Judge: Mark A. Young, Case: 24SMCV00341, Date: 2024-08-09 Tentative Ruling
Case Number: 24SMCV00341 Hearing Date: August 9, 2024 Dept: M
CASE NAME: Benge v. Office Depot LLC, et al.
CASE NO.: 24SMCV00341
MOTION: Demurrer to the
Complaint
HEARING DATE: 8/9/2024
LEGAL STANDARD
A demurrer for sufficiency tests whether
the complaint states a cause of action. (Hahn v. Mirda (2007) 147
Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations
liberally and in context. In a demurrer proceeding, the defects must be
apparent on the face of the pleading or via proper judicial notice. (Donabedian
v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) 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. (CCP §§ 430.30, 430.70.) At the pleading stage, a plaintiff
need only allege ultimate facts sufficient to apprise the defendant of the
factual basis for the claim against him. (Semole v. Sansoucie (1972) 28
Cal. App. 3d 714, 721.) A “demurrer does not, however, admit contentions,
deductions or conclusions of fact or law alleged in the pleading, or the
construction of instruments pleaded, or facts impossible in law.” (S. Shore
Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations
omitted.)
“Liberality in permitting amendment is
the rule, if a fair opportunity to correct any defect has not been given.” (Angie
M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.) It is an abuse of
discretion for the court to deny leave to amend where there is any reasonable
possibility that plaintiff can state a good cause of action. (Goodman v.
Kennedy (1976) 18 Cal.3d 335, 349.) Plaintiff has the burden to demonstrate
in what manner¿the complaint can be amended, and¿how¿that amendment will change
the legal effect of the pleading.¿(Id.)
REQUEST FOR JUDICIAL NOTICE
Defendants’
request for judicial notice of the subject LWDA notice letter is GRANTED, as
Plaintiff does not dispute the authenticity of the notice letter. (Evid. Code §452(h).)
Defendants’ request for judicial notice in reply is DENIED.
Plaintiff’s counsel’s unrelated cases are not relevant to the disposition of
this demurrer. (Rep. RJN Exs. A-I.)
ANALYSIS
Defendant argues that Plaintiff failed
to exhaust his administrative remedies because he did not properly comply with
PAGA’s mandatory pre-filing requirements and failed to plead factual
allegations in support his claims.
PAGA
Notice
Labor
Code section 2699.3 requires a representative plaintiff to give written notice
to the employer of the specific provisions of the Labor Code alleged to have
been violated, including the facts and theories to support the alleged
violations. (Lab. Code § 2699.3(a)(1)(A); see Caliber Bodyworks Inc. v.
Superior Court (2005) 134 Cal. App.4th 365, 376 [holding that an employee
“must” first follow administrative procedures].) A complaint is subject to
demurrer for not alleging pre-filing notice and exhaustion of Labor Code
Section 2699.3(a) regarding civil penalties for wage and break violations,
unless the cause of action is a hybrid of claims with some allegations falling
outside the scope of that section. (Id., at 380-384.)
The
notice must contain sufficient information, such as facts, theories, and the
specific Labor Code provisions alleged to have been violated, to give the LWDA
an adequate opportunity to decide whether to allocate resources to investigate
the claim. (Brown v. Ralphs Grocery Store Co. (2018) 28 Cal.App.5th 824,
835.) “Notice to the employer serves the purpose of allowing the employer to
submit a response to the [LWDA] . . . thereby promoting an informed agency
decision as to whether to allocate resources toward an investigation.” (Id.
at 836.) A PAGA notice letter is insufficient when it fails to “give employer
enough information to determine what policies or practices are being complained
of so as to know whether to fold or fight.” (Id. at 837.)
In
Brown, the notice was adequate for a violation of section 226, which
requires employers to maintain accurate and complete wage statements, because
plaintiff stated that the employer failed to include the name and address of
the employer on wage statements. (Brown, supra, 28 Cal.App.5th at 838.)
In contrast, the notice was inadequate in regard to sections 226.7 and 512,
which govern meal and rest periods, because it contained only a “string of
legal conclusions that parroted the allegedly violated Labor Code provisions.
