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Litigation

Litigation Update: September 2018

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, John Derrick, Jessica Riggin and Kenneth Wang
Sanctuary Cities and Federal Funds.

The term “sanctuary jurisdiction,” according to a Department of Justice memorandum, refers to jurisdictions that willfully refuse to comply with 8 U.S.C. § 1373. That statute states: “Notwithstanding any other provision of Federal, State, or local law, a Federal, State, or local government entity or official may not prohibit, or in any way restrict, any government entity or official from sending to, or receiving from, the Immigration and Naturalization Service information regarding the citizenship or immigration status, lawful or unlawful, of any individual.” (8 U.S.C. § 1373(a).) San Francisco prohibits city and county entities and employees from assisting in the enforcement of federal immigration law or gathering or disseminating information regarding release status of individuals, “unless such assistance is required by Federal or State statute, regulation, or court decision.” Federal funds comprise approximately $1.2 billion of San Francisco’s yearly budget of $9.6 billion. On January 25, 2017, five days after his inauguration, President Trump issued an executive order dealing with sanctuary jurisdictions. San Francisco filed suit challenging the order’s direction to withhold federal grant funds from sanctuary jurisdictions “that willfully refuse to comply with 8 U.S.C. 1373.” The Ninth Circuit Court of Appeals held that under the principle of separation of powers, and in consideration of the spending clause, which vests exclusive power to Congress to impose conditions on federal grants, the executive branch may not refuse to disburse federal grants without congressional authorization. The appeals court affirmed the district court’s grant of summary judgment in favor of San Francisco because Congress had not acted. (City & Cty. of San Francisco v. Trump (9th Cir., Aug. 1, 2018) 897 F.3d 1225.)

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/01/17-17478.pdf

“I just love hanging out with good company on a great, fun golf course,” Rich Eisen.

Plaintiff was taking a swing on a golf course when a swarm of yellow jackets attacked her. She ran about 150 yards until the swarm gave up pursuit. On the way to the hospital, she started to lose consciousness. The driver of the car noticed a fire station, stopped, and the paramedics there gave her a shot. She was then taken to the hospital. She sued the golf club operator for general negligence and premises liability. The trial court concluded that the operator had no duty to protect its patrons from yellow jackets that came from an undiscovered nest on the property, and granted summary judgment for defendant. The Court of Appeal reversed, holding the duty of operators of golf courses is to maintain their property in a reasonably safe condition, and that includes a duty to exercise reasonable care to protect patrons from risks presented by yellow jackets nests on the premises. The appellate court stated: “The measures a golf course operator must take to satisfy this duty may vary, and we do not address whether the Club breached its duty, or whether any such breach caused [plaintiff’s] injuries. Here, those questions involve unresolved issues of material fact that must be determined by the trier of fact in the first instance.” (Staats v. Vintner’s Golf Club, LLC (Cal. App. 1st Dist., Div. 1, Aug. 1, 2018) 25 Cal.App.5th 826.)

http://www.courts.ca.gov/opinions/documents/A147928.DOCX

Waiting Time Penalties Against Employer.

When an employee resigns without notice, Labor Code § 202, subdivision (a) requires the employer to pay all wages within 72 hours. If the employer willfully fails to do so, the employee’s wages continue as a penalty from that due date until they are paid, for up to 30 days. (Lab. Code, § 203.) In this case, the Labor Commissioner awarded the former employee $4,250 in “waiting time” penalties. The superior court upheld the award and awarded $86,160 in attorney fees against the employer. The Court of Appeal affirmed in part, but held as to part of the delay period that there was no basis to conclude the failure to pay all wages was willful, and therefore reduced the penalties to $2,250, while affirming the attorney fee award and awarding fees on appeal. (Nishiki v. Danko Meredith, P.C. (Cal. App. 1st Dist., Div. 4, Aug. 1, 2018) 25 Cal.App.5th 883.) 

http://www.courts.ca.gov/opinions/documents/A147733.DOCX

Online Bingo Is Internet Gambling.

Defendant is a federally recognized Indian tribe in San Diego. The tribe launched an online bingo game, offered exclusively on the Internet to all California residents over age 18. The State of California sued the tribe, and a federal trial court issued a temporary restraining order prohibiting the tribe from continuing operation of the game. The tribe argued that because the game was conducted on tribal lands, the Indian Gaming Regulatory Act (25 U.S.C. § 2701 et seq.; IGRA) applies, while the State of California argued the Unlawful Internet Gambling Enforcement Act (31 U.S.C. § 5361 et seq.; UIGEA) applies instead. The district court found UIGEA applies and entered a permanent injunction against the tribe. Affirming, the Ninth Circuit Court of Appeals stated: “In summary, [the tribe] is correct that IGRA protects gaming activity conducted on Indian lands. However, the patrons’ act of placing a bet or wager on a game of [Internet bingo] while located in California constitutes gaming activity that is not located on Indian lands, violates the UIGEA, and is not protected by IGRA.” (California v. Iipay Nation of Santa Ysabel (9th Cir., Aug. 2, 2018) 898 F.3d 960.)

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/02/17-55150.pdf

Violation of Ethical Duties by Arbitrator.

An arbitrator conducted a six-day arbitration and entered an award in favor of the defendant bank. During the proceedings, the arbitrator accepted employment in eight other cases involving the bank’s counsel and one other case involving the bank itself. The trial court confirmed the award and denied a petition to vacate. The Court of Appeal discussed an arbitrator’s continuing obligation of disclosure after the initial disclosures to the parties. The appeals court found the arbitrator violated various statutes and ethics rules in failing to disclose. The Court of Appeal reversed the judgment with directions for the trial court to vacate its order granting the petition to confirm the arbitration award and denying the petition to vacate it, and enter a new order denying the petition to confirm and granting the petition to vacate. (Honeycutt v. JPMorgan Chase Bank, N.A. (Cal. App. 2nd Dist., Div. 7, Aug. 2, 2018) 25 Cal.App.5th 909.)

http://www.courts.ca.gov/opinions/documents/B281982.DOCX

Homeowner’s Liability for Injury to the Employee of an Unlicensed Contractor.

A homeowner hired a gardener to work on her property, and the gardener hired plaintiff to help her. Plaintiff was injured when she fell from a ladder provided by the gardener while trimming a tree at least 15 feet tall. Plaintiff sued the homeowner, claiming the work required a contractor’s license, but the gardener was not licensed, and the gardener’s negligence caused the fall. “When an employee of a contractor is injured, and the contractor is unlicensed and uninsured at the time of injury, the injured employee’s recourse may be against not only the contractor, but also against the landowner who hired the contractor, as an additional employer.” (Vebr v. Culp (2015) 241 Cal.App.4th 1044, 1051-1052.) In the present case, the trial court concluded that the gardener was a “nurseryperson” (Bus. & Prof. Code, § 7026.1, subd. (a)(4)) performing incidental pruning and therefore was exempt from the contractor’s license requirement for trimming trees 15 feet high or taller, and granted the homeowner’s motion for summary judgment. Reversing, the Court of Appeal held the gardener was not a nurseryperson within the meaning of the statute. (Jones v. Sorenson (Cal. App. 3rd Dist., Aug. 2, 2018) 25 Cal.App.5th 933.) 

http://www.courts.ca.gov/opinions/documents/C084870.DOCX

No Guns Near California Schools.

In 1994, the California Legislature enacted the Gun-Free School Zone Act (Pen. Code, § 626.9), which banned the possession of firearms on school grounds and within “school zones” (within 1,000 feet of school grounds). The act exempted two groups: (1) individuals licensed to carry a concealed firearm under California law; and (2) retired peace officers authorized to carry a loaded firearm. In 2015, the Legislature passed Senate Bill No. 707, which preserved the retired-officer exception for firearm possession on school grounds, as well as within school zones, but prohibited concealed-carry weapon holders from possessing a firearm on school grounds. Plaintiffs alleged that S.B. No. 707 violated the equal protection clause of the Fourteenth Amendment because it treated concealed-weapon permit holders differently from retired peace officers. A federal district court dismissed the action. The Ninth Circuit Court of Appeals affirmed, stating, “the classification at issue serves legitimate state interests in retired-officer and public safety.” (Gallinger v. Becerra (9th Cir., Aug. 3, 2018) 898 F.3d 1012.) 

