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Court of Appeal:
Man Who Received Profit-Sharing Payments for Services Can’t Sue for Unpaid Wages
By a MetNews Staff Writer
A man who was hired as an at-will employee, to receive $170,000 a year as his salary plus profit-sharing compensation, and who continued working for the company for nine months and 11 days after he was told his salary would be discontinued, but was paid monthly under the profit-sharing plan, cannot maintain an action for unpaid wages, Div. One of the Court of Appeal for this district has held.
Presiding Justice Frances Rothschild authored the opinion, filed Tuesday and not certified for publication. It affirms a summary judgment awarded by Los Angeles Superior Court Judge H. Jay Ford, III to defendant Mad Science Laboratories, LLC.
Ford ruled on Oct. 19, 2019 that the former employee, laboratory scientist Jonathan Napitupulu, had no entitlement to the $134,578.52 he claimed in unpaid wages, plus waiting time penalties amounting to $14,166.16. Rejecting Napitupulu’s contention that he ““was required to work without pay,” in violation of provisions of the Labor Code, the judge said:
“…Plaintiff was received distribution payments and was ‘compensated.’ The evidence from either party rebuts Plaintiff’s claim that he received no compensation for his work from January 2017 through October 2017. Based on the undisputed evidence, Defendant had no obligation to pay Plaintiff monthly wages in the amount of $14,166.16 from January 1, 2017 through October 11, 2017. Defendant also paid Plaintiff profit-sharing distributions in the amount of at least $103,500 in 2017.”
Rothschild’s Opinion
In her opinion affirming the judgment, Rothschild declared:
“Here, Mad Science has presented undisputed evidence of Napitupulu’s status as an at-will employee. Mad Science also has presented undisputed evidence that it notified Napitupulu in January 2017 of its decision to cease paying him a fixed salary, and that Napitupulu nonetheless continued to work as the lab’s technical supervisor until October 2017.”
She continued:
“Although Napitupulu urges that he never expressly ‘agreed to a loss of his wages,’ he accepted the changed terms and conditions of employment by virtue of his decision to continue working for Mad Science. ….We therefore agree with Mad Science that it had no obligation to pay Napitupulu any fixed salary payments in 2017.”
Leave to Amend
Rothschild said Ford did not abuse his discretion in denying Napitupulu leave to amend, explaining:
“Through the proposed amendment, Napitupulu sought to name five additional defendants and to add causes of action for (1) breach of fiduciary duty against one of the new defendants, and (2) “winding up and dissolution; sale of membership interest” against Mad Science and several of the new defendants….
“We agree with the trial court’s conclusion that these new claims are at best tangentially related to Napitupulu’s claim for unpaid wages….Moreover, following three years of litigation, Napitupulu waited until just six weeks before trial to seek leave to amend his complaint.”
She related in a footnote that “Napitupulu subsequently filed a separate action asserting claims substantially similar to the new claims he sought to present in his proposed amended complaint in this action.”
The case is Napitupulu v. Mad Science Laboratories, B317570.
Napitupulu brought the new action against Mad Science, on Jan. 26, 2022, as an individual. Mad Science protested that he was seeking to relitigate his Labor Code claims; Napitupulu insisted that the gist of the action was that he was given a five percent ownership interest in the company, through which he to receive profit-sharing payments, but that his rights as an owner were being ignored.
The second amended complaint substituted Perdana Group, LLC, as the plaintiff, proclaiming that it was now the holder of the five percent interest.
On Feb. 21, Ford overruled Mad Science’s demurrer to the second amended complaint, saying that most of he allegations do not relate to Napitupulu’s Labor Code claims. As to those that do, he ordered that they be stricken.
Ford noted that “Plaintiff Perdana is suing to enforce its rights as a 5% member of Mad Science.”
Perdana seeks, among other things, dissolution of Mad Science and an accounting.
A case management conference is scheduled for June 7 in 22SMCV00132.
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