Litigation
Litigation Update: April 2020
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, Division Three
- Managing Editor, Reuben Ginsburg
- Editors, Dean Bochner, Julia Shear Kushner, Jessica Riggin, and David Williams
Failure to Object Did Not Forfeit Sanchez Claim.
In People v. Sanchez (2016) 63 Cal.4th 665, the California Supreme Court held that an expert generally cannot relate case-specific hearsay to explain the basis for an opinion. Trial in the instant criminal case occurred before Sanchez was decided, and the prosecution’s expert witness provided case-specific hearsay testimony. The defendants were convicted, and the Court of Appeal affirmed, finding defendants’ Sanchez argument forfeited for failure to object at trial. Reversing, the California Supreme Court stated: “We now conclude that a defense counsel’s failure to object [before Sanchez was issued] does not forfeit a claim based upon Sanchez.” (People v. Perez (Cal., Feb. 27, 2020) 9 Cal.5th 1.)
No Preemption of State Identity Theft Law.
Kansas law makes it a crime to commit identity theft or engage in fraud to obtain a benefit. Three aliens not authorized to work in this country were convicted under Kansas law for fraudulently using another person’s Social Security number on state and federal tax-withholding forms that they submitted in order to obtain employment. The Kansas Supreme Court held that the federal Immigration Reform and Control Act of 1986 (IRCA) expressly preempted the Kansas statutes insofar as the IRCA provides a federal basis for such prosecutions. Reversing, the U.S. Supreme Court found no federal preemption, rejected the reasoning of the Kansas high court, and stated: “there is certainly no suggestion that the Kansas prosecutions frustrated any federal interests.” (Kansas v. Garcia (U.S., Mar. 3, 2020) 140 S.Ct. 791.)
Previously we reported:
Migrant Protection Protocols.
The Department of Homeland Security promulgated the Migrant Protection Protocols (MPP) without going through notice-and-comment rulemaking. The MPP provides that non-Mexican asylum seekers arriving at our southern border be returned to Mexico for the duration of their immigration proceedings, rather than either being detained for expedited or regular removal proceedings or issued notices to appear for regular removal proceedings. The MPP does not apply to certain groups, including unaccompanied alien children, aliens processed for expedited removal, aliens with known physical or mental health issues, returning legal permanent residents seeking admission, and aliens with an advance parole document or in parole status. Plaintiffs presented evidence in the federal district court that they and others returned to Mexico under the MPP face targeted discrimination, physical violence, sexual assault, overwhelmed and corrupt law enforcement, lack of food and shelter, and practical obstacles to participation in court proceedings in the United States. The hardship and danger to individuals returned to Mexico under the MPP have been repeatedly confirmed by reliable news reports. The district court entered a preliminary injunction setting aside the MPP, and the government appealed. The Ninth Circuit affirmed, stating that “because the MPP directly affects immigration into this country along our southern border, the issuance of a temporary injunction setting aside the MPP was not an abuse of discretion.” (Innovation Law Lab v. Wolf (9th Cir., Feb. 28, 2020) 951 F.3d 1073.)
http://cdn.ca9.uscourts.gov/datastore/general/2020/02/28/19-15716_opinion.pdf
The latest:
The Ninth Circuit stayed the injunction insofar as it operates outside the Ninth Circuit. But the court declined to stay the district court’s injunction against the MPP insofar as it operates within the Ninth Circuit. (Innovation Law Lab v. Wolf (9th Cir., Mar. 4, 2020) 951 F.3d 986.) https://cdn.ca9.uscourts.gov/datastore/opinions/2020/03/04/19-15716.pdf
The U.S. Supreme Court subsequently stayed the injunction insofar as it operates both inside and outside the Ninth Circuit, pending the timely filing of a petition for a writ of certiorari. Should the petition for certiorari be denied, the stay will terminate automatically. (Wolf v. Innovation Law Lab (U.S., Mar. 11, 2020) 2020 WL 1161432.) https://www.supremecourt.gov/orders/courtorders/031120zr_19m2.pdf
Previously we reported:
Works in the Public Domain Can Be Copyrightable.
Plaintiff claims the rock group Led Zeppelin copied key portions from its song “Taurus” and placed those portions in its hit “Stairway to Heaven.” A jury returned a verdict in favor of Led Zeppelin. Reversing, the Ninth Circuit held the district court misinstructed the jury, stating: “In sum, we conclude that the district court’s originality jury instructions erroneously instructed the jury that public domain elements are not copyrightable, even if they are modified in an original manner or included as part of a selection and arrangement.” (Skidmore v. Led Zeppelin (9th Cir. Sept. 28, 2018) 905 F.3d 1116.)
http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/28/16-56057.pdf
The latest:
The case was reheard en banc. The Ninth Circuit affirmed the trial verdict and judgment in favor of Led Zeppelin. Unlike the original panel, the en banc court found that the jury instructions correctly described how works within the public domain are “not protected by copyright,” but a protectable “original work may include or incorporate elements taken . . . from the public domain.” The court also overruled prior Ninth Circuit precedent to abrogate the “inverse ratio rule,” which required a lower standard of proof of substantial similarity when a high degree of access is shown. (Skidmore v. Led Zeppelin (9th Cir., Mar. 9, 2020) 952 F.3d 1051.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/03/09/16-56057.pdf
Debt Collectors Cannot Avoid Liability by Hiring a Third Party to Actually Collect.
