Litigation

Litigation Update: November 2022

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

  • Senior Editor, Eileen C. Moore, Associate Justice, California Court of Appeal, Fourth District, Division Three
  • Managing Editor, Julia C. Shear Kushner
  • Editors, Dean Bochner, Jonathan Grossman, Jennifer Hansen, Gary A. Watt, David Williams, Ryan Wu
Child Sex Tourism.

A criminal defendant was arrested returning from the Philippines, where he engaged in sex tourism involving minors. He arranged for his illegal activities through online messaging services provided by Yahoo and Facebook. He was convicted of two crimes and sentenced to 300 months in prison. On appeal, he argued that the evidence seized from his electrical devices upon arrest should have been suppressed because Yahoo and Facebook were acting as government agents when they searched his online accounts. Affirming, the Ninth Circuit stated, “the ESPs’ [electronic service communications providers] desire to purge child pornography from their platforms and enforce the terms of their user agreements is a legitimate, independent motive apart from any interest that the ESPs had in assisting the government in apprehending [defendant].” (United States v. Rosenow (9th Cir. Oct. 3, 2022) 50 F.4th 715.)

https://cdn.ca9.uscourts.gov/datastore/opinions/2022/10/03/20-50052.pdf

Bond Flippers Found to Be Brokers Under the SEC.

When municipal bonds are offered, there is an order priority. The order priority is significant because demand usually outpaces supply. Investors with low priority may not receive bonds even if they place an order. Defendants were so called “bond flippers,” who would purchase newly issued municipal bonds and immediately sell them on the secondary market for a profit, using the capital of a man named Riccardi and his company. They did not register as brokers with the U.S. Securities & Exchange Commission (SEC). The SEC sued defendants, including Riccardi, alleging violation of 15 U.S.C. § 78c(a)(4)(A) for not registering as brokers. The SEC separately alleged the defendants, other than Riccardi, violated § 10b of the SEC Act and Rule 10b-5, which prohibit the use of “any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe.” The district court granted summary judgment for the SEC. Affirming, the Ninth Circuit stated: “Because Appellants put Riccardi’s capital at risk on their trades and acted as his agents, they behaved as ‘brokers’ under the Exchange Act. And by not registering as brokers with the SEC, Appellants appeared as if they were merely retail investors (who receive priority for municipal bonds), allowing them to circumvent municipal bond purchasing order priority. . . . [Appellant] also made material misrepresentations in violation of § 10(b) and Rule 10b-5 when she lied about her zip code to obtain high priority municipal bond allocations.” (U.S. Securities & Exchange Commission v. Murphy (9th Cir. Oct. 4, 2022) 50 F.4th 832.)

https://cdn.ca9.uscourts.gov/datastore/opinions/2022/10/04/21-55178.pdf

Lack of Substantial Custodial Relationship with Patient Thwarted Elder Abuse Claim.

An elderly man, now deceased, went to defendant’s emergency room where he underwent a magnetic resonance imaging (MRI) scan. Afterward, he complained of pain on his abdomen, and a burn was found. A jury concluded that plaintiff, the decedent’s estate, had proved recklessness, oppression, or malice by clear and convincing evidence and that an officer, director, or managing agent of defendant had authorized this conduct. However, the jury awarded no damages. The trial court granted judgment notwithstanding the verdict on the elder abuse claim brought pursuant to Welfare and Institutions Code, § 15600 et seq. Affirming, the Court of Appeal agreed with the trial court’s conclusion there was insufficient evidence that defendant had a substantial caretaking or custodial relationship with decedent, which was a prerequisite for recovery for neglect under the Act. (Kruthanooch v. Glendale Adventist Medical Center (Cal. App. 2nd Dist., Div. 3, Oct. 4, 2022) 83 Cal.App.5th 1109.)

https://www.courts.ca.gov/opinions/documents/B306423.PDF

Trial Court Erred in Denying Leave to Amend Complaint.

Plaintiff’s insurer denied plaintiff’s claim for costs incurred to clean, disinfect, and test its facilities for the coronavirus that causes COVID-19. Plaintiff’s claim was made under a policy with both communicable disease coverage and loss avoidance and mitigation extensions. The trial court sustained without leave to amend the insurance company’s demurrer. At the hearing, plaintiff’s general counsel stated that he was “responsible for interacting with the counties [about] COVID and keeping our 2,500 employees safe.” While insisting that the complaint was sufficient, he added, “we’re happy, if necessary, to go into further detail to amend the complaint.” Representing that he had “had specific calls with the county” and has “correspondence and communications where in response to our location, they directed us to clean, disinfect and do other such steps,” he offered “to amend and include further information on that point.” The Court of Appeal reversed and instructed the trial court to grant plaintiff leave to amend. (Amy’s Kitchen, Inc. v. Fireman’s Fund Ins. Co. (Cal. App. 1st Dist., Div. 4, Oct. 4, 2022) 83 Cal.App.5th 1062.)

https://www.courts.ca.gov/opinions/documents/A163767.PDF

No Selling the Blessed Sacrament.

Defendants own a church, whose adherents consume cannabis blessed by church pastors as “sacrament.” The County of San Bernardino determined that the church, routinely sold cannabis products in violation of a county ordinance prohibiting commercial cannabis activity on unincorporated county land. The trial court found that the church was operating an illegal cannabis dispensary and issued a permanent injunction against defendants, among other relief. Defendants contended the injunction violated the Religious Land Use and Institutionalized Persons Act of 2000 (42 U.S.C. § 2000cc et seq.; RLUIPA). Affirming, the Court of Appeal stated: “The Church’s only relevant religious practice is the use of blessed cannabis products, which its adherents consider to be their sacrament. The County ordinance, however, does not prohibit appellants from possessing, blessing, or consuming cannabis products. The ordinance bans only commercial cannabis activity, including selling and dispensing cannabis, whether for profit or otherwise.” (County of San Bernardino v. Mancini (Cal. App. 4th Dist., Div. 2, Oct. 5, 2022.) 83 Cal.App.5th 1095.)

https://www.courts.ca.gov/opinions/documents/E075246.PDF

Plaintiff May Proceed with Action Against Debt Collector.

