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, Julia C. Shear Kushner
- Editors, Dean Bochner, Jessica Riggin, David Williams, Ryan H. Wu, and Greg Wolff
Tragedy During School Field Trip.
An autistic high school student went on a school field trip. A school aid was watching the student while he was in a swimming pool. Three lifeguards were also monitoring the pool. The aide watched the boy leave the pool and go into the locker room. The aide waited in a designated observation area for the boy to change and come outside again. Unbeknownst to the aide, the boy did not change and instead returned to the pool. Five minutes later, the aide found lifeguards trying unsuccessfully to resuscitate the boy, who had drowned. His parents sued the school district under 42 U.S.C. § 1983, for deprivation of familial relationship. The district court granted summary judgment for defendants. Noting no genuine dispute of fact, since there was undisputed evidence that the boy was never left completely without protection in that at least four individuals were tasked with supervising him while he was in the pool, the Ninth Circuit affirmed the judgment for the school district, the aide, and the county. (Herrera v. Los Angeles Unified School District (9th Cir., Dec. 1, 2021) 18 F.4th 1156.)
Prefiling Notice Requirement for a PAGA Claim.
In a wage and hour action, the trial court dismissed with prejudice plaintiffs’ representative cause of action under the Private Attorneys General Act (Lab. Code, § 2698 et seq.; PAGA), for failure to satisfy the act’s notice requirements. Before bringing a PAGA claim, a plaintiff must comply with the administrative procedures outlined in Labor Code § 2699.3, requiring notice to the Labor and Workforce Development Agency (LWDA), and allowing the employer an opportunity to cure certain violations. (Lab. Code, §§ 2699.5, 2699, subds. (a), (c), (g)(1).) To satisfy these requirements, plaintiffs’ attorney provided written notice to the LWDA stating plaintiff was employed by defendant employer from 2011 to 2015, and was not given meal or rest breaks, or accurate wage statements. The notice stated that the employer knew of the violations because it used a time card machine, and the payroll records plaintiff eventually received showed numerous shifts worked without meal breaks and without “clock outs for rest periods.” The notice listed the statutes allegedly violated and that plaintiff wished to proceed under PAGA. The trial court concluded this notice was inadequate and granted judgment on the pleadings. Reversing, the Court of Appeal held that the “notice alerted the agency and defendants to ongoing Labor Code violations that were not by nature isolated or unique to plaintiffs, the notice was not deficient for failing to reference other aggrieved employees implicated by the representative action. Plaintiffs’ letter provided fair notice to the agency of representative claims for meal break, rest break, and overtime violations.” (Santos v. El Guapos Tacos, LLC (Cal. App. 6th Dist., Dec. 1, 2021) 72 Cal.App.5th 363.)
Labor Code § 226 Is Not Preempted by Federal Law.
In Ward v. United Airlines, Inc. (2020) 9 Cal.5th 732, a group of airline pilots and flight attendants who perform duties across the country, sued their employer alleging that it failed to provide wage statements compliant with Labor Code § 226, subdivision (a) (§ 226(a)). The California Supreme Court explained that these employees were entitled to § 226(a)-compliant wage statements if California qualified as the employee’s principal place of work. Plaintiffs here are flight attendants who alleged that their employer, Alaska Airlines, failed to provide § 226(a)-compliant wage statements. They sought penalties under the Private Attorneys General Act of 2004 (Lab. Code, § 2699 et seq.; PAGA). After a bench trial, the court concluded that § 226(a) applied to the flight attendants because their employment was based in California and Alaska Airline’s wage statements was noncompliant. The court found Alaska Airlines liable for over $25 million in heightened penalties under § 226.3 of PAGA. The court also awarded attorney fees to plaintiffs. Affirming in part and reversing in part, the Court of Appeal stated: “[W]e reject Alaska’s argument that application of section 226 is preempted by federal law and affirm the trial court’s determination that the flight attendants in this case are entitled to section 226(a)-compliant wage statements. We conclude, however, that the trial court erred in awarding heightened penalties under section 226.3 because the plain language of the statute provides that heightened penalties apply only where the employer fails to provide wage statements or fails to keep required records, which is not the situation here. Accordingly, we reverse the penalties awarded under section 226.3 and remand the matter to the trial court to determine the penalty amount under section 2699, subdivision (f)(2) of PAGA. We also conclude that, on this record, reversal of the penalty award does not require vacation of the attorney’s fees award.” (Gunther v. Alaska Airlines, Inc. (Cal. App. 4th Dist., Div. 1, Dec. 1, 2021) 72 Cal.App.5th 334.)
Breach of Contract Where There Had Been an Agreement, But It Had Not Yet Been Reduced to a Formal Writing.
A man was injured in a car accident. The man and the insurer for the driver reached an agreement whereby the insurer would pay the man $100,000 for his personal injuries. But when the release arrived, it required the man to release the insurer from claims for both personal injury and property damage. The man refused to sign, and instead sued the driver for both personal injury and property damage. The insurance company responded in kind, and counter-sued the man for breach of contract, alleging he reneged on his agreement to settle his personal injury claim for $100,000. The trial court granted summary judgment for the insurer. Affirming, the Court of Appeal stated: “We are confident that an objective observer would conclude from those communications that the parties intended to settle Hodroj’s bodily injury claim for the amount of the insurance policy limits ($100,000) and to later memorialize those terms in a formal document. That the proposed document contained terms materially different from what had been agreed to does not change the binding effect of the initial agreement. Hodroj was under no obligation to sign a release that was inconsistent what he agreed to. But a proposed writing that does not accurately reflect the terms of an agreement does not unwind the entire deal. The contract formed by the parties’ offer, acceptance, and consideration is still enforceable. Hodroj breached the contract here by filing suit on the bodily injury claims he had agreed to settle.” (CSAA Insurance Exchange v. Hodroj (Cal. App. 6th Dist., Dec. 1, 2021) 72 Cal.App.5th 272.)
Group Boycott and Price-Fixing Allegations.
A group boycott occurs when multiple producers refuse to sell goods or services to a particular consumer. The City of Oakland alleged the National Football League (NFL) created artificial scarcity in the number of NFL teams and then used that scarcity to demand supra-competitive prices from host cities. When the city could not pay those prices, the NFL moved the Raiders to Las Vegas. The city contends that the NFL’s conduct amounts to an unreasonable restraint of trade in violation of § 1 of the Sherman Act (15 U.S.C. § 1), because it was, in effect, a group boycott and a horizontal price-fixing scheme. The district court dismissed the action for failure to state a claim. Affirming, the Ninth Circuit stated: “We hold that the district court properly dismissed the City’s Sherman Act claim for failure to state a claim upon which relief may be granted. The City’s group boycott theory fails to state a claim because the City has not alleged that more than one team refused to deal with the City. The City’s horizontal price-fixing theory fails because the City has not adequately alleged antitrust standing. Although the City has alleged antitrust injury, it has not alleged with sufficient certainty that it would have purchased the product (i.e., that the Raiders would have stayed in Oakland), and under what terms, in a hypothetical competitive market.” (City of Oakland v. Oakland Raiders (9th Cir., Dec. 2, 2021) 20 F.4th 441.)
