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, Jonathan Grossman, Jennifer Hansen, Judith Sklar, David Williams, Greg Wolff, Ryan Wu
City’s Refusal to Permit Christian Flag at City Hall Abridged Freedom of Speech.
For years, Boston has allowed private groups to request use of the flagpole to raise flags of their choosing. As part of this program, Boston approved hundreds of requests to raise dozens of different flags. The city did not deny a single request to raise a flag until 2017, when petitioner, the director of a group called Camp Constitution, asked to fly a Christian flag. Boston refused. The district court held that flying the flag amounted to government speech. The First Circuit affirmed. Reversing and remanding, the U.S. Supreme Court stated: “We conclude that, on balance, Boston did not make the raising and flying of private groups’ flags a form of government speech. That means, in turn, that Boston’s refusal to let Shurtleff and Camp Constitution raise their flag based on its religious viewpoint ‘abridg[ed]’ their ‘freedom of speech.’ U. S. Const., Amdt. I.” (Shurtleff v. City of Boston (U.S., May 22, 2022) 142 S.Ct 1583.)
Unilateral Mistake Insufficient to Void Agreement.
A probate court denied a woman’s request to be appointed the personal representative of her late husband’s estate based on a premarital agreement that waived the woman’s interest in her husband’s separate property. In a prior appeal, the Court of Appeal held the woman was entitled to introduce extrinsic evidence to support her argument that she and her late husband mistakenly believed the agreement would apply only in the event of divorce rather than upon death. On remand, the probate court found the mistaken belief about the agreement was a unilateral one, on the woman’s part only and denied her petition. Affirming, the Court of Appeal stated: “Because [the woman] failed to read the Agreement and to meet with her attorney to discuss it before signing it, she bore the risk of her mistake and is not entitled to rescission.” (Estate of Scott Eskra (Cal. App. 1st Dist., Div. 5, May 3, 2022) 78 Cal.App.5th 209.)
Inhumane Treatment of Prisoner.
A Nevada prisoner reported a medical problem to prison authorities. He had trouble urinating and his pain was “so severe that he had to curl into a fetal position to help alleviate the pain.” Prison officials prodded his abdominal area, gave him generic medication, and sent him on his way. But neither the pain nor the inability to urinate stopped. At some point, his urethra, testicles, and abdominal areas grew inflamed. Additional complaints were ignored. Subsequently he was transferred to another facility, and at the end of an eight-hour drive he was pale, flushed, sweating, and unbalanced. Medical staff initiated emergency care. He now has several long-term issues, including stage 3 kidney disease. The prisoner sued the state prison authorities under 42 U.S.C. § 1983 alleging that defendants were deliberately indifferent to his medical needs. The district court denied qualified immunity to the prison officials. Affirming, the Ninth Circuit stated: “[I]t has been established that ‘deny[ing], delay[ing], or intentionally interfer[ing] with medical treatment’ can violate the constitution.” (Stewart v. State of Nevada (9th Cir., May 4, 2022) 32 F.4th 1192.)
Exclusive Concurrent Jurisdiction Rule.
Petitioners brought a representative suit under the Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.; PAGA). They conceded that their suit arose from the same facts and theories as another PAGA action pending in a different county. While their petition for judicial coordination under Code of Civil Procedure § 404 pended, the trial court here stayed petitioners’ suit. After the petition for coordination was denied, the trial court denied petitioners’ motion to lift the stay, concluding that the stay was warranted under the doctrine of exclusive concurrent jurisdiction. Denying the petition for writ of mandate, the Court of Appeal found the trial court did not err in applying the exclusive concurrent jurisdiction rule to this dispute. The Court of Appeal stated: “Long before the Legislature enacted PAGA, California recognized the judge-made doctrine of exclusive concurrent jurisdiction.  Under this doctrine, when two or more courts have subject matter jurisdiction over a dispute, the court that first asserts jurisdiction assumes it to the exclusion of the others.” (Shaw v. Superior Court (Cal. App. 1st Dist., Div. 4, May 4, 2022) 78 Cal.App.5th 245.)
School District Did Not Have Duty to Monitor Teachers to the Extent Plaintiff Contends.
