Testing Liability: The Legacy of Brown v. Superior Court in Products Liability

Now over 25 years old, Brown v. Superior Court established a significant precedent regarding medical products liability, and products liability generally. In addition to its specific holdings, Brown has been credited with articulating the three separate theories of products liability—manufacturing defect, design defect, and failure to warn—at a time when these were often lumped into a single claim of strict products liability. The court in Brown unanimously held that:

1)  Strict products liability for defect design does not apply to prescription drugs,

2)  Strict liability for failure to warn in prescription drug cases is limited to information that was reasonably scientifically known or knowable at the time of distribution, and

3)  The market share theory applied in Sindell v. Abbott Laboratories does not apply to breach of warranty or fraud claims and a defendant is only liable for an apportionment equal to its then market share of the subject product.

In the time since Brown, its blanket restriction on design defect claims, which remains a minority rule, has been expanded in California to all implanted medical devices, such as IUDs, breast implants and artificial joints. Attempts to expand it further to selected non-prescription medical products have so far been unsuccessful, although on a case-by-case basis. Conversely, its ruling on warnings follows the national majority rule and has been applied to products claims generally. The market share theory has not seen wide application, presumably in part because of the restrictions imposed by Brown. For more details regarding the history and legacy of Brown, please see my article in the September 2014 issue of Los Angeles Lawyer, which can be found here.
 

Copyright 2014 Los Angeles Lawyer. Reprinted with permission.

Governor Brown Taps Cuellar to Fill Latest Vacancy on California Supreme Court

 

Governor Jerry Brown has nominated Stanford law professor Mariano-Florentino Cuellar to fill the most recent vacancy on the California Supreme Court created by the impending retirement of Justice Marvin Baxter. Cuellar is “a renowned scholar who has served two presidents and made significant contributions to both political science and law,” Brown said.  “His vast knowledge and even temperament will – without question – add further luster to our highest court.”

Cuellar was born in Matamoros, Mexico. As a child he crossed the border each day to attend Catholic school in Brownsville, Texas, until he and his family relocated to California’s Imperial Valley when he was 14. After earning a bachelor’s degree from Harvard in 3 years (magna cum laude, 1993), he received a Master’s degree in political science from Stanford in 1996, followed by a law degree from Yale in 1997, and his Ph.D. in political science from Stanford in 2000. He then served as law clerk to Chief Judge Mary M. Schroeder of the United States Court of Appeals for the Ninth Circuit. 

Since the culmination of his clerkship in 2001, Cuellar has been a professor at Stanford. He is currently the Stanley Morrison Professor of Law at Stanford Law School, as well as the Director of Stanford’s Freeman Spogli Institute for International Studies, where he is also a Senior Fellow. According to his faculty biography, his work at Stanford involves “the intersection of law, public policy, and political science.” His courses deal with issues of administrative law, regulation and bureaucracy, executive power, and national security. 

Professor Cuellar’s tenure at Stanford has included governmental, as well as academic, endeavors. In fact, even before he assumed his faculty position at Stanford, he interrupted his Ph.D. program to serve as Senior Advisor to the Under Secretary (Enforcement) of the Treasury from 1997 to 1999, focusing on financial crime enforcement, terrorism financing countermeasures, immigration, and border security. In 2008 and 2009, he served as Co-Chair of the Immigration Policy Working Group for the Obama-Biden Transition Project, where he worked to formulate policies on immigration, borders, and refugees. In 2009 and 2010, he served as Special Assistant to the President for Justice and Regulatory Policy, leading the White House Domestic Policy Council’s work on criminal justice and drug policy; civil rights and liberties; immigration, borders, and refugees; public health and safety; rural development and agriculture policy; and regulatory reform. 

From 2011 to 2013, Cuellar co-chaired the National Equity and Excellence Commission, instituted by Congress to seek ways to improve the performance of public schools. He is currently an Obama appointee to the Council of the Administrative Conference of the United States, which monitors the fairness and efficiency of federal regulatory programs. He is also a board member of the American Constitution Society, often described as a progressive counterpart to the conservative Federalist Society, and the Constitution Project, a non-profit think tank that builds bipartisan consensus on constitutional and legal issues.

Beyond Stanford, Professor Cuellar is associated with the Council on Foreign Relations, the American Bar Association, the La Raza Lawyers’ Association of California, and the National Hispanic Bar Association, among others.  He is married to former Santa Clara County Superior Court Judge Lucy H. Koh, who is now a federal district court judge for the Northern District of California pursuant to an appointment by President Obama.

Because Cuellar has not served on the bench, glimpses of his prospective judicial outlook must be gleaned from his writings and his appearances in the media. A brief survey of his publications reflects an interest and expertise in national and international matters:

  • Governing Security: The Hidden Origins of American Security Agencies, Stanford: Stanford University Press, 2013.
  • “Securing” the Nation: Law, Politics, and Organization at the Federal Security Agency, 1939-1953, 76 U. Chi. L. Rev. 587 (2009) (arguing that American public law is driven by 1) how the executive branch defines national security and 2) how politicians compete to control public organizations that implement the law, and analyzing the intersection of those dynamics by investigation the history of the U.S. Federal Security Agency and drawing perspectives from separation of powers, organization theory, and the study of American political development.)
  • The Political Economies of Criminal Justice, 75 U. Chi. L. Rev. 941 (2008) (responding to the proposition that politicians increasingly govern by framing social policy choices as criminal justice problems, and concluding that “reshaping the [crime-governance connection] to achieve more defensible social goals is a subtle enterprise. Sensible changes in criminal justice could almost certainly yield an acceptable social equilibrium less dependent on incarceration.”)
  • Auditing Executive Discretion, 82 Notre Dame L. Rev. 227 (2006) (proposing an audit framework similar to “sample adjudication of class action” in lieu of the deferential or non-existent judicial review of executive decision-making and reaching 3 conclusions: “(1) Judicial review fails to constrain a broad range of discretionary executive decisions subject to mistakes or malfeasance. (2) The limitations of traditional judicial review do not imply that discretionary executive branch decisions should be immune from some form of review. (3) Arguments for broad executive discretion are often radically underdeveloped and fail to withstand scrutiny.”)
  • The International Criminal Court and the Political Economy of Antitreaty Discourse, 55 Stanford L. Rev. 1597 (May 2003) (arguing that the United States objects to the ICC on “process-oriented” grounds because a “focus on procedure sounds marginally more principled to international audiences than a brute realist assertion that American interests are best served by keeping unfettered control of military decisions.” “Yet this comes with costs: It elides the debate over the value of the brute realist position that American military power should be subject to few meaningful constraints and instead makes it look like the most important question is about the procedural shortcomings of a court that is precisely meant to address the arbitrariness in international criminal justice that critics use to assail it.”)

Cuellar’s appearances in the media have often revolved around his role in shaping the Obama Administration’s immigration policy. His appointment to President Obama’s Immigration Policy Working Group was interpreted by experts as confirmation that President Obama was committed to comprehensive immigration reform. Cuellar observed earlier this year that such reform “is more likely now than it has been in decades.” 

Cuellar’s own experience with immigration shapes his views on the subject now. He told The Stanford Daily last year that “when you grow up on the border, you realize that a legal demarcation has such a huge effect in distinguishing one country from another, for example, and the whole structure of law shapes who’s a citizen and therefore who counts in one society for another.” He recounted to Stanford Magazine being stopped by a law enforcement agent while jogging along the border in Calexico when he was 16, and being asked to provide his papers. He described the encounter as reflecting the “duality” of law enforcement, whose role is to protect, yet who can also spark fear in the community it polices. He acknowledges, though, that moving to the U.S. with a green card gave him “a clear sense that even the very imperfect country I was joining was an extraordinary place.”

Cuellar has also spoken out about “the problem of staggering education inequity.” “Our nation’s stated commitments to academic excellence,” he has written, “are often eloquent but, without more, an insufficient response to challenges at home and globally.” He has also criticized leaders who “decry but tolerate disparities in student outcomes that are not only unfair, but socially and economically dangerous.” 

Pervading his opinions on these and other topics, however, is a fundamental realism. He describes the core of all his research efforts as “trying to look at how societies and legal systems and organizations take on problems that are so difficult to solve that nobody can really expect that they’re likely to be completely solved – ever.” His conclusion: “The world is as messy and complicated as it is beautiful and full of possibility.” As a result, says Hoover Institution Senior Fellow Abraham Sofaer, Cuellar is “not an ideologue,” but is “interested in … practical solutions.” According to Sofaer, a legal adviser to the U.S. Department of State during Ronald Reagan’s and George H.W. Bush’s presidencies, he and Cuellar “could serve in the same administration.”

Justice Marvin Baxter, whose position Cuellar has been nominated to fill, is widely regarded as the court’s most conservative justice. On the other hand, Cuellar was described by Hank Greely, another law professor at Stanford, as “certainly to the left of the middle of the American political spectrum.” Greely qualified his description, however, by noting that Cuellar is “fundamentally a pragmatist.” Thus, while Cuellar’s nomination will likely pull the overall outlook of the Court leftward, its new ideological center may be more moderate than Cuellar’s bona fides might indicate. Moreover, Governor Brown’s second consecutive appointment to the state’s highest bench of an academic with no judicial experience (former U.C. Berkley law professor Goodwin Liu was the first) suggests the Court’s new makeup will include a willingness to approach issues from a fresh perspective and, at any rate, an intellectual bent.

Before Cuellar can take his place on the state’s highest bench, his nomination must be approved by California’s Commission on Judicial Appointments, and by the electorate on the upcoming November ballot.

Image courtesy of Flickr by Lauren Mitchell.

When Numbers Lie: The Limits of Statistical Methodology in California Class Action Management

Courts that oversee class actions can use class sampling and other statistical methods to manage litigation involving large numbers of plaintiffs and the vast amount of data associated with them. In California, however, those methods must be reliable, and cannot strip defendants of the right to litigate affirmative defenses.

The California Supreme Court recently announced its decision in Duran v. U.S. Bank National Association, 2014 WL 2219042, finding that the trial court had abused its discretion in managing a class action employee misclassification case. The Court criticized various aspects of the trial court’s plan, but focused significant attention on the faulty statistical methods utilized by the trial court to assess both liability and damages. Additionally, the Supreme Court found that the trial court’s plan prevented U.S. Bank (“USB”) from litigating its affirmative defenses.   In a 43-page opinion that will likely have implications in class action case management beyond the employment context, the Supreme Court held that “[a] trial plan that relies on statistical sampling must be developed with expert input and must afford the defendant an opportunity to impeach the model or otherwise show its liability is reduced.”

 

In Duran, USB business banking officers (BBOs) sued their employer, asserting that they had been misclassified as exempt employees who were not entitled to overtime. USB had classified them as outside sales employees exempt under California Labor Code Section 1170, which requires such employees to spend more than 50% of their workday in sales outside of the office. The trial court certified a class of 260 BBOs.

After certification, USB proposed dividing the class members into groups and appointing special masters to conduct individual hearings on liability and damages. Plaintiffs, on the other hand, proposed using a class-wide survey and random sampling.  Rejecting both USB’s and Plaintiffs’ proposal, the trial court devised its own plan to select a random group of 20 class members plus the 2 class representatives (the “Random Witness Group” or “RWG”) who would testify at trial and determine both liability and damages for USB, and to then extrapolate those outcomes to the class as a whole.

USB objected repeatedly to the trial court’s management of the case, and unsuccessfully moved to decertify the class due to the predomination of individual issues. Once trial began on liability, the trial court refused to accept any evidence related to the classification of any class member not in the RWG. On the issue of liability, USB sought to offer evidence that some class members worked outside the office more than 50% of the time, and therefore had been properly classified. Because those class members were not in the RWG, however, the court refused to allow USB to present any of that evidence.

In criticizing the trial court’s approach, the Supreme Court focused first on the certification and trial management plan. Not only does the trial court have to consider the predominance of common issues, it also must “conclude that litigation of individual issues, including those arising from affirmative defenses can be managed fairly and efficiently.” If a class is certified and then proves unmanageable, the trial court has a duty to decertify. 

The Supreme Court also criticized the trial court for “rigidly adhering to its flawed trial plan and excluding relevant evidence central to the defense.” By using a small statistical sampling to determine liability – an individual issue driven by the number of hours spent in the office – not just damages, it glossed over the potential that USB was not liable to some of the BBOs. In short, the trial court “did not manage individual issues.  It ignored them.”

As to the flawed trial plan, the Supreme Court highlighted several rulings that compromised the randomness of the RWG. First, while 20 of the class members were chosen by the court, the RWG also included the two named plaintiffs, who had been selected by class counsel. In fact, the named plaintiffs had been substituted several times, based on friendliness to the class’s position. The Supreme Court noted that the inclusion of the 2 named plaintiffs was the opposite of random, and skewed the sample in favor of the plaintiffs. Additionally, there was no explanation by the trial court of whether or how it had determined that twenty plaintiffs was an appropriate sample size for the RWG.

The Court also pointed out that, after the RWG was selected, the Plaintiffs amended the complaint. This in turn led the trial court to allow an additional opt-out opportunity for class members who no longer wanted to be a part of the class under the amended complaint.   In the RWG, 4 out of 20 opted out (20%), while only 5 of the remaining 250 members opted out (2%).  Such a large discrepancy in opt-out rates was “very unlikely to be attributable to random chance,” according to USB’s expert. When USB investigated the RWG class opt-outs, some of the RWG members who had opted out said that class counsel had encouraged them to do so, further calling the randomness of the sample into question.

As for the use of statistical sampling, the Supreme Court noted that “the court’s attempt to implement random sampling was beset by numerous problems.”  While not going so far as to say that sampling is never permissible, the Supreme Court laid out how the trial court failed to use sampling properly and protect parties’ rights. Specifically, the sample size was too small, not random, and had intolerably large margins of error – for example, 43.3% as to estimated overtime.

The Duran opinion makes clear that – whatever the methods used by courts to make class actions manageable – individual issues must be fairly managed, and, when a court utilizes statistical sampling, the sample “must be representative and the results obtained must be sufficiently reliable to satisfy concerns of fundamental fairness.” This focus on the fairness and reliability of class action management methods raises parallels to the United States Supreme Court’s Daubert opinion’s focus on the relevance and reliability of expert testimony. Just as Daubert seeks to avoid undue intrusion into the parties’ rights to call whichever scientific expert they see fit while ensuring that the resulting testimony is still scientific, so Duran seeks to avoid unnecessarily limiting trial court’s discretion to manage unwieldy litigation, while ensuring that the methods employed are still fundamentally fair. And while Daubert and Duran apply to plaintiff and defense equally, the nature of the two sides approaches to litigation suggest that Duran will evolve into authority widely perceived as defense-friendly.

Image courtesy of Flickr by LendingMemo.com.

The Iskanian Decision: California Supreme Court Partly Retreats on Arbitration

Yesterday, the California Supreme Court at least partially retreated from a long-standing reluctance to enforce many business arbitration agreements. In an opinion by Justice Goodwin Liu, a 6-1 court affirmed in most respects the decision of the Court of Appeal in Iskanian v. CLS Transportation Los Angeles LLC, including on the crucial point of class action waivers. The Court reversed only with respect to the enforceability of complete waivers of statutory actions under the Private Attorneys General Act (“PAGA”). Our pre-argument previews of Iskanian, reviewing the voluminous briefing by the parties and amici as well as the facts and lower court decisions, are here, here, here, here and here.

The plaintiff in Iskanian worked as a driver for the defendant for nearly a year and a half in 2004 and 2005. Halfway through his employment, he signed an agreement providing that “any and all claims” arising out of his employment were to be submitted binding arbitration before a neutral arbitrator. The arbitration provisions themselves were quite reasonable, providing for discovery, a written reward and judicial review of the award. The employer agreed to pay all costs unique to arbitration. Finally, the agreement included a blanket waiver of class and representative actions, regardless of the forum.

A year after leaving his employment, the plaintiff filed a class action complaint against the defendant in court, alleging failure to pay overtime, provide meal and rest breaks, reimburse business expenses, and various other alleged violations of the Labor Code. The defendant promptly moved to compel arbitration, and the trial court granted the motion.

But while the defendant’s petition was pending before the Court of Appeal, the Supreme Court handed down Gentry v. Superior Court, which held that class action waivers in employment contracts were in most cases unenforceable. The Court of Appeal directed the superior court to reconsider its ruling in light of Gentry, and the defendant acknowledged that it couldn’t prevail under the Gentry test by dropping its motion to compel arbitration.

Four years later, the United States Supreme Court issued AT&T Mobility LLC v. Concepcion, holding that the California Supreme Court’s Discover Bank rule, which invalidated many class action waivers in consumer contracts, was preempted by the Federal Arbitration Act. The defendant immediately renewed its motion to compel arbitration. The plaintiff insisted that Gentry survived Concepcion, but the trial court granted the motion to compel, and the Court of Appeal affirmed.

The majority opinion begins by determining the central question of whether Gentry survived Concepcion. The answer, the Court found, was no. The plaintiff had argued that Gentry was materially different from Discover Bank in that Discover Bank had barred almost all class action waivers, whether or not they disadvantaged consumers, while Gentry mandated a case-by-case approach. The majority held that it didn’t matter, noting the Supreme Court’s holding in Concepcion that states can’t require a procedure that interferes with the basic attributes of arbitration, even if it seems desirable for other reasons. The court noted, however, that it was not receding from dicta in its 2013 decision in Sonic-Calabas, which noted that states were free to hold employee arbitration provisions unconscionable where they failed to provide for certain procedural protections.

The majority then turned to the plaintiff’s claim that requiring class action waivers as a condition of employment violated the National Labor Relations Act, which protects collective action by employees. The National Labor Relations Board had so held in 2012 in D.R. Horton, but the Fifth Circuit rejected the Board’s holding the following year. The California Supreme Court rejected Horton as well.

The Board had held that class action waivers were permissible under the FAA’s savings clause, which allows defenses which are equally applicable to litigation and arbitration contracts. The Court disagreed, noting that the Supreme Court had clearly said in Concepcion that class action waivers interfere with fundamental attributes of arbitration and are therefore inconsistent with the FAA, even where they do not discriminate against arbitration contracts on their face. Nor was the Court impressed by the argument that the NLRA was enacted after the FAA, so it should prevail in any conflict between the statutes. The NLRA was enacted many years before the advent of modern class action practice, the majority pointed out, so it was difficult to argue that it had much to say about a civil procedure that largely hadn’t been invented yet.

Next the Court turned to a portion of the opinion which many observers will likely overlook, but which is likely to have considerable import in a variety of cases moving forward. The plaintiff had argued that the defendant had waived its right to arbitration by litigating for roughly four years between Gentry and Concepcion. The defendant responded that any petition for arbitration was futile in the wake of Gentry, but the plaintiff responded that futility had never been adopted as part of California’s standard for waiver. However, “futility as grounds for delaying arbitration is implicit in the general waiver principles we have endorsed,” the majority found. Even though a scattered few motions to compel arbitration had succeeded after Gentry, the Court found that a party could potentially avoid waiver where a motion was “highly unlikely to succeed.”

Finally, the Court addressed the PAGA issue. PAGA had been enacted, the Court found, in response to a governmental problem: too few tax resources chasing too many Labor Code violations. Even though only “aggrieved employees” could bring representative PAGA actions, the Court found that the State – which receives three quarters of any recovery and is bound by any judgment – is the real party in interest. As such, the Court analogized PAGA actions to the classic qui tam cause of action. Against that background, the Court held that the right to bring a PAGA action could not be waived, given that at least two provisions of California law expressly bar waiving the advantage of laws intended to protect the public interest.

Nor was a ban on PAGA waivers preempted by the FAA, the majority found. This was so, according to the Court, because a PAGA claim was not a dispute between an employer and an employee arising out of their contractual relationship – it was a dispute between the employer and the State arising out of alleged Labor Code violations. Nothing in the FAA suggested that Congress intended to foreclose qui tam actions, a cause of action reaching back to the dawn of the republic, long before the FAA.

The majority opinion concludes with the question of what comes next. The plaintiff wanted to litigate everything in court, the defendant wanted to arbitrate all individual claims and bar PAGA claims altogether. Neither had gotten everything they wanted. There was no real basis in the agreement to decide whether the parties would prefer to litigate or arbitrate the PAGA claim. So the majority punted the remaining issues back to the Court of Appeal, and ultimately in all likelihood the trial court: (1) Can the parties agree on a PAGA forum; (2) Should the claims be bifurcated; (3) If so, should the arbitration be stayed pending litigation of the PAGA claim in court; (4) Are the plaintiff’s PAGA claims time-barred, or did the defendant waive that claim?

The concurring opinion by Justice Ming Chin, joined by retiring Justice Marvin Baxter, is of interest as well. Justice Chin concurs with the majority’s result in all respects, but disputes the reasoning in a couple of ways. First – having dissented in Sonic-Calabasas - he disputes the view that its unconscionability standard can be reconciled with U.S. Supreme Court law on arbitration. Second, although he agrees that the PAGA waiver cannot stand, he disputes most aspects of the majority’s reasoning. Justice Chin rejects the notion that a PAGA claim isn’t a dispute between employer and employee. He describes as “novel” the theory that PAGA claims are actually disputes between the employer and the State, and suggests a far simpler reason for striking the PAGA waiver. The waiver was invalid, he writes, because it purported to give up the right to pursue a PAGA claim anywhere. The United States Supreme Court has noted that global waivers of statutory rights may still be invalidated without running afoul of the FAA. Nor does Justice Chin entirely agree with the idea that the FAA has no impact at all on quasi-qui tam actions.

Justice Kathryn Werdegar wrote a lone dissent. Although she agreed that the plaintiff’s PAGA waiver was unenforceable, she argued that the class action waiver was unlawful as well. Justice Werdegar analogized waivers of class actions in employment contracts to nineteenth century style “yellow dog contracts” barring collective action by employees. Such contracts had been illegal for “eight decades,” Justice Werdegar wrote, and there was no basis for holding that the FAA had changed that: since class action waivers were banned across the board, regardless of the type of contract they appeared in, they fit within the FAA’s savings clause authorizing defenses which “exist at law or in equity for the revocation of any contract.”

The lessons of Iskanian seem relatively clear. Employers have a powerful new tool to persuade lower courts, some of which have been resistant to arbitration even while Iskanian was pending, to enforce arbitration agreements even where they include class action waivers. Although an agreement to waive PAGA rights in all forums will not be enforced, it seems that an agreement to arbitrate PAGA claims would be upheld by the Court. And finally, although preserving a party’s rights early and often is nearly always the best course (and waiver disputes are always highly fact-driven), California appears to have adopted the common-sense view that parties may not necessarily be obligated to bring a motion with virtually no chance of prevailing simply in order to preserve the defense.

Image courtesy of Flickr by Alden Jewell.

Waiting for Iskanian, Part 6 - California Supreme Court to Hand Down Its Opinion This Morning

The California Supreme Court has announced that it will hand down its much-anticipated decision in Iskanian v. CLS Transportation Los Angeles, LLC this morning. According to the Court’s Pending Issues Summary, Iskanian presents 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?

The opinion will be posted by the Court at 10:00 A.M. Pacific time, 12:00 P.M. Central. For our pre-argument previews of Iskanian, see here, here, here, here and here.

We’ll be back later today with our first impressions of the decision.

Image courtesy of Flickr by Luz Adriana Villa.

California Supreme Court to Clarify What's In, What's Out in the Five-Years-to-Trial Rule

According to Section 583.310 of the California Code of Civil Procedure, "An action shall be brought to trial within five years after the action is commenced against the defendant."

On the surface, it seems like a simple rule. But as with so many things, the devil is in the details. During last week's conference, the California Supreme Court agreed to further clarify how to calculate the five-year period, granting a petition for review in Gaines v. Fidelity National Title Insurance Company.

According to Section 583.340, there are only three situations in which the five-year clock pauses – during times that (1) the jurisdiction of the court to try the action was suspended; (2) prosecution or trial of the action was stayed or enjoined; or (3) bringing the action to trial, for any other reason, was impossible, impracticable, or futile.  Once the clock runs out, dismissal is mandatory. Gaines involves the application of the second and third exclusions.

Gaines started in 2006 when two senior citizen homeowners fell behind on their mortgage. An individual defendant contacted the homeowners and identified herself as an employee of the loan holder. She explained that she had given a copy of the homeowners' refinance application to her fiance, who helped homeowners find refinancing loans. Within a few months, after a complicated series of transactions, the fiance and his business partners wound up owning the homeowners' home - which they allegedly bought for $300,000 less than it was worth - and the homeowners held only a month-to-month lease with no option to buy. Around this time, the husband homeowner died.

The surviving wife filed suit in November 2006 against the original loan holder, the loan holder's employee, her fiance and his business partners, and various others. In January 2008, the plaintiff filed a fourth amended complaint adding additional defendants. In April 2008, the plaintiff's counsel successfully obtained an order staying the action for 120 days, excepting only outstanding discovery, and directing the parties to participate in good faith in a mediation. The stay was terminated in November 2008 after the mediation failed to produce a settlement.

The new presiding judge set an August 2009 trial date. Around that time, one of the newly added defendants indicated that it didn't have title to the property after all, and the trial date was vacated. In a declaration filed in November 2009, counsel for that defendant indicated that a bankrupt entity in New York owned the relevant loan, and his client had no interest in the property or the loan.

The wife died in November 2009. Leave was granted two months later to substitute her son as the successor in interest and plaintiff, and the court set yet another trial date in 2010. At a mid-2010 status conference, with the real loan holder still in bankruptcy, the plaintiff's counsel suggested a further continuance to allow time to bifurcate proceedings, carving out the claim against the bankrupt entity and proceeding against the other defendants. Three months later at another status conference, plaintiff's counsel said they were ready to proceed to trial, but one of the defense counsel pointed out that plaintiff had made no attempt to proceed against the bankrupt entity. By February 2011, plaintiff's counsel indicated he had authorization to retain New York counsel to seek relief from the bankruptcy stay as to the missing party. In October 2011, the bankruptcy court entered an order lifting the bankruptcy stay for the missing party as to the plaintiff's claims. Plaintiff amended her complaint to name the bankrupt entity in mid-November 2011, and trial was finally set for August 2012.

In May 2012, one group of defendants moved to dismiss the action under Section 583.310 on the grounds that it had been pending five years without being brought to trial. The trial court granted the motion and - concluding that violation of the five-year statute was jurisdictional - dismissed the remaining defendants as well. A divided Court of Appeal (Second District, Division Eight) affirmed in part and reversed in part.

The trial court declined to exclude the seven-month 2008 stay from the five-year calculation. The Court of Appeal agreed. The Supreme Court had held in Bruns v. E-Commerce Exchange, Inc. that a partial stay was not enough to pause the five-year clock, the court pointed out. Since the 2008 stay in Gaines exempted already-outstanding discovery, it was a partial stay, and Bruns governed. Nor were the defendants estopped from arguing that the 2008 stay counted in the calculation just because they had agreed to it.

The Court of Appeal further held that the trial court was within its discretion to find that it was not impossible, impractical or futile to bring the case to trial during the 2008 partial stay.  The plaintiff had failed to establish a causal connection between the stay and missing the five-year deadline, the court found. Moreover, even if the causal connection existed, the court agreed with the trial court's finding that plaintiff had not been reasonably diligent at all times in prosecuting the case. Nor was the fact that certain defendants hadn't formally joined the motion to dismiss a barrier to dismissal, the Court held. As long as those defendants were named in the original complaint, they were entitled to dismissal, even on the court’s own motion.

The Court of Appeal reversed the dismissal only with respect to the bankrupt defendant. That defendant had been named for the first time in the Fourth Amended Complaint, the court pointed out. There's an additional wrinkle here for counsel to be aware of here, however. When a defendant is brought into the action by being identified as a previously sued Doe defendant, the five-year clock begins when the Doe defendant is sued, not when the defendant is finally identified.

Associate Justice Laurence D. Rubin dissented, writing that he would have reversed the trial court's judgment in its entirety. Justice Rubin's dissent is noteworthy to appellate practitioners for its initial section - a scholarly discussion of the abuse of discretion standard and its shortcomings as a guide for appellate decision-making.

We expect Gaines to be decided in eight to ten months.

Image courtesy of Flickr by Alan Cleaver.

One Step Forward, One Step Back: Court of Appeal Denies Arbitration in Imburgia

Fresh on the heels of signs during the Iskanian oral argument that the California Supreme Court might at least partially fall in line behind the rule of Concepcion (subscr. req.), we received a reminder that arbitration clauses continue to receive an uncertain reception in the Courts of Appeal. In Imburgia v. DirecTV, Inc., Division One of the Second Appellate District affirmed a trial court decision invalidating a consumer arbitration clause in its entirety. (See here for a quick sketch of the background law at the federal and California state level.)

The plaintiff in Imburgia filed a putative class action complaint alleging a laundry list of consumer claims: unjust enrichment, declaratory relief, false advertising, and violation of the Consumer Legal Remedies Act, the unfair competition law and Civil Code Section 1671(d). Plaintiff’s theory was that the defendant improperly charged early termination fees to its customers.

The parties litigated for two and a half years, but less than a month after Concepcion was handed down in 2011, the defendant petitioned to compel arbitration. The trial court denied the motion.

Two provisions of the defendant’s then-standard customer agreement were at issue. Section 9 provided that “any legal or equitable claim” relating to the Agreement or service would first be addressed informally, and then through “binding arbitration” under JAMS rules. The clause barred all class claims, both in litigation and arbitration:

Neither you nor we shall be entitled to join or consolidate claims in arbitration by or against other individuals or entities, or arbitrate any claim as a representative member of a class or in a private attorney general capacity . . . If, however, the law of your state would find this agreement to dispense with class arbitration procedures unenforceable, then this entire Section 9 is unenforceable.

Section 10 was called “Applicable Law”:

The interpretation and enforcement of this Agreement shall be governed by the rules and regulations of the Federal Communications Commission, other applicable federal laws, and the laws of the state and local area where Service is provided to you . . . Notwithstanding the foregoing, Section 9 shall be governed by the Federal Arbitration Act.

The plaintiffs’ argument on appeal went like this. Class action waivers are unenforceable under the Consumer Legal Remedies Act. The final sentence of Section 9 referring to “the law of your state” means “the law of your state disregarding any impact of the FAA.” Since California law bars class waivers in CLRA cases, “this agreement to dispense with class arbitration procedures [is] unenforceable,” and the entire arbitration clause falls.

The Court of Appeal agreed. The court based this conclusion on two general principles. First, the final sentence of Section 9 is a specific exception to the general invocation of the FAA in Section 10, and a specific contract clause always governs a more general one. Second, the clause was ambiguous as written, and ambiguities must be resolved against the drafter – here, the defendant. In so holding, the Court of Appeal declined to follow directly contrary decisions from the federal district court hearing the parallel MDL action and the Ninth Circuit.

The California Supreme Court should grant review in Imburgia and reverse. Defendants made two arguments before the Court of Appeal which seem to me to dispose of the plaintiff’s “imagine there’s no FAA” argument.

First, the plaintiffs’ arguments, adopted by the Court of Appeal, depend on the proposition that the last sentence of Section 9 and Section 10 conflict. But they don’t. The plaintiff argues that the CLRA bars class waivers. But that tells us nothing. Section 9 does not invoke California law in a vacuum. The clause asks whether “the law of your state would find this agreement . . . unenforceable.” Well, California law couldn't find the defendant's subscriber agreement unenforceable.  The agreement deals with interstate commerce and is therefore subject to the FAA.  If the Supremacy Clause means anything, it's that Concepcion is the law of every jurisdiction, including California.  The class waiver is perfectly valid under Concepcion and Concepcion preempts the CLRA.

Second, Section 10 provides that “Section 9 shall be governed by the Federal Arbitration Act.” As the federal MDL court held, the plaintiffs’ interpretation of Section 9 renders that clause completely meaningless, in violation of the most fundamental principles of contract construction. The Court of Appeal disagreed, describing Section 9 as a “narrow and specific exception to the general provision” of Section 10, which “[i]t does not render . . . meaningless,” but this seems conclusory. Before the Supreme Court, the plaintiffs are likely to have considerable difficulty explaining what practical impact the FAA clause of Section 10 can ever have if their construction of the contract is correct.

The likely petition for review in Imburgia adds another element of uncertainty to the Court’s deliberations over what to do about Iskanian. The Appellate Strategist will be following both cases closely.

Image courtesy of Flickr by Yale Law Library.

California Supreme Court Agrees to Decide Temp Disability Benefits for Police Officers

In the only civil review grant from last week’s conference, the California Supreme Court agreed to review the Third District’s decision in Larkin v. Workers’ Compensation Appeals Board. Larkin involves an issue of what temporary disability payments might be available to full-time, salaried peace officers.

The petitioner filed a claim for temporary disability payments after he sustained various injuries in the course of his employment as a police officer for the City of Marysville. The workers’ compensation judge denied the claim, the Workers Compensation Appeals Board affirmed, and the Court of Appeal affirmed the Board.

The claim turned on the meaning of Labor Code Section 4458.2, which provides:

If an active peace officer of any department as described in Section 3362 suffers injury or death while in the performance of his or her duties as a peace officer . . . then, irrespective of his or her remuneration from this or other employment or from both, his or her average weekly earnings for the purposes of determining temporary disability indemnity and permanent disability indemnity shall be taken at the maximum fixed for each, respectively, in Section 4453 . . .

Section 3362 simply deemed police officers as “employees” of the relevant government: “Each male or female member registered as an active policeman or policewoman of any regularly organized police department . . . shall . . . be deemed an employee of such county, city, town or district for the purpose of this division and shall be entitled to receive compensation from such county, city, town or district in accordance with the provisions thereof.”

The petitioner argued that he was an active peace officer, so the statute authorized temporary disability benefits at the set rate for him. But that “would be an absurd result,” the Court of Appeal found.

The Court pointed out that Section 3362 appears in an Article of the Labor Code called “Employees.” The Code offers the broadest possible definition of “employee” – “every person in the service of an employer” – and carves out limited exceptions for volunteers and independent contractors. So it was undisputed that the petitioner was an “employee” of the City. There was no need for Section 3362 to separately say so.

The Sections in the immediate neighborhood of 3362 are concerned with deeming certain persons who would not ordinarily be considered employees to be such for purposes of entitlement to workers compensation benefits. Section 3361 addresses volunteer firefighters, Section 3364 volunteer members of a sheriff’s reserve, and Sections 3365, 3366 and 3367 those who voluntarily assist law enforcement and firefighters upon request. In each section, the affected individuals are deemed employees and awarded temporary disability at the maximum rate. The idea, the Court wrote, was to encourage public service by volunteers. Without these provisions, one injured in the voluntary service of a government entity might lose his or her income for a time and have no means of support, since workers’ comp from his or her regular employer wouldn’t be available.

If Section 3362 was intended to apply only to salaried officers, volunteer peace officers would have no recourse if injured while they were working. This would “punish them for their service,” the Court wrote, and “leave such volunteers in a markedly different position than volunteers of other public safety agencies. This cannot be what the Legislature intended.”

We expect Larkin to be decided in eight to ten months.

Image courtesy of Flickr by Nic Walker.

