Litigation Update: August 2020

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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, Division Three
  • Managing Editor, Reuben Ginsburg
  • Editors, Dean Bochner, Julia Shear Kushner, Jessica Riggin, and David Williams
Interim Adverse Judgment Rule.

If an action succeeds after a hearing on the merits—including a hearing on a motion for summary judgment—that success ordinarily forecloses a later malicious prosecution suit. This principle is known as the “interim adverse judgment rule.” A winery sued its former owners and prevailed on summary adjudication, but dismissed the case before trial. The former owners filed a malicious prosecution action. The trial court denied the winery’s special motion to strike the malicious prosecution claim under the anti-SLAPP statute (Code Civ. Proc., § 425.16). Affirming, the Court of Appeal found that, had the winery in the underlying action not withheld a critical piece of evidence in willful violation of multiple court orders, the owners would have prevailed on summary judgment in the initial action. Thus, the fraud or perjury exception to the interim adverse judgment rule applied, despite the fact that plaintiffs in the underlying action prevailed on their summary adjudication motion. (Roche v. Hyde (Cal. App. 1st Dist., Div. 4, June 30, 2020) 51 Cal.App.5th 757.)

Confusing Notice from Agency About When Its Decision Was Final.

Plaintiff filed a petition for writ of mandate under Code of Civil Procedure § 1094.5, seeking to overturn a decision of the Los Angeles County Department of Children and Family Services. The trial court granted the county’s summary judgment motion, finding plaintiff’s petition was barred by the statute of limitations because it was not filed within 90 days after the decision. Reversing, the Court of Appeal found that the plaintiff had been given inconsistent information about when the disputed decision was final. The plaintiff received a notice indicating that the decision “is final,” and that § 1094.6 required plaintiff to file any petition no later than “the 90th day on which the petition is deemed final.” But the notice also said the decision would become final “90 days from the date it is placed in the mail.” Because these two statements were in conflict, the notice did not clearly indicate when the decision became final, as required by statute. The writ petition would have been timely if finality were based on when the notice was “placed in the mail,” so the statute of limitations did not bar the action. (Alford v. County of Los Angeles (Cal. App. 2nd Dist., Div. 8, July 1, 2020) 51 Cal.App.5th 742.)

Trial Court Erred in Refusing to Confirm Arbitration Award.

The parties trifurcated arbitration issues. The arbitrator issued a series of three rulings, and modified the second ruling prior to issuing the third ruling. The trial court then refused to confirm the arbitration award, finding the arbitrator exceeded her powers in issuing a modification because an arbitrator’s power to modify rulings is severely curtailed if that ruling constitutes an “award” within the meaning of Code of Civil Procedure § 1283.4. Reversing, the Court of Appeal explained: “because the arbitrator’s second of three rulings did not determine all issues necessary to the controversy and left unaddressed issues that could have been addressed at that time, the arbitrator acted within her authority in modifying that second ruling prior to issuing her third and final ruling that constituted an ‘award.’” (Lonky v. Patel (Cal. App. 2nd Dist., Div. 2, July 2, 2020) 51 Cal.App.5th 831.)

Punishing Electors.

In the 2016 presidential election, three members of the Electoral College from the State of Washington, who had pledged to vote for Hillary Clinton, voted for Colin Powell instead. The state fined each of them $1,000. The issue before the U.S. Supreme Court was whether a state may penalize an elector for breaking his or her pledge. The court held that a state may so penalize, stating: “That direction accords with the Constitution—as well as with the trust of a Nation that here, We the People rule.” (Chiafalo v. Washington (U.S., July 6, 2020) 140 S.Ct. 2316.)

Robocalls on Cell Phones.

A group of political consultants alleged that their First Amendment rights were violated by the Telephone Consumer Protection Act (47 U.S.C. § 227; TCPA), which prevents robocalls to cell phones. A 2015 amendment to the TCPA permits robocalls to collect debts owed or guaranteed by the federal government, including robocalls made to collect many student loan and mortgage debt. The political consultants argued that Congress impermissibly favored debt collection speech over political and other speech. The U.S. Supreme Court held that the 2015 amendment to the TCPA violated the First Amendment, so the amendment must be invalidated and severed from the remainder of the statue. (Barr v. Am. Ass’n of Political Consultants (U.S., July 6, 2020) 140 S.Ct. 2335.)

Requesting Asylum in a Third Country.

The Department of Justice and the Department of Homeland Security published a joint interim final rule without notice and comment. With limited exceptions, the rule categorically denied asylum to aliens arriving at the border with Mexico unless they had first applied for, and been denied, asylum in Mexico or another country through which they had traveled. Nonprofit organizations sued, seeking an injunction against enforcement of the rule and contending that it was invalid on three grounds: first, the rule was not “consistent with” the Immigration and Nationality Act (8 U.S.C. § 1158); second, the rule was arbitrary and capricious; third, the rule was adopted without notice and comment. The district court found that plaintiffs had a likelihood of success on all three grounds and entered a preliminary injunction. Affirming in part, the Ninth Circuit Court of Appeals held: “plaintiffs have shown a likelihood of success on the first and second grounds. We do not reach the third ground.” (E. Bay Sanctuary Covenant v. Barr (9th Cir., July 6, 2020) 964 F.3d 832.)