A high school teacher had a sexual relationship with one of his students, including sexual activities in his classroom. The student sued the school district and officials in the district and school. The trial court granted summary judgment for the defendants, finding there was no evidence the school district knew or should have known that the teacher posed a risk of harm to students. Affirming, the Court of Appeal stated: “We conclude the District did not know that [the teacher] would have sex with Doe, and it had no information that would support a conclusion that it should have known. On this record, the District did not have a duty to review alarm data and video recordings in order to constantly monitor all teachers, students, and campus visitors.” (Jane Doe v. Anderson Union High School District (Cal. App. 3d. Dist., May 4, 2022) 78 Cal.App.5th 236.)
Duress by a Third Person Cannot Void a Contract when the Other Contracting Party Did Not Know About the Duress.
A personal injury case settled during trial. The settlement was placed on the record, and the court excused the jury. Months later, the trial court denied the plaintiff’s motion to set aside the settlement on the grounds the plaintiff’s lawyer threatened plaintiff and subjected her to duress to accept. Thereafter, the trial court denied plaintiff’s motion for reconsideration. Affirming the court’s denial of plaintiff’s motion to set aside the settlement, the Court of Appeal stated: “’Duress by a third person’ is the legal label for this contract case. [Plaintiff] is trying to escape a settlement she put on the record. She claims her trial lawyer forced her to take the deal. But duress by a third person cannot void a contract when the other contracting party did not know about the duress and relied in good faith. [Plaintiff] settled with defendants who were unaware of the alleged duress.” (Fettig v. Hilton Garden Inns Management LLC (Cal. App. 2nd Dist., Div. 8, May 4, 2022) 78 Cal.App.5th 264.)
The Reconstruction-Era Posse Comitatus Act Resurrected as a Defense in Criminal Case.
A criminal defendant scaled a border fence and entered the United States unlawfully. A Marine Corps surveillance unit, using a night vision scope, spotted him immediately. They notified U.S. Customs and Border Patrol agents, who soon detained him. He was charged and convicted of illegal reentry into the country after removal. Defendant sought to reverse his conviction, arguing that all evidence obtained as a result of his arrest should be excluded, contending the Marine Corps surveillance violated the 1878 Posse Comitatus Act (18 U.S.C. § 1385), a law that prohibits military enforcement of civilian law. However, under the Posse Comitatus Act, the military may still assist civilian law enforcement agencies if Congress expressly authorizes it, as it did in the 2016 National Defense Authorization Act (Pub. L. No. 114-92, 129 Stat. 726 (2015); NDAA). Under the 2016 NDAA, the U.S. Secretary of Defense offered military assistance to border patrol in hopes of securing the southern land border. But the defendant countered that the 2016 NDAA was merely an annual appropriations bill that had lapsed. Affirming defendant’s conviction, the Ninth Circuit noted that § 1059 of the 2016 NDAA, the section allowing military assistance at the southern border, was amended in the 2021 NDAA, and stated: “Congress would have no reason to amend § 1059 if it was a lapsed appropriations act.” (United States v. Hernandez-Garcia (9th Cir., May 4, 2022) 32 F.4th 1207.)
Dismissed Case Against Bank and Loan Servicer for Wrongful Foreclosure Reversed.
A bank bought plaintiff’s home at public auction. In her suit, plaintiff claimed that the trustee’s sale occurred without notice to her. Her core allegation was that the bank and then the loan servicer at the time of the trustee’s sale pursued foreclosure secretly, while giving her false assurances that loan modification terms were forthcoming, and shuttling her back and forth between uninformed representatives who gave her inconsistent information about the status of her modification request. She claimed she would have qualified for a modification, and avoided foreclosure, had defendants dealt with her in good faith. The operative complaint sought various forms of post-foreclosure relief, including damages, an order setting aside the trustee’s sale, and a declaration quieting title. The trial court sustained defendants’ demurrers without leave to amend as to all claims. Reversing in part and affirming in part, the Court of Appeal stated: “In the published portion of this opinion, we reverse with directions that the trial court enter a new and different order overruling the demurrers to the first cause of action alleging failure to appoint a single point of contact ([Civ. Code,] § 2923.7), the second cause of action alleging dual tracking (§ 2923.6), and the third cause of action alleging failure to mail upon request a notice of default and notice of trustee’s sale (§ 2924b). In the unpublished portion of the opinion, we affirm on the remaining four causes of action.” (Morris v. JPMorgan Chase Bank, N.A. (Cal. App. 1st Dist., Div. 4, May 5, 2022) 78 Cal.App.5th 279.)
No Coverage Because No Accident.
