Filed 11/12/20; Certified for Publication 12/7/20 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE
MING-HSIANG KAO,
Plaintiff and Respondent, A157886
A158531
v.
(San Mateo County
JOY HOLIDAY, et al., Super. Ct. No. CIV509729)
Defendants and Appellants.
In these consolidated appeals, defendants Joy Holiday 1, Jessy
Lin, and Harry Chen appeal from an amended judgment and order
awarding plaintiff Ming-Hsiang Kao unpaid wages, attorney fees, and
costs, payable jointly and severally. 2
1 Although Joy Holiday is a California corporation, it was sued as
“Joy Holiday,” which is the appellation used by the parties and this
court in referring to that entity.
2 On our own motion, after appellants filed separate records and
the parties completed briefing, we consolidated the appeal from the
amended judgment (case No. A157886) and the appeal from the order
awarding attorney fees and costs (case No. A158531) for oral argument
and disposition.
1
Defendants Lin and Chen challenge the trial court’s ruling that
they were personally liable for Kao’s damages based upon both alter
ago and joint employer liability theories. We affirm.
We dismiss the appeals filed on behalf of defendant Joy Holiday
as no relief is sought on behalf of that entity. (See Golightly v. Molina
(2014) 229 Cal.App.4th 1501, 1519 [appellate “ ‘review is limited to
issues which have been adequately raised and briefed’ ”].)
FACTUAL AND PROCEDURAL BACKGROUND
We set forth only those facts, taken in part from our prior
decision in Kao v. Holiday (2017) 12 Cal.App.5th 947, 951-954 (Kao I ),
necessary to give context to the resolution of these appeals.
A. Background
Joy Holiday was a travel tour company operating bus tours
across the United States and China for Chinese-speaking travelers.
Lin and Chen (collectively referred to as “appellants”), a married
couple, owned and operated Joy Holiday as a closely-held corporation.
In early 2009, Kao, a Taiwanese national, came to the United
States after accepting a job offer from Joy Holiday. Appellants
intended to sponsor Kao for an H-1B work visa, and eventually – in
October 2009 – Joy Holiday filed a visa application stating it wished to
employ Kao as a computer systems administrator working at least 20
hours per week at an hourly salary of $29.30.
Before receipt of the H-1B visa, in March 2009, Kao moved into
appellants’ home and began working for Joy Holiday at its Millbrae
office. Appellants paid Kao $1,700 monthly, representing a gross
amount of $2,500 less $800 for rent. Appellants characterized the
payments, variously, as an allowance, stipend, or payments for learning
2
as a student. Joy Holiday’s chief financial officer and accountant
characterized the payments as salary and recorded them in a
handwritten salary record despite Kao not being on the company
payroll. Several payments made by check contained the notation
“ ‘salary’ ” on the memo line, but Kao received no itemized statements
of wages or hours.
After receipt of the H-1B visa, in February 2010, Kao signed a
one-paragraph work agreement stating he was hired as the office
manager and was put on Joy Holiday’s payroll. He agreed to a $2,500
monthly salary, with an obligation to work a minimum of 20 hours per
week. Kao normally worked a minimum of 10 to 12 hours daily, or
approximately 50 hours per week. Two months later, his rent was
reduced to $600 and he began receiving $1,900 per month.
In January 2011, Kao was demoted to non-managerial status and
his gross monthly salary was reduced to $2,000. While Kao moved into
his own apartment sometime in 2011 while working for Joy Holiday,
the payroll records reflect the $600 rent deduction through April 2011.
Kao’s employment was terminated in May 2011.
Kao filed a lawsuit against Joy Holiday and appellants, in which
he alleged causes of action for violations of federal and state law
regulating minimum wage and overtime pay. (29 U.S.C. § 201 et seq.;
Lab. Code, §§ 1194, 1194.2.) Following a bench trial, the trial court
rejected all of Kao’s statutory wage claims but found he was entitled to
recover unpaid wages under a quantum meruit theory.
