Litigation Update: October 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
  • Editors, Dean Bochner, Glenn Danas, Herb Fox, Jessica Riggin, Anne Voigts and Kenneth Wang
Hiring Practice Violates Americans with Disabilities Act.

Plaintiff received a conditional job offer from defendant, contingent on his satisfactory completion of a post-offer medical review. During that medical review, plaintiff disclosed that he had injured his back four years before, suffering a two-level spinal disc extrusion. Plaintiff’s primary care doctor, his chiropractor, and the doctor hired by defendant to examine plaintiff all determined that plaintiff had no current limitations due to his back and found no need for follow-up testing. Yet, defendant demanded that plaintiff submit an MRI of his back—at his own cost—or it would treat plaintiff as having declined the offer. Plaintiff was in bankruptcy at that time and did not obtain an MRI. As a result, defendant revoked the job offer. A federal district court determined defendant violated the Americans with Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.). The district court further issued a nationwide injunction prohibiting defendant from engaging in certain hiring practices. The Ninth Circuit Court of Appeals affirmed the judgment of liability, but vacated the injunction, remanding the matter for the district court to apply the traditional four-factor test prescribed in eBay Inc. v. MercExchange, LLC (2006) 547 U.S. 388, 391 ((1) whether a plaintiff has suffered an irreparable injury, (2) whether remedies available at law are inadequate to compensate for that inquiry, (3) the balance of hardships, and (4) the public interest) before issuing any permanent injunction. (Equal Employment Opportunity Commission v. BNSF Railway Company (9th Cir., Aug. 29, 2018) 2018 U.S. App. LEXIS 25852.)

Wine of Babylon.

Plaintiff is a California limited liability company. Defendant is a citizen of Italy who is accused of stealing a painting entitled Wine of Babylon by Jean-Michel Basquiat from her former husband, who is plaintiff’s predecessor-in-interest. A federal district court granted summary judgment to defendant, holding plaintiff’s action for various state law claims was barred by California’s statute of limitations borrowing statute (Code Civ. Proc., § 361). With regard to the conversion cause of action, the Ninth Circuit Court of Appeals affirmed, finding the claim was time-barred. However, with regard to the claims for replevin and unjust enrichment, the judgment was vacated and remanded because the trial court did not determine when those claims accrued. (G & G Prods. LLC v. Rusic (9th Cir., Aug. 29, 2018) 2018 U.S. App. LEXIS 24538.)

Denial of Asylum Request Reversed.

Petitioner, a native and citizen of El Salvador, entered the United States without authorization on May 25, 1991, at the age of seventeen. He has continuously resided in the United States for the last twenty-seven years, and currently lives here with his wife and three children, the latter of whom are U.S. citizens. He is the sole provider for his family. During the 1980’s and early 1990’s, petitioner and his family were subjected to threats, home invasions, beatings, and killing by guerillas who specifically targeted his family. In 1989, guerillas sought out and murdered petitioner’s brother while he was on leave from the military; murdered the next door neighbor, apparently believing she was a family member; broke into the family home three times; sought to kill another family member; and ultimately kidnapped petitioner with the apparent intent to forcibly conscript him. After he escaped, petitioner fled to the United States and applied for asylum. After taking no action on petitioner’s asylum application for 13 years, the government rejected it and ordered petitioner’s deportation. After another multi-year delay, the Board of Immigration Appeals affirmed the denial of his application for asylum. The Ninth Circuit Court of Appeals reversed, stating: “We conclude that the record compels a finding of past persecution, and that substantial evidence does not support the agency’s determination that the government successfully rebutted the presumption of future persecution.” (Parada v. Sessions (9th Cir., Aug. 29, 2018) 2018 U.S. App. LEXIS 24535.)

“I don’t care what people say, [DNA] is here to stay,” Danny & the Juniors (minus the rock ‘n roll part).

Juveniles declared wards based on felony conduct (but not for misdemeanor conduct) must submit DNA samples to the California Department of Justice. In 2014, the passage of Proposition 47 reduced various drug and property offenses from felonies to misdemeanors. In this case, persons who were juveniles when they committed felonies that were later reduced to misdemeanors argued that they were now entitled to have their DNA samples removed from the DNA databank. The California Supreme Court rejected this argument, holding that neither Proposition 47 nor equal protection compels such relief. (In re C.B. (Cal., Aug. 30, 2018) 6 Cal.5th 118.)

Prospective Waiver of Conflicts Language in Retainer Agreement Held Unenforceable.

A large California law firm agreed to represent a company, J-M, in a federal qui tam action. The law firm was already representing one of the public entities (South Tahoe) suing J-M, in matters unrelated to the qui tam action. Both J-M and South Tahoe clients had executed engagement agreements that purported to waive all such conflicts, current or future. When South Tahoe became aware of the conflict, it successfully moved to disqualify the law firm in the qui tam action. The law firm had done more than $1 million worth of unpaid work in the case, which J-M refused to pay. The law firm sued J-M for the fees owed, and an arbitrator ruled in favor of the law firm. The trial court affirmed the arbitration award, but the Court of Appeal reversed, holding that, notwithstanding the conflict waiver, the undisclosed concurrent conflict of interest violated the Rules of Professional Responsibility and disentitled the law firm to the fees owed. The California Supreme Court granted review and affirmed the Court of Appeal, stating: “We agree with the Court of Appeal that, under the framework established in Loving & Evans v. Blick (1949) 33 Cal.2d 603, the law firm’s conflict of interest rendered the agreement with the manufacturer, including its arbitration clause, unenforceable as against public policy.” (Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co., Inc. (Cal., Aug. 30, 2018) 6 Cal.5th 59.)

