Litigation Update: June 2021

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

  • Senior Editor, Eileen C. Moore, Associate Justice, California Court of Appeal, Fourth District, Division Three
  • Managing Editor, Julia C. Shear Kushner
  • Editors, Dean Bochner, Reuben Ginsburg, Jessica Riggin, David Williams, Ryan H. Wu, and Greg Wolff
U.S. Supreme Court Justice Balks at Denial of Cert in a Rape Case.

A cadet was raped by a fellow cadet while she was a student at the U. S. Military Academy at West Point. She sued the United States under the Federal Tort Claims Act, claiming that West Point’s sexual assault policies were inadequate to protect students from sexual violence, but lost in both the trial court and the appellate court. The U.S. Supreme Court denied the cadet’s petition for certiorari. Justice Thomas wrote a dissent to that denial, stating: “70 years ago, this Court made the policy judgment that members of the military should not be able to sue for injuries incident to military service. See Feres v. United States, 340 U. S. 135 (1950). Relying on Feres, the Second Circuit held that sovereign immunity barred petitioner’s claims, even if she could have brought these same claims had she been a civilian contractor employed by West Point instead of a student. . . . [¶] Feres was wrongly decided; and this case was wrongly decided as a result. We should grant certiorari to correct this error.” (Doe v. United States (U.S., May 3, 2021) 141 S.Ct. 1498.)

California Supreme Court Clarified Unlawful Detainer Law.

The California Supreme Court granted review in an unlawful detainer case to decide whether a defendant may use a motion to quash service of summons pursuant to Code of Civil Procedure § 418.10 to challenge a complaint on the ground that it fails to state a cause of action. California’s high court held: “[A] motion to quash service of summons under section 418.10 is as limited in unlawful detainer actions as it is in other civil actions: to challenge the service of process as improper or the summons as defective. . . . [P]roper service of process under sections 412.20 and 1167, providing a copy of the summons and complaint to the defendant, confers personal jurisdiction in an unlawful detainer case.” (Stancil v. Superior Court of San Mateo County (Cal., May 3, 2021) 11 Cal.5th 381.)

Default Judgment Set Aside Because Award of an Earn-Out Payment Was Contrary to the Law.

Defendant borrower moved to set aside a default judgment against him in an action on a promissory note. On appeal, the borrower contended the default judgment was rendered void because the $100,000 earn-out payment and $16,163.05 in interest constituted “illegal rates of interest under California usury law.” Reversing, the Court of Appeal stated: “As to the $100,000 Earn-Out Amount, we agree with [defendant] that the award is contrary to law because it exceeds the constitutionally allowable maximum interest rate of 10 percent, and thus renders the default judgment void on its face.” The appellate court also found the interest awarded on the earn-out payment was also contrary to the law. (Grados v. Shiau (Cal. App. 1st Dist., Div. 3, May 3, 2021) 63 Cal.App.5th 1042.)

Snapchat Can’t Get Lawsuit Against It Dismissed.

Three young men, two aged 17 and one aged 20, were driving at up to 123 mph, while using a filter that enables Snapchat users to record their real-life speed. Many users believe Snapchat will reward them for recording a 100-MPH or faster snap. After several minutes, they crashed into a tree and all three died. Two sets of parents sued Snapchat under the Communications Decency Act (47 U.S.C. § 230(c)(1); CDA). They alleged Snapchat knew that its users believed they would receive a reward for high speed snaps, and that the speed filter was incentivizing young drivers to drive at dangerous speeds. The district court dismissed the action for failure to state a claim. Reversing, the Ninth Circuit stated: “In short, Snap ‘is being sued for the predictable consequences of’ designing Snapchat in such a way that it allegedly encourages dangerous behavior. [Citation.] The CDA does not shield Snap from liability for such claims.” (Lemmon v. Snap, Inc. (9th Cir., May 4, 2021) 995 F.3d 1085.)

You Snooze, You Lose.

After an arbitrator conducted a nine-day hearing and issued a final ruling, the losing side alleged—for the first time—the arbitrator had openly taken opioids during the hearing and, as a result, the arbitrator was unable to properly perceive the evidence and unable to properly conduct the proceeding. During the arbitration, the arbitrator openly consumed his medication, remarking one time that he was taking enough to down a horse. Finding the issue forfeited for failure to raise it earlier, the trial court denied the motion to vacate the award. Affirming the denial of the motion, the Court of Appeal stated: “Absent the legal jargon, the term ‘forfeiture’ essentially means: ‘You snooze, you lose.’” (Alper v. Rotella (Cal. App. 4th Dist., Div. 3, May 5, 2021) 63 Cal.App.5th 1142.)

Superior Court Erred in Issuing Administrative Writ.

After a dispute over eligibility for developmental disability services pursuant to Welfare & Institutions Code § 4500 et seq., an administrative law judge (ALJ) found a young man met the statutory criteria for developmental disability (autism spectrum disorder). The plaintiff Regional Center thereafter petitioned the superior court for a writ of administrative mandamus. The superior court reversed the ALJ’s decision. Reversing the superior court, the Court of Appeal stated: “We conclude the superior court erred when it deferred to the Regional Center’s eligibility determinations. A fair hearing under the Act is just that — an even playing field on which the participants present their evidence to an impartial hearing officer. The superior court owed deference not to the Regional Center’s evaluators but to the administrative process created to fairly resolve disputes over eligibility for services.” (Tri-Counties Association for the Developmentally Disabled, Inc. v. Ventura County Public Guardian (Cal. App. 2nd Dist., Div. 6, May 5, 2021) 63 Cal.App.5th 1129.)

CalSavers Is Not Preempted.

