Judge: Upinder S. Kalra, Case: 22STCV19865, Date: 2023-01-03 Tentative Ruling

Case Number: 22STCV19865    Hearing Date: January 3, 2023    Dept: 51

Tentative Ruling

Judge Upinder S. Kalra, Department 51

HEARING DATE:    January 3, 2023                                              

CASE NAME:           Adam Handwerker v. PMC Global, a Corpoartion, et al.

CASE NO.:                22STCV19865

DEMURRER WITHOUT MOTION TO STRIKE

MOVING PARTY: Defendant PMC Global, Inc.

RESPONDING PARTY(S): Plaintiff Adam Handwerker

REQUESTED RELIEF:

1.     A order sustaining the demurrer as to the 1^st, 2^nd, 3^rd, and 4^th causes of action

TENTATIVE RULING:

1.     Demurrer as to the 1^st, 2^nd, 3^rd, and 4^th causes of action is OVERRULED.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

On June 17, 2022, Plaintiff Adam Handwerker filed a complaint against Defendants PMC Global, PMC Capital, LLC (“Defendants.”) On June 27, 2022, Plaintiff filed the operative First Amended Complaint. It alleged four causes of action: (1) Retaliation – Cal. Labor Code § 98.6, (2) Retaliation - § 1102.5, (3) Wrongful Termination, and (4) Breach of Contract. Plaintiff alleges that he was hired by Defendants, with an offer of $175,000 salary, $15,000 bonus and 3.0% profits interest. However, Plaintiff alleges that Defendants denied the $15,000 bonus, despite performing satisfactorily. After complaining about failing to be paid the $15,00 bonus, Plaintiff was terminated.

On August 22, 2022, Defendant PMC Global filed an Answer.

On August 22, 2022, Defendant PMC Global filed a Demurrer. Plaintiff’s Opposition was filed on December 8, 2022. Defendant’s Reply was filed on December 23, 2022.

On December 7, 2022, Plaintiff filed an Amended Complaint, which was REJECTED.

LEGAL STANDARD

Demurrer

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. …. The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn 147 Cal.App.4th at 747.)

Meet and Confer:

Prior to filing a demurrer, the demurring party is required to satisfy their meet and confer obligations pursuant to Code of Civ. Proc. §430.41, and demonstrate that they so satisfied their meet and confer obligation by submitting a declaration pursuant to Code of Civ. Proc. §430.41(a)(2) & (3). The Declaration of Corina Gallardo indicates that the parties met and conferred telephonically on July 27, 2022, but were unable to resolve the matter. (Dec. Gallardo ¶ 4.)

ANALYSIS:

Defendant demurs on the grounds that the first, second, third, and fourth causes of action all fail to state facts sufficient to constitute causes of action against Defendant.

Defendant argues that Plaintiff fails to allege facts that establish an employer-employee relationship between Plaintiff and PMC Global. The only allegation that PMC Global was Plaintiff’s employee is that PMC Capital “is a fully own subsidiary of PMC Global.” (Demurrer 5: 13-15; Comp. ¶ 6.) Thus, there are no allegations that PMC Global made any decisions to Plaintiff’s employment or his duties.

Plaintiff argues that PMC Global may be liable as a joint employer. Additionally, Plaintiff argues that the Complaint alleges that both PMC Global and PMC Capital Partners “exercised authority over him to hire, not hire, or discharge him, specifically paragraphs 24, 25, and 42. These indicate a “joint employer theory against PMC Global.” (Opp. 5: 13.) Moreover, paragraphs 16, 40, and 41 allege facts that indicate PMC Global, as well as PMC Capital Partners, determined the elements of Plaintiff’s compensation. 

Both parties rely on Vernon v. State of California, which provides the factors courts use to determine if an employer-employee relationship exists. The Court of Appeal stated: “

Factors to be taken into account in assessing the relationship of the parties include payment of salary or other employment benefits and Social Security taxes, the ownership of the equipment necessary to performance of the job, the location where the work is performed, the obligation of the defendant to train the employee, the authority of the defendant to hire, transfer, promote, discipline or discharge the employee, the authority to establish work schedules and assignments, the defendant's discretion to determine the amount of compensation earned by the employee, the skill required of the work performed and the extent to which it is done under the direction of a supervisor, whether the work is part of the defendant's regular business operations, the skill required in the particular occupation, the duration of the relationship of the parties, and the duration of the plaintiff's employment.

(Vernon v. State of California (2004) 116 Cal.App.4th 114, 125(Vernon).)

No one Vernon factor is controlling, however, “the extent the defendant’s right to control the means and manner of the worker’s performance is the most important.” (Id. at p. 126.) Of particular significance is the level of control an entity “asserts of an individual’s access to employment opportunities.” (Ibid.) In that regard, trial court’s are compelled to evaluate “ ‘ “the degree an entity or person significantly affects access to employment” ’ ” opportunities in order to hold the alleged co-employer responsible for the acts of the “immediate employer.” (Ibid.)  A review of the complaint indicates that Plaintiff has alleged that he entered into an employment contract with Defendant Capital, that included the $175,000 salary, a $15,000 bonus, and 3.0% profits interest, vesting over a three-year period, with 1 % vesting after one year. (FAC ¶ ¶ 7, 14.) The complaint further alleges that at the one-year anniversary date, Plaintiff was informed by the managing partner of Defendant PMC Capital that the Chairman of Defendant PMC Global had denied the bonus and that management was questioning his motivation. (FAC ¶ ¶ 16-17.)  Assuming these facts are true, as this Court must do at a Demurrer, Plaintiff has plead facts that PMC Global “determined the amount of compensation earned by the Plaintiff.”  Moreover, this court must accept as true reasonable interpretations of these facts.  It is reasonable to infer that Defendant PMC Global was part of the “management team” that was questioning Plaintiff’s performance. Therefore, by denying Plaintiff benefits and controlling the manner in which Plaintiff’s performance was evaluated and limiting Plaintiff’s opportunities, Plaintiff has alleged Defendant PMC Global sufficiently exercised  control over Plaintiff’s employment to establish that Defendant PMC Global was Plaintiff’s co-employer.

Accordingly, Demurrer as to the First, Second, Third and Fourth Cause of Action are OVERRULED.

CONCLUSION:

For the foregoing reasons, the Court decides the pending motion as follows:

            Demurrer as to the 1^st, 2^nd, 3^rd, and 4^th causes of action is OVERRULED.

Defendant PMC Global to file an Answer only within 20 days- notice of this order.

Moving party is to give notice.

IT IS SO ORDERED.

Dated:             January 3, 2023                       _______­­­­­­­­­­___________________________                                                                                                                        Upinder S. Kalra

                                                                                    Judge of the Superior Court