Judge Upinder S. Kalra, Case Number: 19STCV10703, Date: 2023-12-06 Tentative Ruling

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1. Summary Judgment as to Each Cause of Action as Barred by Plaintiffs’ Failure to Properly Exhaust Administrative Remedies;

2. Summary Judgment as to Plaintiff Bonilla’s Causes of Action as Barred by her Waiver of Claims Against One Stop, its employees, and assigns;

3. Summary Judgment as to the First through Eleventh and Fifteenth Causes of Action because Moving Defendant did not employ Plaintiffs, had no control over their employment or treatment, and had no relationship with Plaintiffs in any capacity;

4. Summary Judgment as to the Twelfth Cause of Action because Moving Defendant did not employ Plaintiffs, had no control over their employment or treatment, and had no relationship with Plaintiffs in any capacity;

5. Summary Judgment as to the Thirteenth Cause of Action because Moving Defendant did not employ Plaintiffs, had no control over their employment or treatment, and had no relationship with Plaintiffs in any capacity;

6. Summary Judgment as to the Fourteenth Cause of Action because Moving Defendant did not employ Plaintiffs, had no control over their employment or treatment, and had no relationship with Plaintiffs in any capacity;

7. Summary Judgment as to the Fifteenth Cause of Action because Moving Defendant did not employ Plaintiffs, had no control over their employment or treatment, and had no relationship with Plaintiffs in any capacity;

8. Summary Judgment as to the Sixteenth Cause of Action because Moving Defendant did not employ Plaintiffs, had no control over their employment or treatment, and had no relationship with Plaintiffs in any capacity;

9. Summary Judgment as to the Seventeenth Cause of ction because Moving Defendant did not employ Plaintiffs, had no control over their employment or treatment, and had no relationship with Plaintiffs in any capacity.

1. Motion for Summary Judgment, or Alternatively Summary Adjudication, is DENIED in its entirety.

On March 28, 2019, Plaintiffs Griselda Bonilla and Lucero Lopez (“Plaintiffs”) filed a complaint against Defendants One Stop Internet, Inc., One Stop LLC, Alfonso Rodriguez, Juan Beltran, and Does 1 through 100.

Plaintiffs filed a First Amended Complaint on September 19, 2019. The FAC alleges 17 causes of action: (1) Actual/Perceived Disability Harassment, Violation of Cal. Gov Code §§ 12940 et seq., (2) Actual/Perceived Disability Discrimination, Violation of Cal. Gov Code §§ 12940 et seq., (3) Failure to Engage in the Mandatory Good-Faith Interactive Process, Cal. Gov. Code § 12940 et. seq., (5) Failure to Accommodate, Cal. Gov. § 12940 et seq., (6) Race/National Original Harassment, Violation of the FEHA, (7) Race/National Original Discrimination, Violation of FEHA, (8) Race/National Original Retaliation, Violation of FEHA, (9) Sex/Gender Harassment, Violation of FEHA, (10) Sex/Gender Discrimination, Violation of FEHA, (11) Sex/Gender Retaliation, Violation of FEHA, (12) Failure to Pay Overtime Wages in Violation of Cal. Labor Code § 510 and IWC Wage Order No. 4, (13) Violation of Cal. Bus. & Prof. Cod §§ 17200 et seq., (14) Whistleblower Violations, Cal. Labor Code § 1102.5, (15) Retaliation and Wrongful Termination in Violation of Public Policy, (16) Failure to Provide Employee Personnel Files, Violation of Cal. Labor Code § 432, 1198.5, and (17) Failure to Provide Wage & Hour Statements, Violation of Cal. Labor Code § 226. The complaint alleges that the Plaintiffs suffered harassment based on disabilities, need for accommodations and need for medical leave. Plaintiffs also allege that they were wrongfully terminated by Defendants.

On October 11, 2019, Plaintiffs filed an Amendment to the Complaint, Fictitious/Incorrect Name, designating Doe 1 as Branded Online, Inc. Defendant Branded Online, Inc., filed an Answer on March 3, 2020.

On April 28, 2022, Defendants Alfonso Rodriguez filed a Demurrer to the FAC, which the court Sustained without leave to amend on August 16, 2022.

On June 21, 2022, Defendant Branded Online Inc., filed a Motion for Judgment on the Pleadings, which the court Denied on July 18, 2022.

On October 19, 2022, Plaintiff filed a Motion for Leave to Amend the SAC, which the court Granted on November 15, 2022.

On November 16, 2022, Plaintiff filed a Third Amended Complaint (TAC). The TAC has the same seventeen causes of action.

On March 22, 2023, Defendant Branded Online, Inc. filed the instant Motion for Summary Judgment, or Alternatively, Summary Adjudication.

