Filed 11/29/16 (unmodified opn. attached)

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

SHARMALEE 

GOONEWARDENE,

 Plaintiff and Appellant,

v.

ADP, LLC et al.,

 Defendants and

 Respondents.

 B267010

 (Los Angeles County

 Super. Ct. No. TC026406)

 ORDER MODIFYING

 OPINION AND DENYING

 REHEARING [NO CHANGE

 IN JUDGMENT]

THE COURT:*

It is ordered that the opinion filed herein on November 

4, 2016 be modified as follows: 

On page 24, line 20, change “1172-1174” to “1772-1774”

On page 25, lines 12 through 17, delete: 

Under the principles discussed above, when 

a business enters into a contract with a service 

provider clearly aimed at aiding the business in 
2

discharging its duty to supply information or 

benefits to certain individuals, those individuals 

constitute third party creditor beneficiaries of the 

contract between the business and service 

provider. 

And substitute: 

Under the principles discussed above, when 

an employer enters into a contract with a service 

provider by which the provider is to take over the 

employer‟s payroll tasks, including the 

preparation of the payrolls themselves, the 

employees constitute third party creditor 

beneficiaries of the contract between the 

employer and service provider.

On page 45, line 14, following the sentence ending with the 

word “ADP,” insert the following footnote: 

In a petition for rehearing, ADP asserts that the 

economic loss rule bars the professional negligence 

claim. As that contention was not raised prior to the 

filing of our opinion, it has been forfeited. (Alameda 

County Management Employees, Assn. v. Superior 

Court (2011) 195 Cal.App.4th 325, 338, fn. 10.) 

Moreover, we would reject the contention 

were we to consider it. The economic loss rule 

provides that “„“„[w]here a purchaser‟s 

expectations in a sale are frustrated because the 

product he bought is not working properly, his 

remedy is said to be in contract alone, for he has 

suffered only “economic” losses.‟” . . . “The 

economic loss rule requires a purchaser to recover 

in contract for purely economic loss due to 

disappointed expectations, unless he can 

demonstrate harm above and beyond a broken 

contractual promise.” (Robinson Helicopter Co. v. 
3

Dana Corp. (2004) 34 Cal.4th 979, 988.) Under 

the rule, a plaintiff is permitted to recover purely 

economic losses due to negligence in the 

performance of a contract if a “„special 

relationship‟” exists (Greystone Homes, Inc. v. 

Midtec, Inc. (2008) 168 Cal.App.4th 1194, 1215), 

which may arise when the plaintiff, though not in 

privity to the contract, is a third party beneficiary 

of the contract and the Biakanja factors are 

appropriately present (J’Aire Corp. v. Gregory

(1979) 24 Cal.3d 799, 803-807; see Ratcliff 

Architects v. Vanir Construction Management, 

Inc. (2001) 88 Cal.App.4th 595, 605). Under the 

allegations in the 6AC, that is the case here. 

The petition for rehearing by respondents is denied. 

The modification does not change the judgment.

____________________________________________________

*EPSTEIN, P. J., WILLHITE, J. MANELLA, J.,
Filed 11/4/16 (unmodified opn.)

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

SHARMALEE 

GOONEWARDENE,

 Plaintiff and Appellant,

v.

ADP, LLC et al.,

 Defendants and

 Respondents.

 B267010

 (Los Angeles County

 Super. Ct. No. TC026406)

APPEAL from a judgment of the Superior Court of Los 

Angeles County, William Barry, Judge. Affirmed in part, 

reversed in part and remanded with directions.
2

Glen Broemer for Plaintiff and Appellants.

Morgan Lewis & Bockius, Robert A. Lewis, Thomas M. 

Peterson and Zachary Hill for Defendants and Respondents. 

____________________________________

In the underlying action, appellant Sharmalene 

Goonewardene‟s fifth amended complaint asserted claims 

against respondents ADP, LLC, ADP Payroll Services, Inc. 

and AD Processing, LLC for wrongful termination, violations 

of the Labor Code, and related causes of action, including 

breach of contract, negligent misrepresentation, and 

negligence. The trial court sustained respondents‟ 

demurrers relating to the fifth amended complaint without 

leave to amend. Appellant contends the court abused its 

discretion in denying her leave to amend, arguing that her 

proposed sixth amended complaint states claims against 

respondents. We conclude that the proposed complaint 

states claims against respondents only for breach of contract, 

negligent misrepresentation, and negligence. We therefore 

affirm the trial court‟s ruling in part, reverse it in part, and 

remand with instructions to permit appellant to file a 

complaint against respondents asserting those claims.

RELEVANT FACTUAL AND PROCEDURAL 

BACKGROUND

In April 2012, appellant commenced the underlying 

action. Her initial complaints named as defendants a 
3

California corporation and New York corporation bearing the 

same name -- Altour International Inc. -- and Alexandre 

Chemla, who was alleged to be the corporations‟ alter ego 

(collectively, Altour). The complaints asserted claims for 

wrongful termination, breach of contract, violations of the 

Labor Code, and related causes of action predicated on 

allegations that appellant was employed by Altour, which 

failed to compensate her in accordance with the Labor Code 

and wrongfully terminated her when she brought that 

misconduct to its attention. 

In March 2015, appellant filed her fourth amended 

complaint (4AC), which, in addition to the claims previously 

alleged against Altour, included a single cause of action 

against respondent ADP, LLC, namely, a claim for unfair 

business practices under the unfair competition law (UCL; 

Bus. & Prof. Code, § 17200 et seq.). In connection with that 

claim, the complaint alleged that ADP, LLC, failed to 

provide appellant with adequate documentation and records 

regarding her compensation. 

After ADP, LLC, demurred to the 4AC, appellant 

informed the trial court that she wished to assert additional 

claims against ADP, LLC. The trial court deferred ruling on 

the demurrer to permit appellant to submit a motion for 

leave to file the fifth amended complaint (5AC), which 

contained claims against all three respondents for wrongful 

termination, violations of the Labor Code and federal labor 

laws, breach of contract, unfair business practices, false 

advertising, negligence, and negligent misrepresentation. 
4

The 5AC alleged that respondents entered into a contract 

with Altour to provide payroll services relating to Altour‟s 

employees. Several claims in the 5AC also effectively 

asserted or alleged that all respondents acted as appellant‟s 

employer. 

In ruling on the pending demurrer to the 4AC and the 

motion for leave to file the 5AC, the trial court sustained the 

demurrer to all claims founded on the assumption that ADP, 

LLC was appellant‟s employer, co-employer, or joint 

employer. The court denied appellant leave to amend with 

respect to those claims, and ordered them dismissed with 

prejudice. The court otherwise permitted appellant to file 

the 5AC, on the condition that appellant assert only the 

remaining claims against respondents. 

The 5AC nevertheless contained claims predicated on 

the assumption that ADP Payroll Services Processing, Inc. 

and AD Processing, LLC were appellant‟s employers. 

Respondents demurred to the 5AC, contending the employerbased claims were defective, and the remaining claims 

against respondents were untenable. The trial court 

sustained the demurrer without leave to amend, and asked 

respondents to prepare the final order reflecting its ruling. 

While that order was pending, appellant submitted a 

motion for reconsideration and a proposed sixth amended 

complaint (6AC), which materially resembles the 5AC, as 

originally proposed. The 6AC contains claims similar to 

those in the original 5AC -- including the claims relying on 

the theory that respondents were appellant‟s employers --
5

with additional factual allegations. The motion for 

reconsideration requested leave to file the 6AC. On August 

5, 2015, without expressly denying the motion for 

reconsideration, the trial court entered a final order 

sustaining respondents‟ demurrer to the 5AC without leave 

to amend, and a judgment of dismissal in favor of 

respondents. This appeal followed.

DISCUSSION

Appellant contends the trial court erred in sustaining 

respondents‟ demurrer to the 5AC without leave to amend. 

As explained below, we agree with the trial court that the 

majority of appellant‟s claims must be dismissed. However, 

we conclude the proposed 6AC adequately pleads claims for 

breach of contract, negligent misrepresentation, and 

negligence based on allegations that respondents performed 

payroll services for appellant‟s benefit in an inaccurate and 

negligent manner. 

A. Standard of Review

“Because a demurrer both tests the legal sufficiency of 

the complaint and involves the trial court‟s discretion, an 

appellate court employs two separate standards of review on 

appeal. [Citation.] . . . Appellate courts first review the 

complaint de novo to determine whether or not the 

. . . complaint alleges facts sufficient to state a cause of 

action under any legal theory, [citation], or in other words, to 

determine whether or not the trial court erroneously 
6

sustained the demurrer as a matter of law. [Citation.]” 

(Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 

879, fn. omitted (Cantu).) We do not assess the credibility of 

the allegations, as “„it is wholly beyond the scope of the 

inquiry to ascertain whether the facts stated are true or 

untrue.‟” (Garton v. Title Ins. & Trust Co. (1980) 106 

Cal.App.3d 365, 375 quoting Colm v. Francis (1916) 30 

Cal.App. 742, 752.)

“Second, if a trial court sustains a demurrer without 

leave to amend, appellate courts determine whether or not 

the plaintiff could amend the complaint to state a cause of 

action. [Citation.]” (Cantu, supra, 4 Cal.App.4th at p. 879, 

fn. 9.) To establish an abuse of discretion regarding the 

denial of leave to amend, “a plaintiff may propose new facts 

or theories to show the complaint can be amended to state a 

cause of action . . . .” (Connerly v. State of California (2014) 

229 Cal.App.4th 457, 460.) 

That showing may be made by way of a motion for 

reconsideration. (Mogilefsky v. Superior Court (1993) 20 

Cal.App.4th 1409, 1418.) Furthermore, the “showing need 

not be made in the trial court so long as it is made to the 

reviewing court.” (Careau & Co. v. Security Pacific Business 

Credit, Inc. (1990) 222 Cal.App.3d 1371, 1386 (Careau & 

Co.).)

B. Scope of Review

At the outset, we examine the scope of our review of 

the ruling on the 5AC. The trial court‟s grant of 
7

respondents‟ demurrer to the 5AC without leave to amend 

effectively barred appellant from filing the 6AC. Thus, our 

review examines whether the trial court erred in denying 

leave to amend the 5AC.

