Reported / Citable
Background
Ana Villasenor worked as a restaurant hostess for corporate entities ultimately owned through companies controlled by Kurt Schneiter. A jury found the employing corporations liable for sexual harassment and other violations of California’s Fair Employment and Housing Act, or FEHA. In a second trial phase, Villasenor sought to hold Schneiter personally responsible as the corporations’ alter ego.
The trial court applied the ordinary presumption that a corporation has a legal existence separate from its owners and found Villasenor had not overcome it. On appeal, she did not challenge the sufficiency of the evidence supporting those factual findings. Instead, she argued that FEHA’s remedial purpose changes the starting rule and creates, or should create, a presumption favoring alter ego liability against a corporate owner.
The Court’s Holding
The Second District affirmed and held that FEHA does not alter the common-law presumption of corporate separateness. FEHA contains no provision addressing alter ego liability or judgment enforcement, much less the clear and unequivocal statement courts expect before concluding that legislation displaced a settled common-law rule. The direction to construe FEHA liberally and provide effective remedies was not enough to create a new presumption.
The court explained that ordinary alter ego doctrine is compatible with FEHA’s objectives. Employees may obtain judgments against corporate employers, and an owner may still be liable when the plaintiff proves the established requirements—typically a unity of interest and ownership plus an inequitable result if the acts are treated solely as those of the corporation. Presuming separateness does not immunize abuse; it assigns the burden under the same doctrine used in other civil cases.
Because Villasenor framed the appeal as a legal challenge to the presumption and did not show error in the trial court’s factual findings under the ordinary standard, the judgment for Schneiter stood. The ruling did not disturb the corporate defendants’ FEHA liability or suggest that owners can never face alter ego exposure in an employment case.
Key Takeaways
- FEHA’s broad remedial purpose does not reverse the usual presumption that corporations and their owners are separate.
- An employee seeking personal collection from an owner must prove the established elements of alter ego liability.
- A judgment against an employing corporation does not by itself establish liability against its parent, member, or ultimate owner.
- Plaintiffs should develop capitalization, control, asset movement, formalities, and inequity evidence rather than rely only on FEHA policy.
Why It Matters
The decision matters to employees trying to collect judgments and to owners of layered California businesses. FEHA can provide substantial damages and fees, but it does not automatically collapse an ownership structure after liability is established. Plaintiff-side lawyers should investigate alter ego facts early, plead them with specificity, and preserve evidentiary challenges instead of depending on a proposed FEHA-specific presumption.
Businesses should not read the ruling as permission to disregard separateness. Commingled funds, inadequate capitalization, undocumented intercompany transactions, or use of entities to frustrate a judgment can still support traditional alter ego relief. Maintaining records and observing formal boundaries remains important, particularly when one entity employs workers while another holds operating assets.
The court emphasized that no appellate authority had previously adopted the FEHA-specific presumption Villasenor requested. Its decision therefore preserves the established allocation of proof without narrowing FEHA’s substantive prohibitions or remedies against an actual employer in California employment litigation.