Regina Ruiz and Florence Berger v. St. Vincent's Institution, et al.

Defendants concurrently filed a motion to strike portions of the complaint. Plaintiffs opposed the demurrer and motion to strike. On November 12, after a hearing, the Court issued a minute order sustaining Defendants' demurrer to the first, second, third, fourth, fifth, and sixth causes of action alleged in the complaint, with leave to amend; and granting Defendants' motion to strike the words "and punitive damages" from paragraph 4 of the complaint. The Court denied Defendants' motion to strike the complaint in all other respects.

Plaintiffs filed their first amended complaint (FAC) on November 25, asserting or effectively asserting the same nine causes of action described above. As alleged in the operative FAC: SVI and DC are California non-profit corporations that primarily operate educational institutions, including SVI's Early Childhood Education Center to which the majority of SVI's personnel and resources are dedicated. (FAC, P.P. 1 & 10-11.) SVI and DC are the joint employers of Plaintiffs. (FAC, P. 1.) Ruiz was SVI's first ever Chief Development Officer. (FAC, P. 2.)

Plaintiff Berger was Legal Liaison and Lead Case Manager, and eventually Director. (FAC, P. 3.) Ruiz and Berger have each been diagnosed with a disabling medical condition that limited one or more of their life activities. (FAC, P.P. 7-8.) In September 2023, Ruiz reported false billings of an SVI contractor and in November 2023, the theft of donated gift cards by an SVI employee. (FAC, P. 2.) Berger also reported the theft of donated gift cards. (FAC, P. 3.) The SVI contractor was the husband of SVI's President and Chief Executive Officer, Rosa Paredes, and the SVI employee was Paredes' female relative. (FAC, P.P. 2, 3.)

Following the reports described above, Ruiz was subject to retaliation and discrimination by Paredes. (FAC, P. 2.) When Ruiz complained of the retaliation and discrimination by Paredes, SVI and DC did nothing and allowed Paredes to continue her adverse actions with impunity. (Ibid.) After experiencing months of retaliatory actions and increasing intolerable working conditions, Ruiz was forced to resign. (Ibid.) Berger also suffered retaliation by Paredes, and was subjected to sexual harassment by SVI's Human Resources Manager and Safety Officer, Francis Avila. (FAC, P. 3.)

Berger reported the retaliation, discrimination, and harassment to SVI and DC and, shortly after, was terminated for pretextual reasons, after returning from an approved trip on April 10, 2024. (FAC, P.P. 3 & 67.) On January 8, 2026, DC filed a demurrer to the first through sixth causes of action alleged in the FAC, on the grounds that DC is statutorily excluded or exempted from FEHA. Defendants concurrently filed a motion to strike portions of the FAC. Plaintiffs oppose the demurrer and motion to strike of DC.

Analysis: (1) The Demurrer "In reviewing the sufficiency of a complaint against a general demurrer, we are guided by long-settled rules. 'We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.' [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context." (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) "If the complaint states a cause of action under any theory, regardless of the title under which the factual basis for relief is stated, that aspect of the complaint is good against a demurrer." (

Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38.) In support of the demurrer, Defendants request that the Court take judicial notice (the DCRJN) of: (DCRJN exhibit 4) DC's Restated Articles of Incorporation, filed with the California Secretary of State on June 25, 1987 (the Restated Articles); (exhibit 5) DC's current registration status with the State of California, Department of Justice as a charitable or nonprofit religious corporation; and (exhibit 6) a January 5, 2026, California Franchise Tax Board Entity Status Letter pertaining to DC (the FTB Letter). (DCRJN, P.P. 1-3.)

The Court will grant the requests for judicial notice of exhibits 4 through 6 as recorded documents and official acts. (See Evid. Code, Sec. 452, subds. (c), (h).) Judicial notice does not extend to the truth of factual matters set forth in those documents. (Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117; Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1569.) The demurrer argues that DC is expressly excluded from FEHA's definition of an employer based on the religious-entity exemption contained in subdivision (d) of Government Code section 12926.