Although appellant‟s opening brief seeks a reversal of 

the trial court‟s rulings “as to every cause of action,” she 

does not, in fact, attack the portion of those rulings 

sustaining the demurrers to the 5AC. Her brief contains no 

argument (supported by legal authority and citations to the 

record) aimed at showing any claim in the 5AC is tenable.1 

Rather, appellant‟s focus is on whether the trial court erred 

in denying leave to amend. In this regard, she argues that 

the trial court improperly declined to grant her motion for 

reconsideration, urges us to evaluate the allegations in the 

6AC, and contends those allegations state causes of action. 

Accordingly, appellant has forfeited her challenge to the 

rulings on the 5AC, insofar as the court sustained demurrers 

to the claims in that complaint. (Rossberg v. Bank of 

America, N.A. (2013) 219 Cal.App.4th 1481, 1504; see Badie 

v. Bank of America (1998) 67 Cal.App.4th 779, 784.) 

The remaining issue is whether appellant may 

challenge the denial of leave to amend on appeal, as the 

record reflects no oral request for leave to amend at the 

 

1 Appellant‟s sole express citations to the 5AC occur in 

her reply brief, in the context of arguments intended to 

support the 6AC‟s allegations and to show that certain 

purported defects are curable by amendment.
8

hearing on the demurrer to the 5AC, and shows only that 

appellant sought to file the 6AC by means of a motion for 

reconsideration submitted while the final ruling on the 

demurrer to the 5AC was pending. In Careau & Co., the 

plaintiffs in two consolidated actions filed first amended 

complaints, to which the defendants demurred. (Careau & 

Co., supra, 222 Cal.App.3d at p. 1379.) After the trial court 

sustained the demurrers without leave to amend, the 

plaintiffs filed motions for reconsideration of the denial of 

leave to amend, accompanied by proposed second amended 

complaints. (Id. at pp. 1379-1380.) The trial court denied 

reconsideration, filed orders stating the grounds for the 

demurrers, and later entered judgments in favor of the 

defendants. (Id. at pp. 1380-1381.) Although the record 

reflected no request for leave to amend at the hearing on the 

demurrers, the appellate court concluded that in view of the 

reconsideration motions, it was appropriate to examine 

whether the second amended complaints stated causes of 

action. (Id. at pp. 1386-1387.) 

We reach the same conclusion here and, accordingly, 

examine the 6AC in order to determine whether it states a 

claim against respondents (henceforth, collectively, ADP).2

 

2 ADP suggests that appellant may not challenge the 

denial of leave to amend because her motion for 

reconsideration was “premature.” In view of the liberal 

policy permitting a party to show on appeal that an amended 

complaint states a cause of action, that contention fails. 

(Scott v. City of Indian Wells (1972) 6 Cal.3d 541, 550 
9

C. Facts3

The 6AC alleges the following facts: ADP is a payroll 

services provider. Since 2000, ADP‟s advertising and 

corporate statements have stated that it provides payrollrelated services to employers and employees. ADP offers to 

“„serve as an extension of [an employer‟s] payroll department 

and [to] take over all [the employer‟s] payroll tasks.” ADP 

holds itself out as possessing specialized knowledge 

regarding the calculation of wages under applicable wage 

laws and regulations, and states that it “can save 

employer[]s[‟] money by calculating their payroll.” ADP‟s 

Web site advertises its expertise in tracking employee work 

hours, determining wages, and preparing payrolls in 

accordance with applicable laws. According to the Web site, 

 

[“[A]buse of discretion in sustaining a demurrer without 

leave to amend is reviewable on appeal even in the absence 

of a request for leave to amend”].)

3 We observe that the prolix and poorly organized 6AC 

ignores the rule that “the complaint must contain a 

statement of the facts in ordinary and concise language . . . .” 

(M.G. Chamberlain & Co. v. Simpson (1959) 173 Cal.App.2d 

263, 267.) In such cases, we “disregard any defects in the 

pleading which do not affect the substantial rights of the 

parties,” and assess whether “there are averments of 

ultimate facts sufficient to constitute a cause of action . . . .” 

(Ibid.)
10

ADP provides “„self-service tools‟” allowing employees to view 

their attendance, vacation benefits, and time card approvals. 

At some point, ADP entered into an unwritten contract 

with Altour, which provides travel-related services. Under 

that agreement, ADP calculated payrolls, maintained 

employee records, offered legal advice, and provided other 

wage-related services for the benefit of Altour and its 

employees. According to the 6AC, ADP entered into “a 

partnership or joint venture with Altour for the purpose of 

handling Altour‟s payroll and maintaining records and 

confidential information regarding Altour‟s employees.” 

(Underscoring omitted.) 

Appellant‟s ethnicity is Sinhalese and her nationality 

is Sri Lankan. In November 2005, appellant began her 

employment with Altour. She answered telephones, made 

airline, automobile, and hotel reservations, and issued 

electronic tickets and refunds. Because she worked on teams 

that provided services “24 hours a day 365 days of the year,” 

she accrued overtime hours. Appellant “logged directly into 

an ADP system to track her earnings.” 

From 2005 to 2012, appellant did not receive the 

compensation due her, including overtime compensation, 

and she was denied meal and rest breaks required under 

Labor Code section 226.7. In addition, she was “treated 

differently as a result of her race, nationality[, and] 

ethnicity,” as she was offered no promotions despite 

favorable work evaluations, and received less pay than a 

male counterpart. 
11

Under ADP‟s agreement with Altour, the 6AC alleges, 

ADP maintained appellant‟s earnings records, added the 

hours on her time cards, calculated her earnings, and 

provided her with an earnings statement. ADP also was 

responsible for determining whether appellant was to 

receive, inter alia, overtime or double time (that is, overtime 

reflecting a doubled hourly rate of pay), in accordance with 

applicable labor laws. ADP alone was responsible for 

maintaining appellant‟s records relating to her 

compensation, adding the hours shown on her time cards, 

and applying the labor laws to determine her wages. 

ADP failed to act with “even scant care” in calculating 

appellant‟s wages. (Underscoring omitted.) Her earnings 

statements provided by ADP never contained a breakdown of 

her regular hours, overtime hours or double overtime hours, 

and did not reflect data regarding meal and rest breaks. 

Although her time cards reflected facts requiring the 

payment of double time compensation, she received no such 

payment.4 She was paid twice a month on a basis that was 

intentionally confusing and did not comply with the wage 

orders of the Industrial Welfare Commission (IWC). 

 

4 In connection with appellant‟s reply brief, she filed a 

motion to augment the record with certain documents 

intended to show that ADP‟s pay calculations failed to reflect 

overtime compensation owed her. As we conclude that the 

6AC sufficiently alleges that fact (see pts. E., F. & G. of the 

Discussion, post), we deny the motion.
12

According to the 6AC, Altour and ADP knew that appellant 

was not being paid in accordance with California law. 

Appellant reasonably relied on the earnings statements 

provided to her. In 2010, she noticed disparities between her 

own bookkeeping and her hours worked, as shown on her 

paychecks. In January 2012, she was terminated. 

According to the 6AC, she was terminated “on a pretext and 

in retaliation for [her] efforts to be paid fairly and to receive 

those benefits to which she was legally entitled.” 

D. Claims Based on Theory That ADP Was Appellant’s

 Employer

The 6AC asserts several claims predicated on the 

theory that ADP was appellant‟s employer. Specifically, 

they allege or suggest (1) that ADP was subject to certain 

duties to appellant imposed on employers under California 

and federal law, and (2) that ADP was empowered to 

terminate appellant‟s employment. The claims assert 

violations of the Labor Code and the Fair Labor Standards 

Act of 1938 (FLSA) (29 U.S.C. § 201 et seq.), racial 

discrimination under the California Fair Employment and 

Housing Act (FEHA) (Gov. Code, § 12900 et seq.) and title 

VII of the Civil Rights Act of 1964 (title VII) (42 U.S.C. 

§ 2000e et seq.), and wrongful termination in violation of 

public policy. As explained below, the claims fail for want of 

sufficient allegations establishing an employee-employer 

relationship between appellant and ADP.
13

1. Labor Code Claims 

We begin with appellant‟s claims under the Labor 

Code. The 6AC asserts claims against ADP for failure to 

make timely wage payments (Lab. Code, §§ 201, 201.3, 

201.5, 202, 203, 205.5; second cause of action), failure to pay 

overtime compensation (Lab. Code, § 1194; tenth cause of 

action), and failure to issue adequate earnings statements 

(Lab. Code, § 226; eleventh cause of action). 

ADP‟s liability under the claims hinges on whether 

ADP employed appellant within the meaning of the term 

“employ” in the applicable IWC wage order which the 6AC 

alleges to be Wage Order No. 4-2001 or Wage Order No. 9-

2001 (Futrell v. Payday California, Inc. (2010) 190 

Cal.App.4th 1419, 1428-1429 (Futrell). Those wage orders 

define the term “[e]mploy” as “to engage, suffer, or permit to 

work.” (Cal. Code Regs., tit. 8, § 11040(2)(E), 11090(2)(D).) 

That definition incorporates “three alternative definitions. 

It means: (a) to exercise control over the wages, hours or 

working conditions, or (b) to suffer or permit to work, or (c) 

to engage, thereby creating a common law employment 

relationship.” (Martinez v. Combs (2010) 49 Cal.4th 35, 64 

(Martinez).) Generally, “[t]he essence of the common law 

test of employment is in the „control of details.‟ A number of 

factors may be considered in evaluating this control, 

including: (1) whether the worker is engaged in a distinct 

occupation or business; (2) whether, considering the kind of 

occupation and locality, the work is usually done under the 

alleged employer‟s direction or without supervision; (3) the 
14

skill required; (4) whether the alleged employer or worker 

supplies the instrumentalities, tools, and place of work; (5) 

the length of time the services are to be performed; (6) the 

method of payment, whether by time or by job; (7) whether 

the work is part of the alleged employer‟s regular business; 

and (8) whether the parties believe they are creating an 

employer-employee relationship. [Citations.]” (Futrell, 

supra, 190 Cal.App.4th at p. 1434.) 

The application of the IWC‟s definition of “employ” to 

Labor Code claims against a payroll services provider was 

examined in Futrell. There, the plaintiff initiated a class 

action against a television commercial production company 

and its hired payroll services provider, asserting claims 

under the Labor Code and the applicable IWC wage order for 

failure to make timely wage payments, issue adequate pay 

statements, and pay overtime compensation (Lab. Code, 

§§ 203, 226, 1194), together with claims under the FLSA for 

failure to pay overtime compensation (29 U.S.C. §§ 207, 216). 