Some Employers Do Not Have to Provide Contraceptive Coverage in Group Health Plans.

The Patient Protection and Affordable Care Act requires certain employers to provide preventive health coverage to their employees through their group health plans. The government promulgated an interim final rule to include contraceptive coverage within this requirement. This rule is known as the contraceptive mandate. After protracted litigation, the government exempted certain employers who had religious and conscientious objections to the contraceptive mandate. The Third Circuit Court of Appeals concluded the government lacked the authority to provide these exemptions and granted a nationwide injunction. Reversing, the U.S. Supreme Court held: “the Departments had the authority to provide exemptions from the regulatory contraceptive requirements for employers with religious and conscientious objections,” and the exemptions were “free from procedural defects.” (Little Sisters of the Poor Saints Peter & Paul Home v. Pennsylvania (U.S., July 8, 2020) 140 S.Ct. 2367.)

Religious Schools Can Fire Teachers Despite Laws That Would Prevent Other Schools From Doing So.

In Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC (2012) 565 U.S. 171, the plaintiff had received special training to be a “called teacher,” meaning she was more than a lay teacher because she had undergone theological study. In addition to teaching religion classes, she led her students in prayer and devotional exercises. Plaintiff developed narcolepsy and took a leave of absence for treatment of her condition. After several months, she notified the Lutheran school she was ready to come back to work. She was not permitted to return because the school had already hired someone else. Plaintiff reported the matter to the Equal Employment Opportunity Commission, which sued the school for firing the teacher because she had a temporary disability. The Supreme Court held that based on the “ministerial exception” to laws governing the employment relationship between a religious institution and key employees, the First Amendment barred a court from entertaining an employment discrimination claim brought by an elementary school teacher against the religious school where she taught. In the current cases, the employment discrimination claims were brought by two elementary school teachers at Catholic schools whose teaching responsibilities include teaching religion. But neither of them had the special theological training or did the daily prayer and devotional exercises as did the teacher in Hosanna-Tabor. One of the teachers alleges she was fired after she told the school she had breast cancer. She sued under the Americans with Disabilities Act (42 U.S.C. § 12101). The other teacher was let go when she was in her 60’s, after teaching at the school for 16 years. She sued under the Age Discrimination in Employment Act (29 U.S.C. § 621 et seq.). Although these teachers were not given the title of “minister” and have less religious training than the plaintiff in Hosanna-Tabor, the Supreme Court held that their cases fell within the same “ministerial exception” rule as in Hosanna-Tabor, explaining: “The religious education and formation of students is the very reason for the existence of most private religious schools, and therefore the selection and supervision of the teachers upon whom the schools rely to do this work lie at the core of their mission. Judicial review of the way in which religious schools discharge those responsibilities would undermine the independence of religious institutions in a way that the First Amendment does not tolerate.” (Our Lady of Guadalupe Sch. v. Morrissey-Berru (U.S., July 8, 2020) 140 S.Ct. 2049.)

Summary Judgment Reversed in Medical Malpractice Case.

Plaintiff filed a medical malpractice action against defendant doctor for injuries she suffered as a result of colonoscopies performed on her in 2015. In 2018, with trial approaching, the doctor filed a summary judgment motion, supported by a declaration from an expert who reviewed the medical records and opined that the doctor’s actions were within the standard of care. Plaintiff opposed the motion, but she did not submit a competing expert opinion. While the summary judgment motion was pending, plaintiff sought leave to amend her complaint to state a cause of action for lack of informed consent. The trial court denied leave to amend and granted summary judgment. Plaintiff appealed the grant of summary judgment and the order denying her motion for leave to amend, arguing that the expert declaration presented in support of the motion for summary judgment was conclusory and insufficient to meet the initial burden for summary judgment. She also argued that the trial court abused its discretion in denying her request for leave to amend. The Court of Appeal noted defendant’s expert declaration did not elaborate or explain why the doctor’s treatment was within the standard of care. With regard to the denial of the request for leave to amend, the appeals court said the plaintiff did not offer any satisfactory explanation for the delay and that the new cause of action would prejudice the doctor at that late date. Reversing the grant of summary judgment, the appellate panel stated: “We find no abuse of discretion in the order denying leave to amend, but agree the trial court improperly granted summary judgment based on an expert opinion unsupported by factual detail or reasoned explanation.” (McAlpine v. Norman (Cal. App. 3d Dist., July 8, 2020) 51 Cal.App.5th 933.)

Neither Party Initialed the Jury Waiver in Arbitration Agreement…Left Space for Initials Blank.

