Judge Lynne M. Hobbs, Case Number: 24STCV14774, Date: 2024-12-02 Tentative Ruling

Judge: Lynne M. Hobbs, Case: 24STCV14774, Date: 2024-12-02 Tentative Ruling

Case Number: 24STCV14774 Hearing Date: December 2, 2024 Dept: 61

GUY GOTTLIEB vs CONNEX ONE INC.

TENTATIVE

Defendant Connex One Inc.’s Demurrer to the First Amended Complaint IS SUSTAINED with leave to amend, within 20 days, as to the second, third, fourth, fifth, ninth, and tenth causes of action, and otherwise OVERRULED.

Moving party to provide notice.

DISCUSSION

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) In particular, as is relevant here, a court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) 39 Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 [“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. [Citation.]”)

“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Such demurrers “are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Insurance Agency, Inc. (2017) 14 Cal.App.5th 841, 848.)

A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)

Defendant Connex One, Inc. (Defendant) demurrers to the First Amended Complaint (FAC) of Plaintiff Guy Gottlieb. Defendant argues that Plaintiff’s first, second, and twelfth causes of action for retaliation must be dismissed because Plaintiff has failed to allege protected activity. (Demurrer at pp. 3–7.) Defendant argues that the third, fourth, fifth, ninth, and tenth causes of action (for overtime, meal and rest period violations, and inaccurate wage and payroll records) fail because Plaintiff falls into the exemption for outside salespeople. (Demurrer at pp. 7–8.) Defendant argues that the sixth, seventh, and eighth causes of action (for failure to pay timely wages earned) fail because Plaintiff does not plead specific details. (Demurrer at p. 8.) Defendant argues that the eleventh cause of action for failure to reimburse business expenses fails to state what expenses were not reimbursed, and the thirteenth cause of action for unfair business practices fails because the predicate claims for violations of the Labor Code also fail. (Demurrer at p. 9.)

Plaintiff adequately pleads that he engaged in protected activity for the purposes of his first cause of action for retaliation under Labor Code § 232.5 and Labor Code § 98.6. The former section states that employers may not “[d]ischarge, formally discipline, or otherwise discriminate against an employee who discloses information about the employer's working conditions.” (Lab. Code § 232.5, subd. (c).) And Labor Code § 98.6 prohibits employers from retaliating against an employee who has, among other things, “made a written or oral complaint that they are owed unpaid wages.” (Lab. Code § 98.6, subd. (a).) Plaintiff alleges in the FAC that Plaintiff “raised concerns about the lack of transparency regarding the commission scheme rules of Defendant,” specifically that “[t]he sales commission was never itemized on a monthly basis, resulting in Plaintiff and other sales representatives being unaware of its basis, the origin of the accounts contributing to the commission, and the corresponding breakdown.” (FAC ¶ 20.) Defendant does not articulate a reason why the concerns regarding Defendant’s opaque commissions calculations do not constitute concerns about “work conditions” under Labor Code § 232.5. Likewise, the concerns are reasonably interpreted to be addressed to constitute a written or oral complaint about commissions owed or unpaid to employees under Labor Code § 98.6. Thus Plaintiff has alleged protected activity under the first cause of action, and the demurrer is OVERRULED as to that claim.

But Plaintiff has not pleaded protected activity under Labor Code § 1102.5, the second cause of action. That section states that employers shall not retaliate against employees “for disclosing information . . . to a person with authority over the employee . . . if the employee has reasonable cause to believe that the information discloses a violation of state or federal statute or a violation of or noncompliance with a local, state, or federal rule or regulation, regardless of whether disclosing the information is part of the employer’s job duties.” (Lab. Code § 1102.5, subd. (b).) The FAC does not plead what state or federal statute, or local, state or federal rule or regulation, Plaintiff’s complaint concerned. Plaintiff in opposition does not articulate a basis for alleging protected activity under Labor Code § 1102.5. (Opposition at pp. 6–7.) The demurrer is therefore SUSTAINED as to the second cause of action with leave to amend.

Defendant’s arguments against the claims for overtime and meal/rest period violations and inaccurate wage statements and payroll records are persuasive, as Plaintiff was an outside salesperson per the allegations of the FAC. Labor Code § 1171 expressly exempts from these requirements “any individuals employed as an outside salesman.” (Lab. Code § 1171.) The same exemption is stated in the wage order cited in Plaintiff’s FAC. (See 8 CCR § 11040, subd. 1(C).) Application of this exemption requires a “purely quantitative approach, focusing exclusively on whether the individual “works more than half the working time ... selling ... or obtaining orders or contracts.” (Ramirez v. Yosemite Water Co., Inc. (1999) 20 Cal.4th 785, 797; see 8 CCR § 11040, subd. 1(M).) The FAC alleges facts disclosing that Plaintiff fit within this exemption: He was “primarily engaged in sales activities for which he received a monthly commission,” and did so “from his residence in Marina Del Ray.” (FAC ¶ 17.) Plaintiff thus worked “more than half the working time away from the employer’s place of business selling tangible or intangible items.” (8CCR § 11040, subd. 1(M).) The demurrer is therefore SUSTAINED as to the third, fourth, fifth, ninth, and tenth causes of action, with leave to amend.

Plaintiff’s remaining claims are not subject to demurrer. Defendant argues that the seventh and eighth causes of action fail to state facts supporting Plaintiff’s claims that he was not paid all wages owed at termination. (Demurrer at p. 8.) But the FAC pleads that Defendant owed Plaintiff outstanding commissions upon his termination, and Defendant identifies no authority requiring greater detail. The same reasoning applies to Plaintiff’s eleventh cause of action for failure to reimburse Plaintiff for business expenses, which pleads that Defendant failed to reimburse Plaintiff for the expenses incurred in carrying out his work duties from home. (FAC ¶ 17.) And because Plaintiff can maintain claims for predicate violations, his claims for wrongful termination and unfair competition likewise survive demurrer.

The demurrer is therefore SUSTAINED with leave to amend as to the second, third, fourth, faith, ninth, and tenth causes of action, and otherwise OVERRULED.