Investigation  |  Labor  |  Franchise Liability  |  April 2026

Shell Games and Stolen Breaks: How Massage Envy’s Franchise System Left a Worker Holding the Bill

For eight years, Karla Amezcua showed up and did the work. When she stood up for her legal rights, she was fired. What followed was a multi-year legal fight against a corporate structure specifically designed to make sure workers like her could never collect.

The Non-Financial Ledger: What a Paycheck Cannot Measure

Karla Amezcua spent more than eight years of her working life in a Massage Envy franchise location in the Eastlake neighborhood of Chula Vista. Eight years of her hands, her labor, her physical presence in that building. The law in California is clear: when you work, you are entitled to meal breaks and rest breaks. These are not perks. They are rights, encoded in the Labor Code, designed to protect the bodies and minds of people who do physical work for a living.

At Securecare, the franchise that employed Amezcua, those breaks came with a price. Every time she stopped to eat or rest, the company flagged that time as “non-productive” and used it to reduce her hourly rate of pay. Think about what that means in practice. She was being penalized, financially, for following the law. Every break was a choice between her body’s basic needs and her paycheck. The employer had engineered a system where resting cost money.

She complained. The record does not detail the specifics of what she said or to whom, but the outcome is documented: she was terminated on December 23, 2019. Two days before Christmas. After more than eight years of employment.

Then came the lawsuit, which she filed in January 2022. And then came years of delay, evasion, and obstruction. Documents that the law required her employer to hand over were withheld, claimed lost, or produced only after discovery had already closed. An insurance policy that could have resolved her claim was kept from her legal team until her employer’s own owner accidentally revealed it to a mediator. A contract that disclosed the true structure of her employment situation was produced three years into the litigation, after the deadline had passed.

Every month of delay was another month Amezcua carried the cost of litigation. Every corporate shell, every “lost” document, every deflected subpoena was another wall between her and accountability. The legal system that is supposed to protect workers from exactly this kind of behavior was turned, repeatedly, into a tool to exhaust her. And when a trial court decided that her legal misstep in how she structured her amendment deserved a $25,000 fine payable to the corporation’s lawyers, the message was plain: the cost of fighting back is high, and someone has to pay it, and it will be you.

Legal Receipts: What the Documents Actually Say

These are not interpretations. These are the words in the court record.

“Securecare was covered under the policy as an additional insured. According to Perez, his insurance broker structured the insurance policy to be under the name of MEEV because it costs less than having separate policies for each franchise location. Perez represented he did not provide the insurance policy to his attorney during discovery because he ‘mistakenly did not believe [Amezcua’s] claims were covered’ until the mediation.”

• This admission confirms the owner of the franchise knew an insurance policy existed that could cover the worker’s claims, chose not to disclose it to his own attorney, and that policy was hidden under an entirely separate corporate entity’s name. The worker was denied years of potential resolution because of this.
• The framing of “mistakenly” is doing significant legal work here. The owner is claiming confusion rather than intent. The appeals court accepted the facts of the petition as true because the franchisor’s response was “unverified,” meaning legally ineffective to deny them.

“The Purchase Agreement required Eastlake Village ME to ‘transfer all of its W2 employees working in the [b]usiness to [Securecare],’ and provided that Securecare would ‘not assume, succeed or inherit any of the liabilities of [Eastlake Village ME].'”

• This is the contract at the center of the franchise liability question. Employees, including Amezcua, were transferred to the new entity. Their prior employment liabilities stayed with the old entity. The old entity, Eastlake Village ME, terminated its operations in February 2021. Any worker with a claim against the original employer was left with nothing to collect from.
• This contract was produced by Securecare on December 13, 2024, after the close of discovery, despite Amezcua having requested documents relating to the sale years earlier.

“Securecare represented that all documents relating to the sale had been ‘lost or misplaced.'”

• This was Securecare’s response to a request for the Purchase Agreement. The same agreement was later produced on December 13, 2024. The document was not lost. It was found and produced after the discovery deadline had already closed.

“Perez testified Securecare was a member of a ‘Massage Envy’ franchise association that had hired an attorney to prepare a ‘productivity matrix’ to address wage-and-hour lawsuits.”

• This testimony, given at Perez’s May 2023 deposition, indicates that wage-and-hour lawsuits were a known, recurring problem across the Massage Envy franchise network, not an isolated incident. A legal response was organized at the franchise association level.
• Perez later signed a declaration in July 2025 stating he “did not mean to attribute the creation of the productivity matrix to Massage Envy.” The court record notes ambiguity about who created it and who the lawsuits were filed against.

