Judge Michael E. Whitaker, Case Number: 24SMCV04341, Date: 2025-03-03 Tentative Ruling

Judge: Michael E. Whitaker, Case: 24SMCV04341, Date: 2025-03-03 Tentative Ruling

This case arises from a business/employment dispute. In the operative First Amended Complaint (“FAC”) Plaintiff Christopher Mohoney (“Plaintiff”) alleges thirteen causes of action against Defendants Hexacorp Ltd. dba Orfium (“Hexacorp”); Robert Wells (“Wells”); Drew Delis (“Delis”) and Richard Constant (“Constant”) as follows:

Moving Defendants Hexacorp, Wells, and Delis (“Moving Defendants”) now demur to the first through seventh and twelfth causes of action on the grounds that they fail to state facts sufficient to constitute a cause of action under Code of Civil Procedure section 430.10, subdivision (e).

“It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) In testing the sufficiency of a cause of action, a court accepts “[a]s true all material facts properly pled and matters which may be judicially noticed but disregard contentions, deductions or conclusions of fact or law. [A court also gives] the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (290 Division (EAT), LLC v. City & County of San Francisco (2022) 86 Cal.App.5th 439, 450 [cleaned up]; Hacker v. Homeward Residential, Inc. (2018) 26 Cal.App.5th 270, 280 [“in considering the merits of a demurrer, however, “the facts alleged in the pleading are deemed to be true, however improbable they may be”].)

Further, in ruling on a demurrer, a court must “liberally construe” the allegations of the complaint “with a view to substantial justice between the parties.” (See Code Civ. Proc., § 452.) “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

In summary, “[d]etermining whether the complaint is sufficient as against the demurrer on the ground that it does not state facts sufficient to constitute a cause of action, the rule is that 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, or may be intermingled with a statement of other facts irrelevant to the cause of action shown, or although the plaintiff may demand relief to which he is not entitled under the facts alleged.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

Plaintiff’s first and second causes of action for violations of California Family Rights Act (“CFRA”) and Plaintiff’s seventh cause of action for aiding or abetting unlawful employment practices are premised on alleged violations of Government Code sections 12945.2 and 12940, subd. (i), respectively. Similarly, Plaintiff’s seventh cause of action for aiding or abetting unlawful employment practices is premised on Plaintiff’s third through sixth causes of action for whistleblower retaliation, wrongful termination, failure to pay wages on termination, and failure to provide accurate wage statements, are premised on alleged violations of Labor Code. Further, Plaintiff’s twelfth cause of action alleges violations of Unfair Competition Law, Business and Professions Code sections 17200 et seq.

Moving Defendants argue that none of the statutes apply, because as the FAC alleges, Plaintiff lived and worked in Europe during all relevant times. Plaintiff alleges in the FAC:

2. Defendant Hexacorp is, and at all times relevant hereto was, a Delaware corporation with a principal place of business in Los Angeles County, California. Hexacorp has been doing business as “Orfium” since July, 9, 2015. Mohoney is informed and believes and thereon alleges that Hexacorp is a private employer engaged in a business or enterprise in California that directly employs five or more employees in any state, the District of Columbia, or any US territory to perform services for a wage or salary.

3. Defendant Wells is an individual residing in Los Angeles County, California. Wells is, and at all times relevant hereto was, the Chief Executive Officer (“CEO”) of Hexacorp, a common stockholder of Hexacorp, and one of Hexacorp’s Common Directors.

4. Defendant Delis is an individual residing in San Diego County, California. Delis is, and at all times relevant hereto was, Chief Product Officer (“CPO”) of Hexacorp, a common stockholder of Hexacorp, and one of Hexacorp’s Common Directors.

9. Jurisdiction is proper in this Court pursuant to California Code of Civil Procedure § 410.10 in that defendants Wells and Delis reside in California and because Hexacorp maintains a principal place of business in California.

10. Venue is proper in this Court pursuant to California Code of Civil Procedure § 395 and Local Rule 2.3 of the Los Angeles County Superior Court in that defendant Hexacorp does business in the City of Malibu, Los Angeles County, California, and further because Wells and Delis reside in Los Angeles County, California.

