Filed 7/10/18 CERTIFIED FOR PARTIAL PUBLICATION *

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE
STATE OF CALIFORNIA

JOSE LUIS MORALES et al., Plaintiffs and Appellants,

v. 22nd DISTRICT AGRICULTURAL ASSOCIATION,
Defendant and Respondent. D072378

(Super. Ct. No. 37

- 2013

- 00040938

- CU

- OE

- CTL)

APPEAL from a judgment of the Superior Court of San Diego County,
Joel R. Wohlfeil, Judge. Affirmed.
Law Offices of David J. Gallo and David J. Gallo for Plaintiffs and Appellants. Gordon & Rees, James J. McMullen , Jr. , Matthew G. Kleiner and Justin M. Michitsch for Defendant and Respondent. League of California Cities and California State Association of Counties, as Amicus Curiae on behalf of Defendant and Respondent.

* Pursuant to California Rules of Court, rule 8.1110, this opinion is certified for publication with the exception of part III. D

.2 I.
INTRODUCTION In this appeal, we must determine whether a state entity whose employees are exempt from state law requiring the payment of overtime compensation is nevertheless required to pay overtime compensation to such employees when the state entity jointly employs the employees with a non

- state employer. Although we concluded in a prior appeal in this case that the matter should be remanded to the trial court to permit the plaintiffs to amend their complaint to attempt to state a cause of action premised on such

a theory ( Morales v. 22nd Dist. Agricultural Ass n. (2016) 1 Cal.App.5th 504, 542

– 544 ( Morales )), we now conclude that such a cause of action would not be legally viable. We
further conclude that the law

- of

- the

- case doctrine does not require that we reverse the
trial court ' s order sustaining a demurrer to the plaint iffs ' second amended complaint. 1
II.
FACTUAL AND PROCEDURAL BACKGROUND
A. Proceedings in the case prior to our decision in Morales 2 Defendant 22nd District Agricultural Association of the State of California (the DAA) is a California agency that owns and manages the Del Mar Fairgrounds and the
Del Mar Horsepark. Plaintiff Jose Luis Morales and a group of other seasonal employees

1 In an unpublished portion of this opinion, we conclude that plaintiffs have not adequately alleged a separate theory of overtime compe nsation liability against the state entity. (See pt. III.D, post .) 2 We base our description of the proceedings in the case prior to Morales on the "Factual and Procedural Background" section of that opinion. (See Morales , supra , 1 Cal.App.5th at pp. 51 3

– 514.)3

of the DA A filed a putative class action alleging that the DAA fail ed to pay plaintiffs overtime compensation required by state law under Labor Code section 510 3 and federal law under the Fair Labor Standards Act of 1938 (29 U.S.C. § 201 et seq.) (FLSA).
T he trial court sustained, without leave to amend, the DAA ' s demurr er to plaintiffs ' section 510 cause of action. After the trial court conditionally certified the case

a s a collective action, the DAA asserted an affirmative defense to plaintiffs ' FLSA claim. Specifically, the DAA alleged that the employees were exempt from the FLSA overtime compensation requirements pursuant to a statutory exemption (29 U.S.C. § 213(a)(3) ) commonly referred to as the " amusement exemption. " 4 T he trial court held a jury trial on
the DAA ' s affirmative defense to plaintiffs ' FLSA claim. T he jury rendered a verdict in favor of the DAA and the trial court entered a judgment in favor of the DA A. Plaintiffs timely appealed.
B

. Morales The primary issues on appeal in Morales related to plaintiffs ' claim under the FLSA. ( Morales , supra , 1 C al.App.5th at p. 513.) The Morales court concluded that the trial court properly granted judgment for the DAA on the FLSA claim. ( Ibid

. ) The present appeal presents no iss ues with respect to that claim.

3 Unless otherwise specified, all subsequent statutory references are to the Labor Code. 4 The Morales court explained, " Under this exemption, an employee of an amusement or recreational establishment is not entitled to overtime compensation [mandated by the FLSA] if certain criteria are met. " ( Morales , supra , 1 Cal.App.5th at p. 513.)4

The Morales court also rejected plaintiffs ' contention that the trial court erred in sustaining the DAA ' s demurrer to plaintiffs ' section 510 claim. ( Morales , supra , 1 Cal.App.5th at p. 542.) After reviewing relevant case law, 5 statutory law, and administrative regulations, we concluded, " when se ction 510 and [W]age [O]rder No. 10

- 2001 are viewed together, the inescapable conclusion is that public employees in the amusement and recreation industry are exempt from state overtime requirements. " ( Morales , supra , at p. 54 1 .) However, the Morales cou rt concluded that the trial court erred in denying plaintiffs leave to amend to attempt to state a claim for section 510, subdivision (a) overtime " under the joint employee doctrine. " ( Morales , at p. 543 .) In reaching this latter conclusion, the Morales court noted that plaintiffs contended
that " the DAA is required to comply with section 510 when it loans out its employees t o outside promoters to support ' interim events, '

. . . and charges the outside promoters the labor costs of employing the employees, plus a markup. " ( Morales , supra , 1 Cal.App.5th at p. 542 .) We further noted that " [plaintiffs] assert that they can amend the complaint to allege that when they work on interim events, the DAA is a joint employer with the outside promoters and must therefore comply with section 510. " ( Id

