Litigation Update: June 2019

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

  • Senior Editor, Eileen C. Moore, Associate Justice, California Court of Appeal, Fourth District
  • Managing Editor, Reuben Ginsburg
  • Editors, Dean Bochner, Glenn Danas, Herb Fox, Jessica Riggin, Anne Voigts and Kenneth Wang
Employee Exempt from Arbitration.

The Federal Arbitration Act (9 U.S.C. § 1; FAA) exempts from FAA coverage employees engaged in interstate commerce. Plaintiff, a truck driver, sued his former employer in a class action for wage and hour violations under the California Labor Code. Labor Code section 229 authorizes lawsuits for unpaid wages notwithstanding an agreement to arbitrate. The employer transports cargo within California, but 99 percent of the cargo originates outside California. The trial court denied part of the employer’s motion to compel arbitration. The Court of Appeal affirmed, stating: “Even though [plaintiff] did not physically transport goods across state lines, his employer is in the transportation industry, and the vast majority of the goods he transported originated outside California.” (Muller v. Roy Miller Freight Lines, LLC (Cal. App. 4th Dist., Div. 3, May 1, 2019) 35 Cal.App.5th 1056.)

Previously we reported: California Supreme Court States Rule to Determine Whether a Worker Is an Employee or an Independent Contractor.

In this action, delivery drivers brought a class action against a nationwide delivery company alleging they are independent contractors rather than employees. California wage orders impose obligations relating to minimum wages, maximum hours and a limited number of very basic working conditions of California employees. The California Supreme Court held:  “[W]e conclude that in determining whether a worker is properly considered the type of independent contractor to whom the wage order does not apply, it is appropriate to look to a standard, commonly referred to as the ‘ABC’ test, that is utilized in other jurisdictions in a variety of contexts to distinguish employees from independent contractors. Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the hiring entity establishes: (A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.” (Dynamex Operations West, Inc. v. Superior Court (Cal., Apr. 30, 2018) 4 Cal.5th 903.)

The latest:

The Ninth Circuit Court of Appeals held the Dynamex holding does not apply retroactively. (Vazquez v. Jan-Pro Franchising Int’l. (9th Cir., May 2, 2019) 923 F.3d 575.)

Bank Not Subject to Mandatory Arbitration Before FINRA.

Plaintiff is a federally chartered bank. The question before the court was whether plaintiff is a municipal securities dealer and subject to compelled arbitration before a self-regulatory organization (Federal Industry Regulatory Authority, FINRA). The Ninth Circuit Court of Appeals noted that while the bank’s Institutional Investment Department was registered as a municipal securities dealer, its Corporate Trust Department (CTD) was not. The appeals court found the bank was not subject to compelled arbitration because its CTD is not a municipal securities dealer. (BOKF, NA v. Estes (9th Cir., May 2, 2019) 923 F.3d 558.)

Medicare Fraud.

A criminal defendant, the owner of a health care medical equipment supply company, was previously tried and convicted on five counts of fraud and sentenced to five years’ probation. She was also ordered to pay $814,445.95, the full amount of Medicare’s losses from the fraudulent healthcare scheme. She contended the restitution order unlawfully included losses resulting from conduct outside the statute of limitations. Affirming the restitution order, the Ninth Circuit stated: “We join the Eleventh Circuit in holding that a district court may order restitution for all losses resulting from a fraudulent scheme, even those caused by conduct occurring outside the statute of limitations.” (United States v. Anieze-Smith (9th Cir., May 2, 2019) 923 F.3d 565.)

Appeals Court Dismisses Appeal by Vexatious Litigant.

After her house was condemned and demolished by a public entity, plaintiff filed suit. Dismissing her appeal, the appeals court stated: “We find no proper purpose for McFadden’s improper attempts to relitigate issues that either were or should have been litigated more than a decade ago. We find that the only possible purpose of these appeals is to harass the respondents.” (McFadden v. Los Angeles County Treasurer and Tax Collector (Cal. App. 2nd Dist., Div. 1, May 2, 2019) 34 Cal.App.5th 1072.)

Disruption Not Rewarded.

A criminal defendant, who an expert said has an IQ of 77, was sentenced to death after the evidence showed he entered a convenience store in the middle of the night and shot and killed the clerk, stealing $261. During trial, defendant became upset when his mother cried while leaving the stand. Defense counsel asked for a recess, and the jurors left the courtroom, but not before defendant began banging on counsel table with both hands, making noises and trying to lift the table. It took eight or nine deputies to subdue him, and some deputies were injured. The next day, a Friday, defendant came to court in a wheelchair, wearing jail clothes and reporting severe pain in his back and legs. Defense counsel told the court that his client did not want to be in court and wanted to go back to his cell. After counsel assured the court that defendant’s presence would not be required, the court offered to continue the trial to the following Monday. But a defense expert witness had traveled to testify and defense counsel wanted to proceed. Defendant was excused. The court later received a note from the jury about defendant’s violent behavior the previous day, and the court instructed the jury not to consider it when it decided the case. Defendant returned to court the following Monday wearing a suit and stating he felt “fine.” On appeal, defendant argued his absence from trial violated his rights to due process and confrontation under the federal and state Constitutions. Affirming the conviction, the California Supreme Court stated that defendant’s absence was during his own portion of the case and his counsel had informed him what the witnesses were going to say, and concluded there was no constitutional violation. As to his argument that the jury was biased against him, the court held there was no error because the court repeatedly instructed the jury not to consider his conduct at trial. (People v. Bell (Cal., May 2, 2019) 7 Cal.5th 70.)