A taxpayers association sued the State of California over a retirement program that mandates participation by private employers, CalSavers. Plaintiff contended CalSavers is preempted by the Employee Retirement Income Security Act (ERISA). According to plaintiffs, CalSavers places taxpayers at risk. Under CalSavers, eligible employees of certain private employers in California that do not provide their employees with a tax-qualified retirement savings plan are automatically enrolled in CalSavers, but may opt out. If they do not, their employer must remit certain payroll deductions to CalSavers, which funds the employees’ IRAs. The state manages and administers the IRAs and acts as the program fiduciary. Citing a need to encourage greater savings among future retirees, other states have enacted similar state-managed IRA programs in recent years. The district court dismissed the action. Affirming, the Ninth Circuit stated: “We hold that the preemption challenge fails. CalSavers is not an ERISA plan because it is established and maintained by the State, not employers; it does not require employers to operate their own ERISA plans; and it does not have an impermissible reference to or connection with ERISA. Nor does CalSavers interfere with ERISA’s core purposes. ERISA thus does not preclude California’s endeavor to encourage personal retirement savings by requiring employers who do not offer retirement plans to participate in CalSavers.” (Howard Jarvis Taxpayers Association v. California Secure Choice Retirement Savings Program (9th Cir., May 6, 2021) 997 F.3d 848.)

Misconduct by Arbitrator.

Plaintiff petitioned the superior court to vacate an arbitration award in favor of Kaiser. The superior court found arbitrator Byron Berry’s conduct “did not rise to a level that substantially prejudiced [plaintiff’s] rights.” Reversing, the Court of Appeal found the arbitrator committed misconduct on several levels: “A neutral arbitrator has a continuing duty to disclose all matters that could cause a person aware of the facts to reasonably entertain a doubt that the neutral arbitrator would be able to be impartial. The arbitrator’s ex parte communication with Kaiser’s counsel certainly qualifies. Because the arbitrator was aware of this communication and did not disclose it to [plaintiff], the award must be vacated. ([CCP] § 1286.2, subd. (a)(6)(A).)” (Grabowski v. Kaiser Foundation Health Plan, Inc. (Cal. App. 4th Dist., Div. 1, May 10, 2021) 64 Cal.App.5th 67.)

Man Confessed so the Government Would Release His Family.

A family who lives in Mexico was on the way to shop in Arizona. At the international border checkpoint, one border patrol agent told another the car was carrying drugs. A certified drug detection dog alerted when she sniffed the front of the vehicle. The agents could find nothing, so they drove the family’s car to a spot where it could be more thoroughly searched. The windshield wiper fluid looked murky and an agent suspected it contained liquid drugs. One of several drug kit tests indicated the presence of methamphetamine. Other agents separated and questioned the family. The father was told that unless he confessed, he would go to prison, and his children would remain in U.S custody. Eventually, he falsely confessed. He was taken to a holding facility in Phoenix where he told federal agents he only confessed so his family would be released. A criminal complaint was filed against him. A more sophisticated investigation revealed no drugs in the windshield wiper fluid. The government dismissed the complaint and released the father after 40 days in custody. The family sued the United States. The district court entered judgment for the government. Dismissing for lack of jurisdiction, the Ninth Circuit stated: “This appeal requires us to decide if the discretionary function exception, 28 U.S.C. § 2680(a), shields the United States from suit under the Federal Tort Claims Act (FTCA) for allegedly tortious actions during a criminal investigation related to a border crossing. We hold that, because the alleged actions are not unconstitutional, it does.” (Nieves Martinez v. United States (9th Cir., May 11, 2021) 997 F.3d 867.)

Compensation for an Innocent Man who Served 13 Years in Prison.

After the district court granted a petition for writ of habeas corpus triggering plaintiff’s release from prison after 13 years of confinement, plaintiff filed a claim with the California Victim Compensation Board seeking compensation as a wrongfully convicted person. The board denied plaintiff’s claim, concluding it was entitled to make its own determination whether plaintiff was factually innocent because the district court’s finding that no reasonable juror would convict him did not predetermine the question and obviate the need for a board hearing. Thereafter, plaintiff sought mandamus relief in the district court, and the court upheld the board’s determination. Deciding what the term factual innocence means, the Court of Appeal reversed, stating: “A habeas corpus petitioner who makes a showing of actual innocence strong enough to convince a court to entertain an otherwise procedurally barred collateral attack on a final judgment and who then wins permanent release from prison on a writ of habeas corpus has been found factually innocent by a preponderance of the evidence.” (Larsen v. California Victim Compensation Board (Cal. App. 2nd Dist., Div. 5, May 11, 2021) 64 Cal.App.5th 112.)

Cultural Insensitivity.

The government sent notice of the hearing date for a woman and her child to appear in immigration court for removal proceedings. When she didn’t appear, they were ordered removed in absentia. The notice for the date of appearance stated: “07/12/2016.” Based on how numerical dates are typically written in Latin America, this was interpreted as December 7, 2016. The Ninth Circuit found they made a showing of exceptional circumstances and granted the petition for review, then remanded the matter to the Board of Immigration Appeals for further proceedings. (Hernandez-Galand v. Garland (9th. Cir., May 12, 2021) 996 F.3d 1030.)

Children of Naturalized Citizens.

A 13-year-old boy entered the United States lawfully under a non-immigrant student visa. His mother was naturalized in 1999, and he applied for adjustment of status to lawful permanent resident when he was 15, in 2000. Due to an administrative error, he was not granted adjustment of status until 2003, after he had turned 18. After theft convictions, the Board of Immigration Appeals ordered him removed from the country. The board relied on Romero-Ruiz v. Mukasey (9th Cir., 2008) 538 F.3d 1057, which held the two different pathways for citizenship for children required the child to have lawful permanent resident status. The Ninth Circuit reexamined Romero-Ruiz and concluded otherwise and remanded to the board for further proceedings. (Cheneau v. Garland (9th. Cir., May 13, 2021) 997 F.3d 916.)

Alleged Racially Offensive Remarks at Work Will Go to Trial on IIED Claim.