“Massage Envy responded to the subpoena with a letter stating it was ‘the manager of an Arizona-based franchisor and d[id] not own or operate any locations,’ and that ‘[a]ny and all subsequent communications . . . should be directed to the franchisee, who is the independent business owner of the franchised location.'”

• When Amezcua subpoenaed Massage Envy for documents in June 2024, the franchisor produced nothing and redirected her back to the franchisee. Massage Envy stated it had forwarded the subpoena to Securecare. The corporation used its structural separation from its franchisees as a complete shield against document discovery.

“Such conduct is incongruent with [Amezcua’s] acknowledgement during the meet and confer process that [her] complaint was deficient as to [Massage Envy], and is also antithetical to the purpose behind the [section] 430.41 meet and confer requirement.”

• This is the trial court’s stated rationale for ordering Amezcua to pay $25,000 to Massage Envy. The appeals court found this reasoning legally flawed on two grounds: first, Section 430.41 explicitly states that findings about the meet-and-confer process cannot be grounds to sustain a demurrer; second, fee-shifting requires specific statutory authority and specific procedural safeguards that were not followed here.

A Decade of Delay: The Full Chronology

From Amezcua’s first day of work to the appellate court’s ruling, this case spans fifteen years. The documents that should have resolved it were withheld for three years of active litigation.

What You Were Told vs. What Was Actually Happening

The record in this case documents a consistent gap between what Securecare, Massage Envy, and their principals represented under oath and what the underlying documents actually showed.

• Claim: In June 2022, Securecare served verified discovery responses stating it was not covered by an insurance policy. Reality: An employment practices liability insurance policy covering Securecare as an additional insured existed the entire time. The owner did not disclose it to his own attorney until it came up at mediation in November 2024, two and a half years later.
• Claim: In response to requests for the Purchase Agreement, Securecare represented that all documents relating to the sale had been “lost or misplaced.” Reality: The Purchase Agreement was produced on December 13, 2024, after the close of discovery. Perez stated he “later found it and gave it to my lawyer.”
• Claim: When Amezcua’s First Amended Complaint alleged the franchise business had simply “changed its name” from Eastlake Village ME to Securecare, this framing implied one continuous business entity. Reality: The Purchase Agreement showed a distinct sale transaction in which Eastlake Village ME explicitly retained all pre-sale employee liabilities, transferring only the workers themselves to Securecare. Eastlake Village ME subsequently terminated its operations in February 2021.
• Claim: Massage Envy told Amezcua in response to a subpoena that it “did not own or operate any locations” and directed all communications to the franchisee as “the independent business owner.” Reality: Amezcua alleged, based on documents produced late in litigation, that Massage Envy had approved and participated in structuring a franchise sale whose terms would leave employees without recourse for labor violations. The franchisor’s structural distance from the transaction is precisely what Amezcua’s lawsuit disputes.

How Capitalism Exploits Delay: Time as a Corporate Weapon

The timeline of document production in this case reads as a textbook example of how delay functions as a defense strategy, regardless of intent.

• Securecare first represented in June 2022 that it had no insurance policy covering Amezcua’s claims. That representation stood unchallenged for approximately two and a half years, until a mediator’s question prompted the owner to tell his own lawyer the truth in November 2024. Every month of that gap was a month Amezcua negotiated, litigated, and planned without knowing a potentially decisive asset existed.
• The Purchase Agreement, which Amezcua’s lawyers needed to understand the corporate structure and identify potential defendants, was claimed to be “lost or misplaced” in response to production requests. It was finally produced on December 13, 2024, after the close of discovery. The late production directly triggered the chain of events that led to the demurrer, the $25,000 fee condition, and the appellate petition.
• Amezcua subpoenaed Massage Envy for documents in June 2024, more than two years after filing her lawsuit. The franchisor produced nothing, redirecting her to the franchisee. This deflection effectively closed off a major documentary avenue for the remainder of the pre-amendment period.
• By the time the key documents were produced in December 2024, trial was set for January 10, 2025. The compressed timeline forced Amezcua to seek amendments in an emergency posture, which is precisely the procedural context the trial court later cited as the basis for penalizing her litigation tactics.
• In total, from Amezcua’s termination in December 2019 to the appellate ruling in April 2026, the case spans more than six years, with the core documentary record still disputed and a second amended complaint not yet filed as of the appellate decision.