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/03/16-56125.pdf

Bullets Need Tracing.

California’s Unsafe Handgun Act (Pen. Code, § 31900 et seq.) requires that new models of handguns meet certain criteria. New handguns must microscopically stamp the handgun’s make, model, and serial number onto each fired shell casing. Plaintiffs argued their ability to buy firearms in California was limited, violating the Second Amendment. Applying intermediate scrutiny, the Ninth Circuit Court of Appeals held that only commercial sales are regulated, not possession, and these circumstances do not impose a substantial burden on purchasers. The appeals court noted the microstamping requirement is reasonably tailored to address the substantial problem of untraceable bullets at crime scenes and the value of a reasonable means of identification. (Pena v. Lindley (9th Cir., Aug. 3, 2018) 898 F.3d 969.) 

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/03/15-15449.pdf

Community College Immunity for Field Trips and Excursions Inapplicable to College Hosting Volleyball Game.

Plaintiff attended a public community college in Los Angeles. She traveled to another college with a women’s volleyball team to play in a beach volleyball tournament. She was injured during a game when she dove into the sand and her knee struck a rock in the sand. She sued the college where the game took place. There is a field trip and excursions immunity in section 55220 of title 5 of the California Code of Regulations. The trial court sustained the college’s demurrer without leave to amend based on that immunity. Reversing, the Court of Appeal stated: “The sole issue raised on this appeal is whether the field trips and excursions immunity provided in section 55220 applies here. We conclude that it does not apply to an injury suffered by a member of a visiting team during an intercollegiate athletic event.” (Anselmo v. Grossmont-Cuyamaca Community College Dist. (Cal. App., 4th Dist., Div. 1, Aug. 3, 2018) 25 Cal.App.5th 948.) 

http://www.courts.ca.gov/opinions/documents/D072549.DOC

No Cause of Action for Theft of Labor Under Penal Code § 496.

Founders of a company asked plaintiff to work for the company. They told plaintiff that because of the company’s limited funds they could only afford to pay him $50,000, plus stock options and benefits. He was told he would also receive commissions, but at some point other employees would have some of the accounts. The parties executed a written employment contract. After 17 months on the job, plaintiff was terminated. He sued the founders and the company, alleging several causes of action, including fraud, breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of Penal Code § 496, which prohibits receiving stolen property and authorizes treble damages and an attorney fee award in a civil action. The trial court granted a motion for nonsuit as to cause of action for violation of Penal Code § 496. The jury found in plaintiff’s favor and awarded substantial damages. Plaintiff appealed, challenging the nonsuit. Affirming the nonsuit, the Court of Appeal stated the statute refers to stolen “property,” not “labor,” and, “labor is not ‘property’ as that term is used in the Penal Code.” (Lacagnina v. Comprehend Systems, Inc. (Cal. App. 1st Dist., Div. 4, Aug. 3, 2018) 25 Cal.App.5th 955.) 

http://www.courts.ca.gov/opinions/documents/A147559.DOC

Subsidiary on the Hook for Price Fixing by Parent Company.

Various plaintiff groups filed class action lawsuits around the country, in both state and federal courts, alleging that natural gas traders manipulated the price of natural gas by reporting false information for price indices published by trade publications and engaging in other deceptive practices. Plaintiffs filed this action in Wisconsin state court on behalf of “all industrial and commercial purchasers of natural gas.” The action was removed to federal court and later transferred to Nevada. Plaintiffs alleged that a wholly owned subsidiary company sold natural gas to plaintiffs. The subsidiary sold the gas at prices previously rigged by the parent and sent the profits back to the parent. But the subsidiary asserted there was no evidence that it knew the prices were inflated or that it had the purpose to carry out the price-fixing scheme. A district court granted summary judgment to defendants. Reversing, the Ninth Circuit Court of Appeals held that “ ‘a parent and a wholly owned subsidiary always have a “unity of purpose” ’ and thus act as a ‘single enterprise’ whenever they engage in ‘coordinated activity.’ ” Thus, the appeals court concluded that the subsidiary could be liable to plaintiffs. (Arandell Corp. v. CenterPoint Energy Servs. (9th Cir., Aug. 6, 2018) 2018 U.S. App. LEXIS 21699.) 

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/06/16-17099.pdf

“Death is not the end. There remains the litigation over the estate,” Ambrose Bierce.

Decedent left a $65 million estate, most in unequal shares to his four children. One of the children appealed the probate court’s order settling the trustee’s account and overruling his objections to allocating to his share all of the capital gains tax on the sale of a valuable property. The Court of Appeal found the tax on the property left to him was his responsibility as the gift of the property to him “was a funding mechanism for [his] 35% share of the remainder or residue of the estate rather than an additional specific gift to him.” (Blech v. Blech (Cal. App. 2nd Dist., Div. 3, Aug. 6, 2018) 25 Cal.App.5th 989.) 

http://www.courts.ca.gov/opinions/documents/B268326.DOC

Olympic Committee Dismissed from Antitrust Action.

Plaintiff, a manufacturer of chewing gum, sued the Olympic Committee because it was precluded from sponsoring athletes during Olympic trials. In its complaint, plaintiff alleged defendants engaged in an anticompetitive conspiracy in violation of antitrust law by imposing advertising restrictions during the Olympic trials for track and field athletes. A federal trial court dismissed the complaint. The Ninth Circuit Court of Appeals affirmed, relying on the Olympic and Amateur Sports Act (36 U.S.C. § 220503), which provides that with respect to amateur athletics, the Olympic Committee may “organize, finance, and control the representation of the United States in the competitions and events of the Olympic Games, the Paralympic Games, and the Pan-American Games.” (Gold Medal LLC v. USA Track & Field (9th Cir., Aug. 7, 2018) 2018 U.S. App. LEXIS 21928.) 

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/07/16-35488.pdf

Bivens Action Permitted in Cross-border Shooting.

The complaint alleged that a border patrol agent was on duty on the U.S. side of the border with Mexico while a 16-year-old boy was peacefully walking down a street that runs parallel on the other side. The agent shot between 14 and 30 bullets across the border, hitting the boy about 10 times. According to the complaint, the boy was not throwing rocks or engaging in any violent or threatening behavior against anyone or anything. The facts as pleaded amounted to the act being murder, as opposed to negligence or justifiable conduct. The boy’s mother sued for violation of her son’s Fourth and Fifth Amendment rights. A federal trial court held the border patrol agent was not entitled to qualified immunity on the Fourth Amendment claim, and dismissed the Fifth Amendment claim. The Ninth Circuit Court of Appeals agreed the agent was not entitled to immunity because he violated a clearly established constitutional right. The appeals court held plaintiff may bring a Bivens action under Bivens v. Six Unknown Fed. Narcotics Agents (1971) 403 U.S. 388. (Rodriguez v. Swartz (9th Cir., Aug. 7, 2018) 2018 U.S. App. LEXIS 21930.)

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/07/15-16410.pdf

Class Action Fairness Act.

Defendant removed plaintiffs’ class action to federal court. Finding that only attorney fees that had been incurred as of the date of removal could be included in the amount in controversy, a federal trial court remanded the action to state court on the ground defendant failed to prove the matter in controversy exceeded $5 million, as required for jurisdiction under the Class Action Fairness Act (28 U.S.C. §§ 1332(d), 1453 & 1711-1715). Reversing, the Ninth Circuit Court of Appeals held, “if a plaintiff would be entitled under a contract or statute to future attorneys’ fees, such fees are at stake in the litigation and should be included in the amount in controversy.” (Fritsch v. Swift Transp. Co. of Ariz., LLC (9th Cir., Aug. 8, 2018) 2018 U.S. App. LEXIS 22036.) 

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/08/18-55746.pdf

Difference Between the Marital Communication Privilege and the Spousal Testimonial Privilege.