Plaintiff alleged her employer told her in November 2019 that it had received an order to garnish her wages. Upon learning this, plaintiff claimed she investigated and only then discovered the existence of a 2010 default judgment against her and in favor of defendant for a debt of $8,529.93 plus interest. Plaintiff further contended that she had never been served with process in the underlying lawsuit the creditor/debt collector brought against her and had no knowledge of the lawsuit or the judgment before 2019. Included in her complaint were equitable causes of action for vacatur of the default judgment and a cause of action for damages under the Rosenthal Fair Debt Collection Practices Act (Civ. Code, § 1788 et seq.). The trial court granted defendant’s anti-SLAPP motion. Reversing, the Court of Appeal held that plaintiff produced prima facie evidence that defendants falsely represented substituted service on her was effected in the debt collection lawsuit. Further, she was not required under § 1788.17 of the Rosenthal Act to show that defendants knowingly made a false representation, and that provision controls over § 1788.15 (a) that states knowledge is a required element, to the extent the two sections are inconsistent. (Young v. Midland Funding, LLC (Cal. App. 1st Dist., Div. 4, Oct. 7, 2022) 84 Cal.App.5th 34.)

https://www.courts.ca.gov/opinions/documents/A161843.PDF

Muslim Prisoner Contends He Is Harassed While Trying to Pray.

A Muslim prisoner in Arizona contended he was unable to pray five times a day as the Qur’an requires. He sued the prison and the state under the Religious Land Use and Institutionalized Persons Act (42 U.S.C. §§ 2000cc, et seq.; RLUIPA) because he was housed with people who harassed him as he prayed. He appealed after the district court granted defendants’ judgment on the pleadings. The Ninth Circuit affirmed, stating: “The Equal Protection Clause prohibits the government from classifying people based on suspect classes, unless the classification is narrowly tailored to satisfy a compelling governmental interest (i.e., the government’s action passes strict scrutiny). [Citation.] Religion is a suspect class. [Citation.] Accordingly, housing prisoners based on their religious beliefs and practices would result in classifying them based on membership in a suspect class, and would violate the Equal Protection Clause unless the classification satisfies strict scrutiny.” The prisoner sought an en banc rehearing, which was denied. (Al Saud v. Days (9th Cir., Oct. 11, 2022) 50 F.4th 705.)

https://cdn.ca9.uscourts.gov/datastore/opinions/2022/10/11/21-15089.pdf

ABC Test Tested.

Plaintiffs sought a preliminary injunction to restrain the California Attorney General from applying California’s “ABC test,” codified in Labor Code § 2775(b)(1), to classify plaintiffs’ doorknockers and signature gatherers as either employees or independent contractors. Plaintiff Mobilize the Message provides political campaigns with doorknockers and signature gatherers, which it purports to hire as independent contractors. Plaintiff Moving Oxnard Forward is a nonprofit corporation dedicated to making the government of Oxnard, California, more efficient and transparent and in the past has hired signature gatherers as independent contractors. Plaintiffs claimed that California law violates the First Amendment because it discriminates against speech based on its content: While plaintiffs’ doorknockers and signature gatherers are classified as employees or independent contractors under the ABC test, a less stringent test applies when classifying direct sales salespersons, newspaper distributors, and newspaper carriers under S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341 (1989). The district court denied plaintiff’s request for a preliminary injunction. Affirming, the Ninth Circuit found plaintiffs had not established a colorable claim that their First Amendment rights had been infringed, or were threatened with infringement. (Mobilize the Message, LLC v. Bonta (9th Cir., Oct. 11, 2022) 50 F.4th 928.)

https://cdn.ca9.uscourts.gov/datastore/opinions/2022/10/11/21-55855.pdf

Liquidated Damages Provision in a Settlement Agreement.

This action involves 20 separate medical malpractice lawsuits. Plaintiffs and defendants resolved the underlying lawsuits by entering into a global settlement agreement pursuant to which defendants agreed to pay plaintiffs $575,000 in two installments. If the installments were not paid on time, liquidated damages would be assessed at the rate of $50,000 per month and $1,644 per day, up to a cap of $1.5 million. When defendants failed to pay either installment, plaintiffs filed a motion to enforce the settlement agreement, including the liquidated damages provision. Defendants opposed the motion, arguing the liquidated damages provision was unreasonable and thus invalid pursuant to Civil Code § 1671. The trial court found defendants failed to establish the provision was unreasonable under the circumstances, and it entered judgment against defendants in the amount of $1,393,084 (the settlement amount of $575,000 plus $818,084 in liquidated damages). Affirming, the Court of Appeal stated: “Here, the trial court considered the fact that the ‘settlement was negotiated with the assistance of counsel and after numerous drafts were exchanged between the parties,’ and the liquidated damages provision in particular involved ‘significant negotiations.’ In other words, these were parties with relatively equal bargaining power who were represented by counsel, and the liquidated damages provision was not part of a form contract such that Defendants might have been unaware of what they were agreeing to. The Legislature has expressly directed courts to consider circumstances such as these, and all of these circumstances support the trial court’s finding that the provision is not unreasonable.” (Gormley v. Gonzalez (Cal. App. 3rd Dist., Oct. 12, 2022) 84 Cal.App.5th 72.)

https://www.courts.ca.gov/opinions/documents/C093201.PDF

Federal Government Project Will Increase Greenhouse Gases.

An environmental group brought an action against the federal government challenging its approval to expand a coal mine in south-central Montana. Plaintiffs contended the project would increase the emission of greenhouse gases. The district court granted summary judgment for the Department of Interior on all but one cause of action. The Ninth Circuit affirmed in part and reversed in part, and held that the Department of Interior violated the National Environmental Policy Act (42 U.S.C. § 4321 et seq.) by failing to provide a convincing statement of reasons why the project’s impacts were insignificant. The court remanded for additional factfinding in order to determine whether vacatur of the project is required. (350 Montana v. Haaland (9th Cir., Oct. 14, 2022) 50 F.4th 1254.)

https://cdn.ca9.uscourts.gov/datastore/opinions/2022/10/14/20-35411.pdf

Previously we reported:
Petition to Compel Arbitration Denied.

