Litigation Update: April 2018

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A monthly publication of the Litigation Section of the California Lawyers Association

  • Senior Editor, Eileen C. Moore, Associate Justice, California Court of Appeal, Fourth District
  • Managing Editor, Reuben Ginsburg
  • Editor, Jessica Riggin
Parking Lot Rage.

Plaintiff was driving toward a taco truck in a parking lot when he hit another car. The driver of the other car was enraged and refused to exchange information. Instead, the other driver got back into his car and, without any warning, suddenly backed up into the street and drove away, striking plaintiff and dragging him into the street, causing serious bodily injury. Plaintiff sued the parking lot owner for premises liability, negligence, negligent infliction of emotional distress, and loss of consortium. His basic argument was that the parking lot did not have enough parking spaces to accommodate patrons of the taco truck, so he had to back up to exit the lot. It was in backing up that plaintiff hit the other car. The trial court granted summary judgment in favor of defendant. Analyzing the issue of duty on the part of the parking lot owners, the Court of Appeal looked at the factors delineated in Rowland v. Christian (1968) 69 Cal.2d 108, 113. In affirming the appellate court stated: “Here, the conduct of the driver of the [the other] vehicle was not foreseeable or derivative of [the owner of the parking lot’s] conduct in designing, leasing or operating the parking lot.” (Sakai v. Massco Investments, LLC (Cal. App. 2nd Dist., Div. 1, Mar. 1, 2018) 20 Cal.App.5th 1178.)

Doctor Wouldn’t Sign Return Receipt But Lost His License Anyway.

The Medical Board of California revoked the medical license of a doctor who was prescribing himself controlled substances. The doctor filed a petition for a writ of mandate in the superior court alleging that attempts to serve him and later the entry of default were erroneously done by certified mail in violation of service requirements set forth in Government Code § 8311. The doctor argued he never signed a return receipt, and service was never effectuated. The superior court ordered the board to vacate its revocation. The board filed a petition for writ of mandate in the Court of Appeal. The Court of Appeal granted the petition, stating: “The trial court was in error in concluding that the board’s service of the documents by certified mail was ineffective without a signed receipt.” (Medical Bd. of California v. Superior Court(Cal. App. 1st Dist., Div. 3, Mar. 1, 2018) 20 Cal.App.5th 1191.)

Trial Court Dismissed Inverse Condemnation Action After Granting Motions in Limine; Appellate Court Reverses.

Plaintiffs are homeowners who sued several public entities for inverse condemnation after noise increased when a sound wall was built near their homes. Relying on Code of Civil Procedure § 1260.040, the trial court dismissed the action after granting defendants’ motions in limine. The appellate court reversed, finding that § 1260.040 applies only to eminent domain actions, disagreeing with the holding in Dina v. People ex rel. Dept. of Transportation (2007) 151 Cal.App.4th 1029 that the statute applied to inverse condemnation actions. With regard to the nuisance cause of action, the reviewing court stated: “Under well-established law, Plaintiffs here were entitled to a jury trial on their nuisance cause of action, absent a summary judgment motion and ruling disposing of their claims.” (Weiss v. People ex rel. Dept. of Transportation (Cal. App. 4th Dist., Div. 3, Mar. 1, 2018) 20 Cal.App.5th 1156.)

Federal Law Does Not Preempt California’s Escrow Interest Law.

Plaintiff filed a lawsuit on behalf of himself and a proposed class of similarly situated Bank of America customers, alleging that the bank violated both California state law and federal law by failing to pay interest on his escrow account funds.A federal trial court dismissed the class action on the grounds that the National Bank Act preempted California’s escrow interest law (Civ. Code, § 2954.8, subd. (a)), which requires financial institutions to pay borrowers at least 2% annual interest on funds held in the borrowers’ escrow accounts. This type of account is often set up in conjunction with a mortgage to ensure payment of obligations such as property taxes and insurance. These accounts often carry a significant positive balance. The Court of Appeals framed the question on appeal as whether, in light of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the National Bank Act preempts section § 2954.8, subdivision (a).The Court of Appeals reversed the district court and permitted the plaintiff to proceed with his California unfair competition law and breach of contract claims against the bank, holding that the National Bank Act does not preempt section § 2954.8, subdivision (a) because “[a]lthough Dodd-Frank significantly altered the regulatory framework governing financial institutions, with respect to NBA preemption, it merely codified the existing standard established in Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25 (1996).” (Lusnak v. Bank of Am., N.A. (9th Cir., Mar. 2, 2018) 833 F.3d 1185.)

Revised Limited Liability Law.

Corporations Code § 17707.06, part of the California Revised Uniform Limited Liability Company Act, was amended in 2016. Another provision in the same act states that upon filing a certificate of cancellation, an LLC’s “powers, rights, and privileges shall cease.”(Corps. Code, § 17707.08, subd. (c).) Amended section  §17707.06 now provides that an LLC can file a certificate of cancellation, yet retain its powers of “prosecuting and defending actions by or against it in order to collect and discharge obligations.” The question faced by the Court of Appeal in the instant case is whether the 2016 amendment to § 17707.06 applied to a certificate of cancellation filed by plaintiff in 2014. The appellate court stated: “As purely a question of statutory construction, we think it does. However, [plaintiff] concealed the certificate of cancellation and then unsuccessfully challenged its authenticity, prolonging the proceedings into 2016 when the changes to section 17707.06 took effect. Had [plaintiff] been forthcoming, the case would have been dismissed under the prior law. It would now be unfair to reward [plaintiff]’s delay by allowing it to take advantage of the 2016 law, so we affirm the judgment dismissing [plaintiff]’s complaint.” (DD Hair Lounge, LLC v. State Farm General Ins. Co. (Cal. App. 2nd Dist., Div. 8, Mar. 2, 2018) 20 Cal.App.5th 1238.)

Previously we reported: Military Retirement Changed Long After Divorce.

A federal statute (10 U.S.C. §1408(c)(1)) provides that a state may treat as community property, and divide at divorce, a military veteran’s retirement pay. Exempted from this statute is any amount that the government deducts “as a result of waiver” that the veteran must make “in order to receive” disability benefits. (10 U.S.C. §1408(a)(4)(B).) A state may not treat as community property the waived portion of the veteran’s retirement pay. In this case, a state awarded to a veteran’s spouse upon divorce a portion of the veteran’s total retirement pay. Long after the divorce, however, the veteran waived a share of the retirement pay in order to receive nontaxable disability benefits from the federal government instead. Thus, the question is whether a state can thereafter increase the amount the divorced spouse receives each month from the veteran’s retirement pay in order to indemnify the divorced spouse for the loss caused by the veteran’s waiver? The United States Supreme Court answered: “The question is complicated, but the answer is not. Our cases and the statute make clear that the answer to the indemnification question is ‘no.’” (Howell v. Howell (U.S., May 15, 2017) 137 S.Ct. 1400.)