. at p p. 542

– 543.) After observing that " where joint employment exists, all employers are individually

5 The Morales court relied on Johnson v. Arvin

- Edison Water Storage Dist

. (2009) 174 Cal.App.4th 729 ( Johnson ). In Johnson , the Court of Appeal concluded tha t "a public entity, was exempt from section 510." ( Morales , supra , 1 Cal.App.5th at p. 538

. ) The Morales court noted that the Johnson court had relied i n part on "th e established rule that public entities are not subject to a general statute unless expre ssly included. " ( Ibid

. ) Section 510, subdivision (a) does not refer to public entities or public employees. (See pt. III.A.2, post .)5

responsible for compliance with the FLSA, " ( id. at p. 543) and that " joint employment is also recognized under C alifornia law, " ( ibid

. ) we concluded that plaintiffs should be granted leave to amend their complaint, reasoning:

" We conclude that [plaintiffs] should be permitted to amend their section 510 claim since they have shown how they can potentially amend their complaint to state a valid claim under the joint employee doctrine. Accordingly, we reverse that part of the order sustaining the demurrer without leave to amend and direct the trial court to grant [plaintiffs] leave to amend the complaint. In so doing, we express no view as to the ultimate merits of [plaintiff s ' ] section 510 claim. " ( Id

. at p p . 543

– 544.) We remanded the matter to the trial court with directions to grant plaintiffs leave to amend their complaint. ( Morales , supra , 1 Cal.App.5th at
pp. 543

– 544.)
C

. Plaintiffs ' second amended complaint On remand, plaintiff s filed a second amended complaint as a putative class action for the recovery o f unpaid overtime compensation. In their second amended complaint, plaintiffs alleged that they had w orked as joint employees of the DAA a nd certain

" Outside Promoters. " Plaintiffs further alleged that the DAA had failed to pay plaintiffs overtime compensation required by section 510, subdivision (a). Specifically, pla intiffs alleged the following:

" 12. [DAA] employs numerous perso ns to whom [DAA] refers as

' 119

- day Employees '

.

" 13. [DAA] ' s 119

- day Employees per form tasks such as cleaning out stables, manually sorting trash for recycling, digging an d filling trenches, parking lot security, ticket

- tak ing, etc.6

" 14. [DAA] loans out, leases, and/or se conds, its 119

- day Employees to u naffiliated, private ' promoters ' (hereinafter ' Outside Promoters ' ) to support events (hereinafter ' Interim Events ' ) such as gun shows, bridal bazaars, private parties, weddings, Christmas tree sales, hot tub sales, home and garden shows, etc.

" 15. [DAA] charges the Outside Promote rs the labor costs of employing the 119

- day Employees, plus a ' markup '

.

" 16. When [DAA] ' s 119

- day Employees are loaned out, leased , and/or seconded, to perform work in support of Outside Prom oter s ' Interim Events, the 119

- day Employees are subject to the control of both [DAA] and the Outside Promoter.

" 17. When [DAA] ' s 119

- day Employees are loaned out, leased, and/or seconded, to perform work in support of Out side Promoters ' Interim Events, [DAA] is a joint employer with the Outside Promoters, and must therefore comply with Labor Code section 510, subdivision (a).

" 18. Separate and in addition to the forego ing, when the 119

- day E mployees are loaned out, leased, and/or seconded, to per form work in support of Outside Promoters ' Interim Events, the 119

- day Employees a re not directly employed by the State or any political subdivision thereof, for purposes of Wage Order No. 10.

" 19. Many of [DAA] ' s 119

- day Employees work overtime hours in support of Outside Promoters ' Interim Events.

" 20. [DAA] does not pay its 119

- day Employees any overtime compensation.

" 21. [DAA] ' s above

- described policies and practices are in contravention of law.

" 22. Each Plaintiff herein has been employe d as a 119

- day Employee at some point in time subsequent to 25 March 2010.

" 23. Each Plaintiff herein is informed and bel ieves he or she (as applicable) has performed work in support of Outside Promoters ' Interim Ev ents, and worked overtime hours in connection with such work. "7

Based on these allegations, plaintiffs brought a single cause of action for recovery of overtime compensation, attorney fees, and costs pursuant to section 510, subdivision (a) and section 1194, subdivision (a) 6 on behalf of themselves and a putative class of

" 119 day employees. " 7

D

. The DAA '

s demurrer
The DAA filed a demurrer t o the second amended complaint. In its demurrer, the DAA argued that in Morales , this court concluded that it was exempt from paying overtime compensation as specified i n section 510, subdivision (a). The DAA further argued that it was not liable to plaintiffs for overtime compensation under section 510, subdivision (a) by virtue of its alleged status as plaintiffs ' joint employer. The DAA argued that Noe v. Superior Court (2015) 237 Cal. App.4th 316, 333

– 334 ( Noe ) " confirms that the joint employer doctrine does not extend California ' s overtime laws to a joint employer who is otherwise exempt from that law. " 8

