SEBASTIAN VASILESCU v. LUMINA RECOVERY, LLC, et al.

[5] For example, Blacknell alleges that her position at LACDA "placed her in the crosshairs for attack by those within [LACDA] who opposed Gascón, his policies, and any efforts to align [LACDA] with the interests of the community that it exists to serve" and that her "vocal opposition to police brutality and the historic failure of [LACDA] to hold law enforcement accountable... triggered fierce backlash from those that opposed [LACDA's] evolving values under DA Gascón." (TAC, P.P. 13, 15.)

Blacknell admits that she was targeted "because of her perceived political association with [DA] Gascón, current [DA] Hochman's political opponent, and because of her vocal opposition to the historic lack by [the County Defendants] to redress the persistent instances of police brutality and shootings in Los Angeles County." (Id. P. 38(a).)

Blacknell also concedes that her "advocacy against [LACDA's] troubling history of failing to prosecute police officers for unjustified officer-involved shootings, as well as her support for DA Gascón's initiatives to address these injustices, put her at the center of a retaliatory storm. " (Id. P. 38(c).)

Blacknell further alleges that the alleged hostile work environment was "directly connected to [her] efforts to align [LACDA] with the interests of the community that she believed had been underserved by prior administrations. (Id. P. 38(g).)

9:15 a.m., Friday, August 28, 2026 SEBASTIAN VASILESCU v. LUMINA RECOVERY, LLC, et al. [26STCV09495] DEFENDANTS LUMINA RECOVERY, LLC AND SUREN HARUTYUNYAN'S DEMURRER WITH MOTION TO STRIKE AS TO THE COMPLAINT MEET AND CONFER: CONTESTED Counsel for moving parties declares that the parties met and conferred telephonically on May 12. Plaintiff's counsel asserts that further meet and confer is required. (El Hasan Decl., P.P. 8-9.)

TIMELINE: Employment: retaliation, Labor Code violations, PAGA claim, etc.

Circa 2020: Plaintiff Sebastian Vasilescu ("Plaintiff"), a therapist, was employed by Defendant Lumina Recovery, LLC ("Lumina") and its affiliated addiction treatment and recovery centers in Los Angeles, CA.

In late 2022, Plaintiff is promoted to serve as Lumina's Clinical Director. Throughout his employment, Plaintiff was misclassified as an independent contractor and was paid via 1099 form instead of a W-2.

2022 to 2025: Plaintiff repeatedly raises concerns to Lumina's management regarding his pay classification.

In or around 2022-2023, Plaintiff asks Defendant Suren Harutyunyan ("Harutyunyan"), the owner and CEO of Lumina, to be classified as a W-2 employee. Harutyunyan responds that Lumina would not be able to pay Plaintiff same compensation if he were a salaried employee.

4-11/2023: Lumina is the subject of insurance audits for numerous clients related to suspicious billing and treatment records. Lumina's management instructs Plaintiff to modify records, including dates and treatment records. In July 2023 and July 2024, Plaintiff is also instructed to add session notes for sessions that were not performed.

2/2024: Plaintiff speaks to Lumina Director Michael Connard about his 1099 tax form containing "the wrong TIN/EIN," but Mr. Connard states it was "too late" to make changes because Lumina had already filed its taxes.

7/2024: Plaintiff speaks to Mr. Connard and Human Resources about his pay classification. HR states that his classification depended on the nature of the agreement between the company and the employee.

8-9/2024: Mr. Connard informs Plaintiff that Lumina was becoming "corporate" and Plaintiff should begin thinking about a salary.

9/2024: Lumina Program Director Joe Marino questions how Plaintiff could be classified as an independent contractor while holding the title of Clinical Director, but Mr. Marino takes no corrective action.

1/2025: Plaintiff speaks to Mr. Marino again and requests to become a W-2 employee. Mr. Marino tells Plaintiff that he would earn less as a salaried employee.

3/2025: Plaintiff discovers that his 1099 paperwork for 2024 also lists the wrong TIN/EIN. Lumina's management confirms that the company would not amend the form.

3/26/2025: Lumina terminates Plaintiff's contract, citing an investigation into communications with a former client who had reached out to Plaintiff under an alias.

