Judge: Michael Small, Case: 23STCV11642, Date: 2024-03-20 Tentative Ruling
Case Number: 23STCV11642 Hearing Date: April 10, 2024 Dept: 57
Pending before the Court are the demurrers of (1)
Defendant PopID, Inc. (“PopID”), and (2) Defendants John Miller, Kourosh Gohar,
and Julie Shao (collectively, “the Individual Defendants”) to Plaintiff Omid
Zokaeim’s Second Amended Complaint (“SAC”). PopID also has moved to strike certain
portions of the SAC. The Court’s rulings
on the demurrers and motion to strike are set forth below.
PopID’s Demurrer
First and Second Causes of Action
The demurrer is sustained with leave to amend as to the SAC’s
first cause of action for wrongful termination in violation of public policy
and second cause of action for retaliation in violation of Labor Code Sections
1102.5 and 98.6. The basis for this
ruling is that the allegations supporting these causes of action are
uncertain. Specifically, it is uncertain
whether the purported retaliatory actions that necessarily must underpin both
causes of actions were taken because Plaintiff reported PopID to the California
Labor Board (“CLB”), or whether the actions were taken because Plaintiff told
PopID he was going to make a report to the CLB. Paragraphs 64 and 81 of the SAC are the
pertinent provisions. Paragraph 64
alleges that PopID’s decision to terminate Plaintiff’s employment “was
substantially motivated by [Plaintiff’s] protected complaints to notify the
California Board . . . . .” Paragraph 81
alleges that Plaintiff “complained to report [PopID] to the California
Board.” It is uncertain from Paragraphs
64 and 81 whether Plaintiff is alleging that he actually reported PopID to the
CLB.
Fifth Cause of Action
The demurrer is sustained with leave to amend as to the fifth
cause of action for breach of contract.
The basis for this ruling is that the allegations supporting this cause
of action are uncertain. The contract
that PopID is alleged to have breached is an employment contract. Paragraph 122 of the SAC alleges that “[p]ursuant
to the terms of the Employment Contract, [PopID was] obligated to pay PLAINTIFF
the sum of $72,756.69. Paragraph 123
alleges that [PopID] breached the Employment Contract by failing and refusing
to pay PLAINTIFF’s housing reimbursement for the month of March 2023 and has
thereafter failed and refused to pay such sums to PLAINTIFF. Paragraph 124 alleges that “[a]s a proximate
result of said breach of written contract by DEFENDANTS, PLAINTIFF is entitled
to recover the sum of $1,500.00 and interest thereon. Paragraph 21 alleges that the contract
stipulated that “[i]n order to assist [plaintiff] with living closer to the
Santa Monica area, [PopID] will also provide a housing allowance for twelve
(12) months up to a maximum of $1500.00 per month for reimbursement of
documented rental costs in the Santa Monica area.”
The allegations in these four paragraphs are inconsistent
and contradictory. It is alleged that PopID
owes Plaintiff $72,756.69. But it also
is alleged that PopID owes Plaintiff “the sum of $1,500 and interest thereon.” Those two figures do not match up. Further, the first allegation does not align
with the terms providing “a housing allowance for twelve (12) months up to a
maximum of $1500.00 per month” because the maximum total housing allowance is
$18,000, and $72,756.69 exceeds the maximum.
The Court rejects PopID’s contention that the breach of
contract claim fails because it cannot be ascertained from the pleading whether
the “employment contract” is written, oral or implied by conduct. Paragraph 124 alleges that it was
written.
The Court also rejects PopID’s contention that the breach
of contract claim fails because Plaintiff neglected to attach the purported
contract to the SAC or, at minimum, set forth the terms verbatim in the
SAC. Where a cause of action for breach
of contract is based on a written contract, the plaintiff must do one of the
following: attach a copy of the contract to the complaint and incorporate the
contract by reference; plead the exact language of the contract by setting
forth verbatim the contract's terms; or plead the legal effect of the
contract." (Miles v. Deutsche
Bank National Trust Co. (2015) 236 Cal.App.4th 394, 401-402; see also (Construction
Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189,
199 [it is sufficient for a complaint for breach of contract to “plead the
legal of the contract rather than its precise language”].) Here, the pertinent paragraphs of the SAC set
forth the contract terms, or, at minimum, plead the legal effect of the
contract. The problem, as discussed
above, is that the allegations as to what Plaintiff is owed under the contract are
inconsistent and contradictory.
Third and Fourth Causes of Action
The demurrer is overruled as to the third and fourth
causes of action for misclassification in violation of the Labor Code because
PopID’s memorandum in support of the demurrer fails to advance arguments about
these cause of action.
Sixth Through Twelfth Cause of Action
In the sixth through twelfth causes of action, the SAC alleges
that, in violation of the Labor Code, PopID failed to pay Plaintiff minimum and
overtime wages, failed to provide meal and rest breaks, failed to provide accurate
wage statements, failed to reimburse him for business expenses, and that PopID owes
him waiting time penalties. The
demurrer is overruled as to all of these causes of action.