On appeal, we reversed as Kao was a non-exempt employee of Joy
Holiday and therefore entitled to recover unpaid wages under his
statutory law claims. (Kao I, supra, 12 Cal.App.5th at p. 960.) We
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found Kao had worked 50 hours per week from February 2010 through
May 2011 and made no express findings as to Kao’s work hours
between March 2009 and January 2010. (Id. at p. 960.) We remanded
the matter to the trial court with instructions to calculate the wage and
overtime payments for Kao’s entire employment from March 2009 to
May 2011, including a determination of the number of hours worked
from March 2009 through January 2010 and of compensation rates.
(Id. at pp. 960, 963.)
B. Current Trial Proceedings
The parties agreed the trial court could consider exhibits
admitted into evidence in the prior trial along with transcripts of the
prior trial proceeding. The parties filed trial briefs, waived opening
statements, and stipulated to written closing arguments. Kao testified
on his own behalf regarding his compensation, while defendants
presented no additional evidence.
In an amended judgment filed on May 21, 2019, and an order
filed on July 30, 2019, Kao was awarded $481,088.94 for violations of
Labor Code sections 1194 and 1194.2 (unpaid wages, attorney fees, and
costs) payable by appellants, jointly and severally, with Joy Holiday.
This sum represented the total of the principal sum of $109,550.57 plus
prejudgment interest of $97,400.00 for unpaid wages, $265,536.00 for
attorney fees, and $8,602.37 for costs.
In its statement of decision, the trial court found that Kao was
employed by Joy Holiday and it was appropriate to invoke the alter ego
doctrine to hold appellants personally liable for wages owed to Kao.
After stating the governing law, the trial court set forth the facts
supporting its ruling as follows:
4
Defendant Lin and Defendant Chen testified at the prior
trial as follows: [ 3] Joy Holiday is a California corporation
with its principle [sic] place of business in Millbrae, San
Mateo County. [Lin] and Chen were married at all times
that Plaintiff worked for Joy Holiday. Joy Holiday was
founded by Lin and Chen, was jointly owned by Lin and
Chen, and was jointly controlled by Lin and Chen (who
made business decisions together). Chen is the Chief
Executive Officer and Lin is the President of Joy Holiday.
Chen also served as the ‘general manager’ of Joy Holiday in
its daily operations, sales and marketing. [Later, Plaintiff
was given the duties of ‘office manager’.] During the
relevant time period, Joy Holiday had approximately eleven
employees. Lin and Chen discussed and agreed to hire
Plaintiff to work at Joy Holiday, and discussed with
Plaintiff that he would be paid $2500 per month. Lin and
Chen paid for Plaintiff to come to California from Taiwan,
and provided Plaintiff a place to stay in their personal
home. Lin and Chen had Joy Holiday pay the rent for their
home, allegedly as a ‘loan,’ until the IRS later conducted
[an] audit and required Lin and Chen to pay back the rent
money to Joy Holiday. Lin and Chen personally charged
Plaintiff ‘rent,’ which ‘rent’ they had the Joy Holiday
bookkeeper take out of Plaintiff’s payroll. When Plaintiff
first started working for Joy Holiday, he only had a tourist
visa, and applied for an H-1B work visa. Lin signed the
letter to the government in support of Plaintiff’s visa.
While awaiting the H-1B visa, Lin paid Plaintiff his
3 Appellants have not submitted as part of the record on appeal the
prior trial transcripts and exhibits considered by the trial court at the
retrial. Instead, in footnote one of their opening brief in case
No. A157886, appellants ask us to take judicial notice of the reporter’s
transcript submitted in Kao I. We deny the request for judicial notice
on procedural grounds as it fails to comply with the California Rules of
Court, rule 8.252(a), which states that in order to obtain judicial notice
by a reviewing court under Evidence Code section 459, “a party must
serve and file a separate motion with a proposed order” and a copy of
the matter to be judicially noticed or an explanation as to why it is not
practicable to submit such a copy.
5
monthly $2500 out of her own cash funds – for which she
thereafter sought and obtained reimbursement by Joy
Holiday. Joy Holiday had a time clock for employees to
punch-in and punch-out their hours in the office. Lin and
Chen did not require themselves to keep time records for
their own time. As part of his job, Plaintiff accompanied
Lin on business trips to Asia. These were business
networking trips, with the schedule and activities set by
Lin. Lin and Chen made the decision to terminate
Plaintiff.
DISCUSSION
Appellants argue the trial court erred in finding they were the
alter egos of Joy Holiday, and therefore personally liable for Kao’s
unpaid wages and related attorney fees and costs. We see no merit to
this claim.
