Judge: Teresa A. Beaudet, Case: 22STCV10431, Date: 2023-02-06 Tentative Ruling

Case Number: 22STCV10431    Hearing Date: February 6, 2023    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

            Plaintiff Hsiang H. Kung (“Plaintiff”) filed this action on March 25, 2022 against Defendants CBL Freight Systems, Inc. (“CBL Freight”), Coast Bridge Logistics, Inc. (“Coast Bridge Logistics”), Auto Link Diesel Repair, Inc. (“Auto Link Diesel”), Qwic Trans. Inc. (“Qwic Trans.”), Pacific Ocean Transportation, Inc. (“Pacific Ocean Transportation”), Quinn Wu, Michael Wu, Hsin Hsu Wu, and Tina Wang (“Wang”).

            On September 14, 2022, the Court issued an Order sustaining Defendants CBL Freight, Qwic Trans., Pacific Ocean Transportation, Hsin Hsu Wu, Michael Wu, and Wang’s demurrer to the first, second, third, and fourth causes of action of the original Complaint, with leave to amend. The Court sustained Defendants’ demurrer to the thirteenth cause of action of the original Complaint without leave to amend.

            On October 5, 2022, Plaintiff filed the operative First Amended Complaint (“FAC”) asserting causes of action for (1) wrongful termination and retaliation in violation of public policy; (2) hostile work environment harassment in violation of FEHA and Government Code    § 12940(j); (3) age discrimination in violation of Government Code § 12940(a); (4) discrimination based on race, color, national origin and/or ancestry in violation of Government Code § 12940(a); (5) failure to pay overtime; (6) meal break violations; (7) rest break violations; (8) late pay and waiting time penalties; (9) failure to pay all wages; (10) inaccurate wage statements; (11) failure to reimburse expenditures; and (12) unfair business practices.

             Defendants CBL Freight, Qwic Trans., Coast Bridge Logistics, Auto Link Diesel, Pacific Ocean Transportation, Hsin Hsu Wu, Michael Wu, and Wang (collectively, “Defendants”) now demur to the first, second, third, and fourth causes of action of the FAC. Plaintiff opposes.

Discussion

A.    Legal Standard

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.    Allegations of the FAC

Plaintiff alleges that CBL Freight, Coast Bridge Logistics, Auto Link Diesel, Qwic Trans., and Pacific Ocean Transportation employed him as an employee from March 2008 to January 13, 2021. (FAC, ¶ 23.) Plaintiff was hired as a Sales Manager in March of 2008. (FAC,  ¶ 24.)

For each year of his employment starting in March of 2008, defendants paid Plaintiff a percentage of his gross sales in commissions, which defendants sometimes characterized as a bonus. (FAC, ¶ 26.) In or about the first week of January 2021, Plaintiff, having not received his commissions for the year 2020, inquired about his commissions to management. (FAC, ¶ 26.) Knowing that Plaintiff would be owed substantial commissions at the end of 2020 because of a large sales increase in 2020, defendants decided to “re-arrange” Plaintiff’s sales position to another position whereby defendants would purchase a “chassis” for Plaintiff which Plaintiff could then rent to defendants for a fee. (FAC, ¶ 27.)

            Plaintiff alleges that in an attempt to avoid paying Plaintiff his owed commissions, Quinn Wu told Plaintiff that the “companies” had more than enough business and that Plaintiff was to switch his role to finding and hiring truck drivers. (FAC, ¶ 30.) On January 12, 2021, Plaintiff complained to management, Michael Wu, regarding his 2020 sales commissions, but his complaint was ignored. (FAC, ¶ 31.)  

Plaintiff alleges that on January 13, 2021, defendants decided to retaliate and discriminate against Plaintiff for complaining about his owed commissions and “for his age” by terminating him. (FAC, ¶ 32.) Plaintiff alleges that the only other salesperson in the “companies” is significantly younger than Plaintiff and has not been terminated. (FAC, ¶ 32.) On January 13, 2021, Plaintiff received a phone call from Quinn Wu, who informed Plaintiff that he was being terminated because the company could no longer afford him. (FAC, ¶ 33.)