PopID contends that the SAC does not allege facts to show
it failed to pay Plaintiff minimum and overtime wages, which is what the sixth,
seventh and eleventh causes of action are about. PopID’s contention overlooks the following paragraphs
in the SAC, which the Court sets forth here verbatim:
131.
PLAINTIFF was not paid all minimum wages because PLAINTIFF was never paid for
any work in excess of 8 hours in a day or 40 hours in a week due to the
misclassification of her employment as “exempt”. Moreover, PLAINTIFF did not
receive all rent stipends owed to him, which constitute “wages” under the
California Labor Code.
142.
PLAINTIFF was not paid all overtime wages because PLAINTIFF regularly worked in
excess of forty (40) hours a week and in excess of eight (8) hour shifts per
day. However, he was never compensated for this time due to the
misclassification of her employment as “exempt”.
184.
PLAINTIFF’s last day of employment . . . was on or about March 29, 2023.
However, [PopID] failed to provide PLAINTIFF with PLAINTIFF’s final wages.
In the Court’s view, the allegations in these paragraphs
are sufficient to support the sixth, seventh, and eleventh causes of action.
Equally unavailing is PopID’s contention that the SAC
fails to allege facts to show that Plaintiff was not afforded meal and rest
breaks, which is what the eight and ninth causes of action are about. That contention overlooks the following
paragraphs of the SAC, which the Court sets forth here verbatim:
154.
PLAINTIFF was subject to . . . illegal meal break practices, including the
failure to provide coverage during meal periods, not allowing meal breaks,
requiring PLAINTIFF to work during meal breaks, and failing to provide accurate
information on paycheck stubs in violation of Labor Code Section 226(a).
PLAINTIFF was forced to miss PLAINTIFF’s breaks several times. Additionally,
PLAINTIFF was not provided a meal period within the first five hours of his
shift, and/or was not allowed to take a fully uninterrupted 30-minute meal
break for every five hours of work, and many times had to take a shorter meal
period or an on-duty meal period due to workload and lack of coverage.
PLAINTIFF was subject to [PopID’s] policy and/or practices of not providing
meal breaks and not paying the applicable penalties for meal period violations,
all of which are unpaid and still owed to PLAINTIFF.
163. PLAINTIFF was subject to ]PopID’s] illegal
rest break practices, including the failure to provide coverage during rest
periods, not allowing rest breaks, requiring PLAINTIFF to work during rest
breaks, and failing to provide accurate information on paycheck stubs in
violation of Labor Code Section 226(a). PLAINTIFF was forced to miss
PLAINTIFF’s breaks several times. Additionally, PLAINTIFF was not provided a
10-minute rest break within the first four hours, or major fraction thereof.
PLAINTIFF was subject to [PopID’s policy and/or practices of not providing rest
breaks and not paying the applicable penalties for rest period violations, all
of which are unpaid and still owed to PLAINTIFF.
In the Court’s view, the allegations in these paragraphs
are sufficient to support the eighth and ninth causes of action. .
PopID also contends
that “[t]he tenth cause of action fails to allege any facts to show Plaintiff’s
wage statements were not accurate or that he suffered an injury as a result of
those inaccuracies.” (Demurrer, p. 9.) However,
Paragraph 174 of the SAC alleges just that. It says:
PLAINTIFF’s wage statements were inaccurate because they
did not contain all wages owed to PLAINTIFF.”
In the Court’s view, the allegations in this paragraph are sufficient to
support the tenth cause of action.
Finally, PopID contends that the Twelfth Cause of Action
fails because it does not allege “facts of any specific business expenses that
were incurred, facts showing that PopID was required to reimburse them and that
were not reimbursed.” (Demurrer, p. 10.) Here, PopID overlooks the following paragraph
of the SAC:
194.
PLAINTIFF incurred necessary business expenses on behalf of [PopID] in the
direct consequence of the discharge of PLAINTIFF’s duties when he expensed gas
and mileage of his personal car for business purposes.
203.
However, PLAINTIFF was never reimbursed for said expenses.
In the Court’s view, the allegations in these paragraphs
are sufficient to support the twelfth causes of action.
PopID’s Motion to Strike
PopID moves to strike (1) allegations in paragraphs 57,
68, and 85 of the SAC supporting Plaintiff’s request for punitive or exemplary
damages on the first and second causes of action, and (2) paragraph 2 of the prayer
for relief section of the SAC, which asks for punitive or exemplary damages
related to those causes of action. Because
the Court has sustained PopID’s demurrer to the first and second of causes of
action with leave to amend, PopID’s motion to strike is denied as moot.
Individual Defendants Demurrer
The Individual Defendants are named along with PopID in
the third and fourth causes of action and the sixth through twelfth cause of
action -- all of which, as indicated above, allege violations of the Labor Code.
