Litigation Update: March 2018

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

  • Senior Editor, Eileen C. Moore, Associate Justice, California Court of Appeal, Fourth District
  • Managing Editor, Reuben Ginsburg
  • Editor, Jessica Riggin
998 Offer by Multiple Plaintiffs to Multiple Defendants Valid.

After two people died in a rented home, their families sued the homeowners, a couple. Defendants rejected plaintiffs’ joint offer to compromise (Code Civ. Proc., § 998), and the case went to trial. A jury awarded plaintiffs substantially more than the amount in their offer to compromise, awarding one decedent’s heirs an amount greater than the total offer and a lesser amount to the other decedent’s heirs. After trial, the plaintiffs asked for almost $80,000 for their expert witness costs, and the defendants moved to tax costs. The trial court denied the motion to tax costs. Defendants argued on appeal that an unallocated joint offer from multiple parties should always be invalid because it precludes the receiving party from evaluating the claims of the offering parties separately. In affirming, the Court of Appeal stated: “Under the unique circumstances of this case, we conclude the joint offer was valid and affirm the court’s order.” (Gonzalez v. Lew (Cal. App. 2nd Dist., Div. 3, Feb. 1, 2018) 20 Cal.App.5th 155.)

“To a father growing old, nothing is dearer than a daughter,” Euripides.

During a period of time that a husband and wife were separated, the wife had an affair with another man. The husband and wife later reconciled and thereafter had a baby girl. The husband was in the birthing room and cut the umbilical cord. His name is on the birth certificate. He helped care for the baby, changed her diapers, fed her, washed her laundry, and rocked her to sleep. As the little girl’s features developed, the wife began to suspect the other man was the father, and this was confirmed by DNA tests. When the child was six years old, the biological father requested joint legal and physical custody, visitation, and that the girl’s last name be changed to his name. The trial court denied the requests, finding he was not the presumed parent within the meaning of Family Code § 7611, subdivision (d), which provides that “[a] person is presumed to be the parent of a child if . . . (d) The presumed parent receives the child into his or her home and openly holds out the child as his or her natural child.” In ruling against the biological father and affirming the trial court’s order, the Court of Appeal noted that the law distinguishes presumed fathers from biological fathers and that biology is not determinative of presumed fatherhood, stating: “A father is not elevated to presumed father status unless he has demonstrated a ‘commitment to the child and the child’s welfare. . . regardless of whether he is biologically the father.’” (W.S. v. S.T. (Cal. App. 6th Dist., Feb. 1, 2018) 20 Cal.App.5th 132.)

Window Washer Gets to Go to Trial Against Homeowner.

Plaintiff, who advertised his window washing company as being experienced in cleaning hard to reach windows, climbed onto the roof using a ladder affixed to a hard to reach skylight in a residence, then lost his footing and fell off the roof. He sued the homeowner for compensation for his injuries. The homeowner argued the window washer was an independent contractor and moved for summary judgment. The trial court granted summary judgment. On appeal, the plaintiff did not dispute he is an independent contractor but contended there are triable issues of fact whether the homeowner can be held liable under the “retained control” exception set forth in Hooker v. Department of Transportation (2002) 27 Cal.4th 198 and the “hazardous condition” exception set forth in Kinsman v. Unocol Corp. (2005) 37 Cal.4th 659. While the appellate court did not find there were any triable issues of fact under the retained control exception, it did find there are triable issues of fact under the hazardous condition exception, and reversed.  (Gonzalez v. Mathis (Cal. App. 2nd Dist., Div. 7, Feb. 6, 2018) 2018 Cal. App. LEXIS 96.)

Opt Out or Forever Hold Your Tongue.

A class action against a now defunct real estate seminar provider reached a settlement. A lone objector to the settlement sought to opt out of the class and bring her claims in a separate lawsuit, which would derail the settlement. The objector concedes she received a court-approved notice of her right to exclude herself from the class at the class certification stage, but did not do so by the deadline. She argues she should be given another opportunity to opt out. A federal trial court approved the settlement, and the objector appealed. With regard to whether the objector has standing to appeal the settlement approval, the Ninth Circuit Court of Appeals found she did, stating: “[S]he claims that the settlement’s approval improperly denied her a second, settlement-stage opportunity to remove herself from the class. [The objector] therefore ‘has an interest in the settlement that creates a ‘case or controversy’ sufficient to satisfy the constitutional requirements of injury, causation, and redressability.’” The appeals court thereafter rejected the objector’s argument that the class notice language provided a second settlement-stage opportunity to opt out of the class and, further found that, even if it did, that due process did not compel a second opt out opportunity.  (Low v. Trump Univ., LLC (9th Cir., Feb. 6, 2018) 881 F.3d 1111.)

Previously we reported: No Civil Enforcement of Workplace Safety by Prosecutors Under Consumer Protection Statute.