The latest: California application of the U.S. Supreme Court’s holding

In 1964, the parties were married; in 1986, they were divorced. After 20 years of service, the husband retired from the United States Air Force. In a stipulated judgment, the trial court awarded the wife her community property interest in the husband’s military retirement pay. Fast forward 26 years. In 2012, it was determined that the husband had a combat-related disability. As a result, he became eligible to receive both veteran’s disability benefits and combat-related special compensation. To do so, however, he had to waive his retirement pay, which he did. Before the waiver, the husband received $791 a month and wife received $541 in retirement pay (taxable). After the waiver, the husband received $1,743 a month in veteran’s disability benefits and $1,389 a month in combat-related special compensation, for a total of $3,132 (tax-free). The wife received zero. As a result, the trial court ordered the husband to pay the wife $541 a month in permanent and nonmodifiable spousal support. The husband appealed, contending the trial court erred. In reversing and remanding, the Court of Appeal stated: “We agree that federal law prohibited the trial court from compensating [the wife], in the form of spousal support or otherwise, for the loss of her share of [the husband’s] retired pay. However, it could properly modify spousal support, provided it did so based on the relevant factors and not as compensation. Accordingly, we will reverse and remand with directions to hold a new trial on [the wife’s] request for a modification of spousal support.” (In re Marriage of Cassinelli(Cal. App. 4th Dist., Div. 2, Mar. 2, 2018) 20 Cal.App.5th 1267.)

California Supreme Court Answers the Ninth Circuit’s Question About Law Firm’s Property Interest in Cases.

A case before the Ninth Circuit Court of Appeals involves a global law firm with more than 700 attorneys. By August 2008, the firm was in financial distress, and its partners voted to dissolve the firm. The firm filed for bankruptcy under chapter 11. The Ninth Circuit asked the California Supreme Court to answer the question, “Under California law, does a dissolved law firm have a property interest in legal matters that are in progress but not completed at the time the law firm is dissolved, when the dissolved law firm had been retained to handle the matters on an hourly basis?” (Matter of Heller Ehrman LLP (9th Cir. 2016) 830 F.3d 964, 966.) This is what the California Supreme Court said: “What we hold is that under California law, a dissolved law firm has no property interest in legal matters handled on an hourly basis, and therefore, no property interest in the profits generated by its former partners’ work on hourly fee matters pending at the time of the firm’s dissolution. The partnership has no more than an expectation that it may continue to work on such matters, and that expectation may be dashed at any time by a client’s choice to remove its business. As such, the firm’s expectation — a mere possibility of unearned, prospective fees — cannot constitute a property interest. To the extent the law firm has a claim, its claim is limited to the work necessary for preserving legal matters so they can be transferred to new counsel of the client’s choice (or the client itself), effectuating such a transfer, or collecting on work done pretransfer.” (Heller Ehrman LLP v. Davis Wright Tremaine LLP (Cal., Mar. 5, 2018) 4 Cal.5th 467.)

California Supreme Court Speaks on Overtime Pay Calculations.

The California Supreme Court ruled on a matter involving how overtime pay should be calculated when an employee has “earned a flat sum bonus during a single pay period.” The amount of the bonus was a flat sum of $15 per day of weekend work, regardless of whether the employee worked in excess of the normal work shift on the day in question. The court decided the divisorfor purposes of calculating the per-hour value of the bonus is the number of nonovertimehours the employee worked during the pay period. (Alvarado v. Dart Container Corp. of California (Cal., Mar. 5, 2018) 4 Cal.5th 542.)

Serving a Certificate of Merit on a Physician.

Plaintiffs filed a medical malpractice action 85 days after the expiration of the one-year statute of limitations. The physician filed a motion for summary judgment. In opposition, plaintiffs filed a declaration from a legal assistant stating she was told the doctor no longer worked at the address where one of the plaintiffs was treated, so she mailed the 90-day notice of intent to file the action required by Code of Civil Procedure § 364 to the address the doctor provided to the Medical Board of California. The doctor denied receiving notice. The trial court granted summary judgment in favor of the doctor. In reversing, the Court of Appeal held that notice sent to the doctor’s address of record with the Medical Board of California satisfies the statutory requirement. (Selvidge v. Tang (Cal. App. 3rd Dist., Mar. 5, 2018) 20 Cal.App.5th 1279.)

Dipping Into the County Trough.

A deputy sheriff suffered a shoulder injury in 2010 and was awarded a 12% permanent disability award in 2011. In 2015, he filed a petition to reopen the matter, contending his injury had worsened and seeking salary continuation and total disability benefits pursuant to Labor Code §§ 4653 & 4850. The question presented to the Court of Appeal was whether Labor Code § 4656 precludes an award of temporary disability payments for a period of disability occurring more than five years after the date of the underlying injury.The court concluded, “the plain language of the statute indicates that the answer to this question is, ‘Yes.’” (County of San Diego v. Workers’ Comp. Appeals Bd. (Cal. App. 4th Dist., Div. 1, Mar. 6, 2018) 21 Cal.App.5th 1.)

Suit Against Child Protective Services May Continue in Federal Court.

A mother took her 13-year-old daughter to a clinic, informing the clinic the child had been depressed for four to six months and that she expressed suicidal ideations. The clinic notified Child Protective Services (CPS), who removed the child and placed her first in a foster home and later in a group home. Mother and child were separated for four months. The mother sued CPS, the state, and government employees for violation of mother’s and daughter’s constitutional rights to familial association. A federal trial court dismissed the constitutional claims, finding defendants were entitled to qualified immunity. The Ninth Circuit Court of Appeals discussed constitutional law on point and stated: “In sum, our case law clearly establishes that the rights of parents and children to familial association under  the Fourteenth, First, and Fourth Amendments are violated if a state official removes children from their parents without their consent, and without a court order, unless information at the time of the seizure, after reasonable investigation, establishes reasonable cause to believe that the child is in imminent danger of serious bodily injury, and the scope, degree, and duration of the intrusion are reasonably necessary to avert the specific injury at issue.” The appeals court, reviewing de novo, reversed the trial court’s decision, concluding the allegations in the complaint supported a reasonable inference that the defendants are liable for the misconduct alleged. (Keates v. Koile (9th Cir., Mar. 6, 2018) 833 F.3d 1228.)

“A Shakespearean tragedy, to be sure,” the Appellate Court.

A collector of $18 million of purportedly rare vintage wine found out from law enforcement that the wine seller had been filling wine bottles with his own concoction and affixing counterfeit labels on them. The collector, who had insured his wine collection for many years, filed a claim with his insurance company based on his “Valuable Possessions” property insurance policy. His claim was denied, so the insured sued his insurance company. The trial court sustained the insurance company’s demurrer. On appeal, the insurance company argued there was no loss or damage to the covered property because the wine is in the exact same condition now that it was when it was insured. The Court of Appeal affirmed, stating plaintiff suffered a financial loss, but there was no loss to his covered property. (Doyle v. Fireman’s Fund Ins. Co. (Cal. App. 4th Dist., Div. 3, Mar. 7, 2018) 21 Cal.App.5th 33.)

Governmental Damage to the Environment Alleged to Violate Plaintiff’s Constitutional Rights.