Underlying the present lawsuit for insurance bad faith is another. In the prior action, a neighbor sued plaintiff herein because plaintiff graded her neighbor’s land and cut down her neighbor’s trees, mistakenly believing the work was done on property she owned. Plaintiff herein asked her insurance company to defend her against the neighbor’s suit, and the insurer denied her request. Plaintiff thereafter sued her insurance company, and the trial court granted the insurance company’s motion for summary judgment. Affirming, the Court of Appeal stated: “Because the undisputed evidence demonstrates the acts for which the neighbors seek to impose liability on [plaintiff] were not accidental, [plaintiff] failed to carry her burden to show the neighbors’ claims may fall within the scope of the policy.” (Ghukasian v. Aegis Security Insurance Company (Cal. App. 2nd Dist., Div. 4, May 5, 2022) 78 Cal.App.5th 270.)
Liability on Bank for Not Honoring a Notice of Levy.
A judgment creditor, seeking to seize funds in bank accounts held by the judgment debtor’s spouse, served a notice of levy on the bank’s agent for service of process. Although the notice of levy form unambiguously listed the bank as the party to be served, the agent misread the form and rejected it. By the time the agent informed the bank of its mistake and the bank then froze the accounts, the funds were drained. The trial court denied plaintiff’s motion to impose third party liability on the bank. Reversing, the Court of Appeal stated: “[B]ecause the agent in this case was negligent in misreading the standardized form it was served with, the agent for service of process—and hence its principal, the bank—had reason to know of the levy, such that the bank is liable to the judgment creditor for some (though not all) of the funds withdrawn.” (Bergstrom v. Zions Bancorporation, N.A. (Cal. App. 2nd Dist., Div. 2, May 5, 2022) 78 Cal.App.5th 387.)
Foie Gras in California.
California prohibits the in-state sale of products that are “the result of force feeding a bird for the purpose of enlarging the bird’s liver beyond normal size.” (Health & Saf. Code, § 25982.) Plaintiffs contended this sales ban is preempted by the Poultry Products Inspection Act (21 U.S.C. § 451) and the dormant Commerce Clause. The Ninth Circuit mostly upheld the ban. It ruled that the foie gras sales ban does not affect transactions outside the state, is not discriminatory, is not preempted by federal law, and does not impose an undue burden on interstate commerce. The court, however, upheld summary judgment for plaintiffs, permitting the sale of foie gras from force fed birds to individual California buyers from out-of-state companies by internet, phone, or fax. (Association des Éleveurs de Canards et d’Oies du Quebec v. Bonta (9th Cir., May 6, 2022) 33 F.4th 1107.)
A Constitutional Right Trumps a Local Rule.
On the day of trial, the trial court found that plaintiff waived his right to a jury trial by failing to comply with a local pretrial procedural rule. Reversing, the Court of Appeal noted that the California Constitution provides that in civil matters the “inviolate right” of trial by jury “may be waived by the consent of the parties expressed as prescribed by statute.” (Cal. Const., Art. I, § 16; italics added.) And the statute governing jury trial waivers (Code Civ. Proc., § 631) does not contemplate waiver for failing to comply with local rules. (Amato v. Downs (Cal. App. 4th Dist., Div. 2, May 6, 2022) 78 Cal.App.5th 435.)
Period Recovering from a Biopsy May Amount to a Disability.
A woman was unable to work after a biopsy was performed so that her doctors could rule out bone cancer. Her employer authorized unpaid medical leave only. She brought suit under the Americans with Disabilities Act (42 U.S.C. § 12112; ADA), and the district court dismissed her case. Reversing, the Ninth Circuit stated: “Because Shields adequately alleged that, during the period of her requested extension, she suffered from a ‘disability’ within the meaning of the ADA, we reverse the district court’s dismissal of her operative complaint.” (Shields v. Credit One Bank, N.A. (9th Cir., May 6, 2022) 32 F.4th 1218.)
13 Month Delay Did Not Amount to Arbitration Waiver.
A former employer appealed after the trial court denied its motion to compel arbitration of a case initiated by its former employee. The trial court found the employer had waived the right to arbitrate by propounding a “large amount of written discovery,” taking plaintiff’s deposition, and expending “significant time meeting and conferring.” Reversing, the Court of Appeal stated: “Our Supreme Court has made clear that participation in litigation alone cannot support a finding of waiver, and fees and costs incurred in litigation alone will not establish prejudice on the part of the party resisting arbitration. [Citation.] This rule has particular force here, where Quach admitted he incurred no costs in litigation that he would not otherwise have expended had the case gone to arbitration earlier.” (Quach v. California Commerce Club, Inc. (Cal. App. 2nd Dist., Div. 1, May 10, 2022) 78 Cal.App.5th 470.)