Plaintiff also alleges that management perpetuated and condoned a hostile work environment. (FAC, ¶35.) Plaintiff and other employees of Chinese descent were constant targets of Quinn Wu’s harassment and hostile treatment. (FAC, ¶ 35.) Plaintiff observed that Quinn Wu would only treat the employees of Chinese descent harshly. (FAC, ¶ 35.)  

C.    Exhaustion of Administrative Remedies

First, Defendants argue that the Court has no jurisdiction over the first, second, third, and fourth causes of action because Plaintiff failed to exhaust his administrative remedies prior to filing suit.

Before suing for violation of FEHA, a plaintiff must file a timely and sufficient administrative complaint with the California Department of Fair Employment and Housing (“DFEH”) and receive a “right to sue” notice. (Gov. Code, §§ 12960, 12965(b).) “In the context of the FEHA, exhaustion of the administrative remedy is a jurisdictional prerequisite to resort to the courts: Under California law an employee must exhaust the . . . administrative remedy provided by the Fair Employment and Housing Act, by filing an administrative complaint with the [DFEH] and obtaining the DFEH’s notice of right to sue, before bringing suit on a cause of action under the act or seeking the relief provided therein…[t]o exhaust his or her administrative remedies as to a particular act made unlawful by the Fair Employment and Housing Act, the claimant must specify that act in the administrative complaint, even if the complaint does specify other cognizable wrongful acts. [I]n the context of the Fair Employment and Housing Act…[t]he failure to exhaust an administrative remedy is a jurisdictional, not a procedural, defect…” (Okoli v. Lockheed Technical Operations Co. (1995) 36 Cal.App.4th 1607, 1613 [internal quotations and citations omitted].) In addition, “[a]s a jurisdictional prerequisite, plaintiff bears the burden of pleading and proving timely filing of a sufficient complaint with the DFEH and obtaining a right-to-sue notice.” (Cal. Practice Guide: Employment Litigation (The Rutter Group 2022) ¶ 16:253, citing Holland v. Union Pacific Railroad Co. (2007) 154 Cal.App.4th 940, 945 [internal quotations and emphasis omitted].) 

The Court noted in its September 14, 2022 Order regarding the demurrer to Plaintiff’s original Complaint that “Plaintiff attaches as Exhibit 1 to the Complaint a November 9, 2021 ‘Notice of Case Closure and Right to Sue’ from the DFEH. (Compl., ¶ 1, Ex. 1.) However, as Defendants note, the Complaint does not attach any administrative complaint Plaintiff filed with the DFEH, nor does Plaintiff allege that he filed an administrative complaint with the DFEH.” (Order at p. 4:4-7.) The Court accordingly sustained the demurrer to the first through fourth causes of action of the original Complaint, with leave to amend.

In the FAC, Plaintiff now alleges that “Plaintiff has timely and properly exhausted his administrative remedies for discrimination and retaliation under the California Fair Employment and Housing Act, California Government Code § 12900 et seq. On November 9, 2021, Plaintiff filed a complaint with the California Department of Fair Employment and Housing (“DFEH”) for wrongful termination and retaliation, harassment, and discrimination based on ancestry, color, and age. On the same day, the DFEH issued the Notice to Complainant of Right-to-Sue. A true and correct copy of the November 9, 2021 Notice to Right-to-Sue is attached hereto and incorporated herein as Exhibit 1.” (FAC, ¶ 17.)