The complaint for violation of the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.; FDCPA) did not allege that the defendant interacted directly with consumers. The federal district court therefore dismissed the complaint. Reversing, the Ninth Circuit stated: “We join the Third Circuit in concluding that an entity that otherwise meets the ‘principal purpose’ definition of debt collector cannot avoid liability under the FDCPA merely by hiring a third party to perform its debt collection activities.” (McAdory v. M.N.S. & Associates (9th Cir., Mar. 9, 2020) 952 F.3d 1089.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/03/09/18-35923.pdf
Late Claim Request Was Not Credible.
A minor collapsed from dehydration during high school football try-outs. He suffered permanent injuries, and his mother presented a timely claim on behalf of her son to the public school district under the Government Claims Act (Gov. Code, § 810 et seq.). About four months later, she applied for leave to present a late claim on her own behalf based on her allegedly newfound realization of the severity of her son’s injuries, their impact on her own life, and her right to file her own claim. After the application was denied, she filed a petition for relief from the claim presentation requirement in the superior court. At the hearing on her petition, counsel presented a new explanation for the delay in submitting the mother’s claim. The trial court granted the mother’s petition, despite noting “legitimate concerns regarding [her] credibility.” Reversing and granting the school district’s petition for writ of mandate, the Court of Appeal stated: “The reason a petitioner submits to justify relief from the claim presentation requirement must be the same as the reason advanced in the underlying application to the public entity. Additionally, the general policy favoring trial on the merits cannot justify the approval of a petition that is not credible and that does not demonstrate a right to relief by a preponderance of the evidence.” (Lincoln Unified School Dist. v. Superior Court (Cal. App. 3rd Dist., Mar. 3, 2020) 45 Cal.App.5th 1079.)
Delayed Discovery Rule.
Plaintiff underwent shoulder and carpal tunnel surgery in 2013. She woke up suffering from paralysis and loss of sensation in her arms. Subsequent examination revealed paraplegia, incontinence, central cord syndrome, and cervical spinal stenosis, and plaintiff sued various medical professionals. Through discovery, she obtained documents showing that a previously unnamed doctor breached the standard of care by delaying her surgery. She added that doctor to the action as a Doe defendant, but the trial court found the claim against him was barred by the statute of limitations. Later, the trial court reversed its previous position and reinstated the claim because of the delayed discovery rule. The doctor appealed. Affirming, the Court of Appeal held there were factual disputes about when plaintiff experienced appreciable harm from the doctor’s delay, as well as when plaintiff should have linked the persistence of her symptoms to the doctor’s delay. (Brewer v. Remington (Cal. App. 5th Dist., Mar. 4, 2020) 46 Cal.App.5th 14.)
No Relief for Unilateral Mistake of Fact.
Plaintiff purchased a deed of trust at a nonjudicial foreclosure sale. He mistakenly believed the deed of trust was in first position on the property; it was actually in second position with a much lower fair market value than the price he paid. Plaintiff sued for rescission of the sale and declaratory relief. The trial court granted summary judgment for defendants. Affirming, the Court of Appeal concluded that plaintiff was not entitled to relief under the common law principle of unilateral mistake of fact. (Matson v. S.B.S. Trust Deed Network (Cal. App. 4th Dist., Div. 1, Mar. 5, 2020) 46 Cal.App.5th 33.)
Criminal Defendants Have No Right to Obtain Private Communications Between a Victim and a Prosecution Witness.
Two defendants were indicted for murder and other crimes stemming from a drive-by shooting. Each defendant served a subpoena on various social media providers, seeking communications between the victim and a prosecution witness. The providers argued the federal Stored Communications Act (18 U.S.C. § 2701 et seq.) bars them from disclosing the communications without user consent. The trial court held that the act must yield to the defendants’ due process and confrontation rights and ordered the providers to produce the private communications. The Court of Appeal reversed, concluding the trial court abused its discretion. (Facebook, Inc. v. Superior Court (Cal. App. 1st Dist., Div. 5, Mar. 6, 2020) 46 Cal.App.5th 109.)
Charter Schools Are Not Exempt From Paying Taxes.
A nonprofit charter school sued the county tax assessor and others for a refund of property taxes and special assessments, and for declaratory relief. The trial court rejected the school’s claims and entered judgment for the defendants after a bench trial. Affirming, the Court of Appeal stated: “We find no support in statutory or case law for plaintiffs’ implied exemption claim. Plaintiffs cannot establish that charter schools are public entities for purposes of exemption from taxation. Plaintiffs’ policy arguments to the contrary—that charter schools should be treated like public entities because monies taken for taxes and special assessments reduce monies available for educating students, and put charter schools at a competitive disadvantage with other public schools—are properly addressed to the Legislature, not to this court.” (Los Angeles Leadership Academy, Inc. v. Prang (Cal. App. 2nd. Dist., Div. 8, Mar. 10, 2020) 46 Cal.App.5th 270.)
