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
“If You Want To Test A Man’s Character, Give Him Power,” Robert Green Ingersoll.
Petitioner is an inmate in the Texas Department of Criminal Justice. He alleges that, for six full days, correctional officers confined him in a pair of shockingly unsanitary cells. The first cell was covered, nearly floor to ceiling, in massive amounts of feces, all over the floor, the ceiling, the window, the walls, and even packed inside the water faucet. Fearing that his food and water would be contaminated, he did not eat or drink for nearly four days. Correctional officers then moved him to a second, frigidly cold cell, which was equipped with only a clogged drain in the floor to dispose of bodily wastes. He held his bladder for over 24 hours, but he eventually (and involuntarily) relieved himself, causing the drain to overflow and raw sewage to spill across the floor. Because the cell lacked a bunk, and because Taylor was confined without clothing, he was left to sleep naked in sewage. The Court of Appeals for the Fifth Circuit granted immunity to the officers. The U.S. Supreme Court reversed, stating: “[A]ny reasonable officer should have realized that Taylor’s conditions of confinement offended the Constitution.” (Taylor v. Riojas (U.S., Nov. 2, 2020) 2020 WL 6385693.)
Police Officer Severely Injured During Protest.
Petitioner organized a demonstration in Baton Rouge, Louisiana to protest a shooting by a local police officer. The protesters, allegedly at petitioner’s direction, occupied the highway in front of the police headquarters. As officers began making arrests to clear the highway, an unknown individual threw a “piece of concrete or a similar rock-like object,” striking respondent Officer Doe in the face. Officer Doe suffered devastating injuries, including loss of teeth and brain trauma. Although the culprit remains unidentified, Officer Doe sought to recover damages from petitioner on the theory that he negligently staged the protest in a manner that caused the assault. The district court dismissed the negligence claim as barred by the First Amendment. A divided panel of the Fifth Circuit Court of Appeals reversed. Before the U.S. Supreme Court, petitioner argued that his role in leading the protest onto the highway, even if negligent and punishable as a misdemeanor, cannot make him personally liable for the violent act of an individual whose only association with him was attendance at the protest. Reversing and remanding, the high court stated: “The constitutional issue, though undeniably important, is implicated only if Louisiana law permits recovery under these circumstances in the first place. The dispute thus could be ‘greatly simplifie[d]’ by guidance from the Louisiana Supreme Court on the meaning of Louisiana law.’” (McKesson v. Doe (U.S., Nov. 2, 2020) 2020 WL 6385692.)
Gamesmanship Is Sometimes Costly.
An arbitration company (AAA) erroneously closed an arbitration on the basis that the defendants failed to pay its arbitration fee—not realizing that, in fact, the defendant had timely paid the fee. When AAA realized its mistake, it asked plaintiff to confirm it would like the arbitration to proceed. Instead of responding to the arbitration provider, plaintiff filed a motion in court to lift the stay of judicial proceedings, arguing that defendants had waived their right to proceed in arbitration. The court “emphasized the record was clear – defendants had paid their AAA fee, AAA had made a mistake causing it to administratively close the case, and [plaintiff] sought to capitalize on that mistake by ignoring two different communications from [AAA] asking you whether your client wished to reopen the case, and instead [you] tried to run in here and get an Order that the defendants had waived their right to arbitrate, when they clearly hadn’t. [¶] By doing so, you imposed financial and other burdens on your opponent and on the Court.” The court granted sanctions of $22,159.50 against plaintiff’s counsel pursuant to Code of Civil Procedure § 128.7 for filing a frivolous motion to lift the stay. Reviewing the award for abuse of discretion, the Court of Appeal affirmed. (McCluskey v. Henry (Cal. App. 1st Dist., Div. 3, Nov. 2, 2020) 56 Cal.App.5th 1197.)
Unconscionable Arbitration Agreement.