Both the employer and the employee signed an arbitration agreement, but neither initialed a jury waiver included in the agreement. Later the employee sued the employer, and the trial court denied the employer’s petition to order the matter into arbitration. Reversing, the Court of Appeal stated: “In this situation, that Martinez did not also initial the subject paragraph does not provide a basis for concluding the parties did not mutually assent to the arbitration agreement.” (Martinez v. BaronHR, Inc. (Cal. App. 2nd Dist., Div. 4, July 8, 2020) 51 Cal.App.5th 962.)

“In our judicial system, ‘the public has a right to every man’s evidence.’ Since the earliest days of the Republic, ‘every man’ has included the President of the United States,” Chief Justice Roberts.

In the summer of 2018, the New York County District Attorney’s Office opened an investigation into what it opaquely describes as “business transactions involving multiple individuals whose conduct may have violated state law.” As part of that investigation, the D.A. issued a subpoena for President Trump’s personal accounting firm to produce evidence, in the form of financial records. In his personal capacity, President Trump sued both the D.A. and his accountant to enjoin enforcement of the subpoena, arguing that under article II and the supremacy clause of the Constitution, a sitting President enjoys absolute immunity from state criminal process. The district court abstained from exercising jurisdiction and dismissed the case. The Second Circuit Court of Appeals reversed, finding the President did not enjoy absolute immunity. The U.S. Supreme Court granted certiorari. The high court affirmed the appeals court, stating, “. . . the President is neither absolutely immune from state criminal subpoenas seeking his private papers nor entitled to a heightened standard of need.” The case was returned to the district court for further proceedings. (Trump v. Vance (U.S., July 9, 2020) 140 S.Ct. 2412.)

Congress Does Not Get President’s Financial Records . . . Yet.

Three committees of the House of Representatives issued four subpoenas seeking information about the finances of President Trump and his children and affiliated businesses. The question before the U.S. Supreme Court was whether the subpoenas exceed the authority of the House under the Constitution. The Supreme Court noted: “Congressional subpoenas for information from the President . . . implicate special concerns regarding the separation of powers.” Ruling against Congress, the high court stated: “While we certainly recognize Congress’s important interests in obtaining information through appropriate inquiries, those interests are not sufficiently powerful to justify access to the President’s personal papers when other sources could provide Congress the information it needs.” The Supreme Court stated that four factors must be considered in order for Congress to demonstrate its need for the documents requested in the subpoenas. The matter was remanded for further proceedings, and presumably for Congress to try to demonstrate its need. (Trump v. Mazars USA, LLP (U.S., July 9, 2020) 140 S.Ct. 2019.)

Huge Win for Native Americans.

A Native American was convicted of sex crimes in Oklahoma state court. The crimes took place on land that is part of the Creek Reservation. Defendant is a member of that tribe. A federal statute, the Major Crimes Act (18 U.S.C. § 1153), provides that “any Indian who commits” certain offenses is subject to the exclusive jurisdiction of the United States if that crime was committed “within the Indian country.” Treaties from 1832, 1833 and 1866 established the border of lands reserved for Native Americans. Since that time, much of that land has been parceled and sold to individual tribe members, and later to people who are not Native Americans. The upshot is that the defendant must be tried in federal court. The real impact of the case will likely be on Oklahoma in that, if half of its land is on a reservation, its tax base has just been limited. Also, the status of prior criminal and civil determinations might be in jeopardy. In response to these fears, the majority opinion states: “Dire warnings are just that, and not a license for us to disregard the law.” (McGirt v. Oklahoma (U.S., July 9, 2020) 140 S.Ct. 2452.)

Blow-up Provision in Arbitration Agreement.

An employer moved to compel arbitration of an employment dispute pursuant to an arbitration agreement that purported to waive class actions and any “other representative action.” The agreement also contained a so-called “ ‘blow up’ provision,” which states if the representative waiver is found to be invalid, “the Agreement becomes null and void as to the employee(s) who are parties to that particular dispute.” The trial court granted the employer’s motion to compel arbitration, explaining: (1) it did not find the representative waiver invalid because defendants did not ask the court to rule on the enforceability of that waiver, so the blow-up provision was never triggered, and (2) the blow-up provision may apply only to the attempted waiver of the claim under the Private Attorneys General Act (PAGA), not to the arbitrability of plaintiff’s claims under the Labor Code. Granting the employee’s petition for a writ of mandate, the Court of Appeal stated: “There is no dispute that this representative waiver is broad enough to cover a PAGA claim, and is thus invalid. Usually, where a single contract provision is invalid, but the balance of the contract is lawful, the invalid provision is severed, and the balance of the contract is enforced. But here, the arbitration agreement goes on to provide that the provision containing the class action and representative waiver is not modifiable nor severable.” (Kec v. Superior Court (Cal. App. 4th Dist., Div. 3, July 9, 2020) 51 Cal.App.5th 972.)

Strings Attached to Grant Money.

