¶ 6-13); and (2) the Agency Agreement, the Best Practices Contract and the Model Release were presented and explained to the artists in a single orientation session (Madjarian Dec., ¶7.) Hay Appellants also do not dispute the terms of the three agreements, nor do they argue the agreements are ambiguous.

Hay Appellants instead argue that triable issues of material fact remain as to whether the Agency Agreement, the Best Practices Contract, and the Model Release are to be taken together or treated as separate agreements. (See Motion, Exs. 5-9 [Agency Contracts]; Exs. 10-13 [Best Practices Contract]; Exs. 14-17 [Model Release Contracts].) Hay Appellants argue that if the Best Practices Contract and Model Release are construed as separate agreements, only these two agreements violate Labor Code §1700.23, and therefore, only these two agreements are void. If these agreements are taken together, Appellants ask that the court exercise its discretion and sever the Best Practices Contract and Model Release.

Civil Code § 1642 provides, “Several contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together.” It is well established that under Civil Code § 1642, several agreements concerning the same subject matter and made as part of the same transaction must be construed together. (Miller & Starr, 1 Cal. Real Estate (4^th ed. 2015), §1:62. “When two or more documents are executed as part of the same transaction, relating to the same matter and between the same parties, they are interpreted together as one contract even though they were not executed contemporaneously, and they do not refer to each other.” (Id.)

Whether several documents were intended to govern the same transaction is generally a question of fact. (Boyd v. Oscar Fisher Co. (1989) 210 Cal.App.3d 368, 278.) However, “interpretation of a contract presents a question of law unless it depends on conflicting evidence, and an appellate court is not bound by a trial court's interpretation which does not depend on the credibility of extrinsic evidence.” (Id.)

The intent of the contracting parties is to be determined from the parties’ mutual, objective manifestations of assent, not the subjective understanding of one of the parties. (Archer v. Coinbase, Inc. (2020) 53 Cal.App.5th 266, 275.) “The precise meaning of any contract . . .

depends upon the parties’ expressed intent, using an objective standard. When there is ambiguity in the contract language, extrinsic evidence may be considered to ascertain a meaning to which the instrument's language is reasonably susceptible.” (Golden West Baseball Co. v. City of Anaheim (1994) 25 Cal.App.4th 11, 21.)

Here, the terms of the Agency Agreement, the Best Practices Contract, and the Model Release are undisputed. Hay’s testimony that Hay Appellants did not subjectively intend or believe the Best Practices Contract to be a contract is irrelevant. The parties’ intent is to be gleaned from the plain language of the agreements using an objective standard. Hay Appellants also do not claim or establish any ambiguity in the language of the agreements. As such, the question of whether the parties intended the Agency Agreement, the Best Practices Contract, and the Model Release Agreement to be “taken together” can be determined as a question of law.

Based on the undisputed facts and the language of the agreements, all three agreements were intended to be taken together and to govern the parties’ obligations and rights during Hay Appellants’ representation of DOEs 1-3 and 5. Based on the language of all three agreements, they were intended to regulate the same subject matter—Hay Appellants’ representation of DOEs 1-3 and 5. The Best Practices Contract expressly references the Agency Agreement in its introductory paragraph, stating that its terms “shall govern Artist’s standard of conduct for the duration of the Term (as defined in Artist’s Exclusive Talent/Talent Agency Agreement with Agent) in which Artist in the capacity of ‘principal’ in the principal/agency relationship contracts with Agent as Artist’s exclusive talent agency within the ‘adult entertainment industry.’” (Motion, Ex. 10, ¶ 1.) The Best Practices Contract set forth the terms and conditions of the agency created by the Agency Agreement. Under such facts, the two agreements were intended by the parties to be taken together.

The same analysis applies to the Model Release Agreement. The Model Release Agreement sets forth the terms of Hay Appellants’ representation of the artists, including how they were to perform assignments and assigning certain rights to their images generated by the artists’ performances. (Motion, Exs. 14-17.)

This instrument constitutes the entire agreement between us and no statement, promises, or inducement by any party hereto that is contained herein shall be binding or valid, and this contract may not be enlarged, modified, or altered, except in writing by both parties hereto; and provided further, any substantial changes in this contract must be approved by the Labor Commissioner.

(Renewed Motion, Exs. 5-9 [Agency Contracts], ¶ 9.) It is undisputed that the Agency Agreement was a form agreement that Hay Appellants took from the Labor Commissioner’s website and Paragraph 9 was not drafted by Hay Appellants. Hay Appellants contravened the form language of the Agency Agreement by “enlarging” the terms of the agency through the Best Practices and Model Release Agreement, which they did draft. (Motion, Ex. 2, ¶¶ 14, 17, 26, 27; Ex. 3 at p. 150; Ex. 32 at p. 3 [Trans. at p. 41:2-14], 36 [Trans. at p. 91:2-5].) Paragraph 9 in the Agency Contract therefore does not support a finding that the three agreements should not be “taken together.”

