Judge: Ralph C. Hofer, Case: 24NNCV00339, Date: 2024-08-30 Tentative Ruling
Case Number: 24NNCV00339 Hearing Date: August 30, 2024 Dept: D
TENTATIVE RULING
Calendar: 8
Date: 8/30/2024
Case
No: 24
NNCV00339 Trial Date: None Set
Case Name: Chen
v. Annavee, Inc., et al.
DEMURRERS (2)
MOTION TO STRIKE
Moving Party:
Defendant Annavee Wingy Wong Kim
Defendant
Annavee, Inc.
Responding Party: Plaintiff
Wangxia Chen
RELIEF REQUESTED:
Sustain demurrer to fourth, fifth, sixth, and
twelfth causes of action of First Amended Complaint
Strike punitive damages, request for PAGA
penalties
CAUSES OF ACTION: from
First Amended Complaint
1)
Unlawful Failure to Pay Overtime Compensation v.
All Defendants
2)
Failure to Provide Meal Breaks v. All Defendants
3)
Failure to Provide Rest Breaks v. All
Defendants
4)
Inaccurate Wage Statements v. All Defendants
5)
Unfair Business Practices v. All Defendants
6)
Violation of the Rules on Tips and Gratuities v.
All Defendants
7)
Split Shift v. All Defendants
8)
Age Discrimination v. All Defendants
9)
Constructive Wrongful Termination and Retaliation v. All
Defendants
10) Violation
of Labor Code Section 558.1 v. Kim
11) Violation
of Labor Code Section 1198.5 v. All Defendants
12) Violation
of Labor Code Section 1174.5 v. All Defendants
SUMMARY OF FACTS:
Plaintiff
Wanxia Chen alleges that defendant Annavee Inc. is a California corporation
doing business as Chang’s Garden (Chang’s Garden), and that in 2006, defendant
Annavee Wingyi Wong Kim hired plaintiff as a server in Chang’s Garden.
Plaintiff
alleges that while plaintiff served as a server at defendants’ establishment,
Chang’s Garden, from September 2021 until December 3, 2022, plaintiff suffered a series of employment
violations. The FAC alleges that
defendants began treating plaintiff differently as she aged, deliberately
reducing her hours to favor younger servers. When plaintiff raised concerns
about age-based discrimination, it is alleged that defendants responded by
further cutting plaintiff’s hours, ultimately forcing her to resign on December
3, 2022.
The FAC
alleges that plaintiff also faced various wage and hour violations, including
improper tip distribution, non-payment for overtime hours, inadequate meal and
rest break periods, and the failure to provide plaintiff with accurate wage
statements. Plaintiff alleges that these
actions collectively demonstrate a clear pattern of discrimination,
retaliation, and disregard for fair labor practices. Plaintiff alleges that defendant Kim should
be held accountable for specific labor violations, given her roles in
ownership, operations and/or management within Chang’s Garden, and bears
responsibility as the employer of plaintiff for the Labor Code violations.
ANALYSIS:
Meet and Confer—Plaintiff failed to Meet and
Confer
The declaration of counsel submitted with the
moving papers indicates that plaintiff has failed to respond to defendants’
counsel’s efforts to meet and confer prior to the filing of the demurrer and
motion to strike.
Specifically, the declaration of counsel
indicates that plaintiff’s counsel has failed to respond to two written meet
and confer correspondences, each of which requested plaintiff’s counsel’s
availability for a telephonic meet and confer conference and provided a written
summary of grounds for the demurrers and motion to strike. [Perry Decl., paras. 3-9, Ex. A]
CCP § 430.41 requires that both parties meet and confer:
“(a) Before
filing a demurrer pursuant to this chapter, the demurring party shall meet and
confer in person or by telephone with the party who filed the pleading that is
subject to demurrer for the purpose of determining whether an agreement can be
reached that would resolve the objections to be raised in the demurrer. If an
amended complaint, cross-complaint, or answer is filed, the responding party
shall meet and confer again with the party who filed the amended pleading
before filing a demurrer to the amended pleading.
(1) As part of the meet and confer process, the demurring
party shall identify all of the specific causes of action that it believes are
subject to demurrer and identify with legal support the basis of the
deficiencies. The party who filed
the complaint, cross-complaint, or answer shall provide legal support for its
position that the pleading is legally sufficient or, in the alternative, how
the complaint, cross-complaint, or answer could be amended to cure any legal insufficiency.”
(Emphasis added).
