Case Number: BC522091    Hearing Date: August 13, 2014    Dept: 32

CASE NAME: Samantha Covington, et al. v. Professional Organization of Women in Entertainment Reaching Up, et al.
CASE NO.: BC522091
HEARING DATE: 08/13/14
DEPARTMENT: 32
CALENDAR NO.: 2
SUBJECT: Demurrer to First Amended Complaint
MOVING PARTY: Defendant Stacy Codikow
RESP. PARTY: Plaintiffs Samantha Covington, Janelle Eagle, Alishe Beardeaux, Amanda Overton, Ted Campbell, Malorie Folino, Michelle Hejduk, and Vanessa Wolf

COURT’S TENTATIVE RULING

Demurrer to First Amended Complaint (FAC)

First Cause of Action (failure to pay minimum wage and overtime) SUSTAINED WITH 20 DAYS LEAVE TO AMEND.

Second Cause of Action (failure to provide itemized pay stubs) SUSTAINED WITH 20 DAYS LEAVE TO AMEND.

Third Cause of Action (continuing wages) SUSTAINED WITH 20 DAYS LEAVE TO AMEND.

Fourth Cause of Action (meal and rest breaks) SUSTAINED WITH 20 DAYS LEAVE TO AMEND.

Fifth Cause of Action (unfair business practices) SUSTAINED WITH 20 DAYS LEAVE TO AMEND.

Sixth Cause of Action (Labor Code § 226.8 – mis-categorizing employees) SUSTAINED WITH 20 DAYS LEAVE TO AMEND.

Demurrer for Uncertainty SUSTAINED WITH 20 DAYS LEAVE TO AMEND.

STATEMENT OF THE CASE

This is an employment case against a corporate defendant and an individual who is alleged to be the founder and Executive Director of the non- profit defendant. The demurring defendant is the individual and the crux of the demurrer is that the FAC does not adequately allege any basis for liability against the individual for the acts of the corporate defendant. The court agrees. Imposing liability on an individual for corporate actions is the exception to the normal rule of limited liability. However, since this is the first ruling on a demurrer to a pleading in this case, given the policy of liberally granting leave to amend, the court does so in this case.
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The factual allegations in the FAC may be summarized as follows: Plaintiffs were employed by defendant Professional Organization of Women in Entertainment Reaching Up, also known as Power Up or Power Up Films (“Power Up”) on the crew for the production and promotion of the unreleased film entitled Girltrash: All NightLong (the “Film”). Defendant Stacey Codikow (“Codikow”) is the founder and Executive Director of Power Up, which operates as a non-profit organization. Despite this non-profit status, when Power Up produced and marketed the Film, Power Up engaged in commercial activity that would financially benefit of Codikow. Codikow staffed the Film primarily with “mentees,” who werepromised career training and exposure to the Hollywood film industry in exchange for their full-time services.

Plaintiffs Eagle provided services relating to the production of the Film, including acting as the Film’s second assistant director (“Second AD”); Beardeaux provided services relating to he Film, including acting as a production assistant and in craft services (“PA”); Covington provided services relating to the Film, including acting as the Film’s second second assistant director (“Second
second AD”), Overton provided services relating to the Film, including acting as a PA; Campbell provided services relating to the Film, including acting as an assistant director (“AD”); and Folino provided services relating to the Film, including acting as the Film’s art director; Hejduk provided services relating to the Film, including acting as a PA; Wolf provided services relating to the Film, including acting as the Film’s Best Boy Electric.

While working on the Film, Plaintiffs allegedly were subjected to a hostile working environment that routinely reduced crew members to tears. Codikow used the mentee program as a means to intimidate employees while filming the movie, preying on their youth and desire to work in the extremely competitive entertainment industry. Plaintiffs allege that Defendants committed a number of Labor Code violations, including failure to minimum wages and overtime wages; failure to provide meal and rest breaks, and failure to provide itemized pay stubs.

ANALYSIS

General Demurrer

A demurrer to a complaint may be taken to the whole complaint or to any of the causes of action stated therein. (CCP § 430.50(a).) A demurrer challenges only the legal sufficiency of the complaint, not the truth of its factual allegations or the plaintiff’s ability to prove those allegations. (Picton v. Anderson Union High Sch. Dist. (1996) 50 Cal.App.4th 726, 732.) The court must treat as true all of the complaint’s material factual allegations, but not contentions, deductions or conclusions of fact or law. (Id. at 732-33.) The complaint is to be construed liberally to determine whether a cause of action has been stated. (Id. at 733.)

Defendant Stacy Codikow demurs to the first, second, third, fourth, fifth, and sixth causes of action for failure to state a claim. Codikow contends that Plaintiffs have not alleged that she was their employer or otherwise engaged in conduct so that she could be held individually liable on the FAC. Individual employees or corporate agents are not liable for Labor Code violations. (See Oppenheimer v. Robinson (1957) 150 Cal.App.2d 420, 423.)

In opposition, Plaintiffs contend that all causes of action are properly pleaded against Codikow based on alter ego allegations. Generally stated, “two conditions must be met before the alter ego doctrine will be invoked. First, there must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist. Second, there must be an inequitable result if the acts in question are treated as those of the corporation alone.” (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.) Courts consider various factors to show unity of interest, including commingling of funds, disregard of corporate formalities, diversion of funds or assets, and under-capitalization. (Ibid.)

As pointed out in reply, the FAC does not use the words “alter ego.” Although it may not be strictly required for the FAC to use the words “alter ego,” it is generally done when seeking to invoke this doctrine. More importantly, Plaintiffs have not pointed the court to allegations in the FAC that would establish the two primary elements of alter ego – lack of corporate separateness and inequitable result. Plaintiffs cite paragraph 1 of the FAC, which alleges that “Power Up engaged in commercial activity that would financially benefit [] Codikow.” Plaintiffs also allege that Codikow is the founder and executive director of Power Up and that she made the decision to staff the film primarily with “mentees.” (FAC ¶¶ 1-5.) However, these are not sufficient ultimate facts regarding the elements of alter ego to give Codikow notice of the claims she faces. As argued in reply, the authorities cited by Plaintiffs in opposition do not suggest otherwise. (See Reply 2, fn. 1; see also Vasey v. California Dance Co. (1977) 70 Cal.App.3d 742, 749 [“In order to prevail in a cause of action against individual defendants based upon disregard of the corporate form, the plaintiff must plead and prove such a unity of interest and ownership that the separate personalities of the corporation and the individuals do not exist.”].)

In opposition, Plaintiffs represent that they have conducted written discovery that supports the alter ego theory and they request leave to amend on that basis. This was the court’s first ruling on a demurrer to Plaintiffs’ complaint. Given the liberal policy of permitting amendments, Plaintiffs’ representation that they can cure the defects discussed above based on discovery is sufficient to grant leave to amend. Also, the allegation that Codikow is the founder and executive director of Power Up also supports a reasonable probability that Plaintiffs would be able to augment alter ego allegations by amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 348 [Leave to amend must be allowed where there is a reasonable possibility of successful amendment].)

The general demurrer is SUSTAINED WITH LEAVE TO AMEND as to all causes of action.

Demurrer for 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.) Here, the FAC is uncertain with respect to Codikow. As Plaintiffs concede, her liability is based on alter ego allegations not made explicit in the pleading.

The demurrer for uncertainty is SUSTAINED WITH LEAVE TO AMEND.