Filed 8/15/22 Illing v. Harvey’s Tahoe Management CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

After 18 years of working at Harrah’s Lake Tahoe in Nevada, Vera Illing resigned and filed a hostile work environment suit against her employer in San Francisco Superior Court. The trial court granted her employer’s motion to quash service of summons for lack of personal jurisdiction. We affirm.

Factual and Procedural Background

In 2000, Illing began working at Harrah’s Lake Tahoe as a maître d’ and bartender in the Diamond Lounge, an area for the casino’s highest spending customers. In March 2018, Illing resigned from her job. She informed Harrah’s that her resignation was induced by her employer’s actions and working conditions which were so intolerable “as to amount to [a] firing despite a lack of termination.” While employed by Harrah’s and at the time of her resignation, Illing was a resident of Orangevale, California.

In December 2018, Illing filed suit against Caesars Entertainment Corporation in San Francisco Superior Court. Illing alleged that on January 12, 2018, at Harrah’s Lake Tahoe in Nevada, “Defendant engaged in such wrongful employment practices that working conditions were so intolerable as to amount to firing. With knowledge that a customer was dangerous and violent, defendant allowed the customer access to plaintiff’s work area and create[d] a hostile work environment. Defendant’s work practices were reckless with a conscious disregard for plaintiff’s safety.”

In January 2019, Illing also filed a “charge of discrimination” against Harrah’s Lake Tahoe/Caesars Entertainment with the Nevada Equal Rights Commission. The charge alleged that her employer discriminated against her due to her sex and that she was subjected to sexual harassment which resulted in her constructive discharge.

Specially appearing Caesars Holdings, Inc. fka Caesars Entertainment Corporation (“Caesars”) moved to quash the complaint filed in San Francisco Superior Court for lack of personal jurisdiction. Caesars asserted it was a Delaware Corporation with headquarters in Nevada, and it had no contacts with California related to Illing’s claims. Thus, Caesars argued it had not had sufficient minimum contacts with California for purposes of either general or specific jurisdiction. In May 2021, following a contested hearing, the trial court granted Caesar’s motion to quash.

Illing amended her complaint to substitute Harvey’s Tahoe Management Company, Inc. (“HTMC Inc.”) and Harvey’s Tahoe Management Company LLC (“HTMC LLC”) (collectively “Harvey’s”) for two of the Doe defendants.

Harvey’s moved to quash service of summons for lack of jurisdiction. As part of the motion, Harvey’s submitted evidence that HTMC LLC was a Nevada limited liability company whose headquarters and principal place of business were in Nevada. They proffered evidence that HTMC LLC operated Harrah’s Lake Tahoe, which was located in Stateline, Nevada, and was a property operated under the “Caesars Entertainment” brand name. Harvey’s also put forward evidence that it did not maintain offices in California, have employees assigned to California, or conduct advertising in California since marketing was performed by an entity named Caesars Enterprise Services LLC. Further, Harvey’s noted that Illing’s hostile work environment allegations stemmed from an incident that occurred in Harrah’s in Nevada by a man Harvey’s believed to be a Nevada resident who had been questioned by Nevada’s Douglas County Sheriff and plead guilty to a trespassing charge filed by Nevada’s Douglas County District Attorney. Harvey’s asserted that since they had no contacts with California that rendered them “at home” in the state, there were no grounds for the court to exercise general jurisdiction over them. They also averred that they had no contact with Illing in California, and Illing’s claims did not arise out of any contacts with Illing in California that could serve as grounds for the court to exercise specific jurisdiction over them either.

In opposition, Illing described Harrah’s multiple contacts in California. She submitted evidence that a portion of Harrah’s building was in California and straddled the Nevada/California state line. She also provided evidence that a remodel of Harrah’s food court encroached into California and gave the facility a physical presence in the state. She proffered evidence that Harrah’s did business in California by its use of a VIP bus service that transported California residents to Harrah’s on a monthly basis and brought them to the Diamond Lounge where she worked. In addition, she established that a vast majority of the bus passengers and Diamond Lounge customers were California residents and multiple witnesses lived in California. She argued there was a sufficient relationship between her causes of action and California to warrant personal jurisdiction.