California Supreme Court Depublishes Decision on Finality from the Register of Actions

Depublication orders usually aren’t exactly the most earthshaking thing on the California Supreme Court’s weekly conference summaries. Nevertheless, I took particular notice of one on last week’s summary: Dattani v. Lee. Dattani is worthy of note for a couple of reasons. First, the Court took the unusual step of depublishing the Court of Appeal’s opinion on its own motion – nobody had filed a depub request. Second (and more importantly), Dattani underlines one of the most important lessons in all of appellate law (see the end of this post for the takeaway).

It’s not uncommon for those of us in the defense bar to find that a common legal theory serves as the foundation for many but not all of a plaintiff’s claims. If the trial court rejects that theory pre-trial, the plaintiff faces a dilemma: go to trial with what are often sideshow claims before getting appellate review, or seek an interlocutory appeal.

Every jurisdiction has various avenues to possible interlocutory review; in California, it’s usually through a petition for writ of mandate, while in Illinois, Rules 304, 306, 307 or 308 might serve, depending on the facts. But the thing is, in most cases, review is discretionary. The appellate court can simply refuse to hear the matter – and usually, that’s exactly what happens. Interlocutory orders that are reviewable as of right are rare.

To understand the significance of Dattani, it’s necessary to briefly revisit a major decision the Supreme Court handed down last year: Kurwa v. Kislinger. In Kurwa, the plaintiff sued for breach of fiduciary duty and assorted related claims. The parties traded claims and cross-claims for defamation.

Before trial, the court held that once the parties formed a corporation, they didn’t owe each other any fiduciary duties. That was pretty much that for the fiduciary duty count and all the related stuff. But there was nothing final about the ruling: the defamation counts were still viable.

So the parties worked out a deal. The plaintiff dismissed the fiduciary duty and related claims with prejudice. Both parties dismissed their defamation claims without prejudice and swapped waivers of the statute of limitations. Then off the plaintiff went to the Court of Appeal.

Ultimately, it didn’t work. The Supreme Court pointed out that given the statute of limitations waiver, the parties were apparently planning to go right back to court regardless of what happened on appeal, so the dismissals weren’t final and appealable.

Fast forward to Dattani.

Dattani arose from a four-count complaint. In 2012, the trial court granted the defendant summary adjudication on the first count. When the defendant appeared for trial in September 2012 on the remaining claims, the plaintiff’s attorney said he was dismissing those claims to pursue an appeal.

The request for dismissal was filed on the proper Judicial Council form. The court’s register of actions for that day stated that “a dismissal of all the other causes of action” had been filed and removed the matter from the master calendar. But the section of the Judicial Council form for the clerk to note whether dismissal had been entered as requested was never filled in.

Seven months later, on April 16, 2013, the trial court filed a take-nothing judgment prepared by the plaintiffs’ counsel stating that the “remaining causes of action” had been dismissed on September 10. On May 6 – less than thirty days later – the plaintiffs filed a notice of appeal.

The defendants moved to dismiss the appeal, arguing that the plaintiff’s mere request for dismissal of all remaining claims was the equivalent of a final judgment as of the day it was filed – in September 2012, long before the notice of appeal was filed. The Court of Appeal agreed.

There’s a line of cases going back thirty years allowing plaintiffs or cross-plaintiffs to in essence manufacture finality after losing on a key point of law by voluntarily dismissing the remaining claims. The rationale is that even though voluntary dismissals aren’t generally appealable, in such cases it’s not really a voluntary act – it amounts to a request for entry of judgment on the adverse ruling of law.

The Court of Appeal concluded that Kurwa isn’t to the contrary. Sure, the Supreme Court refused to allow an appeal from a voluntary dismissal, but in the Dattani court’s view, finality hadn’t been destroyed in Kurwa by the voluntary dismissal itself – the problem was the mutual statute of limitations waivers.

Bottom line, the Dattani court held, even though no judgment was filed until seven months later, the mere filing of the notice of voluntary dismissal, coupled with the earlier loss on the pretrial order, amounted to a final and appealable judgment. Since that happened in September 2012 and the notice of appeal wasn’t filed until May 2013, the notice of appeal was untimely, and the appeal was dismissed for lack of jurisdiction.

Although the Supreme Court regularly reminds us that an order to depublish isn’t an expression of their opinion one way or the other about the Court of Appeal’s opinion, it seems clear that the Supreme Court didn’t want a published Dattani opinion knocking around in the Official Reports. Nevertheless, the takeaway seems clear. Consider the Dattani facts one more time. There was no judgment entered at the time the Court of Appeal says finality happened. The plaintiff had filed a notice of dismissal, but the section of the form reserved for the clerk to note that dismissal had actually occurred hadn’t been filled in. The only indication anywhere (apparently) that the court staff regarded the matter as concluded was the register of actions.

A timely notice of appeal is jurisdictional everyplace I’m aware of. In most jurisdictions, there’s no remedy for an untimely filing; even in places where one exists, it’s extremely limited.

So if you’re even in the same zip code as anything that seems remotely like the end of the line in a case, extraordinary caution is called for. Confirm everything, assume nothing, and check everywhere (remember that register of actions from Dattani). Finality – and the possible tolling of the time to appeal – is an intricate area of the law. Nevertheless, it’s a question counsel has to get right.

Image courtesy of Flickr by John Morgan.

The Future is Here - Is the Internet a Place?

The California Supreme Court has certified a question for review posed by the Ninth Circuit – Is the internet a “place of public accommodation” as described in the California Disabled Persons Act (“DPA”), Civil Code §§ 54, et seq.? The DPA provides at § 54.1(a)(1) that “[i]ndividuals with disabilities shall be entitled to full and equal access, as other members of the general public, to accommodations, advantages, facilities . . . and privileges of . . . places of public accommodation . . . and other places to which the general public is invited.” Finding no resolution in existing California law, the Ninth Circuit asked for guidance on the question of whether DPA’s reference to “places of public accommodation” includes web sites, which, at best, are “non-physical places.”

In Greater Los Angeles Agency on Deafness (GLAD) v. Cable News Network (CNN), GLAD filed a class action suit against CNN for failing to provide closed captioning with all of its online videos, and thereby limiting access to those materials by hearing impaired viewers. GLAD alleged violations of DPA and the California Unruh Civil Rights Act, Cal. Civ. Code §§ 51 et seq. (“Unruh Act”) and sought declaratory and injunctive relief. CNN removed the matter to federal court and filed an unsuccessful motion to strike under California’s anti-SLAPP statute. The district court found that the provision of closed captioning did not raise a free speech issue for CNN and it did not address the merits. In a published opinion, the Ninth Circuit reversed, finding that forcing CNN to add closed captioning to its news content arose from its freedom of expression because it would necessarily change how CNN presented the news. The court then struck the Unruh Act claim, finding that GLAD had not shown it would probably satisfy the intentional discrimination requirement.

Turning to the DPA claim, the Ninth Circuit concluded that GLAD had demonstrated a probability of success regarding the constitutional and preemption defenses raised by CNN. However, to address the merits of the DPA claim, the court first needed to determine whether the DPA even applied to a “virtual location” on the internet. While the internet was certainly not considered when the DPA was originally passed in 1968, it is also true that, as presently used, internet websites often operate as “non-physical places,” such as stores, classrooms, gaming halls and public forums. Since lower California courts, state and federal, are divided on this issue, the Ninth Circuit certified the question for the California Supreme Court. The increasing importance of the internet for commerce and public discourse demonstrate the potential significance of this ruling, and allow a prediction of multiple amicus briefs.

Image courtesy of Flickr by LearnerWeb.

Waiting for Iskanian, Part 5: The Parties' Briefs on the Merits

With tomorrow’s oral argument before the California Supreme Court in Iskanian v. CLS Transportation Los Angeles, LLC, our series of previews concludes with a look at the parties’ merits briefs. To read all the briefs in Iskanian, check out the National Chamber Litigation Center’s page on the case here.

The argument in plaintiff’s opening brief begins with a quotation from Armendariz: “California law, like federal law, favors enforcement of valid arbitration agreements.” Plaintiff describes Gentry as no more than a “limited qualification” to that proposition.

The plaintiff's centerpiece argument boils down to three propositions: (1) arbitration clauses are solely about forum selection and do not affect any substantive rights under federal or state law; (2) the right to file a PAGA suit seeking recovery on behalf of the State and one's fellow employees is a substantive right which cannot be waived; and (3) therefore, the FAA has nothing to say about the enforceability of the plaintiff's agreement not to file a class or representative claim.

Plaintiff's argument is based on a couple of dubious propositions: that whatever importance California state law places on an unrelated cause of action is relevant to FAA preemption, and that the right to bring a collective claim is somehow not only substantive (as opposed to procedural) but also unwaivable.

Like the plaintiff’s amici we considered here, the plaintiff relies heavily upon the U.S. Supreme Court’s decision in Mitsubishi as supporting the “effective vindication” theory. The plaintiff argues that the theory is “fully applicable” to state-law rights, citing Armendariz and Little v. Auto Stiegler from the California Supreme Court, as well as Preston v. Ferrer – a case which enforced an arbitration agreement – from the United States Supreme Court.

According to plaintiff, the FAA merely requires that arbitration clauses - which are nothing more than specialized forum selection clauses - be enforced; it affects no substantive rights at all. Since the FAA does not require the waiver of any substantive rights, it cannot preempt state law protecting such rights. Since Concepcion does not disturb “the Supreme Court’s repeated holdings” that the FAA does not require enforcement of agreements preventing effective vindication of statutory rights, Concepcion has no impact on Gentry. Given that, plaintiff argues, the agreement's ban on representative actions could not be enforced against him. Plaintiff acknowledges the Appellate Court's view that he could pursue an individual PAGA claim, but insists that there is no such thing.

Plaintiff also argues that any ban on representative actions by employees violates federal labor law, relying heavily on the NLRB’s opinion in D.R. Horton. (Like the amicus briefs, the merits briefs were filed before the Fifth Circuit reversed in D.R. Horton.) Finally, plaintiff argues that the defendant’ s pursuit of the litigation between Gentry and Concepcion waived any right to arbitrate, both because “futility” is not a basis for opposing waiver under California law, and because a pre-Concepcion motion to compel arbitration wouldn’t have been futile even under federal law.

According to the appellee's brief, the plaintiff’s brief rests on the “misguided premise” that the FAA treats waiver of representative claims in employment cases differently than it does such waivers in consumer cases.

The federal cases plaintiff cites for his claim that the effective vindication theory is well established at the federal level are “irrelevant,” the defendant argues – each involved a federalstatutory right, not a state statute. Not only that – those cases hold that an arbitration agreement can’t be invalidated on the grounds that arbitration would somehow be a less desirable forum, since that conclusion embodies the kind of judicial skepticism of arbitration that the FAA was intended to end.

Gentry is no longer good law, the defendant argues; its test “derives its meaning from the fact that an agreement to arbitrate is at issue,” and besides, there’s no principled distinction between Gentry and Discover Bank.

Nor did Iskanian’s decision to bring a PAGA claim impact the enforceability of the party's arbitration agreement. First, PAGA is an unconstitutional delegation of governmental power; second, the plaintiff's claim is time-barred; and third, the opportunity to bring a PAGA claim on behalf of the State and fellow employees is neither mandatory, nor a substantive right.

The defendant next turns to the labor law issue, attacking D.R. Horton on multiple grounds. The “unambiguous” Federal right to pursue class or collective action doesn’t exist, defendant argues. “Concerted” activity means being engaged with other employees; a class or representative action was thus “the antithesis” of concerted action. Although the NLRB’s interpretations of federal labor law are traditionally given deference in the courts, the defendant argues that the courts owed no deference at all to the NLRB’s interpretation of the FAA.

The defendant concludes by attacking the plaintiff’s waiver claim. Defendant litigated when it was forced to by Gentry and immediately moved to compel when Concepcion was handed down, according to the defendant; there was no conduct inconsistent with an intent to arbitrate. Besides, plaintiff could show no prejudice from the delay, since merely being required to litigate isn’t enough under California law.

The plaintiff replies that the defendant "misunderstands Mr. Iskanian's argument." Conducting a class action is not a substantive right, plaintiff argues, but "the availability of class actions is sometimes essential to the vindication of substantive rights." Concepcion didn't settle the issue, he claims, since if it did, "the Court's decision to receive full briefing and argument" in Italian Colors "would be inexplicable." According to the plaintiff, the defendant's constitutional and statute of limitations challenges to the PAGA claims are not properly before the Court.

As for defendant's remark that plaintiff remained free to bring an individual PAGA claim, plaintiff responds that "all PAGA claims are representative claims."  Even if the parties' agreement permitted such an action, the plaintiff argues, it still bars "a substantial portion of the recovery PAGA authorizes" - penalties for the State or other employees.

The plaintiff closes its reply by again arguing that the agreement violates federal labor law, and that defendant has waived its right to arbitrate anyway. The plaintiff notes that even reversal of D.R. Horton by the Fifth Circuit (which has now happened) wouldn't settle the labor law issue, since the losing party would seek Supreme Court review, and the NLRB doesn't follow adverse opinions in cases not involving the same parties anyway.

Iskanian will be argued tomorrow morning at 9:00 A.M. West Coast time in the Third Floor Courtroom of the Ronald Reagan State Office Building, 300 South Spring Street, North Tower, Los Angeles.

Image courtesy of Flickr by Sam Howzit.

Waiting for Iskanian, Part 2: Italian Colors, Sonic-Calabasas and Iskanian

One would have thought in the wake of Concepcion that Gentry was doomed: Concepcion expressly killed off Discover Bank; Gentry was expressly described by the Court itself as a gloss on Discover Bank; therefore, Concepcion must overturn Gentry.

In the wake of the Concepcion defeat, the plaintiffs' bar made a strategic retreat, insisting that Gentry was based on an entirely different theory, entirely unrelated to Discover Bank and therefore not affected by Concepcion: the "effective vindication of statutory rights" theory. That theory goes like this: if the practical effect of an arbitration clause is to make it impossible for a plaintiff to "effectively vindicate" (whatever that means) his or her non-waivable statutory rights, then out it goes.

And then American Express Company v. Italian Colors Restaurant came along.

The plaintiffs in Italian Colors were merchants who entered into agreements with the defendant to accept the defendant's charge and credit cards. The agreement included a clause both requiring arbitration and barring all class proceedings. The plaintiffs brought a putative class action under the federal antitrust laws, alleging that the defendant had used its monopoly power in the market for charge cards to both force merchants to accept its credit cards (an allegedly illegal tie) and to charge merchants rates 30% higher than its competitors.

The defendants moved to compel arbitration. Opposing the motion, the plaintiffs offered a declaration from an economist opining that an expert study and analysis sufficient to prove the claim would cost anywhere from several hundred thousand to a million dollars. Which was a bit of a problem, since the maximum per-plaintiff recovery would be just short of $40,000. Nevertheless, the district court granted the motion to compel arbitration. The Second Circuit reversed. The Supreme Court reversed and remanded for reconsideration in light of Stolt-Nielsen S.A. v. Animal Feeds Int'l Corp., but the Second Circuit reversed again after considering both Stolt-Nielsen and Concepcion.

The plaintiffs' pitch before the United States Supreme Court was very simple: enforcing the class action waiver as written means no antitrust suit - nobody spends several hundred thousand dollars to recover $40K. Thus, as briefed and argued, Italian Colors provided about as square a test of the "effective vindication" theory as can be imagined.

One problem, the Supreme Court held: "the antitrust laws do not guarantee an affordable procedural path to the vindication of every claim." The majority seemed to doubt whether there is any such thing as the "effective vindication" theory in the first place, describing its genesis as "dictum in Mitsubishi Motors." But even assuming such an exception exists, it was far more limited than the plaintiffs believed. Certainly it would cover an arbitration clause saying "nobody brings an antitrust claim." Prohibitive filing fees, sure: a clause requiring a ten million dollar per-claim filing fee would fall. But merely making it not worth the expense to prove a statutory remedy wasn't the same thing as "the elimination of the right to pursue that remedy," the majority wrote. In a footnote on the final page of their opinion, the majority wrote what one would have expected to be the epitaph of the "effective vindication" theory: "the FAA does . . . favor the absence of litigation when that is the consequence of a class-action waiver."

Only a few months after Italian Colors, the California Supreme Court got its first major chance to address the new landscape in Sonic-Calabasas A, Inc. v. Moreno.

The plaintiff in Sonic-Calabasas is a former employee of an automobile dealership. As part of his employment, he signed an agreement providing that all disputes arising out of the employment would be settled by binding arbitration pursuant to the FAA and the California Arbitration Act. After leaving his employment, the plaintiff filed an administrative wage claim with the Labor Commissioner, seeking vacation pay. The filing of such a claim is the first step in California towards what's known as a Berman hearing - a highly informal administrative proceeding designed for more-or-less speedy employee wage claims. The employer moved to compel arbitration of all disputes, arguing that the arbitration clause waived the Berman hearing. The Superior Court denied the petition to compel arbitration, but the Court of Appeal reversed, holding that a Berman waiver was enforceable.

The California Supreme Court granted review and reversed, holding that Berman waivers are per se unconscionable and unenforceable in California. The United States Supreme Court vacated and shipped the case back to California for reconsideration in light of Concepcion.

On remand, the state Supreme Court retreated slightly from its earlier holding in an opinion written by Justice Liu and joined by Justices Kennard, Werdegar and Corrigan, and Chief Justice Cantil-Sakauye. A Berman waiver did not by definition doom an arbitration clause, but the trial courts were still free to refuse to enforce an arbitration clause if "it is otherwise unreasonably one-sided in favor of the employer." Although the Court's majority swept away the per se rule, the Court suggested that a Berman waiver might still cast a long shadow over the unconscionability hearing: "waiver of these protections in the context of an agreement that does not provide an employee with an accessible and affordable arbitral forum for resolving wage disputes may support a finding of unconscionability." Although unconscionability has usually been stated in terms of contracts that "shock the judicial conscience," the court majority seemed to suggest a more malleable standard: "Unconscionability doctrine is instead concerned with whether the agreement is unreasonably favorable to one party, considering in context 'its commercial setting, purpose, and effect.'" The unconscionability inquiry it was mandating was "not preempted by the FAA," the majority held, expressing confidence that trial courts could make the necessary determinations fast enough not to rob arbitration of its primary virtue: speedy resolution.

The Court majority summarized its holding in language reminiscent of the "effective vindication" theory:

[W]here, as here, a particular class has been legislatively afforded specific protections in order to mitigate the risks and costs of pursuing certain types of claims, and to the extent those protections do not interfere with fundamental attributes of arbitration, an arbitration agreement requiring a party to forgo those protections may properly be understood not only to substitute one dispute resolution forum for another, but also to compel the loss of a benefit.

Justice Chin, joined by Justice Baxter, vigorously dissented from the majority's opinion:

[W]e should reject Moreno's unconscionability claim . . . I also disagree with the majority's advisory opinion regarding the unconscionability principles the trial court should apply on remand. In my view, those principles are both contrary to state law and invalid under - and thus preempted by - the FAA.

Which finally brings us to IskanianThe plaintiff was employed for a little over a year as a driver for the defendant. He signed an agreement providing that "any and all claims" arising out of his employment would be submitted to binding arbitration. The arbitration clause provided for reasonable discovery, a written award and judicial review. Costs unique to arbitration were paid by the employer. Class procedures - either class actions in court or class arbitration - was barred.

After leaving his employment, the plaintiff filed a putative class complaint, alleging that the defendant had failed to pay overtime, provide meal and rest breaks, reimburse business expenses, provide accurate and complete wage statements, and pay final wages in a timely manner. The trial court initially granted the employer's motion to compel arbitration, but then Gentry came down, and the Second District issued a writ of mandate directing the trial court to reconsider in light of the new decision. Apparently concluding that the result post-Gentry was a foregone conclusion, the employer withdrew its motion to compel arbitration. Not long after, the plaintiff filed a consolidated first amended complaint, purporting to state claims under the Labor Code, for unfair competition, and claims in a representative capacity under the Labor Code Private Attorneys General Act ("PAGA") of 2004.

After discovery, the plaintiff moved to certify a class. The employer opposed, but the motion was granted in the fall of 2009. In April 2011, with trial imminent, the United States Supreme Court handed down Concepcion. The employer promptly renewed its motion to compel arbitration and dismiss the class claims. The trial court granted the motion in both respects.

The Second District affirmed, holding that Concepcion had necessarily overruled not only Discover Bank, but Gentry to boot. This was so for three reasons: if Gentry was applied, as the plaintiff wanted, the case would be decided under class arbitration, even though the employer had never agreed to it. Such a situation was clearly barred by Concepcion. Second, the Gentry rule was irreconcilable with the fundamental lesson of the FAA -- that arbitration agreements must be enforced according to their terms. Third, the premise that the plaintiff brought the class action to "vindicate statutory rights" was necessarily irrelevant after Concepcion.

Next, the Court turned to D.R. Horton, a decision of the National Labor Relations Board handed down while briefing in Iskanian was under way. There, the NLRB held that class waivers were a per se violation of the National Labor Relations Act, which protects employees' right to engage in concerted actions. Although courts usually defer to the NLRB's interpretation of its governing statute, the Iskanian court noted that D.R. Horton was also an interpretation of the FAA itself. The Court of Appeal concluded that Concepcion trumped D.R. Horton, and refused to follow the NLRB.

The Court of Appeal next addressed the plaintiff's argument that his PAGA claims were a non-waivable statutory right to proceed in a judicial class action. Division Five of the Second District had held that Concepcion was inapplicable to PAGA actions under California state law in Brown v. Ralphs Grocery Co. in 2011, but the Iskanian court refused to follow suit: "the United States Supreme Court has spoken on the issue, and we are required to follow its binding authority." Only an express finding by Congress that a Federal claim had to proceed in court was sufficient to override the FAA, the Court held.

The Court concluded by briefly addressing the plaintiff's claim that by withdrawing its motion to compel arbitration post-Gentry, and not raising the issue again until Concepcion, the defendant had waived any right to arbitration. The Court of Appeal disagreed, holding that since any motion to compel arbitration would have, according to all parties, been doomed to failure in the years between Gentry and Concepcion, the defendant's conduct had not been inconsistent with an intent to arbitrate.

Next time in Waiting for Iskanian, Part 3, we'll consider the amicus briefs filed at the Supreme Court for the plaintiff's side.

Image courtesy of Flickr by Richard-G.

Waiting for Iskanian, Part 1 -- Gentry, Discover Bank and Concepcion

On Thursday, the California Supreme Court will hear arguments in the highly-anticipated Iskanian v. CLS Transportation Los Angeles, LLC. Iskanian has produced several inches worth of paper from a host of interested parties in the past few months, and in these final days before the argument, we'll be taking a look at the briefing. But first, let's review the legal background for this latest skirmish in the arbitration wars.

The story begins with a deceptively simple statute, the Federal Arbitration Act. The FAA was enacted in 1925 as a response to generations of judicial hostility to contracts to arbitrate. Section 2 of the Act, provides:

A written provision . . . to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

The FAA wasn't an especially hot topic for many years after its enactment. In fact, it took until 1984 in Southland Corp. v. Keating for it to be finally settled that the FAA applied to contracts arising under state law, as long as they addressed interstate commerce. Even then, Justice O'Connor and then-Justice Rehnquist dissented, arguing that the Act applies only to federal-law contracts - a view which Justice Thomas continues to hold today. But even after Southland Corp., enforcement in the states still continued to vary from one jurisdiction to another.

Which brings us to Gentry v. Superior Court, a 2007 decision from the California Supreme Court and the center of the Iskanian debate. Gentry was a putative class action filed by a salaried customer service manager alleging that the defendant had misclassified certain employees as "exempt managerial/executive" rather than "non-exempt non-managerial," meaning that they didn't get paid for overtime. The problem was that when the plaintiff started work, he'd been given a package incorporating various options for resolving employment disputes. One was an arbitration provision which barred class arbitration, as well as incorporating various limitations on damages and attorney's fees. The packet stated that if the employee didn't opt out of the arbitration clause in thirty days, he or she was bound. The plaintiff didn't opt out. The employer successfully moved to compel arbitration at the trial court, and the Court of Appeal refused to get involved.

Gentry reached the California Supreme Court for the first time while it was considering another arbitration case called Discover Bank v. Superior CourtThe Court entered a grant-and-hold in Gentry, awaiting Discover Bank. The Court ultimately held in Discover Bank that "at least under some circumstances, the law in California is that class action waivers in consumer contracts of adhesion are unenforceable." Once Discover Bank was finished, the Court tossed Gentry back in the Court of Appeal's lap for reconsideration in light of the new decision. Nope, the Court of Appeal said - the petition is still denied. So the second time around, the Supreme Court granted full plenary review in Gentry.

Admittedly, Gentry is an employment law case while Discover Bank is a consumer-law case - a distinction we'll be hearing much more of in a few days when we discuss the plaintiff's side briefing in Iskanian. But the second review grant in Gentry was - to quote the Court itself- "to clarify our holding in Discover Bank."

The Gentry Court reversed the lower court's order compelling arbitration. The statutory right to overtime pay could not be waived, the Court wrote. A few years before in Armendariz v. Foundation Health Psychcare Services, Inc., the Court had held that such rights could only be subject to compelled arbitration - regardless of what the parties had agreed to - only if the arbitration contained certain safeguards: (1) no limit on the damages normally available; (2) sufficient discovery; (3) a written decision and judicial review; and (4) the employer to pay all costs unique to arbitration. The basis of Armendariz was that an employee couldn't be forced to arbitrate - regardless of the parties' contract - when the arbitration amounted to a de facto waiver of statutory rights that couldn't be waived.

Discover Bank hadn't been intended to suggest that class action waivers would be stricken only in consumer cases involving minimal damages, the court wrote. Class actions "play an important function in enforcing overtime laws," the Court said. The enforceability of a class action waiver depended on the court's weighing of four factors: (1) the modest size of the potential recovery; (2) the potential for retaliation against members of the putative class; (3) whether absent class members are ill informed about their rights; and (4) other real world obstacles to the "vindication" of class members' rights through individualized arbitration. Class arbitration waivers couldn't "be used to weaken or undermine the private enforcement of overtime pay legislation by placing formidable practical obstacles in the way of employees' prosecution of those claims," the Court found.

Justice Moreno wrote the majority opinion on behalf of himself, Justices Kennard and Werdegar and Chief Justice George. Justice Baxter dissented, joined by Justices Chin and Corrigan: "I cannot join the majority's continuing effort to limit and restrict the terms of private arbitration agreements, which enjoy special protection under both state and federal law."

In the years following the double-whammy of Discover Bank and Gentry, the vast majority of class action waivers, and often arbitration clauses themselves, were disregarded by California courts, notwithstanding the FAA. The rationale was that clauses were being denied enforcement pursuant to the general contract defense of unconscionability, and the FAA specifically preserves such general defenses. The answer to that, of course, is that when unconscionability inflicts fatal wounds on far more arbitration clauses than general contracts, something has gone astray in terms of the FAA's nationwide policy in favor of arbitration.

Which brings us to AT&T Mobility LLC v. ConcepcionThe defendant gave away what it advertised as free phones as part of a promotion. When the defendant charged customers a nominal sum as sales tax based on the retail price of the phones, the plaintiffs filed a putative class action alleging false advertising and fraud. The defendant moved to compel arbitration, pointing out that its contract with the plaintiffs included a blanket arbitration clause and a class action waiver. The district court denied the motion to compel arbitration, finding the waiver unconscionable under Discover Bank, and the Ninth Circuit agreed.

The Supreme Court reversed. Granted, the savings clause of the FAA Section 2 preserved "generally applicable contract defenses" - but that didn't mean that Congress intended to "preserve state-law rules that stand as an obstacle to the accomplishment of the FAA's objectives." Requiring that parties engage in classwide arbitration, regardless of the terms of their agreement, "interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA," the Court held; class arbitration was "slower, more costly, and more likely to generate procedural morass than final judgment." Class arbitration required far greater formality, and considerably increased risks to defendants. Although the Discover Bank rule didn't require classwide arbitration, it allowed any party to a consumer contract to demand it after the fact. The rule was therefore preempted by the FAA.

Join us back here soon for Part 2 of the legal backdrop - Italian Colors, Sonic-Calabasas and the Court of Appeal's decision in Iskanian.

Image courtesy of Flickr by Craig Cloutier.

California Supreme Court to Tackle Labor and Insurance Issues

The California Supreme Court has five civil cases scheduled for its April calendar, each addressing important questions of labor and insurance law.  

  • Independent Contractors or Employees – Class Actions: In Ayala v. Antelope Valley Newspapers, Inc., S206874, the court will address the determination of whether and when common issues dominate in a class action in which the putative class members – in this case, newspaper home delivery carriers – are claiming that they were improperly classified as independent contractors when they should be employees.  The trial court denied certification on all claims, while the Court of Appeal approved certification on the issue of classification, but agreed that the wage and hour claims lacked commonality. In two other Court of Appeal cases which addressed this issue, one also found that the classification issue should not be certified as a class, while the other approved certification.  (Sotelo and Bradley, respectively).
  • Federal Arbitration Law v. California Labor Law:  The matter of Iskanian v. CLS Transportation Los Angeles, LLC, S204032, addresses the continuing dispute over the impact of the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion on California law.  In Concepcion, the U.S. Supreme Court empowered waivers of class arbitrations in most consumer contracts, which has resulted in a series of responses by California courts, as previously discussed by Sedgwick partner Kirk Jenkins here.  The issue in Iskanian is whether Concepcion implicitly overruled the court’s decision in Gentry, which held that a class arbitration waiver in an employment contract is not enforceable if the prohibition of class relief would undermine the vindication of the employees’ unwaivable statutory rights and would pose a serious obstacle to the enforcement of the state's overtime laws.
  • What Rights Do Undocumented Workers Have?  In Salas v. Sierra Chemical Co., S196568, the trial court dismissed claims under the Fair Employment and Housing Act in light of after-acquired evidence and unclean hands, based on plaintiff’s use of false documentation to obtain this employment.  The court initially granted review to address whether California statutes preserving access to state protections and remedies regardless of immigration status barred such a ruling.  The court then requested supplemental briefing on the issue of whether federal preemption precluded an undocumented worker from obtaining, as a remedy for a violation of “state labor and employment laws,” an award of compensatory remedies, including back pay.   
  • Can an Advertisement That Does Not Name or Refer to a Product be Disparaging?  On the grounds that the advertisement at issue neither named nor disparaged the underlying plaintiff’s product, the trial court granted summary judgment for the insurer in the related coverage dispute, which was affirmed on appeal in Hartford Casualty Ins. Co. v. Swift Distribution, Inc., S207172.  The court granted review on the issue of whether the pleading allegations were sufficient to constitute disparagement, perhaps by implication, to support a duty to defend.
  • Who Owns a Life Insurance Policy?  The court granted review over In re Marriage of Valli S193990 to determine the ownership of a life insurance policy.  The Court of Appeal concluding that the insurance policy on the husband’s life was the wife’s separate property upon dissolution of the marriage, even though the policy was purchased during the marriage and the premiums prior to the couple’s separation were paid with community funds, because the policy listed the wife as the owner.

The Supreme Court files its opinion within 90 days of oral argument, which here take place on April 2 and 3, 2014.  So, we should have decisions on these issues by or before July 2014.  For more details on Labor (compensation cases or other) or Insurance cases currently pending before the California Supreme Court, follow the links to see our summaries.

Image courtesy of Flickr by Ken Lund

The Perils of Small Errors: California Supreme Court Publishes Lower Court's Foreclosure Opinion

 

In its second noteworthy action during Wednesday's conference, the California Supreme Court granted a request to publish an August 2013 opinion from the Appellate Division of the Santa Clara County Superior Court in The Bank of New York Mellon v. Preciado. Preciado carries noteworthy lessons about the perils of small errors in foreclosure cases.

Certain property in Alviso, California was owned and occupied until 2011 by the appellants. In the summer of 2011, the property was acquired by the respondent bank at a trustee's sale pursuant to foreclosure. The bank served a written notice to quit, and 90 days later, filed two unlawful detainer complaints against appellants.

The actions were tried, and judgment was entered for the bank, awarding possession, rent and damages. But when the sheriff tried to execute the writ, he discovered that the property was actually in Alviso; the complaints - and therefore the writ - said it was in San Jose. The bank went back to court seeking an ex parte order to amend the judgment, which the trial court granted. The appellants appealed.

On appeal, the appellants argued that they were never properly served with the notices to quit. C.C.P. Section 1162 provides three methods of service: (1) personal delivery; (2) either leaving a copy with a person of suitable age and discretion at home or business, or mailing to the residence if the tenant is absent from both the home and business; or (3) if the home or business can't be ascertained, or no person of suitable age and discretion can be found, then by posting conspicuously at the property, and mailing to the defendant's attention at the property. Strict compliance is required.

At trial, the resident denied ever receiving the notice to quit. The bank responded with the declaration of its registered process server, who said that "after due and diligent effort," he had posted a copy of the notices at the address, and mailed them to the owner's post office box address. The trial court accepted that showing and entered judgment.

Not so fast, the Appellate Division said. Although substituted service was fine without a showing of reasonable diligence, it does require showing that personal service was attempted, and neither the resident nor a person of suitable age or discretion could be found. There was no such showing in the process server's declaration. Since strict compliance was required, the judgment for possession had to be reversed.

But that wasn't the only problem. In order to perfect its title, the bank was required to show strict compliance with Civil Code Section 2924. That requires proof of all elements of a valid sale.

Under a deed of trust, power to sell the property rests in the trustee. Well, the Deed of Trust in Preciado identified one entity as the Trustee. The Trustee's Deed of Sale identified another entity entirely as "acting as Trustee." Since there was no evidence that one entity had substituted for the other as trustee, the sale was faulty and the judgment had to be reversed.

The lesson of Preciado seems clear: at least in foreclosure cases, any error could be fatal.

 

Image courtesy of Flickr by Jeff Turner.

California Supreme Court To Consider Causation in Workers Comp for Medication-Related Injuries

In Wednesday’s conference, the California Supreme Court agreed to review South Coast Framing v. Workers’ Compensation Appeals Board, an unpublished decision from Division One of the Fourth District. South Coast Framing poses an interesting question: how does the legal standard for causation in a workers’ comp matter apply when an injured worker apparently dies as a result of interactions among the drugs he’s taking following his injuries?

The decedent in South Coast Framing was seriously injured in 2008 when he fell from a roof. His workers’ compensation physician prescribed various pain medications. The decedent was also taking anxiety and sleep medications. Several months after the original accident, the decedent died from the combined effects of two or more of his medications and associated early pneumonia. The decedent’s widow and minor children filed a claim for death benefits, alleging that the decedent’s death was the result of the injury and industrially prescribed medications.

The petitioners’ retained medical expert reviewed various medical records and concluded that the decedent had died as a result of the interaction of all his medications – both the prescribed pain meds and his sleep and anxiety medications. However, the parties’ agreed medical examiner reviewed the medical file, including autopsy and toxicology reports, and concluded that death was the result solely of the sleep and anxiety medications which were unrelated to the injury – the level of the pain medications in the bloodstream was not high enough to trigger any dangerous interaction.

In his deposition, the agreed medical examiner was pressed hard in regard to the pain medications. Ultimately, he commented that “it’s possible” that one of the pain medications might have been “additive” or “an incremental contributor,” but the anxiety and sleep meds had “carried the day.” He declined to quantify any possible contribution from the pain medications, commenting that it would be “throwing a dart at a dartboard kind of stuff . . . just pulling numbers out of the sky.” The examiner also commented that the decedent’s medical records didn’t reveal whether the decedent’s sleep medications had anything to do with pain from his back injury.

