Litigation Update: September 2020

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

  • Senior Editor, Eileen C. Moore, Associate Justice, California Court of Appeal, Fourth District, Division Three
  • Managing Editor, Reuben Ginsburg
  • Editors, Dean Bochner, Julia Shear Kushner, Jessica Riggin, and David Williams
Independent Wrongfulness Required.

Plaintiff Ixchel Pharma, LLC, a biotechnology company, entered into an agreement with Forward Pharma to jointly develop a drug for treatment of a disorder called Friedreich’s ataxia. The drug development went according to plan until Forward decided to withdraw from the agreement, as was allowed by its terms. Pursuant to a settlement with another biotechnology company, defendant Biogen, Inc., Forward had agreed to terminate its contract with Ixchel. Ixchel sued Biogen in federal court for tortious interference with Ixchel’s contractual and prospective economic relationship with Forward and claimed that Biogen did so in violation of Business and Professions Code § 16600. On appeal, the Ninth Circuit Court of Appeals asked the California Supreme Court to decide (1) whether Biogen’s interference with Ixchel’s at-will contract with Forward must be independently wrongful to support tort liability and (2) how  § 16600 applies to the settlement provision requiring Forward to terminate its agreement with Ixchel. The California Supreme Court ruled: “We hold that tortious interference with at-will contracts requires independent wrongfulness and that a rule of reason applies to determine the validity of the settlement provision under Business and Professions Code section 16600.” (Ixchel Pharma, LLC v. Biogen, Inc. (Cal., Aug. 3, 2020) 9 Cal.5th 1130.)

Judicial Discretion.

A federal district court declined to extend the deadline it had set for the filing of a motion for class certification of a wage and hour case, despite the fact the parties stipulated to a continuance. Plaintiff contended the court abused its discretion in not extending the deadline and erred in denying the motion for class certification. The Ninth Circuit affirmed, holding the district court did not abuse its discretion in setting and enforcing a deadline. The appeals court also held there was no error in denying plaintiff’s motion for class certification because plaintiff failed to offer any evidence that defendant’s written rest break policy that allegedly violated California law was actually applied to its employees. (Davidson v. O’Reilly Auto Enterprises, LLC (9th Cir., Aug. 3, 2020) 968 F.3d 955.)

Children Decedent Didn’t Know He Had.

After a man died, alleged children brought claims in superior court requesting an intestate share of decedent’s estate. They claimed to be decedent’s children who were unintentionally omitted from decedent’s trust. Decedent’s trust stated in relevant part: “‘I have no children, living or deceased. [¶] I am intentionally not providing for . . . any other person who claims to be a descendant or heir of mine under any circumstances and without regard to the nature of any evidence which may indicate status as a descendant or heir.’” The superior court sustained the trustee’s demurrers. Affirming, the Court of Appeal stated: “[N]othing in the plain language of [Probate Code] section 21622 or elsewhere prevents a trustor from expressing his intent to disinherit potential heirs living at the time—even if unknown to the trustor—by including a general disinheritance clause in his trust.” (Rallo v. O’Brian (Cal. App. 2nd Dist., Div. 3, Aug. 3, 2020) 52 Cal.App.5th 997.)

The False Claims Act.

The False Claims Act (31 U.S.C. § 3730) allows any person with knowledge that false or fraudulent claims for payment have been submitted to the federal government to bring a qui tam suit. The government may choose to intervene and prosecute the case itself. Here, the government declined to intervene and instead filed a motion to dismiss the case. The federal district court denied the motion to dismiss, finding the government failed to demonstrate a valid governmental purpose and also failed to investigate the allegations in the complaint. The government appealed. The Ninth Circuit dismissed the appeal because the order denying the motion to dismiss was not an appealable order. (United States v. Acad. Mortg. Corp. (9th Cir., Aug. 4, 2020) 968 F.3d 996.)

Unenforceable Penalty.

A landlord brought an unlawful detainer action against his tenants, alleging they owed him $27,100 in unpaid rent. On the day of trial, the parties entered into a stipulated judgment in which the tenants agreed to vacate the property by a certain date and time. If they failed to do so, the landlord would be entitled to enter a $28,970 judgment against them. The tenants missed their move-out deadline by a few hours, and the landlord filed a motion seeking entry of judgment. The trial court granted the motion and entered a $28,970 judgment against the tenants under the terms of the stipulation. The tenants appealed, arguing the judgment constitutes an unenforceable penalty because it bears no reasonable relationship to the range of actual damages the parties could have anticipated would flow from a breach of the stipulation. The Court of Appeal reversed, finding the $28,970 judgment constitutes an unenforceable penalty. (Graylee v. Castro (Cal. App. Div. 3, Aug. 4, 2020) 52 Cal.App.5th 1107.)

Injunction Requiring Jail to Protect Inmates is Stayed by SCOTUS.

On May 26, 2020, a federal district court issued an injunction compelling the Orange County Sheriff to implement several practices within the county jails to quell the spread of COVID-19. The U.S. Supreme Court granted the sheriff’s petition to stay the injunction while the matter was pending in the Ninth Circuit. Dissenting, Justices Ginsburg and Sotomayor stated: ‘“It has long been said that a society’s worth can be judged by taking stock of its prisons. That is all the truer in this pandemic, where inmates everywhere have been rendered vulnerable and often powerless to protect themselves from harm.’ The District Court found that, despite knowing the severe threat posed by COVID–19 and contrary to its own apparent policies, the Jail exposed its inmates to significant risks from a highly contagious and potentially deadly disease. Yet this Court now intervenes, leaving to its own devices a jail that has misrepresented its actions to the District Court and failed to safeguard the health of the inmates in its care.” (Barnes v. Ahlman (U.S., Aug. 5, 2020) 2020 WL 4499350.)