Three delivery drivers sued Domino’s Pizza on behalf of themselves and a putative class, asserting violations of various California labor laws. Domino’s moved to compel arbitration pursuant to its contracts with the drivers. The district court denied the motion, finding that the drivers are a “class of workers engaged in foreign or interstate commerce,” and are therefore exempt from the requirements of the Federal Arbitration Act (9 U.S.C. § 1; FAA). Affirming, the Ninth Circuit compared this situation with the one in Rittmann v. Amazon.com, Inc. (9th Cir. 2020) 971 F.3d 904, stating: “Like Amazon, Domino’s is directly involved in the procurement and delivery of interstate goods; the D&S drivers, like the Amazon package delivery drivers, transport those goods ‘for the last leg’ to their final destinations. [Citation.] Like Amazon, Domino’s is involved in the process from beginning to the ultimate delivery of the goods to their destinations and its ‘business includes not just the selling of goods, but also the delivery of those goods.’ ” (Carmona v. Domino’s Pizza, LLC (9th Cir., Dec. 23, 2021) 21 F.4th 627.)

https://cdn.ca9.uscourts.gov/datastore/opinions/2021/12/23/21-55009.pdf

The latest:

The United States Supreme Court vacated the judgment of the Ninth Circuit, stating: “The judgment is vacated, and the case is remanded to the United States Court of Appeals for the Ninth Circuit for further consideration in light of Southwest Airlines Co. v. Saxon, 596 U. S. ___ (2022).” (Domino’s Pizza v. Carmona (U.S., Oct. 17, 2022) 2022 WL 9552609.)

https://www.supremecourt.gov/orders/courtorders/101722zor_9ok0.pdf

Accusation Against Mobile Home Operators by Department of Real Estate.

Plaintiffs operated a mobile home park. The Department of Real Estate, defendant here, accused plaintiffs of violating various provisions and regulations of real estate law and the Health and Safety Code. An administrative law judge (ALJ) found plaintiffs violated the statutes and regulations. Plaintiffs filed a petition for a writ of administrative mandate in the superior court, contending they did not receive a fair hearing. Among other things, they argued that the ALJ considered improper evidence, including expert testimony from several witnesses who defendant did not designate as experts. The trial court denied the petition, ruling that the ALJ did not consider any improper evidence and, after conducting an independent review of the evidence, that plaintiffs violated the applicable statutes. Affirming, the Court of Appeal agreed that plaintiffs received a fair hearing before the ALJ. (Miller v. Department of Real Estate (Cal. App. 2nd Dist., Div. 7, Oct. 17, 2022) 2022 WL 9689825.)

https://www.courts.ca.gov/opinions/documents/B311510.PDF

“This case demonstrates the unfortunate reality that some members of the legal profession have not demonstrated the yearned-for professionalism.” Court of Appeal for the Fourth District, Division Three.

In the course of the underlying lease dispute, defendant (CFI) asked plaintiff (Shapell) to direct communications regarding the subject lease to CFI’s counsel. Despite that request, Shapell’s counsel never communicated with CFI’s counsel before requesting default and default judgment from the trial court. Shapell’s counsel also did not provide either the complaint or the request for entry of default and default judgment to CFI’s registered agent for service of process, CFI’s corporate headquarters, or the address given in the Lease for service of notices to CFI. The trial court denied CFI’s motion to set aside the default and default judgment on these grounds. Reversing and ordering the matter remanded to a different judge, the Court of Appeal stated: “An attorney has both an ethical and statutory obligation to warn opposing counsel, if counsel’s identity is known, of an intent to seek a default and to give counsel a reasonable opportunity to file a responsive pleading.” (Shapell Socal Rental Properties, LLC v. Chico’s FAS, Inc. (Cal. App. 4th Dist., Div. 3, Oct. 17, 2022) 2022 WL 9755390, as modified (Oct. 31, 2022).)

https://www.courts.ca.gov/opinions/documents/G060411M.PDF

Trial Court Erred in not Permitting Cross Examination.

A residential hotel that provides supportive housing to homeless persons filed a petition for a workplace restraining order against defendant. Both parties were represented by counsel at a hearing. The trial court refused to allow defendant’s counsel to cross-examine one of plaintiff’s employees, concluding that the hearing was not a court trial, and there was no authority to allow cross-examination at such a hearing. The trial court then granted the hotel a three-year workplace violence restraining order based on “clear and convincing evidence” that had “been supported” and was “logical” and “believable.” Reversing, the Court of Appeal stated: “Courts have long recognized the importance of cross-examination and its crucial relationship to the ability to defend against accusations, deeming it a due process right that is fundamental to a fair proceeding.” (CSV Hospitality Management LLC v. Lucas (Cal. App. 4th Dist., Div. 1, Oct. 17, 2022) 2022 WL 9744258.)

https://www.courts.ca.gov/opinions/documents/A163345.PDF

Discovery Order Reviewed via Writ of Mandate Because Question of First Impression.

Does the 45-day time period to file a motion to compel further responses to interrogatories begin to run upon service of a combination of unverified responses and objections if the motion challenges only the objections? The Court of Appeal held: “The most reasonable construction of the applicable statutes seems to us to require verification of such a hybrid of responses and objections before the time period begins to run.” (Golf & Tennis Pro Shop, Inc. v. Superior Court of Orange County (Cal. App. 4th Dist., Div. 3, Oct. 17, 2022) 2022 WL 9833211.)

https://www.courts.ca.gov/opinions/documents/G060852.PDF

Trial Court’s Reduction of Punitive Damages Award to Four Times Compensatory Damages Reversed.

These appeals stemmed from the nationwide litigation related to the emissions defeat devices installed in certain Volkswagen and Audi vehicles. Plaintiffs opted-out of the class action and pursued their claims individually. After a three-phase trial, the district court awarded plaintiffs damages, but reduced the award of punitive damages to exactly four times the amount of compensatory damages suffered by each plaintiff. Reversing and remanding, the Ninth Circuit stated: “We conclude that in the circumstances here, a punitive damages award of approximately 8 times that of the compensatory damages award fairly comports with due process requirements under the Supreme Court’s Gore and State Farm guidelines. [(BMW of North America, Inc. v. Gore, 517 U.S. 559, 575 (1996); State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003).)].” (Riley v. Volkswagen Group of America, Inc. (9th Cir., Oct. 18, 2022) 51 F.4th 896.)

https://cdn.ca9.uscourts.gov/datastore/opinions/2022/10/18/20-15882.pdf

Some Deputies Entitled to Qualified Immunity for Excessive Force Claim, but Others Are Not.