E

. Plaintiff

s ' opposition Plaintiffs filed an opposition in which they argued that the second amended complaint stated a cause of action for overtime violations under section 1194, subdivision
6 Section 1194, subdivision (a) provides a cause of action to employees to recover legally mandated overtime and minimu m wage compensation. (See III.B, post .) 7 The second amended complaint contained a series of class action allegations through which plaintiff s asserted their claim on behalf of a clas s of similar situated "119

- day employees. " 8 While the DAA's argument suggested that Noe involved an employer that was exempt from the relevant labor law, Noe did not involve an exempt employer. (See Noe, supra , 237 Cal.App.4th at pp. 331

– 334.) Thus, as discussed in p art III.B, post , we view the No e court's discussion of the joint employment doctrine and section 1194 as inapposite.8

(a), which , as the Noe court recognized, " ' imposes a duty on every employer ( i.e., including all co

- employers), " (boldface omitted) to ensure that that employees receive overtime compensation mandated by section 510, subdivision (a). Plaintiffs further argued that " [t] he Morales decision precludes [the DAA ] ' s current argument, because
Morales held that plaintiffs ' then

- proposed amendment would state a claim if joint employment were to be properly pleaded

. " Finally, plaintiffs argued that " if [the trial court] were to conclude that Noe cannot be harmonized with Morales , [the trial court] would be required to follow Morales under the law

- of

- the case doctrine. "
F

. The trial court '

s ruling After further briefing and a hearing, 9 the trial court sustained the DAA ' s d emurrer without leave to amend. The trial c ourt reasoned:

" [The DAA] is exempt from the state overtime requirements of Labor Code section 510. Morales [ , supra , 1 Cal. App.5th at pp. 537

– 538 ] (citing Johnson [, supra , 174 Cal. App.4th 729 ] ). In an attempt to avoid this prohibition, paragraph 17 of the SAC alleges:

'

. . . [DAA] is a joint employer with the Outside Promoters, and must therefore comply with Labor Code section 510, subdivision (a). ' However, there exists ' no authority for the proposition that a joint employer may be held liable for L abor Code violations committed by a cojoint employer based on principles of agency or joint and several liability. Rather, whether an employer is liable under the Labor Code depends on the duties imposed under the particular statute at issue. ' Noe [ , supr a , 237 Cal. App.4th at pp. 333

– 334 ]

. In short, the alleged joint employment of plaintiffs by the DAA and the private employers does not serve to transfer the liability of the private employers to the DAA. Labor Code section 510 does not contain language from which such joint liability can be inferred.

9 The record does not contain a reporter's transcript from the hearing.9

" Plaintiffs argue that the appellate decision in Morales issued after Noe , such that the Morales decision controls and constitutes ' law of the case. ' This argument lacks merit. Morales does not hold that joint employers are jointly and severally liable for the wrongdoing of co
- joint employers. Instead, the narrow issue that Morales decided was whether P laintiffs could potentially amend their Complaint. Morales [, supra , at pp. 514, 542

– 543 ]

. Although lea ve to amend was permitted, the appellate court ' express[ed] no view as to t he ultimate merits of [plaintiffs ' ] section 510 claim. ' Id

. at 544

. " (E mphasis altered .)
The trial court thereafter entered a judgment in favor of the DAA.
G

. The appeal Plaintiffs timely appeal from the judgment. 10
III.
DISCUSSION The trial court properly sustained the DAA ' s demurrer to plaintiffs ' second amended complaint without leave to amend
Plaintiff s claim that the trial court erred in sustaining the DAA ' s demurrer to their second amended complaint without leave to amend. Specifically, plaintiffs contend that the trial court erred in concluding that the second amended complaint did not adequately state a claim against the DAA for overtime compensation pursuant to s ections 510,
subdivision (a) and 1194, subdivision (a).

10 While this appeal was pending, we granted an application of the League of California Cities and California State Association of Counties (the League) to file an amicus brief on behalf of the DAA. We have considered the League's amicus brief, as well as the plaintiffs' answer to that brief, in determining the issues presented on appeal.10

A. Governing law and standard of review
1. The law governing demur rers and the standard of review
In Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, the
court outlined the following well

- established law governing the review of an order sustaining a demurrer without leave to amend:

" A demurrer tests the legal sufficiency of the complaint. We review the complaint de novo to determine whether it alleges facts sufficient to state a cause of action. For purposes of review, we accept as true all material facts alleged in the complaint, but not contentions, deductions or conclusions of fact or law. We also consider matters that may be judicially noticed. [Citation.] When a d emurrer is sustained without leave to amend, ' we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discret ion and we affirm. ' [Citation.] Plaintiff has the burden to show a reasonable possibility the complaint can be amended to state a cause of action. " ( Id. at pp. 1608

– 1609, fn. omitted.) In considering a trial court ' s order sustaining a demurrer without leave to amend,

" ' we review the trial court ' s result for error, and not its legal reasoning. ' " ( Bains v.
Moores (2009) 172 Cal.App.4th 445, 478.) " O n appeal from a judgment of dismissal
entered after a demurrer has been sustained without leave to amend

. . . the appellate court must affirm the judgment if it is correct on any theory. " ( Hendy v. Losse (1991) 54 Cal.3d 723, 742 ( Hendy ) .)
2. Relevant substantive law Section 510, subdivision (a) provides:

" Eight hours of labor constitutes a day ' s work. Any work in excess of eight hours in one workday and any work in excess of 40 hours in any one workweek and the first eight hours worked on the seventh11

day of work in any one workweek shall be compensated at the rate of no less than one and one

- half times the regular rate of pay for an employee. " Section 1194, subdivision (a) provides:

" Notwithstanding any agreement to work for a lesser wage, any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to t he employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney ' s fees, and costs of suit. " While section 1194, subdivision (a) does not expressly state " who is liable " for a cause of action based on that statute ( Martinez v. Combs (2010) 49 Cal.4th 35, 49 ( Martinez )), the Martinez court held that " only an employer can be liable " ( ibid

. , italics added) for a wage claim under section 1194, subdivision (a) since " no generally applicable rule of law imposes on anyone other than an employer a duty to pay wages. " ( Martinez , supra , at p. 49. ) Industrial Welfare Commission Wage O rder 10

- 2001 (Wage Orde r No. 10) 11 provides that " [e] ight (8) hours of labor constitutes a day ' s work, " and specifies that employment beyond eight hours is " permissible provided the employee i s compensated
for such overtime. " 12 (C al. Code Regs., tit. 8, § 11100 ( 3)(A)(1).) While Wage Order No. 10 generally applies to " all persons employed in the amusement and recreation

11 The In dustrial Welfare Commission " ha [ s ] constitutional and statutory authority to adopt wage orders prescribing, among other things, maximum hours of employment for employees in California. " ( Morales , supra , 1 Cal.App.5th at p. 539 .) 12 The order specifies var ious rates of compensation to be paid based on the amount of overtime worked. (Cal. Code Regs., tit. 8 , § 11100 (3)(A)(1)(a) , (b) , (c).)12

industry " (Cal. Code Regs. , tit. 8, § 11100(1) ) , the order exempts from its scope certain public employees pursuant to the following provision:

" [T] he prov isions of this order shall not apply to any employees directly employed by the State or any political subdivision thereof, including any city, county, or special district. " (Cal. Code Regs., tit. 8, § 11100(1)(C).) 13
B. Plaintiffs may not hold the DAA l iable for overtime compensation by virtue of the DAA ' s status as plaintiffs ' joint employer
Plaintiff s claim that the trial court erred in sustaining the DAA ' s demurrer to their section 1194, subdivision (a) claim for overtime wages allegedly due under section 510, subdivision (a) by virtue of the DAA ' s status as plaintiffs ' joint employer 14 with various

" Outsider Promoters. " 15 Notwithstanding that the Morales court concluded that " public employees in the amusement and recreation industry are exempt from state overtime requirements , " ( Morales , supra , 1 Cal.App.5th at p. 541 ) p laintiffs contend that the DAA is jointly liable with the Outside Promoters for all wages due to plaintiffs under section 510, subdivision (a) because the DAA act ed as plaintiff s ' joi nt employer

. Plaintiffs correctly note that the DAA do es not dispute that they adequately alleged that t he DAA is their joint employer. Thus, we assume for purposes of this

13 It is undisputed that plaintiffs are employed in the amusement and recreation industry and would be subject to Wage Order No. 10, but for the public employee exemption. (See Morales , supra , 1 Cal.App.5th at p. 540.) 14 As we explained in Morales , " ' Joint employment occurs when two or more persons engage the services of an employee in an enterprise in which the employee is subject to the control of both.' " ( Morales , supra , 1 Cal.App.5th at p. 543 .) 15 We consider plaintiffs' additional claim that th ey have adequately stated a cause of action against the DAA under the theory that they are not "directly employed," (Wage Order No. 10) by the DAA in part III.D, post

.13

decision that plaintiffs ' second amended complaint adequately alleges that the DA A acted as their joint employer. Thus, the question we must determine is whether, under California law, the DAA may be held liable for overtime wages due under section 510, subdivision (a) when the DAA acted as plaintiffs ' joint employer, even though this court
concluded in Morales " public employees in the amusement and recreation industry are exempt from state overtime requirements

. " ( Morales , supra , 1 Cal.App.5th at p. 541 .)
In Morales , we concluded that the matter should be remanded to the trial court because the plaintiffs had " shown how they [could] potentially amend their complaint to state a valid claim under the joint employee doctrine. " ( Morales, supra , 1 Cal. A pp.5th at p. 543 , italics added .) However, f or the reasons stated below, we now conclude that section 510, subdivision (a) does not require the DAA to pay its employees overtime compensation, and that is true whether the DAA is acting as plaintiffs ' sole employer or plaint iffs ' joint employer. Thus, the trial court properly sustained the DAA ' s demurrer to the second amended complaint. 16 To begin with, we are aware of no authority, and plaintiffs have cited none, in either this appeal or in Morales , that supports the counte rintuitive proposition that a public employee who is not entitled to overtime compensation when employed solely by a public entity , is entitled to such overtime compensation from the public entity when the

16 We address plaintiffs' argument that the law

- of

- the

- case doctrine requires that we re verse the trial court's order in part III.C, post