My Pot, Please.

Law enforcement seized more than 2,000 marijuana plants from a medical marijuana dispensary for violating a local ordinance restricting cannabis cultivation. When the dispensary sued to recover the marijuana, the county asserted it had no obligation to return the plants since the dispensary violated the ordinance. The trial court agreed and sustained the county’s demurrer without leave to amend. Reversing, the Court of Appeal stated: “A government entity does not have to return seized property if the property itself is illegal. But the ordinance here ultimately regulates land use within the county; it does not (nor could it) render illegal a substance that is legal under state law. For that reason, the causes of action seeking return of property survive demurrer.” (Granny Purps, Inc. v. County of Santa Cruz (Cal. App. 6th Dist., Aug. 5, 2020.) 53 Cal.App.5th 1.)

Vaccination Exemptions.

Two children are under the jurisdiction of the juvenile court. The pediatricians hired by the state, the children’s current doctors, recommended they receive vaccinations. Another doctor, who saw the children briefly on one occasion 18 months ago, wrote the children have “a medical reason not to vaccinate.” The doctor testified in juvenile court and was questioned about the basis for his conclusion. The doctor said: “I did not see a medical condition directly with either child.” In 2018, that doctor had issued 350 vaccination exemptions for children; he charges $290 for an exemption examination. The parents of the children said family members had allergies, asthma, autoimmune disease, mental disorders, and autism. The juvenile court ordered that the children receive their vaccinations. Affirming, the Court of Appeal held that a state public health officer or a doctor designated by the state may revoke a vaccination exemption. (In re S.P. (Cal. App. 2nd Dist., Div. 6, Aug. 6, 2020) 53 Cal.App.5th 13.)

Stop Complaining, Take the Pills, and Play Football.

Plaintiffs, nine former National Football League players, represent a putative class of NFL athletes who played for any NFL-member Club between 1969 and 2014 and allegedly suffered injury from what they claim was a “return to play” business plan prescribed by the NFL. According to plaintiffs’ complaint, the NFL negligently facilitated giving controlled substances to dull players’ pain and return them to the game after injury in order to maximize revenues by keeping marquee players on the field. The federal district court granted the NFL’s motion to dismiss for failure to state a claim. On appeal, plaintiffs challenged the dismissal of their negligence claim based on three different theories: negligence per se, voluntary undertaking, and special relationship. Reversing in part, the Ninth Circuit stated: “Though we agree with the district court that two of those theories were insufficiently pled, we conclude that Plaintiffs’ voluntary undertaking theory survives dismissal, given sufficient allegations in the [complaint] of the NFL’s failure to ‘use its authority to provide routine and important safety measures’ regarding distribution of medications and returning athletes to play after injury. [citation] If proven, a voluntary undertaking theory could establish a duty owed by the NFL to protect player safety after injury, breach of that duty by incentivizing premature return to play, and liability for resulting damages.” (Dent v. National Football League (9th Cir., Aug. 7, 2020) 968 F.3d 1126.)

Landlord & Management Company Had No Duty to Decedent Who Died in an Explosion on Leased Premises.

Decedent was killed when a hair product he was handling exploded and he was engulfed in fire. Plaintiffs sued the owner and lessor of the premises and its property management company, claiming they had a duty to maintain and inspect the area where the lessee/employer stored the product to ensure the product was stored in compliance with state and local ordinances. The trial court granted summary judgment in defendants’ favor. Affirming the grant of summary judgment, the Court of Appeal stated: “We agree there was no evidence defendants had actual or constructive knowledge the employer was storing and handling a hazardous material, and defendants therefore owed no duty to the decedent.” (Oh v. Teachers Insurance and Annuity Association of America (Cal. App. 2nd Dist. Div. 8, Aug. 7, 2020) 53 Cal.App.5th 71.)

Contractor Licensed During Only Part of Contract Entitled to Hearing.

A homeowner was not satisfied with flooring installed by a contractor. He sued the contractor for breach of contract and disgorgement of money paid to an unlicensed contractor, fraud, and unfair business practices. The contractor cross-complained seeking the balance of the contract price, alleging breach of contract and quantum meruit. The trial court sustained the demurrer to the cross-complaint on the ground the contractor was not licensed during part of the contract (Bus. & Prof. Code, § 7031). The Court of Appeal reversed, stating: “The contractor is entitled to an evidentiary hearing on whether it substantially complied with contractor licensing law.” (C.W. Johnson & Sons, Inc. v. Carpenter (Cal. App. 2nd Dist., Div. 6, Aug. 7, 2020) 53 Cal.App.5th 165.)

Summary Judgment for Insurer Based on Genuine Dispute Rule Reversed.

Plaintiffs have a son with autism. Defendants are the family’s health insurance company and the company that administers the benefits under the policy. Until the child was seven years old, he was approved for 157 hours of therapy each month. Shortly after his seventh birthday, defendants reduced the child’s monthly therapy to 81 hours. Under Health & Safety Code § 1374.30 et seq., the family was entitled to an independent review by three physicians. Two of the three physicians disagreed with the reduction of hours, while the third agreed. As a result of the review, the California Department of Managed Health Care ordered defendants to provide the requested care. Defendants provided the requested care. Nonetheless, plaintiffs sued defendants for bad faith, alleging defendants indiscriminately reduce the amount of therapy when autistic children turn seven years old, regardless of medical need. The trial court granted defendants’ motions for summary judgment based on the genuine dispute rule. Reversing, the Court of Appeal noted that the reduction might appear to be reasonable since one independent physician concluded the reduction was appropriate because the child was not making much progress. But other evidence suggested defendants’ medical necessity guidelines were not consistent with community medical standards and that defendants’ did not fairly evaluate plaintiffs’ claims. The Court of Appeal stated, “it is not enough that an insurer’s ultimate decision might be considered reasonable at first glance. Here, the trial court erred by failing to look past an arguably reasonable denial to determine whether the insurer fairly evaluated its insured’s claim.” (Ghazarian v. Magellan Health, Inc. (Cal. App. 4th Dist., Div. 3, Aug. 7, 2020) 53 Cal.App.5th 171.)