The Workers’ Compensation Judge found that the decedent’s death resulted from the medications prescribed as a result of his injury, and that the petitioners were therefore entitled to death benefits. The Judge relied heavily on the examiner’s comments that one of the medications could be part of the “causation pie” and that another represented additional “crumbs” of that pie. In her report to the Workers’ Compensation Board, the Judge concluded that the causal connection between employment and injury is enough if the employment is a contributing cause to the injury; it need not be the sole cause. The Board adopted the Judge’s report.

The Court of Appeal reversed. In order to be a covered injury, the Court held, an applicant has the burden of demonstrating a “reasonable probability of industrial causation” by a preponderance of the evidence. In reaching its conclusion, the Board must consider a physician’s report or testimony as a whole, rather than overly emphasizing snippets of testimony. Considered as a whole, the physician’s report must be based upon reasonable medical probability in order to adequately support an award.

The Board believed that the examiner had changed his opinion from his written report to his deposition testimony. On the contrary, the Court held, the examiner had testified that he stood by his original report. Even if his remark that “it’s possible” that one of the pain medications contributed to the decedent’s death constituted a change of opinion, the new opinion was based on “surmise, speculation, conjecture and guess.” Although a medical examiner was not required to opine as to a precise percentage of causation, a “reasonable probability of industrial causation” was required. “[T]hrowing a dart at a dartboard kind of stuff” wasn’t good enough to satisfy that standard. The Court also found that the record did not establish a reasonable probability that the decedent’s sleeping issues were the result of his injury, since his medical record reflected the decedent was not reporting pain during the times he had trouble sleeping. The unanimous Court reversed the Board’s order and remanded the matter with instructions to deny the claim.

We expect South Coast Framing to be decided in late 2013 or early 2014.

Image courtesy of Flickr by Paul Holloway.

Party Hosts (and Their Insurers) Beware - An Entry Fee to Cover Costs May Expose You to Liability

Trying to have a party on a budget, albeit an underage party with alcohol, the host required a cover charge to help cover the costs of the party. Both the trial court and the Court of Appeal agreed that this was not a sale of alcohol, making the social host immune from liability for the actions of the drinkers. However, in Ennabe v. Manosa, the California Supreme Court reversed both lower courts; holding instead that a host charging an entrance fee which entitles guests to alcoholic is a sale. As a result, this falls into an exception to the general immunity and the host is potentially liable for selling alcohol to an obviously intoxicated minor. This is true whether or not she required a liquor license, since she would still qualify as “any other person” who sells alcohol. (Bus. & Prof. Code §25602.1.) While the Court initially stated that it was only reversing summary judgment based on a question of fact on the existence of a sale, the opinion is not so limited.

In this case, Manosa was hosting a mostly underage party at an empty rental house and charged an entrance fee to any unknown guest to help pay for drinks. The money collected was later used to buy more drinks. One underage guest, Garcia, arrived intoxicated, paid an entrance fee, and reportedly drank more at the party. Ennabe was a friend of Manosa, and so apparently did not pay, but was also intoxicated. Garcia became obnoxious and was asked to leave, and an altercation between Ennabe and Garcia’s friends on their way out ended when Garcia struck Ennabe with his car, killing him. Defendant won a summary judgment and the Court of Appeal affirmed. (See, our blog entry when the Supreme Court initially granted review here.)

After a detailed history of alcohol related immunities in California, the Court followed the definition in the Alcohol Beverage Control Act that any transaction involving any consideration for alcohol constitutes a sale, regardless of the intent behind the fee. As such, the Court found that this exception to immunity extends to a private person who, for whatever reason, charges a fee for drinks, even if only as a cover charge, regardless of whether the host is part of any commercial enterprise or has any intention to profit. The Court expressed confidence that this holding would not interfere with the wide variety of social and commercial settings in which alcohol is provided (gallery openings, political fundraisers, etc.). In any case, it found no reason to be concerned about extending liability to anyone selling alcohol to an intoxicated minor.

While not addressed in this opinion, there is an underlying coverage issue which may ultimately need to be addressed. It is interesting to note that Manosa’s parents were unaware that she was throwing this party. It is also unknown whether the applicable premises policy terms assumed that the immunity provisions for social hosts would apply. An exclusion regarding commercial or business activities may provide little protection to the insurer, given the apparent evidence that this was not a commercial enterprise, but merely an attempt to defray party costs. Presumably, this opinion will inspire premises insurers to review their policy terms to confirm that this opinion does not create unexpected exposure. 

Image courtesy of Flickr by Carl Malamud
 

Coming Soon - The Jurisdictional Implications of Social Media Posts

In the second significant order to come off the civil side of the California Supreme Court’s docket in the wake of Wednesday’s conference, the Court entered a “grant-and-transfer” order in Burdick v. Superior Court (Sanderson), granting the petition for review and shipping the case back to the Fourth Appellate District, Division Three. Ordinarily, G&T orders don’t attract all that much attention on the order list, but Burdick is significant as a potential signal of issues likely to reach the Court in the next year or two. According to the Court’s docket, its order instructed the Court of Appeal to “vacate its order denying mandate and to issue an order to show cause why the relief sought in the petition should not be granted in light of Walden v. Fiore.” The Court’s order was unanimous.

Burdick is a defamation claim brought by California residents against a competitor as a result of a Facebook post. The defendant challenged personal jurisdiction for lack of minimum contacts with California, but the trial court refused to quash service.

Although some G&T orders involve the straightforward application of new and controlling authority from either the state or federal Supreme Courts, Burdick is worthy of attention because Walden isn’t a social media case. So whatever the Court of Appeal decides, it will be breaking new ground. It’s worth reviewing Walden in some detail to understand its possible application to the social media questions involved in Burdick.

Walden arose when the respondents were searched by DEA agents at an airport in San Juan, Puerto Rico. When the agents found $97,000 in cash on the respondents, the respondents explained that they were professional gamblers – the money was their “bank” and winnings. The agents released the respondents to fly to Atlanta, but notified a DEA task force waiting at the Atlanta airport that the respondents were coming. As the respondents waited for a connecting flight from Atlanta to Las Vegas, the petitioner – a police officer working as a deputized agent of the DEA -- approached, briefly questioned them, and ultimately seized the cash.

On two occasions in the month that followed, the petitioner received documentation from the respondents’ attorney regarding the legitimacy of the money. Nevertheless, the petitioner helped draft an affidavit in support of an action for forfeiture of the funds. According to the respondents, the affidavit misrepresented the parties’ encounter at the airport and omitted exculpatory information. In any event, no forfeiture complaint was ever filed, and the money was returned seven months after it was taken. The respondents filed a Bivens suit against the petitioner in Nevada, alleging that the search, seizure and affidavit violated their Fourth Amendment rights.

The district court tossed the case for lack of personal jurisdiction in Nevada, but a divided panel of the Ninth Circuit reversed.

The Supreme Court unanimously reversed the Ninth Circuit. Like many plaintiffs, the plaintiffs in Walden pointed to the petitioner’s interactions with them as the petitioner’s “minimum contacts” with the forum. But “minimum contacts” analysis “looks to the defendant’s contacts with the forum State itself,” the Court pointed out, “not the defendant’s contacts with persons who reside there . . . the plaintiff cannot be the only link between the defendant and the forum . . . a defendant’s relationship with a plaintiff or third party, standing alone, is an insufficient basis for jurisdiction.”

The Walden Court addressed the landmark personal jurisdiction case Calder v. Jones in some detail. In Calder, the tabloid defendant, based in Florida, wrote an allegedly libelous story about a California resident. The Supreme Court ultimately upheld jurisdiction. But that was because of the defendant’s contacts with the forum, not merely with the California-based plaintiff, the Walden court noted: the defendant had reached out to “California sources” for the article; the article related to alleged activities in California; any reputational injury and damages had been suffered in California.

There was nothing analogous in Walden, the Court found. The petitioner officer had never traveled to, conducted activities within, contacted anyone in, or sent anything or anyone to Nevada. The mere fact that he had allegedly directed activities towards individuals he knew resided there wasn’t enough. Nor was the fact that the respondents happened to be in Nevada when they wanted to use the seized money and thereby suffered their damages enough. No minimum contacts – no jurisdiction.

One footnote in Walden stands out in view of the California Supreme Court’s action in Burdick. The Walden respondents argued that if the Court failed to find minimum contacts, it might be impossible for plaintiffs to act against persons committing frauds through the internet. “[T]his case does not present the very different questions whether and how a defendant’s virtual ‘presence’ and conduct translate into ‘contacts’ with a particular State. To the contrary, there is no question where the conduct giving rise to this litigation took place . . . We leave questions about virtual contacts for another day.”

For the Fourth District – and perhaps within the next year or two, for the California Supreme Court – that day will soon come.

The California Supreme Court’s order in Burdick probably shouldn’t be read to indicate that the Court has already decided that Walden necessarily means that there can never be jurisdiction over a non-resident defendant in an internet tort case. But it does show that the Court views Walden as a useful framework for addressing those issues. And given the Walden Court’s emphasis on contacts with the state, not merely the plaintiff – and its specific comment that jurisdiction can’t rest merely on the plaintiff’s injuries suffered in the forum – plaintiffs in such internet cases will face significant barriers to establishing personal jurisdiction in their home forums.

Image courtesy of Flickr by Joel Kramer.

California Supreme Court Agrees to Decide Potentially High-Stakes Employment Issue

 

 

During its Wednesday conference, the California Supreme Court agreed to answer an issue certified for its decision by the Ninth Circuit: what standard should an employer use to determine whether employees are entitled a "suitable seats" during their working hours pursuant to California law?

The question arises from two consolidated cases, Kilby v. CVS Pharmacy, Inc. and Henderson v. JPMorgan Chase Bank NA. The plaintiff in Kilby was employed as a clerk/cashier. She spent about ninety percent of her time operating the cash register, scanning and bagging merchandise and processing customer payments. The rest of her time, she performed tasks requiring that she move around the store - gathering shopping carts and restocking display cases. The plaintiff was told during her training that her job would require standing for long periods; the defendant's view was that standing while operating a cash register promoted excellent customer service.

Henderson poses the same question in a slightly different context. The plaintiff, a former teller, spent most of her time accepting deposits, cashing checks, and handling withdrawals. A small fraction of her time was spent doing various other things that required moving around the bank branch: escorting customers to safe deposit boxes, working the drive-up teller window and checking ATMs.

The issue turns on two orders of the California Industrial Welfare Commission. California Wage Order 4-2001 governs "professional, technical, clerical, mechanical and similar occupations." Wage Order 7-2001 governs non-executive employees in "the merchantile industry." Section 14 of the two orders is identical:

(A) All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats.

(B) When employees are not engaged in the active duties of their employment and the nature of the work requires standing, an adequate number of suitable seats shall be placed in reasonable proximity to the work area and employees shall be permitted to use such seats when it does not interfere with the performance of their duties.

So what does "nature of the work" mean? Neither Wage Order says. Nor do they define "reasonably permits" or "suitable seats."

The plaintiffs argue that the "nature of the work" refers to each discrete task an employee performs: if the job can reasonably be done seated, the employer has to provide a suitable seat. The defendants take what the Ninth Circuit called a "holistic" approach, taking into account the entire range of an employee's duties, the layout of the workplace, the employer's philosophy about the employee's job (i.e., the defendant in Kilby's view that standing cashiers perform better), and any other relevant factors. Both district courts adopted the holistic approach and found for the defendants.

The question potentially makes an enormous difference to California employers. According to the Ninth Circuit, if the Supreme Court adopts the task-by-task approach, "thousands of California's employees" might argue that they are entitled to seats. And the financial stakes are huge: "If, at the time of the alleged violation, the person employs one or more employees, the civil penalty is one hundred dollars ($100) for each aggrieved employee per pay period for the initial violation and two hundred dollars ($200) for each aggrieved employee per pay period for each subsequent violation." So we should expect to see many amicus briefs from both sides of the issue before the Supreme Court.

The California Supreme Court generally decides certified questions more quickly than other cases, so we expect Kilby to be decided in the next eight to twelve months.

Image courtesy of Flickr by Wu_135.

 

California Confirms Preemption by FAA Over State Rule Barring Employee Waiver - Mostly

In Sonic-Calabasas A, Inc. v. Moreno (Sonic II), the California Supreme Court addressed an employee’s waiver of access to an administrative hearing, in this case a Berman hearing, in an arbitration agreement imposed as a condition of employment. The unanimous court concluded that a categorical rule prohibiting such waivers is preempted by the Federal Arbitration Act (FAA) in light of the U.S. Supreme Court’s ruling in AT&T Mobility LLC v. Concepcion (Concepcion). A divided court (5-2) further held that state courts can still invalidate such an arbitration agreement on a case-by-case basis by finding that is unconscionable, so long as waiver of the Berman hearing is not the sole basis and the finding does not “interfere with the fundamental attributes of arbitration.” Such a finding could be based on the benefits received by the employee under the arbitration agreement in comparison to those which were waived, in light of the totality of circumstances.

Sonic I. As a former employee of Sonic-Calabasas A, Inc., Moreno filed a claim with the Labor Commissioner for unpaid vacation time totaling nearly $28,000. Under California law, Labor Code §§ 98, et seq., this triggers an administrative process referred to as a Berman hearing procedure. This provides an expedited process for employee wage claims and provides additional protections to employees, such as potential access to representation by the Labor Commissioner in pursuing the claim. Any party can appeal the result, but the employer must post a bond to cover any adverse judgment, which otherwise becomes enforceable. Also, if the employer’s appeal is unsuccessful, the employee can recover all costs and fees, but the employer can only recover costs and fees if it obtains a judgment of zero on appeal.

In Sonic I, a bare majority of the California Supreme Court (4-3) held categorically that waiver of the Berman hearing procedure as a condition of employment was a violation of public policy. In addition, the court held that such a waiver was unconscionable and therefore unenforceable in any case. In doing so, the court did not invalidate the arbitration agreement, only the waiver of the statutory right to a Berman hearing. Should either party appeal the administrative ruling, that appeal could be submitted to arbitration. In that way, the employee would still have the significant protections provided by the Berman hearing procedure, and the employer could still compel arbitration for an ultimate resolution. The court explained that the FAA did not preempt this approach because any waiver of the Berman hearing was invalidated, whether or not it was part of an arbitration agreement.

Concepcion and Sonic II. Shortly after Sonic I, the U.S. Supreme Court issued its decision in Concepcion, which addressed Discover Bank, an earlier decision by the California Supreme Court. Discover Bank had invalidated a waiver of class actions and the corresponding arbitration agreement as unconscionable in a consumer protection context. Concepcion abrogated Discover Bank, holding that the FAA preempted any state law rule or holding which was aimed at destroying arbitration or which demanded procedures incompatible with arbitration. This includes any rule which is generally applicable to contracts, such as unconscionability, but which is applied in a fashion which disfavors arbitration. Conception held that requiring the availability of class actions, whether judicial or some sort of class arbitration, would sacrifice the principle advantages of arbitration – lower costs, informality which results in greater efficiency and speed, and the ability to choose the adjudicator.

The U.S. Supreme Court granted certiorari, vacated Sonic I, and remanded for further consideration in light of Concepcion. Following Concepcion, a unanimous California Supreme Court reversed its decision in Sonic I, holding that any general rule against waiving a Berman hearing, whether based on public policy or unconscionability, was preempted by the FAA since it would categorically favor Berman hearings over arbitration and add a significant delay to the arbitration process, thus infringing on one of its fundamental attributes.

Sonic II’s Unconscionability Doctrine. A divided court (5-2) noted that Concepcion only bars the application of unconscionability if it interferes with the “fundamental attributes of arbitration,” leaving open any other application of the doctrine. While acknowledging that states cannot categorically prefer one form of dispute resolution (e.g. Berman hearings) over arbitration, the court concluded this does not prevent a case specific evaluation from finding that an arbitration agreement which includes such a waiver is unconscionable. Sonic II discusses several previous California holdings finding unconscionability on grounds not preempted by the FAA, such as an arbitration process in which a full recovery is not even theoretically possible, up-front costs that deter employees, or unfairly one-sided provisions. As such, while the waiver of an administrative process, in itself, cannot support unconscionability, that waiver could be part of a larger evaluation to determine whether the arbitration agreement was unconscionable.
Such an evaluation should address the adequacy of the arbitration process provided, both as described in the contract and as implemented, in comparison to the Berman protections that were waived. The Berman hearing procedures provide a speedy, informal and affordable means of resolving a wage claim. Thus, the waiver of such protections in favor of an arbitration process which does not provide the same type of protections may be unconscionable and unreasonably one-sided, as well as contrary to the goals of the FAA. Importantly, the court acknowledged that there are many different means to reach these goals, and that the arbitration procedures need not mirror the Berman procedures. Of course, such an evaluation should consider the totality of circumstances (e.g., contract of adhesion?). Since the record did not address these issues, the court remanded to the trial court for further proceedings.

Concur and Dissent. Justice Corrigan concurred, but wrote separately to complain that the majority failed to articulate a clear standard for assessing the unconscionability of an arbitration agreement, and instead seemed to provide multiple formulations. She agreed with Justice Chin on the standard – terms which are so one sided that they shock the conscience.
Justices Chin and Baxter dissented from the new unconscionability doctrine primary on grounds that Moreno forfeited the argument by failing to raise it below, and that he could not show unconscionability in any case. The dissent also disagreed with the majority‘s “advisory opinion” regarding the unconscionability doctrine, which it argued was contrary to state law and preempted by the FAA.

The Next Step.  Sonic II is hardly the last word from the California Supreme court on the issue of FAA preemption. The court has two such cases already fully briefed. In Sanchez, the issue is whether the FAA, a’ la Concepcion, preempts state law rules which invalidate as unconscionable mandatory arbitration provisions in a consumer contract. In Iskanian, the court granted review to address whether Concepcion implicitly overruled Gentry, with respect to contractual class action waivers in the context of non-waivable labor law rights and whether Concepcion permits arbitration agreements to override the statutory right to bring representative claims under state law. Between them, Sanchez and Iskanian have twelve grant and holds cases waiting for a decision, indicating the broad interest in these rulings. For more details on ADR cases pending before the California Supreme Court, see our summary here.
 

California Supreme Court Rejects Erosion of One Final Judgment Rule: "Final Means Final"

On October 3, 2013, the California Supreme Court handed down its opinion in Kurwa v. Kislinger, S201619, confirming that under settled California practice, as codified in Code of Civil Procedure section 904.1(a), to be appealable a judgment must dispose of all causes of action pending between the parties. The Court rejected arguments submitted by the California Academy of Appellate Lawyers, as amicus curiae, that permitting appeals under the circumstances presented would “allow parties as much autonomy and choice as possible,” thereby facilitating efficiency both at the trial and appellate levels.

Plaintiff and defendant were doctors who formed a corporation to serve patients of a health maintenance organization (“HMO”). Later, plaintiff’s license was suspended, and defendant notified the HMO that their corporation was ended and that defendant’s medical corporation would treat the HMO’s patients going forward. The HMO terminated its contract with the parties’ corporation and signed a new one with defendant’s corporation. 

Litigation ensued, with plaintiff alleging breach of fiduciary and defamation claims (among others), and defendant cross-complaining for defamation. On pretrial motions, the trial court held that the parties’ formation of a corporation relieved them of further fiduciary duties to one another. Since the ruling foreclosed prosecution of the fiduciary duty and related claims, those were dismissed with prejudice, as well as other counts he abandoned. But (and it is a big “but”), the parties agreed to dismiss the reciprocal defamation claims without prejudice together with a waiver of the limitations period, allowing them to test the fiduciary duty issue on appeal before disposing of the temporarily dormant defamation claims.

No can do, notwithstanding any claimed efficiency. In Morehart v. County of Santa Barbara, the Court expressly disapproved of a similar tactic, ruling that the parties’ desire to segregate claims—some for review and others not—was directly contrary to the one judgment rule. Instead, if parties who lacked a single final judgment were so inclined to seek appellate review, the proper procedural vehicle was a petition for a writ of mandate. (Note, the Court did not address the reality that such petitions are granted as frequently as Democrats and Republicans agree on fiscal issues.) The Court endorsed a considerable line of intermediate appellate authority, starting with Don Jose’s Restaurant, Inc v. Truck Ins. Exchange, holding that reservation of some issues from review will not be countenanced under settled California practice.

The unspoken driver of the opinion, for a Court that issues relatively few opinions a year, may well be the additional burden on appellate courts if such a policy were permitted. “We are busy enough without these cases being brought up for another level of scrutiny.”

The California Supreme Court Confirms the Power of Local Governments to Regulate Medical Marijuana

Few issues have sparked so much debate in so many local governments then how to regulate the medical marijuana industry. Proponents have filed numerous challenges to various attempts by cities and counties, but now the legal, if not the political issue, has been resolved. In the lead case – City of Riverside v. Inland Empire Patient’s Health & Wellness Center, Inc. – the unanimous Supreme Court has confirmed the power of local authorities to regulate, and even ban, facilities that distribute medical marijuana. The Court noted that the Compassionate Use Act of 1996 and the Medical Marijuana Program simply “removed certain state law obstacles from the ability of qualified patients to obtain and use marijuana for legitimate medical purposes.” This is not a mandate that such facilities must be allowed, nor an attempt by state government to dominate the field, and therefore these state laws do not preempt the constitutional right of cities and counties to exercise their police powers to regulate such facilities, or even ban them. As such, the City of Riverside ordinance which declares all marijuana dispensaries as a banned public nuisance, and which also bars any use which violates federal or state law, is valid. This limited view of these state laws as being “incremental steps” to increase access to medical marijuana, rather than signaling a more expansive reform, is wholly consistent with the Court’s previous ruling in Ross v. RagingWire Telecommunications, Inc. (2008) 42 Cal.4th 920, in which the Court held that the medical marijuana laws did not protect a medical user from being discharged after failing a drug test.

As a result of this ruling, local debates will not necessarily be limited to how to best implement medical marijuana dispensaries. Now, medical marijuana proponents may have to defend the policy of allowing such dispensaries at all, city by city, county by county. However, establishing the power of local authorities to act goes a long way to allowing some resolution to take place. For example, an attempt by Los Angeles to regulate dispensaries in 2010 drew 66 lawsuits and a court injunction, with many of the suits challenging the city’s authority to act. (See, Los Angeles Times, 5/10/13.) Los Angeles was so shell shocked by this debate that it now has three separate measures on the ballot for the upcoming election, each proposing a different set of regulation and taxation policies for dispensaries, in the hopes that the public picks one with sufficient support to at least put some policy in place. However, now that the right to act has been confirmed, perhaps even Los Angeles will be able to reach a decision.
 

California Supreme Court To Tackle Arbitration, Foreclosures and Peer Review in Upcoming Oral Arguments

In addition to the more typical criminal issues, the oral arguments scheduled for April 3 and 4 in L.A. will also address when to compel arbitration, foreclosure sales and hospital peer review.

On the April 3, the court has two arbitration cases scheduled. The Supreme Court will take a second look at Sonic-Calabasas A, Inc., having previously held that contractual arbitration of a wage claim could not be compelled until after the preliminary non-binding hearing and decision by the Labor Commissioner addressing the same claim. However, the U.S. Supreme Court has since vacated that judgment and ordered further consideration in light of AT&T Mobility LLC v. Concepcion (2011) 563 U.S.__, which upheld contractual arbitration under the FAA even when the arbitration provision was found unconscionable by state law because it barred class arbitration.

Also in an employment context, the court will address in City of Los Angeles whether grievances over imposed furloughs are subject to contractual arbitration, or whether that would be an improper transfer of the city’s discretionary salary-setting and budget-making powers.

On the next day, the court addresses two other issues, foreclosure sales and peer review. The trustee in Biancalana made an error in processing the beneficiary’s “credit bid” during foreclosure proceedings, and thereby announced a required opening bid only a tenth of the intended value. Since it had not yet issued the deed of trust to the highest bidder at the foreclosure sale when the error was discovered, can the trustee set aside the foreclosure sale?

In El-Attar, the Court will address whether the executive committee of the hospital medical staff can delegate to the hospital governing board its authority to designate a peer review panel, and if the review process needs to be restarted if it has already done so.

Look for opinions in each of these cases by July 2013, as the court typically issued opinions within 90 days of the case being submitted.
 

Don't Panic - The Fall of Pendergrass and Restoring the Full Fraud Exception to the Parol Evidence Rule May Not Be as Bad as You Think.

In Riverisland Cold Storage, Inc., v. Fresno-Madera Prod. Credit Ass., S190581, the unanimous California Supreme Court recently overturned the widely criticized Pendergrass rule, thus restoring the full breadth of the fraud exception to the parol evidence rule. In 1935, the Court limited the fraud exception to the parole evidence rule - holding that evidence of a promise that was “directly at variance with the promise of the writing” was inadmissible.  (See, Pendergrass (1935) 4 Cal.2d 258, 263.)  This allowed defendants to demur to promissory fraud claims by citing the contract terms, or at least obtain summary judgment. This rule had put California in a minority of one, as it departed from the majority rule, the Restatement, and most treatises. Indeed, Riverisland concluded that Pendergrass is unsupported by the controlling statute (C.C.P. §1856), was contrary to then existing California law, has been widely criticized ever since (resulting in convoluted attempts to distinguish it), and can be used to shelter fraud (begging the question of how the Pendergrass rule managed to survive for nearly 80 years).

While there has been some hand wringing by potential defendants over losing the Pendergrass rule, and it will certainly be more difficult to resolve promissory fraud claims by demurrer or summary judgment, all is not lost. Consider:

  1. California now follows the majority rule, so most of the country has already adapted to this holding.
  2. Plaintiffs still have to meet the more demanding pleadings requirements for any fraud claim, and Riverisland confirms that the intent element of promissory fraud entails more than proof of an unkept promise or mere failure of performance.
  3. In Rosenthal, 14 Cal.4th 394, the Court held that the negligent failure to read a contract precludes a finding that it is void for fraud, although the threshold for this showing might be lower for equitable relief.
  4. Promissory fraud requires justifiable reliance on the defendant’s oral misrepresentation, which ties back into plaintiff’s negligent failure to read the contract.

The Supreme Court in Riverisland refused to decide whether the borrowers justifiably relied on the lender’s oral promises not to execute on the promissory notes for at least a year, notwithstanding the contract terms allowing prompt execution, given the borrowers’ failure to read the contract. So, how to balance these considerations remains an open question. While procedures to fend off such claims are often already in place, California businesses should proactively tighten up their practices and procedures to lessen the potential exposure that Riverisland represents, rather than wait for the courts to address these issues. In particular, the parties should customarily document that no oral promises were relied on in entering into the agreement.  In addition to fending off claims based on an oral promise, such documentation will presumably support an argument that the plaintiff was negligent in failing to read the contract. 
 

Primary Assumption of the Risk - 20 Years Later, Nalwa Confirms the Vitality and Breadth of Knight.

Implicitly marking the 20th anniversary of its seminal decision in Knight v. Jewett, which established the doctrine of primary assumption of the risk, the California Supreme Court confirmed both the continuing vitality and breadth of that decision in Nalwa v. Cedar Fair (2012), S195031. In Knight, a plurality of the Supreme Court held that a player in a touch football game had no duty to prevent injuries resulting from the inherent risk of playing this contact sport. In Nalwa, the Court confirmed 6-1 that this doctrine remains the law in California and also that it extends to the operator of bumper cars at an amusement park, and the inherent risks of, well, bumping. In both cases, the Court held that the only duty of operators, sponsors and fellow participants engaged in a recreational activity with inherent risks was not to increase those risks.

Guided by the facts in Knight, and its companion case Ford (which applied this doctrine to noncompetitive waterskiing), the most common application of primary assumption of the risk has involved physical sports, although the courts have sometimes used a broad definition of "sport," including: downhill skiing (Cheong – colliding skiers), baseball (Avila – injury from an inside pitch), motorcycle “off-roading” (Distefano – colliding motorcycles), golf (Shin – getting hit by an errant ball), sport fishing (Mosca – getting hit with a someone else’s fishing line ), rock climbing (Regents – falling to death after anchors gave way), river rafting (Ferrari – rider struck her head on the raft frame), and even a noncompetitive group bicycle ride (Moser – colliding bicycles), and a group motorcycle ride toy drive (Amezcua – against the organizers, after a 3rd party collided with a motorcycle). This doctrine also extends to the training and instruction of athletic activities, so that coaches and trainers have a duty not to increase the inherent risks of training for and learning a given sport (e.g., Kahn – addressing a coach’s instructions to dive into a shallow pool). Sports spectators also assume the risk of being in the vicinity (e.g., Nemarnik – hockey fan hit by a puck).

However, the language in Knight and Ford is broader than just sports or athletics, and more generally addresses recreational activities, repeatedly referring to the inherent risk in "the activity or sport" at issue. Following suit, a recent lower court decision abandoned any pretense that an activity had to be considered a sport and applied primary assumption of the risk to an injury resulting from participation in the closing fire ritual at the annual Burning Man festival, an event which was not, in any way, a sport. In Beninati, the plaintiff tripped and fell into the remains of a substantial bon fire, having deliberately walked through the remaining embers. In essence, the court found that if you play with fire you may well get burned, and no one else has a duty to prevent this.

In Nalwa, the Supreme Court clarified the scope of primary assumption of the risk as it applies to recreational activities, consistent with Knight and Ford, whether or not the activity might constitute a sport, such as bumper cars. As clarified, the doctrine applies to 1) recreational activities, 2) that involve an inherent risk of injury, 3) to voluntary participants, 4) where the risk cannot be eliminated without altering the fundamental nature of the activity, 5) and in which the participants are actively engaged. The last point was the basis on which Nalwa distinguished bumper cars from roller coasters. Once engaged, bumper cars are individually controlled by each driver, much like players in a sport, and this is an inherent part of the activity. In contrast, participants are only passively engaged in roller coasters, having surrendered all control over the carriage to the operator, who is therefore held to the duty of a common carrier for hire (as held in Gomez). Finally, this doctrine is not barred by the existence of regulations governing the recreational activity, including safety regulations, although such regulations could establish negligence per se, or set the bar on what risks are considered inherent.
 

Daily Journal Interview with Marston on New California Opinion on Expert Testimony

Special Counsel Hall R. Marston recently published an article in the California Daily Journal on Sargon Enterprises v. USC (pdf), a new California Supreme Court opinion setting out Daubert-like standards for admissibility of expert testimony.  Anticipating interest in the article, the paper’s editorial staff arranged a video interview (subscribers only) for Hall to address the practical aspects of how Sargon is likely to impact a typical state court trial.  For more on Hall's insights on the Sargon opinion, see here.

Business and Commercial Issues Will Dominate the Upcoming Calendar of California Supreme Court

On December 4, 2012, the California Supreme Court is scheduled to hold oral arguments in Los Angeles on six matters, five of which are civil matters addressing a variety of business and commercial issues. Presumably these matters will all be submitted at the close of argument, so (barring any order to vacate the submission) the final decisions in these cases will be due by March 4, 2013.  Please note that the substantive briefs for these cases have not yet been posted, but a link to those briefs will be added to the update of pending California Supreme Court cases on this blog.

  • Is a Contemporaneous Factual Misrepresentation of Contract Terms Admissible Under the Parol Evidence Rule? 

In Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn. (S190581) the Supreme Court will address whether the fraud exception to the parol evidence rule permits evidence of a contemporaneous factual misrepresentation as to the terms contained in a written agreement at the time of execution, or whether such evidence is inadmissible under Bank of America National Trust & Savings Association v. Pendergrass (1935) 4 Cal.2d 258, 263, as “a promise directly at variance with the promise of the writing.”  For more details, see the B & P 17200/Class Actions/Commercial update page.

  • To What Degree Can the Reach of a §17200 Action Be Extended by the Continuing Violation Doctrine, the Accrual Doctrine or the Delayed Discovery Rule?

The scope of the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) will be addressed in Aryeh v. Canon Business Solutions, Inc. (S184929), in which the Supreme Court will address to what degree, if any, an such an action can be expanded by the following doctrines: (1) the continuing violation doctrine, under which a defendant may be held liable for actions that take place outside the limitations period if those actions are sufficiently linked to unlawful conduct within the limitations period;  (2) the continuous accrual doctrine, under which each violation of a periodic obligation or duty is deemed to give rise to a separate cause of action that accrues at the time of the individual wrong, be asserted in such an action; or, (3) the delayed discovery rule, under which a cause of action does not accrue until a reasonable person in the plaintiff’s position has actual or constructive knowledge of facts giving rise to a claim.  For more details, see the B & P 17200/Class Actions/Commercial update page.

  • Can a Corporation Correct Its Suspended Status and Salvage an Appeal Initiated While Suspended? 

In Bourhis v. Lord (S199887 and S199889, consolidated) the Supreme Court accepted review after the Court of Appeal denied a motion to dismiss the appeal before the principle briefing, to address the following issue: If a corporation’s corporate status is suspended due to nonpayment of taxes at the time it files a notice of appeal, can the appeal proceed if the corporation thereafter revives its status even if it does not do so until the time for filing the notice of appeal has expired?  For more details, see the B & P 17200/Class Actions/Commercial update page.

  • Which State Law Controls Whether a Dissolved Corporation Lacks the Capacity To Be Sued?

The Supreme Court will also contribute to the body of choice of law opinions in Greb v. Diamond International (S183365) in the context of whether a California plaintiff alleging personal injuries from asbestos can pursue a claim against a dissolved Delaware corporation when the complaint was filed more than three years after the dissolution of the corporation.  Does California Corporations Code § 2010 or Delaware General Corporation Law § 278 control? For more details, see the Civil Procedure/Evidence/Discovery update page.

  • Is an Employer Entitled to a Jury Instruction on Mixed Motives for Firing an At-Will Employee?

In Harris v. City of Santa Monica (S181004) the Supreme Court will also address whether the “mixed-motive” defense apply to employment discrimination claims under the Fair Employment and Housing Act, (Gov. Code, § 12900 et seq.).  For more details, see the Employment – Other update page.

CA Supreme Court Accepts Review In Valdez v. W.C.A.B. (Warehouse Demo Services)

The California Supreme Court has unanimously voted to accept review in the matter of Valdez v. W.C.A.B. (Warehouse Demo Services) in order to address the following issue: Does Labor Code § 4616.6 exclude from evidence reports of a treating physician obtained by an applicant outside of his or her employer’s Medical Provider Network ?   Two en banc decisions by the Worker’s Compensation Appeals Board answered this question in the affirmative, but those decisions were overturned by the Court of Appeal.  The issue has been a great concern to California employers, many of whom employ such networks to provide reasonable medical care at controllable costs.  As a result, 19 amicus letters were filed urging the Supreme Court to reverse the Court of Appeal, representing most of California’s counties, cities, and school districts in additional to numerous other public and privates entities, particularly self-insured employers who often rely on MPNs.

A Potential Liability Trap for Settling Joint Tortfeasors

Late last month, the California Supreme Court raised the stakes for defense counsel negotiating settlements in multiple defendant cases, abolishing the common-law “release rule” in Leung v. Verdugo Hills Hospital [pdf]. Leung has gotten a good bit of attention in the news and the blogs, including stories in The Wall Street Journal, Findlaw, Plaintiff Magazine [pdf] and Law360.  

