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, Colin P. Cronin, Jenn French, Jennifer Hansen, Ryan Wu
Song-Beverly Consumer Warranty Act Applies Even if Not First Owner. 

The automobile manufacturer was unable to repair defects in the vehicle after the owners, who were not the car’s first owners, made a reasonable number of attempts to obtain repairs. The owners sued the manufacturer under the Song-Beverly Consumer Warranty Act (Civ. Code, §§ 1790–1795.8). The trial court sustained the manufacturer’s demurrer without leave to amend. Reversing, the Court of Appeal stated: “Here we hold that a previously owned motor vehicle purchased with the manufacturer’s new car warranty still in effect is a ‘new motor vehicle’ as defined by section 1793.22, subdivision (e)(2). Thus the replace or refund remedy of section 1793.2, subdivision (d)(2) applies.” (Stiles v. KIA Motors America, Inc. (Cal. App. 2nd Dist., Div. 6, May 2, 2024) 101 Cal.App.5th 913.)

It Is Not Necessary to Be Counsel of Record to Be Liable for Discovery Sanctions.

A law firm substituted out of a case before a motion to compel discovery was filed. The trial court ordered $10,000 in discovery sanctions against the firm. Affirming, the Court of Appeal stated that the law firm’s “main argument—that it had substituted out of the case as counsel before the motion to compel was filed and was therefore unsanctionable—is unavailing. It is not necessary to be counsel of record to be liable for monetary sanctions for discovery misuse.” (Masimo Corporation v. The Vanderpool Law Firm, Inc. (Cal. App. 4th Dist., Div. 3, May 2, 2024) 101 Cal.App.5th 902.)

When an Employer Reasonably and in Good Faith Provides a Wage Statement, It Does Not Knowingly and Intentionally Fail to Comply with Labor Code § 226. 

California law requires employers to provide employees with written wage statements listing gross and net wages earned, hourly pay rates, hours worked, and other employment-related information. (Lab. Code, § 226.) If the employer intentionally fails to comply, statutory penalties may be awarded. The California Supreme Court addressed whether an employer has knowingly and intentionally failed to comply with § 226’s requirements when the employer had a good faith, yet erroneous, belief that it complied. It held: “We now conclude that if an employer reasonably and in good faith believed it was providing a complete and accurate wage statement in compliance with the requirements of section 226, then it has not knowingly and intentionally failed to comply with the wage statement law. We affirm the judgment of the Court of Appeal, which reached the same conclusion.” (Naranjo v. Spectrum Security Services, Inc., (Cal., May 6, 2024) 15 Cal.5th 1056.)

Former Employer Failed to Timely Pay Arbitration Fees. 

When plaintiff was employed by defendant, he entered into an agreement to arbitrate any disputes. A dispute arose, and plaintiff filed a demand for arbitration. Under the heading “WHAT RULES OF ARBITRATION DO YOU PREFER,” he marked the checkbox for “CCP § 1280 et se[q].” Defendant twice failed to pay fees and costs required to continue arbitration, and plaintiff moved the superior court to withdraw from arbitration. The trial court denied the motion. Granting plaintiff’s petition for extraordinary relief, the Court of Appeal stated: “The clear and unequivocal language of section 1281.98, subdivision (a)(1) ‘establishes a simple bright-line rule that a drafting party’s failure to pay outstanding arbitration fees within 30 days after the due date results in its material breach of the arbitration agreement.’” The Court of Appeal issued a writ of mandate directing the trial court to vacate its order denying plaintiff’s motion to withdraw from arbitration and remanded for the trial court to address monetary and nonmonetary sanctions. (Reynosa v. Superior Court (Cal. App. 5th Dist., May 6, 2024) 101 Cal.App.5th 967.)

When a Party Seeks Attorney Fees When Suing Its Insurer for Bad Faith, the Party Impliedly Waives the Attorney-Client Privilege vis-à-vis Attorney Fee Documents. 

This discovery dispute arises from an action brought by plaintiffs against their homeowners’ insurer. Among other causes of action, plaintiffs alleged defendant was liable for breach of contract and breach of the covenant of good faith and fair dealing related to the installation of hardwood flooring at their home. The complaint’s prayer for relief included a prayer: “For attorneys’ fees and costs.” Plaintiffs’ response to an interrogatory read: “The Byers are entitled to Brandt [v. Superior Court (1985) 37 Cal.3d 813] fees, as an element of damages caused by USAA wrongfully withholding benefits owing under its policies, including attorneys’ fees and other the [sic] prelitigation expenses incurred in the Byers’ attempts to obtain the benefits owing to them under the policies issued by USAA.” Thereafter, defendant served document requests seeking attorney fee documents. The trial court ordered plaintiffs to produce the documents. Instead, plaintiffs petitioned the Court of Appeal for extraordinary relief from the order and requested a stay of the trial court’s order. Plaintiffs argued the trial court abused its discretion by forcing them to waive the attorney-client privilege during litigation as a condition of seeking Brandt fees; by forcing an election of remedies; ordering production of all invoices, fees agreements and payment history; ordering in camera review of attorney invoices; and failing to consider the improper form of the requests for production and their overbreadth. Further, they contended that production of evidence to support their Brandt fee claims should be deferred until after the jury first determined liability. Declining to issue a writ, the Court of Appeal stated: “When a party seeks attorney fees as damages caused by an insurer’s breach of the covenant of good faith and fair dealing under Brandt[, supra, 37 Cal.3d at p. 819], it impliedly waives the attorney-client privilege with respect to its attorney fees agreements, invoices, fees statements, billing records, receipts, and proof of payments (collectively, attorney fees documents) that evidence the amount of its damages.” As to plaintiffs’ contention the trial court abused its discretion by not delaying production of the documents until after the jury determined liability, the Court of Appeal held: “We conclude that the trial court did not err and deny the petition.” (Byers v. Superior Court (Cal. App. 1st Dist., Div. 5, May 7, 2024) 101 Cal.App.5th 1003.)