Petition to Compel Arbitration Denied.

Plaintiffs are the children of a woman who died in a senior living facility. They sued the operators of the facility for wrongful death and elder abuse. When their mother was admitted to the facility, two of the three adult children signed a contract that contained an arbitration clause. When they signed it, they were temporary conservators of the person of their mother. The trial court denied defendants’ petition to compel arbitration. Affirming, the Court of Appeal found the children lacked the power to bind their mother to an agreement giving up substantial rights without her consent or a prior adjudication of her lack of capacity. Further, the appeals court found that as temporary conservators, the children were constrained from making long-term decisions without prior court approval. (Holley v. Silverado Senior Living Mgmt., Inc (Cal. App. 4th Dist., Div. 3, Aug. 7, 2020) 53 Cal.App.5th 197.)

Previously we reported:
Proposition 51 Redux.

In an excessive force/wrongful death case involving sheriff’s deputies, a jury awarded plaintiff $8 million in noneconomic damages. The jury assessed 40 percent fault to the decedent for his own death and 20 percent each to the deputies. One of those deputies was found to have intentionally harmed the decedent. The court entered judgment for the entire $8 million against that deputy, citing Thomas v. Duggins Construction Co., Inc. (2006) 139 Cal.App.4th 1105, which held that Civil Code § 1431.2 does not apply to an intentional tortfeasor’s liability in a personal injury case. Reversing, the Court of Appeal stated: “Because we conclude Thomas conflicts with the plain text of section 1431.2, we decline to follow its holding.” The matter was remanded to the trial court with instructions to enter a new judgment allocating noneconomic damages to each defendant in proportion to his percentage of fault. (B.B. v. County of Los Angeles (Cal. App. 2nd Dist., Div. 3, July 12, 2018) 25 Cal.App.5th 115.)

The latest:

The California Supreme Court agreed with the trial court and disagreed with the Court of Appeal, holding that an intentional tortfeasor is not entitled to a reduction of noneconomic damages under Civil Code § 1431.2 based on apportionment of fault. (B.B. v. County of Los Angeles (Cal., Aug. 10, 2020) 10 Cal.5th 1.)

Hostile Work Environment and Continuing Violation.

A salesman repeatedly asked his coworker for dates, grabbed her buttocks, boasted of his own sexual prowess and conquests, and showed her smartphone photographs of himself engaging in sex acts with other women. Things came to a head in 2017 when the salesman yelled at the woman in front of coworkers, used gender slurs, and then physically assaulted her, bumping his chest against hers. Eventually, the woman was fired. She sued the saleman and their employer, alleging various workplace causes of action. Defendants moved for summary adjudication, arguing that the individual defendant had actually engaged in workplace sexual misconduct since 2006—and since the plaintiff stopped complaining when she realized her complaints were futile, the one-year statute of limitations had run . The trial court denied the motion. Defendants challenged the denial by filing a petition for writ of mandate in the Court of Appeal. The Court of Appeal denied the petition, finding that some incidents occurred within the one-year limitations period, and questions about whether prior incidents constituted a continuing course of conduct must be resolved by a jury. (Blue Fountain Pools & Spas Inc. v. Superior Court (Cal. App. 4th Dist., Div. 2, Aug. 10, 2020) 53 Cal.App.5th 239.)

Brave New Digital Currency World.

Defendant is a digital currency bank that allows customers to send, receive, and store certain digital currencies. Plaintiff stored 350 Bitcoin in his account on defendant’s platform. In 2017, a third party launched a new cryptocurrency called Bitcoin Gold as a so-called “fork,” a type of derivative currency that could copy Bitcoin code and repurpose it in a new digital network. The result of this copying was that plaintiff retained his original 350 Bitcoin, but was also granted 350 new Bitcoin Gold. Defendant determined it would not support the new currency because it was a security risk, and so informed its customers. Plaintiff sued defendant for refusing to allow him to retrieve his forked Bitcoin Gold currency from defendant’s platform, alleging breach of contract, conversion, and negligence. The trial court granted defendant’s motion for summary judgment. Affirming, the Court of Appeal found that: (1) the breach of contract claim failed because plaintiff did not establish the existence of an agreement with defendant to provide the Bitcoin Gold to him; (2) plaintiff failed to establish defendant took any action to convert plaintiff’s Bitcoin Gold; and (3) defendant had no legal duty to plaintiff with regard to the Bitcoin Gold, so the negligence cause of action also failed. (Archer v. Coinbase, Inc. (Cal. App. 1st Dist., Div. 1, Aug. 10, 2020) 53 Cal.App.5th 266.)

Conviction Reversed Because Analyst Who Performed Drug Test Was Not the Analyst Who Testified.

A criminal defendant argued on appeal that he was deprived of his rights under the Sixth Amendment because the analyst who tested the seized drugs was not the analyst who testified at trial. Reversing, the Court of Appeal stated that “the Constitution requires the source of those statements to personally appear at trial for cross-examination.” (People v. Ogaz (Cal. App. 4th Dist., Div. 3, Aug. 10, 2020) 53 Cal.App.5th 280.)

