Litigation
Litigation Update: October 2020
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, Reuben Ginsburg
- Editors, Dean Bochner, Julia Shear Kushner, Jessica Riggin, and David Williams
Abuse of Discretion of Unemployment Insurance Appeals Board.
Petitioner was fired from his job, and an administrative law judge found him ineligible for unemployment benefits. The Unemployment Insurance Appeals Board agreed because petitioner was discharged for breaking “a reasonable employer rule.” Reversing, the Court of Appeal concluded that the board abused its discretion in refusing to consider additional evidence regarding the sequence of events, offered by petitioner after the administrative law judge had rendered its decision. The need for an accurate chronology in determining petitioner’s eligibility for benefits outweighed any deficiencies in the proffer of potentially significant new evidence. (Land v. California Unemployment Ins. Appeals Bd. (Cal. App. 1st Dist., Div. 1, Sept. 1, 2020) 54 Cal.App.5th 127.)
Stranger to a Contract May Be Liable in Tort for Intentional Interference with Contract.
A property owner hired a contractor. The contractor subcontracted plaintiff to perform four phases of paving work. After a brief delay, the owner told the contractor to “kick [the subcontractor plaintiff] off the job or hire somebody else.” Plaintiff sued the owner for intentional interference with contract. The trial court granted the owner’s motion for summary judgment on the grounds that the owner was not a stranger to the contract and therefore could not be liable for intentional interference, citing Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1991) 7 Cal.4th 503. The Court of Appeal reversed, stating, “a defendant who is not a party to the contract or an agent of a party to the contract is a . . . stranger to the contract and, regardless whether the defendant claims a social or economic interest in the contractual relationship, may be liable in tort for intentional interference with contract.” (Caliber Paving Co., Inc. v. Rexford Industrial Realty & Management, Inc. (Cal. App. 4th Dist., Div. 3, Sept. 1, 2020) 54 Cal.App.5th 175.)
Previously we reported:
Compensation for Hours Worked.
A group of employees filed a class action against their employer, arguing they were not paid minimum and overtime wages for time spent waiting for and undergoing exit searches. Industrial Welfare Commission Wage Order No. 7-2001 requires employers to pay their employees a minimum wage for all “hours worked,” which is defined as “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” At the request of the Ninth Circuit, the California Supreme Court considered the following certified question: “Is time spent on the employer’s premises waiting for, and undergoing, required exit searches of packages, bags, or personal technology devices voluntarily brought to work purely for personal convenience by employees compensable as ‘hours worked’ within the meaning of Wage Order 7?” The Supreme Court answered “yes,” explaining that “[t]he exit searches burden [the] employees by preventing them from leaving the premises with their personal belongings until they undergo an exit search—a process that can take five to 20 minutes to complete—and by compelling them to take specific movements and actions during the search.” (Frlekin v. Apple, Inc. (Cal., Feb. 13, 2020) 8 Cal.5th 1038.)
https://www.courts.ca.gov/opinions/archive/S243805.PDF
The latest:
Once the question was answered by the California Supreme Court, the Ninth Circuit held: “We reverse the district court’s grant of Apple’s motion for summary judgment and denial of Plaintiffs’ motion for summary judgment, and we remand for further proceedings with instructions to (1) grant Plaintiffs’ motion for summary judgment on the issue of whether time spent by class members waiting for and undergoing exit searches pursuant to the Policy is compensable as ‘hours worked’ under California law, and (2) determine the remedy to be afforded to individual class members.” (Frlekin v. Apple, Inc. (9th Cir., Sept. 2, 2020) 973 F.3d 947.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/02/15-17382.pdf
Jury Verdict in Antitrust Case Reversed for Lack of Substantial Evidence.
This case arises from an antitrust dispute involving the licensing of motion pictures to movie theaters for public exhibition. A jury found in plaintiff’s favor, awarding $1.25 million in damages, which was automatically trebled to $3.75 million pursuant to provisions of the Cartwright Act applicable to all successful private antitrust suits. The Court of Appeal noted that the Cartwright Act, like its federal counterpart the Sherman Act, does not prohibit all agreements restraining trade, but only prohibits agreements that unreasonably restrain trade. Stating that plaintiff bore the burden of establishing harm to competition, the Court of Appeal reversed for lack of substantial evidence. (Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc. (Cal. App. 2nd Dist., Div. 1, Sept. 2, 2020) 54 Cal.App.5th 192.)
Challenge to California’s History Teachings.
Parents of Hindu children in California public schools sued the State Department of Education and State Board of Education. They alleged that sixth and seventh grade history and social science curriculum materials discriminated against the Hindu religion. Of particular concern was a passage concerning the role of invaders and their effect on the origins of Hinduism. Plaintiffs alleged that this theory had been discredited and disparaged their religion. The district court dismissed plaintiffs’ due process, equal protection, and free exercise clause claims, and subsequently granted summary judgment on the remaining establishment clause claim. The court excluded an expert report offered to explain how, from the perspective of a person knowledgeable in the field of religious history, the curriculum expressed a negative view of Hinduism. The Ninth Circuit concluded the exclusion was proper because the question was how curriculum materials would be understood by a reasonable observer, not how an expert would interpret them. Affirming, the Ninth Circuit held the challenged materials did not disparage Hinduism in violation of the Constitution. (California Parents for the Equalization of Educational Materials v. Torlakson (9th Cir. 2020) 973 F.3d 1010.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/03/19-15607.pdf
Untimely Appeal from Order Granting Anti-SLAPP Motion.
