Judge Upinder S. Kalra, Case Number: 23STCV15234, Date: 2023-12-12 Tentative Ruling

MOVING PARTY: Defendants Serve Automation Inc., Benson Tsai, Brian Langone, and James Wahawisan

1. Demurrer to the entire Complaint for failure to state sufficient facts to constitute a cause of action.

2. Plaintiff to file an amended complaint within 14 days of notice of this order.

On June 30, 2023, Plaintiff Deborah Goldberg (Plaintiff) filed a Complaint against Defendants Serve Automation Inc., Benson Tsai, Brian Langone, and James Wahawisan (Defendants) with seven causes of action for: (1) Discrimination (Based on Age) – Disparate Treatment; (2) Discrimination (Based on Age) – Disparate Impact; (3) Failure to Prevent and/or Investigate Discrimination; (4) FEHA Retaliation; (5) Labor Code § 1102.5 Retaliation; (6) Wrongful Termination; and (7) Declaratory & Injunctive Relief.

According to the Complaint, Plaintiff was 53 years old when she was fired on October 7, 2022. She was hired in 2020 by Defendant Serve Automation Inc. as their Chief Marketing officer. In September 2022, Defendants told Plaintiff they had lost faith that she could lead the company forward and that she was out of touch. Plaintiff complained about Defendants’ conduct and was subsequently terminated.

On August 18, 2023, Defendants filed the instant demurrer. Plaintiff filed an opposition on November 29, 2023. Defendants filed a reply on December 5, 2023.

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.)

When considering demurrers, courts read the allegations liberally and in context, accepting the alleged facts as true. (Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406.) Courts also consider exhibits attached to the complaint and incorporated by reference. (See Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94 (Frantz).)

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). Upon reviewing the Declaration of Ashton Riley, the parties met and conferred via letter on July 24, 2023, by telephone on July 27, 2023, and via email on August 4, 2023, but could not reach an agreement. (Riley Decl. ¶ 5.) Accordingly, the parties sufficiently met and conferred.

Defendants contend that there are no alleged facts supporting claims against individual defendants, as individual supervisory employees, that are separate from the claims against the corporate employer. Defendants also contend there are insufficient factual allegations supporting alter ego liability. Plaintiff argues that at least the Fifth Cause of Action provides for a claim against the individual defendants. Plaintiff additionally argues that due to the individual defendants’ alter ego liability, they are liable as employers. Defendants reply that Plaintiffs “boilerplate” allegations are insufficient to find alter-ego liability.[1]

“The essence of the alter ego doctrine is that justice be done. ‘What the formula comes down to, once shorn of verbiage abound control, instrumentality, agency, and corporate entity, is that liability is imposed to reach an equitable result.’ ” (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 301.) “ ‘It is the law in California as elsewhere that, although a corporation is usually regarded as an entity separate and distinct from its stockholders, both law and equity will, when necessary to circumvent fraud, protect the rights of third persons and accomplish justice, disregard this distinct existence and treat them as identical.’” (Kohn v. Kohn (1950) 95 Cal.App.2d 708, 718.)

In Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 235-36, the court of appeal held that the following alter ego allegations were sufficient to survive a demurrer: that the individual defendant dominated and controlled the entity defendant; that a unity of interest and ownership existed between the individual defendant and entity defendant; that the entity defendant was a mere shell and conduit for the individual defendant’s affairs; that the entity defendant was inadequately capitalized; that the entity defendant failed to abide by corporate formalities; that the individual defendant used the entity defendant’s assets as her own; and that recognizing the separate existence of the entity defendant would promote injustice.

Here, the court agrees with Plaintiff that the Complaint sufficiently alleges facts for alter-ego liability. The Complaint’s alter-ego allegations here mirror those in Rutherford. (Compl. ¶¶ 8, 12.)

Employees of an entity subject to FEHA are not personally liable for FEHA discrimination. (Reno v. Baird (1998) 18 Cal.4th 640, 643; Leek v. Cooper (2011) 194 Cal.App.4th 399, 408.)