A similar provision applies to
motions to strike. CCP § 435.5
The
court views this obligation to meet and confer in good faith to extend to both
sides in connection with a demurrer, as well as with a motion to strike.
The
court would be within its discretion to continue the motions and require the
parties to meet and confer. The court
will instead require the parties to meet and confer by telephone prior to the
matter being called for hearing and for plaintiff to prepare and submit by
filing on eCourt the required meet and confer declaration under CCP § 430.41(a)(3) for review by the court
prior to the motions being called for hearing.
Substantive
Fourth Cause of
Action—Inaccurate Wage Statements—Demurrer by Kim and
Demurrer by Annavee, Inc.
Statute of Limitations
Defendants Kim and Annavee, Inc.
have brought largely identical demurrers to plaintiff’s FAC.
Defendants first argue that the fourth cause of action for inaccurate
wage statements fails to sufficiently allege a cause of action because the
claim is barred by the applicable statute of limitations.
Defendants argue that the FAC makes
clear that plaintiff’s employment with defendants ended on or around December
3, 2022. [FAC, paras. 12-13]. The complaint in this case was filed on March
19, 2024.
Defendants argue that the applicable statute of limitations period with
respect to wage statement penalties is one year, citing to CCP section 340(a),
which provides, that the time for bringing an action is “Within one year,” for
“(a) An action upon a statute for a penalty or forfeiture, if the action is
given to an individual, or to an individual and the state, except if the
statute imposing it prescribes a different limitation.” The moving papers fail to cite the statute
at issue, quote the statutory language, or indicate that the subject statute
does not prescribe a different limitation.
The FAC brings the cause of action
pursuant to Labor Code section 226, alleging that subdivision (e) mandates
penalties. The section provides, in
pertinent part:
“(a) An employer, semimonthly or at the time of each payment of wages,
shall furnish to their employee, either as a detachable part of the check,
draft, or voucher paying the employee's wages, or separately if wages are paid
by personal check or cash, an accurate itemized statement in writing showing
(1) gross wages earned, (2) total hours worked by the employee, except as
provided in subdivision (j), (3) the number of piece-rate units earned and any
applicable piece rate if the employee is paid on a piece-rate basis, (4) all
deductions, provided that all deductions made on written orders of the employee
may be aggregated and shown as one item, (5) net wages earned, (6) the
inclusive dates of the period for which the employee is paid, (7) the name of
the employee and only the last four digits of their social security number or
an employee identification number other than a social security number, (8) the
name and address of the legal entity that is the employer and, if the employer
is a farm labor contractor, as defined in subdivision (b) of Section 1682, the
name and address of the legal entity that secured the services of the employer,
and (9) all applicable hourly rates in effect during the pay period and the
corresponding number of hours worked at each hourly rate by the employee and,
beginning July 1, 2013, if the employer is a temporary services employer as
defined in Section 201.3, the rate of pay and the total hours worked for each
temporary services assignment. The deductions made from payment of wages shall
be recorded in ink or other indelible form, properly dated, showing the month,
day, and year, and a copy of the statement and the record of the deductions
shall be kept on file by the employer for at least three years at the place of
employment or at a central location within the State of California. For
purposes of this subdivision, “copy” includes a duplicate of the itemized
statement provided to an employee or a computer-generated record that
accurately shows all of the information required by this subdivision….
(e)(1) An employee suffering injury as a result of a knowing and
intentional failure by an employer to comply with subdivision (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.
(2)(A) An employee is deemed to suffer injury for purposes of this
subdivision if the employer fails to provide a wage statement….
(h) 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.”
The statute expressly provides that
an employee is deemed to suffer injury if there is a complete failure to
provide a wage statement, presumably extending the date on which any
limitations period would begin to run.
The FAC here alleges:
“Defendants consistently withheld
accurate, itemized wage statements from Plaintiff at each payment period,
opting instead to provide generic earnings statements reflecting a fixed
salary. These intentionally inaccurate statements misrepresented both gross and
net earnings for Plaintiff and other employees.”
[FAC, para. 36].
The FAC alleges that Labor Code
section 226(e) mandates penalties for employers who knowingly fail to provide
an accurate, itemized wage statement, and that due to defendant’s conduct,
plaintiff is entitled to those penalties.
[FAC paras. 37, 38].
The original
complaint was filed on March 19, 2024.
The complaint alleges that plaintiff was forced to resign on December 3,
2022. [FAC, para. 13]. It would appear from these allegations that
plaintiff was receiving regular pay statements, which she alleges were
inaccurate, and it would appear that those statements would have not extended
past January of 2023, so that the complaint filed in March of 2024 was not
filed within one year of the complained of misconduct.