.14

employee is jointly employed by the public entity and a private entity. 17 Further, there is nothing in the text of either section 510 or Wage Order No. 10 that would support such an anomalous result. Section 510, subdivision (a) makes no reference to public entities. As
the Johnson court observed, in the context of wage and hour provisions, " the Legislature expressly refers to public entities when it intends them to be included. " ( Johnson , supra , 174 Cal.App.4th at p. 737.) Wage Order No. 10 in turn expressly " exempts ' any employe es directly employed by the State or any political subdivision thereof, including any cit y, county, or special district. ' " ( Morales , supra , 1 Cal.App.5th at p. 540, quoting Cal. Code Regs., tit. 8, § 11100(1)(C).) Thus, there is nothing in the text of e ither section 510, subdivision (a) or Wage Order No. 10 that suggests that the DAA may be liable for overtime obligations when it acts as the plaintiffs ' joint employer. Further, plaintiffs have offered no plausible reason why the DAA could
nevertheless b e liable for paying overtime compensation pursuant to section 510, subdivision (a) , when the DAA jointly employs the plaintiffs with Outside Promoters. The plaintiffs contend that the Morales court must have concluded that " [the DAA ' s] employees do not qu alify as public employees performing exempt work when they ar e leased out to support private

- sector businesses

. ' " 18 (Italics & boldface omitted.) This rationale might be plausible if Morales were based solely on the sovereign powers

17 Whether the employee would be entitled to overtime compensation from the private entity is not a question presented in this appeal. 18 Plaintiffs advanced this same argument in the prior appeal. (See M orales , supra , 1 Cal.App.5th at p. 542 ["[Plaintiffs] assert that when they are performing work for these outside entities, they are not public e mployees performing exempt work"].)15

cannon of statutory construction. Under that cannon, a statute that does not expressly refer to a public entity is deemed not to apply to the public entity if such application

" would result in an infringement upon sovereign govern mental powers. " ( Morales , supra , 1 Cal.App.5th at p. 538.) As applied here, if the Morales court had concluded that plaintiffs were exempt from overtime requirements solely because applying the statute would infringe upon the sovereign powers of the DAA when the plaintiffs performed work on behalf of the DAA , then a reasonable argument could be made that the employees are entitled to overtime compensation from the DAA when they are " leased out to support private

- sector businesses

. " However, neither Moral es , nor Johnson on which the
Morales court relied, concluded that section 510, subdivision (a) did not apply to public employees solely because such application would violate public entities ' sovereign
powers. On the contrary, as the Morales court recogni zed, the Johnson court concluded that the sovereign powers cannon of statutory interpretation provided an additional and
alternative basis for concluding that section 510, subdivision (a) did not apply to public employees. ( Morales , supra , 1 Cal.App.5th at p. 538 [ " indicia of legislative intent led
the Johnson court to conclude that a water district wa s exempt from section 510, but ' [i]n
any event , the [water] District [was] also exempt ' under the sovereign powers ca non of statutory interpretation " ( itali cs added ) ].) 19

19 The Johnson court was clear that the sovereign powers cannon of interpre tation was not the exclusive basis for the court's conclusion that section 510 does not apply to public entities:16

The Morales court, in turn, based its interpretation of section 510 almost entirely on Wage Order No. 10, which broadly exempts state employees from overtime compensation irrespective of the nature of the employees ' work

. ( See Cal. Code Reg s., tit. 8, § 11100(1)(C) [ " [T]he provisions of this order shall not apply to any employees directly employed by the State or an y polit ical subdivision thereof . . . " ].) The Morales court reasoned, " [ W ] hen it enacted section 510, the Legislature was aware that [Wage Order No. 10] exempted public employees in the amusement and recreation indus try from overtime compensation. " 20 ( Morales , supra , 1 Cal.App.5th at p. 541.) In sum, there is nothing in either Morales or Johnson indicating that public employees ' exemption from section 510, subdivision (a) overtime compensation applies solely when the employees are performing work that furthers the sovereign purposes of
the state. We therefore see no basis for c oncluding that the applicability of the public employees ' exemption from section 510, subdivision (a) turns on the type of work they are performing. Stated differently, we see no basis for concluding, as plaintiffs contend, that public employees are exemp t from the overtime compensation mandates of section 510, subdivision (a) if the employees are performing work that furthers the DAA ' s sovereign purposes, but that such employees become entitled to overtime compensation if

" As discussed above, the indicia of legislative intent lead to the conclusion that the District, as a public enti ty, is exempt from section[ ] 510

. . . . In any event, the District is also exe mpt under the 'sovereign powers' maxim. " ( Johnson , supra , 174 Cal.App.4th at p. 738, italics added.) 20 As noted in footnote 5, ante , section 510, subdivision (a) does not refer to public entities or public employees.17

they are performing work that fur thers the interests of " Outside Promoters. " On the contrary, as the Morales court concluded, without qualification, " [P] ublic employees in the amusement and recreation industry are exempt from state overtime requirements. " ( Morales , supra , 1 Cal.App.5th at p. 541 .) Finally, w hile both parties and the trial court extensively discussed Noe, supra, 237 Cal.App.4th 316, we view that decision as i napposite because Noe did not involve, as does this case, a group of employees ' section 1194, subdivision (a) claim against an employer based on a joint employment theory where the employee s are exempt from the
L abor C ode provision at issue

. Thus, whatever may be said about the legal responsibilities of joint employers pursuant to pr inciples of joint and several liability or section 1194, subdivision (a) generally, 21 those principles have no application in this case since plaintiffs are exempt fro m section 510, subdivision (a).