It did not state facts and theories supporting the alleged violations . . ..” (Id.
at 837.)
In
Alcantar, the Ninth Circuit applied the same standard and held the
plaintiff's notice was “a string of legal conclusions with no factual
allegations or theories of liability to support them.” (Alcantar v. Hobart
Service (9th Cir. 2015) 800 F.3d 1047, 1057.) The notice identified
plaintiff's employer and stated the employer “(1) failed to pay wages for all
time worked; (2) failed to pay overtime wages for overtime worked; (3) failed
to include the extra compensation required by ... section 1194 in the regular
rate of pay when computing overtime compensation, thereby failing to pay
Plaintiff and those who earned additional compensation for all overtime wages
due;” and so on. (Ibid.) The court reasoned these bare allegations were
insufficient because they simply paraphrased the allegedly violated statutes
without supporting facts or theories. “The only facts or theories that could be
read into this letter are those implied by the claimed violations of specific
sections of the California Labor Code.” (Ibid.) The notice did not allow
the LWDA “to intelligently assess the seriousness of the alleged violations” or
give the employer enough information “to determine what policies or practices
are being complained of so as to know whether to fold or fight.” (Id. at
105.)
Here,
the complaint alleges compliance with the notice requirements. On November 16,
2023, Plaintiff provided written notice by online submission to the LWDA and to
Defendants of the specific provisions of the California Labor Code alleged to
have been violated, including the facts and theories to support the alleged
violations. (Compl., ¶ 19.) Plaintiff did not receive an LWDA Notice within
sixty-five calendar days of the date of Plaintiff’s notice. (Id.) Plaintiff has
satisfied the administrative prerequisites under California Labor Code section
2699.3(a). (¶ 20.)
The
noticed LWDA letter at issue puts forth sufficient facts to place Defendants on
notice of the policies/practices challenged, and the corresponding Labor Code
citations. (Lab. Code §§201, 202, 203, 204, 226(a), 226.7, 510, 512(a), 551,
552, 558, 1174(d), 1194, 1197, 1197.1, 1198, 2800 & 2802.) The letter
explains that Office Depot employed Mr. Benge as an hourly-paid, non-exempt
employee from approximately April 2022 to approximately April 2023. The letter
defined the “aggrieved employees” as all current and former hourly-paid or
non-exempt employees who worked for any of the above-referenced entities, or
Office Depot and Office Max, within the State of California.
Corresponding
with each alleged violation, Plaintiff proffered ultimate facts of the
violations in the letter. Mr. Benge and other aggrieved employees worked in
excess of 8 hours a day and 40 hours in a week. but were not paid for all
overtime hours worked. (Lab. Code §§ 510, 1198.) Office Depot required Mr.
Benge and other aggrieved employees to work during meal and rest periods and
failed to compensate them properly for noncompliant meal and rest periods
including short, late, interrupted, and missed meal and rest periods. (Lab.
Code §§ 226.7, 512.) Office Depot failed to pay Mr. Benge and other aggrieved
employees earned and unpaid minimum, overtime, and premium wages due to them within
any time period provided by sections Labor Code sections 201-202. (Lab. Code §§
201, 202.) Office Depot failed to pay Mr. Benge
and other aggrieved employees earned and unpaid minimum, overtime, and premium
wages due to them within any time period specified by section 204. (Lab. Code §
204.)
Office Depot did not provide Mr. Benge and other aggrieved employees
with complete and accurate itemized wage statements, as the wage statements
failed to include the total hours worked by Mr. Benge and other aggrieved
employees, including time spent working off-the-clock and during meal and rest
periods, and by naming of the incorrect business entity on Mr. Benge's records.
(Lab. Code § 226.) Office Depot required Mr. Benge and the aggrieved employees
to regularly work in excess of six days in a workweek, in excess of thirty (30)
hours in a week and/or six (6) hours in any one day, in excess of six days in a
workweek without accumulating or being provided the opportunity to take at
least one (1) day of rest. (Lab. Code §§ 551, 552.) When Mr. Benge and the
aggrieved employees accumulated days of rest, they were not actually provided
the opportunity to take the equivalent of one day's rest in seven during each
calendar month. (Id.) Office Depot failed to keep accurate
and complete payroll records showing the actual hours worked daily and the
wages earned by Mr. Benge and other aggrieved employees, including earned and
unpaid minimum, overtime, and premium wages. (Lab. Code § 1174(d).) Office
Depot did not provide Mr. Benge and other aggrieved employees with the minimum
wages to which they were entitled for work performed "off-the-clock.” (Lab.