Anticompetitive Behavior Versus Hypercompetitive Behavior.

The Federal Trade Commission alleged defendant violated the Sherman Act by unreasonably restraining trade in portions of the cellular modem chip markets. After a bench trial, the district court ordered a permanent, worldwide injunction prohibiting several of defendant’s core business practices. Reversing, the Ninth Circuit vacated the injunction, finding defendant’s behavior was hypercompetitive, but not anticompetitive. (Federal Trade Commission v. Qualcomm Incorporated (9th Cir., Aug. 11, 2020) 2020 WL 4591476.)

Sudden Emergency Doctrine.

Plaintiffs filed a wrongful death action after their family member was killed in a freeway collision. Defendant had been driving in front of decedent, saw a car stopped ahead, and changed lanes to avoid it. The decedent, however, did not see the stopped car in time, rear-ended the vehicle, and died. Defendant saw the collision in his rear view mirror, stopped his SUV, and called 9-1-1. Plaintiffs claimed that defendant’s vehicle obscured decedent’s vision, preventing him from seeing the stopped car until it was too late to avoid a collision. The trial court granted summary adjudication to defendant under the “sudden emergency” doctrine: when a person, without negligence on his part, is suddenly and unexpectedly confronted with imminent danger, that person is not required to use the same judgment or care as in calmer and more deliberate moments. Affirming, the Court of Appeal found that the sudden emergency doctrine provided a complete defense to defendant, who was confronted with the sudden emergency of a stopped car on the freeway. (Abdulkadhim v. Wu (Cal. App. 2nd Dist., Div. 1, Aug. 11, 2020) 53 Cal.App.5th 298.)

Teacher Fired After Expressing Her Opinion.

 In 2017, a quarter of a high school student body boycotted school for a day to protest President Trump’s immigration policies. In response to a school employee’s email asking about the high rate of absences, appellant (a teacher) emailed: “The PROFESSIONAL staff members and SERIOUS students are here today, boycott be darned.” Later, the teacher commented to a Facebook post: “Cafeteria was much cleaner after lunch, lunch itself, went quicker, less traffic on the roads, and no discipline issues today. More please.” When a counselor expressed disappointment with her remarks, the teacher posted: “Disappointing is to think that some of my students still don’t get it about education. Staff members who are sympathetic to the cause were at school today. The kids who care were there. The professional staff members were there. What I saw today was more proof, just like last year, that boycotts, especially of education, aren’t the answer. It just keeps the ones who need it the most as useful fools.” The teacher made other similar comments on Facebook. People took screen shots of the teacher’s posts and placed them on Twitter, and the school received hundreds of complaints about the teacher’s comments. The school administration found the teacher’s conduct was immoral and rendered her unfit to serve. She was dismissed from her position. She sought a writ of mandate in the superior court; the court denied her petition. She then appealed. Affirming, the Court of Appeal stated that substantial evidence supported the trial court’s finding that the teacher’s conduct rendered her unfit to teach. (Crawford v. Commission on Professional Competence of Jurupa Unified School Dist. (Cal. App. 4th Dist., Div. 2, Aug. 11, 2020) 53 Cal.App.5th 327.)

Public Interest Group Challenges Confidential Informant Program in Jails.

 A government watchdog group that includes family members of a murder victim, a family member of a man who was killed by the police, and a woman who connects prisoners with their families sued a county prosecutor and sheriff in their official capacities. They alleged an illegal and clandestine confidential informant program within county jails. The trial court sustained defendants’ demurrer, finding that the plaintiffs lacked standing. Reversing, the Court of Appeal stated: “The fundamental rights at stake fit comfortably within the doctrines of taxpayer and public interest standing.” (People for Ethical Operation of Prosecutors etc. v. Spitzer (Cal. App. 4th Dist., Div. 3, Aug. 12, 2020) 53 Cal.App.5th 391.)

Factors to Consider in Motion to Quash Subpoena Duces Tecum Served on Third Party.

The California Supreme Court addressed the propriety of a criminal defense subpoena served on Facebook. The subpoena sought restricted posts and private messages of a Facebook user, who was also a victim and critical witness in an attempted murder prosecution. The trial court denied Facebook’s motion to quash. The Supreme Court remanded the matter to the trial court with directions to vacate its order. The Supreme Court held that, when ruling on a motion to quash a subpoena duces tecum directed to a third party, trial courts should consider and balance seven factors: (1) plausible justification; (2) overbreadth; (3) availability of material; (4) privacy/confidentiality rights; (5) timeliness of request; (6) necessity of an unreasonable delay in trial; and (7) burden placed on third party. (Facebook, Inc. v. Superior Court (Touchstone) (Cal., Aug. 13, 2020) 10 Cal.5th 329.)

Product Liability Verdict Upheld on Appeal.

Defendant manufactures intravascular filters, which are medical devices to prevent blood clots that are usually prescribed for patients who cannot take blood thinner medications. Plaintiff had a filter implanted in a major vein in 2007. Several years later, the device fractured into pieces and perforated the vein. She underwent two repair surgeries, but surgeons were unable to remove one piece of the broken filter, which remains embedded in the wall of the vein. In a bellwether trial, a jury found defendant liable for failure to warn, awarding plaintiff $1.6 million in compensatory damages and $2 million in punitive damages. Defendant claimed the district court erred when it denied its motion for summary judgment based on preemption, and the punitive damages award was not supported by substantial evidence. Affirming, the Ninth Circuit concluded that the district court correctly allowed the jury to decide the adequacy of the warning, and the evidence supported the jury’s award of punitive damages. (In re Bard IVC Filters Product Liability Litigation (9th Cir., Aug. 13, 2020) 2020 WL 4692349.)