11. Plaintiff Mohoney has received a right-to-sue letter from the California Department of Fair Housing and Employment and has thus exhausted all necessary administrative remedies. A true and correct copy of that right-to-sue letter is attached hereto as Exhibit A

15. Mohoney and defendant Delis co-founded defendant Hexacorp in Los Angeles in November, 2014. Defendant Wells joined Hexacorp as its CEO in 2018.

18. On October 1, 2018, Hexacorp and Mohoney entered into a written employment agreement (the “Employment Contract”) pursuant to which Hexacorp hired Mohoney as its Chief Production Officer (“CPO”). A true and correct copy of the Employment Contract is attached hereto as Exhibit C.

19. Among other key terms, the Employment Contract sets forth Mohoney’s starting base salary, confirms Mohoney’s eligibility to participate in Hexacorp’s “employee benefit plans and programs,” provides that Mohoney’s “principal place of employment shall be at our corporate office in Los Angeles, California” but that Hexacorp “reserves the right to change [Mohoney’s] position, duties and work location from time to time in its discretion,” and states that it “shall be governed by the laws of California, without regard to conflict of law principles.”

20. In 2019, Mohoney became the Chief Financial Officer (“CFO”) of Hexacorp, while defendant Delis took on the role of CPO.

22. In 2020, Mohoney began taking extended business trips abroad as Hexacorp was then expanding its international operations including growing a large R&D office and new business division in Athens, Greece and was also setting up its presence in London and Dublin. Because of the increasingly demanding needs of the business and the rapidly expanding duties Mohoney was being required to take on as Hexacorp grew, Mohoney agreed to relocate to Athens, Greece in May, 2021.

23. After Mohoney’s first child was born in July of 2021, he was entitled to take a 12- week leave to care for his family. Nevertheless, Defendants pressured Mohoney to instead focus on closing key transactions of the company, and Mohoney consequently took only a few days of family care leave while his newborn was in the hospital, which caused significant emotional distress for Mohoney and his wife.

24. Subsequently, Mohoney relocated temporarily to London from November 2021 to March 2022 to simultaneously lead both a fundraise for Hexacorp and the company’s acquisition of a London-based business, as well as to help establish Hexacorp’s London and Dublin offices. After returning to Athens, Mohoney again temporarily relocated to London from November 2022 to April 2023 to complete the acquisition of the London-based business before returning to Athens. For Mohoney’s work on the acquisition and fundraise transactions, which were transformative to the company, Mohoney did not receive a bonus of any sort while a contractor hired by Wells, who contributed little to either transaction, received a success fee of $500,000.

25. During Mohoney’s time abroad, to facilitate Hexacorp’s rapid expansion and at the urging of Defendants, Mohoney forewent compensation increases and did not participate in any company bonus scheme. After his first child was born in July 2021 and over his years abroad, Mohoney repeatedly discussed with Defendants (i) his desire to return to the United States as soon as possible after his assignments abroad were completed, and (ii) correcting his compensation to market rates for his role so that he could afford to return to the United States to raise his new family.

28. Mohoney’s employment benefits included a high deductible health insurance policy, and Mohoney had a health savings plan (“HSA”) into which Hexacorp contributed funds. After Mohoney and his wife began having children, Mohoney and Hexacorp agreed in writing that, in exchange for Mohoney continuing to defer an increase in his salary to help fund Hexacorp’s growth and its hiring/retention of other executives, Hexacorp would increase its contributions to Mohoney’s HSA (the “HSA Agreement”). A true and correct copy of the HSA Agreement is attached hereto as Exhibit D.

29. However, Hexacorp never increased its contribution despite Mohoney’s repeated requests that Hexacorp do so.

30. The California Family Rights Act (“CFRA”) provides that new fathers can take 12 weeks of unpaid family leave within one year of a child’s birth with guaranteed job protection. This includes maintaining the new father’s eligibility for health insurance coverage and other employee benefits while he is out on leave.

31. Hexacorp’s employee handbook similarly provides that its employees are entitled to take 12 weeks of paid job-protected family leave because of the birth of a child.