According to the “release rule,” a plaintiff’s settlement and release of one joint tortfeasor releases all nonsettling tortfeasors from any liability for the plaintiff’s economic damages. The traditional rationale for the rule has been that since defendant can receive only one compensation for the joint wrong, and each joint tortfeasor is responsible for the entire liability, any payment must necessarily satisfy the claim.

California law has developed two “work-arounds,” one statutory and one judge-made.

In 1957, the legislature enacted C.C.P. Section 877, which establishes a system of “good faith settlements.” Where the trial court determines the settlement to be in good faith – meaning in the reasonable ballpark of the settling defendant’s liability, taking into account that the defendant should pay less in settlement than after trial – the settlement reduces joint tortfeasors’ potential liability, but does not automatically release them. Once a good faith determination is made, nonsettling defendants are barred from later suing the settling defendant for contribution on the grounds that the settling defendant paid too little.

The judge-made work-around was even simpler: courts held that as long as the settlement agreement was phrased as a “covenant not to sue” rather than a “release” (a distinction the courts ultimately admitted was largely without a difference), non-settling joint tortfeasors would not be released.

Leung involved an infant who sustained severe brain damage from kernicterus, a condition in which excessive bilirubin builds up in a newborn’s body and migrates to the brain. Before trial, the plaintiffs settled with the pediatrician for $1 million – his policy limits. The pediatrician agreed to participate in the trial, and in return, the plaintiffs gave him a release. The pediatrician’s petition for a good faith determination under Section 877 was denied, but the parties went ahead with the settlement anyway. At trial, the jury returned a verdict against both the pediatrician and the hospital, awarding over $95 million in future medical expenses and lost future earnings. The trial court entered judgment against the hospital for 95% of all economic damages – the share of liability for the pediatrician and hospital – subject only to the $1 million settlement as a setoff. On appeal, the Court of Appeal applied the release rule and reversed the judgment with respect to economic damages, holding that the release of the pediatrician released the hospital as a matter of law.

The Supreme Court reversed the Court of Appeal: “In light of the unjust and inequitable results the common law release rule can bring about, as shown in this case, we hold that the rule is no longer to be followed in California." After considering various alternatives for a new rule, the Court held that a settlement by a joint tortfeasor, absent a finding of good faith, operates as a setoff against the ultimate judgment, but that the nonsettling tortfeasors retain the right to pursue the settling defendant for contribution.

What all this means as a practical matter is that Section 877 good faith hearings will likely be harder-fought than ever. Settling defendants will litigate the matter aggressively, since a good faith determination cuts off future satellite lawsuits for contribution. Counsel for settling defendants should give careful consideration to including in the settlement agreement a provision allowing the parties to abrogate the settlement if a good faith determination is denied. Nonsettling defendants will have every incentive to scrutinize the settlement carefully and challenge anything not in the Section 877 “ballpark.”

 

Justice Liu Authors Four Unanimous Opinions by the California Supreme Court

As the summer got started, and his first year on the bench nearly completed, Justice Liu produced four unanimous opinions on wide ranging issues of California law, including arbitration, preemption work product and environmental regulations. This makes a total of six opinions by Justice Liu in civil cases. The other two, Dicon Fiberoptics, Inc. (re tax credit for disadvantaged worker) and Kirby, (addressing a fee shifting agreement) were also unanimous. Here is a summary of Justice Liu’s recent opinions.

Arbitration –Arbitration of provisions in a collective bargaining agreement should not be compelled if the provisions violate existing statutes.

In United Teachers of Los Angeles v. Los Angeles Unified School Dist., S177403 (opinion issued 6/28/12), the Court held that a petition to compel arbitration to enforce collective bargaining provisions between a union and a school district should by denied if the provisions at issue directly conflict with provisions of the Education Code — that is, if they would annul, replace, or set aside Education Code provisions. The Court further held that, under the Education Code, an arbitrator has no authority to deny or revoke a school charter. However, the Court found that the union’s claims in this case were too general to make the necessary determinations at this time, and so remanded the case to allow the union to identify those specific provisions of the agreement it claims the district violated.
For more details about United Teachers of Los Angeles, see the ADR update page.

Work Product Doctrine – The Court describes the limits of the work product doctrine regarding witness interviews, and the showing needed to apply the doctrine.

The Court addressed the work product doctrine (C.C.P.  § 2018.010, et seq.,) in Coito v. Superior Court, S181712 (opinion issued 6/25/12). The Court reversed the Court of Appeal and made two primary holdings. First, that recorded witness statements obtained by investigators hired by counsel are entitled as a matter of law to at least qualified work product protection, and potentially to absolute protection if the party can show that disclosure would reveal its “attorney’s impressions, conclusions, opinions, or legal research or theories.” Second, that the identity of those witnesses from whom counsel has obtained statements is not automatically entitled to any work product protection. To prevent disclosure of such a list, counsel must justify such protection on a case-by-case basis.  For more details about Coito, see the Attorney Related update page.  Also, for an analysis of the opinion by the Court of Appeal in Coito, see the previous March 2010 post on this blog.

Environmental Regulations – An air quality district can mandate pollution standards based on reasonably anticipated technologies that do not yet exist.

Partially reversing the Court of Appeal, in National Paint & Coatings Assn., Inc. v. South Coast Air Quality Management Dist., S177823 (opinion issued 6/25/12), the court found that Health and Safety Code § 40440 authorizes an air quality district to promulgate pollution standards based on technologies that do not currently exist but are reasonably anticipated to exist by the compliance deadline. Furthermore, the Court found that the district had sufficiently demonstrated that its challenged emissions limits were achievable in each category and that the categories were reasonably drawn.  For more details about National Paint & Coatings Assn., Inc., see the Environmental update page.

Preemption – State consumer protection disclosure requirements are preempted by the broad federal grant of power given to banks to conduct their business.

Again reversing the Court of Appeal, the court held in Parks v. MBNA American Bank, S183703 (opinion issued 6/21/12), that the National Bank Act (NBA) (12 U.S.C. § 21 et seq.) preempts the requirements of California Civil Code § 1748.9 regarding specific types of notice to consumers regarding the use of convenience checks as cash advances on credit card accounts. The Court held that these disclosure requirements stand as an obstacle to the broad grant of power given by the NBA to national banks to conduct the business of banking.  For more details about Parks, see the B & P 17200/Class Actions/Commercial update page.
 

Self-Contradictory Testimony Does Not Necessarily Create A Triable Issue of Fact Requiring Denial of Summary Judgment

It is not uncommon for a deposition witness testifying regarding critical events to make somewhat inconsistent statements under direct- and cross-examination.  For decades California trial courts have denied summary judgment motions on the ground that such inconsistencies create triable issues of fact that must be resolved by juries.  The lower courts cite two California Supreme Court opinions, Clemmer v. Hartford Insurance Co., 22 Cal.3d 865 (1978) and Reid v. Google, Inc., 50 Cal.4th 512 (2010), for the principle that "the task of disambiguating ambiguous utterances is for trial, not for summary judgment."

In Davis v. Foster Wheeler Energy Corp., __Cal.App.4th__, 2012 WL 1435016 (2012) [pdf], the California Court of Appeal was asked to reverse a summary judgment entered against the heirs of a refinery worker who had died of asbestos-related disease and in favor of the manufacturer of an industrial boiler that had been insulated with asbestos.  A witness who had worked with the decedent testified under examination by plaintiffs’ counsel that he had witnessed (while working nearby the decedent) the manufacturer’s employees remove asbestos insulation from pipes attached to the boiler, creating dust that was inhaled by the decedent.  Later in the deposition, while being examined by defense counsel, the witness said the opposite; only insulators hired by the refinery had applied and removed asbestos.  He denied having any knowledge that anyone associated with the manufacturer had ever applied or removed asbestos.  The trial judge, having reviewed the testimony of another percipient witness that corroborated the deponent’s second version of the relevant events, granted summary judgment for the manufacturer:  “[N]o reasonable jury considering this opposing testimony would conclude that the [Foster Wheeler] workers are the workers who removed the asbestos insulation around the Foster Wheeler boilers.”

On appeal plaintiffs argued that Clemmer and Reid required reversal.  The Court of Appeal, affirming, disagreed:  “In this case, the testimony is not ambiguous, but is contradictory, and the issue is . . . whether with [the witness’s] internally contradictory testimony plaintiffs established the existence of a triable issue of fact, and on de novo review [citation] we agree with the trial court that it did not.”

Under Davis counsel need not shy away from bringing a summary judgment motion even where there are internal inconsistencies in the testimony, especially where the testimony favorable to the client is consistent with the weight of other evidence submitted for the trial court’s evaluation.

California Plaintiffs' Bar Seeks to Overturn Landmark Howell Decision On Medical Special Damages

Last August, the California Supreme Court issued one of those once-in-a-generation opinions that cut a wide swath across many areas of tort law. A 6-1 opinion, Howell v. Hamilton Meats held that personal injury plaintiffs are limited to recovering, as medical special damages, the amount plaintiff’s private health insurer actually paid plaintiff’s medical provider in full satisfaction of the bill for services rendered to treat the personal injury. Plaintiffs cannot recover the face amount that their providers billed if their private health insurers paid less in full satisfaction, e.g., where the health insurer and hospital have a prenegotiated contractual agreement on how much the hospital will accept. Typically, the prenegotiated “discount” – though not really a “discount” at all – is much less than the face amount of the bill.

Though the phrase “landmark decision” is often over-used, Howell is one of those rare opinions that truly deserves the label.   It applies to virtually every type of lawsuit in which the plaintiff who claims personal injury had private health insurance which picked up the tab for plaintiff’s medical services. In other words, Howell governs not merely in the traditional auto accident scenario, but any case in which plaintiff seeks to recover for medical services attributable to the injury defendant caused. Howell limits recovery to the “reasonable value” of the service, capped by the amount the provider accepted as payment in full. Some have estimated that Howell represents a net savings to defendants and their liability insurers of as much as $3 billion per year. Full disclosure: Sedgwick’s appellate department filed one of the amici curiae briefs on which the Supreme Court relied in its Howell decision.

The ink on Howell was hardly dry before a bill was introduced in the California Legislature to overrule it. SB 1528 was sponsored by Senate President Pro Tem Darrell Steinberg for the Consumer Attorneys of California (aka the plaintiffs’ bar.) As introduced in February, the two-paragraph bill declared that injured plaintiffs "shall be entitled to recover the reasonable value of medical services provided without regard to the amount actually paid." [pdf]  In other words, the original version was aimed squarely at legislatively-overruling Howell.

But just a few days ago, the measure took an interesting detour. Proponents deleted all of the language that would have overturned Howell, leaving only a shell that says: “it is intent of the Legislature to establish a framework for compensating persons with injuries due to the fault of third parties.”  [pdf] This, in essence, reduces the measure to a “spot bill” – one that contains no substantive provisions, a placeholder declaring the drafters’ “intent” to establish a compensation “framework” in the future. As Dan Walters, blogging for the Sacramento Bee, describes it: the remaining language is “essentially a blank slate that can move through the process and then be filled in later, perhaps in the crush of the legislative session's final days, with or without a compromise between the warring factions.”

According to California’s official legislative website, a hearing is set for May 8, 2012.

Stay tuned to Appellate Strategist for further reports.

Products Liability Law Ebbs as California Supreme Court Issues Definitive O'Neil Opinion

The California Supreme Court has issued a resounding and conclusive opinion rejecting the surging liability theory that a product manufacturer may be held liable for harmful defects in products made by third parties unless the manufacturer’s own product contributed substantially to the harm, or the manufacturer participated substantially in creating a harmful combined use of the products.

The Court’s unanimous opinion in O’Neil v. Crane Co. – issued Thursday – slammed the door on plaintiffs’ attempt to create “an unprecedented expansion of strict products liability,” and reaffirmed the “bedrock principle” that strict liability is premised on harm caused by deficiencies in the defendant’s own product.

The plaintiffs in O’Neil had postulated that the defendant valve and pump manufacturers should be liable for the harm caused by the plaintiff’s exposure to asbestos-containing insulation products (made by others) that were used on or near the defendant’s all-metal products. However, there was no evidence that asbestos insulation – as opposed to some other type of insulation material – was necessary for the defendants’ pumps and valves to function properly.

A product’s “mere compatibility for use” or even its foreseeable use with defective components is not enough to render the defendant’s product itself defective. The Court noted the absurdity that would follow recognition of plaintiffs’ liability theory. Manufacturers of the saws and tools used to cut and remove asbestos insulation would become the next targets in asbestos litigation. And taken to its logical extreme, match manufacturers might be required to warn about the hazards of dynamite.

“The broad rule plaintiffs urge would not further the purposes of strict liability. Nor would public policy be served by requiring manufacturers to warn about the dangerous propensities of products they do not design, make, or sell,” wrote Justice Corrigan, writing for the unanimous Court. A manufacturer of a non-defective product is unable to exert pressure on other manufacturers to make their products safe. Additionally, manufacturers of non-defective products should not shoulder a burden of liability for products, the sale from which they derived no economic benefit. Nor should strict liability require manufacturers to investigate the potential risks of all other products and replacement parts that might foreseeably be used with their own product and warn about such risks. This “unrealistic” and “excessive” burden would actually undermine consumer safety by inundating users with excessive warnings.

The Court did not expressly opine on, but rather left open the possibility of liability in the case of a product that requires the use of a defective product in order to operate, or if a product manufacturer specifies or requires the use of a defective replacement part. However, the Court noted that in both contexts, “the policy rationales against imposing liability on a manufacturer for a defective part it did not produce or supply would remain.” 

Now that two state Supreme Courts – California and Washington (see Braaten v. Saberhagen Holdings (2008) 165 Wn.2d 373,and Simonetta v. Viad Corp. (2008) 165 Wn.2d 341.) – have recently rejected this proposed expansion of products liability law in the asbestos context, expect that many other jurisdictions will follow and cap this emerging theory.

California Supreme Court Hears Argument in Pivotal Asbestos Product Liability Case

The California Supreme Court heard oral argument in O’Neil v. Crane Co. The Court’s decision will likely define an important area of strict products liability law in California – specifically, it will expand or limit the duty of product manufacturers to warn about the hazards of replacement parts made by others that are subsequently incorporated by the purchaser into the manufacturer’s original product. 

O’Neil arises out of the plaintiff’s exposure to asbestos-containing gaskets and packing materials used in and around the defendants’ valves and pumps, which were incorporated by the Navy into the steam propulsion system aboard the USS Oriskany, where the plaintiff served while he was enlisted. Though the pumps and valves delivered to the Navy originally incorporated asbestos-containing gaskets and packing, all parties agreed that by the time plaintiff served aboard the Oriskany, the original asbestos packing and gaskets had been removed and replaced with packing and gaskets manufactured by third parties. Nevertheless, the plaintiff argued the pump and valve manufacturers had a duty to warn him regarding the hazards of asbestos.  

Prior to O’Neil this legal issue had been addressed by the California Court of Appeal, most notably in Taylor v. Elliot Turbomachinery Co., Inc. (2009) 171 Cal. App. 4th 564. There, the First Appellate District noted, on facts indistinguishable from the present case, that the plaintiff’s injury did not come from the defendants’ equipment itself, but instead was released from products made or supplied by other manufacturers, though used in conjunction with the defendants’ equipment. Thus, the defendant manufacturers were not part of the chain of distribution of the injury-causing product, which was actually the asbestos-containing insulation. The court held that California law did not recognize a duty to warn of defects in another manufacturer's product.  The Second District Court of Appeal below in O’Neil rejected the reasoning of Taylor, and instead ruled that a manufacturer is strictly liable for dangerous products with which its product will necessarily be used. The Supreme Court granted certiorari in O’Neil to resolve the conflict between the O’Neil and Taylor decisions.

At oral argument, one of the Justices’ primary concerns appeared to be factual in nature: What exactly was meant by the parties’ contention that the Navy “specified” or “required” the use of asbestos-containing insulation? As phrased by Chief Justice Cantil-Sakauye, did the Navy “say the magic word, ‘asbestos’” in its specifications to the defendants, or did the Navy merely promulgate performance specifications and the defendant manufacturers independently determined that asbestos-containing insulation was the best (or even only) material suitable to meet those requirements?  

Another significant concern of the Court appeared to be whether the pumps and valves were capable of functioning without the asbestos-containing components. In other words, was asbestos required for the pumps and valves to function properly, or was asbestos merely required by the dictates of the steam propulsion system, and not the design of the valves or pumps themselves. The Court seemed troubled settling on the proposition that the pumps and valves could be deemed defectively designed if the pumps and valves were “asbestos neutral,” and could function just as well in other systems utilizing non-asbestos containing materials. 

Ultimately this latter point may be where the court draws the line, assigning a duty to warn about replacement parts made by others only if the replacement part is identical to the original hazardous part, and the replacement part is essential to the function of the defendant’s product. The Court will issue its opinion within 90 days. 

A Claim for Medical Expenses Is Limited to the Rate Negotiated by Plaintiff's Insurer - So Rules The California Supreme Court in Howell

 

Adding its voice to a continuing national debate, the California Supreme Court has adopted the minority rule and held that tort damages for past medical expenses are limited to those amounts actually paid and accepted as full payment for the services provided, when such amounts are determined by an existing agreement with the plaintiff’s insurance carrier. In such a case, an amount otherwise “billed” using rates outside of the agreement is irrelevant. In its opinion, the Court explained that only the prenegotiated amount actually paid by, or on behalf of, the plaintiff to settle a previous medical bill is recoverable as economic damages, because such a payment is the extent of plaintiff’s actual loss. As a result, the collateral source rule does not apply, because the issue is the measure of plaintiff’s actual damages, not how they were paid. The Court noted that, to be recoverable, such damages must be both reasonable and actually incurred. While acknowledging that this could result in wildly different damages for the same injury, depending on whether the plaintiff was insured, this does not change the measure of a particular plaintiff’s damages. The Court noted a similar disparity in lost income damages between different plaintiffs with identical injuries. There were several amicus briefs filed in this matter, including one prepared by Sedgwick. For more details about Howell, see the Damages update page.

Governor Brown Nominates U.C. Berkley Law Professor Goodwin Liu to California Supreme Court

Governor Jerry Brown has acted to fill the California Supreme Court vacancy created by the retirement earlier this year of Associate Justice Carlos R. Moreno by nominating U.C. Berkley law professor Goodwin Liu to the post. 

Professor Liu, 40, has never been a judge, but recently garnered headlines as President Obama’s nominee for a seat on the U.S. 9th Circuit Court of Appeals. His confirmation was blocked by Senate Republicans, citing his legal philosophy and despite support from prominent legal conservatives Kenneth W. Starr and Richard Painter. He ultimately withdrew his nomination

Professor Liu is the son of Taiwanese immigrants. He was born in Georgia, but raised in Sacramento where, according to his CV, he attended public schools. He graduated Stanford in 1991 with a bachelor’s degree in biology, then went to Oxford on a Rhodes scholarship, where he took a masters degree in philosophy and physiology. “Upon returning to the United States, he went to Washington, D.C., to help launch the AmeriCorps national service program and worked for two years as a senior program officer at the Corporation for National Service.” 

Professor Liu’s career in the law began upon graduation from Yale Law School in 1998, whereupon he clerked for Judge David Tatel of the U.S. Court of Appeals for the District of Columbia Circuit. He then worked “as Special Assistant to the Deputy Secretary of the U.S. Department of Education, where he developed and coordinated K-12 education policy.” A U.S. Supreme Court clerkship with Justice Ruth Bader Ginsburg followed, then a stint in O’Melveny & Myers’ appellate litigation practice in Washington, D.C. Since joining the Boalt Hall faculty in 2003, he has ascended to the rank of Associate Dean and Professor of Law while establishing himself as a nationally recognized expert on constitutional law, education policy, civil rights, and the Supreme Court. 

He is also a prolific and influential legal scholar. Some of his more recent publications include:

  • Keeping Faith With The Constitution (2009) (with Pamela S. Karlan and Christopher H. Schroeder);
     
  • The Bush Administration and Civil Rights: Lessons Learned, 4 Duke Journal of Constitutional Law & Public Policy 77 (2009);
  • National Citizenship and the Promise of Equal Educational Opportunity, in The Constitution in 2020 (Jack M. Balkin & Reva B. Siegel eds., 2009);
  • Rethinking Constitutional Welfare Rights, 61 Stanford Law Review 203 (2008).

Employers Liable Only Once For Employee Negligence - California Follows the Majority Rule

Under respondeat superior, an employer is held vicariously liable for the acts of an employee when driving a vehicle within the scope of employment, irrespective of any fault by the employer. Alternatively, an employer can be directly liable for its own negligence under the theory of negligent hiring/retention or negligent entrustment. As a practical matter, a plaintiff injured by the driving employee can allege all such theories; however, does that remain true once the employer admits liability under respondeat superior?

In Armenta v. Churchill (1954) 42 Cal.2d 448 (Armenta), the California Supreme Court held that once an employer admits liability under respondeat superior for an employee driver, the plaintiff is then barred from also pursuing a claim of negligent entrustment. The Court concluded that these were merely two alternative theories for holding an employer liable for the same injury. Under the “all of nothing” principles then in place, an employer would either be held for 100% of the damages, or none at all, regardless of the theory used. However, since Armenta, California has adopted comparative negligence principles and voters enacted Proposition 51, creating mechanisms for parsing out the separate liability of each party involved. As a result, the courts of appeal split as to the continuing viability of Armenta, with the Court of Appeal in Diaz finding that Proposition 51 required a separate evaluation of the employer’s direct liability.

In Diaz v. Carcamo (2011) ___ Cal.4th ___, S181627, the unanimous Supreme Court has resolved the conflict below and upheld Armenta, noting that this remained the majority rule in the U.S. The Court first dismissed the purported distinction between a claim of negligent entrustment (Armenta) and negligent hiring (Diaz), noting these were “functionally identical” when addressing an employee driver. The Court also found it made no difference whether the employer conceded vicarious liability before or during trial. As to the main issue, the Court sided with Jeld-Wen, Inc. v. Superior Court (2005) 131 Cal.App.4th 853, finding that the employer’s liability cannot exceed that of the employee driver who allegedly caused the accident, and that nothing in the development of negligence principles since Armenta had changed this. As a result, once vicarious liability for the employee is conceded, making the employer fully liable for the employee’s actions, the additional claims of negligent entrustment or negligent hiring become duplicative and superfluous and must be barred. Indeed, the Court noted the inherent inequity of holding the employer for a second share of liability in excess of the negligent driver’s liability, and remanded for a full retrial. For more details about Diaz, see the Torts & Products update page.
 

California Supreme Court Short List Profiles: Stanford Law Professor Mariano-Florentino Cuellar

Appellate Strategist’s survey of potential nominees to the California Supreme Court  begins with Mariano-Florentino Cuellar. Cuellar graduated from Calexico High School in Calexico, California. After earning a bachelor’s degree from Harvard in 3 years (magna cum laude, 1993), he received a Master’s degree in political science from Stanford in 1996, followed by a law degree from Yale in 1997, and a Ph.D. from Stanford in 2000. He then served as law clerk to Chief Judge Mary M. Schroeder of the United States Court of Appeals for the Ninth Circuit. 

Since the culmination of his clerkship in 2001, Cuellar has been a professor at Stanford Law School, first as an Assistant/Associate Professor and then, since June 2007, as a Full Professor and Deane F. Johnson Faculty Scholar. According to his faculty biography, his work at Stanford involves “the intersection of law, public policy, and political science.” His courses deal with issues of administrative law, regulation and bureaucracy, executive power, and national security. 

Professor Cuellar’s tenure at Stanford has included governmental, as well as academic, endeavors. In fact, even before he assumed his faculty position at Stanford, he interrupted his Ph.D. program to serve as Senior Advisor to the Under Secretary (Enforcement) of the Treasury from 1997 to 1999, in which role he focused on financial crime enforcement, terrorism financing countermeasures, immigration, and border security. In 2008 and 2009, he served as Co-Chair of the Immigration Policy Working Group for the Obama-Biden Transition Project, where he worked to formulate policies on immigration, borders, and refugees. In 2009 and 2010, he served as Special Assistant to the President for Justice and Regulatory Policy, in which role he led the White House Domestic Policy Council’s work on criminal justice and drug policy; civil rights and liberties; immigration, borders, and refugees; public health and safety; rural development and agriculture policy; and regulatory reform.

Beyond Stanford, Professor Cuellar is associated with the Council on Foreign Relations, the American Bar Association, the American Law Institute, the American Constitution Society, the La Raza Lawyers’ Association of California, and the National Hispanic Bar Association, among others. He is married to former Santa Clara County Superior Court Judge Lucy H. Koh, who is now a federal district court judge for the Northern District of California pursuant to an appointment by President Obama.

Because Cuellar has not served on the bench, his views on topics that might come before the Court must be gleaned from his writings and appearances in the media. A brief sampling of his academic writing is heavy on federal matters:

  • Mariano-Florentino Cuellar, The Political Economies of Criminal Justice, 75 U. Chi. L. Rev. 941 (2008) (responding to the proposition that politicians increasingly govern by framing social policy choices as criminal justice problems, and concluding that “reshaping the [crime-governance connection] to achieve more defensible social goals is a subtle enterprise. Sensible changes in criminal justice could almost certainly yield an acceptable social equilibrium less dependent on incarceration.”)
  • Mariano-Florentino Cuellar, Auditing Executive Discretion, 82 Notre Dame L. Rev. 227 (2006) (proposing an audit framework similar to “sample adjudication of class action” in lieu of the deferential or non-existent judicial review of executive decision-making and concluding “(1) Judicial review fails to constrain a broad range of discretionary executive decisions subject to mistakes or malfeasance. (2) The limitations of traditional judicial review do not imply that discretionary executive branch decisions should be immune from some form of review. (3) Arguments for broad executive discretion are often radically underdeveloped and fail to withstand scrutiny.”)
  • Mariano-Florentino Cuellar, The International Criminal Court and the Political Economy of Antitreaty Discourse, 55 Stanford L. Rev. 1597 (May 2003) (arguing that the United States objects to the ICC on “process-oriented” grounds because a “focus on procedure sounds marginally more principled to international audiences than a brute realist assertion that American interests are best served by keeping unfettered control of military decisions.” “Yet this comes with costs: It elides the debate over the value of the brute realist position that American military power should be subject to few meaningful constraints and instead makes it look like the most important question is about the procedural shortcomings of a court that is precisely meant to address the arbitrariness in international criminal justice that critics use to assail it.”)

Professor Cuellar’s appearances in the media have often revolved around his role in shaping the Obama Administration’s immigration policy. His appointment to President Obama’s Immigration Policy Working Group was interpreted by experts as confirmation that President Obama was committed to comprehensive immigration reform.  Moreover, both the National Council of La Raza and the League of United Latin American Citizens greeted Professor Cuellar’s appointment with approval.

Though economic factors have put the immigration debate on the back burner, President Obama’s recent attempt to jump-start the issue suggests that his need for Professor Cuellar’s services may become more pressing in the near future. Whether that impacts Governor Brown’s appointment, or Professor Cuellar’s willingness to serve, remains to be seen.

Preemption, Standing and Vexatious Litigants on California Supreme Court's May Argument Docket

The California Supreme Court has scheduled oral arguments for May, including four civil cases.

  • Brown v. Mortensen: The Court will address whether the Federal Credit Reporting Act (15 U.S.C. § 1681 et seq.) preempts causes of action for the improper disclosure of medical information under California’s Confidentiality of Medical Information Act (Civ. Code, § 56 et seq.). This case attracted one amicus brief in support of appellants (by the National Association of Consumer Advocates). For more details about Brown, see the B & P 17200/Class Actions/Commercial update page.
  • Save the Plastic Bag Coalition v. City of Manhattan Beach: Does the plaintiff, an association of plastic bag manufacturers, have standing to challenge a local ban on the use of plastic bags? The Court also granted review to address whether the ordinance was properly held invalid for the failure to prepare an environmental impact report. This case has generated significant amicus interest, including four amicus briefs supporting the City’s ordinance (by Heal the Bay, Manhattan Beach Residents Association, Californians Against Waste, and [jointly] the League of California Cities and California State Association of Counties) and one supporting the plastic bag manufacturers (by the Pacific Legal Foundation). For more details about Save the Plastic Bag Coalition, see the Environmental update page.
  • Shalant v. Girardi: If a vexatious litigant subject to a prefiling order files a lawsuit while represented by counsel, may the litigant proceed in propria persona without first obtaining the approval of the presiding judge under C.C.P.§ 391.7 should counsel later withdraw? The Court of Appeal thought so, reversing the trial court’s dismissal. This case attracted one amicus brief supporting the plaintiff vexatious litigant (by the Los Angeles Society For The Prevention Of Cruelty To Animals). For more details about Shalant, see the Attorney-Related update page.
  • In re K.C.: What injury is needed for a parent to have standing to contest the denial of a petition to place his child with the child’s grandparents? This case attracted one amicus brief in favor of the Kings County Human Services Agency (by the California State Association of Counties). For more details about In Re K, see the Other update page.
     

California Supreme Court to Address Liability for Residential Parties Serving Alcohol

The California Supreme Court has granted review in Ennabe v. Manosa, S189577, in which the Second District Court of Appeal upheld a summary judgment for defendant, who hosted a party at a private residence where alcoholic beverages were available and who charged uninvited party guests an entrance fee of $3 to $5. The Court of Appeal accepted, with little discussion, that the defendant was a “social host” for purposes of Civil Code §1714(c), and hence generally immune from civil liability for furnishing alcoholic beverages both under that provision and under Business and Professions Code §25602. The unanimous panel then held that where drinks were simply available to party guests, once admitted, the host had not sold or caused to be sold an alcoholic beverage under Business and Professions Code §25602.1, and was therefore not civilly liable for damages for admitting to the party an obviously intoxicated minor who, upon leaving the party, drove his car into a pedestrian, another partygoer, killing him. The court further held that, in any case, the defendant was not “required to be licensed” for this party within the meaning of Business and Professions Code §25602.1, giving “no weight” under these facts to a contrary statement in an information guide by the Department of Alcoholic Beverage Control, because it failed to address or cite the controlling statutes.

The California Supreme Court granted review on two issues: 1) whether such a defendant is a “social host” pursuant to Civil Code §1714(c); and, 2) whether the exception to immunity created by Business and Professions Code §25602.1 applies under these facts. The high court had previously noted the first issue, without deciding it, in Cory v. Shierloh (1981) 29 Cal.3d 430, 437. For more details about Ennabe, see the Torts & Products update page.
 

California Supreme Court Schedules Oral Argument for April

  • Oasis West Realty v. Goldman (S181781) – Does an attorney’s duty of loyalty owed to a former client apply when the attorney actively takes a position against the former client on the same issue for which the lawyer previously had been retained, but does so while acting on his or her own behalf, without a subsequent representation or employment? For more details about Oasis West Realty, see the Attorney-Related update page.
  • Diaz v. Carcamo (S181627) – In an attempt to extend the holding in Armenta v. Churchill (1954) 42 Cal.2d 448, which held that a claim of negligence entrustment is no longer viable against an employer who admits to being vicariously liable for the employee, the employer in Diaz argues that the same result should apply to a claim of negligent hiring against the employer, thus precluding evidence of the employee’s poor driving record. The Court of Appeal declined to make such an extension, in part because Armenta pre-dates Proposition 51. This case has attracted significant amicus interest, and multiple requests to depublish the Court of Appeal opinion. For more details about Diaz, see the Torts and Products update page.
  • Sullivan v. Oracle Corporation (S170577) – This case addresses the application of California Labor Code overtime requirements to out-of-state employees hired by a California employer, including: (1) Does the Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week? (2) Does Bus. & Prof. Code § 17200, et seq., apply to such overtime work? (3) Does § 17200, et seq. apply to overtime work performed outside of California for a California-based employer by out-of-state plaintiffs if the employer failed to comply with the overtime provisions of the federal Fair Labor Standards Act, 29 U.S.C. § 207 et seq.? This case has also attracted significant amicus interest. For more details about Sullivan, see the Employment – Compensation & Benefits update page.

The California Supreme Court Issues Unanimous Opinions Addressing Insurance, Consumer Protection and ADR

  • Insurance – In Century-National Ins. Co. v. Jesus Garcia, the court held that a fire insurance policy could not exclude coverage for innocent insureds because of the intentional acts of another insured; in this case the intentional act of the son setting fire to his parents house. The policy excluded coverage based on the intentional act or criminal conduct of “any insured,” and on this basis the carrier excluded coverage for the parents based on the acts of the son. While similar language was previously held as effective to exclude coverage as to all insureds in Minkler; the Court held that Insurance Code §§ 2070 and 533 limit the scope of such an exclusion in fire insurance policies to the specific insured who committed the intentional act. In doing so, the Court warned that this holding may have limited application in other contexts. For more details about Century-National Ins. Co. see the Insurance update page.
  • Consumer Protection – The Song-Beverly Credit Card Act of 1971 is a consumer protection act which bars businesses from requesting that cardholders provide “personal identification information” during credit card transactions, and then recording that information. In Pineda v. Williams-Sonoma Stores, Inc. the Supreme Court found that zip codes constituted “personal identification information,” making it a violation of the act for a business to request and record zip codes as a part of credit card transactions. For more details about Pineda see the B & P 17200/Class Actions/Commercial update page.
  • ADR – Several of the plaintiffs in Tarrant Bell Property, LLC v. Superior Court (Abaya) signed lease agreements requiring that any arbitrable issues, including those involving conditions at the subject mobilehome park, which were made subject to judicial proceedings would be decided by a referee upon the motion of any party pursuant to CCP § 638.  After the residents collectively brought suit, the trial court refused to enforce this provision and the Supreme Court affirmed, finding that the trial court had discretion to deny the motion. Moreover, given the redundancy that would result from referring only some of the residents to a referee over the same legal issues, the trial court did not abuse its discretion. In so ruling, the Court disapproved of both Greenbriar Homes Communities, Inc. v. Superior Court (2004) 117 Cal.App.4th 337, and Trend Homes, Inc. v. Superior Court (2005) 131 Cal.App.4th 950, to the extent they are inconsistent. For more details about Tarrant Bell Property, LLC see the ADR update page.
     

A Profile of the California Supreme Court (minus Justice Moreno)

Before profiling potential candidates to replace Justice Moreno on the California Supreme Court, we first provide a brief profile of the remaining court – not including Justice Moreno, whose announced retirement has initiated this discussion. When choosing a new member for the high court, there is often a discussion about what is “missing” from the court; in order to better address that issue, it can be helpful to look at its existing composition.

The remaining six members of the California Supreme Court represent a total of 134 years of judicial experience, although only two of them, Chief Justice Cantil-Sakauye and Justice Corrigan, had extensive experience on the bench before joining the high court, each with about twenty years of prior experience. In comparison, Justice Chin had previously served as a judge for eight years, while the others had previously served for about three years each. There may be other types of judicial experience, however, in that Justice Werdegar was a senior staff attorney with both the California Court of Appeal and the California Supreme Court, while Justice Baxter assisted in the appointment of more than 700 judges while serving in the Deukmejian administration. However, regardless of their varied judicial experiences, each of the current justices had previously sat on a Court of Appeal before being nominated to the Supreme Court.