3/24/2026: Plaintiff files the Complaint, alleging causes of action for: 1. Whistleblower Retaliation (Lab. Code Sec. 1102.5) 2. Wrongful Termination in Violation of Public Policy 3. Fraudulent Filing of Information Returns (26 USC Sec. 7434) 4. Failure to Indemnify Necessary Expenditures (Lab. Code Sec. 2802) 5. Failure to Provide Accurate Itemized Wage Statements (Lab. Code Sec. 226(a)) 6. Failure to Pay Wages Upon Termination/Waiting Time Penalties (Lab. Code Sec. 203) 7. Unfair Business Practices (Bus. & Prof. Code Sec. 17200) 8. Penalties Pursuant to Lab. Code Sec. 2699, et seq.

5/19/2026: Lumina and Harutyunyan (collectively, "Defendants") file this Demurrer with Motion to Strike, which is followed by Plaintiff's Opposition (6/26/2026) and Defendants' Reply (7/2/2026).

TENTATIVE RULING: DEFENDANTS LUMINA RECOVERY, LLC AND SUREN HARUTYUNYAN'S DEMURRER is SUSTAINED without leave to amend in part, SUSTAINED with LEAVE TO AMEND in part, and OVERRULED in part. DEFENDANTS LUMINA RECOVERY, LLC AND SUREN HARUTYUNYAN'S MOTION TO STRIKE is DENIED.

I. DEMURRER Defendants demur to the third, fifth, sixth, seventh, and eighth causes of action in the Complaint pursuant to Code Civ. Proc., Sec. 430.10, subds. (e) and (f).

A. 3 rd Cause of Action: Fraudulent Filing of Information Returns (26 USC Sec. 7434) - SUSTAINED without leave to amend

Plaintiff's third cause of action is insufficiently pled. 26 U.S.C.A. Sec. 7434 permits the recovery of civil damages against a person who "willfully files a fraudulent information return with respect to payments purported to be made to any other person..." (26 U.S.C.A. Sec. 7434, subd. (a).)

"Under Sec. 7434, a plaintiff must show: (1) the defendant filed an information return on his or her behalf, (2) the return was false as to the amount paid, and (3) the defendant acted willfully and fraudulently, which here is equivalent to knowingly or recklessly." (Doherty v. Turner Broadcasting Systems, Inc. (D.C. Cir. 2023) 72 F.4th 324, 326.)

Here, Plaintiff alleges that Defendants "willfully and repeatedly issued fraudulent 1099s" to Plaintiff, despite specific knowledge that the information contained in the 1099s was false or incorrect, in violation of 26 U.S.C.A. Sec. 7434. (Compl., P.P. 82-83.)

Specifically, Plaintiff alleges that Defendants "willfully filed false information returns, claiming that Plaintiff was a 1099 worker, and knowing that he was improperly classified," thereby intentionally increasing Plaintiff's tax obligations and decreasing Plaintiff's benefits. (Id. P. 54.)

In other words, Plaintiff is not alleging that Defendants incorrectly reported the amount paid to Plaintiff in the 1099, but that Defendants incorrectly classified Plaintiff as an independent contractor. (Id. P. 85.)

Plaintiff further alleges that Defendants "repeatedly issued 1099 tax forms to [Plaintiff] with incorrect Taxpayer Identification Numbers (TINs) and Employer Identification Numbers (EINs)." (Id. P. 25.)

Plaintiff makes no allegation, however, suggesting that Defendants inaccurately reported the amount of payments made to Plaintiff.

Federal "courts are split on whether intentionally filing the wrong form that includes the right amount can constitute a violation of the statute." (Butler v. Enterprise Integration Corporation (D.D.C. 2020) 459 F.Supp.3d 78, 106 (Butler).)

However, the view that "both the text and structure of the statute preclude liability for misclassification" adopted by the court in Liverett v. Torres Advanced Enter. Sols. LLC (E.D. Va. 2016) 192 F. Supp. 3d 648, 653 has more recently "become the dominant view." (Butler, supra, 459 F.Supp.3d 78 at p. (Butler).)

