Case Name:   Casey v. Solopower, Inc., et al.

Case No.:       1-14-CV-262109

Defendants Solopower Systems, Inc. and Solopower Holdings, Inc. (collectively, “demurring defendants”) demur to the first cause of action of the amended complaint (“FAC”) for breach of contract on the ground that it fails to state facts sufficient to constitute a cause of action.

As demurring defendants assert, the employment agreement attached to the FAC clearly lists the parties as plaintiff Edward Casey (“Plaintiff”) and Solopower, Inc., not demurring defendants.  However, demurring defendants also note the allegations that demurring defendants are the alter ego of Solopower, Inc.  (See FAC, attachment to FAC, “item 9”.)  Demurring defendants contend that the alter ego allegations lack specificity, citing Leek v. Cooper (2011) 194 Cal.App.4^th 399, in which the court stated, “a plaintiff need not use the words ‘alter ego,’ but must allege sufficient facts to show a unity of interest and ownership, and an unjust result if the corporation is treated as the sole actor.”  (Id. at p.415.)  However, as noted in Demurring Defendants’ reply brief, Leek involved a motion for summary judgment.  Further, the complaint in Leek alleged that the individual defendant was the sole owner of a corporate entity, owned all of its stock, and that all defendants were the agents of the other defendants.  (Id.)  Immediately after the quote upon which demurring defendants rely, the Leek court stated: “[a]n allegation that a person owns all of the corporate stock and makes all of the management decisions is insufficient to cause the court to disregard the corporate entity.  (Id.)  The court continued: “[t]hese allegations neither specifically alleged alter ego liability, nor alleged facts showing a unity of interest and inequitable result from treatment of the corporation as the sole actor.”  (Id.)  In contrast, here, the FAC specifically alleges alter ego liability and alleges facts—albeit the bare minimum—to support alter ego liability.

“An employee who seeks to hold a parent corporation liable for the acts or omissions of its subsidiary on the theory that the two corporate entities constitute a single employer has a heavy burden to meet under both California and federal law.”  (Laird v. Capital Cities/Abc (1998) 68 Cal.App.4^th 727, 737.)  “Corporate entities are presumed to have separate existences, and the corporate form will be disregarded only when the ends of justice require this result.”  (Id.; see also Zoran Corp. v. Chen (2010) 185 Cal.App.4^th 799, 811-812 (Sixth District case discussing alter ego liability); see also Misik v. D’Arco (2011) 197 Cal.App.4^th 1065, 1073 (discussing requirements for application of alter ego doctrine); see also Greenspan v. LADT LLC (2010) 191 Cal.App.4^th 486, 512 (discussing alter ego test as to sister corporate entites).)  Thus, Plaintiff indeed has a heavy burden to meet to demonstrate liability based on alter ego.  Although it may seem unlikely that Plaintiff will be able to prove liability based on an alter ego theory, this is an issue that needs to be addressed on summary judgment or at trial as Plaintiff has sufficiently alleged facts supporting the basis for liability.  (See First Western Bank & Trust Co. v. Bookasta (1968) 267 Cal.App.2d 910, 915 (stating that “the courts have followed a liberal policy of applying the alter ego doctrine where the equities and justice of the situation appear to call for it rather than restricting it to the technical niceties depending upon pleading and procedure.. [i]t is essential principally that a showing be made that both requirements, i.e., unity of interest and ownership, and the promotion of injustice by the fiction of corporate separate existence, exist in a given situation”).)

The demurrer is OVERRULED.   The Court will prepare the order.