Attempt to Stop Research About Gun Violence Prevented.

Penal Code §§ 11106, subdivision (d) and 30352, subdivision (b)(2) provide for research about firearm violence that includes data regarding purchasers of firearms and ammunition as well as of persons who hold permits to carry concealed weapons. Plaintiffs are registered gun owners in California who filed an action challenging the legislation as violating their Fourteenth Amendment right to informational privacy. The district court judge dismissed the action. Affirming, the Ninth Circuit stated: “With respect to the Second Amendment, the district court ruled that the statute does not restrict conduct covered by the plain text of the Second Amendment under the standard articulated by the Supreme Court in New York Rifle & Pistol Ass’n, Inc. v. Bruen, 597 U.S. 1 (2022). Id. at 1072. We affirm.” (Doe v. Bonta (9th Cir., May 8, 2024) 101 F.4th 633.)

Grant of Anti-SLAPP Motion in Defamation Claim Reversed. 

Defendants made statements on YouTube about plaintiff and her family at a time when plaintiff’s husband was running for political office. Plaintiff sued defendants for defamation and intentional and negligent infliction of emotional distress. Concluding plaintiff was a limited purpose public figure who needed to show actual malice in conjunction with her defamation claim, the trial court granted defendants’ anti-SLAPP motion under Code of Civil Procedure § 425.16. Affirming in part and reversing in part, the Court of Appeal concluded the evidence established plaintiff was a private figure for defamation purposes and that she demonstrated the requisite minimal merit of her defamation claim, but she did not do so with respect to her emotional distress claims. Consequently, the court directed entry of a new order denying the anti-SLAPP motion with respect to the defamation claim and granting it with respect to the remaining claims. (Bui v. Ky (Cal. App. 4th Dist., Div. 3, May 8, 2024) 101 Cal.App.5th 1061.)

The Copyright Act Entitles a Copyright Owner to Recover Damages for Any Timely Claim.

Alleged copyright infringement activity occurred in 2008, but the current copyright infringement action was filed in 2018, despite the Copyright Act’s three-year statute of limitations. (17 U.S.C. § 507(b).) At issue on appeal was whether a plaintiff is prohibited from recovering damages that occurred more than three years before a copyright action is filed. The U.S. Supreme Court held: “In this case, we assume without deciding that a claim is timely under that provision if brought within three years of when the plaintiff discovered an infringement, no matter when the infringement happened. We then consider whether a claim satisfying that rule is subject to another time-based limit—this one, preventing the recovery of damages for any infringement that occurred more than three years before a lawsuit’s filing. We hold that no such limit on damages exists. The Copyright Act entitles a copyright owner to recover damages for any timely claim.” (Warner Chappell Music, Inc. v. Nealy (U.S., May 9, 2024) 144 S.Ct. 1135.)

A Preliminary Hearing Is Not Required Prior to a Timely Forfeiture Hearing When a Car Is Seized by Police.

The question before the U.S. Supreme Court here was whether the Constitution requires a separate preliminary hearing to determine whether the police may retain a car that was seized because it was used to commit a drug offense pending a forfeiture hearing. The Court held the Constitution does not require a separate preliminary hearing. (Culley v. Marshall (U.S., May 9, 2024) 144 S.Ct. 1142.)

Previously we reported: Plaintiffs Retired, Then Learned the Real Amounts of Their Pensions.

Defendant employer sponsored and administered an employee pension plan subject to the requirements of the Employee Retirement Income Security Act (ERISA). The employer contracted with an outside administrator to generate account statements. Using an online platform provided by the employer, plaintiffs requested statements of their expected incomes when they retired. Relying on those statements, they both retired. But instead of the $2,000 and $1,600 per month specified on their statements, plaintiffs were only entitled to receive $807 and $823 per month, respectively. The district court granted defendants’ motion to dismiss. Affirming in part and reversing in part, the Ninth Circuit stated: “Calculation of benefits pursuant to a formula is not a fiduciary function, so Plaintiffs failed to state a claim for breach of a fiduciary duty by any of the three defendants. Furthermore, Plaintiffs did not adequately plead that they submitted written requests for pension benefit statements as required to state a claim for violation of 29 U.S.C. § 1025(a)(1)(B)(ii). . . . However, because Plaintiffs could plead facts adequate to allege they made written requests, we direct the district court to permit Plaintiffs to file an amended complaint. Finally, Plaintiffs’ state-law professional negligence and negligent misrepresentation claims are not preempted by ERISA because they do not have a ‘reference to or connection with’ an ERISA plan.” (Bafford v. Northrop Grumman Corporation (9th Cir., Apr. 15, 2021) 994 F.3d 1020.)