The average tenure of the remaining Supreme Court justices is about 13 years, ranging from 22 years for Justice Kennard to about one month for Chief Justice Cantil-Sakauye. A majority of the justices have been on the Supreme Court for at least 15 years. While the existing justices had widely varying experiences before taking the bench, all of them were government prosecutors earlier in their careers, most as deputy district attorneys (Justice Werdegar worked in the U.S. Dept. of Justice, Justice Kennard in the L.A. Attorney General’s office). All of the justices are long time California residents, with four of them native born and two others moving here in the early 1960’s. The average age of the remaining justices is about 65, with the youngest being Chief Justice Cantil-Sakauye at 51 years old.

All of the justices were nominated to the Supreme Court by Republican governors, two each by Deukmejian, Wilson and Schwarzenegger. As such, the new justice, like Justice Moreno, will be the only member of the Court nominated by a Democratic governor. Of the remaining six justices, four are women, meaning the court will have a female majority regardless of who Governor Brown nominates. Along ethnic lines, the court has three Asian-Americans and three justices of European descent. The current lack of either a Latino or an African-American has been raised by commentators in predicting the next nominee.

In future posts, we will profile candidates being considered to replace Justice Moreno on the California Supreme Court. 

A Unanimous CA Supreme Court Upholds Mediation Confidentiality

In Cassel v. Superior Court (Wasserman Comden Casselman & Pearson), the California Supreme Court evaluated the mediation confidentiality created by Evidence Code, § 1119, which prevents the admission of “evidence of anything said,” or any “writing” which was prepared “for the purpose of, in the course of, or pursuant to, a mediation. . . .”, subject only to certain statutory exceptions. Upholding an earlier Court of Appeal decision, Wimsatt, but reversing here, the Court found that the express statutory language applied to protect discussions between counsel and client made during and immediately preceding the mediation in the underlying action, even in a subsequent legal malpractice action in which counsel’s conduct at the mediation was a basis for the malpractice claim. As a result, the court found that counsel defending itself against a legal malpractice action was entitled to exclude evidence of such communications with its own former client, now the legal malpractice plaintiff. While expressing no opinion on the merits of this statutory scheme, the Court noted that the Legislature was free to reconsider it. Justice Chin concurred, “reluctantly,” noting this was “a high price to pay for confidentiality in the mediation process,” and suggesting statutory amendments which could avoid this result while preserving mediation confidentiality. For more history regarding Cassel, see the ADR update page.

Associate Justice Carlos Moreno of the California Supreme Court

After serving the California courts for twenty-four years, Associate Justice Carlos R. Moreno has announced his retirement from the court.  In a recent interview, Justice Moreno said that recent changes, including the retirement of Chief Justice Ronald George and the election of Governor Jerry Brown, had prodded him to explore other possibilities.  His retirement creates an early opportunity for newly sworn Governor Brown to establish a tone for his administration. In future posts, we will provide profiles for candidates being considered to fill this unexpected vacancy. But first, we note the distinguished judicial career of Justice Moreno.

Justice Moreno is native to Los Angeles, where he continued to live after his appointment to the Supreme Court by commuting to San Francisco.  After receiving a B.A. in political science from Yale University (1970) and a 1975 J.D. from Stanford Law School, Carlos Moreno served in the Los Angeles City Attorney's Office, prosecuting criminal and civil consumer protection cases. In 1979, he joined a private firm, representing clients in general commercial litigation. During this time he was also president of the Mexican American Bar Association.

Moreno has enjoyed judicial nominations from both parties. Governor George Deukmejian appointed Justice Moreno to the Municipal Court, Compton Judicial District, in 1986, where Moreno handled general criminal matters and supervised the court’s civil department. In October 1993, Governor Pete Wilson elevated Justice Moreno to the Los Angeles County Superior Court, where he presided over felony trials in downtown Los Angeles. In 1997, Moreno received the Criminal Justice Superior Court Judge of the Year Award from the Los Angeles County Bar Association. President Bill Clinton nominated Justice Moreno to the federal bench, and he was unanimously confirmed to the United States District Court for the Central District of California by the United States Senate in February 1998.

After his nomination by Governor Gray Davis, Justice Moreno was sworn in as an associate justice of the Supreme Court of California on October 18, 2001. Moreno was given the Roger J. Traynor Appellate Justice of the Year Award from the Consumer Attorneys Association of Los Angeles in 2003. At present, Justice Moreno is the only Democrat on the Supreme Court, and the only Latino.  Describing himself as a “moderate-to-liberal centrist,” Moreno initially sided with conservative members of the court as often as its more liberal members. As the court reportedly became more conservative over the years Moreno wrote an increasing number of solo dissents, the most prominent of which was his dissent from the Court’s decision upholding Proposition 8, in which the Court reinstated the ban on same-sex marriage.  Justice Moreno was prominently mentioned as a potential nominee by President Obama for the United States Supreme Court both in 2009 and in 2010.  During that debate, Appellate Strategist profiled Justice Moreno here.

Join us below the jump for a sampling of Justice Moreno’s most important opinions.

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CA Supreme Court schedules its February 2011 calendar

The CA Supreme Court has scheduled three civil cases for hearing on February 8, 2011. These cases address issues of duty & causation, the statute of limitations for multiple distinct injuries and the final judgment rule.

  • Pooshs v. Philip Morris USA, Inc., et al., S172023, results from a request for guidance from the Ninth Circuit regarding the application of the statute of limitations on multiple distinct personal injuries allegedly arising from smoking tobacco; specifically - does the earliest injury trigger the statute for all claims, including those based on a later injury? For more details regarding Pooshs, see the Civil Procedure/Evidence/Discovery update page.
  • Cabral v. Ralphs Grocery Company, S178799, addresses whether a big-rig truck driver owes a duty of care to freeway motorists not to park for non-emergency reasons in an “Emergency Parking Only” area at the side of a freeway. Review was also granted on the issue of whether the driver’s act of parking in the “Emergency Parking Only” area was not a substantial factor, as a matter of law, in causing plaintiff’s injuries in this case. For more details regarding Cabral, see the Torts & Products update page.
  • In re Baycol Cases I and II, S178320, the Court addresses whether the “death knell doctrine” requires plaintiff to immediately appeal the sustaining of a demurer as to class claims when the ruling resolved both individual and class claims, or whether the one final judgment rule applies and requires a single appeal from the subsequent entry of final judgment on all claims? For more details regarding Baycol, see the Appeals & Writs update page.
     

California Supreme Court Justice Carlos Moreno Announces Retirement

Justice Carlos Moreno of the California Supreme Court announced today that he will be retiring from the Court, effective February 28, 2011.  The surprise announcement, coming on the heels of Chief Justice Ronald M. George's retirement, gives new Governor Jerry Brown his first Supreme Court appointment only days into his term.

Chief Justice Ronald M. George: The Most Notable Opinions

For the final day of our profile of retiring California Chief Justice Ronald M. George, we offer our own subjective list of the Chief Justice’s most notable opinions. If anyone has a nomination for a favorite case that belongs on this list – and there are many important opinions that aren’t here – explain in the comments section.

In re Marriage Cases, 43 Cal.4th 757 (2008) – Reversing the Court of Appeal, the Supreme Court held that provisions of the Family Code defining marriage as between a man and a woman violated the fundamental constitutional right to marry of all Californians. This was so for several reasons: (1) the exclusion of gay couples from the designation of marriage was not necessary to afford full protection to the rights and benefits accorded opposite-sex couples; (2) denying the designation "marriage" to same-sex couples would impose appreciable harm on such couples and their children; (3) denying same-sex couples the designation of "marriage" would be perceived as reflecting an official view that such relationships are of lesser dignity, and that same-sex couples and gay individuals are in some respects "second-class citizens."

Costa v. Superior Court, 37 Cal.4th 986 (2006) – In a legal challenge to Proposition 77, the Supreme Court found that where a challenger questioned whether an voter initiative was properly before the voters – as opposed to the substantive validity of the change in law made by the initiative – it should, as a general matter, be resolved before the election. The Court further held that technical deficiencies in referendum and initiative petitions should not invalidate the petitions if they are in substantial compliance with statutory and constitutional requirements.

Yanowitz v. L'Oreal USA, Inc., 36 Cal.4th 1028 (2005) -- The Supreme Court held that a plaintiff's refusal to follow an order which he or she reasonably believed to be discriminatory was a protected activity within the meaning of the Fair Employment and Housing Act, so long as the employee's communications to the employer sufficiently convey the employee's reasonable concerns that the employer has acted or is acting in an unlawful manner. The Court concluded that the appropriate test for determining an adverse employment action within the meaning of the statute was whether the action materially affected the terms and conditions of employment.

Miller v. Department of Corrections, 36 Cal.4th 446 (2005) – Reversing the Court of Appeal, the Supreme Court held that a plaintiff could establish an actionable claim under the FEHA by demonstrating, in a case involving a supervisor who allegedly gave favorable employment opportunities to a person with whom he was having an affair, that the sexual favoritism was so severe or pervasive as to alter his or her working conditions and create a hostile environment.

Aguilar v. Avis Rent a Car System, Inc., 21 Cal.4th 121 (1999) – In an action for employment discrimination and wrongful discharge, the trial court entered an injunction directing defendant to cease and desist from using derogatory racial or ethnic epithets directed at Hispanic/Latino employees. The Supreme Court affirmed, holding that the injunction was not a prior restraint barred by the First Amendment. The Court pointed out that the vice of a prior restraint is that communication will be suppressed before an adequate determination that it is unprotected by the First Amendment. Plaintiffs' speech, in contrast, had been adjudicated to be unprotected on the grounds that it contributed to a hostile working environment. The Court held that enjoining the continuation of unprotected speech was not contrary to the Federal or state constitution.

NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, 20 Cal.4th 1178 (1999) -- The Court held that as a general matter, the First Amendment protects the right of access to civil trials and proceedings. Under Code of Civil Procedure Section 124, a proceeding may not be closed unless the trial court provides public notice of the intent to hold closed proceedings; and after a hearing, expressly finds that (1) an overriding interest supports closure, (2) there is a substantial likelihood of prejudice to that interest absent closure, (3) the closure is narrowly tailored to protect the threatened interest, and (4) there is no less restrictive means available.

Curran v. Mount Diablo Council of the Boy Scouts of America, 17 Cal.4th 670 (1998) -- Plaintiff's application to serve as an assistant scoutmaster was rejected, and he sued under the Unruh Act, alleging that the rejection was on grounds of his homosexuality. The Supreme Court held that the Boy Scouts were not a "business establishment" within the meaning of the Unruh Act, noting that although the Scouts regularly engaged in business transactions with nonmembers, the primary function of the Scouts was to inculcate certain values in youth members. Nor did business transactions with nonmembers involve sale of access to the basic activities or services offered by the organization.

American Academy of Pediatrics v. Lungren, 16 Cal.4th 307 (1997) -- The Supreme Court affirmed a judgment permanently enjoining the enforcement of a state statute requiring parental consent or judicial authorization before a minor may obtain an abortion. The Court acknowledged that certain parental consent laws had been upheld at the Federal level, but pointed out that the right to privacy protected by the state constitution was, in many contexts, broader and more protective of privacy than the federal right. The Court held that because the statute intruded upon an interest fundamental to personal autonomy, it was subject to scrutiny under the compelling interest test. The Court concluded that the statute could not be upheld on the grounds that it was necessary to protect the health of a pregnant minor, or to protect the minor's relationship with her parent.

Vons v. Seabest Foods Inc., 14 Cal.4th 434 (1996) -- In a case arising from an e coli outbreak, the Supreme Court held that the trial court could constitutionally exercise specific jurisdiction over a cross-claim between a meat supplier and certain franchisees. The Court pointed out that the cross-defendants' franchise agreements -- which specified that California law governed disputes -- controlled the purchase of ingredients, training, equipment and cooking procedures. The Court concluded that the cross-claim was sufficiently related to two contracts substantially connected to California -- the franchisees' franchise agreement, and their contract with the meat supplier -- to serve as a basis for jurisdiction.

Warfield v. Peninsula Golf & Country Club, 10 Cal.4th 594 (1995) -- In an action arising from a country club's termination of a woman's country club membership, the Supreme Court held that the Club was a "business establishment" subject to the Unruh Act. The Court emphasized the Club's interaction with the public: (1) the Club regularly permitted nonmembers to rent facilities for a fee; (2) the Club regularly obtained income from fees for the use of its facilities, and the purchase of food and beverages; (3) the Club obtained indirect financial benefit from the regular business transactions with nonmembers conducted on the premises. The Court also rejected the defendant's claim that subjecting the Club to the Unruh Act would violate its members' constitutional right to freedom of association.

Knight v. Jewett, 3 Cal.4th 296 (1992) -- In an action arising from an informal game of touch football, the Supreme Court granted review to determine the proper application of assumption of the risk, if any, following the adoption of comparative negligence. The Court held that the cases in which assumption of the risk had been applied could be divided into two classes: "primary assumption of the risk," referring to cases in which the court concluded that defendant owed plaintiff no duty to protect him from a particular risk; and "secondary assumption of the risk," meaning cases where defendant did owe a duty, but the plaintiff knowingly encountered the risk. The Court held that while "primary assumption of the risk" was still viable under a comparative negligence regime, "secondary assumption of the risk" was merged into the comparative negligence analysis. "Primary assumption of the risk," the Court found, depended not upon the reasonableness of the plaintiff's conduct, but rather on the nature of the activity or sport in which the defendant is engaged, and the relationship of the defendant and the plaintiff to that activity or sport.

Chief Justice Ronald M. George's Supreme Court Tenure (Part Three of Four)

In the first two posts of this series, we've reviewed Chief Justice George's career prior to his judicial service, and his early years as a Judge of the Los Angeles Superior Court and a Justice of the Court of Appeals. Today, we turn to a review of the Chief's more than eighteen years on the California Supreme Court.

 Chief Justice George was appointed to the Supreme Court by Governor Pete Wilson on July 29, 1991, replacing the retiring Justice Allen Broussard. "At the risk of being immodest," Governor Wilson said as he announced the nomination, "I don't see how I could have done better." The Judicial Nominees Evaluation Commission agreed with Governor Wilson's assessment, rating George "exceptionally well qualified." During his five years as a moderate member of the Lucas Court, the Chief Justice wrote a variety of important opinions for the Court on subjects such as civil rights, domestic relations and the California initiative system.

In late 1995, Chief Justice Lucas announced his retirement. Governor Wilson nominated George on March 28, 1996, as the twenty-seventh Chief Justice of California. Once again he received a rating of "exceptionally well qualified" from the JNE Commission, and the Chief Justice was resoundingly confirmed by the voters in 1998, winning retention by a three-to-one margin.

Chief Justice George's tenure has been a time of fundamental reform for California's court system. As the Chief Justice recalled earlier this year in a speech to the State Bar, he assumed office as Chief Justice in the midst of yet another state financial crisis. "I was determined to improve the fiscal security of the trial courts," he said. Many counties were facing "substantial closures and cutbacks in courtroom and clerk's office services as well as widespread employee layoffs." The Chief Justice's first major goal was achieved the following year when, in the waning hours of its legislative session, the Legislature enacted a bill creating a statewide system of funding for California's courts.

The second major reform of the Chief Justice's tenure came only one year later. When the Chief Justice took office, California's judiciary was a maze of over two hundred different superior and municipal courts. The result -- as the new Chief Justice observed in the course of visiting all fifty-eight of California's counties in those early years of his term -- was overlapping of services and inefficiency. As the Chief Justice recalled earlier this year: "Too often, courts were struggling in solitude to meet their obligations, without anywhere to turn. I found the equivalent of the wheel being reinvented in country after county."

All that changed in 1998 when the electorate approved a constitutional amendment permitting the counties' superior and municipal courts to unify into a single trial court for each county. Within three years, judges in every county had voted to unify.

In 2002, Chief Justice George achieved another major goal with passage of the Trial Court Facilities Act, which transferred responsibility, and in many cases ownership, of the 532 court facilities scattered around the state from the individual counties to the judicial branch. Six years later, a $5 billion revenue bond measure was approved, providing financing for forty long-overdue court construction and modernization programs.

The Chief Justice has received dozens of honors for his service throughout his judicial career. In recent years, these have included the James Madison Freedom of Information Award from the Society of Professional Journalists (2003), the Matthew O. Tobriner Public Service Award from the Legal Aid Society of San Francisco (2006), the American Judicature Society's Opperman Award for Judicial Excellence (2006) and the Champion of Justice Award from the Bar Association of San Francisco. In 2009, the Chief Justice was inducted as a Fellow of the American Academy of Arts and Sciences.

Join us tomorrow as we conclude our profile with our nominations for the Chief Justice’s most notable opinions.

Chief Justice Ronald M. George's Early Judicial Career (Part Two of Four)

Yesterday, in the first post of this series, we considered Chief Justice George’s career prior to his elevation to the bench. Today, we continue with the Chief’s service on the trial bench and the California Court of Appeal.

The Chief Justice was appointed to the Los Angeles Municipal Court on April 20, 1972 by Governor Ronald Reagan. He was thirty-two years old. “I sort of felt and looked like the boy judge,” he told a newspaper reporter in 1996. He served as Supervising Judge of the West Los Angeles Branch of the Court in 1974-75, where he instituted several reforms, including a master court operation and seeing that forms were provided in Spanish translation. He was elected to a six-year term on the court without opposition in 1976.

Chief Justice George was elevated to the Los Angeles Superior Court on December 23, 1977, this time by a Democratic Governor – Jerry Brown. He was elected to six-year terms, again without opposition, in 1978 and 1984.

In 1981, then-Judge George was assigned to preside in the case of the Hillside Strangler, People v. Angelo Buono. The case nearly went off the rails in the pretrial stages when Kenneth Bianchi, an accused accomplice who had entered into a plea bargain agreement requiring him to testify, gave an unbelievable performance on the stand, ultimately testifying that he did not know whether he was telling the truth in saying Angelo was involved in the murders.

Concluding that Bianchi would never withstand cross-examination, the District Attorney’s office responded by moving to dismiss all ten counts of murder against Buono. In a courageous ruling, Judge George denied the motion to dismiss, concluding that there was sufficient evidence to corroborate Bianchi’s testimony and convict Buono. Not long after, the District Attorney withdrew from the prosecution, which was then undertaken by Attorney General George Deukmejian.

The trial was arduous -- jury selection consumed over three months, and the prosecution’s case involved more than a thousand exhibits and two hundred fifty witnesses. The Government’s closing argument took eleven days. But  finally, in the fall of 1983, what was at the time the longest criminal trial in U.S. history concluded with verdicts of guilty against Buono on nine of ten murder counts.

Following the Hillside Strangler case, George became Supervising Judge of the Criminal Division. On July 23, 1987, he was appointed to the Second District of the Court of Appeal, this time by Governor George Deukmejian.

Join us tomorrow as we review Chief Justice George’s nineteen years of service on California’s Supreme Court.

Retiring Chief Justice Ronald M. George -- First of a Series

On January 3, 2011, the twenty-seventh Chief Justice of California, Ronald M. George, will conclude over thirty-eight years of service on the California bench. To mark the retirement of this great California jurist, we begin a four part profile on state's third longest-serving Chief Justice.

Born in March 1940, Chief Justice George graduated from Beverly Hills High School in 1957. Following high school, the Chief attended the Woodrow Wilson School of Public and International Affairs. At the time, he planned to make his career in the Foreign Service.

All that changed at age nineteen, when he spent the summer between his sophomore and junior years in college hiking around West Africa and meeting American diplomats. "Most of them seemed to just be congregating amongst themselves and having very little contact with the local populace and not having much, if any, of an impact on the problems of the area," the Chief Justice recalled in a 1996 newspaper profile.

So he decided to attend law school. "I decided . . . that a law degree would offer the most options for whatever form of public service I might choose to pursue." The Chief Justice graduated from Stanford Law School in 1964.

Following law school, the Chief Justice joined the Attorney General's office as one of then-Attorney General Stanley Mosk's deputies. During seven years in the Attorney General's office, the Chief Justice handled a number of high-profile cases. The Chief was unsuccessful in one of his highest profile cases, People v. Anderson, where the Supreme Court struck down California's death penalty, but he prevailed not long after that in People v. Sirhan, where the Court affirmed the conviction of Sirhan Sirhan for assassinating Senator Robert F. Kennedy.

Chief Justice George served as counsel and argued six cases before the United States Supreme Court, including several which are still familiar to criminal law practitioners: Chimel v. California (invalidating warrantless search of entire house in connection with arrest of burglary suspect); Hill v. California (approving search incident to arrest, although police arrested the wrong person) and McGautha v. California (allowing jury to choose between life or death without governing standards not unconstitutional in capital cases) All together, the Chief Justice handled over one hundred appeals and writs, ending his career in the AG's office with a year as Administrative Assistant in charge of the Los Angeles office.

Join us tomorrow as we turn to the early years of the Chief Justice's judicial career.

California Confirms Four Appointments to the Third Appellate District

Following the recent retirement of Justices Scotland and Sims, as well as the elevation of Justice Tani Cantil Sakauye to the California Supreme Court, the California Commission on Judicial Appointments has now confirmed four appointments for the Third Appellate District. First, Associate Justice Vance W. Raye, who has served on the Court of Appeal, Third Appellate District since 1991, was confirmed as Presiding Justice. The Commission also confirmed three new associate justices for the Third Appellate District:

  • Judge Elena J. Duarte, who has served on the Superior Court of Sacramento County since 2008, having also served as a Superior Court Judge in Los Angeles (2007-2008), and as an Assistant U.S. Attorney for the Central District of California (1994-2007).
  • Ms. Andrea Hoch, who has served as the Governor’s Legal Affairs Secretary since 2005, having previously served as the Administrative Director of the Division of Workers’ Compensation (2004-2005) and in the Office of the Attorney General (1992-2004).

Orders Compelling Compliance with a Legislative Subpoena Are Appealable in California

While avoiding the marijuana legalization debates raging in the state, the California Supreme Court confirmed that orders compelling five medical marijuana dispensaries to comply with subpoenas issued by the City of Dana Point were appealable, reversing the dismissal by the Court of Appeal in these consolidated cases. In Dana Point Safe Harbor Collective v. Superior Court, S180365, the Court held that the order enforcing the legislative subpoena and compelling the production of documents was a final order for purposes of an appeal, returning the matter to the Fourth Appellate District, Division Three, of the Court of Appeal for further proceedings. In doing so, the Supreme Court specifically declined to address the ancillary issue of whether an appealing party is entitled to a stay of enforcement of the subpoena pending appeal. Having resolved a split in the Courts of Appeal, the Supreme Court disapproved Bishop v. Merging Capital, Inc.(1996) 49 Cal.App.4th 180, People ex rel. Franchise Tax Bd. v. Superior Court (1985) 164 Cal.App.3d 526, and Barnes v. Molino (1980) 103 Cal.App.3d 46, to the extent they are inconsistent with its holding. For more details regarding Dana Point Safe Harbor Collective, see the Appeals & Writs update page.

California Supreme Court Upholds an Expanded Application of Private Attorney General Fees

Code of Civil Procedure § 1021.5 allows for the recovery of attorney fees from the opposition under certain circumstances when a successful litigant acts as a private attorney general.  While it was well established that a financial interest in the matter can disqualify a party from an award under § 1021.5, it was disputed as to whether a non-financial interest could also disqualify a successful litigant from such a recovery.  In Conservatorship of Roy Whitley, the Supreme Court unanimously resolved this dispute by holding that “a litigant‘s personal nonpecuniary motives may not be used to disqualify that litigant from obtaining fees” under § 1021.5. In Whitley, the interest of the successful litigant was the appropriate care for her disabled brother, but she had no pecuniary interest as the case involved injunctive relief and the mandatory procedures for transferring a disabled person. It was not disputed that an important public right was at issue. The Supreme Court held that the application of § 1021.5 was conditioned on the “financial burden of private enforcement,” i.e., the existing financial incentives and burdens, and not on any nonpecuniary interest in the outcome.

To the extent they disagree with this conclusion, the Court disapproved of Williams v. San Francisco Bd. of Permit Appeals (1999) 74 Cal.App.4th 961, Families Unafraid to Uphold Rural El Dorado County v. Bd. of Supervisors (2000) 79 Cal.App.4th 505, Hammond v. Agran (2002) 99 Cal.App.4th 115, and Punsly v. Ho (2003) 105 Cal.App.4th 102. For more details about Whitley, see the Attorney Related update page.
 

The Forgotten Election - Three California Supreme Court Justices Stand For Election Tomorrow

With so much press devoted to political candidates and state propositions, there has been little attention to the three California Supreme Court justices who are standing for election tomorrow. Associate Justice Tani Gorre Cantil-Sakauye, currently sitting on the Third District Court of Appeal, is seeking confirmation of her nomination as the new Chief Justice, while Justices Ming W. Chin and Carlos R. Moreno are seeking to retain their existing positions on the Supreme Court. While a terse profile for all three justices is provided in the Voter’s Guide supplied by the Secretary of State, more detailed profiles are available:

California Supreme Court Sets Oral Argument for December 2010

The California Supreme Court has scheduled oral argument in three civil cases for hearing in Los Angeles in December 2007.

  • Cortez v. Abich, which will address the extent of the household domestic service exception to Cal-OHSA (Labor Code section 6300 et seq.) in light of the defendant home owner’s remodeling project, which added a new master bedroom, a new master bath, a new garage in place of a carport, and a new roof. For more details about Cortez, see the Employment – Other update page.
  • Sonic-Calabasas A, Inc. v. Moreno, addresses two issues: (1) Can a mandatory employment arbitration agreement be enforced prior to the conclusion of an administrative proceeding conducted by the Labor Commissioner concerning an employee’s statutory wage claim? (2) Was the Labor Commissioner’s jurisdiction over employee’s statutory wage claim divested by the Federal Arbitration Act under Preston v. Ferrer (2008) __ U.S. __, 128 S.Ct. 978? For more details about Sonic-Calabasas A, Inc., see the Employment – Other update page.
  • California Farm Bureau Fed. v. California State Water Resources Control Bd., which evaluates Water Code § 1525: (1) Does § 1525, which was amended by the Legislature by majority vote in 2003 to impose annual fees on the persons and entities holding permits and licenses issued by the State Water Resources Control Board, impose an invalid tax or a lawful regulatory fee? (2) If §1525 is valid, may the Water Resources Control Board permissibly collect a fee levied on an entity which has sovereign immunity from a person or entity who has a contract with the immune sovereign? (3) If the statutory scheme is valid, but the regulations implementing it are invalid, did the Court of Appeal err in limiting refunds to only those persons and entities filing petitions for reconsideration before the Water Resources Control Board? For more details about California Farm Bureau Fed., see the Taxation & Assessments update page.

 

California Supreme Court To Review the Potential Scope of § 17200 Claims

The Supreme Court has granted review in two civil cases:

  • City of Alhambra v. County of Los Angeles, S185457, in which the Court will address whether a county is barred from taking into account money diverted to a city from the county’s Educational Revenue Augmentation Fund when determining that city’s share of costs incurred by the county in assessing and allocating property taxes. For more details about City of Alhambra, see the Taxation and Assessments update page.
     

 

State Public Utilities Commission Has Exclusive Jurisdiction Over Claims that Utility Unreasonably Destroyed Crops Beneath Power Lines

A public utility, Pacific Gas and Electric Company, owns easements across rural properties traversed by its electric transmission lines.  The easements typically, as here, authorize PG&E to trim vegetation in the vicinity of its power lines to prevent accidental contacts that can cause fires and related damages.  After such a fire caused massive and widespread destruction and power outages in the Northeast and southern Canada in 2003, PG&E and other utilities across the country began trimming more aggressively to prevent, to the extent possible, accidental contacts.  The California Public Utilities Commission had regulated the vegetation management practices of the state’s utilities, establishing minimum (but not maximum) power line clearances.

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The California Supreme Court Schedules Oral Argument For Four Civil Cases

The Court will hear oral argument on four civil cases this November, addressing a variety of issues:

  • Cassel v. Superior Court. (Wasserman, Comden, Casselman & Pearson),S178914: (1) Are the private conversations of an attorney and client for the purpose of mediation entitled to confidentiality under Evid. Code §§1115 through 1128? (2) Is an attorney a "participant" in a mediation such that communications between the attorney and his or her client for purposes of mediation must remain confidential under Evid. Code §§1119(c) and 1122(a)(2)? Oral argument is scheduled for 11/2/10. For more details about Cassell, see the Attorney-Related update page
  • Kwikset Corp. v. Superior Court, S171845: Does a plaintiff’s allegation that he purchased a product in reliance on the product label’s misrepresentation about a characteristic of the product satisfy the requirement for standing under the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) that the plaintiff allege a loss of money or property, or is such a plaintiff unable to allege the required loss of money or property because he obtained the benefit of his bargain by receiving the product in exchange for the payment? Oral argument is scheduled for 11/3/10. For more details about Kwikset, see the Torts & Products update page.
  • In re Enforcement Against Dana Point Safe Harbor Collective of City of Dana Point City Council Subpoena, S180365: Is an order compelling compliance with a legislative subpoena issued under Gov. Code § 37104 appealable as a final judgment? This issue is raised in several consolidated matters after the Court of Appeal issued a series of unpublished orders that the underlying was not an appealable order and could only be challenged by petition for extraordinary writ. Oral argument is scheduled for 11/2/10. For more details about these consolidated matters, see the Appeals & Writs update page.
  • International Assn. of Firefighters v. Public Employee Relations Bd., S172377: (1) Is the decision by the Public Employee Relations Board not to issue an unfair labor practices complaint under the Meyers-Milias-Brown Act (Gov. Code, § 3500 et seq.) subject to judicial review? (2) Is a decision to lay off firefighters for fiscal reasons a matter that is subject to collective bargaining under the Act? Oral argument is scheduled for 11/3/10. For more details about International Assn. of Firefighters, see the Employment -Other update page.
     

 

California Supreme Court To Address Public Forum Doctrine and Nursing Care For Diabetic Students

The Court has recently granted review in two civil cases:

  • Ralphs Grocery v. United Food & Commercial Workers Union, S185544, in which the Court of Appeal, formerly 186 Cal.App.4th 1078, held that the state cannot force the owner or possessor of real property that is not a public forum to give an uninvited group (in this case, a union) access to private property to engage in speech based on the content of the speech, in light of the First and Fourteenth Amendments of the U. S. Constitution. The Supreme Court will also address whether the parking area and walkway in front of the entrance to plaintiff’s retail store, which is part of a larger shopping center, constitute a public forum under Robins v. Pruneyard Shopping Center and its progeny. For more details, see the Civil Rights update page.
  • American Nurses Ass. v. O'Connell, S184583, in which the Court of Appeal, formerly at 185 Cal.App.4th 393, held that current California law does not allow designated voluntary school personnel, who are not licensed nurses, to administer insulin to diabetic students who require the injections under a Section 504 Plan (29 U.S.C. § 794; 34 C.F.R. § 104.1 et seq.) or Individualized Education Program (IEP) (20 U.S.C. § 1414(d)), and affirmed an injunction barring the practice. The Supreme Court will also address whether state law is preempted by federal law requiring equal access to education. For more details, see the Other update page.
     

California Supreme Court's Workload Continues to Increase

The California Supreme Court has released its annual report describing the operations of the Court from 2009 to 2010. The Court issued 105 opinions in this period, 42 of which were in civil cases. However, this does not account for the 30 habeas corpus petitions denied by order, so the court’s workload continues to be dominated by criminal matters. While the total filings with the court increased to 9,917 (from 9,556), the court’s output was reduced from 110 opinions in the prior year, and total dispositions decreased by almost 2%. One factor might have been the mandatory furlough, which decreased total work hours by over 4%. In addition, the last conference of the court was delayed into the next fiscal year to accommodate judicial confirmation hearings. Interestingly, the number of civil petitions for review decreased to 1,219 (from 1,307). This was offset by an increase in criminal filings, particularly habeas corpus petitions in non-capital criminal matters. Depublication orders reached a record low of four, beating the previous record of ten in 2007-2008. This compares to the 1980’s and early 1990’s, in which the court regularly depublished over 100 opinions each year. The Court issued a single publication order.

This follows a report by the AOC Office of Court Research on the fiscal year 2009, which shows that filings in the California Superior Court topped 10 million for the first time, a 7% increase from 2008 and a 20% increase over the last ten years. This reflects an increase in each major category (civil, criminal, family and juvenile) although the largest increase was in civil filings –with unlimited civil filings increasing more than 17% and limited civil filings increasing almost 14%. The increase in unlimited civil filings was largely driven by nontort cases, as the number of tort cases filed only increased by 2%. While data on unlimited filings in incomplete, a similar trend is apparent.
 

This week the California Supreme Court has set three civil matters for oral argument in October

  • Conservatorship of Roy W addresses whether a prevailing party can be denied attorney fees under C.C.P. § 1021.5 because the prevailing party had a significant non-pecuniary personal interest in the outcome of the litigation. For more details on Roy W, see the Attorney-Related update page.
  • Martinez v. Regents of University of California addresses a challenge by out-of-state U.S. citizens regarding the validity under federal law of Education Code § 68130.5, which provides that undocumented aliens are exempt under certain circumstances from paying the nonresident tuition at State University and California Community Colleges which out-of-state U.S. citizens are required to pay. For more details on Martinez, see the Other update page.
     

California Supreme Court Grants Review in Another Preemption Case

The Supreme Court has granted review to again address preemption, this time in the timely area of consumer protection and banking. In Parks v. MBNA American Bank, the Court of Appeal reversed a judgment on the pleadings, finding that Civil Code § 1748.9, a state consumer protection law which mandates specific notice requirements regarding the use of preprinted checks (aka convenience checks) as an advance on credit card accounts, was not preempted by the National Bank Act (12 U.S.C. § 21 et seq.) on its face. For more details about Parks, see the B & P 17200/Class Actions/Commercial update page.

California Supreme Court Rules That an Insured Seeking to Undo a Settlement Agreement with Its Insurer Must Sue for Rescission and Return the Settlement Proceeds

This case arises out of an insured’s claim against its insurer for property damages caused by an earthquake that struck the Los Angeles area in 1984.  After a protracted dispute (during which the insurer made substantial payments) over the value of the claimed damages, and the extent to which they were earthquake-related, the parties entered into a settlement agreement.  The insurer agreed to pay an additional $1.5 million, and the insured executed a standard release by which it waived its right to recover any undiscovered damages and agreed to forbear bringing suit on any and all claims, known or unknown.

Several years later, the insured brought a lawsuit seeking to recover additional damages under the policy.  It argued that it was fraudulently induced into entering into the settlement agreement and that under general contract principles it could elect to affirm the agreement (and thus keep the money it had already received) and sue for damages caused by the alleged fraud.  The trial court, relying on decades of precedent from the Supreme Court and the Court of Appeal, as well as the statutory scheme governing settlements and releases, granted dispositive motions in favor of the insurer.  The authorities, the court said, made clear that a party seeking to undo a settlement agreement must seek rescission and return any monies obtained as consideration for the release.  The Court of Appeal reversed.  Distinguishing the prior authorities on the basis that they involved third-party personal injury claims, rather than first-party breach of contract claims, the court found that public policy supports the rule (followed in several jurisdictions) that a policyholder may affirm, keep the money, and sue, despite having executed a full release.

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California Commission Confirms Judicial Nominations, Including for Chief Justice

The California Commission on Judicial Appointments has unanimously confirmed the nomination of Associate Justice Tani Gorre Cantil-Sakauye, of the Third Appellate District of the Court of Appeal (Sacramento), as the new Chief Justice of California.

In the same session, the Commission also confirmed by unanimous vote: 

Justices Cantil-Sakauye, Codrington and Hill will stand for election in their new positions in the November 2010 election.
 