Defendants note that like the Complaint, the FAC also does not attach any administrative complaint that Plaintiff filed with the DFEH. Defendants also assert that Plaintiff failed to plead that he filed a “sufficient” DFEH complaint under the governing law, including Cal. Code Regs, tit. 2, § 10005, subdivision (d). This provision provides in pertinent part that, “[t]o obtain an immediate right-to-sue notice via the department’s automated right-to-sue system or by submitting a completed right-to-sue notice packet to the department, an aggrieved person shall file a right-to-sue complaint with the department containing the following:

(1) complainant’s name and, where available, address, telephone number and e-mail address;

(2) respondent’s name, address and, where available, telephone number and e-mail address. If applicable, the job title and/or capacity in which the respondent is being named also shall be included;

(3) a description of the alleged act or acts of discrimination, harassment or retaliation;

(4) the date or dates each alleged act of discrimination, harassment or retaliation occurred, including the date of the last or most recent alleged act;

(5) each protected basis upon which the alleged discrimination or harassment was based;

(6) for retaliation complaints, the date and type of protected activity in which the complainant engaged;

(7) the complainant’s declaration, made under penalty of perjury under the laws of the State of California, that to the best of the complainant’s knowledge all information stated is true and correct, except matters stated on information and belief, which the complainant believes to be true;

(8) the signature of the complainant, or an authorized signature, and the date signed, unless the complaint is filed electronically…” (Cal. Code Regs., tit. 2, § 10005, subd. (d).)

Although Plaintiff does not allege all of the foregoing information in the FAC, Defendants do not appear to cite to any legal authority indicating that the DFEH administrative complaint must be attached to the FAC in order for Plaintiff to plead that he adequately exhausted his administrative remedies. Plaintiff does allege that “[o]n November 9, 2021, Plaintiff filed a complaint with the California Department of Fair Employment and Housing (“DFEH”) for wrongful termination and retaliation, harassment, and discrimination based on ancestry, color, and age. On the same day, the DFEH issued the Notice to Complainant of Right-to-Sue.” (Compl., ¶ 17.)[1] The Court finds that this is sufficient at the pleading stage and notes that “[a]s a general rule¿in testing a pleading against a demurrer the facts alleged in the pleading are deemed to be true, however improbable they may be.” (Del E. Webb Corp. v. Structural Materials Co.¿(1981) 123 Cal.App.3d 593, 604.)

D.    Cause of Action for Wrongful Termination and Retaliation in Violation of Public Policy

Next, Defendants assert that the first cause of action fails to state facts sufficient to constitute retaliation, because it lacks factual allegations for the element of a “protected activity.”

¿“[I]n order to establish a prima facie case of retaliation under the FEHA, a plaintiff must show (1) he or she engaged in a ‘protected activity,’ (2) the employer subjected the employee to an adverse employment action, and (3) a causal link existed between the protected activity and the employer’s action.¿” (¿Yanowitz v. L'Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1042¿.) Protected activity includes opposing “¿any practices forbidden¿” under FEHA or filing a complaint, testifying, or assisting in any proceeding under FEHA. (¿Gov. Code, § 12940, subd. (h)¿.)¿ 

Defendants note that Plaintiff alleges that “DEFENDANTS’ decisions to harass, discriminate against, and ultimately terminate him, as alleged herein, was motivated by his complaints regarding DEFENDANTS’ business practices, as alleged herein.” (FAC, ¶ 38.) More specifically, Plaintiff alleges that “[o]n January 9, 2021, in retaliation to Plaintiff KUNG’s lawful inquiry and complaint regarding his 2020 sales commissions, management informed Plaintiff KUNG that his job duties were being changed without any warning.” (FAC, ¶ 30.) Defendants assert that Plaintiff’s alleged complaints regarding his commissions and Defendants’ business practices are not “protected activity” covered by FEHA.

In the opposition, Plaintiff asserts that he alleges that he complained of Defendants’ retaliatory and discriminatory activity, which is protected activity under FEHA, and was then further retaliated against by his wrongful termination, citing to paragraphs 27-32 of the FAC. But in paragraph 32 of the FAC, Plaintiff again alleges that “[o]n January 13, 2021, DEFENDANTS decided to fully retaliate and discriminate against Plaintiff KUNG for complaining about his owed commissions and for his age by terminating him…” (FAC, ¶ 32.) Thus, Plaintiff’s allegations are that Defendants retaliated against Plaintiff for complaining about his commissions and Defendants’ business practices. Plaintiff does not cite to any legal authority demonstrating that complaining about commissions or business practices is a “protected activity” under FEHA.

