Judge Jon R. Takasugi, Case Number: 23STCV04903, Date: 2024-09-06 Tentative Ruling

Defendants’ motion for summary judgment is DENIED. Defendants’ motion for summary adjudication is GRANTED as to the first through eighth causes of action.

On 3/6/2023, Plaintiff Casey Miller (Plaintiff) filed suit against Spectrum Hydroponics and Scott Murray (collectively, Defendants), alleging: (1) discrimination; (2) retaliation; (3) failure to prevent; (4) failure to provide reasonable accommodation; (5) failure to engage in good faith process; (6) violation of California Family Rights Act (CFRA); (7) declaratory judgment; (8) wrongful termination; (9) failure to pay wages; (10) failure to pay overtime; (11) failure to provide meal and rest periods; (12) failure to provide itemized wage statements; (13) waiting time penalties; (14) unfair competition; and (15) failure to permit inspection of personnel and payroll records.

Now, Defendants move for summary judgment, or, in the alternative, summary adjudication, of Plaintiff’s Complaint.

As a preliminary matter, neither Defendants’ Memorandum of Points and Authorities nor its Separate Statement addressed causes of action Nos. 9-15.[1] Accordingly, summary judgment is not appropriate, and the Court limits its analysis to the claims which were addressed in the moving papers. As their motion for summary judgment, it is Defendants’ initial burden to submit sufficient evidence to shift the burden of proof to Plaintiff. Without any mention of, or evidence concerning, the Labor Code causes of action, Defendants have not met their initial burden of proof as to these claims, and thus the burden did not shift to Plaintiff to produce any evidence.

Defendant argues that: (1) Plaintiff’s first through sixth causes of action fail against Defendants because the Spectrum Hydroponics did not regularly employ five or more employees; (2) Plaintiff cannot establish a disability discrimination claim; (3) Plaintiff cannot establish a failure to accommodate or an interactive process claim; and (4) Plaintiff cannot establish a retaliation claim under either FEHA or CFRA.

As for the first contention, Government Code section 12926(d) provides a clear definition as to which employers are governed by the FEHA, stating “‘Employer’ includes any person regularly employing five or more persons…” (Gov’t Code § 12926, subdivision d; (emphasis added;) see also Jennings v. Marralle (1994) 8 Cal.4th 121, 130 [“the FEHA, which declares the right to employment without discrimination to be a civil right and establishes that right as public policy of this state, simultaneously limits the application of the act’s enforcement provisions to employers of five or more persons.”) The Code of Regulations explains that “regularly employing means employing five or more individuals for any part of the day on which the unlawful conduct allegedly occurred, or employing five or more employees on a regular basis.” (Cal. Code Regs., tit. 2, § 11008.) Similarly, Government Code section 12945.2(b)(4)(A) states that “‘Employer means … any person who directly employs five or more persons to perform services for a wage or salary.”” (Gov’t Code § 12945.2, subdivision b.)

In support of its contention that it never employed five or more employees, Defendants submitted evidence that:

- Spectrum LLC (the Company) is a retail business located in Santa Fe Springs, California, that sells hydroponics equipment and supplies. Formed in March 2021, Spectrum LLC is the successor in interest of Spectrum Hydroponics, Plaintiff’s employer. (SS 1-2.)

- Defendant Scott Murray was the sole proprietor of Spectrum Hydroponics and, currently, he is one of the managing members of Spectrum LLC. Defendant Scott Murray was never an employee of Spectrum Hydroponics and is not an employee of Spectrum LLC. (SS 3-4.)

- Throughout Plaintiff’s employment with the Company (which spanned over a three-year period), there has never been five or more employees working for the company simultaneously. (SS 7.)

- Specifically, from 2018 through Plaintiff’s resignation in 2021, there were only three employees, including Plaintiff. (SS 8.)

- The Company’s Quarterly Federal Tax Return (Form 941), reveals that the Company employed only three employees for all four quarters of 2020, including Plaintiff, and only three employees for the first quarter of 2021, including Plaintiff. (SS 9.)

- At his deposition, Plaintiff speculated that, during his tenure at the Company, about seven to eight other individuals worked at the Company. Plaintiff believes these individuals were employees because he was in the Company store with them and because they “did company parties together. (SS 11.) However, Plaintiff admitted that he did not know the employment status of these individuals as he never saw these individuals’ personnel files, IRS W-2 Forms or wage statements. (SS 12.) Moreover, Plaintiff confirmed he did not know whether these individuals were independent contractors who were free to set their own work schedules. (SS 13.)