21 T he DAA and the trial court emphasize that the Noe court stated, " We are aware of no authority suggesting that, under California law, joint employers are generally treated

' as if they were each other ' s agents ' or that joint employers a re normally held jointly liable for Labor Code violation [s] committed b y a co employer. " ( Noe , supra , 237 Cal.App.4th at p. 332; Serrano v. Aerotek, Inc. (2018) 21 Cal.App.5th 773, 784 ( Serrano ) [ " Noe made clear that whether an employer is liable for a co e mployer ' s violations depends on the scope of the employer ' s own duty under the relevant statutes, not ' principles of agency or joint and several liability ' " ].) However, plaintiffs properly note that the Noe court suggested that a joint employer may be li able pursuant to section 1194 for a cojoint employers ' wage violations. (See Noe , supra , 237 Cal.App.4th at p. 333 [ " section 1194 permits an employee with multiple employers to seek recovery of unpaid wages from any of them " ]; id. at p. 334 [" if plaintiff s prove defendants were their joint employers, those defendants may be held liable under section 1194 for any unpaid minimum wage and overtime compensation resulting fro m plaintiffs' misclassification"].) The Serrano court disagreed with the Noe court's statement that certain provisions of the Labor Code impose liability on an employer for the acts of a joint employer "by18

In sum, we conclude that the DAA may not be liable for ov ertime compensation mandated by section 510, subdivision (a) when the DAA acts as a joint employer with another entity. Accordingly, we reject plaintiffs ' claim that they properly stated a section 1194, subdivision (a) claim for section 510, subdivision ( a) overtime compensation against the DAA pursuant to a joint employment theory of liability. 22
C

. The law

- of

- the

- case doctrine does not mandate reversal
Plaintiffs claim that the law

- of

- the

- case doctrine requires that we reverse the trial

court ' s order s ustaining the DAA ' s demurrer. Specifically, plaintiffs contend that the
Morales court held that, if plaintiffs could adequately allege that the DAA was their joint employer, they would state a valid claim against the DAA for section 510, subdivision (a)

o vertime compensation and that the law

- of

- the

- case doctrine requires that we adhere to this conclusion in this appeal. 23

virtue of employer status." (Compare Noe , supra , 237 Cal.App.4th at p. 334 , fn.10 [" many sections of the Labor Code do impose employer liability ' by virtue of employer status, ' " and stating " [b]ecause sections 512 and 226.7 impose a duty on every employer to provide meal periods, an employee with multiple employers who is denied a meal period may pursue a section 226.7 claim ag ainst any of his or her employers " ] with Serrano , supra , 21 Cal.App.5th at p. 784 [disagreeing with " Noe ' s statement that ' an employee with multiple employers who is denied a meal period may pursue a section 226.7 claim against any of his or her employers ' " ].) 22 While the trial court relied on Noe in sustaining the demurrer, we must affirm a judgment entered after an order sustaining a demurer if the order is correct on any theory. ( Hendy , supra , 54 Cal.3d at p. 742.) 23 While, plaintiff s did not refer t o the law

- of

- the

- case doctrine as a separately captioned argument in their opening brief, we conclude that the argument was adequately raised on appeal. To begin with, plaintiff s clearly raised the argument in the trial court, and the trial court expressly discussed the doctrine in its order. Further, plaintiffs assert ed in their opening brief that " the law

- of

- case doctrine is fully applicable

. . . . " In addition, plaintiff s ' o pening brief contained a section entitled, " The court ' s holding in19

1. Governing law

" ' " The decision of an appellate court, stating a rule of law necessary to the decision of the case, conclusively establishes that rule and makes it determinative of the rights of the same parties in any subsequent retrial or appeal in the same case. " ' " ( Leider v. Lewis (2017) 2 Cal.5th 1121, 1127.) " ' [Q]uestions presented and decided by [an] appellate court upon appeal from a judgment on demurrer become the law of the case, and are not open to question on a subsequent appeal ' unless the evidence ' " is substantially different in a material respect. " ' " ( Bigbee v. Pacific Tel. & Tel. Co. (1983) 34 Cal.3d 49, 57.)
In Morohoshi v. Pacific Home (2004) 34 Cal.4th 482 ( Morohoshi ) , the Supreme
Court outlined the " unjust decision " exception to the law

- of

- the case doctrine as follows:

" The law of the case doctrine applies to [the Supreme Court] even though the previous ap peal was before the Court of Appeal, and it applies even though this court may conclude the previous Court of Appeal opinion was erroneous. [Citation.] ' Indeed, it is only when the former rule is deemed erroneous that the doctrine of the law of the case becomes at all important. ' [Citation.] The doctrine is, we have recognized, harsh. [Citation.] Accordingly, we have declined to adhere to it where its application would result in an unjust decision, e.g., where there has been a manifest misapplication of existing principles resulting in substantial injustice . . . . The unjust decision exception does not apply when there is a mere disagreement with the prior appellate determination. " ( Id

. at p. 491

– 492.)