Decedent’s wife sued following a fatal encounter between her husband and members of the Orange County Sheriff’s Department. Five deputies responded to a 911 call reporting that the man was acting erratically and threatening someone with a firearm. The deputies asserted that the man ignored their warnings, picked up a gun, and began raising it toward them. At that point, two deputies shot and killed the man. The man’s wife sued the deputies under 42 U.S.C. § 1983, claiming that they violated her husband’s Fourth Amendment right to be free from excessive force and her own Fourteenth Amendment right to a familial relationship. The district court denied the deputies’ motion for summary judgment, and the deputies appealed. Affirming in part and reversing in part, the Ninth Circuit stated: “On the excessive-force claim, we conclude that the deputies who shot [the deceased man] are not entitled to qualified immunity, but that the deputies who did not shoot him are entitled to qualified immunity. On the familial-association claim, we conclude that all of the deputies are entitled to qualified immunity.” (Peck v. Montoya (9th Cir., Oct. 18, 2022) 51 F.4th 877.)

https://cdn.ca9.uscourts.gov/datastore/opinions/2022/10/18/20-56413.pdf

Motion for Class Certification Denied.

Plaintiff filed a class action against defendant medical group, claiming that it failed to secure patients’ personal information, which allowed a former employee to download private medical information concerning more than 5,000 patients and take it with her when she left her employment with defendant. Among other causes of action, the complaint alleged that defendant violated the Confidentiality of Medical Information Act (Civ. Code, § 56 et seq.; CMIA) by negligently releasing class members’ confidential medical information. Several months after initiating the action, plaintiff filed a motion for class certification. The trial court denied the motion, finding as to the CMIA claim that each class member would have to show that the confidential nature of his or her medical information had been breached by an unauthorized party by Sutter Health v. Superior Court (2014) 227 Cal.App.4th 1546, and therefore common issues would not predominate. Affirming, the Court of Appeal stated: “[Plaintiff] appeals, asserting that the trial court relied on an erroneous reading of the CMIA and that a breach of confidentiality can be shown on a class wide basis. We reject those arguments, and we affirm, concluding that the trial court properly applied the CMIA and exercised its discretion in denying class certification.” (Vigil v. Muir Medical Group IPA, Inc. (Cal. App. 1st Dist., Div. 2, Oct. 18, 2022) 2022 WL 10239738.)

https://www.courts.ca.gov/opinions/documents/A160897.PDF

Arbitration Agreement Added Three Years After Plaintiff Joined Program.

Plaintiff signed up for a loyalty program when he bought a pair of shoes and socks from defendant. Plaintiff said he was unaware of an automatic subscription fee for the program and didn’t discover the fee until he had paid for four years of renewals. Once he discovered these payments, he joined a class action as a named plaintiff. Defendant contended plaintiff was bound by an arbitration provision it added to the agreement three years after plaintiff enrolled in the loyalty program. and that Defendant contended plaintiff had constructive knowledge of the agreement to arbitrate through his class action lawyer. The trial court denied the petition to arbitrate. Affirming, the Court of Appeal stated: “We disagree this is sufficient under California law to prove consent to or acceptance of an agreement to arbitrate.” (Costa v. Road Runner Sports, Inc. (Cal. App. 4th Dist., Div. 1, Oct. 18, 2022) 2022 WL 10279623.)

https://www.courts.ca.gov/opinions/documents/D079393.PDF

Suing Immigration Consultants.

The Immigration Consultant Act (Bus. & Prof. Code, § 22440 et seq.; ICA) requires an immigration consultant to procure and file a bond in the amount of $100,000. Any person who suffers damages by reason of the immigration consultant’s fraud, misrepresentation, or failure to provide services has a right of action against the consultant and the surety on the bond. And any person who believes an ICA violation has been committed may bring a civil action “on behalf of the general public” seeking solely injunctive relief. In October 2017, plaintiff filed more than 90 such actions against immigration consultants, two of whom had bonds issued by defendant insurance company. After plaintiff prevailed in its lawsuit against those two consultants, plaintiff sued defendant to recover its attorney fees and costs against the ICA bond. The trial court granted summary judgment for defendant, concluding that plaintiff was not entitled to recover these litigation costs against an ICA bond. Affirming, the Court of Appeal stated: “[A] surety issuing a statutory bond is liable only to the extent indicated in the code section under which the surety executes the bond.” (Immigrant Rights Defense Council, LLC v. Hudson Insurance Company (Cal. App. 2nd Dist., Div. 4, Oct. 18, 2022) 2022 WL 10272740.)

https://www.courts.ca.gov/opinions/documents/B313878.PDF

Plaintiff’s Equal Pay Act Claim to Go to Trial.

Defendant employer terminated plaintiff’s employment after informing her that her position had been eliminated. Plaintiff sued defendant for gender discrimination, violation of the Equal Pay Act (Lab. Code, § 1197.5; EPA), and harassment. The trial court granted defendant’s motion for summary judgment. Affirming in part and reversing in part, the Court of Appeal remanded the case with directions to the trial court to enter a new order denying summary adjudication on the claim alleging an EPA violation, but granting summary adjudication on the remaining causes of action and punitive damages claims. (Allen v. Staples, Inc. (Cal. App. 2nd Dist., Div. 5, Oct. 18, 2022) 2022 WL 10347728.)

https://www.courts.ca.gov/opinions/documents/B311426.PDF

Defendant Waived the Right to Compel Arbitration by Waiting Too Long.

Plaintiff, a 92-year-old with dementia, lives in a residential care facility for the elderly. One of her daughters is conservator of her person and estate, and the other daughter is conservator of her person. The daughter who is conservator of her person and estate agreed to binding arbitration in any dispute against the estate. On February 28, 2022, plaintiff filed suit against the facility in her own name, alleging elder abuse. Defendant facility was served on March 10, and on March 15, the other daughter filed a petition to act as plaintiff’s guardian ad litem, which the court granted on March 21. On April 11, defendant filed opposition to plaintiff’s motion for preference, requesting 12 accommodations should the court grant the motion for preference, but not mentioning a petition to arbitrate. The trial court immediately set schedules for discovery and trial. On April 25, defendant demanded that plaintiff stipulate to arbitration. On May 4, defendant moved ex parte for an order shortening time to file a petition to compel arbitration. The court froze discovery and set a hearing for May 26. Finding defendant offered no explanation why it didn’t move to compel arbitration immediately after service of the complaint, the trial court denied defendant’s petition. Affirming, the Court of Appeal stated: “Under the unique facts of this case, we conclude substantial evidence supported the trial court’s waiver finding and affirm the order.” (Leger v. R.A.C. Rolling Hills L.P. (Cal. App. 4th Dist., Div. 1, Oct. 17, 2022) 2022 WL 10328841.)