Not Enough $$$ To Go Around.

This appeal was from an order disqualifying an attorney for a conflict of interest. The lawyer represented multiple clients, all of whom were seeking damages from the same pool of money, controlled by another party. Affirming the order of disqualification, the Court of Appeal stated that “when more than one client is seeking funds from the same source, the conflict is self-evident. There might not be enough money to satisfy each client’s claim.” (Bridgepoint Construction Services, Inc. v. Newton (Cal. App., 2nd Dist., Div. 6, Sept. 4, 2018) 26 Cal. App. 5th 966.)

Ambivalent Statements of a Prospective Juror Regarding Impartiality Amount to Admission of Actual Bias.

A defendant convicted of criminal identity theft in federal court appealed his conviction, arguing that the district court erred by refusing to dismiss a prospective juror for bias where the juror refused to state unequivocally that she could be fair and impartial. The juror stated that five years earlier, she had her social security number stolen and, “I might be able to put that aside and just go by what I hear here in the courtroom.” As the court questioned her, she added, “Well, I would want to put my personal stuff aside, but I honestly don’t know if I could.” Eventually she said she would try to be fair and would tell the court if she could not be. The Ninth Circuit Court of Appeals reversed the conviction, stating the juror was not able to state that she would serve fairly and impartially despite being asked for assurances that she would, and that the juror’s statements “do not provide any assurance that she was, or could have been, impartial.” (United States v. Kechedzian (9th Cir., Sept. 4, 2018) 2018 U.S. App. LEXIS 25031.)

Homeless With No Place to Sleep.

Plaintiffs, six homeless persons, filed an action challenging under the Eighth Amendment to the U.S. Constitution city ordinances making it a misdemeanor to use any streets, sidewalks, parks or public places for camping. Plaintiffs had been turned away from the city’s shelters, forcing them to sleep on the streets. They received citations, and expected they would be cited again in the future, prompting them to bring a civil rights action under 42 U.S.C. § 1983 for declaratory and injunctive relief. After the action was filed, however, the city amended its ordinance to prohibit enforcement against any homeless person on public property on any night when no shelter had available overnight space. The Ninth Circuit Court of Appeals concluded the Eighth Amendment’s prohibition on cruel and unusual punishment bars a city from prosecuting people criminally for sleeping outside on public property when those people have no home or other shelter to go to, stating: “We conclude that a municipality cannot criminalize such behavior consistently with the Eighth Amendment when no sleeping space is practically available in any shelter.” (Martin v. City of Boise (9th Cir., Sept. 4, 2018) 2018 U.S. App. LEXIS 25032.)

“Every time a football player goes to ply his trade, he’s got to play from the ground up—from the soles of his feet right up to his head. Every inch of him has to play.” Vince Lombardi.

Plaintiff, a retired football player who played on four different NFL teams during his fourteen-year career, filed a class action against the NFL on behalf of 1,000 retired players, alleging negligence and other state law causes of action. Plaintiff alleged that during his professional career, doctors and trainers gave him “hundreds, if not thousands” of injections and pills containing powerful painkillers in an effort to keep him on the field. According to plaintiff, he was never warned about the potential side effects or long-term risks of the medications he was given, and he ended his career with an enlarged heart, permanent nerve damage in his foot, and an addiction to painkillers. Plaintiff alleges the NFL distributed controlled substances and prescription drugs to players in violation of state and federal laws, resulting in permanent injuries and chronic medical conditions. Plaintiff also alleged that the NFL encouraged players to take these pain-masking medications to keep them on the field and revenues high, even as the annual football season got longer and the time between games got shorter, increasing their chances of injury. A federal district court, relying on the fact that the players’ union had freely negotiated the collective bargaining agreements dictating player medical care, held that plaintiff’s claims were preempted by § 301 of the Labor Management Relations Act (29 U.S.C. § 141 et seq). The Ninth Circuit Court of Appeals reversed, stating: “As pled, the players’ claims neither arise from collective bargaining agreements (CBAs) nor require their interpretation.” (Dent v. NFL (9th Cir., Sept. 6, 2018) 2018 U.S. App. LEXIS 25302.)

Asserting Lack of Personal Jurisdiction While Litigating Merits Defenses.

A federal district court determined a defendant waived its lack of personal jurisdiction defense by litigating other defenses and counterclaims in a related matter. Reversing, the Ninth Circuit Court of Appeals stated: “A defendant that timely asserts that the district court lacks personal jurisdiction and litigates the issue to an adverse decision from the district court does not waive the personal jurisdiction defense by vigorously litigating defenses to the merits, including by asserting counterclaims against other parties.” (InfoSpan, Inc. v. Emirates NBD Bank PJSC (9th Cir., Sep. 7, 2018) 2018 U.S. App. LEXIS 25426.)