Defendant manufactures plastic products. In 2009, a water heater exploded, killing two workers instantly. After the incident, California’s Division of Occupational Safety and Health (Cal/OSHA) opened an investigation and determined the explosion had been caused by a failed safety valve and the lack of “any other suitable safety feature on the heater” due to “manipulation and misuse.” Based on its investigation, Cal/OSHA charged defendant with five serious safety violations. As required by Labor Code § 6315, Cal/OSHA forwarded its results to the district attorney, who filed felony charges against two persons, including defendant’s plant manager. The district attorney also filed a civil action against defendant. One of the causes of action is an unlawful, unfair and fraudulent business practice under Business and Professions Code § 17200 and another alleges violation of § 17500, and the district attorney requested imposition of civil penalties of up to $2,500/day per employee from November 29, 2007 through March 19, 2009 in each cause of action. Defendant demurred to these two causes of action, contending they were preempted under Fed/OSHA, because a prosecutor’s pursuit of civil penalties under the UCL is not part of California’s workplace safety plan approved by the Secretary. The trial court disagreed, and overruled the demurrer to the district attorney’s two causes of action based on violations of the UCL. The trial court subsequently granted a request to certify the preemption issue as appropriate for early appellate review under Code of Civil Procedure § 166.1. Defendant filed a petition for writ of mandate, which the appellate court denied, but the California Supreme Court granted review and transferred the case back to the appellate court with directions to issue an order to show cause. The second time around, the appellate court granted the writ of mandate, stating: “California’s workplace safety plan, as approved by the Secretary, does not include any provision for civil enforcement of workplace safety standards by a prosecutor through a cause of action for penalties under the UCL. Under controlling law, any part of a state plan not expressly approved is preempted.” (Solus Industrial Innovations, LLC v. Superior Court (Cal. App. 4th Dist., Div. 3, Feb. 24, 2014) 224 Cal.App.4th 17.) 

The latest:

The California Supreme Court took the case and reversed the Court of Appeal, stating: “[W]e conclude that the federal act does not preempt unfair competition and consumer protection claims based on workplace safety and health violations when, as in California, there is a state plan approved by the federal Secretary of Labor. The district attorney’s use of UCL and FAL causes of action does not encroach on a field fully occupied by federal law, nor does it stand as an obstacle to the accomplishment of the federal objective of ensuring a nationwide minimum standard of workplace protection. In addition, the federal act’s structure and language do not reflect a clear purpose of Congress to preempt such claims.” (Solus Industrial Innovations, LLC v. Superior Court (Cal., Feb. 8, 2018) 2018 Cal. LEXIS 934.)

Guns & Rules.

Under 18 United States Code § 921, the federal government issues licenses to collectors of curio and relic firearms. Penal Code § 27535 limits the number of handguns that can be purchased in a 30-day period. The California Dept. of Justice (DOJ) has a policy that the federal license for collectors does not permit the licensee to use the license in transactions other than those involving curio and relic firearms. Plaintiffs are licensed collectors who contend their licenses exempt them from the limitations of § 27535 in all firearm transactions.  The Court of Appeal found the DOJ’s policy is void because, in enacting it, the DOJ did not comply with the rule making procedures set forth in the Administrative Procedures Act (Gov. Code, § 11340 et seq.), and failure to follow those procedures renders the policy void. (Doe v. Becerra (Cal. App. 3rd Dist., Feb. 8, 2018) 20 Cal.App.5th 330.)

Summary Judgment Motion in the Context of the Right of Privacy.

Plaintiff sued defendant, a business, for violating her right of privacy under the California Invasion of Privacy Act (Pen. Code, § 630 et seq.) by intentionally recording her telephone conversations without her knowledge or consent. The trial court granted defendant’s motion for summary judgment. In reversing, the Court of Appeal noted that a defendant moving for summary judgment “has the initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact.” The appellate court also recognized that violation of either Penal Code § 632, subdivision (a) or 632.7, subdivision (a) requires that defendant “‘intentionally’” recorded the confidential telephone calls at issue and that “the issue on appeal is whether for purposes of determining a potential violation of section 632(a) or 632.7(a), as a matter of law, [defendant] did not intentionally record the telephone calls to which [plaintiff] was a party.”  Here, defendant attempted to meet its burden by showing that plaintiff could not show defendant intentionally recorded the calls, and the appellate court ruled defendant did not meet its initial burden of showing it lacked the requisite intent to trigger a violation of either § 632, subdivision (a) or 632.7, subdivision (a). (Rojas v. HSBC Card Services Inc. (Cal. App. 4th Dist., Div. 1, Feb. 9, 2018) 20 Cal.App.5th 427.)

Possessing a Billy Club.

A defendant in a criminal matter was pulled over for a traffic violation while driving a car that belonged to his friend’s mother. Because of factors not relevant here, the police searched the vehicle and found a wooden bat wedged between the driver-side door and seat. Defendant was charged with possessing a billy club in violation of Penal Code § 22210. At trial, a police officer testified the small bat was a billy club, and the court instructed the jury that a charge of possessing a billy club does not require the prosecution to prove he intended to use it as a weapon. Defendant was convicted. In affirming the conviction, the Court of Appeal stated: “The Legislature enacted section 22210 to criminalize the possession of dangerous weapons.” (People v. Baugh (Cal. App. 1st Dist., Div. 4, Feb. 9, 2018) 20 Cal.App.5th 438.)

Man and Woman Have an Affair; the Woman Is Fired; the Man Is Not.