Consumer Financial Protection Bureau Is Constitutionally Structured.

In the process of investigating a law firm for its debt collection practices, the Consumer Financial Protection Bureau (CFPB) issued a civil investigative demand (CID) to the law firm, requiring it to respond to seven interrogatories and four requests for documents. When the law firm refused to comply with the CID, the CFPB filed a petition in a federal trial court to enforce compliance, which the court ordered. On appeal, the law firm argued that the CFPB is unconstitutionally structured, rendering the CID (and everything else the agency has done) unlawful.  Specifically, the law firm argued that the agency is headed by a single Director who exercises substantial executive power but can be removed by the President only for cause. Affirming the enforcement order, the Ninth Circuit stated: “[T]he for-cause removal restriction protecting the CFPB’s Director does not ‘impede the President’s ability to perform his constitutional duty’ to ensure that the laws are faithfully executed.” (Consumer Financial Protection Bureau v. Seila Law LLC (9th Cir., May 6, 2019) 923 F.3d 680.)

California Supreme Court Explains the Anti-SLAPP Statute’s Catchall Provision.

Plaintiff sued defendant for disparagement of plaintiff’s digital distribution network in confidential reports to defendant’s clients. Defendant responded by filing a special motion to strike under the anti-SLAPP statute (Code Civ. Proc., § 425.16). The California Supreme Court granted review “to decide if and how the context of a statement—including the identity of the speaker, the audience, and the purpose of the speech—informs a court’s determination of whether the statement was made ‘in furtherance of’ free speech ‘in connection with’ a public issue. (§ 425.16, subd. (e)(4).)” The court explained, “within the framework of section 425.16, subdivision (e)(4), a court must consider the context as well as the content of a statement in determining whether that statement furthers the exercise of constitutional speech rights in connection with a matter of public interest.” The court articulated a two-part analysis under the catchall provision: “First, we ask what ‘public issue or [] issue of public interest’ the speech in question implicates—a question we answer by looking to the content of the speech. (§ 425.16, subd. (e)(4).) Second, we ask what functional relationship exists between the speech and the public conversation about some matter of public interest. It is at the latter stage that context proves useful.” A statement is made “in connection with a public issue” when it contributes to some public conversation on the issue. The commercial context of the speech is relevant but not necessarily dispositive. The court found that defendant’s speech did not qualify for anti-SLAPP protection, even though the topic discussed was one of public interest, because the confidential reports by a for-profit entity about the business practices of another for-profit entity did not contribute to a public conversation on an issue of public interest. (, Inc. v. Doubleverify Inc. (Cal., May 6, 2019) 7 Cal.5th 133.)

Deficiency Judgment.

A creditor held two deeds of trust on the same property. The California Supreme Court concluded, “under the circumstances here, [Code of Civil Procedure] section 580d does not preclude a creditor holding two deeds of trust on the same property from recovering a deficiency judgment on the junior lien extinguished by a nonjudicial foreclosure on the senior.” (Black Sky Capital, LLC v. Cobb (Cal., May 6, 2019) 7 Cal.5th 156.)

Donation to a Spiritual Group Will Not Be Returned.

Plaintiff and her company donated about a half million dollars to a spiritual group toward a building fund and a kids’ program, financing the donation mainly by loans on a house. When she perceived the money was not being used the way she had been promised it would, she sued the group for return of the donation, claiming she had an oral contract with defendant that her money would be returned if the group did not buy/build a building. The trial court granted summary judgment/adjudication in favor of defendant. The appellate court found there was no credible evidence to support plaintiff’s claim. However, with regard to $25,000 earmarked for a kids’ program, there was conflicting evidence about plaintiff’s claimed oral contract, so that portion of the trial court’s order was reversed and remanded for further proceedings. (Cohen v. Kabbalah Centre International, Inc. (Cal. App. 2nd Dist., Div. 8, May 7, 2019) 35 Cal.App.5th 13.)

Asylum Seekers Told to Wait in Mexico.

In January 2019, the Department of Homeland Security (DHS) issued the Migrant Protection Protocols (MPP), to apply to asylum applicants along the southern border. The MPP directs the return of asylum applicants who arrive from Mexico as a substitute to the traditional options of detention and parole. Under the MPP, applicants are made to wait in Mexico until an immigration judge resolves their asylum claims. The MPP does not apply to unaccompanied minors, Mexican nationals, applicants who are processed for expedited removal, and any applicant “who is more likely than not to face persecution or torture in Mexico.” This action was filed by 11 Central American asylum applicants who were returned to Tijuana. A federal trial court enjoined the nationwide implementation of the MPP. The Ninth Circuit Court of Appeals stayed enforcement of the injunction, finding it likely that DHS will prevail on the merits of plaintiffs’ claims.  (Innovation Law Lab v. McAleenan (9th Cir., May 7, 2019) 924 F.3d 503.)

Discretionary Dismissal of Action Reversed.