Outdoor Advertising Act.
The California Department of Transportation issued notices to plaintiff alleging violations of the Outdoor Advertising Act (Bus. & Prof. Code, § 5200 et seq.; OAA) in connection with two large advertising displays plaintiff erected on the walls of a 12-story office building adjacent to Interstate 405 in Inglewood. Plaintiff argued that the displays were exempted from the OAA because they advertised businesses and products available within a specified redevelopment project area. (Bus. & Prof. Code, §§ 5272, 5273.) An administrative law judge and a trial court disagreed, finding that the exemptions did not apply because the business location taglines on the displays were “visually dwarfed” by the advertising copy for the products available at those businesses. After a formal hearing, the administrative law judge issued a proposed decision affirming the violations and imposing penalties. Plaintiff’s petitioned for a writ of administrative mandate ordering the trial court to issue a writ. Reversing, the Court of Appeal concluded that under some circumstances there are exemptions to OAA requirements. Specifically, a redevelopment display is exempt from the OAA’s requirements if it advertises goods or services available within the redevelopment project area, provided it also includes a business location tagline that satisfies minimum size standards. Neither the applicable statute nor Caltrans’s implementing regulations prohibit the business location tagline from being “visibly dwarfed” by the advertising copy. (Sky Posters Inc. v. Department of Transportation (Cal. App. 2nd Dist., Div. 7, May 10, 2022) 78 Cal.App.5th 644.)
Portion of California’s Gun Control Laws Found to Be Unconstitutional.
California has restricted the sale of most firearms to anyone under 21. Several young adults, gun shops, and advocacy groups sued, asking the district court to enjoin the long gun regulation under the Second and Fourteenth Amendments. The district court declined to issue a preliminary injunction to enjoin enforcement of California’s requirement that young adults obtain a hunting license to purchase a long gun, and also declined to enjoin the ban on semiautomatic centerfire rifles. Affirming in part and reversing in part, the Ninth Circuit stated: “Unlike other gun-control laws that target a person’s specific and individual characteristics or actions (e.g., commission of felony, mental illness), California’s law strips individuals of their fundamental constitutional rights based solely on what other people in their group may have committed in the past. That is antithetical to the very nature of individual rights and leads us down a dark path.” (Jones v. Bonta (9th Cir., May 11, 2022) 34 F.4th 704.)
No Liability for County Attorneys Who Accessed Information in Juvenile Files.
Plaintiffs are minors who sued the county and social workers for violating their Fourth Amendment rights by interviewing them without a court order or parental consent during the course of a child abuse investigation. Attorneys defending the county reviewed the child-abuse investigation file without first obtaining a court order. Plaintiffs then brought this action, alleging that the attorneys who accessed the file violated their right to privacy. The district court dismissed the action. Affirming, the Ninth Circuit stated: “Even assuming that the social workers’ records comprised sensitive medical and psychological records, there was no constitutional violation because the [c]ounty’s need to access the records was high.” (A.C. v. Cortez (9th Cir., May 13, 2022) 34 F.4th 783.)
Too Close For Comfort.
An attorney represented a party who was also a party in two cases over which he presided when he was a judge. The other side moved to disqualify him. The entire bench on which the former judge sat recused itself from hearing the matter because of its association with the former judge. Rules of Professional Conduct, rule 1.12 states in relevant part: “[A] lawyer shall not represent anyone in connection with a matter in which the lawyer participated personally and substantially as a judge.” The trial court disqualified the attorney. Affirming the disqualification order, the Court of Appeal stated: “We conclude the trial court did not err in disqualifying Bailey due to his personal and substantial participation as a judge in a matter within the meaning of rule 1.12 of the Rules of Professional Conduct.” (Hassett v. Olson (Cal. App. 3rd Dist., May 13, 2022) 78 Cal.App.5th 866.)