Plaintiff was a patient of defendant for hair removal by laser treatment. She spent months in pain after treatment as matters went awry. Defendant moved to compel arbitration. Plaintiff recalled she was presented with an electronic tablet for her to sign some forms, but she did not know if one of them was an arbitration agreement. The trial court found the agreement was “permeated by substantive unconscionability” and unenforceable. The Court of Appeal noted several of the provisions of the agreement and the manner it was presented to plaintiff: the agreement prohibited plaintiff from seeking public injunctive relief; the agreement required plaintiff to arbitrate the claims she was likely to bring, but did not require defendant to arbitrate the claims it was likely to bring, such as claims to collect fees from patients; defendant required plaintiff to sign the agreement before receiving treatment; defendant failed to explain the agreement’s terms; the agreement required plaintiff to pay half the costs of three arbitrators, “the most expensive kind of arbitration,” and an amount plaintiff could not afford to pay. As to defendant’s contention that Code of Civil Procedure § 1295 compliance demonstrates the agreement is not unconscionable as a matter of law, the appellate court stated: “[Defendant] made no showing in the trial court, and makes no showing on appeal, it is licensed or certified under one of the enumerated laws and therefore is a health care provider for purposes of section 1295.” The appeals court concluded the agreement had a high degree of substantive unconscionability and affirmed denial of defendant’s petition to arbitrate. (Swain v. LaserAway Med. Grp., Inc. (Cal. App. 2nd Dist., Div. 7, Nov. 3, 2020) 57 Cal.App.5th 59.)
Freedom Of Information Act Disclosure May Be Used To Allege Causation In a Securities Fraud Action.
Plaintiffs filed a class action alleging that defendant and its senior executives violated sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78j(b)–78t(a)) by denying that defendant was the subject of a money laundering investigation. The complaint also alleged defendant falsely stated that a whistleblower’s separate allegations that it made undisclosed loans to criminals were “disconnected from the reality of [defendant’s] highly compliant and top-performing business.” To establish a causal connection between defendant’s two statements and declines in its stock price, plaintiffs pointed to two articles, one of which relied on information obtained through a Freedom of Information Act (5 U.S.C. § 552; FOIA) request to the Securities and Exchange Commission. The other article appeared on a website. The district court dismissed the complaint, concluding that plaintiffs adequately alleged the falsity of defendants’ statements but failed to adequately allege loss causation. Reversing, the Ninth Circuit Court of Appeals stated: “Plaintiffs may rely on a corrective disclosure derived from a FOIA response by plausibly alleging that the FOIA information had not been previously disclosed.” (Grigsby v. BofI Holding, Inc. (9th Cir., Nov. 3, 2020) 979 F.3d 1198.)
Attorney Fee Sanctions for Filing a Frivolous Anti-SLAPP Motion.
The trial court found defendants filed a frivolous anti-SLAPP motion and ordered defendants to pay plaintiff $61,915 for attorney fees in opposing the anti-SLAPP motion under Code of Civil Procedure § 425.16, subdivision (c)(1). On appeal, defendants contended the trial court erred because (1) defendants were not given a 21-day safe harbor period, and (2) plaintiff requested attorney fees in its opposition to the anti-SLAPP motion, rather than in a separate motion. The Court of Appeal explained: “The plain language of section 128.5 creates an impossible procedure when the statute is read as a whole because there is no means by which a person could comply with the procedures set forth in the statute. One cannot obtain an order under subdivision (a) while still providing a meaningful safe harbor under subdivision (f). . . . We can find no way to make section 128.5 function in the context of requests for attorney’s fees. If one takes the time to comply with subdivision (a) then the safe harbor provision is effectively meaningless. . . . For all these reasons, subdivision (f) does not work with the anti-SLAPP statute. Therefore, we conclude the proper procedure for the trial court to follow in regard to a request for attorney’s fees related to an anti-SLAPP motion is the procedure set forth in subdivisions (a) and (c).” The appeals court affirmed, concluding: “Because the request was properly submitted in Changsha’s opposition and defendants were given an opportunity to be heard, we conclude the trial court followed the proper procedure in awarding attorney’s fees to Changsha.” (Changsha Metro Grp. Co. v. Peng Xufeng (Cal. App. 4th Dist., Div. 2, Nov. 3, 2020) 57 Cal.App.5th 1.)
Debt Collector Couldn’t Avoid Liability Under Fair Debt Collection Practices Act by Claiming Bona Fide Error.
Plaintiff sued defendant for violation of the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.; FDCPA).Defendant was hired by plaintiff’s creditor to collect a debt, but the creditor gave defendant inaccurate information about the debt. Defendant tried to avoid liability for violations of FDCPA by contractually obligating creditor-clients to provide only accurate information regarding delinquent accounts. Thus, when plaintiff sued defendant, defendant raised the defense of “bona fide error.” The district court granted summary judgment in favor of defendant on that defense. Reversing, the Ninth Circuit stated: “We conclude the FDCPA’s bona fide error defense does not allow debt collectors to avoid liability by contractually obligating creditor-clients to provide accurate information, nor by requesting that creditor-clients provide notice of any errors in the accounts assigned for collection without waiting to receive a response before instituting collection efforts.” (Urbina v. Nat’l Bus. Factors Inc. (9th Cir., Nov. 5, 2020) 979 F.3d 758.)