A woman told agents from the Internal Revenue Service she married a man so he could secure U.S. citizenship and that he agreed to pay her rent in exchange. She then assisted the agents by wearing a concealed recording device. In recorded conversations, the man expressed concern about his immigration status and told her, among other things, “do not set us up, me and you . . . no one can prove anything.” The government charged the man with three counts of subscribing to false income tax returns and other crimes. The man filed a motion to suppress the recordings, citing the marital communications privilege. Noting that the “sham marriage” exception applies to the spousal testimonial privilege, the district court stated it found no authority that it also applied to the marital communications privilege. However, the court ruled that it did, and denied the motion to suppress the man’s recorded statements. The Ninth Circuit Court of Appeals reversed. The appeals court stated the marital communications privilege protects statements or actions intended to be confidential and that either spouse may invoke it. On the other hand, the spousal testimonial privilege prohibits one spouse from testifying against the other in criminal cases during the course of their marriage and “the witness-spouse alone has a privilege to refuse to testify adversely.” (United States v. Fomichev (9th Cir., Aug. 8, 2018) 2018 U.S. App. LEXIS 22033.) 

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/08/16-50227.pdf

MICRA Applied in Claim Against Nursing Facility.

An elderly man undergoing treatment in a skilled nursing facility was expected to live eight or nine more years. It was noted he had difficulty swallowing, so a change in his diet was ordered. That order was not communicated to the facility’s kitchen, and 20 minutes after he ate his dinner a nurse found him in respiratory arrest. Paramedics removed pieces of chicken from his throat before intubating him. He died the following day due to oxygen deprivation to the brain. A jury awarded the representative of his estate large amounts of money for elder abuse and wrongful death. Finding insufficient evidence to support the elder abuse claim, the trial court granted judgment notwithstanding the verdict (JNOV). The trial court also reduced the remaining damages pursuant to Civil Code § 3333.2 (the Medical Injury Compensation Reform Act of 1975; MICRA). Reviewing de novo, the Court of Appeal affirmed the grant of JNOV because there was no substantial evidence of recklessness, as required under the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code, § 15600 et seq.). Also finding the trial court did not err in reducing the award under MICRA, the appellate court affirmed the judgment. (Cochrum v. Costa Victoria Healthcare, LLC (Cal. App. 4th Dist., Div. 3, Aug. 8, 2018) 25 Cal.App.5th 1034.) 

http://www.courts.ca.gov/opinions/documents/G052934.DOCX

Denial of Fair Hearing by College Disciplinary Committee.

A pair of students from two different colleges had a drunken sexual encounter that initially was consensual, until the female asked the male to stop. He continued despite her begging him to stop; he eventually passed out. After the incident, a college review committee conducted an “Investigation Finding and Review” meeting. The male appeared at the meeting, but the female did not appear. After the meeting, the committee found the male had violated college policy regarding sexual relations and suspended him for one year. He challenged the decision by filing a petition for writ of administrative mandate, claiming he was denied a fair hearing. The trial court denied the petition. Reversing, the Court of Appeal held if an accused student faces a severe penalty and the college’s determination turns on the credibility of the complaining witness, the accused student is entitled to a process that allows for questioning the complainant before the trier of fact, either physically or through videoconferencing or similar technology. (Doe v. Claremont McKenna College (Cal. App. 2nd Dist., Div. 1, Aug. 8, 2018) 25 Cal.App.5th 1055.)

http://www.courts.ca.gov/opinions/documents/B281722.DOCX

No ‘Trial Within a Trial’ Necessary when a Lawyer’s Breach of Fiduciary Duty is Intentional.

An internationally-ranked high school swimmer was offered five-year scholarships to several universities. She turned them down to accept a lucrative offer from USA Swimming’s head coach. She hired a lawyer after USA Swimming reneged on its offer. The lawyer failed to disclose his close ties to USA Swimming. In fact, the lawyer had refused to represent another potential client against USA Swimming due to a conflict of interest. The lawyer negotiated a settlement. After learning of the lawyer’s conflict of interest, the swimmer sued him. A jury awarded her $617,810. The trial court granted the lawyer’s new trial motion on grounds of insufficiency of the evidence of causation and emotional distress damages. Reversing, the Court of Appeal stated: “First, we hold that claims of fraudulent concealment and intentional breach of fiduciary duty by a client against his or her attorney are subject to the substantial factor causation standard, not the ‘but for’ or ‘trial within a trial’ causation standard employed in cases of legal malpractice based on negligence. The fact that an attorney-client relationship existed between the plaintiff and the defendant does not change the method by which the plaintiff must establish causation in cases of intentional torts. [¶] Second, we hold that in a case such as this, where the plaintiff’s emotional distress consisted of anxiety, shame, a sense of betrayal, and a continuing impact on personal relationships, the testimony of the plaintiff alone is sufficient to support emotional distress damages. [The young woman’s] testimony that the contract negotiated by [the lawyer], and which he encouraged her to enter, led to stress and extra pressure that made swimming an emotionally painful activity, that she felt shamed and betrayed when she learned about [the lawyer’s] duplicitousness, and that her personal relationships have been impacted due to her lack of trust in others, was sufficient to establish her damages in the absence of any expert testimony.” (Knutson v. Foster (Cal. App. 4th Dist., Div. 3, Aug. 8, 2018) 25 Cal.App.5th 1075.) 

http://www.courts.ca.gov/opinions/documents/G054247.DOCX

“Nobody gets justice. People only get good luck or bad luck,” Orson Welles.

Plaintiff alleged she developed mesothelioma as a result of exposure to asbestos in talcum powder products. A jury found for defendant. The trial court granted plaintiff’s motion to tax over $300,000 in costs, finding the plaintiff had no ability to pay and it would be unjust to impose a large cost award under the circumstances. The Court of Appeal held the trial court abused its discretion. (LAOSD Asbestos Cases (Cal. App. 2nd Dist., Div. 4, Aug. 8, 2018) 25 Cal.App.5th 1116.) 

http://www.courts.ca.gov/opinions/documents/B281022.DOC

Department of Homeland Security Deported Man Despite Ninth Circuit’s Order Staying Removal.

A citizen of Mexico was apprehended by U.S. Customs and Border Patrol officers. An asylum officer determined he had not established a reasonable fear of persecution or torture, and an immigration officer affirmed that finding. The case was sent to the Department of Homeland Security (DHS) to effectuate his removal from the country. Shortly thereafter, the Ninth Circuit Court of Appeals issued a stay on his removal, but DHS deported him anyway. Pursuant to further order of the court, DHS returned him to the United States. The man sued the U.S. under the Federal Tort Claims Act (28 U.S.C. § 2401(b); FTCA). The Ninth Circuit Court of Appeals held that 8 U.S.C. § 1252(g), which provides that no court shall have jurisdiction to hear any cause by an alien arising from an action by DHS, does not deprive federal courts of jurisdiction to hear the FTCA claims of a noncitizen who was wrongfully removed in violation of a court order. (Arce v. United States (9th Cir., Aug. 9, 2018) 899 F.3d 796.) 

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/09/16-56706.pdf

Alleged Joint Operation of a Speedboat.

Decedent was driving a speedboat that belonged to a man who was a passenger. The boat crashed into a ferry. The driver died, and the owner was severely injured. The driver’s widow and his estate sued the owner for negligence. A federal district court granted the owner’s posttrial motion for judgment as a matter of law. Applying federal maritime law, the Ninth Circuit Court of Appeals affirmed, stating: “We hold that a boat owner who is a passenger on his boat has no duty to keep a lookout unless the owner-passenger knows that the person operating his boat is likely to be inattentive or careless or the owner-passenger was jointly operating the boat at the time of the accident. We also hold that joint operation is not viewed over the course of the entire trip, but instead at the time immediately preceding and concurrent with the accident.” (Holzhauer v. Golden Gate Bridge Highway & Transp. Dist. (9th Cir., Aug. 10, 2018) 899 F.3d 844.) 