Failure to Exhaust Administrative Remedy in FEHA Claim.
A community hospital contracted with a medical group to operate its Behavioral Health Unit. The hospital fired three nurses in the unit, who sued the hospital and medical group for wrongful termination under the Fair Employment and Housing Act (Gov. Code, § 12900 et seq.; FEHA). The jury found in favor of the nurses against the hospital and the medical group. On appeal, the medical group argued that the nurses failed to exhaust their administrative remedies because they did not name the medical group in their administrative claim under FEHA. The Court of Appeal agreed and reversed the judgment against the medical group with directions. (Alexander v. Community Hospital of Long Beach (Cal. App. 2nd Dist., Div. 1, Mar. 10, 2020) 46 Cal.App.5th 238.)
Person Who Had Been Mentally Ill Barred From Purchasing Firearm.
Plaintiff sought to buy a firearm, but federal law barred him from doing so. Several years earlier, plaintiff was committed involuntarily, for more than nine months, to a mental institution after a Washington state court found him to be both mentally ill and dangerous. 18 U.S.C. § 922(g)(4) prohibits the possession of firearms by those, like plaintiff, whom a state court committed involuntarily to a mental institution. Plaintiff conceded that the statutory prohibition on his possession of firearms during the period of his commitment was constitutional under the Second Amendment, but argued that its continued application to him despite his alleged return to mental health violated the Second Amendment. The district court dismissed his action. Affirming, the Ninth Circuit held that “the prohibition on the possession of firearms by persons, like Plaintiff, whom a state court has found to be both mentally ill and dangerous is a reasonable fit with the government’s indisputably important interest in preventing gun violence. Scientific evidence supports the congressional judgment that those who have been committed involuntarily to a mental institution still pose an increased risk of violence even years after their release from commitment. Section 922(g)(4)’s continued application to Plaintiff does not violate the Second Amendment.” (Mai v. United States (9th Cir., Mar. 11, 2020) 952 F.3d 1106.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/03/11/18-36071.pdf
Breach of Fiduciary Duty by Trustee.
The Attorney General of California petitioned for an accounting of a trust. After a bench trial, the trial court ordered the trustee to reimburse the trust $1,421,598 for breach of fiduciary duty. The court also awarded the Attorney General $1,654,083.65 in attorney fees under Probate Code § 12598. Affirming, the Court of Appeal held that section 12598 does not require courts to consider the extent to which the Attorney General was effective in achieving his goals. (People ex rel. Becerra v. Shine (Cal. App. 1st Dist., Div. 5, Mar. 11, 2020) 46 Cal.App.5th 288.)
Employee Who Settles and Dismisses Individual Claims Still Has Standing to Pursue PAGA Claim.
The California Supreme Court held that when an employee settles and dismisses an individual claim alleging Labor Code violations, the employee nonetheless has standing to pursue a claim under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.; PAGA), stating: “Settlement of individual claims does not strip an aggrieved employee of standing, as the state’s authorized representative, to pursue PAGA remedies.” (Kim v. Reins International California, Inc. (Cal., Mar. 12, 2020) 2020 WL 1174294.)
Production Company Cannot Be Sued for Injuries Sustained at Sea.
A seaman on a commercial fishing vessel out of the Gulf of Mexico was seriously injured at sea at the time a production company was filming a reality TV show. The injured man sued the vessel’s owner and the production company. The trial court granted summary judgment in favor of the production company. The Court of Appeal described the issues before it as follows: “(1) Is the production company liable under the Jones Act (46 U.S.C. § 30104) because it ‘borrowed’ the crew members as ‘employees’ by filming them doing their jobs and by occasionally asking them to repeat what they are doing for the camera and explain it, and (2) Is the production company liable under maritime tort law because (a) it had a ‘special relationship’ with the crew members it was filming sufficient to give rise to a duty to rescue them, (b) it voluntarily assumed a duty to rescue but effectuated that rescue with gross negligence, worsened the crewman’s position or caused the crewman to detrimentally rely on its rescue efforts, or (c) it acted negligently in ‘taking charge’ of a ‘helpless’ person within the meaning of Restatement First and Second of Torts, section 324?” Affirming, the appellate court stated: “We conclude that the answer to these questions is ‘no’ . . . plaintiff was neither an employee nor ‘borrowed servant’ of [the production company] . . .” (McHenry v. Asylum Entm’t Delaware, LLC (Cal. App. 2nd Dist., Div. 2, Mar. 12, 2020) 2020 WL 1180471.)
Government Claims Act in Childhood Sexual Abuse Case.
A 17-year-old high school student alleged she was sexually abused by a teacher. She and her foster mother sued the school district. The trial court granted judgment on the pleadings after finding plaintiff had not complied with the Government Claims Act (Gov. Code, § 810 et seq.). Due to amendments to controlling statutes enacted during the pendency of the appeal, the Court of Appeal remanded with respect to the minor’s claims but affirmed with regard to the foster mother. (Coats v. New Haven Unified Sch. Dist. (Cal. App. 1st Dist., Div. 2, Mar. 12, 2020) 2020 WL 1181526.)