For example, the U.S. District Court for the District of Columbia takes the view that a plaintiff cannot state a claim under 26 U.S.C.A. Sec. 7434 "merely for mischaracterizing [him] as independent contractors rather than employees ... and thereby filing the wrong tax form." (Ibid.)

While the Butler decision carves out an exception for an employer's failure to report "the amount of corporate gains and losses that should have passed through the corporation to [owners] as shareholders," this factual scenario is inapplicable here as Plaintiff is only alleging he was an employee of Defendants, not a shareholder. (Id., at p. 107.)

Thus, Plaintiff's characterization of Butler as indicating that 26 U.S.C.A. Sec. 7434 applies in all circumstances where an employer mischaracterizes a plaintiff as an independent contractor is inaccurate. (Opp., at pp. 7-8.)

As neither party has set forth any binding California authority which contradicts Butler, this Court is inclined to follow the federal court's "dominant view" that misclassification of an employee, standing alone, is insufficient to state a claim for violation of 26 U.S.C.A. Sec. 7434 where there are no allegations that the employer misreported the amount of the payments made to the plaintiff.

Therefore, Defendants' demurrer to Plaintiff's third cause of action is SUSTAINED without leave to amend.

B. 5 th and 6 th Causes of Action: Failure to Provide Accurate Itemized Wage Statements (Lab. Code Sec. 226(a)) and Failure to Pay Wages Upon Termination/Waiting Time Penalties (Lab. Code Sec. 203) - SUSTAINED with LEAVE TO AMEND

Defendants argue that the fifth and sixth causes of action are insufficiently pled with respect to Defendant Harutyunan.

California's wage-and-hour protections under Lab. Code Sec.Sec. 226 and 203 apply to "employers." (Naranjo v. Spectrum Security Services, Inc. (2024) 15 Cal.5th 1056, 1064 ["California law requires employers to provide their employees with written wage statements listing gross and net wages earned, hourly pay rates, hours worked, and other employment-related information."].)

Defendants argue that individual liability for these wage-and-hour claims should not be extended to Harutyunan in his individual capacity because he was not Plaintiff's "employer," he was merely an owner of Lumina. (Mot., at pp. 6-7.)

Defendants do not appear to dispute that Lumina was Plaintiff's employer for purposes of Lab. Code Sec.Sec. 226 and 203. The Complaint itself suggests that Lumina was Plaintiff's primary employer, whereas Harutyunan simply owned Lumina. (Compl., P. 2.)

However, Plaintiff argues that Harutyunan can be held personally liable because he acted as Plaintiff's joint employer with Lumina and because Defendants had an alter ego relationship. (Compl., P.P. 10-13.)

Even so, the allegations made in support of these theories are largely boilerplate and conclusory and fail to support the elements of either joint employer or alter ego status.

First, Plaintiff's reliance on improper group pleading fails to distinguish the activities of the two Defendants, which precludes a finding of joint employment based on the facts currently pled.

"'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.'" (Mattei v. Corporate Management Solutions, Inc. (2020) 52 Cal.App.5th 116, 123 (Mattei).)

To be considered a joint employer, a defendant must exercise control over the wages, hours, or working conditions of an employee. (Martinez v. Combs (2010) 49 Cal.4th 35, 76; Mattei, supra, 52 Cal.App.5th at p. 123, citing Duffey v. Tender Heart Home Care Agency, LLC (2019) 31 Cal.App.5th 232, 254.)

Here, Plaintiff alleges that both Defendants exercised "control over the wages, hours, working conditions, and employment status" of Plaintiff, and both Defendants had the "power to hire and fire" Plaintiff, supervised and controlled Plaintiff's work schedule, determined his rate of pay, and maintained his employment records. (Compl., P. 12.)

However, Plaintiff does not specifically allege that Harutyunan engaged in such conduct in his individual capacity, rather than in the scope of his role as Lumina's owner and CEO.

By nature of his position as Lumina's owner and officer, Harutyunan would have had some level of control over Plaintiff's working conditions at Lumina. Individual liability should not be extended to Harutyunan simply based on the fact that he exercised some degree of control over Plaintiff's employment in this capacity.