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/10/16-15942.pdf

“If two wrongs don’t make a right, try three,” Lawrence J. Peter.

In a sale of a business, the sides ended up suing each other. A jury returned a $1.313 million verdict for one of the businesses based on its finding that the other breached the asset purchase agreement by failing to forward all post-closing customer payments received. The jury also found the losing party breached its fiduciary duties by withholding customer payments and creating false backdated invoices to conceal its failure to pay. The jury also awarded $2 million in punitive damages. On appeal, the losing party alleged the prevailing party didn’t pay what it owed either, and the Court of Appeal agreed an offset was in order. It was also argued on appeal that since the losing party was incorporated in Delaware, the law of that state should apply, and Delaware bars fiduciary duty claims arising from contractual obligations. The appellate court disagreed on that point, however, since the prevailing party’s employment agreement stated that all rights and liabilities would be decided under California law. (Colaco v. Cavotec SA (Cal. App. 4th Dist., Div. 3, Aug. 10, 2018) 25 Cal.App.5th 1172.) 

http://www.courts.ca.gov/opinions/documents/G052619.DOC

Considering Matters Outside the Complaint in Deciding Request to Dismiss Securities Action.

Defendant is a small biotechnology firm that develops obesity drugs. Defendant was sanctioned by the Food and Drug Administration for leaking early results of a drug study. The day before the interim results were revealed, defendant’s stock closed at $5.79 per share. After the revelation, the stock peaked at $9.37 per share and closed at $7.64 per share on an unusually high trading volume. However, as the study continued, additional data changed the early results. Plaintiff, an investor in defendant’s company, filed a class action on behalf of himself and other investors, charging various securities violations under the Securities Exchange Act of 1934 (15 U.S.C. §§ 78a et seq.). A federal district court granted defendant’s motion to dismiss the action, considering 22 documents outside the complaint. Reversing, the Ninth Circuit Court of Appeals criticized the trial court’s consideration of matters not in the complaint, noting such procedures are “a concerning pattern in securities cases like this one: exploiting these procedures improperly to defeat what would otherwise constitute adequately stated claims at the pleading stage.” The appeals court found the district court abused its discretion by improperly considering those materials. (Khoja v. Orexigen Therapeutics, Inc. (9th Cir., Aug. 13, 2018) 2018 U.S. App. LEXIS 22371.) 

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/13/16-56069.pdf

Unconscionable Interest Rates.

Defendant makes consumer loans, attracting many borrowers with low credit scores through television ads. Plaintiffs filed an action in federal court, alleging violation of California’s unfair competition law. (Bus. & Prof. Code, § 17200 et seq.) A district court certified the suit as a class action, defining the class as borrowers who took out loans from defendant of at least $2,500 at an interest rate of 90% or higher. Thereafter, the district court granted summary judgment to defendant because ruling on the claim would impermissibly require the court to regulate economic policy. The Ninth Circuit Court of Appeals asked the California Supreme Court to answer this question: “Can the interest rate on consumer loans of $2,500 or more render the loans unconscionable under section 22302 of the Financial Code?” The California Supreme Court responded: “The answer is yes. An interest rate on a loan is the price of that loan, and ‘it is clear that the price term, like any other term in a contract, may be unconscionable.’ [Citation.]” (De La Torre v. CashCall, Inc. (Cal., Aug. 13, 2018) 5 Cal.5th 966.) 

http://www.courts.ca.gov/opinions/documents/S241434.DOCX

Previously we reported: Lobbyists at Work Writing Statutes . . . Topic . . . High Speed Police Pursuits Resulting in Death and Injury to Bystander Motorists.

In 2002, an appellate court reluctantly granted summary judgment to a police department in Nguyen v. City of Westminster (2002) 103 Cal.App.4th 1161, noting that Vehicle Code § 17004.7 permitted police departments to merely adopt a pursuit policy and accomplish complete immunity from civil suits, without ever having to implement that policy. The opinion urged the Legislature to revisit the statute. The Legislature did so, amending the statute in 2005 to require that a “public agency that employs peace officers to drive emergency vehicles and authorizes vehicle pursuits shall develop, adopt, promulgate, and provide regular and periodic training for those peace officers in accordance with the agency’s pursuit policy.” In the present case, a husband/father died when a criminal suspect crashed head-on into his vehicle while fleeing from police during a vehicle pursuit that lasted nearly 12 minutes. The man’s family sued the police department for wrongful death, and the trial court granted the police department’s motion for summary judgment, concluding it was immune pursuant to Vehicle Code § 17004.7. In reversing, the Court of Appeal found defendant police department failed to proffer sufficient evidence to establish as a matter of law that the police department “promulgated” its vehicle pursuit policy as required by the statute. (Morgan v. Beaumont Police Dept. (Cal. App. 4th Dist., Div. 1, Apr. 4, 2016) 246 Cal.App.4th 144.)

And then . . . 
“The Police Must Obey the Law While Enforcing the Law,” Earl Warren.
 Decedent was a passenger in a pickup truck that was the subject of a police pursuit. He died from injuries sustained when the truck spun into a street light pole after one of the officers bumped the left rear of the truck using a “pursuit intervention technique” maneuver. The trial court granted the city’s summary judgment motion, finding the city was immune pursuant to Vehicle Code, § 17004.7. On appeal, the decedent’s mother argued that not all of the police officers had been certified regarding the city’s pursuit policy. In affirming the dismissal of the case after grant of summary judgment, the Court of Appeal stated the city’s pursuit policy met the standards required under the law, stating: “[W]e conclude that section 17004.7, subdivision (b)(2) does not require proof of compliance by every officer with the written certification requirement as a prerequisite to immunity. Thus, other evidence that the City submitted—in the form of the POST certifications and the electronic training log—is sufficient to support summary judgment under section 17004.7, subdivision (b)(2), even though that evidence does not establish 100 percent compliance with the written certification requirement.” (Ramirez v. City of Gardena (Cal. App. 2nd Dist., Div. 1, Aug. 23, 2017) 14 Cal.App.5th 811.)

And now . . . 
The latest: 
Affirming the judgment of the Court of Appeal, the California Supreme Court stated: “We conclude that the agency’s policy must require the written certification, but 100 percent compliance with that requirement is not a prerequisite to receiving the immunity.” It also disapproved of Morgan v. Beaumont Police Dept. (2016) 246 Cal.App.4th 144, “to the extent it is inconsistent with this opinion.” (Ramirez v. City of Gardena (Cal., Aug. 13, 2018) 5 Cal.5th 995.) 

http://www.courts.ca.gov/opinions/documents/S244549.DOC

“If we are going to reverse the race to the bottom, workers must have the right to engage in collective bargaining,” Bernie Sanders.

Plaintiffs are cashiers whose association collectively bargains for them. Plaintiffs filed an action under the Private Attorney General Act (Lab. Code, § 2699), alleging their employer violated Labor Code § 512, subdivision (a) by requiring them to work through mandatory meal breaks. On behalf of the employees’ association, its chair signed a document that provided: “ ‘Employees who work shifts of more than 5 hours will be provided a meal period of at least 30 minutes, except that when a work period of not more than 6 hours will complete a day[’]s work, a meal period is not required.’ ” The trial court granted summary judgment to the employer. The Court of Appeal affirmed, stating: “In sum, then, we uphold the trial court’s ruling that, as a matter of law, the Agreement waived the Employees’ right under Labor Code section 512, subdivision (a) to a meal break when working more than five hours but not more than six hours.” (Ehret v. Winco Foods, LLC (Cal. App. 4th Dist., Div. 2, Aug. 13, 2018) 26 Cal.App.5th 1.) 

http://www.courts.ca.gov/opinions/documents/E067575.PDF

Specifically Pleading Gross Negligence Not Necessary.