Amazon Held to be in the Chain of Distribution in Product Liability Case.

Plaintiff purchased a replacement laptop computer battery on Amazon charged plaintiff for the purchase, retrieved the battery from an Amazon warehouse, prepared the battery for shipment in Amazon-branded packaging, and sent it to plaintiff. Plaintiff alleged the battery exploded and she suffered severe burns as a result. She sued Amazon for strict product liability. The trial court granted Amazon’s motion for summary judgment. Reversing, the Court of Appeal stated: “Whatever term we use to describe Amazon’s role, be it ‘retailer,’ ‘distributor,’ or merely ‘facilitator,’ it was pivotal in bringing the product here to the consumer.” (Bolger v., LLC (Cal. App. 4th Dist., Div. 1, Aug. 13, 2020) 53 Cal.App.5th 431.)

Claim Preclusion Bars Second PAGA Action.

In 2019, the San Diego Superior Court approved a class action settlement brought under Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.; PAGA). The settlement covered all persons employed by defendants in certain job classification between 2013 and 2018. Plaintiff in the instant case opted out of that San Diego action. He filed a representative action in Contra Costa County, seeking civil penalties under PAGA. The trial court dismissed the action, finding it was barred by claim preclusion. Affirming, the Court of Appeal found the plaintiff’s claims relating to violations between 2013 to 2018 were barred by claim preclusion, and the plaintiff lacked standing to pursue a PAGA claim arising after 2018 because he was no longer an employee. (Robinson v. Southern Counties Oil Co. (Cal. App. 1st Dist., Div. 4, Aug. 13, 2020) 53 Cal.App.5th 476.)

California Went Too Far in Gun Control.

California barred its citizens from owning so-called “large capacity magazines” that hold more than ten rounds of ammunition. The ban makes it criminal for Californians to own magazines that come standard in Glocks, Berettas, and other handguns that are staples of self-defense. Even law-abiding citizens, regardless of their training and track record, must alter or turn over to the state any prohibited magazines that they may have legally owned for years. Finding the law unconstitutional under the Second Amendment, the Ninth Circuit held: “The state of California has latitude in enacting laws to curb the scourge of gun violence, and has done so by imposing waiting periods and many other limitations. But the Second Amendment limits the state’s ability to second-guess a citizen’s choice of arms if it imposes a substantial burden on her right to self-defense. Many Californians may find solace in the security of a handgun equipped with [a large capacity magazine]: those who live in rural areas where the local sheriff may be miles away, law-abiding citizens trapped in high-crime areas, communities that distrust or depend less on law enforcement, and many more who rely on their firearms to protect themselves and their families. California’s almost-blanket ban . . . goes too far in substantially burdening the people’s right to self-defense.” (Duncan v. Becerra (9th Cir., Aug. 14, 2020) 2020 WL 4730668.)

Petition to Compel Arbitration Denied.

Plaintiff signed an arbitration agreement with his employer, an auto dealership. Shortly thereafter, he was transferred to another auto dealership. He subsequently sued both dealerships, as well as several other affiliated dealerships, for wage and hour violations. Defendants moved to compel arbitration. The trial court ordered arbitration, but only as to the initial employer. Further, the trial court ordered that claims under the Private Attorney General Act would proceed in the trial court without staying any portion of the case. Defendants argued on appeal that the arbitration provision should have included the affiliated dealerships, so that all defendants would be entitled to compel arbitration—either under the terms of the agreement, as third party beneficiaries, or under the theory of equitable estoppel. Affirming, the Court of Appeal held the defendants failed to show the arbitration agreement was expressly for their benefit, and that the inequities that the doctrine of equitable estoppel is designed to protect were not present in this action. (Jarboe v. Hanlees Auto Group (Cal. App. 1st Dist., Div. 3, Aug. 14, 2020) 53 Cal.App.5th 539.)

Remedy for Violations in Skilled Nursing Facility.

Health and Safety Code § 1430, subdivision (b) gives a current or former nursing care patient or resident the right to bring a private cause of action against a skilled nursing facility for violating certain regulations. The available remedies include injunctive relief, costs, and attorney fees, and “up to five hundred dollars ($500)” in statutory damages. The California Supreme Court held that the remedy is capped at $500 per action, not per regulatory violation. (Jarman v. HCR ManorCare, Inc. (Cal., Aug. 17, 2020) 10 Cal.5th 375.)

Words in a Contract Have Meaning.

An arbitrator determined the meaning of the word “terminates” in a contract between a sports team and a venue. The team allowed its contract with the venue to expire by its own terms. A licensing agreement contract term stated that termination of the contract would result in the team’s continuing to pay the licensing debt. The arbitrator found in favor of the venue, and the trial court confirmed the arbitration award. Affirming, the Court of Appeal stated that in its review of the contract and extrinsic evidence the parties may have intended the phrase “terminates this License Agreement for any reason” to encompass a termination of the agreement by the failure to exercise the first two five-year options to renew it. Turning to the question of what the parties meant by that language, the appellate court found that was an issue of fact, not one of law, so it was beyond its review. (Oakland-Alameda County Coliseum Authority v. Golden State Warriors, LLC (Cal. App. 1st Dist., Div. 5, Aug. 18, 2020) 2020 WL 4760203.)

Trial Court Had No Authority to Order Sanctions Against Vexatious Litigant.