Twenty-one young plaintiffs brought suit against the United States, the President, and various executive branch officials and agencies, alleging that the defendants have contributed to climate change in violation of the plaintiffs’ constitutional rights. They allege that the defendants have known for decades that carbon dioxide emissions from the burning of fossil fuels destabilize the climate, yet the defendants have enabled and continue to enable, through various government policies, the burning of fossil fuels, allowing atmospheric carbon dioxide concentrations to reach historically unprecedented levels, injuring the plaintiffs. The defendants moved to dismiss the suit for lack of jurisdiction and for failure to state a claim. A federal trial court denied the motion. On appeal, the defendants argued that allowing the case to proceed would result in burdensome discovery obligations on the federal government that would threaten the separation of powers. The Ninth Circuit Court of Appeals denied extraordinary relief, citing the factors set forth in Bauman v. U.S. Dist. Ct. (9th Cir. 1977) 557 F.2d 650, and noting that the trial court has not yet issued a single discovery order. (United States v. United States Dist. Court (9th Cir., Mar. 7, 2018) 884 F.3d 830.)

“You’re not drunk if you can lie on the floor without holding on,” Dean Martin.

After a single-car accident, a driver smelling of alcohol refused to take a field sobriety test, closed his eyes when the police officer asked him to follow the tip of his pen with his eyes, told the officer he refused to submit to chemical testing, kicked the rear window of the patrol car, and bucked at officers trying to restrain him. When a suspected drunk driver is arrested, Vehicle Code § 23612, subdivision (a)(1)(D) requires the person to be told that failure to submit to the required chemical testing will result in a fine, possible imprisonment, and suspension of driving privileges for a period of one year. In the instant case, on the DMV chemical test refusal admonition form, the officer wrote “unable to read due to combative state of subject.” The DMV suspended his driver’s license, and the man unsuccessfully sought extraordinary relief in the superior court. The man appealed, and the Court of Appeal reversed, holding the arresting officer is required to at least attempt to provide the required admonition.  (Munro v. Department of Motor Vehicles (Cal. App. 6th Dist., Mar. 7, 2018) 21 Cal.App.5th 41.)

The Ninth Circuit Holds Class Action Plaintiffs Sufficiently Alleged Standing Based on Identity Theft.

Hackers stole the names, account numbers, passwords, email addresses, and billing/shipping information for 24 million retail customers. Several of those customers filed class actions in federal courts across the country, alleging the retailer did not adequately protect their personal information. Some of the plaintiffs, but not those involved in this appeal, alleged that the hackers used stolen information to conduct financial transactions. A federal trial court dismissed the action for lack of Article III standing. Although this appeal concerns claims based on the hacking incident itself, and not on any subsequent illegal activity, the Ninth Circuit Court of Appeals held that plaintiffs have sufficiently alleged standing based on the risk of identity theft. (In re, Inc. (9th Cir., Mar. 8, 2018) 884 F.3d 893.)

Securities Class Action Dismissed.

In a class action, plaintiffs allege defendants violated the Securities Exchange Act of 1934 § 10b when they changed the company’s accounting formula prior to the IPO in order to misrepresent profitability. A federal trial court held that plaintiffs failed to adequately plead scienter and dismissed the action. In affirming the dismissal, the Ninth Circuit Court of Appeals examined the plaintiffs’ pleading holistically, stating plaintiffs’ “allegations do not support a strong inference of scienter,” which is required under the Private Securities Litigation Reform Act (15 U.S.C. § 78u-4(b)(2)(A)). (Webb v. SolarCity Corp. (9th Cir., Mar. 8, 2018) 884 F.3d 844.)

Past Persecution in China.

Petitioner is a citizen of China. He testified that he was beaten, arrested, jailed, and denied food, water, sleep, and medical care because he tried to stop the police from forcing his wife to have an abortion. The Board of Immigration Appeals (BIA) found he was not eligible for asylum or withholding of removal. The Ninth Circuit Court of Appeals held that petitioner’s evidence was sufficiently persuasive and compelled the conclusion that the harm he suffered from resisting his wife’s forced abortion rose to the level of past persecution. The case was remanded to the BIA for further proceedings. (Ming Dai v. Sessions (9th Cir., Mar. 8, 2018) 884 F.3d 858.)

The Secret to a Happy Marriage is to File the Marriage License.

After living together for three years, a couple applied for a marriage license and exchanged vows at a ceremony. After the ceremony, the officiant gave the signed license to the parties, who promised to file it with the county. Four years later, the husband petitioned for dissolution of the marriage. The wife moved to quash on the ground they were never married because the license was never returned to the county. Nonetheless, the trial court found the marriage was valid and denied the motion to quash. In affirming, the Court of Appeal stated that noncompliance with the requirement to return the license does not necessarily invalidate an otherwise valid marriage, stating: “Once they secured a license from the country, exchanged vows at a solemnization ceremony and the license was authenticated, the parties were married.” (Chaney v. Netterstrom (Cal. App. 2nd Dist., Div. 6, Mar. 8, 2018) 21 Cal.App.5th 61.)

“You Should Have Stopped Me” Allegation Not Enough For Negligence.

Plaintiff was voluntarily enrolled in a drug treatment facility due to his addiction. One night, he left the facility without permission and smuggled heroin inside when he returned. He told his roommate he wanted to get high. He was discovered unconscious in his room the next morning, and in this action he blames the facility for not preventing him from obtaining heroin and for not finding him sooner. The trial court denied the facility’s motion for summary judgment. Its order stated: “Health and Safety Code Section 11706 does not preclude [plaintiff] from filing a common law negligence claim against [the facility]. The claim is that [the facility] did not monitor [plaintiff] which led to his obtaining drugs and overdosing.” In granting the facility’s petition for writ of mandate, the Court of Appeal held plaintiff has no basis to pursue a negligence claim against the facility. (Klean W. Hollywood, LLC v. Superior Court (Cal. App. 2nd Dist., Div. 4, Mar. 8, 2018) 21 Cal.App.5th 70.)

Code of Civil Procedure § 425.16 vs. § 425.17.

Plaintiff home developers sued defendants for making allegedly false statements regarding a planned development on a golf course. In their complaint, plaintiffs alleged that defendants consistently “opposed any development on the Pine Meadow Golf Course property.” The trial court granted defendants’ antiSLAPP motion and dismissed the action. On appeal, plaintiffs argued their claims arose from commercial speech, which is not protected activity under the antiSLAPP law. The Court of Appeal noted that because of reported abuses of the antiSLAPP law (Code Civ. Proc., § 425.16), the Legislature enacted § 425.17 to exempt commercial speech from the antiSLAPP law, stating the commercial speech exemption should be narrowly construed. In affirming the dismissal, the appellate court found plaintiffs’ causes of action arose from protected activity and did not arise from commercial speech, and plaintiffs did not establish a probability of success on their claims. (Dean v. Friends of Pine Meadow (Cal. App. 1st Dist., Div. 4, Mar. 8, 2018) 21 Cal.App.5th 91.)

Death Penalty Reversed Due to False Evidence at Trial.