A couple hired a contractor to build them a home on a wooded lot and also paid the contractor $10,000 to trim trees on the lot. The contractor hired an unlicensed subcontractor to trim the trees. The subcontractor damaged a tree that was partially on a neighbor’s lot. The couple sued the contractor, and the action turned on whether Business & Professions Code § 7031—the statute that protects licensed contractors by barring suits for compensation for work done by unlicensed contractors—applied where a licensed contractor sought payment for work done by an unlicensed subcontractor it hired. Upholding a judgment for the couple for return of the $10,000, the Court of Appeal stated: “We note that the application of section 7031 does not require general contractors to use only licensed subcontractors; in theory, general contractors remain free to hire unlicensed subcontractors. However, general contractors who use unlicensed subcontractors may not turn to the courts to recover compensation for those services if a dispute arises.” (Kim v. TWA Construction, Inc. (Cal. App. 6th Dist., May 13, 2022) 78 Cal.App.5th 808.)
Burden on Political Speech Without Justification.
Candidates for federal office often loan money to their campaign committees. Federal law bars campaigns from using more than $250,000 of funds raised after election day to repay a candidate’s personal loans. Here, Senator Ted Cruz loaned $260,000 to his campaign, and the campaign committee repaid him only $250,000 because of the federal restriction. The question is whether this restriction violates the First Amendment rights of candidates and their campaigns to engage in political speech. The district court granted summary judgment for Cruz. Affirming, the U.S. Supreme Court held the restriction “burdens core political speech without justification.” (Federal Election Commission v. Ted Cruz for Senate (U.S., May 16, 2022) 142 S.Ct. 1638.)
No Immigration Relief for Man Who Misrepresented He Was a Citizen on Driver’s License Application.
Plaintiff entered the United States illegally in the 1990s. In 2007, after the government began removal proceedings, he applied for citizenship. While his application pended, he applied for a Georgia driver’s license. On that application, he checked a box falsely stating that he was a U.S. citizen. Because of that misrepresentation, he was denied adjustment of his illegal entry status, making him ineligible for citizenship. Before an immigration judge, the man asserted he mistakenly said he was a citizen on his driver’s license application. The immigration judge denied the man’s application for adjustment of status and ordered the man and his wife to be removed. The Board of Immigration Appeals dismissed his appeal, so the man petitioned the Eleventh Circuit for relief, but that court held it lacked jurisdiction to consider his claim. Agreeing with the circuit court, the U.S. Supreme Court held: “Federal courts lack jurisdiction to review facts found as part of discretionary-relief proceedings under §1255 and the other provisions enumerated in [8 U.S.C.] §1252(a)(2)(B)(i).” (Patel v. Garland (U.S., May 16, 2022) 142 S.Ct. 1614.)
Summary Judgment for Defendant Reversed After It Failed to Investigate Challenged Debt.
The district court granted summary judgment for CitiMortgage, Inc., in plaintiff’s action alleging that defendant violated the Fair Credit Reporting Act (15 U.S.C. §§ 1681, et seq.; FCRA), by failing to reasonably investigate plaintiff’s dispute concerning a debt that defendant reported to national credit reporting agencies and by providing inaccurate information to those agencies. Reversing, the Ninth Circuit stated: “When a consumer disputes an entry on his credit report, the furnisher must conduct a reasonable investigation—not merely rubberstamp information in the file.” (Gross v. CitiMortgage, Inc. (9th Cir., May 16, 2022) 33 F.4th 1246.)
No Cumis Counsel for Plaintiff.
In San Diego Federal Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358, the court held that if a conflict of interest exists between an insurer and its insured, based on possible noncoverage under the insurance policy, the insured is entitled to retain its own independent counsel at the insurer’s expense. The plaintiff here was sued in another action for negligence resulting from an auto accident, but he had already hired a law firm to represent him because he intended to sue the other driver for negligence. After the plaintiff informed his own insurance company, the defendant here, that he had been sued, he was told his insurance company would “settle or defend, as we consider appropriate. . . .” Plaintiff construed this statement as meaning his own insurance company had already decided he was the one responsible for the accident, and that, therefore, his insurer had a conflict of interest if it defended him. When the insurance company denied his request for it to pay for independent counsel, plaintiff brought this action for breach of contract, alleging a firm hired by the insurance company would work against him. The trial court entered summary judgment for the insurance company. Affirming, the Court of Appeal stated: “Alleging ‘anticipated circumstances’ that ‘have not occurred yet in the underlying litigation’ is insufficient to state a claim that independent counsel is required.” (Simonyan v. Nationwide Insurance Company of America (Cal. App. 3rd Dist., May 16, 2022) 78 Cal.App.5th 889.)