In any event, the Court notes that Plaintiff’s first cause of action appears to be a combination of two causes of action for wrongful termination in violation of public policy and retaliation. The first cause of action is captioned “Wrongful Termination and Retaliation in Violation of Public Policy,” while the demurrer concerns Plaintiff’s retaliation claim. The Court notes that “¿a demurrer cannot rightfully be sustained to part of a cause of action or to a particular type of damage or remedy.¿” (¿Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1047¿; ¿see also PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682 [“A demurrer does not lie to a portion of a cause of action.”]¿.) “¿[W]hen a substantive defect is clear¿from the face of a complaint . . . a defendant may attack that portion of the cause of action by filing a motion to strike.¿” (PH II, Inc. v. Superior Ct., supra, ¿33 Cal.App.4th at pp. 1682-1683¿.) 

Based on the foregoing, the Court overrules the demurrer to the first cause of action.

E.     Cause of Action for Hostile Work Environment in Violation of FEHA

Pursuant to Government Code section 12940, subdivision (j)(1), it is an unlawful employment practice “[f]or an employer…because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, reproductive health decisionmaking, or veteran or military status, to harass an employee...”

“To establish a prima facie case of a hostile work environment, [plaintiff] must show that (1) [plaintiff] is a member of a protected class; (2) [plaintiff] was subjected to unwelcome harassment; (3) the harassment was based on her protected status; (4) the harassment unreasonably interfered with her work performance by creating an intimidating, hostile, or offensive work environment; and (5) defendants are liable for the harassment.” (Ortiz v. Dameron Hospital Assn. (2019) 37 Cal.App.5th 568, 581.)

Defendants assert that the second cause of action must fail because the FAC does not

identify the dates of any harassing acts and what such acts are. Defendants also assert that Plaintiff does not allege that the harassment was based on his protected status, race, or ancestry.

As Plaintiff notes, he alleges that “Plaintiff KUNG and other employees of Chinese descent were the constant targets of Defendant QUINN WU’s harassment and hostile treatment. Defendant QUINN constantly used obscene language and made offensive remarks and demeaning comments unrelated to the workplace to employees of Chinese descent.” (FAC, ¶ 35.) However, Plaintiff does not respond to Defendant’s point that the FAC does not identify the dates of the alleged harassing acts, such that Defendant cannot determine whether Plaintiff’s harassment claims are within the applicable limitations period.

Based on the foregoing, the Court sustains the demurrer to the second cause of action with leave to amend.

F.     Cause of Action for Age Discrimination

Defendants note that “[i]n order to make out a prima facie case of age discrimination under FEHA, a plaintiff must present evidence that the plaintiff (1) is over the age of 40; (2) suffered an adverse employment action; (3) was performing satisfactorily at the time of the adverse action; and (4) suffered the adverse action under circumstances that give rise to an inference of unlawful discrimination, i.e., evidence that the plaintiff was replaced by someone significantly younger than the plaintiff.” (Sandell v. Taylor-Listug, Inc. (2010) 188 Cal.App.4th 297, 321.)

Defendants assert that the third cause of action for age discrimination must fail because Plaintiff failed to allege any facts in the FAC regarding being replaced with someone significantly younger. Rather, Plaintiff alleges that “[o]n January 13, 2021, DEFENDANTS decided to fully retaliate and discriminate against Plaintiff KUNG for complaining about his owed commissions and for his age by terminating him. Plaintiff KUNG is informed and believes that the only other salesperson in the companies is significantly younger than Plaintiff KUNG and has not been terminated.” (FAC, ¶ 32.)

