Pegastaff v. Pac. Gas & Elec. Co.

• Decision Date: 28 August 2015
• Docket Number: A142736
• Court: California Court of Appeals Court of Appeals
• Parties: PEGASTAFF, Plaintiff and Appellant, v. PACIFIC GAS AND ELECTRIC COMPANY, et al., Defendants and Respondents.

239 Cal.App.4th 1303

192 Cal.Rptr.3d 614

PEGASTAFF, Plaintiff and Appellant

v.PACIFIC GAS AND ELECTRIC COMPANY, et al., Defendants and Respondents.

A142736

Court of Appeal, First District, Division 2, California.

Filed August 28, 2015

Rehearing denied September 22, 2015

Attorney for Plaintiffs and Appellants: Litigation Law Group, Gordon M. Fauth, Jr., The Quinlan Law Firm, William J. Quinlan, Lisa H. Quinlan, Sarah M. Steele.

Attorneys for Defendants and Respondents: Lafayette & Kumagai, Gary T. Lafayette, Africa E. Davidson, Kenneth P. Roberts Law Office, Kenneth P. Roberts, Ryan P. Tish.

Attorneys for Real Party in Interest: Miller Law Group, Walter M. Stella, Joseph P. Mascovich, Noah A. Levin.

Opinion

STEWART, J.

PegaStaff is an agency that provides temporary staffing for its clients. A large part of PegaStaff's business was the provision of staffing to Pacific Gas & Electric Company (PG & E), through a staffing agency with which PG&E directly contracted, initially Corestaff Services, LP (Corestaff), and later Agile 1.

The California Public Utilities Commission (PUC or commission) adopted general order 156 (GO 156) to implement Public Utilities Code ¹ sections 8281 through 8286 (Article 5),² the purpose of which is to encourage and develop the use of women-, minority-, and disabled veteran-owned business enterprises (minority enterprises) within the public utility sector.³ PegaStaff is not a minority enterprise, and after PG&E adopted a program to increase the utilization of minority enterprises, PegaStaff's provision of labor to PG&E was substantially reduced. PegaStaff attributes this reduction to the implementation of a tier system preferential to minority enterprises and the transfer of many of its contingent workers to minority enterprises.

PegaStaff filed suit against the PUC, PG&E, Corestaff and Agile 1. Its claims against the PUC consisted of constitutional challenges to Article 5 and GO 156. The trial court determined that it did not have subject matter jurisdiction to consider PegaStaff's constitutional challenges, granted the PUC's motion for judgment on the pleadings, and entered judgment in favor of the PUC. We affirmed that judgment in PegaStaff v. California Public Utilities Commission (2015) 236 Cal.App.4th 374 (PegaStaff I ).

PG&E, Corestaff and Agile 1 also filed motions for judgment on the pleadings, arguing that just as the trial court lacked subject matter jurisdiction to consider PegaStaff's causes of action against the PUC, it also lacked jurisdiction to consider the causes of action asserted against them. The trial court agreed and granted the motions for judgment on the pleadings.

In this appeal, PegaStaff maintains that the trial court erred in determining that it lacked subject matter jurisdiction to consider its claims against PG&E and Agile 1. We agree and reverse the trial court's judgments in favor of these defendants.⁴

In a separate petition for writ of mandate, PegaStaff maintains that the trial court erred in its determination that it lacked subject matter jurisdiction to consider its claims against Corestaff. We agree and grant PegaStaff's petition in a separate order, issued this day, that refers to this opinion for its reasoning.

BACKGROUND⁵

The PUC is an agency created by the California Constitution to regulate privately owned public utilities such as PG&E. (Cal. Const., art. XII.)

PegaStaff is a division of PegaSoft Corporation, a California corporation, that provides temporary staffing in the fields of information technology and engineering. Mark Arshinkoff, a White male, owns 100 percent of PegaSoft stock.

For nine years prior to filing suit, PegaStaff provided contract labor to PG&E through a program administered by Corestaff,⁶ another staffing company. PegaStaff's placement of workers at PG&E peaked in 2007 at about 40 workers. In that year, PegaStaff received about 400 job orders and revenue of about $4.5 million from PG&E. The revenue from PG & E comprised about 50 percent of PegaStaff's gross revenues for the year.

In October 2007, at the direction of PG&E, Corestaff created a tier structure whereby all minority enterprises were placed in the first tier and all other businesses, such as PegaStaff, were placed in the second tier. First tier businesses received preference in job orders for temporary workers.

The number of PG&E job orders routed to PegaStaff declined substantially as a consequence of the tier structure. At the direction of PG&E, Corestaff “transferred many of the contingent workers placed by PegaStaff to the minority owned businesses,” thereby harming PegaStaff financially. Between January and September 2009, PegaStaff received only one job order for PG&E from Corestaff and employed only four temporary workers at PG&E. In 2010, defendant Agile 1⁷ replaced Corestaff as the administrator of PG&E's contingent worker program.