A criminal defendant was convicted of murdering a 21-month-old baby girl. The death penalty was imposed. The baby was brought to the hospital by her mother and defendant. She had a bruise on her forehead. Her condition worsened, and she became comatose and later died. Defendant filed a petition for habeas corpus, arguing that false testimony was presented at trial. He claims the theory at trial was that the baby’s injuries were partially caused by anal penetration, and now argues that evidence was not accurate, was false and misleading, and prejudiced the jury. He argues the baby showed no signs of sexual assault and that her injuries can instead be attributed to medical intervention, including repeated failed attempts to insert an adult-sized catheter rather than a more appropriately-sized device as well as rectal temperature taking and the use of certain medications. An emergency room nurse submitted a declaration stating that no one at the hospital noted any anal or vaginal trauma. An expert medical doctor and two treating doctors declared that vaginal or anal tearing would have cause bleeding, and there was no bleeding. All but one of the doctors who testified at trial about sexual assault recanted their testimony. The Secretary of the Department of Corrections and Rehabilitation conceded that false testimony was admitted at trial, but requested the California Supreme Court to reduce defendant’s conviction to second degree murder. Instead, the court granted defendant’s writ, stating: “There is extensive evidence that Consuelo suffered profound injury while in his care. But, in the absence of sexual assault, how those injuries might have been caused, and any motive for their infliction, is less than clear. The jury heard some evidence suggesting Consuelo could have been struck by a car. But much of that testimony was challenged by the false evidence.” California’s high court declined to reduce defendant’s conviction, and vacated the judgment of conviction in its entirety instead. (In re Figueroa (Cal., Mar. 12, 2018) 4 Cal.5th 576.)

Summary Judgment in Favor of Defendants Reversed in Civil Rights Action.

A defendant in jail was assigned a red jumpsuit because he is a sexually violent predator. Another inmate attacked him with a makeshift knife while screaming, “Die, baby raper, die!”  Without representation by counsel, and while representing himself, he filed a civil rights action under 42 U.S.C. § 1983 seeking monetary damages against the sheriff and the county. A federal trial court granted the defendants’ motion for summary judgment and dismissed the action. The Ninth Circuit Court of Appeals affirmed as to the sheriff in his individual capacity, but reversed as to the county and remanded for the district court to determine relevant conditions in the jail. (King v. Cty. of Los Angeles (9th Cir., Mar. 12, 2018) 2018 U.S. App. LEXIS 6045.)

Anti-SLAPP Motion Grant Affirmed.

A man was fired from a company. At that time, the man had company documents stored on his personal computer. The man turned his computer over to his lawyer. The lawyer filed a qui tam action, using unprivileged company documents found on the man’s personal computer to prepare the pleading. The qui tam action alleges the company overcharged Medicare by more than $1 billion dollars. The company sued the lawyer representing the man in the qui tam action, and the lawyer filed an anti-SLAPP motion (Code of Civ. Proc., § 425.16). The trial court granted the motion, and the Court of Appeal affirmed, stating: “The documents were ‘reasonably relevant’ to pending or contemplated litigation and thus protected by the litigation privilege.” (MMM Holdings, Inc. v. Reich (Cal. App. 4th Dist., Div. 3, Mar. 12, 2018) 21 Cal.App.5th 167.)

Foreign Judgment Recognized Despite Claim of Lack of Personal Jurisdiction.

A bank initiated a lawsuit in California pursuant to the Uniform Foreign-Country Money Judgments Recognition Act (Code of Civ. Proc., §§ 1713-1725) to recognize a Russian judgment against defendant. Defendant moved for summary judgment, arguing the Russian court lacked personal jurisdiction over him. The trial court granted defendant’s MSJ. The Court of Appeal reversed, stating: “[D]ue process does not require actual notice; it requires only a method of service ‘reasonably calculated’ to impart actual notice under the circumstances of the case.” (AO Alfa-Bank v. Yakovlev (Cal. App. 4th Dist., Div. 1, Mar. 12, 2018) 21 Cal.App.5th 189.)

Terminating Sanctions Reversed Because the Claims Were Not Frivolous.

A bank’s representatives assured home loan borrowers their property would not be sold because they were approved for a loan modification. Despite those assurances, the property was sold and the new owners sued the borrowers in unlawful detainer. The borrowers filed a lawsuit against the bank and others for fraudulent misrepresentation and fraudulent inducement. Meanwhile, the new owner obtained a judgment for possession. The borrowers filed for bankruptcy. The trial court found the borrowers’ action frivolous, granted terminating sanctions pursuant to Code of Civil Procedure § 128.7, and dismissed the action with prejudice. In reversing, the Court of Appeal held the nonfrivolous nature of the borrowers’ claims “necessarily establishes their good faith.” (Ponce v. Wells Fargo Bank (Cal. App. 3rd Dist., Mar. 13, 2018) 21 Cal.App.5th 253.)

Mortgage Servicer Found to be Debt Collector.

Defendant serviced plaintiff’s home mortgage, and sent plaintiff the following message: “THIS COMMUNICATION IS FROM A DEBT COLLECTOR AS WE SOMETIMES ACT AS A DEBT COLLECTOR. WE ARE ATTEMPTING TO COLLECT A DEBT AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE.” According to plaintiff, defendant thereafter made harassing and annoying telephone calls to plaintiff. Plaintiff brought a class action against defendant and its parent company, alleging they violated the Rosenthal Fair Debt Collection Practices Act (Civ. Code, § 1788) and the unfair competition law (Bus. & Prof. Code, § 17200 et seq.). The trial court sustained defendants’ demurrer, concluding defendants are not debt collectors because servicing a mortgage is not a form of collecting consumer debts. In reversing, the Court of Appeal noted the general rule that civil statutes for the protection of the public are broadly construed, and reversed. (Davidson v. Seterus, Inc. (Cal. App. 4th Dist., Div. 1, Mar. 13, 2018) 21 Cal.App.5th 283.)

Safe Harbor From Copyright Infringement Claim.

Defendant runs an Internet site that contains 12.6 million mostly pornographic pictures and video clips. In 2011, the free website had nearly 750,000 active users and about 611,000 visits daily. A premium subscription is available for viewers willing to pay to avoid ads. Defendant makes about 15% of its income from these subscriptions; the remaining 85% comes from ads. Defendant does not have any licensing deals with content producers. Plaintiff is a creator of pornographic films; he alleged defendant had 33 of his clips stored on the website and sued for copyright infringement under federal law and unfair business practices under California law. Defendant asked plaintiff to identify the offending clips, and deleted them immediately. A federal trial court granted defendant’s motion for summary judgment on the copyright infringement claim, and dismissed the California claim without prejudice, declining to exercise supplemental jurisdiction over the state claim. In concluding the defendant qualified for the safe harbor defense set forth in 17 U.S.C. § 512(c), the Ninth Circuit Court of Appeals affirmed the grant of summary judgment on the copyright infringement claim and concluded the trial court did not abuse its discretion with regard to its dismissal of the state claim. (Ventura Content, Ltd. v. Motherless, Inc. (9th Cir., Mar. 14, 2018) 2018 U.S. App. LEXIS 6307.)

Ralph and Bane Acts’ Special Arbitration Requirements Preempted by FAA.