The
opposition does not address this argument but indicates “Plaintiff
the Fourth and Thirteenth causes of action [sic] and thus Defendants’ Demurrer
as to this cause of action is moot.” It is not clear what plaintiff intends to
state here. First of all, there is no
thirteenth cause of action in this action at all. The statement evidently is intended to apply
to the twelfth cause of action, as the demurrer to the fourth cause of action
and the twelfth cause of action are not addressed on their merits in the
opposition.
There is no request for dismissal
of these causes of action, or any causes of action, in the file. If plaintiff intends to withdraw those causes
of action, plaintiff should have clearly so stated. The court will
construe plaintiff’s argument with respect to the fourth cause of action as a
concession that the cause of action is insufficient. Hence, the court sustains the demurrer to the
cause of action without leave to amend.
Fifth Cause of
Action—Unfair Business Practices—Demurrer by Kim and Demurrer by Annavee,
Inc.
To state a cause of action for
Unfair Business Practices, a plaintiff must allege the following elements:
1) Defendant has engaged in more
than one unlawful, unfair, or fraudulent transaction, including unfair,
deceptive, untrue or misleading advertising
2) Plaintiff’s right to
restitution, if any. Damages are not
recoverable.
3) Plaintiff’s right to injunctive
relief, if any.
Bus. & Prof. Code § 17200 et seq.; Dean Witter Reynolds,
Inc. v. Superior Court (1989) 211 Cal.App.3d 758.
It is held that the Unfair Business
Practices Act is not confined to anticompetitive business practices but is also
directed toward the public’s right to protection for fraud, deceit, and
unlawful conduct, and courts have thus “consistently interpreted the language
of section 17200 broadly.” Community
Assisting Recovery, Inc. v. Aegis Security Ins. Co. (2001 2nd
Dist.) 92 Cal.App.4th 886, 891, quoting South Bay Chevrolet v. General
Motors Acceptance Corp. (1999) 72 Cal.App.4th 861, 877.
Defendants argue that to the extent this cause of action is based on
allegations that defendants unlawfully deducted tips, providing defendants with
an unfair competitive advantage, plaintiff does not explain what she means by
the allegations that defendants deducted tips, and does not allege that
defendant retained any portion of any tips or gratuities for themselves, so it
is not clear how defendant gains a competitive advantage. [See FAC, para.
41]. It does not appear that it is required that
facts showing the gaining of an unfair competitive advantage must be alleged to
satisfy the pleading elements.
In any case, as pointed out in the opposition, the cause of action also
alleges that defendants, “have engaged in unfair
business practices in California by consistently failing to properly compensate
employees. These violations include, but are not limited to, failure to pay
overtime, inadequate provision of meal and rest periods, and non-compliance
with Labor Code Sections 226 and 226.7.”
[FAC, para. 40]. The
demurrer does not address these allegations, which involve alleged unlawful
practices, in violation of statutory law.
The demurrers are accordingly only addressed to part of the cause of
action. As plaintiff argues in the
opposition, defendants improperly fail to take into account the entirety of
plaintiff’s cause of action. A demurrer does not lie to only part of a cause of action,
and a cause will survive demurrer if there are sufficient allegations that
might entitle the pleader to relief. Kong
v. City of Hawaiian Gardens Redevelop. Agency (2003, 2nd Dist.)
108 Cal.App.4th 1028, 1046; PH II, Inc. v. Superior Court (1995) 33
Cal.App.4th 1680, 1682. The demurrers do
not address the various other theories alleged to support unfair business
practices cause of action. The motion to strike does not seek to strike these
particular allegations from the pleading.
The demurrers accordingly are overruled to this cause of action.
Sixth Cause of
Action—Violation of the Rule on Tips and Gratuities—Demurrer by Kim and
Demurrer by Annavee, Inc.
Defendants
argue that plaintiff’s sixth cause of action is based on Labor Code section
351, which provides no private right of action, so that plaintiff lacks
capacity to sue under that statute.
Labor Code
section 351 provides:
“No employer or agent shall collect, take, or receive any gratuity or a
part thereof that is paid, given to, or left for an employee by a patron, or
deduct any amount from wages due an employee on account of a gratuity, or
require an employee to credit the amount, or any part thereof, of a gratuity
against and as a part of the wages due the employee from the employer. Every
gratuity is hereby declared to be the sole property of the employee or
employees to whom it was paid, given, or left for. An employer that permits
patrons to pay gratuities by credit card shall pay the employees the full
amount of the gratuity that the patron indicated on the credit card slip,
without any deductions for any credit card payment processing fees or costs
that may be charged to the employer by the credit card company. Payment of
gratuities made by patrons using credit cards shall be made to the employees
not later than the next regular payday following the date the patron authorized
the credit card payment.”