https://www.courts.ca.gov/opinions/documents/D080705.PDF

The Added Cost of Building a House

A county imposed a traffic impact mitigation fee on plaintiff, who applied for a building permit for the construction of a single-family residence on his property. Plaintiff sued the county, alleging violation of Government Code § 66000 et seq. and the takings clause of the U.S. Constitution. The trial court sustained the county’s demurrer without leave to amend and denied his petition for writ of mandate. Finding no error, the Court of Appeal affirmed. (Sheetz v. County of El Dorado (Cal. App. 3rd Dist., Oct. 19, 2022) 2022 WL 10993726.)

https://www.courts.ca.gov/opinions/documents/C093682.PDF

CCP §§ 2023.010 and 2023.030 Require Violation of Some Other Provision of the Discovery Act Before Sanctions May Be Granted.

Defendant filed a motion for sanctions under §§ 2023.010 and 2023.030 of the Civil Discovery Act in the Code of Civil Procedure. The trial court awarded $2.5 million in sanctions for egregious misuse of the discovery process. Reversing, the Court of Appeal stated: “We hold that monetary discovery sanctions may be imposed under section 2023.030 only to the extent authorized by another provision of the Discovery Act. Section 2023.010 describes conduct that is a misuse of the discovery process, but does not authorize the imposition of sanctions. The plain language of the statutory scheme does not provide for monetary sanctions to be imposed based solely on the definitional provisions of sections 2023.010 or 2023.030, whether construed separately or together. We conclude that the sanctioned party met its burden on appeal to show error, because the award of monetary sanctions was not authorized by the statutes cited.” (City of Los Angeles v. PricewaterhouseCoopers, LLC (Cal. App. 2nd Dist., Div. 5, Oct. 20, 2022) 2022 WL 12010415.)

https://www.courts.ca.gov/opinions/documents/B310118.PDF

Agreement to Arbitrate Signed Under a Fictitious Name.

Plaintiff sued defendant and defendant moved to compel arbitration. The trial court denied the motion after finding that Business and Professions Code § 17918 barred defendant from enforcing an arbitration agreement made in the name of an unregistered fictitious business. Affirming, the Court of Appeal stated: “The trial court did not err. Section 17918 bars a party that regularly transacts business in California for profit under a fictitious business name from maintaining an action on a contract until a fictitious business name statement is filed. Substantial evidence supports the trial court’s finding [defendant] LAD-T was transacting business as DT Los Angeles Toyota. Although section 17918 is most commonly applied to prevent a plaintiff from maintaining an action on a contract in the name of the fictitious business, we conclude it also applies to bar a party from maintaining a motion to compel arbitration because the motion is in essence a suit in equity to compel performance of a contract—the arbitration agreement.” (Villareal v. LAD-T, LLC (Cal. App. 2nd Dist., Div. 7, Oct. 20, 2022) 2022 WL 12004855.)

https://www.courts.ca.gov/opinions/documents/B313681.PDF

Secretly Recording Planned Parenthood Meetings.

Defendants infiltrated Planned Parenthood meetings and secretly recorded the meetings for roughly a year-and-a-half before releasing edited videos of those recordings on the internet. Planned Parenthood sued defendants for monetary damages and injunctive relief. After pre-trial motions and a six-week trial, defendants were found guilty of trespass, fraud, conspiracy, breach of contracts, unlawful and fraudulent business practices, violating civil RICO laws, and violating various federal and state wiretapping laws. Planned Parenthood was awarded statutory, compensatory, and punitive damages as well as limited injunctive relief. Affirming in part and reversing in part, the Ninth Circuit stated: “We affirm the awards of compensatory and punitive damages, but we reverse the jury’s verdict on the Federal Wiretap Act claim and vacate the related statutory damages for violating the Federal Wiretap Act.” (Planned Parenthood Federation of America Inc. v. Newman (9th Cir., Oct. 21, 2022) 51 F.4th 1125).)

https://cdn.ca9.uscourts.gov/datastore/opinions/2022/10/21/20-16068.pdf

Downward Adjustment of Attorney Fee Award.

Plaintiff is “a serial Americans with Disabilities Act (ADA) litigant.” After prevailing on the merits in a largely uncontested action, plaintiff moved for an award of over $34,000 in attorney’s fees and costs. The district court reduced this award significantly, finding that factors such as the routine nature of the work performed by plaintiff’s attorneys and the lack of meaningful opposition by defendant warranted the use of a $300/hour “blended billing rate” for all the work performed by plaintiff’s counsel, as well as a 65% downward multiplier to the total amount of fees. Ultimately, the lower court awarded just under $10,000 in fees and costs. Plaintiff argued on appeal this downward reduction was unjustified. Affirming, the Ninth Circuit stated: “At bottom, this was a simple, relatively uncontested case.” (Shayler v. 1310 PCH, LLC (9th Cir., Oct. 24, 2022) 51 F.4th 1015.)

https://cdn.ca9.uscourts.gov/datastore/opinions/2022/10/24/21-56130.pdf

Paying Employees Under a Quarter-Hour Rounding Policy.

One of the named plaintiffs in a class action contended he lost wages due to the employer’s quarter-hour rounding policy. Defendant employer moved for summary judgment, arguing that, while plaintiff lost a total of 470 minutes over approximately four-and-a-half years due to the rounding policy, defendant was still entitled to summary judgment because its rounding policy was neutral on its face and neutral as applied. Reversing, the Court of Appeal stated: “[W]e conclude that [defendant], in relying on its quarter-hour rounding policy, did not meet its burden to show that there was no triable issue of material fact regarding plaintiff[’s] claims for unpaid wages, where [defendant] could and did track the exact time in minutes that an employee worked each shift and those records showed that [plaintiff] was not paid for all the time he worked.” (Camp v. Home Depot U.S.A., Inc. (Cal. App. 6th Dist., Oct. 24, 2022) 2022 WL 13874360.)

https://www.courts.ca.gov/opinions/documents/H049033.PDF

Employees Want Compensation for Booting Up and Shutting Down Their Computers.