Based on the undisputed evidence, the Best Practices Contract, the Model Release and the Agency Agreement were intended by the parties to be taken together as a single contract governing the parties’ relationship. As Hay Appellants point out, the court has discretion to sever the Best Practices Contract and Model Release. (Marathon Entertainment, supra, 42 Cal.4th at p. 992.) However, “severance is not mandatory and its application in an individual case must be informed by equitable considerations. Civil Code section 1599 grants courts the power, not the duty, to sever contracts in order to avoid an inequitable windfall or preserve a contractual relationship where doing so would not condone illegality.” (Id.)

Severance would not be appropriate here. Hay Appellants argue DOEs earned substantial income from their lawful performance of their duties under the Agency Agreement and disgorgement would be inequitable. All three documents governed the Parties’ relationship equally and together formed the terms of Hay Appellants’ representation of the DOEs. Any work obtained for the artists by Hay Appellants under the Agency Agreement would have to be performed in accordance with the Best Practices Contract and the Model Release Agreement. There is no way to separate the work performed by DOEs under the Agency Agreement from the work performed subject to the Best Practices Contract and the Model Release. The entire work relationship was tainted by agreements used in violation of Labor Code §1700.23. If severance were allowed here, talent agencies could easily circumvent Labor Code §1700.23 by using the Labor Commissioner’s pre-approved form agreement and requiring artists to sign separate documents containing additional substantive terms governing the agency’s representation.

In fact, preservation of the contractual relationship under the Agency Agreement would implicitly condone illegality and the type of abuse the TAA was intended to prevent. Hay Appellants’ representation of DOEs 1-5 involved sending them to TLC, an escort service and a front for prostitution. (UMF Nos. 91 and 94.) Hay Appellants also sent DOEs to hazardous assignments (see discussion of fourth cause of action for violation of Labor Code §1700.33). Such occurrences were precisely the type of abuse the TAA was intended to prevent and redress: “From an early time, the Legislature was concerned that those representing aspiring artists might take advantage of them, whether by concealing conflicts of interest when agents split fees with the venues where they booked their clients, or by sending clients to houses of ill-repute under the guise of providing ‘employment opportunities.’” (Marathon Entertainment, Inc., supra, 42 Cal.4th at p. 984 [italics added].)

Hay Appellants also maintain in their separate statement that the Best Practices Contract and Model Release Contract did not require approval by the Labor Commissioner under Labor Code §1700.23. “It is elementary that the construction of a statute and its applicability is solely a question of law.” (Lewis v City of Los Angeles (1982) 137 Cal.App.3d 518, 521.) There is no dispute as to the agreements’ terms. These agreements were written contracts with DOEs for Hay Appellants’ employment as their talent agency, each one imposing terms on Hay Appellants’ representation of them. Hay Appellants were required to obtain approval by the Labor Commissioner prior to using the agreements. (Lab. Code, § 1700.23.)

As no triable issues of fact remain as to the first cause of action for violation of Labor Code §1700.23, DOEs 1-5’s Renewed Motion for Summary Adjudication of the first cause of action for violation of Labor Code §1700.23 is GRANTED.

“No talent agency shall knowingly issue a contract for employment containing any term or condition which, if complied with, would be in violation of law, or attempt to fill an order for help to be employed in violation of law.” (Lab. Code, §1700.31.)

Respondent DOEs 1-5 allege that Hay Appellants violated Labor Code §1700.31 by referring them to an unlicensed and illegal escort services business, The Luxury Companion (“TLC”). (Notice of Appeal, Ex. A, FAP, ¶ 31.) DOEs 1-5’s claim for violation of Labor Code §1700.31 is limited to this conduct, nothing more. “The pleadings play a key role in a summary judgment motion. The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues and to¿frame¿the outer measure of materiality in a summary judgment proceeding.” (Hutton v. Fidelity National Title Co.¿(2013) 213 Cal.App.4th 486, 493.)

Therefore, the DOEs assertions that Hay Appellants violated §1700.31 by using the unapproved Best Practices Contract to charge unlawful fees for photos and banners in violation of Lab. Code § 17400.40 and violated Lab. Code § 17200.24 by charging unlawful “kill fees,” are allegations that were not plead in the third cause of action in the FAP. On reply, DOEs claim that Paragraph 20’s general allegation of unapproved fees and penalties are incorporated by reference in Paragraph 30 of the third cause of action and form the basis for that cause of action. The court disagrees. Merely incorporating Paragraph 20 by reference into the third cause of action does not put Hay Appellants or the court on notice that Paragraph 20 forms the basis of the third cause of action. DOEs only specifically identify the referrals to TLC as violations of Labor Code §1700.31 in the body of the third cause of action and they allege supporting evidentiary facts as to TLC. (Notice of Appeal, Ex. A, FAP, ¶¶32-33.)

DOEs 1-5 do not argue the third cause of action as it is pled in the FAP, nor does the section of the separate statement pertaining to the third cause of action include facts material to the third cause of action as pled. DOEs 1-5 do not discuss Hay Appellants’ referral of them to TLC for illicit work. DOEs 1-5 are not entitled to move for summary adjudication of the third cause of action based on an unpled theory of liability. (Jacobs v. Coldwell Banker Residential Brokerage Co. (2017) 14 Cal.App.5th 438, 444-446 [trial court properly determined that plaintiffs’ complaint failed to allege empty pool theory of liability and could not defeat summary judgment based on that theory].)