Defendants rely on Lu v. Hawaiian Gardens Casino, Inc. (2010) 50
Cal.4th 592, in which the California Supreme Court expressly
concluded that “section 351 does not contain a private right to sue.” Lu, at 595.
The Court in Lu reviewed the
statutory language, the penalties provided in the statutory scheme, including
that the employer is guilty of a “misdemeanor,” and is subject to a fine or
imprisonment, and the identification in the statutory scheme of an agency
charged with enforcing the tipping practices provisions, and also reviewed the
legislative history of Labor Code section 351 and related provisions, and
concluded that “there is no clear indication that the Legislature intended to
create a private cause of action under the statute.” Lu, at 600.
The Court in Lu noted that employees were not completely without
remedy where an employer fails to properly pay gratuities but could bring a
claim against the employer not based on Labor Code section 351, such as pursuant
to a cause of action for conversion. Lu,
at 603-604.
The Court noted that the statute expressly provides that “Every
gratuity is hereby declared to be the sole property of the employee or
employees to whom it was paid, given, or left for,” which language, “suggests
that employees may bring an action to recover any misappropriated tips to which
they are entitled, just as with other property rights.” Lu, at 598. The Court cited to CCP section 28, which
provides, “An injury to property consists in depriving its owner of the benefit
of it.” Lu, at 598.
The Court more specifically noted:
“Contrary to plaintiff's suggestion, our holding that section 351 does
not provide a private cause of action does not necessarily foreclose the
availability of other remedies. To the extent that an employee may be entitled
to certain misappropriated gratuities, we see no apparent reason why other
remedies, such as a common law action for conversion, may not be available
under appropriate circumstances. (See Moradi–Shalal, supra, 46
Cal.3d at pp. 304–305, 250 Cal.Rptr. 116, 758 P.2d 58 [even without private cause
of action under statute, “courts retain jurisdiction to impose civil damages or
other remedies ... in appropriate common law actions”]; see also Civ.Code, §
3523 [“For every wrong there is a remedy”].)”
Lu, at 603-604, footnote omitted.
In any case, a more recent California
Supreme Court case cited in the moving papers, Kim v. Reins
International California, Inc. (2020) 9 Cal.5th 73, has
expressly recognized, citing Lu, that Labor Code section 351 is among
the “numerous” Labor Code statutes which “impose civil penalties without
affording a private right of action.” Kim,
at 89 (“Lu v. Hawaiian Gardens Casino, Inc. (2010) 50 Cal.4th 592, 601,
113 Cal.Rptr.3d 498, 236 P.3d 346, for example, held there is no private right
of action under section 351, which prohibits employers from taking employees’
tips.”)
This
court accordingly finds that plaintiff here has failed to establish the
existence of a private right of action under Labor Code section 351.
Plaintiff
also argues that if the court should find that section 351 is only available to
the Labor Commissioner, plaintiff can amend the cause of action to assert
claims based on conversion, or other applicable common law or statutory
theories. This approach is what the Court
appeared to suggest would be appropriate in Lu.
The demurrers accordingly are sustained to
the cause of action as based on Labor Code section 351, but with leave to amend
to state a claim based on the alleged failure to properly pay gratuities under
some other legal theory, if possible.
Twelfth
Cause of Action—Violation of Labor Code 1174.5—Demurrer by Kim and Demurrer by
Annavee, Inc.
Labor
Code section 1174.5 provides:
“Any
person employing labor who willfully fails to maintain the records required by
subdivision (c) of Section 1174 or accurate and complete records required by
subdivision (d) of Section 1174, or to allow any member of the commission or
employees of the division to inspect records pursuant to subdivision (b) of
Section 1174, shall be subject to a civil penalty of five hundred dollars
($500).”
Defendants
argue that the only remedy for a violation of Labor Code § 1174.5 is a civil
penalty in the amount of $500, which is recoverable by the Labor Commissioner.
Defendants rely on a discussion in that case
which does not mention Labor Code section 1174.5, but which observes that
“numerous” Labor Code statutes “impose civil penalties without affording a
private right of action,” including Labor Code sections 351 (citing Lu,
as discussed above), 226.8, and 558.