Plaintiffs sued defendant for defamation and intentional infliction of emotional distress. On May 11, 2018, the trial court filed an order granting defendant’s special motion to strike the complaint (Code Civ. Proc., § 425.16). The clerk served a signed, filed-endorsed copy of the order that same day. On June 29, the court filed another order granting the special motion to strike, this one prepared by defendant’s attorney. On August 9, plaintiffs filed a motion for reconsideration of the granting of the special motion to strike. On August 29, the court awarded defendant $79,000 in attorney fees. On October 25, plaintiffs filed a notice of appeal from the orders of May 11, June 29, and August 29. The trial court denied the motion for reconsideration on November 15. The Court of Appeal concluded the May 11 order granting the anti-SLAPP motion was an appealable order under Code of Civil Procedure §§ 425.16, subdivision (i) and 904.1, subdivision (a)(13). The notice of appeal from the May 11 order was untimely because it was filed more than 60 days after the clerk served a filed-endorsed copy of the order. The June 29 order did not supplant the May 11 order. The motion for reconsideration did not extend the time to appeal from the May 11 order because that order was a judgment and the court had no jurisdiction to rule on the reconsideration motion after judgment. The appeal was timely as to the August 29 order concerning attorney fees. The Court of Appeal found no abuse of discretion in the fee award. (Marshall v. Webster (Cal. App. 3rd Dist., Sept. 4, 2020) 54 Cal.App.5th 275.)
Arbitration Agreements with Uber Drivers Are Not Exempt from the FAA.
The Federal Arbitration Act (9 U.S.C. § 1 et seq.; FAA) exempts from its coverage “contracts of employment” of three categories of workers: “seamen,” “railroad employees,” and a residual category comprising “any other class of workers engaged in foreign or interstate commerce.” The district court held that rideshare drivers who pick up and drop off passengers at airports do not fall within the residual category, and therefore compelled arbitration in accordance with the terms of their contracts. Denying a petition for writ of mandamus, the Ninth Circuit found that the district court’s decision was not clearly erroneous. The rideshare drivers all operated intrastate, rather than interstate. The court also contrasted these drivers with Amazon drivers, who are exempt even though they only operate within a single state because they deliver packages that move in interstate commerce. (In re Grice (9th Cir., Sept. 4, 2020) 2020 WL 5268941.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/04/20-70780.pdf
Winner Take All.
California, like 47 other states, employs a winner-take-all approach to selecting its presidential electors. Under this system, the state awards all of its electors to the political party of the popular vote winner in the state. Appellants, a coalition of voters in California, alleged that winner-take-all violates the equal protection and First Amendment rights of California residents who do not vote for the state’s popular vote winner and thus enjoy no representation among the state’s electors. The district court dismissed the complaint with prejudice. Affirming, the Ninth Circuit held that “a State’s use of [winner-take-all] to select its presidential electors is consistent with the Constitution’s guarantee of equal protection.” (Rodriguez v. Newsom (9th Cir., Sept. 8, 2020) 2020 WL 5361884.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/08/18-56281.pdf
Alleged Copyright Infringement.
Before the “Jersey Boys” play debuted on Broadway in 2005, one of the band members partnered with a ghost writer to write a book telling “the whole story” of The Four Seasons band. The ghostwriter’s surviving wife alleged that the play constituted copyright infringement. The district court granted judgment as a matter of law to Frankie Valli and other defendants. Affirming, the Ninth Circuit held that facts, in and of themselves, may not be the basis for a copyright claim. (Corbello v. Valli (9th Cir., Sept. 8, 2020) 2020 WL 5361461.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/08/17-16337.pdf
Class Action Fairness Act.
The Class Action Fairness Act (28 U.S.C. § 1332(d)(2)) provides that a federal district court shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000. A truck driver filed a class action against his employer in state court, alleging various wage and hour violations of California law. Defendant removed the case to federal district court, which granted plaintiff’s motion to remand on the ground that defendant failed to adequately show the amount in controversy exceeded $5 million due to the cursory nature of a declaration submitted by defendant. Reversing, the Ninth Circuit concluded that the district court “erred in treating [plaintiff’s] attack on [defendant’s] presentation as a factual, rather than facial, challenge.” (Salter v. Quality Carriers, Inc. (9th Cir., Sept. 8, 2020) 2020 WL 5361459.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/08/20-55709.pdf
Sexual Harassment and Qualified Immunity.
