SUPERIOR COURT OF CALIFORNIA
`COUNTY OF ALAMEDA
`
`22CV006830: DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING, AN
`AGENCY OF THE STATE OF CALIFORNIA vs TESLA, INC.
` 01/11/2023 Hearing on Motion - Other PLAINTIFF CIVIL RIGHTS
`DEPARTMENT’S MOTION TO STRIKE TESLA, INC.’S AMENDED
`CROSS-COMPLAINT OF DEFENDANT TESLA, INC. in Department 21
`
`Tentative Ruling
`
`The Demurrer filed by California Civil Rights Department, Formerly Known as Department of
`Fair Employment and Housing on 11/21/2022 is Sustained with Leave to Amend.
`
`The Demurrer of the CRD to Tesla’s 1AXC is SUSTAINED WITH LEAVE TO AMEND. The
`motion of the CRD to strike portions of the Tesla’s 1AXC is GRANTED IN PART WITH
`LEAVE TO AMEND.
`
`OVERVIEW
`
`The CRD filed this case alleging that Tesla has engaged in pattern or practice of race
`discrimination and harassment. Tesla immediately asserted that the case was premature and
`procedurally improper. (Orders dated 6/8/22 [motion to stay pending completion of pre-filing
`process] and 8/24/22 [demurrer to CRD complaint for failure to allege completion of pre-filing
`process].)
`
`Tesla’s answer filed 9/22/22 asserts as affirmative defense #2 that the CRD failed to comply with
`the statutory prerequisites to filing the civil case against Tesla and asserts as affirmative defense
`#3 that the CRD brings this action base on invalid underground regulations in violation of the
`Administrative Procedure Act (“APA”). (Govt Code 11340.5(a), 11342.600.)
`
`On 10/18/22, Tesla file the 1AXC, alleging that the CRD has improperly adopted and is
`generally applying rules, regulations and/or procedural standards in violation of the APA. Tesla
`assets “CRD’s underground regulations unlawfully permit it to (a) initiate employer
`investigations without disclosing the factual bases for such investigations, (b) issue “cause”
`determinations against employers without providing any information in support of those
`determinations, (c) file civil suits against employers without first engaging in good faith
`conciliation and mediation, (d) file civil suits against employers on claims not previously
`investigated and/or concerning which the employers were provided no pre-suit notice, and (e)
`demand that employers waive their legal rights and protections as a condition precedent for
`CRD’s performing its statutorily required acts, including conciliation and mediation.” (1AXC,
`para 2) (See also para 16, 29-32.)
`
`Th 1AXC asserts claims for (1) violation of the APA; and (2) declaratory relief that CRD has
`violated the APA. The 1AXC at para 1 and 6 makes passing references to CCP 1085 (traditional
`writ of mandate) but does not assert a claim for a traditional writ of mandate.
`
`NATURE OF AFFIRMATIVE DEFENSES AND CROSS-COMPLAINT
`
`

`

`SUPERIOR COURT OF CALIFORNIA
`COUNTY OF ALAMEDA
`
`22CV006830: DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING, AN
`AGENCY OF THE STATE OF CALIFORNIA vs TESLA, INC.
` 01/11/2023 Hearing on Motion - Other PLAINTIFF CIVIL RIGHTS
`DEPARTMENT’S MOTION TO STRIKE TESLA, INC.’S AMENDED
`CROSS-COMPLAINT OF DEFENDANT TESLA, INC. in Department 21
`
`Tesla asserts affirmative defenses to the claims in the CRD’s complaint. An affirmative defense
`is a defense to the claims asserted, resulting in a finding of no liability, mitigation of damages, or
`offset of damages. If a party wants affirmative relief, then that party needs to file a cross-
`complaint seeking affirmative relief. (CCP 431.30(c); City of Stockton v. Superior Court (2007)
`42 Cal.4th 730 fn 12; Morris Cerullo World Evangelism v. Newport Harbor Offices & Marina,
`LLC (2021) 67 Cal.App.5th 1149, 1159.)
`
`Tesla’s 1AXC asserts claims for affirmative relied against the CRD. Those claims are under CCP
`428.10. Tesla’s claims that could have been asserted in a separate action and are not defenses or
`affirmative defenses to the claims in the CRD’s complaint.
`
`Tesla’s assertions that the CRD applied the underground regulations against Tesla is relevant for
`two purposes. First, they demonstrate that Tesla has standing. (California Department of
`Consumer Affairs v. Superior Court (2016) 245 Cal.App.4th 256.) Second, they provide a factual
`basis for Tesla’s assertion that the CRD has taken certain actions.
`
`The court recalls that in earlier briefing on another motion the CRD cited to a case holding that a
`party cannot as an affirmative defense assert that a state agency has failed to comply with the
`APA. That case would appear to explain why Tesla recast its APA violation affirmative defense
`as an APA violation cross complaint. That case, if the court recalls it correctly, also suggests that
`the outcome of Tesla’s 1AXC would affect the CRD’s future enforcement efforts but might have
`no effect on the CRD’s prosecution of this particular case.
`
`DEMURRER TO 1AXC
`
`The demurrer to the first cause of action for violation of the APA is SUSTAINED WITH
`LEAVE TO AMEND.
`
`The court reviewed the relevant statutes regarding the CRD’s pre-filing process and regulations
`in the orders of 6/8/22 and 8/24/22. The CRD has adopted regulations about filing, investigating,
`conciliating, and otherwise processing administrative complaints. (2 CCR 10002 et seq) The
`CRD’s regulations include 2 CCR 10012, regarding Director’s Complaints, 2 CCR 10013,
`regarding Class or Group Complaints, 2 CCR 10026 regarding complaint investigations, and so
`forth.
`
`The court is somewhat frustrated with both parties because both briefed the issue of whether the
`CRD has underground regulations without addressing that the CRD has express regulations that
`cover the same topics as the alleged underground regulations. The lapse is particularly stunning
`because the CRD is presumably aware of its own regulations and Tesla referenced the
`regulations in the 1AXC at para 13.
`
`

