Litigation Update: January 2019

California Lawyers Association Litigation Section Logo

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

  • Senior Editor, Eileen C. Moore, Associate Justice, California Court of Appeal, Fourth District
  • Managing Editor, Reuben Ginsburg
  • Editors, Dean Bochner, Glenn Danas, Herb Fox, Jessica Riggin, Anne Voigts and Kenneth Wang
Previously we reported: Droit de Suite [right of following on]

Plaintiffs are artists seeking resale royalties under the California Resale Royalties Act (Civ. Code, § 986; CRRA), a statute that grants artists an unwaivable right to five percent of the proceeds on any resale of their work. The artists sought damages for nonpayment of royalties since the CRRA came into effect on January 1, 1977. The Ninth Circuit Court of Appeals discussed the 1976 federal Copyright Act (17 U.S.C. § 301(a)) and its effective date of January 1, 1978, as well as the earlier 1909 federal Copyright Act. The court held that plaintiffs’ action was preempted by the 1976 act, but not by the 1909 one. Therefore, they could seek damages between the effective date of the CRRA and the effective date of the 1976 Copyright Act, i.e., only between January 1, 1977 and January 1, 1978. (Close v. Sotheby’s, Inc. (9th Cir., July 6, 2018) 894 F.3d 1061.)

The latest:

Defendants asked the Ninth Circuit to grant them prevailing party attorney fees pursuant to Civil Code § 986, subdivision (a)(3). Regarding plaintiffs’ argument that the CRRA fee-shifting provision is preempted by the 1976 Copyright Act, the appeals court held that the fee-shifting provision is not subject to either express or conflict preemption. The appeals court concluded defendants are entitled to a fee award, referring the matter to the Appellate Commissioner to determine the amount. (Close v. Sotheby’s, Inc. (9th Cir., Dec. 3, 2018) 909 F.3d 1204.)

“The problem with socialism is that you eventually run out of other peoples’ money,” Margaret Thatcher.

Plaintiff is a candidate for public office in California. He challenges the Elections Code requirement that the primary ballot list his party preference as “None,” when in reality he prefers the Socialist Party USA. A federal trial court dismissed the action. Reversing, the Ninth Circuit Court stated: “Because California, at this very early stage of the litigation, has failed to demonstrate as a matter of law why its ballot must describe [plaintiff] as having no party preference when in fact he prefers the Socialist Party USA, we reverse and remand.” (Soltysik v. Alex Padilla in his official capacity as Secretary of State(9th Cir., Dec. 3, 2018) 910 F.3d 348.)

Truth in Lending.

Defendant and his companies make short-term loans to cash-strapped borrowers. Between 2008 and 2012, they made more than five million payday loans at triple-digit interest rates. Online borrowers could read the terms and conditions via links to seven documents, one of which made the disclosures required under the Truth in Lending Act (15 U.S.C. § 1601 et seq.) Or borrowers could simply ignore the documents, electronically sign their names and click “I AGREE. Send Me My Cash!” The Federal Trade Commission filed suit against defendant and his businesses for violation of the Federal Trade Commission Act (15 U.S.C. § 45(a)(1)), alleging that defendant violated § 5 of the Act because the terms disclosed in the loan note were likely to mislead borrowers about the real terms of the loan. Finding the loan disclosures were deceptive, the Ninth Circuit upheld the trial court’s award of $1.27 billion and its injunction order. (Federal Trade Commission v. AMG Capital Management (9th Cir., Dec. 3, 2018) 910 F.3d 417.)

Previously we reported: Colleges Have Gone From In Loco Parentis to “You’re On Your Own, Kid.”

A UCLA student suffered severe injuries after being attacked by another student during class. Several months earlier, the school treated the attacker for symptoms of schizophrenia including auditory hallucinations and paranoid thinking. The injured student filed a negligence claim against the Regents for failing to adopt reasonable measures that would have protected her from the attacker’s foreseeable violent conduct. The trial court denied the Regents’ motion for summary judgment, concluding they owed the injured student a duty of care based on her status as a student and, alternatively, as a business invitee onto campus property. The trial court further concluded there was a question of fact whether UCLA had voluntarily undertaken a duty to protect students by providing mental health treatment to the attacker. The Regents sought extraordinary relief in the Court of Appeal. The appellate court granted the petition, stating: “We now grant defendants’ petition, concluding that a public university has no general duty to protect its students from the criminal acts of other students.” (Regents of the University of California v. Superior Court (Cal. App. 2nd Dist., Div. 7, Oct. 7, 2015) 240 Cal.App.4th 1296.)

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

Aware one of its students was having hallucinations and suffering under delusions, a university attempted to provide mental health treatment. However, one morning the student stabbed a fellow student during a chemistry lab. The stabbed student sued the university and several of its employees for negligence, arguing they failed to protect her from foreseeable violent conduct. The California Supreme Court held that a college or university owes a duty of care to protect students from harm, stating: “Considering the unique features of the collegiate environment, we hold that universities have a special relationship with their students and a duty to protect them from foreseeable violence during curricular activities.” (Regents of the University of California v. Superior Court (Cal., Mar. 22, 2018) 4 Cal.5th 607.)

The latest:

This time around, upon remand from the California Supreme Court, the Court of Appeal denied defendants’ petition for writ of mandate challenging the denial of their motion for summary judgment, concluding: (1) the standard of care governing a university’s duty to protect its students from foreseeable acts of violence is the ordinary reasonable person standard; (2) triable issues of fact exist as to whether defendants breached their duty of care to plaintiff; and (3) although Civil Code § 43.92 precludes the psychologist’s liability, the remaining defendants are not statutorily immune from suit. (Regents of the University of California v. Superior Court (Cal. App. 2nd Dist., Div. 7, Dec. 4, 2018) 29 Cal.App.5th 890.)

When a Singing Telegram Doesn’t Effect Service, Be Sure to Publish in the Correct Newspaper!

