Case No. 18CV328742
Martinez, et al. v. First Quality Bumper, Inc., et al.

Defendants First Quality Bumper, Inc. (“First Quality”), Raul Barron, Yariska Arteaga and Jesus Arteaga (collectively, “Defendants”) demur to the First Amended Complaint (“FAC”) filed by plaintiffs Jose Martinez (“Martinez”) and Juan Gallegos (“Gallegos”) (collectively, “Plaintiffs”).

I. Factual and Procedural Background

This is a labor action for wage and hour violations. According to the allegations of the FAC, Martinez initially began working at First Quality in 2011 as a line cook. (FAC, ¶ 5.) Approximately three years later, he was promoted to the position of head chef, where he performed cooking duties approximately eighty percent of the time. (Id.) Gallegos was also hired in 2011, and experienced the same job trajectory as Martinez. (Id., ¶ 6.) Plaintiffs performed duties that were non-exempt under both California and federal labor law. (Id., ¶ 7.)

From the beginning of their employment until their termination, Plaintiffs were required to work in excess of eight hours per day and/or forty hours per week without overtime compensation. (FAC, ¶ 8.) Plaintiffs were also denied rest breaks and did not receive immediate payment of their wages upon termination of their employment as required by law. (Id., ¶ 36.)

Based on the foregoing allegations, Plaintiffs filed the FAC on September 5, 2018 asserting the following causes of action: (1) violation of Fair Labor Standards Act (the “FLSA” or the “Act”)- overtime compensation; (2) violation of Labor Code § 510- nonpayment of overtime wages; (3) rest breaks; (4) failure to pay wages upon separation of employment; and (5) for restitution of unpaid overtime wages in violation of Business and Professions § 17200. On November 15, 2018, Defendants filed the instant demurrer to each of the five causes of action asserted in the FAC on the following grounds: nonjoinder or misjoinder of parties; failure to state facts sufficient to constitute a cause of action; and uncertainty. (Code Civ. Proc., § 430.10, subds. (d), (e) and (f).) Plaintiffs oppose the motion.

II. Demurrer

A. Defect or Misjoinder of Parties

Defendants first maintain that there is a defect/misjoinder of parties to all claims asserted in the FAC because the individual defendants, Raul Barron, Yariska Arteaga and Jesus Arteaga (collectively, the “Individual Defendants”), are not proper parties to the FAC, with Plaintiffs having failed to plead an employment relationship between themselves and each of these defendants. First Quality is Plaintiffs’ employer, Defendants explain, not the Individual Defendants, and therefore none of the claims in the FAC can be or have been stated against them.

This particular ground for demurrer does not appear to be applicable to the circumstances at bar. A demurrer on the ground that there is a “defect or misjoinder of parties” is implicated in the following two situations, which must appear from the face of the pleading at issue: a party has been improperly joined or there has been a failure to join a necessary party. (See Code Civ. Proc., § 430, subd. (d); Anaya v. Superior Court (1984) 160 Cal.App.3d 228, 231, fn. 1; see also Law Offices of Dixon R. Howell v. Valley (2005) 129 Cal.App.4th 1076, 1105.) A party is deemed to have been improperly joined if the plaintiffs lack sufficient unity of interest (Code Civ. Proc., § 378) or there is no common question of law or fact as to the defendants (Code Civ. Proc., § 379). Neither of the foregoing is what is being argued by Defendants here. Instead, they are asserting that no basis to impose liability against them individually has been pleaded (or can be) because they were not Plaintiffs’ employers. Thus, what Defendants are actually arguing is that Plaintiffs have failed to state sufficient facts to assert claims for wage and hour violations against them. Thus, the demurrer to the FAC and the five claims asserted therein on the ground that there is a defect/misjoinder of parties is OVERRULED. The Court will construe Defendants’ argument as one in support of its demurrer on the ground of failure to state facts sufficient to constitute a cause of action.

Plaintiffs do not dispute that the Individual Defendants were not their employer, but maintain that First Quality is their alter ego, and it is on this basis that Plaintiffs seek to impose liability against these defendants individually for wage and hour violations. “Alter ego is essentially a theory of vicarious liability under which the owners of a corporation may be held liable for harm for which the corporation is responsible.” (Doney v. TRW, Inc. (1995) 33 Cal.App.4th 245, 249.) The alter ego doctrine is “used to prevent a corporation from using its statutory separate corporate form as a shield from liability.” (Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 993.) Of relevance here, while California law does not impose personal liability on corporate officers or directors for wages owed by a corporate employer, the alter ego doctrine may be invoked in state wage claim actions to impose liability on such individuals. (See Reynolds v. Bement (2005) 36 Cal.4th 1075, 1089, fn. 10 [abrogated on other grounds in Martinez v. Combs (2010) 49 Cal.4th 35, 75.) Alter ego liability is not necessary to impose individual liability for claims brought under the federal FLSA; the Act expressly imposes wage claim liability on “any person” acting on behalf of the employer, including its officers and directors. (29 U.S.C. § 203, subd. (d); see also Department of Labor v. Cole Enterprises, Inc. (6th Cir. 1995) 62 F.3d 775, 778.)

