California Supreme Court Civil Issues Pending: B & P 17200/Class Actions/Commercial


Did Borrower Waive Protections for Mortgagee in Short Sale? The Court granted review on the following issues: (1) Do the anti-deficiency protections in CCP § 580b apply to a borrower who engages in a “short sale” of real property when the lender approved the sale and reconveyed its deed of trust to facilitate the sale on the condition that the borrower remain liable for any outstanding balance on the loan following the sale? (2) Does a borrower’s request that the creditor release its security interest in real property to facilitate a short sale result in a waiver of the protection of the “security first” rule set forth in CCP § 726? Coker v. JP Morgan Chase Bank, N.A., S213137 (opinion below D061720, formerly 218 Cal.App.4th 1).  Review granted 11/20/13.

Is the Proposed Development Consistent with the City’s General Plan? After the Court of Appeal affirmed in part and reversed in part in an action for writ of administrative mandate, the Court granted review of the following issue: Is the proposed development project of low density housing at issue in this case consistent with the city’s general plan? Orange Citizens for Parks & Recreation v. Superior Court, S212800 (opinion below G047013, G047219, formerly 217 Cal.App.4th 1005). Review granted 10/28/13.

What Is the Standard of Review When Challenging Housing Ordinances?
After the Court of Appeal reversed the judgment in a civil action, the Court granted review on the following issue: What standard of judicial review applies to a facial constitutional challenge to inclusionary housing ordinances that require set asides or in-lieu fees as a condition of approving a development permit? (See San Remo Hotel L.P. v. City & County of San Francisco (2002) 27 Cal.4th 643, 670.) California Building Industry Assn. v. City of San Jose, S212072 (opinion below H038563, formerly 216 Cal.App.4th 1373). Review was granted 9/11/13.

What Makes a Valid Class When Challenging Status as Employees v. Independent Contractors? After the Court of Appeal affirmed in part and reversed in part an order denying class certification, the Court accepted review on questions concerning the determination of whether common issues predominate in a proposed class action relating to claims that turn on whether members of the putative class are independent contractors or employees. Ayala v. Antelope Valley Newspapers, Inc. S206874 (opinion below B235484, formerly 210 Cal.App.4th 77). Review was granted on 1/30/13.  Update 6/26/13: The Court orders supplemental letter briefs discussing the relevance of Martinez v. Combs (2010) 49 Cal.4th 35, 52-57, 73, and IWC wage order No. 1-2001, subdivision 2(D)-(F) (Cal. Code Regs., tit. 8, § 11010, subd. 2(D)-(F)), with additional reference to Sotelo v. Medianews Group, Inc. (2012) 207 Cal.App.4th 639, 660-662 and Bradley v. Networkers Internat., LLC (2012) 211 Cal.App.4th 1129, 1146-1147.  Update 3/6/14: Oral argument scheduled for 4/2/14. Update 3/11/14: Oral argument rescheduled for 4/3/14.  Update: 4/3/14: Case argued and submitted.  Update 6/30/14: Opinion issued. The Court unanimously affirmed the Court of Appeal, holding that whether a common law employer-employee relationship exists turns foremost on the degree of a hirer’s right to control how the end result is achieved; and that class certification will depend on the extent to which individual variations in the hirer’s rights vis-à-vis each putative class member exist, and whether such variations, if any, are manageable. The trial court erroneously rejected certification largely based not on differences in Antelope Valley’s right to exercise control, but on variations in how that right was exercised.

Is a Commercial Property Owner Required to Maintain a Defibrillator?
In response to a request under C.R.C., rule 8.548 by the United States Court of Appeals for the Ninth Circuit, the Court certified the following issue: In what circumstances, if ever, does the common law duty of a commercial property owner to provide emergency first aid to invitees require the availability of an Automatic External Defibrillator (‘AED’) for cases of sudden cardiac arrest? Verdugo v. Target Corp., S207313 (the 9th Cir. order, No. 10-57008; __ F.3d __, 2012 WL 6199193). Certification was granted on 1/16/13.  Update 4/4/14: Oral argument scheduled for 5/6/14. Update: 5/6/14: Case argued and submitted.  The briefs are hereUpdate 6/23/14: Opinion issued.  Having narrowed the issue to conform to the facts of this case, the unanimous Court concluded that existing California statutes do not preclude the Court from determining such a common law duty, but that under California law, Target’s common law duty of care to its customers does not include a duty to acquire and make available an AED for use in a medical emergency.