Plaintiff, who had worked two decades for defendant, is African American. During a presentation at work, the presenter made three statements plaintiff found offensive. The first statement, in response to a question was: “Huh. Speak up. I can’t hear you. . . .You sound like Barry White.” The second statement was: “I don’t like taking my car to Jiffy Lube because I’ve had a bad experience with a mechanic putting his hands all over my car. How would you like Barry White over there with his big banana hands working on your car?”  The third statement was in response to another question from plaintiff: “What, I can’t see your eyes, what?” When these remarks were made, the non-African American audience members laughed. The next day, a Jiffy Lube employee crossed out Smith’s name on the schedule and replaced it with “Banana Hands.” Plaintiff sued his employer and the presenter for harassment under the Fair Employment and Housing Act (Gov. Code, §§ 12940 et seq.; FEHA), and for discrimination under the Unruh Act (Civ. Code, § 51, subd. (b)). He also sued the presenter for intentional infliction of emotional distress (IIED). The trial court sustained defendants’ demurrer without leave to amend, and plaintiff timely appealed. The Court of Appeal affirmed as to the FEHA claims, but reversed as to the Unruh Act and IIED claims. (Smith v. BP Lubricants USA Inc. (Cal. App. 4th Dist., Div. 2, May 13, 2021) 64 Cal.App.5th 138.)

Huge Jury Award and Interesting Causation Jury Instruction in Roundup Case.

Plaintiff sued the manufacturer of Roundup pesticide, which he used from the 1980s to 2012, after he developed non-Hodgkin’s lymphoma (NHL). The jury returned a verdict for of plaintiff, awarding him $5,267,634.10 in compensatory damages and $75 million in punitive damages. The district court reduced the jury’s punitive damages award to $20 million. On appeal, defendant argued: (1) the Federal Insecticide, Fungicide, and Rodenticide Act preempted plaintiff’s failure-to-warn claims; (2) the district court made a series of evidentiary and jury instruction errors; (3) the district court erred in denying judgment as a matter of law; and (4) the punitive damages award violated California law and the Due Process Clause. Affirming, the Ninth Circuit discussed plaintiff’s expert’s testimony that plaintiff’s exposure to Roundup’s active ingredient, glyphosate, caused his NHL, and defendant’s expert’s testimony that little evidence links glyphosate to cancer in humans, and that plaintiff’s cancer was idiopathic. The district court instructed the jury that, to rule for plaintiff, it must find that glyphosate exposure was a but-for cause of his cancer or one of two or more factors that independently could have caused his cancer. (Hardeman v. Monsanto Company (9th Cir., May 14, 2021) 997 F.3d 941.)

No Evidence in Legal Malpractice Case that, Absent Attorney’s Breach, Plaintiff Would Have Had a Better Result.

Plaintiff sued his family law attorney for legal malpractice on the basis his ex-wife was awarded an excessive amount of child support. The case went to trial and the jury concluded, in a special verdict, that the attorney owed a professional duty of care that she breached. The jury was unable to agree, however, on whether the breach of duty caused him damage, and the judge declared a mistrial. Counsel for the attorney moved for a directed verdict on the grounds that the evidence presented at trial did not support a finding of causation, specifically, that without the alleged malpractice, plaintiff would have received a better result. The trial court directed the verdict in the attorney’s favor. Affirming, the Court of Appeal held plaintiff did not establish that he would have experienced a better outcome absent his attorney’s breach. (O’Shea v. Lindenberg (Cal. App. 4th Dist., Div. 1, May 14, 2021) 64 Cal.App.5th 228.)

A Man’s Home Is His Castle.

A woman asked the police to check on her husband because she thought he might be suicidal as he had taken out a gun the evening prior. Her husband denied he was suicidal, but the officer thought he posed a risk to himself or others. The man agreed to go to the hospital for a psychiatric evaluation, but only after the police promised not to confiscate his firearms. However, once the ambulance took the man away, police seized his firearms. The man sued the police for violation of his rights under the Fourth Amendment when they entered his home and took his guns without a warrant. The lower court granted judgment in favor of the police officers. Vacating the judgment, the U. S. Supreme Court stated: “What is reasonable for vehicles is different from what is reasonable for homes.” (Caniglia v. Strom (U.S., May 17, 2021) 141 S.Ct. 1596.)

Micro-Captive Transactions.

People tend to resist paying taxes. In the past, some taxpayers have sought injunctions against the government, alleging certain taxes were illegal. As a result, Congress passed an Anti-Injunction Act, 26 U.S.C. § 7421(a), barring such injunctions. The Internal Revenue Service determined that so-called micro-captive transactions are reportable. Such transactions typically involve an insurance agreement between a parent company and a “captive” insurer under its control. The code provides the parties to such an agreement with tax advantages. But no tax benefit should accrue if the money is not really for insurance. Petitioners challenged that reporting requirement, along with a request to enjoin the IRS from enforcing it. The U.S. Supreme Court held this action did not implicate the Anti-Injunction Act, stating: “CIC’s suit aims to enjoin a standalone reporting requirement, whose violation may result in both tax penalties and criminal punishment. That is not a suit ‘for the purpose of restraining the [IRS’s] assessment or collection’ of a tax, and so does not trigger the Anti-Injunction Act.” (CIC Services, LLC v. Internal Revenue Service (U.S., May 17, 2021) 141 S.Ct. 1582.)

2020 Case Holding State Court Criminal Juries Must Be Unanimous to Sustain a Conviction Is Not Retroactive.

Apodaca v. Oregon (1972) 406 U.S. 404, held that non-unanimous juries were allowed in state criminal trials. Ramos v. Louisiana (2020) 140 S.Ct. 1390, held that a state jury must be unanimous to convict a criminal defendant of a serious offense. The question in this case was whether the new rule of criminal procedure announced in Ramos applies retroactively to overturn final convictions on federal collateral review. The U.S. Supreme Court held: “Under this Court’s retroactivity precedents, the answer is no.” (Edwards v. Vannoy (U.S., May 17, 2021) 141 S.Ct. 1547.)

