Reynolds v. Bement

• Decision Date: 02 April 2003
• Docket Number: No. B158966.,B158966.
• Citation: 107 Cal.App.4th 738,132 Cal.Rptr.2d 384
• Court: California Court of Appeals Court of Appeals
• Parties: Steven REYNOLDS, Plaintiff and Appellant, v. Christian BEMENT et al., Defendants and Respondents.

132 Cal.Rptr.2d 384

107 Cal.App.4th 738

Steven REYNOLDS, Plaintiff and Appellant, v. Christian BEMENT et al., Defendants and Respondents.

No. B158966.

Court of Appeal, Second District, Division 2.

April 2, 2003.

Rehearing Denied May 1, 2003.

Review Granted July 23, 2003.

The Legal Solutions Group, Robert S. Boulter, San Francisco; Law Office of Jonathan Weiss and Jonathan Weiss, Beverly Hills, for Plaintiff and Appellant.

Van Bourg, Weinberg, Roger & Rosenfeld, Ellyn Moscowitz, Anaheim, Joanna Mittman for The Building and Construction Trades Council of Alameda County, The Building and Construction Trades Council of Los Angeles and Orange Counties, The Building and Construction Trades Council of San Bernardino and Riverside Counties, The District Council of Iron Workers for the State of California and Vicinity, The Northern California Carpenters Regional Council, The International Brotherhood of Electrical Workers Local 11, The Painters District Council Local 36, The Roofers Union Locals 81, 36 and 220, The Sprinkler Fitters United Association, Local 483; Saperstein, Goldstein, Demchak & Bailer, David Borgen, Oakland, Darci Burrell and Joshua Konecky, for The Impact Fund, Asian Law Caucus, Inc., Asian Pacific American Legal Center, California Employment Lawyers Association, The Legal Aid Society—Employment Law Center, La Raza Centro Legal, Inc., and Women's Employment Rights Clinic at Golden Gate University School of Law as Amici Curiae on behalf of Plaintiff and Appellant.

Munger, Tolles & Olson, Alan V. Friedman, Kathleen M. McDowell, Linda S.

Goldman, Los Angeles, and Katherine M. Forster for Defendants and Respondents.

Paul, Hastings, Janofsky & Walker and Paul Grossman, Los Angeles, for California Employment Law Council as Amicus Curiae on behalf of Defendants and Respondents.

NOTT, J.

Appellant Steven Reynolds appeals from the trial court's order sustaining the demurrers of respondents Christian Bement, David Sunkin, Phillip Colburn, Alexander Kyman, Gregory Helm, Daniel Seigel, Stuart Buchalter, and James Smith, to Reynolds's first amended complaint (FAC). The California Employment Law Council has filed an amicus brief in support of respondents. The Building and Construction Trades Council of Alameda County, The Building and Construction Trades Council of Los Angeles and Orange Counties, The Building and Construction Trades Council of San Bernardino and Riverside Counties, The District Council of Iron Workers for the State of California and Vicinity, The Northern California Carpenters Regional Council, The International Brotherhood of Electrical Workers Local 11, The Painters District Council Local 36, The Roofers Union Locals 81, 36 and 220, The Sprinkler Fitters United Association, Local 483, The Impact Fund, Asian Law Caucus, Inc., Asian Pacific American Legal Center, California Employment Lawyers Association, The Legal Aid Society—Employment Law Center, La Raza Centro Legal, Inc., and Women's Employment Rights Clinic at Golden Gate University School of Law have filed amicus briefs in support of Reynolds.

Respondents are officers and directors of Earl Scheib, Inc., and Earl Scheib of California, Inc. (the corporate defendants are hereafter collectively referred to as Scheib), who are alleged to have knowingly implemented unlawful wage and hour policies to the detriment of Scheib shop managers and assistant shop managers. We are asked to determine if corporate agents can be personally liable for unpaid wages based on their status as "employers" or because they allegedly committed tortious acts. On the facts alleged here, we conclude in the negative and affirm the judgment.

CONTENTIONS

Reynolds contends that: (1) the FAC properly pled 10 causes of action against respondents; (2) public policy requires a reversal; and (3) respondents should be held personally liable for causing a corporation's unlawful or tortious acts.

FACTS AND PROCEDURAL BACKGROUND

Reynolds, a former Scheib shop manager, filed a complaint¹ against Scheib on March 13, 2000, seeking damages, equitable relief, and restitution on behalf of himself, the general public, and other similarly situated employees of Scheib working in California, from March 13, 1996, to the present. Reynolds subsequently added Scheib's president, Christian Bement, who cross-complained and removed the case to federal court. On July 9, 2001, the case was remanded to the state court. Reynolds named the remaining respondents as defendants. On November 14, 2001, respondents, with the exception of Bement, demurred to the complaint. The trial court sustained the demurrer with leave to amend.