Code §§ 1194, 1197, 1197.1.) For workdays in which Mr. Benge and the other
aggrieved employees reported to work and were furnished less than half the
usual or scheduled day's work, Office Depot failed to pay Mr. Benge and other
aggrieved employees an amount no less than two (2) hours nor more than four (4)
hours at the employee's regular rate of pay. (Lab. Code § 1198.) On days in
which Mr. Benge and the other aggrieved employees were required to report for
work a second time in one workday and were furnished less than two (2) hours of
work upon the second reporting, Office Depot failed to pay Mr. Benge and other
aggrieved employees for two (2) hours at the employee's regular rate of pay.
(Id.) Office Depot did not fully reimburse Mr. Benge and other aggrieved
employees’ incurred, necessary, business-related expenses and costs including the
purchasing and maintenance of clothing in compliance with the dress code. (Lab.
Code §§ 2800, 2802.)
The
above concise factual statements go beyond recitations and legal conclusions.
The letter provides sufficient facts for the LWDA to assess the seriousness of
the alleged violations and decide whether to allocate resources to an
investigation. The letter allows Defendants to assess which policies or
practices are at issue and gave an opportunity to cure the violations. Therefore,
Plaintiff complied with the notice requirements.
Allegations of
the Complaint
Defendant
argues that complaint does not state sufficient facts in support of each Labor
Code violation. The court will address each contention on a violation-by-violation
basis.
Reimbursement
Defendant
contends that there are insufficient facts to support a failure to reimburse
business expenses. “[T]he elements of a section 2802 claim are: ‘(1) the
employee made expenditures or incurred losses; (2) the expenditures or losses
were incurred in direct consequence of the employee’s discharge of his or her
duties, or obedience to the directions of the employer; and (3) the
expenditures or losses were necessary.’” (USS-POSCO Industries v. Case
(2016) 244 Cal.App.4th 197, 205.)
The
complaint alleges that Defendants employed Plaintiff as an hourly-paid,
nonexempt employee from approximately April 2022 to approximately April 2023 in
the State of California. (Compl., ¶ 22.) The other “aggrieved employees” are defined
as all hourly-paid or non-exempt current or former employees who worked for any
of the Defendants, or Office Depot and Office Max, in the State of California,
and one or more of the alleged violations were committed against them. (¶¶ 17,
21.)
As
to expenses, the complaint alleges that Defendants knew or should have known
that Plaintiff and the other aggrieved employees were entitled to reimbursement
for necessary business-related expenses and costs. (¶39.) Defendants failed to
reimburse Plaintiff and the other aggrieved employees for necessary
business-related expenses and costs. (¶ 48.) These two allegations only state
the violation in conclusory terms. Further facts are required to establish that
the aggrieved employees incurred expenses or losses and that such expenses were
incurred as a part of the discharge of employment duties or at Defendants’
direction.
Accordingly,
the demurrer is SUSTAINED with leave to amend as to the reimbursement claim.
Labor Code sections 201-204
Labor
Code section 201 provides that if an employer discharges an employee, wages
earned and unpaid at the time of the discharge are due and payable immediately.
(See Lab. Code, § 201(a); Price v. Starbucks Corp. (2011) 192
Cal.App.4th 1136, 1144.) Labor Code section 202 provides that if an employee
quits employment, “wages shall become due and payable not later than 72 hours
thereafter, unless the employee has given 72 hours previous notice of his or
her intention to quit, in which case the employee is entitled to his or her
wages at the time of quitting.” Labor Code section 203 provides additional
penalties for willful violations of section 201 and 202. Labor Code section 204
provides that “all wages earned for labor in excess of the normal work period
shall be paid no later than the payday for the next regular payroll period.”