Closed Courtroom During Pandemic Denied Criminal Defendant His Right to a Public Trial.
At the height of the 2020 pandemic, a district court prohibited members of the public from attending a criminal defendant’s suppression hearing and trial. The court also rejected defendant’s request to video stream the proceedings. He was found guilty of the charges and sentenced to six years in federal prison. On appeal, defendant contended the court’s order violated his Sixth Amendment right to a public trial. Reversing the conviction, the Ninth Circuit stated: “We conclude that the district court’s order was not narrowly tailored, in part because courts throughout the country, facing the same need to balance public health issues against a defendant’s public trial right, consistently developed COVID protocols that allowed some sort of visual access to trial proceedings. Accordingly, we conclude that the court’s COVID protocols in this case violated the defendant’s public trial right, and he is entitled to a new suppression hearing and trial.” (United States v. Allen (9th Cir., May 16, 2022) 34 F.4th 789.)
Continuances During Pandemic Did Not Deny Criminal Defendant His Right to a Speedy Trial.
In the early days of the pandemic, a criminal defendant was arraigned and his trial was set for October 2020, but it was continued several times until June 2021 based on the COVID-19 general orders and instances when the defendant was in medical isolation. Thereafter, the trial court granted two additional trial continuances on June 24 and July 6, 2021, and denied his motion to dismiss on August 9, 2021. Defendant filed a petition for writ of habeas corpus contending the court violated his right to a speedy trial pursuant to Penal Code § 1382 and the U.S. Constitution. The Court of Appeal construed his petition as a petition for writ of mandate and/or prohibition. Denying the petition, the court stated: “Given the unique and unprecedented circumstances caused by the global public health emergency, courts must exercise their inherent power to manage and prioritize their cases to work through the backlog. The record before us shows the court did just that. We conclude the court did not abuse its discretion in finding good cause to grant the continuances or in denying Elias’s motion to dismiss.” (Elias v. Superior Court (Cal. App. 4th Dist., Div. 1, May 17, 2022) 78 Cal.App.5th 926.)
Discovery for Use in Foreign Tribunals.
Plaintiff seeks documents to use in a potential lawsuit in Germany against an affiliate of defendant, pursuant to 28 U.S.C. § 1782, which allows district courts to provide discovery assistance to foreign or international tribunals. After a magistrate judge denied the petition, a district judge reviewed the magistrate judge’s decision for clear error and declined to overturn it. Reversing, the Ninth Circuit stated: “We vacate the district court’s order and remand for further proceedings because the district judge should have reviewed the magistrate judge’s decision de novo.” (CPC Patent Technologies PTY Ltd. V. Apple, Inc., (9th. Cir., May 18, 2022) 34 F.4th 801.)
The Spending Clause.
Arizona expects to receive $4.7 billion under the American Rescue Plan Act (42 U.S.C. § 802(b)(3)(A); ARPA), a federal statute passed to mitigate the ongoing effects of the pandemic. Acceptance of the funds came with strings attached. Arizona contended Congress violated the Spending Clause of the Tenth Amendment by attaching some of those strings. The question on appeal was whether Arizona had standing to bring an action before an actual dispute over its use of those funds has arisen. The Ninth Circuit held for Arizona, stating: “We hold that Arizona has standing to challenge the American Rescue Plan Act, 42 U.S.C. § 802(c)(2)(A), (“ARPA” or “the Act”), both because there is a realistic danger of ARPA’s enforcement, and because there is a justiciable challenge to the sovereignty of the State, which alleges infringement on its authority to set tax policy and its interest in being free from coercion impacting its tax policy.” (State of Arizona v. Yellen (9th Cir., May 19, 2022) 34 F.4th 841.)
Insufficient Allegations of Fraud Against Pharmaceutical Company.
During drug trials a drug was shown to not be as effective as the initial trial had suggested. The pharmaceutical company’s price plunged over 40 percent. Two public pensions sued the company for fraud, alleging the company relied on outlier data. The district court dismissed the action. Affirming, the Ninth Circuit stated: “Plaintiffs do not sufficiently explain what the clinical trial would have shown without the alleged outlier data, nor do they specify how that would have affected the investing public’s assessment of the drug. For all we know, the clinical trial could have still shown excellent results, even without the data from the supposed outlier patient. Without specific allegations to connect the dots, Plaintiffs’ theory fails to plead securities fraud.” (In re Nektar Therapeutics Securities Litigation (9th Cir., May 19, 2022) 34 F.4th 828.)