Reynolds filed the FAC as a class action lawsuit on December 31, 2001, against respondents and Scheib,² alleging the following causes of action: (1) failure to pay overtime compensation in violation of Labor Code section 1194³ (against respondents and Scheib); (2) failure to pay compensation at the time of termination in violation of sections 201-203 (against Scheib); (3) unlawful deduction of wages (against respondents and Scheib); (4) conversion (against respondents and Scheib); (5) violation of section 216 (against respondents and Scheib); (6) violation of sections 1174 and 1175 (against respondents and Scheib); (7) violation of section 558 (against respondents and Scheib); (8) violation of section 1199 (against respondents and Scheib); (9) negligence per se (against respondents and Scheib); (10) negligence (against respondents and Scheib); (11) violation of Business and Professions Code section 17200 et seq. (against respondents and Scheib); (12) declaratory relief (against respondents and Scheib); (13) for an accounting (against respondents and Scheib); and (14) for injunctive relief (against respondents and Scheib).

The FAC alleges the following. It is a class action lawsuit brought on behalf of persons employed during the period of March 13,1996 to the present by Scheib as shop managers and assistant shop managers in Scheib's 54 automobile paint shops in California (the Class). Respondents are officers, agents, and/or directors of Scheib. Respondents assisted in tortious acts, including violation of overtime regulations found in wage orders, and conspired to require the Class to work unpaid overtime hours even though the Class members are not exempt from the requirement to pay overtime compensation. Respondents took unlawful deductions from Class members' pay and conspired to convert Class wages.

First cause of action

(Failure to pay overtime compensation in violation of sections 510, 1194, and applicable wage orders against respondents and Scheib)

Respondents and Scheib intentionally misclassified nonexempt employees as exempt employees in order to deprive them of overtime pay and required the Class to work in excess of eight hours per day and/or 40 hours per week without paying them overtime. Members of the Class were scheduled to work 59 hours per week, 11 hours per day Monday through Friday, and four hours per day on Saturday without overtime pay, but did not meet the test for executive employees who are exempt from overtime compensation requirements.

Third cause of action

(Unlawful deductions from Class members against respondents and Scheib)

Respondents and Scheib deducted amounts from Class members' pay for alleged clerical mistakes, calculation errors, late filed paperwork, returned checks from customers, and cash shortages. Respondents and Scheib attempted to legitimize the deductions by requiring Class members to authorize the deductions by signing preprinted forms stating that the Class member had engaged in willful misconduct, regardless of whether the member had actually engaged in any acts that would constitute willful misconduct or gross negligence, and waiving any claim to the withheld wages. Fourth cause of action

(Conversion against respondents and Scheib)

Respondents and Scheib refused to pay earned overtime wages to the Class, thereby converting the property owned by the Class.

Fifth cause of action

(Violation of section 216 against respondents and Scheib)

Respondents and Scheib refused to pay wages due or falsely denied the amount of the claimed wages in violation of section 216.

Sixth cause of action

(Violation of sections 1174 and 1175 against respondents and Scheib)

Respondents and Scheib failed to keep records of hours worked by employees in violation of sections 1174 and 1175.

Seventh cause of action

(Violation of section 558 against respondents and Scheib)

Respondents and Scheib failed to pay compensation, wages and overtime wages in violation of sections 510 and 515 and the applicable wage orders.

Eighth cause of action

(Violation of section 1199 against respondents and Scheib)

Respondents and Scheib failed to pay compensation, wages, and overtime wages in violation of section 1194 and wage orders; caused the Class members' wages to be deducted on account of cash shortages in violation of wage orders; implemented a plan to defraud the Class of their overtime wages by misclassifying them as exempt, thereby causing the Class to work long overtime hours without overtime pay; required the Class to work under prohibited conditions of labor; paid the Class less than the wage required by the applicable wage order; and violated the applicable wage orders, all in violation of section 1199.

Ninth cause of action

(Negligence per se against respondents and Scheib)

Respondents and Scheib breached their duties of care as set forth in the statutes and regulations set forth in counts one through eight when they violated the aforementioned statutes and regulations.

Tenth cause of action

(Negligence against respondents and Scheib)

Respondents were unqualified or reckless or intentionally harmed the Class in performing their duties with regard to employee compensation.

Eleventh cause of action

(Violation of Business and Professions Code section 17200 against respondents and Scheib)

Respondents and Scheib committed unfair, unlawful and...