Judge: Yolanda Orozco, Case: 20STCV17540, Date: 2022-08-19 Tentative Ruling

Case Number: 20STCV17540    Hearing Date: August 19, 2022    Dept: 31

DEMURRER IS SUSTAINED WITH LEAVE TO AMEND 

Background 

On May 08, 2022, Plaintiff Irma Gonzalez filed a Complaint against Martini Associates Development, LLC d/b/as Los Angeles Adventurer All-Suite Hotel; Frank Martini (collectively “Defendants”); and Does 1 to 20.

The operative First Amended Complaint (“FAC”) was filed on January 24, 2022. The FAC alleges:

1)     Failure to Pay Wages (Labor Code §§ 201, 1182.12, 1194, and 1194.2.)

2)     Failure to Pay Minimum Wages (Labor Code §§ 1182.12, 1194, 1194.2, and 1197.)

3)     Failure to Pay Overtime Compensation (Labor Code §§ 510, 1194.)

4)     Failure to Provide Rest Breaks (Labor Code § 226.7.)

5)     Failure o Provide Itemized Wage and Hour Statements (Labor Code §§226 et seq.)

6)     Private Attorney General Act (Labor Code § 2699)

7)     Failure to Permit Inspection of Personnel and Payroll Records (Labor Code § 1198.5.)

8)     Unfair Competition (Bus. & Prof. Code § 17200 et seq.)

On April 05, 2022, Defendants filed a demurrer without a motion to strike Plaintiff’s FAC.

Plaintiff filed Opposition papers on August 08, 2022.

Defendants filed a reply on August 12, 2022. 

Meet and Confer 

Before filing a demurrer, the demurring party is required to meet and confer with the opposing party in person or telephonically to determine whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code Civ. Proc. (CCP) § 430.41.) 

Counsel for the Defendants, Jordan Cohen, asserts he tried to meet and confer with Plaintiff’s counsel regarding the demurrer prior to filing this Motion. (Cohen ¶ 6.) Thus, the meet and confer requirement is met. 

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.) 

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿ The burden is on the complainant to show the Court that a pleading can be amended successfully. (Id.)¿¿ 

Request for Judicial Notice 

Defendants request Judicial Notice of following Private Attorney General Act (“PAGA”) claim notice letters submitted to the California Labor and Workforce Development Agency (“LWDA”):

Judicial Notice is proper pursuant to Evidence Code Section 452(c), which provides that courts may take judicial notice of the records and files of a state administrative board, such as the LWDA. However, the court may only judicially notice the existence of the record, not the truth of their contents.  (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1565.) 

Defendants also request the Court take Judicial Notice of the following:

Exhibit 1: Plaintiff’s PAGA notice letter: a letter from Plaintiff’s counsel on behalf of Plaintiff to the California Labor and Workforce Development Agency (“LWDA”) and Defendants regarding the alleged violations of the Labor Code that Defendants were accused of, dated March 11, 2020

Exhibit 2: Plaintiff Irma Gonzalez’s First Amended Complaint (“First Amended Complaint”) against Martini Associates Development, LLC d/b/a Los Angeles Adventurer All-Suite Hotel, a Nevada limited liability company; Frank Martini; and DOES 1 through 20 in Case No. 20STCV17540.

Defendants’ Request for Judicial Notice is GRANTED, pursuant to Evidence Code Section 452 subdivision (c) and (d). 

Discussion 

Defendants’ demur to Plaintiff’s FAC as to the sixth and eighth cause of action.

1.               COA 6: Private Attorney General Act (Labor Code § 2699)

a.               Lack of Proper Notice before filing PAGA Claim

Defendants argue Plaintiff’s sixth cause of action fails because Plaintiff failed to exhaust her administrative remedies and therefore, lacks the capacity to sue under the PAGA.

A prerequisite to filing a PAGA claim is that the aggrieved employee give notice to the Labor and Workforce Development Agency (“LWDA”) and the employer of the alleged labor violations. (Williams v. Superior Court (2017) 3 Cal.5th 531, 545.) Defendants allege that Plaintiff’s PAGA notice is deficient and does not comply with Labor Code Section 2699.3(a)(1)(A) because it contains conclusory allegations that fail to set forth “the facts and theories supporting the alleged violations” sufficient to give LWDA information to assess the seriousness of the alleged violations and to decide whether to allocate resources to an investigation. (See Lab. Code § 2699.3.) For this reason, Defendants assert Plaintiff failed to exhaust her administrative remedies before filing her PAGA claim.

Defendants cite Brown v. Ralphs Grocery (2018) in support of the proposition that Plaintiff’s notice to LWDA was deficient. (Brown v. Ralphs Grocery (2018) 28 Cal.App.5th 824.) The plaintiff in Brown, before bringing her PAGA action, filed a notice of the alleged Labor Code violations with LWDA in 2009 (the “2009 Notice”), as required under Labor Code Section 2699.3(a). (Id. at 829.) In 2016, Plaintiff sent LWDA and the defendant another notice (“2016 Notice”) alleging new labor violations not alleged in the 2009 Notice. (Id. at 832.) The defendant in Brown moved for judgment on the pleadings as to the LWDA notices, alleging the 2009 Notice was deficient and the 2016 Noice was time-barred. (Id. at 829) The trial court sustained the demurrer finding the 2009 notice was deficient. (Id.) The 2016 Notice was found to be time-barred. (Id. at 839.)