Morales ." (Boldface & some capitalization omitted.) I n that section, plaintiffs argued that Morales established that "[plaintiffs] then

- proposed amendment would state a claim if joint emp loyment were to be properly pleaded. " Further, the DAA included a sep arately headed argument in its brief captioned, "Law of the case doctrine is not applicable." (Some c apitalization omitted.) Finally , plaintiffs offered a separately captioned law

- of

- t he

- case argument in their reply brief. Under these circumstances, we conclude that plaintiffs adequately raised the contention that the law

- of

- the

- case doctrine requires reversal of the trial court 's order.20

2. Application
The trial cour t concluded that the law

- of

- the

- case doctrine did not apply because
the Morales court concluded only that the " [p]laintiffs could potentially amend their Complaint. " (Italics added.) The trial court reasoned further, " Although leave to amend was permitted, the [ Mora les ] court, ' express[ed] no view as to the ultimate merits of [ plaintiff s ' ] section 510 claim. ' " The DAA echo es this reasoning on appeal, contending,

" [T]he issue that Morales decided was whether Plaintiffs could potentially amend their complaint. " We a gree with this reasoning. The Morales court did not expressly hold that, if plaintiffs could adequately allege that the DAA was their joint employer, they would state a valid claim against the DAA for section 510, subdivision (a) overtime compensation

. T he two key portions of the Morales opinion are as follows. In a paragraph summarizing the plaintiffs ' claim for overtime due under section 510, subdivision (a) , the
Morales court stated:

" We agree that section 510 does not apply to the DAA. Nevertheless, we conclude that the trial court erred in sustaining the demurrer without leave to amend because [plaintiffs] have shown how they can amend their complaint to allege a potentially valid claim for overtime compensation. " ( Morales , supra , 1 Cal.App.5th at p. 538 .) In addition, the final paragraph of a section of the opinion entitled " Leave to Amend, " ( Morales , supra , 1 Cal.App.5 th at p. 54 3, italics omitted ) states:

" We conclude that [plaintiffs] should be permitted to amend their section 510 claim since t hey have shown how they can potentially amend their complaint to state a valid claim under the joint21

employee doctrine. Accordingly, we reverse that part of the order sustaining the demurrer without leave to amend and direct the trial court to grant [plai ntiffs] leave to amend the complaint. In so doing, we express no view as to the ultimate merits of [plaintiffs ' ] section 510 claim. " ( Id. at p p
. 543

– 544 .) In light of such equivocal language, we conclude that the Morales court did not
hold that plaintiff s yet

- to

- be plead ed joint employment theory adequately stated a cause of action against the DAA. Even if we were to agree with plaintiffs that the Morales

court did hold that exempt public employees could sue their public employer for overtime

co mpensation to the extent the public employer jointly employed such employees with a private employer , the law

- of

- the

- case doctrine would not require that this court adhere to
this erroneous conclusion. ( Morohoshi , supra , 34 Cal. 4th at pp. 491

– 492.)
We ex plained in part III. B , ante , that the DAA cannot be liable for section 510, subdivision (a) overtime compensation when the DAA is an employee ' s joint employer with another entity. Further, neither of the two cases that we cited in Morales in support
of ou r decision to remand the matter to permit the plaintiffs to amend their complaint to attempt to state a claim pursuant to the joint employment doctrine

— Bonnette v. Calif ornia Health & Welfare Agency (9th Cir. 1983) 704 F.2d 1465 ( Bonnette ) and
Guerrero v. Superior Court (2013) 213 Cal.App.4th 912, 955 ( Guerrero )

— supports application of the doctrine in this context. Specifically, neither Bonnette nor Guerrero applied the joint employment doctrine to a public employer to require that the employer comply with a law that, as in this case, exempts its employees from th e relevant law. Rather, in both cases, courts concluded that the public entity could be liable as a joint employer ( Bonnette , supra , at pp. 1469

– 1470; Guerrero , supra , at p. 955), where the22

releva nt public entity was not exempt f rom the relevant law. (See Bonnette , at p. 1472 [concluding that " the tenth amendment is not a bar to the application of the FLSA ' s minimum wage provisions " ]; Guerrero , at p. 955 [interpreting wage order and stating

" IWC d id not intend to exempt public agencies or political subdivisions generally from [wage order ' s] provisions " ].) Further, plaintiffs have not cited

— in this case or in
Morales

— and our own research has not uncovered, any case in which a court has applied the joint employment doctrine in such an unorthodox manner. Under these circumstances, to reverse the trial court ' s ruling and permit the plaintiffs ' action to proceed would constitute " a manifest misapplication of exist ing principles resulting in substantial injustice , " ( Morohoshi , supra , 34 Cal.4th at pp. 491

– 492 [outlining unjust decision exception to law

- of

- the

- case doctrine] )

. Accordingly, we conclude that the law

- of

- the

- case doctrine does not require that

we revers e the trial court ' s order sustaining the demurrer.
D

. Plaintiffs failed to adequately state a claim for overtime compensation based on the theory that the DAA is not their direct employer
Plaintiffs also contend that they properly stated a claim for s ection 510, subdivision (a) overtime compensation against the DAA because they properly alleged that they were not " directly employed " by the DAA. (Wage Order No. 10.) 24 Plaintiffs argue that " when they are leased out to support private

- sector businesses, " they are not

" directly employed , " by the DAA under Wage Order No. 10

.