DOEs 1-5 fail to satisfy their burden as moving parties on the third cause of action for violation of Labor Code §1700.31 as pled in the FAP. The Renewed Motion for Summary Adjudication is DENIED as to the third cause of action for violation of Labor Code §1700.31.

“No talent agency shall send or cause to be sent, any artist to any place where the health, safety, or welfare of the artist could be adversely affected, the character of which place the talent agency could have ascertained upon reasonable inquiry.” (Lab. Code, §1700.33.)

DOEs 1-5 allege that “[Hay Appellants’] actions, as asserted herein, constitute a violation of California Labor Code §1700.33.” The fourth cause of action does not provide any more detail as to what specific “actions” DOEs 1-5 engaged in that violated Lab. Code §1700.33. DOEs 1-5 argue in their Renewed Motion that Hay Appellants violated Labor Code §1700.33 by referring them to escort and prostitution work, to “POV shoots” with only a single individual on set, and topless party bookings without adequate security.

DOEs 2, 3 and 4 submit evidence that they were sent to TLC or introduced to members of TLC by Hay Appellants. (Motion, DOE 2 Dec., ¶16; DOE 3 Dec., ¶16; DOE 4 Dec., ¶ 5.) DOE 4 testifies that she was sent explicitly for escort work. (Motion, DOE 4 Dec., ¶ 5.) DOEs 1-5 also submit evidence that Hay Appellants knew TLC engaged in prostitution. (Motion, Ex. 32, pp. 40, 114-115.)

DOEs 1-5 also submit evidence that Hay Appellants sent them to “POV shoots” where there were no persons present except the artist (DOE 1, 2, 3, 4 or 5) and the individual who would be filming his sexual actions with that artist. (Motion, DOE 1 Dec., ¶¶ 10-11; DOE 2 Dec., ¶¶ 10-11; DOE 3, ¶¶ 10-11; DOE 4, ¶¶ 10-11; DOE 5, ¶¶ 10-11.) Due to the nature of the acts being filmed and the absence of any persons other than the artist and the individual filming his sexual acts with the artist, the safety of the artists “could be adversely affected” on such assignments. As DOEs 1-5 testify, there is no one to protect them in the event they refuse to perform, attempt to end a scene or if they are sexually assaulted. (DOEs 1-5 Dec., ¶ 11.) In fact, DOE 3 testifies she was sexually assaulted during a POV shoot that was done after a main shoot, when the only persons left were herself and the male filming his sexual acts with her, Pierre Woodman. (Motion, DOE 3 Dec., ¶ 11.)

Respondent DOEs also identify specific assignments they were coerced into doing despite voicing health, safety and/or welfare concerns over them. DOE 1 testifies that Hay Appellants booked her for a double penetration scene with Pierre Woodman just after she returned to the industry. (Motion, DOE 1 Dec., ¶ 17.) DOE 1 indicated she did not feel ready to shoot such a scene. (Ibid.) In response, Hay told her she could not cancel and told her she would be charged a large kill fee if she did not do the scene. (Id.)

DOE 2 testifies that Hay Defendant booked a scene with her brother-in-law. (Motion, DOE 2 Dec., ¶ 19.) When she informed Hay Defendant she did not want to do the scene, Hay Defendant informed her she would be charged thousands of dollars in kill fees if she did not do it. (Id.) As a result, DOE 2 performed the scene and suffered abuse from her brother-in-law. (Id.)

DOE 5 testifies that Hay Appellants booked her for work as a topless ambient model, even though she indicated in her profile that she did not want to do such performances. (Motion, DOE 5 Dec., ¶ 16.) Hay Appellants charged her kill fees for refusing such jobs, even though she timely informed them that she did not want to perform them. (Id.) DOE 5 was thereafter booked by Hay Appellants as a topless ambient model for an event where there was no security present. (Id. at ¶ 17.) DOE 5 was groped as a result. (Id.)

DOE 5 also testifies that Hay Appellants booked her for an anal sex scene, and DOE 5 did not check the box on her profile indicating that she was open to such scenes. (Motion, DOE 5 Dec., ¶ 21.) Hay Appellants booked her for an anal scene with Pierre Woodman anyway, and threatened her with a huge kill fee if she did not perform. (Ibid.)

Based on this evidence, DOEs 1-5 establish that Hay Appellants sent them or caused them to be sent on assignments where their health, safety and welfare could have been adversely affected. DOEs 1-5’s evidence also establishes that the character of those assignments could have reasonably been ascertained. DOEs 1-5 therefore satisfy their burden as moving parties on the fourth cause of action for violation of Labor Code §1700.33.

Hay Appellants’ evidence in response fails to raise a triable issue of material fact. Hay Appellants do not dispute any of the actual events testified to by each DOE. Hay Appellants instead argue that POV shoots are common in the industry. Hay Appellants also argue the Labor Enforcement Action found against DOEs on the dangerousness of POV shoots.