A Mediator Cannot Confirm the Terms of the Settlement Reached Without a Waiver under California Evidence Code § 703.5

In a case brought to enforce a settlement reached at mediation, a dispute arose about the final terms of the settlement reached. One of the parties offered the declaration of the mediator to confirm the accuracy of the attached agreement. In Radford v. Shehorn, the Second District Court of Appeal held this was inadmissible under Evidence Code § 703.5, which declares that a mediator is incompetent "to testify, in any subsequent civil proceeding, as to any statement, conduct, decision, or ruling, occurring at or in conjunction with the prior proceeding...." The court ruled that this extended to a statement regard the terms of any agreement reached. While the parties can waive this restriction, in Radford the dispute extended to whether the signed waiver was actually part of the agreement. With that in dispute, the mediator remained barred from testifying. Ultimately, this error was found harmless, as a declaration of counsel confirming receipt of the agreement from opposing counsel was found sufficient to identify the final agreement. Note: Radford is consistent with an earlier case, Eisendrath v. Superior Court (2003) 109 Cal.App.4th 351, which barred a party from deposing the mediator in an action to correct the written agreement signed at the mediation.

California Supreme Court Issues Two Opinions - Addressing Collateral Estoppel and Compelling Arbitration of Medical Malpractice Wrongful Death Claims

  • Murray v. Alaska Airlines, Inc. holds that collateral estoppel applies to the administrative findings of a federal agency when those findings were subject to objection and judicial review that was never pursued, resulting in a final nonappealable order based on those findings. The Court found that in a subsequent civil lawsuit, those administrative findings have an issue-preclusive effect against the claimant who failed to challenge those findings and allowed them to become a final order and also failed to take any steps to withdraw his administrative complaint. For more details about Murray, see the Civil Procedure/Evidence/Discovery update page.
  • Ruiz v. Podolsky holds that an arbitration agreement between a patient and treating physician extends to compel the heirs of that patient to arbitrate a wrongful death lawsuit when the agreement so extends by its own terms. The Court found that this result was compelled by C.C.P. § 1295, which by its terms intended to extend the arbitration of medical malpractice allegations to wrongful death claims. For more details about Ruiz, see the ADR update page.
     

No Private Right of Action Under Labor Code § 351 for Claim that Employer Wrongfully Took Tips

Labor Code § 351 bars an employer from collecting any gratuity that is left for an employee. Previous cases have addressed whether various tip pooling systems (i.e. systems which pool gratuities for division among a set of employees) operated by the employer are permitted under Labor Code § 351. Facing a split in the Court of Appeal on the existence of a private cause of action by the employee, the Supreme Court did not address the issue of whether the tip pooling system imposed in Lu v. Hawaiian Garden Casino was permitted. Instead, the Court unanimously ruled that Labor Code § 351 does not authorize a private right of action to sue an employer for allegedly taking gratuities. Finding no statutory language or legislative intent to provide such a remedy, the Court declined to create one. For more details about Lu, see the Employment-Compensation & Benefits update page.

California Supreme Court Grants Review in Three Civil Cases

This week the Supreme Court granted review in three civil cases, covering a variety of issues:

  • Serrano v. Stefan Merli Plastering, in which the Court of Appeal, formerly at 184 Cal.App.4th 178 affirmed the denial of attorney’s fees under C.C.P. § 1021.5, finding that the trial court was within its discretion following Adoption of Joshua S. (2008) 42 Cal.4th 945, on the grounds that plaintiffs were protecting their own interests and only inadvertently triggered a published opinion which may have benefited others. For more details, see the Attorney-Related update page.
  • Retired Employees Assoc. v. County of Orange, in which the Court certified review of the following issue: Whether, as a matter of California law, a California county and its employees can form an implied contract that confers vested rights to health benefits on retired county employees. For more details, see the Employment – Compensation & Benefits update page.

California Supreme Court Clarifies Application of Triple-Penalty For Elder Claims

In Clark v. Superior Court, the Supreme Court considered the claims of elderly plaintiffs under California’s unfair competition law, Business & Professions Code, § 17200 et seq., which sought treble damages under Civil Code § 3345. Under Civil Code § 3345, which is part of the Consumers Legal Remedies Act, the trier of fact is authorized to impose a penalty (i.e. a remedy intended to punish or deter) three times greater than otherwise provided for by the authorizing statute, when considering specified types of conduct regarding claims brought by or on behalf of elderly or disabled persons. If the statute does not provide a specific amount, then the trier of fact is authorized to increase the penalty it would otherwise have imposed, up to triple the original amount. The Court first ruled that § 3345 is not limited to claims brought under the Consumers Legal Remedies Act, but applies as a penalty enhancement for any claim which satisfies the terms of § 3345. However, following this statutory language, only “penalties” are potentially tripled, not compensatory damages. As such, the Court also ruled that § 3345 does not apply to claims brought under Business & Professions Code §17200, et seq., since the only monetary award provided for there is for restitution, which is not a “penalty” by definition. For more details about the Clark case, see the B & P 17200/Class Actions/Commercial update page.

 

The California Supreme Court Holds That Evidentiary Objections on Summary Judgment Aren't Waived Just Because the Trial Court Never Rules

In Reid v. Google, the California Supreme Court addressed and resolved a well-known procedural trap for California attorneys: if you file your objections to your opponent’s evidence on a summary judgment motion, but the trial court never specifically rules on them, are the objections preserved on appeal? The Supreme Court’s answer: “yes.”

In opposing a summary judgment motion, Google made numerous written objections to its opponent’s evidence (175, in fact). The trial court failed to specifically rule on the objections, merely stating that it was “relying only on competent and admissible evidence” pursuant to Biljac. After reviewing the legislative history of C.C.P. § 437c  , the Court found that once an objection is properly made, it is not waived on appeal. If the trial court fails to rule on the objection it is considered overruled and the trial court is presumed to have considered the evidence, but the objection is preserved for appeal.

In doing so, the Supreme Court disapproved: 1) bothAnn M. and Sharon P. to the extent they each hold that the failure of the trial court to rule on objections to summary judgment evidence waives those objections on appeal; 2) Biljac to the extent it permits the trial court to avoid ruling on specific evidentiary objections; and 3) numerous court of appeal decisions which were contrary to this ruling (see footnote 7 of the opinion). For more procedural history of Reid v. Google, see the Summary Judgment update page.
 

California Supreme Court Expands the Liability of Landowners to Recreational Users of the Property

California, like most states, has enacted a statute (Civil Code section 846) which provides that property owners have no duty to maintain their premises in a manner that makes them “safe” for recreational users of the land.  The statute was intended to encourage landowners to make their property available for recreational use without fear of exposure to liability, and California courts have, in a number of cases, read the statute expansively to promote that goal.  One decision, by an intermediate California appellate court (Shipman v. Boething Treeland Farms, Inc., 77 Cal.App.4th 1424 (2000), held that “recreational use immunity” barred a claim by a recreational user that he was injured by the landowner’s negligent operation of a motor vehicle on the property.

In Klein v. United States of America, __Cal.4th__ (July 26, 2010), plaintiff was riding a bicycle on a paved road in a National Forest when he was struck by a vehicle driven by a Park Service employee.  Under governing law, the liability of the United States was controlled by California tort principles.  A lawsuit was brought in federal district court, where summary judgment was granted in favor of the government based upon Shipman and other California authorities applying Section 846.  On appeal, the Ninth Circuit certified to the California Supreme Court the question whether Section 846 immunizes the landowner from negligent activities on the premises, or only from claims arising out of the nature and condition of the property itself.  The Ninth Circuit questioned whether Shipman was correctly decided, suggesting that the reasoning of certain Supreme Court opinions, while not directly on point, questioned its validity.

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Schwarzenegger Nominates Justice Tani Cantil-Sakauye For Chief Justice of the California Supreme Court

Governor Arnold Schwarzenegger has named Associate Justice Tani Cantil-Sakauye of the California Court of Appeal as his choice to replace the retiring Hon. Ronald M. George as Chief Justice of the California Supreme Court.

Governor Schwarzenegger praised Justice Cantil-Sakauye's record in announcing the nomination:

Justice Tani Cantil-Sakauye has a distinguished history of public service and understands that the role of a justice is not to create law, but to independently and fairly interpret and administer the law.

Justice Cantil-Sakauye has served on the Third District Court of Appeal in Sacramento since 2005. Prior to joining the Court of Appeal, she was a superior court judge and earlier a municipal court judge, serving in each position for seven years. Justice Cantil-Sakauye was a deputy district attorney for Sacramento County from 1984 to 1988, before serving for two years in Governor Deukmejian’s administration.

Justice Cantil-Sakauye is a member of the California Judicial Council, where she serves as Vice Chair of the Rules and Projects Committee, chair of the Advisory Committee on Financial Accountability and Efficiency and co-chair of the Judicial Recruitment and Retention Working Group. She has served as a Special Master since 2007, appointed by the Supreme Court to conduct disciplinary proceedings before the Commission on Judicial Performance.

"It is a privilege and a tremendous honor to have the opportunity to serve as Chief Justice of the California Supreme Court," said Justice Cantil-Sakauye. “I deeply respect the inspirational and visionary work of Chief Justice Ronald George and hope to build upon it.”

California Chief Justice Ronald M. George Announces Retirement

California Chief Justice Ronald M. George has announced today that he will be retiring from the Court, effective January 2, 2011. We will have a profile of this great California jurist soon.

The California Supreme Court Further Restricts the Peculiar Risk Doctrine

In Tverberg v. Fillner Construction, Inc., the Supreme Court resolved a conflict in the lower courts by holding that the peculiar risk doctrine does not make a hiring party liable for workplace injuries of an independent contractor or subcontractor. In doing so, the Court departed from the rationale in Privette, holding instead that an independent contractor, unlike an employee, has the ability to determine the manner in which inherently dangerous construction work will be performed, and thus assumes legal responsibility for carrying out the contracted work, including the selection of workplace safety precautions. Having assumed responsibility for workplace safety, an independent contractor is barred from holding a hiring party vicariously liable for injuries resulting from the contractor’s own failure to effectively guard against the inherent risks of the contracted work. As such, the Court reversed, while upholding the result, if not the specific rationale, in Michael v. Denbeste Transp., Inc. (2006) 137 Cal.App.4th 1082. For more Tverberg case history, see theTorts & Products update page.

California Supreme Court Holds To Strict Interpretation Of Anti-Spam Statute

In Kleffman v. Vonage Holdings Corp., the Court addressed a legal question from the Ninth Circuit regarding the application of Business and Professions Code §17529.5(a)(2) to spam e-mails that were being sent from multiple domain names to avoid spam filters. While this statute bars spam which “contains or is accompanied by falsified, misrepresented, or forged header information” in an effort to curtail an explosion of spam traffic, the Court held that merely using multiple domain names did not violate this restriction, making the statute inapplicable unless the e-mail ran afoul of its restriction for some other reason. For more Kleffman case history, see the B & P 17200/Class Actions/Commercial update page.

California Supreme Court Grants Review in Six Civil Cases

Last week the Supreme Court granted review in six civil cases, covering a wide variety of issues:

 

  • Professional Engineers in California Government v. Schwarzenegger, which the Supreme Court transferred on its own motion before the Court of Appeal ruled on the issues raised, in order to expedite review of the Governor’s ability to mandate a furlough program on state employees. See Employment – Compensation & Benefits update.
  • SeaBright Ins. Co. v. U.S. Airways, Inc., which addresses the ability of an injured employee of an independent contractor to hold the hirer of the contractor liable for the breach of statutory or regulatory non-delegable duty. See Torts & Products update.
  • Oasis West Realty, LLC v. Goldman, which addresses counsel’s duty of loyalty to a former client when there is no subsequent representation and the attorney is acting on his or her own behalf. See Attorney-Related update.
  • St. John’s Well Child & Family Center v. Schwarzenegger, which addresses the application of the governor’s line item veto to mid-year bills that reduce appropriations. See Other update.
  • Episcopal Church Cases, in which the court returns to a case already reviewed to address whether the Court of Appeal properly implemented the court’s opinion. See Civil Procedure/Evidence/Discovery update.
     

 

California Supreme Court Rejects Attempt to Expand Definition of Employer

In Martinez, the unanimous California Supreme Court affirmed the rulings of the lower courts by rejecting an attempt by agricultural workers to collect unpaid wages from food distributors who bought produce from that farm. In doing so, the court reviewed the history and jurisdiction of the Industrial Welfare Commission (IWC) and its work orders from 1916 to the present. The Court found that a civil action for unpaid wages authorized by Labor Code section 1194 was properly directed only to employers, and rejected attempts to expand the definition of "employ" as historically used by the IWC. For more Martinez case history, see the Employment-Compensation & Benefits update page.

California Supreme Court Dismisses Hertz Without Review

 

In March 2009, the California Supreme Court granted review in Hertz to address the issue of whether a worker’s inability to participate in vocational rehabilitation due to nonindustrial causes should be apportioned under Labor Code sections 4663 and 4664, as they were amended in 2004 by SB 899. The Court of Appeal had ruled that the statute required apportionment. (see H032438.) Briefing was complete, including several amicus briefs, and the matter was presumably waiting for oral argument. However, the Supreme Court has now dismissed this matter under Cal. Rules of Court, rule 8.528(b). As such, unless the court orders otherwise, the Court of Appeal opinion will remain unpublished

The California Supreme Court Addresses the Commercial Speech Exception to the Anti-SLAPP Statute

In Simpson Strong-Tie Company, Inc., a manufacturer brought suit against an attorney who ran an advertisement regarding possible claims against the manufacturer's products and the trial court granted counsel's anti-SLAPP motion to strike. The California Supreme Court has now affirmed the judgment, holding that: 1) the plaintiff has the burden of proof in demonstrating the application of the commercial speech exception found in C.C.P. § 425.17(c) to anti-SLAPP motions and 2) the subject advertisement by counsel regarding potential claims against specified product manufacturers was not a statement by counsel “consisting of representations of fact about that person’s [i.e., counsel's] or a business competitor’s business operations, goods, or services.” As such, the advertisement did not fall within the commercial speech exception, and the manufacturer’s action was subject to an anti-SLAPP motion to strike. For more information regarding Simpson Strong-Tie Company, Inc., see the Civil Procedure/Evidence/Discovery update.

 

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California Supreme Court 5/12/10 Conference

In its weekly conference, see list of actions, the California Supreme Court granted review in:

  • Jankey v. Lee, in which the Court of Appeal held that the Americans with Disabilities Act does not preempt Civil Code § 55, which entitles the prevailing defendant to attorney's fees upon defeating a claim for injunctive relief under the California Disabled Persons Act. See Attorney-Related update page.
  • Diaz v. Carcamo, in which the Court of Appeal rejected an employer's argument that by conceding its liability under respondeat superior it was shielded from a claim that it was independently negligent in its hiring and retention of that same employee. See Torts & Products update page. In doing so, the Court of Appeal in Diaz distinguished two prior cases which held that an employer is protected from a claim of negligent entrustment upon such a concession. See Armenta v. Churchill (1954) 42 Cal.2d 448 and Jeld-Wen, Inc. v. Superior Court (2005) 131 Cal.App.4th 853.

 

The California Supreme Court Sets A Busy Civil Calendar

The California Supreme Court has scheduled oral argument in seven civil cases, five at the end of May and two in Los Angeles at the beginning of June. These hearings should address a wide variety of issues, including:

  • Do employees have a private right of action against employers who take some of the tips? See the Lu case in the Employment-Compensation & Benefits update.
  • Should CA recognize the "Stray Remarks" Rule in discrimination cases? See the Reid case in the Employment - Other update.
  • Can an insured sue an insurer for fraudulently inducing settlement and seek to avoid the release without returning the money already paid? See the Village Northridge Homeowners Assn. case in the Insurance update.
  • Does an administrative proceeding constitute a “suit” to trigger insurance coverage? See the Ameron Internat. Corp. case in the Insurance update.  
  • Are non-signatory heirs bound by an arbitration agreement signed by the decedent? See the Ruiz case in the ADR update.
  • Does the damages enhancement for actions brought by elderly plaintiffs apply to §17200 actions? See Clark case in the Damages update.
  • Are evidentiary objections not expressly ruled on regarding an MSJ motion preserved for appeal? See the Reid case in the Appeals & Writs update.
  • What is the preclusive effect of the investigatory findings of a federal agency? See the Murray case in the Civil Procedure/Evidence/Discovery update.

These cases represent about 10% of the civil cases currently under review by the Court.

Update: Oral argument in Ameron has been continued to the September 2010 calendar.

 

California State University Whistleblowers Have One Less Hurdle to Jump

In Runyon, the unanimous California Supreme Court ruled that whistleblowers employed with California State University do not have to exhaust their judicial remedies (i.e., petition for a writ of mandate) to bring a suit for damages, so long as they first exhaust their administrative remedies. While this ruling is consistent with previous whistleblower rulings by the high court, it expressly overturns the Court of Appeal opinion in Ohton insofar as it is inconsistent. While not mentioned, this instruction necessarily applies equally to Ohton II , which recently reaffirmed the portion of the original opinion addressed in Runyon. For more Runyon case history, see the Employment-Other update page.

 

Is an Equipment Manufacturer Liable for Injuries Caused by a Defective Replacement Part? Another California Court of Appeal Weighs in

The California Supreme Court, in O'Neil v. Crane Co., No. S177401, is considering the liability of an equipment manufacturer under these circumstances:  The manufacturer sells a product pursuant to the buyer's specifications (say, a valve or pump) that is accompanied by an allegedly defective part (say, an asbestos-containing gasket) made by another, which is incorporated into a much larger and highly complex installation of machinery (say, the propulsion system for a Navy war vessel) designed by the buyer.  Over decades, the gasket is replaced many times during scheduled maintenance.  Eventually a replacement gasket, produced by an unknown third-party supplier, releases asbestos dust that causes injury.  May the original equipment manufacturer be found liable?
 
The first California Court of Appeal decision to address this question was issued by the First Appellate District (Division 1).  Taylor v. Elliott Turbomachinery Co., 171 Cal.App.4th 564 (2009). Taylor found the manufacturer was not liable because:

  • it was not in the chain of distribution of the defective part, and received no profit or other economic benefit from the sale of the part;
  • a manufacturer is not liable for an injury caused by a component part supplied by another unless the manufacturer's product caused or created the risk of harm, and
  • a manufacturer is not liable where it simply produces a product pursuant to the specifications of a buyer who intends to incorporate it into a buyer-designed product unless the manufacturer's part itself caused the injury, which was not the case in Taylor.

The California Supreme Court declined  review.
 
Seven months after Taylor was decided, the Second District (Division 5) of the Court of Appeal handed down O'Neil v. Crane Co., 99 Cal.Rptr.3d 533 (2009).  O'Neil expressly rejected the holding and analysis of Taylor under analytically indistinguishable facts, concluding that the original product manufacturer may be liable on the theory that the pumps and valves were designed to be used in conjunction with asbestos-containing parts, and the foreseeable use of the product required maintenance which included periodic replacement and disturbance of parts containing asbestos.  If this foreseeable use caused injury, the court found, the manufacturer may be liable for that injury under established California law.  The Supreme Court granted the manufacturer's petition for review.
 
Shortly after O'Neil was decided, and before the Supreme Court granted review, another division (Division 3) of the Second District, in a published opinion, followed Taylor and ignored O'Neil in Merrill v. Leslie Controls, 101 Cal.Rptr.3d 614 (2009).  The Supreme Court issued a "grant and hold" in Merrill (that is, the court granted review and deferred briefing until O'Neil is decided).  Three months later, Division 2 of the Second District decided Hall v. Warren Pumps LLC, 2010 WL 528489 (unpublished) (2010), which also followed the reasoning and holding of Taylor.  A petition for review of Hall is pending, and undoubtedly the Supreme Court will issue a grant and hold in that matter as well.
 
Now yet another division of the Court of Appeal (Second District, Division 4) has expressed its views on the issue.  In a published opinion (Walton v. The William Powell Co., __ Cal.App.4th __, 2010 WL 1612209) the court explicitly adopted the analysis, conclusions, and holdings of Taylor while declining to address O'Neil or its reasoning in light of the Supreme Court's grant of review.  That the court decided to publish its views while breaking no ground not covered by Merrill suggests that is strongly wished its voice to be clearly heard while the Supreme Court is considering the question.  The Supreme Court will unquestionably issue a grant and hold in Walton; however, for those keeping score the number of justices voting for the Taylor view now stands at twelve, while there are three who support O'Neil.  The votes of the justices who will put the issue to rest is expected in the first half of 2011.

The California Supreme Court Limits Scope of Arbitration Awards

In Pearson Dental Supplies, Inc. v. Sup. Ct., the court considered an arbitrator’s decision, pursuant to a mandatory arbitration agreement, that an employee’s discrimination claim was time barred. Since by failing to apply the tolling statute CCP § 1281.12, the arbitrator had committed “a clear error of law” which would deprive the employee of any review on the merits “of an unwaivable statutory employment claim,” the California Supreme Court ruled that the trial court could vacate the award. At the same time, the Court rejected an argument to strike down the arbitration agreement as a whole because it barred access to administrative remedies and set a one year limitations period. In concluding that it was “reasonably susceptible to a lawful interpretation,” the Court interpreted the restriction on administrative remedies as affecting only adjudicative agencies, such as the Labor Commissioner, while not affecting prosecutory agencies, such as the FEHA. For more case history, see the ADR update page.

California Supreme Court 4/21/10 Conference

 

In conference Wednesday (see list of actions), the Court granted review in Save the Plastic Bag Coalition v. City of Manhattan Beach, in which the Court of Appeal upheld vacating a city ordinance banning the use of plastic bags because an environmental impact report was not prepared. See the Environmental update page. In addition, the Court granted review in Harris v. City of Santa Monica, in which the Court of Appeal reversed a plaintiff’s judgment for discrimination because the trial court had failed to give an instruction on mixed motives for her discharge. See Employment – Other update page. In a previous action outside of the weekly conference, the Court asked for additional briefing in Reid v. Google addressing exactly how a party can preserve evidentiary objections so that they are “made at the hearing.” See the Civil Procedure/Evidence/Discovery update page.
 

California Court of Appeal Takes A Further Step Toward Reining In Unfair Competition Law

California’s Unfair Competition Act has generated an enormous amount of litigation, and has long been a target of tort reform groups. Those reform efforts met with an important success in 2004, when the voters approved Proposition 64, finding that the statute had been “misused by some private attorneys” to file “frivolous lawsuits as a means of generating attorney’s fees.” Proposition 64 significantly tightened standing requirements for private enforcement suits based on the UCL.

Earlier this week, the Fourth District of the California Court of Appeal filed an important decision strengthening the arsenal of weapons available to defense counsel defending UCL suits.

Durell v. Sharp Healthcare [pdf] was a putative class action alleging violations of the UCL, the Consumer Legal Remedies Act, and various common law claims. Plaintiff had been a patient in the defendant’s emergency room several times, and he alleged that the defendant had engaged in deceptive and unfair practices by billing uninsured patients such as plaintiff its full standard rates, while accepting sharply reduced payments for Medicare and privately insured patients.

The UCL prohibits “unlawful, unfair or fraudulent” business acts. In 2009, the state Supreme Court held in In re Tobacco II Cases that Prop 64 meant that a plaintiff must show actual reliance on any supposed misrepresentation to plead a “fraudulent” act. The first question for the Court in Durell was whether Tobacco II applied equally to the “unlawful” prong of the statute.

The court unequivocally held that it did:

A consumer’s burden of pleading causation in a UCL action should hinge on the nature of the alleged wrongdoing rather than the specific prong of the UCL the consumer invokes.

But the court went even further. In Cel-Tech Communications, the state Supreme Court held that a competitor’s claim of an “unfair” act had to be tethered to an incipient violation of an antitrust law, or a comparable statute aimed at protecting competition. Since then, the districts of the Court of Appeal have been divided as to whether Cel-Tech applied to consumer actions. Durell came down firmly on the side of applying the restrictive Cel-Tech test to plaintiff’s action, a test he came nowhere near meeting. Plaintiff’s failure to plead causation was similarly fatal to his claim under the Consumer Legal Remedies Act.

Durell is an important reaffirmation of the voters’ will in Prop 64, and the message for the defense bar is clear: when defending a UCL case based on a purported misrepresentation, always begin by carefully studying plaintiff’s allegations of reliance.

Taxpayer Action Draws Significant Amicus Interest

Demonstrating the potential significance and broad implications of the California Supreme Court's deliberations in Loeffler v. Target Corporation, so far a total of nine amicus briefs have been filed on behalf of sixteen entities addressing the issue of whether a taxpayer can directly bring suit against a retailer who allegedly charged a sales tax on transactions that were not taxable. The concerned entities unwilling to wait on the sidelines range from consumer groups and taxpayer advocates to statewide and national retailers, as well as the California Attorney General and the California State Board of Equalization. Some of these had also filed briefs with the Court of Appeal, which barred the taxpayer claim.

California Supreme Court 4/14/10 Conference

In conference today (see list of actions), the Court granted review in Brown v. Mortensen, in which the Court of Appeal found that the Fair Credit Reporting Act preempted the restrictions imposed by the Confidentiality of Medical Information Act.  See B & P 17200/Class Actions/Commercial update page.  In addition, the Court also requested supplemental briefing in Murray v. Alaska Airlines, Inc. regarding the application, if any, its decision in McDonald v. Antelope Valley Community College Dist. (2008) 45 Cal.4th 88. See Civil Procedure/Evidence/Discovery update page.

New California Bill Would Cap Punitive Damages at Three Times Compensatories, Outright Bar Punitives Retroactively in Product-Warning Cases

CAPPING AT THREE.  AB2740, a new version of an old bill pending in the California State Legislature, would cap the amount of punitive damages available in California to a flat three times the jury’s award of compensatory damagesAB2740 The previous version died in Committee.  The new iteration (tacked onto a National Guard bill, of all things) was alive and well as of late March, 2010.
 

  • Should the measure pass, California would fall in step with many other States that impose some type of ceiling on punitive damages, whether flat-out monetary caps, caps keyed to a multiple of compensatory damages, caps based on defendant’s wealth or the nature of the act, the type of action (e.g., medical malpractice) or some combination, including: Alaska, Arkansas, Alabama, Colorado, Florida, Georgia, Idaho, Indiana, Kansas, Mississippi, Montana, North Carolina, North Dakota, New Jersey, Nevada, Oklahoma, and Texas.  That isn’t a comprehensive list, nor can AppellateStrategist list all the wrinkles and permutations in this post.  But the point is clear.  There’s a growing movement afoot to impose a bright line on the imposition of punitives, thereby streamlining or eliminating the current multipart constitutionality analysis mandated by State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, and BMW of North America, Inc. v. Gore (1996) 517 U.S. 559.


PRODUCT WARNING CASES.  AB2740 would also bar punitive damages in products cases if the warning accompanying the product was “either approved by, or in material compliance with,” a statute, or the standards, rules, regulations or requirements of the federal or state agency responsible for “regulating, evaluating, or approving the product.”  Should the bill pass, it would apply to every products-warning “case pending on or after the date of enactment regardless of when the case was filed.”

The sole exception is that the bar would not apply if plaintiff proves by clear and convincing evidence that defendant intentionally withheld or intentionally misrepresented information it was required to submit to the agency at any time, and the withholding or misrepresentation of that information was causally related to the injury or harm alleged.

AppellateStrategist will monitor the bill, and provide regular updates.  Stay tuned.

"Cutting-Edge" Law: Another California Court Trims a 7-Figure Punitive Damages Award Down to Size

Add yet another appellate opinion to the growing list of California courts that have cut punitive damage awards on constitutional excessiveness grounds. In this one, Amerigraphics, the jury awarded $3 million in punitive damages in an insurance bad faith case.  The trial court cut that number  to $1.7 million, but according to the California Court of Appeal (Second District, Division 2), that was not enough.  The constitutionally-permissible maximum was $500,000. 

At the risk of looking a gift horse in the mouth, the case is a mixed bag for insurer defendants.

One of the principal questions in deciding excessiveness is how bad – “reprehensible” -  the defendant’s conduct was.  That is determined under a scale of relative reprehensibility.  The theory is simple: relatively speaking, some acts and harms are worse, and therefore more deserving of punishment, than others.  For example:

1. Defendants who are repeat offenders – who have committed the act before – need a bigger punishment to discourage them from repetition, to get the message across.

Amerigraphics rejected the notion that an insurer which commits multiple acts in the handling of a single claim for benefits can be viewed as a “repeat offender.”  Though the insurer’s

“conduct could  be characterized as more than a single isolated incident, as the evidence showed several discrete acts of misconduct involving Amerigraphics’s claim for coverage under various policy provisions, the conduct at issue ultimately involved only one insured and one claim. There was no evidence presented that [the insurer] acted similarly toward other insureds in similar circumstances.”   (Emphasis added.)

More authority for the “one claim, one punishment rule.”  That’s as it should be.  Any act – such as the denial of a single claim for benefits – could theoretically be broken down into a series of smaller “sub-acts.” That doesn’t mean the punishment should be multiplied by the number of sub-acts.  (See also Walker v. Farmers Ins. Exch. (2007) 153 Cal.App.4th 965, 975; 63 Cal. Rptr. 3d 507)  Courts should not be in the business of finding ways to maximize a plaintiff’s punitive award.  By definition, in the constitutionality jurisprudence, the plaintiff is made whole by the compensatory award;  the punitive award punishes the defendant; it does not compensate the plaintiff for the injury.

2. Physical harm is worse than economic harm, but, relatively speaking, a defendant who causes economic injury to a financially vulnerable plaintiff deserves more punishment.  

Amerigraphics suggested that the very nature of the insurance relationship means that insureds will qualify as “financially vulnerable.”  The court relied on the “unique” nature of the relationship: insureds purchase policies “precisely to buy peace of mind and security.” Therefore, an insured is “not on equal footing . . . .” with its insurer.  That may have been true in the Amerigraphics case, which involved a small insured put out of business by the carrier’s claims handling, but it does not apply across the board, nor should it.  When, e.g., the insured is a large corporation with an insurance claim, the parties are on relatively equal footing.  The concept of financial vulnerability is not automatically satisfied merely because this is an insurance relationship.  Example in point: Slottow v. Amer. Cas. Co. of Reading, Pa. (9th Cir. 1993) 10 F.3d 1355, 1362 (applying Calif. law.)

California Supreme Court: Is The Economic Crisis Having An Effect On The State's Highest Court?

Statistics show that the number of civil cases accepted for review by California’s highest court has varied dramatically in recent years, but by any count, the numbers are still small.

According to a report released by the State’s Administrative Office of the Courts, for the year 2008, the California Supreme Court granted 6% of all civil petitions for review, down from 8% the previous year (2007) but up from the mere 3% granted in 2006

For 2008, out of a total of 5,989 civil petitions, the court
• denied just over 5,400
• outright granted 82
• granted and held 210
• granted and transferred 51 back to the intermediate court of appeal. 

These numbers may seem exceedingly low, but consider that many litigants just don’t understand the court’s limited function in reviewing decisions of the lower courts.  Review by the California Supreme Court is discretionary.  As a judicial policy maker, the court typically accepts only those issues that may affect other litigants or when necessary to resolve a conflict in the published decisions.  But many litigants do not understand this unique function, choosing to seek review even when they cannot satisfy these special requirements.  Thus, a great many petitions are denied out of hand.

Maximizing the chances for review:  read and comply with the court’s special requirements.  Follow the rules.  List the issue presented first, followed by an explanation of why this case deserves to be one of the select few that should make the cut.  The petition for review is less a legal document, explaining why the petitioner should win under the law, than it is a persuasive plea on why the court should hear the case.

Innocent Blood: California Style. May the "Innocent" Insured Recover Despite a Coinsured's Intentional, Excluded Act?

The problem of coverage for the so-called "innocent insured" is a recurring one.  The issue arises when there is more than one insured on the policy and one commits an act that would bar coverage.  Does that act bar coverage for all, or only for the intentional actor?  In California, this problem has reared its head again, or, more accurately, two heads, in the form of two cases the state Supreme Court has agreed to hear and decide.  One presents the issue in the context of property coverage, the other as whether there is a duty to defend the non-actor insured under a liability policy.

  • Century National Ins. Co. v. Garcia, S179252, rev. gr. 3/17/10.  The state Supreme Court just granted review last week.  At issue is whether an insurer may enforce an exclusion in a fire policy that denies coverage to "innocent insureds" for damages from a fire intentionally caused by a coinsured.  The gist of the insured's argument is that California Insurance Code Section 2071 mandates the language of fire policies, and it couches the intentional acts exclusion in terms of "the insured."  Century National's policy barred coverage for all when any insured acted intentionally.  Garcia asks whether insurers may deviate from the statute's prescribed language, and to what extent.
     
  • Minkler v. Safeco Ins. Co., S174106, question certified 8/12/10.  Minkler, now fully briefed, asks whether the severability clause in a liability insurance policy can trump an intentional acts exclusion which prohibits coverage for all insureds when "an insured" -- i.e., any insured -- has committed an excluded intentional act.  In Minkler, one insured committed child sex abuse.  The victim sued not only the abuser but his mother, also an insured, for negligently-supervising her adult son.  The victim and insured in Minkler argue that the severability clause creates separate insurance policies, and therefore, an "innocent" insured sued for negligently-supervising the intentional actor is entitled to a defense.  Their theory is that because there supposedly are "separate" policies, the only intent that is relevant is that of the mother, who never committed an intentional act.  The insurer, by contrast, contends that the severability clause was never designed to rewrite the plain language of the exclusions.  The insurer is represented by Appellate Strategist lawyers.

Two New Features on The Appellate Strategist

The Appellate Strategist was the first blog to offer a comprehensive, regularly-updated database of civil issues -- broken down by category and subject matter -- that the California Supreme Court has agreed to hear and decide.

We are proud to announce two new features.

  1. Since this "preview of coming attractions" has been one of our most popular features, we have expanded our reach to track and report on civil issues pending before the Texas Supreme Court and the Illinois Supreme Court.
     
  2. In the coming months, we will be adding Florida, New York and New Jersey to our coverage of state Supreme Courts. 

We welcome your comments.

The Coito Decision Questions Nacht and Puts the Scope of California Work Product Protection in Question

 

Nacht & Lewis Architects, Inc. v. Superior Court may be the most widely cited case in California.  It seems to appear in most responses to Form Interrogatory Nos. 12.2 and 12.3 to justify refusing to produce recorded interviews of witnesses, any resulting attorney notes, or a list of interviewed witnesses.  Now those numerous discovery responses may be in question.  In Coito v. Superior Court, [pdf] California's Fifth District Court of Appeal considered and rejected Nacht, holding in a divided decision that attorney notes from witness interviews and the list of those interviewed will often be discoverable. 

These conflicting decisions leave two crucial questions unresolved. 1) Do the questions asked by counsel in an interview reveal counsel’s impressions, conclusions, opinions, or theories?  2) Does the selection of who to interview reveal the same?  Coito says not usually to both, Nacht says yes.  Given the frequency in which these issues arise, the state Supreme Court may be asked to intervene to clarify the issue and provide clear guidelines for California litigators and overworked trial courts.