Plaintiffs attempted service of process on defendant numerous times. Plaintiffs suspected that every time the process server passed through the guard gate at defendant’s gated community, the guard would alert defendant that the process server was on the way. Plaintiffs twice attempted service by mail, but each time the mailing was returned with the word “unknown” written on the envelope. Plaintiffs attempted mail service on a post office box, but the mail was never retrieved. Plaintiffs also sent a singing telegram to defendant on her birthday, but did not make contact. Following all of those attempts at service, plaintiffs obtained an order for publication of the summons in a newspaper. Following publication, plaintiffs proved damages of $1,940,506 at a default hearing. The trial court denied defendant’s motion to vacate the default judgment. Reversing, the Court of Appeal concluded the default judgment was void on its face, stating: “The trial court ordered plaintiffs to publish the summons in The Orange County Register, a newspaper of general circulation published at Orange County, California. Plaintiffs, however, published notice in the Laguna News-Post. This error is fatal to their judgment.” (Calvert v. Binali, (Cal. App. 2nd Dist., Div. 8, Dec. 5, 2018) 29 Cal.App.5th 954.)

To Rescind a Home Refinance Loan for Truth in Lending Act Violations, a Borrower Need Not Bring a Rescission Action, but Simply Notify the Creditor of Intent to Rescind.

In 2004, plaintiffs borrowed money from Wells Fargo Bank to purchase a home. In 2010, they refinanced with Bank of America. At the time of the refinancing, B of A failed to give plaintiffs notice of the right to rescind the loan, which violated the Truth in Lending Act (15 U.S.C. § 1635(a)). In 2013, within three years after the loan’s consummation, plaintiffs sent a notice of intent to B of A to rescind the loan. B of A took no action. In 2017, B of A declared plaintiffs in default and initiated nonjudicial foreclosure proceedings. Plaintiffs filed suit a few months later. The bank moved to dismiss because plaintiffs did not file a rescission action within three years. A federal trial court dismissed plaintiffs’ action. The Ninth Circuit Court of Appeals reversed, stating that borrowers may effect a rescission by simply notifying the creditor within the three-year period of their intent to rescind. (Hoang v. Bank of America, N.A. (9th Cir., Dec. 6, 2018) 910 F.3d 1096.)

Safe Harbor Period for Code of Civil Procedure § 128.5 Sanctions.

A prior version of Code of Civil Procedure § 128.5 expressly incorporated the safe harbor period under Code of Civil Procedure § 128.7. The trial court ordered sanctions against a party under that prior version of the statute. The Court of Appeal reversed because the offending party was not given a safe harbor period to make things right. (CPF Vaseo Associates, LLC v. Gray (Cal. App., 4th Dist., Div. 1, Dec. 6, 2018) 29 Cal.App.5th 997.)

A Voice for Choice Muted.

A nonprofit corporation called “A Voice for Choice” and others challenged the constitutionality of the repeal of the personal belief exception to California’s immunization requirements for children attending public and private schools and child care facilities. The Court of Appeal rejected the challenge, stating that “in 1890, the California Supreme Court rejected a constitutional challenge to a ‘vaccination act’ that required schools to exclude any child who had not been vaccinated against smallpox. . . . In dismissing the suggestion the act was ‘not within the scope of a police regulation,’ the court observed that, ‘while vaccination may not be the best and safest preventive possible, experience and observation . . . dating from the year 1796 . . . have proved it to be the best method known to medical science to lessen the liability to infection with the disease.’” (Love v. State Department of Education (Cal. App. 3rd Dist., Dec. 6, 2018) 29 Cal.App.5th 980.)

“Such madness should not continue,” Justice Sotomayor.

In Glossip v. Gross(2015) 135 S.Ct. 2726, death row inmates in Oklahoma claimed that lethal injection created an unacceptable risk of severe pain in violation of the Eighth Amendment’s prohibition of cruel and unusual punishment, and the U.S. Supreme Court concluded that the inmates did not establish that any risk of harm was substantial when compared to a known and available alternative method of execution. In this case, death row inmates in Tennessee sought a stay of execution and requested to be executed in the electric chair rather than by Tennessee’s lethal injection protocol. The Supreme Court denied the application to stay the execution. Dissenting, Justice Sotomayor wrote: “These cases are the unfortunate byproducts of this Court’s decision in Glossip v. Gross, 576 U.S. ___ (2015). Such madness should not continue.” (Miller v. Parker (U.S., Dec. 6, 2018) 139 S.Ct. 399.)

Meaningful Appellate Review Requires a Clear and Explicit Articulation of the Court’s Evaluative Process.

Since Proposition 57 passed in 2016, the prosecution must make a motion to transfer a minor from juvenile court to a court of criminal jurisdiction in order to have a juvenile who is charged with a felony treated as an adult. In this case, a 15-year-old was charged with murder and other offenses in 2012. At that time, the law permitted a district attorney to charge a juvenile in a court of criminal jurisdiction. A jury convicted the minor of the charged offenses three months before Proposition 57 passed. After the proposition passed, the case was sent to the juvenile court for a retrospective transfer hearing to allow the juvenile court to decide whether the minor should have been tried in juvenile or adult court. The juvenile court decided that he was properly tried in a court of general criminal jurisdiction. The minor petitioned for extraordinary relief, contending the juvenile court abused its discretion and overlooked critical evidence. The Court of Appeal found the juvenile court’s order did not permit meaningful appellate review because it did not clearly and explicitly articulate its evaluative process, and granted the petition, directing the juvenile court to vacate the challenged transfer order and make further findings pursuant to Welfare & Institutions Code § 707, subdivision (a)(2). (C.S. v. Superior Court (Cal. App. 6th Dist., Dec. 6, 2018) 29 Cal.App.5th 1009.)

Previously we reported: No Class Certification in Wage and Hour Case Against Hospital.