The Ninth Circuit, sitting en banc, described the disposition alternatives when a panel finds error under Daubert v. Merrill Dow Pharmaceuticals, Inc. (1993) 509 U.S. 579: “when . . . the district court has committed a non-harmless Daubert error, the panel has discretion to impose a remedy ‘as may be just under the circumstances.’” This may require a new trial in some instances, and a limited remand in others. The opinion concluded: “The normal rules of appellate review of evidentiary decisions still apply. . . . our holding today restores Daubert errors to the usual realm of appellate review and remedy, rather than keeping them in a separate, special category.” (United States v. Bacon (9th Cir., Nov. 5, 2020) 979 F.3d 766.)
Covenants Not to Compete Outside the Employment Context.
A contract between Quidel and Beckman prohibits Beckman from researching or developing a certain assay. Beckman developed a closely related assay, which Quidel contends is a “potential direct substitute” for its assay. Beckman sued Quidel for declaratory relief, contending the contractual prohibition was an invalid restraint on trade. The trial court agreed, granting summary adjudication, and Quidel sought a writ of mandate or prohibition. Granting the writ, the Court of Appeal held that “the per se ban on noncompetition clauses outlined . . . is limited to employment agreements.” Outside the employment context, “as long as a noncompetition provision does not negatively affect the public interests, is designed to protect the parties in their dealings, and does not attempt to establish a monopoly, it may be reasonable and valid.” (Quidel Corp. v. Superior Court (Cal. App. 4th Dist., Div. 1, Nov. 6, 2020) 2020 WL 6534466.)
Emotional Distress Damages for Mixing Ashes of Cremated Pets.
Plaintiffs’ two dogs died about a year apart, and they paid for private cremations for each of them, meaning they would receive separate ashes for each. Because of the weight of the boxes for each dog, plaintiffs believe they were not separately cremated. Devastated because they intended to bury their ashes with their deceased daughter, who had been very close to both dogs, plaintiffs sued and asked for emotional distress damages. The trial court sustained a demurrer. Reversing, the Court of Appeal found that the case “fit comfortably in a cause of action for trespass to chattel claim, which permits recovery of emotional distress damages. The allegations also support a negligence cause of action because defendant advertised its services as providing emotional solace, and thus it was foreseeable that a failure to use reasonable care with the ashes would result in emotional distress.” (Levy v. Only Cremations for Pets, Inc. (Cal. App. 4th Dist., Div. 3, Nov. 6, 2020) 57 Cal.App.5th 203.)
No Insurance Coverage for Out-of-State Mental Health Treatment.
A health insurance policy governed by the Employee Retirement Income Security Act (29 U.S.C. §§ 1001-1461) excluded coverage for any out-of-state treatment, except for emergency or urgently needed services. Plaintiff, aware of this exclusion, sent her daughter to an out-of-state residential treatment program for anorexia nervosa. The insurance company denied coverage. Plaintiff sued, contending the insurance company had violated the federal Mental Health Parity and Addiction Equity Act and the California Mental Health Parity Act. The district court granted summary judgment in favor of the insurance company. Affirming, the Ninth Circuit stated: “the denial of coverage was based solely on the Plan’s exclusion of coverage for out-of-state treatment, which applies equally to mental and physical illnesses.” (Stone v. UnitedHealthcare Insurance Company (9th Cir., Nov. 9, 2020) 979 F.3d 770.)
Bad Times for Taxi Drivers.
Particularly hard hit by competition from Uber and Lyft are taxi drivers who recently obtained taxi permits (“medallions”) from the City of San Francisco for $250,000 — only to see ridership dry up in the face of technological competition. In part to aid these taxi drivers, San Francisco established several rules favoring recent owners of taxi medallions over those who obtained medallions years earlier. For example, the new rules give priority for lucrative airport pick-up rides to recent medallion owners. Several taxi drivers with now-disfavored medallions challenged these new rules. The district court granted the government’s motion for judgment on the pleadings, ruling that the taxi drivers failed to state plausible claims. Affirming, the Ninth Circuit found the rules to be “rationally related to the legitimate government interests of aiding beleaguered taxi drivers and easing taxi congestion at the airport.” However, the matter was remanded for plaintiffs to be given an opportunity to amend some of their causes of action. (San Francisco Taxi Coalition v. City and County of San Francisco (9th Cir., Nov. 9, 2020) 979 F.3d 1220.)