A person claiming to be aggrieved by an unlawful practice under FEHA may bring a civil action. (Gov. Code, Sec. 12965.) An "unlawful employment practice" under FEHA is defined in Government Code section 12940 which, generally, prohibits discrimination, retaliation, and harassment by an "employer". (See Gov. Code, Sec. 12940, subds. (a), (d) [discrimination including by discharge], (h) [retaliation for opposing any practices forbidden by FEHA] & (j)(1) [harassment]; see also Kelly v. Methodist Hospital of Southern Cal. (2000) 22 Cal.4th 1108, 1116 [liability under FEHA is predicated on "the status of the Defendant as an 'employer.' [Citation.]"].)

In connection with unlawful practices, FEHA defines an "employer" to include "any person regularly employing five or more persons, or any person acting as an agent of an employer, directly or indirectly, the state or any political or civil subdivision of the state, and cities..." (Gov. Code, Sec. 12926, subd. (d).) FEHA expressly excepts from that definition, "a religious association or corporation not organized for private profit." (Ibid.) Courts "give great weight to an administrative agency's interpretation of its own regulations and the statutes under which it operates." (Bradley v.

Department of Corrections & Rehabilitation (2008) 158 Cal.App.4th 1612, 1625.) Relevant here, California Code of Regulations, title 2, section 11008 defines an "employer" to include "any non-profit corporation or non-profit association other than that defined in subsection (5)." (Cal. Code Regs., tit. 2, Sec. 11008, subd. (e)(6).) Subdivision 5 of that section states: "A religious association or religious corporation not organized for private profit is not an employer under the meaning of this Act; any non-profit religious organization exempt from federal and state income tax as a non-profit religious organization is presumed not to be an employer under this Act.

Notwithstanding such status, any portion of such tax exempt religious association or religious corporation subject to state or federal income taxes as an unrelated business and regularly employing five or more individuals is an employer." (Cal. Code Regs., tit. 2, Sec. 11008, subd. (e)(5).) DC's Restated Articles state: "This corporation is a religious corporation and is not organized for the private gain of any person. It is organized under the Nonprofit Religious Corporation Law exclusively for religious purposes" (DCRJN, exhibit 4, art.

II(A).) "The specific purpose of this corporation is to support and foster the mission and purpose of the religious congregation of the Daughters of Charity of St. Vincent de Paul." (DCRJN, exhibit 4, art. II(B).) In addition, the FTB Letter states that DC "is currently exempt from tax under Revenue and Taxation Code ... [s]ection 23701", subdivision (d). (DCRJN, exhibit 6, no. 3.) The judicially noticed material shows that DC is a charitable or nonprofit religious corporation that falls within the exception to the definition of "employer" under FEHA.

As to the allegation that DC operates an educational institution (see FAC, P.P. 1 & 15-16), the demurrer asserts that any reliance by Plaintiffs on the provisions of subdivision (f) of Government Code section 12926.2 is misplaced because DC is organized as a charitable or nonprofit religious corporation and not a nonprofit public benefit corporation. "(1) Notwithstanding any other provision of law, a nonprofit public benefit corporation formed by, or affiliated with, a particular religion and that operates an educational institution as its sole or primary activity, may restrict employment, including promotion, in any or all employment categories to individuals of a particular religion.

"(2) Notwithstanding paragraph (1) or any other provision of law, employers that are nonprofit public benefit corporations specified in paragraph (1) shall be subject to the provisions of this part in all other respects, including, but not limited to, the prohibitions against discrimination made unlawful employment practices by this part." (Gov. Code, Sec. 12926.2, subd. (f).) The judicially noticed material also shows that DC is organized under the Nonprofit Religious Corporation Law, codified as Corporations Code section 9110 et seq., and not as a "nonprofit public benefit corporation" under the Nonprofit Public Benefit Corporation Law for purposes of Government Code section 12926.2. (See, e.g., Corp.

Code, Sec. 5110 et seq.; see also Henry v. Red Hill Evangelical Lutheran Church of Tustin (2011) 201 Cal.App.4th 1041, 1049-1050 [general discussion, noting that "the school has no independent legal status apart from the church[]"].) In opposition, Plaintiffs assert that the FAC does not set forth any allegations as to DC's status as a nonprofit religious association or corporation, and does not contain any allegations which support an entitlement to the religious entity exemption under FEHA. "Although a general demurrer does not ordinarily reach affirmative defenses, it 'will lie where the complaint "has included allegations that clearly disclose some defense or bar to recovery." ' [Citations] 'Thus, a demurrer based on an affirmative defense will be sustained only where the face of the complaint discloses that the action is necessarily barred by the defense.' [Citations.]" (Ivanoff v.