Labor Code §§ 512 and 516 require two meal periods for shifts longer than 12 hours. But an Industrial Welfare Commission (IWC) order authorizes employees in the health care industry to waive one of those two required meal periods on shifts longer than 8 hours. In a wage and hour case, the trial court granted summary judgment in favor of a hospital and denied a petition to certify the case as a class action. In 2015, the Court of Appeal concluded the IWC order was partially invalid to the extent it authorized second meal break waivers on shifts longer than 12 hours. Two things happened thereafter. First, as emergency legislation, the Legislature amended Labor Code § 516 to say the meal period waiver provided in the IWC order is valid and enforceable, and second, the California Supreme Court ordered the Court of Appeal to reconsider its cause in light of the change. The Court of Appeal, now concluding the IWC order is valid, affirmed the judgment and orders of the trial court. (Gerard v. Orange Coast Memorial Medical Center (Cal. App. 4th Dist., Div. 3, Mar. 21, 2017) 234 Cal.App.4th 285.)

The latest:

In a unanimous opinion, the California Supreme Court affirmed the Court of Appeal’s opinion, stating: “Considering the relevant statutory and regulatory provisions in light of their history, we agree with the Court of Appeal that the IWC order does not violate the Labor Code.” (Gerard v. Orange Coast Memorial Medical Center (Cal., Dec. 10, 2018) 6 Cal.5th 443.)

U.S. Supreme Court Says Burglary Includes a Vehicle Adapted for Overnight Accommodation.

Under federal law, if a criminal defendant has prior convictions, the sentencing judge must impose a longer sentence. Defendant had prior convictions for burglary. The U.S. Supreme Court said, “[T]he question here is whether the statutory term ‘burglary’ includes burglary of a structure or vehicle that has been adapted or is customarily used for overnight accommodation. We hold that it does.” (United States v. Stitt (U.S., Dec. 10, 2018) 139 S.Ct. 399.)

Value of a Forged Check.

Proposition 47 downgraded several felonies to misdemeanors and permits persons convicted of those felonies to return to court and ask to be resentenced. Under Penal Code § 473, subdivision (b), check forgery is punishable as a felony if the value of the check exceeds $950. Defendant was convicted of felony check forgery for forging an uncashed check in the amount of $1,500. Seeking resentencing, defendant argued that the value of a forged check is no more than the value of the paper it is written on. The trial court rejected that argument and denied the request for resentencing. Affirming, the Supreme Court concluded: “Because forgery requires the intent to defraud, and the stated value of the forged check indicates the severity of the intended fraud, we conclude that when the check contains a stated value, that amount is its value for this purpose.” (People v. Franco (Cal., Dec. 10, 2018) 6 Cal.5th 433.)

Nursing Board May Restrict License Based on Conduct Underlying Applicant’s Criminal Conviction.

Penal Code § 1203.4 allows persons convicted of a crime who then successfully complete probation to obtain a court order dismissing the conviction. The dismissal releases the person “from all penalties and disabilities resulting from the offense of which he or she has been convicted.” Plaintiff was convicted of four misdemeanors, which were later dismissed under Penal Code § 1203.4. Plaintiff subsequently applied for a license to be a registered nurse. The Board of Registered Nursing granted her a probationary license only. Plaintiff successfully petitioned the superior court for a writ of mandate based on Business & Professions Code § 480, subdivision (c), which bars a licensing board from denying a license “solely on the basis of a conviction that has been dismissed pursuant to Section 1203.4.” Reversing, the Court of Appeal concluded that the board may deny or restrict a license based on the conduct underlying a dismissed action, and here plaintiff was twice convicted of petty theft, which bears on her honesty. (Moustafa v. Board of Registered Nursing (Cal. App. 1st Dist., Dec. 10, 2018) 29 Cal.App.5th 1119.)

Failure to Respond to Discovery Results in $4,016,152.39 Award.

In February 2014, the trial court ordered defendant to produce documents relating to a warning about child molesters in church congregations. By November 2014, the documents had not been produced. Plaintiff moved for terminating sanctions. At the hearing, the trial court offered to give defendant more time to produce the documents. Defendant declined the offer and the trial court entered defendant’s default. The court later awarded plaintiff $4,016,152.39 in damages. One of defendant’s arguments on appeal was that the withheld documents related only to punitive damages and that lesser sanctions were in order. Affirming, the Court of Appeal stated: “We cannot conclude the trial court abused its discretion by failing to enter an order that was never suggested.” (J.W. v. Watchtower Bible and Tract Society of New York, Inc. (Cal. App. 4th Dist., Div. 2, Dec. 10, 2018) 29 Cal.App.5th 1142.)

What Does the Notice of Appeal Say?

Time one-trial court granted defendant’s summary judgment motion.
Time two-plaintiff filed a motion for reconsideration.
Time three-the court filed its judgment in favor of defendant.
Time four-plaintiff filed an unsuccessful ex parte application for an order striking the filing of the judgment in an attempt to have the motion for reconsideration heard. At the same time, the court vacated plaintiff’s motion for reconsideration.
Time five-plaintiff filed a timely notice of appeal from the judgment. 
Time six-The Court of Appeal noted that plaintiff did not appeal from the postjudgment order vacating the motion for reconsideration, so it had no jurisdiction to consider that issue. (Donohue v. AMN Services, LLC (Cal. App. 4th Dist., Div. 1, Dec. 10, 2018) 29 Cal.App.5th 1068.)

University Student Was Denied a Fair Hearing.

John Doe was expelled from a university for unauthorized alcohol use, sexual misconduct, sexual assault, and the rape of Jane Doe. The trial court denied his petition for a writ of administrative mandamus. The Title IX (20 U.S.C. § 1681 et seq.) investigator found by a preponderance of evidence that John knew or should have known Jane was too drunk to consent to sexual activity. On appeal, John claimed he was denied a fair hearing. The Court of Appeal agreed and reversed because the investigator did not interview three central witnesses and because the university did not request Jane’s clothes from the time of the incident, nor did it request Jane’s consent to release her medical records from the rape treatment center. (Doe v. University of Southern California (Cal. App. 2nd Dist., Div. 7, Dec. 11, 2018) 29 Cal.App.5th 1212.)

Default Judgments Set Aside due to Extrinsic Mistake.