The latest:

On remand, the district court again dismissed the action. Reversing and remanding for further proceedings, the Ninth Circuit stated: “We now hold that Plaintiffs adequately alleged facts that, if proved, triggered the duty to provide pension benefit statements, and that Plaintiffs stated a viable ERISA claim by alleging that the plan administrator provided substantially inaccurate pension benefit statements.” (Bafford v. Administrative Committee of Northrop Grumman Pension Plan (9th Cir., May 9, 2024) 101 F.4th 641.)

For Anti-SLAPP Motion Purposes, Statements Must Be in Connection With an Issue Under Consideration or Review.

Defendant and plaintiff were formerly  married to each other. Plaintiff filed a petition for a domestic violence restraining order in response to a series of emails from defendant that he contended were harassing, disturbed his peace, interfered with his business, and affected his standing in the community. Defendant filed an anti-SLAPP motion pursuant to Code of Civil Procedure § 425.16, asserting her emails were protected free speech and litigation-related correspondence. Affirming the trial court’s denial of defendant’s motion, the Court of Appeal stated: “There is no dispute that [plaintiff’s] petition arises generally from speech activity, namely, [defendant’s] e-mails communicating what she contends is litigation related information. The disputed question is whether [defendant] has shown that the e-mails fall within one or more of the four categories of ‘“act[s]”’ set out in section 425.16(e). . . . None of these e-mails, or related evidence, suggests a ‘good faith intention to file a lawsuit’ . . . . [¶] . . . [¶] As the court did in Paul [v. Friedman (2002) 95 Cal.App.4th 853], we conclude it is insufficient for [defendant] to generally aver a connection between her communications to [plaintiff] and the anticipated exercise of her petitioning rights by filing a federal RICO action. The statements must be ‘in connection with’ the subject of the dispute and ‘an issue under consideration or review’ in the anticipated litigation.” (Bassi v. Bassi (Cal. App. 6th Dist., May 9, 2024) 101 Cal.App.5th 1080.)

Change of Ownership of Property with a Lease and Proposition 13.

Under a 1978 voter initiative known as Proposition 13, if the remaining term of a lease is less than 35 years at the time of transfer of the property, there is a change of ownership. (Rev. & Tax. Code, § 61, subd. (c)(1)(D)). In 2015, plaintiff sold property and the county assessor’s office determined the transaction resulted in a change of ownership permitting reassessment for property tax purposes. At the time, the remaining term on the lease was under 35 years. Having found a change in ownership, the assessor reassessed the property at its then current 2015 market value, which meaningfully increased the tax payable on the property. Plaintiff and the current owner challenged the assessor’s change in ownership determination in the superior court, which rejected the challenge. Affirming, the Court of Appeal stated: “They do not claim that the language of section 61(c)(1)(D) is ambiguous when applied to the facts in this case, and concede that the section’s plain language deems the 2015 transaction to be a change in ownership permitting reassessment. They instead contend that section 61(c)(1)(D) is invalid for various reasons, including that it is inconsistent with Proposition 13 and another section in the statutory scheme, section 60. We find no merit to appellants’ arguments and affirm the trial court’s rejection of the challenge to the reassessment.” (Equinix LLC v. County of Los Angeles (Cal. App. 2nd Dist., Div. 1, May 9, 2024) 101 Cal.App.5th 1108.)

Petition to Arbitrate When There Are Both Individual and Representative Claims.

The lower court compelled arbitration of all of plaintiff’s individual and representative claims. Affirming in part and reversing in part, the Ninth Circuit stated: “[Plaintiff’s] individual PAGA claims were properly ordered to arbitration, but we vacate that portion of the order compelling arbitration of the non-individual claims. We remand to the district court to treat the nonarbitrable claims consistent with Adolph [v. Uber Technologies, Inc., 532 P.3d 682 (Cal. 2023)] and the agreement of the parties.” (Diaz v. Macy’s West Stores, Inc. (9th Cir., May 10, 2024) 101 F.4th 697.)

Commercial Traveler Rule in Workers’ Compensation.

Under the “commercial traveler” rule in workers’ compensation law, an employee traveling on the employer’s business is regarded as acting within the course of employment during the entire period of travel. As a result, workers’ compensation coverage applies to injuries an employee sustains during the travel itself and during the course of other personal activities “reasonably necessary for the sustenance, comfort, and safety of the employee,” such as procuring food and shelter. Here, respondent Workers’ Compensation Appeals Board determined, under the commercial traveler rule, workers’ compensation coverage applied to injuries the worker sustained in an auto accident while he was off work and away from his job at a remote fire base camp. The board found the worker’s use of his own car while off work to drive approximately 70 miles away from camp purportedly to obtain cellular service was conduct reasonably expected by his employer to be incident to its requirement that the worker spend time away from home where cellular service was not adequately provided at the camp. The board concluded that the worker’s travel was for comfort and leisure and was not a distinct departure from his employment. In a petition for writ of review, the employer contended the board acted in excess of its authority and that substantial evidence did not support the board’s findings. It argued that the evidence showed that the worker was injured during a material deviation from his employment; he left the camp without employer approval on a personal activity that, under the unique circumstances of working at this remote fire camp, was not contemplated by the employer. Affirming, the Court of Appeals stated: “We deny the petition, as substantial evidence supports the Board’s findings.” (3 Stonedeggs, Inc. v. Workers’ Compensation Appeals Board (Cal. App. 3rd Dist., May 24, 2024) 101 Cal.App.5th 1136.)

Both Survivor Claim and Wrongful Death Claim Must Be Arbitrated.