Plaintiff was a police officer still within her probationary period when she and a male fellow officer, who had been with a police department for seven years, began a romantic relationship. Both were married, but separated from their spouses. The male officer’s wife filed a citizen’s complaint, alleging that plaintiff and her husband were having an affair and engaging in inappropriate sexual conduct while on duty. An internal affairs investigation revealed no evidence of on-duty sexual contact, but the two made a number of calls and texts to each other while on duty, which actions “potentially” violated department policy. Plaintiff was fired. She sued the police department and individuals within it for violation of her rights to privacy, free association, and due process, and for sex discrimination. A federal trial court granted defendants’ motion for summary judgment. The Ninth Circuit Court of Appeals reversed with regard to plaintiff’s claims for violation of her constitutional rights to privacy and intimate association, stating: “We have long held that the constitutional guarantees of privacy and free association prohibit the State from taking adverse employment action on the basis of private sexual conduct unless it demonstrates that such conduct negatively affects on-the-job performance or violates a constitutionally permissible, narrowly tailored regulation.” (Perez v. City of Roseville (9th Cir., Feb. 9, 2018) 2018 U.S. App. LEXIS 3212.)

Folkens’ Dolphins Not Copyright Protected.

A wildlife artist, the plaintiff here, created a pen and ink copyright registered depiction of Two Dolphins in 1979. The wildlife artist alleges another artist created an unauthorized copy of Two Dolphins in a color painting titled “Life in the Living Sea” in 2011, making $4,195,250 in sales. A federal trial court granted summary judgment in favor of the defendant artist who created the color painting in 2011. Plaintiff concedes the idea of dolphins swimming underwater is not protected but argues his unique expression of that idea is protected. The Ninth Circuit Court of Appeals, finding there was no copyright infringement, affirmed, stating: “We hold that the depiction of two dolphins crossing underwater in this case is an idea that is found first in nature and is not a protectable element.” (Folkens v. Wyland Worldwide, LLC (9th Cir., Feb. 13, 2018) 2018 U.S. App. LEXIS 3404.)

Appellate Court Affirms Conviction for Human Trafficking of an Adult Prostitute.

Defendant conceded he was guilty of pimping (derives support and maintenance from the earnings of a prostitute) and pandering (procures a person for prostitution), but challenged the sufficiency of evidence to support his conviction for human trafficking (entails a deprivation of liberty and carries a much heftier sentence) of an adult woman. The Court of Appeal affirmed the human trafficking conviction, stating defendant isolated the woman and kept her financially dependent upon him. The appellate court also found there was further evidence of human trafficking: “And then there’s the baby.  Defendant kept the child from his mother for four months, in a secret place, permitting [the mother] to see him when he determined she earned that right and after he gave his permission. We note that the liberty interest in family privacy has its source in intrinsic human rights.  (Smith v. Organization of Foster Families for Equality & Reform (1977) 431 U.S. 816, 845.)  Accordingly, we further hold that when a pimp keeps a woman’s baby away from her unless she makes enough money to satisfy the pimp, that is a substantial and sustained restriction of the woman’s liberty accomplished through force, fear, fraud, deceit, duress or menace.” The appellate court also stated: “Something far more serious and sinister than a pimp deriving support or maintenance from the prostitute’s earnings was occurring here.” (People v. Guyton (Cal. App. 4th Dist., Div. 3, Feb. 14, 2018) 20 Cal.App.5th 499.)

Expert Opinion Testimony.

In People v. Sanchez (2016) 63 Cal.4th 665, a criminal case, the California Supreme Court adopted a rule: “When any expert relates to the jury case-specific out-of-court statements and treats the content of those statements as true and accurate to support the expert’s opinions, the statements are hearsay.” The instant case is a juvenile dependency matter, in which cases is not uncommon that the social worker who worked on the matter and prepared relevant reports is no longer with the agency at the time of a court hearing. That’s what happened in the present case, and the parent objected. At the hearing, the parent’s lawyer extensively cross-examined the replacement social worker, who wrote part of the reports. The Court of Appeal noted the parent did not subpoena the social worker who quit and found that there is an exception to the hearsay rule in Welfare & Institutions Code § 281 that allowed introduction of the reports. The appellate court stated, “Here, we hold that Sanchez’s limitations do not render social service reports inadmissible in status review hearings held pursuant to the Welfare and Institutions Code.” However, the court noted that although Sanchez was a criminal case, its limitations extend beyond the scope of criminal law. (J.H. v. Superior Court (Cal. App. 2nd Dist., Div. 6, Feb. 15, 2018) 20 Cal.App.5th 530.)

The Tiger Next Door.

Plaintiff applied to the county for a conditional use permit to keep up to five tigers on her property, a 19-acre plot close to residential homes and two children’s camps. The animals would be used in the entertainment business, including movie sets, commercials and still photography. The tigers would be transported from the property by sport utility vehicle or truck up to 60 times a year. Neighbors opposed the project. The county denied the application. The plaintiff petitioned the superior court for a writ of administrative mandate, and lost there as well. One of the arguments plaintiff made on appeal was that members of the board of supervisors violated their own rules by meeting with proponents and opponents of her application outside the hearing, but the appellate court stated that “the standard of impartiality required at an administrative hearing is less than that required at a judicial proceeding” and “it is not enough to overcome the presumption of impartiality for a party to show the appearance of bias.” In affirming the superior court, the Court of Appeal stated that plaintiff received a full and fair hearing. (Hauser v. Ventura County Bd. of Supervisors (Cal. App. 2nd Dist., Div. 6, Feb. 20, 2018) 2018 Cal. App. LEXIS 131.)