A medical doctor brought several claims against another doctor and a medical center. The trial court ordered most of the claims into arbitration, but declined to order claims brought pursuant to Civil Code § 51 (Ralph Act) and § 52.1 (Bane Act), which statutes prohibit enforcement of agreements to arbitrate claims made as a condition of certain contracts. In reversing, the Court of Appeal concluded the special requirements for arbitration under the Ralph and Bane Acts are preempted by the Federal Arbitration Act. (Saheli v. White Memorial Medical Center (Cal. App. 2nd Dist., Div. 8, Mar. 14, 2018) 21 Cal.App.5th 308.)

No Due Process Violation When District Attorney Hires Private Counsel and Seeks Civil Penalties Under UCL.

A county district attorney filed an action under California’s unfair competition law (Bus. & Prof. Code, § 17200 et seq.) alleging deceptive trade practices, seeking injunctive relief, restitution, civil penalties, and attorney fees. The county hired private counsel to prosecute the action on a contingency fee basis, so the pleadings listed both the D.A. and private counsel. Because only public prosecutors may seek civil penalties, one of the defendants in the underlying action filed the present action in federal court, challenging the contingency fee agreement between the D.A. and private counsel as a violation of its federal due process rights. Applying the holding in Kelly v. Boeing Co. (9th Cir. 1993) 9 F.3d 743, by analogy (Kelly rejected a due process challenge to contingent monetary awards for private plaintiffs bringing qui tam actions), the Ninth Circuit Court of Appeals held the present arrangement between the D.A. and private counsel does not violate due process.  (Am. Bankers Mgmt. Co. v. Heryford (9th Cir., Mar. 15, 2018) 2018 U.S. App. LEXIS 6408.)

Public Disclosure Bar in False Claims Act.

In a False Claims Act (FCA; 31 U.S.C. § 3729(a)(1)) action filed in 2009, plaintiff alleges pharmaceutical companies promoted dangerous off-label uses of two drugs. A federal trial court concluded the claim was foreclosed by the public disclosure bar in the FCA and dismissed the action. In affirming, the Ninth Circuit Court of Appeals noted the FCA deprives federal courts of subject matter jurisdiction over FCA suits when the alleged fraud has already been publicly disclosed, which happened in the present situation when another action was filed three years prior to the instant action. (United States ex rel. Solis v. Millennium Pharms., Inc. (9th Cir., Mar. 15, 2018) 2018 U.S. App. LEXIS 6409.)

Lease Provision to Purchase Property.

A lease provision allowed the lessee to purchase the property at its fair market value according to an appraisal. The parties’ appraisers differed regarding the FMV, and the parties ended up in court. Meanwhile, the lessee continued to pay rent. Eventually, the court determined the lessee prevailed as of a certain date, but declined to offset the purchase price for rents paid after that date. The Court of Appeal reversed, stating: “[T]he court failed to place the parties in the positions in which they would have been at the time the sale and purchase contract should have been performed.” (Petrolink, Inc. v. Lantel Enterprises (Cal. App. 4th Dist., Div. 1, Mar. 15, 2018) 21 Cal.App.5th 375.)

Governmental Claims Requirements Can Make One’s Head Spin!

Jane Doe filed a civil action against a school district alleging that her former teacher molested her. The teacher was criminally convicted, and, following the prosecutor’s instruction, Jane Doe delayed filing a civil action until the criminal prosecution was resolved. The school district unsuccessfully demurred to plaintiff’s complaint based on her failure to present a governmental claim. The school district filed a petition for a writ of mandate.

The Labyrinth of Statutes on Point:

  • Code of Civil Procedure § 340.1, subdivision (a) provides an action for childhood sexual abuse must be filed within three years after the date a plaintiff discovers or reasonably should have discovered a psychological injury or illness.
  • Government Code § 905 requires the presentation of a claim prior to filing a lawsuit against a local public entity.
  • Government Code § 911.2, subdivision (a) requires the claim be presented within six months after the accrual of the cause of action.
  • Gov. Code § 905 lists exceptions to the claim presentation requirement, including an exception for claims for damages for childhood sexual abuse under Code of Civil Procedure § 340.1.
  • Government Code § 935 says claims that are excepted under § 905 shall be governed by a procedure prescribed in any charter, ordinance, or regulation adopted by the local public entity.

The school district had adopted a regulation requiring presentation of a claim within six months after the accrual of the cause of action if the claim was excepted under Government Code § 905. The Court of Appeal granted the school district’s petition, stating: “Because Doe failed to allege timely compliance with the district’s claim presentation requirement, or an excuse for failure to comply, we conclude petitioners’ demurrers to the first amended complaint should have been sustained.” (Big Oak Flat-Groveland Unified School Dist. v. Superior Court (Cal. App. 5th Dist., Mar. 16, 2018) 21 Cal.App.5th 403.)

Forum Non Conveniens Overcomes Agreement to Resolve Dispute in California Courts.

A Taiwanese company entered into a contract to manufacture and sell cellular telephones to a Japanese company. The parties negotiated a forum selection clause mandating that any dispute be resolved in a California court under California law. Nothing in the creation, performance, or alleged breach of the contract has any connection to California. The Taiwanese company filed an action in the Los Angeles Superior Court alleging breach of contract by the Japanese entity. The trial court ordered the case dismissed on forum non conveniens grounds because California has no public interest in burdening its courts with an action lacking any identifiable connection to the state. In affirming, the Court of Appeal held the trial court did not abuse its discretion, and stated: “We emphasize that the trial court’s ruling does not rest on a finding that the court lacked jurisdiction.” (Quanta Computer Inc. v. Japan Communications Inc. (Cal. App. 2nd Dist., Div. 5, Mar. 16, 2018) 21 Cal.App.5th 438.)

Contempt Judgment Against Plaintiffs’ Lawyer for Not Producing Expert at Deposition.

Plaintiffs are registered nurses who brought a class action against a hospital, alleging violations of wage and hour laws. Plaintiffs moved for class certification and fileda declaration by an economist. Defendants sought to depose the economist, and a dispute about witness fees ensued. Defendants subpoenaed the expert, but neither the witness nor counsel appeared at the scheduled deposition. A lot more dickering took place. A magistrate judge ordered plaintiff’s counsel to produce the witness on a certain date, but, once again, neither the witness nor counsel appeared. The magistrate judge sanctioned plaintiffs’ counsel $15,112 to cover defendants’ costs associated with the deposition and motions. When counsel did not pay, the district court entered a contempt judgment against plaintiffs and their counsel. Plaintiffs and their counsel appealed from the contempt judgment, arguing the district court lacked authority to compel the expert’s deposition and impose sanctions.  In affirming, the Ninth Circuit Court of Appeals stated: “We hold that under Rule 37’s general discovery enforcement provisions, a court can order a party to produce its nonparty expert witness at a deposition and, if the party makes no effort to ensure that its witness attends the deposition, sanction the party’s counsel when the witness fails to appear unless the failure to produce the expert ‘was substantially justified or other circumstances make an award of expenses unjust.’” (Sali v. Corona Reg’l Med. Ctr.(9th Cir., Mar. 19, 2018) 2018 U.S. App. LEXIS 6768.)

SCOTUS Speaks Out on Securities Class Actions.