Plaintiffs served a company with complaints. The company had ceased operating in 1974, and did not respond to the complaints. The trial court entered default judgments against the defendant. Thereafter, plaintiffs served notice of entry of the default judgments on the defendant’s insurer. The insurance company moved to set aside the defaults and default judgments, arguing its insured was a suspended corporation and that the insurance company never had its day in court. The trial court set aside the defaults and default judgments on the ground of extrinsic mistake. The Court of Appeal found no abuse of discretion and affirmed. (Mechling v. Asbestos Defendants (Cal. App. 1st Dist., Div. 5, Dec. 11, 2018) 29 Cal.App.5th 1241.)

Lemon Law Fees, Costs and Prejudment Interest.

A jury awarded plaintiff $17,455.57 in a lemon law case under the Song-Beverly Consumer Warranty Act (Civ. Code, § 1790 et seq.). The court awarded plaintiff $115,848.24 in attorney fees and $24,436.65 in costs and expenses.

  • In ruling on the attorney fee request, the trial court applied a negative multiplier stating: “The three firms billed a total of $351,055.26. This is an excessive amount for a non-complex case. The court will exercise its discretion and reduce this amount to 33%, or $115,848.24, of the original requested amount.” The Court of Appeal reversed, concluding the trial court “abused its discretion in applying the 33% negative multiplier to [plaintiff’s] requested lodestar attorney fees of $351,055. Part of the court’s expressed purpose in applying the negative multiplier was to tie the attorney fee award to a proportion of [plaintiff’s] modest damages award. This was error.” The case was remanded for the trial court to determine a reasonable fee award.
  • As to costs, the trial court disallowed the cost of court reporter trial transcripts. The Court of Appeal reversed, stating that Civil Code § 1794, subdivision (d) covers costs not included in Code of Civil Procedure § 1033.5.
  • Regarding the trial court’s denial of prejudgment interest, the Court of Appeal found that Civil Code § 3287, subdivision (a)’s requirement of a showing of “damages certain, or capable of being made certain by calculation” was not satisfied because there were many issues the fact finder had to make, concluding the trial court did abuse its discretion.

(Warren v. Kia Motors America, Inc. (Cal. App. 4th Dist., Div. 2, Dec. 12, 2018) 30 Cal.App.5th 24.)

Even Big Companies Must Attend to Small Details.

Plaintiff is a large contracting company. The Contractors’ State License Board found plaintiff violated Business & Professions Code § 7110 by failing to obtain a building permit before replacing a boiler. On appeal, plaintiff contended both the administrative law judge and the trial court erred in finding a violation when the failure to obtain a permit was inadvertent because § 7110 requires the failure to be “willful.” Affirming, the Court of Appeal discussed Penal Code § 7 which states: “The word ‘willfully,’ when applied to the intent with which an act is done or omitted, implies simply a purpose or willingness to commit the act, or make the omission referred to. It does not require any intent to violate law, or to injure another, or to acquire any advantage.” The appellate court concluded the term “willful” in § 7110 only requires a showing of general intent. (Acco Engineered Systems, Inc. v. Contractors’ State License Board (Cal. App. 2nd Dist., Div. 5, Dec. 14, 2018) 30 Cal.App.5th 80.)

No Impermissible Delegation of Authority Relating to Execution Protocols.

Plaintiffs are death row inmates who argue a number of executions across the country have been botched due to execution protocols. They contend Penal Code § 3604 violates the separation of powers provision of the California Constitution (art. III, § 3) because it leaves to the California Department of Corrections and Rehabilitation fundamental policy questions regarding the pain, speed, reliability, and secrecy of the execution process. Section 3604 states: “(a) The punishment of death shall be inflicted by the administration of a lethal gas or by an intravenous injection of a substance or substances in a lethal quantity sufficient to cause death, by standards established under the direction of the Department of Corrections and Rehabilitation.” Plaintiffs sought a determination that § 3604 violates the separation of powers clause and that any protocols issued under it are invalid. The trial court sustained defendants’ demurrer to the petition. Affirming, the Court of Appeal agreed with the trial court that plaintiffs have not alleged an improper delegation of authority. (Sims v. Kernan (Cal. App. 1st Dist., Div. 4, Dec. 14, 2018) 30 Cal.App.5th 105.)

Doctor Guilty of Murder for Prescribing Opioids.

Defendant, a doctor, routinely wrote prescriptions for opioids (such as oxycodone, oxymorphone, fentanyl, and hydrocodone), sedatives (such as promethazine and benzodiazepine), muscle relaxants (such as carisoprodol, which is sold under the brand name Soma®), and amphetamines, as well as controlled substances used to treat drug and opioid addictions (such as methadone and buprenorphine/naloxone). Defendant sometimes allowed patients to pick up prescriptions for other patients who were not at the clinic. The evidence presented at trial showed that on at least one occasion defendant prescribed for a patient’s relative, who had never been the doctor’s patient, a controlled substance. Beginning in 2008, pharmacists began to refuse to fill defendant’s prescriptions because the prescriptions raised “red flags.” From 2007 through 2010, the clinic’s gross receipts were approximately $5,000,000. From September 2007 to December 2009, nine of defendant’s patients— ranging from 21 to 34 years of age—died shortly after filling the prescriptions. A jury found defendant guilty of three counts of second degree murder. On appeal, defendant contended substantial evidence did not support his convictions. Finding no merit in that argument, the Court of Appeal affirmed the convictions. (People v. Tseng (Cal. App. 2nd Dist., Div. 1, Dec. 14, 2018) 30 Cal.App.5th 117.)

Employee Union Challenges Superior Court’s Personnel Rules.

The Fresno County Superior Court challenged a decision by the Public Employment Relations Board (PERB) that certain court personnel rules and regulations violate the Trial Court Employment Protection and Governance Act (Gov. Code, § 71600), and thus constitute unfair practices. The personnel rules in question prohibit court employees from (1) wearing clothing or adornments with writings or images, including pins, lanyards and other accessories; (2) soliciting during working hours for any purpose without prior court approval; (3) distributing literature during nonworking time in working areas; and (4) displaying writings or images not published by the court in work areas visible to the public. PERB found certain of the rules violated § 71600. Ruling on a petition for writ of review, the Court of Appeal affirmed PERB’s conclusion invalidating the rule prohibiting the distribution of literature in working areas because the term “working areas” is ambiguous. The remaining conclusions of PERB were set aside. (Superior Court v. Public Employment Relations Board (Cal. App. 5th Dist., Dec. 14, 2018) 30 Cal.App.5th 158.)

