Judge Randolph M. Hammock, Case 19STCV37114 2022-12-27 Tentative Ruling

Plaintiffs Julia Lim, Gina J. Fergas, and Koby Lopez, worked in retail for Defendant, Looking Toward the Future, Inc. Plaintiffs allege various wage and hour violations under the Labor Code. Plaintiffs also bring a cause of Action for civil penalties for themselves and other aggrieved employees under the Private Attorneys General Act.

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843. In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294. Thus, summary judgment is granted when, after the Court’s consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist and the moving party is entitled to judgment as a matter of law. Code Civ. Proc. § 437c(c); Villa v. McFarren (1995) 35 Cal.App.4th 733, 741.

As to each claim as framed by the Complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520. Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” Dore v. Arnold Worldwide, Inc.¿(2006) 39 Cal.4th 384, 389. A motion for summary judgment must be denied where the moving party's evidence does not prove all material facts, even in the absence of any opposition Leyva v. Sup. Ct. (1985) 164 Cal.App.3d 462, 475) or where the opposition is weak. Salesguevara v. Wyeth Labs., Inc. (1990) 222 Cal.App.3d 379, 384, 387.

A defendant has met its burden of showing that a cause of action has no merit if it demonstrates the absence of any single essential element of plaintiff’s case or a complete defense to plaintiff’s action. Code Civ. Proc. § 437c(o)(2); Bacon v. Southern Cal. Edison Co. (1997) 53 Cal.App.4th 854, 858. Once the defendant moving party has met the burden, the burden shifts to the plaintiff to show via specific facts that a triable issue of material facts exists as to a cause of action or a defense thereto. § 437c(o)(2).

Where a plaintiff cannot establish an essential element of a cause of action, or where a complete defense is shown, a court must grant a motion for summary adjudication. Code Civ. Proc. § 437c(o)(1)-(2). A defendant meets its burden by showing that “one or more elements of a cause of action . . . cannot be established.” Id.; Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853. When a defendant moves for summary judgment or adjudication on the basis of an affirmative defense, the defendant has the burden of establishing the undisputed facts support each element of the affirmative defense. Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 467-68.

As framed by the Complaint, Plaintiffs are former retail employees of Defendants. Plaintiffs allege Defendants failed to provide them timely lunch breaks, failed to provide them with any 10-minute rest breaks, and failed to provide compensation for these violations. (Compl. ¶¶ 22, 30, 31, 32.) At times, Plaintiffs worked “off the clock and without pay.” (Id. ¶ 24.) “Plaintiffs all regularly worked over eight hours in a day and over forty hours in a week, yet Defendant frequently failed to pay Plaintiffs at their overtime rate of compensation for those hours worked in excess of their regular hours.” (Id. ¶ 31.) Defendants also “consistently failed to provide Plaintiffs with timely, accurate, and itemized wage and hour statements,” and “failed to pay Plaintiffs’ wages on a timely semi-monthly basis,” among other things. (Id. ¶¶ 32-37.)

As relevant to the instant motion, Plaintiffs’ eighth cause of action seeks to recover civil penalties under the Private Attorney’s General Act (“PAGA”). Plaintiffs allege they and other employees “are aggrieved employees as defined under Labor Code § 2699(c),” and “seek wages and penalties under Labor Code §§ 2698 and 2699 for Defendants’ violation of all Labor Code provisions included under Labor Code § 2699.5.” (Id. ¶ 82.) They also “seek any and all penalties and remedies set forth in Labor Code § 558.” (Id. ¶ 83.)

Under Labor Code section 558.1, “[a]ny employer or other person acting on behalf of an employer, who violates, or causes to be violated, any provision regulating minimum wages or hours and days of work in any order of the Industrial Welfare Commission, or violates, or causes to be violated, Sections 203, 226, 226.7, 1193.6, 1194, or 2802, may be held liable as the employer for such violation.” “For purposes of this section, the term ‘other person acting on behalf of an employer’ is limited to a natural person who is an owner, director, officer, or managing agent of the employer…” (Id.) Section 558.1 “was intended by the Legislature to expand liability for wage and hour violations and ‘discourage business owners from rolling up their operations and walking away from their debts to workers and starting a new company.’” (Espinoza v. Hepta Run, Inc. (2022) 74 Cal. App. 5th 44, 58.)