Three pension funds filed a class action against a telecommunications company and its officers and directors in superior court in California, alleging the company’s stock offering contained material misstatements in violation of the Securities Act of 1933. Defendants moved to dismiss the action for lack of subject matter jurisdiction. The trial court denied the dismissal motion. Eventually the case made its way to the United States Supreme Court. The 1933 Act required companies offering securities to the public to make “full and fair disclosure” of relevant information, and it created private rights of action in both state and federal courts. (Stat. 74, as amended, 15 U.S.C. § 77a et seq; § 22(a), 48 Stat. 86.) The 1934 Securities Exchange Act also provided for a private right of action. (15 U.S.C. § 78a et seq.) In 1995, the Private Securities Litigation Reform Act amended both the 1933 Act and the 1934 Act to stem perceived abuses in class actions. (109 Stat. 737.) In 1998, Congress passed the Securities Litigation Uniform Standards Act of 1998 (SLUSA; 112 Stat. 3227). In an opinion authored by Justice Kagan, the Supreme Court stated: “This case presents two questions . . . . First, did SLUSA strip state courts of jurisdic­tion over class actions alleging violations of only the Secu­rities Act of 1933 . . . . And second, even if not, did SLUSA empower defendants to remove such actions from state to federal court? We answer both questions no.” (Cyan, Inc. v. Beaver Cty. Emples. Ret. Fund (U.S., Mar. 20, 2018) 200 L.Ed.2d 332.)

Trial Date Preference Per Code of Civil Procedure § 36.

Plaintiff, 81 years old with stage IV lung cancer and asbestosis, filed an action against 18 defendants, alleging personal injury resulting from exposure to asbestos from approximately 1954 through 1963. She filed a motion for trial preference pursuant to Code of Civil Procedure § 36, subdivision (a). One defendant opposed the motion, arguing plaintiff failed to support her claim with clear and convincing evidence. The trial court denied the motion. Plaintiff filed a petition for writ of mandate in the Court of Appeal. The defendant switched arguments, this time claiming plaintiff must show that “death or incapacity might deprive [her] of the opportunity to have [her] case effectively tried.” The appellate court issued a peremptory writ in the first instance, ordering the trial court to set the trial within 120 days, stating: “The idea that Ms. Fox should be made to wait to file a preference motion until she is clearly in her final days—when attendance at a trial is hardly what she should be doing—makes no sense at all.” (Fox v. Superior Court (Cal. App. 1st Dist., Div. 4, Mar. 20, 2018) 21 Cal.App.5th 529.)

The Law is Apparently Scrambling to Keep Up With Science.

A husband and wife underwent in vitro fertilization (IVF). They elected to cryopreserve any surplus embryos. They stated in their paperwork an intention to continue using their embryos. After the husband deposited his sperm to be used in the IVF procedure, the clinic cryopreserved some sperm as “back-up” in the event initial attempts at IVF failed. The initial rounds were not successful. Then, the husband developed cancer and died. After his death, the “back-up” sperm was used to fertilize some of the wife’s eggs. This time, there was success and twins were born. The wife applied for Social Security death benefits for the children. An administrative law judge (ALJ) denied the claim because the children did not satisfy the requirement in California Probate Code § 249.5 that a child shall be deemed to have been born in the lifetime of a decedent if the child proves “[t]he decedent, in writing, specifies that his or her genetic material shall be used for the posthumous conception of a child of the decedent.” Here, the ALJ found the writing executed by the couple, while it stated what should be done with the embryos, was silent with regard to use of that “back-up” sperm that was used to conceive the children. Faced with this situation, the Ninth Circuit Court of Appeals certified the following question to the California Supreme Court: “Does a writing that specifies that some genetic material of the decedent shall be so used satisfy § 249.5(a), regardless whether the genetic material specified in the putative writing includes the genetic material actually used to conceive the claimant child? Or must the genetic material identified in the putative writing include the genetic material actually used to conceive the claimant child?” (Delzer v. Berryhill (9th Cir., Mar. 21, 2018) 2018 U.S. App. LEXIS 7055.)

No Blurred Lines in Music Copyright Infringement.

After a seven-day trial and two days of deliberations, a jury found defendants’ song “Blurred Lines,” the world’s best-selling single in 2013, infringed the copyright in Marvin Gaye’s 1977 hit song “Got To Give It Up.” The Ninth Circuit Court of Appeals discussed the broad copyright protection given when there is a wide range of expression and the thin protection provided for narrow ranges of expression, and that music copyright infringement claims come under a substantial similarity standard. The appeals court rejected the argument that the Gayes’ copyright is limited to only thin copyright protection, stating: “the Gayes need not prove virtual identity to substantiate their infringement claim.”  The opinion states that “Got To Give It Up” is entitled to broad copyright protection because musical compositions are not confined to a narrow range of expression. (Williams v. Gaye (9th Cir., Mar. 21, 2018) 2018 U.S. App. LEXIS 7057.)

Statute of Limitations Not Tolled.

A client sued his criminal defense lawyer for legal malpractice. The trial court found the action was time-barred under Code of Civil Procedure § 340.6. However, during all relevant times, the plaintiff was incarcerated in county jail, and Code of Civil Procedure § 352.1 tolls the statute of limitations when a person is imprisoned on a criminal charge. In affirming, the Court of Appeal stated: “[W]e hold that a plaintiff is ‘imprisoned on a criminal charge’ within the meaning of Code of Civil Procedure section 352.1 if he is serving a term of imprisonment in state prison. Because none of the statutes of limitations at issue here were tolled as a result of [plaintiff’s] pretrial incarceration in the county jail, the trial court properly sustained [the lawyer’s] demurrer without leave to amend on statute of limitations grounds.” (Austin v. Medicis (Cal.App. 2nd Dist., Div. 3, Mar. 21, 2018) 2018 Cal. App. LEXIS 223.)

Duty of a University to Protect Its Students; Sort of Sounds Like “In Loco Parentis.”

Aware one of its students was having hallucinations and suffering under delusions, a university attempted to provide mental health treatment. However, one morning the student stabbed a fellow student during a chemistry lab. The stabbed student sued the university and several of its employees for negligence, arguing they failed to protect her from foreseeable violent conduct. The California Supreme Court held that a college or universityowes a duty of care to protect students from harm, stating: “Considering the unique features of the collegiate environment, we hold that universities have a special relationship with their students and a duty to protect them from foreseeable violence during curricular activities.” (The Regents of the University of California v. Superior Court (Cal., Mar. 22, 2018) 2018 Cal. LEXIS 1971.)

One For Me; One For a Veteran; One For Me; One For a Veteran.