A trial court declared plaintiff to be a vexatious litigant under Code of Civil Procedure § 391, subdivision (b) and ordered plaintiff to furnish a $100,000 security bond. The trial court also ordered discovery sanctions. Reversing the award of discovery sanctions, the Court of Appeal held that the trial court was without authority to impose the sanctions because, under the plain language of Code of Civil Procedure § 391.6, all further proceedings were stayed once the vexatious litigant motion under § 391.1 was filed. (Hanna v. Little League Baseball, Inc. (Cal. App. 4th Dist., Div. 2, Aug. 18, 2020) 2020 WL 4783519.)

Amazon’s Delivery Drivers Exempt From Federal Arbitration Act.

A Washington state federal judge denied Amazon’s petition to compel arbitration, finding plaintiff, a delivery driver for Amazon, was exempt from the Federal Arbitration Act (9 U.S.C. § 1 et seq.; FAA). The FAA exempts workers “engaged in foreign or interstate commerce.” On appeal, Amazon argued its delivery drivers participate in intrastate activities only. Affirming, the Ninth Circuit Court held “that the AmFlex delivery providers in this case are transportation workers engaged in interstate commerce and are thus exempt from the FAA’s enforcement provisions pursuant to § 1.” (Rittmann v., Inc. (9th Cir., Aug. 19, 2020) 2020 WL 4783519.)

Criminal Conviction Reversed Because Expert Evidence Not Shown to Be Reliable.

A federal judge sentenced a defendant convicted of four felonies for transportation of marijuana to 120 months in prison. The defendant asserted as an affirmative defense that he acted under duress; that armed gunmen seized his truck in Mexico and held him at gunpoint for several hours. During that time, one of the gunmen drove the truck away and returned it. The gunmen then told the defendant to continue driving and pretend nothing had happened or they would kill him and his family. During the trial, over objection by the defense, a special agent from Immigration and Customs Enforcement testified the likelihood that drug trafficking organizations would entrust a large quantity of illegal drugs to the driver of a commercial vehicle who was forced or threatened to comply was “[a]lmost nil, almost none.” Vacating his conviction, the Ninth Circuit stated that the “the government must still establish that its expert opinions are reliable under the standards mandated by Daubert and Kumho Tire. The government failed to do so here.” (United States v. Valencia-Lopez (9th Cir., Aug. 19, 2020) 2020 WL 4814139.)

Government Not Permitted to Attach Social Security Benefits.

After a man was convicted of wire and securities fraud, on a writ of garnishment, the government sought to attach community funds in a bank account to satisfy a restitution order. That account held the Social Security benefits of the criminal defendant’s wife. The federal district court overruled the wife’s objections, concluding the Mandatory Victims Restitution Act (18 U.S.C. § 3663A; MVRA) overrides the protections afforded Social Security benefits. Reversing, the Ninth Circuit held: “Because Mr. Swenson had no right to Mrs. Swenson’s Social Security benefits, we conclude the district court erred by finding that those benefits were subject to garnishment pursuant to the MVRA.” (United States v. Swenson (9th Cir., Aug. 19, 2020) 2020 WL 4814151.)

Copyright Infringement.

Plaintiffs own a software operating system. From time to time, they release patches for the system to fix vulnerabilities. Plaintiffs limit use of the software and patches through the grant of licenses and require a prepaid annual support contract. Plaintiffs sued defendants for copyright infringement, alleging defendants improperly accessed and used the patches without a prepaid contract license. A federal district court granted summary judgment for defendants. Affirming in part and reversing in part, the Ninth Circuit noted that defendants’ employees testified that defendants installed patches on an unsupported server, and stated: “We reverse summary judgment on all infringement claims for pre-installation conduct, and on the direct infringement claims for unauthorized patch installations by [defendants].” (Oracle America, Inc. v. Hewlett Packard Enterprise Company (9th Cir., Aug. 20, 2020) 2020 WL 4876833.)

No Notice Illegally Parked Car Would Be Towed.

The City of Portland, Oregon left six citations on petitioner’s illegally parked car over the course of seven days. On the seventh day, the city left a red tow slip on the windshield. The car was then towed. Petitioner alleged that the pre-towing notice provided was inadequate under the Fourteenth Amendment’s due process clause. The federal district court granted the city’s motion for summary judgment. Reversing and remanding for the court to decide specific issues, the Ninth Circuit stated: “We therefore remand this case to the district court to consider, among other questions: (1) Is putting citations on a car that do not explicitly warn that the car will be towed reasonably calculated to give notice of a tow to the owner?; (2) Did the red tow slip placed on Grimm’s car shortly before the tow provide adequate notice?; and (3) Was Portland required under Jones to provide supplemental notice if it had reason to suspect that the notice provided by leaving citations and the tow slip on Grimm’s windshield was ineffective?” (Grimm v. City of Portland (9th Cir., Aug. 21, 2020) 2020 WL 4914057.)

Wrongful Death Verdict Against CHP Upheld.

CHP officers arrested a man during a traffic stop and observed  the man put in his mouth and swallow something he insisted was gum, not drugs. Officers repeatedly offered medical attention, which the man declined. Officers observed no symptoms of drug intoxication and took the man to county jail where he died of acute methamphetamine intoxication. His parents sued the CHP for wrongful death, and a jury awarded $827,544, 22 percent of which was allocated to decedent. On appeal, the officers argued: (1) they had no duty to obtain a medical examination for decedent in the circumstances presented; (2) they fulfilled the scope of any duty they may have had by taking him to a jail with medical staff on site; and (3) their failure to take him to the hospital was not a proximate cause of his death. They further argued the trial court erred in ruling the jury could not consider decedent’s intentional act of swallowing the methamphetamine in allocating comparative fault, and in denying defendants’ motion in limine to exclude evidence and argument that the officers attempted to coerce an admission to possession of a controlled substance by conditioning medical treatment on decedent’s admitting he swallowed a controlled substance. Affirming, the Court of Appeal noted decedent’s negligence in swallowing the drug had no bearing on the CHP’s response, and held the trial court did not abuse its discretion in its evidentiary rulings. (Frausto v. Department of the California Highway Patrol (Cal. App. 1st Dist., Div. 2, Aug. 21, 2020) 2020 WL 4915622.)