On May 18, 2023, Plaintiffs moved ex parte for an Order continuing Trial and MSJ hearing dates and respective deadlines by at least 90 days. The court granted this ex parte application and continued the MSJ hearing date to November 13, 2023.

On September 18, 2023, Counsel for Defendant Branded Online, Inc. filed a Motion to be Relieved as Counsel, which the court granted on November 1, 2023.

On October 26, 2023, the court continued the hearing on Defendant Branded Online, Inc.’s MSJ to December 6, 2023.

On November 22, 2023, Plaintiffs filed an Opposition to Defendant Branded Online, Inc.’s MSJ. Defendants did not file a Reply brief.

Plaintiffs contend that the court should deny the MSJ because Moving Defendant failed to set forth each issue and the facts to support each issue in violation of Cal. Rules of Court 3.1350(d).

“(1) The Separate Statement of Undisputed Material Facts in support of a motion must separately identify:

(A) Each cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion; and

(B) Each supporting material fact claimed to be without dispute with respect to the cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion.

(2) The separate statement should include only material facts and not any facts that are not pertinent to the disposition of the motion.

(3) The separate statement must be in the two-column format specified in (h). The statement must state in numerical sequence the undisputed material facts in the first column followed by the evidence that establishes those undisputed facts in that same column. Citation to the evidence in support of each material fact must include reference to the exhibit, title, page, and line numbers.”

CCP 437c(b)(1) states in pertinent part: “The supporting papers shall include a separate statement setting forth plainly and concisely all material facts that the moving party contends are undisputed. Each of the material facts stated shall be followed by a reference to the supporting evidence. The failure to comply with this requirement of a separate statement may in the court's discretion constitute a sufficient ground for denying the motion.”

The court disagrees with Plaintiffs’ contention that it must deny the MSJ due to faulty Separate Statement. Indeed, the code provides such a response when there is no Separate Statement filed with the MSJ. Here, Moving Defendant has provided a Separate Statement of the material facts upon which it relies to support its motion.

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 (Aguilar).) In analyzing such motions, 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 or summary adjudication 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.¿(CCP § 437c(c);¿Villa v.¿McFarren¿(1995) 35 Cal.App.4th 733, 741.)

A triable issue of material fact exists where “the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar, supra, at p. 850.)

As to each claim as framed by the complaint, the party¿moving for summary judgment or summary adjudication must satisfy the initial burden of proof by presenting facts to negate an essential element.¿(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 or summary adjudication must be denied where the moving party's evidence does not prove all material facts, even in the absence of any opposition or where the opposition is weak.¿(See¿Leyva v. Superior Court (1985) 164 Cal.App.3d 462, 475;¿Salesguevara¿v. Wyeth Labs., Inc. (1990) 222 Cal.App.3d 379, 384, 387.)¿¿¿

Once the¿moving¿party has met the burden, the burden shifts to the opposing party¿to show via specific facts that a triable issue of material facts exists as to a cause of action or a defense thereto.¿(CCP § 437c(o)(2).)¿ When¿a¿party¿cannot¿establish an essential element or defense, a court must grant a motion for summary judgment or summary adjudication.¿(CCP § 437c(o)(1)-(2).)¿

The court grants Moving Defendant’s request for judicial notice as to Exhibits 2-4 and Plaintiffs’ request for judicial notice as to Exhibits 1 through 13. (Evid. Code § 452(c), (h); See Kalnoki v. First American Trustee Servicing Solutions, LLC (2017) 8 Cal.App.5th 23,37.) However, the court only takes judicial notice of the foregoing documents only as to “the existence, content and authenticity of public records and other specified documents”; it does not take judicial notice of the truth of the factual matters asserted in those documents. (Dominguez v. Bonta (2022) 87 Cal. App. 5th 389, 400.)¿

Moving Defendant contends that Plaintiffs’ claims fail because Moving Defendant was not their employer since they did not control or direct Plaintiff’s activities, did not pay Plaintiffs, Defendant One Stop terminated Plaintiffs’ employment one month before Moving Defendant purchased any assets from One Stop, and there was no unity of interest with One Stop. Additionally, Moving Defendant contends that it is not liable for Plaintiffs’ claims because it did not explicitly assume liability for any of One Stop’s liabilities in the assignment of the benefit of creditors. Finally, Moving Defendant contends that it does not have successor liability because it did not assume One Stop’s liabilities, it did not maintain an identical workforce as compared to One Stop, none of its officers, directors, or board members worked for or owned any interest in One Stop, or had any control over One Stop’s assignment for benefit of creditors process, or had any influence over the trustee’s decision, and none of One Stop’s officers, directors, shareholders, or board members worked for Moving Defendant before or after the asset purchase.