“Any employer or other person acting on behalf of an
employer, who . . . violates, or causes to be violated, Sections 203, 226,
226.7, 1193.6, 1194, or 2802 [of the Labor Code], may be held liable as the
employer for such violation.” (Lab. Code, § 558.1(a).) All of Plaintiff’s wage and hour claims are
based on alleged violations of these Labor Code sections. A “person acting on behalf of an employer” is
statutorily defined as “a natural person who is an owner, director, officer, or
managing agent of the employer.” (Id., § 558.1(b).) The term “managing agent” has the same meaning
as in Civil Code section 3294(b). (Id.) The liability of such natural persons has been
cabined by case law, however.
Specifically, “in order to ‘cause’ a violation of the Labor Code, an individual
must have engaged in some affirmative action beyond his or her status as an
owner, officer or director of the corporation. [This] does not necessarily mean the
individual must have had involvement in the day-to-day operations of the
company, nor is it required the individual authored the challenged employment
policies or specifically approved their implementation. But to be held personally liable he or she
must have had some oversight of the company's operations or some influence on
corporate policy that resulted in Labor Code violations.” (Espinoza v. Hepta Run, Inc. (2022) 74
Cal.App.5th 44, 59 [“Espinoza”].)
The SAC alleges the Defendant Miller is POP ID’s
President, CEO, director, officer and owner. (SAC, ¶ 14.) The SAC alleges that Plaintiff’s direct
supervisor was Defendant Gohar, who is alleged to be a corporate manager. (Id.,
¶ 15.) The SAC alleges that Defendant Shao
is POP ID’s accounting manager. (Id., ¶ 16.)
Through the SAC, Plaintiff seeks to hold the Individual Defendants
liable for the actions/inactions on which Plaintiff also has sued PopID in the
third and fourth causes of action, and the sixth through twelfth causes of
action. Plaintiff’s attempt to do so fails.
Shao had twice demurred to the third, fourth, and sixth
through twelfth causes of action. She
demurrer to these causes of action in the Plaintiff’s initial Complaint, and
then in his First Amended Complaint. in the Complaint and the FAC. Twice the Court sustained Shao’s demurrer with
leave to amend, both times finding insufficient allegations to support the
imposition of personal liability on her for the asserted Labor Code violations. The Court finds that the SAC is still
deficient. The additional allegations in
the SAC are, inter alia, that Shao was “responsible for payroll and employee
payments” including wage statements and for “misclassifying PLAINTIFF” because
“she was the accounting officer and managing agent of the company.” (SAC, ¶¶
98, 117, 134, 144, 175, 185.) The SAC
also newly alleges that Shao “participated in the determination to classify
PLAINTIFF as an independent contractor” and “as an exempt employee” and that
Shao “participated in the failure to pay PLAINTIFF all minimum and overtime
wages owed.” (Id., ¶¶ 99, 118, 135, 145.) Further, “POP ID’s policies were
carried out on a daily basis by . . . SHAO.” (Id., ¶¶ 154, 164.) The SAC adds
that Shao was “responsible as [a] managing agent[] . . . to reimburse
PLAINTIFF’s business expenses under his agreed upon contract.” (Id., ¶ 198.)
These allegations are conclusory and fall short of the
requirement that “an individual must have engaged in some affirmative action
beyond his or her status as an owner, officer or director of the corporation”
to impose personal liability under the Labor Code. (Espinoza, supra,
74 Cal.App.5th at p. 59.) The SAC merely alleges that Shao “was
responsible as [a] managing agent[],” not beyond it. (SAC, ¶ 198, emphasis
added.) The Court already rejected and
rejects again Plaintiff’s argument that alleging that Shao is the accounting
manager “on its own is sufficient to hold her personally liable.” (See
Opposition, p. 9.) The SAC moreover does
not allege facts that Shao “had some oversight of the company’s operations or
some influence on corporate policy that resulted in Labor Code violations.” (Espinoza,
supra , 74 Cal.App.5th at p. 59.) Because the Court granted Plaintiff leave to
amend twice as to Shao, and the SAC failed to cure the previous pleading
defects, the Court is sustaining the Individual Defendants’ demurrer as to Shao
this third time without leave to amend.
The allegations in SAC as to Gohar and Miller are similarly
conclusory. While the SAC additionally alleges that Plaintiff notified Gohar
and Miller “about the inaccurate accounting and illegal payroll practices
several times,” being notified does not amount to having operations oversight
or policy influence. (SAC, ¶¶ 98, 117, 134, 144.) Nor does the allegation that “POP ID’s
policies were carried out on a daily basis by” Gohar and Miller. (Id., ¶¶ 154,
164.) The Court is sustaining the Demurrer as to Gohar and Miller with leave to
amend as this is their second, not third, pleading challenge.