A woman who volunteered to become her niece’s legal guardian alleged that she was sexually harassed by the social worker assigned to the case. After she complained about the harassment, the social worker and his supervisors allegedly retaliated against her. The woman sued the social worker, his supervisors, and the county for violating her rights under 42 U.S.C. § 1983 and the First Amendment. The district court granted qualified immunity to the defendants. The Ninth Circuit vacated the grant of qualified immunity on the First Amendment claim and “reluctantly” affirmed the grant of immunity on the equal protection claim, explaining: “Although we are prevented from denying qualified immunity in the instant case, we want to make it abundantly clear moving forward—if it was not already—that State public officials violate our Constitution’s promise of equal protection when they sexually harass the people they serve.” (Sampson v. County of Los Angeles (9th Cir., Sept. 9, 2020) 2020 WL 5405672.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/09/18-55450.pdf
Involuntary Detention.
A man who allegedly made comments to a bank teller about automatic weapons and mass murder was detained by police and placed on a mental hold. The man alleged that defendants, a private entity and private health care professionals, violated his rights under the Fourth and Fourteenth Amendments by wrongfully detaining him, forcibly injecting him with antipsychotic medications, and misleading a court into extending his period of involuntary commitment for a total of 55 days. The district court dismissed the man’s claims on summary judgment, concluding that defendants did not act under color of state law. Reversing, the Ninth Circuit concluded that defendants acted under color of state law. (Rawson v. Recovery Innovations (9th Cir., Sept. 9, 2020) 2020 WL 5405684.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/09/19-35520.pdf
Restroom Door Too Narrow for a Wheelchair.
Plaintiff, who is confined to a wheelchair, alleged that he was unable to use the restroom aboard a passenger ferry because the restroom door was too narrow to allow his wheelchair to enter. Plaintiff sued the owner and operator of the vessel under the Americans with Disabilities Act of 1990 (42 U.S.C. § 12182(b)(2); ADA) and California’s Unruh Civil Rights Act (Civ. Code, § 51 et seq.; Unruh Act) for failing to widen the restroom door. The district court denied plaintiff’s motion for summary judgment, granted summary judgment for defendant on the ADA claim, and refused to exercise supplemental jurisdiction over the Unruh Act claim. Affirming in part and reversing in part, the Ninth Circuit stated: “We affirm the district court’s conclusion that [plaintiff] failed to meet his initial burden of plausibly showing that widening the . . . restroom door was ‘readily achievable’ under 42 U.S.C. §§ 12182(b)(2)(A)(iv). In doing so, we adopt a burden-shifting framework whereby plaintiffs have the initial burden at summary judgment of plausibly showing that the cost of removing an architectural barrier does not exceed the benefits under the particular circumstances. The defendant then bears the ultimate burden of persuasion that barrier removal is not readily achievable. [¶] We reverse the district court’s grant of summary judgment, however, because the district court did not evaluate whether [defendant] made the restroom available to [plaintiff] through ‘alternative methods.’ ” The Ninth Circuit remanded the case to allow the district court to determine in the first instance whether there was sufficient evidence that the defendant made the restroom “ ‘available through alternative methods.’ ” (Lopez v. Catalina Channel Express (9th Cir., Sept. 9, 2020) 2020 WL 5405677.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/09/19-55136.pdf
Prevailing Defendant in Action Brought by DFEH.
After the Department of Fair Employment and Housing (DFEH) unsuccessfully brought an action against an employer, the employer sought an attorney fee award. Government Code § 12974 contains a unilateral attorney fee provision in favor of DFEH. Under California’s private attorney general statute (Code Civ. Proc., § 1021.5), absent special circumstances, a prevailing defendant should not receive fees unless the action was objectively without foundation when brought or the plaintiff continued to litigate after it clearly became so. Both the trial court and the appellate court found that “a prevailing defendant in a section 12974 action is not entitled to an award of fees against the DFEH under Code of Civil Procedure section 1021.5” because section 12974 is the more specific and later-enacted statute. (Department of Fair Employment and Housing v. Cathy’s Creations, Inc. (Cal. App. 5th Dist., Sept. 9, 2020) 2020 WL 5405797.)
Surgery Went Beyond Plaintiff’s Consent.
Plaintiff underwent what was supposed to be a simple outpatient procedure to remove a small mass in his scrotum for testing. During the surgery, the surgeon discovered that the mass was more extensive than expected, involving not only the scrotum but also the penis, and he believed that the mass was malignant. Without consulting plaintiff (who was under anesthesia) or the person plaintiff had designated as his medical proxy, the surgeon removed the mass from both the scrotum and the penis, a different and substantially more invasive procedure than had been contemplated. Plaintiff suffered serious side effects, some of which are permanent, and the mass turned out to be benign. Plaintiff sued the doctor and hospital for medical negligence and battery, and a jury awarded $9,272,246.11 in noneconomic damages. The trial court denied defendants’ request to reduce the award to $250,000 under Civil Code section 3333.2. Affirming, the Court of Appeal stated: “The limitation on such damages provided by Civil Code section 3333.2 does not apply to [the] medical battery claim, and we do not find the award excessive.” The appellate court reversed the award of expert fees under Code of Civil Procedure § 998 because the offer to settle was made before plaintiff had filed an amendment to the complaint naming the correct entity as a defendant. (Burchell v. Faculty Physicians & Surgeons of Loma Linda University School of Medicine (Cal. App. 4th Dist., Div. 2, Sept. 10, 2020) 2020 WL 5422950.)