32. Mohoney and his wife had a second child in July 2023, and Mohoney exercised his rights under the CFRA and Hexacorp’s company leave policy to take a family care leave because of the birth of a child.

33. However, Defendants repeatedly intruded on and disrupted Mohoney’s family care leave, requesting, pressuring and insisting that Mohoney handle certain work matters during that time period. Other than a few days immediately after the birth of his child when Mohoney was in the hospital with his wife and newborn, he worked under pressure from the Defendants through most of his leave nearly every day, with some days being full days of work.

34. In addition, Wells and Delis bullied and harassed Mohoney for having exercised his right to take family care leave. For example, and without limitation, Wells belittled Mohoney for having an “out of office” automatic email response stating he was on family care leave and told Mohoney he should change that response.

35. Mohoney complained about the bullying and harassment to Richard Constant (“Constant”), Chairman of Hexacorp’s Board of Directors (“Board”), who said he would speak to Wells, but Hexacorp did nothing to address the bullying and harassment.

36. In or about mid-October 2023, Constant traveled from London to Athens to meet with Mohoney to discuss Mohoney’s future with the company. During that visit, Constant told Mohoney that Mohoney would be getting the long-deferred raise in his salary along with participation in the company bonus plan as well as a relocation allowance so he could return with his family to the United States. Constant also acknowledged that Mohoney had made sacrifices to facilitate Hexacorp’s growth.

37. While discussing with Mohoney his relocation back to the United States, Constant asked Mohoney to where he would like to return. Mohoney responded that he perceived Southern California, either Los Angeles or San Diego, as the best option because it would be good for Hexacorp’s business if Mohoney could work in close proximity to Wells and Delis. Constant agreed, replying to the effect, “That makes sense.”

38. During Constant’s visit with Mohoney, Constant acknowledged that Mohoney had been asked to work during his family care leave, and also expressed Hexacorp’s understanding that it would be challenging for Mohoney to relocate with his young family back to the United States. Based on these concerns, Constant conveyed that the company wanted Mohoney to temporarily step away from his job responsibilities by immediately going back on family leave through the end of 2023 so that Mohoney could focus his attention on getting his family moved back to the United States. To facilitate this, Constant made clear that he wanted Mohoney to instruct his direct reports to report to Constant instead through the end of 2023.

39. During his visit, Constant also discussed with Mohoney the future needs of Hexacorp and where within Hexacorp Mohoney could be of most use when he returned to work in January 2024. In particular, Constant and Mohoney discussed having Mohoney return to R&D because of the recent problems that department had been experiencing (discussed hereinafter) and given Mohoney’s experience developing the music rights software that launched Hexacorp and is still the core of the company’s success.

40. On or about October 12, 2023, Mohoney had breakfast with Delis. During that time, Mohoney and Delis discussed Mohoney’s desire to move back to the United States, and whether Mohoney should return to Los Angeles or San Diego. Delis responded that Mohoney should go to San Diego, and talked about how the two of them could share an office and work together.

41. Thereafter, on or about October 17, 2023, persuaded by Constant’s representations made during his visit with Mohoney and buoyed by his breakfast conversation with Delis, Mohoney entered into a written agreement with Hexacorp (the “10/17/23 Agreement”), the terms of which included:

• Mohoney’s job-protected family care leave would be extended until the end of 2023 to enable Mohoney to focus on relocating himself and his family back to the United States;

• During the period of his extended paternity leave, Mohoney would step back from his job responsibilities with the exception of making himself available to provide any assistance Hexacorp might reasonably request;

• Mohoney would instruct his direct reports that, until the end of 2023, they were to report to Constant instead of to Mohoney;

• Mohoney’s remuneration would be increased on January 1, 2024 by $13,000 per month to cover the additional costs associated with his relocation and living in the United States going forward; and

A true and correct copy of the 10/17/23 Agreement is attached hereto as Exhibit E.