Here, the court agrees with Defendants that Plaintiff has not sufficiently alleged facts of discriminatory conduct by the individual defendants that is separate and apart from the corporate employer’s acts. Specifically, the Complaint alleges that the “Employing Defendants” who are defined as Defendant Serve Automation Inc. and the fictiotusly-named defendants, not the individual defendants, told Plaintiff that they “lost faith that Plaintiff could lead the company forward” and that she was “out of touch.” (Compl. ¶¶ 3, 22.) Additionally, all of Plaintiff’s causes of action refer to conduct only of the “Employing Defendants” not of the individual defendants. Therefore, there are no allegations of specific conduct by any individual defendant.

Accordingly, the court SUSTAINS Defendants’ demurrer on these grounds with leave to amend.

First Cause of Action – Discrimination (Based on Age) – Disparate Treatment

Defendants contend that Plaintiff has not sufficiently alleged facts supporting age discrimination claims. Plaintiff alleges that she plead she is a member of a protected class, that she was terminated, and that her termination was motivated by her age.

A claim for age discrimination requires plaintiff to show she was: (1) a member of a protected class (over 40 years old); (2) plaintiff was qualified or competent for the position sought or performed; (3) plaintiff suffered an adverse employment action; and (4) some other circumstance suggesting discriminatory motive. (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 355; Sandell v. Taylor-Listug, Inc. (2010) 188 Cal.App.4th 297, 321.)

Here, the court agrees with Defendants that Plaintiff failed to sufficiently allege facts supporting a claim for age discrimination. Specifically, Plaintiff failed to allege facts supporting the second and fourth elements. First, Plaintiff does not allege that she was qualified or competent to perform her job. Indeed, she alleges the opposite. (Compl. ¶ 22.) Second, she alleges she “believes” that “the perception of her age was a substantial motivating factor” in her termination, but this is conclusory, not fact.[2] (Compl. ¶ 28.)

Accordingly, the court SUSTAINS the demurrer to the First Cause of Action with leave to amend.

Second Cause of Action – Discrimination (Based on Age) – Disparate Impact

Accordingly, the court SUSTAINS the demurrer to the Second Cause of Action with leave to amend.

Third Cause of Action – Failure to Prevent and/or Investigate Discrimination

Defendants contend that there is no standalone claim for failure to prevent and/or investigate discrimination under the Government Code. Additionally, Defendants contend that there are no factual allegations supporting such a claim. Plaintiff argues that this cause of action survives because she sufficiently plead discrimination. Plaintiff also argues that she did allege notifying Defendants of any potential discrimination.

A claim for Failure to Prevent Discrimination requires: (1) actionable discrimination or harassment by employees or non-employees; (2) defendant’s legal duty of care toward plaintiff (defendant is plaintiff’s employer); (3) breach of duty (failure to take all reasonable steps necessary to prevent discrimination from occurring); (4) legal causation; and (5) damages to plaintiff. (Trujillo v. No. County Transit Dist. (1998) 63 Cal.App.4th 280, 287, 289; Carter v. Cal. Dept. of Veterans Affairs (2006) 38 Cal.4th 914, 925 fn. 4; Bradley v. Dept. of Corrections & Rehabilitation (2008) 158 Cal.App.4th 1612, 1630; Thompson v. City of Monrovia (2010) 186 Cal.App.4th 860, 880; Kelly v. Conco Companies (2011) 196 Cal.App.4th 191, 208.)

Here, Plaintiff did not sufficiently allege facts supporting this cause of action because she did not sufficiently allege actionable discrimination.

Accordingly, the court SUSTAINS the demurrer to the Third Cause of Action with leave to amend.

Defendants contend that Plaintiff has not sufficiently alleged facts showing a causal link between her termination and any purported protected activity.[3] Plaintiff argues that Defendants’ argument is not appropriate at the pleading stage.

A claim for FEHA retaliation requires Plaintiff to show: (1) she was engaged in a protected activity as an employee; (2) the employer subjected Plaintiff to an adverse employment action; and (3) a causal link between the protected activity and the employer’s action. (Thompson, supra, at p. 874; Mokler v. County of Orange (2007) 157 Cal.App.4th 121, 138; Jones v. R.J. Donovan Correctional Facility (2007) 152 Cal.App.4th 1367, 1380.)