In August 2021, following a contested hearing, the trial court granted Harvey’s motion to quash in a 7-page written order. As with Caesars, the court found Harvey’s was not subject to general jurisdiction in California because it was a Nevada entity whose principal place of business and headquarters were in Nevada; it did not maintain offices in California; and it did not have employees in California. The court rejected Illing’s argument that because a small portion of Harrah’s food court encroached into California it was “at home” in the state. The court also found that Illing had not established specific personal jurisdiction over Harvey’s. While Illing showed Harvey’s had purposefully availed themselves of the privilege of doing business in California, the court found she did not present evidence demonstrating a connection between her alleged injury and Harvey’s marketing activities in California. The court observed that all of the events that gave rise to Illing’s lawsuit occurred exclusively in Nevada: Illing worked for Harrah’s in Nevada; she was allegedly harassed at her place of employment in Nevada by a Nevada resident who had been convicted of a crime in Nevada; and she exhausted her administrative remedies by filing a charge of discrimination with a Nevada agency. Specifically, it found that Illing did not and could not demonstrate that her claims, related to incidents in Nevada with a Nevada resident, were related to Harvey’s advertisements in California and/or alleged bus services.

Illing again amended her complaint and added Harrah’s South Shore Corporation (“South Shore”), the entity that operated the VIP bus program, as a defendant. In addition, Illing added substantive allegations related to defendants’ physical presence in the state, defendants’ activities in California, and the relation of her causes of action to California. She alleged that South Shore was a California corporation whose principal place of business was San Francisco. She alleged that South Shore and Harvey’s were “100 percent owned by the same entity.” She also alleged that there was “such a unity of interest and ownership” between South Shore and Harvey’s that “their separate identities [did] not exist,” and South Shore was not a functioning independent entity and if its acts were treated as solely its own, an inequitable result would follow. Illing further alleged the defendants negligently and intentionally employed hosts who accompanied VIP guests, some of whom were potentially dangerous, to Harrah’s Diamond Lounge where she was subject to a hostile work environment.

Again, specially appearing Harvey’s moved to quash the amended pleading for lack of jurisdiction. Harvey’s maintained the California court could not assert personal jurisdiction over them in Illing’s case. It further argued that there was no factual basis upon which the court could pierce the corporate veil between South Shore and Harvey’s and determine South Shore was Harvey’s alter ego so as to find jurisdiction over Harvey’s. Harvey’s noted that the newly added defendant, California-based South Shore did not contest jurisdiction.

In opposing the motion, Illing argued that there had never been divisibility between Harvey’s and South Shore. She argued Brunzell Construction Co., Inc. of Nevada v. Harrah’s Club (1964) 225 Cal.App.2d 734 (Brunzell), in which the court concluded that Harrah’s South Shore Corporation was an alter ego of Harrah Club, was controlling. It compared South Shore’s present-day operations with those of Harrah’s South Shore Corporation more than 50 years earlier, and argued that it continued to be a “shell and conduit” for Harrah’s.

In November 2021, following another contested hearing, the trial court granted the motion to quash. With respect to Brunzell, the court stated that the 1964 case was decided 57 years ago “before the development of much of modern jurisdictional jurisprudence, when the defendants’ corporate structure, ownership and operations were very different, and concerned entirely distinct facts and claims.” The court was also unpersuaded by Illing’s contention that jurisdiction existed over Harveys as South Shore’s alter ego. The court observed that such allegations did not automatically give the trial court jurisdiction against whom such allegations are directed. The court further found that Illing had not presented any substantial evidence of misconduct or injustice sufficient to invoke the alter ego doctrine as a basis for jurisdiction. This appeal followed.

Discussion

A. Personal Jurisdiction Based on Alter Ego Principles

Illing argues that Harvey’s motion to quash should have been denied. We disagree.

