Judge: Michelle C. Kim, Case: 22STCV34742, Date: 2023-05-24 Tentative Ruling
Case Number: 22STCV34742 Hearing Date: May 24, 2023 Dept: 31
TENTATIVE
The Demurrer to Plaintiffs’ second,
third, seventh, eighth causes of action, and eighteenth causes of action is
SUSTAINED WITH LEAVE TO AMEND witihin 30 days.
The
demurrer to Plaintiffs’ alter ego allegation is OVERRULED.
The
Court also DENIES Defendants’ Motion to Strike.
MEET AND CONFER
Before
filing a demurrer or motion to strike, the moving party must meet and confer in
person or by telephone with the party who filed the pleading to attempt to
reach an agreement that would resolve the objections to the pleading. (Code
Civ. Proc., §§ 430.41, 435.5.) “Any determination by the court that the meet
and confer process was insufficient shall not be grounds to overrule or sustain
a demurrer.” (Code Civ. Proc., § 430.41, subd. (a)(4).)
The
meet and confer requirement has been met. (Shon Decl. ¶ 4, Ex. B.)
Legal Standard
A. Demurrer¿¿¿
¿¿
A demurrer can be used only to
challenge defects that appear on the face of the pleading under attack or from
matters outside the pleading that are judicially noticeable.¿ (Blank v.
Kirwan (1985) 39 Cal.3d 311, 318.)¿ “To survive a demurrer, the complaint
need only allege facts sufficient to state a cause of action; each evidentiary
fact that might eventually form part of the plaintiff’s proof need not be
alleged.”¿ (C.A. v. William S. Hart Union High School Dist. (2012)
53 Cal.4th 861, 872.)¿ For the purpose of testing the sufficiency of the cause
of action, the demurrer admits the truth of all material facts properly
pleaded.¿ (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962,
966-967.)¿ A demurrer “does not admit contentions, deductions or conclusions of
fact or law.”¿ (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695,
713.)¿¿
B. Motion to
Strike¿¿
¿
Any party, within the time allowed to respond to a pleading
may serve and file a notice of motion to strike the whole or any part thereof.
(Code of Civ. Proc., § 435(b)(1); Cal. Rules of Court (CRC), Rule 3.1322(b).)
The court may, upon a motion or at any time in its discretion and upon terms it
deems proper: (1) strike out any irrelevant, false, or improper matter inserted
in any pleading; or (2) strike out all or any part of any pleading not drawn or
filed in conformity with the laws of California, a court rule, or an order of
the court. (Code of Civ. Proc., § 436, subds. (a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767,
782 [“Matter in a pleading which is not essential to the claim is surplusage;
probative facts are surplusage and may be stricken out or disregarded”].)¿¿¿
C. Leave to
Amend¿¿¿
¿¿
“Where the defect raised by a motion to strike or by demurrer
is reasonably capable of cure, leave to amend is routinely and liberally
granted to give the plaintiff a chance to cure the defect in question.” (CLD
Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.)
The burden is on the complainant to show the Court that a pleading can be
amended successfully. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿¿
Discussion
I.
Demurrer
Defendants demur to
Plaintiff Plakos’ second cause of action for Age Harassment and the third cause
of action for Failure to Prevent Age Harassment on the bases that the causes of
action do not state sufficient facts. Similarly, as to Plaintiff Perea, Defendants
demur to Perea’s seventh cause of action for Age Harassment and eighth cause of
action for Failure to Prevent Age Harassment on the same bases as Plaintiff
Plakos. Defendants also demurrer to Plaintiffs’ cause of action for alter ego
liability and eighteenth cause of action for Civil Penalties under Labor Code
sections 2699 et seq. on the basis that the cause of action does not state
sufficient facts.
Age Discrimination and
Failure to Prevent Age Harassment
To establish a claim for harassment,
an employee must show that he was: (1) subjected to verbal or physical conduct
because of the employee’s protected status; (2) the conduct was unwelcome; and
(3) the conduct was sufficiently severe or pervasive to alter the conditions of
the employee’s employment and create an abusive work environment. (Fisher v.
San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 609.) The
offensive conduct¿must be of a repeated, routine, or generalized nature when
the harassing conduct is not severe. (See Lyle v. Warner Bros. Television
Productions (2006) 38 Cal.4th 264, 283.) Harassment that is occasional,
isolated or sporadic is insufficient. (Id.)