(Futrell, supra, 190 Cal.App.4th at pp. 1424-1425.) When 

the payroll services provider sought summary adjudication 

on the claims, the evidence established that it collected 

timecards from the plaintiff, placed that information in a 

computer system to create the plaintiff‟s paychecks, and 

maintained records relating to the plaintiff‟s compensation. 

(Id. at p. 1427.) The trial court granted summary 

adjudication on the claims, concluding that the payroll 

services provider was not the plaintiff‟s employer. (Id. at 

pp. 1429-1430.)
15

Affirming the ruling, the appellate court held that for 

purposes of the Labor Code claims, no employment 

relationship existed under the three definitions incorporated 

in the IWC‟s definition of the term “employ[].” (Futrell, 

supra, 190 Cal.App.4th at pp. 1424-1425.) Regarding the 

first definition, the court determined that the payroll service 

provider‟s role in generating paychecks established no such 

relationship: “[W]e conclude that „control over wages‟ means 

that a person or entity has the power or authority to 

negotiate and set an employee‟s rate of pay, and not that a 

person or entity is physically involved in the preparation of 

an employee‟s paycheck. This is the only definition that 

makes sense. The task of preparing payroll, whether done 

by an internal division or department of an employer, or by 

an outside vendor of an employer, does not make [the 

preparer] an employer for purposes of liability for wages 

under the Labor Code wage statutes. The preparation of 

payroll is largely a ministerial task, albeit a complex task in 

today‟s marketplace. The employer, however, is the party 

who hires the employee and benefits from the employee‟s 

work, and thus it is the employer to whom liability should be 

affixed for any unpaid wages. The extension of personal 

liability to the agents of an employer is not reasonably 

derived from the language and purposes of the Labor Code 

wage statutes.” (Id. at p. 1432.) 

The court further determined that no employment 

relationship existed under the remaining definitions. 

Regarding the second definition, the court concluded that the 
16

payroll service provider did not “suffer or permit” the 

plaintiff “to work,” as there was no evidence it “had the 

power to either cause him to work or prevent him from 

working.” (Futrell, supra, 190 Cal.App.4th at p. 1434.) 

Regarding the third definition, the court concluded that the 

record reflected no common law employment relationship 

because the payroll service provider lacked control over the 

circumstances of the plaintiff‟s work. (Id. at pp. 1433-1434.) 

We find Futrell persuasive and apply its analysis in 

assessing the Labor Code claims in the 6AC. In an apparent 

effort to establish that ADP exercised a type of control over 

appellant required for an employment relationship, the 6AC 

alleges that ADP, by “partnering with or attaching itself to 

Altour‟s business and taking over a variety of employer 

functions, . . . essentially became [appellant‟s] employer at 

least in the area in which it maintain[ed] control . . . .” 

Because that allegation represents a legal conclusion, we 

disregard it, and examine whether the facts pleaded in 6AC 

establish an employment relationship. (B & P Development 

Corp. v. City of Saratoga (1986) 185 Cal.App.3d 949, 953.) 

As explained below, they do not.

The allegations in the 6AC demonstrate only that ADP 

took over the functions ordinarily assigned to an employer‟s 

internal payroll department, which is not properly regarded 

as an additional employer. (Futrell, supra, 190 Cal.app.4th 

at pp. 1424-1434.) Nothing in the 6AC suggests ADP had 

“the power or authority to negotiate and set [appellant‟s] 

rate of pay.” (Futrell, supra, 190 Cal.app.4th at p. 1432.) On 
17

the contrary, the 6AC asserts a claim for breach of contract 

solely against Altour (fourth cause of action), alleging that 

appellant entered into written and oral agreements with it, 

and that from 2005 to 2012, Altour repeatedly breached the 

agreements “by failing to pay [her] in accord with the agreed 

upon rate in . . . pay.” (Italics added.) Furthermore, 

notwithstanding the wrongful termination claim asserted 

against ADP, the 6AC contains no factual allegations that 

ADP had the power to hire or fire appellant or control the 

circumstances of her work. Indeed, in the 6AC and on 

appeal, appellant asserts only that ADP exercised a specific 

type of control over the payment of her compensation. As 

discussed below, that purported control does not render ADP 

her employer. 

Appellant contends ADP undertook an employment 

relationship with her because the 6AC assigns a broader 

range of responsibilities to ADP than attributed to the 

payroll service provider in Futrell. The 6AC alleges that 

under ADP‟s contract with Altour, ADP was exclusively 

responsible for determining how appellant‟s salary was to be 

calculated under applicable laws. Indeed, according to 

appellant‟s opening brief, Altour played no role in the 

calculation of her wages, aside from providing her time card 

data to ADP. The brief states that Altour “did nothing more

than transmit time card information prepared by [appellant] 

to ADP, and by design ADP exercised complete control over 

the amount [appellant] was actually paid.” (Italics added.) 

Relying on those allegations, appellant maintains that ADP‟s 
18

responsibilities in applying the governing laws were not 

ministerial, arguing that ADP‟s exercise of judgment 

regarding those laws necessarily “„influenced‟ a key term of 

[her] employment, [namely], how much she was to receive in 

exchange for her labor.” 

Appellant‟s contention fails, as ADP‟s influence is not 

reasonably regarded as “„control over wages,‟” for purposes of 

IWC‟s definition of the term “employ.” That definition refers 

to “the power or authority to negotiate and set an employee‟s 

rate of pay,” that is, the basic discretionary right to select 

the rate of pay from a range of potential values. (Futrell, 

supra, 190 Cal.App.4th at p. 1432.) The allegations of the 

6AC fail to establish that ADP had such power. Rather, 

ADP‟s influence arose solely through Altour‟s duties under 

the Labor Code and the applicable wage orders, which 

specified how appellant‟s pay was permissibly calculated 

once she and Altour agreed upon her rate of pay. Because 

those duties identify the appropriate lawful “time and 

manner of paying wages” and “mandatory overtime pay” 

(Cuadra v. Millan (1998) 17 Cal.4th 855, 858, abrogated on 

another ground in Samuels v. Mix (1999) 22 Cal.4th 1, 16, 

fn. 4), they are not discretionary, but mandatory (Redwood 

Coast Watersheds Alliance v. State Bd. Of Forestry & Fire 

Protection (1999) 70 Cal.App.4th 962, 970 [discretionary acts 

are those regarding which there is no hard and fast rule as 

to the course of conduct that one must or must not take]). 

Accordingly, in undertaking to determine appellant‟s 

compensation in compliance with those duties, ADP acquired 
19

no basic discretionary right to set appellant‟s rate of pay. 

Rather, ADP‟s alleged deviations from the lawful 

determination of appellant‟s compensation constituted 

errors by ADP, not the exercise of a right. ADP‟s conduct 

under its agreement is thus properly characterized as 

ministerial. (Id. at p. 970 [“A duty is ministerial when it is 

the doing of a thing unqualifiedly required”].) In sum, the 

6AC fails to allege the employment relationship required for 

the Labor Code claims.

2. FLSA Claims

The 6AC asserts two claims against ADP under the 

FLSA for failure to pay overtime compensation (sixth and 

twelfth causes of action; 29 U.S.C. §§ 207, 216). ADP‟s 

liability under those claims hinges on whether there is an 

employer-employee relationship under the so-called 

“„economic reality test.‟” (Futrell, supra, 190 Cal.App.4th at 

p. 1435.) That test, though distinct from the IWC‟s 

definition of the term “„employ‟” (Martinez, supra, 49 Cal.4th 

at pp. 59-60), ordinarily involves the consideration of similar 

factors (Futrell, supra, 190 Cal.App.4th at p. 1435). In 

applying the test, courts examine “„the economic reality of a 

work relationship,‟” with due attention to “„“whether the 

alleged employer (1) had the power to hire and fire the 

employees, (2) supervised and controlled employee work 

schedules or conditions of employment, (3) determined the 

rate and method of payment, and (4) maintained 

employment records.”‟” (Guerrero v. Superior Court (2013) 
20

213 Cal.App.4th 912, 928-929, quoting Bonnette v. California 

Health and Welfare Agency (9th Cir. 1983) 704 F.2d 1465, 

1469-1470, disapproved on another ground in Garcia v. San 

Antonio Metropolitan Transit Authority (1985) 469 U.S. 528, 

539.) 

The FLSA claims fail in view of Futrell. In affirming 

summary adjudication of the plaintiff‟s FLSA claims relating 

to overtime compensation, the court reasoned that under the 

economic reality test, the payroll services provider was not 

the plaintiff‟s employer, as it merely prepared his paychecks 

and maintained certain compensation records. (Futrell, 

supra, 190 Cal.App.4th at pp. 1435-1436.) That rationale 

applies here. As explained above (see pt. C.1. of the 

Discussion, ante), according to the facts alleged in the 6AC, 

ADP acted as Altour‟s payroll department; it exercised no 

material control over appellant‟s rate of pay, terms of 

employment, or circumstances of work. Accordingly, under 

the “economic reality” test, the 6AC fails to establish an 

employment relationship sufficient to support the FLSA 

claims.

3. Discrimination Claims 

The 6AC contains claims against ADP for 

discrimination under FEHA (eighth cause of action) and title 

VII (ninth cause of action). As these claims assert 

discrimination relating to appellant‟s employment, ADP is 

liable for the alleged discrimination only if it employed her. 

(Vernon v. State of California (2004) 116 Cal.App.4th 114, 

123 [FEHA prohibits only employers from engaging in 
21

discrimination]; Murray v. Principal Financial Group, Inc.

(9th Cir. 2010) 613 F.3d 943, 944 [plaintiffs may assert title 

VII discrimination claim against entity only if they are its 

employees].) Although courts have applied a variety of 

specific tests to determine the existence of an employment 

relationship under the two statutory schemes, “[t]he common 

and prevailing principle espoused in all of the tests” directs 

attention to “the „totality of circumstances‟ that reflect upon 

the nature of the work relationship of the parties, with 

emphasis upon the extent to which the defendant controls 

the plaintiff‟s performance of employment duties.” (Vernon, 

supra, 116 Cal.App.4th at p. 124.) As explained above, the 

circumstances surrounding appellant‟s work did not 

demonstrate an employment relationship between her and

ADP. Accordingly, the 6AC states no discrimination claims 

against ADP.