 The Edward Byrne Memorial Justice Assistance Grants program is the primary provider of federal grant dollars to support state and local criminal justice programs. In 2017, the U.S. Department of Justice (DOJ) announced three new conditions that state and local governments must satisfy in order to receive Byrne grants. Two of those conditions require recipient jurisdictions to provide the U.S. Department of Homeland Security (DHS) with access to detention and correctional facilities to interview people in custody about their right to be in the United States. The third condition prohibits recipients from preventing the flow of information regarding an individual’s citizenship or immigration status to DHS. Plaintiffs are the City and County of San Francisco, so called “sanctuary” jurisdictions that limit their employees’ authority to speak with federal immigration enforcement employees. The district court granted summary judgment in favor of plaintiffs and enjoined DOJ from implementing these new conditions. The Ninth Circuit affirmed as to California only and vacated the nationwide injunction. (City and County of San Francisco v. Barr (9th Cir., July 13, 2020) 965 F.3d 753.)

Horizontal Exhaustion not Required.

 In asbestos litigation, the trial court granted summary judgment in favor of excess insurance carriers on the ground that plaintiff had failed to establish that the primary and, in some cases, underlying layers of excess insurance had been exhausted. The trial court explained that the policies required exhaustion of all underlying layers of insurance (horizontal exhaustion) rather than exhaustion of only those policies specified in each policy (vertical exhaustion). Based on Montrose Chemical Corp. of California v. Superior Court (2020) 9 Cal.5th 215, the Court of Appeal reversed, stating: “[T]he trial court erred in interpreting the policies at issue in this case to require horizontal exhaustion of all primary and underlying excess insurance coverage before accessing coverage under the excess policies at issue.” (SantaFe Braun, Inc. v. Insurance Company of North America (Cal. App. 1st Dist., Div. 4, July 13, 2020) 52 Cal.App.5th 19.)

Executions to Proceed.

Plaintiffs are four federal prisoners who were sentenced to death for murdering children decades ago and have exhausted all avenues for direct and collateral review. To carry out their sentences, the federal government planned to use a single drug—pentobarbital sodium—that “is widely conceded to be able to render a person fully insensate” and “does not carry the risks” of pain that some have associated with other lethal injection protocols. Hours before the first execution was set to take place, the district court enjoined all four executions on the ground that the use of pentobarbital likely constitutes cruel and unusual punishment prohibited by the Eighth Amendment. The U.S. Supreme Court vacated the preliminary injunction, noting that pentobarbital has been shown to be less painful and less risky than alternative lethal injection protocols, and has been used in over 100 executions without incident. The Supreme Court added: “The plaintiffs in this case have not made the showing required to justify last-minute intervention by a Federal Court.” (Barr v. Lee (U.S., July 14, 2020) 2020 WL 3964985.)

Required Showing for Removal.

Plaintiff filed a putative class action in state court alleging the defendant deceptively priced its motorcycles. Defendant removed the case to federal court under the Class Action Fairness Act (28 U.S.C. § 1332(d)(4)(A); CAFA), alleging the action satisfied CAFA’s requirement that the amount in controversy exceed $5 million. The district court remanded the case to state court on the ground that the potential recovery for punitive damages was far less than the roughly $2 million defendant had alleged. Reversing, the Ninth Circuit held “that the defendant must show that the punitive damages amount is reasonably possible. [Defendant] met that standard by identifying prior cases involving the same cause of action in which the juries awarded punitive damages based on the same or higher punitive/compensatory damages ratios than the one relied upon by [defendant]. We thus reverse the district court’s order remanding this case to state court because it effectively required [defendant] to provide evidence that the proffered punitive damages amount is probable or likely.” (Greene v. Harley-Davidson, Inc. (9th Cir., July 14, 2020) 965 F.3d 767.)

Alleged Discrimination Under the Affordable Care Act.

Two plaintiffs have hearing loss severe enough to qualify them as disabled. They require treatment other than cochlear implants, but their Kaiser health insurance plans exclude all hearing loss treatment except cochlear implants. Plaintiffs filed a putative class action alleging that Kaiser violated the Patient Protection and Affordable Care Act (42 U.S.C. § 18116) when designing plan benefits because Kaiser’s categorical exclusion of most hearing loss treatment discriminates against hearing disabled people. The district court ruled that Kaiser’s plans do not exclude benefits based on disability because the plans treat individuals with hearing loss alike, regardless of whether their hearing loss is disabling. Affirming in part and reversing in part, the Ninth Circuit held: “While Kaiser’s coverage of cochlear implants is inadequate to serve [the named plaintiffs’] health needs, it may adequately serve the needs of hearing disabled people as a group. Because the pleadings do not suggest otherwise, we affirm the district court’s dismissal of the second amended complaint. But because amendment may not be futile, we reverse the district court’s dismissal without leave to amend and remand so that [plaintiffs] have that opportunity.” (Schmitt v. Kaiser Foundation Health Plan of Washington (9th Cir., July 14, 2020) 2020 WL 3969281.)

Garnishment of Wages.

A creditor obtained a judgment against a debtor in a California state court. Later, the creditor obtained from the same court an earnings withholding order, which is the equivalent of a wage garnishment order, and served it on the federal government, which employed the debtor. Shortly before the order was served, the debtor moved to Indiana. He later moved to Texas, but remained employed by the federal government while living in each state. As to whether the creditor was required to domesticate the California judgment in Indiana and Texas to pursue collection, the Ninth Circuit held “that because the garnishment order was properly served on the federal government and [the debtor] remained a government employee, his federal wages were properly garnished under the California order.” (Farrell v. Boeing Employees Credit Union (9th Cir., July 16, 2020) 2020 WL 4013076.)

