Plethora of Evidence Reverses Alter-Ego Employer's Summary Judgment

After reading through the opinion of the California Court of Appeals it is surprising to find that the trial court granted summary judgment for Ensign in Castaneda v. The Ensign Group, Inc. (229 Cal.App.4th 1015). Castaneda filed a class action suit against Ensign, alleging violations of California Labor Code for unpaid minimum and overtime wages.  He claimed Ensign was the alter ego of Cabrillo Rehabilitation and Care center, the nursing facility where he worked, and that the corporate veil should be pierced.  The trial court accepted Ensigns’ argument that Cabrillo was an independent company and granted summary judgment.

The Court of Appeals opinion first explained the situation hypothetically.  The Court stated that a corporation with no employees, who owns a corporation with employees, could be the employer of the owned corporation’s employees.  Under California law, the broad definition of an employer includes “any person...who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working condition of [an employee].”

The facts against Ensign were many.  Castaneda introduced evidence that Ensign: owned Cabrillo, exercised control over its operations and employees, acknowledge control over Cabrillo, transferred officers between Ensign and Cabrillo, supervised and controlled employee job functions, and provided policy and training videos for Cabrillo employees.  At summary judgment, Ensign claimed it had no employees, but a brochure it distributed stated otherwise.  Castaneda and other witnesses also testified that they were hired and paid by both Ensign and Cabrillo.  Finally, Cabrillo employees were given Ensign email addresses, the Ensign VP set their rate of pay, they received their employee benefits through Ensign, and they had to file complaints with Ensign’s HR department.

The Court reversed summary judgment.