Plaintiff's use of group pleading fails to distinguish the specific conduct of the two Defendants and provides insufficient factual support for the inference that Harutyunan's conduct was separate from his role as owner and officer.

Second, Plaintiff's alter ego allegations are also conclusory.

"In California, two conditions must be met before the ¿ alter ¿ ego ¿ doctrine will be invoked. First, there must be such a unity of interest and ownership between the corporation and its ¿ equitable ¿ owner that the separate personalities of the corporation and the shareholder do not in reality exist. Second, there must be an inequitable result if the acts in question are treated as those of the corporation alone. " (Sonora Diamond Corp. v. Superior Court ¿ (2000) 83 Cal.App.4th 523, 538 ¿ (Sonora Diamond).)

¿ When evaluating ¿ alter ¿ ego ¿ liability, courts may consider various factors including the commingling of funds and other assets, identical equitable ownership ¿ or identical directors and officers, ¿ the " use of one ¿ as a mere shell or conduit for the affairs of the other, " ¿ inadequate capitalization, disregard of corporate formalities, ¿ and ¿ lack of segregation of corporate records. (Id. at pp. 538-539.)

¿ Here, Plaintiff alleges a single paragraph of boilerplate factual allegations to support his claim of alter ego l iability. (Compl., P. 11.) Like Plaintiff's joint employment allegations, this paragraph improperly relies on group pleading such that the Court cannot differentiate the conduct of each Defendant.

Plaintiff also fails to set forth any specific factual support for his conclusion that the Defendants had a "unity of ownership and interest" or that the adherence to the separate existence would promote injustice. (Ibid.)

For example, the Complaint contains no allegations regarding the commingling of funds, the ownership and control structure of Lumina, the use of one another as a mere "shell," lack of capitalization, disregard of corporate formalities, or improper maintenance of corporate records.

Plaintiff's conclusory allegations are insufficient to overcome the Sonora Diamond test for alter ego status.

Because the Complaint does not adequately identify a factual basis to conclude that Harutyunan, in his individual capacity, was Plaintiff's employer or that Harutyunan acted as an alter ego of Lumina, Plaintiff fails to state his fifth and sixth causes of action against Harutyunan as an individual.

Therefore, Defendants' demurrer to Plaintiff's fifth and sixth causes of action is SUSTAINED with LEAVE TO AMEND.

C. 7 th Cause of Action: Unfair Business Practices (Bus. & Prof. Code Sec. 17200) - OVERRULED

Defendants argue that Plaintiff's claim for violation of California's Unfair Competition Law ("UCL") fails to the extent that it seeks non-restitutionary relief and duplicates defective underlying claims. Both arguments provide insufficient grounds to sustain the demurrer to Plaintiff's UCL claim.

First, Plaintiff seeks "restitution, disgorgement, injunctive relief, and all other remedies available under the statute" in connection with his UCL claim. (Compl., P. 112.)

It does not appear that Plaintiff is seeking damages or non-restitutionary disgorgement because his request for relief is expressly limited to remedies that are available under the UCL. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144 ["A UCL action is equitable in nature; damages cannot be recovered."].)

Even if Plaintiff is seeking relief beyond what is permitted by the UCL, the proper procedural mechanism to challenge Plaintiff's request for relief is a motion to strike rather than a demurrer.

"'Ordinarily, a general demurrer does not lie as to a portion of a cause of action and if any part of a cause of action is properly pleaded, the demurrer will be overruled.'" (Elder v. Pacific Bell Telephone Co. (2012) 205 Cal.App.4th 841, 856, fn. 14 (Elder).)

Because Plaintiff has identified remedies that are permissible under the UCL, including restitution and injunctive relief, he states a cause of action under the UCL.

Second, Defendants argue that Plaintiff's UCL claim is derivative of his other deficient claims. (Mot., at p. 7.) However, Defendants' assertion is overbroad.

Plaintiff's UCL claim alleges "unlawful" and "unfair" conduct by Defendants based on the willful misclassification of Plaintiff as an independent contractor, the failure to reimburse necessary business expenses and to pay all wages due, and Defendants' retaliatory termination of Plaintiff in violation of public policy and Lab. Code Sec.Sec. 98.6, 1102.5, and 2802. (Compl., P. 111.)