42. Mohoney was relieved at these developments which indicated that Hexacorp was going to finally follow through on its promise to compensate him fairly after he had deferred increases in his compensation for so many years to facilitate the $6 million plus financing of Wells’ Malibu home and Hexacorp’s growth. Mohoney had been wanting to return to the United States for some time already, but the cost of relocating his family had proven prohibitive given Mohoney’s modest salary. Mohoney also appreciated Defendants’ acknowledgment that his demanding work as CFO of an expanding global company justified an increase in his salary going forward.

43. Mohoney is now informed and believes and thereon alleges that, unbeknownst to him at the time, the 10/17/23 Agreement was nothing more than a ruse devised by Defendants to keep Mohoney out of the way and in the dark while defendants Wells, Delis, Constant and Does 1-50, inclusive, were plotting behind Mohoney’s back to terminate his employment, remove him from the Board, and otherwise push him out of Hexacorp.

44. On or about November 3, 2023, during the midst of Mohoney’s extended family care leave, defendants Wells and Delis notified Mohoney that, instead of returning full-time to his position as CFO after his leave ended, his employment at Hexacorp was going to be terminated.

46. Wells and Delis claimed they wanted to conclude matters in an amicable manner, advising Mohoney that if he would voluntarily resign, Defendants would negotiate a severance package for Mohoney. Mohoney agreed he would voluntarily resign and help craft a message to employees that would minimize any disruptions once Hexacorp and Mohoney had agreed on the terms of a suitable severance package.

47. Nevertheless, three days later on November 7, 2023, before the parties had reached any agreement on the terms of a severance package, and despite Mohoney having explicitly warned Constant, Chairman of the Board, that he did not agree to any company-wide communication about his departure being sent yet, Defendants unilaterally sent a company-wide email prematurely and falsely notifying everyone at Hexacorp that Mohoney had stepped down from his role as CFO. In fact, as alleged above, Mohoney had only agreed to step back from his responsibilities during his extended family care leave and instruct his direct reports that they were to report to Constant instead of to Mohoney until the end of 2023 (when his extended leave was to end), and that he would voluntarily resign only once he and Hexacorp had agreed to the terms of a suitable severance package. The email was sent without Mohoney’s approval and caused him to suffer mental and emotional distress, humiliation and embarrassment.

50. On or about January 15, 2024, Defendants disabled Mohoney’s access to his work email account. Nevertheless, Defendants continued asking and expecting Mohoney to provide services to Hexacorp, including signing documents and fielding questions from Hexacorp’s finance department, which services Mohoney continued to provide.

51. After January 18, 2024, Defendants notified Mohoney that Hexacorp was “withdrawing and revoking the offer.” Even though Mohoney had neither resigned nor been discharged, was still performing services for the company, and had not yet received the promised raise or relocation allowance, Defendants also advised Mohoney that Hexacorp was going to “halt any further payments” to him and demanded that Mohoney repay all amounts he had received from Hexacorp since November 3, 2023.

52. On March 8, 2024, Defendants notified Mohoney that “… the Board terminated his employment by written Board Consent dated February 23, 2024 and removed him from all offices and positions he held with Hexacorp (and its subsidiaries and affiliates), which was confirmed by the requisite holders of Hexacorp’s Series A Preferred Stock in accordance with Hexacorp’s Certificate of Incorporation. Inadvertently, this notice of termination was not provided to [Mohoney] on that date, but written notice is being provided now.”

53. Defendants not only terminated Mohoney’s employment behind his back and then inexplicably delayed notifying Mohoney of his discharge for nearly two weeks, but Hexacorp also failed to pay Mohoney his final wages on February 23, 2024.

54. On March 8, 2024, Hexacorp remitted a payment to Mohoney which it described as a “basic salary payment covering the period from January 15, 2024 through February 29, 2024 …” That payment did not include the agreed upon raise, however.

59. Further, although the promised $39,000 relocation allowance was supposed to enable Mohoney to relocate himself and his family back to the United States before the end of 2023, Hexacorp did not remit the $39,000 to Mohoney until March 8, 2024, and only after Mohoney had made repeated requests for its remittance.