Be Careful What You Wish for . . . in the Corporate Dissolution Setting.
The three parties to this action are siblings and co-equal general partners of a family limited partnership. Bruce sued to dissolve the partnership. In response, Phillip and Judith initiated a statutory procedure to buy out Bruce’s interest. The court-appointed appraisers submitted valuations that Bruce considered too low, so he dismissed his complaint without prejudice. Phillip and Judith moved to vacate the dismissal and the court granted their motion. Declining to issue a writ of mandate to reverse the lower court’s order, the Court of Appeal stated: “Here, Bruce’s dismissal of the dissolution cause of action would frustrate the statutory scheme under [Corporations Code §] 15908.02. Under that statute, once the buyout procedure has been ordered, the plaintiff’ s dissolution action is stayed . . . . If Bruce is allowed to dismiss his dissolution action and then permitted to file a new action for dissolution, he would effectively nullify the order staying the action and deny Phillip and Judith the relatively quick and efficient resolution of the issue the buyout procedure was intended to provide. Indeed, as the trial court observed, each time Bruce ‘is unhappy’ with the appraiser’s valuations, he could simply dismiss his action and start over with a new complaint. The result not only frustrates the statutory scheme, but is patently unfair to Phillip and Judith and an obvious waste of judicial resources.” (Guttman v. Guttman (Cal. App. 2nd Dist., Dec. 2, 2021) 72 Cal.App.5th 396.)
Question About the Economic Loss Rule Certified to the California Supreme Court.
Uber Technologies retained an attorney in Argentina to serve as its legal representative in launching its ridesharing platform in Argentina. According to that attorney, the plaintiff here, Uber concealed its launch plans from plaintiff and launched before its Argentine subsidiary was fully formed and registered with the proper tax authority. As a result, plaintiff was subject to personal liability under Argentine law. Within days of the launch, law enforcement authorities raided plaintiff’s office and the homes of his business colleagues. In the operative complaint, plaintiff alleged claims of negligence, breach of the implied covenant of good faith and fair dealing, fraudulent concealment, and aiding and abetting fraudulent concealment. Applying California law, the district court concluded that plaintiff’s negligence and breach of the implied covenant claims were time barred. The district court also held that the fraudulent concealment claims were foreclosed by the economic loss rule—a doctrine that prevents a party to a contract from recovering economic damages resulting from breach of contract under tort theories of liability. Accordingly, the district court dismissed the complaint. The Ninth Circuit certified this question to the California Supreme Court: “Under California law, are claims for fraudulent concealment exempted from the economic loss rule?” (Rattagan v. Uber Technologies, Inc. (9th Cir., Dec. 6, 2021) 19 F.4th 1188.)
Previously we reported:
Constitutional Challenge to School Closures During Pandemic.
Plaintiffs are parents and a student who challenged California’s extended prohibition on in-person schooling during the COVID-19 pandemic. The district court granted summary judgment in favor of California and dismissed the case. Affirming in part and reversing in part, the Ninth Circuit stated: “Because the State’s evidentiary showing was insufficient to establish, as a matter of law, that its school-closure order was narrowly tailored as applied to the five private-school Plaintiffs, we reverse the district court’s grant of summary judgment to the State on those Plaintiffs’ substantive due process claim, and we remand for further proceedings. We remand also for the district court to consider the private-school Plaintiffs’ challenge under the Equal Protection clause in light of our conclusion that the State’s actions implicate a fundamental right of those Plaintiffs. We otherwise affirm the district court’s grant of summary judgment.” (Brach v. Newsom (9th Cir., July 23, 2021) 2021 WL 3124310.)
The above opinion was ordered vacated, and the matter will be heard en banc. (Brach v. Newsom (9th Cir., Dec. 8, 2021) 18 F.4th 1031.)
Voting Rights Battles Continue.
When voting by mail in Arizona, the voter must complete a ballot and also sign an affidavit attesting thatthe voter personally has cast the ballot. Sometimes voters neglect to sign the affidavit. Election officials in Arizona scrupulously examine each affidavit to ensure that it is signed. If the signature is missing, officials notify the voter that the unsigned ballot is invalid and that the voter may cast a replacement or provisional ballot. Arizona long has allowed voters to correct a missing signature by casting a replacement or provisional ballot, provided that the voter does so by the election-day deadline. The Arizona Democratic Party, the Democratic National Committee, and the Democratic Senatorial Campaign Committee brought this action challenging the election-day deadline for voters who neglect to sign the affidavit as a violation of the First and Fourteenth Amendments and as a denial of procedural due process. The district court agreed with plaintiffs and ordered Arizona to extend the deadline to sign the affidavit. Reversing and vacating the injunction, the Ninth Circuit stated: “[T]he State has an important regulatory interest in reducing the administrative burden on poll workers, especially during the busy days immediately following an election. In light of the minimal burden on the voter to sign the affidavit or to correct a missing signature by election day, the State’s interest sufficiently justifies the election-day deadline.” (Arizona Democratic Party v. Hobbs (9th Cir., Dec. 8, 2021) 18 F.4th 1179.)
No Arbitration in Employment Dispute.
An employee submitted an electronic application for employment that contained an agreement to arbitrate disputes as a precondition to employment. When a dispute arose and the employee sued the employer, the employer petitioned the court to order the matter into arbitration. The trial court denied the motion, finding the agreement was procedurally unconscionable because the plaintiff was required to sign it as a precondition to his employment; and substantively unconscionable because of its limits on discovery and because it shortened the statute of limitations to one year for all claims. Affirming, the Court of Appeal agreed with the trial court’s unconscionability findings and found the court did not abuse its discretion by refusing to sever any portion of the arbitration agreement. (De Leon v. Pinnacle Property Management Services, LLC (Cal. App. 4th Dist., Div. 3, Dec. 8, 2021) 72 Cal.App.5th 476.)
Motion to Reduce Spousal Support Denied, and Sanctions Ordered.
A former husband moved for a reduction of spousal support in family court. The court denied the request and the former husband appealed, contending the court failed to consider criteria under Family Code § 4320; erroneously excluded live testimony; and abused its discretion by issuing attorney fee sanctions against him. Affirming, the Court of Appeal stated: “Although by statute the trial court must consider section 4320 factors in deciding whether to modify a spousal support order, the statute does not purport to require the court to address each factor expressly;” “Consideration of the factors identified in Rule 5.113 [of the California Rules of Court] supports the court’s finding of good cause to deny live testimony;” and, “Husband claims both his due process and statutory rights were violated. Section 271, subdivision (b) provides that an award of attorney fees as sanctions shall be imposed only after notice and opportunity to be heard. This does not mean that wife was required, as husband suggests, to file a formal noticed motion seeking sanctions. Wife asked for sanctions under section 271 in her opposition to husband’s moving papers. Husband, thus, had an opportunity to address sanctions in his reply and at the hearing.” (In re Marriage of Kahan and Diamond (Cal. App. 2nd Dist., Div. 5, Dec. 9, 2021) 72 Cal.App.5th 595.)
