Why You May Not Want To Be A "Guiding Spirit"

Allen Matkins
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Allen Matkins

Last week, I wrote about California Labor Code § 558.1 which provides that an owner, director, officer, or managing agent of an employer (a "person acting on behalf of an employer") may be liable "as the employer" for violating, or causing to be violated, any provision regulating minimum wages or hours and days of work in any order of the Industrial Welfare Commission, or violating, or causing to be violated, Sections 203, 226, 226.7, 1193.6, 1194, or 2802 of the Labor Code.  

Presumably, these violations must relate to employment in California.  But what if the owner, director, officer, or managing agent of the employer is not in California?  According to U.S. District Court Judge Dolly M. Gee, "just because an individual's job title may open him up to potential liability under a California statute in the abstract does not mean that, without any minimum contacts, he is subject to California courts' personal jurisdiction".  Duong v. Groundhog Enterprises, Inc., No.  2020 WL 2046397, at *3 (C.D. Cal. Feb. 7, 2020).  According to Judge Gee, "Courts may have personal jurisdiction over corporate officers arising out of their duties as officers only when the officers are ‘the guiding spirit behind the wrongful conduct, or the central figure in the challenged corporate activity.’ ” Id.  [In re Boon Glob. Ltd., 923 F.3d 643 (9th Cir. 2019)] at 651 (citing Facebook, Inc. v. Power Ventures, Inc., 844 F.3d 1058, 1069 (9th Cir. 2016))."  Judge Otis D. Wright, II has also applied a "guiding spirit" test for personal jurisdiction in a case seeking to impose liability under Section 558.1.  Green v. Hepta Run, Inc., 2020 WL 1638273, at *3 (C.D. Cal. Apr. 2, 2020).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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