Harassment includes
epithets, derogatory comments or slurs.¿ (Dee v. Vintage Petroleum, Inc.
(2003) 106 Cal.App 4th 30, 35.) California Courts have been guided in their
interpretations of FEHA by the federal court decisions interpreting Title VII
of the federal Civil Rights Act.¿ (Id.) To prove a claim under Title
VII, the harassment must be sufficiently severe or pervasive to alter the
conditions of the victim's employment and create an abusive working
environment.¿ (Id.)¿However, negative employment decisions, such as
termination or demotion, cannot¿form¿the basis of a¿hostile environment
claim¿and are suited to a discrimination claim. (Roby v. McKesson Corp.
(2009) 47 Cal.4th 686, 707-711 [holding the same, however, finding that
negative employment actions may be used as evidence to show animus¿in a
harassment case.].)
i.
Age-Related Allegations in Complaint
Plaintiff Peggy Plakos is
65 years old and was a customer Care Manager for Defendant Ventura Transfer
Company (“VTC”) until she was wrongfully terminated on January 19, 2022.
(Compl. ¶¶ 1, 22) The Complaint alleges that Plakos’ job duties were largely given
to the owner’s daughter, Ms. Andrea Clifford (“Andrea”), age 26, who was being
groomed for Plakos’ position. (Id. ¶ 23.) Ms. Clifford’s first cousin,
director of operations, David Clifford (“David”), in the presence of Andrea, asked
Plakos “how many more years do you plan to work at VTC?” (Id.) On
October 07, 2021, Andrea resigned but in January 2022 she was assigned to
Plakos Department, despite Plakos’ protest because Andrea was the owner’s
daughter. (Compl. ¶¶ 1, 26.) Later, in January 19, 2022, Plakos was informed
that her position was eliminated. (Id.) Some of Plakos’ job duties were
transferred to Andrea, who was much younger. (Id.) Significantly, 2021
was VTC’s best year ever in both revenue and volume, yet Plakos’ job was
eliminated when VTC was at its busiest. (Coml. ¶ 27.)
VTC also had ageist
policies where employees were segregated in “retirement meetings” by age groups
and football terminology was used to call older employee groups, 50 plus, the
“Red Zone.” (Compl. ¶¶ 1, 25) The Complaint alleges that other evidence of age
discrimination is present in the termination of Veronica Williams by a much
younger employee who had no prior experience in the role she replaced. (Id.)
Plaintiff Doreen Perea, age
58, worked for VTC as a dispatch until she was fired on April 22, 2022 by her manager
Defendant Julio Villa (“Villa”). (Compl. ¶¶ 1, 33.) The Complaint alleges that
VTC hired a younger woman, Danielle, for a newly created “night dispatcher”
position, but Villa never informed Perea she was training her own replacement.
(Id.) Danielle replaced Perea and the “night dispatcher” position was
never created.
ii.
Demurrer to Age Harassment
and Failure to Prevent Harassment Claims
Defendants demur to the
Plaintiffs’ Age Harassment and Failure to Prevent Age Harassment claims on the
basis that Plaintiffs fail to allege facts that show the harassment was severe
or pervasive.
Defendants allege that David’s
question asking Plaintiff Plakos how long she planned to work at VTC was an
isolated incident insufficient to constitute harassment. (See Cornell v. Berkeley Tennis Club (2017) 18 Cal.App.5th
908, 940 [“Four comments over several months does not establish a pattern of
routine harassment creating a hostile work environment, particularly given that
the comments were not extreme.”].) They assert that Plaintiff also failed to
state whether the retirement meetings were routine or that segregating
employees based on age for such meetings was unnecessary and done in
furtherance of age harassment. Lastly, they claim Plaintiffs’ termination was a
personal management action and by itself, is insufficient to show harassment.
(See Roby, supra, 47 Cal.4th at 707-711.)
Furthermore, unlike
discrimination claims, harassment claims are cognizable against individual
defendants under FEHA. (Reno v. Baird (1998) 18 Cal.4th 640, 650;
Janken v. GM Hughes Electronics (1996) 46 Cal.App.4th 55, 71.) Here, Plaintiffs’ Age Harassment claims are
alleged against Defendants Randall Clifford, Greg Clifford, Steven Clifford,
and David Clifford (collectively “Clifford Defendants”) without specific facts
alleging that each individual Clifford Defendant engaged in harassment that was
severe or pervasive.