Government Enforcing Agency Cannot Be Compelled to Arbitrate Under a Private Arbitration Agreement.

The Ninth Circuit was called upon to decide whether a private arbitration agreement binds the Secretary of Labor when bringing a Fair Labor Standards Act (29 U.S.C. §§ 201–219), enforcement action that seeks relief on behalf of one party to an arbitration agreement against the other party to that agreement. The appeals court noted that the Federal Arbitration Act addresses enforceability only as to the parties to the arbitration agreement. It does not provide that agreements to arbitrate are enforceable against nonparties. The court also noted that the U.S. Supreme Court addressed the issue of whether a private agreement to arbitrate is enforceable against a government actor that brings an enforcement action to vindicate the rights of a party to the arbitration agreement in EEOC v. Waffle House (2002) 534 U.S. 279. The appellate court concluded in the present case: “As in Waffle House, the remedial statute at issue here unambiguously authorizes the Secretary to obtain monetary relief on behalf of specific aggrieved employees.” (Walsh v. Browne (9th Cir., May 18, 2021) 2021 WL 1972613.)

Suit Alleging Prison Guard Tapped Calls Between Prisoner and His Attorney Tossed.

A Nevada prisoner alleged the prison was monitoring his calls to the attorney he had engaged to help with his civil actions. He sued for damages, contending illegal wiretapping. The district court granted summary judgment for a prison guard. Affirming, the Ninth Circuit stated: “As required by prison policy, Baker screened and intermittently checked in on Witherow’s phone conversations with the attorney he had hired to bring lawsuits on his behalf. Because Baker did not violate any Fourth Amendment right that was clearly established at the time of her challenged conduct, we hold that she is entitled to qualified immunity.” (Witherow v. Baker (9th Cir., May 18, 2021) 997 F.3d 1060.)

Large Jury Verdict Upheld in Asbestos Case.

A husband and wife sued defendant compressor-manufacturer and others alleging they exposed husband to asbestos that caused him to develop mesothelioma. By the end of trial, defendant compressor-manufacturer was the only defendant remaining. The jury found defendant compressor-manufacturer liable, apportioned it sixty percent of the fault for husband’s harm, and awarded, among other damages, $25 million in noneconomic damages. On appeal, defendant compressor-manufacturer argued that substantial evidence did not support the jury’s allocation of fault; that the trial court erred in denying a motion by defendant for a new trial on the ground of excessive damages or for remittitur; and that the noneconomic damages award was excessive. Of interest is that in the motion for new trial, defendant compressor-manufacturer submitted a spreadsheet showing verdict amounts in California asbestos cases over a five-year period. The trial court sustained a relevancy objection to the spreadsheet. Affirming, the Court of Appeal stated: “We hold that the defendant has the burden at trial to show the percentage of fault attributable to other parties who may have contributed to causing the plaintiff’s harm and that Copeland has not met its burden on appeal to show as a matter of law the evidence compelled an apportionment of fault more favorable to Copeland. We also hold the trial court, in denying Copeland’s motion for a new trial, did not err under Code of Civil Procedure sections 657 and 658 in declining to consider a spreadsheet created by Copeland’s attorneys that presented a survey and comparative analysis of verdicts in California asbestos cases over a recent five-year period. Finally, we conclude substantial evidence supported the jury’s award of noneconomic damages.” (Phipps v. Copeland Corp. LLC (Cal. App. 2nd Dist., Div. 7, May 18, 2021)64 Cal.App.5th 319.)

Dismissal for Failure to Prosecute Reversed.

After a successful appeal in a civil case, plaintiffs had three years, until July 18, 2019, to bring their case to trial. Meanwhile, the parties resumed pre-trial activities, which included amending pleadings, filing demurrers, and conducting discovery.

May 16, 2019—The parties apprised the court they were ready for trial, and the court set the trial date of January 13, 2020. When the court suggested an earlier date, defendant asked for a later date.

August 30, 2019—Defendant moved to dismiss pursuant to Code of Civil Procedure § 583.320 on the ground that the three-year deadline for bringing the case to trial had passed.

September 26, 2019—The court dismissed the action.

January 30, 2020—The court entered judgment of dismissal with prejudice.

February 18, 2020—Plaintiffs filed a motion to correct the minutes of May 16, 2019, seeking to have them reflect that the January 2020 trial date was set by the agreement of the parties to accommodate defendant’s request to do more discovery. Plaintiffs also filed a motion for new trial. The trial court denied both motions.

Reversing, the Court of Appeal stated: “We conclude the parties’ agreement here to a trial date outside the three-year period extended the statutory deadline to that trial date, and on that basis we reverse the judgment dismissing this case for failure to prosecute.” (Nunn v. JPMorgan Chase Bank, N.A. (Cal. App. 1st Dist., Div. 4, May 18, 2021) 64 Cal.App.5th 346.)

Case Involving Securities Fraud Allegations Tossed.

This case concerns allegations of securities fraud against Uber Technologies, Inc., a technology startup known for its ridesharing application, and Travis Kalanick, co-founder and former CEO of Uber. After Uber’s founding in 2009, its valuation soared, with some investors assigning a valuation as high as $68 billion by mid-2016. Between June 2014 and May 2016, Kalanick and Uber completed four preferred stock offerings, raising more than $10 billion in additional capital through limited partnerships and other entities. Irving Firemen’s Relief & Retirement Fund, a retirement fund for firefighters, acquired Uber securities through one of these offerings. Throughout 2017, several alleged corporate scandals surfaced, and by early 2018, investors estimated a nearly 30% decline in Uber’s valuation. Irving filed a putative class action against Uber and Kalanick alleging one claim of securities fraud under California Corporations Code §§ 25400, subdivision (d) and 25500. The district court dismissed the operative complaint for failure to state a claim. Affirming, the Ninth Circuit stated: “Irving did not plausibly allege that Uber and Kalanick’s alleged misstatements caused its damages. Accordingly, we do not reach the other elements of Irving’s claim, or the other arguments advanced by the parties.” (Irving Firemen’s Relief & Retirement Fund v. Uber Technologies, Inc. (9th Cir., May 19, 2021) 2021 WL 1992242.)