The operative first amended complaint (FAC) was filed on September 5, 2012, naming PG&E, Corestaff, Agile 1 and the PUC as defendants. The FAC asserts 10 causes of action: (1) violation of Civil Code section 51.5 (barring discrimination by businesses based on enumerated characteristics), asserted against Corestaff and PG&E; (2) violation of California Constitution, article I, section 31 (barring discrimination by the state based on race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting), asserted against the PUC; (3) violation of the equal protection clause of the California Constitution (Cal. Const., art. I, § 7 ), asserted against the PUC; (4) injunctive relief for violation of California's unfair competition law (UCL) ( Bus. & Prof.Code, § 17200 et seq. ), asserted against Corestaff and PG&E; (5) intentional interference with prospective economic advantage, asserted against PG&E; (6) negligent interference with prospective economic advantage, asserted against PG&E; (7) civil conspiracy, asserted against Agile 1; (8) intentional interference with prospective economic advantage,asserted against Agile 1; (9) negligent interference with prospective economic advantage, asserted against Agile 1; and (10) violation of the UCL, asserted against Agile 1.

On May 13, 2013, the PUC filed a motion for judgment on the pleadings, asserting that section 1759⁸ deprives the superior court of subject matter jurisdiction over PegaStaff's two causes of action asserted against it. PegaStaff opposed the PUC's motion and moved for transfer of those causes of action to this court, should the trial court determine that it lacked jurisdiction.

On July 15, 2013, the court filed an order granting the PUC's motion for judgment on the pleadings and denying PegaStaff's motion for transfer. The court determined that pursuant to section 1759, it lacked jurisdiction to hear constitutional challenges to Article 5 and GO 156. The court also entered judgment in favor of the PUC on July 15, 2013. PegaStaff appealed from the court's judgment, but we affirmed in PegaStaff I.

On July 9, 2013, Agile 1 filed a motion for judgment on the pleadings as to the causes of action asserted against it. On July 10, 2013, and July 17, 2013, respectively, PG&E and Corestaff filed their own motions for judgment on the pleadings. PegaStaff opposed the motions and sought leave to amend should the motions be granted. PegaStaff also argued that if the court denied leave to amend, its suit against PG&E, Corestaff, and Agile 1 should be transferred to the Court of Appeal.

The trial court held a hearing on September 5, 2013, and granted the motions for judgment on the pleadings but reserved the issue whether to grant leave to amend. The court requested that PegaStaff provide a proposed second amended complaint (SAC) prior to a hearing scheduled for October 8, 2013. PegaStaff provided a proposed SAC on October 4, 2014. At the October 8, 2013 hearing, the court denied PegaStaff leave to amend because it believed that it did not “have jurisdiction over the matters set forth in the [SAC].”

On November 20, 2013, the court filed an order granting defendants' motions for judgment on the pleadings. The order also denied PegaStaff leave to amend its complaint and denied PegaStaff's motion to transfer the matter to the Court of Appeal. On the same day, the court entered judgment in favor of PG&E. On November 22, 2013, the court entered judgment in favor of Agile 1. Corestaff did not submit a judgment on the trial court's order granting judgment on the pleadings and the court did not enter a separate judgment in favor of Corestaff.⁹

PegaStaff filed a notice of appeal on December 4, 2013. Corestaff filed a motion to dismiss PegaStaff's appeal for lack of an appealable judgment or order. On July 10, 2014, because we had before us appeals from judgments of dismissal in favor of PG&E and Agile 1 based on the same order from which PegaStaff sought to appeal with regard to Corestaff, we denied Corestaff's motion to dismiss and on our own motion treated the appeal as a petition for writ of mandate. On August 15, 2014, on our own motion, we bifurcated the writ petition with regard to Corestaff and the appeal with regard to PG&E and Agile 1 into two separate cases and notified the parties that the petition would be considered with the appeal. This appeal, case No. A142736, concerns dismissal of the suit as to defendants PG&E and Agile 1. The petition for writ of mandate, case No. A140521, concerns the order granting Corestaff's motion for judgment on the pleadings.

DISCUSSION

In an appeal from a motion granting judgment on the pleadings, “ ‘[a]ll properly pleaded, material facts are deemed true, but not contentions, deductions, or conclusions of fact or law....’ ” (People ex rel. Harris v. Pac Anchor Transportation, Inc. (2014) 59 Cal.4th 772, 777 [174 Cal.Rptr.3d 626, 329 P.3d 180].) We review the complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any theory. (Taiheiyo Cement U.S.A., Inc. v. Franchise Tax Bd. ...