Following the death of their son at a skilled nursing facility, the man’s parents brought this action, alleging survivor claims for dependent adult abuse and negligence as well as their own claim for wrongful death. Defendant moved to compel arbitration of the entire complaint pursuant to an arbitration agreement between the decedent and the nursing facility. The trial court granted the motion as to the survivor claims, but denied as to the wrongful death claim since the parents did not have an enforceable arbitration agreement with the facility. On appeal, the nursing facility argued that pursuant to Ruiz v. Podolsky (2010) 50 Cal.4th 838, the parents were bound by decedent’s agreement to arbitrate. Reversing the order denying arbitration of the wrongful death claim, the Court of Appeal stated: “We agree with [Defendant] that Ruiz governs this matter. Accordingly, under Ruiz and Code of Civil Procedure section 1295,3 the parents’ wrongful death claim must go to arbitration along with [the] survivor claims.” (Holland v. Silverscreen Healthcare, Inc. (Cal. App. 2nd Dist., Div. 2, May 10, 2024) 101 Cal.App.5th 1125.)

Capitally-Charged Defendant Not Present for Entire Voir Dire.

In Texas, potential jurors are called to court as a group, questioned by a judge and then divided into smaller groups, except in capital cases. A different procedure is used in a capital case. The trial judge may issue an order for a special venire that is assigned solely to the particular capitally-charged defendant’s case prior to the winnowing through the qualification, exemption, and excusal process. A prospective juror summoned as a part of a special venire may be excused from attendance by the court before he is impaneled, but only with the consent of both of the parties. In the instant case, involving a criminal defendant in Texas charged with capital murder for shooting to death an off-duty border patrol agent during a robbery, potential jurors were sent a jury questionnaire that informed them about the facts of the case. Prior to this procedure, the defendant’s request for a complete recording of the proceedings was granted. Yet, when the special venire was questioned about excusal requests, the judge told the court reporter the proceedings would be off the record. Texas courts held the trial court did not violate the defendant’s due process rights when it excluded him and his counsel from the special venire questioning about discretionary excusals. When the case came to the U.S. Supreme Court, the high court denied certiorari. Justice Jackson, joined by Justice Sotomayor, dissented, stating: “Because this Court has already recognized the due process right of a defendant to be present at voir dire, it seems to me self-evident that a defendant’s presence for the first [] appearance of prospective jurors assembled specifically for his case likewise bears on ‘the fulness of his opportunity to defend against the charge.’ [Citation.] But here, without even the benefit of a full record of the exchanges between the trial court and prospective jurors, the [Texas Court of Criminal Appeals] held categorically that a defendant in Tijerina Sandoval’s position had no right to be present during the court’s preliminary assessment of the jury pool.”

(Sandoval v. Texas (U.S., May 13, 2024) 144 S.Ct. 1166.)

Filing Deadline Not Jurisdictional.

A federal employee subjected to an adverse personnel action may complain to the Merit Systems Protection Board. If the board rules against him, he may appeal to the Court of Appeals for the Federal Circuit “within 60 days.” (5 U. S. C. §7703(b)(1).) The question presented was whether that 60-day limit is “jurisdictional,” and therefore precludes equitable exceptions. The U.S. Supreme Court held that the limit, like most filing deadlines, is not jurisdictional. (Harrow v. Department of Defense (U.S., May 16, 2024) 144 S.Ct. 1178.)

Trail Immunity. 

Plaintiff tripped and fell on a wire cable while walking to a recreational area at Diaz Lake in Inyo County. That wire cable was suspended between two wooden poles and was intended to prevent vehicles from accessing a pedestrian pathway. He sued various public entities for the injuries sustained. The entities prevailed on a motion for summary judgment after the court concluded they were immune under Government Code § 831.4, trail immunity. Noting the stated purpose of trail immunity on public land is to encourage public entities to open their property for public recreational use, the Court of Appeal affirmed. (Helm v. City of Los Angeles (Cal. App. 4th Dist., Div. 1, May 13, 2024) 321 Cal.Rptr.3d 57.)

Federal Court Should Have Stayed Instead of Dismissing Case Pending Arbitration.

Delivery drivers sued defendant, contending defendant misclassified them as independent contractors. Defendant moved the case to federal court and also moved to compel arbitration and to dismiss the court action. Plaintiffs conceded that all their claims were arbitrable, but they argued that § 3 of the Federal Arbitration Act (FAA) required the district court to stay the action pending arbitration rather than dismissing it entirely. The District Court issued an order compelling arbitration and dismissing the case without prejudice. Once in the U.S. Supreme Court, the court framed the issue: “The question here is whether §3 permits a court to dismiss the case instead of issuing a stay when the dispute is subject to arbitration and a party requests a stay pending arbitration.” In a unanimous opinion, the Supreme Court held that when a federal court finds that a dispute is subject to arbitration and a party has requested a stay of the court proceeding pending arbitration, the FAA compels the court to stay the proceeding. (Smith v. Spizzirri (U.S., May 16, 2024) 144 S.Ct. 1173.)

Clickwrap with a Bit Extra. 

