Case Number: BC485782 Hearing Date: May 21, 2014 Dept: 34

Moving Party: Defendants L&B Real Estate and William Little (“defendants”)

Resp. Party: Plaintiffs Samuel Rayon, et al. (“plaintiffs”)

Defendants’ demurrer to the third amended complaint is OVERRULED.

Defendants’ motion to strike is DENIED.

PRELIMINARY COMMENTS:

Plaintiffs’ oppositions were not timely filed, both memoranda grossly exceed the 15-page limit, and both oppositions improperly include exhibits. (See Code Civ. Proc., §§ 437(a), 1005(b); CRC rule 3.1113(d).) The court would be interested in hearing from plaintiffs’ counsel why it should not set an OSC re sanctions for plaintiffs’ counsel’s repeated violations of the Rules of Court.

The Court notes that the demurrer raises many of the same arguments that were raised in the demurrer to the SAC. The Court has since vacated its ruling sustaining that demurrer. In its 2/5/14 minute order, the Court expressed concerns about another round of pleadings if a third amended complaint was filed. The Court is concerned that Defendants have ignored such concerns, and have instead opted to extend the pleadings phase by re-asserting previously rejected arguments.

The court also wishes to remind both parties that trial is set this matter for July 14, 2014, and the court expects the trial will proceed as scheduled.

BACKGROUND:

Plaintiffs commenced this action on June 1, 2012. After the Court, the Honorable David L. Minning presiding, sustained defendants’ demurrer to the first and fourth causes of action in the complaint, plaintiffs filed a first amended complaint on September 21, 2012, alleging causes of action for: (1) failure to pay overtime; (2) failure to provide rest and meal periods; (3) failure to accurately record hours worked; (4) waiting time penalties; (5) liquidated damages; (6) failure to pay minimum wage; and (7) violation of Business & Professions Codes § 17200. After the Court, the Honorable Ralph W. Dau presiding, sustained defendants’ demurrer to the first amended complaint, plaintiffs filed a second amended complaint (“SAC”) on May 8, 2013, alleging the same seven causes of action.

On 11/14/13, a hearing was held on defendants’ demurrer to the SAC. The Court sustained the demurrer to the first, second, fourth, fifth, sixth, and seventh causes of action, as they pertain to plaintiffs Rayon, Pat, Vasquez, Martinez, and Perez, without leave to amend. The Court overruled the demurrer to the third cause of action. The Court overruled the demurrer to the SAC as it pertains to plaintiff Mendez.

On 2/5/14, the Court denied plaintiffs’ motion for reconsideration of the order as to the demurrer. The Court, on its own motion, reconsidered and vacated the 11/14/13 order.

On 2/24/14, plaintiffs filed a third amended complaint.

ANALYSIS:

Demurrer

Defendants demur to first, second, fourth, fifth, sixth and seventh causes of action contained in the third amended complaint on the grounds of uncertainty and failure to allege sufficient facts.

1. Uncertainty

Defendants demur to first, second, fourth, fifth and sixth causes of action contained in the third amended complaint on the grounds of uncertainty.

Demurrers for uncertainty are strictly construed, because discovery can be used for clarification, and apply where defendants cannot reasonably determine what issues or claims are stated. (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616; Weil & Brown, Civ. Pro. Before Trial (The Rutter Group 2012) ¶ 7:85.) “Demurrer for uncertainty will be sustained only where the complaint is so bad that the defendant cannot reasonably respond; i.e., he or she cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her.” (Weil & Brown, ¶ 7:85 [citing Khoury, 14 Cal.App.4th at p. 616].)

The TAC is not so uncertain that defendants cannot reasonably respond. Plaintiffs allege that defendants did not inform them of their hourly rates. (TAC ¶¶ 10-11.) Plaintiffs allege they were paid amounts less than what they should have earned. (See id., ¶¶ 12-18.) To the extent that defendants seek more information as to plaintiffs’ regular rates of pay, such information may be obtained during the discovery process.

Defendants’ demurrer for uncertainty is OVERRULED.

2. Fifth and Sixth Causes of Action for Labor Code Violations

Defendants argue that the sixth cause of action fails to state a cause of action because plaintiffs have failed to plead an hourly rate of less than the applicable minimum wage. Defendants argue that the fifth cause of action also fails because liquidated damages are only available for minimum wage claims. (See Lab. Code, § 1194.2.)