`

`SUPERIOR COURT OF CALIFORNIA
`COUNTY OF ALAMEDA
`
`22CV006830: DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING, AN
`AGENCY OF THE STATE OF CALIFORNIA vs TESLA, INC.
` 01/11/2023 Hearing on Motion - Other PLAINTIFF CIVIL RIGHTS
`DEPARTMENT’S MOTION TO STRIKE TESLA, INC.’S AMENDED
`CROSS-COMPLAINT OF DEFENDANT TESLA, INC. in Department 21
`
`Tesla’s claim in large part appears to have no merit.
`
`Tesla assets “CRD’s underground regulations unlawfully permit it to (a) initiate employer
`investigations without disclosing the factual bases for such investigations. There is an express
`regulation. 2 CCR 10012 states that a Director’s complaint must include the information in Govt
`Code 12960(c). A Director’s complaint would presumably need to have all the information in an
`individual complaint under 2 CCR 10002 and the referenced CRD form.
`
`Tesla assets “CRD’s underground regulations unlawfully permit it to (b) issue “cause”
`determinations against employers without providing any information in support of those
`determinations. The court has not located any statute or regulation that states the CRD must
`prepare or issue “cause” determinations. There is no need for the CRD to develop a regulation on
`something it is not required to do and that it might not actually do.
`
`Tesla assets “CRD’s underground regulations unlawfully permit it to (c) file civil suits against
`employers without first engaging in good faith conciliation and mediation. There is an express
`regulation. The order of 6/3/22 states: “The DFEH then has a conciliation process. (2 CCR
`10024) The DFEH also has a “mandatory dispute resolution” process that involves mediation. (2
`CCR 10025(d)) “After mediation is declined or is unsuccessful, the department shall commence,
`resume, or complete the investigation as necessary.” (2 CCR 10025(f).) (Govt Code 12963.7.)”
`
`Tesla assets “CRD’s underground regulations unlawfully permit it to (d) file civil suits against
`employers on claims not previously investigated and/or concerning which the employers were
`provided no pre-suit notice. There is an express regulation. 2 CCR 10003 states “The department
`shall liberally construe all complaints” and that complaints are to include related claims
`“regardless of whether such other claims are expressly stated.” The order of 8/24/22 addressed
`this stating: “If the court considered both the Director’s Complaint and the Director’s Complaint
`did not identify each of the claims ultimately asserted in this civil action, then the court would
`consider whether the claims in this case are “like and reasonably related to” those in the
`Director’s Complaint. (Guzman v. NBA Automotive (2021) 68 Cal.App.5th 1109, 1118.) (See
`also Department of Fair Employment and Housing v. Law School Admission Council Inc. (N.D.
`Cal. 2012) 896 F.Supp.2d 849, 861-864.) Any claims in a civil action must “be reasonably
`expected to grow out of” the charges or “reasonably have been uncovered in an investigation of
`the charges that were made.” (Okoli, supra.)”
`
`Tesla assets “CRD’s underground regulations unlawfully permit it to (e) demand that employers
`waive their legal rights and protections as a condition precedent for CRD’s performing its
`statutorily required acts, including conciliation and mediation.” The court has not located any
`regulation on this issue, but the relevant issue appears to be whether the CRD can control the
`scheduling of the conciliation process and require that employers agree to certain matters as a
`
`