60. Because Defendants withheld the relocation allowance for so long, Mohoney and his family were forced to remain in Greece much longer than anticipated. During the interim, both of Mohoney’s children experienced medical emergencies requiring each child to be admitted to a public hospital in Greece for over a week each, instead of being treated at a hospital in the United States, causing considerable emotional and mental distress to Mohoney.

61. The delay and time spent attempting to remedy the situation with the Defendants also made it much more difficult for Mohoney to seek other work due to the distance and time zone difference abroad from the United States. In addition, now that he is finally back in the United States, Mohoney has experienced difficulty obtaining suitable housing for his family because he no longer is employed, another source of emotional and mental distress to Mohoney.

Thus the FAC adequately alleges that he was employed by a Los Angeles based company (FAC ¶ 2) and the employment agreement is governed by California law (FAC ¶ 19.)

However, as of May 2021, Plaintiff permanently relocated to Greece.[1] (FAC ¶ 22.) Approximately two months later, Plaintiff had his first child, after which he sought to exercise his parental leave rights, but was forced to work while on leave. (FAC ¶ 23.) In July 2023, Plaintiff had his second child, after which Plaintiff again sought to take family care leave, but he was again forced to work while on leave and “bullied and harassed” for attempting to take leave. (FAC ¶¶ 32-35.)

Although Plaintiff had negotiated and the parties agreed that Plaintiff would relocate to Southern California, the parties subsequently began negotiating Defendants’ voluntary resignation and severance package. (FAC ¶¶ 39-46.) Defendants’ alleged February 23, 2024 termination of Plaintiff’s employment without paying Plaintiff his final wages, thus occurred while Plaintiff was still living and working from Greece and at a time when the parties had no intention to continue Plaintiff’s employment from California. (FAC ¶¶ 52-54.)

To begin, while a contractual choice of law provision in an employment agreement governs under what law the agreement will be interpreted, it does not necessarily dictate what employment laws apply to the employer-employee relationship. For example, “[t]he liability of the employer to pay compensation arises from the law itself, rather than from any agreement of the parties.” (North Alaska Salmon Co. v. Pillsbury (1916) 174 Cal. 1, 2.)

With regard to the applicability of California statutes to the instant dispute, in general, although a state may legislate the rights and obligations of its citizens regarding transactions that occur outside its boundaries, there is a presumption against the extraterritorial application of state statutes. (Diamond Multimedia Systems, Inc. v. Superior Court of Santa Clara County (1999) 19 Cal.4th 1036, 1059, citing North Alaska Salmon Co. v. Pillsbury (1916) 174 Cal.1])

As for the CFRA specifically, in Campbell v. Arco Marine, Inc. (1996) 42 Cal.App.4th 1850, 1852, the appellate court held that the Fair Employment and Housing Act (“FEHA”), of which the CFRA is a subset (see Dudley v. Department of Transportation (2001) 90 Cal.App.4th 255, 260), does not apply to “cover the sexual harassment claims of an employee of a California-based company who is not herself a resident of California, whose employment duties were performed, for the most part, outside the boundaries of the state, and whose injuries are based on behavior occurring outside the state.”

Here, Plaintiff alleges he had already permanently moved to Greece, and thus both worked and resided in Greece at the time of the alleged CFRA (family leave) violations. As such, California law does not apply to the first and second causes of action alleging violations of CFRA.

For the same reasons, the seventh cause of action, which alleges violations of Government Code section 12940, subdivision (i), is also precluded. Government Code section 12940, subdivision (i) prohibits aiding or abetting violations of FEHA. As discussed above, FEHA does not appear to apply to employment work done entirely in Europe by a European resident.

Similarly, with regard to the California Labor Code, several cases are instructive. In Ward v. United Airlines, Inc. (2020) 9 Cal.5th 732, the California Supreme Court held that Labor Code section 226 (governing the information provided on wage statements) applies if the employee’s principal place of work is in California, which is defined as the majority of their work is done in California, or if they do not perform the majority of their work in any one state, then California covers the dispute if the California serves as the physical location where workers presents themselves to begin work. (Ward v. United Airlines, Inc. (2020) 9 Cal.5th 732, 755.)