Code of Civil Procedure § 583.410, subdivision (a) provides a court may in its discretion dismiss an action for delay in prosecution. But Code of Civil Procedure § 583.420, subdivision (a) limits that discretion. It states discretionary dismissal is authorized when the action is not brought to trial within three years after the action is commenced against the defendant. California Rules of Court, rule 3.1342 provides the factors for the court to consider in deciding whether to dismiss under § 583.410. The trial court dismissed an action under § 583.410, finding that “plaintiff did virtually nothing to prosecute this case other than appear at Case Management Conferences.” The Court of Appeal, however, found it was undisputed that plaintiff had served two sets of discovery, produced 8,000 documents in response to a request for documents, deposited jury fees, demanded exchange of expert witness information, and filed a declaration of counsel attesting readiness for trial. The appeals court concluded the trial court abused its discretion by dismissing the action. (Corrinet v. Bardy (Cal. App. 1st Dist., Div. 4, May 9, 2019) 35 Cal.App.5th 69.)

Insurance Companies Charged Unapproved Premiums.

The California Insurance Commissioner filed a notice of noncompliance, alleging that certain insurance companies charged discriminatory, unapproved premiums in the form of broker fees added to automobile insurance policies. After the Commissioner imposed civil penalties, the insurance companies filed a petition for writ of mandate in superior court. The trial court granted relief, finding the broker fees were not premiums because they were charged for separate services. Reversing, the Court of Appeal found that substantial evidence supported the Commissioner’s decisions, holding “the ‘broker fees’ [the insurance companies] charged were in fact premiums that had to be reported and approved.” (Mercury Insurance Company v. Lara (Cal. App. 4th Dist., Div. 3, May 8, 2019) 35 Cal.App.5th 82.)

Immigration Consequences.

A woman born in Mexico in 1972 entered the United States when she was six months old and became a lawful permanent resident in 1980. She continued to reside in the United States, but never became a citizen. In 2014, she pled guilty to felony possession of marijuana for sale and was placed on three years’ probation.  After Proposition 64 passed, a California court granted her petition to reduce her felony conviction to a misdemeanor. Nonetheless, an immigration judge denied her requests to remain in the United States, finding that her original conviction remained a conviction for immigration purposes. The Ninth Circuit affirmed the decisions of the immigration judge and the Board of Immigration Appeals, stating, “we are not impressed with [the woman’s] attempt to characterize California’s decision that its marijuana policy was flawed as proof of a ‘substantive’ flaw in her conviction.” (Prado v. Barr (9th Cir., May 10, 2019) 923 F.3d 1203.)

Treble Damages Plus Attorney Fees.

Cross-complainant sued cross-defendants for various claims, including breach of contract and fraud, and for civil remedies under Penal Code § 496. Section 496 provides enhanced civil remedies of treble damages, costs, and attorney fees in the event the statute has been violated—that is, where a person has knowingly received, withheld, or sold property that has been stolen or obtained in any manner constituting theft. After a jury found cross-defendants violated § 496, the trial court declined to award treble damages or attorney fees, reasoning the Legislature could not have intended to apply the treble damage remedy to wrongful conduct where ordinary fraud and breach of contract remedies would be available. Reversing, the Court of Appeal stated: “That statute is clear and unambiguous, and its remedial provisions should be applied where, as here, a clear violation of section 496(a) has been found.” The appellate court remanded the matter with directions to enter a modified judgment that includes treble damages and attorney fees on the § 496 causes of action. (Switzer v. Wood (Cal. App. 5th Dist., May 10, 2019) 35 Cal.App.5th 116.)

Man Unsuccessfully Tried to Sue California in Nevada.

A man earned substantial income from a technology patent. Before receiving the patent, he lived in California. He claimed he received the patent after he moved to Nevada in 1991. Suspecting his claim of Nevada residency was a sham, California authorities conducted an investigation and ultimately concluded that he did not move to Nevada until April 1992 and that he owed California more than $10 million in taxes, interest, and penalties. The man sued California in a Nevada court for torts allegedly committed by the Franchise Tax Board during the investigation. The U.S. Supreme Court held that under the federal Constitution, a private party may not sue a state in the courts of a different state without the state’s consent. (Franchise Tax Board of California v. Hyatt (U.S., May 13, 2019) 139 S.Ct. 1485.)

Statute of Limitations for Qui Tam Action.

The False Claims Act (31 U.S.C. § 3731 (b)) identifies two limitations periods that apply to a “civil action under section 3730”—that is, an action asserting that a person presented false claims to the U.S. government. First, the action must be brought within 6 years after the statutory violation occurred. Second, the action must be brought within 3 years after the U.S. official charged with the responsibility to act knew or should have known the relevant facts, but not more than 10 years after the violation. Whichever period provides the later date controls. But what is the statute of limitations for qui tam suits in which the United States does not intervene? The U.S. Supreme Court held that the limitations periods in § 3731 (b) apply in accordance with their terms, regardless of whether the United States intervenes. (Cochise Consultancy, Inc. v. United States ex rel. Hunt (U.S., May 13, 2019) 139 S.Ct. 1507.)

“What app? I didn’t sell that to you,” Apple.

In this antitrust action, consumers contended Apple monopolized the apps market and charged consumers higher-than-competitive prices. The U.S. Supreme Court in Illinois Brick Co. v. Illinois (1977) 431 U.S. 720 held that while direct purchasers may sue antitrust violators, indirect purchasers may not. Here, Apple argued that consumers were indirect purchasers. The U.S. Supreme Court disagreed, holding that plaintiffs purchased apps directly from Apple and therefore were direct purchasers under Illinois Brick. (Apple Inc. v. Pepper (U.S., May 13, 2019) 139 S.Ct. 1514.)

Predatory Conduct by Used Car Dealer Sanctioned.