After crossing the finishing line at a half marathon, a man tragically suffered a cardiac arrest, collapsed, and died. His wife and two small children filed a wrongful death action against the event organizers and others alleging negligence in the provision of emergency services. There was evidence cardiac arrests are more likely to occur near the finish line of a race because runners tend to push themselves to improve their times, causing an adrenaline rush and arrhythmia. But the only medical personnel near the finish line were a chiropractor and a chiropractic student. There was also evidence that there were no cell phone active radios in the medical tent, the ambulance, or on the chiropractor. The court initially granted summary judgment for the defendant, but later granted the plaintiffs’ motion for new trial and denied the summary judgment motion. The trial court stated that even though there was a written waiver and release of the organizers by the decedent, the family should be given an opportunity to amend the complaint to allege gross negligence, and thus overcome the waiver in the release. In affirming in part and reversing in part, the Court of Appeal held the trial court erred by not considering plaintiffs’ gross negligence claim even though they had not pled gross negligence in their complaint. The appellate court stated that without amending the complaint, there is a triable issue of fact whether the organizer’s provision of emergency services was grossly negligent. (Hass v. Rhodyco Productions (Cal. App. 1st Dist., Div. 4, Aug. 13, 2018) 26 Cal.App.5th 11.)

http://www.courts.ca.gov/opinions/documents/A142418.PDF

Alleged Breach of Settlement Confidentiality Agreement by Plaintiff’s Lawyer.

After a case was settled, plaintiff’s lawyer wrote, “Approved as to form and content,” and signed the settlement agreement. Relevant provisions of the settlement agreement include: “Said Settlement Agreement shall be on the behalf of the settling Parties, individually, as well as on the behalf of their, without limitation, respective beneficiaries, trustees, principals, attorneys . . .” and “Plaintiffs and their counsel agree that they will keep completely confidential all of the terms and contents of this Settlement Agreement. . . .” Thereafter, plaintiff’s lawyer was interviewed by a reporter for a publication that reports on verdicts and settlements. In that interview, plaintiff’s lawyer stated: [¶]

“1. The recent case of a 14-year-old girl—who was at a mall with friends, had two Monster energy drinks, went into cardiac failure, and died—had been resolved. 
“2. In response to a question about what the resolution was, ‘[S]ubstantial dollars for the family.’
“3. Monster ‘wants the amount to be sealed.’
“4. Regarding Monster’s energy drinks, ‘It is not the individual ingredients, it is the synergistic effect of these 26 ingredients’ that is ‘deadly.’ ”

Monster filed this action against plaintiff’s attorney, asserting causes of action for: (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) unjust enrichment, and (4) promissory estoppel. The trial court denied an anti-SLAPP motion as to the contract cause of action, and granted it as to the others. Stating the attorneys were not parties to the settlement agreement, the Court of Appeal reversed the denial of the anti-SLAPP motion and ordered the trial court to grant the motion in its entirety, and to grant attorney fees and costs. The appellate court also awarded attorney fees and costs incurred on appeal to plaintiff’s lawyer. (Monster Energy Company v. Schechter (Cal. App. 4th Dist., Div. 2, Aug. 13, 2018) 26 Cal.App.5th 54.) 

http://www.courts.ca.gov/opinions/documents/E066267.PDF

First Amendment May Be Implicated When Government Seizes Photographs Taken at the Border.

While on public property, plaintiffs took photographs of activities at ports of entry into the United States from Mexico. They were stopped and searched by officers of the United States Customs and Border Protection, and their photos were destroyed. They filed suit for violation of their First Amendment rights and sought injunctive and declaratory relief. A federal trial court dismissed the action. In vacating the judgment of dismissal and remanding for further proceedings, the Ninth Circuit Court of Appeals concluded plaintiffs have stated First Amendment claims upon which relief can be granted. (Askins v. U.S. Department of Homeland Security (9th Cir., Aug. 14, 2018) 2018 U.S. App. LEXIS 22499.)

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/14/16-55719.pd

Right Back at You, Officer.

While driving in the City of Lancaster in Los Angeles County, petitioner was issued a speeding ticket. He asked the citing officer to specify the county seat as the place to appear, and the officer refused, instead instructing petitioner to appear in the Antelope Valley courthouse, 70 miles from petitioner’s home. At his arraignment, petitioner moved to transfer the case to the county seat, two miles from his home. In denying the transfer motion, the court stated, “These distances are far too great for the traffic enforcement agencies to expend the funds to have their officers travel in order to appear on a single traffic citation in view of current public funding budget problems.” Petitioner petitioned for a writ of mandate, and the Court of Appeal gave notice under Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, indicating it would dismiss the petition as moot if the respondent court reconsidered and vacated its order and entered a new order granting petitioner’s motion. The respondent court refused to vacate its order. The Court of Appeal discussed Vehicle Code § 40502, which states that upon demand of the arrested person, the place specified in the notice to appear before a magistrate shall be “at the county seat of the county in which the offense is alleged to have been committed” if the person lives or works closer to the county seat than to the courthouse closest to the place where the arrest is made. The appellate court issued a peremptory writ of mandate in the first instance [which means without a hearing] directing the trial court to vacate its order denying the petitioner’s motion to set the trial in the county seat. (Amir v. Superior Court. (L.A. Sup. Ct. App. Div., Aug. 14, 2018) 26 Cal.App.5th Supp. 1.)

Statute Concerning Compensation for Rest/nonproductive Time Interpreted.

The California Legislature codified the holdings in Gonzalez v. Downtown LA Motors, LP(2013) 215 Cal.App.4th 36 and Bluford v. Safeway Stores, Inc. (2013) 216 Cal.App.4th 864 in Labor Code § 226.2, providing a mechanism for compensating piece-rate workers for previously unpaid accrued rest/nonproductive time. This lawsuit concerns whether an employer complying with the requirements of § 226.2, subdivision (b) has a safe harbor against any employee claims for rest/NP time accruing prior to January 1, 2016, or has an affirmative defense only to those claims accruing between July 1, 2012 and December 31, 2015. The Court of Appeal concluded that under the plain and unambiguous language of § 226.2, subdivision (b), an employer complying with the statute has an affirmative defense against any employee claims for rest/NP time accruing prior to January 1, 2016. (Jackpot Harvesting Company, Inc. v. Superior Court (Cal. App. 6th Dist., Aug. 14, 2018) 26 Cal.App.5th 125.)

http://www.courts.ca.gov/opinions/documents/H044764.PDF

The Litigation Privilege Is Not Without Limit.

A tenant said the conditions in her apartment were intolerable. She called the city’s vector control unit, and the landlord made a few cosmetic repairs, but the unendurable state of the apartment continued. The tenant informed her landlord she would not pay the next month’s rent unless repairs were made. The landlord served a three-day notice to pay rent or quit and then an unlawful detainer complaint when the tenant did not pay the rent. The matter settled when the landlord agreed the tenant could remain for three months rent-free and be paid $1,250 for moving expenses. In return for the tenant’s departure, the unlawful detainer action would be dismissed. Shortly after that settlement, the tenant sued the landlord for damages, alleging various causes of action, including retaliatory eviction under Civil Code § 1942.5. The landlord filed an anti-SLAPP motion pursuant to Code of Civil Procedure § 425.16, contending the tenant’s action was based on the landlord’s three-day notice to quit and the unlawful detainer action, and those actions are protected by the litigation privilege in Civil Code § 47, subdivision (b). The trial court granted the motion. In reversing, the Court of Appeal said the litigation privilege is not without limit, and stated: “Because recognition of the privilege here would neuter section 1942.5 by removing eviction from the statutory remedy of retaliatory eviction, we view the clash between section 47, subdivision (b), on the one hand, and section 1942.5, subdivisions (d) and (h), on the other, as irreconcilable. To be consistent with the high court’s guidance that we give section 1942.5 a liberal construction designed to achieve the legislative purpose, we conclude that the litigation privilege must yield to it.” (Winslett v. 1811 27th Avenue, LLC, (Cal. App. 1st Dist., Div. 4, Aug. 15, 2018) 26 Cal.App.5th 239.) 

http://www.courts.ca.gov/opinions/documents/A146932.PDF

Res Judicata Applied in Wage & Hour Claim.