Required Vehicle Use Exception.

Defendant struck and killed a teenager while driving his own vehicle from an assisted living facility where he was volunteering dog therapy to a Kaiser hospital patient. Decedent’s survivors brought a wrongful death action. The trial court granted summary judgment for Kaiser. On appeal, plaintiffs contended there were triable issues of fact regarding application of the required vehicle use exception and/or the incidental benefit exception to the general rule that an employer is not liable for the acts of an employee while coming to or going from the place of employment. Noting there was no evidence that Kaiser required defendant driver to use his own vehicle, the Court of Appeal affirmed. (Savaikie v. Kaiser Foundation Hospitals (Cal. App. 2nd Dist., Div. 8, July 16, 2020) 52 Cal.App.5th 223.)

Arbitrator Did Not Have Authority to Issue Discovery Order.

An arbitrator ordered a discovery subpoena in an action involving an employment dispute. The former employee’s new employer, a nonparty to the arbitration, was the entity subpoenaed. The new employer initiated a special proceeding in superior court, requesting the court to review the arbitrator’s discovery order. The former employer filed a separate petition in superior court to enforce the arbitrator’s discovery order, which the court granted. The new employer appealed the order denying its petition and the order granting the old employer’s petition. Noting the parties to the arbitration agreement [the former employer and the former employee] had neither incorporated the discovery provisions of Code of Civil Procedure § 1283.05 into their arbitration agreement nor made them applicable by § 1283.1, the Court of Appeal held the arbitrator did not have the authority to issue the discovery subpoena. (Aixtron, Inc. v. Veeco Instruments Inc. (Cal. App. 6th Dist., July 16, 2020) 52 Cal.App.5th 360.)

Renewing a Judgment Was Not the Unauthorized Practice of Law.

In 1995, 17 plaintiffs sued defendants on several promissory notes, and the parties entered into a stipulation whereby a single judgment was entered in favor of the plaintiffs in various amounts. In 2005, an attorney representing the plaintiffs renewed the judgment using the standard Judicial Council form. The attorney subsequently died, and when the judgment was again due to be renewed in 2015, one of the plaintiffs did so, again using the standard Judicial Council form. Defendants successfully moved to vacate the 2015 renewal, arguing that it was void because, to the extent one plaintiff purported to file it on behalf of the others, doing so constituted the unauthorized practice of law. Reversing, the Court of Appeal stated, “there was a single judgment entered against defendants in favor of 17 plaintiffs, and Bisordi’s renewing that judgment on behalf of himself and the other plaintiffs was not the unauthorized practice of law.” (Altizer v. Highsmith (Cal. App. 1st Dist., Div. 2, July 20, 2020) 52 Cal.App.5th 331.)

Summary Judgment Based on Primary Assumption of Risk Reversed.

Plaintiff suffered injuries after defendant’s dog allegedly collided with her on a hiking trail where dogs are allowed off leash under the control of their owners. Plaintiff sued, alleging causes of action for negligence and negligence per se. The complaint stated defendant breached his duty of care “ ‘by failing to leash or otherwise control [his dog] in order to ensure the dog’s safe and proper behavior on the trail.’ ” The trial court granted summary judgment in favor of defendant based on primary assumption of risk. The Court of Appeal reversed, concluding primary assumption of risk did not apply. (Wolf v. Weber (Cal. App. 1st Dist., Div. 4, July 17, 2020) 52 Cal.App.5th 406.)

Damages Reduced on Appeal.

Plaintiff was a grounds manager for a school district that was a heavy user of herbicides made by defendant. He sued after contracting non-Hodgkin’s lymphoma. A jury awarded him $39.3 million in compensatory damages and $250 million in punitive damages. The compensatory damages award included $1 million for each year of the man’s 33-year life expectancy. The appeals court found that the award of future damages was not supported by evidence of plaintiff’s life expectancy, stating: “It follows that Johnson was entitled to future noneconomic damages measured by a life expectancy that was reasonable and realistic, not a life expectancy based on the hope that he might miraculously live for dozens of more years.” With the exception of the amount of damages, the Court of Appeal affirmed. As to those damages, the court ordered: “The jury’s future noneconomic compensatory damages award is reduced to $4 million, which results in a total reduced award of $10,253,209.32 in compensatory damages. The judgment is further modified to reduce the award of punitive damages to $10,253,209.32.”  (Johnson v. Monsanto Company (Cal. App. 1st Dist., Div. 1, Jul. 20, 2020) 52 Cal.App.5th 434.)

Requirement for Insurance Coverage for Abortions.