A jury in federal court convicted defendants of committing crimes after the government proved they misused funds belonging to the Wounded Marine Careers Foundation (WMCF). WMCF teaches veterans the technical skills required to succeed in the film industry; some of its funding comes from the Department of Veterans Affairs (VA). The defendants obtained funding from the VA under its Vocational Rehabilitation and Employment Program, which provides, on behalf of specific veterans, payments to the educational institutions that those veterans attend; and the VA certified WMCF as a vendor authorized to provide training. Defendants transferred significant sums from WMCF’s account to their personal accounts. Defendants also spent large sums of WMCF’s money on personal expenses such as groceries, meals, medical bills, and coffee. 18 U.S.C. § 666 prohibits the wrongful taking of property from an organization that receives more than $10,000 in federal benefits during a one-year period. On appeal, defendants argued the government failed to present sufficient evidence that WMCF received “benefits” within the meaning of the statute. The Ninth Circuit Court of Appeals affirmed their convictions, noting the statute contemplates a variety of kinds of benefits, such as grants, contracts, subsidies, loans, guarantees and insurance, concluding that WMCF received benefits within the meaning of the statute. (United States v. Paixao(9th Cir., Mar. 22, 2018) 2018 U.S. App. LEXIS 7168.)

When to Strike.

Code of Civil Procedure § 425.16, known as the anti-SLAPP statute, permits a defendant to file a special motion to strike a cause of action “within 60 days of the service of the complaint or, in the court’s discretion, at any later time upon terms it deems proper.” Here, defendants filed the motion within 60 days of the third amended complaint, but not within 60 days of any earlier complaint. The third amended complaint contains some of the same causes of action as earlier complaints. The court was called upon to decide whether a special motion to strike an amended complaint may seek dismissal of causes of action that had been included in the earlier complaints. The California Supreme Court held: “Because the anti-SLAPP statute is designed to resolve these lawsuits early, but not to permit the abuse that delayed motions to strike might entail, we conclude, as did the Court of Appeal, that, subject to the trial court’s discretion under section 425.16, subdivision (f), to permit late filing, a defendant must move to strike a cause of action within 60 days of service of the earliest complaint that contains that cause of action.” (Newport Harbor Ventures, LLC v. Morris Cerullo World Evangelism (Cal., Mar. 22, 2018) 2018 Cal. LEXIS 1970.)

Trail Immunity.

Plaintiff and his friends entered a park in the dark, pre-dawn hours, while it was closed, in order to go ghost hunting. While taking a shortcut to reach a trail, plaintiff lost his footing and fell over a retaining wall, sustaining devastating personal injuries. Defendant’s summary judgment motion, based on trail immunity found in Government Code § 831.4, was granted. Noting that California’s population approaches 40,000,000 and there is a need to preserve access to public open space, the Court of Appeal affirmed, stating: “We recognize trail immunity comes at a cost to those denied recovery for their injuries on public land. But so did the Legislature, and we must defer to its calculus.” (Arvizu v. City of Pasadena (Cal. App. 2nd Dist., Div. 3, Mar. 23, 2018) 2018 Cal. App. LEXIS 242.)

Statement to Nurse Practitioner Found to be an Exception to the Hearsay Rule.

A criminal defendant was convicted of sexually abusing a developmentally delayed 11-year-old girl. On appeal, he challenges two of the trial court’s evidentiary rulings. One of the challenged statements occurred when the victim’s mother took her to a medical center where a nurse practitioner conducted a sexual assault examination. During the exam, the child said a man who lived in a red house had recently touched her vagina with his hand and tongue. Other witnesses testified defendant lived in a red cinder-block house. The trial court ruled the statement satisfied an exception to the hearsay rule for statements made for purposes of medical diagnosis or treatment under Federal Rules of Evidence, rule 803(4). The Ninth Circuit Court of Appeals affirmed, stating: “[A] court may infer from those circumstances alone that a reasonable person would have understood she was providing information for purposes of diagnosis or treatment.” (United States v. Kootswatewa (9th Cir., Mar. 23, 2018) 2018 U.S. App. LEXIS 7351.)

Previously we reported: “ELECTRICITY IS JUST ORGANIZED LIGHTNING,” George Carlin.

In a jury trial, a jury awarded $1,050,000 in compensatory damages and $3,000,000 in punitive damages against an electric company and in favor of plaintiff on her claims for IIED, negligence and nuisance, based upon her contentions the company failed to control its electrical substation next door to plaintiff’s house. She said the company allowed uncontrolled stray electrical currents to enter her home, including low levels of electricity while showering. The company offered to replace plaintiff’s metal pipes with plastic pipes, but she refused, insisting on the elimination of all stray voltage on her property. On appeal, the company contends all of plaintiff’s claims fall under the exclusive jurisdiction of the California Public Utilities Commission (PUC). The appellate court reversed, stating: “We conclude that the PUC has not exercised its authority to adopt a policy regarding the issues in this lawsuit, and therefore it does not have exclusive jurisdiction over [plaintiff’s] claims. But we also conclude [plaintiff] failed to present sufficient evidence to support her IIED and negligence claims, or to support an award of punitive damages. Finally, we conclude the verdict on the nuisance claim cannot stand because the trial court refused to give [the electric company’s] proffered instruction regarding causation of [plaintiff’s] physical symptoms, and therefore the jury relied upon irrelevant evidence when determining that claim.  Accordingly, we reverse the judgment, order judgment entered in favor of [the electric company] on the IIED and negligence claims, and remand to the trial court for a retrial on the nuisance claim.” (Wilson v. Southern California Edison Co. (Cal. App. 2nd Dist., Div. 4, Feb. 9, 2015) 234 Cal.App.4th 123.)

The latest: 

On retrial, a jury again found in plaintiff’s favor, awarding her $1.2 million. Once again, the Court of Appeal reversed and remanded for retrial, stating: “[W]e find that the trial court erred in admitting irrelevant evidence related to stray voltage incidents involving prior owners or tenants of the house or other properties, and that the admission of that evidence was prejudicial to Edison. Accordingly, we reverse the judgment and remand to the trial court for retrial of the nuisance claim.” (Wilson v. Southern California Edison Co. (Cal. App. 2nd Dist., Div. 4, Mar. 26, 2018) 2018 Cal. App. LEXIS 244.)

Proper Venue Just Might Be at The Happiest Place on Earth.

Based on finding its motion was time barred, the trial court denied Disney’s motion to transfer venue from Los Angeles to Orange County. There are two venue statutes, Code of Civil Procedure §§ 396b and 397. Section 396b contains a time limitation, and § 397 is a discretionary statute without a time limitation. Noting that the right of the defendant to have certain actions tried in the county of its residence is an ancient and valuable right, the Court of Appeal granted Disney’s petition for a writ of mandate, ordering the trial court to vacate its order and to consider the hearing on its merits. (Walt Disney Parks and Resorts U.S. Inc. v. Superior Court (Cal. App. 2nd Dist., Div. 7, Mar. 26, 2018) 2018 Cal. App. LEXIS 248.)

Use of a Declaration in Request to Modify/Terminate Spousal Support.

After dissolving their marriage, a couple agreed the husband would pay the wife $2,600/month based on his current monthly income of $12,570. The wife was supposed to become self-supporting the next year. After 11 years of paying $2,600/month, the husband filed a motion to terminate spousal support because he was retiring for health reasons. The wife’s share of his retirement income was more than the amount of support he had been paying. The wife filed an income and expense declaration in response, but she did not appear at the hearing. The family law court found a material change in circumstances, considered the income of the husband’s new wife, and ordered the husband to pay $750/month to his former wife. The Court of Appeal reversed, stating the family law court erred in considering the former wife’s declaration without granting the husband’s request to cross-examine her on the content of the declaration. (In re the Marriage of Swain(Cal. App. 2nd Dist., Div. 2, Mar. 26, 2018) 2018 Cal. App. LEXIS 246.)