California courts may exercise jurisdiction on any basis consistent with the Constitutions of California and the United States. (Cal. Code Civ. Proc., § 410.10.) Jurisdiction is proper if a defendant has minimum contacts with California such that a suit here does not offend traditional notions of fair play and substantial justice. (Internat. Shoe Co. v. Washington (1945) 326 U.S. 310, 316.)

There are two categories of personal jurisdiction – general and specific. (Bristol-Myers Squibb Co. v. Superior Court (2017) 137 S.Ct. 1773, 1779–1780.) The paradigm of general jurisdiction for an individual is his or her domicile, and for a corporation its state of incorporation or principal place of business. (Daimler AG v. Bauman (2014) 571 U.S. 117, 137.) If general jurisdiction exists, the defendant may be sued in California whether or not its contacts with the state are related to the controversy alleged in the litigation. (See ibid.) On the other hand, specific jurisdiction exists if the nonresident has purposefully availed itself of the state, those contacts are related to or gave rise to the controversy, and the exercise of jurisdiction would comport with justice and fairness. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445–447 (Vons).)

When a defendant moves to quash service for lack of personal jurisdiction, the plaintiff bears the burden of proving facts supporting the exercise of jurisdiction by a preponderance of the evidence. (Farina v. SAVWCL III, LLC (2020) 50 Cal.App.5th 286, 293.) When there is conflicting evidence, the trial court’s factual determinations are not disturbed on appeal if supported by substantial evidence. (Vons, supra, 14 Cal.4th at p. 449.) When there is no conflict in the evidence, however, the question of jurisdiction is one of law and the reviewing court engages in an independent review of the record. (Ibid.) As the appellant, Illing bears the burden of showing the trial court’s refusal to exert jurisdiction was error. (See Vaughn v. Jonas (1948) 31 Cal.2d 586, 601.)

In this appeal, Illing does not raise any contentions with respect to the trial court’s findings or conclusions in its November 2021 order (or previous orders) that Harvey’s was not subject to general jurisdiction in California based on Harrah’s direct contacts with the state. Nor does Illing contest the trial court’s conclusion that there was no colorable basis for California to assert specific jurisdiction over Harvey’s given the absence of any connection between Illing’s claims and Harrah’s contacts with the state. Rather, as we understand it, Illing contends only that her alter ego allegations went to the merits of her case, which precluded the court from granting the motion to quash. This, however, is not the law.

“When the nonresident defendant is a parent corporation of a subsidiary which does business in California, the minimum contacts may be direct between the parent and the state, or imputed to the parent via its subsidiary. General jurisdiction over a local subsidiary extends to the foreign parent under an alter ego theory, general principles of agency, or under the representative services doctrine, a narrow species of agency.” (BBA Aviation PLC v. Superior Court (2010) 190 Cal.App.4th 421, 429 (BBA Aviation); Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 540 (Sonora Diamond) [describing circumstances that will subject a parent corporation to general jurisdiction based upon its subsidiaries’ contacts with the forum].)

“Ordinarily, a corporation is regarded as a legal entity, separate and distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations. [Citations.] A corporate identity may be disregarded–the ‘corporate veil’ pierced–where an abuse of the corporate privilege justifies holding the equitable ownership of a corporation liable for the actions of the corporation. [Citation.] Under the alter ego doctrine, then, when the corporate form is used to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose, the courts will ignore the corporate entity and deem the corporation’s acts to be those of the persons or organizations actually controlling the corporation, in most instances the equitable owners. [Citations.] The alter ego doctrine prevents individuals or other corporations from misusing the corporate laws by the device of a sham corporate entity formed for the purpose of committing fraud or other misdeeds.” (Sonora Diamond, supra, 83 Cal.App.4th at p. 538.)