A used car dealer repossessed cars after buyers failed to obtain financing, but refused to return their down payments. The Department of Motor Vehicles (DMV) instructed the dealer to refund the down payments, but the dealer refused. The DMV brought a disciplinary action against the dealer and ultimately revoked its license for two years. The superior court denied the dealer’s petition for writ of mandate, and the Court of Appeal affirmed, concluding the Rees-Levering Motor Vehicles Sales and Finance Act (Civ. Code, § 2981 et seq.) does not sanction a dealer’s predatory conduct and the DMV does have the power to stop such abuse. (Front Line Motor Cars v. Webb (Cal. App. 4th Dist., Div. 3, May 13, 2019) 35 Cal.App.5th 153.)

Nonsuit for Condominium Association Reversed.

Defendant, a condominium association, was responsible for maintaining and repairing the building’s common areas, including roofs, and keeping them in “first class condition.” The roof and pipe over plaintiffs’ condominium had not been inspected or maintained for years. A pipe on the roof ultimately broke, resulting in water damage to plaintiffs’ condominium. Plaintiffs sued defendant for breach of contract and negligence. After two witnesses testified, the trial court granted nonsuit, reasoning that plaintiffs could not prove their case without expert testimony. The Court of Appeal reversed the nonsuit on the contract claim, stating: “A complete lack of preventive maintenance is evidence the association did not keep the roof or pipes in first class condition.” But the court affirmed the nonsuit on the negligence claim, concluding: “Outside the covenants, conditions, and restrictions, the association had no independent duty as to the pipes and roof arising from tort law.” (Sands v. Walnut Gardens Condominium Association Inc. (Cal. App. 2nd Dist., Div. 8, May 13, 2019) 35 Cal.App.5th 174.)

Statutory Confusion over Motion to Stay or Dismiss for Inconvenient Forum.

Defendants filed a motion to stay or dismiss on the ground of inconvenient forum pursuant to a forum selection clause, but they filed the motion only after they had already filed two demurrers. Code of Civil Procedure § 418.10, subdivision (e) provides that a defendant may file such a motion “simultaneously” with an answer, demurrer, or motion to strike, and that a “[f]ailure to make a motion under this section at the time of filing a demurrer or motion to strike constitutes a waiver of the issue[ ] of . . . inconvenient forum.” But § 410.30, subdivision (b) states that § 418.10 does not apply to a motion to stay or dismiss by a defendant who has made a general appearance. The trial court denied the motion as untimely under § 418.10, subdivision (e). Reversing, the Court of Appeal concluded the motion “was timely under section 410.30. Section 418.10 applies before a defendant has made a general appearance. It allows a defendant filing a motion to dismiss an action for lack of personal jurisdiction to file simultaneously a motion to stay or dismiss the action for inconvenient forum, without having the latter motion constitute a general appearance.” (Global Financial Distributors v. Superior Court (Cal. App. 2nd Dist., Div. 7, Apr. 16, 2019) 35 Cal.App.5th 179.)

Motions in Limine Should Have Been Denied.

Plaintiff, a 16-year-old high school student, sued a school district, alleging she was sexually molested by a teacher. She claimed the teacher hugged her tightly, touched her in a way that made her uncomfortable, pressed his genitals against her, and took inappropriate photographs of female students. She further alleged the school district knew about the teacher’s conduct and failed to properly train and supervise its staff to protect students from sexual abuse. At trial, the teacher denied the allegations. The jury returned a verdict for defendant. On appeal, plaintiff argued that the trial court abused its discretion by excluding evidence, including a comment the teacher made to the class about the size of a student’s breasts, and evidence the teacher offered students a ride home,  asked female students about their boyfriends and sexual experiences, posted photographs of students on Facebook, and showed favoritism to female students. Reversing, the Court of Appeal concluded that the trial court “abused its discretion in excluding all evidence of conduct by [the teacher] that did not involve physical touching.” (D.Z. v. Los Angeles Unified School District (Cal. App. 2nd Dist., Div. 4, May 14, 2019) 35 Cal.App.5th 210.)

Vexatious Litigant.

A man who was declared a vexatious litigant petitioned the presiding superior court judge for a prefiling order so that he could sue his attorneys for malpractice. The presiding judge denied the request, and the Court of Appeal denied his petition for extraordinary relief. Undaunted, he submitted the same request with the same proposed complaint to the next presiding judge, who knew nothing about the earlier round of litigation. The second presiding judge granted the request. The trial judge dismissed the case, and the Court of Appeal affirmed, concluding, “the doctrine of res judicata precludes a litigant from filing successive prefiling requests.” (Colombo v. Kinkle, Rodiger & Spriggs (Cal. App. 4th Dist., Div. 3, May 16, 2019) 2019 Cal. App. LEXIS 447.)

City’s Urgency Ordinance Is Invalid.

A city enacted an urgency ordinance that imposed a temporary moratorium on charter schools while it considered amending its zoning code. Plaintiff petitioned the superior court for a writ of mandate, arguing the ordinance violated state law. The trial court denied the petition. Reversing, the Court of Appeal held that the city’s findings that it had received “numerous inquiries and requests for the establishment and operation of charter schools . . . that may be incompatible with current land uses” did not amount to a “current and immediate threat” under Government Code § 65858. (California Charter Schools Association v. City of Huntington Park (Cal. App. 2nd Dist., Div. 3, Apr. 25, 2019) 2019 Cal. App. LEXIS 444.)

Noneconomic Damages Awarded in Criminal Case.