In this case, doctors prescribed a continuous use monitoring system to their diabetic patients, but the system failed to alert the patients that their blood glucose level was either too low or too high. They suffered injuries and sued the system’s manufacturer for product liability. The manufacturer successfully moved to compel arbitration before the trial court, arguing that each injured party entered into a clickwrap agreement to arbitrate all disputes when they installed their devices, and clicked the box next to: “I agree to Terms of Use.” Terms of Use was a hyperlink to a separate webpage with contractual terms, including an arbitration provision. Issuing a writ of mandate, the Court of Appeal stated: “Although a clickwrap agreement—one in which an internet user accepts a website’s terms of use by clicking an “I agree” or “I accept” button, with a link to the agreement readily available—is generally enforceable, [defendant’s] G6 App clickwrap agreement is not. We find that [defendant] undid whatever notice it might have provided of the contractual terms by explicitly telling the user that clicking the box constituted authorization for [defendant] to collect and store the user’s sensitive, personal health information. For this reason, [defendant] cannot meet its burden of demonstrating that the same click constituted unambiguous acceptance of the Terms of Use, including the arbitration provision. Consequently, arbitration agreements were not formed with any of the plaintiffs.” (Herzog v. Superior Court (Cal. App. 4th Dist., Div. 1, May 16, 2024) 101 Cal.App.5th 1280.)

Local Court Rule Affecting Peremptory Challenge of Judge Inconsistent with Statute.

Plaintiff filed a peremptory challenge to a newly assigned judge who was assigned by the previous judge. Code of Civil Procedure § 170.6 allows a party to file a challenge “to a judge supervising the master calendar not later than the time the cause is assigned for trial.” The court has a local rule that purports to provide any superior court judge with the power to act as a master calendar department for purposes of assigning cases for trial. The newly assigned judge denied the challenge on timeliness grounds, immediately started trial and shortly thereafter entered judgment for the defendant. The Court of Appeal reversed, concluding: “Superior Court of San Diego County, Local Rules, rule 2.1.3 (rule 2.1.3), which purports to provide any superior court judge with the power to act as a master calendar department for purposes of assigning cases for trial, is inconsistent with section 170.6 and case law interpreting the statute.” (Lorch v. Superior Court (Cal. App. 4th Dist., Div. 1, May 16, 2024) 101 Cal.App.5th 1266.)

Arbitration Denied After Moving Party Met Only Its Initial Burden.

In an employment dispute alleging sexual harassment and other causes of action, the employer moved to compel arbitration by submitting a declaration of its human resources analyst. The employee challenged the moving papers, pointing out the human resources analyst was not present when she signed the initial hiring papers, and that the other non-signatory defendant that relied on a delegation clause could not rely on that clause because no agreement existed. The employee produced five documents bearing her electronic signature from that first day; each of the five pages showed her signature as “Maria Garcia,” but the purported arbitration agreement’s electronic signature reads “Maria Isabel Izzy Garcia.” Additionally, the five documents produced by the employee indicated she assented to the agreement by inserting a password, but the purported arbitration agreement had no such indication. Other differences were also shown. The trial court denied the petitions to compel arbitration. Affirming, the Court of Appeal finding the defendants failed to prove the existence of an agreement to arbitrate. (Garcia v. Stoneledge Furniture LLC (Cal. App. 1st Dist., Div. 3, May 17, 2024) 102 Cal.App.5th 41.)

No Legal Duty to Conduct Criminal Background Checks on Lyft Passengers. 

Plaintiff was working as a Lyft driver when a passenger suddenly and unprovokedly attacked him, stabbing his hand and legs. Unbeknownst to plaintiff, the passenger had a criminal record. Although Lyft conducts criminal background checks on its drivers, it does not similarly screen passengers. Plaintiff sued Lyft for negligence based on the rideshare company’s failure to conduct criminal background checks on all passengers. The trial court granted Lyft’s motion for judgment on the pleadings. Affirming, the Court of Appeal stated: “We conclude [the plaintiff] has not established that Lyft’s legal duty to its drivers extends to conducting criminal background checks on all riders seeking to use the service.” (Al Shikha v. Lyft, Inc. (Cal. App. 2nd Dist., Div. 3, May 17, 2024) 102 Cal.App.5th 14.)

What Works in Negligence Cases Does Not Necessarily Work in Strict Liability Cases. 

Plaintiff did not live with his brother, but the two had frequent contact while the brother worked with asbestos-cement pipe for more than 20 years. Plaintiff sued under a strict liability theory for personal injuries, contending secondary exposure to asbestos manufactured by defendant caused his cancer. The jury found for plaintiff and defendant appealed. Affirming, the Court of Appeal discussed Kesner v. Superior Court (2016) 1 Cal. 5th 1132, stating: “There is no doubt that Kesner has been followed by courts to determine the scope of duty for negligence claims. . . . [Defendant], however, does not present any authority concluding that the limitation on duty in Kesner summarily precludes a strict liability cause of action asserted by a non-household member alleging secondary exposure to asbestos like [plaintiff].” (Williams v. J-M Manufacturing Company, Inc. (Cal. App. 1st Dist., Div. 2, May 22, 2024) 2024 WL 2312099.)

Federal Arbitration Act Preempts Code of Civil Procedure § 1281.97 (Pay Fees on Time or Forfeit Arbitration). 