In general, the two requirements for applying the alter ego doctrine are that (1) there is such a unity of interest and ownership between the corporation and the individual or organization controlling it that their separate personalities no longer exist, and (2) failure to disregard the corporate entity would sanction a fraud or promote injustice. (Communist Party, supra, 35 Cal.App.4th at 993.) To recover on this theory, a plaintiff need not use the words “alter ego,” but must simply plead facts sufficient to show the foregoing elements. (Vasey v. California Dance Co. (1977) 70 Cal.App.3d 742, 749.) The extent of Plaintiffs’ alter ego allegations in the FAC is that “[t]here is a unity of interest and ownership between [First Quality] and [the Individual Defendants] such that the separate personalities of the corporation and individual no longer exist, inter alia, to wit: money and assets are commingled between [First Quality] and [the Individual Defendants]; the formalities of the corporate structure are disregarded by [the Individual Defendants] and [First Quality].” (FAC, ¶ 2.) Plaintiffs further allege that “it would be unfair and unequitable to honor the corporate shield in the instant case because the result would be to fraudulently deprive Plaintiffs … of money lawfully owing to them due to their labor, and such a result would be inequitable.” (Id.)

Though relatively sparse, Plaintiffs have pleaded facts in support of their alter ego allegation that are more than the type of “bare conclusion,” i.e., that First Quality is the alter ego of the Individual Defendants, that other courts have deemed insufficient. (See, e.g., Vasey v. California Dance Co. (1977) 70 Cal.App.3d 742, 749.) Consequently, Plaintiffs have pleaded a sufficient basis for liability against the Individual Defendants, despite none of them being alleged to have been Plaintiffs’ employer.

B. Uncertainty

Defendants maintain that the allegations of the FAC are uncertain because Plaintiffs have made various factual errors in their pleading, including misstating their job titles and dates of employment. This argument, however, evidences a misunderstanding on Defendants’ part as to what qualifies as “uncertain” under Code of Civil Procedure section 430.10. A demurrer on this ground is disfavored and will be sustained only where the pleading at issue is so unintelligible that the defendant cannot reasonably respond. (See Khoury v. Maly’s of Calif., Inc. (1993) 14 cal.App.4th 612, 616 [stating that “[a] demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures”].) Defendants do not assert that the allegations of the FAC are unintelligible or ambiguous, nor could they credibly do so given the straightforward nature of what is pleaded. Instead, they argue that the facts pleaded by Plaintiffs are wrong. However, a demurrer is not the appropriate mechanism to test the substantive merits of the allegations of a complaint. The nature of Plaintiffs’ claims is otherwise clearly evident: Defendants purportedly failed to pay them the wages that they were legally entitled to. It is also clear that these allegations apply with equal force to each defendant given the fact that Plaintiffs’ effort to impose liability on the Individual Defendants is predicated on the alter ego doctrine and not separate acts specific to certain defendants.

In sum, given the allegations of the FAC, there is no reason to sustain the demurrer on the ground of uncertainty. Accordingly, it is OVERRULED.

C. Failure to State Facts Sufficient to Constitute a Cause of Action

Finally, Defendants contend that Plaintiffs have not pleaded sufficient facts to state their claims for unpaid overtime wages under the FLSA and the Labor Code, failure to provide rest breaks, failure to pay all wages due at separation of employment, and for violations of Business and Professions Code sections 17200, et seq. (the “UCL”). Defendants maintain that more facts need to be pleaded, including what Defendants “specifically did or did not do to violate the Labor Code,” the specifics of Plaintiffs’ work schedules, how often and how much overtime was worked, “why rest breaks were not provided, how often they were not provided, or any policies or practices that Defendants adopted to prevent employees from taking rest breaks.” However, Defendants cite no authority for the proposition that Plaintiffs’ claims need to be pleaded with the level of particularity that they are asserting, especially considering the fact that at this point in the proceedings it is likely that Plaintiffs are not in possession of the employment records necessary to establish the exact numbers of hours and wages involved in their claims.

Defendants additionally attack the sufficiency of Plaintiffs’ UCL claim by arguing that Plaintiff has impermissibly requested penalties under Labor Code sections 203 and 226 as restitution under the UCL. (See FAC, Prayer at ¶ 4.) While Defendants are correct that Labor Code section 203 penalties are not recoverable as restitution under the UCL (see Pineda v. Bank of America, N.A. (2010) 50 Cal.4th 1389, 1401), the proper device to attack the inclusion of impermissible damages in the prayer is a motion to strike and not a demurrer. Defendants otherwise fail to demonstrate that Plaintiffs have not adequately pleaded their claim for violation of the UCL, which is predicated on violations of the Labor Code and the FLSA.

In accordance with the foregoing, Defendants’ demurrer to the FAC and each of the five causes of action asserted therein on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED.

Plaintiffs’ request for leave to amend to correct the factual errors in their FAC is GRANTED.

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