Bank of America, N.A. (2017) 9 Ca1.App.5th 719, 726.) Though a Plaintiff is not required to anticipate or negate potential statutory exemptions in their pleading, the religious entity exemption is "an otherwise viable defense to FEHA liability." (Mathews v. Happy Valley Conference Center, Inc. (2019) 43 Cal.App.5th 236, 259 (Mathews).) Plaintiffs' FAC expressly asserts causes action under FEHA which, reading the allegations of the FAC described above as a whole, are subject to that defense. (See, e.g., FAC, P.P. 12 & 17 [alleging that Plaintiffs did not perform any "religious duties[]"].)

The FAC also alleges that DC was Plaintiffs' employer within the meaning of FEHA; that DC primarily operates educational institutions; that DC required FEHA training for its employees; that no one employed by DC ever informed Plaintiffs that FEHA did not apply to their employment; and that Plaintiffs were covered by FEHA which is binding on DC. (FAC, P.P. 1, 18-19, 21, 24, 80, 87, 99, 110, 117 & 125.) By their pleading, Plaintiffs have squarely and clearly placed the exemption in issue. (Mathews, supra, 43 Cal.App.5th at p. 258.)

For these and all further reasons discussed above, Plaintiffs' contention that the defense raised in the present demurrer is not disclosed in the FAC is without merit. Plaintiffs also assert that DC cannot establish the religious entity exception by relying on the judicially noticed records because the Court may not consider the truth of any statements contained in those records. A Court may take judicial notice of "documents reflecting official acts of the executive department of the State of California." (Friends of Shingle Springs Interchange, Inc. v.

County of El Dorado (2011) 200 Cal.App.4th 1470, 1484 (Friends).) These documents may include a corporation's original articles of incorporation, as well as the corporate status of a party. (Ibid.; see also Newport Harbor Ventures, LLC v. Morris Cerullo World Evangelism (2016) 6 Cal.App.5th 1207, 1215 [granting request for judicial notice of the fact that a party's "corporate status had changed to suspended."]; People v. Thacker (1985) 175 Cal.App.3d 594, 599 [the Court "may acknowledge the mere existence or status of a corporation" by judicial notice].)

Moreover, "[t]he fact that there may be disputed facts outside the matters noticed does not preclude a Court from taking judicial notice of documents containing undisputed facts." (Friends, supra, 200 Cal.App.4th at p. 1484.) Plaintiffs also fail to explain why the truthfulness or proper interpretation of the materials judicially noticed are disputable. (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 114 [general discussion of circumstances under which judicial notice on demurrer is not appropriate].)

Noted above, the judicially noticed material, which are proper subjects of judicial notice for the reasons stated above, reflects that DC is registered with the Secretary of State as a charitable or nonprofit religious corporation based on DC's "founding and registration documents." (DCRJN, exhibit 5.) That material also reflects that DC is tax exempt. For all reasons discussed above, the demurrer fails to explain why the Court may not take judicial notice of these matters.

Plaintiffs also argue that Defendants have waived, or should be estopped from asserting, the religious entity exception under FEHA. "The equitable estoppel doctrine is founded on the concepts of equity and fair dealing. It has four elements: ' "(1) the party to be estopped must be apprised of the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel has a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury." ' [Citation.]

Importantly, equitable estoppel is ' "defensive in nature only, and 'operates to prevent one [party] from taking an unfair advantage of another.' " ' [Citations.]" (Mathews, supra, 43 Cal.App.5th at pp. 258-259.) Similar to the Plaintiff in Mathews, Plaintiffs invoke the doctrine of equitable estoppel offensively to prevent DC from relying on the religious entity exception as a defense to liability under FEHA. For these reasons, it would be error for the Court to allow Plaintiff to assert that doctrine under the circumstances present here. (Mathews, supra, 43 Cal.App.5th at p. 259.)