ONE A DAY Vitamin Maker Instructs Users to Take Two Per Day.

Very small print on the back label of ONE A DAY vitamins instructs the user to take two vitamin pills daily. Plaintiffs filed a class action against the manufacturer under the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.), unfair competition law (Bus. & Prof. Code, § 17200), and express warranty law (Com. Code, § 2313). The trial court sustained defendant’s demurrer without leave to amend. Reversing, the Court of Appeal stated: “We don’t think that the microscopic “Chew: Two Gummies daily” and “Serving Size: 2 gummies” on the back is sufficiently conspicuous to modify the implied warranty on the front. . . The “ONE A DAY” text on the front label is orders of magnitude larger than the fine print “two gummies” text on the back label.” (Brady v. Bayer Corp. (Cal. App. 4th Dist., Div. 3, Sept. 7, 2018) 26 Cal.App.5th 1156.)

The Borello Standard.

California Trucking Association (CTA) brought an action for declaratory and injunctive relief in federal court challenging the California Labor Commissioner’s use of a common law test, referred to as the Borello standard, to determine whether a motor carrier had properly classified its drivers as independent contractors. The determination whether an individual is an employee or an independent contractor is one of fact if dependent upon disputed evidence or inferences. (S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.) CTA argued that application of the Borello standard disrupted existing contractual arrangements between owner-operators and motor carriers and was preempted by the Federal Aviation Administration Authorization Act (49 U.S.C. § 14501(c)(1)). A federal trial court dismissed the action. The Ninth Circuit Court of Appeals affirmed, stating: “We hold that the Borello standard, a generally applicable test used in a traditional area of state regulation, is not ‘related to’ prices, routes, or services, and therefore is not preempted.” (Cal. Trucking Ass’n v. Su (9th Cir., Sept. 10, 2018) 2018 U.S. App. LEXIS 25567.)

Breach of Collective Bargaining Agreement by Movie Studio.

Since 1946 or earlier, major motion picture studios and the musicians, conductors, and orchestras that score motion pictures have agreed to a series of collective bargaining agreements governing the musicians’ hiring, wages, and working conditions. This case concerns whether Paramount Pictures breached those agreements. The musicians’ labor union sued Paramount in federal court after the motion picture Same Kind of Different As Me was scored in Slovakia. The union alleged that Paramount breached its obligation under article 3 of the Basic Agreement to score domestically, with union musicians, any motion picture that it produces domestically. Paramount moved for summary judgment, contending that article 3 did not apply because Paramount did not produce the film. A federal district court granted Paramount’s motion. Reversing, the Ninth Circuit Court of Appeals stated the district court misinterpreted article 3 to apply only if a signatory producer (like Paramount) employs the cast and crew shooting the picture. The appellate court held, “Article 3 applies when a signatory studio produces a motion picture and has authority over the hiring and employment of scoring musicians. Whether a studio also employs the cast and crew is not relevant to Article 3.” (Am. Fedn. of Musicians of the United States v. Paramount Pictures Corp. (9th Cir., Sep. 10, 2018) 2018 U.S. App. LEXIS 25570.)

Even Brats Have Civil Rights.

A group of seventh grade girls were handcuffed, arrested, and transported in police vehicles from their middle school campus to the police station. An assistant principal had asked a school resource officer, a sheriff’s deputy, to counsel a group of girls who had been involved in ongoing incidents of bullying and fighting. The group included both aggressors and victims. Speaking with the group, the deputy initially intended to verify the information the school had given him and to mediate the conflict. Within minutes, however, the deputy concluded that the girls were being unresponsive and disrespectful. He then arrested the girls, explaining to them that he was not “playing around” and taking them to jail was the easiest way to “prove a point” and “make [them] mature a lot faster.” Three girls of the group sued the arresting officers and the county for unlawful arrest in violation of state laws and the Fourth Amendment. A federal trial court denied the defendants qualified immunity and granted summary judgment in favor of the students. Affirming, the Ninth Circuit Court of Appeals stated: “Lacking both justification and probable cause for their arrests, Defendants cannot avoid liability for false arrest under state law.” (Scott v. County of San Bernardino (9th Cir., Sept. 10, 2018) 2018 U.S. App. LEXIS 25568)

Dismissal of a False Claims Act Action Reversed.

Plaintiff filed a complaint under the False Claims Act (31 U.S.C., § 3729 et seq.) against defendant, a Medicare Advantage organization. Plaintiff claimed that defendant retained her employer to create fraudulent payment data and made false claims for payment by Medicare. The U.S. government declined to intervene. A federal trial court dismissed the action. Reversing, the Ninth Circuit Court of Appeals stated: “Here, [plaintiff] plausibly pleads that the defendant Medicare Advantage organizations submitted false claims and certifications and used false records with actual knowledge, reckless disregard, or deliberate ignorance of their falsity. The complaint details a variety of ways in which the defendant organizations knew or showed reckless disregard or deliberate indifference of the alleged fact that [plaintiff’s employer’s] risk adjustment data were invalid.” (U.S. ex rel. Siligo v. Wellpoint, Inc. (9th Cir., Sept. 11, 2018) 2018 U.S. App. LEXIS 25708.)