Since the Plaintiffs’ Age
Harassment claims fail to state sufficient facts to show that the harassment
was severe or pervasive and that each Clifford Defendant engaged in the
harassing behavior, the demurrer to the second and seventh causes of action is
SUSTAINED WITH LEAVE TO AMEND.
Moreover, because the
demurrer to each Plaintiffs’ cause of action for Age Harassment was SUSTAINED,
the Plaintiffs’ respective claims for Failure to Prevent Age Harassment also
fails. (See Dickson v. Burke Williams, Inc. (2015) 234
Cal.App.4th 1307, 1315 [finding that in the absence of actionable harassment,
plaintiff has no cause of action for failure to investigate unlawful harassment
or retaliation].) Therefore, the demurrer to the Plaintiffs’ third and eighth
cause of action is SUSTAINED WITH LEAVE TO AMEND.
Alter Ego Liability
“To
succeed on their alter ego claim, plaintiffs must be able to show: (1) such a
unity of interest and ownership between the corporation and its equitable owner
that no separation actually exists, and (2) an inequitable result if the acts
in question are treated as those of the corporation alone.” (Leek v. Cooper
(2011) 194 Cal.App.4th 399, 417.) However, on demurrer, the Court does not
consider whether the plaintiff will be able to prove the allegations. (See Stevens
v. Superior Court (1986) 180 Cal.App.3d 605, 609–610; Fisher v. San
Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 604.)
Instead,
the Court focuses on whether the complaint sets forth facts sufficient to put
the defendant on notice about what the plaintiff is complaining of and what remedies
are being sought. (Leek, supra, 194 Cal.App.4th at 415.) “The
particularity required in pleading facts depends on the extent to which the
defendant in fairness needs detailed information that can be conveniently
provided by the plaintiff.” (Ludgate Ins. Co. v. Lockheed Martin Corp.
(2000) 82 Cal.App.4th 592, 608.) Detailed
pleading is not required to allege an alter ego theory of
liability. Indeed, “[i]t is not even essential, apparently, that ... the
alter ego doctrine always be specifically pleaded in the complaint in order for
it to be applied in appropriate circumstances. [¶] ... [Citation.] ... [C]ourts
have followed a liberal policy of applying the alter ego doctrine where the
equities and justice of the situation appear to call for it rather than
restricting it to the technical niceties depending upon pleading and procedure.
It is essential principally that a showing be made that both requirements,
i.e., unity of interest and ownership, and the promotion of injustice by the
fiction of corporate separate existence, exist in a given situation.” (First
Western Bank & Trust Co. v. Bookasta (1968) 267 Cal.App.2d 910, 915
[italics omitted]; see Rutherford Holdings, LLC v. Plaza Del Rey
(2014) 223 Cal.App.4th 221, 236 [stating “only ‘ultimate rather than
evidentiary facts' ” necessary to support alter ego theory].)
i.
Alter Ego Allegations in
Complaint
The Complaint alleges that
Defendants Randall Clifford, Greg Clifford, Steven Clifford, and David Clifford
(collectively “Clifford Defendants”) are the owners of Defendant VTC and a
unity of interest and ownership exists between them and VCT, and VTC is their
alter ego. (Compl. ¶ 19.) The Clifford Defendants are alleged to completely
control, dominate, manage, and operate VTC for their sole exclusive benefit and
each is the equitable owner and person in charge of VTC and comingle the assets
of the company with their assets to suit their needs and convenience. (Compl. ¶
20.)
The Complaint alleges that
the Clifford Defendants failed to maintain the proper degree of separateness
with Defendant VTC and observe corporate formalities such as holding meetings
and maintaining records or minutes. (Compl. ¶ 20.) The Clifford Defendants are
alleged to control and operate Defendant VTC to avoid individual agency and
respondent superior liability, “and for the purpose of substituting a
financially insolvent company and/or company with limited financial resources,
in place of Defendants RANDALL, GREG, STEVEN, and DAVID.” (Id.)