4. Claim for Wrongful Termination in Violation 

of Public Policy 

The 6AC‟s claim charging ADP with appellant‟s 

wrongful termination in violation of public policy (fifth cause 

of action) fails for similar reasons. The claim alleges that 

when appellant sought the compensation due her, Altour 

and ADP discharged her, in contravention of public policy 

incorporated in the Labor Code favoring timely payment of 

all wages owed. That claim, however, “can only be asserted 

against an employer.” (Miklosy v. Regents of University of 

California (2008) 44 Cal.4th 876, 900.) In sum, the claims in 
22

the 6AC predicated on the theory that ADP employed 

appellant are fatally defective, as the allegations establish 

no employee-employer relationship between appellant and 

ADP.

E. Breach of Contract Claim Predicated on Third

 Party Beneficiary Theory 

The 6AC contains a breach of contract claim against 

ADP predicated on the theory that appellant and other 

Altour employees were third party beneficiaries of the 

agreement between Altour and ADP (eighteenth cause of 

action). For the reasons discussed below, we conclude the 

claim is adequately pleaded.

Civil Code section 1559 provides: “A contract, made 

expressly for the benefit of a third person, may be enforced 

by him [or her] at any time before the parties thereto rescind 

it.” Here, “„“„[e]xpressly,‟ . . . means „in an express manner; 

in direct or unmistakable terms; explicitly; definitely; 

directly.‟” [Citations.] “[A]n intent to make the obligation 

inure to the benefit of the third party must have been clearly 

manifested by the contracting parties.”‟ [Citation.]” 

(Schauer v. Mandarin Gems of Cal. (2005) 125 Cal.App.4th 

949, 957-958.) For that reason, the statute “„excludes 

enforcement of a contract by persons who are only 

incidentally or remotely benefited by it. [Citations.]‟” 

(California Emergency Physicians Medical Group v. 

PacifiCare of California (2003) 111 Cal.App.4th 1127, 1137 

(California Emergency Physicians Medical Group).) 
23

A third party may have enforceable rights under a 

contract as either a creditor beneficiary or a donee 

beneficiary. (Lake Almanor Associates L.P. v. HuffmanBroadway Group, Inc. (2009) 178 Cal.App.4th 1194, 1199.) 

“A person cannot be a creditor beneficiary unless the 

promisor‟s performance of the contract will discharge some 

form of legal duty owed to the beneficiary by the promisee.” 

(Martinez v. Socoma Companies, Inc. (1974) 11 Cal.3d 394, 

400.) In contrast, “[a] person is a donee beneficiary only if 

the promisee‟s contractual intent is either to make a gift to 

him or to confer on him a right against the promisor.” (Id. at 

pp. 400-401.)

Because “[t]hird party beneficiary status is a matter of 

contract interpretation” (California Emergency Physicians 

Medical Group, supra, 111 Cal.App.4th at p. 1138), a party 

alleging a claim for breach of contract based on that status 

“must plead a contract which was made expressly for his 

benefit and one in which it clearly appears that he was a 

beneficiary” (Luis v. Orcutt Town Water Co. (1962) 204 

Cal.App.2d 433, 441.) The term “„express,‟” as applied here, 

is subject to two pertinent qualifications. 

First, to be an express third party beneficiary, a person 

“„need not be named or identified individually,‟” as it is 

sufficient that the contract shows he or she “„is a member of 

a class of persons for whose benefit it was made.‟” (Spinks v. 

Equity Residential Brairwood Apartments (2009) 171 

Cal.App.4th 1004, 1023.) In Soderberg v. McKinney (1996) 

44 Cal.App.4th 1760, 1763 (Soderberg), a mortgage broker 
24

engaged in the business of arranging investments in 

mortgage loans. In order to secure the plaintiff‟s investment 

in a specific loan, the broker arranged for an appraiser to 

provide the plaintiff with an appraisal of the net value of the 

pertinent property. (Ibid.) After the investment failed, the 

plaintiff learned that the property‟s true net value was far 

less than as appraised, and sued the broker and appraiser 

for breach of contract. (Id. at pp. 1763-1764.) When the trial 

court ruled that the complaint stated no claim against the 

appraiser, the plaintiff sought leave to amend to assert a 

third party beneficiary theory based on an alleged contract 

between the broker and the appraiser for the preparation of 

appraisal reports to be given to potential investors. (Id. at 

p. 1772.) The trial court denied that request, concluding 

that the alleged contract did not expressly designate the 

plaintiff as a third party beneficiary. (Id. at p. 1773.) 

Reversing, the appellate court concluded that the proposed 

amendment asserted a tenable third party beneficiary 

theory, even though the alleged contract did not specifically 

identify the plaintiff as a beneficiary. (Id. at pp. 1172-1174.) 

Second, the status of a third party beneficiary does not 

require a written contract. In Del E. Webb Corp. v. 

Structural Materials Co. (1981) 123 Cal.App.3d 593, 606 (Del 

E. Webb Corp.), a general contractor asserted a claim for 

breach of contract against a construction materials supplier, 

contending it was the third party beneficiary of an oral 

contract between one of its subcontractors and the supplier. 

The general contractor‟s complaint alleged that “„in order to 
25

provide [the subcontractor] with the roofing materials and 

other materials needed in the performance of the 

subcontract, and for the benefit of [the general contractor], 

[the supplier] agreed to supply any and all roofing materials 

and other materials necessary for the subcontract between 

[the general contractor] and [the subcontractor].‟” (Id. at 

pp. 606-607.) The appellate court held that a demurrer to 

the claim had been improperly sustained, concluding that 

the allegation was sufficient to plead the general contractor‟s 

status as a third party creditor beneficiary of the oral 

contract. (Id. at p. 607.)

Under the principles discussed above, when a business 

enters into a contract with a service provider clearly aimed 

at aiding the business in discharging its duty to supply 

information or benefits to certain individuals, those 

individuals constitute third party creditor beneficiaries of 

the contract between the business and service provider. (See 

Martinez v. Socoma Companies, Inc., supra, 11 Cal.3d at 

p. 400; Soderberg, supra, 44 Cal.App.4th at pp. 1771-1774; 

Del E. Webb Corp., supra, 123 Cal.App.3d at pp. 606-607.) 

The 6AC articulates that theory. The gravamen of its 

allegations is that Altour engaged ADP to discharge Altour‟s 

wage-related legal duties to its employees, that is, Altour‟s 

obligations under the Labor Code and applicable wage orders 

to accurately calculate employees‟ wages, fully distribute 

those wages in a timely manner, and provide employees with 

accurate earnings statements.
26

The 6AC alleges that ADP, in its advertising, 

“expressly offers to partner with employers for their mutual 

benefit and for the benefit of employees.” The 6AC further 

alleges that “Altour and ADP entered into an unwritten 

contract whereby ADP provided payroll calculation, records 

maintenance, legal advice and a host of related services to 

Altour for the benefit of Altour and its employees in the 

general area of employee wages and benefits.” In this 

regard, the 6AC contains specific allegations that ADP 

provided services directly to Altour employees. The 6AC 

alleges that under the agreement, ADP added the hours on 

appellant‟s time cards, calculated her earnings, and provided 

her with earnings statements in connection with her 

compensation. Additionally, ADP allegedly was responsible 

for determining whether appellant was to receive overtime 

or double time in accordance with applicable labor laws. The 

6AC thus alleges that Altour employees such as appellant 

are, at a minimum, third party creditor beneficiaries of the 

unwritten agreement.5 

 

5 In addition to alleging that ADP‟s advertising 

“expressly offers to partner with employers for their mutual 

benefit and for the benefit of employees,” the 6AC alleges

that ADP provided services to employees not legally 

required, for example, a mechanism allowing employees to 

access information and track their earnings. Accordingly, 

the 6AC arguably also alleges that Altour employees are 

donee beneficiaries of the agreement.
27

The 6AC further alleges that that ADP breached its 

contractual obligations relating to Altour‟s wage-related 

duties to appellant, and that appellant suffered damages as 

a result. As elaborated below (see pt. F of the Discussion, 

post), the 6AC asserts that appellant was denied full 

compensation because ADP repeatedly failed to determine 

that she was owed overtime or double time pay, and

otherwise provided inadequate earnings statements. 

Regarding these matters, the 6AC expressly attributes some 

of that alleged misconduct to ADP‟s own errors and 

misapplication of the applicable wage orders, rather than to 

mistakes in earnings data transmitted by Altour. Appellant 

has thus stated a breach of contract claim against ADP as a 

third party creditor beneficiary.6 

Relying on Martinez, supra, 49 Cal.4th 35, ADP 

contends that as a matter of law, Altour employees cannot be 

third party beneficiaries of ADP‟s contract with Altour for 

the provision of payroll processing services. In our view, 

that broad proposition finds no support in Martinez. There, 

a farmer entered into contracts with merchants for the sale 

of his produce. (Id. at pp. 42-44.) Under the contracts, the 

farmer received advance payments that were to be retired 

 

6 In so concluding, we make no findings regarding the 

accuracy of the allegations in the 6AC. As explained above 

(see pt. A. of the Discussion, ante), for purposes of our 

review, we must accept the factual allegations in the 6AC as 

true.
28

from the revenues generated when his produce was delivered 

and sold; in addition, the farmer was entitled to a share of 

those revenues. (Ibid.) During the harvest season, the 

farmer failed to pay his field workers, who asserted Labor 

Code claims against the farmer and the merchants, 

contending all were their employers. (Id. at p. 48.) After the 

merchants secured summary judgment on the claims against 

them, our Supreme Court affirmed that ruling, determining 

that none of the merchants employed the workers. (Id. at 

pp. 68-77.) The court also rejected a contention that the 

workers were third party beneficiaries of one of the 

contracts, concluding that the terms of the contract 

manifestly placed sole responsibility for discharging wagerelated duties on the farmer. (Id. at p. 77.) In contrast, 

according to the 6AC, under the unwritten contract between 

Altour and ADP, ADP undertook to discharge Altour‟s wagerelated duties -- including the calculation of employees‟ 

wages and the provision of earnings statements -- to Altour‟s 

employees for their benefit. In sum, the 6AC states a breach 

of contract claim against ADP predicated on a third party 

beneficiary theory. 

