Case Name: Alycia Singleton v. Luxul Technology, Inc., et al.
Case No.:? 16CV292976
Currently before the Court is the demurrer by Defendants Luxul Technology, Inc. and James Pan (?Defendants?) to the original complaint of Plaintiff Alycia Singleton (?Plaintiff?) filed March 21, 2016.? Plaintiff alleges that she was employed by Defendant Luxul Technology from May 2014 to March 2016.? Plaintiff claims that shortly after she began working as an hourly paid employee Defendant Pan, Luxul CEO, offered her a position as a sales representative where she would be paid commissions based on the sales she generated.? Plaintiff often worked overtime and generated substantial sales for Defendants, but did not receive overtime pay or the promised commissions.? Plaintiff was eventually promoted to be Supervisor in the Customer Service department.? She asked Defendant Pan about the unpaid commissions in February 2016 and he denied any promise to pay commissions.? Defendants then allegedly retaliated against Plaintiff by restructuring the Customer Service department and reducing Plaintiff?s pay.? Plaintiff was then asked to sign a document that treated her as a new hire, memorialized the loss of pay, and contained an arbitration clause.? When Plaintiff refused to sign this document she was terminated on March 10, 2016.? (See Complaint at 1-30 generally).
As an initial matter the Court notes that Code of Civil Procedure (?CCP?) ?430.41(a) requires the parties to meet and confer ?in person or by telephone.?? Exchanging emails does not comply with the plain terms of the statute.? Nor does merely stating each side?s position constitute meeting and conferring.? In the event there is a further demurrer, the parties will comply with CCP ?430.41 and Defense Counsel will relate the substance of the meet and confer discussion ?in person or by telephone? in the required declaration.? Defendants are reminded that pursuant to CCP ?430.41(b) ?[a] party demurring to a pleading that has been amended after a demurrer to an earlier version of the pleading was sustained shall not demur to any portion of the amended complaint, cross-complaint, or answer on grounds that could have been raised by demurrer to the earlier version of the complaint, cross-complaint or answer.?
The Court in ruling on a demurrer treats it ?as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.?? (Piccinini v. Cal. Emergency Management Agency (2014) 226 Cal.App.4th 685, 688, citing Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)? ?A demurrer tests only the legal sufficiency of the pleading.? It admits the truth of all material factual allegations in the complaint; the question of plaintiff?s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.?? (Committee on Children?s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214.)? Extrinsic evidence may not be considered by the Court in ruling on a demurrer.? Accordingly, the Court has not considered the exhibit attached to the declaration of Plaintiff?s Counsel Aron Liang, or any opposition arguments dependent upon the exhibit.
The demurrer by Defendant James Pan only to the 1st, 2nd, 4th, 5th, 6th, 7th, 8th, 9th, 10th, 11th and 12th causes of action on the ground that they are barred as alleged against him by the ?manager?s privilege? is OVERRULED.? Preliminarily, an assertion of privilege is an affirmative defense not a failure to state sufficient facts, and neither the notice of demurrer or the demurrer itself properly raise this issue; it is only raised in Defendants? memorandum of points & authorities (?P&As?).? More importantly, the Court is not aware of any California authority extending the manager?s privilege to any cause of action other than one for intentional interference with contractual relations or prospective economic advantage (which is not alleged here).? (See Halvorsen v. Aramark Uniform Services, Inc. (1998) 65 Cal.App.4th 1383, 1388; Aalgaard v. Merchants Nat. Bank, Inc. (1990) 224 Cal.App.3d 674, 681; Huynh v. Vu (2003) 111 Cal.App.4th 1183, 1198; Klein v. Oakland Raiders, Ltd. (1989) 211 Cal.App.3d 67, 82.)? The Sixth District Court of Appeal has taken the position that even when it is applicable the privilege is qualified, not absolute.? (See Wanland v. Los Gatos Lodge, Inc. (1991) 230 Cal.App.3d 1507, 1522-1523.)
Even if the Court were to assume that the ?manager?s privilege? could be asserted as a defense to claims other than interference with contract, as an affirmative defense the existence of the privilege must clearly appear on the face of the complaint for a demurrer to lie. (See Becket v. Welton Becket & Associates (1974) 39 Cal.App.3d 815, 823; Olivet v. Frischling (1980) 104 Cal.App.3d 831, 841, overruled on other grounds in Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510.)? Defendant Pan has not shown that it is apparent from the face of the pleading that, in taking the alleged actions, his primary motive was to benefit the corporation rather than his own interests.
Defendants? demurrer to the 4th, 5th, 6th, 10th, 11th and 12th causes of action on the ground that they each fail to state sufficient facts is OVERRULED.? As Plaintiff?s opposition correctly points out, while the notice of demurrer and demurrer challenge these causes of action as failing to state sufficient facts no arguments in support of the demurrer to these claims are presented in the P&As apart from the ?manager?s privilege? affirmative defense asserted against them by Defendant Pan only.
This leaves the demurrer to the 1st, 2nd, 3rd, 7th, 8th and 9th causes of action on the sole ground that they each fail to state sufficient facts as both 1) properly identified in the notice of demurrer and demurrer and 2) supported by arguments in the P&As.
Defendants? demurrer to the 1st cause of action for breach of contract on the ground that it fails to state sufficient facts is OVERRULED.? The Complaint clearly alleges that shortly after Plaintiff was hired as hourly employee she was made a sales representative and was orally promised that (in addition to hourly pay) she would receive a 10% commission on sales that she generated where products were sold at or above the company set price and a 5% commission on all sales that she generated that were sold at below the company set price as part of her compensations as a sales representative.? (See Complaint at 2, 20, 21 and 34-39.)? These allegations are accepted as true for purposes of demurrer and it is not apparent from the face of the pleading that there was any gratuitous promise.