Manufacturer Owes No Duty of Care for Injuries Resulting From Product Misuse.

Plaintiffs were injured and one of their family members, a child, was killed when their car was struck by another driver who was using the FaceTime application on his iPhone. Plaintiffs sued Apple Inc., alleging it failed to warn users that the iPhone “was likely to be dangerous when used or misused in a reasonably foreseeable manner.” The complaint quoted portions of Apple’s patent application for lockout technology that says: “Texting while driving has become a major concern” and “an April 2006 study found that 80 percent of auto accidents are caused by distractions such as applying makeup, eating, and text messaging on handheld computing devices.” The trial court sustained Apple’s demurrer without leave to amend. Affirming, the Court of Appeal determined Apple did not owe plaintiffs a duty of care and that plaintiffs cannot show that Apple’s design of the iPhone was a proximate cause of the injuries they suffered. (Modisette v. Apple Inc.(Cal. App. 6th Dist., Dec. 14, 2018) 30 Cal.App.5th 136.)

Perfection of Title Required Before Serving a Three-day Notice to Quit.

A bank sold the promissory note and deed of trust on real property to plaintiff after the previous owner defaulted on the loan. The next day, plaintiff, now the new owner, served a three-day notice to quit on the tenant, defendant. Defendant did not vacate the property, so plaintiff sued for unlawful detainer. The trial court ruled in defendant’s tenant’s favor, and the Court of Appeal reversed. The California Supreme Court reversed the judgment of the Court of Appeal and agreed with the trial court, stating: “We conclude that the new owner must perfect title before serving the three-day written notice to quit.” (Dr. Leevil, LLC v. Westlake Health Care Center (Cal., Dec. 17, 2018) 2018 Cal. LEXIS 9917.)

The Ministerial Exception Does Not Apply.

Plaintiff was fired from her job as a fifth grade teacher in a Catholic school after she told her employer that she had breast cancer and would need to miss work to undergo chemotherapy. She sued her employer under the Americans with Disabilities Act (42 U.S.C. § 12101). A federal trial court granted the employer’s motion for summary judgment. Reversing, the Ninth Circuit stated: “We hold that, assessing the totality of [plaintiff’s] role at [the Catholic school], the ministerial exception does not foreclose her claim.” The appeals court recognized the U.S. Supreme Court’s holding in Hosanna-Tabor Evangelical Lutheran Church & School v. E.E.O.C. (2012) 565 U.S. 171, noting that religious organizations enjoy a broad right to select their own leaders. Finding the present case does not come within the ministerial exception discussed in Hosanna-Tabor, the appeals court found defendant did not hold plaintiff out as a minister and her job duties did not include important religious functions. (Biel v. St. James School (9th Cir., Dec. 17, 2018) 911 F.3d 603.)

“Wine is constant proof that God loves us and loves to see us happy,” Benjamin Franklin.

Homeowners cultivated a vineyard for the purpose of making wine to be sold to the public. The wine was made, bottled and sold commercially offsite and over the Internet. The CC&Rs of their homeownwers association (HOA) did not prohibit the cultivation of a vineyard for this purpose, but did prohibit “any business or commercial activity.” Other homeowners objected to the operation of what they considered to be a commercial vineyard in violation of the prohibition against any business or commercial activity. The HOA’s board of directors decided there was no violation of the CC&R’s. The objecting homeowners brought the present action against several homeowners and the HOA, alleging violation of the CC&R’s and seeking declaratory and injunctive relief. The trial court deferred to the board’s decision and ruled in favor of defendants and awarded them attorney fees and costs. The Court of Appeal concluded the business was not a prohibited one and affirmed the award of fees and costs. (Eith v. Ketelhut (Cal. App. 2nd Dist., Div. 6, Dec. 17, 2018) 2018 Cal. App. LEXIS 1162.)

Juror Told City to Paint its Crosswalk, but Nonetheless Found No Dangerous Condition of Public Property.

A truck ran over a woman in a crosswalk. She sued both the driver and the city. The cause of action against the city was for a dangerous condition of public property because the crosswalk had not been painted for almost 20 years, making it very faded. The jury returned a multi-million dollar verdict against the truck driver, but found in favor of the city, although a note written on the special verdict form read: “Paint the xwalk Salinas!” After trial, the trial court awarded the cty its expert witness fees after finding the city’s $250,000 pretrial offer was reasonable. Concluding the trial court erred in refusing to give a requested verdict form, giving the jury certain instructions requested by the city, and awarding the city its expert fees, the Court of Appeal reversed the judgment in favor of the city. (Guernsey v. City of Salinas (Cal. App. 6th Dist., Dec. 17, 2018) 2018 Cal. App. LEXIS 1170.)

Borrowed Employee Cannot Double Dip.

Plaintiff was injured while working a maritime job for defendant, a shipbuilder. To carry out its work, defendant contracted with labor brokers for temporary personnel. Plaintiff collected statutory workers’ compensation for her injuries from her primary employer, the labor broker, and then she sued defendant. A federal trial court granted defendant’s motion for summary judgment. The Ninth Circuit affirmed, stating: “[W]e join the Third, Fourth, Fifth, and Eleventh Circuits in holding that the borrowed employee doctrine applies to ‘employees’ under the Longshore and Harbor Workers’ Compensation Act.” (Cruz v. National Steel and Shipbuilding Company (9th Cir., Dec. 19, 2018) 910 F.3d 1263.)

Arbitration Under Uninsured Motorist Law Is Limited.