F. Negligent Misrepresentation Claim

The 6AC contains a negligent misrepresentation claim 

predicated on allegations that appellant‟s earnings 

statements, as provided by ADP, were inaccurate and 

omitted statutorily required information (thirteenth cause of 
29

action). As explained below, we conclude that claim is 

sufficiently pleaded. 

For a claim of negligent misrepresentation, “[a] 

plaintiff must prove the following in order to recover[:] 

„[M]isrepresentation of a past or existing material fact,

without reasonable ground for believing it to be true, and 

with intent to induce another‟s reliance on the fact 

misrepresented; ignorance of the truth and justifiable 

reliance on the misrepresentation by the party to whom it 

was directed; and resulting damage. [Citation.]‟ [Citation.]” 

(Shamsian v. Atlantic Richfield Co. (2003) 107 Cal.App.4th 

967, 983, quoting Home Budget Loans, Inc. v. Jacoby & 

Meyers Law Offices (1989) 207 Cal.App.3d 1277, 1285.)

The tort requires a “„“positive assertion.”‟” (OCM 

Principal Opportunities Fund, L.P. v. CIBC World Markets 

Corp. (2007) 157 Cal.App.4th 835, 854 (OCM Principal 

Opportunities Fund), quoting Diediker v. Peelle Financial 

Corp. (1997) 60 Cal.App.4th 288, 297-298.) The tort thus 

encompasses “„[t]he assertion, as a fact, of that which is not 

true, by one who has no reasonable ground for believing it to 

be true‟ [ citation], and „[t]he positive assertion, in a manner 

not warranted by the information of the person making it, of 

that which is not true, though he believes it to be true‟ 

[citations].” (Small v. Fritz Companies, Inc. (2003) 30 

Cal.4th 167, 174 (Small).) Furthermore, “when the 

defendant purports to convey the „whole truth‟ about a 

subject, „“misleading half-truths”‟ regarding that subject may 

constitute positive assertions for the purpose of negligent 
30

misrepresentation.” (OCM Principal Opportunities Fund, 

supra, 157 Cal.App.4th at p. 854, quoting Randi W. v. Muroc 

Joint Unified School Dist. (1997) 14 Cal.4th 1066, 1081.) 

The tort is also subject to a limitation applicable to 

claims against professionals such as auditors, attorneys, 

architects, engineers, and title insurers, who generally 

provide reports or opinions to clients on the basis of 

information supplied by the clients. (OCM Principal 

Opportunities Fund, supra, 157 Cal.App.4th at p. 856.) In 

Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 408-415 

(Bily), our Supreme Court held that an auditor who plays a 

“secondary” role in the preparation of a financial report for a 

client -- that is, who relies entirely on information provided 

by its client, and is subject to the client‟s “primary control of 

the financial reporting process” -- is liable only to a limited 

class of third parties for negligent representations contained 

in the financial report, viz., the class delimited in section 

552, subdivision (2), of the Restatement Second of Torts.7 

 

7

 Restatement Second of Torts section 552(2) provides 

that the liability of such parties is limited to the “loss 

suffered [¶] (a) by the person or one of a limited group of 

persons for whose benefit and guidance he intends to supply 

the information or knows that the recipient intends to 

supply it; and [¶] (b) through reliance upon it in a 

transaction that he intends the information to influence or 

knows that the recipient so intends or in a substantially 

similar transaction.” This limitation extends liability “only 

to those persons for whose benefit and guidance it is 
31

(Bily, supra, 3 Cal.4th at p. 400.) Under Bily, negligent 

misrepresentation claims against such professionals may be 

asserted only by “specifically intended beneficiaries of the 

report who are substantially likely to receive the 

misinformation.” (Murphy v. BDO Seidman (2003) 113 

Cal.App.4th 687, 694 (Murphy).)

Here, the 6AC alleges that ADP made positive untrue 

assertions regarding appellant‟s wages. Under the 

agreement between Altour and ADP, ADP was responsible 

for “adding the hours on [appellant‟s] time cards,” 

calculating her wages, and preparing her earnings 

statements. Nevertheless, according to the 6AC, from 2005 

to 2012, appellant did not receive her full compensation. 

The 6AC attributes that misconduct directly to ADP, 

alleging that “[w]hile [appellant‟s] time cards often contained 

facts requiring the payment of double time, [she] did not 

receive a single double time payment . . . .” The 6AC further 

asserts that the earnings statements ADP prepared failed to 

comply with Labor Code section 226, contained no 

breakdown of appellant‟s regular hours, overtime hours, or 

double time hours, and reflected an accounting method of 

her time that was intentionally confusing.8 

 

supplied,” as “distinct from the much larger class who might 

reasonably be expected sooner or later to have access to the 

information and foreseeably to take some action in reliance 

upon it.” (Rest.2d Torts, § 552, com. h, pp. 132-133.)

8 Subdivision (a) of Labor Code section 226 provides in 

pertinent part: “Every employer shall, semimonthly or at 
32

Under these allegations, the wage statements provided 

by ADP, based on data supplied by Altour employees, 

contained positive inaccurate assertions that ADP could not 

reasonably have believed to be true. According to the 6AC, 

ADP miscalculated appellant‟s total wages by omitting 

double time payments owed her. In view of those alleged 

miscalculations, her earnings statements inaccurately stated 

her total wages, or alternatively, constituted misleading 

half-truths, as the earnings statements purported to convey 

the whole truth regarding her total wages. As ADP allegedly 

had the time card data necessary to calculate appellant‟s 

overtime, those misrepresentations were not reasonable. 

Furthermore, under the allegations in the 6AC, ADP 

falls outside the limitation of liability applicable to 

 

the time of each payment of wages, furnish each of his or her 

employees . . . an accurate itemized statement in writing 

showing (1) gross wages earned, (2) total hours worked by 

the employee . . . , (3) the number of piece-rate units earned 

and any applicable piece rate if the employee is paid on a 

piece-rate basis, (4) all deductions, provided that all 

deductions made on written orders of the employee may be 

aggregated and shown as one item, (5) net wages earned, (6) 

the inclusive dates of the period for which the employee is 

paid, (7) the name of the employee . . . , (8) the name and 

address of the legal entity that is the employer . . . , and (9) 

all applicable hourly rates in effect during the pay period 

and the corresponding number of hours worked at each 

hourly rate by the employee.”
33

professional providers of financial reports who play only a 

“secondary” role in the preparation of the reports. According 

to the 6AC, under ADP‟s contract with Altour, ADP was 

charged with calculating employee wages in accordance with 

applicable laws. The inaccuracies in the earnings 

statements are alleged to have arisen from ADP‟s own 

conduct, not from errors in the time cards provided to ADP. 

Because ADP itself was allegedly responsible for the 

inaccuracies, its role regarding them was not merely 

“„secondary.‟” (Nutmeg Securities, Ltd. v. McGladrey & 

Pullen (2001) 92 Cal.App.4th 1435, 1441-1442 [complaint 

stated negligent misrepresentation claim against auditor in 

view of allegations that auditor directly participated in 

creation of misleading financial statements]; see OCM 

Principal Opportunities Fund, supra, 157 Cal.App.4th at 

p. 857 [bank was subject to liability for negligent 

misrepresentation for offering memorandum prepared for 

another party because bank possessed reliable information 

establishing the falsity of financial forecasts contained in 

offering memorandum].) Furthermore, for the reasons 

discussed above (see pt. E. of the Discussion, ante), appellant 

was among the “specifically intended beneficiaries” of ADP‟s 

earnings statements “substantially likely to receive the 

misinformation.” (Murphy, supra, 113 Cal.App.4th at 

p. 694.)

In an apparent effort to establish that appellant‟s 

earnings statements contained no inaccuracies supporting a 

negligent misrepresentation claim, ADP directs our 
34

attention to appellant‟s opening brief, which states: “ADP 

received only a record of [appellant‟s] hours per day, 

generated by [appellant], and used that information to 

provide [appellant] with a paycheck and earnings statement 

on a semi-monthly basis. ADP had no ability whatsoever to 

determine whether [appellant] took or missed a meal or rest 

break, and calculated [appellant‟s] pay on the assumption 

that [appellant] never missed a break.” However, 

immediately following that passage, appellant‟s brief states: 

“While [appellant‟s] time cards often showed that she 

worked in excess of 12 hours on various workdays and in 

excess of eight hours on the seventh consecutive day in a 

workweek, ADP never paid [appellant] double time for such 

work, in violation of IWC [Wage Order No.] 9-

2001(3)(A)(1)(b) and Labor Code section 510.”9 That portion 

 

9 We observe that under the allegations in the 6AC, ADP 

undertook to calculate earnings in accordance with 

applicable laws. IWC Wage Order No. 9-2001(3)(A)(1) states 

in pertinent part: “Employment beyond eight (8) hours in 

any workday or more than six (6) days in any workweek is 

permissible provided the employee is compensated for such 

overtime at not less than: [¶] . . . [¶] (b) Double the 

employee‟s regular rate of pay for all hours worked in excess 

of 12 hours in any workday and for all hours worked in 

excess of eight (8) hours on the seventh (7th) consecutive day 

of work in a workweek.” IWC Wage Order No. 4-2001, upon 

which the 6AC also relies, contains an identical provision 

(see IWC Wage Order No. 4-2001(3)(A)(1)(b)).
35

of the opening brief sets forth the alleged inaccuracies in 

ADP‟s calculation of appellant‟s compensation that resulted 

in the underpayment of her wages. As explained above, 

because the earnings statements provided to appellant by 

ADP purported to -- but allegedly did not -- represent her 

accurately calculated compensation due, the 6AC states a 

claim for negligent misrepresentation. 