(Lab. Code, § 204(b)(1).)
Plaintiff
alleges that the aggrieved employees were owed various wages that were not paid
by Defendant at all, let alone at discharge/termination. Defendant allegedly failed
to compensate Plaintiff and aggrieved employees for all hours worked, missed
meal periods or rest breaks. (Compl., ¶ 23.) For instance, Plaintiff and the
other aggrieved employees worked over eight hours in a day, and/or forty hours
in a week during their employment with Defendants without overtime compensation.
(¶¶ 28, 41.) Defendants engaged in a uniform policy
and systematic scheme by failing to pay employees for all hours worked and for
missed (short, late, interrupted, and altogether missed) meal periods and rest.
(¶¶ 29, 42.) Defendants failed to provide Plaintiff and the other aggrieved
employees the required rest and meal periods during the relevant time period.
(¶ 31.) Defendant failed to provide the aggrieved employees with all meal
periods or payment of one additional hour of pay at the regular rate of pay
when a meal period was missed. (¶ 32.) Likewise, the aggrieved employees did
not receive all rest periods or payment of one additional hour of pay at
Plaintiff’s and the other aggrieved employees’ regular rate of pay when a rest
period was missed. (¶ 33.) The aggrieved employees did not, in fact, receive
all wages owed to them upon discharge or resignation, including overtime and
minimum wages and meal and rest period premiums. (¶¶ 35, 44.) The aggrieved
employees did not receive payment of all wages, including overtime and minimum
wages and meal and rest period premiums, within any time permissible under Labor
Code section 204. (¶¶ 36, 45.)
Plaintiff
repeatedly alleges that Defendants had knowledge of their duty to pay the above
wages to the aggrieved employees. Defendants had the financial ability to pay the
above compensation, but willfully, knowingly, and intentionally failed to do
so, and falsely represented to Plaintiff and the other aggrieved employees that
they were properly denied wages, all in order to increase Defendants’ profits.
(Compl., ¶¶ 40, 49.) Thus, Plaintiff alleges that Defendants willfully withheld
the wages owed, entitling the aggrieved employees to section 203 penalties.
Accordingly,
the demurrer is OVERRULED as to the section 201 et seq. violations.
Meal
and Rest Periods
Labor
Code section 226.7 provides that an employer shall not require an employee to
work during a meal or rest or recovery period mandated by an applicable
statute, regulation, or order of the Industrial Welfare Commission. (Lab. Code,
§ 226.7(b).) Section 226.7 further provides that the employer shall pay the
employee one additional hour of pay at the employee’s regular rate for each
workday that the meal or rest or recovery period is not provided. (§ 226.7(c).)
Labor Code
section 512 provides that an employer may not employ an employee for a work
period of more than five hours per day without providing the employee with a
meal period of not less than thirty minutes.
The
complaint alleges that Defendants failed to provide the aggrieved employees
with the requisite meal and rest periods or pay for an additional hour when a
period was missed. As noted above, Defendants’ policy was to fail to pay employees
for missed, short, late, or interrupted meal periods and rest. (Compl., ¶¶ 29,
42.) Defendants failed to provide Plaintiff and the other aggrieved employees
the required rest and meal periods during the relevant period. (¶ 31.) Defendant
failed to provide the aggrieved employees with all meal periods or payment of
one additional hour of pay at the regular rate of pay when a meal period was
missed. (¶ 32.) The aggrieved employees did not receive all rest periods or
payment of one additional hour of pay at Plaintiff’s and the other aggrieved
employees’ regular rate of pay when a rest period was missed. (¶ 33.) The above
facts establish that Defendants did not permit aggrieved employees with a
reasonable opportunity to take a compliant meal or rest break.
Accordingly,
the demurrer is OVERRULED as to the meal and rest period violations.