The Contractor Shield: How the Corporate Structure Absorbed Liability

The ownership structure in this case is a documented example of how a single individual can use multiple corporate entities to separate profitable operations from labor liabilities.

• Robert Perez is the sole shareholder and principal officer of Securecare Inc., the entity that employed Amezcua at the time of her termination. He is also the sole shareholder of ME East Village, Inc. (MEEV), a separate entity that owned a different Massage Envy franchise location.
• The insurance policy that could cover Amezcua’s employment claims was held in MEEV’s name as the primary insured. Securecare was listed only as an additional insured. Perez stated this structure was chosen because it “costs less than having separate policies for each franchise location.” The effect, regardless of intent, was that a critical insurance asset was legally registered under a corporate name with no apparent connection to Amezcua’s employer.
• The Purchase Agreement at the center of the 2018 franchise transfer explicitly provided that Securecare would not “assume, succeed or inherit any of the liabilities” of Eastlake Village ME, the prior franchisee. Workers were transferred; liabilities were not. Eastlake Village ME terminated its operations in February 2021, effectively eliminating the entity that held responsibility for pre-2018 employee claims.
• Amezcua alleged in her proposed Second Amended Complaint that Massage Envy participated in structuring the Purchase Agreement so that potential Labor Code violations would “remain with a corporate entity that would be insolvent.” The franchisor, as Amezcua argued, approved the franchise transfer with terms that its own contractual involvement made possible.

Regulatory Gray Zones: The Rules That Let This Happen

Several features of this case operated in legal territory where the rules either permitted the conduct or failed to clearly prohibit it.

• California’s franchise liability law does not presume a franchisor to be a joint employer of its franchisee’s employees. Amezcua’s lawsuit hinges on establishing the specific factual circumstances, including the productivity matrix and the Purchase Agreement approval, that would overcome this presumption. Until those facts were documented, Massage Envy’s structural separation was legally functional as a shield.
• Liability non-assumption clauses in franchise sale contracts, such as the provision that Securecare would “not assume, succeed or inherit any of the liabilities” of the prior franchisee, are standard commercial terms. There is no documented law in the source that prohibited this specific provision. The result was that pre-transfer employees lost their recourse when the prior entity dissolved.
• Holding an insurance policy under one corporate entity’s name while covering a related but legally separate entity as an additional insured is a documented insurance industry practice. The source establishes this was done here for cost reasons. The practice itself is not documented as illegal; its effect in this case was to obscure the existence of coverage from the litigation process for years.
• Section 473 of the California Code of Civil Procedure, as interpreted by several major California legal treatises, was widely understood to allow attorney fee conditions on leave to amend. The appellate court’s ruling on April 24, 2026 clarifies this was incorrect, but the trial court’s error was described by the appellate court as “understandable” given how authoritative the treatises were. This ambiguity in procedural law directly cost Amezcua a $25,000 fee condition.

Profit-Maximization at All Costs: The Compensation Scheme

The documented conduct at the center of this lawsuit represents a pay structure specifically engineered to extract more labor value while legally minimizing compensation.

• Amezcua’s lawsuit alleges Securecare subjected her to an “illegal compensation scheme” that classified meal and rest breaks as “non-productive” time and used that classification to reduce her hourly rate of pay. California law requires that non-exempt employees receive meal periods and rest breaks, and that those employees be compensated at their regular rate of pay during rest periods. The alleged scheme turns the legal requirement into a financial penalty.
• The productivity matrix, about which Perez testified at his May 2023 deposition, was described as developed in response to wage-and-hour lawsuits facing Massage Envy franchise operations. The existence of a legal instrument designed to address these lawsuits at the franchise-association level suggests the compensation practices generating these claims were not isolated to Securecare but were present across the network.
• Perez later walked back his attribution of the productivity matrix to Massage Envy in a July 2025 declaration. The source notes ambiguity about who created it and whose franchises were involved. The compensation structure that Amezcua was subject to, however, is separately documented in the lawsuit as the direct cause of her harm.

Legal Minimalism: The Letter but Not the Spirit

The liability non-assumption clause in the 2018 franchise Purchase Agreement represents a legally enforceable term that produced an outcome workers’ protection laws were designed to prevent.