No Qualified Immunity for Federal Agent who Watched Plaintiff While She Relieved Herself in the Bathroom.

Federal agents from the Internal Revenue Service were at a home executing a search warrant. The couple, a man and a woman, who lived in the home opted to stay during the search after they were told that if they left they could not return. When the man needed to use the bathroom, a male agent conducted a quick search of the bathroom, then exited the bathroom and closed the door behind him, leaving the man his privacy. When the woman asked to use the bathroom, a female agent refused to leave the bathroom and told the woman to remove her clothing so the agent could make sure she did not have anything hidden on her person. Then the agent ordered the woman to use one hand to hold up her dress and the other to pull down her underwear, and observed the woman as she relieved herself. The woman sued under 43 U.S.C. § 1983 for violation of her civil rights. A federal trial court decided the agent was not entitled to qualified immunity from the woman’s invasion of bodily privacy claim. Affirming the denial of immunity, the Ninth Circuit Court of Appeals stated, “if the Constitution prohibits an officer from conducting a weapons pat-down of an individual during execution of a search warrant in the absence of a reasonable belief that the individual is armed and dangerous, the intrusion here, for which Agent Noll has articulated no reasonable belief that [the woman] was armed and dangerous, clearly was unconstitutional.” (Ioane v. Noll (9th Cir., Sept. 10, 2018) 2018 U.S. App. LEXIS 25569.)

No Voter Right’s Violations.

The Democratic National Committee (DNC) sued the state of Arizona over two of its election practices: (1) requiring that in-person voters cast their ballots in their assigned precinct, which Arizona enforces by not counting ballots cast in the wrong precinct; and (2) precluding third persons from collecting early ballots from voters. Finding Arizona’s election practices imposed no more than a minimal burden on voters and that its law was not motivated by a discriminatory purpose, a federal trial court found in favor of Arizona. Affirming, the Ninth Circuit Court of Appeals held that Arizona carried its burden to show its practices were reasonably tailored to achieve its regulatory interests, and that the district court’s finding there was no discriminatory purpose eviscerates the DNC’s Fifteenth Amendment claim. (Democratic Nat’l Comm. v. Reagan (9th Cir., Sept. 12, 2018) 2018 U.S. App. LEXIS 25821.)

Named Plaintiffs in Class Action Have Standing to Appeal Decertification Order Even Though Named Plaintiffs Settled.

In two collective actions brought by police officers under the Fair Labor Standards Act (29 U.S.C. § 201 et seq.; FLSA) alleging a policy of discouraging the reporting of overtime, a federal trial court decertified the class action because the officers were not similarly situated within the meaning of the FLSA. The original named plaintiffs in the two separately filed class actions reached settlements with the city on their own claims. Although no longer plaintiffs, the previously named plaintiffs appealed, challenging the decertification order. The Ninth Circuit Court of Appeals held the two officers had standing to appeal because opt-in plaintiffs are parties to the collective action, and an order of decertification and dismissal disposes of their statutory right to proceed collectively. (Campbell v. City of Los Angeles (9th Cir., Sept. 13, 2018) 2018 U.S. App. LEXIS 25951.)

Be Careful What You Ask for . . . When You Sue for Involuntary Dissolution of a Corporation.

Corporations Code § 2000, subdivision (a) provides that when shareholders sue for involuntary dissolution, the corporation or the holders of 50 percent or more of the voting power of the corporation may avoid the dissolution by purchasing for cash the shares owned by plaintiffs at their fair value. In the instant action, a minority shareholder sued the majority shareholder for involuntary dissolution of the corporation, asserting direct and derivative claims arising from a dispute over management. The majority shareholder filed a motion to stay proceedings and appoint appraisers to fix the value of the stock. The superior court stayed proceedings and ordered an appraisal. Thereafter, plaintiff tried to dismiss the action, but the clerk would not do so because the matter had been stayed. Plaintiff then asked the court to lift the stay. The court granted the motion, allowed plaintiff to dismiss the action, and terminated the appraisal procedure. The Court of Appeal found the trial court abused its discretion, stating that the “the special proceeding under section 2000, once initiated, ‘supplants’ the involuntary dissolution cause of action for involuntary dissolution.” (Ontiveros v. Constable (Cal. App. 4th Dist., Div. 1, Sept. 18, 2018) 2018 Cal. App. LEXIS 827.)

Personal Jurisdiction.

Plaintiff sued defendants for defamation in a federal court in Nevada. The corporate defendant is a Washington professional corporation; the individual defendant is a Washington resident. Defendants regularly solicited business in Nevada. The corporate defendant belonged to a national trade association that held its annual conference in Las Vegas in 2015. Plaintiff alleged that, at the 2015 conference, defendants interfered with its business by telling competitors that plaintiff’s transactions were unethical and arguably illegal. The trial judge dismissed the action for lack of personal jurisdiction. The Ninth Circuit Court of Appeals reversed, holding there was jurisdiction pursuant to 28 U.S.C. § 1291 because all three prongs of the minimum contacts test for specific jurisdiction were satisfied. (Freestream Aircraft v. Aero Law Group (9th. Cir., Sept. 18, 2018) 2018 U.S. App. LEXIS 26388.)