The California Department of Managed Health Care (DMHC) requires health insurers to include coverage for legal abortion. Plaintiff is a church whose members believe that abortion is impermissible. The district court dismissed the case, reasoning that jurisdiction was lacking because: (1) any injury plaintiff had suffered could not be redressed by a court order directed at the DMHC; and (2) any controversy was not ripe because the DMHC had not yet received a request for approval of an insurance plan that would be consistent with plaintiff’s religious beliefs. Reversing and remanding, the Ninth Circuit held that plaintiffs suffered an injury in fact once the DMHC sent letters describing the abortion-coverage requirement, and that plaintiff’s request for a declaration that the coverage requirement violated its rights under the free exercise clause would likely provide plaintiff redress. (Skyline Wesleyan Church v. California Department of Managed Health Care (9th Cir., July 21, 2020) 2020 WL 4191412.)

Calculating Child Support for Self-Employed Parent.

In a marital dissolution proceeding, the trial court allowed the depreciation deductions claimed on the federal income tax returns of the self-employed father and his corporations to reduce his income available for child support for purposes of determining child support under the statewide guideline. The trial court also presumed the income and expenses reported on father’s individual and corporate tax returns were correct and assigned mother the burden of proving the reported amounts were incorrect. The Court of Appeal held: “After the trial court issued its decision, we decided the question of statutory construction involving depreciation. (In re Marriage of Rodriguez (2018) 23 Cal.App.5th 625, 635 (Rodriguez).) We concluded a self-employed parent’s depreciation deductions for motor vehicles did not constitute ‘expenditures required for the operation of the business’ for purposes of [Family Code] section 4058, subdivision (a)(2). We now extend that statutory interpretation from motor vehicles to depreciation deductions for equipment and other assets used in the self-employed parent’s businesses. The term ‘expenditure’ describes an actual outlay of cash. Claiming a depreciation deduction on an income tax return does not require an outlay of cash and, thus, does not reduce the funds available for child support. [¶] On the question of the burden of proof and the rebuttable presumption that the gross income stated on a parent’s tax returns is correct, we conclude such a presumption, if it exists, does not extend to the tax returns in this case. . . .[W] e conclude the burden of proving that the expenses claimed on the tax returns constitute ‘expenditures required for the operation of the business[es]’ is properly allocated to the self-employed parent who controls the corporations. [¶] We therefore reverse the trial court’s order denying the request to modify child support and remand for further proceedings to determine the father’s income available for child support.” (In re Marriage of Hein (Cal. App. 5th Dist., July 21, 2020) 2020 WL 4187773.)

High Speed Chase Ended in Death.

After leading police officers on a high-speed chase, the driver of the fleeing van turned down a dead-end street. He stopped at the end of the road, and the police officers parked and exited their cruisers behind him. The driver turned the van around, pointing it generally toward the officers. As the van accelerated in an arc toward and eventually between the officers, they commanded him to stop and fired on him. The driver crashed into a police cruiser, pushing that cruiser into one of the officers, and the officers continued to fire. The driver sustained multiple gunshot wounds and was pronounced dead at the scene. Decedent’s parents sued the city and the officers, alleging the officers used excessive force. Granting summary judgment for the city and the five police officers, the district court found that the officers’ use of deadly force was reasonable. Affirming, the Ninth Circuit stated: “We hold that the officers’ use of deadly force was objectively reasonable in this dynamic and urgent situation, where officers were faced with the immediate threat of significant physical harm.” (Monzon v. City of Murrieta (9th Cir., July 22, 2020) 2020 WL 4197746.)

Competing Presumptions.

Evidence Code § 662 states in relevant part: “The owner of the legal title to property is presumed to be the owner of the full beneficial title.” Family Code § 760 states: “Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.” The Ninth Circuit asked the California Supreme Court to determine which presumption governs the characterization of joint tenancy property in a dispute between a couple and the bankruptcy trustee of one of the spouses. California’s high court answered: “Evidence Code section 662 does not apply to property acquired during marriage when it conflicts with Family Code section 760. For joint tenancy property acquired during marriage before 1975, each spouse’s interest is presumptively separate in character. (Fam. Code, § 803; Siberell, supra, 214 Cal. at p. 773.) For joint tenancy property acquired with community funds on or after January 1, 1975, the property is presumptively community in character. (Fam. Code, § 760.) [¶] If such property was acquired before 1985, the parties can show a transmutation from community property to separate property by oral or written agreement or a common understanding. (Fam. Code, § 852, subd. (e); Estate of Blair, supra, 199 Cal.App.3d at p. 167.) Although a joint tenancy deed is insufficient to effect a transmutation, a court may consider the form of title in determining whether the parties had a common agreement or understanding under the pre-1985 rules. (See MacDonald, supra, 51 Cal. 3d at p. 270 & fn. 6.) For joint tenancy property acquired with community funds on or after January 1, 1985, a valid transmutation from community property to separate property requires a written declaration that expressly states that the character or ownership of the property is being changed. (Fam. Code, § 852, subd. (a); MacDonald, at p. 272). A joint tenancy deed, by itself, does not suffice. [¶] Nothing in our decision precludes spouses from holding separate property as joint tenants or from transmuting community property into separate property held in joint tenancy as long as the applicable transmutation requirements are met. Nor does our decision alter the operation of the right of survivorship that is the main incident of joint tenancy title.” (In re Brace (Cal., July 23, 2020) 2020 WL 4211750.)