Several employees of a company brought a class action, alleging various wage and hour violations under Business & Professions Code § 17200 et seq., but did not allege any federal claims. That action was settled, and the employer was released of “all claims that were or could have been pled based on the factual allegations in the complaint.” Thereafter, the plaintiff in the instant case sued the same employer, alleging violations of the federal Fair Labor Standards Act (29 U.S.C. §§ 201 et seq.; FLSA). A federal trial court dismissed the action on grounds of res judicata. On appeal, plaintiff contends the FLSA action is excepted from the ordinary operation of res judicata. In affirming the judgment of dismissal, the Ninth Circuit Court of Appeals stated: “That a settlement may not specifically resolve liability as to all released claims is immaterial. For res judicata purposes, all that matters is that a claim was in fact settled, rather than reserved for future litigation, such that it was in some sense within the judgment approving of the class settlement.” (Rangel v. PLS Check Cashiers of California, Inc. (9th Cir., Aug. 16, 2018) U.S. App. LEXIS 22782.) 

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/16/16-56826.pdf

Special Immigrant Juvenile Status.

A minor’s mother came to the United States years ago. The minor later followed unaccompanied and petitioned the court to grant her mother sole custody of the minor. She also asked the court to enable her to seek special immigrant juvenile status under federal immigration laws (see 8 U.S.C. § 1101(a)(27)(J)). The minor gave her father written and verbal notice of the action and that she was contending her father had abandoned her. The matter went to the California Supreme Court where the question was whether the minor had to join her father as a party to the action in order to proceed. California’s highest court answered the question with a “no,” stating: “Provided that the absent parent has received adequate notice, the action may proceed even if the parent is beyond the personal jurisdiction of the court and cannot be joined as a party. The action may also proceed regardless of whether the court believes it was filed primarily for the purpose of obtaining the protections from abuse, neglect, or abandonment that federal immigration law provides.” (Bianka M. v. Superior Court(Cal., Aug. 16, 2018) 2018 Cal. LEXIS 5984.) 

http://www.courts.ca.gov/opinions/documents/S233757.PDF

Expert Declaration Needed to Defeat Summary Judgment.

Plaintiff sued a yoga studio and yoga instructor, alleging the instructor injured her back while adjusting her yoga position. Defendants successfully moved for summary judgment, including expert declarations in their papers. Plaintiff opposed the motion with excerpts from her own deposition and objections to defendants’ evidence. On appeal, plaintiff argued an expert’s testimony is not determinative, even when uncontradicted because a jury may reject it. In affirming the grant of summary judgment, the Court of Appeal stated, “But even if a jury rejected [defendant’s expert’s] opinion, plaintiff would still have the burden affirmatively to establish the applicable standard of care and a breach thereof, which she cannot do without an expert. In the absence of an expert, she could not show a triable issue of material fact, and defendants were entitled to summary judgment.” (Webster v. Claremont Yoga (Cal. App. 2nd Dist., Div. 1, Aug. 16, 2018) 2018 Cal. App. LEXIS 729.) 

http://www.courts.ca.gov/opinions/documents/B279272.PDF

“There is no client as scary as an innocent [wo]man,” J. Michael Haller, character in Michael Connelly’s book, The Lincoln Lawyer.

A woman was wrongly imprisoned for 17 years until she secured habeas corpus relief. She and her children brought a civil rights action against a detective pursuant to 42 U.S.C. § 1983, alleging that the detective failed to disclose exculpatory evidence about a witness, as required by Brady v. Maryland (1963) 373 U.S. 83 and Giglio v. United States (1972) 405 U.S. 150. A federal trial court granted summary judgment in the detective’s favor. The Ninth Circuit Court of Appeals reversed, stating the withholding of impeachment evidence by the detective raises a genuine issue of material fact as to whether the detective acted with deliberate indifference or reckless disregard for the woman’s due process rights. (Mellen v. Winn (9th Cir., Aug. 17, 2018) 2018 U.S. App. LEXIS 22952.)

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/17/17-55116.pdf

Late Fees Claimed in Unlawful Detainer Action.

This is a decision of the appellate division of the County of Humboldt. A landlord served a three-day notice to pay rent or quit on a tenant. Included in the amount sought was a late fee of $50. The lease stated “the exact amount of which are extremely difficult and impractical to determine,” and the landlord and tenant agreed $50 was a fair and reasonable estimate of the landlord’s costs when rents were late. Civil Code § 1671, subdivision (d) states: “. . . a provision in a contract liquidating damages for the breach of the contract is void except . . . [when] . . . it would be impracticable or extremely difficult to fix the actual damage.” The trial court ruled in favor of the landlord, and the appellate division reversed, concluding the landlord did not prove that the actual losses cause by late payment of rent were extremely difficult or impracticable to determine. The appellate division also stated that a three-day notice that overstates the amount of rent owed does not support an unlawful detainer. (Del Monte Properties and Investments, Inc. v. Dolan (Humboldt Sup. Ct. App. Div., Aug. 17, 2018) 2018 Cal. App. LEXIS 734.)

Trial Court Erred in Not Continuing Hearing on Summary Judgment Motion.

Plaintiff sued defendant for wrongful termination and whistleblower retaliation. Defendant filed a motion for summary judgment, and plaintiff’s counsel filed opposition. Almost immediately thereafter, defendant filed an ex parte application to expunge privileged information from plaintiff’s opposition papers, which information was taken from a document defendant’s counsel had inadvertently produced to plaintiff’s counsel. The trial court sealed portions of plaintiff’s opposition, struck the entire opposition and disqualified plaintiff’s counsel. The summary judgment hearing was continued to permit plaintiff to retain new counsel. New counsel was retained, but no new opposition to the motion for summary judgment was filed. Plaintiff’s new counsel filed an ex parte application for relief under Code of Civil Procedure § 473, subdivision (b) and for a continuance. According to the application, when the new counsel took over the case, it was believed the motion for summary judgment had already been briefed. The trial court denied new counsel’s application and entered judgment in favor of defendant. In reversing, the Court of Appeal found the trial court erred and should have continued the summary judgment hearing and permitted new counsel to file an opposition. (Levingston v. Kaiser Foundation Health Plan, Inc. (Cal. App. 4th Dist., Div. 2, Aug. 17, 2018) 2018 Cal. App. LEXIS 732.)

http://www.courts.ca.gov/opinions/documents/E066271.PDF

Who Bears the Burden of Proof of Net Worth in Consumer Class Action?

Plaintiff financed the purchase of a computer through a loan agreement to be serviced by the computer company. After his account allegedly became delinquent, defendant charged off and sold the purported debt. The debt collection company hired a law firm to file suit against plaintiff. None of the debt collection letters from either the debt collector or the law firm referenced the computer company through whom plaintiff financed the computer. When plaintiff did not respond to the letters, suit against him was filed in state court. Because the lender was misidentified throughout, the suit was ultimately dismissed. Plaintiff filed a class action in federal court, alleging violations of the federal Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.). Pretrial, the federal trial judge ruled that plaintiff carried the burden of proving defendant’s net worth at trial, and because plaintiff lacked competent evidence of defendant’s net worth the case was dismissed. Affirming, the Ninth Circuit Court of Appeals held: “In light of the statutory text and structure, we conclude that Congress intended the plaintiff to carry the burden at trial of introducing evidence of the defendant’s net worth.” (Tourgeman v. Nelson & Kennard (9th Cir. Aug. 20, 2018) 2018 U.S. App. LEXIS 23101.)

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/20/16-56190.pdf

Copyright of Remastered Sound Recordings.