Employer Accused of Taking Advantage of Tip Credit.

The Fair Labor Standards Act (29 U.S.C. § 201 et seq.; FLSA) permits employers to take a tip credit for employees in tipped occupations. The tip credit offsets an employer’s obligation to pay the hourly minimum wage. If the employee’s tip credit wage and tips do not meet minimum wage, the employer must make up the difference. Plaintiffs are servers and bartenders who allege their employers abused the tip credit provision in either (1) treating them as tipped employees when they were engaged in nontipped tasks unrelated to serving or bartending; or (2) treating them as tipped employees when they were engaged in nonincidental tasks relating to serving and bartending. A federal trial court dismissed the action. Sitting en banc, the Ninth Circuit Court of Appeals held the Department of Labor foreclosed this practice by promulgating a regulation (29 C.F.R. § 531.56 (e)), and that regulation was entitled to Chevron deference (Chevron U.S.A., Inc., v. Nat. Res. Def. Council, Inc. (1984) 467 U.S. 837; refers to the doctrine of judicial deference given to administrative agencies). The en banc court reversed and remanded for further proceedings, concluding that plaintiff has “stated two claims for relief under the FLSA: first, that he is entitled to the full hourly minimum wage for the substantial time he spent completing related but untipped tasks, defined as more than 20% of his workweek; and second, that he is entitled to the same for time he spent on unrelated tasks.” (Marsh v. J. Alexander’s LLC (9th Cir. Sept. 18, 2018) 2018 U.S. App. LEXIS 26387.)

Trial Court’s Award of Contractual Attorney Fees Reversed Because There Was No Contractual Attorney Fee Provision.

The prevailing defendant in a wrongful foreclosure action, a mortgage company, was awarded $59,750 in attorney fees. The Court of Appeal reversed the fee award, finding that the deed of trust provision relied upon did not specifically provide for attorney fees. The court stated: “The paragraph allows the lender to take numerous actions, including incurring attorney’s fees, to protect its interest. It then provides . . . that ‘any amounts disbursed by Lender under this Section 9 shall become additional debt of Borrower secured by this Security Instrument.’ This is not a provision that attorney’s fees ‘shall be awarded’; it is, instead, a provision that attorney’s fees, like any other expenses the lender may incur to protect its interest, will be added to the secured debt.” (Hart v. Clear Recon Corp. (Cal. App. 2nd Dist., Div. 8, Sept. 18, 2018) 2018 Cal. App. LEXIS 829.)

For This One, There Was an Attorney Fee Provision, but the Question Concerns Who Gets the Fees.

Plaintiff refinanced a home loan and then failed to make required loan payments, which triggered a nonjudicial foreclosure. Plaintiff sued to stop the foreclosure and lost. The trial court then ordered plaintiff to pay defendants’ (lenders’) attorney fees, finding two trust deed provisions authorized attorney fees: (1) “ ‘Any amounts disbursed by lender under this Section 9 shall become additional debt of Borrower secured by this Security Instrument,’ ” and (2) “ ‘Lender may charge Borrower fees for services performed in connection with Borrower’s default, for the purpose of protecting Lender’s interest in the Property and rights under this Security Instrument, including but not limited to, attorney fees . . . .’ ” Reversing, the Court of Appeal noted that the lenders assigned the trust deed to another financial institution and were no longer the loan servicers or trustees of the trust deed, nor parties to the contract that serves as the foundation for their fee request. The appeals court upheld the award of fees against plaintiff, but ordered the fees added to the outstanding balance plaintiff owes as a result of her default on the promissory note. (Chacker v. JPMorgan Chase Bank, N.A. (Cal. App. 2nd Dist., Div. 5, Sept. 19, 2018) 2018 Cal. App. LEXIS 832.)

Minimum Wage for Ready-mix Concrete Drivers on Public Works Contracts.

California’s prevailing wage laws that ensure workers on public works contracts are paid a minimum wage include delivery drivers of ready-mix concrete. (Lab. Code, § 1720.9.) A group of concrete suppliers contended that the law violates the equal protection clause and is preempted by the Federal Aviation Administration Authorization Act (49 U.S.C. § 14501). A federal trial court granted California’s motion to dismiss the preemption claim, but granted the concrete suppliers’ summary judgment on equal protection grounds, concluding Labor Code § 1720.9 did not pass muster under the rational basis test. The trial court also denied the motion to intervene filed by the International Brotherhood of Teamsters. While the Ninth Circuit Court of Appeals agreed the statute is not preempted, it reversed both the trial court’s order denying intervention and the grant of summary judgment on equal protection grounds, noting several rational reasons for differentiating ready-mix drivers from other delivery drivers. (Allied Concrete &Supply Co. v. Baker (9th Cir., Sept. 20, 2018) 2018 U.S. App. LEXIS 26881.)

Anti-SLAPP Motion Properly Granted in Employment Case.