Hay Appellants miss the point. The statute prohibits them from sending the artists to assignments where their health, welfare and safety could be adversely affected, the character of which could have reasonably been ascertained. While POV shoots are not inherently or obviously dangerous, sending artists to such a shoot alone with no one other than the person filming carries a reasonable possibility that the artist’s health, safety and welfare could have been adversely affected. Likewise, financially coercing artists to performing sexual acts and topless performances when they have objected based on health and safety concerns violates Labor Code §1700.31.

Respondent Hay also testified in a Szarko v. Direct Models, Inc. (2018) TAC 50639 that Hay Appellants do not permit POV producers to be the only person with the model. (Motion, Ex. 48 at p. 461 [Trans. at p. 3:7-28].) He also testified that such assignments are not allowed in part for the sake of the model’s comfort level. (Id. at Trans. at p. 3:24-26.) Hay’s statements in Szarko are a party admission and not hearsay based on Evidence Code §1220.

Hay Appellants focus on Hay’s knowledge or lack of knowledge of TLC’s prostitution activities. Hay testified during the Labor Enforcement Action that he knew the women who worked for TLC engaged in prostitution and that TLC was engaged in prostitution. (Motion, Ex. 32 at p. 40 [Trans. at p. 113:25-116:12].) Hay pled guilty to pandering, an admission. (RJN, Ex. 1, p. 15; Motion, Ex. 50 [Criminal Indictment].) Hay admits in his declaration that he was aware that Karine Michmichian and Dwight Cunningham, TLC’s principals, were engaged in providing escort services. (Hay Dec., ¶ 52.) Hay admits that he sent DOE 4 to Michmichian for escort work after she requested escort work. (Id. at ¶ 54.) Hay denies that he engaged in pandering and that he only entered into the plea agreement for fear of being found guilty by a jury and sentenced to prison. (Id. at ¶ 69.)

Hay Appellants’ evidence does not raise a triable issue of material fact as to the violations of Labor Code §1700.31. As discussed in connection with the first cause of action and based on the same evidence, DOEs 1-5 also establish the amounts to be disgorged based on Hay Appellants’ multiple violations of the TAA.

No triable issues of material fact remain as to the fourth cause of action for violation of Labor Code §1700.33. DOEs 1-5’s renewed motion for summary adjudication of the fourth cause of action for violation of Labor Code §1700.33 is GRANTED.

Every talent agency shall file with the Labor Commissioner a schedule of fees to be charged and collected in the conduct of that occupation, and shall also keep a copy of the schedule posted in a conspicuous place in the office of the talent agency. Changes in the schedule may be made from time to time, but no fee or change of fee shall become effective until seven days after the date of filing thereof with the Labor Commissioner and until posted for not less than seven days in a conspicuous place in the office of the talent agency.

Fee’ means any of the following: (1) Any money or other valuable consideration paid or promised to be paid for services rendered or to be rendered by any person conducting the business of a talent agency under this chapter. (2) Any money received by any person in excess of that which has been paid out by him or her for transportation, transfer of baggage, or board and lodging for any applicant for employment. (3) The difference between the amount of money received by any person who furnished employees, performers, or entertainers for circus, vaudeville, theatrical, or other entertainments, exhibitions, or performances, and the amount paid by him or her to the employee, performer, or entertainer.

Section 1700.24 required Hay Appellants to (1) file a schedule of fees with the Labor Commissioner reflecting any and all fees they would charge and collect in connection with their representation of DOEs 1-5, and (2) post their schedule of fees in a visible place in their office.

DOEs allege that the Schedule of Fees approved by the Labor Commissioner and provided to them by Hay Appellants did not include all of the fees charged and collected in the conduct of talent representation. (Notice of Appeal, Ex. ¶ 42.) DOEs allege that Hay Appellants charged multiple fees that were not included on the approved Schedule of Fees in the conduct of their talent representation of DOEs 1-5, including, but not limited to, Agency Fees, driver fees, “model house” fees, transportation, booking fees, kill fees and “Short Notice Job Cancellation” fees. (Id. at ¶ 42.)

DOEs 1-5 submit the Schedule of Fees provided to them by Hay Appellants. (Motion, Exs. 23-27.) The Schedule of Fees bears the stamp of approval from the Labor Commissioner. (Ibid.) The Schedule of Fees only lists one fee—“the maximum rate of fees due Direct Models, Inc. for services rendered to the artist is fifteen percent (15%) of the total earnings paid to the artist managed by Direct Models, Inc.” (Id.)

DOEs 1-5 submit evidence that (1) DOEs 1-5 were charged fees for photos (Motion, Exs. 39, 44-47; Hay Decl., ¶¶ 22-23). DOEs 1-5 were charged “kill fees,” which were fees for short cancellation of assignments and bookings and which included compensation to Direct Models for lost commissions per the Best Practices Contract. (Motion, Exs. 39, 43-45; Hay Decl., ¶¶ 22-23.)

