SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

CRYSTAL FREGOSO, ADRIANNA RODRIGUEZ, and TRUC BUI, on behalf of themselves and all others similarly situated,

Plaintiffs,

vs.

EAT CLUB, INC., a Delaware Corporation, and DOES 1-100, inclusive,

Defendants.

Case No. 18CV330433

TENTATIVE RULING RE: DEMURRERS

The above-entitled action comes on for hearing before the Honorable Patricia M. Lucas on March 6, 2020 at 9:00 a.m. in Department 3. The Court now issues its tentative ruling as follows:

I. INTRODUCTION
II.
This is a putative class action arising out of various alleged wage and hour violations. On September 18, 2019, plaintiffs Crystal Fregoso, Adrianna Rodriguez, and Truc Bui (collectively, “Plaintiffs”) filed the Second Amended Complaint (“SAC”), which sets forth the following causes of action: (1) Failure to Pay Overtime Wages; (2) Failure to Pay Minimum Wage; (3) Failure to Provide Mandated Meal Periods; (4) Failure to Provide Mandated Rest Periods; (5) Failure to Provide Timely and Accurate Wage Statements; (6) Failure to Pay All Wages Due at Termination – Waiting Time Penalties; (7) Unfair Practice Under the Unfair Competition Act; (8) Violation of the Private Attorney General Act (“PAGA”); and (9) Conversion.

Now before the Court are two demurrers filed by defendant Eat Club, Inc. (“Defendant”). Both demurrers are to the ninth cause of action for conversion – the first on the ground of failure to state facts sufficient to constitute a cause of action and the second on the ground of uncertainty. (Code Civ. Proc., § 430.10, subds. (e) and (f).)

III. DEMURRERS
IV.
A. General Demurrer
B.
Defendant argues that the ninth cause of action for conversion cannot be maintained because: (1) California has not recognized a tort cause of action for conversion of tips; (2) Plaintiffs have not specified the amount of their alleged loss; and (3) Plaintiffs have not alleged the wrongful act or disposition of tips that they were not paid. Defendant also argues the class action component is subject to demurrer and any amendments based on “information and belief” must be supported by substantive facts.

(1) Conversion Based on the Taking of Tips
(2)
Labor Code section 351 prohibits an employer from taking any gratuity left for an employee, but does not provide a private right of action for an employee to sue to recover tips. (Lu v. Hawaiian Gardens Casino, Inc. (2010) 50 Cal.4th 592, 596-601.) Nevertheless, the California Supreme Court has stated:

[O]ur holding that section 351 does not provide a private cause of action does not necessarily foreclose the availability of other remedies. To the extent that an employee may be entitled to certain misappropriated gratuities, we see no apparent reason why other remedies, such as a common law action for conversion, may not be available under appropriate circumstances.

(Lu v. Hawaiian Gardens Casino, Inc. (2010) 50 Cal.4th at pp. 603-604.)

Defendant relies heavily on the recent California Supreme Court case of Voris v. Lampert (2019) 7 Cal.5th 1141. The plaintiff in Voris sought to recover unpaid wages on a theory of common law conversion. (Id. at p. 1144.)

Defendant quotes language in Voris where the Court stated “cases containing passing mentions of conversion claims are not authority for the proposition that such claims are cognizable—or even that they have generally been assumed to be cognizable.” (Voris v. Lampert, supra, 7 Cal.5th at p. 1150, fn. 7, italics in original.) Defendant also points to the Voris Court’s statement that Lu, supra, “did not purport to decide [the] question” of whether a common law claim for conversion might lie “under appropriate circumstances” for an employer’s misappropriation of gratuities left for employees. (Id. at p. 1154.)

However, the Voris Court continued by stating:

[T]he answer would not control here in any event, for an employer’s misappropriation of gratuities is not the same as an employer’s withholding of promised wages. When a patron leaves a gratuity for an employee (or employees), it arguably qualifies as a specific sum of money, belonging to the employee, that is capable of identification and separate from the employer’s own funds; indeed, the employee (or employees) for whom it was left has ownership of the gratuity by statute.

(Voris v. Lampert, supra, 7 Cal.5th at pp. 1154-1155.)

While this language is likely dictum, the reasoning of the Voris Court is still persuasive. Plaintiffs here seek tips, not wages, which are alleged to have been taken by Defendant. (SAC, ¶ 113.)

Defendant argues that even if a cause of action for conversion of tips can be alleged, Plaintiffs have not identified a specific, identifiable sum of lost tips retained by Defendant. Defendant states Plaintiffs have only alleged the putative class lost “approximately $250,000.” (SAC, ¶ 55.) In connection with this argument, Defendant further contends that Plaintiffs have alleged only conclusions and have not supported their claim with factual allegations.

While there is no heightened specificity requirement for alleging a conversion cause of action, a plaintiff must still allege material facts to support the claim. (See Pavicich v. Santucci (2000) 85 Cal.App.4th 382, 389 [court treats a demurrer as admitting all facts properly pleaded, but does not assume the truth of contentions, deductions, or conclusions of law].) Here, Plaintiffs allege that Defendant “stole Class Members’ tips and gratuities in the approximate amount of $250,000 over the past couple years.” (SAC, ¶ 55.) It is unclear how this amount was calculated; no time period is specified, and the “approximate” amount taken is a combined total for an unknown number of class members.

Based on Plaintiffs’ allegations, the “approximate amount of $250,000” in tips is not a sufficiently specific, identifiable sum to support a conversion cause of action. (See PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 397.) Accordingly, Defendant’s demurrer to the ninth cause of action on the ground that it fails to state facts sufficient to constitute a cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

(3) Class Action Allegations
(4)
Defendant argues that the class action allegations in the SAC are subject to demurrer because Plaintiffs have not alleged a community of interest among the putative class members. “[T]rial courts are permitted to decide the issue of class certification on demurrer.” (Schermer v. Tatum (2016) 245 Cal.App.4th 912, 923.) As another court has stated, however, “it is only in mass tort actions (or other actions equally unsuited to class action treatment) that class suitability can and should be determined at the pleading stage. In other cases, particularly those involving wage and hour claims, class suitability should not be determined by demurrer.” (Prince v. CLS Transp., Inc. (2004) 118 Cal.App.4th 1320, 1325; see also Blakemore v. Superior Court (2005) 129 Cal.App.4th 36, 59 [if at all possible, a class action complaint should be allowed to survive the pleading stages of litigation].)

This lawsuit concerns wage and hour claims and the Court finds in this case the issue of class suitability should be deferred until the class certification stage. Accordingly, Defendant’s demurrer to the class action allegations is OVERRULED.

C. Special Demurrer
D.
Defendant separately demurs to the ninth cause of action on the ground that it is uncertain. 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. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal. App. 4th 612, 616.) The ninth cause of action is not so uncertain that Defendant cannot respond to it. Accordingly, Defendant’s demurrer to the ninth cause of action on the ground of uncertainty is OVERRULED.

The Court will prepare the final order if this tentative ruling is not contested.