Employee Paid by Commissions May Be Entitled to Overtime.
Under California law, an employer generally must pay employees overtime if they work more than a set number of hours. Workers employed in an administrative capacity, however, are exempt from this and other wage and hour requirements if they perform certain duties and are paid a monthly salary equivalent to at least twice the state minimum wage for full-time employment. The question presented was whether a compensation plan based solely on commissions qualifies as a “salary” for purposes of this exemption. The trial court found that it did qualify as a salary, and the plaintiff employer therefore was not required to pay overtime. Reversing, the Court of Appeal found that the employer’s “compensation structure does not satisfy the salary basis test, and the administrative exemption thus does not apply.” (Semprini v. Wedbush Securities, Inc. (Cal. App. 4th Dist., Div. 3, Nov. 9, 2020) 57 Cal.App.5th 246.)
Amount of Class Action Attorney Fees When Settlement Provides “Phantom Benefits” to Class Members.
The district court approved a class settlement and awarded $14.8 million in attorney fees based on a lodestar calculation of billable hours expended. The Ninth Circuit began its opinion with this: “Is it reasonable to award $14.8 million in attorney’s fees in a class action settlement that provides $116.7 million in benefits to class members? But what if the class settlement is in fact worth only $4.2 million? We face these two dramatically divergent scenarios in large part because the settlement here offers ‘coupons’ that may provide phantom benefits to most class members.” The court affirmed approval of the settlement, but vacated and remanded the fee award because the district court erred in applying a lodestar-only methodology for the coupon portion of the settlement. “That methodology potentially inflates the amount of attorney’s fees in proportion to the results achieved for the class because the coupons may end up providing minimal benefit to the class. On remand, the district court should thus apply a percentage-of-redemption value methodology for the coupon portion of a settlement, and use a lodestar method for the non-coupon part of the relief. Alternatively, the district court may use a lodestar-only methodology, but only if it does not consider the coupon relief or takes into account its redemption value.” (Chambers v. Whirlpool Corporation (9th Cir., Nov. 10, 2020) 2020 WL 6578223.)
Anticompetitive Provision in Employment Agreement.
When plaintiff began working for defendant in 2005, plaintiff signed a non-competition agreement. Defendant subsequently terminated plaintiff’s employment without cause. While arbitrating a dispute over bonuses, plaintiff filed a copy of a draft separation agreement between him and defendant. Defendant argued that plaintiff forfeited his large bonuses by filing that separation agreement, which violated the anti-competition confidentiality provisions of the employment agreement by disclosing the identity of defendant’s clients. The arbitrator ruled in defendant’s favor, finding that plaintiff breached the non-competition provision in the employment agreement. Reversing, the Court of Appeal held the arbitrator exceeded his power by enforcing a provision that restricted plaintiff’s right to work in violation of Business and Professions Code § 16600, which provides that “every contract” that restrains “anyone . . . from engaging in a lawful profession, trade, or business of any kind is to that extent void.” (Brown v. TGS Management Company, LLC (Cal. App. 4th Dist., Div. 3, Nov. 12, 2020) 57 Cal.App.5th 303.)
A School District Is Not Liable for Discrimination Under the Unruh Civil Rights Act.
An autistic child alleged he was the victim of discrimination by school personnel in violation of, among other things, the Unruh Civil Rights Act (Civ. Code, § 51). The trial court sustained the school district’s demurrer on the Unruh Act claim without leave to amend. Affirming, the Court of Appeal held that the Unruh Act applies only to business establishments, and a school district is not a business establishment. The appeals court also rejected plaintiff’s argument that the school district is liable under the Unruh Act because the alleged conduct is actionable under the Americans With Disabilities Act (42 U.S.C. § 12101 et seq.). (Brennon B. v. Superior Court (Cal. App. 1st Dist., Div. 1, Nov. 13, 2020) 57 Cal.App.5th 367.)
Attorney Held in Contempt.