Anti-SLAPP and a Public Entity.

An event planning company sued a city when the city ceased doing business with the company, despite the fact the company had made commitments to various people on the city’s behalf. The trial court denied the city’s anti-SLAPP motion, and the city appealed. The plaintiff company argued to the Court of Appeal that its causes of action against the city did not arise from protected activity but rather from breach of contract. The city argued that conduct constituting breach of contract may also be protected activity under the anti-SLAPP statute. The appellate court noted that the text of Code of Civil Procedure § 425.16, subdivision (e)(2) contains no “public issue” or “issue of public interest” requirement beyond a showing the communication was made in connection with an issue under consideration by an executive body, and concluded the allegations in the sixth cause of action for misrepresentation “constitute anti-SLAPP protected activity.” The appellate court affirmed as to all but the misrepresentation cause of action. (Area 51 Productions, Inc. v. City of Alameda (Cal. App. 1st Dist., Div. 4, Feb. 20, 2018) 2018 Cal. App. LEXIS 132.)

“It’s so unbelievable that in 2017, almost every single woman has a story about sexual harassment,” Gretchen Carlson.

The principal of a middle school recommended that a 13-year-old boy be expelled based upon allegations he committed sexual assault or battery on a 13-year-old girl multiple times on the school bus. An administrative panel conducted an evidentiary hearing and agreed with the principal’s recommendation. The school district’s governing board adopted the recommendation. The boy’s appeal to the Board of Education was denied. The boy filed a petition for writ of mandate in the superior court, and the court determined there was substantial evidence to support the conclusion the boy had committed sexual battery. The court nonetheless granted a peremptory writ and remanded the case to the school district to consider whether the evidence justified its exercising its statutory discretion to suspend the order of expulsion. The boy filed the instant appeal, arguing the trial court erred in finding there was substantial evidence. On appeal, the boy admitted he touched the intimate part of another person against her will, but said he lacked the requisite specific intent. The Court of Appeal affirmed, concluding substantial evidence supports the boy’s expulsion.  (M.N. v. Morgan Hill Unified School Dist. (Cal. App. 6th Dist., Feb. 20, 2018) 2018 Cal. App. LEXIS 133.)

Collective Bargaining Agreements Must be Interpreted According to Ordinary Principles of Contract Law.

This case involves a dispute between retirees and their former employer about whether an expired collective bargaining agreement created a vested right to lifetime benefits. The agreement provided lifetime medical benefits, and also stated it would terminate in May 2004. The Sixth Circuit Court of Appeals inferred lifetime vesting, finding in the retirees’ favor. The U.S. Supreme Court reversed. The high court stated: “A contract is not ambiguous unless it is subject to more than one reasonable interpretation.” It further stated that M&G Polymers USA, LLC v. Tackett (2015) 135 S.Ct. 926 rejected the type of inferences applied by the Sixth Circuit “as inconsistent with ordinary principles of contract law.” (CNH Indus. N.V. v. Reese (U.S., Feb. 20, 2018) 200 L.Ed.2d 1.)

Public Entity Employers and Personnel Files.

Plaintiff, a state agency employee, met with her supervisor regarding the addition of plaintiff’s domestic partner as a health insurance beneficiary. Months later, the supervisor discussed with a nonsupervisory employee how she might more effectively supervise plaintiff. During that discussion, the supervisor disclosed information from plaintiff’s personnel file that plaintiff had failed her probation in a prior job. At the time of the discussion, plaintiff was standing outside the supervisor’s office, heard the supervisor discussing her personnel file with the other employee, and saw her personnel file open on the supervisor’s desk. Plaintiff became sick and threw up. She then went to her office, wrote an email to the district superintendent about the incident, and told the supervisor she was leaving work. Plaintiff went on medical leave the following day and never returned. She plaintiff filed an action against the state agency and the supervisor for sexual orientation discrimination, violation of the Fair Employment and Housing Act (FEHA; Gov. Code, § 12900 et seq.), the Information Practices Act (IPA; Civ. Code, § 1798 et seq.) (which imposes liability on agencies and individuals for improperly disclosing personal information), and other causes of action. A jury returned a verdict in favor of defendants on the FEHA cause of action and against defendants on the IPA cause of action. With regard to the supervisor only, the jury found against the supervisor on the causes of action for IIED and NIED, and also awarded $28,000 in punitive damages. Additionally, the jury awarded $19,200 for past economic damages and $19,200 for past noneconomic damages. All parties appealed. With the exception of the award against the agency for economic damages, the Court of Appeal affirmed in full. (Hurley v. California Dept. of Parks & Recreation (Cal. App. 4th Dist., Div. 1, Feb. 21, 2018) 2018 Cal. App. LEXIS 135.)

No Injury; No Standing.

When plaintiff used his credit card in a parking garage, he received a receipt displaying the card’s full expiration date. He sued for violation of the Fair and Accurate Credit Transactions Act of 2003 (Pub. L. No. 108-159, 117 Stat. 1952, amended as the Fair Credit Reporting Act), which limits the information that may be printed on receipts. A federal trial district court granted defendant’s motion to dismiss the complaint because plaintiff failed to allege a sufficiently concrete injury.  In affirming, the Ninth Circuit Court of Appeals stated: “Like the district court, we conclude that [plaintiff] failed to allege a concrete injury sufficient to give him standing. In doing so, we join the Second and Seventh Circuits in affirming dismissal under identical circumstances.” (Bassett v. ABM Parking Servs. (9th Cir., Feb. 21, 2018) 2018 U.S. App. LEXIS 4097.)