No Private Right of Action.
Plaintiff brought a putative class action against defendant for violating the automatic renewal law (Bus. & Prof. Code, § 17600 et seq.) and unfair competition (Bus. & Prof. Code, § 17200 et seq.). For a $1.99 monthly fee, users of Google’s subscription data storage plan can upgrade to 100 gigabytes of storage. Plaintiff alleged the upgraded Google Drive plan violated the automatic renewal law because Google did not provide the required clear and conspicuous disclosures, did not obtain his affirmative consent to commence a recurring monthly subscription, and did not adequately explain how to cancel. The trial court sustained defendant’s demurrer without leave to amend. Affirming, the Court of Appeal held there is no private right of action for violation of the automatic renewal law. (Mayron v. Google LLC (Cal. App. 6th Dist., Sept. 11, 2020) 2020 WL 5494245.)
Juror Misconduct in a Criminal Case Was Not Prejudicial.
Defendant was convicted in Nevada of physically and sexually abusing his girlfriend’s three children. After the jury returned the verdict, the judge invited the jurors to “stay and chat” with the attorneys to “discuss the case.” When asked what factors impacted the verdict, one juror said: “It’s like my neighbor, who is a cop, always says, ‘[h]e wouldn’t be here if he didn’t do something.’ ” This comment prompted a motion for a new trial and an evidentiary hearing. At the hearing, the juror explained that the conversation with his neighbor occurred during trial, before deliberations. The Nevada courts affirmed the convictions. The district court denied the defendant’s petition for writ of habeas corpus. Affirming, the Ninth Circuit agreed with the Nevada Supreme Court and the district court that the defendant did not show prejudice—i.e., that the juror’s misconduct affected the verdict. (Von Tobel v. Benedetti (9th Cir., Sept. 14, 2020) 2020 WL 5509745.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/14/18-15892.pdf
Reinsurance Carrier Challenges Underlying Carrier’s Payment of Claim.
An excess insurer challenged an underlying insurer’s payment decision as outside the scope of coverage, arguing that underlying insurers paid an uncovered claim. The district court agreed with the excess carrier and held that it was entitled to seek reimbursement of the payment amount. Reversing, the Ninth Circuit stated: “We find that no authority supports [the excess carrier’s] theory of ‘improper erosion.’ Nor did [the excess carrier] clearly reserve its right to challenge the underlying insurers’ coverage decision. Therefore, consistent with the general rule favoring the objectively reasonable expectations of the insured, we reverse.” (AXIS Reinsurance Co. v. Northrop Grumman Corp. (9th Cir., Sept. 14, 2020) 2020 WL 5509743.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/14/19-55135.pdf
Question of Fact Whether Insurance Broker Undertook a Special Duty.
Plaintiff purchased used computer equipment worth nearly $40,000, which was damaged in transport from California to Texas. Plaintiff’s insurer denied his claim. Plaintiff sued his insurance broker for breach of contract and negligence. He alleged the broker owed him a special duty to make the insurance policy language understandable to an ordinary person and to explain the scope of coverage. The court granted summary judgment for the broker, concluding there was no heightened duty of care. On appeal, plaintiff asked the Court of Appeal to create a new rule that brokers/agents, specializing in a specific field of insurance, hold themselves out as experts and are subject to a heightened duty of care towards clients seeking that particular kind of insurance. Reversing, the appeals court stated: “We decline the invitation to create a per se rule, however, we conclude [plaintiff] raised triable issues of fact as to whether [the broker] undertook a special duty by holding itself out as having expertise in inland marine insurance, and [plaintiff] reasonably relied on its expertise.” (Murray v. UPS Capital Ins. Agency, Inc. (Cal. App. 4th Dist., Div. 3, Sept. 14, 2020) 2020 WL 5508039.)
Humanitarian Relief Program to People from Sudan, Nicaragua, Haiti and El Salvador Ended.
The Temporary Protected Status (TPS) program is a congressionally created humanitarian program administered by the Department of Homeland Security (DHS) that provides temporary relief to nationals of designated foreign countries that have been stricken by a natural disaster, armed conflict, or other “extraordinary and temporary conditions in the foreign state.” (8 U.S.C. § 1254a(b).) In 2017 and 2018, Secretaries of DHS under the Trump Administration terminated the TPS designations of four countries: Sudan, Nicaragua, Haiti, and El Salvador. Plaintiffs, who are TPS beneficiaries from these countries and their children, challenged the TPS termination decisions as unlawful under the Administrative Procedure Act (5 U.S.C. §§ 551 et seq.; APA) and the equal protection clause of the Fifth Amendment. The district court issued a preliminary injunction barring implementation of the termination decisions. Reversing and vacating the preliminary injunction, the Ninth Circuit held: “Based on our reading of the TPS statute, we hold that Plaintiffs’ APA claim is foreclosed from judicial review. We also conclude that Plaintiffs are unable to show a likelihood of success, or even serious questions going to the merits of their [equal protection] claim.” (Ramos v. Wolf (9th Cir., Sept. 14, 2020) 2020 WL 5509753.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/14/18-16981.pdf
Good News for Attorneys Regarding Fees.
