The Appellate Strategist

Insights on appellate issues, trial consultations, and evaluating appeals

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

By Kirk Jenkins on Posted in California

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 (no changes).

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

By Kirk Jenkins on Posted in California

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 (no changes).

Florida Supreme Court Strikes Down Wrongful Death Non-Economic Damages Cap for Med Mal Cases

By Erin E. Dardis on Posted in Florida

On March 13, 2014, the Florida Supreme Court, in a 5-2 ruling, issued its long-awaited opinion following review of the Eleventh Circuit Court of Appeal’s decision in Estate of McCall v. United States, 642 F.3d 944 (11th Cir. 2011), and answered the following rephrased certified question in the affirmative:

Does the statutory cap on wrongful death noneconomic damages, Fla. Stat. §766.118, violate the right to equal protection under Article I, Section 2 of the Florida Constitution?

 

The Supreme Court did not address three additional questions certified by the Eleventh Circuit.

 

To read the Court’s opinion, click here. 

 

Background and Earlier Court Proceedings

Hours after giving birth, Michele McCall went into shock and cardiac arrest as a result of severe blood loss.  She never regained consciousness and was removed from life support. The Estate of Michele McCall, Mrs. McCall’s parents, and the father of Mrs. McCall’s son sued the United States under the Federal Tort Claims Act, as Mrs. McCall’s care took place at a military hospital.  The United States District Court for the Northern District of Florida found the United States liable and determined that the plaintiffs’ economic damages totaled $980,462.40 and that their non-economic damages totaled $2,000,000.00.  However, the district court limited the plaintiffs’ total recovery of non-economic damages to $1,000,000.00 pursuant to Florida Statutes §766.118(2) (2005), which imposes a cap on wrongful death non-economic damages in medical malpractice cases. 

 

§766.118(2) provides:

 

(2) Limitation on noneconomic damages for negligence of practitioners.–

 

(a) With respect to a cause of action for personal injury or wrongful death arising from medical negligence of practitioners, regardless of the number of such practitioner defendants, noneconomic damages shall not exceed $500,000 per claimant. No practitioner shall be liable for more than $500,000 in noneconomic damages, regardless of the number of claimants.

 

(b) Notwithstanding paragraph (a), if the negligence resulted in a permanent vegetative state or death, the total noneconomic damages recoverable from all practitioners, regardless of the number of claimants, under this paragraph shall not exceed $1 million. In cases that do not involve death or permanent vegetative state, the patient injured by medical negligence may recover noneconomic damages not to exceed $1 million if:

 

1. The trial court determines that a manifest injustice would occur unless increased noneconomic damages are awarded, based on a finding that because of the special circumstances of the case, the noneconomic harm sustained by the injured patient was particularly severe; and

 

2. The trier of fact determines that the defendant’s negligence caused a catastrophic injury to the patient.

 

(c) The total noneconomic damages recoverable by all claimants from all practitioner defendants under this subsection shall not exceed $1 million in the aggregate.

 

On appeal to the Eleventh Circuit, the plaintiffs argued that the statutory cap violates the Equal Protection Clause and constitutes an unlawful taking.  They also asserted that the cap violates numerous provisions of the Florida Constitution.  The Eleventh Circuit held that §766.118 does not constitute a taking in violation of the Florida Constitution and that it does not violate either the Equal Protection Clause or the Takings Clause of the U.S. Constitution.  However, the court certified to the Florida Supreme Court four questions regarding the remaining challenges to the statutory cap under the Florida Constitution.

 

Supreme Court Proceedings

The Florida Supreme Court found that §766.118 violates the Equal Protection Clause of the Florida Constitution, which provides that all natural persons are equal before the law, because the cap on wrongful death non-economic damages imposes unfair, illogical burdens on injured parties when medical negligence gives rise to multiple claims.  Claimants in cases involving multiple claims do not receive the same rights or full compensation as compared to claimants in cases involving one claim.  In this case, three separate non-economic damage determinations were assessed by the district court.  The damages suffered by Mrs. McCall’s parents were determined to be $750,000.00 each and the damages suffered by Mrs. McCall’s surviving son were determined to be $500,000.00.  Applying the caps, the federal court reduced these amounts so that each claimant would receive only half of his or her respective damages.  However, if Mrs. McCall had been only survived by her son, he would have recovered the full amount of his non-economic damages:  $500,000.00.  Thus, the cap limited the recovery of a surviving child simply because others also suffered losses. 