Employer’s Petition to Arbitrate Denied.
The trial court denied an employer’s petition to arbitrate an employment dispute. Affirming, the Court of Appeal stated: “[W]e agree with the trial court that the parties’ arbitration agreement is permeated with too high a degree of unconscionability for severance to rehabilitate.” (Lange v. Monster Energy Co. (Cal. App. 2nd Dist., Div. 1, Mar. 12, 2020) 2020 WL 1180470.)
Previously we reported:
Tolling of Statute of Limitations for a Class Action.
The holding in American Pipe & Construction Co. v. Utah (1974) 414 U.S. 538 established that the timely filing of a class action tolls the statute of limitations for all persons encompassed by the class complaint, permitting class members in an action that fails certification to timely intervene as individual plaintiffs in a still-pending action. The present case poses the question whether the tolling permitted by American Pipe applies not only to individual claims but also to successive class actions as well. Underlying the present case was a timely filed class action #1, which was not certified and was settled by individuals. Following that was a timely filed class action #2, which was not certified and settled by other individuals. Then, the present case was filed, class action #3, which was filed a year and one-half after the statute of limitations expired. The federal district court dismissed the present case based on statute of limitations. The Ninth Circuit reversed, finding that American Pipe extends to class claims. The U.S. Supreme Court disagreed with the Ninth Circuit, stating: “The question presented in the case now before us: Upon denial of class certification, may a putative class member, in lieu of promptly joining an existing suit or promptly filing an individual action, commence a class action anew beyond the time allowed by the applicable statute of limitations? Our answer is no.” (China Agritech, Inc. v. Resh (U.S., June 11, 2018) 138 S. Ct. 1800.)
https://www.supremecourt.gov/opinions/17pdf/17-432_08m1.pdf
The latest:
An opinion of the California Court of Appeal begins: “We attempt here to limn the borders of a rule recently promulgated by the United States Supreme Court in China Agritech, Inc. v. Resh (2018) 548 U.S. ___ [138 S.Ct. 1800] (China Agritech). We conclude the proper application of the rule of that case dictates that multiple tolling periods cannot be ‘stacked’ here to extend a statute of limitations.” The trial court denied defendant’s JNOV motion, reasoning that American Pipe tolling is automatic, and that China Agritech, which addressed tolling for subsequent class actions, did nothing to change automatic tolling for subsequent individual actions. Reversing, the appellate court stated: “One-way tolling was an ‘abuse’ of the system because it gave putative class members an incentive to wait and see what the trial court would do (or at least signal what it might do) with the ostensible class action before it. If the merits looked bad, class members could bail on the class action and pursue their own actions elsewhere.” (Montoya v. Ford Motor Co. (Cal. App. 4th Dist., Div. 3, Mar. 12, 2020) 2020 WL 1181503.)
Providing Financial Support to Adult Son Not Enough to Hold Father Liable for Wrongful Death.
A father financially supported his adult son. The son’s girlfriend died from an overdose of methamphetamine purchased by the son. Plaintiff is the decedent’s minor son. He sued the father of the adult son for the wrongful death of his mother. The trial court concluded no special relationship existed between the father and his adult son and sustained the father’s demurrer without leave to amend. Affirming, the Court of Appeal held that the father could not be held liable for the death of his adult son’s girlfriend based on his provision of financial support to his adult son. (K.G. v. S.B. (Cal. App. 4th Dist., Div. 1, Mar. 16, 2020) 2020 WL 1240893.)
No Copyright Protection.
Plaintiff is an expert on children’s emotional intelligence and development. She designed and promoted initiatives that help children cope with strong emotions like loss and trauma. The Ninth Circuit was called upon to consider whether certain anthropomorphized characters representing human emotions qualify for copyright protection. The appeals court held that they do not qualify for copyright protection, stating: “But [plaintiff] cannot succeed on her copyright claim for The Moodsters characters, which are ‘lightly sketched’ and neither sufficiently delineated nor representative of the story being told.” (Daniels v. Walt Disney Co. (9th Cir., Mar. 16, 2020) 952 F.3d 1149.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/03/16/18-55635.pdf
Previously we reported:
On-call Shifts.
Plaintiff is a former employee of a clothing store that has a policy of assigning employees to on-call shifts. Under that policy, the employee is required to call in two hours before the shift begins; at that time, the employee is told whether or not to come in to work. If told to come in, the employee is paid for the shift; if not called into work, the employee receives no compensation. Wage Order No. 7-2001, codified in the California Code of Regulations (tit. 8, § 11070), requires employers to pay employees “reporting time pay” for each workday “an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work.” Plaintiff filed suit, alleging violation of the wage order, and the trial court sustained the employer’s demurrer without leave to amend. Reversing, the Court of Appeal stated: “As we explain, on-call shifts burden employees, who cannot take other jobs, go to school, or make social plans during on-call shifts—but who nonetheless receive no compensation from Tilly’s unless they ultimately are called in to work. This is precisely the kind of abuse that reporting time pay was designed to discourage.” (Ward v. Tilly’s, Inc. (Cal. App. 2nd Dist., Div. 3, Feb. 4, 2019) 31 Cal. App. 5th 1167.)