Plaintiff argues that there is a triable issue of fact as to whether the transfer was a fraudulent conveyance. Alternatively, Plaintiffs argue that the transaction amounted to a consolidation or merger of the two companies. Plaintiffs argue that Moving Defendant did not disprove at least one element of each of the four exceptions to successor liability. Additionally, Plaintiffs argue that Moving Defendant did assume One Stop’s liabilities or that it is a “mere continuation” of One Stop.

“The general rule of successor nonliability provides that where a corporation purchases, or otherwise acquires by transfer, the assets of another corporation, the acquiring corporation does not assume the selling corporation’s debts and liabilities.” (Fisher v. Allis-Chalmers Corp. Product Liability Trust (2002) 95 Cal.App.4th 1182, 1188 (Fisher) [citing Ray v. Alad Corp. (1977) 19 Cal.3d 22, 28 (Ray).] The exceptions to this general rule are: “(1) there is an express or implied agreement of assumption, (2) the transaction amounts to a consolidation or merger of the two corporation, (3) the purchasing corporation is a mere continuation of the seller, or (4) the transfer of assets to the purchaser is for the fraudulent purpose of escaping liability for the seller’s debts.”[1] (Fisher, supra, at 1188; CenterPoint Energy, Inc. v. Superior Court (2007) 157 Cal.Ap.4th 1101, 1120 (CenterPoint).) A defendant requesting summary judgment “must show the exceptions that create successor liability do not apply in this case” which requires “disproving at lease one element of each exception or showing that at least one such element cannot be established.” (Fisher, supra, at 1188.)

Here, the court agrees with Plaintiffs that a triable issue of material fact exists as to Moving Defendant’s successor liability under the mere continuation exception and/or the fraudulent purpose exception.[2]

When a purchasing corporation is “a continuation of the old” (i.e., the selling corporation) despite “change of name or a shift of assets” then it cannot escape liability. (Cleveland v. Johnson (2012) 209 Cal.App.4th 1315, 1327 (Cleveland).) The test is one or both of the following factual elements: “(1) no adequate consideration was given for the predecessor corporation’s assets and made available for meeting the claims of its unsecured creditors; (2) one or more persons were officers, directors, or stockholders of both corporations.” (Ibid.) (citing Ray, supra, at p. 29.)

Here, the court agrees with Plaintiffs that there is a triable issue of material fact. Moving Defendant acquired One Stop in July 2018 for $337,650.00. (Exhibit D.) This sale included One Stop’s customer base and the developed software. (Exhibit J, 56:5-9.) However, another company, Allomer Capital Group LLC, was prepared to acquire One Stop “at an enterprise valuation between $10 million and $13 million” in February 2018. (Exhibit V.) There was also a “some calculation” that totaled about $12 million representing One Stop’s value.[3] (Exhibit I, 68:16-69:1.) And, that Sherwood would not have sold One Stop for $337,000 only. (Exhibit I, 71:20-72:1.) This is a stark contrast that indicates a question of inadequate consideration for the jury to decide.

There was also overlap in operations, equipment, ownership, and records. First, Moving Defendant continued to run One Stop for a number of months after the purchase. (Exhibit D, 31:21-23.) Moving Defendant hired approx. 70 of One Stop’s employees. (Exhibit D, 33:10-12, 34:9-13.) Moving Defendant took over One Stop’s lease and operations. (Exhibit J.) Moving Defendant decided which One Stop employees to hire. (Exhibit I.) At least one officer, Jennifer Smith (VP of Finance and Administration/Controller) moved from One Stop to Moving Defendant in the same role. (Exhibit J.)

Here, the chronology creates a triable issue of material fact as to fraudulent purpose for the transfer because Moving Defendant should have been on notice of the charges prior to the initiation of this lawsuit.[4] Plaintiffs were employed by One Stop. (Third Amended Complaint (TAC) ¶¶ 26, 27.) Plaintiffs’ employment ended on June 4, 2018. (Additional Material Facts (AMF) No. 7.) Moving Defendant purchased assets and rights from One Stop on July 13, 2018.[5] (RJN No. 4, Asset Purchase Agreement.) On October 29, 2018, Bonilla filed a complaint with the DFEH naming One Stop, Alfonso Rodriguez, and Juan Beltran has respondents. (Request for Judicial Notice, No. 2 – Bonilla’s First DFEH Complaint.) On March 26, 2019, Bonilla filed an amended DFEH complaint adding One Stop, LLC as a respondent. (Request for Judicial Notice, No. 3 – Bonilla’s Amended DFEH Complaint.) Plaintiffs filed their initial complaint in this matter on March 28, 2019. (Complaint.) Plaintiffs filed the operative First Amended Complaint on September 19, 2019. On October 10, 2019, Plaintiffs added Branded Online, Inc. as a Doe Defendant (Doe Amendment).