A law firm defended a company through two rounds of litigation with its chief competitor. The Uniform Trade Secrets Act (Civ. Code, § 3426.4) allows courts to award reasonable attorney fees and costs to the “prevailing party.” The question for the Court of Appeal was whether defendant or defendant’s lawyers were the “prevailing party” for purposes of a fee award. After a lengthy discussion about public policy, the appeals court held: “We conclude that, absent an enforceable agreement to the contrary, these fees belong to the attorney to the extent they exceed the fees the litigant already paid. We further conclude that, although the parties here entered into a fee agreement, that agreement did not alter the default disposition of fees in favor of the attorney.” (Aerotek, Inc. v. Johnson Grp. Staffing Co., Inc. (Cal. App. 3rd Dist., Sept. 15, 2020) 2020 WL 5525180.)
Arbitration Provision Violates the Law.
The trial court denied a defendant’s petition to compel arbitration because the arbitration provision barred the customer from pursuing “in any forum” his claim for a public injunction to stop defendant’s allegedly illegal practices, in violation of various consumer protection statutes. Affirming, the Court of Appeal stated: “We conclude the injunctive relief [plaintiff] prays for in the complaint fits the Supreme Court’s definition of ‘public injunctive relief’ in McGill: ‘injunctive relief that has the primary purpose and effect of prohibiting unlawful acts that threaten future injury to the general public.’ (McGill, supra, 2 Cal.5th [945] at p. 951.)” (Mejia v. DACM Inc. (Cal. App. 4th Dist., Div. 3, Sept. 15, 2020) 2020 WL 5525793.)
Union Members’ First Amendment Rights Are Not Violated when Union Dues Are Deducted from Their Paychecks.
In Janus v. American Federation of State, County, and Municipal Employees (2018) 138 S.Ct. 2448, the U.S. Supreme Court concluded that compelling nonmembers to subsidize union speech violates the First Amendment. Public employers stopped automatically deducting representation fees from nonmembers. Plaintiff and fellow union-member employees claimed that, despite their agreement to the contrary, deduction of union dues violated the First Amendment. They sued both the union and the State of Washington for civil rights violation under 42 U.S.C. § 1983 for deducting union dues from their paychecks. The district court dismissed their action. Affirming, the Ninth Circuit stated: “Their claim against the union fails under 42 U.S.C. § 1983 for lack of state action, a threshold requirement. Their First Amendment claim for prospective relief against Washington state also fails because Employees affirmatively consented to deduction of union dues. Neither state law nor the collective bargaining agreement compels involuntary dues deduction and neither violates the First Amendment.” (Belgau v. Inslee (9th Cir., Sept. 16, 2020) 2020 WL 5541390.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/16/19-35137.pdf
Termination of Asylum.
Petitioner is a native of Somalia. He came to the United States in 1996 as a stowaway and was granted asylum in 1997. Years later, the government re-opened the asylum proceeding because petitioner had been convicted of the felony of being a felon in possession of a firearm. The immigration judge terminated petitioner’s asylum status and denied his request to adjust his status to that of a lawful permanent resident. Affirming, the Ninth Circuit concluded the immigration judge did not err in finding petitioner’s firearm conviction constitutes a particularly serious crime and in declining to consider petitioner’s request for change of status because that adjustment must be made by the United States Citizenship and Immigration Services. (Bare v. Barr (9th Cir., Sept. 16, 2020) 2020 WL 5541393.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/16/17-73269.pdf
Arbitration Agreement Silent with Regard to Who Should Decide Arbitrability.
After the parties had a dispute and a lawsuit was filed in federal court, the plaintiff moved to compel arbitration. The agreement to arbitrate was silent as to whether the court or the arbitrator should decide arbitrability. The district court found the parties’ arbitration agreement was broad enough to authorize the arbitrator, rather than the court, to determine whether or not the issue was arbitrable. As a result, the district court granted plaintiff’s motion to compel arbitration without deciding whether the grievance was arbitrable. Reversing, the Ninth Circuit stated that courts should not assume that the parties agreed to arbitrate arbitrability in the face of “silence or ambiguity.” (SEIU Local 121RN v. Los Robles Regional Med. Ctr. (9th Cir., Sept. 18, 2020) 2020 WL 5583677.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/18/19-55185.pdf
Class Action Waiver.