Defendant was convicted of sexual penetration of his niece, a child under the age of 10. He was sentenced to 15 years to life in prison. The trial court also ordered restitution for noneconomic damages to the victim’s mother. Affirming, the Court of Appeal stated: “In our view, the plain language of [Penal Code] section 1202.4 establishes two separate bases—one under subdivision (k)(3) and the other under subdivision (k)(4)—on which parents of children who are sexually abused may qualify as victims in their own right and be awarded restitution for noneconomic losses they sustain.” (People v. Montiel (Cal. App. 1st Dist., Div. 1, May 16, 2019) 2019 Cal. App. LEXIS 451.)

Punitive Damages Award Against Insurance Company Upheld.

Plaintiff was seriously injured in a car accident caused by another driver. The other driver’s insurance company paid plaintiff the policy limits of $50,000.Plaintiff submitted a claim to his own underinsured carrier for $50,000, sending his medical records along with his claim. After its claims adjuster evaluated “the negotiation range” of the claim’s value from $47,047.86 to $52,597.86, plaintiff’s carrier offered its insured $1,000. Plaintiff sued his own carrier for bad faith. The jury awarded him compensatory damages of $313,508 and punitive damages of $4 million. The trial court reduced the punitive damages to $1 million. The insurance company appealed only the punitive damages award. Affirming, the Court of Appeal stated: “There is sufficient evidence in the record to show that GEICO’s managing agent ratified conduct warranting punitive damages. In concluding that Mazik’s claim was worth far less than the policy limits, GEICO disregarded information provided by Mazik showing that he had a permanent, painful injury, and instead selectively relied on portions of medical records that supported GEICO’s position that Mazik had fully recovered. As reduced by the trial court, the $1 million in punitive damages (approximately three times the amount of compensatory damages) is within the constitutionally permitted range in view of the degree of reprehensibility of GEICO’s conduct.” (Mazik v. Geico General Ins. Co. (Cal. App. 2nd Dist., Div. 2, May 17, 2019) 2019 Cal. App. LEXIS 454.)

Ninth Circuit Rejects Claim that 42 U.S.C. § 1981 Claims Are Not Arbitrable.

Plaintiff is an African American who claimed other employees consistently harassed him due to his race. He filed suit against his employer alleging violations of 42 U.S.C. § 1981. He sought a declaration his § 1981 claim was nonarbitrable.  The trial court granted the employer’s motion to compel arbitration. Affirming, the Ninth Circuit Court of Appeals stated it was bound by the holding in EEOC v. Luce, Forward, Hamilton & Scripps (9th Cir. 2003) 345 F.3d 742 and its conclusion that the Civil Rights Act of 1991, which amended § 1981, does not bar arbitration. (Lambert v. Tesla, Inc. (9th Cir., May 17, 2019) 2019 U.S. App. LEXIS 14591.)

Sanctions Under Family Code § 217 Properly Based on Declarations and Documentary Evidence Without Live Testimony.

A family court sanctioned a spouse $10,000 under Family Code § 217 for her conduct during dissolution proceedings, including requiring the husband to file a motion to enter judgment under Code of Civil Procedure § 664.6 despite the fact the parties had completely settled all issues. Affirming the order, the Court of Appeal stated: “Based on the above, we conclude that although in certain circumstances the family court is required by section 217 to receive live testimony when deciding a motion, the family court in this case did not prejudicially err by deciding the sanctions motion based on the declarations and documentary evidence alone.” (In re Deamon  (Cal. App. 4th Dist., Div. 1, May 17, 2019) 2019 Cal. App. LEXIS 455.)

Lack of Jurisdiction to Modify a Custody/support Order of Another State.

In 2017, a North Carolina court issued a detailed child custody and child support order. In 2018, mother initiated proceedings in California to modify the North Carolina order. The California family court judge granted some of mother’s requests and denied some of them. Without reaching the merits, the Court of Appeal reversed because the California court lacked jurisdiction to modify the North Carolina order. (In re Marriage of Kent (Cal. App. 4th Dist., Div. 1,  May 17, 2019) 2019 Cal. App. LEXIS 456.)

Tax Increase due to Back Pay Recoupment Paid in a Lump Sum.

After a dispute with his employer, plaintiff was reinstated and awarded back pay. As a result of receiving his back pay in a lump sum, his tax liability was higher. He contends his employer is responsible to reimburse him for the extra tax liability. Government Code § 19584 provides that a state employee returned to his position shall be paid back salary and accrued interest. Plaintiff argues his increased tax liability equates to back salary. The State Personnel Board ruled against plaintiff, and the superior court denied his petition for writ of mandate. Affirming, the Court of Appeal stated: “Barber is not entitled to increased tax liability recovery under section 19584 or to such recovery as equitable relief, because such relief is not statutorily authorized.” (Barber v. State Personnel Board (Cal. App. 4th Dist., Div. 2 May 17, 2019) 2019 Cal. App. LEXIS 457.)

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 Appeal 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:

The widower requested the U.S. Supreme Court grant certiorari. Taking an unusual step, the high court ordered the Solicitor General to respond to the request when he did not do so on his own. After the government’s opposition was received, for months the high court kept scheduling the case for conference and then continuing it, until the certiorari request was finally denied. Justice Thomas wrote a dissent, stating that, “Feres was wrongly decided and heartily deserves the widespread, almost universal criticism it has received.” (Daniel v. United States (U.S., May 20, 2019) 139 S.Ct. 1713.)