• California’s Labor Code establishes wage-and-hour protections including minimum wage, overtime, and mandatory break requirements for workers in order to ensure that employees can seek redress when those protections are violated. The protections function only if a liable employer exists to pursue.
• The Purchase Agreement transferred all W2 employees from Eastlake Village ME to Securecare while explicitly providing that Securecare would “not assume, succeed or inherit any of the liabilities” of the prior entity. Eastlake Village ME then terminated its corporate existence in February 2021. Workers who had been employed prior to 2018 were transferred to the new entity, but any wage-and-hour claims against the original employer were orphaned when that entity dissolved.
• The result, as Amezcua’s proposed Second Amended Complaint alleged, was that potential Labor Code violations were left “with a corporate entity that would be insolvent.” The structure technically complied with the terms of the contract while producing the precise outcome the Labor Code’s employer-liability provisions were designed to prevent: workers with valid claims and no solvent defendant to collect from.

Societal Impact Mapping

Public Health

The conduct documented in this case represents a direct attack on the physical health protections embedded in California labor law.

• California’s mandatory meal and rest break laws exist because physical labor without adequate recovery time causes documented injury over time. Massage therapy is physically demanding work. Amezcua’s employer allegedly made taking a legally required rest break a financial penalty, creating a direct economic incentive to skip the recovery her body needed.
• When employers successfully implement illegal compensation schemes that penalize breaks, they create a workplace norm in which workers self-select against rest. The harm is not confined to one employee. It shapes the behavior of every worker in that environment, and potentially across a franchise network where a productivity matrix governs compensation structures.

Economic Inequality

Every structural feature of this case functioned to shift cost and risk downward, onto the worker with the least resources to absorb them.

• Amezcua worked for eight years at a franchise location. Her employer ran an illegal pay scheme that reduced her earnings when she exercised legal rights. The Labor Code violations she alleged, including failure to pay full wages and failure to provide compliant breaks, represent money that should have been in her paycheck and was not.
• The legal battle she has waged since 2022 involves costs in time, money, and stress that a corporation with a legal team can absorb indefinitely. An individual worker cannot. The three-year withholding of key documents, the subpoena deflection, and the $25,000 fee condition imposed by the trial court (later struck down) are all mechanisms that increase the cost of fighting and increase the probability that a worker gives up before collecting anything.
• The corporate structure in this case, multiple entities under single ownership, insurance registered under a separate name, liabilities non-assumed at transfer, prior entity dissolved, exemplifies how wealth insulates itself from accountability. Every shell is a wall a worker has to climb over. Most can’t.
• The appellate court’s ruling that the $25,000 fee condition was illegal is a meaningful legal victory. It does not restore the years of litigation Amezcua has already funded, or the breaks she was docked for, or the income she lost when she was terminated for complaining.

This Is the System Working as Intended

The outcome of this case so far is not the result of a broken system failing to stop bad actors. It is the result of a system that allows and facilitates exactly this sequence of events.

• California law does not presume a franchisor is a joint employer of its franchisee’s workers. This is not an accident. Franchise structures are a legally sanctioned mechanism for franchisors to profit from the labor of workers at thousands of locations while maintaining legal separation from those workers’ employment relationships. Massage Envy’s defense, that it does not own or operate locations, is a structural feature of the franchise model, not an evasion of it.
• Non-assumption of liability clauses in business sale contracts are standard commercial terms. The law that allowed Eastlake Village ME to transfer workers to Securecare without transferring prior wage liabilities, and then dissolve, is the law functioning exactly as it was written. No documented rule prohibited this sequence.
• The discovery process, which requires parties to produce documents relevant to a lawsuit, failed here to surface key documents for years. Verified discovery responses stated no insurance existed. The Purchase Agreement was claimed lost. Both representations held for years in a system that has no real-time enforcement mechanism for discovery obstruction short of sanctions motions. The trial court denied Amezcua’s request for discovery sanctions against Securecare even after the belated productions.
• The trial court’s decision to impose a $25,000 fee condition on Amezcua, while legally incorrect as the appellate court found, was described by the appellate court as “understandable” because multiple authoritative legal treatises interpreted Section 473 to permit exactly that. The ambiguity in the law that allowed this to happen was not a bug. It was the predictable result of fee-shifting rules that multiple legal authorities had been misreading for decades.
• Six years after Amezcua was terminated, the case has not resolved. She is still seeking leave to amend her complaint. The alleged illegal compensation scheme, the documented document withholding, and the multi-entity structure that made accountability difficult: all of it occurred within the rules. That is what “working as intended” looks like.

