Daniel Rico v. New Ground Transport, Inc., et al.

against his wishes. (Compl. ¶¶ 30-31.)

B. Present Motions

Now before the Court is Defendants’ general demurrer to Plaintiff’s eighth cause of

action for retaliation and Defendants’ motion to strike punitive damages allegations from

Plaintiff’s Complaint. Plaintiff filed Oppositions. Defendants filed replies. After issuing a

tentative ruling and holding a hearing on the motions, the Court now issues its final ruling.1

II. WHY THE COURT IS OVERRULING THE DEMURRER

Labor Code section 1102.5 prohibits employers from retaliating against an employee for

disclosing a violation of state or federal statute. (Lab. Code § 1102.5, subd. (b)&(c).) To state a

1 The Court finds that the moving party has complied with its meet-and-confer obligation.

prima facie case of retaliation under Labor Code section 1102.5, a plaintiff must establish: (1)

plaintiff engaged in a protected activity; (2) the employer subjected plaintiff to an adverse

employment action; and (3) there is a causal link between the two. (Hager v. County of Los

Angeles (2014) 228 Cal.App.4th 1538, 1540 (disapproved of on other grounds); Soukup v. Law

Offices of Herbert Hafif (2006) 39 Cal.4th 260, 287.) A plaintiff must establish that the alleged

protected activity was a contributing factor in the adverse action taken against plaintiff. (Lawson

v. PPG Architectural Finishes, Inc. (2022) 12 Cal.5th 703, 718; Nejadian v. County of Los

Angeles (2019) 40 Cal.App.5th 703, 719.)

Labor Code section 98.6, subdivision (a) provides in relevant part: A person shall not in

any manner retaliate or take any adverse action against any employee because the employee

made a written or oral complaint that they are owed unpaid wages.

Adverse employment action is viewed the same as it is under the Fair Employment and

Housing Act (FEHA). (Patten v. Grant Joint Union High School Dist. (2005) 134 Cal.App.4th

1378, 1387, disapproved on other grounds by Lawson v. PPG Architectural Finishes, Inc. (2022)

12 Cal.5th 703, 718.) The law is well-settled that mere oral or written criticism of an employee

does not meet the definition of an adverse employment action. (Akers v. County of San Diego

(2002) 95 Cal.App.4th 1441, 1457.) In California, an employee seeking recovery on a theory of

unlawful retaliation must demonstrate that he or she has been subjected to an adverse

employment action that materially affects the terms, conditions, or privileges of employment.

(McRae v. Dept. of Corrections and Rehabilitation (2006) 142 Cal.App.4th 377, 386 (McRae);

citing Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1052 (Yanowitz).) An adverse

employment action must be substantial and detrimental in that it is reasonably likely to impair a

reasonable employee’s job performance or prospects for advancement as distinguished from

minor or relatively trivial actions that are likely to do no more than displease. (Horsford v. Board

of Trustees of Calif. State Univ. (2005) 132 Cal.App.4th 359, 373.) Actions that “anger or upset

an employee cannot properly be viewed as materially affecting the terms, conditions, or

privileges of employment and are not actionable ....” (Yanowitz, supra, 36 Cal.4th at p. 1054.)

This requirement “guards against both judicial micromanagement of business practices and

frivolous suits over insignificant slights.” (McRae, supra, 142 Cal.App.4th at pp. 386-87(A

change that is merely contrary to the employee’s interests or not to the employee’s liking is

insufficient.).)2

Here, the Complaint’s allegations as to the retaliation cause of action are satisfactory. The

Complaint alleges that Defendant Pena was New Ground’s chief executive officer, chief

financial officer, secretary, director, and agent for service, and directly exercised control over

Plaintiff’s wages, hours, and working conditions. (Compl. ¶¶ 5&11.) The Complaint further

alleges Plaintiff was paid $31.00 per hour and regularly worked 10-to-11-hour shifts, at times

without uninterrupted meal and rest periods. (Compl. ¶¶ 12-13 & 16-20.) The Complaint further

alleges that on August 13, 2025, Plaintiff’s counsel sent formal notice of representation and

statutory records requests to Defendants. (Compl. ¶ 30.) It also alleges that, after Plaintiff raised

wage-and-break concerns, Pena singled Plaintiff out by name in company group chats, instigated

arguments, threatened to fire Plaintiff or cut his hours, and directed Plaintiff to take unpaid time

off against his wishes.3 (Compl. ¶ 31.) The Complaint further alleges that after Pena’s August 25,

2 As an initial matter, Defendants argue that Plaintiff should allege the claims under Labor Code section 1102.5 and 98.6 in separate counts as each statute protects different activity and provides for different remedies. But there is no legal requirement that Plaintiff does that and Defendants provide no legal authority for this proposition. 3 Curiously, when arguing that the Complaint does not allege adverse employment actions, the demurrer motion curiously omits the allegation that Defendants directed Plaintiff to take unpaid time off. (See, e.g., Demurrer Opening Brief, filed 3/26/2026, at page 6, lines 8 through 22.)

2025 call to Plaintiff, Pena continued the retaliatory course of conduct, including singling

Plaintiff out in group chats, threatening reduced hours, and directing unpaid time off as

punishment for asserting his rights. (Compl. ¶¶ 30&57.)