Plaintiff worked as a financial advisor for defendant. Form contracts governing the employment entitled plaintiff to deferred compensation unless he resigned or was terminated for cause. In 2015, defendant announced it would shut down its financial advisory operations and that a bank with which defendant had entered into an agreement would recruit defendant’s former financial advisors, with no obligation to hire them. Plaintiff alleged that defendant entered into the agreement with the bank to avoid paying deferred compensation to its financial advisors. Ultimately, defendant paid deferred compensation to those who were hired by the bank, but not to those not hired, including plaintiff. The district court dismissed plaintiff’s action in favor of arbitration. Plaintiff appealed, arguing that the Financial Industry Regulatory Authority, Inc. barred defendant from compelling arbitration. Because plaintiff had agreed to arbitrate and waived filing a class action, the Ninth Circuit affirmed, concluding plaintiff was left with only his individual claim. (Laver v. Credit Suisse Securities (USA), LLC (9th Cir., Sept. 18, 2020) 2020 WL 5583673.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/18/18-16328.pdf
Bank Robbers Use Hostages as Human Shields.
Bank robbers took three women hostage to be used as human shields. One of the robbers accidently shot one of the women in the leg, and then pushed her out of a vehicle during a high speed chase. Plaintiff was one of the two other hostages. The pursuit lasted more than an hour, reaching speeds of 100 mph, and included exchanges of gunfire. Plaintiff ultimately decided her best chance at surviving was to open one of the rear side doors and throw herself from the moving Ford Explorer. Doing so, she sustained serious injuries. A few minutes later, the chase came ended, and police officers fired several hundred rounds into the Explorer, killing two of the robbers and the remaining hostage. Plaintiff sued the police, alleging assault and battery, intentional infliction of emotional distress, and general negligence. In opposition to defendants’ summary judgment motion, plaintiff argued the police officers were not entitled to “fleeing suspect” immunity under Government Code § 845.8 because her injuries were not caused by fleeing robbers, but were caused by her jumping from the moving Explorer in order to avoid being killed by bullets fired by the police. The trial court granted summary judgment for the police. Affirming, the Court of Appeal concluded that the officers’ use of deadly force was reasonable as a matter of law. (Koussaya v. City of Stockton, Sept. 21, 2020) 2020 WL 5626796.)
California Interest on Escrow Accounts Law Preempted.
Plaintiffs obtained a residential home loan from a federal savings association regulated by the Home Owners’ Loan Act of 1933 (12 U.S.C. § 1461 et seq.; HOLA). Defendant, a national bank, assumed the mortgage servicing rights and obligations. Civil Code § 2954.8 provides that mortgagors are entitled to interest on escrow accounts for mortgages issued by a savings association and later assigned to a national bank. Plaintiffs did not receive interest on their accounts. Defendant moved to dismiss the complaint, arguing that because the mortgage was initially issued by a savings association regulated under HOLA, defendant was not required to pay interest. The district court denied defendant’s motion to dismiss, holding that HOLA preemption did not apply because plaintiffs only sought redress for defendant’s nonpayment of escrow interest after defendant acquired the assets of the failed savings association. Reversing, the Ninth Circuit stated: “We hold that HOLA field preemption principles apply to Appellees’ claims against Chase, a national bank, even though its conduct giving rise to the complaint occurred after it acquired the loans in question from WaMu, a federal savings association. Because California’s interest-on-escrow law imposes a requirement regarding escrow accounts; affects the terms of sale, purchase, investment in, and participation in loans originated by savings associations; and has more than an incidental effect on the lending operations of savings associations, we hold that it is preempted by sections 560.2(b)(6) and (b)(10), and 560.2(c) of the OTS regulation governing the case before us.” (McShannock v. JP Morgan Chase Bank NA (9th Cir., Sept. 22, 2020) 2020 WL 5639700.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/22/19-15899.pdf
Employees Contend Employer’s Confidentiality Policy Violates Their Right to Free Speech.
Defendant employer required its employees to comply with various confidentiality requirements. Plaintiff employees contended the policies restricted their speech in violation of California law. The trial court sustained defendants’ demurrers without leave to amend, concluding plaintiffs’ claims were preempted by the National Labor Relations Act under San Diego Bldg. Trades Council v. Garmon (1959) 359 U.S. 236, 244–245. Reversing, the Court of Appeal stated: “We conclude that, although many of plaintiffs’ claims relate to conduct that is arguably within the scope of the NLRA, the claims fall within the local interest exception to Garmon preemption and may therefore go forward.” (Doe v. Google, Inc., Sept. 22, 2020.)
Interference with Expected Inheritance.
Frank and Louise rekindled their love late in life, over 60 years after Frank broke off their first engagement to serve in the Korean War. Frank’s children from a prior marriage, Tammy and Richard, did not approve of Frank’s and Louise’s marriage. After Frank fell ill, he attempted to establish a new living trust with the intent to provide for Louise during her life. Frank’s illness progressed quickly. Frank’s attorney attempted to have Frank sign the new living trust documents the day after Frank was sent home under hospice care. The lawyer never got the chance to speak with Frank because Tammy and Richard intervened and prevented the lawyer from entering Frank’s home. Frank died early the following morning. Louise sued Tammy and Richard for intentional interference with expected inheritance and other torts. The trial court issued a statement of decision finding in favor of Louise as to her intentional interference with expected inheritance cause of action and in favor of Tammy and Richard as to the remaining causes of action. Tammy appealed. Affirming the judgment in favor of Louise, the Court of Appeal stated: “We find no basis to overturn the trial court’s finding that Frank had the requisite mental capacity to execute the trust documents on August 20.” (Gomez v. Smith (Cal. App. 3rd Dist., Sept. 22, 2020) 2020 WL 5640229.)