Employees contended their time booting up and shutting down their computers amounted to an indispensable part of their principal duties, making the time compensable under the Fair Labor Standards Act (29 U.S.C. §§ 201–19; FLSA). The district court granted summary judgment for the employer. Reversing, the Ninth Circuit stated: “We reverse summary judgment on the FLSA claim and remand to the district court for consideration of whether time spent shutting down computers is compensable, whether the time spent booting up and down the computers is not compensable under the de minimis doctrine and whether [defendant] had no knowledge of the alleged overtime such that it is not in violation of 29 U.S.C. § 207.” (Cadena v. Customer Connexx LLC (9th Cir., Oct. 24, 2022) 51 F.4th 831.)

https://cdn.ca9.uscourts.gov/datastore/opinions/2022/10/24/21-16522.pdf

Defendant Homeowner Did Not Violate Statute by Withholding Final Payment to Contractor Pending Resolution of Controversy.

Plaintiff sought recovery of the balance due on his contract for the renovation of a house owned by defendant. Defendant did not dispute the unpaid amount plaintiff had earned for finished work under the terms of their agreement as modified by approved change orders, but he disputed the claim for additional compensation and asserted an offsetting claim for liquidated damages for delay. The trial court held that plaintiff was entitled to the undisputed balance due plus approximately half the disputed amount it claimed in additional compensation; that defendant was entitled to approximately half the amount he claimed as liquidated damages; and that defendant had not violated Civil Code § 8800 by withholding final payment pending resolution of the controversy. The trial court held that neither side had prevailed, so that neither was entitled to attorney fees under § 8800 or to costs of suit under Code of Civil Procedure § 1032. The Court of Appeal affirmed after finding the trial court had not abused its discretion, except regarding costs, finding plaintiff was the prevailing party under § 1032. (Vought Construction Inc. v. Stock (Cal. App. 1st Dist., Div. 4, Oct. 24, 2022) 2022 WL 13833639.)

https://www.courts.ca.gov/opinions/documents/A164823.PDF

Federal Court Has Statutory Authority to Order Restitution Whenever a Defendant Agrees in a Plea Agreement to Pay It.

Defendant kidnapped Jane Doe, who was then 12 years old, and drove her from California to Las Vegas, Nevada, knowing that she would engage in prostitution. Jane Doe eventually alerted authorities that she was a missing juvenile and police officers arrested defendant. Facing five serious criminal charges, defendant entered into a written plea agreement. Pursuant to that agreement, in exchange for the government’s promise to drop the five charges, defendant pleaded guilty to two lesser crimes and agreed to pay restitution to Jane Doe. During the restitution hearing, however, defendant argued the court lacked statutory authority to order restitution. The district court reluctantly agreed and denied Jane Doe’s request for restitution. In this petition for a writ of mandamus filed by Jane Doe, the Ninth Circuit granted the petition, stating: “We publish this opinion to reiterate what we held in two cases decided three decades ago: that 18 U.S.C. § 3663(a)(3) grants statutory authority to district courts to award restitution whenever a defendant agrees in a plea agreement to pay restitution. United States v. McAninch, 994 F.2d 1380, 1384 n.4 (9th Cir. 1993); United States v. Soderling, 970 F.2d 529, 534 n.9 (9th Cir. 1992) (per curiam).” (In re Doe (9th Cir., Oct. 25, 2022) 51 F.4th 1023.)

https://cdn.ca9.uscourts.gov/datastore/opinions/2022/10/25/22-70098.pdf

Fair Credit Reporting Act.

Plaintiff alleged defendant violated the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.; FCRA) by failing to provide him with proper disclosures when it sought and received his authorization to obtain a consumer report about him in connection with his application for employment, and by actually obtaining the consumer report in reliance on that authorization. The trial court sustained defendant’s demurrer without leave to amend. Finding that plaintiff did not suffer a sufficient injury for standing to sue, the Court of Appeal affirmed. (Limon v. Circle K Stores Inc. (Cal. App. 5th Dist., Oct. 25, 2022) 2022 WL 14391789.)

https://www.courts.ca.gov/opinions/documents/F082289.PDF

No Set-Off for Car Manufacturer that Refused to Repurchase or Replace Defective Truck.

A jury found defendant car manufacturer to be in willful violation of the Song-Beverly Consumer Warranty Act (Civil Code § 1790 et seq.) when it refused to repurchase or replace a defective truck. Plaintiff sold the truck to CarMax for $17,000, which was $3,191.93 more than he owed on the loan he used to purchase the truck. The jury awarded plaintiff $30,154 in damages and defendant contended it was entitled to deduct $3,191.93 from the verdict amount. The trial court denied the set-off request. Affirming, the Court of Appeal stated: “[T]he Legislature used the term ‘restitution,’ but it defines what it means by restitution in section 1793.2, subdivision (d)(2)(B). The definition does not include a set-off for the cash received by the vehicle owner on sale of the vehicle or the vehicle’s trade-in value. Second, [defendant] cannot complain that the vehicle’s owner has received an unjustified windfall when it could have avoided such a result by complying with the Song-Beverly Act. Third, it is [defendant], and not the vehicle’s owner, who undercuts the act’s labeling and notification requirements by refusing to repurchase the vehicle as required by the act. The labeling and notification requirements only apply where the manufacturer replaces or repurchases the vehicle, something [defendant] has refused to do.” (Figueroa v. FCA US, LLC (Cal. App. 2nd Dist., Div. 6, Oct. 25, 2022) 2022 WL 14396640.)

https://www.courts.ca.gov/opinions/documents/B306275.PDF

Support Dogs While Testifying.

A criminal defendant was convicted of multiple sexual offenses against children and possession of child pornography. He contended the trial court erred in permitting the two victims to be accompanied by a support dog while testifying, because by the time of testimony, the two child victims were adults. Affirming the trial court’s order permitting the witnesses to be accompanied by support dogs, the Court of Appeal stated: “[Penal Code] Section 868.4, which took effect on January 1, 2018, authorizes a trial court to permit a ‘therapy or facility dog’ (support dog) to accompany certain witnesses during their testimony.”  “The [t]rial [c]ourt [d]id [n]ot [a]buse its [d]iscretion in [a]llowing a [s]upport [d]og to [a]ccompany B. Doe and A. Doe [w]hen [t]hey [t]estified.” As to whether the witnesses were children or adults, the appeals court explained “the statute [does not] impose any different requirements for consideration of a request to use a support animal depending on whether the testifying witness is an adult or a minor.” (People v. Picazo (Cal. App. 1st Dist., Div. 2, Oct. 25, 2022) 2022 WL 14403798.)

https://www.courts.ca.gov/opinions/documents/A161621.PDF

Statute Beneficial to Plaintiffs, but Not Enacted Until After Trial, Is Not Retroactive.