In 1971, Congress passed the Sound Recording Act (17 U.S.C. §§ 114, 301(c)). This act for the first time created federal copyright protection for certain sound recordings. Sound recordings fixed after February 15, 1972 were made subject to a compulsory license regime for performance via digital transmission and were excused from infringement for performance via terrestrial radio. Congress reserved governance of sound recordings fixed before 1972 to state statutory law and common law and excluded such sound recordings from federal copyright protection until 2067. Plaintiff hired remastering engineers to remaster certain pre-1972 recordings it owns. Defendant delivers music through its many radio stations. Plaintiff sued defendant in federal court, alleging violation of Civil Code § 980, subdivision (a)(2), violation of Business & Professions Code § 17200, misappropriation, and conversion. Defendant’s motion for summary judgment was granted after a federal trial court concluded the remastered works were subject only to federal copyright law as original derivative works. In reversing, the Ninth Circuit Court of Appeals concluded there were no genuine issues of material fact the remastered sound recordings used by defendant were independently copyright eligible, noting that “a remastering, for example, of Tony Bennett’s ‘I Left My Heart in San Francisco’ recording from its original analog format into digital format, even with declicking, noise reduction, and small changes in volume or emphasis, is no less Bennett’s ‘I Left My Heart in San Francisco’ recording.” (ABS Entertainment, Inc. v. CBS Corporation (9th Cir., Aug. 20, 2018) 2018 U.S. App. LEXIS 23097.) 

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/20/16-55917.pdf

Employee Background Checks.

The California Supreme Court decided a conflict between the Consumer Credit Reporting Agencies Act (Civ. Code, § 1785.1 et seq.; CCRAA) and the Investigative Consumer Reporting Agencies Act (Civ. Code, § 1786 et seq.; ICRAA). Plaintiff, a bus driver, sued her employer because it violated ICRAA, which required her written authorization to conduct a background investigation. The employer moved for summary judgment, arguing it followed the requirements under CCRAA, and that the requirements under ICRAA are unconstitutionally vague. The trial court granted the motion. The Court of Appeal reversed, and the Supreme Court agreed with the Court of Appeal that the background check of a bus driver required compliance with ICRAA, but the fact that an ICRAA check may also be a credit report requiring compliance with CCRAA does not render ICRAA unconstitutionally vague. (Connor v. First Student, Inc. (Cal., Aug. 20, 2018) 2018 Cal. LEXIS 6266.) 

http://www.courts.ca.gov/opinions/documents/S229428.PDF

Untimely Appeal from Labor Commissioner’s Award.

The Labor Commissioner issued an award in favor of an employee. The employer appealed to the superior court, but failed to post a statutorily required undertaking within the time provided under Labor Code § 98.2, subdivision (b). The employer requested a waiver of the undertaking due to indigency. The trial court found the employer’s failure to request a waiver prior to filing the notice of appeal deprived the court of jurisdiction to consider the request, and dismissed the appeal. In affirming, the Court of Appeal stated the plain language of the statute establishes the requirement of posting an undertaking by the deadline for a notice of appeal is jurisdictional. (Burkes v. Robertson (Cal. App. 1st Dist., Div. 5, Aug. 20, 2018) 2018 Cal. App. LEXIS 736.) 

http://www.courts.ca.gov/opinions/documents/A150249.PDF

Arbitrator’s “Partial Final Award.”

An arbitrator determined only that the parties’ arbitration agreement permits the claimant to move for class certification, issuing the determination in a document entitled “partial final award.” Defendant petitioned the superior court to vacate the partial final award. The court concluded it had no jurisdiction at this preliminary stage and denied the petition. Defendant appealed, requesting the appellate court to adopt a “rule” that when parties agreed that courts can review an arbitrator’s award for legal error, the parties have also agreed that interim awards are reviewable. In affirming, the Court of Appeal stated that parties to an arbitration agreement cannot confer jurisdiction on courts to review an arbitrator’s rulings by agreeing to allow immediate review of some interim awards. (Maplebear, Inc. v. Busick (Cal. App. 1st Dist., Div. 2, Aug. 22, 2018) 2018 Cal. App. LEXIS 742.) 

http://www.courts.ca.gov/opinions/documents/A151677.PDF

Prefiling Requirements for Conspiracy Claims Against Attorneys.

A daughter alleges her deceased stepfather and his lawyer, as co-trustee of the stepfather’s trust, conspired to breach the stepfather’s fiduciary duties to plaintiff’s mother. The lawyer demurred to the complaint, arguing the plaintiff/daughter did not comply with the prefiling requirements of Civil Code § 1714.10. That statute requires a plaintiff to establish a reasonable probability of prevailing before pursuing a “cause of action against an attorney for a civil conspiracy with his or her client arising from any attempt to contest or compromise a claim or dispute.” The trial court overruled the demurrer, ruling the complaint did not allege a cause of action covered by § 1714.10. The Court of Appeal reversed, stating that despite the absence of the label “conspiracy,” the daughter’s cause of action must be construed as alleging a conspiracy between the attorney and his client. (Cortese v. Sherwood (Cal. App. 1st Dist., Div. 5, Aug. 22, 2018) 2018 Cal. App. LEXIS 746.)

http://www.courts.ca.gov/opinions/documents/A152351.PDF

Consideration of Stock Options as Income in Calculating Child Support.

Most of a father’s compensation was provided in the form of stock options. In calculating child support, the family law court included only income from the proceeds of actual sales of stock and not the net gain available to him on vested shares. In reversing, the Court of Appeal held that vested, mature stock options are income for purposes of child support. (In re Marriage of John and Patricia Macilwaine (Cal. App. 1st Dist., Div. 2, Aug. 22, 2018) 2018 Cal. App. LEXIS 751.)

http://www.courts.ca.gov/opinions/documents/A147847.PDF

Workers’ Compensation Is the Exclusive Remedy, Even if Doctors or Bean Counters Make a Mistake.

California’s workers’ compensation system provides an injured employee’s exclusive remedy against an employer for work-related injuries. (Lab. Code, § 3602, subd. (a).) In that process, reviewers, acting on behalf of employers, determine whether the treatment for an industrial injury is medically necessary. The reviewer may modify or deny a treatment request. In this case, a doctor recommended a certain prescription medication, and a reviewer denied the doctor’s request to continue with that treatment. The employee sued the medical group treating him for the employer in tort, alleging the reviewer caused him additional injuries by denying the request without authorizing a weaning regimen or warning him of the possible side effects of abruptly ceasing the medication. The trial court sustained defendants’ demurrer without leave to amend. When the matter made its way to the California Supreme Court, that court held the workers’ compensation system was the exclusive remedy, even for collateral and derivative claims, stating: “It is undoubtedly true that the availability of additional remedies would increase utilization reviewers’ incentives to perform their tasks with appropriate competence and care. But as we read the statute the Legislature enacted, the workers’ compensation system provides the exclusive remedy for otherwise compensable injuries stemming from alleged mistakes in the utilization review process.” (King v. CompPartners, Inc. (Cal., Aug. 23, 2018) 2018 Cal. LEXIS 6268.)

http://www.courts.ca.gov/opinions/documents/S232197.PDF

Previously we reported: Bar Exam Scores A Matter Of Public Interest.

Plaintiffs requested the State Bar provide them access to information contained in its bar admissions database, including applicants’ bar exam scores, law school attended, grade point averages, LSAT scores, and race or ethnicity “in order to conduct research on racial and ethnic disparities in bar passage rates and law school grades.” The California Supreme Court held: “We conclude that under the common law right of public access, there is a sufficient public interest in the information contained in the admissions database such that the State Bar is required to provide access to it if the information can be provided in a form that protects the privacy of applicants and if no countervailing interest outweighs the public’s interest in disclosure.” (Sander v. State Bar of California (Cal., Dec. 19, 2013) 58 Cal. 4th 300.)

The latest: 

Following remand, more than a dozen individuals who had applied to take the California Bar Exam since 1972 and two non-profit professional associations of African American lawyers, the Black Women Lawyers Association of Los Angeles, Inc., and the John M. Langston Bar Association of Los Angeles intervened on the side of the State Bar. They did so “to protect privacy and reputational interests that are at the heart of the litigation between Petitioners and the State Bar” by preventing disclosure of “the sensitive, private information of Individual Intervenors or the members of Organizational Intervenors that stands to be exposed if the Petitioners prevail in this action.” The trial court denied plaintiff’s petition for writ of mandate, finding the request to be beyond the purview of the California Public Records Act (Gov. Code, § 6250 et seq.) in that the request would require the Bar to create new records. The Court of Appeal found the trial court’s analysis “is legally correct and supported by the record.” (Sander v. State Bar of California (Cal. App. 1st Dist., Div. 3, Aug. 23, 2018) 2018 Cal. App. LEXIS 755.)

http://www.courts.ca.gov/opinions/documents/A150061.PDF

Damages Recoverable in a Survivor Action.