Failure to Warn About Danger of Prescription Drug.

The federal Food, Drug and Cosmetic Act (21 U.S.C. §301 et seq.) requires the Food and Drug Administration (FDA) to ensure prescription drugs are “safe for use under the conditions prescribed, recommended, or suggested” in the drug’s labeling. The drug involved in this case is Fosamax, which treats and prevents osteoporosis in postmenopausal women. A side effect of the drug is that it can prevent the healing of stress fractures and as a result, lead to complete bone breaks that require surgical repairs. The plaintiffs here are more than 500 persons who took Fosamax and suffered femoral fractures. In Wyeth v. Levine (2009) 555 U.S. 555, the U.S. Supreme Court held that clear evidence that the FDA would not have approved a change in the drug’s label preempts a claim for failure to warn. A federal trial court found this action was preempted and granted summary judgment to the drug’s manufacturer in the plaintiffs’ action for failure to warn under state law. The Third Circuit Court of Appeals reversed after finding the fact finder, a jury, must decide whether the FDA would have approved a change in the drug’s label. Reversing the judgment of the appeals court, the U.S. Supreme Court stated: “We here determine that this question of pre-emption is one for a judge to decide, not a jury.” (Merck Sharp & Dohme Corp. v. Albrecht (U.S., May 20, 2019) 139 S.Ct. 1668.)

“Because Native American Indians are so marginalized in the historical world, we are compelled to search for tiny openings in the armor of recorded history to work resistant magic,” Autumn Morning Star.

Petitioner is a member of the Crow Tribe who resides on the Crow Reservation in Montana. He was charged with off-season hunting without a hunting license after he pursued a group of elk past the boundary of the reservation into the Bighorn National Forest in Wyoming. He and his friends shot several bull elk and returned to Montana with the meat. In 1868, the Crow Tribe ceded most of its territory in modern-day Montana and Wyoming to the United States. In exchange, the United States promised that the Crow Tribe “shall have the right to hunt on the unoccupied lands of the United States so long as game may be found thereon” and “peace subsists . . . on the borders of the hunting districts.” Petitioner asked the court to dismiss the action, but the Wyoming courts held that treaty-protected hunting rights expired when Wyoming became a state and, in any event, do not permit hunting in Bighorn National Forest because that land is not “unoccupied.” Petitioner was found guilty by a jury in Wyoming state court. Reversing the conviction, the U.S. Supreme Court stated: “The Crow Tribe’s hunting right survived Wyoming’s statehood, and the lands within Bighorn National Forest did not become categorically ‘occupied’ when set aside as a national reserve.”  (Herrera v. Wyoming (U.S., May 20, 2019) 139 S.Ct. 1668.)

Previously we reported: Dinosaur Fossils Found to Be Minerals.

An amateur paleontologist uncovered valuable dinosaur fossils on a ranch owned by plaintiffs. A year earlier, the previous owners sold their surface estate and one-third of the mineral estate to plaintiffs, expressly reserving the remaining two-thirds of the mineral estate. Plaintiffs and the previous owners brought dueling declaratory relief actions, each claiming ownership of the fossils. The district court granted summary judgment for the plaintiffs. Reversing, the Ninth Circuit held that the fossils were minerals. (Murray v. BEJ Minerals, LLC (9th Cir. Nov. 6, 2018) 908 F.3d 437.)

The next thing that happened:

The Ninth Circuit ordered the matter to be reheard en banc. (Murray v. BEJ Minerals, LLC (9th Cir., Apr. 4, 2019) 920 F.3d 583.)

The latest:

The Ninth Circuit certified a question to the Montana Supreme Court: “Whether, under Montana law, dinosaur fossils constitute ‘minerals’ for the purpose of a mineral reservation?” (Murray v. BEJ Minerals, LLC (9th Cir., May 20, 2019) 2019 U.S. App. LEXIS 14866.)

A Living Trust After Death.

In 1975, four dentists formed a partnership to acquire and maintain a dental office building. In 1994, the partners amended their agreement to allow one of the partners, Dr. Richard Hallberg, to assign his partnership interest to his living trust and to substitute as trustee Dr. Hallberg as a general partner in place of Dr. Hallberg individually. When Dr. Hallberg died 15 years later, litigation ensued over whether, despite the substitution, Dr. Hallberg was still a partner at the time of his death, triggering certain buyout provisions that applied in the event of a partner’s death. The trial court concluded the trust was not a separate legal entity, and that Dr. Hallberg was a partner at the time of his death. The court stated it was required to follow Presta v. Tepper (2009) 179 Cal.App.4th 909. Reversing, the Court of Appeal stated: “We conclude Dr. Hallberg was not a partner when he died. His trust, or the trustee of his trust, was the partner. While a trust cannot act in its own name and must always act through its trustee, a trust is a ‘person’ that may associate in a partnership under the Uniform Partnership Act of 1994 (UPA; Corp. Code, § 16100 et seq.), based on the plain language of the UPA’s definition of ‘person.’ The clear statutory language is reinforced by other provisions of the statute, as well as by its legislative history. We see no contradiction between the terms of the UPA and California trust law, and to the extent Presta suggests otherwise, we disagree. Accordingly, we reverse the trial court’s judgment.” (Han v. Hallberg (Cal. App. 2nd Dist., Div. 8, May 21, 2019) 2019 Cal. App. LEXIS 475.)

Dismissal of Wrongful Death Action as Filed One Day Late, Reversed.