While working for her employer, plaintiff was injured in a collision involving an uninsured motorist. She sought workers’ compensation benefits, and the next year she filed a claim under her personal automobile policy seeking uninsured motorist benefits. The insurance company requested a “final lien” relating to the workers’ compensation benefits. When the insurance company did not pay her claim, plaintiff sought arbitration. When the insurer did not immediately submit to arbitration, plaintiff brought the current action for bad faith and punitive damages, alleging that although she filed a verified final workers’ compensation lien relating to her medical expenses, the insurer neither paid her claim nor submitted to arbitration. After plaintiff gave her insurer information showing she had exhausted the possibility of receiving additional workers’ compensation payments, the insurance company settled her uninsured motorist claim. Then the insurer brought a summary judgment motion in this case, which the trial court granted. Noting the scope of arbitration mandated by Insurance Code § 11580.2 is limited and that double recoveries are not permitted under the statutory scheme and Rangel v. Interinsurance Exchange(1992) 4 Cal.4th 1, the Court of Appeal affirmed. (Case v. State Farm Mutual Insurance Co., Inc. (Cal. App. 2nd Dist., Div. 4, Dec. 18, 2018) 2018 Cal. App. LEXIS 1178.)

Prevailing Party Attorney Fees for Trespass.

Plaintiff, who uses a portion of her 28-acre plot of land to grow plants for a nursery, successfully sued defendant for trespass on her land. The trial court awarded her attorney fees of $289,153.75. Code of Civil Procedure § 1021.9 reads: “In any action to recover damages to personal or real property resulting from trespassing on lands either under cultivation or intended or used for the raising of livestock, the prevailing plaintiff shall be entitled to reasonable attorney’s fees in addition to other costs, and in addition to any liability for damages imposed by law.” On appeal, defendant argued that plaintiff was not entitled to attorney fees because its trespass was not on the portion of land under cultivation, and no crops were damaged. Another appellate argument was that the trial court abused its discretion in not apportioning the fee award between plaintiff’s successful and unsuccessful causes of action. Affirming, the Court of Appeal held the trial court properly awarded prevailing party attorney fees and did not abuse its discretion in the amount it awarded. (Hoffman v. Superior Ready Mix Concrete, L.P. (Cal. App. 4th Dist., Div. 1, Dec. 19, 2018) 2018 Cal. App. LEXIS 1180.)

No Duty Imposed on University to Protect a Fraternity’s Invitees.

An off-campus fraternity held an unauthorized party in the fraternity house’s backyard. When plaintiff and a friend stepped onto a make-shift “stage,” consisting of tables stacked seven feet off the ground, another party goer gave her a sour look and bumped into her, causing her to fall to the ground and sustain serious injuries. Plaintiff sued the university. The trial court denied the university’s motion for summary judgment and the university petitioned for extraordinary relief. Granting the petition, the appellate court stated that a person generally has no duty to protect another from third party harm, and concluded that the university had no special relationship with either the plaintiff or the fraternity giving rise to a duty of care, the negligent undertaking doctrine was inapplicable, and the Rowland v. Christian (1968) 69 Cal.2d 108 factors, on balance, weighed against imposing a duty on the university to protect a fraternity’s invitees from the risk of harm at an off-campus fraternity party. (University of Southern California v. Superior Court (Cal. App. 2nd Dist., Div. 4, Dec. 19, 2018) 2018 Cal. App. LEXIS 1183.)

You Deserve a Break Today.

Plaintiffs pursued a representative action under the Private Attorney General Act (Lab. Code, § 2698 et seq.) claiming defendant failed to provide either meal breaks or additional compensation for certain employees in violation of Labor Code §§ 226.7 and 512. The trial court imposed penalties of $150,000, 75 percent going to the Labor and Workforce Development Agency and 25 percent to the employees. The Court of Appeal affirmed, finding substantial evidence of numerous instances in which employees were working “slightly more” than five hours, but were neither provided breaks nor paid. (Carrington v. Starbucks Corporation (Cal. App. 4th Dist., Div. 1, Dec. 20, 2018) 2018 Cal. App. LEXIS 1190.)

Question of Fact Whether Driver Was Acting in the Course and Scope of his Employment When an Accident Occurred.

Plaintiff was seriously injured while he was a passenger in a truck driven by his father. The two were returning home late in the evening after attending a family gathering. Plaintiff sued his father, the corporation that employed his father, and the corporation that owned the vehicle. The trial court concluded that plaintiff’s father was not acting in the course and scope of his employment and granted summary adjudication to both corporations. Reversing, the Court of Appeal stated: “Here, the evidence shows defendants required the driver to be on call 24 hours a day, seven days a week to respond immediately to cell phone calls for repairs and maintenance needed at the ranches, farms and dairies operated by defendants. Also, there is conflicting evidence about whether the driver was required to use the company-owned vehicle, which contained tools and spare parts, at all times so he could respond quickly to call for repairs at defendants’ various locations. Based on this evidence and other details about the driver’s job, a reasonable trier of fact could find the driver was acting within the scope of his employment when the accident occurred.” (Moreno v. Visser Ranch, Inc. (Cal. App. 5th Dist., Dec. 20, 2018) 2018 Cal. App. LEXIS 1194.)

Inordinate Delay in Seeking to Disqualify Counsel.

In 2004, a law firm was asked to represent a water district in ongoing litigation. Two years later, another public entity that had an existing relationship with the law firm was brought into the litigation. Ten years after that, the public entity demanded the law firm voluntarily recuse itself from further representing the water district. The law firm declined. Six months later, the public entity filed a motion to disqualify the law firm. The trial court denied the motion. On appeal, the public entity argued that its written consent was required before the law firm could represent the water district. Affirming the denial of the motion to disqualify the law firm, the Court of Appeal held that there was substantial evidence to support the trial court’s conclusion the public entity consented to the law firm’s representation of the water district and its inordinate delay in seeking disqualification estopped it from seeking to disqualify the water district’s chosen counsel. (Antelope Valley Groundwater Cases v. Los Angeles County Waterworks District No. 40 (Cal. App. 5th Dist., Dec. 20, 2018) 2018 Cal. App. LEXIS 1195.)

Privacy Rights of an Accused Teacher.