Anti-SLAPP Motion Should Have Been Granted in Favor of Production Company.

In a television miniseries, Feud: Bette and Joan, an actress plays the role of another real-life actress, Olivia de Havilland. De Havilland sued the creators and producers of the show for various causes of action, and the defendants filed an anti-SLAPP motion (Code Civ. Proc., § 425.16). The trial court found de Havilland satisfied her burden to establish that her claims had at least minimal merit, and denied the motion. In reversing, the Court of Appeal stated: “The trial court’s ruling leaves authors, filmmakers, playwrights, and television producers in a Catch-22. If they portray a real person in an expressive work accurately and realistically without paying that person, they face a right of publicity lawsuit. If they portray a real person in an expressive work in a fanciful, imaginative—even fictitious and therefore ‘false’—way, they face a false light lawsuit if the person portrayed does not like the portrayal. ‘[T]he right of publicity cannot, consistent with the First Amendment, be a right to control the celebrity’s image by censoring disagreeable portrayals.’ [] [Defendants’] evidence here—especially the docudrama itself—establishes as a matter of law that de Havilland cannot prevail. [] ‘[B]ecause unnecessarily protracted litigation would have a chilling effect upon the exercise of First Amendment rights, speedy resolution of cases involving free speech is desirable.’” (De Havilland v. FX Networks, LLC (Cal. App. 2nd Dist., Div. 3, Mar. 26, 2018) 2018 Cal. App. LEXIS 247.)

HOA in Coastal Community Bans Short Term Rentals.

A homeowners association (HOA) in a beach community banned short term rentals (STR). Homeowners are fined $1,000 for the first STR offense, $2,500 for the next, and $5,000 each for all subsequent STRs. One of the homeowners unsuccessfully sought a preliminary injunction staying enforcement of the HOA’s ban on STR’s. The Court of Appeal reversed, noting that one of the basic goals of the California Coastal Act of 1976 (Pub. Resources Code, § 30000 et seq.) is to maximize public access to the beach, and that the HOA here “has not erected a physical barrier to the beach but has erected a monetary barrier to the beach.” The appellate court stated: “We reverse. Section 30803, subdivision (a) of the California Coastal Act provides that ‘[a]ny person may maintain an action for declaratory and equitable relief to restrain any violation of this division . . . . On a prima facie showing of a violation of this division, preliminary equitable relief shall be issued to restrain any further violation of this division.’ (Italics added.)” (Greenfield v. Mandalay Shores Community Ass’n (Cal. App. 2nd Dist., Div. 6, Mar. 27, 2018) 2018 Cal. App. LEXIS 258.)

Ignoring a 998 Offer Has Consequences.

After a court trial, plaintiff was awarded $4,483.30 for defendant’s violation of her right of publicity under both the common law and Civil Code § 3344. That award was exclusive of any costs or attorney fees. Prior to trial, defendant served plaintiff with an offer of $12,500 pursuant to Code of Civil Procedure § 998, exclusive of costs and attorney fees. That offer expired without acceptance. After trial, the effect of that § 998 offer was in dispute. The trial court held plaintiff did not receive a more favorable result than what defendant offered, and awarded plaintiff only her pre-offer costs and fees. In affirming, the Court of Appeal stated: “In sum, defendant’s 998 was not ambiguous and the trial court did not err in applying the penalties for not accepting that offer in Code of Civil Procedure § 998, subdivision (c)(1).” (Timed out LLC v. 13359 Corp. (Cal. App. 2nd Dist., Mar. 27, 2018) 2018 Cal. App. LEXIS 262.)

Design Immunity.

Plaintiffs were seriously injured in a car accident that was fatal for one of the car’s occupants. They sued the state for dangerous condition of public property, contending a guard rail was inadequate and a rumble strip was necessary. They argued that when the Caltrans engineer approved the plans in 1992, he “did not consider using rumble strips on the shoulder,” and that design immunity does not immunize decisions that were not made. The trial court granted defendant’s motion for summary judgment. The Court of Appeal affirmed, stating: “[W]e merely hold where, as here, an employee with discretionary authority signs off on a plan that includes the injury-producing feature, and it was reasonable to do so, design immunity applies.” (Rodriguez v. Department of Transportation (Cal. App. 5th Dist., Mar. 27, 2018) 2018 Cal. App. LEXIS 261.)

GAMBLING…SHOCKED, SHOCKED!! (Virtual Game Found to be Illegal Gambling).

The Ninth Circuit Court of Appeals was called upon to decide whether a virtual game platform constitutes illegal gambling under Washington law. The game at issue is called Big Fish Casino. Users can download the game for free, and first-time users receive a set of free chips. Users can also purchase additional chips or earn more chips by winning a game. The chips have no monetary value and cannot be exchanged for cash or “any other tangible value.” But chips can be transferred among users outside the game by using the game’s app mechanism. For these transfers, the game charges transaction fees. The present class action alleges violations of the gambling laws of the State of Washington. A federal trial court found the virtual chips are not a thing of value and dismissed the case with prejudice. The appeals court reversed, stating: “Because the virtual chips are a ‘thing of value,’ we conclude that Big Fish Casino falls within Washington’s definition of an illegal gambling game.” (Kater v. Churchill Downs Inc. (9th Cir., Mar. 28, 2018) 2018 U.S. App. LEXIS 7739.)

A Second Bite…After Arbitration Award was Confirmed by the Court, the Court Confirmed the Arbitrators’ Award of Costs.

The prevailing party in an arbitration sought and received confirmation of the arbitrators’ award in the superior court. After that, the superior court confirmed a second award, this time for the arbitrators’ award of costs. The losing party appealed. The appellate court affirmed, determining there was no violation of the one final judgment rule, and that principles of waiver and estoppel do not preclude the second confirmation. (EHM Productions, Inc. v. Starline Tours of Hollywood, Inc. (Cal. App. 2nd Dist., Div. 2, Mar. 28, 2018) 2018 Cal. App. LEXIS 269.)

Summary Judgment Affirmed in Consumer Class Action.

Plaintiff filed a class action alleging defendant violated the Telephone Consumer Protection Act (47 U.S.C. § 227) by calling her repeatedly using an automatic telephone dialing system. A federal trial court granted summary judgment to the defendant. The Ninth Circuit Court of Appeals noted that when plaintiff enrolled with a medical insurance plan, she signed the following: “THE USE AND DISCLOSURE OF PROTECTED HEALTH INFORMATION: I acknowledge and understand that health care providers may disclose health information about me . . . to Health Net Entities . . . . Health Net Entities . . . may disclose this information for purposes of treatment, payment and health plan operations, including but not limited to, utilization management, quality improvement, disease or case management programs.” In affirming, the appeals court stated: “We hold that Plaintiff, by completing and submitting the Enrollment Form, gave ‘prior express consent’ to the calls at issue.” (Fober v. Mgmt. & Tech. Consultants, LLC (9th Cir., Mar. 29, 2018) 2018 U.S. App. LEXIS 7927.)

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