The latest:
Plaintiffs filed a class action in federal court alleging their employer scheduled employees for work according to two scheduling policies. First, defendant scheduled employees for “Show-Up” shifts, requiring employees to report for the scheduled work shift by physically showing up at one of defendant’s stores. Second, defendant scheduled employees for “Call-In” shifts; if the employee was scheduled for a Show-Up shift, the employee had to wait until the end of the Show-Up shift to ask the manager if she/he would be required to work the scheduled Call-In shift. If the employee was not scheduled to work a Show-Up shift immediately before a Call-In shift, then the employee was required to make a phone call to the manager between thirty minutes and one hour before the scheduled Call-In shift. The employee would then wait for the manager to determine whether the employee would be permitted to work during the scheduled shift. Phone calls for Call-In shifts generally lasted five to fifteen minutes. Whether the employee had a shift before the Call-In shift or not, the employee was required to be available to work the Call-In shift. The employee could be subject to discipline for not working Call-In shifts and could be disciplined for not working Show-Up shifts. The district court denied defendant’s motion for judgment on the pleadings. While the appeal was pending in the Ninth Circuit, Ward v. Tilley’s (2019) 31 Cal.App.5th 1167 was filed by a California Court of Appeal. Accordingly, the Ninth Circuit affirmed the district court’s denial of defendant’s motion to dismiss, stating: “In sum, following Ward, we conclude that, under subsection (5)(A) of Wage Order 7, a requirement that employees call their manager thirty minutes to one hour before a scheduled shift constitutes “report[ing] for work.”” Herrera v. Zumiez, Inc. (9th Cir., Mar. 19, 2020) 2020 WL 1301057.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/03/19/18-15135.pdf
Background Check by Employer.
The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.; FCRA) requires employers who obtain a consumer report on a job applicant to first provide the applicant with a “clear and conspicuous disclosure” that the employer may obtain such a report. That disclosure must be provided “in a document that consists solely of the disclosure.” Defendant hired plaintiff pending the results of a background check. Several weeks later, defendant obtained a negative consumer report and terminated plaintiff’s employment. Plaintiff brought an FCRA action, which a federal trial court dismissed. Reversing, the Ninth Circuit stated: “We hold that beyond a plain statement disclosing ‘that a consumer report may be obtained for employment purposes,’ some concise explanation of what that phrase means may be included. . . . We also hold that the right provided by the FCRA to dispute inaccurate information in a consumer report does not require employers to provide job applicants or employees with an opportunity to discuss their consumer reports directly with the employer. [] Instead, the FCRA requires that an employer provide, in a pre-adverse action notice to the consumer, a description of the consumer’s right to dispute with a consumer reporting agency the completeness or accuracy of any item of information contained in the consumer’s file at the consumer reporting agency.” (Walker v. Fred Meyer, Inc. (9th Cir., Mar. 20, 2020) 2020 WL 1316691.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/03/20/18-35592.pdf
Timely/Untimely Prosecution of Actions.
A trial court dismissed two coordinated actions, one because the action was not brought to trial within three years and the other because the action was not brought to trial within five years.
The Five-year Dismissal
The Court of Appeal reversed a dismissal under Code of Civil Procedure § 583.340, stating: “[T]he trial court erred in failing to exclude 135 days immediately following the assignment of a coordination motion judge to rule on a petition to coordinate the [two actions]. We reach this conclusion because it was ‘impracticable’ to bring either action to trial (§ 583.340, subd. (c)) during this period since California Rules of Court, rule 3.515(i) provides that ‘no trial may be commenced’ during such a period. We further conclude that this error requires reversal of the dismissal of the [action] because, after excluding these 135 days, the five-year period had not expired as of the time the trial court dismissed that action, and the matter was set for trial within the five-year period.”
The Three-year Dismissal
The trial court concluded that plaintiffs failed to bring the action to trial within three years after issuance of the remittitur in a prior appeal as required by Code of Civil Procedure § 583.310. Affirming, the Court of Appeal stated: “We reach this conclusion because, even after excluding 135 days related to the coordination proceedings, the three-year period that the [plaintiffs] had to bring that action to trial had expired as of the time the trial court dismissed that case.” (Fidelity National Home Warranty Company Cases (Cal. App. 4th Dist., Div. 1, Mar. 20, 2020) 2020 WL 1316736.)
Federal Copyright Law Unconstitutional.
