Zheng v. Wong CA2/8 ( 2014 )

Filed 12/4/14 Zheng v. Wong CA2/8
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
MING ZHENG, B250654
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC474107)
v.
JEFF WONG,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los Angeles County.
Mary H. Strobel, Judge. Affirmed.
Law Offices of Barry G. Florence, Barry G. Florence; Lee Law Offices, Thomas
M. Lee; Law Offices of Choi & Associates and Edward W. Choi for Plaintiff and
Appellant.
Prince & Heuer and Henry T. Heuer for Defendant and Respondent.
_____________________________
Plaintiff Ming Zheng appeals from a judgment dismissing his wage and hour
claims against Jeff Wong, the manager of the restaurant at which Zheng was formerly
employed. On appeal, Zheng contends the trial court erred in concluding Wong could not
be held personally liable as Zheng’s employer under the Labor Code. We affirm the
judgment.
FACTUAL AND PROCEDURAL BACKGROUND
From 2007 to 2011, Zheng worked as a delivery person at the Joy Feast restaurant.
Jeff Wong was the restaurant manager and Zheng’s boss. Wong set Zheng’s work hours,
told him how to do his job, and gave Zheng his pay in the form of a check and cash
wages. The Joy Feast restaurant was owned by Chyn King, Inc., a corporate entity.
Wong was instrumental in forming Chyn King and, at the time of trial, he was a
stockholder in the corporation. Chyn King employed Wong as the manager of Joy Feast.
In November 2011, Zheng filed a complaint against Wong and Chyn King
asserting claims for failure to pay overtime compensation and minimum wages, for
violation of the unfair competition law, and seeking Labor Code penalties. The
complaint alleged the defendants were agents of one another, and that there was a “unity
of interest” between Wong and Chyn King, such that it would be fair and equitable to
pierce the corporate veil and hold Wong personally liable for Zheng’s claims. In
December 2012, Zheng filed a notice of bankruptcy stay as to Chyn King, which had
filed a bankruptcy petition. In February 2013, Zheng voluntarily dismissed Chyn King
from the action. Despite the allegations in the complaint, Zheng did not pursue an alter
ego theory.
Trial was bifurcated. The first phase concerned only whether Wong was Zheng’s
employer within the meaning of the Labor Code. Following the bench trial, the court
ruled Wong was not Zheng’s employer and entered judgment in favor of Wong. Zheng
timely filed this appeal.
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DISCUSSION
Zheng contends the trial court erred in concluding Wong was not his employer
within the meaning of the Labor Code. We disagree. We review the trial court’s findings
of fact for substantial evidence. However, we independently review purely legal
questions and issues concerning the application of law to undisputed facts. (Le v. Pham
(2010) 180 Cal. App. 4th 1201, 1205-1206; Steinman v. Malamed (2010) 185 Cal. App. 4th
1550, 1556.)
I. The Trial Court Properly Concluded There Was No Legal Basis to Hold
Wong Personally Liable for Alleged Labor Code Violations
As Zheng acknowledges, the California Supreme Court has considered the
question of whether an individual who is a corporate agent may be held personally liable
for failing to pay overtime or other wages under the Labor Code. In Reynolds v. Bement
(2005) 36 Cal. 4th 1075 (Reynolds), the court considered whether the plaintiff could state
a cause of action for recovery of unpaid overtime compensation against individuals who
were officers or directors and shareholders of the corporate entities that owned the
business for which the plaintiff worked. (Id. at p. 1081.) The court concluded the
relevant Industrial Welfare Commission (IWC) wage order that defines employer “does
not expressly impose liability under section 1194 on individual corporate agents.” (Id. at
p. 1086.) The court determined that “employer” under section 1194 should be construed
consistent the common law.1 (Id. at pp. 1086-1087.)
The court then explained: “Under the common law, corporate agents acting within
the scope of their agency are not personally liable for the corporate employer’s failure to
pay its employees’ wages. [Citation.] . . . . It is ‘well established that corporate agents
and employees acting for and on behalf of a corporation cannot be held liable for
1 Under Labor Code section 1194, subdivision (a), “[n]otwithstanding any
agreement to work for a lesser wage, any employee receiving less than the legal
minimum wage or the legal overtime compensation applicable to the employee is entitled
to recover in a civil action the unpaid balance of the full amount of this minimum wage
or overtime compensation, including interest thereon, reasonable attorney’s fees, and
costs of suit.”
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inducing a breach of the corporation’s contract.’ [Citation.] And ‘[d]irectors or officers
of a corporation do not incur personal liability for torts of the corporation merely by
reason of their official position. . . .’ [Citation.]” (Reynolds, at p. 1087.) The court thus
concluded the plaintiff could not pursue a section 1194 action against the individual
defendants, noting: “Had the Legislature meant in section 1194 to expose to personal
civil liability any corporate agent who ‘exercises control’ over an employee’s wages,
hours, or working conditions, it would have manifested its intent more clearly than by
mere silence after the IWC’s promulgation of Wage Order No. 9.” (Id. at p. 1088.)
In a subsequent case, Martinez v. Combs (2010) 49 Cal. 4th 35 (Martinez), the
court limited Reynolds in its application of the common law to the definition of the
employment relationship under section 1194. The court held “that the applicable wage
order’s definitions of the employment relationship . . . apply in actions under section
1194.” (Id. at p. 66.) While the common law definition of employment plays a role in
the wage order definition of “employ,” the court explained it is only one of three
alternative definitions. (Id. at pp. 64-65.)
However this distinction is not relevant to this case. Martinez limited Reynolds,
but not on the only issue that matters here. As stated in Martinez: “The opinion in
[Reynolds] properly holds that the IWC’s definition of ‘employer’ does not impose
liability on individual corporate agents acting within the scope of their agency.