Challenge to Texas Abortion Law to Proceed . . . While Law Remains in Effect.
Texas enacted a statute that does not allow state officials to bring criminal prosecutions or civil enforcement actions when physicians perform prohibited abortions. Instead, the statute directs enforcement through private civil actions culminating in injunctions and statutory damages against those who perform or assist in performing prohibited abortions. Abortion providers requested emergency injunctive relief in the U.S. Supreme Court, which denied the request. Here, abortion providers filed a second emergency request, asking the nation’s highest court to resolve its appeals in the first instance without awaiting rulings from the Fifth Circuit. The high court placed this matter on an expedited schedule and held that a pre-enforcement constitutional challenge to Texas Senate Bill 8—the Texas Heartbeat Act—may proceed past the motion to dismiss stage against certain named defendants but not others. (Whole Woman’s Health v. Jackson (U.S., Dec. 10, 2021) 142 S.Ct. 522.)
Plaintiff’s Unruh Act Claim Allowed to Remain in Federal Court.
Plaintiff, who uses a wheelchair, alleged denial of access to defendant’s liquor store. Plaintiff sued the liquor store under the Americans with Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.; ADA) and the Unruh Act (Civ. Code, § 51 et seq.). The district court granted summary judgment for plaintiff on the ADA claim but dismissed the Unruh claim without prejudice to refiling it in state court. The court explained that recent changes in California law made it more difficult to file an Unruh claim in state court, and to allow plaintiff to evade California requirements was contrary to federal-state comity. The Ninth Circuit explained that: “Because . . . every violation of the ADA in California is automatically a violation of the Unruh Act, the net practical consequence is to create a state law cause of action that permits, for California-based ADA claims, a damages remedy that is not available under the ADA.” The appeals court nonetheless reversed the dismissal of plaintiff’s Unruh claim because of comity, judicial economy, supplemental jurisdiction, convenience, and fairness. (Arroyo v. Rosas (9th Cir., Dec. 10, 2021) 19 F.4th 1202.)
Sheriff’s Appeal of COVID Injunction Dismissed.
Several inmates in Orange County jails brought a civil rights action under 42 U.S.C. § 1983 and other federal statutes against the county and sheriff for alleged failure to combat COVID-19. The district court issued a preliminary injunction under the Prison Litigation Reform Act (42 U.S.C. § 1997e; PLRA) requiring adequate spacing, hygiene, and laundry services. The sheriff appealed. Dismissing the appeal as moot, the Ninth Circuit stated: “Because the PLRA provides that any preliminary injunction automatically expires 90 days after being issued (absent further finalization), the injunction and provisional class certification are no longer in effect.” (Ahlman v. Barnes (9th Cir., Dec. 10, 2021) 20 F.4th 489.)
County Could Have Avoided Burden of Sorting Through Its Documents to Find Out Which Might Be Privileged “by Simply Setting Privileged Documents Apart.”
A county refused to comply with a public record request for five years’ worth of emails between the county and four domain addresses, contending the request was too burdensome because it would require the county to review its records to sort out which documents might be privileged. The trial court agreed with the county that the request was too burdensome. Granting a petition for writ of mandate filed by the party requesting the emails, the Court of Appeal explained: “An agency cannot resist disclosure based on the burden stemming from actions needed to assuage an abstract fear of improvident disclosure, a fear that could be avoided by simply setting privileged documents apart.” (Getz v. Superior Court of El Dorado County (Cal. App. 3rd Dist., Dec. 13, 2021) 72 Cal.App.5th 637.)
First-to-File Rule Under the Insurance Fraud Protection Act.
State Farm filed an action against a medical doctor for fraudulent billing related to epidural steroid injections pursuant to the Insurance Fraud Protection Act (Ins. Code, § 1871 et seq.; IFPA). However, the IFPA contains a first-to-file provision to prevent duplicative lawsuits—and as it turned out, a month prior to the filing of the present action, Allstate had filed a fraud action against the same defendant, also relating to fraudulent billing of epidural steroid injections. The trial court sustained defendant’s demurrer under the first-to-file rule. Reversing, the Court of Appeal noted that State Farm’s action differed from Allstate’s action, in that each contained a different pool of victims: That is, Allstate’s complaint only sought IFPA penalties for false insurance claims that defendant submitted to Allstate, while State Farm’s complaint sought penalties for claims that defendant submitted to any insurer. The Court of Appeal also differentiated the IFPA from the federal False Claims Act (31 U.S.C. § 3729 et seq.; FCA), stating: “The IFPA seeks to prevent insurance fraud. Insurers, not the federal government, are the direct victims of the fraud. Unlike an FCA claim, the same fraudulent scheme can have numerous direct victims.” The appeals court therefore held: “If each complaint seeks penalties for false insurance claims relating to different groups of insurer-victims, the first-to-file rule does not apply.” (People ex rel. State Farm Mutual Automobile Insurance Company v. Rubin (Cal. App. 4th Dist., Div. 3, Dec. 14, 2021) 72 Cal.App.5th 753.)
When Immigration Official Waves a Non-Citizen into the U.S., the Non-Citizen’s Entry Is Not Necessarily Legal.
Petitioner, a Canadian citizen , was deported in 1990. In 1991, he reentered the United States. At the border check point, a border official waved him in. Years later, the Department of Homeland Security again ordered him removed under the Immigration and Nationality Act. A divided three-judge panel of the Ninth Circuit granted his petition for review, holding that his reentry was not illegal because he was purportedly waved into the country, and that a noncitizen’s status of inadmissibility, standing alone, was insufficient to render the reentry illegal. Sitting en banc, the appeals court decided otherwise, and concluded that DHS did not err in reinstating the removal order. Observing that the Immigration and Nationality Act does not define the phrase, “reentered the United States illegally,” the en banc court looked to the language’s ordinary meaning. Applying the ordinary and commonly understood meaning of “illegal,” as reflected in dictionary definitions, the en banc court concluded that a noncitizen reenters “illegally” when the noncitizen is forbidden by law from gaining admission into the country. The reentry was therefore illegal, and the court affirmed DHS’s reinstatement of the removal order. (Tomczyk v. Garland (9th Cir., Dec. 14, 2021) 20 F.4th 495.)
Coastal Commission’s Approval of Development Reversed.