ADP also suggests that the 6AC contains no allegations 

establishing justifiable reliance. We disagree. Generally, to 

plead a claim for negligent misrepresentation, a plaintiff 

must allege with sufficient particularity that he or she 

actually relied on the misrepresentation, as well as that such 

reliance was justifiable. (Daniel v. Select Portfolio Servicing, 

Inc. (2016) 246 Cal.App.4th 1150, 1166-1168.) Reliance may 

be predicated on a theory of forebearance, that is, “the 

decision not to exercise a right or power . . . .” (Small, supra, 

30 Cal.4th at p. 174.) Under such a theory, the plaintiff 

should ordinarily allege “actions, as distinguished from 

unspoken and unrecorded thoughts and decisions, that 

would indicate that the plaintiff actually relied on the 

misrepresentations.” (Id. at p. 184.) Additionally, to allege 

 

Labor Code section 510 states: “Any work in excess of 

12 hours in one day shall be compensated at the rate of no 

less than twice the regular rate of pay for an employee. In 

addition, any work in excess of eight hours on any seventh 

day of a workweek shall be compensated at the rate of no 

less than twice the regular rate of pay of an employee.”
36

justifiable reliance under any theory, the plaintiff “must set 

„forth facts to show that his or her actual reliance on the 

representations was justifiable, so that the cause of the 

damage was the defendant‟s wrong and not the plaintiff‟s 

fault.‟” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 

1066, quoting 5 Witkin, Cal. Procedure (5th ed. 2008) 

Pleading, § 732, p. 153.) Reliance is justifiable when the 

“„circumstances were such to make it reasonable for [the] 

plaintiff to accept [the] defendant‟s statements without an 

independent inquiry or investigation.‟ [Citation.] The 

reasonableness of the plaintiff‟s reliance is judged by 

reference to the plaintiff‟s knowledge and experience. 

[Citation.]” (OCM Principal Opportunities Fund, supra, 157 

Cal.App.4th at p. 864, italics omitted, quoting Wilhelm v. 

Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 

1332.)

Aside from alleging in general terms that appellant 

reasonably relied on the earnings statements, the 6AC 

asserts that after appellant began her employment in 2005, 

she was paid twice monthly, and received earnings 

statements from ADP. In 2010, she noticed disparities 

between her own records and her hours worked as reflected 

on her paychecks. She then made her own wage calculations 

to verify deficiencies in the paychecks. After she sought 

unpaid compensation, she was terminated. Those 

allegations adequately plead actual reliance predicated on 

forebearance, as they show that appellant decided to claim 

additional compensation only after she became aware of 
37

inaccuracies in the earnings statements. Until then, the 

“„circumstances were such to make it reasonable for 

[appellant] to accept [ADP‟s] statements without an 

independent inquiry or investigation‟” (OCM Principal 

Opportunities Fund, supra, 157 Cal.App.4th at p. 864, italics 

omitted). Thus, in view of the relative complexity of the 

wage calculation, appellant‟s reliance on ADP‟s earnings 

statements until 2010 was justifiable. In sum, the 6AC 

states a claim for negligent misrepresentation against ADP. 

G. Professional Negligence Claim

The 6AC contains a claim for professional negligence 

against ADP (fourteenth cause of action) predicated on 

allegations that ADP, as a payroll services provider, 

breached a duty of care owed to appellant, resulting in the 

underpayment of her compensation. Generally, “there are 

four essential elements of a professional negligence claim: 

„(1) the duty of the professional to use such skill, prudence, 

and diligence as other members of his profession commonly 

possess and exercise; (2) a breach of that duty; (3) a 

proximate causal connection between the negligent conduct 

and the resulting injury; and (4) actual loss or damage 

resulting from the professional‟s negligence. [Citations.]” 

(Osornio v. Weingarten (2004) 124 Cal.App.4th 304, 319, 

quoting Budd v. Nixen (1971) 6 Cal.3d 195, 200.) Here, the 

key question regarding appellant‟s claim is whether the 6AC 

adequately alleges that ADP owed a duty of care to her. 
38

Privity of contract is required for the existence of such 

a duty of care, absent special circumstances. (Giacometti v. 

Aulla, LLC (2010) 187 Cal.App.4th 1133, 1137 (Giacometti).) 

Biakanja v. Irving (1958) 49 Cal.2d 647 is the leading case 

regarding those circumstances. There, a notary public 

prepared a will for a client, but negligently failed to have it 

properly attested. (Id. at p. 648.) Following the client‟s 

death, the primary beneficiary under the will asserted a 

claim for negligence against the notary. (Ibid.) After the 

beneficiary secured a judgment in his favor, our Supreme 

Court examined whether the notary owed a duty of care to 

the beneficiary, notwithstanding the absence of a contract 

between them. (Id. at pp. 648-651.) The court stated: “The 

determination whether in a specific case the defendant will 

be held liable to a third person not in privity is a matter of 

policy and involves the balancing of various factors, among 

which are the extent to which the transaction was intended 

to affect the plaintiff, the foreseeability of harm to him, the 

degree of certainty that the plaintiff suffered injury, the 

closeness of the connection between the defendant‟s conduct 

and the injury suffered, the moral blame attached to the 

defendant‟s conduct, and the policy of preventing future 

harm.” (Id. at p. 650.) Under that test, the court concluded 

the beneficiary was entitled to recover against the notary, 

despite the absence of privity. (Id. at p. 651.) 

 In Bily, the Supreme Court concluded that under the 

multi-factor test set forth in Biajanka, auditors playing a 

“secondary” role in preparing financial reports for a client 
39

owe no duty of care to third parties not in privity of contract 

with the auditors. (Bily, supra, 3 Cal.4th at pp. 402, 396-

407.) As the court explained, auditors acting in that role are 

ultimately dependent upon the information supplied by their 

client, and have little or no control over to whom the client 

distributes their reports. (Id. at pp. 400.) The court 

determined that three considerations conclusively weighed 

against the imposition of a duty of care: (1) that recognition 

of such a duty exposed an auditor to “potential liability far 

out of proportion to its fault,” in view of its “secondary 

„watchdog‟ role”; (2) that the “generally more sophisticated 

class of plaintiffs in auditor liability cases (e.g., business 

lenders and investors) permit[ted] the effective use of 

contract rather than tort liability to control and adjust the 

relevant risks”; and (3) that the imposition of tort liability 

was likely to increase the costs and reduce the availability of 

auditing. (Id. at p. 398.) Regarding item (3), the court 

concluded that the imposition of liability would not yield 

greater accuracy “without disadvantage,” in view of the 

“labor-intensive nature of auditing,” which creates a report 

through “a complex process involving discretion and 

judgment on the part of the auditor at every stage.” (Id. at 

pp. 400, 404.) In view of that complexity, the court noted, 

few audits are immune from criticism. (Id. at p. 400.) 

Greater vulnerability to litigation was therefore likely to 

reduce the availability of auditing services. (Id. at p. 404.) 

The court thus held that “an auditor‟s liability for 

general negligence in the conduct of an audit of its client‟s 
40

financial statements is confined to the client, i.e., the person 

who contracts for or engages the audit services. Other 

persons may not recover on a pure negligence theory.” (Bily, 

supra, 3 Cal.4th at p. 406.) Nonetheless, in a footnote 

accompanying that holding, the court stated: “In theory, 

there is an additional class of persons who may be the 

practical and legal equivalent of „clients.‟ It is possible the 

audit engagement contract might expressly identify a 

particular third party or parties so as to make them express 

third party beneficiaries of the contract. Third party 

beneficiaries may under appropriate circumstances possess 

the rights of parties to the contract. [Citations.]” (Id. at 

p. 406, fn. 16.) Noting the case presented no third party 

beneficiary issue, the court declined to further address the 

issue. (Ibid.)

Here, we confront the question not resolved in Bily, 

namely, whether a financial services provider may be subject 

to a duty of care to a third party beneficiary of the contract 

between the provider and its client. In our view, under the 

facts alleged in the 6AC, ADP owed a duty of care to 

appellant, for purposes of a professional negligence claim. 

As explained below, that conclusion relies on three 

considerations: (1) that under the 6AC‟s allegations, 

appellant is a creditor beneficiary to the contract between 

Altour and ADP with respect to wage-related duties that 

Altour owed appellant; (2) that the Biajanka factors weigh in 

favor of recognizing a duty of care; and (3) that the 
41

considerations identified in Bily as precluding the imposition 

of such a duty on auditors are not present here. 

In view of appellant‟s status as a creditor beneficiary, 

she is reasonably regarded as “the practical and legal 

equivalent” of a party to the contract between Altour and 

ADP. (Bily, supra, 3 Cal.4th at p. 406, fn. 16.) Generally, 

creditor beneficiaries may enforce the terms of the contract 

made for their benefit to the extent the promissee is 

authorized to do so. (Mercury Casualty Co. v. Maloney

(2003) 113 Cal.App.4th 799, 802 [“A person who is not a 

party to a contract may nonetheless have certain rights 

thereunder, and may sue to enforce those rights, where the 

contract is made expressly for her benefit”]; Johnson v. 

Holmes Tuttle Lincoln-Merc. (1958) 160 Cal.App.2d 290, 296 

[“While the contract remains unrescinded, the relations of 

the parties are the same as though the promise had been 

made directly to the third party [beneficiary]”].) 

Accordingly, to the extent the contract obligated ADP to 

discharge Althour‟s pre-existing wage-related duties to 

appellant, she is authorized to enforce that contractual 

obligation against ADP. 

Furthermore, the Biajanka factors weigh in favor of 

recognizing a duty of care. The contract between Altour and 

ADP was intended to affect all Altour employees, including 

appellant, and harm to them was manifestly foreseeable 

upon ADP‟s alleged failure to determine their wages in 

accordance with applicable laws. For the reasons discussed 

above (see pt. E. of the Discussion, ante), appellant‟s injuries 
42

were certain and closely connected with ADP‟s alleged 

conduct, as ADP was engaged both to calculate her earnings 

and to provide earnings statements reflecting the wages due; 

her failure to received the compensation owed her was 

attributable to ADP‟s own alleged errors. That 

underpayment must be regarded as significant, as “„it has 

long been recognized that . . . because of the economic 

position of the average worker . . . , it is essential to public 

welfare that he receive his pay when it is due.” (Kerr’s 

Catering Service v. Department of Industrial Relations

(1962) 57 Cal.2d 319, 326, quoting, In re Trombley (1948) 31 

Cal.2d 801, 809-810.) Furthermore, recognizing a duty of 

care encourages accurate payment of wages. (See Roberts v. 

Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 

104, 110-112 [law firm engaged by clients to prepare an 

opinion letter to be shown to bank in order to secure loan 

from bank owed a duty of care to bank].) 

The considerations set forth in Bily barring the 

imposition of a duty of care on auditors are not present here. 