A school district investigated complaints that a teacher who worked as a coach for a girls’ volleyball team yelled and belittled student athletes in public. The school district sent him two letters, a letter of warning and a letter of concern, and those letters were NOT placed in the teacher’s official personnel file. The coach/teacher resigned. Around the same time period, a writer for a local newspaper sought disclosure of the district’s investigation materials, including the two letters. The school district notified the coach/teacher that it intended to release the documents, and the teachers’ union asked the superior court to prevent release of the documents. The court denied the requested relief, and the teachers’ union appealed. The Court of Appeal concluded the California Public Records Act (Gov. Code, § 6250 et seq.) does not require release of the documents because the coach/teacher’s privacy interests outweigh the public interest in their disclosure. (Associated Chino Teachers v. Chino Valley Unified School District (Cal. App. 4th Dist., Div. 2, Dec. 20, 2018) 2018 Cal. App. LEXIS 1192.)

Impounding Cars.

California state law provides that a peace officer may impound a vehicle for 30 days if the vehicle’s driver has never been issued a driver’s license. Relying on this statute, local authorities in California impounded two vehicles because their drivers had not been issued California driver’s licenses. The drivers then sued the municipalities under 42 U.S.C. § 1983 and state civil rights law, contending the impounds violated the Fourth Amendment. A federal trial court granted summary judgment to the defendants on plaintiffs’ state law claims, denied class certification, and granted summary judgment to the plaintiffs on their section 1983 claims. The defendants appealed from the trial court’s grant of summary judgment. Affirming, the Ninth Circuit held that the California statute under which the officers impounded the cars (Veh. Code, § 14602.6, subd. (a)) provides for impounding a vehicle when the driver has never been issued a driver’s license, but the local policy was to impound a car if the driver had never been issued a California driver’s license. The Ninth Circuit further held that the continued impoundment of plaintiffs’ vehicles once the community caretaking interest had dissipated was not a reasonable seizure within meaning of Fourth Amendment. (Sandoval v. County of Sonoma (9th Cir., Dec. 21, 2018) 2018 U.S. App. LEXIS 36147.)

Four Separate Agreements to Arbitrate Signed by Plaintiff; the Trial Court Denied Defendant’s Petition to Compel Arbitration.

Plaintiff signed four agreements to arbitrate. Three of them were signed in 2011 when plaintiff became employed by defendant. The fourth was signed as part of a separation agreement in 2013 when plaintiff’s employment with defendant ended. In this action, plaintiff sued the chief executive officer and members of the board of directors of his former employer for breach of fiduciary duty in taking actions that diluted his stock. On appeal, defendants argued that plaintiff received much of his company stock as compensation for his employment with and separation from the former employer. Affirming the denial of defendant’s petition to compel arbitration, the Court of Appeal explained that plaintiff’s former employment status, and the circumstances under which he received his shares or gained the right to retain them, did not affect defendants’ independent obligations not to breach their fiduciary duties to him or to aid and abet such a breach. The court also held that defendants would have owed plaintiff the same duty if he had acquired the stock in a completely different manner, for example by purchasing it from a third party, or if the only shares he owned were those he acquired before he began working for the Company. (Howard v. Goldbloom (Cal. App. 1st Dist., Div. 4, Dec. 21, 2018) 2018 Cal. App. LEXIS 1198.)

City and Towing Company Alleged to Have a Profitable Deal Going.

Plaintiff alleged in her lawsuit for conspiracy and denial of due process and equal protection under 42 U.S.C. § 1983 that defendants, a city and a towing company, had an agreement whereby the towing company would tow vehicles with more than five parking citations. Plaintiff’s vehicle, a “black chev,” was towed and sold “due to $841 in parking tickets and ‘boot fees.’” But the proceeds were not used to pay the citation arrearages; instead the money was used to pay the towing company for its towing and storage. Five years later, plaintiff’s “2002 black Mercedes” was towed due to $1,244 in unpaid tickets. Plaintiff was unable to recover the Mercedes once she discovered the parking tickets associated with the “black chev” remained unpaid. The trial court sustained defendants’ demurrer without leave to amend. The Court of Appeal held that the trial court did not err with regard to the cause of action for conspiracy because the complaint alleges the conspiracy was formed after the “black chev” was sold and contains no allegations of acts in furtherance of a conspiracy. However, as to the second cause of action for denial of due process and equal protection, the appellate court found that plaintiff had adequately alleged a cause of action because the complaint alleged a violation of Vehicle Code § 22851.1, which states how the proceeds of the sale should have been distributed. The appeals court explained that a § 1983 claim may be based on a showing that the defendant, acting under color of state law, deprived the plaintiff of a federally protected right. (Modacure v. B&B Vehicle Processing, Inc. (Cal. App. 1st Dist., Div. 5, Dec. 21, 2018) 2018 Cal. App. LEXIS 1201.)

EIR Inadequate.

On a site formerly zoned agricultural, a project was planned to develop the Central Valley’s first master-planned “pedestrian friendly” community. Through its board of supervisors, the county received written comments to a draft Environmental Impact Report (EIR), held a public hearing, and approved the project. Plaintiffs, various environmental groups, filed a petition for writ of mandamus in the trial court, alleging that the EIR violated the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.). The trial court rejected plaintiffs’ challenges and approved the project. The Court of Appeal affirmed the judgment in part and reversed in part. The California Supreme Court addressed the standard of review that applies to a challenge to the adequacy of an EIR’s discussion of environmental impacts and mitigation measures, and issues concerning the adequacy of mitigation measures. The Supreme Court concluded that a reviewing court must decide whether the EIR serves its purpose as an informational document, which is to provide enough detail to enable those who did not participate in its preparation to understand and meaningfully consider the issues raised by the proposed project. California’s highest court held that the EIR failed to provide an adequate discussion of the health problems likely to result from the project’s adverse air quality impacts. The high court concluded that the project did not improperly defer mitigation measures. (Sierra Club v. County of Fresno (Cal., Dec. 24, 2018) 2018 Cal. LEXIS 9831.)

Ninth Circuit Clarifies Summary Judgment Standard for False Advertising Claims.