In 1717, the pirate Blackbeard’s ship sank off the North Carolina coast. In 1996, Intersal, Inc., a marine salvage company, discovered the shipwreck. Under federal and state law, the wreck belongs to North Carolina. The state contracted with Intersal to take charge of the recovery activities. Intersal retained petitioner, a local videographer, to document the operation. For over a decade, petitioner created videos and photos of divers’ salvage efforts. He registered copyrights on all those works. The state published some of petitioner’s videos and photos. Petitioner filed suit in federal court, contending the state infringed his copyrights. The state moved to dismiss the suit on the ground of sovereign immunity, invoking the general rule that federal courts cannot hear suits brought by individuals against nonconsenting states. Petitioner contended an exception to the rule applied because Congress had abrogated the states’ sovereign immunity in some suits via the Copyright Remedy Clarification Act of 1990 (17 U.S.C. §511(a); CRCA). The federal district court agreed and denied the state’s motion to dismiss. The Fourth Circuit Court of Appeals reversed, and the U.S. Supreme Court granted certiorari. Affirming the judgment of the Fourth Circuit, the Supreme Court held that Congress lacked authority to abrogate the States’ immunity from copyright infringement suits in the CRCA. (Allen v. Cooper (U.S., Mar. 23, 2020) 2020 WL 1325815.)
But-for Causation Required in Racial Discrimination Action.
An African-American media company sought to have a large cable company carry its channels. The cable company, claiming legitimate business reasons, refused. The media company sued the cable company for discrimination under 42 U.S.C. §1981(a), which guarantees, among other things, “[a]ll persons . . . the same right . . . to make and enforce contracts . . . as is enjoyed by white citizens.” The federal district court dismissed the action, and the Ninth Circuit reversed, holding that a plaintiff in a § 1981 action need only plead facts plausibly showing that race played some role in a defendant’s decision-making process. The U.S. Supreme Court reversed the judgment of the appeals court, stating: “It is ‘textbook tort law’ that a plaintiff seeking redress for a defendant’s legal wrong typically must prove but-for causation,” and, “To prevail, a plaintiff must initially plead and ultimately prove that, but for race, it would not have suffered the loss of a legally protected right.” (Comcast Corp. v. National Assn. of African-American-Owned Media (U.S., Mar. 23, 2020) 2020 WL 1325816.)
https://www.supremecourt.gov/opinions/19pdf/18-1171_4425.pdf
No Error in Class Certification of Action Against Life Insurance Company.
In purchasing a life insurance policy from defendant, a prospective policyholder receives at least one type of “illustration” — an informational document projecting a policy’s returns, over the life of the policy, on premiums in addition to the payment of a lump-sum benefit at death. Plaintiffs contend defendant’s illustrations of potential earnings violated California’s unfair competition law (Bus. & Prof. Code, § 17200 et seq; UCL) because they do not explain the meaning of policy column headings “Guaranteed Values at 2.00%” and “Guaranteed Values at 2.50%.” The federal district court certified a plaintiffs’ class. Both parties appealed. Defendant argued that class certification was improper because individual issues predominated. Plaintiffs argued that the trial court erred in limiting the size of the class. The Ninth Circuit affirmed, finding the trial court considered the key issue of whether class members were exposed to defendant’s illustrations and could have relied on them. Plaintiffs’ attempted appeals from the class certification and reconsideration orders were untimely and procedurally improper. (Walker v. Life Insurance Company of the Southwest (9th Cir., Mar. 23, 2020) 953 F.3d 624.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/03/23/19-55241.pdf
Qui Tam Action Requirements.
Plaintiff, the former Director of Care Management at defendant hospital, brought a qui tam action under the False Claims Act (31 U.S.C. §§ 3729–3733; FCA), alleging defendants submitted, or caused to be submitted, Medicare claims falsely certifying that patients’ inpatient hospitalizations were medically necessary. The federal district court dismissed the action for failure to state a claim, holding that “ ‘to prevail on an FCA claim, a plaintiff must show that a defendant knowingly made an objectively false representation,’ and so a statement that implicates a doctor’s clinical judgment can never state a claim under the FCA because ‘subjective medical opinions . . . cannot be proven to be objectively false.’ ” Reversing, the Ninth Circuit stated: “We hold that a plaintiff need not allege falsity beyond the requirements adopted by Congress in the FCA, which primarily punishes those who submit, conspire to submit, or aid in the submission of false or fraudulent claims. Congress imposed no requirement of proving ‘objective falsity,’ and we have no authority to rewrite the statute to add such a requirement. A doctor’s clinical opinion must be judged under the same standard as any other representation. A doctor, like anyone else, can express an opinion that he knows to be false, or that he makes in reckless disregard of its truth or falsity.” (Winter ex. rel. United States v. Gardens Regional Hospital & Medical Center, Inc. (9th Cir., Mar. 23, 2020) 2020 WL 1329661.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/03/23/18-55020.pdf
Uber Exempt From Below-cost Sales Prohibition.