Previously we reported: Anti-Retaliation Provision in Dodd-Frank Act Protects Whistleblower Employees Who Make Internal Disclosures About Securities Irregularities.

Plaintiff was employed as a vice president by defendant. He reported several times to senior management that the company was possibly violating securities laws, and was fired. The Dodd-Frank Act (DFA; 15 U.S.C. § 78u-6(h)(1)(A)(iii)) has a provision prohibiting employers from retaliating against employees who report irregularities. There has been a split within the federal courts whether that anti-retaliation provision protects only employees who make reports to the Securities and Exchange Commission (SEC), or whether it also protects employees who make internal reports, such as the plaintiff here. Both the federal trial court and the Ninth Circuit Court of Appeals concluded the anti-retaliation provision reflects congressional intent to provide protection for those who made internal disclosures as well as those who make disclosures to the SEC. (Somers v. Digital Realty Trust, Inc. (9th Cir., Mar. 8, 2017) 850 F.3d 1045.)

The latest: The case made its way to the United States Supreme Court.

The nation’s highest court reversed, stating: “To sue under Dodd-Frank’s anti retaliation provision, a person must first ‘provide information relating to a violation of the securities laws to the Commission.’” (Dig. Realty Trust, Inc. v. Somers (U.S., 2018) 200 L.Ed.2d 15.)

Challenges Involved With Protecting the Environment.

The U.S. Forest Service proposed a wood vegetation project which would entail thinning old growth trees in 495 acres of forest to prevent forest fires. Plaintiffs are environmental groups who brought an action to enjoin the project, alleging it violates the Endangered Species Act (16 U.S.C. § 1531 et seq.) because the U.S. Fish and Wildlife Service did not adequately study the effect of the project on grizzly bears and Canada lynx. A federal trial court initially enjoined the project but later dissolved the injunction and granted summary judgment in favor of the Forest Service. In affirming, the Ninth Circuit Court of Appeals stated: “Under the Plan, the Forest Service fulfills its obligations as long as it does not take actions incompatible with the stated goal of ‘[p]rovid[ing] habitat for viable populations of all indigenous wildlife species and for increasing populations of big game animals’ in the forest as a whole.” (Native Ecosystems Council v. Marten (9th Cir., Feb. 22, 2018) 2018 U.S. App. LEXIS 4215.)

PACA Trusts.

The Perishable Agricultural Commodities Act (PACA; 7 U.S.C. §§ 499a–499s) was first enacted in 1930 and amended in 1984 to prevent unfair business practices and promote financial responsibility in the fresh fruit and produce industry. PACA creates a statutory trust to remedy the burden created when lenders have a superior security interest to the growers in perishable agricultural commodities. This action was brought by the growers under PACA after they sold their product to a distributor that later failed. The distributor sold the product on credit to third parties and transferred the accounts receivable to a factoring agent. The growers never received full payment for their product. In this action, the growers contend the accounts receivable remain trust property, arguing the growers hold an interest superior to that of any secured lender. A federal district court granted summary judgment in favor of the factoring agent. The Ninth Circuit Court of Appeals sitting en banc reversed and remanded the matter for the trial court to determine whether the transaction at issue was a true sale or a lending agreement. (S & H Packing & Sales Co. v. Tanimura Distrib. (9th Cir., Feb. 22, 2018) 2018 U.S. App. LEXIS 4216.)

It Ain’t Over ‘til the FAA Lady Sings.

An employer and employee agreed to arbitrate nearly all disputes, and the policy was governed “solely by the Federal Arbitration Act.” Section 1 of the Federal Arbitration Act (FAA) expressly exempts from its coverage all “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” The appeals court found there is substantial evidence that the employee was a driver who transported goods—often across state lines—and therefore qualified for the exemption. The trial court also found the arbitration agreement’s class action waiver unenforceable. The Court of Appeal analyzed the issue under the four-part test found in Gentry v. Superior Court (2007) 42 Cal.4th 443, and concluded that the trial court’s factual determinations were supported by substantial evidence. (Muro v. Cornerstone Staffing Solutions, Inc. (Cal. App. 4th Dist., Div. 1, Feb. 23, 2018) 2018 Cal. App. LEXIS 142.)


The Employee Retirement Income Security Act of 1974 (ERISA; Pub. L. 93-406, 88 Stat. 829; codified at 29 U.S.C. § 1001 et seq.) imposes fiduciary duties on various parties in connection with retirement plans. A federal trial court found that a provider breached its fiduciary duties to plan beneficiaries first when negotiating with an employer about providing services to the plan and later when withdrawing predetermined fees from plan funds. The Ninth Circuit Court of Appeals found otherwise and reversed. The appeals court held that a plan administrator is not an ERISA fiduciary when negotiating its compensation with a prospective customer. (Santomenno v. Transamerica Life Ins. Co. (9th Cir., Feb. 23, 2018) 2018 U.S. App. LEXIS 4372.)

Psychiatric Injury in Workers’ Compensation Arena.