Employer and employee entered into an arbitration agreement to the effect that employment-related claims would be arbitrated. Nonetheless, the by-then former employee filed an action against the employer in superior court alleging employment-related claims. The former employee filed a special motion to strike the complaint (Code of Civ. Proc., § 425.16), and the trial court granted the motion. Affirming, the Court of Appeal stated: “[T]he entire FAC is based on protected activity, namely, Ruiz’s act of filing his lawsuit . . . .” (Moss Bros. Toy, Inc. v. Ruiz (Cal. App. 4th Dist., Div. 2, Sept. 20, 2018) 2018 Cal. App. LEXIS 837.)

“I’m baaack,” Royal Globe v. Superior Court.

The California Department of Insurance filed an administrative enforcement action against PacifiCare alleging it engaged in multiple unfair settlement practices in violation of Insurance Code § 790.03, subdivision (h). The Insurance Commissioner found PacifiCare engaged in over 900,000 acts and practices in violation of § 790.03, and imposed penalties of $173 million. The superior court granted PacifiCare’s motion for judgment on the pleadings in an action challenging the commissioner’s decision and order. In granting the motion, the trial court found certain insurance regulations “impermissibly conflict and are inconsistent with . . . sections 790.03, subdivision (h) and 790.035.” The first of the three enjoined regulations states that, for purposes of the statute defining unfair claims settlement practices, a violation occurs when the prohibited settlement practice is either “knowingly committed on a single occasion,” or “performed with such frequency as to indicate a general business practice.” The second regulation defines the word “[k]nowingly” to include implied and constructive knowledge. The third regulation defines the word “[w]illful” without requiring any specific intent to cause harm or violate the law. Thereafter, PacifiCare successfully moved for a preliminary injunction preventing the commissioner from continuing to enforce the three regulations ruled invalid. Reversing the order imposing the injunction, the Court of Appeal noted that in Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880, the California Supreme Court held that section 790.03, subdivision (h) can be violated by an insurer’s single knowing act. The appeals court further stated that to the extent the Supreme Court commented on “single act liability” in Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287, “those comments are dicta.” (PacifiCare Life and Health Ins. Co. v. Jones (Cal. App. 4th Dist., Div. 3, Sept. 20, 2018) 2018 Cal. App. LEXIS 836.)

Involuntary Administration of Antipsychotic Medication.

Appellant is a mentally disordered offender (MDO) who suffers from schizoaffective disorder, severe cannabis use disorder, and other mental conditions. While committed to a state hospital, he physically fought the hospital police, then purposefully slammed his head against a wall and blamed the police for harming him. A month later, when asked to draw a picture of his discharge plan, he drew an automatic rifle spraying bullets and wrote “mass shooting.” Mental health professionals concluded that antipsychotic medication was required to treat him. Claiming he is competent to refuse treatment, he petitioned the superior court for relief from an order under In re Qawi (2004) 32 Cal.4th 1, which authorizes a state hospital to involuntarily administer antipsychotic medication. Affirming the Qawi order, the Court of Appeal stated: “The question of whether an MDO is competent to refuse antipsychotic medication focuses on three factors: (1) whether the patient is aware of his mental illness; (2) whether the patient understands the benefits and risks of treatment as well as the alternatives to treatment; and (3) whether the patient is able to understand and evaluate the information regarding informed consent and participate in the treatment decision by rational thought processes. [Citations.] The trial court determined, and we agree, that appellant, fails on each of these factors.” (California Department of State Hospitals v. A.H. (Cal. App. 2nd Dist., Div. 6, Sept. 21, 2018) 2018 Cal. App. LEXIS 838.)

Interspousal Transfer Grant Deed.

A couple purchased a condo during marriage. When the couple divorced, both claimed the condo as separate property. The funds used for the down payment came from the husband’s separate property, but those funds were provided by the wife’s father to the husband rather than to his daughter due to “cultural” considerations. The condo was supposed to be used by the wife’s parents. The deed to the condo was made out to the wife as “a Married Woman as Her Sole and Separate Property,” and the husband signed an interspousal transfer grant deed (ITGD), which stated he received valuable consideration and acknowledged the condo as the wife’s separate property. The trial court found the ITGD did not contain the requisite language to effectuate a transmutation (property acquired during a marriage is presumed to be community property, Fam. Code, § 760). Reversing, the Court of Appeal stated: “The standard ITGD expresses an intent to transfer a property interest from one spouse to another: The constituent components of the word ‘interspousal’ – literally betweenspouses – plus the words ‘transfer’ and ‘grant,’ plus the usual statement about the grantee (or grantees) taking the property as either community or separate property, are all clear indicators the document constitutes an express declaration of an agreement to change the marital character of the property. This document includes all those features.” The matter was remanded for the family law court to determine whether the wife dispelled any presumption of undue influence, pursuant to Family Code § 721, subdivision (b). (In re Marriage of Wishtasb Kushesh and Farima Kushesh-Kaviani, (Cal. App. 4th Dist., Div. 3, Sept. 21, 2018) 2018 Cal. App. LEXIS 840.)

Veterinarian Forfeited His Contentions on Appeal by Failing to Provide an Adequate Record.