At a mandatory settlement conference, an attorney (1) persistently yelled at and interrupted other participants; (2) accused opposing counsel of lying while providing no supporting evidence; (3) refused to engage in settlement discussions; and (4) effectively prevented the settlement officer from invoking the aid of the supervising judge. The attorney later acknowledged that his contemptuous behavior was the result of a tactical decision to act in such a manner in advance of the settlement conference. After a hearing, the trial court convicted the attorney of four counts of civil contempt, imposed a $900 fine for each count (a total fine of $3,600), and awarded attorney fees and costs to the opposing party. The Court of Appeal affirmed one of the convictions and reversed the other three, reduced the fine to $900, vacated the award of fees and costs, and ordered the clerk “to make the required notification to the State Bar for whatever additional action the Bar may consider appropriate.” (Moore v. Superior Court (Cal. App. 4th Dist., Div. 3, Nov. 16, 2020) 57 Cal.App.5th 441.)
Civil Procedure Lesson for Federal Court Practitioners.
In a contract dispute, defendant raised certain defenses in its answers to the complaint and first amended complaint, but did not file an answer to the second amended complaint. The district court granted summary judgment in plaintiff’s favor. Reversing, the Ninth Circuit concluded that defendant was not required to respond and reassert its affirmative defenses to the second amended complaint because it had already asserted those affirmative defenses in response to the same breach of contract claim in the first amended complaint. (KST Data, Inc. v. DXC Technology Company (9th Cir., Nov. 17, 2020) 980 F.3d 709.)
No Attorney Fees Under Corporations Code.
Defendants prevailed at trial in a case in which plaintiff sought a percentage of a business. After trial, defendants filed a motion seeking attorney fees under Corporations Code § 16701, which authorizes an equitable award of attorney and expert fees “against a party that the court finds acted arbitrarily, vexatiously, or not in good faith.” The trial court denied the motion, concluding that plaintiff did not act arbitrarily, vexatiously, or in bad faith. Affirming, the Court of Appeal concluded that although plaintiff’s “claims lacked objective legal merit, . . . we cannot say that no reasonable attorney would have pursued similar relief, and there is substantial evidence in the record to support the trial court’s finding that [plaintiff’s] subjective state of mind did not evince a lack of good faith.” (Jones v. Goodman (Cal. App. 4th Dist., Div. 1, Nov. 17, 2020) 57 Cal.App.5th 521.)
Arbitration Agreement, Signed When Plaintiff Was a Minor, Was Disaffirmed When She Sued her Former Employer.
Plaintiff started working for defendant when she was 16 years old and signed an arbitration agreement at that time. After plaintiff reached the age of 18, she continued working for defendant for four months before quitting. When plaintiff sued defendant for violations of the Labor Code and Fair Employment and Housing Act, defendant filed a motion to compel arbitration. The trial court denied the motion, finding that plaintiff’s filing of the lawsuit was a disaffirmance of the arbitration agreement under Family Code § 6710, which allows a person upon reaching majority age to disaffirm a contract entered into while a minor. On appeal, defendant argued that plaintiff ratified the arbitration agreement by working for four months after she reached the age of majority, and that she did not disaffirm the agreement within a reasonable time after she turned 18. Affirming, the Court of Appeal stated: “The filing of a lawsuit is sufficient disaffirmance.” (Coughenour v. Del Taco, LLC (Cal. App. 4th Dist., Div. 2, Nov. 20, 2020) 2020 WL 6817570.)
Court Erred in Striking Portion of Registered Out-of-State Judgment.
The trial court stayed enforcement of a portion of a father’s child support arrears determined by a 2001 Minnesota order because the children had intermittently lived with him between 1993 and 2002. The trial court found the remainder of the arrears enforceable. On appeal, the Department of Child Support Services argued that the trial court lacked authority under the Uniform Interstate Family Support Act to stay the arrears owed because the 2001 Minnesota order was registered and confirmed in California in 2005, and the father did not timely challenge its registration. The Court of Appeal agreed and reversed the part of the trial court’s order staying enforcement of $28,890 of the arrears, and affirmed the portion of the trial court’s order finding that the remainder of the arrears ($60,692.15) was enforceable. (In re Marriage of Sawyer (Cal. App. 6th Dist., Nov. 20, 2020) 2020 WL 6817875.)
Bivens Case to Proceed in Federal Court.