A construction laborer was operating a soil compactor when he was injured. When the compactor hit a rock, it rose in the air, causing the worker to fall backward. The compactor landed on top of the worker. The workers’ compensation judge determined the worker sustained an injury to his back and his psyche, and that the psychiatric injury was caused by a “sudden and extraordinary employment condition.” The State Compensation Insurance Fund (SCIF), the carrier for the employer, unsuccessfully petitioned for reconsideration and thereafter filed a petition for review. In annulling the order, the Court of Appeal stated: “[The worker] failed to meet his burden of proving that a ‘sudden and extraordinary employment condition’ caused his injury. ([Lab. Code,] § 3208.3, subd. (d).) [The worker] did not provide any evidence establishing that it is ‘uncommon, unusual, and totally unexpected’ for a rock to be in soil, for a compactor to rise when striking a rock, or for an operator to become unbalanced and to fall when the compactor rises on a 45-degree hillside. [] Indeed, he did not introduce any evidence regarding what regularly or routinely happens if a compactor hits a rock on a slope.” (State Comp. Ins. Fund v. Workers’ Comp. Appeals Bd. (Cal. App. 6th Dist., Feb. 23, 2018) 2018 Cal. App. LEXIS 144.)

Warrantless Entry to Home by Police Enough to Proceed in Court for Civil Rights Violation.

Police were called to a home because of a domestic dispute. A man argued with his girlfriend, who was trying to leave the house with the couple’s nine-month-old baby. By the time the police arrived, everyone but the man was outside and safe. The man locked the door to the home. There was no indication he had a weapon or posed a danger to anyone. The man failed to respond when police attempted to contact him, so the police broke into the house. Even then, the man tried to shut the door to the officers. Police forced their way inside, threw the man down, and stunned him several times with a taser. The Ninth Circuit Court of Appeals ruled this warrantless entry violated the Fourth Amendment and the officers are not entitled to immunity. (Bonivert v. City of Clarkston (9th Cir., Feb. 26, 2018) 2018 U.S. App. LEXIS 4625.)

Court of Appeal Affirms Denial of Hospital’s Petition to Order Arbitration.

The trial court denied a defendant hospital’s petition to compel arbitration in a negligence, willful misconduct, elder abuse, and wrongful death action against the hospital. Years earlier, the patient had executed a power of attorney form, naming his son as his agent. In 2015, the patient was 87 years old and admitted to the hospital. The signature line on an arbitration agreement was stamped “unable to sign” followed by the word “son.” The son signed the arbitration agreement on his father’s behalf. The patient died five days after admission, allegedly as a result of the hospital’s negligence. In 2016, the son filed this action. The hospital filed its petition to compel arbitration, arguing the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) applied, no traditional defenses to contract law applied, and that the agreement was enforceable to both the patient and his son. The trial court exercised its discretion under Code of Civil Procedure § 1281.2, subdivision (c) to refuse to order arbitration, citing the risk of inconsistent judgments. On appeal, defendant conceded the son did not sign the agreement in his individual capacity, but nonetheless argued the son’s wrongful death action is subject to arbitration. The Court of Appeal noted that the arbitration agreement does not mention the FAA at all but does mention California law several times.  The appeals court also noted the complaint sounds in professional negligence, but its primary basis is elder abuse, stating: “The fact that they could have also pleaded a claim for medical malpractice, had they wished to do so, is irrelevant.” In affirming, the appellate court stated: “There is simply no evidence that when [the son] signed the agreement as his father’s agent, he had any intent to waive his right to a jury trial for any personal claims.” (Avila v. Southern California Specialty Care, Inc. (Cal. App. 4th Dist., Div. 3, Feb. 26, 2018) 2018 Cal. App. LEXIS 153.)

Domestic Violence Restraining Order.

The mother of a child obtained a domestic violence restraining order against the child’s father, the appellant in this appeal. The trial court renewed a previously-issued restraining order.  Additionally, the court modified the parenting plan to prohibit the father from attending the child’s after-school activities during the mother’s parenting time after finding he used the time as a pretext to harass and manipulate the mother in violation of the restraining order. In affirming, the Court of Appeal stated: “The trial court was within its discretion to conclude that the totality of the evidence indicated it was more probable than not there was a sufficient risk of future abuse to find that [the mother’s] apprehension was genuine and reasonable.”  The court further held that, “[t]he court’s order modifying the parenting plan to prohibit [the father] from attending extracurricular activities during [the mother’s] parenting time unless she gives him written permission is not vague and overbroad.” (Rybolt v. Riley (Cal. App. 3rd Dist., Jan. 31, 2018) 2018 Cal. App. LEXIS 149.)

Use of Plaintiff’s Pleading in Anti-SLAPP Motion.