Accordingly, the court DENIES Moving Defendant’s motion for summary judgment, or alternatively for summary adjudication as to Issues 3-9.

Moving Defendant contends that Plaintiffs failed to exhaust administrative remedies prior to filing the instant action because they did not name Moving Defendant in their administrative complaints.[6] Moving Defendant additionally contends that Plaintiffs’ amendment to their administrative complaint fails because the statute of limitations had expired prior to the amendment and the amendment did not relate back to the initial filing.[7] Plaintiffs argue that because Moving Defendant is a successor in interest to One Stop, the DFEH charges apply to them, too.

Plaintiffs rely on Martin v. Fisher (1992) 11 Cal.App.4th 118, 122-123 (Martin), Nazir v. United Airlines (2009) 178 Cal.App.4th 243, 268 (Nazir)[8], and Wills v. Superior Court (2011) 195 Cal.App.4th 143, 157-159 (Wills).[9] The Court in Martin concluded that naming the respondent in the caption was not necessary because they were named in the body of the complaint and participated in the administrative investigation. (Martin, supra, at pg. 122-123.) Moving Defendant cites Alexander v. Community Hospital of Long Beach (2020) 46 Cal.App.5th 238, 250-252, 254 (Alexander). There, the Court found the plaintiffs did not exhaust their administrative remedies because they did not name the defendant in their FEHA complaint at all.

The purpose is to put the defendant on notice of the charges and to provide an opportunity to participate in any administrative investigation. (Cole v. Antelope Valley Union High School Dist. (1996) 47 Cal.App.4th 1505, 1511.) Alternatively, naming the defendants allows the DFEH to investigate claims. (Alexander, supra, at p. 251.)

Here, the court agrees with Plaintiffs that there is a triable issue of material fact as to Moving Defendant’s successor in interest liability.

Accordingly, the court DENIES Moving Defendant’s motion for summary judgment, or for summary adjudication, as to Issue 1.

Moving Defendant contends that Plaintiff Bonilla Released all of her claims against One Stop, including Moving Defendant as an assignee, that were known as of March 4, 2019, which include the claims at issue here. Plaintiff Bonilla argues that the purported Release is not authenticated, lacks foundation, and is unsupported hearsay. Additionally, Plaintiffs argue that workers’ compensation does not preclude FEHA causes of action.

Preprinted language in a workers’ compensation compromise and release form should be narrowly construed to apply only to workers’ compensation claims. (Claxton v. Waters (2004) 34 Cal.4th 367, 375-376 (Claxton).) Here, like in Claxton, the purported workers compensation release had different attorneys representing Plaintiff Bonilla and does not mention the pending DFEH complaint. (Exhibit 5.)

Accordingly, the court DENIES Moving Defendant’s motion for summary judgment, or alternatively summary adjudication, as to Issue 2.

[1] Fisher also noted a fifth exception, the “product line successor” rule when “a person injured by the predecessor’s product is given a remedy against the successor corporation.” (Fisher, supra, at 1188.) The court does not believe this fifth exception applies because the instant matter is not product liability dispute.

[2] Plaintiffs address the other two exceptions, but the court need not develop those as just one theory defeats Moving Defendant’s summary judgment request.

[3] Sherwood’s success fee may have been calculated using the $12 million value, not the $337,000 purported purchase price. (Exhibit I, 78:12-16.)

[4] The court was persuaded by U.S. Equal Emp. Opportunity Comm’n v. Phase 2 Invs. Inc. (D. Md. 2018) 310 F.Supp 3d 550, 564-565.

[5] Additionally, there is a dispute as to whether the transaction between Moving Defendant and One Stop was arms-length. (AMF No. 12, Exhibit OO.)

[6] Moving Defendant uses this argument to attack the First through Eleventh, and Fifteenth causes of action.

[7] The court cautions Plaintiffs against mischaracterizing their DFEH complaints. (See UMF No. 4 [indicating the original and amended complaints allege that Branded was an employer.]).

[8] Nazir held that claims need to be interpreted broadly (there, in the context of harassment and discrimination). It did not discuss naming parties to the complaint.

[9] Plaintiffs also rely on U.S. Equal Employment Opportunity Commission v. Phase 2 Investments Inc. (D. Md. 2018) 310 F.Supp.3d 500 to support their argument about successor liability. However, the court is not bound by this decision.