Plaintiff operates a bed and breakfast in Washington on the border with Canada. When a guest who was lawfully in the United States arrived from Turkey, a border patrol agent followed him into the driveway. Plaintiff asked the agent to leave. The agent allegedly shoved plaintiff against a car, grabbed him, and pushed him to the ground, causing injury to plaintiff. After plaintiff complained to the agent’s superiors, the agent retaliated by, among other things, contacting the Internal Revenue Service and asking it to look into plaintiff’s tax status. Plaintiff sued the agent for damages. A federal trial court granted summary judgment to the agent. Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics (1971) 403 U.S. 388 recognized an implied right of action for damages under the Constitution against federal officers. The Supreme Court has made clear that “expanding the Bivens remedy is now a disfavored judicial activity” in Ziglar v. Abbasi (2017) 137 S.Ct. 1843, 1857. Reversing summary judgment, the Ninth Circuit stated: “We conclude that Bivens remedies are available in the circumstances of this case, where a United States citizen alleges that a border patrol agent violated the Fourth Amendment by using excessive force while carrying out official duties within the United States, and violated the First Amendment by engaging in retaliation entirely unconnected to his official duties.” (Boule v. Egbert (9th Cir., Nov. 20, 2020) 2020 WL 6815073.)
Lease Provision Shields Commercial Landlord From Liability for Ordinary Negligence.
Plaintiff leased commercial premises from defendant. The lease contained an exculpatory clause providing that the lessor “shall not be liable for injury . . . to the person . . . of Lessee” and others, whether resulting from conditions arising on the premises or from other sources. While accessing an upstairs office used for storage, when plaintiff got to the top stair he reached for the door handle, but it was stuck. He pushed harder on the door, and it gave way suddenly. Plaintiff suffered injury after hitting the crown of his head on the beam at the top of the door frame, which knocked him backwards. Plaintiff sued, and the trial court granted summary judgment to defendant. The Court of Appeal noted that while Civil Code § 1668 ordinarily invalidates contracts that purport to exempt an individual from liability for future intentional wrongs and gross negligence, an exemption within a commercial lease between business entities does not implicate public interest. Affirming, the appeals court stated that here: “The exculpatory clause shields the lessor from liability for ordinary negligence. Its language is clear. . . .” (Garcia v. D/AQ Corporation (Cal. App. 2nd Dist., Div. 8, Nov. 24, 2020) 2020 WL 6882747.)
Penalties Against Coastal Commissioners Reversed.
Spotlight is a lawyer-created entity. Spotlight has no employees and uses its trial lawyer’s San Diego office as its own address. Spotlight has never appeared at a commission hearing. In its complaint, Spotlight alleged members of the California Coastal Commission violated statutes requiring disclosure of certain ex parte communications. The trial court found there were violations and imposed penalties totaling nearly $1 million. Reversing, the Court of Appeal concluded that Spotlight lacked standing under Public Resources Code §§ 30324 and 30327, and that the penalties under Public Resources Code § 30820, subdivision (a)(2) did not apply to the ex parte disclosure statutes. (Spotlight on Coastal Corruption v. Kinsey (Cal. App. 4th Dist., Div.1, Nov. 24, 2020) 2020 WL 6882940.)
Mother Must Pay Father’s Attorney Fees in Action Involving Child Abduction.
The trial court granted a father’s petition to return a child under the International Child Abduction Remedies Act ( 22 U.S.C. §§ 9001-9011), and also ordered the mother to pay the father’s attorney fees. The mother appealed. The Court of Appeal found the mother’s appeal for the return of the child was moot because of the child’s age. But because the mother did not have an opportunity for a full and fair hearing on the issue of fees, the appeals court reversed the fee order and remanded the case for a new hearing limited to determining the amount of the award. (Noergaard v. Noergaard (Cal. App. 4th Dist., Div. 3, Nov. 24, 2020) 2020 WL 6886596.)
Health Care Plan Does Not Violate Medicare as Second Payer Provisions of the Social Security Act.