After an employer failed to pay arbitration costs within 30 days of the due date, the employee filed a motion to withdraw from arbitration and litigate in state court as permitted under Code of Civil Procedure § 1281.97. The trial court found the employer breached the arbitration agreement and granted the motion. On appeal, the employer contended that the Federal Arbitration Act (9 U.S.C. § 1 et seq.; FAA) governed the parties’ arbitration agreement and preempted § 1281.97. Reversing, the Court of Appeal stated: “[W]e find the arbitration agreement in this case is governed by the FAA, including both the substantive and procedural provisions of the FAA, rather than California’s arbitration laws. As a result, the procedures of section 1281.97 do not apply and the order must be reversed.” (Hernandez v. Sohnen Enterprises, Inc. (Cal. App. 2nd Dist., Div. 5, May 22, 2024) 2024 WL 2313710.)

No Mutual Assent to Arbitrate Despite Employer’s Notification Continued Employment Constituted Assent to Arbitrate. 

In an employment dispute, the trial court denied one side’s request for arbitration because plaintiff clearly stated that he refused to sign the arbitration agreement and the Sierra defendants could terminate his employment if it objected. On appeal, the Sierra defendants contended they notified plaintiff that his continued employment constituted assent to the arbitration agreement, and that plaintiff continued employment for another 19 months. Affirming, the Court of Appeal stated: “The Sierra defendants are correct that where an employer modifies its employment policy to require employees to arbitrate their disputes and clearly communicates to employees that continued employment will constitute assent to an arbitration agreement, the employees will generally be bound by the agreement if they continue to work for the company. However, where, as here, the employee promptly rejects the arbitration agreement and makes clear he or she refuses to be bound by the agreement, there is no mutual assent to arbitrate.” (Mar v. Perkins (Cal. App. 2nd Dist., Div. 7, May 22, 2024) 2024 WL 2313700.)

NAACP Must “Disentangle Race and Politics” to Prove South Carolina’s Voting Districts Were Drawn as a Result of Race. 

In its underlying pleading, the National Association for the Advancement of Colored People (NAACP) alleged: “As the 2020 U.S. Census results demonstrate, South Carolina has experienced significant population shifts and growth during the past decade. These changes have rendered South Carolina’s U.S. Congressional and state House districts unconstitutionally malapportioned. Yet the South Carolina Legislature is currently adjourned, with no clear plan to fix these ongoing violations in time for key election dates early next year.” When the case reached the U. S. Supreme Court, the high court held: “. . . a legislature may pursue partisan ends when it engages in redistricting. By contrast, if a legislature gives race a predominant role in redistricting decisions, the resulting map is subjected to strict scrutiny and may be held unconstitutional. [¶] . . . [A] party challenging a map’s constitutionality must disentangle race and politics if it wishes to prove that the legislature was motivated by race as opposed to partisanship. . . . [I]n assessing a legislature’s work, we start with a presumption that the legislature acted in good faith.” The case was remanded to the lower courts for further proceedings.” (Alexander v. South Carolina State Conference of the NAACP (U.S., May 23, 2024) 144 S.Ct. 1221.)

Previously we reported: Conflicting Online Agreements.

When plaintiffs created their online accounts with defendant, they agreed to the “Coinbase User Agreement,” which contained an arbitration provision. Later, they opted into the “Official Rules,” which included a forum selection clause providing that California courts had exclusive jurisdiction for controversies involving sweepstakes. Plaintiffs sued under various California statutes, and the district court denied defendant’s motion to compel arbitration. Affirming, the Ninth Circuit stated: “The district court correctly ruled that because the User Agreement and the Official Rules conflict on the question whether the parties’ dispute must be resolved by an arbitrator or by a California court, the Official Rules’ forum selection clause supersedes the User Agreement’s arbitration clause.”  (Suski v. Coinbase, Inc. (9th Cir., Dec. 16, 2022) 55 F.4th 1227.).)

The latest:

The U.S. Supreme Court held: “When two such contracts exist, who decides the arbitrability of a contract-related dispute between the parties—an arbitrator or the court? [¶] Basic legal principles establish the answer. Arbitration is a matter of contract and consent, and we have long held that disputes are subject to arbitration if, and only if, the parties actually agreed to arbitrate those disputes. Here, then, before either the delegation provision or the forum selection clause can be enforced, a court needs to decide what the parties have agreed to—i.e., which contract controls. Accordingly, we affirm the judgment of the Ninth Circuit.” (Coinbase, Inc. v. Suski (U.S., May 23, 2024) 144 S.Ct. 1186.)

Previously we reported: Ninth Circuit Certified Question About Business Loss Resulting from COVID-19 to the California Supreme Court.

An insured sued for breach of contract, bad faith, and fraud when its insurer denied coverage for business income losses that the insured incurred following government closure orders issued during the COVID-19 pandemic. The insured alleged that the COVID-19 virus was present on its premises before the orders were issued, or would have been present, had the insured not closed its venues in compliance with the orders. It sought coverage under several provisions of its commercial property insurance policy that require “direct physical loss or damage to property” to trigger coverage. The district court dismissed the insured’s suit for failure to state a claim. The issue here was whether the insured’s allegations, if taken as true, were sufficient to show “direct physical loss or damage to property” as defined by California law. Accordingly, the Ninth Circuit certified the following question to the California Supreme Court pursuant to Rules of Court, Rule 8.548(a): “Can the actual or potential presence of the COVID-19 virus on an insured’s premises constitute ‘direct physical loss or damage to property’ for purposes of coverage under a commercial property insurance policy?” (Another Planet Entertainment, LLC v. Vigilant Insurance Company (9th Cir., Dec. 28, 2022) 56 F.4th 730.)