In Oman v. Delta Air Lines, Inc. (2020) 9 Cal.5th 762, the California Supreme Court held that Labor Code section 204 (guaranteeing full payment on a semimonthly basis) “is subject to the same limits as section 226 and applies only to pay periods during which an employee predominantly works inside California.” (Id. at p. 778.)

Likewise, in Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, the Supreme Court held that California Labor Code provisions involving maritime workers applied to work done in the Santa Barbara Channel. (Id. at pp. 578.) In analyzing the issue, however, the court noted that these overtime provisions may not “govern out-of-state businesses employing nonresidents, though the nonresident employees enter California temporarily during the course of the workday.” (Id. at pp. 577-578.)

Furthermore, in Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191, the Supreme Court held that California overtime law applied to “full days and weeks of work performed [in California] by nonresidents[,]” but opined that California law regarding “the content of an out-of-state business’s pay stubs, or the treatment of its employees’ vacation time” may not necessarily apply. (Id. at p. 1201.)

As such, Plaintiff’s third through sixth causes of action, which are all premised on alleged violations of the Labor Code, are precluded.

Similarly, regarding the Unfair Competition Law, in Norwest Mortgage, Inc. v. Superior Court (1999) 72 Cal.App.4th 214, the Court of Appeal held: “we do not construe a statute as regulating occurrences outside the state unless a contrary intention is clearly expressed or reasonably can be inferred from the language or purpose of the statute” and there is no California authority construing California’s Unfair Competition Law as applying “to claims of non-California residents injured by conduct occurring beyond California’s borders.” (Id. at pp. 222-223.)

Thus, Plaintiff does not allege any facts that the CFRA, Labor Code, or Unfair Competition Law apply to his employment that occurred during a three-year period of time when he resided and worked entirely in Europe.

In opposition, Plaintiff points out that the conduct also violates the plain terms of the parties’ written agreements. While this may be true, that alone does not mean that Defendants also violated California law regarding their treatment of an employee who resided and worked entirely in Europe during the relevant time period.

A plaintiff has the burden of showing in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. (See The Inland Oversight Committee v. City of San Bernardino (2018) 27 Cal.App.5th 771, 779; PGA West Residential Assn., Inc. v. Hulven Int'l, Inc. (2017) 14 Cal.App.5th 156, 189.) A plaintiff must not only state the legal basis for the amendment, but also the factual allegations sufficient to state a cause of action or claim. (See PGA West Residential Assn., Inc. v. Hulven Int'l, Inc., supra, 14 Cal.App.5th at p. 189.) Moreover, a plaintiff does not meet his or her burden by merely stating in the opposition to a demurrer or motion to strike that “if the Court finds the operative complaint deficient, plaintiff respectfully requests leave to amend.” (See Major Clients Agency v Diemer (1998) 67 Cal.App.4th 1116, 1133; Graham v. Bank of America (2014) 226 Cal.App.4th 594, 618 [asserting an abstract right to amend does not satisfy the burden].)

Here, Plaintiff has failed to meet this burden as he does not specify any facts that could be added to the complaint to cure the deficiencies identified above.

For the reasons stated, the Court sustains Moving Defendants’ demurrer to the first, second, third, fourth, fifth, sixth, seventh, and twelfth causes of action, which are all premised on alleged violations of California law that does not apply to the employment of a European resident’s work done entirely within Europe, without leave to amend.

Further, the Court orders Moving Defendants to file and serve an Answer or Answers to the FAC on or before March 28, 2025.

Moving Defendants shall provide notice of the Court’s ruling and file the notice with a proof of service forthwith.

[1] From November 2021 to March 2022, and again from November 2022 to April 2023, Plaintiff temporarily relocated to work from London, before ultimately returning to Greece. (FAC ¶ 24.)

DEPARTMENT	207
HEARING DATE	March 3, 2025
CASE NUMBER	24SMCV04341
MOTION	Demurrer to First Amended Complaint
MOVING PARTIES	Defendants Hexacorp Ltd.; Robert Wells; and Drew Delis
OPPOSING PARTY	Plaintiff Christopher Mohoney