Taxi companies filed suit against Uber, alleging violation of the Unfair Practices Act’s prohibition of below-cost sales (Bus. & Prof. Code, § 17043) and the unfair competition law (Bus. & Prof. Code, § 17200 et seq.; UCL). The prohibition on below-cost sales does not apply to any public utility service for which rates are established by the California Public Utilities Commission (CPUC). Transportation provided by Uber is a public utility service, but the CPUC has not yet established rates for the service. The trial court ruled that the exemption applied because the CPUC had jurisdiction to set rates, even though it had not yet set rates, sustained Uber’s demurrer with leave to amend, and entered a judgment of dismissal when Uber failed to amend. The Court of Appeal affirmed, stating: “[W]e reach the same conclusion as to the applicability of section 17024(1) as have three California federal district courts, two within the last year, in cases alleging identical UPA claims against Uber.” (Uber Technologies Pricing Cases (Cal. App. 1st Dist., Div. 1, Mar. 23, 2020) 2020 WL 1329688.)
Be Careful When Referring a Case if You Expect a Referral Fee.
One attorney sued another attorney for breach of a referral fee agreement. The jury awarded plaintiff damages for breach of contract and quantum meruit, and the trial court awarded prejudgment interest. Defendant appealed, arguing that plaintiff could not recover for breach of contract because the client did not provide written consent to the arrangement, the quantum meruit claim was barred by the statute of limitations, and plaintiff was not entitled to prejudgment interest. Former rule 2-200 of the State Bar Rules of Professional Conduct, which was then in effect, required an attorney to obtain informed, written consent from the client before sharing a fee, and case precedent renders unenforceable as against public policy any attorney fee sharing agreement if the client did not give informed, written consent. Defendant wrote a letter to the client explaining that the referral fee would not come from the client’s percentage of any settlement, and the client signed an acknowledgement indicating that he received the letter and understood its contents. The client subsequently testified that his acknowledgement expressed his agreement that the referral fee could be paid to plaintiff. Reversing, the Court of Appeal stated: “We conclude the client’s written acknowledgement that he received and understood the letter did not constitute written consent to the referral fee agreement under former rule 2-200, and the client’s subsequent testimony did not remedy the deficiency. The referral fee agreement is unenforceable as against public policy and [plaintiff] cannot recover for breach of contract. In addition, we agree with [defendant] that [plaintiff’s] quantum meruit claim is barred by the two-year limitations period.” (Reeve v. Meleyco (Cal. App. 3rd Dist., Mar. 24, 2020) 2020 WL 1429362.)
“If you’re going to do something, do it right,” order from every kid’s parents
Plaintiff is a British citizen who worked for an American company in California under a temporary work visa. The company agreed to sponsor plaintiff for a green card, which would lead to permanent residency. The company assigned the green card process to someone who was unfamiliar with it, and the necessary papers were not timely filed, resulting in plaintiff having to return to England. A jury found the company was negligent and awarded plaintiff and his wife almost $3,000,000 in damages. Affirming, the Court of Appeal held that substantial evidence supported the verdict and workers’ compensation exclusivity rule did not bar the emotional distress damages. (Reynaud v. Technicolor Creative Services USA, Inc. (Cal. App. 2nd Dist., Div. 2, Mar. 24, 2020) 2020 WL 1429256.)
Physician Assistants and MIRCA Limit
A jury awarded plaintiff $4.25 million dollars against doctors and physician assistants for the wrongful death of her four-year-old daughter from malignant melanoma. The court reduced the damages to $250,000 pursuant to Civil Code § 3333.2. On appeal, plaintiff relied on section 3333.2, subdivision (c)(2), which provides that noneconomic damages against a health care provider for negligent professional services are limited to $250,000 “provided that such services are within the scope of services for which the provider is licensed and which are not within any restriction imposed by the licensing agency or licensed hospital.” Plaintiff argued that the $250,000 limit was inapplicable because the physician assistants acted without the supervision of a physician in violation of the governing statutes and regulations. Affirming the reduction of damages, the Court of Appeal stated: “The scope of a physician assistant’s practice is defined, not by the physician assistant license itself, but by the scope of the practice of the physician who supervises them. In this case, the physician assistants had a nominal, but legally enforceable, agency relationship with supervising physicians, but received little to no actual supervision from those physicians. In the absence of any clear legislative statement on the issue, we conclude that a physician assistant acts within the scope of his or her license for purposes of section 3333.2, subdivision (c)(2) if he or she has a legally enforceable agency agreement with a supervising physician, regardless of the quality of actual supervision. A contrary rule would make the damages reduction in section 3333.2 dependent on the adequacy of supervision. Such a rule would be uncertain and difficult to define, and would contravene the purpose of section 3333.2 to encourage predictability of damages to reduce insurance premiums.” (Lopez v. Ledesma (Cal. App. 2nd Dist., Div. 2, Mar. 24, 2020) 2020 WL 1429672.)
Copyright Infringement; Why Not Sue Frosty the Snowman or the Easter Bunny While You’re at it?