These allegations must be accepted as true and construed liberally. Defendants’

disagreement with the weight of the allegations or the inferences to be drawn from them provides

no basis to sustain the demurrer.

Further, the demurrer’s core premise is too narrow because it treats the August 13, 2025

records request as the only pleaded protected activity. The Complaint alleges more. Paragraph 31

alleges that after Plaintiff raised wage-and-break concerns, Pena responded by singling Plaintiff

out, threatening to fire him or cut his hours, and directing unpaid time off. At the pleading stage,

that is enough to allege protected oral complaints under Labor Code section 98.6.

Moreover, an employee need only have a subjective belief or an objective reasonable

cause to believe that the conduct complained of was unlawful; either is sufficient. (Vatalaro v.

County of Sacramento (2022) 79 Cal.App.5th 367, 380-83.)

The August 13, 2025, notice of representation and statutory records requests supports

chronology, employer awareness, and the short sequence between Plaintiff’s assertion of rights

and the retaliatory conduct that allegedly followed. (Compl. ¶ 30.) California courts have long

recognized that the protected-activity inquiry is not narrow. (See, e.g., Sheridan v. Touchstone

Television Productions, LLC (2015) 241 Cal.App.4th 508, 517.)

The Complaint also permits an alternative theory under Labor Code section 1102.5.

Section 1102.5, subdivision (b) protects disclosures to a person with authority over the employee

or to another employee who has authority to investigate, discover, or correct the violation or

noncompliance. The Complaint alleges Pena directly exercised control over Plaintiff’s wages,

hours, and working conditions. (Compl. ¶¶ 5&11.) Read liberally, Plaintiff’s internal wage-and-

break complaints to management with that authority are sufficient, at minimum, to support an

alternative whistleblower theory.

III. WHY THE COURT IS DENYING THE MOTION TO STRIKE

Defendants move to strike paragraph 59 of the Complaint, which alleges Defendants’ acts

were done maliciously, fraudulently, and oppressively, and the Prayer for Relief No. 3c, which

seeks punitive damages. Defendants argue that Plaintiff is not entitled to an award of punitive

damages because the allegations of the Complaint do not meet the requirements of Civil Code

section 3294.

The challenged allegations should not be stricken because the Complaint alleges

retaliatory conduct tied to Plaintiff’s protected wage-and-break complaints. Plaintiff alleges that

after asserting those concerns, Defendant Pena singled him out in company communications,

threatened termination or reduction of hours, and directed him to take unpaid time off. Read as a

whole and liberally construed at the pleading stage, those allegations support the challenged

pleading at least sufficiently to preclude striking the punitive damage allegations and prayer.

Defendants’ motion attempts to recast the pleading as though it alleges only routine

personnel management. That is too narrow a reading. The pleaded conduct includes threatened

adverse action and unpaid time off following protected complaints. The alleged conduct also

supports an inference of “malice” and “oppression” within the meaning of Civil Code section

3294. Threatening termination, threatening reduction of hours, and directing unpaid time off

after an employee asserts wage-and-break rights plausibly reflects conduct undertaken in

conscious disregard of those rights. At the pleading stage, those facts are sufficient.

Further, the Complaint alleges the kind of officer-level involvement that controls under

Civil Code section 3294, subdivision (b). That subdivision provides that punitive damages may

be awarded against a corporate employer where the “advance knowledge and conscious

disregard, authorization, ratification or act of oppression, fraud, or malice” was “on the part of an

officer, director, or managing agent of the corporation.” (Civ. Code, § 3294, subd. (b).)

Plaintiff alleges that Pena was the Chief Executive Officer, Chief Financial Officer,

Secretary, and Director for New Ground Transport, Inc., and that he personally controlled

Plaintiff’s wages, hours, and working conditions. (Compl. ¶¶ 5&11.) The challenged conduct is

therefore alleged not as anonymous lower-level supervision, but as conduct carried out by the

very individual who occupied officer and director-level authority within the company.

The California Supreme Court’s definition of managing agent fits Defendant Pena. A

managing agent is an individual with “substantial discretionary authority over decisions that

ultimately determine corporate policy,” exercising “discretionary powers of direction and control

over corporate business.” (White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 569-70.)

Plaintiff’s allegations — CEO, CFO, Secretary, Director, and direct control over

Plaintiff’s wages, hours, and working conditions — plainly describe a managing agent. They

allege substantial discretionary authority over policy, not mere supervisory authority.

Moreover, in Mathews v. Happy Valley Conference Center, Inc. (2019) 43 Cal.App.5th

236, 267, the Court of Appeal held that punitive damages are recoverable under Labor Code

section 1102.5 because the statute’s penalties are expressly “in addition to other remedies” and

therefore do not preclude punitive damages.

///

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IV. CONCLUSION

1. Defendants’ demurrer to Plaintiff’s eighth cause of action for retaliation is

OVERRULED.

2. Defendants’ motion to strike is DENIED.

3. Defendants shall file an answer to Plaintiff’s Complaint no later than June 8,

2026.

IT IS SO ORDERED.

Dated: [TENTATIVE – NOT FINAL] Hon. Joseph B. Widman Judge of the Superior Court