Both Monterey County and the California Coastal Commission approved development plans for coastal property. Environmental groups brought a petition for writ of mandate, contending approval of the plans violated the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.; CEQA), and the California Coastal Act of 1976 (Pub. Resources Code, § 30000 et seq.). The trial court denied the writ and the environmental groups appealed. The Court of Appeal vacated denial of the writ and ordered the trial court to grant the writ petition because the Coastal Commission had failed to complete the requisite environmental review before approving the developer’s application. Notably, Coastal Commission staff had recommended denying the permit due to lack of an adequate water supply. The Coastal Commission granted the permit anyway, but the staff did not issue a revised analysis sufficient to support the grant until almost a year later. Additionally, the Coastal Commission did not meaningfully consider alternatives and mitigation measures, and even the staff’s revised findings did not reflect what was said at the public hearing. (Friends, Artists & Neighbors of Elkhorn Slough v. California Coastal Commission (Cal. App. 6th Dist., Dec. 14, 2021) 72 Cal.App.5th 666.)
Court Found Probability of Prevailing on the Merits Despite Protected Activity in Anti-SLAPP Motion.
A political consultant designed and distributed two campaign mailers to voters for a city council election. The mailers included statements about a local real estate developer and his litigation history with the city, and linked the developer to certain candidates. The developer sued the consultant for libel based on allegedly false statements about him in the mailers, and the consultant in turn filed an anti-SLAPP motion (Code Civ. Proc., § 425.16). The trial court denied the anti-SLAPP motion, finding that although the complaint arose from protected conduct, the developer demonstrated a probability of prevailing on his defamation claim, noting the mailers could be reasonably read as falsely implying the developer had been found liable for fraud and paid fraud damages. The court further found the developer was a limited purpose public figure and thus had to prove actual malice, and he had demonstrated a probability of proving the consultant knew of or recklessly disregarded the falsity of the implication that the developer had been adjudged liable for fraud. Affirming, the Court of Appeal agreed with the trial court’s analysis and concluded that “the mailers in question could reasonably be understood by an average Dana Point voter to imply that Edward was found liable for fraud and paid money damages to the City as a result.” (Edward v. Ellis (Cal. App. 4th Dist., Div. 3, Dec. 14, 2021) 72 Cal.App.5th 780.)
Court Found No Protected Activity in Anti-SLAPP Motion.
Plaintiff wrote a creative work called Main Justice, a proposed television plot. He sued his former talent agents for breach of fiduciary duty, breach of contract, and other wrongs. He alleged that they used his work to assist in the development of a competing project, also titled Main Justice, for another client. The agents moved to strike under the anti-SLAPP statute (Code Civ. Proc., § 425.16). The trial court denied the motion, ruling that, although the actions of the talent agents was protected speech activity, the writer demonstrated the requisite merit of his claims. Affirming, the Court of Appeal agreed that the challenged conduct arose from protected speech. But, “when the context and content of the specific allegedly wrongful statements are considered, their degree of connection to a topic of public interest [wa]s insufficient to warrant protection.” (Musero v. Creative Artists Agency, LLC (Cal. App. 2nd Dist., Div. 7, Dec. 15, 2021) 72 Cal.App.5th 802.)
Group Objects to Anti-Bias Training by School District.
A group of Santa Barbara County residents sued a school district after the district hired a company to provide anti-bias training to its educators and others, contending the contracts were approved without public bidding. The trial court found for the district. Affirming, the Court of Appeal agreed with the trial court that no bidding process was required because the company was hired to perform special services and the facilitators in the company had a unique understanding of the issues within the school district. (Fair Education Santa Barbara v. Santa Barbara Unified School District (Cal. App. 2nd Dist., Div. 6, Dec. 15, 2021) 72 Cal.App.5th 884.)
When an Arbitrator Fails to Disclose, the Party Raising that Issue Must Object at the Earliest Practicable Opportunity.
The trial court denied plaintiff’s petition to confirm an arbitration award and granted defendant’s petition to vacate the award, reasoning that the arbitrator did not disclose work on a prior case involving plaintiff’s lawyers. The prior case settled before there was a final award. Here, on appeal, the parties argued over whether the disclosure requirement in Code of Civil Procedure § 1281.9 required the arbitrator to disclose an interim award, and whether the omission was sufficiently material to require vacation of the award in the current case. Reversing, the Court of Appeal found defendant did not object to the arbitrator’s failure to disclose at the earliest practicable opportunity after discovering the facts and ruled: “We need not decide those questions” about interim ruling disclosures “because [defendant] forfeited any right to disqualify the arbitrator on that basis by failing to file a notice of disqualification within 15 days of discovering that omission. We will thus reverse the orders at issue and remand with instructions to enter an order confirming the award.” (Goodwin v. Comerica Bank, N.A. (Cal. App. 1st Dist., Div. 4, Dec. 15, 2021) 72 Cal.App.5th 858.)
Parole Agents Had No Duty to Warn Victim of Dangerous Propensities of Parolee.
Rachel Renee Russell was raped and murdered by her grandson while he was on parole. Following her death, Russell’s son brought an action against the California Department of Corrections and Rehabilitation, alleging that the department’s parole agents had a special relationship with Russell, and they failed to warn her of her grandson’s dangerous propensities. The jury agreed: It found the department 60 percent at fault for Russell’s death by failing to warn her of a foreseeable danger that was unknown to her, and the grandson 40 percent at fault. It awarded plaintiff $4.5 million in noneconomic damages, which the trial court reduced to $2.7 million given the department’s 60 percent of fault. On appeal, the department asserted it had no duty to warn Russell of her grandson’s dangerous propensities and, even if it had such a duty, it was immunized from liability. Reversing, the Court of Appeal stated: “Although it is clear that the agents certainly could have done more to warn Russell about the danger posed by her parolee grandson as well as to encourage her to take steps to mitigate that danger, here we are compelled to agree with the Department that because the facts presented were not sufficient to establish that there was a special relationship between the agents and Russell, no duty to warn arose.” (Russell v. Department of Corrections and Rehabilitation (Cal. App. 3rd Dist., Dec. 16, 2021) 72 Cal.App.5th 916.)
Evidence of Gun Found in Car Ordered Suppressed.
In support of their search of defendant’s car without a warrant, police officers adduced the following facts: illegally tinted windows; defendant took one-tenth of a mile to pull over and stop; the smell of marijuana emanated from the car; defendant had a suspended license; and defendant was previously arrested for being a felon in possession of a firearm. The Court of Appeal held that these facts “d[id] not provide probable cause that contraband or evidence of illegal activity was in the car. The evidence show[ed] the impound decision was based on an investigative pretext rather than serving a community caretaking function.” Accordingly, the appeals court ordered the trial court to grant defendant’s motion to suppress evidence of the gun that police found in the car. (Blakes v. Superior Court of Sacramento County (Cal. App. 3rd Dist., Dec. 16, 2021) 72 Cal.App.5th 904.)
After Telling Two Different Stories to Investigators, Registered Nurse Lost Nursing License.