Similarly, Plaintiff claims
that Defendants inadequately capitalized Defendant VTC in comparison with the
business done by VCT and with the risk that their capitalization is trifling
and/or illusory. (Compl. ¶ 20.) “An inequitable result will ensue if the
corporate veil is not pierced, including, but not limited to, Plaintiffs’
inability to recover damages for violations of California law.” (Id.)
ii.
Demurrer to Alter Ego Liability
Defendants assert that the
Plaintiffs’ conclusory allegations that the Clifford Defendants completely
controlled, managed, and operated Defendant VTC for their sole and exclusive
benefit, comingled assets, failed to maintain the proper degree of
separateness, and failed, to observe corporate formalities are insufficient to
allege alter ego liability.
However, at the pleading
stage, Plaintiffs are not required to allege evidentiary facts, only ultimate
facts to support a claim for alter ego liability. (Rutherford Holdings, LLC,
supra, 223 Cal.App.4th at 236.) “The distinction between
conclusions of law and ultimate facts is not at all clear and involves at most
a matter of degree.” (Burks v. Poppy Const. Co. (1962) 57
Cal.2d 463, 473 [explaining that “courts have permitted allegations which
obviously included conclusions of law and have termed them ‘ultimate facts' or
‘conclusions of fact.’”].) “What is important is that the complaint as a whole
contain sufficient facts to apprise the defendant of the basis upon which the
plaintiff is seeking relief.” (Perkins v. Superior Court (1981) 117
Cal.App.3d 1, 6.)
Here,
Defendants do not state Plaintiffs’ alter ego claims are uncertain or
Defendants require more detailed information that can only be provided by
Plaintiffs. Thus, the Court finds Plaintiffs have stated sufficient facts to
show that the Clifford Defendants share a unity of interest and ownership with
Defendant VTC and that injustice will result if VTC is treated as a sole actor
because the Clifford Defendants undercapitalized VTC in order to limit its liability.
(Compl. ¶ 20.)
Therefore, the
demurrer Plaintiffs’ alter ego liability is OVERRULED.
PAGA Penalties Labor Code §
2699
Labor Code section 2699 states in part, “any provision
of this code that provides for a civil penalty to be assessed and collected by
the Labor and Workforce Development Agency or any of its departments,
divisions, commissions, boards, agencies, or employees, for a violation of this
code, may, as an alternative, be recovered through a civil action brought by an
aggrieved employee on behalf of himself or herself and other current or former
employees pursuant to the procedures specified in Section 2699.” (Lab.
Code, § 2699 subd. (a).)
i.
Allegations in
Complaint Related to Wage and Hour Violations
The Complaint
alleges that “Plaintiff and all other current and former employees similarly
situated gave notice to the Labor and Workforce Development Agency of
Defendants' violations of Labor Code §§201, 202, 203, 204, 226(a), 226.7, 510,
512, 1174, 1174.5, 1194, 1197, 1198 and 2802, including the facts and theories
to support the alleged violation, and Plaintiffs' intent to recover penalties
based on the violations set forth herein.” (Compl. ¶ 158, Ex. 7 [March 2, 2022 Notice
to LWDA and the Defendants].) Plaintiff alleges that on January 19, 2022,
Defendants intentionally misclassified Plakos as an exempt employee. (Compl. ¶
39.) Plakos was also not provided with rest periods or received an
uninterrupted meal period and an accurate itemized statement, and all wages due
upon termination. (Compl. ¶¶ 40 -43.) The Complaint also alleges that Plaintiff
Plakos was not paid minimum wage or overtime pay. (Compl. ¶¶ 127-135.) The
Complaint also alleges that Defendants failed to indemnify Plaintiff for her
expenses including the cost of a COVID-19 test. (Compl. ¶¶ 152-152.)
ii.
Demurrer to
PAGA Penalties
Defendants argue that the conclusory allegation
that Defendant VTC and the Clifford Defendants violated Labor Code sections
201, 202, 203, 204, 210, 226(a), 226.7, 510, 512, 558, 1174, 1174.5, 1194,
1197, 1198, and 2802 is insufficient to hold the Clifford Defendants liable for
civil penalties under PAGA. (See Compl. ¶ 159.) The Court notes that Defendants
do not state that Plaintiffs’ insufficiently pled Labor Code violations against
VTC.