(Reynolds, at p. 1086.) The opinion should not be read more broadly than that.”
(Martinez, at p. 66.)2
2 The court further left intact the reasoning of Reynolds in which the court “accepted
plaintiffs’ concession that ‘the plain language of Wage Order No. 9 defining employer
does not expressly impose liability under section 1194 on individual corporate agents’
(Reynolds, at p. 1086.) This reasoning sufficed to dispose of the Reynolds plaintiff’s
claim because, as we have explained, a claim under section 1194 is in reality a claim
under the applicable wage order and thus subject to the order’s definitional provisions.”
(Martinez, at p. 63, fn. omitted.)
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On appeal, Zheng contends Reynolds stands for the proposition that liability may
not be imposed under section 1194 against corporate officers and directors, but the case
leaves open the possibility that individual liability may be imposed on other corporate
agents, such as managers. Reynolds is not so limited. Although the particular facts of the
case involved corporate directors and officers, the opinion expressly concerned
individuals working as corporate agents, not just directors or officers.
Further, Martinez applied the reasoning of Reynolds to reject the plaintiffs’ claim
against an individual defendant. In addition to suing corporate entities, the Martinez
plaintiffs (agricultural workers in strawberry fields) named as a defendant the field
representative of Combs, one of the defendant entities for unpaid wages. (Martinez, at
pp. 42-43.) The plaintiffs alleged that at one point the field representative told the
plaintiffs to keep working, and he said he guaranteed they would be paid. (Martinez, at
p. 47.) The plaintiffs contended the field representative “personally exercised control
over their wages and hours and is thus personally liable as an ‘employer’ under section
1194 and Wage Order No. 14.” (Martinez, at p. 75.) The court rejected this argument:
“The claim fails under our holding in Reynolds, supra, 36 Cal. 4th 1075, that the IWC’s
definition of ‘employer’ does not impose liability on individual corporate agents acting
within the scope of their agency. (Reynolds, at p. 1086.) Plaintiffs specifically allege in
the operative complaint that Ruiz, in making the alleged statements on May 27, 2000,
was ‘acting in his capacity as agent for [Combs] . . . .’ ” (Martinez, at p. 75.)
The reasoning of Reynolds and Martinez eliminates Zheng’s claim against Wong.
Zheng’s claims were all brought under Labor Code section 1194. The complaint alleged
each defendant was acting as an agent of the other defendants, and they acted within the
scope of their agency. The evidence at trial was consistent with the allegation that Wong
was an agent of Chyn King. Further, Zheng chose not to pursue an alter ego theory of
liability. Under Reynolds and Martinez, Wong could not be held personally liable for
actions taken within the scope of his agency for Chyn King.
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Moreover, substantial evidence supported the trial court finding that Wong was
indeed an agent of Chyn King and his exercise of managerial responsibilities was within
the scope of his agency. To the extent Wong’s interrogatory responses suggested he
personally employed Zheng, the trial court properly weighed that evidence, determined
its credibility, and rejected it in the face of Wong’s otherwise undisputed trial testimony
establishing he acted only as a corporate agent of Chyn King.3 We do not reweigh the
court’s credibility determinations on appeal, and we resolve all evidentiary conflicts in
support of the judgment.
There was no legal basis to hold Wong personally liable as an employer under
section 1194. We find no error in the trial court judgment.4
II. We Decline to Impose Sanctions for a Frivolous Appeal
Wong seeks sanctions against Zheng for filing a frivolous appeal. We may find an
appeal frivolous “when it is prosecuted for an improper motive—to harass the respondent
or delay the effect of an adverse judgment—or when it indisputably has no merit—when
any reasonable attorney would agree that the appeal is totally and completely without
merit.” (In re Marriage of Flaherty (1982) 31 Cal. 3d 637, 650.) However, “[a]n appeal
that is simply without merit is not by definition frivolous and should not incur
3 Zheng argues that Wong’s practice of giving Zheng his cash wages in an envelope
that did not identify the name and address of the legal entity employing Zheng, in
violation of Labor Code section 226, subdivision (a), “established” Wong was Zheng’s
employer within the meaning of section 1194. We disagree. Labor Code section 226
does not expressly create such a presumption, and Zheng provides no legal authority to
support this contention.
4 For the first time in his reply brief, Zheng contends the United States Supreme
Court decision in Burwell v. Hobby Lobby Stores, Inc. (2014) __ U.S. __, 134 S. Ct. 2751,
“trumps” Reynolds. We need not consider issues raised for the first time in a reply brief.
(SCI California Funeral Services, Inc. v. Five Bridges Foundation (2012) 203
Cal. App. 4th 549, 573, fn. 18.) Moreover, Zheng’s scant discussion of Hobby Lobby fails
to persuade us that the high court’s conclusions regarding the definition of “person”
under the federal Religious Freedom Restoration Act of 1993 have any bearing on the
definition of “employer” for purposes of liability under California Labor Code section
1194.
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sanctions . . . the punishment should be used most sparingly to deter only the most
egregious conduct.” (Id. at pp. 650-651.)
In light of the controlling authority of Reynolds and Martinez, it is difficult to see
how any reasonable attorney could conclude Zheng’s appeal had merit. However, we
have not been presented with any clear evidence of subjective bad faith, and this appeal
does not appear to fall into the category of the “most egregious conduct.” We therefore
decline to impose sanctions against Zheng for filing a frivolous appeal.
DISPOSITION
The trial court judgment is affirmed. Wong shall recover his costs on appeal.
BIGELOW, P.J.
We concur:
FLIER, J.
GRIMES, J.
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