The administrator of a nursing care facility died unexpectedly. The attorney for the facility hired plaintiff, a registered nurse and certified legal consultant, to assist with the closure of the facility. Plaintiff agreed to assess each of the residents and recommend a new facility for them, as required by the closing procedures. Twelve days after plaintiff assessed an 83-year-old patient, the caregivers at the new facility found the patient in a much worse condition than that assessed by plaintiff. When the incident was investigated, plaintiff told two different stories. In a recorded interview taken soon after the incident, he said he directed the assessment, but 14 months later, he told investigators he was not acting as a registered nurse at the time, but as a “scribe” by filling out the resident appraisal form. An administrative law judge (ALJ) found clear and convincing evidence that plaintiff committed gross negligence in connection with the appraisal. Following the ALJ’s proposal, the Board of Registered Nursing revoked plaintiff’s license. Plaintiff then sought extraordinary relief by way of writ of mandate in the superior court. The superior court denied the petition and plaintiff appealed. Affirming, the Court of Appeal stated: “We find that such dishonesty to the Board investigating plaintiff’s alleged malfeasance constitutes unprofessional conduct and demonstrates an unfitness to practice nursing.” (Clawson v. Board of Registered Nursing (Cal. App. 1st Dist., Div. 5, Dec. 17, 2021) 72 Cal.App.5th 996.)
Class Certification Denied to Volunteers.
Since 1987, the American Film Institute (AFI) has used volunteer workers for its annual film festival in Los Angeles. Plaintiff filed a class action suit, contending that those volunteers were actually employees because AFI is not permitted to use unpaid labor under California law and that such workers were therefore denied employee benefits that California employers are required to provide. The trial court denied class certification because common issues would not predominate over individual ones. Affirming, the Court of Appeal stated: “[I]f the case were to proceed as a class action, the trier of fact would need to decide whether each class member expected to be paid or was in fact a volunteer. The trial court acted within its discretion in finding that the need to decide such individual issues would preclude common issues from predominating.” (Woods v. American Film Institute (Cal. App. 2nd Dist., Div. 2, Dec. 17, 2021) 72 Cal.App.5th 1022.)
MICRA Does Not Apply to Actions Under the Elder Abuse Act.
Three female patients in a psychiatric facility were sexually molested by a male employee who lacked certification but had a past criminal conviction which required registration as a sex offender. The facility had hired a consumer reporting agency to investigate the worker’s background. But since those agencies are not permitted to go back more than seven years to look for convictions, and since the worker’s conviction was older than that, the facility did not know about his criminal background. A jury awarded C.F. $6.5 million; Samantha B. $3.75 million; and Danielle W. $3 million, all in noneconomic damages. On appeal, defendants contended plaintiffs were limited to damages of $250,000 each. (Welf. & Inst. Code, § 15657; Civ. Code, § 3333.2.) Affirming the judgment, the Court of Appeal held: “Civil Code section 3333.2, known as the Medical Injury Compensation Reform Act of 1975 (MICRA), limits noneconomic damages to $250,000 based on professional negligence. Here we decide this limitation does not apply to plaintiffs’ causes of action under the Elder Abuse and Dependent Adult Civil Protection Act (Elder Abuse Act). (Welf. & Inst., § 15600 et seq.)” (Samantha B. v. Aurora Vista Del Mar, LLC (Cal. App. 2nd Dist., Div. 6, Dec. 20, 2021) 2021 WL 5996835.)
Attorney General’s Attempt to Gain Information from Sealed Court Documents.
In the exchange of financial documents during a divorce proceeding and a related action, certain documents were filed under seal. The California Attorney General subsequently filed a motion to unseal the records and set aside the protective orders, asserting that the documents were relevant to his investigation into the misuse of funds by a public charity operated by the parties. The family court granted the motion. On appeal, the parties to the underlying actions argued the family court erred in unsealing the records and setting aside the protective order. Reversing, the Court of Appeal stated: “We conclude the family court had authority to rule on the Attorney General’s motion. We further conclude the Attorney General is entitled to seek the records on behalf of the public and appellants failed to identify a privacy interest that outweighs the public right to access. However, we conclude the family court failed to assess whether the documents at issue were used at trial or submitted as a basis for adjudication, and erred in setting aside the protective orders. Accordingly, we reverse the order granting the motion to unseal and remand to the family court to determine, in the first instance, whether the documents at issue were related to the underlying matter’s adjudication.” (In re Marriage of Tamir (Cal. App. 1st Dist., Div. 1, Dec. 20, 2021) 2021 WL 5997680.)
The Perils of Electronic Banking.
While a bank customer was overseas with limited internet access to check on her account, thieves began stealing her money. Her bank, the defendant, was notified by another bank of a suspicious transfer of $29,000 to that other bank. Both defendant and the other bank determined the transfer was fraudulent. Defendant did nothing to protect plaintiff’s account from further unauthorized withdrawals. Significantly more money was subsequently stolen from the account, and defendant declined to credit most of it to plaintiff’s account, contending she did not report the thefts soon enough. She sued and the district court dismissed the action. Reversing, the Ninth Circuit stated: “Widjaja’s allegations give rise to a reasonable inference that Chase would not have taken action to prevent subsequent losses even if she had reported the initial unauthorized withdrawals within the 60-day period [under the Electronic Fund Transfer Act of 1978 (15 U.S.C. § 1693 et seq.; EFTA)]. Her allegations suffice to survive a motion to dismiss.” (Widjaja v. JPMorgan Chase Bank, N.A. (9th Cir., Dec. 20, 2021) 2021 WL 5997387.)
Peer Review Procedure Used the Wrong Burden of Proof.
A medical doctor’s application for appointment to the medical staff of a dialysis clinic was denied. He petitioned the superior court for an administrative mandate pursuant to Code of Civil Procedure § 1094.5, which was denied. Reversing, the Court of Appeal discussed the burden of proof in the peer review bylaws which state that a physician who requests a hearing “shall thereafter have the burden of proving that the adverse action or recommendation lacks any substantial factual basis, or is otherwise arbitrary or capricious.” The appeals court noted: “Based on . . . comparisons of the substantial evidence standard to the preponderance of the evidence standard, we conclude a standard of proof requiring an applicant to prove the lack of any substantial factual basis for the Peer Review Committee’s recommendation imposed a more demanding standard of proof than the preponderance of the evidence standard.” The appeals court then held: “We conclude the burden of proof contained in the medical staff bylaws is not consistent with the preponderance of the evidence standard required by Business and Professions Code section 809.3, subdivision (b)(2). We further conclude the statute controls in the event of an inconsistency, the application of the bylaws’ more demanding burden of proof constituted procedural error, the error deprived Bichai of a fair hearing and, therefore, was prejudicial. As a result, he is entitled to a writ of administrative mandamus vacating the hearing officer’s decision.” (Bichai v. DaVita, Inc. (Cal. App. 5th Dist., Dec. 20, 2021) 2021 WL 6000005.)
“A man who is his own lawyer has a fool for a client,” English Proverb.