Court Erred in Denying Petition to Arbitrate Underinsured Motorist Claim.

Shortly after plaintiff filed a lawsuit against his insurance company for breach of contract and bad faith, defendant insurance company filed a petition to compel arbitration of his underinsured motorist claim and stay the bad faith litigation. The trial court denied the petition to compel arbitration because the court concluded plaintiff’s bad faith action was not a dispute over coverage or the amount of the underinsured motorist claim. The Court of Appeal reversed and remanded to the trial court with directions to grant the petition to arbitrate the underinsured motorist claim and decide whether the bad faith claim should be stayed pending arbitration. (McIsaac v. Foremost Insurance Company Grand Rapids, Michigan (Cal. App. 1st Dist., Div. 1, May 19, 2021) 2021 WL 1998044.)

Previously we reported:
Homeowners Association’s Construction Defect Claim Tossed.

A homeowners association filed a construction defect claim. The defendant developer alleged in arbitration that the HOA failed to comply with its own CC&R’s, which state: “Required Vote to Make Claim. Prior to filing a claim pursuant to the ADR Provisions, the [HOA] must obtain the vote or written consent of Owners . . . who represent not less than fifty-one percent (51%) of the . . . voting power . . . .” Thereafter, the HOA held a membership meeting. Of the 93 members present, 92 voted to ratify the filing of the already-filed construction defect claim. Still in arbitration, defendant successfully moved for summary judgment; the arbitrator concluded the ratification of the already-filed claim was insufficient. In superior court, the defendant moved to confirm the arbitration award dismissing the claim, and the trial court granted the motion. The Court of Appeal affirmed, stating the Davis-Stirling Common Interest Development Act (Civ. Code, § 4000 et seq.) provides a comprehensive framework for the governance of homeowners associations, providing numerous limits on the power of HOA boards, and a system of checks on a board’s powers, adding: “The CC&R provision here goes a step further, requiring affirmative consent of a quorum of the members ‘prior to’ instituting such action.” (Branches Neighborhood Corporation v. CalAtlantic Group, Inc. (Cal. App. 4th Dist., Div. 3, Aug. 24, 2018) 26 Cal. App. 5th 743.)

The latest:

After the Branches decision, the trial court in another case, involving essentially the same facts, followed the holding in Branches. But after the homeowner’s association filed a notice of appeal, the Legislature amended the Davis-Stirling Act. Civil Code § 5986 now renders prelitigation vote requirements null and void. The newly enacted statute abrogates the defense that noncompliance with such conditions defeats a construction defect claim. Reversing the trial court’s grant of summary judgment, the Court of Appeal stated: “We conclude a ‘final judicial decision on the merits’ within the meaning of section 5986, subdivision (d), does not encompass a judgment that was not final on appeal as of the statute’s effective date. Section 5986 therefore applies retroactively to the Association’s claims and compels reversal of the judgment entered against it. We also hold, as an independent ground for reversal, that the prelitigation vote requirement at issue in this case violates fundamental state public policy.” (Smart Corner Owners Association v. CJUF Smart Corner LLC (Cal. App. 4th Dist., Div. 1, May 20, 2021) 2021 WL 2010152.)

Duty Not to Commit Fraud Is Independent From Contractual Requirements.

Plaintiff brought a class action against Rite Aid Corporation, alleging that Rite Aid fraudulently inflated the reported prices of prescription drugs to insurance companies. Plaintiff alleged that this caused class members to pay Rite Aid a higher co-payment for the drugs than they would have paid if Rite Aid had reported the correct price to their insurance companies. Although Rite Aid and plaintiff had no contract between them containing an arbitration clause, Rite Aid did have such contracts with the intermediaries who coordinated insurance reimbursements and co-payment calculations, called “pharmacy benefits managers.” The district court denied Rite Aid’s petition to compel arbitration. Affirming, the Ninth Circuit stated: “Rite Aid’s duty not to commit fraud is independent from any contractual requirements with the pharmacy benefit managers. . . . [¶] Stafford’s claims do not depend on Rite Aid’s contractual obligations to the pharmacy benefits managers. Consequently, equitable estoppel does not apply to bind Stafford to the arbitration agreements in those contracts.” (Stafford v. Rite Aid Corp. (9th Cir., May 21, 2021) 2021 WL 2024511.)

School District Not Subject to Treble Damages.

Plaintiff was 14 years old when she began her freshman year. Defendant was an aide in two of her classes. During the first semester of plaintiff’s freshman year, defendant began giving her special attention and showing physical affection towards her at school. During the same period, he targeted other female students, one of whom complained to the school administration that he inappropriately touched her. Despite this report, the school did not terminate defendant’s employment. In November 2014, defendant’s “grooming and manipulation” culminated in his sexual abuse of plaintiff. Due to defendant’s threats and coercion, plaintiff did not disclose the abuse to her parents until March 2016. Plaintiff’s parents immediately reported the abuse to law enforcement. In May 2016, defendant was arrested and charged with criminal offenses stemming from the abuse. Her operative complaint, asserting numerous causes of action against the school district, sought an award of economic and noneconomic damages and an award of treble damages under Code of Civil Procedure § 340.1. The school district moved to strike the request for treble damages. It argued the “discretionary award of treble damages” under § 340.1 is “punitive” and, therefore, prohibited against a public entity under Government Code § 818. Code of Civil Procedure § 340.1 authorizes an award of “up to treble damages” in a tort action for childhood sexual assault where the assault occurred “as the result of a cover up.” Government Code § 818 exempts a public entity from an award of damages “imposed primarily for the sake of example and by way of punishing the defendant.” In this writ proceeding, the Court of Appeal was called upon to determine whether Government Code § 818 precludes an award of treble damages under Code of Civil Procedure § 340.1 against a public entity. The appeals court held: “Because treble damages under section 340.1 are primarily exemplary and punitive, a public entity like LAUSD maintains sovereign immunity from liability for such damages under section 818.” (Los Angeles Unified School District v. Superior Court of Los Angeles County (Cal. App. 2nd Dist., Div. 3, May 21, 2021) 2021 WL 2024615.)