Payroll Records and Wage Statements
Labor
Code section 226 provides that an employer shall furnish an accurate itemized
statement in writing showing, in part, the gross wages earned, total hours
worked, all deductions, net wages earned, dates of the period for which the
employee is paid, and all applicable hourly rates in effect during the pay
period and corresponding number of hours worked at each hourly rate by the
employee. (Lab. Code, § 226(a).) An employee suffering injury as a result of a “knowing
and intentional failure” to comply with subsection (a) is entitled to recover
the greater of all actual damages or fifty dollars ($50) for the initial pay
period in which a violation occurs and one hundred dollars ($100) per employee
for each violation in a subsequent pay period, not to exceed an aggregate penalty
of four thousand dollars ($4,000), and is entitled to an award of costs and
reasonable attorney’s fees. (Id., § 226(e).) An employee may also bring an action
for injunctive relief to ensure compliance with this section, and is entitled
to an award of costs and reasonable attorney’s fees. (Id., § 226(h).)
Labor
Code section 1174 provides that an employer has a duty to maintain accurate
employee records, including payroll records showing the hours worked and rate
paid. (Lab. Code, § 1174.) Section 1174.5 provides that any employer who
willfully fails to maintain the requisite records shall be subject to a civil
penalty. (§ 1174.5.)
The
complaint alleges that Plaintiff and the other aggrieved employees did not
receive complete and accurate wage statements or payroll records from
Defendants. (Compl., ¶¶ 37-38, 46-47.) The deficiencies included the failure to
include the total number of hours worked by Plaintiff and the other aggrieved
employees. (Id.) This states a violation of sections 226. However, the Complaint
only alleges the conclusion that Defendants violated section 1174.5 by failing
to maintain accurate payroll records. Critically, the complaint is silent on Defendants’
knowledge or willfulness concerning the payroll records and wage statements. Thus,
the complaint does not allege sufficient facts in support of civil penalties for
violations of sections 226 or 1174.
Accordingly,
the demurrer is SUSTAINED with leave to amend as to the wage statement and
payroll records violations.
Minimum
and Overtime Wages
Labor Code section 510(a) provides
that “[a]ny work in excess of eight hours in one workday and any work in excess
of 40 hours in any one workweek and the first eight hours worked on the seventh
day of work in any one workweek shall be compensated at the rate of no less
than one and one-half times the regular rate of pay for an employee.”
Labor Code section 1194(a) provides
that “any employee receiving less than the legal minimum wage or the legal
overtime compensation applicable to the employee is entitled to recover in a
civil action the unpaid balance of the full amount of this minimum wage or
overtime compensation, including interest thereon, reasonable attorney’s fees,
and costs of suit.” Section 1194.2 provides that an employee is entitled to
recover liquidated damages in an amount equal to the wages unlawfully unpaid in
an action to recover such unpaid wages. (See id., §
1194.2(a).)
Labor Code section 1197 provides
that the minimum wage for employees fixed by the Labor Commission or any
applicable state or local law is the minimum wage to be paid to employees such
that the payment of a lower wage than the minimum is unlawful. (Lab. Code, §
1197.) Any employer who pays “any employee a wage less than the minimum fixed
by an applicable state or local law, or by an order of the commission, shall be
subject to a civil penalty, restitution of wages, liquidated damages payable to
the employee, and any applicable penalties imposed pursuant to Section 203[.]”
(Lab. Code § 1197.1(a).)
The complaint alleges that the aggrieved
employees were not paid minimum wages in violation of Labor Code sections 1194,
1197, and 1197.1 and overtime wages in violation of Labor Code sections 510 and
1198. (Compl., ¶¶ 55, 58.) Plaintiff and the other aggrieved employees worked
over eight hours in a day, and/or forty hours in a week during their employment
with Defendants without overtime compensation. (¶¶ 28, 41.) The aggrieved
employees did not, in fact, receive all wages owed including overtime and
minimum wages. (¶¶ 35-36, 44-45.) Defendants willfully failed to compensate
Plaintiff and the other aggrieved employees in order to increase Defendants’
profits. (¶¶ 40, 49.) Therefore, Plaintiff sufficiently alleges that Defendants
willfully failed to pay all overtime and minimum wages owed, entitling the
aggrieved employees to section 203 penalties.
Accordingly, the demurrer is
OVERRULED as to the minimum wage and overtime violations.
Plaintiff has 20 days to file an
amended complaint.