`

`SUPERIOR COURT OF CALIFORNIA
`COUNTY OF ALAMEDA
`
`22CV006830: DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING, AN
`AGENCY OF THE STATE OF CALIFORNIA vs TESLA, INC.
` 01/11/2023 Hearing on Motion - Other PLAINTIFF CIVIL RIGHTS
`DEPARTMENT’S MOTION TO STRIKE TESLA, INC.’S AMENDED
`CROSS-COMPLAINT OF DEFENDANT TESLA, INC. in Department 21
`condition of the employer’s desired schedule.
`There is probably no need for the CRD to develop a regulation on how it schedules conciliation
`and mediation and whether it can ask for agreements as a condition to a specific schedule.
`
`Tesla may amend, if possible, to identify policies or practices of the CRD that are rules of
`general application that are underground regulations. Policies or practices that are the subject of
`express regulations are not underground regulations almost by definition.
`
`Tesla’s concern appears to be that in this particular case the CRD did not comply with its express
`regulations, not that the CRD has underground regulations of general application that it applies
`generally.
`
`The demurrer to the second cause of action for declaratory relief (CCP 1060, 1061) is
`SUSTAINED WITH LEAVE TO AMEND.
`
`First, as discussed above, the cross-complaint is directed at the prospective validity of the CRD’s
`alleged underground regulations. In contrast, Tesla’s affirmative defenses are directed at whether
`the CRD complied with the pre-filing procedural requirements on the facts of this case. The
`CRD’s argument that the declaratory relief claim is moot has no merit because Tesla’s claim
`regarding the existence of underground regulations is prospective and is not limited to the
`application of those underground regulations to Tesla.
`
`Second, a claim for declaratory relief is an appropriate procedural vehicle for asserting that a
`policy or procedure is an unlawful underground regulation. (Morning Star Co. v. State Bd. of
`Equalization (2006) 38 Cal.4th 324, 328.)
`
`The “procedural” claim for declaratory relief is derivative of the “substantive” claim that the
`CRD has unlawful underground regulations. The fact that declaratory relief is an appropriate
`procedural vehicle for relief does not suggest that the claim has any substantive merit.
`
`MOTION TO STRIKE PORTIONS OF 1AXC
`
`The motion of the CRD to strike the allegations about what happened before and in the
`conciliation/mediation is GRANTED IN PART. The motion is DENIED regarding 1AXC paras
`26 and 27 because they describe logistical and procedural events that happened before the
`conciliation/mediation on 2/8/22. The motion is GRANTED IN PART regarding 1AXC para 28
`to the extent is alleges what the CRD did or not do at the conciliation/mediation on 2/8/22. Tesla
`must limit itself to an allegation that the conciliation/mediation on 2/8/22 was not successful
`without alleging why it was not successful.
`
`The motion of the CRD to strike the prayer seeking declaratory relief is DENIED. As discussed
`
`

`

`SUPERIOR COURT OF CALIFORNIA
`COUNTY OF ALAMEDA
`
`22CV006830: DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING, AN
`AGENCY OF THE STATE OF CALIFORNIA vs TESLA, INC.
` 01/11/2023 Hearing on Motion - Other PLAINTIFF CIVIL RIGHTS
`DEPARTMENT’S MOTION TO STRIKE TESLA, INC.’S AMENDED
`CROSS-COMPLAINT OF DEFENDANT TESLA, INC. in Department 21
`above, the cross-complaint is directed at the prospective validity of the CRD’s alleged
`underground regulations. In contrast, Tesla’s affirmative defenses are directed at whether the
`CRD complied with the pre-filing procedural requirements on the facts of this case.
`
`FURTHER PRPOCEEDINGS
`
`On or before 2/3/23, Tesla may file a Second Amended Cross Complaint on the APA
`undergrounds regulation issues.
`
`PLEASE NOTE: This tentative ruling will become the ruling of the court if uncontested by
`04:00pm the day before your hearing. If you wish to contest the tentative ruling, then both notify
`opposing counsel directly and the court at the eCourt portal found on the court’s website:
`www.alameda.courts.ca.gov.
`
`If you have contested the tentative ruling or your tentative ruling reads, “parties to appear,”
`please use the following link to access your hearing at the appropriate date and time:
`https://alameda-courts-ca-gov.zoomgov.com/my/department21 . If no party has contested the
`tentative ruling, then no appearance is necessary.
`
`