According to the allegations in the 6AC, ADP did not occupy 

a “secondary „watchdog‟ role” (Bily, supra, 3 Cal.4th at 

p. 398), but was contractually obligated to carry out Altour‟s 

wage-related legal duties to its employees; the key 

misconduct asserted against ADP stemmed from its own 

alleged errors. Furthermore, the imposition of a duty of care 

on ADP does not render it vulnerable to potentially openended liability, as the class of potential plaintiffs is limited 

to Altour‟s employees. That class also differs markedly from 
43

the potential plaintiffs in Bily in terms of financial 

sophistication. Finally, payroll preparation, though complex, 

“is largely a ministerial task” carried out by an employer‟s 

internal payroll department or an outside provider. (Futrell, 

supra, 190 Cal.App.4th at p. 1432.) For the reasons 

discussed above (see pt. D.1. of the Discussion, ante), the 

tasks undertaken by ADP do not involve the complex 

exercises of discretion akin to those involved in audits, which 

are thus frequently open to criticism. Accordingly, the 

rationale in Bily linking the imposition of liability to a 

significant reduction in the availability of auditing services 

is inapplicable here. 

The decisions upon which ADP relies are 

distinguishable. In Richard B. LeVine, Inc. v. Higashi (2005) 

131 Cal.App.4th 566, 570-571, a partnership retained an 

accountant to provide accounting services, including a 

calculation of each partner‟s profit allocation in the 

partnership. In making that determination, the accountant 

employed the method of calculation specified by the 

partnership. (Id. at p. 580.) On the basis of that calculation, 

the partnership bought out the interest of one of the 

partners, who later sued the accountant for professional 

negligence. (Id. at pp. 571-572.) Affirming summary 

judgment on that claim in favor of the accountant, the 

appellate court concluded that the claim failed for want of a 

duty of care running from the accountant to the partner. (Id. 

at pp. 580-581.) The court determined that no duty arose 

under Biajanka because the accountant had merely carried 
44

out -- accurately -- the calculation specified by the 

partnership. (Id. at pp. 581-583.) In addition, the court 

determined that the contract between the partnership and 

the accountant established no accountant-client relationship 

with the aggrieved partner. (Id. at pp. 582-585.) In 

contrast, under the 6AC‟s allegations, appellant was a third 

party creditor beneficiary of Altour‟s contract with ADP, and 

it was ADP‟s alleged errors that resulted in appellant‟s 

insufficient compensation.10 

 

10 Those allegations also distinguish Giacometti, which 

ADP does not discuss. There, a restaurant hired an 

accounting firm to prepare year-end documents required by 

the Internal Revenue Service regarding employee earnings. 

(Giacometti, supra, 187 Cal.App.4th at pp. 1135, 1139.) The 

firm prepared employee W-2 forms on the basis of 

information provided by the restaurant concerning wages 

and tips. (Id. at p. 1139.) Several employees asserted a 

claim for professional negligence against the firm, alleging 

that their W-2 forms overstated their income because the 

information provided by the restaurant to the firm included 

tips not received by them. (Id. at pp. 1135-1136.) After the 

trial court sustained a demurrer to their complaint without 

leave to amend, this court affirmed, determining that under 

Biajanka and Bily, it alleged no duty of care. (Id. at 

pp. 1137-1141.) In so concluding, we observed that the 

restaurant‟s intention in hiring the firm was to discharge its 

legal obligation to the Internal Revenue Service, not to 

benefit the employees, and that the firm had no “primary 

role in the harm,” as it had been hired merely to prepare 

documents based on the information provided to it by the 
45

In Goodman v. Kennedy (1976) 18 Cal.3d 335, 339, an 

attorney engaged by a corporation misadvised its officers 

regarding the legality of a sale of shares. The shares were 

purchased by the plaintiffs, who later learned that the sale 

was unlawful, and asserted a claim for professional 

negligence against the attorney. (Id. at pp. 340-341.) After a 

demurrer to the claim was sustained without leave to 

amend, our Supreme Court concluded that the attorney 

owed no duty of care to the plaintiffs, as they had no 

relationship to the corporation or the attorney other than as 

purchasers of the shares. (Id. at pp. 343-345.) That is not 

true here, as Altour hired ADP to assist in discharging its 

legal duties to employees such as appellant. In sum, the 

6AC states a claim for professional negligence against ADP. 

H. False Advertising Claim

We turn to the 6AC‟s claim against ADP under the 

False Advertising Law (FAL) ( Bus. & Prof. Code, § 17500 et 

seq.; seventeenth cause of action). As explained below, that 

claim fails for want of allegations establishing her standing 

to assert it. 

The FAL makes it unlawful for any person or 

corporation, acting with the intent to perform a service or 

“induce the public to enter into any obligation relating” to 

 

restaurant. (Id. at pp. 1139-1141.) As explained above, the 

6AC alleges that Altour relied on ADP to do the appropriate 

calculations based on data ultimately supplied to ADP by 

employees like appellant.
46

that service, to disseminate a statement by means of 

advertising that is “untrue or misleading, and which is 

known, or which by the exercise of reasonable care should be 

known, to be untrue or misleading . . . .” (Bus. & Prof. Code, 

§ 17500.) Claims under the FAL, like claims under the UCL, 

are subject to the requirements imposed under Proposition 

64, which the voters of California approved in November 

2004. (Californians for Disability Rights v. Mervyn’s, LLC

(2006) 39 Cal.4th 223, 227.) Proposition 64 amended the 

FAL and the UCL to limit standing to assert claims to any 

“„person who has suffered injury in fact and has lost money 

or property as a result of‟” a violation of the FAL or the UCL. 

(Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 321 

(Kwikset).) 

“To satisfy these requirements at the pleading stage a 

plaintiff must allege facts showing that he or she suffered an 

economic injury caused by the alleged violation. [Citation.] 

Because „reliance is the causal mechanism of fraud‟ [citation] 

this requires pleading facts showing actual reliance, that is, 

that the plaintiff suffered economic injury as a result of his 

or her reliance on the truth and accuracy of the defendant‟s 

representations. [Citation.]” (Chapman v. Skype Inc. (2013) 

220 Cal.App.4th 217, 228.) 

Here, the 6AC contains no allegations establishing the 

requisite reliance. The 6AC alleges that ADP disseminated 

many untrue or misleading statements by means of 

advertising and the internet. According to the 6AC, those 

statements related to ADP‟s provision of payroll tools and 
47

services to employers and employees to ensure compliance 

with applicable laws, and ADP‟s partnership or joint venture 

with the Altour defendants for the purpose of handling its 

payroll, maintaining its records, and safeguarding 

confidential employee information. The 6AC describes 

ADP‟s purportedly misleading statements, but does not 

allege that appellant actually saw them. Although the 6AC 

asserts that appellant “logged directly into an ADP system to 

track her earnings,” it contains no allegations that she was 

exposed to the misleading statements through that system 

(or in some other way) or that they affected her conduct. In 

the absence of such allegations, the 6AC‟s assertion that the 

misrepresentations caused injury to appellant are 

insufficient to plead reliance. 

Appellant contends those allegations are inessential to 

her claim. Pointing to Kwikset, she argues that the phrase 

“as a result of,” as employed in the FAL and the UCL, 

requires a showing of a causal connection or reliance on the 

alleged misrepresentation. She asserts that “of these 

options, she can show a causal connection, rather than 

reliance.” 

In our view, appellant‟s contention reflects a 

misapprehension of Kwikset. There, in the context of 

examining a false advertising claim under the UCL, our 

Supreme Court discussed the meaning of the phrase “„as a 

result of,‟” for purposes of the FAL and the UCL. (Kwikset, 

supra, 51 Cal.4th at pp. 326-327.) After noting that in Hall 

v. Time, Inc. (2008) 158 Cal.App.4th 847, 855 (Hall), the 
48

appellate court construed that phrase to require “„a showing 

of a causal connection or reliance on the alleged 

misrepresentation,‟” the court in Kwikset set forth the 

“controlling” analysis, which it attributed to its prior 

decision in In re Tobacco Cases II Cases (2009) 46 Cal.4th 

298 (Tobacco Cases II). (Kwikset, supra, at p. 326.) 

The court in Kwikset stated: “Recognizing that 

„reliance is the causal mechanism of fraud‟ [citation] we held 

that a plaintiff „proceeding on a claim of misrepresentation 

as the basis of his or her UCL action must demonstrate 

actual reliance on the allegedly deceptive or misleading 

statements, in accordance with well-settled principles 

regarding the element of reliance in ordinary fraud actions.‟ 

[citation.]” (Kwikset, supra, 51 Cal.4th at p. 326, quoting 

Tobacco Cases II Cases, supra, 46 Cal.4th at pp. 306, 326.) 

In a footnote, the court explained: “„Reliance‟ as used in the 

ordinary fraud context has always been understood to mean 

reliance on a statement for its truth and accuracy. 

[Citation.] . . . It follows that a UCL fraud plaintiff must 

allege he or she was motivated to act or refrain from action 

based on the truth or falsity of a defendant‟s statement, not 

merely on the fact it was made. [Citation.] . . .” (Kwikset, 

supra, 51 Cal.4th at p. 327, fn. 10.) 

The court pointed with approval to Durell v. Sharp 

Healthcare (2010) 183 Cal.App.4th 1350, 1363-1364 (Durell), 

which involved a UCL class action against a hospital 

predicated on a fraudulent business practice. (Kwikset, 

supra, 51 Cal.4th at p. 327.) The class plaintiff‟s complaint 
49

alleged that the hospital‟s Web site and services agreement 

contained misrepresentations regarding the fees charged 

uninsured patients for medical services. (Durell, supra, 183 

Cal.App.4th at pp. 1361-1362.) Although the complaint 

alleged that the plaintiff had suffered damages as a 

“„proximate result‟” of the misrepresentations, it contained 

no allegation that he ever saw them or relied on them. (Id. 

at p. 1363.) After a demurrer to the complaint was 

sustained without leave to amend, the appellate court 

affirmed. (Id. at pp. 1362-1364.) In so concluding, the court 

rejected a contention based on Hall that a simple allegation 

of causation sufficed for a UCL claim, stating that Tobacco 

Cases II required an allegation of reliance. (Id. at pp. 1363-

1364.) 

In view of Kwikset and Durell, the 6AC lacks the 

requisite allegations of reliance, and appellant otherwise 

acknowledges that she cannot cure that deficiency. 

Accordingly, the 6AC states no claim under the FAL. 