After a trial based on sexual abuse at a high school, the California Legislature amended Code of Civil Procedure § 340.1 to reduce procedural barriers for childhood sexual abuse claims and to allow treble damages for a claim involving a prior coverup of abuse. Plaintiffs sought a new trial so they could benefit under the amendment. The Court of Appeal held: “We conclude the treble damages provision in Code of Civil Procedure section 340.1 is neither retroactive, nor applicable to public school districts.” (K.M. v. Grossmont Union High School District (Cal. App. 4th Dist., Div. 1, Oct. 25, 2022) 2022 WL 14391790.)

https://www.courts.ca.gov/opinions/documents/D075957.PDF

Previously we reported:
Prop 65 and Acrylamide.

Acrylamide is used in various foods and beverages. Proposition 65 (Prop. 65) provides that “[n]o person in the course of doing business shall knowingly and intentionally expose any individual to a chemical known to the state to cause cancer . . . without first giving clear and reasonable warning to such individual, except as provided in Section 25249.10.” (Cal. Health & Safety Code, § 25249.6.) The district court granted a preliminary injunction seeking to halt acrylamide litigation brought under Prop. 65. Analyzing the case, the Ninth Circuit noted that: (1) the National Cancer Institute stated that “a large number of epidemiologic studies . . . have found no consistent evidence that dietary acrylamide exposure is associated with the risk of any type of cancer[;]” (2) the American Cancer Society stated that studies “suggest that dietary acrylamide isn’t likely to be related to risk for most common types of cancer[;]” and (3) that the Federal Drug Administration has stated that “warning labels based on the presence of acrylamide in food might be misleading.” Affirming, the appeals court concluded the lower court did not abuse its discretion. (California Chamber of Commerce v. Council for Education & Research on Toxics (9th Cir., Mar. 17, 2022) 29 F.4th 468.)

The latest:

“B[erzon], Circuit Judge, with whom W[ardlaw], W[atford], K[oh], and S[anchez], Circuit Judges, join, respecting the denial of rehearing en banc: The right to access the courts is one of ‘the most precious of the liberties safeguarded by the Bill of Rights.’ United Mine Workers of Am., Dist. 12 v. Illinois State Bar Ass’n, 389 U.S. 217, 222 (1967). But in this opinion, without basis in law or precedent, this Court narrows that fundamental right. The panel opinion closes the courtroom doors to all those seeking to enforce provisions of California’s Proposition 65 with respect to a chemical present in a wide range of food products—on pain of contempt. In doing so, the panel opinion expands the so-called ‘illegal objective’ exception far beyond any prior decision of the Supreme Court or the appellate courts: it allows a single judge to enjoin potential plaintiffs from filing any sort of lawsuit if the judge predicts that the lawsuits will fail upon a defense grounded in a federal right. I object to the panel’s unjustified curtailment of the First Amendment’s protections and of litigation norms and respectfully disagree with this Court’s refusal to reconsider the panel opinion en banc.” (California Chamber of Commerce v. Council for Education and Research on Toxins (9th Cir., Oct. 26, 2022) 2022 WL 14725243.)

https://cdn.ca9.uscourts.gov/datastore/opinions/2022/10/26/21-15745.pdf

Chalking Tires for Traffic Enforcement.

Plaintiffs contended the longstanding practice of chalking tires for parking enforcement purposes violates the Fourth Amendment. The district court granted summary judgment for the city. Affirming, the Ninth Circuit stated: “Even assuming the temporary dusting of chalk on a tire constitutes a Fourth Amendment ‘search,’ it falls within the administrative search exception to the warrant requirement. Complementing a broader program of traffic control, tire chalking is reasonable in its scope and manner of execution. It is not used for general crime control purposes. And its intrusion on personal liberty is de minimis at most. We hold that municipalities are not required to obtain warrants before chalking tires as part of enforcing time limits on city parking spots.” (Verdun v. City of San Diego (9th Cir., Oct. 26, 2022) 51 F.4th 1033.)

https://cdn.ca9.uscourts.gov/datastore/opinions/2022/10/26/21-55046.pdf

Easement Was Not Extinguished by Merger of Two Properties.

After defaulting on a loan and losing one part of two adjoining properties to foreclosure, defendant spent the last decade frustrating the attempts of new owners to renovate or occupy the house on his former property. Plaintiffs sued and obtained a preliminary injunction prohibiting defendant from obstructing an easement pending trial. The trial court twice found defendant in contempt for blocking entry with garbage, old appliances, and a shifting fleet of decaying cars and recreational vehicles. After trial, the court declared the recorded driveway easement valid and permanently enjoined defendant from obstructing plaintiffs’ access. On appeal, defendant contended the recorded driveway easement was extinguished by merger when he acquired sole title to both properties in 2000. Affirming, the Court of Appeal agreed with the trial court that defendant never held the two properties in unity of title because he encumbered the dominant tenancy (now owned by plaintiffs) immediately after acquiring sole ownership. (Tariwala v. Mack (Cal. App. 2nd Dist., Div. 6, Oct. 26, 2022) 2022 WL 14735735.)

https://www.courts.ca.gov/opinions/documents/B311232.PDF

Defense Verdict in a Product Case Against Product Distributor Reversed for Jury Instruction Error.

Plaintiff suffered injuries while riding a Yamaha dirt bike. He sued the U.S. distributor, asserting that the accident was caused by a throttle assembly that fell off the handlebar as he was riding. The jury found in defendant’s favor. On appeal, Plaintiff contended the trial court erred when it declined to give a jury instruction. Reversing, the Court of Appeal stated: “[I]f the dealer negligently assembled the product, Yamaha was jointly liable for damages caused by that negligence. Because the requested instruction should have been given, we reverse the judgment on the negligence cause of action.” (Defries v. Yamaha Motor Corporation, U.S.A. (Cal. App. 4th Dist., Div. 2, Oct. 26, 2022) 2022 WL 14740245.)

https://www.courts.ca.gov/opinions/documents/E073917.PDF

Agenda for Public Meeting Did Not Include Finding of Exemption from CEQA.