Defendants
rely on the discussion in Kim in which the Court observes:
“
‘[W]hen regulatory statutes provide a comprehensive scheme for enforcement by
an administrative agency,’ ” as with the Labor Code, “ ‘courts ordinarily
conclude that the Legislature intended the administrative remedy to be
exclusive unless the statutory language or legislative history clearly
indicates an intent to create a private right of action.’ ” (Thurman v.
Bayshore Transit Management, Inc. (2012) 203 Cal.App.4th 1112, 1132, 138
Cal.Rptr.3d 130, disapproved on another ground in ZB, N.A. v. Superior Court,
supra, 8 Cal.5th at p. 196, fn. 8, 252 Cal.Rptr.3d 228, 448 P.3d 239.)
Kim, at 89.
Defendants then argue that there is
no statutory language or legislative history that suggests the legislature
intended to create a private right of action to enforce Labor Code section 1174.5.
Plaintiff in opposition does not
address this argument on its merits, but indicates, as noted above, that “Plaintiff
the Fourth and Thirteenth causes of action [sic] and thus Defendants’ Demurrer
as to this cause of action is moot.” Again, it is not clear what plaintiff intends,
and there has been no formal request to dismiss any portion of the FAC.
In
light of the fact that there is no thirteenth cause of action in the operative
complaint, the demurrer is to the twelfth cause of action, and the demurrer to
that cause of action is not opposed on its merits, the court construes the
opposition papers as conceding that the twelfth cause of action is insufficient. Hence, the court sustains the demurrer to the
cause of action without leave to amend.
Motion to Strike—Motion by Annavee, Inc.
The motion
to strike is brought only by the corporate defendant, Annavee, Inc., which
argues that the FAC improperly seeks punitive damages, and penalties and relief
pursuant to Labor Code section 2699.
Under CCP §
435, a party may serve and file a motion to strike a part of a
pleading.
Under CCP § 436:
“The court may, upon a motion made pursuant to CCP § 435,
or at any time in its discretion, and upon terms it deems proper:
(a) Strike out any irrelevant, false, or improper matter
inserted in any pleading.
(b) Strike out all or any part of any pleading not drawn or
filed in conformity with the laws of this state, a court rule, or an order of
the court.”
Under CCP § 431.10(c), an
“immaterial allegation,” as defined in that section, “means ‘irrelevant matter’
as that term is used in Section 436.”
CCP §
431.10(b) defines an immaterial allegation as follows:
“(b)
An immaterial allegation in a pleading is any of the following:
(1)
An allegation that is not essential to the statement of a claim or defense.
(2)
An allegation that is neither pertinent to nor supported by an otherwise
sufficient claim or defense.
(3)
A demand for judgment requesting relief not supported by the allegations of the
complaint or cross-complaint.”
For
purposes of ruling on a motion to strike, the allegations of the pleading are
assumed to be true. Clauson v.
Superior Court (1998 2nd Dist.) 67 Cal.App.4th 1253,
1255.
Punitive Damages
Civil Code § 3294 authorizes recovery of punitive damages “in an
action for breach of an obligation not arising from contract…” on the basis of findings that “the defendant
has been guilty of oppression, fraud or malice.”
The motion first argues that punitive damages may not be awarded based on
a cause of action for failure to pay overtime wages. Defendant argues that punitive damages
sought in connection with the first cause of action is therefore improper.
The first cause of action alleges that plaintiff often worked more than
eight hours per day or forty hours per week, but defendants failed to provide
plaintiff with appropriate overtime compensation. [FAC, para. 19]. The cause of action alleges that this is in
violation of certain Labor Code sections and that as a result of defendants’
unlawful practices, “Plaintiff suffered financial losses, including diminished
earnings for overtime hours worked.”
Plaintiff accordingly “seeks recovery for interest, attorneys’ fees,
costs, and an injunction mandating Defendants’ compliance with overtime pay
regulations.” [FAC, para. 23]. There is no request in the cause of action
for punitive damages which the court may strike. Punitive damages are sought generally in the
prayer, which seeks, “exemplary and punitive damages in an amount to be
determined by the Court.” [FAC, Prayer,
para. D]. The prayer is directed to
“all causes of action,” but the motion to strike is directed only to the first cause
of action for failure to pay overtime and ninth cause of action for
constructive wrongful termination and retaliation, so defendants have failed to
show that the punitive damages are not stated properly as to at least one of
the numerous causes of action.