This is the entire opinion rendered by the Court of Appeal: “Attorney Bruce H. Singman sued and lost in the trial court. Serving as his own attorney, he appeals his defeat. His brief on appeal—there is only one, for he filed no reply—contains a table of authorities. That table has one entry. That entry is section 904.1, subdivision (a)(1) of the Code of Civil Procedure, which authorizes appeals from judgments. This section does not impeach the trial court result. No other legal citations appear in this brief. We presume the trial court result is correct. [Citation.] The one contesting that result thus bears the burden of showing legal error. That requires legal authority. Here we have none. This appellant’s brief effectively asks the appellate court to become the appellant’s lawyer. A court cannot fairly embrace this partisan role. An absence of legal authority forfeits an appellant’s cause. [Citation.]” (Singman v. IMDB.com, Inc. (Cal. App. 2nd Dist., Div. 8, Dec. 20, 2021) 2021 WL 5997923.)
Daughter Not Authorized to Bind Senior to Arbitration.
A senior resident of a facility for persons suffering from dementia fell four times. She suffered a fractured hip in the fourth fall, and her need for care increased. Her son, as plaintiff’s attorney-in-fact, sued the facility. The facility moved to compel arbitration, asserting that the senior’s daughter had signed an arbitration agreement pursuant to her authority to make health care decisions when she helped her mother secure placement in the facility. The trial court denied the motion to compel arbitration, ruling that the daughter was not plaintiff’s agent for purposes of binding her to arbitration. Affirming, the Court of Appeal stated: “We agree with the trial court that plaintiff is not bound by an arbitration agreement her daughter signed on her behalf when placing her at Muirwoods, and accordingly we affirm the order.” (Theresa D. v. MBK Senior Living LLC (Cal. App. 1st Dist., Div. 3, Dec. 21, 2021) 2021 WL 6048947.)
Petition to Compel Arbitration Denied.
Three delivery drivers sued Domino’s Pizza on behalf of themselves and a putative class, asserting violations of various California labor laws. Domino’s moved to compel arbitration pursuant to its contracts with the drivers. The district court denied the motion, finding that the drivers are a “class of workers engaged in foreign or interstate commerce,” and are therefore exempt from the requirements of the Federal Arbitration Act (9 U.S.C. § 1; FAA). Affirming, the Ninth Circuit compared this situation with the one in Rittmann v. Amazon.com, Inc. (9th Cir. 2020) 971 F.3d 904, stating: “Like Amazon, Domino’s is directly involved in the procurement and delivery of interstate goods; the D&S drivers, like the Amazon package delivery drivers, transport those goods ‘for the last leg’ to their final destinations. [Citation.] Like Amazon, Domino’s is involved in the process from beginning to the ultimate delivery of the goods to their destinations and its ‘business includes not just the selling of goods, but also the delivery of those goods.’ ” (Carmona v. Domino’s Pizza, LLC (9th Cir., Dec. 23, 2021) 2021 WL 6070564.)
Class Action Involving 60,000,000 People Settled.
In this consolidated class action lawsuit, plaintiffs alleged, on behalf of an estimated sixty million people, that Google illegally collected their Wi-Fi data through its Street View program. The district court approved a settlement, finding that it was not feasible to distribute funds directly to class members given the class size and the technical challenges to verifying class members’ claims. David Lowery, one of two objectors to the settlement proposal, appealed the district court’s approval of the settlement and grant of attorneys’ fees. He argued that the district court should not have approved the settlement because it was feasible to distribute funds to class members, and that if it truly was not feasible to do so, then the district court should not have certified the class. Affirming approval of the settlement, the Ninth Circuit stated: “Because we affirm the district court’s finding that the settlement does provide adequate value to the class, and because there is no indication that counsel accepted excessive attorneys’ fees or favored third parties over class members, we hold that class counsel and class representatives did not breach their fiduciary duties by entering the settlement.”(In re Google Inc. Street View Electronic Communications Litigation (9th Cir., Dec. 27, 2021) 2021 WL 6111383.)
Liability Under Respondeat Superior Applies to Employer in Wildfire Case.
In June 2016, a wildfire burned nearly 7,500 acres of land across Santa Barbara County. Federal, state, and local authorities dispatched over 2,000 fire fighters to battle the blaze (designated the Sherpa Fire) and to protect the people and property it jeopardized. The California Department of Forestry and Fire Protection (CalFire) spent over $12 million suppressing the fire, investigating the fire’s cause, and pursuing reimbursement for the expenses it incurred in doing so. CalFire ultimately determined the Sherpa Fire had started on the property of Presbyterian Camp and Conference Centers, Inc. (Presbyterian), when Presbyterian’s employee removed a smoldering log from a malfunctioning fireplace in one of Presbyterian’s cabins. Under Health and Safety Code §§ 13009 and 13009.1, which permit recovery of expenses from “[a]ny person . . . who negligently . . . sets a fire, allows a fire to be set, or allows a fire kindled or attended by him or her to escape,” CalFire sought recovery of its expenses from Presbyterian. Presbyterian demurred, arguing that §§ 13009 and 13009.1 do not contemplate vicarious liability and asserting that—because the fire was not started by an employee’s authorized or ratified act or by Presbyterian’s failure to act—there was no basis to impose direct liability. The trial court overruled the demurrer, and the Court of Appeal denied Presbyterian’s writ petition challenging the trial court’s order. The question before the California Supreme Court was whether a corporation like Presbyterian can be held vicariously liable for the cost of suppressing fires that its agents or employees negligently or unlawfully set or allowed to escape. Affirming the judgment, California’s high court stated: “[A]lthough our holding answers a narrower question than the one originally presented; we hold that sections 13009 and 13009.1 incorporate the common law theory of respondeat superior. As the parties focused their briefing on this theory and did not comprehensively address other types of vicarious liability, we do not reach the incorporation of vicarious liability generally.” (Presbyterian Camp and Conference Centers, Inc. v. Superior Court (Cal., Dec. 27, 2021) 2021 WL 6111380.)
Judge Was Disqualified When Summary Adjudication Granted.
While his appeal of a civil judgment was pending, petitioner in this action for a writ of error coram vobis discovered evidence, which was not in existence at the time of the judgment, that the superior court judge owned stock in AT&T Corp. at the time the judge summarily adjudicated two causes of action against petitioner and for two wholly-owned subsidiaries of AT&T Corp. Petitioner argued the judge was disqualified under Code of Civil Procedure § 170.1 at the time of his summary adjudication ruling due to his AT&T Corp. stock ownership. Code of Civil Procedure § 170.1 provides: “A judge shall be disqualified if any one or more of the following are true: . . . (3) (A) The judge has a financial interest in the subject matter in a proceeding or in a party to the proceeding.” Code of Civil Procedure § 170.5 provides: “ ‘Financial interest’ means ownership of more than a 1 percent legal or equitable interest in a party, or a legal or equitable interest in a party of a fair market value in excess of one thousand five hundred dollars ($1,500) . . . .” The subsidiaries maintained that the judge was not disqualified because AT&T Corp.’s ownership of the subsidiaries did not make AT&T Corp. a “party” to the proceeding within the meaning of § 170.1. They also asserted that petitioner was precluded from obtaining a writ of error coram vobis because he did not exercise due diligence in discovering the judge’s AT&T Corp. stock ownership and did not otherwise satisfy the requirements to obtain such a writ. Ordering the grant of summary adjudication vacated, the Court of Appeal stated: “We conclude that Chaganti has satisfied his burden and order the superior court to vacate the judgment and the summary adjudication ruling.” (Chaganti v. Superior Court of Santa Clara County (Cal. App. 6th Dist., Dec. 27, 2021) 2021 WL 6112575.)