Though some of the alleged facts are inconsistent, plaintiffs do allege facts which suggest that they were not always paid the current applicable minimum wage of $8.00 per hour. (See Lab. Code, § 1182.12.) For example, plaintiffs allege that Rayon was paid $250.00-$550.00 per week and that he worked 57 hours per week. (TAC ¶ 12.) During the times when Rayon was paid $250.00 per week, his hourly rate would have been below the minimum wage. Similar allegations are made as to the other plaintiffs. (See id., ¶¶ 13-17.) Once again, to the extent that defendants seek more information on the rates of pay, they may seek such information during discovery.

Accordingly, defendants’ demurrer to the fifth and sixth causes of action is OVERRULED.

3. Seventh Cause of Action for Violation of Business & Professions Code section 17200

California Business and Professions Code section 17200 permits recovery for “any unlawful, unfair, or fraudulent business act or practice.” (Bus. & Prof. Code § 17200.) “A plaintiff alleging unfair business practice under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 619.) To state a cause of action under Business and Professions Code section 17200, et seq., plaintiff must show: (1) a business practice; (2) that is unfair, unlawful, or fraudulent; and (3) authorized remedy. (Bus. & Prof. Code § 17200; Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 676.) To support this cause of action, plaintiffs must allege a statutory section that has been violated and describe with particularity any supporting violation. (See 5 Witkin, Cal. Procedure (5th ed. 2008), § 779, p. 196 [citing Khoury, 14 Cal.App.4th at p. 619].)

Defendants first argue that this cause of action necessarily fails because the underlying Labor Code claims fail. Because the Court overrules defendants’ demurrer to the first, second, fourth, fifth, and sixth causes of action, this argument is not well taken.

Defendants next argue that plaintiffs do not seek an authorized remedy under section 17200. This argument is also not well taken. “[O]rders for payment of wages unlawfully withheld from an employee are also a restitutionary remedy authorized by section 17203.” (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 177.) Therefore, plaintiffs’ claims for failure to pay overtime or minimum wages may support the seventh cause of action.

Accordingly, defendants’ demurrer to the seventh cause of action is OVERRULED.

Motion to Strike

Sham pleadings

Defendants argue that certain allegations as to plaintiffs’ rate of pay should be stricken as sham pleadings. Unless the plaintiff provides a satisfactory explanation as to why the earlier allegations were incorrect, “the self-destructive allegations in the earlier pleading or discovery response are ‘read into’ the complaint, and allegations inconsistent therewith treated as sham and disregarded.” (Weil & Brown, Civ. Proc. Before Trial (The Rutter Group 2013) ¶ 7:48.)

The alleged rates of pay for all plaintiffs except Mendez differ in the SAC from what was previously alleged in the complaint. (See TAC ¶¶ 12-17; Compl., ¶¶ 10-15.) Plaintiffs now provide an explanation as to this difference. Plaintiffs state that they have alleged wages earned which represent the amount actually received by plaintiffs and not the amount they were entitled to receive. (TAC ¶ 18.) Plaintiffs explain that they alleged fixed amounts of wages earned in the prior complaint, but that their wages earned fluctuated and the paychecks included payments for supplies; therefore, the amended wages earned pled in the form of a salary range more accurately reflects plaintiffs’ fluctuating salary. (Id., ¶ 19.) This is a satisfactory explanation as to why the earlier allegations were incorrect.

Allegations based on Labor Code sections and IWC orders

Defendants argue that plaintiffs’ references to Labor Code sections 98, 98.8, 512, 558, 1174, 1174.5, 1197.1, and 1198 and to certain IWC wage orders should be stricken because these sections do not provide a private right of action. Defendants provide no authority which holds that a plaintiff may not reference these sections in a complaint for wage and hour violations. Other than a citation to section 558 in the prayer for relief, it does not appear that plaintiffs are seeking remedies under these statutes. For the most part, plaintiffs merely cite to these sections to show that defendants engaged in unlawful conduct. (See TAC ¶¶ 24, 26, 28, 32, 35, 44, 49, 50.)

Defendants also argue that plaintiffs’ references to expired wage orders should be stricken. Defendants once again provide no authority to support this argument. There is no showing that these expired wage orders were not in effect while plaintiffs were employed by defendants, or that they are otherwise inapplicable.

Defendants argue that plaintiffs’ claim that defendants failed to include “wage break premiums” on itemized wage statements should be stricken because such a requirement is not present in Labor Code section 226 or the applicable IWC order. This does not warrant a motion to strike. The Court has the authority to simply disregard errors or defects in the pleading which do not affect the substantial rights of the parties. (Code Civ. Proc., § 475.)