Another Mentally Ill Man Shot and Killed by the Police After the Family Sought Help.
The 80-year-old father of a frail,136-pound, mentally-ill man, who refused to take his medication, and who the father could not control, called the police so the mentally-ill man could be taken to a mental hospital. The man stabbed a police officer in the forearm with a pair of scissors. The police officer fired one shot, hitting the man in the calf, and the man did not approach the officer again. The police officer then fired a second, fatal shot. The decedent’s father filed a civil rights complaint against the city and the police in federal court. A jury awarded the father $2.75 million. Affirming and finding there was sufficient evidence to support the jury’s verdict, the Ninth Circuit held the district court did not err in denying immunity on the Fourth Amendment claim, but did err in denying immunity on the Fourteenth Amendment claim. (Lam v. City of Los Banos (9th Cir., Sep. 25, 2020) 2020 WL 5742071.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/25/18-17404.pdf
Power Press Severely Injures Worker.
A supervisor instructed a machine operator supervisor to operate a material-forming machine using a die without any protective guards or cages. Operating it as instructed, the operator’s left hand was crushed and mangled under the die. Labor Code § 4558 establishes a “power press exception” to workers’ compensation exclusivity. The statute gives a right of action to employees injured by an employer’s knowing removal or failure to install a point-of-operation guard on a power press when required by the manufacturer. In LeFiell Manufacturing Co. v. Superior Court (2012) 55 Cal.4th 275, the California Supreme Court held that § 4558 must be narrowly construed. In the instant case, the Court of Appeal decided the power press exception in § 4558 may apply when, 45 years prior to the passage of the statute, the manufacturer conveyed a general requirement for guards that went entirely unheeded by the present user. Reversing the grant of summary judgment, the appellate court stated: “Under these unusual circumstances, we conclude there are triable issues of material fact as to whether the employer violated the statute and reverse the trial court’s grant of summary judgment in the employer’s favor.” (Santos v. Crenshaw Manufacturing, Inc. (Cal App. 4th Dist., Div. 3, Sept. 25, 2020) 2020 WL 5746848.)
Failure to Appeal Order Granting Special Motion to Strike.
A trial court granted defendants’ special motion to strike under the anti–SLAPP statute (Code Civ. Proc., § 425.16). Plaintiff filed a notice of appeal from the judgment of dismissal later entered. Dismissing the appeal, the Court of Appeal stated: “We conclude, based on the applicable law that makes an order granting a motion to strike immediately appealable (§§ 426.16, subd. (i), 904.1, subd. (a)(13)), that appellants’ appeal as to the order on the anti-SLAPP motions was untimely.” (Reyes v. Kruger (Cal. App. 6th Dist., Sept. 25, 2020) 2020 WL 5742675.)
Contractor Departed from Trade Standards.
An enforcement representative for the Contractors’ State License Board sought revocation or suspension of a contractor’s license and restitution. The accusation alleged that the contractor failed to follow spacing and fastening requirements when installing a hardwood floor, thus subjecting the contractor to discipline for departing from trade standards in violation of Business and Professions Code § 7109, subdivision (a) and for failing to complete a construction project for the agreed contract price in violation of § 7113. After an administrative hearing, the contractor suffered a 65-day suspension, a three-year probation, and a restitution order for $27,884.21. The contractor filed a petition for a writ of administrative mandamus in the superior court. Affirming the denial, the Court of Appeal held the contractor did not show error and that the trial court’s findings were supported by substantial evidence. (Sieg v. Fogt (Cal. App. 1st Dist., Div. 4, Sept. 28, 2020) 2020 WL 5757623.)
Primary Assumption of Risk.
Plaintiff was injured when her bicycle struck a pothole on a county road. The jury awarded plaintiff $1.3 million and allocated 70 percent of fault to the county. On appeal, the county argued that plaintiff’s claim was barred by the primary assumption of risk doctrine. Without deciding plaintiff’s contention that the doctrine does not apply to claims against public entities for dangerous condition of public property, the Court of Appeal assumed the doctrine of primary assumption of risk does apply in such cases. The appeals court further assumed that the doctrine applies to recreational cycling. Affirming the judgment, the Court of Appeal stated: “In sum, because the County already owed a duty to other foreseeable users of the road to repair the pothole, the policy reasons underlying the primary assumption of risk doctrine support the conclusion that the County owes a duty not to increase the inherent risks of long-distance, recreational cycling.” (Williams v. County of Sonoma (Cal. App. 1st Dist., Div. 5, Sept. 28, 2020) 2020 WL 5757662.)