What a Legitimate Fix Looks Like

This case exposes three intersecting structural failures: franchise structures that legally separate worker protections from the entities that profit from workers; discovery processes that can be frustrated by document non-production without effective real-time consequences; and procedural ambiguity that courts used to penalize workers for litigation choices made under conditions of information asymmetry.

Regulatory Track

• The California Labor Commissioner and the Division of Labor Standards Enforcement should be empowered to investigate franchise networks as enterprise employers, not just individual franchisees, when evidence shows shared compensation structures, productivity matrices, or coordinated legal responses to wage-and-hour claims across multiple franchise locations.
• Discovery enforcement in labor cases involving multiple related corporate entities should include automatic triggers for adverse inference instructions or evidence sanctions when verified discovery responses are later shown to have been materially false, without requiring a separate sanctions motion from the plaintiff.
• Insurance disclosure requirements in employment litigation should require the affirmative disclosure of all policies covering any entity under common ownership with the named defendant, not just policies in the defendant’s name.

Legislative Track

• California should amend franchise liability law to establish a rebuttable presumption of joint employer status when a franchisor approves a franchise transfer agreement whose terms leave pre-transfer employee claims without a solvent defendant, and the transferring entity subsequently dissolves.
• Liability non-assumption clauses in franchise sale agreements should not be enforceable against employee wage claims arising from the period of the selling entity’s operation, where the selling entity has dissolved and no successor entity has assumed those liabilities. This closes the specific gap documented in this case.
• California Code of Civil Procedure Section 473 should be amended to expressly clarify that leave to amend cannot be conditioned on payment of attorney fees, codifying the appellate court’s ruling and eliminating the treatise-level ambiguity that allowed the trial court’s error to occur in the first place.

Corporate Governance Track

• Franchise agreements should require franchisors to maintain documented audit trails of any productivity, compensation, or matrix structures distributed to franchisee networks, and to retain those records for the duration of applicable statutes of limitations for employment claims.
• Multi-entity employers operating under common ownership should be required to designate a consolidated entity as the responsible employer for purposes of employment litigation, preventing the use of entity dissolution to orphan worker claims.

What Now? Where to Direct Your Pressure

The entities accountable in this case are Massage Envy Franchising LLC (national franchisor, Arizona-based) and Securecare Inc. (the franchisee/employer of record). The litigation is ongoing. The Second Amended Complaint naming Massage Envy has not yet been filed as of this appellate decision.

Watchlist: Regulatory Bodies With Jurisdiction

• California Division of Labor Standards Enforcement (DLSE) / Labor Commissioner: Primary state agency for wage-and-hour enforcement. Amezcua’s claims fall squarely within its jurisdiction. Worker complaints against Massage Envy franchise locations can be filed directly.
• California Department of Industrial Relations: Oversees the DLSE and broader labor protections. Policy advocacy on franchise employer accountability belongs here.
• California Courts of Appeal, Fourth Appellate District, Division One: This court has now established, in a published opinion, that conditioning leave to amend on attorney fees under Section 473 is illegal. That precedent is now available to every California worker facing the same tactic.
• Federal Trade Commission (FTC): The FTC has jurisdiction over franchise disclosure requirements under the Franchise Rule. Accountability gaps in franchise labor practices have a disclosure dimension worth escalating.

Grassroots and Mutual Aid

• If you are or were a Massage Envy worker and experienced similar break-time pay deductions or other Labor Code violations, the appellate record in this case is now public. Documenting your experience and connecting with employment attorneys in California strengthens the record against systemic practices.
• Support legal aid organizations that represent low-wage workers in wage-and-hour cases. The Amezcua case has run for six years because Amezcua had representation willing to fight. Most workers in identical situations do not.
• Organize at the franchise level. Massage Envy franchisees are independent business owners bound by a franchisor’s operational requirements. Franchise workers have successfully organized for better conditions at other national chains. The productivity matrix mentioned in this record is exactly the kind of shared corporate instrument that makes collective action relevant across locations.
• Share the appellate ruling. The California Court of Appeal’s April 24, 2026 opinion in Amezcua v. Superior Court, Case No. D087216, is certified for publication. That means it is binding precedent. Every California employer that has tried to use Section 473 to impose attorney fees as a condition of amendment is now on notice. So is every plaintiff who faced that tactic and backed down.