In any case, punitive damages are not sought directly in the first cause
of action. At best, the cause of action
alleges that defendants’ conduct was deliberate, carried out in bad faith, and
demonstrates “malicious intent.” [FAC,
para. 24]. This allegation must be taken
as true for purposes of a motion to strike, and it appears that this
allegation, unaccompanied by a direct claim for punitive damages, cannot be
appropriately stricken from the pleading.
The overall claim for punitive damages cannot be stricken in light of
its application to all causes of action.
The motion to strike on this ground accordingly is denied.
However, plaintiff has failed to file timely opposition to the motion to
strike. The court at the hearing will
hear oral argument with respect to whether on amendment, plaintiff would like
leave to eliminate the allegations of malicious intent from the first cause of
action.
Defendant also argues that punitive damages are improperly sought in
connection with plaintiff’s ninth cause of action for constructive wrongful
termination and retaliation in violation of public policy.
The cause of action itself alleges that defendants’ conduct justifies
“punitive damages to deter similar behavior in the future.” [FAC, para. 62].
The cause of action alleges that defendants engaged in discriminatory
practices and retaliatory actions, and that defendants’ retaliation against
plaintiff for speaking out against discrimination and unfair labor practices is
a direct violation of public policy, disregards labor laws and undermines basic
principles of fairness and equity.
[FAC, paras. 56-60].
The motion
to strike concedes that it would be possible to obtain an award of punitive
damages on a wrongful termination or retaliation claim. Defendant argues, however, that plaintiff
fails to plead facts sufficient to support an award of punitive damages, as the
allegations of the FAC related to retaliation are that when plaintiff raised
concerns about age-based discrimination, defendants responded by further
cutting her hours, ultimately forcing her to resign, without any details
concerning the content of any alleged complaint, to whom it was made, in what
form, or the date on which it was communicated, and without specifying the
extent to which plaintiff’s hours were allegedly cut. There is no legal authority cited under which
this level of detail is a pleading requirement for seeking punitive damages in
an age discrimination/retaliation claim.
Hence, this approach appears to be more in the nature of a demurrer to
the sufficiency of the cause of action, not a motion to strike a claim for
punitive damages where age discrimination and retaliation are at issue. The motion to strike on this ground is denied.
The motion
also argues that the FAC fails to plead fact sufficient to support an award of
punitive damages against Annavee, Inc., a corporate defendant, because there
are insufficient allegations that the act of oppression, fraud or malice was on
the part of an officer, director, or managing agent of defendant.
Civil Code § 3294(b) requires that
a plaintiff seeking punitive damages against a corporation must show such
wrongful conduct by managing personnel of the corporation:
“An employer shall not be liable
for [exemplary]...damages based upon acts of an employee of the employer,
unless the employer...ratified the wrongful conduct for which the damages are
awarded or was personally guilty of oppression, fraud or malice. With respect to a corporate employer, the
advance knowledge and conscious disregard, authorization, or ratification of an
act of oppression, fraud or malice must be on the part of an officer, director
or managing agent of the corporation. “
Civil Code §
3294(b).
The FAC includes general allegations
concerning the conduct of defendant Kim as a managing agent of the corporate
defendant:
“Plaintiff asserts that KIM should
be held accountable for specific labor violations given her roles in ownership,
operations, and/or management within CHANG’S GARDEN. In her capacity as an
owner, director, officer, or managing agent of CHANG’S GARDEN, KIM is
implicated in breaches of minimum wage regulations, hours of work provisions
set by the Industrial Welfare Commission, and violations of Labor Code Sections
§ 510, § 226, § 226.7, § 512, § 558, § 1174, and § 1198.”
[FAC, para. 16].
It is also alleged that:
“68. Defendant KIM, in her capacity
as an owner, director, officer, or managing agent, had direct control and
authority over the operations and management of CHANG’S GARDEN, including but
not limited to employment practices, wage policies, and compliance with labor
laws.
69. Despite being aware or having
the obligation to be aware of the labor violations occurring at CHANG’S GARDEN,
Defendant KIM failed to take appropriate corrective actions to ensure
compliance with the provisions of the Labor Code.
70. As a result of Defendant KIM’s
neglect or active participation in the labor violations, Plaintiff and other
employees suffered financial harm, emotional distress, and infringement of
their statutory rights under the Labor Code. Plaintiff asserts that KIM should
be held accountable for specific labor violations given her roles in ownership,
operations, and/or management within CHANG’S GARDEN. In her capacity as an
owner, director, officer, or managing agent of CHANG’S GARDEN, KIM is
implicated in breaches of minimum wage regulations, hours of work provisions
set by the Industrial Welfare Commission, and violations of Labor Code Sections
§ 510, § 226, § 226.7, § 512, § 558, § 1174, and § 1198C.”