A high school music program is supported by a boosters club to defray expenses. The program has five shows a year. A licensing company brought a copyright infringement case against the high school’s music director, the boosters club and some parent who supporters, alleging infringement of four songs in violation of 17 U.S.C. § 501 because the high school did not obtain licenses for the songs. The federal district court granted defendants’ motion for summary judgment and dismissed the action. Affirming, the Ninth Circuit stated: “We conclude that [plaintiff licensing company] lacks standing to sue as to three of the four musical works at issue, and that the defense of fair use renders the use of the fourth noninfringing. We therefore affirm the district court’s grant of summary judgment in favor of Defendants, but reverse its denial of attorneys’ fees to [the high school music director] and the Boosters Club.” (Tresona Multimedia, LLC v. Burbank High School Vocal Music Association (9th Cir., Mar. 24, 2020) 953 F.3d 638.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/03/24/17-56006.pdf
“I had the most magical childhood, running free and going anywhere I wanted to in my head,” Taylor Swift.
The child was born in 2011. He was removed from the home in 2017, where he lived with his mother, grandparents and uncle, after the uncle sexually abused him. The uncle was convicted and given a 20-year sentence in prison. The child’s mother left the state to parts unknown. The child was initially placed in foster care and then in a group home. All the while, the grandparents drove hours to visit with the child and sought to have the boy live with them. The problem with returning the child to his grandparents is that in 1991 the grandfather pleaded no contest to a misdemeanor, pushing his wife and son in a pique of anger. He was ordered to complete an anger management class, which he did. It seems that under Welfare and Institutions Code § 16519.5, the Legislature has made it an absolute bar for the juvenile court to permit placement when such a crime has ever been committed. The grandparents appealed after the juvenile court denied their request to return the child to their home, arguing the bar to placement with them was unconstitutional in these circumstances. Reversing, the Court of Appeal stated: “We agree with grandparents that the absolute statutory bar to placement of the child in their custody would be unconstitutional as to them if they can establish that they have a parental relationship with the child, not just a grandparental relationship. We remand to the trial court to make the predicate factual findings and consider the issue anew from that perspective.” (In re C.P. (Cal. App. 4th Dist., Div. 2, Mar. 26, 2020) 2020 WL 1481757.)
Safe-berth Clause.
In 2004, a 748-foot oil tanker on the Delaware River struck an abandoned nine-ton anchor. As required by federal statute, the shipping company covered the cleanup costs. The shipping company then sued to recover those costs from the refining company and others. According to plaintiff, defendants breached a contractual “safe-berth clause” obligating defendants to select a “safe” berth that would allow the ship to come and go “always safely afloat.” The question before the U.S. Supreme Court was whether the safe-berth clause is a warranty of safety, imposing liability for an unsafe berth. Finding in favor of plaintiff, the high court stated: “We conclude that the language of the safe-berth clause here unambiguously establishes a warranty of safety. . .” (CITGO Asphalt Refining Co. v. Frescati Shipping Co., Ltd.. (U.S., Mar. 30, 2020) 2020 WL 1496603.)
Denial of Petition to Compel Arbitration Affirmed.
The daughter of an elderly man suffering from dementia signed a 70-page admission document at a residential care facility. The document contained an arbitration clause. At the time she signed it, she was sobbing and exhausted because her father had been removed from two other care facilities due to aggressive behavior. She was relieved to find a place that would take her father. The elderly man died in the facility a few months later. His daughter and other family members brought a wrongful death/elder abuse action against the facility. The facility moved to compel arbitration, and the trial court denied the motion. Affirming, the Court of Appeal stated: “Given our conclusion that the Agreement suffered from multiple defects rendering it procedurally and substantively unconscionable, we further conclude that the trial court did not abuse its discretion in finding that the Agreement was ‘permeated with unconscionable provisions,’ and therefore refusing to simply sever the offending clauses.” (Dougherty v. Roseville Heritage Partners, (Cal. App. 3rd Dist., Mar. 30, 2020) 2020 WL 1501701.)
Trademark Infringement.
VIP Products sells the “Bad Spaniels Silly Squeaker” dog toy, which resembles a bottle of Jack Daniel’s Old No. 7 Black Label Tennessee Whiskey, but has light-hearted, dog-related alterations. For example, the name “Jack Daniel’s” is replaced with “Bad Spaniels,” “Old No. 7” with “Old No. 2,” and alcohol content descriptions with “43% POO BY VOL.” and “100% SMELLY.” After Jack Daniel’s Properties, Inc. (JDPI) demanded that VIP cease selling the toy, VIP filed this action, seeking a declaration that the toy did not infringe JDPI’s trademark rights or, in the alternative, that Jack Daniel’s trade dress and bottle design were not entitled to trademark protection. JDPI counterclaimed, asserting trademark infringement and dilution. The federal district court ruled in favor of JDPI and issued a permanent injunction enjoining VIP from manufacturing and selling the Bad Spaniels toy. The Ninth Circuit affirmed in part and reversed in part, stating: “We affirm the district court’s summary judgment in favor of JDPI on the issues of aesthetic functionality and distinctiveness, affirm the judgment as to the validity of JDPI’s registered mark, reverse the judgment on the issue of dilution, vacate the judgment after trial on the issue of infringement, and remand for further proceedings.” (VIP Products v. Jack Daniel’s Properties (9th Cir., Mar. 31, 2020) 2020 WL 618927.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/03/31/18-16012.pdf