On April 18, 2022, Plaintiffs added Anne Frankel as a Defendant via a doe amendment. Anne Frankel was the wife of Ted Frankel, the former President of Tom’s Toys. Frankel took over as President once Ted passed away. Defendants contend Defendant Frankel was at most a “de facto” owner, as she “delegated operating the stores to Jillian Wahlquist,” and “has never managed or supervised the employees of Tom’s Toys.” Likewise, she “has never directed or instructed employees when to take breaks, and has no role in paying their wages. Anne’s role for Tom’s Toys has been limited to occasionally helping out the stores during the holiday seasons by stepping in to gift wrap toys and presents.” (UMF Nos. 27-30.)

In opposition, Plaintiffs contend Frankel is owner, director, officer, or managing agent of the employer who can be liable under section 558.1. “Anne Frankel was and is an owner of Tom’s Toys. As an owner, Anne Frankel is within the provisions of Lab. Code section 558.1 subpart (b) [“…a natural person who is an owner, director, officer, or managing agent of the employer…”]. They further contend and present evidence that Frankel is the CEO of the company, presently supervises employees of the company, and helped Ted Frankel “build the company.” (DMF 27-30, 62.)

The court of appeal recently stated in Espinoza that while “an individual must have engaged in some affirmative action beyond his or her status as an owner, officer or director of the corporation,” to cause a violation of the Labor Code, “that 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.” (Espinoza v. Hepta Run, Inc. (2022) 74 Cal. App. 5th 44, 59.) But “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.” (See id. at 59, 60; see also Usher v. White (2021) 64 Cal.App.5th 883 [stating whether an individual could be liable under section 558.1 “cannot be determined by any bright-line rule, as this inquiry requires an examination of the particular facts in light of the conduct, or lack thereof, attributable to the [individual].”].)

Here, Plaintiffs have shown a triable issue of fact on whether Frankel was Plaintiff’s employer under the Labor Code. The parties have presented conflicting evidence regarding Frankel’s role with Looking Toward the Future, and the extent of her day-to-day involvement. It is left to the trier of fact to determine if, and to what extent, Frankel had oversight of the company’s operations. This necessarily requires examination and weighing of the particular facts, which this court may not do on a motion for summary adjudication. (See Aguilar v. Atl. Richfield Co. (2001) 25 Cal. 4th 826, 856 [“the court may not weigh the plaintiff's evidence or inferences against the defendants' as though it were sitting as the trier of fact,” but “must nevertheless determine what any evidence or inference could show or imply to a reasonable trier of fact.”].) Accordingly, Plaintiffs have met their burden to show a triable issue of material fact. [FN 1]

As to allegations that they failed to pay minimum wages and overtime, Defendants argue that “Tom’s Toys paid the employees for all the hours they recorded as having worked. (UMF Nos. 13-16.), Despite regularly meeting with employees at each of the three stores, Ms. Wahlquist never heard anyone complain about not being paid for hours they worked. (UMF Nos. 6, 7, 8, 17.) Since the employees recorded their work hours, were paid for the hours they recorded, and did not claim to have worked more hours, Plaintiffs cannot later establish these employees should have been paid for additional work time.” Defendants also argue it is not enough that employees “worked ‘off-the-clock’ or did not record their hours,” but must present evidence that “it was at the instruction of Defendants.” (Mtn. 8: 22-23.) “Rather, the Plaintiffs will need to establish with admissible evidence that Defendants knew or should have known the employees were working off-the-clock but failed to pay wages accordingly.” (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1051 [“liability is contingent on proof [employer] off-the-clock work was occurring.”].)

As to allegations that Defendants failed to provide meal and rest breaks, they argue that no person with authority over employees “did anything to prevent these employees from taking timely and proper meal and rest breaks.” (UMF No. 21.) Defendants further contend that to the extend employees did not take meal or rest breaks, that decision was purely their own. In Brinker, the Supreme Court of California explained:

An employer's duty with respect to meal breaks under both section 512, subdivision (a) and Wage Order No. 5 is an obligation to provide a meal period to its employees. The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so. What will suffice may vary from industry to industry, and we cannot in the context of this class certification proceeding delineate the full range of approaches that in each instance might be sufficient to satisfy the law.

Put differently, although “[p]roof an employer had knowledge of employees working through meal periods will not alone subject the employer to liability for premium pay…an employer may not undermine a formal policy of providing meal breaks by pressuring employees to perform their duties in ways that omit breaks.” (Brinker Rest. Corp. supra, 53 Cal. 4th at 1040.)