No Trademark Infringement.
A manufacturer of e-cigarette and vaping products brought a suit for trademark and copyright infringement against defendant, alleging defendant was selling counterfeit versions of plaintiff’s product. Defendant contended plaintiff has no protectible trademarks because its products remain illegal under federal law. The district court granted a preliminary injunction in plaintiff’s favor, finding its products are lawful. Affirming, the Ninth Circuit stated: “[T]he public interest benefits from curtailing the sale of counterfeit products, which this injunction does.” (AK Futures LLC v. Boyd Street Distro, LLC (9th Cir., May 19, 2022) 2022 WL 1574222.)
Extended Statute of Limitations Against Person Convicted of a Felony Inapplicable to Felon’s Employer.
A man with dementia living in a senior living facility left unsupervised on many occasions. On his last such excursion, he was hit by a car and killed. The facility director was convicted of felony elder abuse and manslaughter. The manager was convicted of felony elder abuse. The decedent’s heirs sued the facility, the director, and the manager for wrongful death and torts. The facility contended the statute of limitations, Code of Civil Procedure, § 335.1, was violated since the action was not filed within two years of the death. Plaintiffs argued, however, that the director’s and manager’s felony convictions revived the statute of limitations under CCP § 340.3. Plaintiffs claimed that because the facility was liable under the doctrine of respondeat superior, the statute of limitations was also revived as to the facility. The trial court sustained the facility’s demurrer without leave to amend. Affirming, the Court of Appeal stated: “The victim of a felony has an extended statute of limitations in which to bring an action for personal injury or wrongful death against the person convicted of that felony. (Code Civ. Proc., § 340.3.) Here we hold this extended statute of limitations does not apply to the employer of the felon in an action based on the doctrine of respondeat superior.” (Cardenas v. Horizon Senior Living (Cal. App. 2nd Dist., Div. 6, May 19, 2022) 2022 WL 1577038.)
Claims that Right to Arbitrate Have Been Waived Just Got a Whole Lot Easier.
The U.S. Supreme Court tackled the question of when a party to an arbitration agreement waives the right to arbitrate. The nation’s highest court noted that lower federal courts have required a showing of harm before concluding the right to arbitrate was waived. Here, defendant initially defended itself against plaintiff’s wage and hour claim as if no arbitration agreement existed, and then changed course eight months later by moving to stay the trial action and compel arbitration. Analyzing the case, the Supreme Court noted that “outside the arbitration context, a federal court assessing waiver does not generally ask about prejudice.” Rejecting a circuit court’s prejudice requirement, the Supreme Court held: “Our sole holding today is that it may not make up a new procedural rule based on the FAA’s ‘policy favoring arbitration.’” (Morgan v. Sundance, Inc. (U.S., May 23, 2022) 2022 WL 1611788.)
Electric Scooters and the Fourth Amendment.
The City of Los Angeles adopted a permitting program that required e-scooter companies to disclose real-time location data for every device. An e-scooter user claimed that the location disclosure requirement violates the Fourth Amendment and California law. The district court dismissed the complaint for failure to state a claim. Affirming, the Ninth Circuit stated: “Having ‘voluntarily conveyed’ his location to the operator ‘in the ordinary course of business,’ Sanchez cannot assert a reasonable expectation of privacy.” (Sanchez v. Los Angeles Department of Transportation (9th Cir., May 23, 2022) 2022 WL 1613620.)
Plaintiff exited a Nevada state courthouse, and, without warning, two plainclothes detectives tackled him to the ground, fracturing his hip. Plaintiff was not resisting, fleeing, or committing a crime. Because he had just passed through the courthouse’s security checkpoint, which included a metal detector and x-ray scanner, the detectives knew he was unarmed. Plaintiff sued the detectives and the City of Henderson under 42 U.S.C. § 1983 for excessive force in violation of the Fourth Amendment. The detectives moved for summary judgment arguing that they were protected by qualified immunity, and the city moved for summary judgment. The district court denied the detectives’ motion and denied the city’s motion except as to plaintiff’s ratification theory. Affirming, the Ninth Circuit stated: “[W]e conclude that the government’s interest in using substantial force was minimal here.” (Andrews v. City of Henderson (9th Cir., May 23, 2022) 2022 WL 1613618.)
Compensation for Missed Meal Breaks Constitutes Wages.
