Case Name: Lex Barber v. Linear Options, Inc., et al.

Case No.: 18CV321863

Demurrer of Defendants Linear Options, Inc., Galeb Paving, Inc., Charles Wilson, and Slobodan Galeb to Plaintiff Lex Barber’s Complaint

Factual and Procedural Background

Plaintiff Lex Barber (“Barber”) worked as a Shop Manager for defendants Linear Options, Inc. (“Linear”), Galeb Paving, Inc. (“GPI”), Charles Wilson (“Wilson”), and Slobodan Galeb (“Galeb”) (collectively, “Defendants”) from approximately March 2012 through March 2017. (Complaint, ¶¶9 and 15.) Defendant Wilson is alleged to have acted on behalf of Linear as its owner, officer and/or managing agent. (Complaint, ¶12.) Defendant Galeb is alleged to have acted on behalf of Linear and Galeb as their owner, officer and/or managing agent. (Complaint, ¶13.)

Initially, Defendants classified plaintiff Barber as a non-exempt employee, paying plaintiff an hourly wage that included premiums for overtime. (Complaint, ¶16.) In or around July 2012 and for the remainder of plaintiff’s employment, Defendants reclassified plaintiff as an exempt employee even though his job duties did not change. (Complaint, ¶17.)

From July 2012 until January 2015, Defendants paid plaintiff Barber a salary and did not pay plaintiff Barber any compensation for overtime worked. (Complaint, ¶18.)

In or around January 2015, defendant Wilson informed plaintiff Barber that his salary would thereafter include 50 hours of work per week and Defendants would pay plaintiff Barber $60 per hour for hours worked in excess of 50 hours in a workweek. (Complaint, ¶19.) Defendant Galeb ratified this pay arrangement. (Id.)

Throughout his employment with Defendants, plaintiff Barber regularly worked in excess of eight hours in a workday and often worked more than 12 hours in a workday. (Complaint, ¶20.) Plaintiff Barber regularly worked over 40 hours in a week and often worked more than seven days in a workweek. (Id.) Throughout his employment with Defendants, plaintiff Barber regularly prepared timesheets documenting his actual hours worked and submitted the timesheets to Defendants. (Complaint, ¶21.)

Defendants regularly failed to provide plaintiff Barber a 30 minute off-duty meal period when he worked more than five hours in a day. (Complaint, ¶22.) Defendants failed to pay plaintiff Barber an additional hour of pay at the regular rate of pay on each day that Defendants failed to provide plaintiff Barber one or more off-duty meal periods. (Complaint, ¶23.) Defendants regularly failed to provide plaintiff Barber 10 minutes off-duty rest time for each four hours worked by plaintiff. (Complaint, ¶24.) Defendants failed to pay plaintiff Barber an additional hour of pay at the regular rate of pay on each day that Defendants failed to provide plaintiff Barber one or more off-duty rest periods. (Complaint, ¶25.) After classifying plaintiff Barber as exempt in July 2012, Defendants failed to accurately itemize the total hours worked and pay rates on wage statements furnished to plaintiff Barber. (Complaint, ¶26.)

Plaintiff Barber alleges each of the defendants is plaintiff Barber’s joint employer and directly liable for violations of state and federal law. (Complaint, ¶¶27 – 30.)

On January 16, 2018, plaintiff Barber filed a complaint against Defendants asserting causes of action for:

(1) Failure to Pay California Overtime Compensation
(2) Failure to Provide Meal Periods
(3) Failure to Provide Rest Periods
(4) Failure to Furnish Accurate Wage Statements
(5) Waiting Time Penalties
(6) Violations of the FLSA
(7) Violations of the Unfair Competition Law

On March 5, 2018, Defendants filed the motion now before the court, a demurrer to plaintiff Barber’s complaint.

II. Defendants’ demurrer to plaintiff Barber’s complaint on grounds of uncertainty is OVERRULED.

Defendants demur to the entire complaint on the ground that the pleading is uncertain. Defendants contend the complaint is uncertain because plaintiff Barber did not comply with California Rules of Court, rule 2.112 which states, “Each separately stated cause of action … must specifically state … [t]he party asserting it if more than one party is represented on the pleading (e.g., ‘by plaintiff Jones’); and [t]he party or parties to whom it is directed (e.g., ‘against defendant Smith’).”