References to Meal and Rest Break Requirements

Defendants argue that plaintiffs’ allegation that defendants failed to “provide them with rest periods and/or break periods” should be stricken because the law only requires defendants to “authorize and permit” rest periods. Defendants’ challenge is merely one of semantics. Nothing in the complaint suggests that plaintiffs are alleging that defendants had a duty to ensure that no work was performed during the meal time. It appears that plaintiffs’ use of “provide” is meant to be read as “authorize or permit.” Indeed, the language of the relevant Labor Code sections uses the word “provide.” (See Lab. Code, §§ 226.7(c) [“If an employer fails to provide an employee a meal or rest or recovery period. . . .”], 512 [“An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes. . . .”].)

Improper Relief

Defendants argue that plaintiffs’ request for $100 for each violation regarding the failure to maintain accurate payroll records is inflated because an employee may only recover $50 for the first violation and the maximum allowed is $4,000. This argument is not well taken. Labor Code section 226 provides that an employee may recover “the greater of all actual damages or fifty dollars ($50) for the initial pay period in which a violation occurs and one hundred dollars ($100) per employee for each violation in a subsequent pay period.” (Lab. Code, § 226(e)(1) [emphasis added].) Therefore, the amount requested is not limited to only $50 for the first violation and $100 for each subsequent violation. Defendant is correct that such penalties may not exceed $4,000; however, plaintiffs’ allegations do not indicate that the request for $100 for each violation will result in penalties in excess of $4,000.

Defendants are correct that section 203 penalties do not constitute restitution. (See Pineda v. Bank of America, N.A. (2010) 50 Cal.4th 1389, 1401.) Again, it is not necessary to strike this language from the complaint because the Court may simply disregard it. (See Code Civ. Proc., § 475.)

The Court rejects defendants’ argument that plaintiffs are not entitled to penalties with regard to sections 512 and 558. Section 512 provides that an employer must provide meal periods, and 226.7 provides for penalties for failure to provide meal and rest periods. (See Lab. Code, § 226.7(c).) Section 558 expressly imposes penalties on employers that violate wage and hour laws.

Defendants argue that plaintiffs’ request for $1,000,000.00 in compensatory damages is “grossly exaggerated.” Nothing in the pleadings establishes that this amount is exaggerated. To the extent that defendants wish to obtain more information as to the amount of compensatory damages, they may seek such information during the discovery process.

Claims Asserted on Behalf of Other Employees

Defendants seek to strike language referring to others who were harmed by defendants’ alleged conduct. It is not necessary to strike this language because it does not have a substantial effect on the parties’ rights. It is clear that plaintiffs are asserting their own claims are not seek relief for unnamed third parties. The challenged paragraphs appear to refer to third parties only to show the extent of defendants’ alleged wrongdoing. (See TAC ¶¶ 28, 47.) Defendants’ references to class action requirements are not relevant because this is not a class action.

Claims re Inaccurate Payroll Recording System and Shaving of Overtime

Defendants argue that portions of paragraphs 34 and 35 should be stricken because employees recorded their own time sheets and there was no formal payroll recording system. This argument improperly relies on extrinsic facts not alleged in the pleadings. (See Code Civ. Proc., § 437(a) [“The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.”].)

Business and Professions Code §17200

The Court rejects defendants’ argument that the Court should strike references to certain Labor Code sections in the seventh cause of action. The allegations in the seventh cause of action do not clearly assert that plaintiffs are seeking to recover penalties under these sections as restitution for the UCL claim. Instead, plaintiffs appear to cite to the Labor Code sections to establish that defendants engaged in unlawful conduct. (See TAC ¶¶ 49-50.) Unlawful business practices can constitute unfair competition under section 17200. (See Bus. & Prof. Code, § 17200; People ex rel. Bill Lockyer v. Fremont Life Ins. Co. (2002) 104 Cal.App.4th 508, 515 [“With respect to the unlawful prong, ‘[v]irtually any state, federal or local law can serve as the predicate for an action’ under section 17200.”].)

Though defendants are correct that there are no facts to support the references to Labor Code sections 2800 and 2802, this does not warrant a motion to strike because the Court may simply such defects in the pleading which do not affect the substantial rights of the parties. (Code Civ. Proc., § 475.)

Attorney’s Fees under CCP §1021.5

Defendants argue that the request for attorney’s fees under section 1021.5 should be stricken because plaintiffs cannot show that a significant benefit will be conferred on the public at large. Section 1021.5 provides: “Upon motion, a court may award attorneys’ fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.” The Court need not strike the reference to section 1021.5 at this time because an award of attorney’s fees under this section only occurs after a party prevails in the action and upon a noticed motion. Whether plaintiffs are entitled to such fees need not be determined until after this action has been adjudicated.

Accordingly, defendants’ motion to strike is DENIED.

Defendants to answer within 10 days.