The California Supreme Court addressed whether extra pay for missed meal breaks under Labor Code § 226.7 constitutes wages that must be reported on statutorily required wage statements under § 226. The court held: “We conclude, contrary to the Court of Appeal, that the answer is yes. Although the extra pay is designed to compensate for the unlawful deprivation of a guaranteed break, it also compensates for the work the employee performed during the break period. (See Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1104.) The extra pay thus constitutes wages subject to the same timing and reporting rules as other forms of compensation for work.” (Naranjo v. Spectrum Security Services, Inc. (Cal., May 23, 2022) 2022 WL 1613499.)
Missouri’s Exercise of Personal Jurisdiction Against California Defendants Held to Be Constitutional.
A husband and wife, both residents of Missouri, filed a lawsuit in Missouri state court against a California resident and California corporation for making deceptive and fraudulent representations to the couple in the course of providing them with adoption facilitation services. Although the two California defendants were properly served with notice of the action, they did not respond, and the court entered default judgment. The Missouri couple then applied in San Diego Superior Court for entry of the sister state judgment. The clerk of the superior court granted the application and entered judgment against defendants. The trial court granted the motion of the California defendants to vacate entry of the Missouri judgment. Reversing, the Court of Appeal stated: “[W]e conclude Missouri’s exercise of personal jurisdiction over the California defendants in this case was constitutional.” (Casey v. Hill (Cal. App. 4th Dist., Div. 1, May 23, 2022) 2022 WL 1616987.)
Attorney Fees Under the Holder Rule.
Plaintiff purchased a used vehicle from defendant auto dealership pursuant to an installment sales contract. The contract was subsequently assigned to defendant finance company/bank. After a jury found for plaintiff, she filed a posttrial motion seeking attorney’s fees in the amount of $169,602 under the Song-Beverly Act (Civ. Code, § 1794, subd. (d)). The issue was whether or not the holder of the contract, the finance company/bank, can be held liable for attorney fees. The California Supreme Court held: “We conclude that the Holder Rule does not limit the award of attorney’s fees where, as here, a buyer seeks fees from a holder under a state prevailing party statute. The Holder Rule’s limitation extends only to ‘recovery hereunder.’ This caps fees only where a debtor asserts a claim for fees against a seller and the claim is extended to lie against a holder by virtue of the Holder Rule. Where state law provides for recovery of fees from a holder, the Rule’s history and purpose as well as the Federal Trade Commission’s repeated commentary make clear that nothing in the Rule limits the application of that law.” (Pulliam v. HNL Automotive Inc. (Cal., May 26, 2022) 2022 WL 1672918.)
Trial Court Erred in Limiting Expert Testimony.
A jury found a medical device used in plaintiff’s hip surgery was defective and awarded plaintiff $153,317 in damages. That judgment was reversed on appeal and the matter remanded for a second trial. Defendant manufacturer’s expert was prepared to testify about possible alternative causes of plaintiff’s pain, but the trial court excluded the testimony and all medical opinions that were expressed to less than a reasonable medical probability. The second trial resulted in a jury verdict against defendant: $80,460.19 in economic damages and $7.6 million in noneconomic damages. Again reversing the judgment, the Court of Appeal stated: “We agree with Zimmer that the court erred in categorically excluding all of Zimmer’s proffered medical opinions expressed to less than a reasonable medical probability as to issues on which Kline bore the burden of proof. Because that error prevented Zimmer from presenting any expert testimony as to an issue where expert testimony was essential, we reverse for a retrial.” (Kline v. Zimmer, Inc. (Cal. App. 2nd Dist., Div. 8, May 26, 2022) 2022 WL 1679539.)
Lien on Personal Injury Settlement
A severely disabled child whose congenital abnormalities were undetected during his mother’s pregnancy until after viability sued various medical providers for wrongful life, settling with one. The trial court awarded the California Department of Health Care Services (DHCS) the full amount of its lien. Reversing, the Court of Appeal stated: “[W]e reject Daniel’s contentions that DHCS’s lien is preempted by federal law and that there is no substantial evidence that Daniel’s settlement included payments for past medical expenses. However, we find that the trial court erred by failing to distinguish between past medical expenses and other damages, and to apportion the settlement accordingly. We therefore will reverse and remand to the trial court to make the required findings and allocation.” (Daniel C. v. White Memorial Medical Center (Cal. App. 2nd Dist., Div. 3, May 26, 2022) 2022 WL 1682925.)