Defendants? demurrer to the 2nd cause of action for breach of the implied covenant of good faith and fair dealing on the ground that it fails to state sufficient facts is SUSTAINED with 10 days? leave to amend.? At present this claim (Complaint at 40-46) simply repeats the alleged breach of contract as a breach of the implied covenant.? ?The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party?s right to receive the benefits of the agreement actually made.? The covenant thus cannot ?be endowed with an existence independent of its contractual underpinnings.?? It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.? (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349-350.)? ?[W]here breach of an actual term is alleged, a separate implied covenant claim, based on the same breach, is superfluous.?? (Id. at 327.)
Defendants? demurrer to the 3rd cause of action for failure to pay compensation owed (alleged against Defendant Luxul Technologies only) on the ground that it fails to state sufficient facts is OVERRULED.? The only argument presented in support of the demurrer to this claim is that ?Defendant did not owe Plaintiff any commissions because they were gratuitous promises.? Therefore, Defendant did not fail to pay compensation owed, and did not violate Labor Code ??200, et seq.?? Defendants? P&As at 6:28-7:2.? Defendants have not established that the alleged oral/implied-in-fact contract to pay Plaintiff a commission for sales that she generated was a gratuitous promise and Labor Code ?200(a) expressly defines wages to include ?all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation.?? (Court?s emphasis.? See also Sciborski v. Pacific Bell Directory (2012) 205 Cal.App.4th 1152 [Under the statute prohibiting employers from receiving from an employee ?any part of wages theretofore paid,? sales commissions are considered ?wages.?]; Nein v. HostPro, Inc. (2009) 174 Cal.App.4th 833 [Commissions are ?wages,? for purposes of statute requiring employers to pay compensation for services rendered up to the time of an employee?s dismissal and statute requiring payment of wages concededly due.])
Defendants? demurrer to the 7th cause of action for violation of Labor Code ?558 (alleged against Defendant James Pan only) on the ground that it fails to state sufficient facts is SUSTAINED with 10 days? leave to amend.? Labor Code ?558(a) states in pertinent part that ?[a]ny employer or other person acting on behalf of an employer who violates, or causes to be violated, a section this chapter or any provision regarding hours and days of work in any order of the Industrial Welfare Commission shall be subject to a civil penalty . . .?? The Complaint admits that at all relevant times Defendant Pan was founder and CEO of Luxul.? (See Complaint at 2, 8.)? The seventh cause of action expressly alleges that Pan is responsible for the failure to pay Plaintiff overtime wages, which the fourth cause of action for violations of the Labor Code (misidentified as the fifth in the Complaint?s caption) blames both Defendants for.? (See Complaint at 74.)? There are no allegations that Pan acted in anything other than his capacity as CEO and so he cannot be reasonably considered to have been an ?other person acting on behalf of an employer? for purposes of Labor Code ?558.? The general rule is that statutory causes of action must be pleaded with particularity.? (See Lopez v. Southern California Rapid Transit District (1985) 40 Cal.3d 780, 795; Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 790.)
California law does not impose personal liability on corporate officers or directors for wages owed by a corporate employer.? The Industrial Welfare Commission (?IWC?) definition of ?employer? does not include individual corporate agents acting within the scope of their agency.? (See Reynolds v. Bement (2005) 36 Cal.4th 1075, 1085, abrogated on other grounds in Martinez v. Combs (2010) 49 Cal.4th 35, 75.)? While the alter ego doctrine can be invoked in wage claim actions to impose liability on controlling directors and shareholders (See Reynolds, supra, at 1089) there are no allegations that Luxul was the alter ego of Pan (the boilerplate allegations at 11-13 are inadequate for this purpose).
Defendants? demurrer to the 8th and 9th causes of action for fraud and deceit and negligent misrepresentation respectively on the ground that they fail to state sufficient facts are both OVERRULED.? Defendants assert that Plaintiff has inadequately alleged their knowledge of falsity, intent to deceive and to induce reliance, and Plaintiff?s reliance because they are not alleged with specificity.? ??[F]raud must be pled specifically; general and conclusory allegations do not suffice.? The particularity requirement ??necessitates pleading facts which ?show how, when, where, to whom, and by what means the representations were tendered.??? (Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, 1615, internal citations omitted but citing among others Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)? Despite the particularity requirement, because a Defendant?s knowledge of falsity is a fact, it may be generally pled.? (See 5 Witkin, Cal. Procedure (5th Ed., 2008) Pleading ?726.)? ?Intent, like knowledge, is a fact.? Hence, the averment that the representation was made with the intent to deceive the plaintiff, or any other general allegation with similar purport, is sufficient.?? (Id. at ?728.)? As for Plaintiff?s reliance (alleged in the Complaint at 82 and 91), ?[e]xcept in the rare case where the undisputed facts leave no room for a reasonable difference of opinion, the question of whether a plaintiff’s reliance is reasonable is a question of fact.?? (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239.)
Regarding the ?how, when, where, to whom, and by what means the representations were tendered,? the Complaint at 20 adequately alleges that the first time Defendant Pan promised her she would receive a commission from Luxul for sales that she generated was during the LFI lighting show in Las Vegas, Nevada that Plaintiff attended on behalf of Defendant Luxul from May 30, 2014 through June 5, 2014.