Trashy Stuff.

Guam and the United States are engaged in a long-running dispute over the Ordot Dump, a “ ‘280-foot mountain of trash’ ” near the center of the island. The Navy constructed the dump in the 1940s, and then allegedly deposited toxic military waste there for several decades. The United States later ceded control of the site to Guam, which itself used the dump as a public landfill. In the late 20th century, the Environmental Protection Agency (EPA) determined that the dump posed an ecological hazard. After Guam allegedly failed to comply with agency directives to remediate the site, the EPA sued under the Clean Water Act. That litigation ended in 2004, when Guam and the EPA entered into a consent decree requiring Guam, among other things, to pay a civil penalty and to close and cover the dump. Thirteen years later, it was Guam’s turn to sue—this time under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U. S. C. §9601 et seq.; CERCLA) to recover the costs of remediation. The D.C. Circuit rejected Guam’s claim for contribution under § 113, subdivision (f)(3)(B) of CERCLA, finding it to be time-barred after the 2004 Clean Water Act settlement. Reversing and remanding, the United States Supreme Court stated: “The most natural reading of § 113 (f)(3)(B) is that a party may seek contribution under CERCLA only after settling a CERCLA-specific liability.” (Guam v. United States (U.S., May 24, 2021) 2021 WL 2044537.)

Unlawful Reentry.

A Mexican national, who obtained permanent resident status in 1990, was removed from this country in 1998 after he was convicted of felony DUI in California. Six years later, the U.S. Supreme Court held in Leocal v. Ashcroft (2004) 543 U. S. 1, that “a higher mens rea than the merely accidental or negligent conduct involved in a DUI offense” is necessary for an offense to qualify as a crime of violence resulting in removal. In 2017, the man was again found living in the United States. A grand jury indicted him on one count of unlawful reentry after removal. At that point, the man argued his 1998 removal was invalid. However, the statute criminalizing unlawful reentry provides that a collateral challenge to the underlying deportation order may proceed only if the noncitizen first demonstrates that (1) “any administrative remedies that may have been available” were exhausted; (2) “the opportunity for judicial review” was lacking; and (3) “the entry of the order was fundamentally unfair.” (8 U.S.C. § 1326(d).) Both the district court and the Ninth Circuit excused the man from proving the first two requirements of § 1326(d) because his 1998 conviction should not have made him removable under Leocal. Reversing, the U.S. Supreme Court stated: “The question for the Court is whether Palomar-Santiago is excused from making the first two of these showings . . . because his prior removal order was premised on a conviction that was later found not to be a removable offense. The Court holds that the statute does not permit such an exception.” (United States v. Palomar-Santiago (U.S., May 24, 2021) 2021 WL 2044540.)

When Requested, Send the Client’s File Immediately.

A convicted criminal defendant requested his case file in order to file for habeas corpus relief in federal court. Only after being ordered to do so by the court, and two years too late for habeas relief, the attorney produced the file. The State Bar dropped the ball as well, taking six months to even respond to the client. The client sued the lawyer for conversion and intentional infliction of emotional distress. He claimed as damages the cost of reconstructing his criminal file, estimated at $175,000. After a bench trial, the court found for the lawyer, finding a lack of proof that the delay in producing the file impaired the client’s post-conviction efforts. Affirming, the Court of Appeal stated: “We cannot condone such laxity on the part of a lawyer toward his client. But absent a miscarriage of justice (of which we have no evidence here) our moral and professional assessments, however deeply felt, cannot create a cause of action in tort.” (White v. Molfetta (Cal. App. 4th Dist., Div. 3, May 24, 2021) 2021 WL 2070202.)

Law of the Case Compels Affirmance of Denial of Motion to Dismiss for Inconvenient Forum.

A successful businessman and his wife fled Iran in 1978 during the unrest that led to the Iranian revolution, leaving behind significant real estate holdings. In 1996, the businessman entered into a contract with defendant to try to reclaim some of his Iranian properties. The businessman and his wife are now deceased. The present action was brought by their children against defendant, alleging he stole their parents’ money. Following a bench trial, the court concluded defendant was unjustly enriched and entered judgment in plaintiffs’ favor for more than $34 million. On appeal, defendant asserted the trial court should have granted his inconvenient forum motion, arguing a civil court in Iran was better suited to preside over the matter. In a 2015 interlocutory appeal, brought after the trial court denied defendant’s motion to dismiss based on the doctrine of inconvenient forum, the Court of Appeal affirmed, explaining the “evidence is overwhelming that Iranian courts discriminate against women and non-Muslims. Among other things, Plaintiffs submitted evidence that the testimony of a woman counts for half the value of that of a man, and that women are not treated equally before the courts, particularly in personal status matters relating to marriage, divorce, inheritance, and child custody, and only men can serve as judicial officers. . . . Two of the three Plaintiffs here are women and the Galstian family members are not Muslim. Leaving aside whether Iranian courts are independent or corrupt, this is sufficient to show Iran is not a suitable alternative forum. This is the ‘rare circumstance’ in which an alternative forum ‘provides no remedy at all.’ ” (Aghaian v. Minassian (2015) 234 Cal.App.4th 427, 435-436.) This time around, after judgment, the Court of Appeal again affirmed, stating: “The law of the case doctrine applies and compels the denial of Minassian’s renewed inconvenient forum motion.” (Aghaian v. Minassian (Cal. App. 2nd Dist., Div. 8, May 24, 2021) 2021 WL 2069943.)