The Appeal Court found that only part of the 2009 notice was adequate and satisfied the PAGA notice requirement under section 2699.3(a), while the other part did not. (Brown, supra, 28 Cal.App.5th at 829.) The 2009 Notice stated:

“plaintiff was an hourly-paid security guard employed by defendants at Los Angeles County business locations. Plaintiff alleged she and other aggrieved employees ‘did not take all meal and rest periods and were not properly compensated for missed meal and rest periods’ in violation of sections 226.7 and 512. She claimed defendants ‘failed to pay [her] and other aggrieved employees all wages due to them within any time period specified by California Labor Code section 204.’ Plaintiff alleged that defendants ‘did not provide [her] and other aggrieved employees with proper itemized wage statements’ as required by section 226, subdivision (a), including by failing ‘to include the name and address of the legal entity that is the employer.’”

(Id. at 838.)

The Appeal Court found “the 2009 Notice was a string of legal conclusions that parroted the allegedly violated Labor Code provisions” but “[i]t did not state facts and theories supporting the alleged violations not implied by reference to the Labor Code.” (Id. at 837.) The one exception was section 226 subdivision (a) that alleged that the employer failed to maintain accurate and complete wage statements because the violation contained a “minimal fact” to support the alleged violation, specifically that “‘[t]he violations include, without limitation, the failure to include the name and address of the legal entity that is the employer.’” (Id. at 838.)

Similarly, in Santos v. El Guapos Tacos, LLC (2021), the Appeal Court found the LWDA notice was sufficient because it “stated that over the course of five years, two employees were denied meal and rest breaks and not properly compensated for those violations, which could be proven through defendants' time keeping records.” (Santos v. El Guapos Tacos, LLC (2021) 72 Cal.App.5th 363, 372.)

The Appeal Court in Brown noted that LWDA notice required the aggrieved employee to state any basis for the alleged violations that amounted to “something more than bare allegations of a Labor Code violation.” (Brown, supra, 28 Cal.App.5th at 836.) Proper notice would not only allow LWDA the opportunity to decide whether to investigate but give the employer sufficient information to submit a response as required by Labor Code section 2699.3 subdivision (a)(1)(B). (Id. at 545-546.)

A review of Plaintiff’s notice to LWDA, shows that some of the alleged labor violations only “parrot” the labor code and do not include “the facts or theories” supporting the alleged violations. (See RJN Ex. 1.)

·       “Respondents violated Labor Code §§ 1182.12, 1194, 1194.2, and 1197 because they failed to pay our client and/or other aggrieved employees California’s statutory minimum wage.” (RJN Ex. 1.)

·       “Respondents violated Labor Code §510 because they failed to pay our client and/or other aggrieved employees overtime, even though they worked more than 8 hours per day and/or 40 hours per week throughout their employment.”

Plaintiff does not state any facts and theories, such as what wage were the employees paid in comparison to what they should have been paid or how frequently Plaintiff was uncompensated for overtime pay. Plaintiff could have included a timeframe regarding when the alleged violations occurred or the basis for believing that the alleged violations occurred.

·       “Respondents violated Labor Code §221 by collecting and/or receiving from our client and/or other aggrieved employees part of their wages theretofore paid by said Respondents to said employees.” (RJN Ex. 1.)

·       “Respondents violated Labor Code §206.5 by requiring our client, and other aggrieved employees, to execute a release as a condition of being paid, and employees were required to execute a statement of hours they each worked during the pay period which Respondents knew to be false.” (Id.)

Plaintiff again does not state any theories or facts supporting the basis for the allegation, but only “parrots” the language of Labor Code section 221.

·       “Respondents violated Labor Code §§ 98.6 and 1102.5 because they retaliated against our client and/or other aggrieved employees for complaining that they are owed unpaid wages and for exercising or requesting to exercise their rights under the Labor Code.” (RJN Ex. 1.)

Plaintiff does not state how the Defendants retaliated against the aggrieved employees or any other “facts and theories” supporting the allegation.

·       “Respondents violated Labor Code § 2802 because they failed to indemnify our client and/or other aggrieved employees for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties and/or of his or her obedience to the directions.” (RJN Ex. 1.)

·       “Respondents violated Labor Code § 227.3 because they failed to pay our client, and/or other aggrieved employees, wages for unused vested vacation time.” (Id.)
 

·       “Respondents violated Labor Code § 226.8 because they willfully misclassified our client and/or other aggrieved employees as independent contractors instead of as employees.” (Id.)

Plaintiff again does not state any “facts and theories” outside of the stated Labor Code violation to support the alleged violation. Mere “parroting” of the Labor Code is insufficient to provide adequate notice to LWDA and the employer.