In opposition, Plaintiffs argue that alter ego
liability extends PAGA penalties to each individual Clifford Defendant because
they are the directors of the company and are part of the same family and there
are no directors outside of the family circle. (Opp. at 9:24-25.) Plaintiffs
fail to cite case law to support their position and Defendants fail to cite
case law that shows that alter ego liability does not extend to PAGA penalties.
However, in Atempa v. Pedrazzani (2018), the Appeal Court found that the common law
doctrine of alter ego is inapplicable to the statutory scheme of civil
penalties in a PAGA action. (Atempa v. Pedrazzani (2018) 27
Cal.App.5th 809, 825 (“Atempa”) [“there is no need to reconcile or
harmonize the statutory scheme (§§ 558(a), 1197.1(a)) and the common law (alter
ego doctrine) on the record in this case, because the common law is inapplicable.”] [italics original].) The Appeal
Court reasoned that alter ego liability was inapplicable in assessing Labor
Code penalties against the individual defendant, Pedrazani, because his “individual
liability did not result from a corporate debt or obligation based on what Pedrazzani describes as ‘disregarding the
corporate form’ under the common law.” (Id. at 825.)
Pedrazanni was
found liable for Labor Code penalties because he incorporated the defendant
employer, Pama, Inc. (Pama), and was the owner, president, and director of Pama.
(Atempa, supra, 27 Cal.App.5th
at 813.) Pedrazzani was found to have participated in the payment of wages in
violation of overtime pay and minimum wage laws, thus he was “personally
responsible for earlier statutory violations that he
committed or caused to be committed in carrying out an underlying corporate
obligation.” (Id. at 817, 824 [italics original].)
Pedrazanni PAGA liability
was justified because he was found to be an “other person acting of behalf
an employer who violates, or cases to be violated, a section this chapter
or any provision regulating hours and days of work in any order of the
Industrial Welfare Commission . . ..” (Lab. Code, § 558 [italics added].)
Therefore, Pedrazzani was liable for Labor Code penalties because he was “an
‘other person’ who caused the overtime and minimum wage violations.” (Atempa, supra, 27
Cal.App.5th at 816.)
Therefore, for the Clifford
Defendants to be personally liable for PAGA penalties, Plaintiff must allege
facts that show that the Clifford Defendants are “other persons acting on
behalf of the employer” who violated the applicable Labor codes.
Accordingly,
the demurrer to the eighteenth cause asserted against individual Defendants Randall Clifford, Greg
Clifford, Steven Clifford, and David Clifford is SUSTAINED WITH LEAVE TO AMEND.
II.
Motion
to Strike
Defendants seek to strike
the following, at paragraph 31 on page 14 lines 20 through page 15 to line 4:
“Another
example of age discrimination that occurred at VTC was Veronica Williams'
termination. Veronica Williams worked for VTC as a customer care representative
from in or about 2017 to April 8, 2020, when her employment was terminated.
During Veronica Williams' employment with VTC, PLAKOS was her manager. On April
8, 2020. Veronica Williams was terminated from VTC. She was 66 years old when
she was terminated. After Veronica Williams was terminated, Nicole Jackson who was
much was younger than Veronica took over her duties. Nicole Jackson had no
prior experience in the transportation industry, and had only worked in the
furniture industry up until she was hired by VTC.”
(Compl. ¶
32.)
Defendant argues that
paragraph 32 is irrelevant, false, and improper under Code of Civil Procedure
sections 431.10 and 436 subdivision (a). Defendants maintain that the
allegation regarding Veronica Williams is irrelevant and immaterial because it
has nothing to do with any element in support of the Plaintiffs’ nineteen
causes of action. Plaintiffs argue the evidence is relevant as “me too”
evidence that is both relevant and admissible under California Law.
The Court is not convinced
that paragraph 32 is irrelevant, false, or improper and should be stricken. The
Motion to Strike is DENIED.
Conclusion
The Demurrer to Plaintiffs’ second,
third, seventh, eighth causes of action, and eighteenth causes of action is
SUSTAINED WITH LEAVE TO AMEND withiin 30 days.
The
demurrer to Plaintiffs’ alter ego allegation is OVERRULED.
The
Court also DENIES Defendants’ Motion to Strike.
Moving
party is ordered to give notice.