DOE 2 was charged “lost/wasted advertisement fees.” (Motion, Exs. 43, 45.) DOE 4 was charged home rental fees staying in Hay’s’ home. (Motion, Exs. 43, 70.) DOE 4 was charged “cat tree fees” for purchase of a cat tree while she stayed at Hay’s’ home (Motion, Exs. 43, 45, 70.) DOEs 1 to 5 was charged transportation and hotel fees for attending Hay’s birthday party. (Motion, Exs. 23-27, 43, 45; Doe 2 Dec. ¶ 20.) DOE 4 was charged transportation fees for cancelled shoots. (Motion, Ex. 70; Doe 4 Dec., ¶ 32.) DOEs 2-5 were charged travel arrangement fees. (Motion, Exs. 32, 39, 43, 45, 46, 47.) Hay Appellants also charged “booking fees” for hiring each of the DOEs. (Motion, Exs. 23-27, 43, 68, 70, 86.) CamSoda, a live webcamming business, was charged a flat fee for use of DOEs. (Motion, Ex., 23-27, 43; Hay Dec., ¶¶ 35-39.)

DOEs submit evidence that Hay Appellants charged several fees that should have been included on a Schedule of Fees and submitted to the Labor Commissioner for approval but were not. Several of the “fees” clearly satisfy the broad definition of “fee” set forth under Labor Code §1700.2(a), which covers any money or consideration to Hay Appellants for services they rendered as a talent agency. These include the fees for photo shoots, the “kill fees,” the charges for cancelled shoots, booking fees and the flat fee charged to CamSoda.

The rental fees and cat tree fees charged DOE 4 for staying in Hay’s home and the airfare to attend Hay’s birthday party charged to DOE 2 were charged to DOEs 2 and 4’s Direct Models trust account, as if they were for services provided by Direct Models. (Motion, Exs. 45 and 70.) DOEs therefore establish that the rental fees, cat tree fee and airfare for Hay’s birthday party were treated by Hay Appellants as fees for services provided by Direct Models and chargeable directly from their trust accounts.

In response, Hay Appellants fail to raise a triable issue of material fact. Hay Appellants do not dispute that the only Schedule of Fees provided to DOEs was the sample form approved by the Labor Commissioner, which only listed Hay Appellants’ 15% commission. Hay Appellants only argue that the booking fees did not have to be included on the Schedule of Fees, because the producers were charged the booking fees, and the producers paid those fees directly. (Hay, Dec., ¶ 35.) Hay Appellants argue these fees were not charged and collected from DOEs, excluding it from the purview of Labor Code §1700.24.

However, the definition of “fee” under section 1700.2 is not limited to payment charged and collected from the artist. Section 1700.2 includes any money or consideration that is paid or to be paid to Hay Appellants for conducting business as a talent agency, which would include booking fees. The same reasoning applies to the fees charged to CamSoda.

Hay Appellants argue booking fees are not illegal and may be charged based on a line of Labor Commissioner decisions. This argument is addressed in connection with DOEs’ sixth cause of action for breach of fiduciary duty.

Hay Appellants argue kill fees were imposed by producers when an artist did not show up for an assignment. (Hay Dec., ¶¶ 15-25.) Whether producers were the impetus for kill fees is immaterial. Even if producers demanded kill fees, Hay Appellants were the ones who charged the artists’ Direct Models accounts. Hay Appellants’ evidence also fails to address the fact that the $300 kill fee was set forth in The Best Practices Contract, which they drafted. Under the Best Practices Contract, kill fees were fixed at $300, $200 of which would be paid to the producer and $100 of which would be paid to Hay Appellants in lost commissions. (Motion, Exs. 10-13 [Best Practices Contracts, ¶ 11].) DOEs submit undisputed evidence that DOEs 1, 2 and 5 were charged kill fees in the amount of $300, the precise amount for kil fees set forth in the Best Practices Contract, on specific dates. (Motion, Exs, 39, 43-47.)

Hay Appellants argue that a detailed and exhaustive list of fees is not required under section 1700.24 and listing their 15% commission is all that is required. Hay Appellants fail to cite any authority in support of that proposition. A reasonable interpretation of the mandatory language of section 1700.24 and the overall purpose of the TAA to protect artists and provide them with all required information does not support Hay Appellants’ position.

DOEs 1-5 establish that no triable issues of fact remain as to the fifth cause of action for violation of Labor Code §1700.24. DOEs 1-5’s Renewed Motion for Summary Adjudication of the fifth cause of action for violation of Labor Code §1700.24 is GRANTED.

“The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach. Whether a fiduciary duty exists is generally a question of law.” (Hodges v. County of Placer (2019) 41 Cal.App.5th 537, 546.) “A fiduciary relationship is any relation existing between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party. Such a relation ordinarily arises where a confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the interest of the other party without the latter's knowledge or consent.” (Hodges, at pp. 546–547.) “Traditional examples of fiduciary relationships in the commercial context include trustee/beneficiary, directors and majority shareholders of a corporation, business partners, joint adventurers, and agent/principal.” (Id. at p. 547.)