Although compliance with rule 2.112 would be preferred, plaintiff Barber’s failure to identify who the cause of action is directed to does not render the cause of action so uncertain that Defendants cannot properly respond. As is apparent by this demurrer, Defendants understand the complaint, and each cause of action therein, is directed against each of them. “‘A demurrer for uncertainty will not lie where the ambiguous facts alleged are presumptively within the knowledge of the demurring party. [Citations.] A special demurrer should not be sustained if the allegations are sufficiently clear to apprise the defendant of the issues that must be met, even if the allegations of the complaint may not be as clear and as detailed as might be desired. [Citations.] . . . [a] demurrer for uncertainty will not lie as to even uncertain and ambiguous allegations, if such allegations refer to immaterial matters. In such event, they will be treated as surplusage and disregarded. [Citations.]’” (Gonzales v. State of California (1977) 68 Cal.App.3d 621, 631.)

Accordingly, Defendants’ demurrer to plaintiff Barber’s complaint on the ground that the pleading is uncertain [Code Civ. Proc., §430.10, subd. (f)] is OVERRULED.

III. Defendants Wilson and Galeb’s demurrer to plaintiff Barber’s complaint is OVERRULED.

Defendants Wilson and Galeb separately demur to each of the causes of action in plaintiff Barber’s complaint (except for the sixth cause of action) by arguing that they are not liable as corporate agents of Linear and GPI acting within the scope of their agency. (Martinez v. Combs (2010) 49 Cal.4th 35, 66 (Martinez)—“The opinion in Reynolds, supra, 36 Cal.4th 1075, 32 Cal.Rptr.3d 483, 116 P.3d 1162, properly holds that the IWC’s definition of “employer” does not impose liability on individual corporate agents acting within the scope of their agency.)

As noted above, defendant Wilson is alleged to have acted on behalf of Linear as its owner, officer and/or managing agent. (Complaint, ¶12.) Defendant Galeb is alleged to have acted on behalf of Linear and Galeb as their owner, officer and/or managing agent. (Complaint, ¶13.)

However, plaintiff Barber’s complaint alleges not only that defendants Wilson and Galeb are officers and/or managing agents, but goes on to allege that defendants Wilson and Galeb are joint employers. (Complaint, ¶¶27 – 30.)

In fact, the IWC’s definition of employment incorporates the common law definition as one alternative. As defined in the wage orders, “ ‘[e]mployer’ means any person … who … employs or exercises control over the wages, hours, or working conditions of any person,” and “ ‘[e ]mploy’ means to engage, suffer, or permit to work.” (E.g., Wage Order No. 14, Cal.Code Regs., tit. 8, § 11140, subd. 2(C), (F), italics added.) The verbs “to suffer” and “to permit,” as we have seen, are terms of art in employment law. (See ante, 109 Cal.Rptr.3d at pp. 530–531, 231 P.3d at p. 273 et seq.) In contrast, the verb “to engage” has no other apparent meaning in the present context than its plain, ordinary sense of “to employ,” that is, to create a common law employment relationship.35 This conclusion makes sense because the IWC, even while extending its regulatory protection to workers whose employment status the common law did not recognize, could not have intended to withhold protection from the regularly hired employees who undoubtedly comprise the vast majority of the state’s workforce. To employ, then, under the IWC’s definition, has three alternative definitions. It means: (a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.

(Martinez, supra, 49 Cal.4th at p. 64.)

“One reason the IWC defined “employer” in terms of “exercising control” was to reach situations in which multiple entities control different aspects of the employment relationship. Supervision of the work, in the specific sense of exercising control over how services are performed, is properly viewed as one of the “working conditions” mentioned in the wage order.” (Chin et al., CAL. PRAC. GUIDE: EMPLOYMENT LITIGATION (The Rutter Group 2017) ¶11:113 citing Martinez, supra, 49 Cal.4th at p. 76.) “This definition reaches situations in which multiple entities control different aspects of the employment relationship; e.g., when one entity hires and pays workers and places them with other entities that supervise the work.” (Id. at ¶11:112.5 citing Martinez, supra, 49 Cal.4th at pp. 59 – 60.)