The Law Is for Thee, But Not for Me, Is the Basic Argument of a State Agency.

In separate criminal cases, a trial court found 37 defendants incompetent to stand trial and ordered the California Department of State Hospitals to timely admit them. The Department failed to admit 31 of the 37. Those 31 defendants separately sought sanctions against the department pursuant to Code of Civil Procedure § 177.5, claiming violation of a court order. The trial court found the Department in violation of the orders, and imposed monetary sanctions pursuant to § 177.5, which provides in relevant part: “A judicial officer shall have the power to impose reasonable money sanctions . . . for any violation of a lawful court order by a person, done without good cause or substantial justification. . . . For the purposes of this section, the term ‘person’ includes a witness, a party, a party’s attorney, or both.” On appeal, the department contended the trial court was not authorized to impose sanctions against it under § 177.5. Additionally, it claimed good cause or substantial justification for violating the order even assuming the court could impose sanctions under § 177.5. Affirming, the Court of Appeal stated the sanctions were imposed “consistent with the purposes of the statute, which include punishing and deterring violations of lawful court orders.” (People v. Aguirre (Cal. App. 3rd Dist., May 24, 2021) 2021 WL 2070079.)

“We work to restore the civil rights of formerly incarcerated people.” A New Way of Life Reentry Project, One of the Plaintiff’s Counsel.

Plaintiffs sought declaratory and injunctive relief against the Riverside Superior Court, alleging it improperly maintains records in criminal cases in various ways, including failing to properly destroy records of old marijuana-related offenses, allowing users of its website to perform improper searches, and disclosing protected criminal information. The trial court rejected all of plaintiffs’ claims. Reversing in part, the Court of Appeal largely held in favor of plaintiffs, such as its causes of action for violations of  Health and Safety Code § 11361.5 (mandating the destruction of certain records pertaining to marijuana-related arrests and convictions) and California Rules of Court, Rule 2.507 (specifying the manner by which electronic trial court records are to be made available to the public). (All of US or None — Riverside Chapter v. Hamrick (Cal. App. 4th Dist., Div. 1, May 26, 2021) 2021 WL 2134161.)

Trial Court Abused Its Discretion in Vacating a Judgment After Acceptance of a § 998 Offer to Compromise.

In a wrongful death action, defendant served plaintiffs with an offer to compromise pursuant to Code of Civil Procedure § 998. In exchange for “settlement of all claims and causes of action being litigated in this action,” defendant offered to pay $15,000. Plaintiffs signed and returned an executed copy of the § 998 offer acceptance form. Thereafter, defendant asked plaintiffs to sign a settlement agreement. When questioned, defendant explained that “we don’t provide for entry of a judgment, instead we provide for settlement and execution of a release exactly for this reason.” Plaintiffs refused to sign the settlement agreement, stating that a written judgment would instead be presented for the court’s signature. The court signed and entered the judgment, but, on defendant’s motion, the trial court subsequently vacated the judgment and plaintiffs appealed. Reversing, the Court of Appeal stated: “In finding that the section 998 offer did not contemplate judgment, the trial court abused its discretion and modified the offer’s terms.” (Arriagarazo v. BMW of North America, LLC (Cal. App. 3rd Dist., Apr. 30, 2021) 2021 WL 2134981.)

Parental Rights of Parent Struggling with Drugs Will Not Be Terminated.

 The juvenile dependency court found a parent had established that parental rights should not be terminated due to the parental-child relationship. The Court of Appeal reversed, holding that because the parent continued to struggle with substance abuse and mental health issues and because of the risks of foster care and benefits of the potential adoptive home, no reasonable court could find the child’s relationship with his parent outweighed the benefits of adoption. Reversing the Court of Appeal, the California Supreme Court stated: “The [parental-benefit] exception preserves the child’s right to the relationship even when the child cannot safely live with that parent. What it does not allow is a judgment about the parent’s problems to deprive a child of the chance to continue a substantial, positive relationship with the parent.” (In re Caden C. (Cal., May 27, 2021) 2021 WL 2150620.)

County and Sheriff’s Deputies Immune from Liability.

Plaintiff’s husband was shot and killed by a neighbor in a driveway of a mobile home park. A county sheriff dragged decedent’s body several feet and, while he was being dragged, decedent’s pants fell to his thighs, exposing his genitals for eight hours. Plaintiff sued the county and its deputies for negligent infliction of emotional distress, based on their failure to cover the exposed body. The trial court granted summary judgment for the county. Affirming, the Court of Appeal stated: “[T]he deputies are immune from liability to [plaintiff] ([Gov. Code,] § 821.6), and, the county, as the deputies’ public entity employer, is immune from vicarious liability for the deputies’ negligence, if any. (Gov. Code, §§ 815.2, subd. (b), 821.6.)” (Leon v. County of Riverside (Cal. App. 4th Dist., Div. 2, May 27, 2021) 2021 WL 2155566.)

California Supreme Court Asks Jury Instruction Committee to Evaluate Eyewitness Certainty Instruction.

