Villasenor v. Schneiter: Is the Owner Personally Liable for a FEHA Judgment Against the Company?

You won a harassment or discrimination verdict against your employer’s company, and now you want the owner to pay. In California, owning the company does not make the owner personally liable: you must prove the owner is its “alter ego,” and the Fair Employment and Housing Act (FEHA) does not make that easier. Courts presume the company is separate from its owner, and the employee must overcome that presumption.

That is the published holding of Villasenor v. Schneiter, No. B337209 (Cal. Ct. App. Oct. 26, 2026), from the Second Appellate District, Division One. The court concluded that FEHA “does not alter the common law’s rebuttable presumption that a corporation exists separately from an alleged alter ego.”

A Verdict Against the Companies, Then a Separate Trial About the Owner

Ana Villasenor worked as a restaurant hostess from December 2015 to April 2016. Her employers were SR Long Beach FD, Inc. and its parent, SR Restaurant Holdings Group, Inc. Kurt Schneiter owned SR Holdings through MMart 1, LLC, of which he is the sole member. Villasenor alleged that her supervisor sexually harassed her and retaliated when she rejected his advances, leading to her constructive discharge. She sued both companies and named Schneiter as their alleged alter ego. She dismissed the supervisor after he obtained a bankruptcy discharge.

The Los Angeles County Superior Court tried the case in two phases. A jury found both companies liable and awarded $345,061.17 in compensatory damages and $100,000 in punitive damages. A second phase, tried to the judge, addressed only whether Schneiter was the companies’ alter ego.

The trial court ruled for Schneiter. It found that Villasenor proved neither a unity of interest between Schneiter and the companies nor an unjust result from treating them as separate. It described Schneiter as “a business owner who appears on balance to have availed himself appropriately of the protections of the Corporations Code.” It was also “unpersuaded by the evidence presented that plaintiff’s judgment against the entity defendants will necessarily go unsatisfied.” At trial, Schneiter estimated the companies had about $720,000 in liquid assets, when the judgment covered only about $450,000 in damages. An amended judgment then added $949,672.50 in attorney fees and $103,241.65 in costs against the two companies.

Alter Ego Starts With a Presumption the Employee Must Overcome

Alter ego, often called piercing the corporate veil, lets a court hold an owner liable for a company’s obligations when the owner has abused the corporate form. The Villasenor court restated two requirements: such a unity of interest and ownership that the company and owner are not really separate, and an inequitable result if the company alone were treated as responsible. Courts use the remedy sparingly.

The starting point is a presumption. “It is the plaintiff’s burden to overcome the presumption of the separate existence of the corporate entity,” the court explained. Whether a plaintiff has done so is a question of fact. Alter ego is a common-law doctrine; the court pointed to the Corporations Code provision making members of a limited liability company subject to “the common law governing alter ego liability.” The case therefore turned on whether FEHA changes a common-law rule.

Villasenor did not challenge the evidence behind the trial court’s findings. She argued only that the presumption should not apply at all, an argument first made on appeal that the court considered because it was purely legal. The court therefore did not decide whether substantial evidence supported the finding.

FEHA’s Purpose Did Not Reverse the Presumption

Courts presume that a statute does not displace the common law unless its language or evident purpose shows that intent; the Supreme Court has required the language to do so “clearly and unequivocally.” The Villasenor court applied that framework. FEHA does not expressly address alter ego liability, and no authority had addressed whether it alters the presumption.

Villasenor relied on FEHA’s declared purpose “to provide effective remedies” and its instruction that the Act be construed liberally. The liberal-construction rule had little relevance, the court said, because no FEHA provision addresses alter ego liability or judgment enforcement. And the presumption is compatible with effective remedies: an employee who collects from the company never needs the owner, and when the company cannot pay, an employee who rebuts the presumption can still collect from an alter ego. One plaintiff’s loss on the facts did not show that the presumption makes FEHA remedies ineffective generally.

FEHA’s Fee and Cost Rules Did Not Change the Answer

Villasenor’s second argument drew on FEHA’s one-sided fee and cost rule: a prevailing employee ordinarily recovers fees, while a prevailing employer recovers fees and costs only if the case was frivolous, unreasonable or groundless when brought, or the employee kept litigating after it clearly became so. She argued that the cases enforcing that rule over other law supported overriding the alter ego presumption too.

The court disagreed. Those decisions interpreted FEHA’s express fee and cost provision; FEHA has no provision on alter ego. The policy was different too: without the fee rule, losing employees could face ruinous awards that would chill FEHA litigation. By contrast, the alter ego presumption “becomes relevant only when a plaintiff prevails and seeks to enforce the judgment against a corporate defendant’s alleged alter ego.” The Legislature could reasonably believe that few employees would forgo FEHA claims for that reason, the court reasoned. It added that her reasons for a FEHA-only exception “would appear to apply equally” to other statutes using the same fee standard.

Supreme Court language about assuring attorneys that they will “actually receive” fees did not help either. The court read Flannery v. Prentice as deciding who owns a FEHA fee award, the attorney or the client, not whether fees can be collected from an owner, and noted that the fee-on-fee cases she cited did not interpret FEHA.

The Result, and What It Means for the Next Case

The Court of Appeal affirmed the judgment for Schneiter. Justice M. Kim wrote the opinion, joined by Presiding Justice Rothschild and Justice Weingart. Under the disposition, each side bears its own costs on appeal, citing the Supreme Court’s FEHA appellate-costs decision in Pollock.

In our reading, the decision makes the evidence the whole case. An employee who wants an owner to answer for a FEHA judgment needs proof on both requirements: how the owner and company actually operated together, and why limiting recovery to the company would be unjust. The trial court listed its doubt that the judgment would go unpaid among its reasons for finding no inequitable result. That suggests a company’s ability to pay can matter to the second requirement, though the Court of Appeal did not review that finding.

FEHA’s own provisions also create direct individual liability in some situations, such as an employee who personally commits harassment under Government Code section 12940(j)(3). For unpaid wages, the Labor Code adds owner and successor rules that FEHA lacks. Our Insight on when a company cannot pay what it owes you compares those routes.