Does a Victory on Procedural Grounds Support Attorney Fees under Civil Code § 1717? After the Court of Appeal affirmed an award of attorney fees the Court granted review on the following issue: Is a party who obtains the dismissal of a contract action entirely on procedural grounds entitled to an award of attorney fees under Civil Code § 1717 as the prevailing party in an action on a contract? Kandy Kiss of California, Inc. v. Tex-Ellent, Inc., S206354 (opinion below B234541, formerly 209 Cal.App.4th 604). Review was granted on 1/16/13.

How Can Multistate Business Income Taxes Be Apportioned? After the Court of Appeal reversed the judgment in a civil action, the Court granted review on the following issue: Were multistate taxpayers required to apportion business income according to the formula set forth in Revenue and Taxation Code § 25128 as amended in 1993 or could they elect to apportion income according to the formula set forth in former Revenue and Taxation Code § 38006 pursuant to the adoption of the Multistate Tax Compact in 1974? The Gillette Co. v. Franchise Tax Bd., S206587 (opinion below, A130803, and opinion on rehearing, formerly 209 Cal.App.4th 938), review granted 1/16/13.

What is the Vicarious Liability of a Franchisor for the Tortious Conduct of a Supervising Employee of a Franchisee? After the Court of Appeal reversed a summary judgment, the court limited review to this issue: Whether the defendant franchisor is entitled to summary judgment on plaintiff’s claim that it is vicariously liable for tortious conduct by a supervising employee of a franchisee. Patterson v. Domino’s Pizza, LLC, S204543 (opinion below B235099, formerly 207 Cal.App.4th 385), review granted 10/10/12.  Update 2/13/13: Review granted in Monarrez v. Automobile Club of Southern California, S207726 (opinion below B233512, formerly 211 Cal.App.4th 177, as modified 211 Cal.App.4th 701a). Briefing was deferred pending a decision in PattersonUpdate 5/8/14: Oral argument scheduled for 6/4/14. Update 6/4/14: Case argued and submitted. Briefs are here.

Did the U.S. Supreme Court Overrule Provisions of California Labor Law?
In reviewing an order compelling arbitration and dismissing class claims, the court granted review on the following issues: (1) Did AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __ [131 S. Ct. 1740, 179 L.Ed.2d 742] impliedly overrule Gentry v. Superior Court (2007) 42 Cal.4th 443 with respect to contractual class action waivers in the context of non-waivable labor law rights? (2) Does the high court’s decision permit arbitration agreements to override the statutory right to bring representative claims under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.)? (3) Did defendant waive its right to compel arbitration? Iskanian v. CLS Transportation Los Angeles, LLC, S204032 (opinion below, B235158, formerly 206 Cal.App.4th 949), review granted on 9/19/12. Update 10/29/12: Review granted in Caron v. Mercedes-Benz Financial Services USA LLC, S205263 (opinion below, G044550, formerly 208 Cal.App.4th 7), with briefing deferred pending resolution of IskanianUpdate 12/12/12: Review granted in Reyes v. Liberman Broadcsting, Inc., S205907 (opinion below B235211, formerly 208 Cal.App.4th 1537), with briefing deferred pending resolution of Iskanian.  Update 2/13/13: Review granted in Franco v. Arakelian Enterprises, Inc., S207760 (B232583, formerly 211 Cal.App.4th 314, as modified). Briefing was deferred pending a decision in Iskanian.  Update 4/10/13: Review granted in Flores v. West Covina Auto Group, LLC, S208716 (opinion below B238265, formerly 212 Cal.App.4th 895), with briefing deferred pending a decision in Iskanian. Update 9/11/13: Review granted in Brown v. Superior Court S211962 (opinion below H037271, formerly 216 Cal.App.4th 1302), with briefing deferred pending a decision in IskanianUpdate 3/6/14: Oral argument scheduled for 4/3/14. Update: 4/3/14: Case argued and submitted.  Update 6/25/14: review granted in Ybarra v. Apartment Investment & Management Co., S217994 (opinion below B245901, nonpublished),with briefing deferred pending a decision in Iskanian. Update 6/26/14: Opinion issued. The Court held that recent U.S. Supreme Court decisions have abrogated the Court’s decision in Gentry, and further rejected arguments that the class action waiver at issue here is unlawful under the National Labor Relations Act and that this employer waived its right to arbitrate by withdrawing its motion to compel arbitration after Gentry. Regarding the representative claim under PAGA, the Court found that a waiver of bringing such a claim in any forum was contrary to public policy, and that the FAA did not preempt a state law preventing such a waiver. Update 7/24/14: The Court issued a remittitur for Iskanian, but the other cases that were deferred pending Iskanian remain on the docket