Plaintiff is a DirectTV service provider. Defendant previously worked for plaintiff as a field installer. The parties disagree whether the fact that defendant no longer works for plaintiff results from a voluntary departure or wrongful termination. Plaintiff sued its former employee for intentional interference with contractual relations, breach of contract, breach of the implied covenant of good faith and fair dealing, and conversion. Basically, plaintiff alleges defendant encouraged other employees to quit and join the lawsuit. Defendants filed an anti-SLAPP motion, which the trial court denied. The Court of Appeal held that defendants could rely on the allegations in plaintiff’s complaint to show alleged pre-litigation communications were protected and did not need to make an additional evidentiary showing, stating: “We conclude that, if the complaint itself shows that a claim arises from protected conduct (supplemented, if appropriate, with the plaintiff’s description of the factual basis for its claim in its declarations), a moving party may rely on the plaintiff’s allegations alone in making the showing necessary under prong one without submitting supporting evidence.” Ultimately, the appellate court affirmed in part and reversed in part. (Bel Air Internet, LLC v. Morales (Cal. App. 2nd Dist., Div. 2, Feb. 26, 2018) 2018 Cal. App. LEXIS 147.)

Jury Verdict Reversed After Huge Award for Bad Faith.

A manufacturer of plumbing products sued its insurers in connection with product liability claims against it that resulted in litigation. The case proceeded to trial on plaintiff’s claim of bad faith. A jury awarded $1,073,868.80 for breach of contract, $8,259,712.31 for attorney fees on the bad faith claim, and $46,000,000 in punitive damages. The Court of Appeal reversed, stating: “We agree with the insurers there was error, beginning with the court’s allowance of the use of the RFA responses, compounded by the court’s intensive questioning of [a claim’s examiner], and compounded further by several errors in how the court handled [a claim’s examiner’s] invocation of the Fifth Amendment privilege. We conclude such error was prejudicial, and thus reverse on that ground, without the need to address the insurers’ other arguments.” (Victaulic Co. v. American Home Assurance Co. (Cal. App. 1st Dist., Div. 2, Feb. 26, 2018) 2018 Cal. App. LEXIS 146.)

Intentional Interference with Contract by a “Stranger” to the Contract.

A food and beverage broker sued a national food retailer for intentional interference with contractual relations, negligent interference with prospective economic advantage, and unfair competition. The broker alleges an executive with the national retailer spread false rumors about the brokerage in order to discourage two food corporations from dealing with the brokerage, resulting in termination of a brokerage contract with a food corporation. The trial court sustained the national retailer’s demurrer without leave to amend. The Court of Appeal discussed the meaning of the rule from Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503 that only “a stranger to the contract” can be liable in tort for intentional interference with contract. The Court of Appeal concluded that a person “who is not a party to the contract or an agent of a party to the contract is a ‘stranger’ for purpose of the tort of intentional interference with contract,” and reversed.  (Redfearn v. Trader Joe’s Co. (Cal. App. 2nd Dist., Div. 7, Feb. 27, 2018) 2018 Cal. App. LEXIS 148.)

Declaration of Party Appraiser Inadmissible to Challenge the Appraisal Award.

After a trial court granted a petition to compel an appraisal and the appraisers made their decision, one of the parties challenged the award on the ground the appraisers exceeded their authority. The challenger offered a declaration from its selected appraiser that described the appraisal proceedings. The other party asserted objections to the declaration under Evidence Code section 703.5 [““No . . . arbitrator or mediator, shall be competent to testify . . .” ], which the trial court overruled. On appeal, the party seeking vacation of the award challenged the admission of the party appraiser’s declaration. The Court of Appeal stated: “The court’s ruling thus presents a question of statutory interpretation—whether the term ‘arbitrator,’ as used in the statute, applies to party-selected appraisers. . . . For the reasons discussed below, we conclude the term ‘arbitrator’ encompasses all the members of the appraisal panel.” The appellate court determined the trial court erred in admitting the declaration. (Khorsand v. Liberty Mutual Fire Ins. Co. (Cal. App. 2nd Dist., Div. 4, Feb. 27, 2018) 2018 Cal. App. LEXIS 154.)

Failure to Serve a “Roe” Defendant Within Three Years Results in Dismissal of Cross-Complaint.

In a wrongful death action after a helicopter crash, two cross-complainants each designated the petitioner here as a Roe cross-defendant. In this petition for writ of mandate, the petitioner challenges the trial court’s order denying its motion to quash service of summons and dismiss the cross-complaints, citing Code of Civil Procedure § 418.10. An alternative writ was issued directing the trial court to vacate its order, or to show cause why the relief sought in the petition should not be granted. The court elected not to comply with the alternative writ. The Court of Appeal issued the writ after determining service was attempted beyond the three-year statutory period and the real party “offers no valid exception to this rule.” (Inversiones Papaluchi S.A.S. v. Superior Court (Cal. App. 2nd Dist., Div. 5, Feb. 14, 2018) 2018 Cal. App. LEXIS 162.)

Property Owner Not Liable for Death of Independent Contractor Window Washer.

Plaintiffs are the surviving wife and children of decedent, who fell to his death while washing windows of a building owned by defendant. Plaintiffs sued defendant for negligence and negligence per se, alleging that decedent was fatally injured because defendant failed to install structural roof anchors, as required by statute, to which decedent could attach a descent apparatus. Defendant moved for summary judgment, contending plaintiffs’ suit was barred by Privette v. Superior Court (1993) 5 Cal.4th 689 and subsequent cases. The trial court agreed and granted summary judgment for defendant. The Court of Appeal affirmed, stating: “Privette and its progeny hold that when a property owner hires an independent contractor, the property owner is not liable for injuries sustained by the contractor’s employees unless the defendant’s affirmative conduct contributed to the injuries. In the present case, the undisputed evidence was that [defendant] did not direct how the window washing should be done nor otherwise interfere with the means or methods of accomplishing the work. Accordingly, summary judgment was properly granted.”  (Delgadillo v. Television Center, Inc. (Cal. App. 2nd Dist., Div. 3, Feb. 2, 2018) 2018 Cal. App. LEXIS 161.)