The City of Thousand Oaks was considering entering into a new exclusive solid waste franchise agreement with the real party in interest. The agreement was for a 15-year term beginning January 1, 2022, and ending December 31, 2036. On March 4, 2021, the city posted an agenda for a regular meeting of the city council to be held on March 9, 2021. An item on the agenda stated that the city would consider awarding the franchise agreement to the real party, along with a note that the city’s staff recommended approval. One item was not listed on the city’s agenda, that the city would also consider whether the agreement is exempt from the California Environmental Quality Act (Pub. Resources Code § 21000, et seq.; CEQA). Plaintiff, the business that had the waste management contract at the time the new contract was being awarded, is the plaintiff here. The city approved the new contract, and plaintiff petitioned the trial court for a writ of mandate to vacate its approval and its finding that the project was exempt from CEQA. The trial court entered judgment for the city. Reversing, the Court of Appeal stated: “Section 54954.2 of the Brown Act, requires this CEQA finding of exemption to be listed on the agency’s agenda for its public meeting. It was not. The trial court erred when it entered judgment after sustaining demurrers without leave to amend brought by a local agency and the real party in interest.” (G.I. Industries v. City of Thousand Oaks (Cal. App. 2nd Dist., Div. 6, Oct. 26, 2022) 2022 WL 14740209.)

https://www.courts.ca.gov/opinions/documents/B317201.PDF

Economic Loss Rule.

Plaintiffs sued Nissan, alleging the transmission in a 2013 Sentra they purchased was defective. In their operative second amended complaint, plaintiffs asserted statutory claims under the Song-Beverly Consumer Warranty Act (Civ. Code, § 1790 et seq.), and a common law fraud claim alleging that Nissan, by fraudulently concealing the defects, induced them to purchase the car. The trial court sustained Nissan’s demurrer without leave to amend and granted defendant’s motion to strike punitive damages. Reversing, the Court of Appeal stated: “We conclude that, under California law, the economic loss rule does not bar plaintiffs’ fraudulent inducement claim. We also reject Nissan’s argument that plaintiffs did not adequately plead a claim for fraudulent inducement. We therefore reverse the judgment entered in favor of Nissan and remand for further proceedings on plaintiffs’ fraudulent inducement claim.” (Dhital v. Nissan North America, Inc. (Cal. App. 1st Dist., Div. 4, Oct. 26, 2022) 2022 WL 14772909.)

https://www.courts.ca.gov/opinions/documents/A162817.PDF

No Attorney Fees for Losing Party.

Plaintiff brought an action under Proposition 65 (Health & Saf. Code, § 25249.5 et seq.; The Safe Drinking Water and Toxic Enforcement Act of 1986) against dozens of companies that roast, distribute, or sell coffee. Plaintiff contended that defendants had failed to provide required Prop. 65 warnings for their coffee products based on the presence of acrylamide, which is included in the Prop. 65 list of known carcinogens and is naturally produced in coffee as a result of the roasting and brewing processes. While the litigation was pending, the Office of Environmental Health Hazard Assessment, charged with implementing Prop. 65, adopted a new regulation providing that “[e]xposures to chemicals in coffee . . . do not pose a significant risk of cancer.” (Cal. Code Regs., tit. 27, § 25704; the “Coffee Regulation”.) Defendants thereafter moved for summary judgment, which the trial court granted. After the court entered judgment for defendants, plaintiff moved to recover attorney fees from some of the defendants, on the basis that its litigation efforts catalyzed them to post Prop. 65 warnings voluntarily during the pendency of its actions. The trial court denied the motion, concluding it was ineligible for fees because it had lost its case on the merits and conferred no significant benefit on the public. Affirming, the Court of Appeal stated: “We agree with the trial court that in light of the Coffee Regulation, these temporary warnings proved unnecessary and therefore conferred no significant benefit on the public, rendering [plaintiff] ineligible for fees.” (Council for Education and Research on Toxics v. Starbucks Corporation (Cal. App. 2nd Dist., Div. 4, Oct. 27, 2022) 2022 WL 15136422.)

https://www.courts.ca.gov/opinions/documents/B309227.PDF

Does a § 998 Offer Automatically Expire When a Trial Court Orally Grants the Offeror’s Summary Judgment Motion?

A defendant in a negligence suit moved for summary judgment and made an offer pursuant to Code of Civil Procedure § 998 days before the hearing on its motion. Mere minutes after the trial court orally granted summary judgment, the plaintiff zipped off an email to the defendant purporting to accept the § 998 offer. The question for the courts was: Does a § 998 offer automatically expire when a trial court orally grants the offeror’s summary judgment motion? The Court of Appeal answered the question: “We hold that that answer is ‘yes.’” (Trujillo v. City of Los Angeles (Cal. App. 2nd Dist., Div. 2, Oct. 27, 2022) 2022 WL 15119812.)

https://www.courts.ca.gov/opinions/documents/B314042.PDF

Defendant Employer’s Actions Inconsistent with an Intent to Arbitrate.

Employee agreed to arbitration in her “new hire” paperwork in 2018. After three months, she resigned because she “was subjected to ongoing, sexually explicit, and demeaning comments, unwanted touching, and indecent exposure from her co-worker, Danilo Ensuncho, as well as other harassing conduct from Shiekh customers.” On March 25, 2019, plaintiff filed a complaint against Shiekh and Ensuncho. Defendant employer, Shiekh, engaged in court conferences and discovery before moving for arbitration on October 5, 2020—about 17 months after Shiekh was served with the complaint. The trial court denied the motion. Affirming, the Court of Appeal stated: “In light of [defendant] Shiekh’s nearly one-and-a-half-year delay in moving to compel arbitration, request for trial, active participation in discovery, acquiescence to the trial and discovery schedule, and court appearances, the trial court had ample evidence from which to conclude Shiekh’s actions were inconsistent with an intent to arbitrate.” (Davis v. Shiekh Shoes, LLC (Cal. App. 1st Dist., Div. 2, Oct. 31, 2022) 2022 WL 16546189.)

https://www.courts.ca.gov/opinions/documents/A161961.PDF


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