I. UCL Claims

The 6AC contains two claims under the UCL against 

ADP, one of which (fifteenth cause of action) relies on the 

misconduct alleged in connection with the claims for 

negligent misrepresentation, negligence, and violations of 

the FAL, and the other of which (sixteenth cause of action) 

relies on the misconduct alleged in connection with the 

claims based on the theory that ADP was appellant‟s 

employer. Generally, the UCL defines “unfair competition” 
50

broadly to include “any unlawful, unfair or fraudulent 

business act or practice.” (Bus. & Prof. Code, § 17200.) 

Under the UCL, damages cannot be recovered, and plaintiffs 

are generally limited to restitution and injunctive relief. 

(Clark v. Superior Court (2010) 50 Cal.4th 605, 610.) As 

explained below, the allegations in the 6AC fail to 

adequately state these claims. 

First, we conclude that the 6AC alleges no unlawful or 

unfair business practice. Generally, “[b]y proscribing „any 

unlawful‟ business practice, „[the UCL] “borrows” violations 

of other laws and treats them as unlawful practices‟ that the 

unfair competition law makes independently actionable. [¶] 

. . . [¶] However, the law does more than just borrow. The 

statutory language referring to “any unlawful, unfair or

fraudulent” practice (italics added) makes clear that a 

practice may be deemed unfair even if not specifically 

proscribed by some other law.” (Cel-Tech Communications, 

Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 

163, 180 (Cel-Tech).) 

Liability for unlawful and unfair practices is subject to 

a restriction traceable to Cel-Tech, which involved UCL 

claims relating to the marketing of consumer goods and 

services. The court concluded that for purposes of the type of 

UCL claim presented to it, the public policy necessary to 

establish an unfair practice must be closely tied to a statute. 

(Cel-Tech, supra, 20 Cal.4th at p. 187.) Following Cel-Tech, 

at least one appellate court has concluded that in any UCL 

action, the public policy underlying an alleged unfair 
51

practice “must be „tethered‟ to specific constitutional, 

statutory, or regulatory provisions.” (Gregory v. Albertson’s, 

Inc. (2002) 104 Cal.App.4th 845, 854.)

In Aleksick v. 7-Eleven, Inc. (2012) 205 Cal.App.4th 

1176, the appellate court applied that limitation to a UCL 

claim arising in circumstances closely resembling those 

presented here. There, a franchisor of convenience stores 

imposed a contractual obligation on franchisees to obtain 

payroll services from the franchisor. (Id. at pp. 1180-1181.) 

A franchisee‟s employee asserted a UCL class action against 

the franchisor, alleging that its payroll system did not fully 

compensate franchisee employees for their work. (Aleksick, 

supra, 205 Cal.App.4th at pp. 1180-1181.) When the 

franchisor secured summary judgment on the claim, the 

appellate court affirmed, concluding that because the 

franchisor was not the class members‟ employer, the UCL 

claim failed for want of a cognizable unlawful or unfair 

practice under the Labor Code, as the franchisor was not 

subject to the wage-related duties imposed on employers 

under that code. (Aleksick, supra, at pp. 1185-1193.) 

Likewise, the 6AC fails to allege an unlawful or unfair 

practice. As explained above (see pt. D. of the Discussion, 

ante), the labor laws and wage orders identified in the 6AC 

are not applicable to ADP. For that reason, the alleged 

misconduct by ADP does not violate the public policy 

underlying them.

Additionally, we conclude that the 6AC alleges no 

fraudulent practice entitling appellant to relief under the 
52

UCL. To the extent the UCL claims rely on the alleged false 

advertising attributed to ADP in connection with the FAL 

claim, the UCL claims fail for the same reason as the FAL 

claim, namely, insufficient allegations of reliance. 

Furthermore, to the extent the UCL claims rely on the 

misrepresentations in appellant‟s earnings statements, as 

alleged in connection with the negligent misrepresentation 

claim, the claims fail for want of any allegation that ADP 

derived a benefit from the misrepresentations supporting a 

restitutionary recovery. 

In Bradstreet v. Wong (2008) 161 Cal.App.4th 1440, 

1444, abrogated on another ground in Martinez, supra, 49 

Cal.4th at page 50, footnote 12, three corporations hired an 

accountant to perform bookkeeping and payroll work for 

them. When the corporations failed to pay wages owed their 

employees, litigation ensued in which two employees and 

other parties asserted a UCL claim against the corporation‟s 

owners and the accountant. (Bradstreet, supra, 161 

Cal.App.4th at pp. 1444-1448.) When the accountant 

secured a judgment in her favor on the claim, the appellate 

court affirmed, concluding there was no basis for a 

restitutionary recovery against her because she derived no 

benefit from the unpaid wages. (Id. at pp. 1458-1463.) That 

rationale applies here, as the 6AC contains no allegation 

that ADP derived a benefit from appellant‟s unpaid wages 

for which she may seek restitution. In sum, the 6AC states 

no UCL claim. 
53

J. Aiding and Abetting Claim

Appellant contends she is entitled to assert a claim for 

aiding and abetting against ADP. Although her opening 

brief discusses that theory of joint liability and the 6AC‟s 

caption page refers to an aiding and abetting claim as the 

nineteenth (and final) cause of action, the 6AC contains no 

such claim. Appellant‟s reply brief states that the omission 

was inadvertent, and directs our attention to the aiding and 

abetting claim in the 5AC. As explained below, appellant 

has failed to show she can state a tenable aiding and 

abetting claim. 

Generally, “[t]he burden of showing that a reasonable 

possibility exists that amendment can cure the defects [in a 

complaint] remains with the plaintiff; neither the trial court 

nor this court will rewrite a complaint. [Citation.]” 

(Rakestraw v. California Physicians’ Service (2000) 81 

Cal.App.4th 39, 44.) To carry that burden, appellant “must 

clearly and specifically set forth the „applicable substantive 

law‟ [citation] and the legal basis for amendment, i.e., the 

elements of the cause of action and authority for it. Further, 

[she] must set forth factual allegations that sufficiently state 

all required elements of that cause of action. [Citations.] 

Allegations must be factual and specific, not vague or 

conclusionary. [Citation.]” (Id. at p. 43.)

Aiding and abetting, though similar to conspiracy, 

involves distinct elements.11 (American Master Lease, supra, 

 

11 “Civil conspiracy is „a legal doctrine that imposes 

liability on persons who, although not actually committing a 
54

225 Cal.App.4th at p. 1475.) “Liability may . . . be imposed 

on one who aids and abets the commission of an intentional 

tort if the person (a) knows the other‟s conduct constitutes a 

breach of duty and gives substantial assistance or 

encouragement to the other to so act or (b) gives substantial 

assistance to the other in accomplishing a tortious result and 

the person‟s own conduct, separately considered, constitutes 

a breach of duty to the third person. [Citations.]” (Saunders 

v. Superior Court (1994) 27 Cal.App.4th 832, 846.) Unlike a 

conspirator, an aider and abettor need not be capable of the 

target tort. (Casey v. U.S. Bank Nat. Assn. (2005) 127 

Cal.App.4th 1138, 1144, fn. 2.) To plead aiding and abetting 

by a defendant, the plaintiff must allege that the defendant 

had actual knowledge of the “specific primary wrong” being 

committed, and gave substantial assistance to the wrongful 

conduct. (Id. at pp. 1145, 1146-1147; Nasrawi v. Buck 

Consultants LLC (2014) 231 Cal.App.4th 328, 343-344 

 

tort themselves, share with the immediate tortfeasors a 

common plan or design in its perpetration. [Citation.] . . . .‟ 

[Citation.] „By its nature, tort liability arising from 

conspiracy presupposes that the coconspirator is legally 

capable of committing the tort, i.e., that he or she owes a 

duty to plaintiff recognized by law and is potentially subject 

to liability for breach of that duty.” (American Master Lease 

LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 

1473-1474 (American Master Lease), quoting Applied 

Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 

Cal.4th 503, 510-511.)
55

(Nasrawi).)

 As alleged in the 5AC, the aiding and abetting claim is 

the final cause of action, and incorporates all the previous 

factual allegations. The claim‟s material additional 

allegations are (1) that Altour and ADP “formed a common 

plan to pay Altour employees unfairly,” (2) that they knew 

that appellant was not being paid in accordance with 

California law, (3) that “ADP knowingly aided and abetted 

Altour in committing the wrongful termination,” (4) that 

ADP gave substantial assistance or encouragement to 

Altour, and (5) that ADP‟s conduct was a substantial factor 

in causing harm to appellant. 

Appellant has failed to show that she can state an 

aiding and abetting claim against ADP with respect to 

unpaid wages. Generally, aiding and abetting requires the 

commission of an underlying tort. (Nasrawi, supra, 231 

Cal.App.4th at p. 344, fn. 7.) Although her briefs refer to two 

potential torts -- namely, conversion and “theft” -- the 5AC 

and 6AC assert no such claims against Altour, and she offers 

no argument (with citation to legal authority) that the 

misconduct alleged in them constitutes those torts. 

Appellant also has forfeited any contention that she 

can state an aiding and abetting claim against ADP with 

respect to the alleged wrongful termination, as her briefs 

contain no argument in support of that claim. We also point 

out that an aider and abettor must “„provide assistance that 

was a substantial factor in causing the harm suffered‟” 

(American Master Lease, supra, 225 Cal.App.4th at p. 1476, 
56

quoting Neilson v. Union Bank of California, N.A. (C.D. Cal. 

2003) 290 F.Supp.2d 1101, 1135). Thus, “„causation is an 

essential element of an aiding and abetting claim . . . .‟” 

(American Master Lease, supra, at p. 1476, quoting Neilson, 

supra, at p. 1135.) However, as neither the 5AC nor the 6AC 

contains specific allegations describing how ADP assisted in 

or encouraged her termination, appellant has failed to plead 

the requisite causation. (Schulz v. Neovi Data Corp. (2007) 

152 Cal.App.4th 86, 97 [aiding and abetting claim fails for 

want of specific factual allegations showing substantial 

assistance or encouragement].) In sum, appellant had failed 

to demonstrate a tenable aiding and abetting claim.
57

DISPOSITION

The judgment is reversed to the extent the trial court 

denied appellant leave to file an amended complaint 

asserting claims against respondents limited to breach of 

contract, negligent misrepresentation, and negligence, as set 

forth in our opinion (see pts. E., F. & G. of the Discussion, 

ante). The judgment is affirmed in all other respects. The 

parties shall bear their own costs on appeal. 

CERTIFIED FOR PUBLICATION

MANELLA, J.

We concur:

EPSTEIN, P. J. 

WILLHITE, J.