[FAC paras. 68-70].
There is authority under which
allegations may be sufficient where they involve a director, officer, or
managing agent who exercises substantial discretionary authority over
significant aspects of a corporation’s business and policy. See CRST, Inc. v. Superior Court
(2017, 2nd Dist.) 11 Cal.App. 5th 1255, 1273, citing White
v. Ultramar, Inc. (1999) 21 Cal.4th 563, 576-577. This situation appears what to be alleged
here, as the FAC refers to Annavee, Inc.’s officer, director or manager
engaging in the conduct of adopting or ratifying policies which implicate
violation of public policy, such as discriminatory practices.
The motion to strike on this ground
accordingly is denied.
The motion also appears to briefly
argue that the FAC does not allege any conduct on the part of defendant Annavee
Kim at all. The motion to strike is not
brought by defendant Kim, but only by defendant Annavee, Inc. There is no separate motion to strike brought
by Kim. In addition, as quoted above,
there are sufficient allegations of Kim’s participation in wrongful conduct
here in her position as an owner, operator, and manager of Chang’s Garden. The motion to strike is denied on this
ground.
Penalties—Labor Code Section 2699
Defendant
argues that the court should strike the prayer for damages which seeks
penalties pursuant to Labor Code section 2699,
because that section pertains to PAGA claims, when there is no PAGA claim being
asserted in the FAC.
The FAC
seeks in the prayer, “Penalties and relief pursuant to Labor Code section
2699.” [FAC, Prayer, para. J].
Labor Code
section 2699 provides, in pertinent part:
“(a) Notwithstanding any other
provision of law, 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 the employee and
other current or former employees against whom a violation of the same
provision was committed pursuant to the procedures specified in Section 2699.3.”
The
complaint here does not include a cause of action brought by plaintiff on
behalf of herself and other current or former employees pursuant to the
provisions specified in Section 2699.3, which requires, among other things,
that the aggrieved employee give written notice to the employer through various
agencies, and pay special filing fees, none of which is alleged to have been
done here.
The prayer
appears to have been included in error.
The opposition papers do not address this argument, or request that
leave to amend include leave to assert a new cause of action under Labor Code
section 2699. The motion to strike is granted
without leave to amend.
RULING:
Demurrer to Plaintiff’s First Amended Complaint by Defendant
Annavee Wingyi Wong Kim:
The parties are
ordered to meet and confer in good faith by telephone prior to the hearing on
the demurrer, and plaintiff’s counsel is ordered to efile with the Court the
required declaration indicating the outcome of those efforts, and clearly indicating
which issues remain for the Court to resolve on the demurrer of defendant
Kim. The Court will not hear the
demurrer, and plaintiff will not be assigned a trial date, until plaintiff has appropriately
met and conferred on the status of the pleadings.
Demurrer is to the
fourth cause of action for inaccurate wage statements is SUSTAINED
WITHOUT LEAVE TO AMEND, based on the apparent concession in the opposition that the
cause of action is withdrawn, and the lack of substantive opposition to the
motion, on the ground the cause of action is barred by the applicable statute
of limitations.
Demurrer to the fifth
cause of action for unfair business practices is OVERRULED. The demurrer is addressed only to the
allegations that defendants unlawfully deducted tips but does not address or
challenge the allegations that defendants engaged in unfair business practices by
failing to properly compensate employees under numerous unrelated specified
Labor Code sections. [FAC, para. 40]. Because
a demurrer does not lie to only part of a cause of action, and a cause will
survive demurrer if there are sufficient allegations that might entitle the
pleader to relief, the demurrer is overruled.
Kong v. City of Hawaiian Gardens Redevelop. Agency (2003, 2nd
Dist.) 108 Cal.App.4th 1028, 1046; PH II, Inc. v. Superior Court (1995)
33 Cal.App.4th 1680, 1682.
Demurrer to the
sixth cause of action for violation of the rule on tips and gratuities is SUSTAINED
WITH LEAVE TO AMEND on the ground the cause of action is based on Labor Code §
351, and the California Supreme Court has held that there is no private
right of action to enforce Labor Code § 351. Lu v. Hawaiian Gardens
Casino, Inc. (2010) 50 Cal.4th 592, 595, 600. The demurrer is
sustained with leave to amend to permit plaintiff to amend the pleading, if
possible, to seek recovery of the alleged withheld tips on some other viable. See Lu, at 598, 603-604.