Plaintiff brought a wrongful death action pursuant to 42 U.S.C. § 1983. The trial court dismissed the action because it was filed one day beyond the two-year statute of limitations. The parties stipulated to the following facts: (1) plaintiff’s date of birth is December 3, 1993; (2) plaintiff reached the age of majority on December 3, 2011; and (3) plaintiff filed his original complaint in this suit on December 3, 2013. Reversing, the Court of Appeal concluded the limitations period began on plaintiff’s 18th birthday, when he was first able to file his lawsuit, and he timely filed his complaint within two years after that date. (Shalabi v. City of Fontana (Cal. App. 4th Dist., Div. 2, May 21, 2019) 2019 Cal. App. LEXIS 477.)

Probable Cause to Arrest Defeats Retaliation Claims.

The First Amendment prohibits government officials from subjecting an individual to retaliatory actions for engaging in protected speech. During “Arctic Man” week, upwards of 10,000 people descend on a small town in Alaska. Snowmobiles, alcohol, and freezing temperatures do not always mix well, and officers spend much of the week responding to snowmobile crashes, breaking up fights, and policing underage drinking. Plaintiff was mouthing off and was arrested after he got very close to an officer in a combative stance. Later, the charges were dropped, and plaintiff filed the instant action against the police under 42 U.S.C. § 1983 for deprivation of his civil rights, arguing he was arrested in retaliation for exercising his First Amendment rights. The U.S. Supreme Court was asked to resolve whether probable cause to make an arrest defeats a claim that the arrest was in retaliation for speech protected by the First Amendment. The high court held: “Because there was probable cause to arrest Bartlett, his retaliatory arrest claim fails as a matter of law.” (Nieves v. Bartlett (U.S., May 28, 2019) 2019 U.S. LEXIS 3557.)

Removal to Federal Court.

28 U. S. C. §1441(a) provides that “any civil action” over which a federal court would have original jurisdiction may be removed to federal court by “the defendant or the defendants.” The Class Action Fairness Act of 2005 (28 U.S.C. §1453(b)) provides that a class action may be removed to federal court by “any defendant without the consent of all defendants.” In this case, a third-party counterclaim defendant—that is, a party brought into a lawsuit through a counterclaim filed by the original defendant—claims a right to remove the counterclaim to federal court. The U.S. Supreme Court held: “Because in the context of these removal provisions the term ‘defendant’ refers only to the party sued by the original plaintiff, we conclude that neither provision allows such a third party to remove.” (Home Depot U.S.A. v. Jackson (U.S., May 28, 2019) 2019 U.S. LEXIS 3558.)

Criminal Protective Orders and Family Law Domestic Violence Protective Orders May Coexist.

A family court denied a request for a domestic violence restraining order (DVRO) pursuant to Family Code § 6200 et seq. because the criminal court had already issued a criminal restraining order under Penal Code § 136.2. The appellate court agreed with the petitioner that DVRO’s may sweep more broadly than criminal protective orders by protecting personal property and family members or addressing custody and visitation issues. Reversing, the Court of Appeal stated: “[I]t is clear that criminal and civil protective orders may coexist, and the issuance of one does not bar the other.” (Lugo v. Corona (Cal App. 2nd Dist., Div. 4, May 28, 2019) 2019 Cal. App. LEXIS 493.)

Venue Selection Clause Disallows Removal When There Is No Federal Court in the Identified Venue.

The contracts at issue contain identical venue-selection clauses that provide: “Venue for litigation shall be in Linn County, Oregon.” Notwithstanding this provision, the defendant removed the case under 28 U.S.C. § 1441 to the U.S. District Court for the District of Oregon. Linn County lies within the district court’s Eugene Division, but there is no federal courthouse located in Linn County. The plaintiff moved to remand the case to state court, and a federal trial court granted that motion. The defendant appealed. The Ninth Circuit affirmed, stating: “In short, the venue-selection clause at issue here precludes litigation in federal court because no federal courthouse is located in Linn County. Accordingly, the only way to effectuate the parties’ agreement is to limit venue for litigation to the state court in Linn County.” (City of Albany v. CH2M Hill, Inc. (9th Cir., May 29, 2019) 2019 U.S. App. LEXIS 15802.)

Denial of Petition to Compel a Fee Dispute Arbitration Is Not an Appealable Order.

A man petitioned to compel arbitration of a fee dispute with his lawyers pursuant to the Mandatory Fee Arbitration Act (Bus. & Prof. Code § 6200 et seq.; MFAA) The MFAA permits a client 30 days to request nonbinding arbitration by a local bar association, but the client petitioned beyond that 30-day period and the superior court denied his petition to compel an MFAA arbitration. The Court of Appeal dismissed his appeal because denial of a petition to compel an MFAA arbitration is not an appealable order. (Levinson Arshonsky & Kurtz LLP v. Kim (Cal. App. 2nd Dist., Div. 1, May 29, 2019) 2019 Cal. App. LEXIS 499.)

Same Issue, but Different Burden of Proof, so Collateral Estoppel Inapplicable.

To prevail on his claim, plaintiff had to prove his employment status. Invoking the doctrine of collateral estoppel, the trial court excluded evidence that plaintiff’s status was anything other than an employment relationship. Plaintiff’s employment status was at issue in a prior administrative hearing, but in that hearing the burden of proof was on the administrative agency. Reversing, the Court of Appeal stated: “We hold a party is not collaterally estopped from litigating an issue when, in a prior proceeding, a dispositive finding had been made, but only by imposing a lesser burden of proof on the party invoking collateral estoppel than that which would have been applied in the subsequent proceeding.” (Bennett v. Rancho California Water Dist. (Cal. App. 4th Dist., Div. 3, May 29, 2019) 2019 Cal. App. LEXIS 498.)