Plaintiffs are the adult children of decedent who died of mesothelioma allegedly caused by exposure to asbestos in brakes purchased from defendant, an auto parts retailer and service provider. After finding plaintiffs’ wrongful death claims were barred by the statute of limitations, the court awarded $213,052 in economic damages, finding that amount was entirely offset by settlements with other parties. The Court of Appeal held that “damages recoverable in a survival action brought by a decedent’s personal representative or successor in interest are limited to the loss or damage that the decedent sustained or incurred before death, and do not include ‘lost years’ damages’ that would have been incurred had the decedent survived.” (Williams v. The Pep Boys Manny Moe & Jack of California (Cal. App. 1st Dist., Div. 4, Aug. 23, 2018) 2018 Cal. App. LEXIS 756.)

http://www.courts.ca.gov/opinions/documents/A146060.PDF

Defendant Not Entitled to Compel Arbitration.

When plaintiff purchased a motorcycle, there was a written agreement that did not include an arbitration clause. But he financed the purchase with a bank, signing another written agreement that did include an arbitration clause. Plaintiff sued the motorcycle retailer, and the retailer petitioned to compel arbitration, which petition the trial court denied. In affirming, the Court of Appeal stated: “We will hold that [the motorcycle retailer] was not entitled to compel arbitration because it was not a party to the arbitration clause, it was not acting in the capacity of an agent of a party to the arbitration clause, and it was not a third party beneficiary of the arbitration clause.” (Fuentes v. TMCSF, Inc. (Cal. App. 4th Dist., Div. 2, Aug. 23, 2018) 2018 Cal. App. LEXIS 759.)

http://www.courts.ca.gov/opinions/documents/E066242.PDF

Homeowners Association’s Construction Defect Claim Tossed.

A homeowners association filed a construction defect claim. The defendant developer alleged in arbitration that the HOA failed to comply with its own CC&R’s, which state: “Required Vote to Make Claim. Prior to filing a claim pursuant to the ADR Provisions, the [HOA] must obtain the vote or written consent of Owners . . . who represent not less than fifty-one percent (51%) of the . . . voting power . . . .” Thereafter, the HOA held a membership meeting. Of the 93 members present, 92 voted to ratify the filing of the already-filed construction defect claim. Still in arbitration, defendant successfully moved for summary judgment; the arbitrator concluded the ratification of the already-filed claim was insufficient. In superior court, the defendant moved to confirm the arbitration award dismissing the claim, and the trial court granted the motion. The Court of Appeal affirmed, stating the Davis-Stirling Common Interest Development Act (Civ. Code, § 4000 et seq.) provides a comprehensive framework for the governance of homeowners associations, providing numerous limits on the power of HOA boards, and a system of checks on a board’s powers, adding: “The CC&R provision here goes a step further, requiring affirmative consent of a quorum of the members ‘prior to’ instituting such action.” (Branches Neighborhood Corporation v. CalAtlantic Group, Inc. (Cal. App. 4th Dist., Div. 3, Aug. 24, 2018) 2018 Cal. App. LEXIS 762.)

http://www.courts.ca.gov/opinions/documents/G055201.PDF

Previously we reported: Custom and Practice Evidence in Strict Liability Actions.

In a trial involving allegations against a car manufacturer that plaintiff lost control of a pickup truck because the truck lacked electronic stability control (ESC), the trial court denied plaintiffs’ motion in limine to exclude evidence that the custom of the automotive industry was not to include ESC as standard equipment in pickup trucks. The jury found in favor of the car manufacturer. On appeal, plaintiff argued the denial of the motion was error. The Court of Appeal affirmed, stating: “In rejecting this challenge, we part company with one line of cases stating that evidence of industry custom and practice is always inadmissible in a strict products liability action, and with a recent case suggesting such evidence is always admissible. Instead, we hold that evidence of industry custom and practice may be admissible in a strict products liability action, depending on the nature of the evidence and the purpose for which the proponent seeks to introduce the evidence. Because [plaintiff] moved to exclude all such evidence, the trial court properly denied their motion in limine.” (Kim v. Toyota Motor Corporation (Cal. App. 2nd Dist., Div. 7, Jan. 19, 2016) 243 Cal.App.4th 1366.)

The Latest: 

The California Supreme Court held that whether evidence of industry custom and practice may be introduced in a strict products liability action depends on the purpose for which the evidence is offered. California’s high court noted that a product may contain the same safety features as other products on the market and still be defective, and that such evidence is relevant in “the jury’s evaluation of whether the product is as safely designed as it should be, considering the feasibility and cost of alternative designs.” In the instant case, because the evidence was properly admitted for that limited purpose, the judgment of the Court of Appeal was affirmed. (Kim v. Toyota Motor Corporation (Cal., Aug. 27, 2018) 2018 Cal. LEXIS 6302.)

http://www.courts.ca.gov/opinions/documents/S232754.PDF

Defendant’s Status as Registered Subscriber of an Infringing IP Address, by Itself, Is Insufficient to Create a Reasonable Inference Defendant Is the Infringer.

The Ninth Circuit Court of Appeals held: “The direct infringement claim fails because [defendant’s] status as the registered subscriber of an infringing IP address, standing alone, does not create a reasonable inference that he is also the infringer. Because multiple devices and individuals may be able to connect via an IP address, simply identifying the IP subscriber solves only part of the puzzle. A plaintiff must allege something more to create a reasonable inference that a subscriber is also an infringer.” (Cobbler Nevada, LLC v. Gonzales (9th Cir., Aug. 27, 2018) 2018 U.S. App. LEXIS 24183.)

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/27/17-35041.pdf

Outside the Scope of Actionable Unfair Competition or Consumer Protection Claims.

Plaintiff filed a class action against a music producer, alleging claims under the unfair competition law (Bus. & Prof. Code, § 17200 et seq.) and the Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.), contending an album entitled “Michael” misleadingly represented that Michael Jackson was the lead singer on each of the ten vocal tracks, when in fact he not the lead singer on three of those tracks. The trial court denied defendant’s anti-SLAPP motion. In reversing, the Court of Appeal stated: “Before the album was released, certain Jackson family members and others publicly claimed that Jackson was not the lead singer on the Disputed Tracks. Appellants disputed this claim. . . . Thus, the identity of the artist on the three Disputed Tracks was a controversial issue of interest to Michael Jackson fans and others who care about his musical legacy. . . Under these circumstances, Appellants’ statements about the identity of the artist were not simply commercial speech but were subject to full First Amendment protection. They are therefore outside the scope of an actionable unfair competition or consumer protection claim in this case.” (Serova v. Sony Music Entertainment (Cal. App. 2nd Dist., Div. 2, Aug. 28, 2018) 2018 Cal. App. LEXIS 767.)

http://www.courts.ca.gov/opinions/documents/B280526.PDF

The Five-year Rule: it’s Worse Than You Think.

The trial court granted a motion to dismiss pursuant to Code of Civil Procedure §§ 583.310 and 583.360 for plaintiffs’ failure to bring their wage and hour lawsuit to trial within five years. On appeal, plaintiffs argue there was an abuse of discretion in refusing to exclude:

  • 319 days when the matter was in the Court of Appeal for writ of mandate proceedings;
  • 169 days following removal of the case to federal court and remand back to state court.
  • Nine months between the court’s order granting a motion to compel documents and defendant’s compliance with the order.

In affirming the dismissal, the Court of Appeal stated: “Dismissal is mandatory if the requirements of section 583.310 are not met and an exception provided by statute does not apply.” (Martinez v. Landry’s Restaurants, Inc. (Cal. App. 2nd Dist., Div. 7, Aug. 28, 2018) 2018 Cal. App. LEXIS 769.)

http://www.courts.ca.gov/opinions/documents/B278513.PDF

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