Catalyst Attorney Fees.

Defendant sells salad dressings that state on the front label that they are made with olive oil. Plaintiff served defendants with a prelawsuit notice that its product labeling was deceptive in that, for example, one salad dressing contains 28 percent vegetable oil and seven percent olive oil, and another contains 24 percent canola oil and 17 percent olive oil. The same day defendants were invited to mediate, its executives met and changed the labels. Plaintiff moved for attorney fees pursuant to Code of Civil Procedure § 1021.5, and the trial court granted the motion. The Court of Appeal affirmed, stating: “So long as the plaintiff’s lawsuit was a catalyst motivating the defendant to change its behavior, an attorney fee award may be permitted.” (Skinner v. Ken’s Foods, Inc. (Cal. App. 2nd Dist., Div. 6, Aug. 21, 2020) 2020 WL 4915218.)

Petition to Compel Arbitration Denied.

Plaintiffs sued Uber for not providing a wheelchair-accessible ride-sharing option in their hometown of New Orleans. Plaintiffs never downloaded the Uber app—and therefore did not sign Uber’s arbitration agreement—before filing suit. According to Uber, because plaintiffs do not have the Uber app and therefore do not use Uber, they cannot satisfy the injury-in-fact prong of the article III standing analysis. And even if they can, Uber argued, they should be equitably estopped from avoiding Uber’s arbitration agreement because they consciously avoided downloading the app and signing the terms and conditions. The federal district court denied Uber’s petition to compel arbitration. Affirming, the Ninth Circuit stated: “Plaintiffs do not rely on Uber’s Terms and Conditions. None of Uber’s Terms and Conditions is mentioned in the operative complaint, and the only Terms or Conditions Uber has mentioned is the arbitration clause. Plaintiffs’ case arises entirely under the ADA. And Plaintiffs’ ADA claims are fully viable without any reference to Uber’s Terms and Conditions. So equitable estoppel does not apply.” (Namisnak v. Uber Technologies, Inc. (9th Cir., Aug. 24, 2020) 2020 WL 4930650.)

Proximate Cause.

Plaintiff was burned by hot tea she purchased from defendant. She sued alleging the cup was defective. It seems that she set the cup on a table and then pulled her chair closer to the table. The chair bumped the table, causing the hot tea to spill. Some of the tea splashed on plaintiff and caused second degree burns. The trial court granted defendant’s motion for summary judgment. Affirming, the Court of Appeal stated the alleged defects in the cup were too remotely connected to plaintiff’s injuries to constitute their legal or proximate cause. (Shih v. Starbucks Corporation (Cal. App. 2nd Dist., Div .7, Aug. 24, 2020) 2020 WL 4932836.)

Public Policy Prohibits Arbitration Agreements in Residential Lease Agreements.

Five residents of leased property sued the owners about bed bugs and other problems with the property. The owners moved to compel arbitration based on an arbitration agreement in the lease. The trial court denied the motion. The Court of Appeal affirmed because state public policy prohibits arbitration agreements in residential lease agreements. (Williams v. 3620 W. 102nd Street, Inc. (Cal. App. 2nd Dist., Div. 8, Aug. 24, 2020) 2020 WL 4932328.)

Peremptory Challenge of Trial Judge After Appeal.

A jury found in favor of a doctor in a medical malpractice action. The Court of Appeal concluded the trial court erred by failing to inquire more fully concerning defense counsel’s use of peremptory challenges against Hispanic prospective jurors, and conditionally reversed the judgment to allow the trial court to conduct further inquiry. Once back in the trial court, plaintiff filed a peremptory challenge of the trial judge pursuant to Code of Civil Procedure § 170.6, and the trial judge stepped aside. The doctor filed a petition for writ of mandate in the appellate court. Granting the petition, the appeals court stated: “[T]he trial court should have waited to rule on the peremptory challenge until it conducted the Batson/Wheeler inquiry, then granted the disqualification motion only if it ordered a new trial.” (Akopyan v. Superior Court (Cal. App. 2nd Dist., Div. 7, Aug. 24, 2020) 2020 WL 5417507.)

Untimely Federal Appeal.

Appellant filed a postjudgment motion for attorney fees under Federal Rule of Civil Procedure 54(d) and then filed a notice of appeal 30 days after the district court denied that fees motion. The notice of appeal purported to appeal both the denial of fees and the underlying judgment, which by that point had been entered 78 days prior. Dismissing the appeal from the underlying judgment for lack of jurisdiction, the Ninth Circuit stated: “We hold that the notice of appeal was untimely as to the district court’s underlying judgment. The Federal Rules are clear that ‘[o]rdinarily, the entry of judgment may not be delayed, nor the time for appeal extended, in order to tax costs or award fees.’” (Nutrition Distribution LLC v. IronMag Labs, LLC (9th Cir., Aug. 25, 2020) 2020 WL 5001828.)

Two PAGA Actions Against the Same Employer.