However, it is not clear that under Sandell Plaintiff must allege that he was replaced by someone significantly younger in order to state a cause of action for age discrimination. The Court in Sandell noted that “[t]he Hersant court questioned whether a plaintiff must actually show that someone significantly younger than the plaintiff replaced him, for purposes of a prima facie showing, but concluded that it did not have to resolve that question under the facts presented in that case. Because we conclude that Sandell has presented sufficient evidence to meet this requirement, like the Hersant court, we need not address the question and may presume that such a showing is required to demonstrate circumstances that give rise to an inference of unlawful discrimination.” (Sandell v. Taylor-Listug, Inc., supra, 188 Cal.App.4th at p. 321, fn. 12 [internal citations omitted].) The Court in Hersant v. Department of Social Services (1997) 57 Cal.App.4th 997, 1003, fn. 3, found that “[i]t is not entirely clear that this last element is a required part of the employee’s prima facie case. Given the manner in which we resolve this matter, it is not necessary we resolve the issue.” (Internal citations omitted.) The Hersant Court also noted that “it is impossible to make an exact, all-inclusive statement of the elements of a prima facie age discrimination case applicable in all situations. The general requirement is that the employee offer circumstantial evidence such that a reasonable inference of age discrimination arises.” (Id. at p. 1002 [internal citations omitted].)

Defendants also argue for the first time in the reply that the FAC does not allege any incidents pertaining to age discrimination within the claim period. The Court notes that “¿[p]oints raised for the first time in a reply brief will ordinarily not be considered, because such consideration would deprive the respondent of an opportunity to counter the argument.¿” (American Drug Stores, Inc. v. Stroh (1992) 10 Cal.App.4th 1446, 1453¿.) In addition, as set forth above, Plaintiff alleges that “[o]n January 13, 2021, DEFENDANTS decided to fully retaliate and discriminate against Plaintiff KUNG for complaining about his owed commissions and for his age by terminating him.” (FAC, ¶ 32.)

            Based on the foregoing, the Court overrules the demurrer to the third cause of action.

G.    Cause of Action for Race, Color, National Origin and/or Ancestry Discrimination

“¿It is an unlawful employment practice . . . (a) [f]or an employer, because of the . . . race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or veteran or military status of any person, to refuse to hire or employ the person . . . or to bar or to discharge the person from employment . . . or to discriminate against the person in compensation or in terms, conditions, or privileges of employment.¿” (¿¿Gov. Code,   § 12940, subd. (a)¿¿.)  

A cause of action for discrimination requires alleging membership in a protected class, facts showing that an employee “¿was qualified for the position he sought or was performing competently in the position he held,¿” facts showing that he or she “¿suffered an adverse employment action,¿” and facts showing an employer’s discriminatory motive in taking the adverse employment action. (¿Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 355¿.)

Defendants assert that the fourth cause of action must fail because it has “no allegation of racial slur, racist comments or racially biased remarks not only within but also outside the limitations period.” (Demurrer at p. 14:26-15:1.) Plaintiff does not respond to this point in the opposition. As Defendants note, the FAC does not allege any dates on which the alleged discrimination occurred, such that it is unclear whether the alleged discrimination took place during the applicable limitations period. Rather, Plaintiff alleges in a conclusory fashion that “DEFENDANTS intentionally created and knowingly permitted egregious discrimination and retaliation against Plaintiff KUNG on the basis of his race, color, national origin and/or ancestry.” (FAC, ¶ 61.)

Based on the foregoing, the Court sustains the demurrer to the fourth cause of action, with leave to amend. 

Conclusion

For the foregoing reasons, the Court sustains Defendants’ demurrer to the second and fourth causes of action, with leave to amend. The Court overrules Defendants’ demurrer to the first and third causes of action. 

The Court orders Plaintiff to file and serve an amended complaint, if any, within 20 days of the date of this Order. If no amended complaint is filed within 20 days of this Order, Defendants are ordered to file and serve their answer within 30 days of the date of this Order. 

Defendants are ordered to give notice of this Order. 

DATED:  February 6, 2023                            ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court