“In California, two conditions must be met before the alter ego doctrine will be invoked. First, there must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist. Second, there must be an inequitable result if the acts in question are treated as those of the corporation alone. [Citations.] ‘Among the factors to be considered in applying the doctrine are commingling of funds and other assets of the two entities, the holding out by one entity that it is liable for the debts of the other, identical equitable ownership in the two entities, use of the same offices and employees, and use of one as a mere shell or conduit for the affairs of the other.’ [Citations.] Other factors which have been described in the case law include inadequate capitalization, disregard of corporate formalities, lack of segregation of corporate records, and identical directors and officers. [Citations.] No one characteristic governs, but the courts must look at all the circumstances to determine whether the doctrine should be applied. [Citation.] Alter ego is an extreme remedy, sparingly used.” (Sonora Diamond, supra, 83 Cal.App.4th at pp. 538–539.)

The trial court found that there was no evidence of wrongdoing or any evidence of injustice flowing from the recognition of either’s separate corporate identity. In her appellate briefs, Illing identifies no evidence concerning wrongdoing (e.g., perpetration of a fraud or circumvention of a statute) that was presented to the trial court with respect to Harvey’s or South Shore’s corporate identities or relationship. She points to no evidence of wrongdoing by either Harvey’s or South Shore or evidence of injustice flowing from recognizing them separately. Absent such evidence, the trial court did not err in declining to invoke the alter ego doctrine.

Rather, Illing contends the trial court erred because Harvey’s argued the case on the merits and in so doing waived their special appearance and made a general appearance that should have resulted in motion to quash being denied. We are not persuaded.

For this point, Illing cites without explanation Josephson v. Superior Court (1963) 219 Cal.App.2d 354, but the case is unavailing. There, the petitioner filed a motion to quash service of summons supported by an affidavit in which he stated he was not a California resident; was a Nevada resident engaged in business in Nevada; and that the transaction complained of in the complaint against him involved a transaction which occurred wholly in Nevada and was to be performed in Nevada. (Id. at p. 356.) The trial court denied the motion to quash because it found the appearance to have been made generally not specially. (Id. at pp. 356–357.) The court of appeal explained, “ ‘The test as to whether an appearance is general or special is, “Did the party appear and object only to consideration of the case or any procedure in it because the court had not acquired jurisdiction over the person of the defendant or party? If so, then the appearance is special. If, however, he appears and asks for any relief which could be given only to a party in the pending case, or which itself would be a regular proceeding in the case, it is a general appearance regardless of how adroitly, carefully or directly the appearance may be denominated or characterized as special. The rule in this regard may be epitomized by saying that if a defendant by his appearance insists only upon the objection that he is not in court for want of jurisdiction over his person and confines his appearance for that purpose only, then he has made a special appearance, but if he raises any other question, or asks any relief which can only be granted upon the hypothesis that the court has jurisdiction of his person, then he had made a general appearance.” ’ ” (Id. at p. 361.) The court of appeal determined petitioner did not make a general appearance and that his motion was solely aimed at challenging jurisdiction of the person, and it directed the trial court to quash service of summons. (Id. at pp. 362–363.) Likewise, based on our review of the record, we too are satisfied that Harvey’s never waived their special appearance. In their filings, Harvey’s made clear they were appearing specially to challenge personal jurisdiction, and they sought no other or further relief from the court which could only be granted were the court to have jurisdiction over it. Harvey’s never made a general appearance.

Illing also asserts that in Sonora Diamond “[t]he rule is clearly stated that once the court decides that a foreign corporation has minimum contacts then remaining alter ego allegations involve the merits of the case and should proceed.” Illing offers no pincite from Sonora Diamond for such a rule, nor does she provide an adequate discussion of the portion of the opinion that serves as the basis for her argument. We see no expression of such a rule in that opinion, and it is not this court’s obligation to “develop the appellants’ arguments for them.” (Dills v. Redwoods Associates, Ltd. (1994) 28 Cal.App.4th 888, 890, fn.1; Meridian Financial Services, Inc. v. Phan (2021) 67 Cal.App.5th 657, 684. [“The reviewing court is not required to develop the parties’ arguments or search the record for supporting evidence and may instead treat arguments that are not developed or supported by adequate citations to the record as waived.”].)