- The Company hired a construction company to perform carpentry and construction services. The Company hired a graphic designer as a consultant to create a website and social media content. (SS 15-16.) However, these individuals were not employees.

Defendants’ evidence supports a reasonable inference that it did not have five employees or more, and thus is not subject to FEHA. Accordingly, the burden shifts to Plaintiff to disclose a triable issue of material fact.

In opposition, Plaintiff argues that Defendant has not presented evidence to prove that the individuals were independent contractors. More specifically, Plaintiff argues that “for those whom Defendants claim were independent contractors, Defendants have not produced any documentary evidence showing such a relationship (i.e. invoices, contracts for services, etc.)” (Opp., 8: 4-5.)

When Plaintiff was terminated, in March 2021, Spectrum employed Taylor Hansen, Plaintiff, Cooper Weatherly, Cory Peligulas, Donald Doe, David Doe, Ed Wolf, Dave Padilla, Diane Doe, Christian Holguin, Eric, Gunter, Brandon With, and two additional employees who were recently hired. [PSS 7-16.] Each of these employees reported to Hansen and Murray. [Id.] Plaintiff worked both the same and overlapping shifts with these employees. [Id.] Throughout his employment, Plaintiff worked with Cory Peligulas one to two times per week. [Id.] In fact, Spectrum currently has six employees. [PSS 48.] As such, whether Defendants employed five persons is disputed, and Plaintiff’s FEHA claims survive.

However, Defendant submitted Quarterly Federal Tax Return (Form 941) and payroll records to show that they employed only three employees for all four quarters of 2020 (including Plaintiff), and only three employees for the first quarter of 2021 (again including Plaintiff). Moreover, as noted by Defendant, while Plaintiff contends that Defendant’s Exhibit 2 does not indicate the number of persons legally classifiable as employees because Defendants allegedly “have a history of paying employees in cash,” and claims that he and “many” of his coworkers were compensated in cash “at some point,” Plaintiff has not provided any evidence which could show this beyond his own statement that it so. As such, Plaintiff’s assertion is conclusory and speculative. (Evid. Code § 702.)

Moreover, Plaintiff also argues that for purposes of FEHA, the term “employer” can include independent contractors because employer is defined as any person or individual regularly employing “five or more individuals, including individuals performing any service under any appointment, contract of hire or apprenticeship, express or implied, oral or written.” `As such, Plaintiff argues that regardless of whether certain individuals were independent contractors, they may still be counted for purposes of determining whether an entity is an employer.

However, Plaintiff does not cite any caselaw wherein Courts have adopted this interpretation. (“This failure to cite pertinent legal authority is enough reason to reject the argument”); Akins v. State of California (1998) 61 Cal.App.4th 1, 50, 71 (contention waived by failure to cite legal authority). Moreover, Plaintiff offers no explanation as to why the statute would not have been drafted to expressly include independent contractors in the list of included individuals. Accordingly, the Court declines to adopt Plaintiff’s interpretation of this statute. Moreover, as noted by Defendants in reply, subsection (1)(A) goes on to define “regular basis” as referring to “the nature of a business that is recurring, rather than constant.” Here, the evidence submitted only supports a reasonable inference that Defendants’ business is constant, not recurring.

As such, the Court finds Plaintiff’s evidence fails to support a reasonable inference that Defendant regularly employed five or more individuals during the relevant period. Based on this conclusion, summary adjudication can be granted as to claims one through six.

Given this conclusion, the Court necessarily concludes no triable issue exist as to the seventh cause of action for declaratory judgment and the eighth cause of action for wrongful termination, both of which are derivative of claims one through six.

However, given that this motion does not address the Labor Code violations, the Court cannot conclude that Plaintiff’s prayer for punitive damages fails as a matter of law.

Based on the foregoing, Defendants’ motion for summary judgment is denied. Defendants’ motion for summary adjudication is granted as to the first through eighth causes of action.

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org. If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative. If all parties to a motion submit, the court will adopt this tentative as the final order. If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. For more information, please contact the court clerk at (213) 633-0517.

[1] In opposition, Plaintiff argues that Defendants have not addressed causes of action 3 or 9-15. However, by addressing Plaintiff’s claims for disability discrimination, retaliation in violation of FEHA, and retaliation in violation of CRFA, Defendants have necessarily addressed the failure to prevent that conduct (i.e. the 3^rd cause of action). Accordingly, the Court rejects Plaintiff’s contention that the 3^rd cause of action is unaddressed by Defendants motion.