“An agent, however, is not permitted to make any secret profit out of the subject of his agency…All benefits and advantages acquired by the agent as an outgrowth of the agency, exclusive of the agent's agreed compensation, are deemed to have been acquired for the benefit of the principal, and the principal is entitled to recover such benefits in an appropriate action.” (Savage v. Mayer (1949) 33 Cal.2d 548, 551 [italics added] [defendant agent breached fiduciary duty by making “secret profit” on shares he purchased for plaintiff principal].)

DOEs allege that Hay Appellants breached their fiduciary duty to them as their agents by charging producers, production companies and other third parties a “booking fee,” or “agency fee,” for DOEs performance in their productions. (Notice of Appeal, FAP, ¶ 49.) DOEs allege these booking fees were never disclosed to them, accounted for or paid to them. DOEs claim these booking fees directly affected their availability to producers for appearance in those productions.

DOEs establish that Hay Appellants were their talent agents, establishing an agency relationship with them. (Motion, Exs. 5-9 [Agency Contracts].) DOEs establish producers who hired them were each charged booking or agency fees, and those fees were not included in the Schedule of Fees provided to them or disclosed to them. (Motion, DOEs Decs., ¶3 ; Exs. 23-27, 43 and 70.) DOEs establish that Direct Models charged producers (1) $195 in booking fees for DOE 1; (2) $5,270 in booking fees for DOE 2; (3) $2,805 in booking fees for DOE 3; (4) $5,305 in booking fees for DOE 4; and (5) $5,305 in booking fees for DOE 5. (Motion, Ex. 43.)

DOEs establish that Hay Appellants made a secret profit from their services as performers. DOEs establish that they were never informed of these booking fees and that these fees were earned from their performances for the producers who paid these booking fees. These fees are therefore “deemed to have been acquired for the benefit of the principal.” (Savage, supra, 33 Cal.2d at p. 551. Based on DOEs evidence, Hay Appellants made an undisclosed profit from their agency relationship with DOEs and DOEs work. That alone establishes a breach of fiduciary duty as a matter of law.

In response, Hay Appellants do not dispute that booking fees were charged in the amounts stated by DOEs. (UMF Nos. 215-219; Hay Dec., ¶ 35.) Hay Appellants maintain they were not required to disclose the booking fees. Hay Appellants argue booking fees are lawful, so long as they are separately billed to the producer. Hay Appellants rely on three Labor Commissioner decisions, Ali v. Nouveau Model and Talent Mgmt, Inc., Harriell & Red Chair v. Chase and Cappucci v. Lovestone Talent Agency. (Hay Appellants’ RJN, Ex. F.) A review of these three decisions establishes that “Agency Fees” were upheld as valid where two or more of the following were shown (1) the producer was separately billed; (2) the artist was directly or indirectly informed of the Agency Fees, including the fact that the agency fees were going to be charged and were intended as part of an agreement between the producer and the agency, not as part of the principal’s commission; and (3) the evidence clearly establishes that the Agency Fee is separate and apart from the fees the producer pays to the artist. (RJN, Ex. F1, 4:3-14 [agent expressly disclosed and explained agency fee to principal]; Ex. F2, 4:2-6 [despite failure to inform principal of agency fee, agent provided email from production company confirming that 10% was intended for agency]; Ex. F3 at p. 4:20-24.)

Hay Appellants rely on the declaration of Hay to establish that the specific booking fees identified by each DOE were agreed-upon compensation between the producer and Direct Models for their booking services and were not intended to be part of the compensation for DOEs performances. However, Hay’s testimony only provides a general description of booking fees, how that category of fee is arrived at and what it is intended to compensate. (Hay Dec., ¶¶ 32-39.) He provides no testimony as to the specific booking fees identified by each DOE. Hay Appellants fail to provide clear evidence that the production company did not intend the specific booking fees identified by DOEs as compensation to them. “In Ali, it was announced that as long as the ‘agency fee’ was intended for the agent by the production company and was not intended to be part of the artist’s compensation, the artist had no right to it.” (Hay Appellants’ RJN, Ex. F3, 4:7-9.)

Thus, Hay Appellants fail to establish the charges for “booking fees” were in fact valid booking fees under the Ali line of cases. Although not binding precedent, the court also finds persuasive the reasoning of the Labor Commissioner in Doshi v. Twice Baked Media, Inc., et al., which rejected the Ali and found undisclosed booking fees to be in violation of the TAA and a breach of fiduciary duty. (Motion, Ex. 7, pp. 11-15.)

Allowing an agent to charge an undisclosed booking fee would also allow talent agencies to easily circumvent 8 C.C.R. §12001(b). Under 8 C.C.R. §12001(b), a talent agency contract must include a “provision containing a blank space for the insertion of the compensation or rate of compensation to be paid by the artist to the talent agency which compensation shall not exceed the maximum compensation or maximum rate of compensation set forth in the schedule of fees filed with the Labor Commissioner by the talent agency.” (8 C.C.R. §12001(b).) As discussed in connection with the fifth cause of action, booking or agency fees are fees that must be disclosed in the mandatory Schedule of Fees to be approved by the Labor Commissioner.