Statements Made in a 10-K Report Are Protected Speech.
Plaintiff sued defendant bank and several of its directors and officers in the wake of a scandal that led to plaintiff’s resignation from his positions at the bank. All defendants filed anti-SLAPP motions (Code Civ. Proc., § 425.16) to strike various causes of action. Affirming the ruling on a motion by the bank’s auditor, the Court of Appeal held that “statements in an annual 10-K report filed with the Securities and Exchange Commission (SEC) constitute[d] statements ‘made in connection with an issue under consideration or review by [an] official proceeding’ under section 425.16, subdivision (e)(2).” (Sugarman v. Brown (Cal. App. 2nd Dist., Div. 8, Dec. 27, 2021) 2021 WL 6111718.)
Statements Made in Forms 8-K and 10-Q Are Protected Speech.
Plaintiff sued defendant bank and several of its directors and officers in the wake of a scandal that led to plaintiff’s resignation from his positions at the bank. The Court of Appeal held that the trial court should have granted anti-SLAPP motions to strike under Code of Civil Procedure § 425.16 filed by the bank and a group of former directors or executives. The Court of Appeal held: “[S]tatements Banc made in its Forms 8-K and 10-Q filed with the Securities and Exchange Commission (SEC), as well as related investor presentations and conversations, [we]re protected activity under section 425.16, subdivision (e)(2) as matters under review and consideration by the SEC. Statements related to financial projections were also protected under section 425.16, subdivision (e)(4), as matters of public interest.” (Sugarman v. Benett (Cal. App. 2nd Dist., Div. 8, Dec. 27, 2021) 2021 WL 6111725.)
Be Careful What You Ask for . . . It May Cost You a Lot of $$$.
Plaintiff was engaged in litigation against his former attorneys, prompting a collateral dispute between plaintiff and the California Department of Justice (DOJ) over his subpoena duces tecum requiring the DOJ to produce electronically stored documents. The DOJ reportedly reviewed several hundred thousand electronic documents but produced fewer than 100. Partway through production, the trial court ordered plaintiff to pay $32,836.25 to defray the “undue burden or expense” of the DOJ’s compliance with plaintiff’s subpoena. (Code Civ. Proc., §§ 1985.8, subd. (l).) When production was complete, the trial court ordered plaintiff to pay the DOJ an additional $111,618.75. Affirming, the Court of Appeal stated: “[T]he DOJ established that its costs of compliance with the subpoena were ‘significant and represent[ed] an undue expense to the DOJ.’ Taking account of all relevant facts , the referee recommended reducing the amount of the DOJ’s potentially recoverable costs by 50 percent to $111,618.75. The trial court adopted that recommendation after independently considering the matter, and [plaintiff failed] to carry his burden to demonstrate that this decision was an abuse of discretion.” (Park v. Law Offices of Tracy Buck-Walsh (Cal. App. 1st Dist., Div. 3, Dec. 27, 2021) 2021 WL 6112178.)
Previously we reported:
Class Counsel Awarded $175 Million in Fees; Non-Class Counsel Awarded Zilch.
A class action against an automobile manufacturer accused of installing devices to defeat emissions testing settled for more than $10 billion, and the federal district court awarded class counsel $175 million in attorney fees. The court also received 244 fee applications from non-class counsel and denied them all because the attorneys did not conduct pretrial activities that materially drove settlement. The court vacated their attorney fee liens. The trial court stated, however, that non-class counsel “may be entitled to payment of certain fees and costs pursuant to attorney-client fee agreements.” Non-class counsel appealed. Affirming, the Ninth Circuit stated: “We ultimately conclude that the district court did not abuse its discretion when it determined that the efforts of non-Class Counsel for which they sought fees did not benefit the class such that they would be entitled to compensation.” (Hill v. Volkswagen, AG (In re Volkswagen “Clean Diesel” Litigation) (9th Cir., Jan. 24, 2019) 914 F.3d 623.)
Professor Lawrence Kalbers took an academic interest in the Volkswagon (VW) “Dieselgate” emissions scandal and submitted a Freedom of Information Act (FOIA) request to the U.S. Department of Justice (DOJ). The DOJ contended that the documents were “protected from disclosure pursuant to Exemption 7(A) of FOIA, which protects ‘records or information compiled for law enforcement purposes’ that ‘could reasonably be expected to interfere with enforcement proceedings.’ ” ( 5 U.S.C. § 552(b)(7)(A).) Shortly thereafter, on August 22, 2018, the DOJ emailed VW’s outside civil counsel, notifying them of Kalbers’ request and the DOJ’s response. On October 1, 2018, Kalbers sued the DOJ under FOIA to obtain the documents. Sixteen days later, on October 17, 2018, the DOJ emailed VW’s civil counsel a copy of Kalbers’ complaint. Then the DOJ advised VW of a similar action filed by the New York Times. The district court ordered the DOJ to produce an index identifying the documents and explaining why each was not produced; the court also ordered the parties to file motions for summary judgment. VW moved to intervene and the district court denied the motion as untimely. The Ninth Circuit reversed and ordered the district court to permit VW to intervene, stating: “This case was in its early stages when VW moved to intervene.” (Kalbers v. United States Department of Justice (9th Cir., Dec. 28, 2021) 2021 WL 6123196.)
DUI Misdemeanant Not Entitled to Diversion.
The district attorney charged petitioner with misdemeanor driving under the influence of drugs. The trial court ruled petitioner was statutorily ineligible for diversion pursuant to Penal Code § 1001.95, and she sought extraordinary relief in the Court of Appeal. Since 1998, Vehicle Code § 23640 has mandated that no one charged with driving under the influence may be diverted. But after the military diversion statute was amended to say that veterans charged with misdemeanor driving under the influence may be diverted pursuant to Penal Code § 1001.80, petitioner argued she should also be diverted. She pointed out that § 1001.95 has a list of crimes that are excluded and that DUI is not one of the excluded crimes. Denying relief, the Court of Appeal concluded that Vehicle Code § 23640 and Penal Code § 1001.95 can be harmonized since the legislature was aware of the existing exclusion for diversion in § 23640 and didn’t need to specifically list it in the exclusions set forth in § 1001.95. (Grassi v. Superior Court of Orange County (Cal. App. 4th Dist., Div. 3, Dec. 28, 2021) 2021 WL 6124764.)