Plaintiffs provide dialysis treatment to many patients and seek payment from any applicable group health plan. One of plaintiffs’ patients is a beneficiary of defendant’s Employee Benefit Health Plan, a health plan offered and administered by defendant. The patient has end-stage renal disease and has received routine maintenance dialysis from plaintiffs. Defendant’s plan covers all types of dialysis, regardless of the underlying diagnosis, but the plan’s reimbursement rate for dialysis differs from the rate it pays for many other services. The plan paid plaintiffs according to the plan’s terms. Dissatisfied with the payment amounts that it received from defendant, plaintiffs brought this action, arguing that the plan’s dialysis provisions violate (1) the Medicare as Secondary Payer (MSP) provisions of the Social Security Act, (2) the Employee Retirement Income Security Act of 1974, and (3) state law. The district court dismissed the federal claims and declined to exercise supplemental jurisdiction over the state-law claims. With respect to the MSP claim, the district court held that, because the plan reimburses at the same rate for all dialysis services, regardless of underlying diagnosis and regardless of Medicare eligibility, the plan does not violate the MSP. Affirming, the Ninth Circuit stated: “Reviewing de novo and taking the allegations in the complaint as true, . . . we agree with the district court’s conclusions and therefore affirm.” (DaVita Inc. v. Amy’s Kitchen (9th Cir., Nov. 24, 2020) 2020 WL 6887338.)
Plaintiff Dialysis Provider May Bring a Private Cause of Action Against a Health Plan for Violating Medicare Secondary Payer Provisions.
Defendant hospital administers its own group health plan. Among its many provisions, the Plan authorizes payments to providers of dialysis, a critical treatment for persons with end-stage renal disease (ESRD), which persons become eligible for Medicare after three months of dialysis treatment, even if not otherwise eligible for Medicare. When, as here, both Medicare and another insurer have independent obligations to pay for a service such as dialysis, Congress has decreed who pays first and who pays second. (Medicare Secondary Payer provisions, 42 U.S.C. § 1395y(b); MSP) The MSP also imposes substantive requirements on group health plans, including by forbidding plans from taking into account an ESRD patient’s eligibility for Medicare during the first thirty months of Medicare eligibility. Plaintiff brought this action pursuant to the MSP’s private cause of action, which authorizes suit when a plan fails to make a statutorily compliant primary payment. Plaintiff provides dialysis treatment to patients, including a beneficiary of defendant. Plaintiff alleges that defendants reduced the payment amount for one of its patient’s dialysis because of Medicare eligibility as soon as the patient became eligible for Medicare, without waiting the mandatory thirty months. But the reduced payment amount remained greater than the Medicare rate, so Medicare never made any secondary payments. The district court dismissed the complaint, holding that the MSP’s private cause of action is available only when Medicare has made a payment. Reversing, the Ninth Circuit stated: “The statutory text, congressional purpose, and regulatory clues make clear that Congress did not intend payment by Medicare to be a prerequisite to bringing a private cause of action under the MSP. The private cause of action encompasses situations in which a primary plan impermissibly takes Medicare eligibility into account too soon, even if Medicare has not made any payments.” (DaVita Inc. v. Virginia Mason Memorial Hospital (9th Cir., Nov. 24, 2020) 2020 WL 6887341.)
Lawyers Apparently Didn’t Keep Accurate Records.
Lawyers were been hired by a homeowners association to collect past-due homeowner fees. Over the next few years, the debtor declared bankruptcy, the past-due fees were paid to the HOA, and the bankruptcy was discharged. Nonetheless, years later the lawyers hired a debt collector to collect the HOA fees again. A process server entered plaintiff’s backyard without permission by breaking a closed gate, and then banged on his windows, startling plaintiff as well as his cousin and elderly mother. The police were called, and after they arrived, the process server identified himself and served plaintiff with a 2012 notice of default. Plaintiff sued defendant lawyers for violating the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.). The district court granted the lawyers’ motion for summary judgment and dismissed the case, finding plaintiff’s claim was precluded under Walls v. Wells Fargo Bank, N.A. (9th Cir. 2002) 276 F.3d 502. Reversing, the Ninth Circuit held that Walls precludes claims premised on a violation of a bankruptcy discharge order, but here, plaintiff’s claims were based on the wholly independent ground of full payment. (Manikan v. Peters & Freedman LLP (9th Cir., Nov. 25, 2020) 2020 WL 6938318.)
Uh, uh, uh… Only One 170.6 to a Customer.