DOEs 1-5 establish they are entitled to judgment on the sixth cause of action for breach of fiduciary duty based on the undisputed facts and evidence. DOEs 1-5’s Renewed Motion for Summary Adjudication of the sixth cause of action for breach of fiduciary duty is GRANTED.

(a) No talent agency shall collect a registration fee. In the event that a talent agency shall collect from an artist a fee or expenses for obtaining employment for the artist, and the artist shall fail to procure the employment, or the artist shall fail to be paid for the employment, the talent agency shall, upon demand therefor, repay to the artist the fee and expenses so collected. Unless repayment thereof is made within 48 hours after demand therefor, the talent agency shall pay to the artist an additional sum equal to the amount of the fee.

(b) No talent agency may refer an artist to any person, firm, or corporation in which the talent agency has a direct or indirect financial interest for other services to be rendered to the artist, including, but not limited to, photography, audition tapes, demonstration reels or similar materials, business management, personal management, coaching, dramatic school, casting or talent brochures, agency-client directories, or other printing.

(c) No talent agency may accept any referral fee or similar compensation from any person, association, or corporation providing services of any type expressly set forth in subdivision (b) to an artist under contract with the talent agency.

DOEs 1-5 cite to section 1700.40(b) in their ninth cause of action for violation of Labor Code §1700.40. DOEs allege that Hay Appellants violated this subsection by referring them to TLC, CamSoda (a live camming website) and The Lee Network (a live dance agency). (Notice of Appeal, FAP, ¶ 73.) In this Motion, DOEs argue that Hay Appellants violated section 1700.40, subdivisions (a) and (b) by (1) charging DOEs for photos and banners; (2) by referring DOEs to Lee Network, another agency; and (3) referring DOEs to TLC.

DOEs did not allege violation of section 1700.40(a) in the ninth cause of action. DOEs only quoted and cited to section 1700.40(b). DOEs also made no mention of Hay Appellants’ charging them for photos and banners in their ninth cause of action. As with the third cause of action, DOEs cannot seek adjudication of an unpled theory of liability. (Bostrom v. County of San Bernardino (1995) 35 Cal.App.4th 1654, 1663 [“Summary judgment cannot be granted on a ground not raised by the pleadings.”].)

Hay Appellants’ alleged reference of DOEs 1-5 to TLC in violation of Labor Code §1700.40(b) fails to state a claim. Section 1700.40(b) prohibits Hay Appellants from referring DOEs 1-5 to “any person, firm, or corporation in which the talent agency has a direct or indirect financial interest for other services to be rendered to the artist….” TLC was an escort agency that was a front for prostitution. (Mot., Exs. 50, 61; Hay Dec., ¶¶ 63-65.)

Hay Appellants do not deny that they introduced DOEs to TLC’s principals, Karine Michmichian and Dwight Cunninghan, so that the Does could provide services to TLC. (UMF Nos. 255, 257, 258, 260.) Such conduct would not violation Labor Code §1700.40(b), because the DOEs were not referred to TLC so that TLC could provide services to them. (Lab. Code, § 1700.40(b) [“No talent agency may refer an artist to any person, firm, or corporation in which the talent agency has a direct or indirect financial interest for other services to be rendered to the artist. . .].)

DOEs fail to submit any evidence of Hay Appellants’ direct or indirect financial interest in TLC, in order to prove a violation of Labor Code § 1700.40(b). The court cannot speculate or infer that Hay Appellants had a direct or indirect financial interest in TLC based simply on their “close business relationship” speculated by Does and Hay Appellants’ referral of artists to TLC. (Motion, Doe 1 Dec. ¶ 16; Doe 2 Dec. ¶ 18; Doe 5 Dec. ¶ 23.)

While Hay Appellants may have incidentally benefitted from their referral of artists to TLC, because the extra work allowed some artists to financially remain in Los Angeles. (Motion, Ex. 32 at p. 51 [Trans. at p. 88:1-13].) However, having more artists available to them does not qualify as a direct or indirect financial interest in TLC itself. DOEs fail to satisfy their burden on the ninth cause of action as to TLC, because no evidence of direct or indirect financial interest was provided.

DOEs also allege Hay Appellants referred them to The Lee Network, a talent agency that represents feature dancers looking for bookings at gentlemen’s clubs. (UMF No. 238.) Hay Appellants referred DOEs 2 and 5 to The Lee Network for talent agency representation services as feature dancers at gentlemen’s clubs. (Motion, Ex, 99, 98; DOE 2 Dec., ¶ 17; DOE 5, ¶ 23.) Hay had a direct financial interest in The Lee Network. (Motion, Ex. 100.) Between 6/19 /2017 and 12/31/2018, The Lee Network earned $2,180 in fees as a result of its work with DOE 5. (UMF No. 247; Motion, Ex. 99.)

Hay Appellants do not dispute any of these material facts. Hay testifies that he is the principal of The Lee Network. (Hay Dec., ¶ 1.) Hay merely maintains The Lee Network is a separate business entity from Direct Models and Hay Appellants never received any referral fee from The Lee Network for referring artists to it for representation. (Hay Dec., ¶¶ 40-43.) Defendant Hay fails to show that Labor Code § 1700.40(b) requires that he charge a referral fee to be liable under the statute.