Arbitration of Class Claims Ordered.

An employer and an employee entered into the following agreement: “This Arbitration Agreement Is A Waiver Of All Rights To A Civil Jury Trial Or Participation In A Civil Class Action Lawsuit For Claims Arising Out Of Your Employment.” The employee sued the employer alleging employment claims and seeking certification as a class action. The trial court ordered the matter into arbitration and found the employee had waived his right to participate in class action lawsuits. The Court of Appeal modified the trial court’s order as follows: “We conclude (1) the arbitration agreement requires arbitration of Garner’s class claims, and (2) Inter-State Oil did not waive reliance on the arbitration agreement. [¶] We will modify the trial court’s order to require arbitration of both individual and class claims, and affirm the order as modified.” (Garner v. Inter-State Oil Company (Cal. App. 3rd Dist., July 23, 2020) 2020 WL 4218302.)

Code of Civil Procedure § 998 Offer and Recovery of Costs After Arbitration.

Prior to an arbitration, the plaintiff served a Code of Civil Procedure § 998 offer to compromise her claim, but defendant insurance company did not accept it. The arbitrator awarded damages exceeding the § 998 offer. The insurance contract between plaintiff and defendant stated that each party will “pay the expenses it incurs [in arbitration] and “bear the expenses of the arbitrator equally.” The trial court did not award costs to plaintiff. Reversing, the Court of Appeal held that the policy language did not preclude recovery of costs under § 998, stating: “In short, specifying how the costs are to be paid in first instance says nothing about whether such costs may be recouped later under the cost-shifting provisions of sections 998 or 1293.2.” (Storm v. The Standard Fire Insurance Company (Cal. App. 2nd Dist., Div. 4, July 24, 2020) 2020 WL 4250948.)

Sufficiency of Evidence Under a Clear and Convincing Burden of Proof.

The Supreme Court of California explained: “[W]hen reviewing a finding that a fact has been proved by clear and convincing evidence, the question before the appellate court is whether the record as a whole contains substantial evidence from which a reasonable factfinder could have found it highly probable that the fact was true. Consistent with well-established principles governing review for sufficiency of the evidence, in making this assessment the appellate court must view the record in the light most favorable to the prevailing party below and give due deference to how the trier of fact may have evaluated the credibility of witnesses, resolved conflicts in the evidence, and drawn reasonable inferences from the evidence.” (Conservatorship of O.B. (Cal., July 27, 2020) 2020 WL 4280960.)

Certain Fees Do Not Qualify for Restitution Under the Song-Beverly Act.

Under the Song-Beverly Consumer Warranty Act (Civ. Code, § 1790 et seq.), a consumer of new motor vehicles may sometimes sue when the manufacturer is unable to repair after being given a reasonable number of opportunities to do so. Consumers may choose either a replacement vehicle or restitution “in an amount equal to the actual price or payable by the buyer.” The manufacturer must also pay for any “collateral charges” and “incidental damages” incurred. Plaintiff selected restitution and requested reimbursement for vehicle registration renewal and nonoperation fees he paid. The California Supreme Court held those fees are neither collateral charges nor incidental damages under the act. (Kirzhner v. Mercedes-Benz USA, LLC (Cal., July 27, 2020) 2020 WL 4280966 .)

Police Code of Silence.

Based on her failure to report another deputy’s use of force on a jail inmate and her failure to seek medical assistance for the inmate, a deputy sheriff was discharged. During an investigation of the incident, the fired deputy explained that she did not report it out of fear of being “labeled as a rat” by her fellow deputies. The trial court granted the deputy’s petition for writ of mandate and directed the county civil service commission to set aside the discharge. Reversing, the Court of Appeal found error in the trial court substituting its own discretion for that of the sheriff’s department. (Pasos v. Los Angeles County Civil Service Commission (Cal. App. 2nd Dist., Div. 7, July 27, 2020) 2020 WL 4281984.)

Class Action Against Pet Food Marketers to Continue.

Six California residents brought a class action against pet food company and veterinarians for the marketing of so-called prescription pet food under California’s consumer protection laws and federal antitrust law. Plaintiffs alleged that the prescription requirement and advertising led reasonable consumers falsely to believe that such food has been subject to government inspection and oversight, and has medicinal and drug properties, causing consumers to pay more or purchase the product when they otherwise would not have. The district court granted defendants’ motions to dismiss. Noting that consumers rely on accurate labeling, and “the misrepresentation of prescription pet food as medicine or FDA-controlled can be a material fact for a reasonable consumer,” the Ninth Circuit reversed. (Moore v. Mars Petcare US, Inc, (9th Cir., July 28, 2020) 2020 WL 4331765 .)

One Class Action, Two Statutes.