Plaintiffs filed two separate actions against an employer alleging Labor Code violations pursuant to the Private Attorneys General Act (Lab. Code, § 2698 et seq.; PAGA). The first action settled with court approval, without the knowledge of plaintiff in the second action, and the Labor and Workforce Development Agency (LWDA) accepted its share of the settlement proceeds. When plaintiff in the second action learned of the settlement, he moved to vacate the judgment and to intervene in the first action. The trial court denied the motions. The trial court then granted summary judgment for the employer in the second action. Affirming, the Court of Appeal concluded the trial court did not abuse its discretion by denying the motion to intervene as untimely; the LWDA forfeited its right to challenge the judgment by accepting the benefits of the settlement, and the plaintiff in the second action was barred from attacking the judgment on LWDA’s behalf; and summary judgment was proper because the PAGA claim in the second action was encompassed within the judgment in the first action. (Starks v. Vortex Industries, Inc. (Cal. App. 2nd Dist., Div. 1, Aug. 25, 2020) 2020 WL 5015248.)

Statute of Limitations for a Disgorgement Claim Against an Unlicensed Contractor.

Business & Professions Code § 7031 was enacted to deter unlicensed building contractors by (1) preventing them from bringing or maintaining an action to collect compensation for performance of any work for which a license is required, and (2) allowing any person who utilizes the services of an unlicensed contractor to bring an action for disgorgement of all compensation paid for the performance of any act or contract, regardless whether there was any fault in the contractor’s work. The trial court dismissed plaintiff’s action against an unlicensed contractor for disgorgement. Deciding two issues of first impression, the Court of Appeal stated: “We hold that the one-year statute of limitation applies to claims for disgorgement under section 7031(b). We also hold that the discovery rule does not apply, and that a section 7031(b) claim accrues upon the completion or cessation of the performance of the act or contract at issue. Because Eisenberg failed to bring its section 7031(b) claim within one year after the completion or cessation of Suffolk’s performance, we affirm the judgment.” (Eisenberg Village v. Suffolk Construction Company, Inc. (Cal. App. 2nd Dist., Div. 4, Aug. 26, 2020) 2020 WL 5035826.)

Minimum Contacts Through Internet Sales.

California residents sued a retailer based in Georgia that sells its wares through catalogs and through its website. Plaintiffs alleged the website was not fully accessible to the blind and the visually impaired, in violation of the Unruh Civil Rights Act (Civ. Code, § 51 et seq). The trial court granted defendant’s motion to quash service of summons based on lack of personal jurisdiction. Reversing, the Court of Appeal stated: “The evidence showed that Fairfield makes some eight to ten percent of its sales to Californians. Hence, its website is the equivalent of a physical store in California. Moreover, this case arises out of the operation of that website. The trial court therefore can properly exercise personal jurisdiction over Fairfield.” (Thurston v. Fairfield Collectibles of Georgia, LLC (Cal. App. 4th Dist., Div. 2, Aug. 26, 2020) 2020 WL 5036520.)

Previously we reported:
“On my honor, I will never betray my badge, my integrity, my character or the public trust,” Police Officer’s Oath of Honor.

This lawsuit alleges that a Trinity County deputy sheriff phoned citizens James and Norma Gund—who do not work for the county—and asked them to go check on a neighbor who had called 911 for help. The officer told them it was  likely related to inclement weather. The Gunds unwittingly walked into a murder scene and were savagely attacked by the man who apparently had just murdered the neighbor and her boyfriend. The assailant fled. The Gunds sued the County of Trinity and the deputy for negligence and misrepresentation, alleging defendants created a special relationship with the Gunds and owed them a duty of care, which defendants breached by representing that the 911 call was likely weather-related and “probably no big deal” and by withholding information known to defendants suggesting a crime in progress—i.e., that the caller had whispered “help me,” that the dispatcher refrained from calling back when the call was disconnected out of concern the caller was in danger, and that no one answered when another dispatcher called. Defendants filed a motion for summary judgment based on Labor Code § 3366, which provides that any person “engaged in the performance of active law enforcement service as part of the posse comitatus or power of the county, and each person . . . engaged in assisting any peace officer in active law enforcement service at the request of such peace officer, is deemed to be an employee of the public entity that he or she is serving or assisting in the enforcement of the law, and is entitled to receive compensation from the public entity in accordance with the provisions of [workers’ compensation]. . . .”  (Italics added.) The trial court granted the county’s motion for summary judgment and dismissed the action. The Court of Appeal affirmed “because responding to a 911 call for help of an uncertain nature is active law enforcement, regardless of the deputy’s misrepresentations.” (Gund v. County of Trinity (Cal. App. 3rd Dist., June 4, 2018) 24 Cal.App.5th 185.)

The latest:

Affirming the judgment of the Court of Appeal, the California Supreme Court agreed the Gunds were engaged in active law enforcement service and are limited to a recovery in workers’ compensation. (Gund v. County of Trinity (Cal., Aug. 27, 2020) 2020 WL 5049230.)

Workplace Violence Restraining Order.

A deputy city attorney was present at a city council meeting representing his employer, the City of Los Angeles. A man attending the meeting publicly revealed the attorney’s home address and, in a threatening manner, directed profanity at the attorney. The man also submitted public speaker cards; one had a drawing of a Ku Klux Klan hood, another a swastika, and yet another had either two lightning bolts or the letters “SS,” all with the attorney’s name on them. The man had previously indicated his belief that the attorney was Jewish. The trial court issued a workplace violence restraining order pursuant to Code of Civil Procedure § 527.8. On appeal, defendant argued that the restraining order was unwarranted and violated his First Amendment rights. Affirming, the Court of Appeal stated: “The circumstances of the threats, including Herman’s angry demeanor, supported the trial court’s conclusion that the threats could reasonably be viewed as serious.” (City of Los Angeles v. Herman (Cal. App. 2nd. Dist., Div. 2, Aug. 31, 2020) 2020 WL 5106765.)