Case Name: Jocabee Garcia v. 24 Hour Fitness USA, Inc.
Case No.: 16CV302819

I. Background

Plaintiff Jocabee Garcia (“Plaintiff”) alleges she was injured at a gym owned by defendant 24 Hour Fitness USA, Inc. (“Defendant”).

Plaintiff understands Spanish only and alleges Defendant’s Spanish-speaking gym manager failed to tell her about all of the terms of its membership agreement, including the release of liability, when she applied for a gym membership. (Second Amended Complaint (“SAC”), ¶¶ 11-12.) After she signed the membership agreement, another employee took her on a tour of the gym. (SAC, ¶ 15.) The employee walked Plaintiff past a “Pec-Fly” machine that another person was using. (SAC, ¶¶ 16-17.) According to this employee, the person exercising loaded too much weight on the Pec-Fly machine and let it go, at which time it struck Plaintiff in the head as she passed by. (SAC, ¶¶ 16-17.) She went to the hospital where she received stitches and was diagnosed with a concussion. (SAC, ¶ 16.) She now has neck pain, dizziness, persistent headaches, memory loss, difficulty balancing and walking, and insomnia. (SAC, ¶ 16.)

Plaintiff asserts causes of action against Defendant for: (1) fraud; (2) negligent misrepresentation; (3) rescission; (4) negligence; (5) premises liability; and (6) gross negligence. She seeks an award of punitive damages.

The Court previously granted Defendant’s motion to strike the prayer for punitive damages and related allegations in the first amended complaint because Plaintiff’s allegations did not meet the standard for employer liability set forth in Civil Code section 3294, subdivision (b). The Court gave Plaintiff leave to amend, and she filed the SAC. Defendant now moves to strike the prayer for punitive damages and related allegations in the SAC on the basis Plaintiff has not cured this defect in her pleading.

II. Discussion

A party may move to strike improper allegations in a pleading. (Code Civ. Proc., §§ 435, subd. (b)(1), 436, subd. (a).) If a claim for punitive damages is not properly pleaded, it may be stricken. (Grieves v. Super. Ct. (1984) 157 Cal.App.3d 159, 164.) In order to plead a claim for punitive damages, a plaintiff must allege the defendant was guilty of malice, oppression, or fraud and the ultimate facts underlying such allegations. (Civ. Code, § 3294, subd. (a); Clauson v. Super. Ct. (1998) 67 Cal.App.4th 1253, 1255.)

Additionally, to recover punitive damages from an employer based on the conduct of its employee, a plaintiff must allege the “employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice.” (Civ. Code, § 3294, subd. (b).) “With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.” (Civ. Code, § 3294, subd. (b).)

For the following reasons, Plaintiff’s allegations still fall short of what is required to state a claim for punitive damages against an employer.
First, Plaintiff does not allege an officer, director, or managing agent of Defendant personally engaged in malicious, oppressive, or fraudulent conduct. Plaintiff has added a conclusory allegation that, “[a]s alleged herein, she is informed and believes that it was the decision of a managing agent to not repair the defective equipment, not warn members that it was defective, and to ultimately leave it in its defective state out on the floor to be used by members.” (SAC, ¶ 57.) Although this allegation is pleaded as though it is supported by other facts alleged in the SAC, Plaintiff does not actually plead any such supporting facts. In actuality, as in the first amended complaint, she alleges the gym manager, who is not a managing agent, knew the machine was defective and did nothing about it. (SAC, ¶ 54.)
A managing agent is someone who, like a corporate officer or director, exercises “substantial discretionary authority over significant aspects of a corporation’s business” and policies. (White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 577-78.) An employee is not a managing agent simply because he or she bears the title of “manager” and supervises employees. (Ibid.; accord CRST, Inc. v. Super. Ct. (2017) 11 Cal.App.5th 1255, 1273-75.) “‘Rather, the critical inquiry is the degree of discretion the employees possess in making decisions that will ultimately determine corporate policy.’ [Citations.]” (Myers v. Trendwest Resorts, Inc. (2007) 148 Cal.App.4th 1403, 1437.) “An individual must be in a corporate policymaking position in order to be considered a managing agent for purposes of imposing punitive damages liability on the employer.” (Ibid.)
As in the first amended complaint, in the SAC, Plaintiff does not plead facts showing the gym manager had any discretion over corporate policy sufficient to qualify as a managing agent. Accordingly, her allegation that the gym manager knew about and failed to address the defective machine does not support her new conclusory allegation such conduct was that of a managing agent. She does not otherwise allege some other individual who qualifies as a corporate policymaker personally engaged in conduct constituting malice, oppression, or fraud. Thus, Plaintiff fails to allege facts sufficient to support a claim for punitive damages based on malice, oppression, or fraud by an officer, director, or managing agent.
Next, Plaintiff does not allege an officer, director, or managing agent of Defendant knew the employees identified in the pleading were unfit, but employed them with a conscious disregard for her rights or safety. Thus, her allegations do not support recovery of punitive damages against Defendant based on this particular theory of employer liability.
Finally, Plaintiff does not allege an officer, director, or managing agent ratified or authorized the employees’ conduct.
In the SAC, Plaintiff alleges “[she] believes [the gym manager] was acting in accordance with corporate policy and doing as he was trained to do.” (SAC, ¶¶ 27, 40.) Because Plaintiff refers to “corporate policy,” it appears she may be conflating or confusing the standard for determining whether an individual qualifies as a managing agent with the standard for whether a managing agent has authorized or ratified an employee’s conduct.