The procedural posture of Martinez is also of significance. In Martinez, the issue of whether the defendants were employers reached the court in the context of a summary judgment motion where the court must consider whether a triable issue of material fact exists based upon evidence. Here, plaintiff Barber has made allegations which the court must simply accept as true. In the complaint, plaintiff Barber has made allegations which bring defendants Wilson and Galeb within one or more of the IWC’s three alternative definitions of “employer.”

Accordingly, defendants Wilson and Galeb’s demurrer to the first through fifth and seventh causes of action in Plaintiffs’ complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] is OVERRULED.

IV. Defendants Wilson and Galeb’s demurrer to the sixth cause of action is OVERRULED.

Except as otherwise provided in this section, no employer shall employ any of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.

(29 U.S.C.A. § 207.)

Initially, defendants Wilson and Galeb demur to the sixth cause of action by arguing that there are no allegations that plaintiff Barber is “engaged in commerce or in the production of goods for commerce or is employed in an enterprise engaged in commerce or in the production of goods for commerce” as required for this particular statute to apply. Defendants cite to no authority other than section 207 itself.

In opposition, plaintiff Barber provides the definition for “commerce” as used by section 207. “ ‘Commerce’ means trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof.” (29 U.S.C.A. § 203.) “The test to determine whether an employee is engaged in commerce “is not whether the employee’s activities affect or indirectly relate to interstate commerce but whether they are actually in or so closely related to the movement of the commerce as to be a part of it.” (Joseph v. Nichell’s Caribbean Cuisine, Inc. (S.D. Fla. 2012) 862 F.Supp.2d 1309, 1312.)

Plaintiff Barber alleges, at paragraph 15 of the complaint, in relevant part, that he assisted in road striping work in numerous locations throughout Northern California. “Vehicular roads and bridges are as indispensable to the interstate movement of persons and goods as railroad tracks and bridges are to interstate transportation by rail. If they are used by persons and goods passing between the various States, they are instrumentalities of interstate commerce. Cf. Convington & C. Bridge Co. v. Kentucky, 154 U.S. 204, 218, 14 S.Ct. 1087, 1092, 38 L.Ed. 962. Those persons who are engaged in maintaining and repairing such facilities should be considered as ‘engaged in commerce’ … because without their services these instrumentalities would not be open to the passage of goods and persons across state lines.” (Overstreet v. North Shore Corp. (1943) 318 U.S. 125, 129–130.) The court finds plaintiff’s argument and authority more persuasive. Plaintiff’s allegations sufficiently allege that he is engaged in commerce or employed in an enterprise engaged in commerce.

Next, defendants Wilson and Galeb contend plaintiff Barber’s allegations are uncertain because he alleges that defendants Wilson, Galeb, and GPI “exercised control over the wages, hours or working conditions of Plaintiff.” (Complaint, ¶¶27 – 29.) The court does not find these allegations to be uncertain or inconsistent in that each defendant may have, at some relevant point in time, exercised control over plaintiff’s wages, hours or working conditions. Moreover, the definition of “employer” under the FLSA is different from the IWC definition.

Under FLSA, an “employer” is defined as “any person acting directly or indirectly in the interest of an employer in relation to an employee …” 29 U.S.C. § 203(d). In Fegley v. Higgins, 19 F.3d 1126 (6th Cir.), cert. denied, 513 U.S. 875, 115 S.Ct. 203, 130 L.Ed.2d 134 (1994), we held that the test to be applied in determining whether a person is an “employer” responsible for FLSA obligations is one of “economic reality.” Id. at 1131. More than one “employer” can be responsible for FLSA obligations. Thus, a corporate officer who has operational control of the corporation’s covered enterprise is an “employer” under FLSA, along with the corporation itself. Id. One who is the chief executive officer of a corporation, has a significant ownership interest in it, controls significant functions of the business, and determines salaries and makes hiring decisions has operational control and qualifies as an “employer” for the purposes of FLSA. Id.

(U.S. Dept. of Labor v. Cole Enterprises, Inc. (6th Cir. 1995) 62 F.3d 775, 778.)

Accordingly, defendants Wilson and Galeb’s demurrer to the sixth cause of action in Plaintiffs’ complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] and on the ground that the pleading is uncertain [Code Civ. Proc., §430.10, subd. (f)] is OVERRULED.