Plaintiffs concede that Defendants had written policies in place regarding meal and rest breaks. However, they present evidence that Defendants ignored those policies, or at minimum, made it unreasonably difficult for employees to take breaks—even if they were encouraged to do so. (See UMF 20-22.) Plaintiffs present evidence that former employees described the work environment as “chaos,” and that it was “pretty much the norm” to miss timely breaks. (Id.) Timely breaks “were pretty rare” and only happened on “pretty slow days.” (Id.) And although Defendants now deny knowledge of any violations, Plaintiffs say they were aware that employees “claimed to have been denied meal and rest breaks as well as being underpaid for certain overtime work.” (See SSDMF 17.) Plaintiff Fergas testified in deposition that employees avoided recording overtime hours because “it was notorious that Ted wasn't going to pay overtime.” (SSDMF 13, 14, 16; Fergas Depo 60:17-66:16.)

As Brinker demonstrates, the question is largely a factual one. And here, Plaintiffs have shown by admissible evidence that a reasonable trier of fact could conclude that Defendants’ conduct made it difficult or impossible to take reasonable meal and rest breaks. Moreover, there is a reasonable dispute on what Defendants knew or should have known.

Finally, as to wage statements and other derivative claims, Defendants dispute that their wage statements were inaccurate or otherwise failed to comply with Labor Code section 226(a). Section 226(a) requires an employer to “furnish to his or her employee…an accurate itemized statement in writing showing” the gross wages earned and the total hours worked, among other things. Defendants contend their “wage statements are prepared by ADP, and as is customary by ADP, they show all of the information required for hourly employees.” (Mtn. 11: 6-7; UMF 23.) “Because employees were paid for all the time they accurately recorded as having worked, there were no ‘unpaid’ wages at termination and this claim also fails.” (Mtn. 12: 4-5.)

Plaintiff’s disagree, contending paystubs were regularly inaccurate because “Defendants routinely failed to properly document and compensate employees for overtime hours worked.” (SSDMF 23.) In particular, they cite a paystub provided to Plaintiff Lim, purporting to be inconsistent with overtime reflected on time records. (SSDMF 13, 14, 16.) Plaintiffs appear to concede that the paystubs, at least on their face, contained all information required under section 226(a). It is a separate issue whether those paystubs were, in effect, “inaccurate” based on the hours employees actually worked.

The court need not resolve now whether this constitutes a Labor Code violation, or whether Plaintiffs have shown a triable issue of fact on this point. That is because a “motion for summary adjudication shall be granted only if it completely disposes of a cause of action...” (CCP § 437c, subdivision (f)(1).) Plaintiffs have demonstrated with competent evidence the existence of numerous triable issues of fact aside from the pay stubs to support the cause of action, discussed above.

Defendants contend the following individuals admitted through signed declaration that they did not suffer the violations alleged: Alejandro Espinoza, Raul Espinoza, Teodoro Espinoza, Icela Espinoza, Amanda Real, Neal Smith and Jack McKeen (the “Non-Aggrieved Employees”). (UMF No. 26.)

Defendants inadvertently omitted this evidence with their moving papers, but then provided it in Reply. (See Amended Walquist Decl.) “It is well established that the trial court's consideration of additional reply ‘evidence is not an abuse of discretion so long as the party opposing the motion for summary judgment has notice and an opportunity to respond to the new material.’” (Jacobs v. Coldwell Banker Residential Brokerage Co. (2017) 14 Cal. App. 5th 438, 449.)

In these mostly identical declarations, the “non-aggrieved employees” state that Plaintiffs’ claims “do not represent [their] experiences working for Tom’s Toys.” (UMF 56; Amended Walquist Decl., Exh. 10.) They state they can take uninterrupted breaks, are paid for all hours worked, and always received accurate pay stubs. (Id.)

In Opposition, Plaintiffs dispute their account, contending the non-aggrieved employees’ time records do, in fact, show Labor Code violations. In particular, they note records showing that on more than one occasion, employees Amanda Real and Raul Espinosa worked extended periods without a meal period. (SSDMF 11.)