The Complaint asserts independent causes of action for whistleblower retaliation in violation of Lab. Code Sec. 1102.5, wrongful termination in violation of public policy, and violations of Lab. Code Sec. 2802, which Defendants are not challenging on the pleadings.

Plaintiff also states claims against Lumina for violations of Lab. Code Sec.Sec. 226(a) and 203, which Defendants have only challenged with respect to Harutyunan's individual liability. (See supra, Section I.B.)

At minimum, these predicate claims are sufficient to support Plaintiff's claims for unlawful conduct under the UCL. (Paulus v. Bob Lynch Ford, Inc. ¿ (2006) 139 Cal.App.4th 659, 681 [¿ " [V]irtually ¿ any law or regulation -- federal or state, statutory or common law -- can serve as [a] predicate for a [Business and Professions Code section] 17200 ' unlawful ' violation. "].)

Therefore, Defendants' demurrer to Plaintiff's seventh cause of action is OVERRULED.

D. 8 th Cause of Action: Penalties Pursuant to Labor Code Sec. 2699, et seq. - OVERRULED

Plaintiff's representative PAGA claims in his eighth cause of action are sufficiently pled.

PAGA "deputizes employees to stand in the shoes of the state to pursue civil penalties on behalf of themselves and other 'aggrieved employees.'" (Osuna v. Spectrum Security Services, Inc. (2025) 111 Cal.App.5th 516, 519.)

"So long as they were employed by the alleged violator and personally suffered at least one Labor Code violation, aggrieved employees have standing to bring representative PAGA actions." (Ibid.)

Here, Plaintiff seeks to recover penalties under Lab. Code Sec. 2699, et seq. on behalf of himself and other "aggrieved employees" for Defendants' violations of, at minimum, Lab. Code Sec.Sec. 226.8, 2803, 203, and 226(a). (Compl., P. 119.)

First, Defendants argue that Plaintiff fails to allege sufficient facts to support representative liability on behalf of other "aggrieved employees." (Mot., at p. 8.)

Defendants have not submitted any legal authority, however, to suggest that PAGA claims are subject to a heightened pleading standard requiring a plaintiff who has otherwise adequately pled standing under PAGA to allege facts demonstrating specific violations of wage-and-hour protections against other aggrieved employees with particularity.

A plaintiff in a representative PAGA action is simply "...'required to put forward sufficient facts to support their claims of labor violations.'" (Uribe v. Crown Building Maintenance Co. (2021) 70 Cal.App.5th 986, 1004 (Uribe).)

"Put another way, 'something more than bare allegations of a Labor Code violation' is necessary to constitute adequate notice." (Ibid.)

Here, Plaintiff alleges that he was employed by Lumina and suffered various violations of the Labor Code while employed, making him an aggrieved employee under the meaning of PAGA. (Compl., P.P. 22, 47-58, 114-119.)

Plaintiff defines the group of "aggrieved employees" as "all persons who are employed or have been employed as an independent contractor by [Lumina] in the state of California and who worked one or more pay periods since one (1) year prior to the date of this letter and continuing to the present." (Id. P. 120.)

Plaintiff also specifically identifies the Labor Code violations underlying his representative PAGA claim and alleges Defendants engaged in these violations for at least one year prior to receiving Plaintiff's notice. (Id. P.P. 114-117.)

At minimum, Plaintiff alleges ultimate facts showing how Defendants allegedly violated Lab. Code Sec.Sec. 226.8, 203, and 226(a), which are sufficient to survive the demurrer stage. (Id. P. 115-117.)

For pleading purposes, these allegations are adequate to put Defendants on notice of the nature of the representative PAGA claims being asserted and the class of "aggrieved employees" subject to the claims.

Defendants seek a level of particularity that is not reasonable at the pleading stage, given that Defendants are likely to have more information about the status and/or identities of the other "aggrieved employees" at this point in the proceedings.