Plaintiffs filed a class action alleging warranty claims arising out of crashes or injuries caused by the alleged “rollaway effect” of certain Honda Civics. Plaintiffs alleged claims under the Magnuson-Moss Warranty Act (15 U.S.C. § 2301 et seq.; MMWA) and state law. The MMWA requires that class actions filed in federal court name 100 plaintiffs. The district court dismissed the complaint due to plaintiffs’ failure to name 100 plaintiffs. But the trial court did not consider whether the court had jurisdiction under the Class Action Fairness Act (28 U.S.C. § 1332(d)(4)(A); CAFA). The Ninth Circuit reversed in part and remanded for the district court to consider whether plaintiffs’ state law claims met the diversity requirements of CAFA, even if their MMWA claim failed. (Floyd v. American Honda Motor Co. (9th Cir., July 28, 2020) 2020 WL 4331769.)

Dismissal on Collateral Estoppel Grounds Might Amount to a Favorable Termination.

The trial court granted a special motion to strike (Code Civ. Proc., § 425.16) a malicious prosecution action. The court found that plaintiff could not establish a favorable termination of the underlying action and therefore could not prevail on the merits of the malicious prosecution claim because the underlying action was dismissed pursuant to collateral estoppel. Reversing and declining to follow the rule stated in a prior appellate opinion, the Court of Appeal stated: “Thus, when ruling on an anti-SLAPP motion attacking a malicious prosecution claim that arises out of another lawsuit that was dismissed on collateral estoppel grounds, a trial court should look behind the collateral estoppel ruling in the prior case to determine what the rationale for the ruling was. If, in that earlier proceeding, the party’s lack of culpability on the disputed issue was argued, litigated, and decided on the merits, the dismissal of the subsequent case on collateral estoppel grounds qualifies as a favorable termination for purposes of a later malicious prosecution claim.” (Alston v. Dawe (Cal. App. 4th Dist., Div. 3, July 28, 2020) 2020 WL 4332891.)

Sexual Harassment in Professional Relationships Under Civil Code Section 51.9.

Ashley Judd sued Harvey Weinstein for sexual harassment under Civil Code § 51.9, among other claims. Judd alleged that Weinstein, then an influential and well-connected Hollywood producer, sexually harassed her during a business meeting in the late 1990’s. Judd alleged that after she rebuffed his sexual advances, Weinstein derailed her potential involvement in the film adaptation of The Lord of the Rings book trilogy by telling a director and a producer that he had a “bad experience” with Judd and that she was “a nightmare to work with.” Section 51.9 prohibits sexual harassment in business, service, or professional relationships,  including certain specified relationships or any relationship “substantially similar” to the specified relationships.  The district court dismissed Judd’s sexual harassment claim under § 51.9 for failure to state a claim. Reversing, the Ninth Circuit found the Judd/Weinstein relationship “consisted of an inherent power imbalance wherein Weinstein was uniquely situated to exercise coercion or leverage over Judd by virtue of his professional position and influence as a top producer in Hollywood,” and was covered under the statute. (Judd v. Weinstein (9th Cir., July 29, 2020.) 2020 WL 4343738.)

In Sexual Misconduct Investigations, the Accused Has Rights Too.

Arizona State University brought a disciplinary case against plaintiff, a male student, for alleged violations of the University’s Student Code of Conduct after a female student complained that plaintiff had engaged in unwanted contact and sexual misconduct with her. Plaintiff claimeds that the University violated title IX, 20 U.S.C. § 1681(a) by discriminating against him on the basis of sex during the course of the disciplinary case. The district court dismissed the case, reasoning that a university’s aggressive response to a sexual misconduct complaint is not evidence of gender bias. Reversing, the Ninth Circuit held that plaintiff had plausibly alleged gender bias.  (Schwake v. Arizona Board of Regents (9th Cir., July 29, 2020) 2020 WL 4343730.)

Defendant Was Not Served Within Three Years.

The trial court dismissed plaintiffs’ complaint against defendant because plaintiffs did not serve defendant with a summons and complaint within three years, as required by Code of Civil Procedure § 583.210. Plaintiffs initially named defendant  as a Doe defendant. After discovering defendant’s identity shortly before the three-year deadline, and after preparing a certificate of merit, plaintiffs amended their complaint and served defendant. But by that time three years and 38 days had elapsed. On appeal, plaintiffs contended the three-year period should exclude nine months when the action was stayed to allow the parties to participate in an alternative dispute resolution procedure mandated by a contract. Section 583.240, subdivision (b), excludes any time when “[t]he prosecution of the action or proceedings in the action was stayed and the stay affected service.” The Court of Appeal reversed and remanded the matter for factual findings to determine whether the stay affected service, thereby extending the time to serve defendant, stating, “Our reasoning is simple. One cannot serve an unknown party. If discovery was reasonably necessary to identify defendant, then the stay, which prevented discovery, by extension affected service. We will remand for the court to decide in the first instance whether other reasonable means of identifying defendant existed.” (Steciw v. Petra Geosciences, Inc. (Cal. App. 4th Dist.., Div. 3, July 29, 2020) 2020 WL 4345103.)

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