At most, Plaintiff’s evidence in opposition shows that two employees did not take meal breaks on a select few occasions. However, Plaintiffs fail to demonstrate this was due to a policy or circumstance placed by Defendants, and not by the employees’ own decision to forgo a meal break. Indeed, the non-aggrieved employees expressly state they were able to take all meal breaks, never had to wait six hours to do so, the breaks were “not interrupted by Tom’s Toys employees including management,” and that if their meal break was late or interrupted, “it was not because of Tom’s Toys policies or management.” (Id.) In other words—as to the employees who signed the declarations—the undisputed evidence shows Defendants “relieve[ed] [these] employees of all duty, relinquish[ed] control over their activities and permit[ted] them a reasonable opportunity to take an uninterrupted 30-minute break.” (Brinker Rest. Corp. supra, 53 Cal. 4th at 1040.) There is no evidence suggesting Defendants “impede[d] or discourage[d] them from doing so.” (Id.) On these facts, Plaintiffs have failed to present a triable issue as to employees Alejandro Espinoza, Raul Espinoza, Teodoro Espinoza, Icela Espinoza, Amanda Real, Neal Smith and Jack McKeen.

Be that as it may, a “motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (CCP § 437c, subdivision (f)(1).) Although these undisputed facts go to the merits and may impact Plaintiffs’ potential recovery (if any), Defendants cite no authority granting an MSA as to only particular employees. (See's Candy Shops, Inc. v. Superior Ct. (2012) 210 Cal. App. 4th 889, 900 [“Summary adjudication is a drastic remedy and any doubts about the propriety of summary adjudication must be resolved in favor of the party opposing the motion.”)

Finally, Defendants contend that employees Roxy Contreras, Tua Pangaribuan, Kyle Fisher, and Reginal Roundtree signed release agreements releasing any PAGA claim in exchange for compensation. (UMF No. 61; Wahlquist Decl., Exh. 9.) Defendants contend, therefore, that “Plaintiffs cannot recover PAGA penalties on their behalf.” (Mtn. 13: 4.)

In opposition, Plaintiff’s contend these releases are invalid, “as PAGA claims belong to the LWDA and not individual Aggrieved Employees.” (Opp. 16: 15-17.) Rather, “the employees at issue have at most released their ability to serve as PAGA representatives.” (Id. 17: 13-14.) Based on the public policy underlying PAGA suits, the court finds Plaintiffs have the better position.

Defendants provide no authority suggesting that individual employees can voluntarily exclude their PAGA claims, or “opt-out” of, a PAGA action brought by other individuals. A PAGA plaintiff “does so as the proxy or agent of the state's labor law enforcement agencies.” (Arias v. Superior Ct. (2009) 46 Cal. 4th 969, 986.) “Because an aggrieved employee's action under the Labor Code Private Attorneys General Act of 2004 functions as a substitute for an action brought by the government itself, a judgment in that action binds all those, including nonparty aggrieved employees, who would be bound by a judgment in an action brought by the government. The act authorizes a representative action only for the purpose of seeking statutory penalties for Labor Code violations (Lab.Code, § 2699, subds. (a), (g)), and an action to recover civil penalties ‘is fundamentally a law enforcement action designed to protect the public and not to benefit private parties.’” (Id. at 933–34.)

Moreover, “[w]hen a government agency is authorized to bring an action on behalf of an individual or in the public interest, and a private person lacks an independent legal right to bring the action, a person who is not a party but who is represented by the agency is bound by the judgment as though the person were a party. [Citation.] Accordingly, with respect to the recovery of civil penalties, nonparty employees as well as the government are bound by the judgment in an action brought under the act…” (Id. at 934; Williams v. Superior Ct. (2017) 3 Cal. 5th 531, 548 [“absent fellow employees will be bound by the outcome of any PAGA action”].)

Although this authority addressed “absent” employees, and not those who affirmatively opted-out, the same considerations apply. The civil penalties recovered on the state's behalf “are intended to ‘remediate present violations and deter future ones,’ not to redress employees’ injuries.” (Kim v. Reins Int'l California, Inc. (2020) 9 Cal. 5th 73, 86.) More simply, “there is no mechanism for opting out of the judgment entered on the PAGA claim. ‘Because an aggrieved employee's action under [PAGA] functions as a substitute for an action brought by the government itself, a judgment in that action binds all those, including nonparty aggrieved employees, who would be bound by a judgment in an action brought by the government.’” (Robinson v. S. Ctys. Oil Co. (2020) 53 Cal. App. 5th 476, 482.) By opting-out of the action, the employees would effectively deprive the Labor and Workforce Development Agency of its 75 percent portion of the civil penalty to which it may be statutorily entitled. (Lab. Code § 2699, subd. (i).)

Judge of the Superior Court

FN 1 - Interestingly enough, this Court will be the “trier of fact” as to this PAGA cause of action. Accordingly, this Court certainly makes no findings of fact at this time, other than the finding that there is a triable material issue of fact which prevents a summary adjudication.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.