The Veterinary Medical Board filed charges of negligence and/or incompetence against a veterinarian in the treatment of four animals. After those charges were proven at an evidentiary hearing, an administrative law judge (ALJ) recommended that the veterinarian’s license be revoked, the revocation be stayed, and the veterinarian be placed on probation for five years. The board adopted the ALJ’s recommendations. The veterinarian filed a petition for writ of mandate in the superior court. The superior court, exercising its independent judgment, denied the petition. The veterinarian timely appealed, but the Court of Appeal concluded that he forfeited his contentions on appeal by failing to summarize the evidence the trial court relied on and failing to adequately support his factual assertions. (Shenouda v. Veterinary Medical Board (Cal. App. 2nd Dist., Div. 4, Sept. 21, 2018) 2018 Cal. App. LEXIS 845.)

Attack on Credibility Not Enough to Defeat a Summary Judgment Motion.

A scheduling manager for a court reporting agency was speaking on her cell phone with one of the agency’s court reporters while driving late one evening. The scheduling manager struck plaintiff, who was injured. Plaintiff contended the court reporting agency was liable under the theory of respondeat superior. There was evidence that the scheduling manager and the court reporter were good friends, spoke often on the phone, and were discussing personal, not business-related, matters that night. To establish respondeat superior liability, plaintiff relied on cell phone records that contradicted the agency employees’ account of how often they spoke by phone. The trial court granted summary judgment for the agency. Affirming, the Court of Appeal stated: “Code of Civil Procedure section 437c, subdivision (e), provides that ‘summary judgment shall not be denied on grounds of credibility,’ with certain exceptions . . . which we conclude do not apply. Ultimately, plaintiff has no evidence that [the scheduling manager] was operating within the scope of her employment at the time of the accident. Plaintiff attacks [the scheduling manager’s] and [the court reporter’s] credibility. But that is not enough, and thus the court correctly granted summary judgment.” (Ayon v. Esquire Deposition Solutions, LLC (Cal. App. 4th Dist., Div. 3, Sept. 21, 2018) 2018 Cal. App. LEXIS 846.)

Federal Court Should Have Remanded Removed Matter Back to State Court.

Defendant manufactures and sells drones to military and civilian customers. Plaintiff is a reseller of drones in Latin America. In this action, initially filed in state court, plaintiff contends defendant improperly delayed shipments of its orders, wrongfully terminated a distributorship agreement, and appropriated plaintiff’s prior groundwork by moving into the Latin American market. Defendant removed the case to federal court under 28 U.S.C. § 1442(a)(1), which allows removal of civil actions against “any officer (or any person acting under that officer) of the United States.” The district court denied plaintiff’s motion to remand the case to state court. The Ninth Circuit Court of Appeals reversed because the notice of removal did not establish that defendant was acting under the direction of a federal officer in its dealings with plaintiff. (Fidelitad, Inc. v. Insitu, Inc. (9th Cir., Sept. 25, 2018) 2018 U.S. App. LEXIS 27344.)

Arbitration Uber Alles.

Current and former Uber drivers filed class actions alleging that Uber violated various state and federal statutes by, among other things, misclassifying drivers as independent contractors rather than employees. Uber appealed the district court’s orders denying its motions to compel arbitration, granting class certification, and controlling class communications. In Mohamed v. Uber Technologies, Inc. (9th Cir. 2016) 848 F.3d 1201, the Ninth Circuit Court of Appeals previously reversed the district court’s order denying Uber’s motions to compel arbitration. In this appeal, the plaintiffs offered additional arguments why the arbitration agreements were unenforceable, asserting that the lead plaintiffs in one of the actions constructively opted out of arbitration on behalf of the entire class, and that the arbitration agreements contained class action waivers that violated the National Labor Relations Act of 1935. The Ninth Circuit found those arguments unpersuasive, concluding: “The district court’s denial of Uber’s motions to compel arbitration . . . must be reversed, based on Mohamed. Because the arbitration agreements are enforceable, the district court’s class certification orders . . . must also be reversed. The orders entered by the district court under Rule 23(d) orders are moot and are thus reversed as well.” (O’Connor v. Uber Technologies, Inc. (9th Cir., Sept. 25, 2018) 2018 U.S. App. LEXIS 27343.)

Ministerial Exception Applied to Tort but Not Contract Causes of Action.

 A theological seminary/university offers courses that are religious in nature: Biblical studies, Christian counseling, communication and preaching, ministry leadership and administration, discipleship ministries, intercultural studies, and theological and historical studies. A dean at the theological seminary was not only a dean but also taught courses in the Old Testament and God revelation. She had a written employment agreement with the university. The university terminated her for insubordination. She sued her former employer for breach of contract, defamation, invasion of privacy, and intentional infliction of emotional distress. The university moved for summary judgment on the ground plaintiff’s employment was within the ministerial exception, so judicial review of her employment-related dispute was precluded by the First Amendment. In opposition, plaintiff argued the exception is not applicable because she is not a minister, but even if the exception applies, it does not preclude enforcement of her contract and tort claims. The trial court granted summary judgment. The Court of Appeal affirmed in part and reversed in part, stating: “We shall conclude the trial court correctly concluded that [the] University is a religious organization and that [plaintiff] is a minister for purposes of the ministerial exception, but that her contract cause of action is not foreclosed by the ministerial exception. Defendants have failed to show that resolution of [plaintiff’s] contract claim would excessively entangle the court in religious matters. However, her tort causes of action are part and parcel of the actions involved in her termination, and are therefore barred by the ministerial exception.” (Sumner v. Simpson University (Cal. App. 3rd Dist., Sept. 25, 2018) 2018 Cal. App. LEXIS 857.)

