Leek v. Cooper
194 Cal. App. 4th 399
| Cal. Ct. App. | 2011Background
- Plaintiffs allege age discrimination under FEHA and a Family Rights Act violation against Auburn Honda and its sole shareholder Cooper.
- Trial court granted summary judgment to Cooper, holding only the employer can be liable and alter ego theory was not pleaded.
- Plaintiffs claimed Cooper was the actual employer or liable as Auburn Honda’s alter ego.
- Court acknowledged alter ego theory as the proper vehicle to hold a sole shareholder liable for corporate wrongdoing, but found pleadings inadequate.
- Court found plaintiffs failed to show sufficient facts to support an inequitable result or unity of interest under the alter ego doctrine and denied leave to amend.
- Attorney-fee orders awarding Cooper costs were largely reversed; sanctions on appeal denied; overall, summary judgments affirmed except for fee-related reversals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Cooper can be held liable as the employer under FEHA/Family Rights Act. | Cooper is the employer due to control over employees. | Only the employer may be liable; Cooper cannot be liable. | No personal liability absent valid alter ego. |
| Adequacy of the pleadings to support an alter ego claim against Cooper. | Complaint sufficiently alleged alter ego liability. | Alter ego wasn't adequately pleaded. | Alter ego claim not adequately pleaded. |
| Whether the trial court abused its discretion in denying leave to amend to add alter ego allegations. | Amendment should be allowed based on opposition facts. | Amendment would not cure the pleading defect. | No abuse; no reasonable possibility of cure. |
Key Cases Cited
- Reno v. Baird, 18 Cal.4th 640 (Cal. 1998) (only an employer may be liable for FEHA discrimination; managers not liable)
- Janken v. GM Hughes Electronics, 46 Cal.App.4th 55 (Cal. Ct. App. 1996) (discrimination claims arise from personnel management duties; harassment separate)
- Mesler v. Bragg Management Co., 39 Cal.3d 290 (Cal. 1985) (alter ego: shareholder liable for corporation's actions)
- Sonora Diamond Corp. v. Superior Court, 83 Cal.App.4th 523 (Cal. Ct. App. 2000) (unity of interest and inequitable result required for alter ego)
- Auer v. Frank, 227 Cal.App.2d 396 (Cal. Ct. App. 1964) (alter ego pleading doctrine; pleadings may be sufficient without explicit ‘alter ego’ term)
- Pan Pacific Sash & Door Co. v. Greendale Park, Inc., 166 Cal.App.2d 652 (Cal. Ct. App. 1958) (alter ego evidence admissible where defendant prepared to defend agency Liabilities)
- Morrison Knudsen Corp. v. Hancock, Rothert & Bunshoft, 69 Cal.App.4th 223 (Cal. Ct. App. 1999) (factors for alter ego; not exhaustive; context-specific)
- Signal Hill Aviation Co. v. Stroppe, 96 Cal.App.3d 627 (Cal. Ct. App. 1979) (pleadings must put defendant on notice of actionable claim)