Here, Plaintiff did not sufficiently allege facts supporting this cause of action. First, Plaintiff alleges that she “protested her planned termination and complained about Defendants’ conduct” and “voiced concerns and complained about improper workplace behavior under the FEHA.” (Compl. ¶¶ 23, 60.) Reading the Complaint as a whole, however, these facts do not allege that she complained about age discrimination or otherwise engaged in a protected activity.[4]

Accordingly, the court SUSTAINS the demurrer to the Fourth Cause of Action with leave to amend.

For the same reasons articulated above, the court SUSTAINS the demurrer to the Fifth Cause of Action with leave to amend.

A claim for wrongful termination in violation of public policy requires that plaintiff show: (1) an adverse employment action; (2) as a result of refusing to violate a statute, performing a statutory obligation, exercising a statutory right, or reporting a statutory violation. (Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 76; Stevenson v. Sup. Ct. (Huntington Mem. Hosp.) (1997) 16 Cal.4th 880, 889-990.)

Like the above discussion, Plaintiff has not sufficiently alleged that she was terminated as a result exercising a statutory right or reporting a statutory violation. Indeed, the court sees no allegations in the Sixth Cause of Action that pertain to the second element of this claim.

Accordingly, the court SUSTAINS the demurrer to the Sixth Cause of Action with leave to amend.

Defendants contend that this cause of action is a reformulation of the First through Fourth Causes of Action and so cannot exist as a standalone cause of action. Additionally, Defendants contend that Plaintiff does have an adequate remedy at law, namely her demand for money damages. Plaintiff argues this is a “mixed motive” case so this cause of action is appropriate as a standalone claim.

A plaintiff’s declaratory relief complaint must specifically allege that an actual, present controversy exists, and must state the facts of the respective claims concerning the disputed subject matter. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79; Connerly v. Schwarzenegger (2007) 146 Cal.App.4th 739, 746 (Connerly).) A sufficient complaint: (1) sets forth facts showing the existence of an actual controversy relating to the parties’ legal rights and duties, and (2) requests the court to adjudge these rights and duties. (Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 606; Qualified Patients Ass’n v. City of Anaheim (2010) 187 Cal.App.4th 734, 751; see also Travers v. Louden (1967) 254.Cal.App.2d 926, 931-32 (Travers) [commenting that declaratory relief may be appropriate for parties with a continuing relationship].) A declaratory relief claim should not be used to determine issues that are already engaged by other causes of action. (Hood v. Superior Court (1995) 33 Cal.App.4th 319, 324.)

Here, Plaintiff fails to sufficiently state facts sufficient to support a claim for declaratory and injunctive relief. Specifically, Plaintiff requests “a declaration from the Court that Employing Defendants have discriminated and retaliated against Plaintiff and have wrongfully terminated Plaintiff’s employment.”[5] (Compl. ¶ 92.) Notably, there is no present controversy alleged. Plaintiff alleges she was terminated, which is wholly in the past. There are no allegations of continuing relationship or dispute on current legal rights and duties.[6]

Accordingly, the court SUSTAINS the demurrer to the Seventh Cause of Action with leave to amend.

2. Plaintiff to file an amended complaint within 30 days of notice of this order.

[1] Defendants also reply to Plaintiff’s argument that Labor Code § 1102.5 provides individual liability. First, that Plaintiff reasons by analogy, and not with authority directly supporting her position. Second, Plaintiff failed to plead sufficient facts supporting a claim under Labor Code § 1102.5.

[2] The court is not persuaded that Plaintiff’s allegation that the “Employing Defendants believed Plaintiff to be out of touch” is enough to show age discrimination. (Compl. ¶ 22.)

[3] Defendants also contend this fails due to uncertainty.

[4] The court declines to address the causal link argument at this time.

[5] The court notes Defendants’ position that this cause of action is duplicative of the other causes of action in the Complaint.

[6] The court is not persuaded by Plaintiff’s argument for “mixed-motive” claim because, while she cites authority, she did not relate it to the current issues.