Nevertheless, alleged violations of Labor Code Section 226 stated facts outlining what information Defendants failed to include in the employees’ wage statements. (RJN Ex. 1.) Hence, the notice of section 226 is adequate. For violations of Labor Code sections 512, 226.7, Plaintiff articulated how the alleged violations occurred:

“Respondents failed to affirmatively advise our client and other aggrieved employees of the right to take statutory rest breaks, regularly interrupted our client’s rest breaks, and/or did not completely relieve our client of all duty during said rest breaks.”

(Id.)

Accordingly, the Court finds that the LWDA notice was deficient in part and an amended notice should be sent to LWDA and Defendants.

Under the relation back doctrine, Plaintiff should be granted leave to amend the LWDA notice. (See Esparza v. Safeway, Inc. (2019) 36 Cal.App.5th 42, 62 [“The clear import of Brown's holding is that an untimely PAGA claim may relate back to an earlier complaint only if the complaint was preceded by timely notice to the LWDA.”]; see also Ramirez v. Ghilotti Bros. Inc. (N.D. Cal. 2013) 941 F.Supp.2d 1197, 1209-1210 [ruling that the claims in the amended complaint based on the allegations in the second notice would relate back to the original complaint.]; Williams v. Veolia Transportation Services, Inc. (C.D.Cal. June 28, 2012) 2012 WL 12960640, *1-2 [where the original notice was defective, the court allowed the plaintiff to file a new notice and held that plaintiff’s claims were preserved by equitable tolling.].)

b.               Failure to wait 65 days before Filing PAGA Claim

Defendants assert that under Labor Code section 2699.3(a)(3)(B), Plaintiff was required to provide LWDA and Defendants with a 65-day notice before filing her PAGA claim. Section 2699.3 states:

“Upon receipt of that notice or if no notice is provided within 65 calendar days of the postmark date of the notice given pursuant to paragraph (1), the aggrieved employee may commence a civil action pursuant to Section 2699.” 

Plaintiff asserts she waited 65 days between serving the notice to LWDA and filing her complaint. LWDA was served on March 3, 2020, and Plaintiff filed suit, 66 days later on May 8, 2020. (Afgani Decl. ¶ 4.) Plaintiff asserts that the fact that Defendant received notice of the suit on March 11, 2020, less than 65 days, has no bearing on her right to file a PAGA claim after 65 days of notifying LWDA. In other words, the 65-day notice is for LWDA’s benefit, not Defendants. 

The statutory language of section 2699.3 is clear, Plaintiff may file a claim “within 65 calendar days” and nothing in the language of section 2699.3 suggests that the 65-day notice rule also applies to the employer. Moreover, Defendants fail to cite any legal authority applying the 65-day waiting period to when notice is given to Defendant rather than LWDA. When the language of a statute is clear and unambiguous, there is no need for construction or to assess the legislative intent behind the statute. (See Wilcox v. Birnvhistle (1999) 21 Cal.4th 973, 977.) 

Based on the above, the Court finds that Plaintiff’s notice to LWDA and Defendants was deficient, and grants leave to a amend the Notice and refile her PAGA cause of action. Therefore, the Defendants’ demurrer to the sixth cause of action is SUSTAINED with leave to amend.

2.               COA 8: Unfair Competition Law (Bus. & Prof. Code § 17200 et seq.)

Defendants argue Plaintiff’s eighth cause of action fails to state sufficient facts to sustain a cause of action for unfair competition (“UCL”) to the extent it seeks restitution for violations of Labor Code section 203 (waiting time penalties), section 226 (failure to provide itemized wage statement) and section 1198.5 (failure to permit inspection of personnel and payroll records). (See Pineda v. Bank of America, N.A. (2010) 50 Cal.4th 1389, 1401-02 [finding section 203 penalties cannot be recovered as restitution under the UCL because “Section 203 is not designed to compensate employees for work performed” but to encourage employers to pay final wages on time.].)

Plaintiff does not disagree with Defendant’s assertion that she cannot recover restitution for certain labor violations under the UCL but maintains she should be granted leave to amend because she can recover restitution under the UCL for unpaid wages.

As the California Supreme Court explained in Pineda, the purpose UCL is to “prohibit any unlawful, unfair or fraudulent business act or practice.” (Pineda, supra, 50 Cal.4th at 1401 [citations omitted]) For an action brought by a private individual under the UCL, remedies are “generally limited to injunctive relief and restitution. (Id. [citations omitted].) 

“A UCL action is an equitable action by means of which a plaintiff may recover money or property obtained from the plaintiff or persons represented by the plaintiff through unfair or unlawful business practices.” (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173.” The California Supreme Court in Cortez reasoned that because unpaid wages are the property of the employee, they are recoverable as restitution under the UCL. (Id. at 177 [“We conclude that orders for payment of wages unlawfully withheld from an employee are also a restitutionary remedy.”].)

For this reason, Defendants’ Demurrer to Plaintiff’s eight cause of action is SUSTAINED with leave to amend.

Conclusion 

Defendants’ Demurrer to Plaintiff’s sixth and eighth causes of action are SUSTAINED, with 30 days leave to amend. 

Moving Party to give notice. 

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