24 Unlike the joint employment doctrine discusse d in p art III.B, ante , t his theory of liability was not addressed in Morales

.23

As discussed in part III.A.2, ante , the exemption at issue provides , " [T]he provisions of this order shall not apply to any employees directly employed by the State or any political s ubdivision thereof, including any city, county, or special district. " (Cal. Code Regs., tit . 8, § 11100(1)(C).) Plaintiffs have not provided any authority as to the meaning of the term " directly employed " in Wage Order No. 10 (italics added), and our

own research has not uncovered any such authority. Nor have the plaintiffs offered any interpretation of that te rm in their briefing on appeal. One reasonable interpretation of Wage Order No. 10 is that " employees directly employed by the State " refers to e mployees of the State of California, and that Wage
Order No. 10 also exempts employees indirectly employed by the St ate, i.e. , employees
of the S tate ' s political subdivisions. Under this interpretation, the terms " ' employees directly employed by the State or any political subdivision thereof , ' " mean s " ' employees of the state or political subdivisions of the state. ' " ( See Guerrero, supra , 213 Cal.App.4th at p. 953 [stating that wage order that provided exemption f or " employees directly employed by the State or any political subdivision thereof, " exempted

" employees of the state or political subdivisions of the state " ].) 25 If this is the correct interpretation of Wage Order No. 10, then plaintiffs claim fails as a matter of law because

25 Similarly, Labor Code section 220 uses the term "directly employed " in

" distinguish [ing] between, on the one hand, employees of state agencies, departments, and other components of state government

. . . and, on the other, persons employed by counties, incorporated cities, and other political subdivisions of the State

. . . . (Compare § 220, subd. (a) [referring to 'employees directly employed by the State of California ' ] with § 220, subd. (b) [referring to ' employees directly employed by any county, incorporated city, or town or other municipal corporation ' ].) " ( McLean v. State of Californi a (2016) 1 Cal.5th 615, 629 .)24

even under plaintiffs ' indirect employer theory, plaintiffs would still be employees of a state agency, the DAA. However, we need not definit ively interpret the meaning of the term " directly employed " (Wage Order No. 10) in order to affirm the judgment. E ven assuming , strictly
for purposes of argument , that plaintiffs are correct in suggesting that, under Wage Order
No. 10 , indirect employees of the State and its subdivisions are entitled to recover overtime compensation from the State , plaintiffs have not demonstrated that they have adequately alleged that they are in directly employed by the DAA. 26

T he second amended complaint affirmatively al leges that the DAA is the plaintiffs ' employer, albeit at times, plaintiffs ' joint employer. Specifically, the second amended complaint alleges:

" 12. [DAA] employs numerous persons to whom [DAA] refers as

' 119

- day Employees. ' "

" 17. When [DAA] ' s 119

- day Employees are loaned out, leased, and/or seconded, to perform work in support of Outside Promoters ' Interim Events, [DAA] is a joint employer with the Outside Promoters. "

" 22. Each Plaintiff herein has been employed as a 119

- day Employee at some point in tim e subsequent to 25 March 2010. " Further, the second amended complaint alleges that " loaned out, leased, and/or seconded, to perform work in support of Outside Promoters ' Interim Events, the 119

- day Employees are subject to the control of both [DAA] and the Outside Promoter , " (italics

26 Plaintiffs have not suggested in their briefing on appeal that they could allege additional facts supporting the allegation that they are not directly employed by the State such that a remand for further leave to amend woul d be warranted.25

added) an allegation that appears inconsistent with plaintiffs ' claim that the DAA was not
their direct employer. 27 Plaintiffs have failed to explain how such factual allegations sufficiently state a claim based o n the theory that the DAA is not their direct employer. Moreover, plaintiffs point to no other allegations in their second amended complaint demonstrating that they are not directly employed by the DAA. Under these circumstances, we conclude that the pla intiffs have failed to demonstrate how they have sufficiently stated a claim under section 1194, subdivision (a) for overtime compensation due under section 510, subdivision (a) based on the theory that the DAA was not the plaintiffs ' direct employer. (Se e Rakestraw v. California Physicians ' Service (2000) 81 Cal.App.4th 39, 43 [ " O n appeal, a plaintiff bears the burden of demonstrating that the trial court erroneously sustained the demurrer as a
matter of law " ].)

27 T he second amended complaint alleges that when plaintiffs were " loaned out, leased, and/or seconded, to perform work in support of Outside Promoters ' Interim Events, [they] are not directly employed by the State or any political subdivis ion thereof, for purposes of Wage Order No. 10. " (Italics added.) This allegation, however, is a mere legal conclusion, which we disregard in reviewing the adequacy of plaintiffs ' complaint. (See e.g., Tracfone Wireless, Inc. v. County of Los Angeles (2 00 8) 163 Cal.App.4th 1359, 1368.)26 IV.
DISPOSITION The judgment is affirmed. In the interests of justice , each party is to bear its own costs on appeal.

AARON, J.
WE CONCUR: BENKE, Acting P. J. IRION, J.