Plaintiff filed a class action against defendants, two sellers of nutritional supplements, alleging violations of California’s unfair competition law (Bus. & Prof. Code, § 17200 et seq.; UCL), and Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.; CLRA) and breach of express warranty. Plaintiff claims the products’ labels say the products can improve cognitive functions when in fact they cannot. In a federal trial court, plaintiff supported her allegations with expert and other scientific evidence. Nonetheless, because defendants produced contrary expert evidence, the trial court granted summary judgment to defendants. The Ninth Circuit reversed, acknowledging a split between district courts in the circuit over the summary judgment standard that applies to false advertising claims under California’s UCL and CLRA. The Ninth Circuit clarified that UCL and CLRA claims should be analyzed in the same manner as any other claim, and the usual summary judgment rules apply. (Sonner v. Schwabe North America, Inc. (9th Cir., Dec. 26, 2018) 2018 U.S. App. LEXIS 36460.)

Demand Futility.

Plaintiff brought a shareholder derivative action on behalf of The Walt Disney Company, incorporated in Delaware, alleging that its board of directors and several corporate officers participated in a conspiracy to restrict competition for labor by agreeing with other animation studios not to make cold calls to hire each other’s technicians. In his complaint, plaintiff admitted that he had not made a demand on the Board. Defendants moved to dismiss the complaint for failure to plead demand futility. A federal trial court granted the motion, explaining that plaintiff alleged, at most, that a few high-level employees and officers knew of and participated in the alleged conspiracy, and these allegations were not sufficient to establish demand futility under Delaware law because they did not show that at least six members of the current board faced a substantial likelihood of personal liability for violating their fiduciary duties. The Ninth Circuit noted that a smoking gun showing board knowledge was not required, and plaintiff could instead allege particular facts supporting an inference of conscious inaction that would excuse a demand on the board. The appeals court concluded the district court did not abuse its discretion in determining that it could not impute knowledge to the director defendants solely because some of the officer defendants engaged in a conspiracy and discussed it among themselves. (Towers v. Iger (9th Cir., Dec. 26, 2018) 2018 U.S. App. LEXIS 36461.)

Previously we reported: “My religion is very simple. My religion is kindness,” Dalai Lama.

Parents, students, school district employees, and others are the plaintiffs here. They challenge religious exercises at a local school board’s meetings that include praying, Bible reading, and preaching. The prayers are usually led by a member of the clergy selected from local religious groups. Finding the school district’s practice of praying violates the establishment clause, a federal trial judge granted summary judgment in favor of plaintiffs. The Ninth Circuit Court of Appeals stated “The Establishment Clause serves intertwined purposes . . . . The Clause protects ‘the individual’s freedom to believe . . . . [Citation.] It likewise ensures that the government in no way acts to make belief—whether theistic or nontheistic, religious or nonreligious—relevant to an individual’s membership or standing in our political community.” In affirming the grant of summary judgment, the appeals court said: “The Board’s prayer policy and practice violate the Establishment Clause. . . . This is not the sort of solemnizing and unifying prayer, directed at lawmakers themselves and conducted before an audience of mature adults free from coercive pressures to participate, that the legislative-prayer tradition contemplates. [Citations.] Instead, these prayers typically take place before groups of schoolchildren whose attendance is not truly voluntary and whose relationship to school district officials, including the Board, is not one of full parity.” (Freedom From Religion Foundation, Inc. v. Chino Valley Unified School District (9th Cir., July 25, 2018) 896 F. 3d 1132.)

The latest:

The Ninth Circuit denied a petition for rehearing en banc. One judge, joined by seven others, filed an opinion that included the following: “With respect, I believe our court’s refusal to rehear this case en banc is a needless mistake. The practice of Defendant-Appellant Chino Valley Unified School District Board of Education to begin its regular public meetings with prayer does not constitute an establishment of religion in any sense of that term.” (Freedom From Religion Foundation, Inc. v. Chino Valley Unified School District (9th Cir., Dec. 26, 2018) 2018 U.S. App. LEXIS 36459.)

Attorney Fees for Work Done Following a Negotiated Settlement After an Offer to Compromise Pursuant to Code of Civil Procedure § 998.

In a “lemon law” case under the Song-Beverly Consumer Warranty Act (Civ. Code, § 1790 et seq.), following defendant’s second offer to compromise, the parties negotiated a settlement for an amount greater than the offer to compromise made pursuant to Code of Civil Procedure § 998. The settlement declared plaintiffs the prevailing parties for purposes of seeking an award of attorney fees. The trial court awarded attorney fees to plaintiffs. In its order, the trial court substantially reduced the amount of fees, concluding plaintiffs should not have continued to litigate the matter after the second offer to compromise. Plaintiffs appealed. Reversing, the Court of Appeal held that disallowing fees after the second offer to compromise was arbitrary and unsupportable. It remanded the matter to the trial court with directions to award plaintiffs reasonable fees that include amounts for the work done after the second offer to compromise. (Etcheson v. FCA US LLC (Cal. App. 4th Dist., Div. 1, Dec. 27, 2018) 2018 Cal. App. LEXIS 1212.)

Previously we reported: There’s No “Me Too” in the Military: the Feres Doctrine Slams and Locks the Door Again.

In Feres v. United States (1950) 340 U.S. 135, the U.S. Supreme Court held that despite the Federal Tort Claims Act, the government nonetheless enjoys sovereign immunity from tort claims involving injuries to service members that were “incident to military service.” In this case, a service woman gave birth to a baby. She experienced postpartum hemorrhaging and died approximately four hours after delivery. The woman’s husband brought an action for medical negligence at the naval hospital, and a federal trial court dismissed the case under the Feres doctrine. In affirming, the Ninth Circuit Court of Appeals stated: “If ever there were a case to carve out an exception to the Feres doctrine, this is it. But only the Supreme Court has the tools to do so.” (Daniel v. United States (9th Cir., May 7, 2018) 889 F.3d 978.)

The latest:

Could This Be an Indication the Feres Doctrine Will Be Reconsidered? 

The husband, now a widower, filed a petition for certiorari in the U.S. Supreme Court on October 16, 2018. The U.S. Solicitor General waived the right to respond. But the high court ordered the federal government to provide a formal response by December 28. However, the government asked for more time, and its response is now due January 28, 2019. (Daniel v. United States, No. 18-460.)

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