Even to the extent that Defendants are challenging Plaintiff's additional references to Lab. Code Sec.Sec. 201, 202, 204, 210, 226.7, 510, 512, 1194, 1194.2, 1199, 2803, and IWC Wage Order 4-2001, the proper procedural mechanism to challenge these additional references is a motion to strike rather than a demurrer to the entire cause of action. (See Elder, supra, 205 Cal.App.4th at p. 856, fn. 14 [demurrer will be overruled "if any part of a cause of action is properly pleaded."].)

Second, Defendants argue that Plaintiff fails to plead compliance with the pre-suit notice requirements set forth under Lab. Code Sec. 2699.3. (Mot., at p. 8.)

"As a condition of suit, an aggrieved employee acting on behalf of the state and other current or former employees must provide notice to the employer and the responsible state agency 'of the specific provisions of [the Labor Code] alleged to have been violated, including the facts and theories to support the alleged violation.'" (Williams v. Superior Court (2017) 3 Cal.5th 531, 545.)

"If the agency elects not to investigate, or investigates without issuing a citation, the employee may then bring a PAGA action." (Ibid.)

"'Proper notice under section 2699.3 is a "condition" of a PAGA lawsuit.'" (Uribe, supra, 70 Cal.App.5th at p. 1003.)

Here, Plaintiff alleges that pursuant to Lab. Code Sec. 2699.3, he "uploaded a notice letter to the LWDA" online and mailed a letter by certified mail to Defendants, describing Defendants' violations of Labor Code Sec.Sec. 226.8, 2803, 203, and 226(a) and obtained an email confirming LWDA's receipt of the notice. (Compl., P. 121.)

Plaintiff further alleges that he did not receive a letter reflecting LWDA's intent to investigate within 65 calendar days, suggesting that the LWDA had not chosen to investigate. (Id. P. 122.)

Assuming the truth of these allegations, the Court finds that Plaintiff has adequately pled compliance with the PAGA notice requirements under Lab. Code Sec. 2699.3.

Defendants provide no legal authority for their argument that a plaintiff is required to attach a copy of the PAGA notice itself to the pleading or to specifically recite its contents in order to plead compliance with the PAGA notice requirement.

Whether the content of Plaintiff's PAGA notice was adequately specific to comply with Lab. Code Sec. 2699.3 is a factual question that need not be resolved at the pleading stage.

Therefore, Defendants' demurrer to Plaintiff's eighth cause of action is OVERRULED.

II. MOTION TO STRIKE - DENIED

Defendants move to strike the request for punitive damages from Plaintiff's Complaint.

Plaintiff seeks punitive damages in connection with his first and second causes of action for whistleblower retaliation in violation of Lab. Code Sec. 1102.5 and wrongful termination in violation of public policy, respectively. (Compl., P.P. 71, 80; Opp., at pp. 13-14.)

Although Defendants assert that Plaintiff is seeking punitive damages in connection with his fourth, fifth, sixth, seventh, and eighth causes of action, the allegations in the Complaint do not indicate that punitive damages are sought in connection with these claims.

Punitive damages are recoverable in tort actions where "the defendant has been guilty of oppression, fraud, or malice." (Cal. Civ. Code Sec. 3294, subd. (a).)

"California law long has recognized that discharges in violation of public policy may be actionable torts for which punitive damages can be recovered under Civil Code section 3294." (Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211, 220.)

Courts have also held that punitive damages are recoverable for violations of California's whistleblower statute (Lab. Code Sec. 1102.5). (See Mathews v. Happy Valley Conference Center, Inc. (2019) 43 Cal.App.5th 236, 267; see also Hennighan v. Insphere Ins. Sols., Inc., No. 13-cv-00638-JST, 2013 WL 1758934, at *5 (N.D. Cal. Apr. 24, 2013) [punitive damages are available for retaliation claims brought under section 1102.5].)

Defendants fail to address why Plaintiff's request for punitive damages, which is limited to his first and second causes of action, is improper.

Therefore, Defendants' motion to strike Plaintiff's request for punitive damages is DENIED.

Defendants Lumina Recovery, LLC and Suren Harutyunyan to serve notice of ruling.

This tentative ruling ("TR") shall be the order of the Court unless changed at the hearing and shall by this reference be incorporated into the Minute Order.

TR emailed to counsel and posted on website on 8/27/26 at 2:15 p.m. | Home -->)" -->