A criminal defendant was convicted of assault and robbery. The prosecution’s primary evidence at trial was the testimony of the victim, who identified defendant as her assailant and confirmed that she had previously identified defendant during a photographic lineup. The trial court provided the jury an instruction modeled on CALCRIM No. 315 that listed 15 factors it should consider when evaluating eyewitness identification evidence. One of those factors stated: “How certain was the witness when he or she made an identification?” On appeal, defendant argued that the certainty instruction violated his federal and state due process rights to a fair trial (see U.S. Const., 5th & 14th Amends.; Cal. Const., art. I, §§ 7, 15), because empirical research has shown that a witness’s confidence in an identification is generally not a reliable indicator of accuracy. Affirming his conviction, the California Supreme Court stated: “We reject Rudd’s due process claims. When considered in the context of the trial record as a whole, listing the witness’s level of certainty as one of 15 factors the jury should consider when evaluating identification testimony did not render Rudd’s trial fundamentally unfair.” HOWEVER, California’s high court also said: “Despite the absence of a constitutional violation, we nonetheless agree with amici curiae that a reevaluation of the certainty instruction is warranted. Contrary to widespread lay belief, there is now near unanimity in the empirical research that ‘eyewitness confidence is generally an unreliable indicator of accuracy.’ . . . [¶] Given the significance that witness certainty plays in the factfinding process, we refer the matter to the Judicial Council and its Advisory Committee on Criminal Jury Instructions to evaluate whether or how the instruction might be modified to avoid juror confusion regarding the correlation between certainty and accuracy.” (People v. Lemcke (Cal,, May 27, 2021) 2021 WL 2150610.)

Private Prison Locked Him Up and Ignored Him for a Year.

The U.S. Marshals Service arrested plaintiff in California on a warrant issued by the District of Nevada for marijuana-related charges. The next day, a magistrate judge in the Eastern District of California ordered that plaintiff be transferred to the District of Nevada “as soon as possible” for an arraignment and detention hearing. About a week later, the U.S. Marshals transported plaintiff to Nevada and housed him in a private prison run by defendant. But instead of being brought promptly to court, plaintiff spent 355 days in solitary confinement without a court appearance. During his detention, plaintiff repeatedly told defendant’s employees, the only individuals beyond fellow detainees with whom he had contact, that he had not been to court and did not have counsel. But defendant’s employees neither informed the U.S. Marshals of plaintiff’s plight nor took any other steps to remedy the situation. After plaintiff finally sent a letter to the Federal Public Defender’s Office, he was brought before a federal magistrate judge the next business day. The court declared plaintiff’s prolonged detention “extreme” and “egregious” and ordered his immediate release on a personal recognizance bond. The criminal charges against him were eventually dismissed with prejudice. Plaintiff sued defendant in federal court for Nevada torts related to this year-long detention without a court hearing. The district court granted summary judgment for defendant on the ground that defendant did not cause plaintiff’s prolonged detention. Reversing, the Ninth Circuit said: “Given the nature of [plaintiff’s] liberty interest, the egregious length of his detention without arraignment, the ease with which [defendant] could have corrected the problem, and the callousness of its disregard, a rational jury could find that [defendant] acted extremely or outrageously.” (Rivera v. Corrections Corporation of America (9th Cir., May 28, 2021) 2021 WL 2176577.)

Meal-Break Penalties Vacated Because Named Plaintiff Lacked Standing.

In this wage and hour class action against Walmart, the district court at first certified classes corresponding to each of plaintiff’s three claims alleging violations of California Labor Code’s wage-statement and meal-break requirements. After summary judgment and a bench trial, the court found that plaintiff in fact suffered no meal-break violation and decertified that class, but allowed plaintiff to still seek penalties on that claim under the Private Attorneys General Act (Lab. Code, § 2698 et seq.), based on violations incurred by other Walmart employees. The district court then ruled against Walmart on the three claims and awarded plaintiff and the two remaining classes over $100 million in damages and penalties. Reversing, the Ninth Circuit held that plaintiff lacked standing to bring the meal-break claim because he did not suffer any injury himself. (Magadia v. Wal-Mart Associates, Inc. (9th Cir., May 28, 2021) 2021 WL 2176584.)

No Personal Liability for Owner of Business Sued for Wage and Hour Violations.

Labor Code § 558.1 states that a natural person who is an owner, director, officer, or managing agent of an employer may be personally liable if that person, on behalf of the employer, “violates, or causes to be violated” certain wage and hour laws. In this wage and hour case, the trial court granted summary judgment for the owner, concluding as a matter of law that she was not liable under Labor Code § 558.1 because it found undisputed evidence that she did not participate in the determination to classify plaintiffs as independent contractors. Affirming, the Court of Appeal said: “The undisputed evidence in this case shows that [the owner] was not personally involved in the determination to classify plaintiffs as independent contractors, which purported misclassification forms the basis of their class and subclass allegations and their 10 causes of action; and that she also lacked sufficient participation in the operation and management of [the employer] to create a triable issue of material fact that she  ‘cause[d]’ the wage and hour violations.” (Usher v. White (Cal. App. 4th Dist., Div. 1, May 28, 2021) 2021 WL 2173167.)

State Board of Pharmacy Has Primary Jurisdiction Regarding Obligations of Pharmacists.

CVS stopped filling plaintiff’s prescriptions for controlled substances for his patients, citing concerns about his prescribing patterns. Plaintiff subsequently sued CVS and then sought a preliminary injunction to require CVS to fill his prescriptions. The trial court denied the injunction on several grounds, including that plaintiff should have first sought relief from the California State Board of Pharmacy. Under Business and Professions Code § 4001, subdivision (a), the board is charged with the responsibility of enforcing state rules governing pharmaceutical licensees. Affirming, the Court of Appeal held that the board has primary jurisdiction to consider the particular statutory obligations underlying plaintiff’s request for an injunction. (Bradley v. CVS Pharmacy, Inc. (Cal. App. 2nd Dist., Div. 2, May 28, 2021) 2021 WL 2176797.)

Accurate, Itemized Wage Statements.

Plaintiff sued her employer based on its alleged failure to provide accurate, itemized wage statements required under Labor Code § 226, subdivision (a)(9). The trial court denied defendant’s motion for summary adjudication. Defendant sought extraordinary relief in the Court of Appeal. The appeals court granted the petition for writ of mandate, observing that “[t]he wage statements show the applicable hourly rates in effect and the corresponding number of hours worked at each rate.” (General Atomics v. Superior Court of San Diego County (Cal. App. 4th Dist., Div. 1, May 28, 2021) 2021 WL 2176921.)

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