In 1919, when a judge on the Orange County Superior Court was presiding as the coordination motion judge, petitioners filed a petition to disqualify the judge pursuant to Code of Civil Procedure § 170.6. The cases were thereafter presided over by another Orange County judge until petitioners filed an action in Los Angeles County. The second Orange County judge granted a coordination petition, finding that Los Angeles was the appropriate venue for the proceedings. The coordinated actions were assigned to a Los Angeles Superior Court judge. Petitioners filed a petition to disqualify that Los Angeles judge, which petition the Los Angeles judge denied. Petitioners brought the instant petition for extraordinary relief, arguing that California Rules of Court, rule 3.516 permited its second 170.6 petition. Rule 3.516 states: “A party making a peremptory challenge by motion or affidavit of prejudice regarding an assigned judge must submit it in writing to the assigned judge within 20 days after service of the order assigning the judge to the coordination proceeding. All plaintiffs or similar parties in the included or coordinated actions constitute a side and all defendants or similar parties in such actions constitute a side for purposes of applying Code of Civil Procedure section 170.6.” Denying the petition for a writ of mandate, the Court of Appeal stated: “Rule 3.516 does not displace section 170.6’s fundamental directive that there shall be “only one motion for each side . . . in any one action or special proceeding.” (§ 170.6, subd. (a)(4).)” (Prescription Opiod Cases (Cal. App. 2nd Dist., Div. 3, Nov. 25, 2020) 2020 WL 6938326.)
Even in a Time of Crisis, the First Amendment Cannot Be Disregarded.
Representatives of both Roman Catholic and Jewish faiths applied for injunctive relief from an executive order of the Governor of New York in response to the pandemic. In red zones, no more than 10 persons may attend each religious service, and in orange zones, attendance is capped at 25. Petitioners maintain that the regulations treat houses of worship much more harshly than comparable secular facilities. Granting the application for injunctive relief, the U.S. Supreme Court stated in a per curiam opinion: “The applicants have clearly established their entitlement to relief pending appellate review. They have shown that their First Amendment claims are likely to prevail, that denying them relief would lead to irreparable injury, and that granting relief would not harm the public interest.” (Roman Catholic Diocese of Brooklyn v. Cuomo (U.S., Nov. 25, 2020) 2020 WL 6948354.)
Reversed for Trial Court to Determine an Award for Disgorgement.
Defendant, a medical organization, retained plaintiffs, an individual and an entity, to produce medical education conferences. Over time, and without informing defendant, the individual plaintiff increased the scope of the entity plaintiff’s services to include developing defendant’s websites and broadcasting live surgeries to defendant’s conferences, and he also arranged to manage symposia for pharmaceutical companies during defendant’s conferences. The effect of some of the individual plaintiff’s activities was the creation of additional profits for his own company. At some point, the individual plaintiff informed defendant it was $2 million in debt to the entity plaintiff. Defendant terminated its relationship with both plaintiffs. Plaintiffs sued defendants for money owed, and defendant cross-complained for disgorgement of profits. After a bench trial, the court found defendant liable to plaintiffs for breach of contract, but declined to award damages on the cross-complaint for disgorgement because defendant did not show it suffered monetary harm. Reversing the judgment on the cross-complaint, the Court of Appeal stated: “Because [cross-complainant] met its burden to establish a reasonable approximation of the amount by which [cross-defendants] profited through their misconduct, the court was required to exercise its discretion to fashion a remedy.” (Center for Healthcare Educ. and Research, Inc. v. International Congress for Joint Reconstruction, Inc. (Cal. App. 4th Dist., Div. 1, Nov. 30, 2020) 2020 WL 7021312.)
Sanctions for Misuse of the Discovery Process Affirmed.
The trial court granted defendants’ motions for summary judgment in a case where an oil worker developed mesothelioma. Additionally, the trial court granted both monetary and issue sanctions against plaintiff and plaintiff’s lawyers. During plaintiff’s deposition, when defendant asked about what information plaintiff had regarding certain issues, the lawyers instructed plaintiff not to answer on the basis the questions called for legal contentions. The trial court clarified the questions did not call for legal contentions and ordered that plaintiff answer the questions. But when the deposition continued, plaintiff did not answer the questions. Affirming the summary judgment, the Court of Appeal stated: “On balance the J’Aire factors [J’Aire Corp. v. Gregory (1979) 24 Cal.3d 799] do not support imposition of liability on the Chevron and Exxon defendants. . . [plaintiff] seeks to impose a duty on the consortium members arising from the Agreement, but the Agreement was never intended to benefit the refinery workers.” With regard to the trial court’s grant of monetary sanctions against both plaintiff and plaintiff’s lawyers as well as issue sanctions, the Court of Appeal found no abuse of discretion in awarding sanctions for misuse of the discovery process. (Sabetian v. Exxon Mobil Corp. (Cal. App. 2nd Dist., Div. 7, Nov. 30, 2020) 2020 WL 7022405.)