“The alter ego doctrine arises when a plaintiff comes into court
claiming that an opposing party is using the corporate form unjustly
and in derogation of the plaintiff’s interests. [Citation.] In certain
circumstances the court will disregard the corporate entity and will
hold the individual shareholders liable for the actions of the
corporation: ‘As the separate personality of the corporation is a
statutory privilege, it must be used for legitimate business purposes
and must not be perverted. When it is abused it will be disregarded
and the corporation looked at as a collection or association of
individuals, so that . . . the [individuals will be] liable for acts done in
the name of the corporation.’ [Citation.]” (Mesler v. Bragg
Management Co. (1985) 39 Cal.3d 290, 300; italics added.) 4
4 While the Labor Code was amended after this lawsuit was filed to
permit an aggrieved employee to recover unpaid wages against
corporate officers and directors responsible for the nonpayment of
wages (Lab. Code, § 588.1), Kao retained the right to sue to recover his
6
Whether to invoke alter ego liability depends on both: (1) “such
unity of interest and ownership that the separate personalities of the
corporation and the individual no longer exist,” and (2) whether
“adherence to the fiction of separate existence would, under the
circumstances, promote fraud or injustice. On the second score it is
sufficient that it appear that recognition of the acts as those of a
corporation only will produce inequitable results. [Citations.]” (Watson
v. Commonwealth Ins. Co. (1936) 8 Cal.2d 61, 68; Turman v. Superior
Court (2017) 17 Cal.App.5th 969, 981 [invocation of alter ego liability is
not dependent on whether the corporation is “ ‘a real business with real
purpose and assets and not a sham corporate entity formed for the
purpose of committing a fraud or other misdeeds’ ”; italics in original].)
Factors a trial court may consider when deciding unity of interest
and whether the fiction of a separate existence would promote fraud
and injustice include the following: “Commingling of funds and other
assets . . . ; the treatment by an individual of the assets of the
corporation as his own . . . ; . . . the failure to maintain . . . adequate
corporate records . . . ; . . . sole ownership of all of the stock in a
corporation by . . . the members of a family . . . ; the use of a corporation
as a mere shell, instrumentality or conduit for a single venture or the
business of an individual . . . ; . . . [the] concealment of personal
business activities . . . ; the use of the corporate entity to procure labor,
services or merchandise for another person or entity ; . . . or the use of a
unpaid wages against appellants on a theory of alter ego liability.
(Voris v. Lampert (2019) 7 Cal.5th 1141, 1159-1160 [regardless of
available statutory remedies, “where there is evidence that officers or
directors have abused the corporate form, a plaintiff may proceed on a
theory of alter ego liability”].)
7
corporation as a subterfuge of illegal transactions.” (Associated
Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825, 838-840
(Associated Vendors).)
We uphold a trial court’s ruling of alter ego liability if it is
supported by substantial evidence as the invocation of alter ego liability
“is primarily one for the trial court and is not a question of law.”
(Alexander v. Abbey of Chimes (1980) 104 Cal.App.3d 39, 47.) “In
general, in reviewing a judgment based upon a statement of decision
following a bench trial, ‘any conflict in the evidence or reasonable
inferences to be drawn from the facts will be resolved in support of the
determination of the trial court decision. [Citations.]’ [ Citation.] In a
substantial evidence challenge to a judgment, the appellate court will
‘consider all of the evidence in the light most favorable to the prevailing
party, giving it the benefit of every reasonable inference, and resolving
conflicts in support of the [findings]. [Citations.]’ [Citation.]” (Estate of
Young (2008) 160 Cal.App.4th 62, 75-76; see Baize v. Eastridge
Companies, LLC (2006) 142 Cal.App.4th 293, 302 (Baize) [accord].)
Appellants do not contest the trial court’s factual findings but,
rather, argue that the factual findings are insufficient to support alter
ego liability. In doing so, they cite to cases in which the courts discuss
the sufficiency of alter ego allegations in the context of demurrer (A.J.
Fistes Corp. v. GDL Best Contractors, Inc. (2019) 38 Cal.App.5th 677,
696; Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th
221, 235) and summary judgment (Leek v. Cooper (2011) 194
Cal.App.4th 399, 415).