A waiver is " 'the voluntary relinquishment of a known right, which may be effective as a matter of law without any demonstration that the other party was caused by the waiver to expose [itself] to any harm.' [Citation.]" (Mathews, supra, 43 Cal.App.5th at p. 257.) The actions of DC which Plaintiffs contend constitute a waiver of the religious entity exemption under FEHA include: (1) requiring FEHA training for employees; (2) displaying FEHA related posters in the workplace; (3) making explicit commitments in their employee handbook and policies as to compliance with all State laws, especially FEHA; (4) assuring its employees and funding sources that it would abide by Federal, State and local laws prohibiting retaliation, discrimination and harassment; (5) signing contracts with governmental agencies affirming it would adhere to Federal, State and local laws prohibiting retaliation, discrimination and harassment, especially FEHA; and (6) never informing Plaintiffs that FEHA did not apply to protect them nor any of the other employees. (Motion at p. 7, ll. 1-8; FAC, P.P. 19-21.)

Plaintiffs contend that these actions assured DC's employees that it would follow laws prohibiting retaliation, discrimination, and harassment instead of asserting any religious entity exemption under FEHA. In reply, DC relies on the decision in Mathews to argue that allegations described above are insufficient to constitute a waiver of the exemption. Mathews is instructive here. In that case, Plaintiff argued that the trial Court had correctly found Defendants waived the religious entity exemption under FEHA based on, among other actions by Defendants, their "employee handbook's prohibition on discrimination, harassment, and retaliation as well as its references to 'state or local law' and to the Department of Fair Employment and Housing...." (Mathews, supra, 43 Cal.App.5th at p. 257.)

The Sixth Appellate District noted that Defendants' employee handbook "chose boilerplate employee handbook content from a business association' software" but "never explicitly references FEHA." (Id. at p. 258.) The Court found that, because that handbook "makes no promise that Defendants will be bound by FEHA ..., nothing in the handbook amounts to a knowing and voluntary waiver of the religious entity exemption." (Ibid.) Unlike the employee handbook at issue in Mathews, the allegations of the FAC, though sparse, are sufficient for pleading purposes, to show that DC's employee training, and posters displayed in DC's workplace, explicitly referenced FEHA, and that DC made explicit commitments in their employee handbooks to comply with FEHA. (FAC, P. 19.)

Assuming the truth of these allegations without considering Plaintiffs' ability to prove them (Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1034), a reasonable inference can be drawn from the facts expressly alleged in the FAC, that DC waived the religious entity exemption under FEHA by displaying FEHA posters in the workplace and explicitly committing to comply with FEHA in its employee handbook as alleged in the FAC (Candelore v. Tinder, Inc. (2018) 19 Cal.App.5th 1138, 1143 [the Court "adopt[s] a liberal construction of the pleading and draw[s] all reasonable inferences in favor of the asserted claims[]"].)

Though DC contends that its nature as a nonprofit religious organization is determinative without regard to the nature of Plaintiffs' work (Kelly v. Methodist Hospital of Southern Cal. (2000) 22 Cal.4th 1108, 1116), DC offers no reasoned argument, with citations to relevant and controlling legal authority (and the Court is unaware of any such authority), showing why the religious entity exception under FEHA cannot be waived by an employer. For these and all further reasons discussed above, the Court will overrule the demurrer to the first through sixth causes of action, on the grounds stated.

(2) The Motion to Strike "The Court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading." (Code Civ. Proc., Sec. 436.) "Irrelevant matter" includes a "demand for judgment requesting relief not supported by the allegations of the complaint." (Code Civ. Proc., Sec. 431.10, subds. (b)(3), (c).) "The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the Court is required to take judicial notice." (Code Civ.

Proc., Sec. 437, subd. (a).) DC moves to strike various text from the FAC on the grounds that FEHA does not apply to DC because it is not an employer for the same reasons discussed in connection with the demurrer. The same reasoning and analysis apply. For the same reasons discussed above, the Court will deny the motion to strike.

Tentative Ruling: Citibank N.A. v. Svetlana L. Dayal Tentative Ruling: Citibank N.A. v. Svetlana L. Dayal