Based on these undisputed facts, Hay Appellants violated Labor Code §1700.40(b) by referring DOEs 2 and 5 to The Lee Network for talent agency representation services. The undisputed facts establish that Hay Appellants had a direct or indirect financial interest in The Lee Network, even if Direct Models and The Lee Network were separate entities.

DOEs 1-5 fail to submit any evidence as to any referrals to CamSoda, which they explicitly allege as a basis for the ninth cause of action. DOEs 1-5 therefore fail establish that Hay Appellants violated Labor Code §1700.40(b) by referring them to CamSoda for services to be rendered to them.

Only Does 2 and 5 establish that the Hay Appellants referred them to The Lee Network. (Motion, Exs. 98, 99; DOE 2 Dec., ¶ 17; DOE 5, ¶ 23.) Such a referral constitutes a violation of Labor Code §1700.40(b) because Appellant Hay had a direct financial interest in The Lee Network. (Hay Dec. ¶¶ 1, 40-43; Motion, Ex. 100.)

Therefore, summary adjudication as to the ninth cause of action is granted as DOEs 2 and 5. Summary adjudication of the ninth cause of action is otherwise denied as to DOES 1, 3, and 4 because they failed to show that the Hay Appellants referred them to “for other services” in why the Hay Appellants had a direct or indirect financial interest.

The elements of breach of contract are “(1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff.” (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830.)

In the FAC, DOEs 1-5 allege that Hay Appellants breached the Agency Agreement by (1) charging booking fees and (2) failing to use reasonable efforts to procure employment for each DOE in the adult entertainment industry. (Notice of Appeal, FAP, ¶¶ 79 and 80.) As discussed in connection with the sixth cause of action for breach of fiduciary duty, the booking fees were charged in violation of the Schedule of Fees, which stated that the maximum fee due Hay Appellants was 15% of the total earnings paid to each DOE. In addition to that 15%, Hay Appellants charged undisclosed “booking fees,” the entirety of which they retained.

Therefore, DOEs succeed in showing that Hay Appellants breached the Agency Agreement by charging unlawful fees that exceed the maximum contractual percentage. (Motion, Exs. 5-9, 43.) However, DOEs 1-5 fail to submit any evidence that Hay Appellants breached their contractual obligation to “use all reasonable efforts to procure employment” for DOEs in the adult entertainment industry. (Notice of Appeal, Ex. A, FAP, ¶ 80.)

Summary judgment as to the tenth cause of action would be inappropriate because DOEs only prevail on a single issue within the breach of contract cause of action and fail to dispose of the entire cause of action. (See Belio v. Panorama Optics, Inc. (1995) 33 Cal.App.4th 1096, 1103 [Motion seeking summary adjudication as to single issue within cause of action, rather than as to entire cause of action, was unauthorized, and trial court's grant of summary judgment as to entire first cause of action was overbroad]; Lilienthal & Fowler v. Superior Court (1993) 12 Cal.App.4th 1848, 1854 [Summary adjudication proper where “[t]here is no dispute that the two matters have no relation to each other and involve legal services performed at different times, with different and distinct obligations, and distinct and separate alleged damages.”].)

More importantly, DOEs fail to establish that there are no triable issues of fact as to what damages they would be owed for breach of the Agency Contract. (Notice of Appeal, FAP, ¶ 81 [“As a proximate result of Respondents' breach of contract, Petitioners and each of them have suffered damages in an amount to be proven at trial.”].) “ ‘It is fundamental that damages which are speculative, remote, imaginary, contingent, or merely possible cannot serve as a legal basis for recovery.’ ” (McDonald v. John P. Scripps Newspaper (1989) 210 Cal.App.3d 100, 104; see Civ. Code, § 3301.) “The law requires only that some reasonable basis of computation of damages be used, and the damages may be computed even if the result reached is an approximation.” (GHA Associates v. Mayer Group, Inc. (1990) 224 Cal.App.3d 856, 873.)

As triable issues of fact remain as to the breach of contract cause of action. DOEs 1-5’s Renewed Motion for Summary Adjudication of the tenth cause of action is DENIED.

DOEs 1-5’s Renewed Motion for Summary Adjudication is GRANTED as to the first cause of action for violation of Labor Code §1700.24, the fourth cause of action for violation of Labor Code §1700.33, the fifth cause of action for violation of Labor Code §1700.24 and the sixth cause of action for breach of fiduciary duty and DENIED as to the third cause of action for violation of Labor Code §1700.31, and the tenth cause of action for breach of contract. Summary adjudication of the ninth cause of action is granted as to DOES 2 and 5 and is otherwise denied as to DOES 1, 3, and 4.

[1] Hay has requested a trial de novo of DOEs’ FAP before the Labor Commissioner. DOEs are therefore the “plaintiffs” in this action seeking affirmative relief on their pleading, and their burden on a motion for summary adjudication is that of a plaintiff.