The latest:

The California Supreme Court answered the question: “Under California law, direct physical loss or damage to property requires a distinct, demonstrable, physical alteration to property. The physical alteration need not be visible to the naked eye, nor must it be structural, but it must result in some injury to or impairment of the property as property. [¶] The factual allegations of Another Planet’s complaint, which we accept as true for purposes of this proceeding, do not satisfy this standard. While Another Planet alleges that the COVID-19 virus alters property by bonding or interacting with it on a microscopic level, Another Planet does not allege that any such alteration results in injury to or impairment of the property itself. Its relevant physical characteristics are unaffected by the presence of the COVID-19 virus.” (Another Planet Entertainment, LLC v. Vigilant Insurance Company (Cal., May 23, 2024) 548 P.3d 303.)

No Prejudice Resulting from Repeated Beeping of Ankle Monitor During Jury Selection in Criminal Trial. 

Defendant appealed her conviction for conspiracy to distribute methamphetamine, arguing that she was denied due process and prejudiced because her ankle monitor kept beeping during jury selection and jurors watched her as she tried to adjust it each time it beeped. Affirming the conviction, the Ninth Circuit stated: “Because ankle monitors are neither presumptively nor inherently prejudicial, and Wiley has failed to prove that she was actually prejudiced by her beeping ankle monitor, we uphold her conviction.” (United States v. Wiley (9th Cir., May 29, 2024) 2024 WL 2745123.)

Lack of Mutuality in Arbitration Agreement. 

Plaintiff filed a lawsuit against her employer, the University of Southern California (USC) and two coworkers alleging discrimination and harassment in the course of her employment. Defendants collectively moved to compel arbitration under an arbitration agreement signed by plaintiff as a condition of employment. The trial court denied the motion to compel arbitration, holding the agreement lacked mutuality because it required plaintiff to arbitrate her claims against USC and all of USC’s “related entities” including officers, trustees, administrators, employees, and agents. However, in contrast, the agreement only required USC to arbitrate its claims against plaintiff but did not require USC’s “related entities” to arbitrate their claims against plaintiff. The trial court concluded “This lack of mutuality renders the arbitration agreement substantively unconscionable because it provides the employer more rights and greater remedies than would otherwise be available and concomitantly deprives plaintiff of significant rights and remedies that she would normally enjoy, for example, in a judicial forum . . . .” Affirming, the Court of Appeal stated: “We recognize that employment contracts can provide a ‘margin of safety’ that grants extra protection to the party with superior bargaining power if there is a legitimate commercial need for doing so. [Citation.] However, unless the ‘business realities’ that give rise to that special need are explained in the contract itself, they must be factually established.” (Cook v. University of Southern California (Cal. App. 2nd Dist., Div. 4, May 24, 2024) 2024 WL 2495500.)

Peremptory Challenge of a Judge. 

Under Code of Civil Procedure § 170.6, subdivision (a)(2), a challenge is permissible even if a judge has presided at a pretrial conference or other hearing or motion prior to trial but “not involving a determination of contested fact issues relating to the merits.” This writ petition arises out of a lawsuit filed by an adult alleging that he was a victim of childhood sexual assault in elementary school. Under Code of Civil Procedure § 340.1, every plaintiff 40 years of age or older at the time of filing a childhood sexual assault case must file a certificate of merit for each defendant and cannot serve any defendant until the court determines, based solely on those certificates of merit, that there is reasonable and meritorious cause for the filing of the action against that defendant. The Court of Appeal decided as an issue of first impression that a ruling a plaintiff may serve and name a defendant in a complaint filed under § 340.1 is not a determination of contested fact issues relating to the merits under § 170.6. (San Diego Unified School District v. Superior Court of San Diego County (Cal App. 4th Dist., Div. 1, May 28, 2024).)

Trial Court Should Have Shifted the Burden of Accounting for Asset to the Spouse Who Solely Controlled and Managed Asset.

A judgment of dissolution of marriage was entered after a lengthy bench trial on reserved issues. The husband’s principal contention was that the trial court erred by not shifting the burden of proof to the wife regarding two missing assets over which she had exclusive control. Neither of the assets were accounted for at the time of trial, and the trial court declined to charge the wife with the value of the missing assets. It did, though, sanction her for violating her statutory disclosure obligations. Reversing, the Court of Appeal stated: “We hold that the [In re Marriage of Prentis-Margulis & Margulis (2011) 198 Cal.App.4th 1252] burden-shifting framework applies when one spouse solely controls and manages a relationship with a third party who directly oversees the management and investment of community funds postseparation. In such a case, the managing spouse must account for the missing assets under the Margulis burden-shifting framework.” (In re Marriage of Mohammadijoo (Cal. App. 1st Dist., Div. 2, May 28, 2024) 2024 WL 2716849.)

Plaintiff’s Expert Not Qualified to Opine in Medical Malpractice/Wrongful Death Case. 