Specifically, appellants argue the alter ego ruling was based
solely on two factors – appellants “owned all of Joy Holiday’s stock and
8
made all of the management decisions” — which taken together are not
sufficient to support a showing of unity and interest. Appellants are
wrong. The trial court also found they commingled assets and made
unauthorized use of corporate assets as they used corporate funds to
pay their personal rent and used personal funds to pay Kao’s salary.
Appellants further contend there was no evidence (or finding
made) of an unjust result if Joy Holiday “ ‘is treated as the sole actor’ ”
responsible for Kao’s unpaid wages and related attorney fees and costs.
However, given the evidence of unity of interest and ownership
between appellants and Joy Holiday, the trial court could reasonably
find that “the inference to be drawn” from appellants’ commingling of
assets and unauthorized use of corporate assets to pay personal
expenses was “sufficient proof” that a failure to disregard the corporate
entity would lead to an inequitable result. (Goldberg v. Engelberg
(1939) 34 Cal.App.2d 10, 13 [“a virtual identity and unity of ownership
and interest” between judgment debtor and corporation and “the
inference to be drawn from the intermingling of funds” – the payment
of the judgment debtor’s personal obligations by the corporation, and
the deposit of the judgment debtor’s private funds in the corporation’s
bank account – were “sufficient proof of an inequitable purpose”]; see
Baize, supra, 142 Cal.App.4th at p. 303 [appellate court upheld trial
court’s finding of alter ego liability of several entities based on “common
ownership, officers and/or directors,” shared employees, shared offices,
and the same attorneys, and “[m]ore importantly,” within the corporate
entities “accounting entries were made to shift revenue profits freely
for the tax and corporate benefit of the entities and the owners”].)
9
We also are not persuaded by appellants’ assertion that the alter
ego ruling cannot stand because there was no evidence, and therefore
no findings, that Joy Holiday was undercapitalized or that Joy Holiday
was a mere shell or conduit for the business of appellants. It was for
the trial court to determine whether the presence or absence of any
factor listed in Associated Vendors, supra, 210 Cal.App.2d 825, “as well
as the consideration of any other circumstances” warranted invoking
the alter ego doctrine. (Arnold v. Browne (1972) 27 Cal.App.3d 386,
395, disapproved on another ground in Reynolds Metal Co. v. Alperson
(1979) 25 Cal.3d 124, 129.) Therefore, it is no surprise that appellants
cite no case holding that the absence of these factors precludes a trial
court from invoking the alter ego doctrine.
Accordingly, we uphold the trial court’s ruling that appellants, as
the alter egos of Joy Holiday, are personally liable for the sums
awarded as delineated in the amended judgment and order. In light of
our determination, we need not and do not address the trial court’s
ruling that appellants were also personally liable as joint employers of
Kao.
DISPOSITION
The appeals filed by defendant Joy Holiday in case No. A157886
and case No. A158531 are dismissed.
In case No. A157886, the amended judgment filed on May 21,
2019 is affirmed.
In case No. A158531, the order filed on July 30, 2019 is affirmed.
Plaintiff and Respondent Ming-Hsiang Kao is awarded costs on
these consolidated appeals.
10
_________________________
Petrou, J.
WE CONCUR:
_________________________
Fujisaki, Acting P.J.
_________________________
Jackson, J.
11
Filed 12/7/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE
MING-HSIANG KAO,
Plaintiff and Respondent,
A157886
v. A158531
JOY HOLIDAY, et al., (San Mateo County
Defendants and Appellants. Super. Ct. No. CIV509729)
THE COURT:
The opinion in the above-entitled matter, filed on November 12, 2020,
was not certified for publication in the Official Reports. For good cause, the
request for publication is granted.
Pursuant to rule 8.1105(c) of the California Rules of Court, the opinion
in the above-entitled matter is ordered certified for publication in the Official
Reports.
Date: December 7, 2020 FUJISAKI, J , Acting P. J.
1
Trial Court: San Mateo County Superior Court
Trial Judge: Hon. Marie Weiner
Counsel: Lohr Ripamonti & Segarich, Roberto Ripamonti, for Plaintiff
and Respondent.
WHGC, Michael G. York, for Defendants and Appellants.
A157886/A158531/ Kao v. Holiday et al.
2