Alter Egos Added to Judgment as Judgment Debtors.
Pursuit to a written contract, plaintiff provided staffing and payroll services to defendant corporation. Defendant made partial payment but ultimately defaulted on the agreement, leaving $896,578.40 owing to plaintiff. Plaintiff sued defendant, and the parties entered into a settlement agreement providing that defendant would pay plaintiff the greater of $10,000/month or 50 percent of the monthly revenue. The settlement agreement also gave plaintiff a security interest in defendant’s business. The trial court entered a stipulated judgment. As it turned out, defendant corporation was a shell entity that conducted no substantial business activity. The money defendant had been paying for staffing and payroll were being funneled from a different entity. The trial court ordered that the individual owner of both corporations as well as the corporation from which the money had been funneled be added to the judgment as debtors. The alter egos appealed the order adding them to the judgment. Affirming, the Court of Appeal stated: “A judgment debtor with an empty shell is easy to crack.” (Butler America, LLC v. Aviation Assurance Company, LLC (Cal. App. 2nd Dist., Div. 7, Sept. 29, 2020) 2020 WL 5792639.)
Alleged Health Care Kickback Scheme.
Two doctors alleged that a university hospital stopped referring patients to them after they reported an alleged illegal referral and kickback scheme to hospital management. Their causes of action included violation of Health and Safety Code § 1278.5 (California’s health care whistle blower statute), Government Code § 12653 (False Claims Act), and Business and Professions Code § 17200 et seq. (unfair competition law). The trial court sustained defendants’ demurrer without leave to amend because plaintiffs did not first file a petition for writ of mandate pursuant to Code of Civil Procedure § 1085. Reversing, the Court of Appeal stated: “We find that the trial court erred, because plaintiffs were not required to exhaust judicial remedies before asserting the causes of action they have alleged here. [¶] We find plaintiffs’ complaint alleged sufficient facts to support causes of action for violations of Health and Safety Code section 1278.5 and Business and Professions Code section 17200, et seq., and therefore the demurrer should have been overruled as to those claims. We find that plaintiffs’ cause of action for violation of Government Code section 12653 failed to allege sufficient facts to state a cause of action, but leave to amend was warranted.” (Alborzi v. University of Southern California (Cal. App. 2nd Dist., Div. 4, Sept. 29, 2020) 2020 WL 5792911.)
Personal Jurisdiction.
A representative of a decedent’s estate sued defendant, alleging its talc products caused decedent’s mesothelioma. The trial court granted defendant’s motion to quash, concluding that California lacks specific personal jurisdiction because plaintiff failed to establish that her claims arose from defendant’s forum contacts. That is, the trial court found that plaintiff failed to establish that defendant sold and decedent used in California talc products that contained asbestos as opposed to talc products without asbestos. Reversing, the Court of Appeal concluded that plaintiff need not prove that defendant’s products actually contained asbestos to show that plaintiff’s claims arose from defendant’s forum contacts. (Bader v. Avon Products, Inc. (Cal. App. 1st Dist., Div. 4, Sept. 29, 2020) 2020 WL 5793404.)
You Know That Pair of Shoes You Viewed on the Internet, and now They Follow You Everywhere? It’s the Same for Arbitration Agreements.
A man sued defendant DIRECTV for violation of the Telephone Consumer Protection Act (47 U.S.C. § 227) after he received a prerecorded solicitation on his cell phone. The man had no previous contact with defendant. Defendant uncovered the fact that the man signed a wireless services contract in 2011 with AT&T Mobility with an arbitration clause that covered AT&T and its affiliates. It turns out that AT&T acquired DIRECTV in 2015 . The federal district court denied defendant’s petition to compel arbitration. Affirming, the Ninth Circuit stated: “No one disputes that arbitration clauses subject to the Act must be enforced in federal courts. But we are mindful that arbitration is a matter of consent, and we conclude that DIRECTV has failed to establish that Revitch consented to arbitrate this pending dispute.” (Revitch v. DIRECTV, LLC (9th Cir., Sept. 30, 2020) 2020 WL 5814095.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/30/18-16823.pdf
Clarification of Restitution Recoverable under Lemon Law.
Plaintiff had long-running problems with his leased vehicle. He sued the manufacturer under the lemon law (Civ. Code, § 1791 et seq.; Song-Beverly Consumer Warranty Act) . A jury trial resulted in a special verdict finding the car did not have a defect covered by the warranty that substantially impaired the vehicle’s use, value, or safety, and the car was fit for ordinary purposes, but defendants failed to complete warranted repairs within 30 days. The trial court entered judgment in favor of plaintiff for $1,800, covering incidental expenses. Affirming, the Court of Appeal stated: “[A] buyer may not obtain restitution of the full price he paid for a new motor vehicle, where the manufacturer failed to complete repairs to a defect within 30 days, but the defect did not substantially impair the vehicle’s use, value, or safety.” (Ramos v. Mercedes-Benz USA, LLC (Cal. App. 2nd Dist., Div. 8, Sept. 30, 2020) 2020 WL 5810166.)