Plaintiff’s adult son died while being treated for a traumatic brain injury at defendant hospital. Plaintiff sued for wrongful death. The hospital moved for summary judgment, based in part on the declarations of two doctors who opined that the decedent received adequate treatment. In opposition, plaintiff submitted a single expert declaration, by Rhona Wang, a certified registered nurse anesthetist. Wang declared that she was qualified to opine on the care because she had been employed as a nurse and nurse anesthetist since 2002 by several Los Angeles hospitals. She had provided anesthesia to “neuro/trauma patients” and had worked in various cardiac-related observation and intensive care units. She opined: “Based on my education, training, and experience, and my review of the records in this case, to a reasonable degree of medical probability, there was a delay in the performance of the [external ventricular drain] and/or craniectomy, delays in contacting physicians regarding changes in [Michael’s] clinical status, and/or actions or inactions by healthcare providers at [the hospital] in implementing treatment modalities, which were a substantial factor in causing or contributing to [Michael’s] death.” The trial court found Wang’s declaration demonstrated triable issues about the standard of care and causation elements of plaintiff’s claim, and it denied the hospital’s motion for summary judgment. Issuing a writ of mandate, the Court of Appeal stated: “Nothing in Wang’s declaration establishes that her experience as a nurse anesthetist or trauma unit nurse gave her the specialized knowledge required to opine on the standard of care applicable to an intensive care unit neurosurgeon deciding whether a severe traumatic brain injury requires immediate surgical intervention, or whether that standard of care was breached.” (San Antonio Regional Hospital v. Superior Court of San Bernardino County (Cal. App. 4th Dist., Div. 2, May 28, 2024) 2024 WL 2720256.)

No Lack of Due Process in Expulsion of University Students. 

Two students at University of California Riverside were expelled. In a petition to the superior court, they contended the university did not afford them due process. The lower court denied the petition. Affirming, the Court of Appeal discussed that the hazing the petitioners inflicted was against university policies and that, “Due process in the context of university disciplinary proceedings is a flexible concept that depends on the specific circumstances and charges at issue in each particular case.” (Ayach v. The Regents of the University of California (Cal. App. 2nd Dist., Div. 1, May 28, 2024) 2024 WL 2720282.)

Government Strongarming.

The National Rifle Association (NRA) contended the superintendent of the New York Department of Financial Services threatened enforcement actions against entities that refused to dissociate from the NRA and other gun-promotion advocacy groups. The trial court denied the government’s motion to dismiss. The Second Circuit reversed, holding that the actions amounted to permissible government speech, not unconstitutional coercion. Clarifying the situation, the U.S. Supreme Court held plaintiffs plausibly alleged a violation of the First Amendment by coercing gun-promotion entities to terminate their business relationships with the NRA. (National Rifle Association of America v. Vullo (U.S., May 30, 2024) 2024 WL 2751216.)

Jurisdiction and Code of Civil Procedure § 664.6. 

Code of Civil Procedure § 664.6 states: “If parties to pending litigation stipulate, in a writing signed by the parties outside of the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.” Defendant filed a motion under § 664.6 to enforce a settlement agreement, and the trial court granted the motion. On appeal, plaintiff contended the trial court could not enforce the purported settlement because the court did not properly retain jurisdiction. Affirming both the order granting the motion and the judgment enforcing the settlement, the Court of Appeal stated: “We conclude the trial court had subject matter jurisdiction and personal jurisdiction over Eagle and the City when it enforced the settlement because the City’s cross-complaint had not been dismissed and, therefore, this case was ‘pending litigation’ for purposes of section 664.6, subdivision (a)’s first sentence. As a result, the subdivision’s second sentence addressing the retention of jurisdiction did not apply to the facts of this case.” (Eagle Fire and Water Restoration Inc. v. City of Dinuba (Cal. App. 5th Dist., May 30, 2024) 2024 WL 2762495.)

Regional Center Not Responsible for Rape of Developmentally Disabled Person by Employee of a Vendor. 

The State of California provides developmentally disabled persons with services and support through various regional centers. A woman was raped by the employee of a transportation vendor while being transported to an education program. She sued the employee, the vendor and the regional center. The Court of Appeal was faced with the following question: “Does a regional center have a duty to protect a consumer against sexual assault by a vendor’s employees premised on the center’s failure to sufficiently monitor the vendor and its employees?” The  court answered: “We conclude that the answer is ‘no’ except when a regional center has actual knowledge of the vendor employee’s propensity to engage in such conduct.” (A.L. v. Harbor Developmental Disabilities Foundation (Cal. App. 2nd Dist., Div. 2, May 30, 2024) 2024 WL 2762270.)

Documents Created by Attorneys as Part of Investigating the Cause of a Fire in Order to Advise Client About Public Reporting Requirements Are Protected Work Product. 

Plaintiffs are insurance companies that paid for losses after a fire and sued  Southern California Edison (SCE) under a subrogation theory to recover their payments to insureds. During discovery, SCE withheld certain documents that it asserted were generated during an attorney initiated and directed internal investigation into the cause of the fire. Plaintiffs moved to compel, arguing the attorney-client privilege and attorney work product doctrine did not exempt these documents from production. The trial court held the documents were not privileged and compelled production. Granting a writ of mandate, the Court of Appeal stated: “We conclude the trial court’s order improperly invaded the protection afforded by the attorney work product doctrine. Even where the dominant purpose of an attorney directed internal investigation is to comply with a client’s public reporting requirement, attorney work product generated in connection with gathering facts to assist counsel in advising the client on how to comply with that statutory or regulatory reporting requirement remains protected. As plaintiffs have not shown grounds for production of their adversary’s work product, the trial court erred in compelling its production. Our conclusion regarding the attorney work product doctrine is dispositive in this matter, and therefore we do address, and express no opinion on, whether the order also violated the attorney-client privilege.” (Southern California Edison Company v. Superior Court of Los Angeles (Cal. App. 2nd Dist., Div. 1, May 31, 2024) 2024 WL 2794134.)

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