It is true that a managing agent is defined as someone who, like a corporate officer or director, is in a “corporate policymaking position.” (Myers, supra, 148 Cal.App.4th at p. 1437; accord White, supra, 21 Cal.4th at pp. 577-78.) Even so, the standard for ratification or authorization is not whether the employee followed corporate policy; rather, the focus is on the conduct of the managing agent in light of the employee’s conduct. (See College Hospital, Inc. v. Super. Ct. (1994) 8 Cal.4th 704, 726.)

In actuality, “ratification generally occurs where, under the particular circumstances, the employer demonstrates an intent to adopt or approve oppressive, fraudulent, or malicious behavior by an employee in the performance of his [or her] job duties.” (College Hospital, supra, 8 Cal.4th at p. 726.) “The issue commonly arises where the employer or its managing agent is charged with failing to intercede in a known pattern of workplace abuse, or failing to investigate or discipline the errant employee once such misconduct became known.” (Ibid.) “Corporate ratification in the punitive damages context requires actual knowledge of the conduct and its outrageous nature.” (Ibid.)

The employee conduct at issue here consists of the incorrect translation of the membership agreement and the failure to promptly repair and/or replace the defective Pec-Fly machine that hit Plaintiff. Plaintiff does not allege an officer, director, or managing agent of Defendant knew about this conduct and either explicitly approved of it or impliedly approved of it by failing to intercede. Accordingly, Plaintiff fails to allege authorization or ratification sufficient to support a claim for punitive damages against Defendant.

As a final note, the Court observes the punitive damages allegations added by Plaintiff are improperly pleaded on information and belief. For context, Plaintiff’s opposition to Defendant’s previous motion contained many statements reflecting she intended to continue to rely on an erroneous legal theory to recover punitive damages and either could not or would not be able to amend her pleading in that regard. Out of an abundance of caution, the Court granted Plaintiff an opportunity to amend the complaint to the extent she could honestly do so in light of the requirements set forth in Code of Civil Procedure section 128.7. Nearly all of the allegations Plaintiff added are prefaced by a conclusory statement that they are made on information and belief.

“‘Information and belief’ is, of course, a common legal term used to indicate that ‘the allegation is not based on the firsthand knowledge of the person making the allegation, but that person nevertheless, in good faith, believes the allegation to be true.’” (City of Santa Cruz v. Municipal Ct. (1989) 49 Cal.3d 74, 93, fn. 9.) This term originates from the general rule that “an affidavit is normally presumed to state matters personally known to the affiant and lacks evidentiary value, in a variety of civil contexts, when based on information and belief, or hearsay.” (Id. at p. 87.) “A verified pleading is itself an affidavit and may be considered as such.” (Atkins, Kroll & Co. v. Broadway Lumber Co. (1963) 222 Cal.App.2d 646, 654.) Thus, typically, it is only necessary to plead allegations based on information and belief in a verified pleading. (See, e.g., Star Motor Imports, Inc. v. Super. Ct. (1979) 88 Cal.App.3d 201, 203-04.)

A plaintiff cannot, “by placing the incantation ‘information and belief’ in a pleading, [ ] insulate herself or himself” from the requirements of Code of Civil Procedure section 128.7 irrespective of whether the pleading is verified or unverified. (Mabie v. Hyatt (1998) 61 Cal.App.4th 581, 596, fn. 9.) Additionally, even when it is permissible to allege an ultimate fact on the basis of information and belief, a party cannot simply include the phrase “information and belief” without more. (Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1158-59; accord Star Motor Imports, supra, 88 Cal.App.3d at pp. 203-04.) To properly plead an allegation on the basis of information and belief, a plaintiff must allege the facts or information that led him or her to infer or believe the truth of the ultimate factual allegation. (Gomes, supra, 192 Cal.App.4th at pp. 1158-59.) Plaintiff fails to do so here. Consequently, her allegations are not properly pleaded on information and belief.

In conclusion, Plaintiff does not allege facts comporting with Civil Code section 3294, subdivision (b). Thus, her prayer for punitive damages and related allegations will be stricken as improper. Because the Court already gave Plaintiff an opportunity to cure this defect and she does not articulate how she could fix it if given yet another opportunity to do so, leave to amend is not warranted. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) Accordingly, Defendant’s motion to strike is GRANTED WITHOUT LEAVE TO AMEND. The Court hereby strikes paragraphs 27, 40, and 57 as well as paragraph 3 of the prayer for relief.