Defendants’ Demurrer to the Complaint is overruled in its entirety. The Complaint states facts sufficient to constitute the causes of action under CCP 430.

Allegations against Defendant Perez

Defendants argue that Plaintiffs must, but failed to, allege that Perez “authorized” or “ratified” the wrongful conduct of Rodas.

As Plaintiffs point out, however, the Complaint alleges that Perez is the alter ego of Defendants BaronHR and Fortress. Because the Complaint states a cause of action against BaronHR and Fortress, as discussed below, it also states a cause of action against Perez.

Although Defendants refer to “vague, irrelevant, and inappropriate allegations about commingling of funds” which they address in the companion Motion to Strike (see Demurrer, p. 6:10-11), they do not actually argue that the alter ego allegations are insufficient to attach liability.

Uncertainty in loss of earnings claim

Under FEHA, sexual harassment includes hostile work environment, which does not require any adverse employment action. (Meritor Sav. Bank, FSB v. Vinson (1986) 477 U.S. 57, 67; see also Fisher v. San Pedro Peninsula Hosp. (1989) 214 Cal.App.3d 590, 608.) Thus, it is immaterial whether the Complaint does or does not allege an adverse employment action.

First cause of action for harassment

Under FEHA, the employer is strictly liable for workplace harassment by a supervisor but a negligence standard applies for employer liability for nonsupervisory employees. (State Dept. of Health Services v. Sup.Ct. (McGinnis) (2003) 31 Cal.4th 1026, 1041-1042.)

Here, regardless whether Plaintiffs have stated facts sufficient to show that Rodas was a supervisor within the meaning of FEHA, Plaintiffs have alleged facts sufficient to show that Rodas was Defendants’ employee and Defendants knew of Rodas’ improper behavior and were negligent in failing to take adequate remedial measures.

Employer liability for sexual harassment by coworkers is direct liability for negligence in failing to take adequate remedial measures. (Govt. Code, § 12940, subd. (j)(1); State Dept. of Health Services v. Sup.Ct. (McGinnis) (2003) 31 Cal.4th 1026, 1041.) Plaintiffs must prove the employer’s management knew or should have known of the harassment, due to the pervasiveness of the conduct or language, or through other circumstances. (Swinton v. Potomac Corp. (9th Cir. 2001) 270 F.3d 794, 804.)

The Complaint alleges that Rodas was employed by BaronHR and Fortress as a Senior Vice President (¶ 6), and that “Defendants were aware of Rodas engaging in sexually harassing behavior with other female employees that ultimately resulted in a lawsuit against Defendants and a settlement that Defendants had to pay to the former female employees” (¶ 22).

Second cause of action for failure to prevent harassment

Government Code section 12940, subdivision (k) provides that it is an unlawful employment practice for an employer “to fail to take all reasonable steps necessary to prevent discrimination and harassment from occurring.”

As Plaintiffs note, the Complaint alleges that Defendants were aware of Rodas’ inappropriate behavior because Defendants were previously sued by—and settled with—former female employees for Rodas’ sexually harassing behavior. (See Complaint, ¶ 22.) Despite this occurrence, the Complaint alleges that Defendants retained Rodas as a Senior Vice President. (Complaint, ¶ 6.) These allegations are sufficient for pleading purposes to allege failure to prevent harassment.

Defendants Motion to Strike is denied in its entirety.

Alter ego allegations

Defendants argue that the alter ego allegations in paragraph 9 of the Complaint are irrelevant to Plaintiffs’ harassment claims. But as Plaintiffs respond, the allegations are relevant to establish alter ego liability on the part of Defendant Perez for the harassment claims.

Punitive damages

Punitive damages may be recovered in an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of fraud, oppression or malice. (Civ. Code, § 3294, subd. (a).)

“Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. (Civ. Code, § 3294, subd. (c)(2).) “Despicable conduct” is conduct that is so “vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.” (Scott v. Phoenix Schools, Inc. (2009) 175 Cal.App.4th 702, 715.)

The Complaint alleges that “Defendants were aware of Rodas engaging in sexually harassing behavior with other female employees that ultimately resulted in a lawsuit against Defendants and a settlement that Defendants had to pay to the former female employees” (¶ 22) and that they continued to employ Rodas as a Senior Vice President, thereby failing to take preventative measures (¶¶ 6, 36).

These allegations are factual, as opposed to mere conclusions of law. Although minimal, the allegations appear sufficient, if proven, to support a conclusion that Defendants’ continued employment of Rodas was despicable conduct that subjected Plaintiffs to sexual harassment in conscious disregard of Plaintiffs’ rights.

Defendants are to answer the Complaint within 10 days of notice of ruling.

Plaintiffs to serve notice of the ruling.