Demurrer to the twelfth cause of action for violation of
Labor Code 1174.5 is SUSTAINED WITHOUT LEAVE TO AMEND, based on the apparent concession in the
opposition that the cause of action is withdrawn, and the lack of substantive
opposition to the motion, on the ground the cause of action is based on a
statute which does not provide a private right of action.
Ten days leave to amend the sixth
cause of action only, if possible.
Demurrer to Plaintiff’s First Amended Complaint by Defendant
Annavee, Inc.:
The Court notes that the meet and confer declaration
submitted with the demurrers and motion to strike indicates that plaintiff’s
counsel failed to respond to meet and confer efforts, including two written
correspondences. The Court views the
obligation to meet and confer to extend to both plaintiff and defendants. See CCP § 430.41(a)(1) (“The party who filed
the complaint, cross-complaint, or answer shall provide legal support for its
position that the pleading is legally sufficient or, in the alternative, how
the complaint, cross-complaint, or answer could be amended to cure any legal
insufficiency.”). See also CCP § 435.5, applying to motions to
strike.
The parties are ordered to meet and confer in good faith by
telephone prior to the hearing on the demurrer and motion to strike, and
plaintiff’s counsel is ordered to efile with the Court the required declaration
indicating the outcome of those efforts, and clearly indicating which issues
remain for the Court to resolve on the demurrers and motion to strike. The Court will not hear the demurrers or
motion to strike, and plaintiff will not be assigned a trial date, until
plaintiff has appropriately met and conferred on the status of the pleadings.
Demurrer is to the
fourth cause of action for inaccurate wage statements is SUSTAINED WITHOUT
LEAVE TO AMEND, based on the apparent concession in the opposition that the
cause of action is withdrawn, and the lack of substantive opposition to the
motion, on the ground the cause of action is barred by the applicable statute
of limitations.
Demurrer to the
fifth cause of action for unfair business practices is OVERRULED. The demurrer is addressed only to the
allegations that defendants unlawfully deducted tips but does not address or
challenge the allegations that defendants engaged in unfair business practices by
failing to properly compensate employees under numerous unrelated specified
Labor Code sections. [FAC, para. 40]. Because
a demurrer does not lie to only part of a cause of action, and a cause will
survive demurrer if there are sufficient allegations that might entitle the
pleader to relief, the demurrer is overruled.
Kong v. City of Hawaiian Gardens Redevelop. Agency (2003, 2nd
Dist.) 108 Cal.App.4th 1028, 1046; PH II, Inc. v. Superior Court (1995)
33 Cal.App.4th 1680, 1682.
Demurrer to the
sixth cause of action for violation of the rule on tips and gratuities is
SUSTAINED WITH LEAVE TO AMEND on the ground the cause of action is based on Labor
Code § 351, and the California Supreme Court has held that there is no
private right of action to enforce Labor Code § 351. Lu v. Hawaiian
Gardens Casino, Inc. (2010) 50 Cal.4th 592, 595, 600. The demurrer is
sustained with leave to amend to permit plaintiff to amend the pleading, if
possible, to seek recovery of the alleged withheld tips on some other viable theory. See Lu, at 598, 603-604.
Demurrer to the twelfth cause of action for violation of
Labor Code 1174.5 is SUSTAINED WITHOUT LEAVE TO AMEND, based on the apparent concession in the opposition that the cause of
action is withdrawn, and the lack of substantive opposition to the motion, on
the ground the cause of action is based on a statute which does not provide a
private right of action.
Ten days leave to amend the sixth cause of action only, if
possible.
Defendant Annavee, Inc.’s Motion to Strike Portions of
Plaintiff’s First Amended Complaint:
Motion to strike allegations and prayer for punitive damages
is DENIED.
Motion to strike prayer for penalties and relief pursuant to
Labor Code section 2699 is GRANTED WITH LEAVE TO AMEND. Plaintiff is permitted leave to amend to
allege a claim for relief under Labor Code section 2699, if plaintiff had
intended to do so, and if possible, given the requirements of Labor Code
section 2699.3. Otherwise, the motion is
GRANTED WITHOUT LEAVE TO AMEND
Ten days leave to amend only to state a claim under Labor
Code section 2699, if possible.
DEPARTMENT D IS CONTINUING
TO CONDUCT AND ENCOURAGE
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