Judge: James A. Mangione, Case: 37-2023-00007399-CU-OE-CTL, Date: 2023-10-13 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - October 12, 2023

10/13/2023  09:00:00 AM  C-75 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:James A Mangione

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Civil - Unlimited  Other employment Demurrer / Motion to Strike 37-2023-00007399-CU-OE-CTL JUAREZ AYALA VS UNIVERSAL PROTECTION SERVICE LP [EFILED] CAUSAL DOCUMENT/DATE FILED:

Defendant Universal Protection Services, LP's Demurrer is sustained with leave to amend.

The instant demurrer hinges on the interpretation of the 'knowledge' element of Labor Code § 432.5.

The parties have not cited, and the Court has not found, any California case law interpreting this statute.

However, a federal district court found that violation of Section 432.5 'requires knowledge that the agreement was unlawful' and that the plaintiff could not establish the knowledge element because the controlling authority at the time the agreement was signed did not categorically prohibit restrictive covenants in employment contracts as illegal. (Hamilton v. Juul Labs, Inc. (N.D. Cal., Sept. 11, 2020, No.

20-CV-03710-EMC) 2020 WL 5500377, at *7-*8.) Hamilton's interpretation of Section 432.5 as requiring actual knowledge of illegality of the employment condition is supported by the plaint text of the statute.

Section 432.5 forbids requiring an employee to agree to any condition 'which is known by such employer, or agent, manager, superintendent, or officer thereof to be prohibited by law.' (Lab. Code § 432.5.) Consequently, to survive a demurrer, Plaintiff must allege Defendant, or one of its specified employees, knew that the Release violated Civil Code § 1668 and Labor Code § 2804. Plaintiff correctly notes that whether Defendant had actual knowledge of the contract's illegality is 'presumptively within the defendant's knowledge' and, as such, is a disfavored basis for demurrer. (Chen v. Berenjian (2019) 33 Cal.App.5th 811, 822.) However, this does not permit Plaintiff to allege constructive knowledge when the statute requires a showing of actual knowledge.

Plaintiff's amended complaint shall be due within fourteen (14) days.

The minute order is the order of the Court.

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