Far from stating such a rule, the court in Sonora Diamond stated the respondent was “plainly wrong to the extent it claims the inclusion in a complaint of alter ego allegations automatically gives the trial court jurisdiction over the defendant against whom such allegations are directed.” (Sonora Diamond, supra, 83 Cal.App.4th at p. 540.) It added, “It is correct that a motion to quash for lack of personal jurisdiction does not implicate the merits of the complaint, but the plaintiff, in opposing the defendant’s motion to quash, must present evidence to justify a finding that the requisite jurisdictional minimum contacts exist.” (Ibid.) To the extent Illing views these statements as requiring a trial on the merits once an alter ego is alleged, she is mistaken. (See DVI, Inc. v. Superior Court (2002) 104 Cal.App.4th 1080, 1094 [“allegations of alter ego alone are insufficient to create jurisdiction”].) The statements only convey the unremarkable point that a plaintiff bears the burden of producing evidence sufficient to establish a factual basis for the trial court’s exertion of personal jurisdiction over a defendant. (See Vons, supra, 14 Cal.4th at p. 449; BBA Aviation, supra, 190 Cal.App.4th at p. 429 [“If the plaintiff (demonstrates competent evidence of jurisdictional facts), the burden shifts to the defendant to present a compelling case that the exercise of jurisdiction would be unreasonable”].) They also reflect the equally unremarkable point that in a trial court’s jurisdictional analysis, the merits of the complaint – here, the hostile work environment claims – are not implicated. (See F. Hoffman-La Roche, Ltd. v. Superior Court (2005) 130 Cal.App.4th 782, 794 (Hoffman-La Roche); Nelson v. Horvath (1970) 4 Cal.App.3d 1, 4–5.) Illing has not shown the trial court’s refusal to exert jurisdiction over Harvey’s based on alter ego principles was error.

B. Right to Jury Trial

Illing also contends by not allowing her to proceed to a trial on the merits, the court violated her constitutional right to a jury trial. Whether a party was constitutionally entitled to a jury trial is a question of law that we review de novo. (Hollingsworth v. Heavy Transport, Inc. (2021) 66 Cal.App.5th 1157, 1173 (Hollingsworth).) There was no constitutional violation here.

California’s Constitution generally guarantees all parties a right to a jury trial. (Cal. Const., Art I, § 16.) However, a party’s constitutional right to a jury trial applies to questions of fact. (See Shaw v. Superior Court (2017) 2 Cal.5th 983, 993 (Shaw) [“When the right to a jury trial exists, it provides the right to have a jury try and determine issues of fact.” (Original italics.)].) Whether a court may exercise personal jurisdiction over a party is a question of law determined by a court. (See Hollingsworth, supra, 66 Cal.App.5th at 1176; Hoffman-La Roche, supra, 130 Cal.App.4th at p. 794 [“the question of jurisdiction is, in essence, one of law”]; Shaw, supra, 2 Cal.5th at p. 993 [“[I]ssues of law are to be determined by the court, rather than a jury.” (Original italics.)]; People v. Betts (2005) 34 Cal.4th 1039, 1054 [a defendant has no constitutional right to a jury trial or proof beyond a reasonable doubt on “the factual questions that establish jurisdiction”].) A party is not entitled to a jury trial on the issue of jurisdiction. (Hollingsworth, at p. 1173.)

As discussed above, the court did not err in refusing to exercise personal jurisdiction over Harvey’s, which is the only determination made by the trial court in its order granting the motion to quash. In reaching this decision on a legal issue, Illing was not deprived of her right to a jury trial but has simply been informed that she must enforce that right in the proper forum.

Disposition

The order granting the motion to quash is affirmed. The parties shall bear their own costs on appeal.

_________________________

Petrou, J.

WE CONCUR:

_________________________

Tucher, P.J.

_________________________

Rodríguez, J.

A164409/Illing v. Harvey’s Tahoe Management Company Inc., et al.