California Appellate Court End-Runs Moradi-Shalal

The California Court of Appeal has issued an opinion which, if allowed to stand, threatens to eat away at the once-settled body of law that prohibits third-party claimants who were injured by an insured from suing the insured's insurance company for unfair claims settlement practices under California Insurance Code § 790.03.  Over 20 years ago, the State Supreme Court held that only the State's Insurance Commissioner may pursue insurers for improper settlement practices under that statute; § 790.03 does not grant either insureds or third-party claimants the right to sue insurers for violating the statute's prohibitions.  (Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287.)

But the new opinion -- from the intermediate appellate court -- would create a loophole that could accommodate a whole fleet of trucks.  (Zhang v. Superior Court (2009) 178 Cal.App.4th 1081.)  According to Zhang, if plaintiff's allegations are not limited to unfair claims handling, but also include "specific" allegations that the insurer "made fraudulent misrepresentations and promulgated misleading advertising" -- i.e., it never intended to pay covered claims -- the complaint will survive the insurer's demurrer challenge.  However, to prevail, plaintiff would be required to prove the insurer made false representations to the public and that the insurer had a policy that was inconsistent with these representations.

Zhang candidly acknowledged it disagreed with a prior opinion which held squarely to the contrary.  (Textron Financial Corp. v. National Union Fire Ins. Co. (2004) 118 Cal.App.4th 1061.)  The conflict in the published opinions of the intermediate appellate courts makes Zhang a prime candidate for review by the California Supreme Court.  Indeed, the high court extended its time to rule on the insurer's Petition for Review until March 9.  (Ptn. for Review filed 12/09/09, No. S18542.)

Zhang is a troubling opinion, and Appellate Strategist urges interested parties to support the insurer's petition.  It is easy enough to allege a policy or practice.  Under this decision, that alone is sufficient to defeat the insurer's demurrer against what should have been a stillborn claim.  The value of Moradi-Shalal is that it deals an immediate fatal blow, saving defendants the time and expense of discovery and trial on allegations a plaintiff cannot possibly prove.  If Zhang survives, the insurer cannot defeat the suit short of a motion for summary judgment, and perhaps not even then.

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California, As Usual, Is First To Decide: 2003 Medicare Act Preempts Enrollee's State Law Claims Against Healthcare Service Plan

In 2003, Congress enacted the latest version of the Medicare Act.  It contained far broader language than previous versions on what State law claims it preempted: “The standards established under this part shall supersede any State law or regulation (other than State licensing laws or State laws relating to plan solvency) with respect to MA [Medicare Advantage] plans which are offered  by MA organizations under this part.” (42 U.S.C. § 1395w-26(b)(3).) 

The scope and meaning of this new preemption language is being litigated around the country, but as yet precious few cases have made their way through the appellate courts.  One that has comes out of California.  In Yarick v. PacifiCare of California (2009) 179 Cal. App. 4th 1158, the State’s intermediate Court of Appeal held the 2003 Act expressly preempted the enrollee’s statutorily-based state causes of action, and impliedly preempted state common law claims.  Yarick also rejected plaintiffs’ argument that the licensing exception within the Medicare Act's preemption clause could save the claims. Months before, the Ninth Circuit Court of Appeals had reached a similar conclusion, but then granted rehearing.  (Uhm v. Humana, Inc. (9th Cir. Docket No. 06-35672).  Since a grant of rehearing vacates a published opinion, the score rolled back to zero. 

Now the score is back to Plans: 1; enrollees: 0.  As of this writing, Yarick is the only published appellate case anywhere in the country to address the preemption defense on the merits. (Previously, the Eleventh Circuit Court of Appeals rejected an argument that the Medicare Act completely preempted state law claims to afford federal court's subject matter jurisdiction. (Dial v. Healthspring of Alabama, Inc. (11th Cir. 2008) 541 F.3d 1044).)    This is an important and recurring issue, and we haven’t heard the last of it.  Expect to see all manner of decisions on this hot-button question from courts around the country.  As those opinions come down, Appellate Strategist will report on them, and provide a running total  box score.

Money for Nothing: Can You Collect for Expenses Nobody Will Ever Pay?

Can a California trial court reduce a personal injury plaintiff's recovery for medical expenses to reflect the amount actually paid by his health insurer?  That question matters a lot to attorneys, parties and insurers, trying to value claims and where appropriate, seek settlements in thousands of cases every day.

For twenty years, the answer under California law was "yes," as held in Hanif v. Housing Authority (1988) 200 Cal.App.3d 635 and Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298.  In November, California's Fourth District Court of Appeal held that the answer was "no."  Howell v. Hamilton Meats & Provisions, Inc. [pdf] (2009) 179 Cal.App.4th 686.

On March 10, 2010, the California Supreme Court agreed to review Howell and resolve the conflict.  By virtue of the Court's order, Howell is automatically depublished and non-citable, making Hanif and Nishihama the only precedent on this important question until the Supreme Court speaks in Howell.

California Supreme Court Update Re Pending Cases

The California Supreme Court's website is a veritable goldmine of information. Unfortunately, it's not organized in a way that allows lawyers and clients to easily track issues the court has accepted for decision. We were the first site to regularly provide comprehensive and up to date information on all civil cases.  The Appellate Strategist has organized the pending issues according to subject matter. We will update periodically, as new reviews are granted, or opinions issue on old ones. Hope it's useful. (Updated through 10/3/14)

 

California Supreme Court Provides New Guidance to Courts Making "Choice-of-Law"

Today, in a widely anticipated decision, the California Supreme Court held that California's interest in protecting a current resident does not trump another state's interest in having its laws applied. This occurred in the context of an asbestos case. The defendant's conduct occurred in Oklahoma, at a time when plaintiff was present in and a resident of that state, and Oklahoma has its own substantive law - that differs from California's - governing the defendant's potential liability for its Oklahoma acts. (McCann v. Foster Wheeler LLC S162435). This decision should limit forum shopping and prevent California from becoming a litigation magnet for plaintiffs who seek to sue for injuries that might otherwise be time-barred.

Terry McCann was an Oklahoma resident in the 1950s. He claimed he was exposed to asbestos from a Foster Wheeler generator at a refinery in Tulsa in 1957. After his alleged exposure, he moved to California in 1975. He was diagnosed with mesothelioma in 2005. He filed suit against Foster Wheeler in California state court.

Oklahoma has a 10-year statute of repose applicable to McCann's claim, which would bar McCann's lawsuit had he filed it in Oklahoma. However, McCann's suit was timely if measured by California's statute of limitations.

Foster Wheeler sought summary judgment, arguing that the timeliness of the action should be governed by Oklahoma law, rather than California law, and that under Oklahoma law McCann's cause of action against Foster Wheeler was barred by Oklahoma's statue of repose. The trial court agreed, finding that Oklahoma law governed the action, and McCann's claims were barred. The Court of Appeal reversed, concluding that McCann's residence in California at the time of his diagnosis trumped Oklahoma's interest in limiting liability embodied by its statute of repose.

The California Supreme Court disagreed: California's interest in affording a remedy to a current resident was insufficient to justify the choice of forum law over the law of another much more significantly involved jurisdiction.

California Supreme Court Civil Issues Pending: Summary Judgment

[UPDATED THROUGH SEPTEMBER 7, 2010]

 

California Supreme Court Civil Issues Pending: Other

[UPDATED THROUGH SEPTEMBER 10, 2014]

Do Court Rules Conflict With Welfare & Instit. Code Re Application of Indian Child Welfare Act? After the Court of Appeal found that Rules of Court could not change the statutory definition of Indian Children, the Court granted review on the following issue: Do rules 5.482(c) and 5.484(c)(2) of the California Rules of Court conflict with Welfare and Institutions Code § 224.1(a), by requiring the juvenile court to apply the provision of the Indian Child Welfare Act (25 U.S.C. § 1901 et seq.) to a child found by a tribe to be eligible for tribal membership if the child has not yet obtained formal enrollment? In re Abbigail A., S220187 (opinion below C074264, formerly 226 Cal.App.4th 1450. Review granted 9/10/14.

Does Tribal Sovereign Immunity Apply if Daily Operations Are Contracted Out to a Third Party? After the Court of Appeal affirmed the judgment in a civil action, the Court granted review on the following issue: Is a payday loan company owned by a federally recognized Indian tribe entitled to tribal sovereign immunity, and thus exempt from state regulation, if the day-to-day management of the business is handled by a third party management company that is not affiliated with the tribe and pays the tribe a small percentage of the gross revenues? People v. Miami National Enterprises, S216878 (opinion below B242644, formerly 223 Cal.App.4th 21). Review granted on 5/21/14.

Can a Couple be “Separate and Apart” While Sharing a Residence? After the Court of Appeal affirmed the order below, the Court limited review to the following issue: For the purpose of establishing the date of separation under Family Code § 771, may a couple be “living separate and apart” when they reside in the same residence? In re Marriage of Davis, S215050 (opinion below A136858, formally 220 Cal.App.4th 1109). Review granted 2/12/14

What Are a School District’s Obligations to a Charter School? After the Court of Appeal reversed the trial court, the Court granted review on the following issue: Did the Court of Appeal adopt an incorrect methodology for determining what facilities a school district is required to afford to a charter school in accordance with Education Code § 47614? California Charter Schools Assn. v. Los Angeles Unified School Dist., S208611 (opinion below B242601, formerly 212 Cal.App.4th 689). Review was granted on 4/17/13.

Should Extrinsic Evidence Be Allowed To Correct Drafting Errors in a Will?  Should the “four corners” rule (see Estate of Barnes (1965) 63 Cal.2d 580) be reconsidered in order to permit drafting errors in a will to be reformed consistent with clear and convincing extrinsic evidence of the decedent’s intent? Estate of Duke, S199435 (opinion below B227954, formerly 201 Cal.App.4th 599), review granted 3/21/12.  Update 9/11/13: Oral argument scheduled for 10/10/13.

 

California Supreme Court Civil Issues Pending: Taxation and Assessments

[UPDATED THROUGH SEPTEMBER 10, 2014]

What Taxes Must be Paid for Standing to Bring a Taxpayer Waste Action?
The Court granted review on the following issue: Must a plaintiff have paid or be liable to pay a property tax to a government entity in order to bring a taxpayer waste action against that entity under C.C.P. § 526a, or can the payment of other taxes confer standing? Wheatherford v. City of San Rafael, S219567 (opinion below A138949, formerly 226 Cal.App.4th 460). Review was granted on 9/10/14.

Can the Legislature Ask the Public for its Opinion? In an original proceeding the Court issued an order to show cause directing the parties to show cause why the relief prayed for in the petition for writ of mandate should not be granted. This case involves the validity of proposed Proposition 49 for the November 2014 General Election – specifically, whether the Legislature had the authority to place a non-binding measure on the ballot seeking the views of the electorate. Howard Jarvis Taxpayers Assn. v. Bowen, S220289. The order was issued 8/11/14.

How Does Use of Online Travel Company Affect Tax on Hotel Rentals? The Court granted review on the following issue: When a customer books a hotel room through an online travel company, should the occupancy tax levied on the rent charged by the hotel be calculated based on the retail rate paid by the customer to obtain the right to use the room or on the wholesale amount that the hotel receives from the online travel company after that company has deducted its markup and fees? In re Transient Occupancy Tax Cases, S218400 (opinion below B243800, formerly 225 Cal.App.4th 56). Review was granted 7/30/14.

Can the PUC Regulate Municipal User Fees? In this original proceeding, the Court granted review on the following issue: Does the Public Utilities Commission have the authority to review and regulate a user fee imposed by a local government entity that is collected through the bills of a regulated public utility? Monterey Peninsula Water Dist. v. Public Utilities Com., S208838. Review was granted 6/26/13.

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.




 

California Supreme Court Civil Issues Pending: Civil Rights

[UPDATED THROUGH OCTOBER 3, 2014]

What Privacy Interest Do Patients Have in Controlled Substance Prescription Data?
After the Court of Appeal found no violation of privacy rights, the Court granted review of the following issues: (1) Do a physician’s patients have a protected privacy interest in the controlled substance prescription data collected and submitted to the California Department of Justice under Health and Safety Code § 11165? (2) If so, is disclosure of such data to the Medical Board of California justified by a compelling state interest? Lewis v. Superior Court, S219811 (opinion below B252032, formerly 226 Cal.App.4th 933). Review was granted on 9/17/14.

Can the Legislature Ask the Public for its Opinion? In an original proceeding the Court issued an order to show cause directing the parties to show cause why the relief prayed for in the petition for writ of mandate should not be granted. This case involves the validity of proposed Proposition 49 for the November 2014 General Election – specifically, whether the Legislature had the authority to place a non-binding measure on the ballot seeking the views of the electorate. Howard Jarvis Taxpayers Assn. v. Bowen, S220289. The order was issued 8/11/14.

When Do Testing Activities Constitute a Taking Which Allows the Application of Precondemnation Entry Statutes? After the Court of Appeal affirmed in part and reversed in part an order granting a petition for precondemnation entry, the Court limited review to the following issues: (1) Do the geological testing activities proposed by the Dept. of Water Resources constitute a taking? (2) Do the environmental testing activities set forth in the 2/22/11, entry order constitute a taking? (3) If so, do the precondemnation entry statutes (CCP §§ 1245.010-1245.060) provide a constitutionally valid eminent domain proceeding for the taking? Property Reserve v. Superior Court, S217738 (opinion below C067758, formerly 224 Cal.App.4th 828). Review was granted on 6/25/14.

Are Outside Communications by Public Employees Still “Public Records”? After the Court of Appeal granted a petition for peremptory writ of mandate, the Court granted review on the following issue: Are written communications pertaining to city business, including email and text messages, which (a) are sent or received by public officials and employees on their private electronic devices using their private accounts, (b) are not stored on city servers, and (c) are not directly accessible by the city, “public records” within the meaning of the California Public Records Act? City of San Jose v. Superior Court, S218066 (opinion below H039498, formerly 225 Cal.App.4th 75, as modified). Review was granted on 6/25/14.

Are Websites “Places of Public Accommodation” under Discrimination Laws?
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: The California Disabled Persons Act, Cal. Civ. Code §§ 54 et seq. (“DPA”) provides that “[i]ndividuals with disabilities shall be entitled to full and equal access, as other members of the general public, to accommodations, advantages, facilities . . . and privileges of . . . places of public accommodation . . . and other places to which the general public is invited.” Id. § 54.1(a)(1). Does the DPA’s reference to “places of public accommodation” include web sites, which are non-physical places? Greater Los Angeles Agency on Deafness v. Cable News Network, S216351 (9th Cir. Order, Case No. No. 12-15807, is here.) Certification was granted on 3/26/14.

Is a Supervisor’s Log a Personnel File? After the Court of Appeal reversed the judgment in an action for writ of administrative mandate, the Court granted review on the following issue: Did a daily log about firefighters, which was maintained by a supervisor and used by the supervisor to prepare annual performance evaluations, qualify under the Firefighters Procedural Bill of Rights Act (Gov. Code, § 3250 et seq.) as a personnel file and/or as a file used for personnel purposes? Poole v. Orange County Fire Authority, S215300 (opinion below G047691, G047850, formerly 221 Cal.App.4th 155). Review granted 2/26/14.

Can Public Accessibility Regarding Citations Issued To Long Term Care Facilities Be Reconciled with Statutory Confidentiality Requirements? After the Court of Appeal issued a preemptory writ of mandate, the Court granted review on the following issue: In the context of a request under the Public Records Act (Gov. Code, § 6250) for citations issued by the Dept. of Public Health to state facilities housing the mentally ill and the developmentally disabled, can the public accessibility provisions for citations issued under the Long-Term Care Act (Health & Saf. Code, §1417 et seq.) be reconciled with the confidentiality provisions of the Lanterman-Petris-Short Act (Welf. & Inst. Code, § 5000 et seq.) and the Lanterman Developmental Disabilities Services Act (Welf. & Inst. Code, § 4500 et seq.), and, if so, how? State Dept. of Public Health v. Superior Court, S214679, (opinion below C072325, formerly 219 Cal.App.4th 966, as modified). Review granted 1/29/14.

Should a Potential Dedication Requirement Affect an Eminent Domain Case? The Court granted review on the following issues: (1) In this eminent domain case, was the constitutionality of the dedication requirement — that the city claimed it would have required in order to grant the property owner permission to put the property to a higher use — a question that had to be resolved by the jury pursuant to article I, section 19, of the California Constitution? (2) Was the dedication requirement a “project effect” that the eminent domain law required to be ignored in determining just compensation? City of Perris v. Stamper S213468 (opinion below E053395, formerly 218 Cal.App.4th 1104). Review granted on 11/13/13.

Does Law Enforcement Have a Mandatory Duty to Report Suspected Child Abuse?
The Court granted review on the following issues: (1) Does Penal Code § 11166(k) , create a mandatory duty requiring a law enforcement agency to cross-report to the relevant social services agency whenever it receives a report of known or suspected child abuse? (2) If so, when is that duty triggered? (3) Does Penal Code §11166(a), apply to law enforcement agencies that receive initial reports of child abuse? (4) If so, what standard should be applied to determine whether a follow-up report is required? B.H. v. County of San Bernardino, S213066 (opinion below E054516, nonpublished). Review granted on 11/13/13.

Is the Employer’s Honest Belief That the Employee Was Violating Medical Leave Policy a Defense Under the Family Rights Act? After the Court of Appeal reversed a decision to vacate an arbitration award, the Court granted review on the following issues: (1) Is an employer’s honest belief that an employee was violating company policy or abusing medical leave a complete defense to the employee’s claim that the employer violated the Moore-Brown-Roberti Family Rights Act (Gov. Code §§ 12945.1, 12945.2)? (2) Was the decision below to vacate the arbitration award in the employer’s favor consistent with the limited judicial review of arbitration awards? Richey v. Autonation, Inc., S207536 (opinion below B234711, formerly 210 Cal.App.4th 1516, as modified 211 Cal.App.4th 701b). Review was granted on 2/13/13.  Update 10/3/14: Oral argument scheduled for 11/3/14.

California Supreme Court Civil Issues Pending: Environmental

[UPDATED THROUGH OCTOBER 1, 2014]

What Is the Scope of Review Under CEQA? After the Court of Appeal reversed judgment for the City rejecting a petition for administrative mandate , the Court granted review concerning the standard and scope of judicial review under the California Environmental Quality Act. (CEQA; Pub. Resources Code, § 21000 et seq.) Sierra Club v. County of Fresno, S219783 (opinion below F066798, formerlly 226 Cal.App.4th 704). Review was granted 10/1/14.

To What Degree Does The California Environmental Quality Act Restrict Judicial Review and Supersede Other Statutes? The Court granted review on the following issues: (1) Does the California Endangered Species Act (Fish & Game Code, § 2050 et seq.) supersede other California statutes that prohibit the taking of “fully protected” species, and allow such a taking if it is incidental to a mitigation plan under the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.)? (2) Does the California Environmental Quality Act restrict judicial review to the claims presented to an agency before the close of the public comment period on a draft environmental impact report? (3) May an agency deviate from the Act’s existing conditions baseline and instead determine the significance of a project’s greenhouse gas emissions by reference to a hypothetical higher “business as usual” baseline? Center for Biological Diversity v. Dept. of Fish & Wildlife, S217763 (opinion below B245131, formerly 224 Cal.App.4th 1105). Review was granted on 7/9/14.

When Do Testing Activities Constitute a Taking Which Allows the Application of Precondemnation Entry Statutes? After the Court of Appeal affirmed in part and reversed in part an order granting a petition for precondemnation entry, the Court limited review to the following issues: (1) Do the geological testing activities proposed by the Dept. of Water Resources constitute a taking? (2) Do the environmental testing activities set forth in the 2/22/11, entry order constitute a taking? (3) If so, do the precondemnation entry statutes (CCP §§ 1245.010-1245.060) provide a constitutionally valid eminent domain proceeding for the taking? Property Reserve v. Superior Court, S217738 (opinion below C067758, formerly 224 Cal.App.4th 828). Review was granted on 6/25/14.

Are NPDES requirements subject to reimbursement? After the Court of Appeal affirmed the judgment below, the court granted review on the following issue: Are the requirements in the National Pollutant Discharge Elimination System (NPDES) permits issued to real parties in interest by the regional water quality control board state mandates subject to reimbursement under article XIII B, section 6, subdivision (b), of the state Constitution? Dept. of Finance v. Comm. on State Mandates, S214855 (opinion below B237153, formerly 220 Cal.App.4th 740, as modified 221 Cal.App.4th 166d). Review granted 1/29/14.

What Is the Standard of Review for a Subsequent EIR? After the Court of Appeal affirmed the judgment in an action for writ of administrative mandate, the Court granted review on the following issue: When a lead agency performs a subsequent environmental review and prepares a subsequent environmental impact report, a subsequent negative declaration, or an addendum, is the agency’s decision reviewed under a substantial evidence standard of review (Mani Brothers Real Estate Group v. City of Los Angeles (2007) 153 Cal.App.4th 1385), or is the agency’s decision subject to a threshold determination whether the modification of the project constitutes a “new project altogether,” as a matter of law (Save our Neighborhood v. Lishman (2006) 140 Cal.App.4th 1288)? Friends of the College of San Mateo Gardens v. San Mateo County Community College Dist., S214061, (opinion below A135892, nonpublished opinion). Review granted 1/15/14.

When does CEQA Require Consideration of Existing Conditions on Future Residents? After the Court of Appeal reversed the judgment in an action for writ of administrative mandate, the court granted review on the following issue: Under what circumstances, if any, does the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) require an analysis of how existing environmental conditions will impact future residents or users (receptors) of a proposed project? California Building Industry Assn. v. Bay Area Air Quality Management Dist., S213478 (opinion below A135335, A136212, formerly 218 Cal.App.4th 1171). Review granted 11/26/13.

What Are the Procedures for a Petition to Delist a Species Under the California Endangered Species Act? The Court limited review to the following issues: (1) Under the California Endangered Species Act, Fish and Game Code § 2050 et seq., may the Fish and Game Commission consider a petition to delist a species on the ground that the original listing was in error? (2) If so, does the petition at issue here contain sufficient information to warrant the Commission's further consideration? Central Coast Forest Assn. v. Fish & Game Com., S208181 (opinion below C060569, formerly 211 Cal.App.4th 1433). The Court granted review on 2/27/13.

Was a Proposed Project Properly Exempted from the California Environmental Quality Act? Did the City of Berkeley properly conclude that a proposed project was exempt from the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) under the categorical exemptions set forth in California Code of Regulations, title 14, §§ 15303(a) and 15332, and that the “Significant Effects Exception” set forth in § 15300.2(c), of the regulations did not operate to remove the project from the scope of those categorical exemptions? Berkeley Hillside Preservation v. City of Berkeley, S201116 (opinion below A131254, formerly 203 Cal.App.4th 656, as modified). Review was granted 5/23/12.  Update 7/9/14: Review granted in Citizens for Environmental Responsibility v. State ex rel. 14th Dist. Ag. Assn., S218240 (opinion below C070836, formerly 224 Cal.App.4th 1542) with briefing deferred pending a decision in Berkeley.

Does a Failed Request for Funds Satisfy a State Agency’s Duty To Mitigate Off-Site Impacts? Does a state agency that may have an obligation to make “fair-share” payments for the mitigation of off-site impacts of a proposed project satisfy its duty to mitigate under the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) by stating that it has sought funding from the Legislature to pay for such mitigation and that, if the requested funds are not appropriated, it may proceed with the project on the ground that mitigation is infeasible? City of San Diego v. Trustees of the California State University, S199557 (opinion below D057446, formerly 201 Cal.App.4th 1134). Review granted 4/18/12.  Update 10/17/12: Review is granted in City of Hayward v. Trustees of California State University, S203939 (opinion below A131412 (lead case), as modified, formerly 207 Cal.App.4th 446), with briefing deferred pending the resolution of City of San Diego.

California Supreme Court Civil Issues Pending: Civil Procedure/Evidence/Discovery

[UPDATED THROUGH SEPTEMBER 9, 2014]

Can City Officials Invoke CCP §425.16 Against an Allegation that They Had a Financial Interest in the Contract? The Court granted review of the following issue: Did votes by city officials to approve a contract constitute conduct protected under CCP §425.16 despite the allegation that they had a financial interest in the contract? City of Montebello v. Vasquez, S219052 (opinion below B245959, formerly 226 Cal.App.4th 1084). Review was granted 8/13/14.

When Defendant Pays for a Dismissal, Who is the Prevailing Party Regarding Costs? The Court granted review on the following issue: When plaintiff dismissed her action in exchange for the defendant’s payment of a monetary settlement, was she the prevailing party for purposes of an award of costs under CCP § 1032(a)(4), because she was “the party with a net monetary recovery,” or was defendant the prevailing party because it was “a defendant in whose favor a dismissal is entered”? deSaulles v. Community Hospital of the Monterey Peninsula, S219236 (opinion below H038184, formerlly 225 Cal.App.4th 1427). Review was granted 7/23/14.

Does a Stay for Purposes of Mediation Toll the 5-year Limit to Bring the Matter to Trial? After the Court of Appeal affirmed in part and reversed in part the judgment in a civil action, the Court granted review on the following issue: Was this action properly dismissed for the failure to bring it to trial within five years or should the period during which the action was stayed for purposes of mediation have been excluded under C.C.P. § 583.340(b) or (c)? Gaines v. Fidelity National Title Ins. Co., S215990 (opinion below B244961, formerly 222 Cal.App.4th 25). Review granted on 4/16/14.

Is Failure to Issue a Statement of Decision Reversible Per Se? After the Court of Appeal affirmed the judgment in a civil action, the court granted review on the following issue: Is a trial court’s error in failing to issue a statement of decision upon a timely request reversible per se? F.P. v. Monier, S216566 (opinion below C062329, formerly 222 Cal.App.4th 1087). Review was granted 4/16/14

Is an Evidentiary Hearing Required for a Motion for Recusal? After the Court of Appeal denied a petition for peremptory writ of mandate, the Court limited review to the following issue: Did the trial court abuse its discretion by denying a motion for recusal without an evidentiary hearing on the grounds that defendant failed to make a prima facie showing that recusal was warranted? Packer v. Superior Court, S213894, (opinion below B245923, formerly 219 Cal.App.4th 226). Review granted 12/18/13.  Update 9/9/14: Oral argument scheduled for 10/7/14.

Can the Court Award Attorney Fees After Striking the Complaint for Lack of Jurisdiction? After the Court of Appeal reversed an order awarding attorney fees in a civil action, the Court granted review on the following issue: If the trial court grants a special motion to strike under CCP § 425.16 on the ground that the plaintiff has no probability of prevailing on the merits because the court lacks subject matter jurisdiction over the underlying dispute, does the court have the authority to award the prevailing party the attorney fees mandated by § 425.16(c)? Barry v. State Bar of California, S214058 (opinion below B242054, formerly 218 Cal.App.4th 1435). Review granted on 11/27/13.

Can Circumstantial Evidence Support a Finding After a Presumption Supporting that Finding Is Rebutted? After the Court of Appeal affirmed in an action for writ of administrative mandate, the Court granted review on the following issues: (1) Can circumstantial evidence other than the results of chemical tests be used to prove that a driver’s blood-alcohol content at the time of driving was the same as, or greater than, the results of a blood-alcohol test taken approximately an hour after driving? (2) Is the decision of the Court of Appeal consistent with the requirements of Evidence Code § 604  for proof of an initially presumed fact after the presumption has been rebutted? Coffey v. Shiomoto, S213545 (opinon below G047562, formerly 218 Cal.App.4th 1288). Petition for review granted on 10/30/13.

How Can a Defendant Recover Costs in an Action under the Fair Employment and Housing Act? After the Court of Appeal affirmed an order awarding costs, the Court granted review on the following issue: Is a prevailing defendant in an action under the Fair Employment and Housing Act (Gov. Code, § 12900 et seq.) required to show that the plaintiff’s claim was frivolous, unreasonable, or groundless in order to recover ordinary litigation costs? Williams v. Chino Valley Independent Fire Dist., S213100, (opinion below E055755, formerly 218 Cal.App.4th 73). Review was granted 10/16/13.

Does CCP § 1008 Limit Renewed Motions Under CCP § 473(b)?
Petition for review after the Court of Appeal reversed the judgment in a civil action. This case presents the following issue: Do the requirements of CCP § 1008(b), which govern motions to renew previously denied motions, apply to renewed motions under CCP § 473(b), for relief from default judgment?
Even Zohar Construction & Remodeling, Inc. v. Bellaire Townhouses, LLC, S210804 (opinion below B239928, formerly 215 Cal.App.4th 277). Review was granted on 7/17/13.

Can an Administrative Hearing Officer Compel Production of a Correctional Officer’s Personnel File? After the Court of Appeal reversed the trial court order denying production, the Court limited review to this issue: Does the hearing officer in an administrative appeal of the dismissal of a correctional officer employed by a county sheriff's department have the authority to grant a motion under Pitchess v. Superior Court (1974) 11 Cal.3d 531? Riverside County Sheriff’s Dept. v. Stiglitz, S206350 (opinion below E052729, formerly 209 Cal.App.4th 883). Review was granted on 1/16/13. Update 4/16/14: The court directed the parties to file supplemental letter briefs on the following questions: (1) Assuming that a motion for discovery of officer personnel records may be filed in an administrative proceeding (Evid. Code, § 1043(a)), and a hearing officer has authority to determine that the motion states good cause for discovery (Evid. Code, § 1043(b)(3)), is there any existing statutory mechanism that would allow the matter to be transferred to the superior court for an in camera review of the records by a judicial officer (Evid. Code, § 1045(b))? (2) If no existing statutory mechanism applies, do we have the authority to create such a transfer mechanism?  Update 8/4/14: Oral argument scheduled for 9/3/14. Update 9/3/14: Cause argued and submitted. The briefs are here [http://www.courts.ca.gov/26929.htm].

Can a Trial Court Treat Pre-Trial Motions For Nonsuit and Directed Verdict as a Post Trial JNOV Motion? The Court granted review on the following issues: (1) Should a defendant that supplied raw asbestos to a manufacturer of products be found liable to the plaintiffs on a failure to warn theory? (2) Was the trial court’s decision to treat defendant’s pre-trial motions for nonsuit and for a directed verdict as a post-trial motion for judgment notwithstanding the verdict procedurally improper, and if so, was it sufficiently prejudicial to warrant reversal? Webb v. Special Electric Co., Inc., S209927, (opinion below B233189, formerly 214 Cal.App.4th 595, as modified). Review was granted on 6/12/13.

Which Limitations Period Controls a Negligence Action Against a Hospital for Equipment Failure? The Court granted review on the following issues after the Court of Appeal reversed an order of dismissal: (1) Does the one-year statute of limitations for claims under the Medical Injury Compensation Act (CCP § 340.5) or the two-year statute of limitations for ordinary negligence (CCP § 335.1) govern an action for premises liability against a hospital based on negligent maintenance of hospital equipment? (2) Did the injury in this case arise out of “professional negligence,” as that term is used in § 340.5, or ordinary negligence? Flores v. Presbyterian Intercommunity Hospital, S209836 (opinion below, B235409, formerly 213 Cal.App.4th 1386). Review was granted on 5/22/13.

 

California Supreme Court Civil Issues Pending: Judicial & Appellate Review

[UPDATED THROUGH OCTOBER 3, 2014]

What Is the Scope of Review Under CEQA? After the Court of Appeal reversed judgment for the City rejecting a petition for administrative mandate, the Court granted review concerning the standard and scope of judicial review under the California Environmental Quality Act. (CEQA; Pub. Resources Code, § 21000 et seq.) Sierra Club v. County of Fresno, S219783 (opinion below F066798, formerlly 226 Cal.App.4th 704). Review was granted 10/1/14.

Is Failure to Issue a Statement of Decision Reversible Per Se? After the Court of Appeal affirmed the judgment in a civil action, the court granted review on the following issue: Is a trial court’s error in failing to issue a statement of decision upon a timely request reversible per se? F.P. v. Monier, S216566 (opinion below C062329, formerly 222 Cal.App.4th 1087). Review was granted 4/16/14.

What Is the Standard of Review for a Subsequent EIR? After the Court of Appeal affirmed the judgment in an action for writ of administrative mandate, the Court granted review on the following issue: When a lead agency performs a subsequent environmental review and prepares a subsequent environmental impact report, a subsequent negative declaration, or an addendum, is the agency’s decision reviewed under a substantial evidence standard of review (Mani Brothers Real Estate Group v. City of Los Angeles (2007) 153 Cal.App.4th 1385), or is the agency’s decision subject to a threshold determination whether the modification of the project constitutes a “new project altogether,” as a matter of law (Save our Neighborhood v. Lishman (2006) 140 Cal.App.4th 1288)? Friends of the College of San Mateo Gardens v. San Mateo County Community College Dist., S214061, (opinion below A135892, nonpublished opinion). Review granted 1/15/14.

Is an Evidentiary Hearing Required for a Motion for Recusal? After the Court of Appeal denied a petition for peremptory writ of mandate, the Court limited review to the following issue: Did the trial court abuse its discretion by denying a motion for recusal without an evidentiary hearing on the grounds that defendant failed to make a prima facie showing that recusal was warranted? Packer v. Superior Court, S213894, (opinion below B245923, formerly 219 Cal.App.4th 226). Review granted 12/18/13. Update 9/9/14: Oral argument scheduled for 10/7/14.

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.

Was Vacating the Arbitration Award Consistent With Limited Judicial Review? After the Court of Appeal reversed a decision to vacate an arbitration award, the Court granted review on the following issues: (1) Is an employer’s honest belief that an employee was violating company policy or abusing medical leave a complete defense to the employee’s claim that the employer violated the Moore-Brown-Roberti Family Rights Act (Gov. Code §§ 12945.1, 12945.2)? (2) Was the decision below to vacate the arbitration award in the employer’s favor consistent with the limited judicial review of arbitration awards? Richey v. Autonation, Inc., S207536 (opinion below B234711, formerly 210 Cal.App.4th 1516, as modified 211 Cal.App.4th 701b). Review was granted on 2/13/13.  Update 10/3/14: Oral argument scheduled for 11/3/14.

Is a Judgment Through Mandamus Review a Prerequisite for a Whistleblower Action by a Doctor Whose Privileges Were Terminated? After the Court of Appeal affirmed in part and denied in part an order denying a special motion to strike in a civil action, the Court granted review on the following issue: Must a physician obtain a judgment through mandamus review setting aside a hospital’s decision to terminate the physician’s privileges prior to pursuing a whistleblower retaliation action under Health and Safety Code § 1278.5? Fahlen v. Sutter Central Valley Hospitals, S205568 (opinion below F063023, formerly 208 Cal.App.4th 557).  Review was granted 11/14/12. Update 12/5/13: Oral argument scheduled for 1/7/14. Update 1/7/14: Case argued and submitted. The briefs are hereUpdate 2/20/14: Opinion filed. In resolving the conflict between appellate courts, the Court upheld the whistleblower statutes and held that when a physician claims under section 1278.5, that a hospital’s quasi-judicial decision to restrict or terminate his or her staff privileges was itself a means of retaliating against the physician for reporting concerns about the treatment of patients, the physician does not need to seek and obtain a mandamus judgment setting aside the hospital’s decision before pursuing a statutory claim for relief.