Plaintiff Signed Arbitration Agreement with Parent Company of His Employer.
At time of hiring, plaintiff signed an arbitration agreement with the parent company of his employer. Later, plaintiff sued his employer for employment-related claims, and the employer moved to compel arbitration. The district court dismissed plaintiff’s class action allegations and ordered plaintiff’s individual claims to arbitration. Reversing, the Ninth Circuit stated: “Courts adhere to the fundamental principle that corporations, including parent companies and their subsidiaries, are treated as distinct entities.” (Ahlstrom v. DHI Mortgage Company, Ltd., L.P. (9th Cir., Dec. 29, 2021) 2021 WL 6133104.)
Filing an Application for Leave to Present a Late Claim Against a Governmental Agency During the Pandemic.
Plaintiff filed a complaint for money damages against a Ventura County after she was burned while undergoing an MRI at a county medical center. Plaintiff’s petition to file a late claim with the county was denied and she petitioned the superior court for extraordinary relief. At the beginning of the hearing on the petition, the trial court said: “[T]he court is going to make a disclosure . . . that prior to being appointed to the bench I did work for County Counsel’s office, and in that line of work I did have occasion to provide counsel to the healthcare system, but I have . . . nothing that disqualifies me from hearing this matter.” Plaintiff did not contend the judge was disqualified and did not request that the judge recuse herself. The trial court denied plaintiff’s petition for leave to present a late claim against the county. The Court of Appeal decided two issues: First, the appeals court found that plaintiff’s contention the trial court was disqualified was forfeited when she remained silent prior to the court’s ruling against her. Second, the appeals court ruled concerning the meaning of Executive Order N-35-20, issued by Governor Newsom on March 21, 2020. Because of the COVID-19 pandemic, the governor extended the time for presenting a claim to a public entity by 60 days. The appeals court had to decide whether the extension applied only to the six-month statutory period for presenting a timely claim or to the one-year statutory period for filing an application for leave to present a late claim as well. Ruling against plaintiff and affirming, the appeals court stated: “The plain meaning of the unambiguous executive order requires us to hold that the extension applies only to the six-month period for presenting a timely claim. Because appellant did not timely apply for leave to present a late claim within the unextended one-year statutory period, the trial court did not err by denying her petition for relief.” (Coble v. Ventura County Health Care Agency (Cal. App. 2nd Dist., Div. 6, Dec. 29, 2021) 2021 WL 6132855.)
Jack the Notary Relied on Fake Driver’s License.
The job of a notary is to verify that the person executing a document is, in fact, the person who is supposed to be executing that document. If the notary is “neglect[ful]” in this job, the notary is civilly liable for damages. (Gov. Code, § 8214.) However, California law nevertheless sets up a presumptive “safe harbor” for notaries if: (1) as pertinent here, the notary is presented with “[a] driver’s license issued by the Department of Motor Vehicles” (the DMV) that is current or issued within the preceding five years; and (2) there is an “absence of information, evidence, or other circumstances that would lead a reasonable person to believe that the person [appearing before the notary] is not the individual he or she claims to be.” (Civ. Code, § 1185, subds. (b), (b)(3)(A) & (c).) Here, a loan of almost $4 million was extended to a person who signed the required documents. The notary relied upon what appeared to be a real California driver’s license, but was in fact a fake. The trial court granted summary judgment for the notary in an action against the notary for civil damages. Affirming, the Court of Appeal stated: “This appeal requires us to define the scope of this statutory safe harbor. We ultimately conclude that the safe harbor (1) applies when a notary relies upon a driver’s license that looks like one the DMV would issue (and thus does not require a notary to verify with the DMV that the driver’s license is, in fact, a legitimately issued license), (2) applies even if an expert opines that industry custom requires a notary to do more than the statutory safe harbor requires, and (3) is not overcome by the simple fact that the person who appeared before the notary was an imposter.” (North American Title Company, Inc. v. Gugasyan (Cal. App. 2nd Dist., Div. 2, Dec. 29, 2021) 2021 WL 6132791.)
Bad News for Bad Boys Bail Bonds and Others in the Bail Bond Business.
In a class action, the trial court was asked to decide whether the requirement under Civil Code § 1799.91 that notice be afforded to cosigners of consumer credit contracts about the risks of guaranteeing such an agreement applied to bail bond premium financing agreements. The Court of Appeal held: “that a bail bond premium financing agreement between a cosigner and the bail bond agent is a consumer credit contract subject to the notice provision of section 1799.91 and related statutory protections. No statute or regulatory provision supports BBBB’s claim that the legal regime governing bail bond licensees was intended to operate as the exclusive source of law for the bail bond industry. Nor is BBBB able to identify any licensee provision that stands in conflict with the cosigner notice requirement. While we appreciate that this decision may upend business expectations for bail bond agents, we cannot accept BBBB’s urging that the injunction should apply only on a prospective basis. To do so would deprive respondent and other cosigners who never received statutory warning of the risks of cosigning a bail bond premium financing agreement of the protections the consumer credit laws were designed to address.” (BBBB Bonding Corporation v. Caldwell (Cal. App. 1st Dist., Div. 1, Dec. 29, 2021) 2021 WL 6133152.)
Court of Appeal Holds Legislation Won’t Permit Consumers Being Unwittingly Entered into Automatically Recurring Memberships.
Plaintiffs paid defendant JustAnswer LLC $5 to ask a question on their website and receive an answer from an expert. Unbeknownst to plaintiffs, JustAnswer enrolled them in a costlier monthly membership that placed monthly charges on their credit cards. Plaintiffs filed a class action, and JustAnswer moved to compel arbitration and to avoid a class action. JustAnswer contended plaintiffs clicked on a hyperlink that bound them to both arbitration and an agreement not to file a class action. Plaintiffs asserted they were not bound by the arbitration provision because the textual notice was not sufficiently conspicuous to establish constructive notice of the terms of service. The trial court denied JustAnswer’s motion. Affirming, the Court of Appeal stated: “In a case of first impression under California law, we consider whether and under what circumstances a ‘sign-in wrap’ agreement—the manner in which JustAnswer sought to impose contractual terms on consumers over the internet—is valid and enforceable. . . . This is precisely the type of transaction from which the Legislature intended to protect consumers when it enacted the ARL [Automatic Renewal Law]. ([Business and Professions Code] §§ 17600, 17602.) And since the Legislature has specifically addressed the issue of consumers being unwittingly entered into automatically recurring memberships, we consider the notice requirements the Legislature has imposed in such transactions when evaluating the sufficiency of JustAnswer’s textual notice.” (Sellers v. JustAnswer LLC (Cal. App. 4th Dist., Div. 1, Dec. 30, 2021) 2021 WL 6144075.)