Arbitrator’s Denial of Code of Civil Procedure § 998 Costs Is Not Reviewable.

Code of Civil Procedure § 998 authorizes an award of costs to a party that makes a pretrial settlement offer when the opponent rejects the offer and obtains a lesser result at trial. In 1997, the Legislature amended the statute to make the same incentive to settle available in arbitrations. This case involves the procedures for seeking these costs in arbitration. The Court of Appeal held the trial court could vacate the arbitrator’s award because the arbitrator had “refus[ed] . . . to hear evidence material to the controversy.” The California Supreme Court reversed, holding a request for costs under § 998 is timely if filed with the arbitrator within 15 days of a final award. In response to such a request, an arbitrator has authority to award costs to the offering party. However, if an arbitrator refuses to award costs, judicial review is limited. California’s high court stated: “The Court of Appeal erred in relying on a narrow exception to those limits, for failure to consider evidence.” (Heimlich v. Shivji (Cal., May 30, 2019) 2019 Cal. LEXIS 3745.)

Purely Economic Losses to Nearby Businesses Resulting From Industrial Accident.

This case concerns a massive, months-long leak from a natural gas storage facility located just outside Los Angeles. Local businesses—none of which allege they suffered personal injury or property damage—sued to recover in negligence for income lost because of the leak. In other words, their losses were purely economic. The California Supreme Court held: “[C]laims for purely economic losses suffered from mere proximity to an industrial accident create intractable line-drawing problems for courts. So the claims before us are best not treated as compensable in negligence.” (Southern California Gas Leak Cases (Cal., May 30, 2019) 2019 Cal. LEXIS 3747.)

“CLICK.” Thank You. Now You’ve Agreed To Arbitration.

A delivery service customer filed a class action against the delivery service alleging that it overcharged for deliveries to remote areas, in excess of advertised costs for remote deliveries. The defendant successfully petitioned a federal district court to compel arbitration. This is what amounted to an agreement to arbitrate: 

  1. Plaintiff entered his password;
  2. He selected the My Choice program (that selection stated, “By selecting this checkbox and the Continue button, I agree to the UPS Technology Agreement and the UPS My Choice Service Terms”);
  3. He clicked on Continue.

It seems the “UPS Technology Agreement” text hyperlinked to a 96-page agreement, which did not contain an arbitration clause, although an exhibit to the agreement referred to an arbitration agreement. The “UPS My Choice Service Terms” text hyperlinked to a 3-page document that did not mention arbitration but incorporated by reference a 32-page document that was not attached but was available on Section 52 of the 32-page document was an arbitration clause. Denying plaintiff’s request for a writ of mandate, the Ninth Circuit stated: “Because Holl unequivocally assented to the My Choice Service Terms and those terms clearly incorporated the document containing the arbitration clause in question, we are not left with the definite and firm conviction that the district court erred in a manner sufficient to justify mandamus.” (Holl v. U.S. District Court (9th Cir., May 30, 2019) 2019 U.S. App. LEXIS 16058.)

Expert Opinion Regarding Emergency Medical Care.

Health and Safety Code § 1799.110, subdivision (c) states: “In any action for damages involving a claim of negligence against a physician and surgeon providing emergency medical coverage for a general acute care hospital emergency department, the court shall admit expert medical testimony only from physicians and surgeons who have had substantial professional experience within the last five years while assigned to provide emergency medical coverage in a general acute care hospital emergency department.” The trial court granted a defendant doctor’s motion for summary judgment, concluding plaintiffs’ causation expert—a board certified neurointerventional surgeon—was not qualified to offer medical testimony under § 1799.110 because he did not have substantial professional experience working in an emergency department. Reversing, the Court of Appeal stated: “(S)ection 1799.110’s structure and legislative history confirm the Legislature intended the expert qualification provision to ensure only that emergency physicians are subject to a fair and practical appraisal of the applicable standard of care. Although the trial court’s interpretation is consistent with the strict letter of the isolated clause, its literal construction would generate needless conflicts with Evidence Code section 720 and absurd consequences in cases where causation and damages implicate medical issues outside the experience and expertise of emergency room physicians.” (Stokes v. Baker (Cal. App. 2nd Dist., Div. 3, May 30, 2019) 2019 Cal. App. LEXIS 501.)

Damages for Civil Rights Violations of a Citizen Who Spoke Out Against a City’s Accounting Practices Affirmed.

After ten years on the job, the police chief of an Oregon city had suspicions about the city’s budgeting and accounting practices. He discussed his concerns about the city manager with members of the city council and was thereafter fired and unable to find another job. He sued under 42 U.S.C. § 1983, alleging the city manager violated his First Amendment rights by subjecting him to adverse employment actions in retaliation for his protected speech. A jury awarded him $1,117,488 in economic damages and $3,000,000 in noneconomic damages. A federal trial court denied the city’s motion for new trial. Concluding the police chief spoke as a private citizen rather than a public employee when he expressed his concerns, the Ninth Circuit affirmed. (Greisen v. Hanken (9th Cir., May 31, 2019) 2019 U.S. App. LEXIS 16202.)

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