Reverse Triangular Merger.

Plaintiff owns a shopping center where defendant’s drug store is located. In 1968, plaintiff and defendant agreed that if defendant sold or leased any portion of the property to a third party, that party’s proportional share of common area maintenance fees would increase. In 2008, the drug store and a large corporation formed a “reverse triangular merger,” which is a merger in which an acquiring corporation forms a new subsidiary that is merged into the surviving corporation. A reverse triangular merger is useful because the target corporation remains intact as a subsidiary of the acquiring corporation, where the target corporation has contracts or assets that are not easily assignable. The shopping center sued for breach of contract, contending the drug store owed more maintenance fees. The trial court granted summary judgment for the drug store. Affirming, the Court of Appeal concluded that “where the form of reorganization was not chosen to disadvantage creditors or shareholders, we will not ignore the form of reorganization chosen by the corporation.” (North Valley Mall, LLC v. Longs Drug Stores California, LLC (Cal. App. 3rd Dist., Sept. 25, 2018) 2018 Cal. App. LEXIS 856.)

Amount of Insurance in a Loss of Consortium Claim.

A wife sued for loss of consortium after her husband was seriously injured in an automobile accident that was the defendant’s fault. The issue presented in this case is whether the wife’s claim and the husband’s claim are subject to a single per person limit in defendant’s insurance policy or double that amount. All California cases except one have answered the question in the affirmative, finding the policy language provided for the aggregation of the two claims. Here, the policy language reads: “The bodily injury liability limits for each person is the maximum we will pay as damages for bodily injury, including damages for care and loss of service, to one person per occurrence.” In a suit for declaratory relief brought by the husband and wife, the trial court ruled in favor of the insurance company. Affirming, the Court of Appeal stated: “Although the policy language at issue here differs slightly from the language in the published cases, we find it is sufficient to aggregate the two claims.” (Jones v. IDS Property Casualty Insurance Company, Cal. App. 3rd Dist., Sept. 25, 2018) 2018 Cal. App. LEXIS 858.)

Even a Form Complaint Requires a Little Thought.

Plaintiff was injured on a ski slope. In her form complaint, plaintiff alleged that the ski resort operator “is liable for the negligent transportation of an injured party. Ms. Martine injured her knee while skiing and called for ski patrol to transport her to the bottom of the mountain. She was loaded into a sled by ski patrol, who may have loaded her improperly. During her transport to the bottom of the mountain, ski patrol negligently failed to maintain control of the sled, causing it to slide down the mountain and into a tree. As a result of the accident, Ms. Martine suffered injuries to her head and leg.” Defendant moved for summary judgment, which the trial court granted. Affirming, the Court of Appeal held the doctrine of primary assumption of risk was a complete defense to plaintiff’s claim for negligence. As to the claim that the ski patroller was a common carrier, the appeals court said the complaint is devoid of any allegations the ski patroller was acting as a common carrier. With regard to plaintiff’s argument that the ski patroller dropped her, the appeals court stated: “There is no allegation that she sustained additional injuries when she was later dropped when being loaded on the tram.” (Martine v. Heavenly Valley Limited Partnership (Cal. App. 3rd Dist., Sept. 26, 2018) 2018 Cal. App. LEXIS 864.)

Attorney Fees in Marital Dissolution.

The Court of Appeal held the husband’s income tax refunds from his net income and his voluntary contributions to a 401(k) should have been included in the available income for the calculation of child support. Regarding attorney fees, the appellate court noted that Family Code § 2030, subdivision (a)(2) states that ‘“the court shall make an order awarding attorney’s fees and costs’ if the findings required by that subdivision ‘demonstrate disparity in access and ability to pay.’” The court concluded “a trial court must make explicit findings on the issues listed in subdivision (a)(2) of section 2030.” (In re Marriage of Morton (Cal. App. 5th Dist., Sept. 26, 2018) 2018 Cal. App. LEXIS 865.)

Japanese Adoption Issue in California Probate Court.

Decedents are two sisters who died intestate. They were never married and have no descendants. Their father was adopted in Japan in 1911. A dispute arose between descendants of their father’s biological parents and descendants of his adoptive parents. Under Probate Code §§ 6450 and 6451, an adoption severs the relationship between the natural parent and the adopted child, and the relationship of parent and child exists between an adopted person and the person’s adopting parents. The probate court recognized the Japanese adoption. Affirming, the Court of Appeal stated: “For purposes of intestate succession, under California law, the 1911 adoption severed the relationship between decedents’ father and his natural parents.” (Estate of Fusae and Emi Obata (Cal. App. 1st Dist., Div. 3, Sept. 26, 2018) 2018 Cal. App. LEXIS 867.)

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