Summary Judgment for Landlord Affirmed Where Tenant Produced No Evidence of Cause of a Fire.

 A fire in an upstairs apartment caused injuries to several tenants, the plaintiffs here, who sued their landlord for negligence. It was undisputed that the heat source of the fire’s ignition was a gas wall heater in the upstairs apartment, but it was uncertain what actually caused the fire to ignite. One possibility was the heater malfunctioned; another was that plaintiffs placed combustible material too close to the heater. In his deposition, the fire chief investigator was asked whether he determined why the heater malfunctioned.  He responded:  “No. And I noted that in my report, that without forensic testing on the wall heater, itself, there’s no—all I know—all I can tell you for certainty is that the wall heater was the ignition source. I have no idea whether it malfunctioned or if a blanket was thrown onto it or if the couch was too close. All I can tell you is that was the source of the ignition.” Defendant’s expert only identified possible causes. Based on the fire chief’s deposition and the expert declaration, defendant filed a motion for summary judgment on the ground plaintiffs were unable to establish causation, an essential element of a negligence cause of action. Plaintiffs failed to produce any evidence in opposition to the motion. The trial court found defendant met his initial burden of showing plaintiffs could not prove causation, and thus the burden shifted to plaintiffs to set forth evidence demonstrating a triable issue of material fact. Since plaintiffs failed to do so, the trial court granted defendant’s motion for summary judgment. The Court of Appeal affirmed. (Leyva v. Garcia (Cal. App. 5th Dist., Feb. 7, 2018) 2018 Cal. App. LEXIS 166.) 


Copyright Cases Are Not a Snap.

Plaintiff, a photographer, sued Nike alleging that Nike infringed his copyright in a photograph of Michael Jordan when it commissioned its own photograph of Jordan and then used that photo to create its “Jumpman” logo. Plaintiff also alleged a claim for violation of the Digital Millennium Copyright Act (17 U.S.C. § 1202).  Plaintiff’s photograph originally appeared in Life magazine as part of a photo essay featuring American athletes who would compete in the 1984 Summer Olympic Games. It depicts Jordan leaping toward a basketball hoop with a basketball raised above his head in his left hand. Plaintiff had instructed Jordan on the precise pose he wanted Jordan to assume. Not long after plaintiff’s photograph appeared in Life magazine, Nike contacted him and asked to borrow color transparencies of the photo. Plaintiff provided Nike with two color transparencies for $150 under a limited license authorizing Nike to use the transparencies “for slide presentation only.” In late 1984 or early 1985, Nike hired a photographer to produce its own photograph of Jordan, one obviously inspired by plaintiff’s. In the Nike photo, Jordan is again shown leaping toward a basketball hoop with a basketball held in his left hand above his head, as though he is about to dunk the ball. In 1987, Nike created its iconic “Jumpman” logo, a solid black silhouette that tracks the outline of Jordan’s figure as it appears in the Nike photo. Over the past three decades, Nike has used the Jumpman logo in connection with the sale and marketing of billions of dollars of merchandise. It has become one of Nike’s most recognizable trademarks. A federal trial court dismissed plaintiff’s claims with prejudice after concluding that neither the Nike photo nor the Jumpman logo infringes plaintiff’s copyright as a matter of law. The Ninth Circuit Court of Appeals reviewed de novo. In affirming, the appeals court stated: “We conclude that the works at issue here are as a matter of law not substantially similar. Just as [plaintiff] made a series of creative choices in the selection and arrangement of the elements in his photograph, so too Nike’s photographer made his own distinct choices in that regard. Those choices made produced an image that differs from [plaintiff’s] photo in more than just minor details,” and “[i]f the Nike photo cannot as a matter of law be found substantially similar to [plaintiff’s] photo, the same conclusion follows ineluctably with respect to the Jumpman logo.” (Rentmeester v. Nike, Inc. (9th Cir., Feb. 27, 2018) 2018 U.S. App. LEXIS 4817.)

Amount of Interest When Unemployment Benefits Wrongfully Withheld.

The question in this case is a narrow one, involving the correct rate of interest to be applied after a court determines that unemployment benefits have been wrongfully withheld by the Employment Development Department (EDD) and the California Unemployment Insurance Appeals Board. Appellant argues that interest should be charged at the contract rate of 10 percent from the date that each benefit payment was due, in accordance with Civil Code § 3289, subdivision (b). EDD, in contrast, asserts that interest should be calculated at the rate of 7 percent pursuant to article XV, section 1 of the California Constitution and Government Code § 965.5, subdivisions (a) and (d). The trial court applied the rate of 7 percent as urged by EDD. The Court of Appeal reversed, stating: “We conclude that the trial court applied the incorrect interest rate to the wrongfully withheld benefits at issue. Accordingly, we reverse for recalculation of interest, but affirm in all other respects.”  (Brown v. California Unemployment Ins. Appeals Bd. (Cal. App. 1st Dist., Div. 4, Feb. 28, 2018) 2018 Cal. App. LEXIS 163.)

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