Does the FAA Preempt State Consumer Protections Against Mandatory Arbitration? Does the Federal Arbitration Act (9 U.S.C. § 2), as interpreted in AT&T Mobility LLC v. Concepcion (2011) 563 U. S. __, 131 S.Ct. 1740, preempt state law rules invalidating mandatory arbitration provisions in a consumer contract as procedurally and substantively unconscionable? Sanchez v. Valencia Holding Co. LLC, S199119 (opinion below B228027, formerly 201 Cal.App.4th 74), review granted 3/21/12.  Update 5/9/12: Review granted in Buzenes v. Nuvell Financial Services, S200376 (opinion below B221870, nonpublished). Briefing deferred pending decision in SanchezUpdate 6/13/12: Review granted in Mayers v. Volt Management Corp., S200709 (opinion below G045036, formerly 203 Cal.App.4th 1194). Briefing deferred pending decision in SanchezUpdate 12/19/12: Review granted in Goodridge v. KDF Automotive Group, Inc., S206153 (opinion below D060269, formerly 209 Cal.App.4th 325), with briefing deferred pending the resolution of SanchezUpdate 5/1/13: review granted in Natalini v. Import Motors, Inc., S209324 (opinion below A133236, formerly 213 Cal.App.4th 587), with briefing deferred pending the resolution of Sanchez. Update 6/12/13: review granted in Compton v. Superior Court, S210261 (opinion below B236669, formerly 214 Cal.App.4th 873), with briefing deferred pending the resolution of Sanchez. Update 6/26/13: Review granted in Vasquez v. Greene Motors, Inc., S210439 (opinion below A134829, originally 214 Cal.App.4th 1172, as modified 215 Cal.App.4th 764a), with briefing deferred pending the resolution of SanchezUpdate 8/21/13: Review granted in Vargas v. SAI Monrovia B, Inc., S212033 (opinion below B237257, formerly 216 Cal.App.4th 1269), with briefing deferred pending the resolution of Sanchez.

Update 2/19/14: The court invited the parties and interested persons to file supplemental briefing on the following questions. In formulating the standard for determining whether a contract or contract term is substantively unconscionable, this court has used a variety of terms, including “unreasonably favorable” to one party (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1145); “so one-sided as to shock the conscience” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (2012) 55 Cal.4th 223, 246); “unfairly one-sided” (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071–1072; “overly harsh” (Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, 114; and “unduly oppressive” (Perdue v. Crocker National Bank (1985) 38 Cal.3d 913, 925). (1) Should the court use only one of these formulations in describing the test for substantive unconscionability and, if so, which one? (2) Are there any terms the court should not use? (3) Is there a formulation not included among those above that the court should use? (4) What differences, if any, exist among these formulations either facially or as applied?  Update 6/25/14: review granted in Cheroti v. Harvey & Madding S218724 (opinion below A135553, nonpublished), with briefing deferred pending the resolution of Sanchez

Can Attempts to Prolong Patent Life be Challenged Under the Cartwright Act?
May a suit under the Cartwright Antitrust Act (Bus. & Prof. Code, § 16720 et seq.) be brought to challenge “reverse exclusionary payments” made by pharmaceutical manufacturers to settle patent litigation with generic drug producers and prolong the life of the patents in question? In re Cipro Cases I & II, S198616 (opinion below D056361, formerly 200 Cal.App.4th 442), review granted 2/15/12.  Update 6/26/13: The Court directs the parties to submit supplemental briefs discussing the relevance of Federal Trade Com. v. Actavis, Inc. (June 17, 2013, No. 12-416) __ U.S. __ [2013 WL 2922122] to the issues in this case. Update 7/10/13: Request for stay granted pending class action settlement approval proceedings in San Diego County Superior Court.

Are Claims of State Labor and Insurance Laws Violations Preempted by the Federal Aviation Administration Authorization Act? Is an action under the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) that is based on a trucking company’s alleged violation of state labor and insurance laws “related to the price, route, or service” of the company and, therefore, preempted by the Federal Aviation Administration Authorization Act of 1994 (49 U.S.C. § 14501)? People ex re. Harris v. Pac Anchor Transportation, Inc., S194388 (opinion below B220966, formerly 195 Cal.App.4th 765), review granted 8/10/11.  Update 6/26/13: Court orders supplemental briefing addressing the effect of American Trucking Associations, Inc. v. City of Los Angeles (2013) 569 U.S. ___ [2013 U.S. LEXIS 4539], and Dan's City Used Cars, Inc. v. Pelkey (2013) 569 U.S. ___ [133 S. Ct. 1769] on the issue of preemption by the Federal Aviation Administration Authorization Act of 1994.   Update 12/11/13: Review granted in Rodriguez v. RWA Trucking Company, Inc., S214150 (opinion below B241727, formerly 219 Cal.App.4th 692, as modified). Update 5/1/14: Oral argument scheduled for 5/28/14.  Update 5/28/14: Case argued and submitted. The briefs are here.

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