California Supreme Court Civil Issues Pending: Commercial/Class Actions

[UPDATED THROUGH OCTOBER 1, 2014]

Can a Borrower Challenge the Assignment of the Note While Claiming Wrongful Foreclosure? After the Court of Appeal affirmed judgment for defendant on demurrer, the Court granted review on the following issue: In an action for wrongful foreclosure on a deed of trust securing a home loan, does the borrower have standing to challenge an assignment of the note and deed of trust on the basis of defects allegedly rendering the assignment void? Yvanova v. New Century Mortgage Corp., S218973 (opinion below B247188, formerly 226 Cal.App.4th 495). Review was granted 8/27/14.  Update 10/1/14: After the Court of Appeal affirmed judgment for defendant on demurrer, review was granted in Keshtgar v. U.S. Bank, N.A., S220012 (opinion below B246193, as modified, formerly 226 Cal.App.4th 1201), with briefing deferred pending a decision in Yvanova.

Can City Officials Invoke CCP §425.16 Against an Allegation that They Had a Financial Interest in the Contract? The Court granted review of the following issue: Did votes by city officials to approve a contract constitute conduct protected under CCP §425.16 despite the allegation that they had a financial interest in the contract? City of Montebello v. Vasquez, S219052 (opinion below B245959, formerly 226 Cal.App.4th 1084). Review was granted 8/13/14.

Can Parties Who Are Joint and Several Be Sued Separately?  The Court limited review to the following issues: (1) Can parties who are jointly and severally liable on an obligation be sued in separate actions? (2) Does the opinion of the Court of Appeal in this case conflict with the opinion of this court in Williams v. Reed (1957) 48 Cal.2d 57DKN Holdings LLC v. Faerber, S218597 (opinion below E055732, formerly 225 Cal.App.4th 1115). Review was granted 7/23/14.

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.

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 hereUpdate 8/28/14: Opinion issued. While divided 4-3 on the outcome, the Court appears to agree on the general principle that the franchisor can only be held liable for those portions of the franchise operation over which it exercises sufficient control. The Court disagreed over whether there was a triable question of fact in this case on whether Domino’s Pizza exercised such control over the discharge of employees at the franchise. The majority, written by Justice Baxter, found no question of fact and held for Domino’s Pizza. Justice Werdergar’s dissent found a sufficient question of fact to reverse the summary judgment.

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 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?

Sanchez Updates re Related CasesUpdate 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 SanchezUpdate 11/26/13: Review granted in Gonzales v. Metro Nissan of Redlands, S214121 (opinion below E056160, nonpublished), with briefing deferred pending the resolution of SanchezUpdate 6/25/14: review granted in Cheroti v. Harvey & Madding S218724 (opinion below A135553, nonpublished), with briefing deferred pending the resolution of Sanchez.  Update 7/9/14: Review granted in Gillespie v. Svale Del Grande, Inc., S218704 (opinion below, H039428, nonpublished opinion), with briefing deferred pending the resolution of Sanchez.   Update 8/27/14: Two cases in which briefing was deferred pending the decision in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, are still retained by the Court with briefing now deferred pending a decision in Sanchez: Caron v. Mercedes-Benz Financial Services USA LLC, S205263 (opinion below, G044550, formerly 208 Cal.App.4th 7) and Flores v. West Covina Auto Group, LLC, S208716 (opinion below B238265, formerly 212 Cal.App.4th 895).  Update 9/24/14: Review granted in Sabia v. Orange County Metro Realty, Inc., S220237 (opinion below B243141, formerly 227 Cal.App.4th 11), 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), with briefing deferred until a decision in Pac Anchor. Update 5/1/14: Oral argument scheduled for 5/28/14.  Update 5/28/14: Case argued and submitted. The briefs are here.  Update 7/28/14: Opinion issued. The unanimous Court held that the FAAAA does not preempt the People’s UCL action against defendants because the FAAAA addresses the transportation of property, not labor and insurance issues and that this action is independent of defendants’ prices, routes, or services with respect to the transportation of property. Update 7/30/14: Review granted in Grupp v. DHL Express (USA), Inc., S218754 (opinion below B245297, formerly 225 Cal.App.4th 510), with briefing deferred until a decision in Pac Anchor.
 

California Supreme Court Civil Issues Pending: Healthcare Related

[UPDATED THROUGH SEPTEMBER 17, 2014]

What Privacy Interest Do Patients Have in Controlled Substance Prescription Data?
After the Court of Appeal found no violation of privacy rights, the Court granted review of the following issues: (1) Do a physician’s patients have a protected privacy interest in the controlled substance prescription data collected and submitted to the California Department of Justice under Health and Safety Code § 11165? (2) If so, is disclosure of such data to the Medical Board of California justified by a compelling state interest? Lewis v. Superior Court, S219811 (opinion below B252032, formerly 226 Cal.App.4th 933). Review was granted on 9/17/14.

What Is the Obligation of an HMO when it Delegates Emergency Reimbursements to an IPA that becomes Insolvent? This case presents the following issues: (1) Does the delegation — by a health care service plan (HMO) to an independent physicians association (IPA), under Health and Safety Code §1371.4(e) — of the HMO’s responsibility to reimburse emergency medical service providers for emergency care provided to the HMO’s enrollees relieve the HMO of the ultimate obligation to pay for emergency medical care provided to its enrollees by non-contracting emergency medical service providers, if the IPA becomes insolvent and is unable to pay? (2) Does an HMO have a duty to emergency medical service providers to protect them from financial harm resulting from the insolvency of an IPA which is otherwise financially responsible for the emergency medical care provided to its enrollees? Centinela Freeman Emergency Medical Associates v. Health Net of California, Inc., S218497 (opinion below B238867, and upon rehearing, formerly 225 Cal.App.4th 237). Review was granted 7/16/14.

Can Public Accessibility Regarding Citations Issued To Long Term Care Facilities Be Reconciled with Statutory Confidentiality Requirements? After the Court of Appeal issued a preemptory writ of mandate, the Court granted review on the following issue: In the context of a request under the Public Records Act (Gov. Code, § 6250) for citations issued by the Dept. of Public Health to state facilities housing the mentally ill and the developmentally disabled, can the public accessibility provisions for citations issued under the Long-Term Care Act (Health & Saf. Code, §1417 et seq.) be reconciled with the confidentiality provisions of the Lanterman-Petris-Short Act (Welf. & Inst. Code, § 5000 et seq.) and the Lanterman Developmental Disabilities Services Act (Welf. & Inst. Code, § 4500 et seq.), and, if so, how? State Dept. of Public Health v. Superior Court, S214679, (opinion below C072325, formerly 219 Cal.App.4th 966, as modified). Review granted 1/29/14.

Does a Medical Malpractice Defendant Get a Setoff from a Settlement of Non-Economic Damages? After the Court of Appeal modified and affirmed the judgment in a civil action. the Court limited review to the following issue: If a jury awards the plaintiff in a medical malpractice action non-economic damages against a healthcare provider defendant, does Civil Code §3333.2 entitle that defendant to a setoff based on the amount of a pretrial settlement entered into by another healthcare provider that is attributable to non-economic losses or does the statutory rule that liability for non-economic damages is several only (not joint and several) bar such a setoff? Rashidi v. Moser, S214430 (opinion below B237476, as modified, formerly 219 Cal.App.4th 1170). Review granted 1/15/14.  Update 9/9/14: Oral argument scheduled for 10/7/14.

Is a Custodial Relationship Required to Hold a Health Care Provider Liable For Elder Abuse? After the Court of Appeal reversed the judgment in a civil action, the Court granted review on the following issue: Does “neglect” within the meaning of the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code, § 15657) include a health care provider’s failure to refer an elder patient to a specialist if the care took place on an outpatient basis, or must an action for neglect under the Act allege that the defendant health care provider had a custodial relationship with the elder patient? Winn v. Pioneer Medical Group, Inc., S211793 (opinion below B237712, formerly 216 Cal.App.4th 875). Review was granted on 6/12/13.

Which Limitations Period Controls a Negligence Action Against a Hospital for Equipment Failure? The Court granted review on the following issues after the Court of Appeal reversed an order of dismissal: (1) Does the one-year statute of limitations for claims under the Medical Injury Compensation Act (CCP § 340.5) or the two-year statute of limitations for ordinary negligence (CCP § 335.1) govern an action for premises liability against a hospital based on negligent maintenance of hospital equipment? (2) Did the injury in this case arise out of “professional negligence,” as that term is used in § 340.5, or ordinary negligence? Flores v. Presbyterian Intercommunity Hospital, S209836 (opinion below, B235409, formerly 213 Cal.App.4th 1386). Review was granted on 5/22/13.

Is a Judgment Through Mandamus Review a Prerequisite for a Whistleblower Action by a Doctor Whose Privileges Were Terminated? After the Court of Appeal affirmed in part and denied in part an order denying a special motion to strike in a civil action, the Court granted review on the following issue: Must a physician obtain a judgment through mandamus review setting aside a hospital’s decision to terminate the physician’s privileges prior to pursuing a whistleblower retaliation action under Health and Safety Code § 1278.5? Fahlen v. Sutter Central Valley Hospitals, S205568 (opinion below F063023, formerly 208 Cal.App.4th 557).  Review was granted 11/14/12. Update 12/5/13: Oral argument scheduled for 1/7/14. Update 1/7/14: Case argued and submitted. The briefs are hereUpdate 2/20/14: Opinion filed. In resolving the conflict between appellate courts, the Court upheld the whistleblower statutes and held that when a physician claims under section 1278.5, that a hospital’s quasi-judicial decision to restrict or terminate his or her staff privileges was itself a means of retaliating against the physician for reporting concerns about the treatment of patients, the physician does not need to seek and obtain a mandamus judgment setting aside the hospital’s decision before pursuing a statutory claim for relief.

 

California Supreme Court Civil Issues Pending: Attorney Related

[UPDATED THROUGH OCTOBER 1, 2014]

Which Statute of Limitations Applies for Reimbursement Action for Unearned Attorney’s Fees? After the Court of Appeal reversed judgment for defendant on a demurrer, the Court granted review on the following issue: Does the one-year statute of limitations for actions against attorneys set forth inC.C.P. § 340.6 apply to a former client’s claim against an attorney for reimbursement of unearned attorney fees advanced in connection with a lawsuit? Lee v. Hanley, S220775 (opinion below G048501, as modified, formerly 227 Cal.App.4th 1295 and 228 Cal.App.4th 793a.) Review was granted 10/1/14.

When Are Brandt Attorney Fees Considered Part of the Judgment?
After the Court of Appeal modified and affirmed the judgment in a civil action, the Court granted review on the following issue: Is an award of attorney fees under Brandt v. Superior Court (1985) 37 Cal.3d 813 properly included as compensatory damages for purposes of calculating the ratio between punitive and compensatory damages where the fees are awarded by the jury, but excluded from compensatory damages when they are awarded by the trial court after the jury has rendered its verdict? Nickerson v. Stonebridge Life Ins. Co., S213873 (opinion below B234271, formerly 219 Cal.App.4th 188). Review granted on 12/11/13. Update 1/15/14: The Court limited briefing to the following issue: The court ordered the issues to be briefed and argued limited to the following issue: Is an award of attorney fees under Brandt v. Superior Court (1985) 37 Cal.3d 813 properly included as compensatory damages where the fees are awarded by the jury, but excluded from compensatory damages when they are awarded by the trial court after the jury has rendered its verdict?
 

Can the Court Award Attorney Fees After Striking the Complaint for Lack of Jurisdiction? After the Court of Appeal reversed an order awarding attorney fees in a civil action, the Court granted review on the following issue: If the trial court grants a special motion to strike under CCP § 425.16 on the ground that the plaintiff has no probability of prevailing on the merits because the court lacks subject matter jurisdiction over the underlying dispute, does the court have the authority to award the prevailing party the attorney fees mandated by § 425.16(c)? Barry v. State Bar of California, S214058 (opinion below B242054, formerly 218 Cal.App.4th 1435). Review granted on 11/27/13.

Can an Insurer Seek Reimbursement from Independent Counsel?   After the Court of Appeal affirmed judgment, the Court granted review on following issue: After an insured has secured a judgment requiring an insurer to provide independent counsel to the insured (see San Diego Fed. Credit Union v. Cumis Ins. Society Inc. (1984) 162 Cal.App.3d 358), can the insurer seek reimbursement of defense fees and costs it considers unreasonable and unnecessary by pursuing a reimbursement action against independent counsel or can the insurer seek reimbursement only from its insured? Hartford Casualty Ins. Co. v. J.R. Marketing, L.L.C., S211645 (opinon below A133750, formerly 216 Cal.App.4th 1444). Review was granted 9/18/13.

Can a Homeowner Recover Attorney’s Fees Against an HOA When Its Governing Documents Are Found To Be Deficient? The Court limited review to the following issue: Is a prevailing homeowner entitled to attorney fees under Civil Code § 1354 in an action by a homeowners association to enforce its governing documents as those of a common interest development when the homeowner prevailed because it was later determined that the subdivision was not such a development and its governing documents had not been properly reenacted? Tract 19051 Homeowners Assn. v. Kemp, S211596 (B236015, nonpublished opinion). Review was granted 8/28/13. 

California Supreme Court Civil Issues Pending: ADR

[UPDATED THROUGH OCTOBER 3, 2014]

Does a Stay for Purposes of Mediation Toll the 5-year Limit to Bring the Matter to Trial? After the Court of Appeal affirmed in part and reversed in part the judgment in a civil action, the Court granted review on the following issue: Was this action properly dismissed for the failure to bring it to trial within five years or should the period during which the action was stayed for purposes of mediation have been excluded under C.C.P. § 583.340(b) or (c)? Gaines v. Fidelity National Title Ins. Co., S215990 (opinion below B244961, formerly 222 Cal.App.4th 25). Review granted on 4/16/14.

Is Employment Arbitration Agreement Unconscionable if One Party Is More Likely to Use the Relief Provided? Is an employment arbitration agreement unconscionable for lack of mutuality if it contains a clause providing that either party may seek provisional injunctive relief in the courts and the employer is more likely to seek such relief? Baltazar v. Forever 21, Inc., S208345 (opinion below B237173, formerly 212 Cal.App.4th 221). Review was granted 3/20/13, but briefing was deferred pending the decision in Wisdom v. Accentcare, Inc., S200128. Update 7/24/13: Review dismissed in Wisdom due to settlement. Update 8/28/13: Briefing ordered on the above issue. Update 9/11/13: Review granted in Leos v. Darden Restaurant, Inc., S212511 (opinion below B241630, formerly 217 Cal.App.4th 473), with briefing deferred pending decision in Baltazar.

Was Vacating the Arbitration Award Consistent With Limited Judicial Review? After the Court of Appeal reversed a decision to vacate an arbitration award, the Court granted review on the following issues: (1) Is an employer’s honest belief that an employee was violating company policy or abusing medical leave a complete defense to the employee’s claim that the employer violated the Moore-Brown-Roberti Family Rights Act (Gov. Code §§ 12945.1, 12945.2)? (2) Was the decision below to vacate the arbitration award in the employer’s favor consistent with the limited judicial review of arbitration awards? Richey v. Autonation, Inc., S207536 (opinion below B234711, formerly 210 Cal.App.4th 1516, as modified 211 Cal.App.4th 701b). Review was granted on 2/13/13.  Update 10/3/14: Oral argument scheduled for 11/3/14.

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 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?

Sanchez Updates re Related CasesUpdate 5/9/12: Review granted in Buzenes v. Nuvell Financial Services, S200376 (opinion below B221870, nonpublished). Briefing deferred pending decision in Sanchez. Update 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 Sanchez Update 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, formerlly 214 Cal.App.4th 873), with briefing deferred pending the resolution of SanchezUpdate 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 SanchezUpdate 11/26/13: Review granted in Gonzales v. Metro Nissan of Redlands, S214121, (opinion below E056160, nonpublished), with briefing deferred pending the resolution of Sanchez.  Update 6/25/14: review granted in Cheroti v. Harvey & Madding S218724 (opinion below A135553, nonpublished), with briefing deferred pending the resolution of SanchezUpdate 7/9/14: Review granted in Gillespie v. Svale Del Grande, Inc., S218704 (opinion below, H039428, nonpublished opinion), with briefing deferred pending the resolution of SanchezUpdate 8/27/14: Two cases in which briefing was deferred pending the decision in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, are still retained by the Court with briefing now deferred pending a decision in Sanchez: Caron v. Mercedes-Benz Financial Services USA LLC, S205263 (opinion below, G044550, formerly 208 Cal.App.4th 7) and Flores v. West Covina Auto Group, LLC, S208716 (opinion below B238265, formerly 212 Cal.App.4th 895).  Update 9/24/14: Review granted in Sabia v. Orange County Metro Realty, Inc., S220237 (opinion below B243141, formerly 227 Cal.App.4th 11), with briefing deferred pending the resolution of Sanchez.
 

California Supreme Court Civil Issues Pending: Torts & Products

[UPDATED THROUGH SEPTEMBER 17, 2014]

Does Employer Using Asbestos Owe a Duty to Employee’s Family?
The Court granted review in a pair of cases on the following issue: If an employer’s business involves either the use or the manufacture of asbestos-containing products, does the employer owe a duty of care to members of an employee’s household who could be affected by asbestos brought home on the employee’s clothing? Haver v. BNSF Railway Co., S219919 (opinion below B246527, formerly 226 Cal.App.4th 1104, as modified 226 Cal.App.4th 1376b); and Kesner v. Superior Court, S219534 (opinion below A136378, formerly 226 Cal.App.4th 251). Review was granted on 8/20/14.

What Is the Duty of Salespersons from the same Brokerage Firm Who Handle Both Sides of a Residential Sale? The Court granted review of the following issue: When the buyer and the seller in a residential real estate transaction are each independently represented by a different salesperson from the same brokerage firm, does Civil Code §2079.13(b), make each salesperson the fiduciary to both the buyer and the seller with the duty to provide undivided loyalty, confidentiality and counseling to both? Horiike v. Coldwell Banker Residential Brokerage Co., S218734 (opinion below B246606, formerly 225 Cal.App.4th 427). Review was granted 7/16/14.

Is the Claim of an Injured Employee Barred by the Component Parts Doctrine? The Court granted review of the following issue: Are negligence and strict liability claims by an employee of a processing company against a supplier of raw materials for injuries allegedly suffered in the course of processing those materials barred by the component parts doctrine? Ramos v. Brenntag Specialties, Inc., S218176. (opinion below B248038, formerly 224 Cal.App.4th 1239). Review was granted 7/9/14.  Update 9/17/14: Review granted in Uriarte v. Scott Sales Co., S220088 (opinion below B244257, formerly 226 Cal.App.4th 1396), but briefing was deferred pending a decision in Ramos.

Does Federal Organic Foods Production Act of 1990 preempt the California Organic Products Act of 2003? After the Court of Appeal affirmed the judgment in a civil action, the Court granted review on the following issue: Does the Organic Foods Production Act of 1990 (7 U.S.C. § 6501 et seq.) preempt state consumer lawsuits alleging that a food product was falsely labeled “100% Organic” when it contained ingredients that were not certified organic under the California Organic Products Act of 2003 (Food & Agr. Code, § 46000 et seq.; Health & Saf. Code, § 110810 et seq.)? Quesada v. Herb Thyme Farms, Inc., S216305 (opinion below B239602, formerly 222 Cal.App.4th 642). Review granted 4/30/14.

Can the State’s Failure to Evaluate a Potential Sexual Predator be the Proximate Cause of Plaintiff’s Injuries? After the Court of Appeal granted in part and denied in part a petition for peremptory writ of mandate, the Court granted review on these issues: (1) Did the state comply with the requirement of the Sexually Violent Predator Act (Welf. & Inst. Code, § 6600, et seq.) that it conduct a “full evaluation” of an inmate potentially qualifying as a “sexually violent predator” prior to the inmate’s release? (2) Did the Court of Appeal err in finding that, as a matter of law, plaintiff could not establish that defendants’ actions were a proximate cause of her injuries? State Dept. of State Hospitals v. Superior Court, S215132 (opinion below B248603, formerly 220 Cal.App.4th 1503). Review granted 2/11/14.

Does a Medical Malpractice Defendant Get a Setoff from a Settlement of Non-Economic Damages? After the Court of Appeal modified and affirmed the judgment in a civil action. the Court limited review to the following issue: If a jury awards the plaintiff in a medical malpractice action non-economic damages against a healthcare provider defendant, does Civil Code §3333.2 entitle that defendant to a setoff based on the amount of a pretrial settlement entered into by another healthcare provider that is attributable to non-economic losses or does the statutory rule that liability for non-economic damages is several only (not joint and several) bar such a setoff? Rashidi v. Moser, S214430 (opinion below B237476, as modified, formerly 219 Cal.App.4th 1170). Review granted 1/15/14.  Update 9/9/14: Oral argument scheduled for 10/7/14.

Does Design Immunity Apply If The Design Violates That Public Entity’s Standards? After the Court of Appeal affirmed summary judgment in a civil action, the court granted review of the following issue: Does a public entity establish the second element of design immunity under Government Code § 830.6 – discretionary discretionary approval of design plans – as a matter of law by presenting evidence that its design plans were approved by an employee with the discretion to do so, even if the plaintiff presents evidence that the design at issue violated the public entity’s own standards? Hampton v. County of San Diego, S213132 (opinion below D061509, formerly 218 Cal.App.4th 286). Review was granted 10/23/13.

Is a Custodial Relationship Required to Hold a Health Care Provider Liable For Elder Abuse? After the Court of Appeal reversed the judgment in a civil action, the Court granted review on the following issue: Does “neglect” within the meaning of the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code, § 15657) include a health care provider’s failure to refer an elder patient to a specialist if the care took place on an outpatient basis, or must an action for neglect under the Act allege that the defendant health care provider had a custodial relationship with the elder patient? Winn v. Pioneer Medical Group, Inc., S211793 (opinion below B237712, formerly 216 Cal.App.4th 875). Review was granted on 6/12/13.

Can a Supplier of Raw Asbestos Be Liable on a Failure to Warn Claim? The Court granted review on the following issues: (1) Should a defendant that supplied raw asbestos to a manufacturer of products be found liable to the plaintiffs on a failure to warn theory? (2) Was the trial court’s decision to treat defendant’s pre-trial motions for nonsuit and for a directed verdict as a post-trial motion for judgment notwithstanding the verdict procedurally improper, and if so, was it sufficiently prejudicial to warrant reversal? Webb v. Special Electric Co., Inc., S209927, (opinion below B233189, formerly 214 Cal.App.4th 595, as modified). Review was granted on 6/12/13.

Which Limitations Period Controls a Negligence Action Against a Hospital for Equipment Failure? The Court granted review on the following issues after the Court of Appeal reversed an order of dismissal: (1) Does the one-year statute of limitations for claims under the Medical Injury Compensation Act (CCP § 340.5) or the two-year statute of limitations for ordinary negligence (CCP § 335.1) govern an action for premises liability against a hospital based on negligent maintenance of hospital equipment? (2) Did the injury in this case arise out of “professional negligence,” as that term is used in § 340.5, or ordinary negligence? Flores v. Presbyterian Intercommunity Hospital, S209836 (opinion below, B235409, formerly 213 Cal.App.4th 1386). Review was granted on 5/22/13.

What Is the Liability of a Public Entity for the Negligence of a Third Party Which Causes an Accident on a Dangerous Condition? After the Court of Appeal affirmed summary judgment that no dangerous condition existed, the Court granted review and limited briefing to the following issue: May a government entity be held liable if a dangerous condition of public property existed and caused the injuries plaintiffs suffered in an accident, but did not cause the third party conduct that led to the accident? Cordova v. City of Los Angeles, S208130 (opinion below B236195, formerly 212 Cal.App.4th 243). Review granted 3/20/13. Update 10/23/13: Review granted in Curtis v. County of Los Angeles, S213275 (opinion below B238870, formerly 218 Cal.App.4th 366). Briefing was deferred pending a decision in Cordova.

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. The briefs are hereUpdate 8/28/14: Opinion issued. While divided 4-3 on the outcome, the Court appears to agree on the general principle that the franchisor can only be held liable for those portions of the franchise operation over which it exercises sufficient control. The Court disagreed over whether there was a triable question of fact in this case on whether Domino’s Pizza exercised such control over the discharge of employees at the franchise. The majority, written by Justice Baxter, found no question of have and held for Domino’s Pizza. Justice Werdergar’s dissent found a sufficient question of fact to reverse the summary judgment. 

California Supreme Court Civil Issues Pending: Insurance

[UPDATED THROUGH AUGUST 5, 2014]

Can an Insurer Seek Reimbursement from Independent Counsel?  After the Court of Appeal affirmed judgment, the Court granted review on following issue: After an insured has secured a judgment requiring an insurer to provide independent counsel to the insured (see San Diego Fed. Credit Union v. Cumis Ins. Society Inc. (1984) 162 Cal.App.3d 358), can the insurer seek reimbursement of defense fees and costs it considers unreasonable and unnecessary by pursuing a reimbursement action against independent counsel or can the insurer seek reimbursement only from its insured? Hartford Casualty Ins. Co. v. J.R. Marketing, L.L.C., S211645 (opinon below A133750, formerly 216 Cal.App.4th 1444). Review was granted 9/18/13.

Is the Henkel Corp. Opinion Inconsistent With Ins. Code § 520? After the Court of Appeal denied a petition for peremptory writ of mandate, the Court granted review on the following issue: Are the limitations on assignment of third party liability insurance policy benefits recognized in Henkel Corp. v. Hartford Accident & Indemnity Co. (2003) 29 Cal.4th 934 inconsistent with the provisions of Insurance Code § 520? Fluor Corp. v. Superior Court, S205889 (opinion below, G045579, formerly 208 Cal.App.4th 1506). Review was granted 12/12/12.

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, as modified, formerly 219 Cal.App.4th 692), with briefing deferred until a decision in Pac Anchor.  Update 5/1/14: Oral argument scheduled for 5/28/14.  Update 5/28/14: Case argued and submitted. The briefs are hereUpdate 7/28/14: Opinion issued. The unanimous Court held that the FAAAA does not preempt the People’s UCL action against defendants because the FAAAA addresses the transportation of property, not labor and insurance issues, and that this action is independent of defendants’ prices, routes, or services with respect to the transportation of property. Update 7/30/14: Review granted in Grupp v. DHL Express (USA), Inc., S218754 (opinion below B245297, formerly 225 Cal.App.4th 510), with briefing deferred until a decision in Pac Anchor.

California Supreme Court Civil Issues Pending: Labor - Other

[UPDATED THROUGH OCTOBER 3, 2014]

Does Employer Using Asbestos Owe a Duty to Employee’s Family?
The Court granted review in a pair of cases on the following issue: If an employer’s business involves either the use or the manufacture of asbestos-containing products, does the employer owe a duty of care to members of an employee’s household who could be affected by asbestos brought home on the employee’s clothing? Haver v. BNSF Railway Co., S219919 (opinion below B246527, formerly 226 Cal.App.4th 1104, as modified 226 Cal.App.4th 1376b); and Kesner v. Superior Court, S219534 (opinion below A136378, formerly 226 Cal.App.4th 251). Review was granted on 8/20/14.

Do Volunteer Peace Officers Qualify for Workers’ Compensation Benefits Provided to Salaried Officers? After the Court of Appeal affirmed a decision of the Board, the Court granted review on the following issue: Do the benefits provided under Labor Code § 4458.2 extend both to volunteer peace officers and to regularly sworn, salaried officers? Larkin v. Workers’ Comp. Appeals Bd., S216986 (opinion below C065891, formerly 223 Cal.App.4th 538). Review was granted 4/9/14.

What Is the Standard for Causation in a Workers’ Compensation Claim for Death Benefits? After the Court of Appeal annulled a decision of the WCAB, the Court granted review on the following issue: Does a claim for workers’ compensation death benefits have a separate and distinct causation standard and burden of proof requiring that an industrial injury constitute a “material factor” contributing to the employee’s death, or does the standard require only that the industrial injury be a “contributing cause”? South Coast Framing, Inc. v. Workers’ Comp. Appeals Bd., S215637 (opinion below D063945, nonpublished opinion). Review granted 3/19/14.

How Should The Court Determine the Nature of an Employee’s Work for Purposes of Enforcing IWC Wage Orders Regarding Suitable Seating? 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 issues in consolidated appeals. For purposes of IWC Wage Order 4-2001 § 14(A) and IWC Wage Order 7-2001 § 14(A), (1) Does the phrase ‘nature of the work’ refer to an individual task or duty that an employee performs during the course of his or her workday, or should courts construe ‘nature of the work’ holistically and evaluate the entire range of an employee’s duties? (a) If the courts should construe ‘nature of the work’ holistically, should the courts consider the entire range of an employee’s duties if more than half of an employee’s time is spent performing tasks that reasonably allow the use of a seat? (2) When determining whether the nature of the work ‘reasonably permits’ the use of a seat, should courts consider any or all of the following: the employer’s business judgment as to whether the employee should stand, the physical layout of the workplace, or the physical characteristics of the employee? (3) If an employer has not provided any seat, does a plaintiff need to prove what would constitute ‘suitable seats’ to show the employer has violated Section 14(A)? Kilby v. CVS Pharmacy, Inc./Henderson v. JPMorgan Chase Bank NA, S215614, (request submitted, 9th Cir. Nos. 12-56130, 13-56095; 739 F.3d 1192). Certification was granted 3/12/14.

Is a Supervisor’s Log a Personnel File? After the Court of Appeal reversed the judgment in an action for writ of administrative mandate, the Court granted review on the following issue: Did a daily log about firefighters, which was maintained by a supervisor and used by the supervisor to prepare annual performance evaluations, qualify under the Firefighters Procedural Bill of Rights Act (Gov. Code, § 3250 et seq.) as a personnel file and/or as a file used for personnel purposes? Poole v. Orange County Fire Authority, S215300 (opinion below G047691, G047850, formerly 221 Cal.App.4th 155). Review granted 2/26/14.

Can a CHP Officer be a Special Employee? After the Court of Appeal granted a petition for peremptory writ of mandate, the Court granted review on the following issue: Can the California Highway Patrol be considered the special employer of a tow truck driver participating in the Freeway Service Program? State ex rel. Dept. of California Highway Patrol v. Superior Court, S214221 (opinion below G047922, formerly 220 Cal.App.4th 612). Review granted 1/22/14.

How Can a Defendant Recover Costs in an Action under the Fair Employment and Housing Act? After the Court of Appeal affirmed an order awarding costs, the Court granted review on the following issue: Is a prevailing defendant in an action under the Fair Employment and Housing Act (Gov. Code, § 12900 et seq.) required to show that the plaintiff’s claim was frivolous, unreasonable, or groundless in order to recover ordinary litigation costs? Williams v. Chino Valley Independent Fire Dist., S213100, (opinion below E055755, formerly 218 Cal.App.4th 73). Review was granted 10/16/13.

Is Employment Arbitration Agreement Unconscionable if One Party Is More Likely to Use the Relief Provided? Is an employment arbitration agreement unconscionable for lack of mutuality if it contains a clause providing that either party may seek provisional injunctive relief in the courts and the employer is more likely to seek such relief?
Baltazar v. Forever 21, Inc., S208345 (opinion below B237173, formerly 212 Cal.App.4th 221). Review was granted 3/20/13, but briefing was deferred pending the decision in Wisdom v. Accentcare, Inc., S200128. Update 7/24/13: Review dismissed in Wisdom due to settlement. Update 8/28/13: Briefing ordered on the above issue. Update 9/11/13: Review granted in Leos v. Darden Restaurant, Inc., S212511 (opinion below B241630, formerly 217 Cal.App.4th 473), with briefing deferred pending decision in Baltazar.

Is the Employer’s Honest Belief That the Employee Was Violating Medical Leave Policy a Defense Under the Family Rights Act? After the Court of Appeal reversed a decision to vacate an arbitration award, the Court granted review on the following issues: (1) Is an employer’s honest belief that an employee was violating company policy or abusing medical leave a complete defense to the employee’s claim that the employer violated the Moore-Brown-Roberti Family Rights Act (Gov. Code §§ 12945.1, 12945.2)? (2) Was the decision below to vacate the arbitration award in the employer’s favor consistent with the limited judicial review of arbitration awards? Richey v. Autonation, Inc., S207536 (opinion below B234711, formerly 210 Cal.App.4th 1516, as modified 211 Cal.App.4th 701b). Review was granted on 2/13/13.  Update 10/3/14: Oral argument scheduled for 11/3/14.

Is a Judgment Through Mandamus Review a Prerequisite for a Whistleblower Action by a Doctor Whose Privileges Were Terminated? After the Court of Appeal affirmed in part and denied in part an order denying a special motion to strike in a civil action, the Court granted review on the following issue: Must a physician obtain a judgment through mandamus review setting aside a hospital’s decision to terminate the physician’s privileges prior to pursuing a whistleblower retaliation action under Health and Safety Code § 1278.5? Fahlen v. Sutter Central Valley Hospitals, S205568 (opinion below F063023, formerly 208 Cal.App.4th 557).  Review was granted 11/14/12.  Update 12/5/13: Oral argument scheduled for 1/7/14. Update 1/7/14: Case argued and submitted. The briefs are hereUpdate 2/20/14: Opinion filed.  In resolving the conflict between appellate courts, the Court upheld the whistleblower statutes and held that when a physician claims under section 1278.5, that a hospital’s quasi-judicial decision to restrict or terminate his or her staff privileges was itself a means of retaliating against the physician for reporting concerns about the treatment of patients, the physician does not need to seek and obtain a mandamus judgment setting aside the hospital’s decision before pursuing a statutory claim for relief.

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 Patterson Update 5/9/14: Oral argument scheduled for 6/4/14.  Update 6/4/14: Case argued and submitted. The briefs are hereUpdate 8/28/14: Opinion issued. While divided 4-3 on the outcome, the Court appears to agree on the general principle that the franchisor can only be held liable for those portions of the franchise operation over which it exercises sufficient control. The Court disagreed over whether there was a triable question of fact in this case on whether Domino’s Pizza exercised such control over the discharge of employees at the franchise. The majority, written by Justice Baxter, found no question of fact and held for Domino’s Pizza. Justice Werdergar’s dissent found a sufficient question of fact to reverse the summary judgment.

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 was 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, as modified, formerly 219 Cal.App.4th 692), with briefing deferred until a decision in Pac AnchorUpdate 5/1/14: Oral argument scheduled for 5/28/14.  Update 5/28/14: Case argued and submitted. The briefs are hereUpdate 7/28/14: Opinion issued. The unanimous Court held that the FAAAA does not preempt the People’s UCL action against defendants because the FAAAA addresses the transportation of property, not labor and insurance issues and that this action is independent of defendants’ prices, routes, or services with respect to the transportation of property. Update 7/30/14: Review granted in Grupp v. DHL Express (USA), Inc., S218754 (opinion below B245297, formerly 225 Cal.App.4th 510), with briefing deferred until a decision in Pac Anchor.

California Supreme Court Civil Issues Pending: Labor - Compensation & Benefits

[UPDATED THROUGH OCTOBER 3, 2014]

How Should Guards Be Compensated for Nighttime “On Call” Hours? After the Court of Appeal affirmed in part and reversed in part an order granting a preliminary injunction, the Court granted review on this issue: Are the guards that defendants provide for construction site security entitled to compensation for all nighttime “on call” hours, or may defendants deduct sleep time depending on the structure of the guards' work shifts? Mendiola v. CPS Security Solutions, Inc., S212704, (opinion below B240519, formerly 217 Cal.App.4th 851). Review was granted 10/16/13.  Update 10/3/14: Oral argument scheduled for 11/3/14.