 

The Court stated that in addition to causing discrimination between classes of claimants, the caps also violate Florida’s Equal Protection Clause because they bear no rational relationship to a legitimate state objective.  In analyzing this issue, the Court analyzed at length the Florida Legislature’s justification for the caps – the alleged medical malpractice insurance crisis in Florida – and found that there was no support for such a conclusion.  Moreover, even if there were such a crisis, there was no evidence that the statutory caps alleviated the crisis.  Finally, even if there were a crisis when §766.118 was enacted, no rational basis existed to justify the continued use of the caps. 

 

Conclusion

 

In sum, the Court held that the caps on wrongful death non-economic damages set forth in §766.118 violate the Equal Protection Clause of the Florida Constitution.  As the Court made clear, however, “The legal analyses for personal injury damages and wrongful death damages are not the same.  The present case is exclusively related to wrongful death, and our analysis is limited accordingly.”  As such, the Court’s opinion is not applicable to the caps in place when a medical malpractice claimant does not die.

 

 

Florida High Court Liberally Construes Self-Insured Retention Endorsement

By on Posted in Florida

 

             On February 6, 2014, the Florida Supreme Court took a liberal view of self-insured retentions (SIRs) and held that an insured can apply indemnification payments from a third party to satisfy its SIR under a general liability policy.  See Intervest Constr. of Jax, Inc. v. Gen. Fid. Ins. Co., 39 Fla. L. Weekly S75, 2014 WL 463309 (Fla. Feb. 6, 2014) (to read the slip opinion click here).  The Court decided the case on two certified questions from the Eleventh Circuit Court of Appeals.

            General Fidelity issued a general liability insurance policy to a homebuilder with an SIR of $1 million.  The SIR endorsement stated that General Fidelity would provide coverage only after the insured had exhausted the $1 million SIR.  The homebuilder contracted with a third-party to, among other things, install attic stairs in a house under construction.  The contract between the homebuilder and the subcontractor contained an indemnification provision requiring the subcontractor to indemnify the homebuilder for any damages resulting from the subcontractor’s negligence.

            After the house was built, the homeowner fell while using the attic stairs and sued only the homebuilder for her injuries.  The homebuilder sought indemnification from the subcontractor.  Following mediation the parties and their insurers agreed to settle the homeowner’s claim for $1.6 million with the subcontractor’s insurer paying the homebuilder $1 million to settle the homebuilder’s indemnification claim against the subcontractor; the homebuilder would then pay the $1 million to the homeowner.  A dispute then arose as to whether the homebuilder or its insurer was responsible for paying the $600,000 settlement balance.

            The homebuilder argued that the $1 million contribution from the subcontractor’s insurer satisfied its SIR obligation and that General Fidelity was required to pay the remaining $600,000.  General Fidelity, on the other hand, argued that the $1 million payment to settle the indemnity claim did not reduce the SIR because the payment originated from the subcontractor, not its insured.  Thus, General Fidelity maintained that the terms of the policy required its insured—the homebuilder—to pay the additional $600,000 to settle the homeowner’s claim.

            The Court adopted the position advanced by General Fidelity.  While the SIR endorsement required that the payment be “made by the insured,” the Court looked to other policies’ SIR provisions that contained more restrictive language.  These other policies specify that the SIR must be paid from the insured’s “own account” or make clear that payments from additional insureds or insurers could not satisfy the SIR.  Because the General Fidelity policy did not employ this more restrictive language, the Court took a more expansive view of General Fidelity’s SIR endorsement.

            The second prong of the dispute centered around whether the transfer of rights provision in the General Fidelity policy gave General Fidelity priority over its insured to the $1 million that the subcontractor’s insurer paid.  If it did, then the homebuilder could not claim the $1 million as satisfying the SIR.  The majority found that the provision did not give General Fidelity priority over its insured.  The majority rested it conclusion on the fact that the provision “does not address the priority of reimbursement nor does the clause provide that it abrogates the ‘made whole doctrine.’”

            Justices Polston and Canady dissented.  They believed the majority had “rewritten” the SIR provision “to allow satisfaction of the self-insured retention limit in a manner other than the manner specifically provided for in the policy.”  They also characterized the majority’s reasoning as creating a “legal fiction” that “effectively reads the phrase ‘by you’ out of [the SIR endorsement].”

            To view the history of this case in the Florida Supreme Court, please click here.

            Image courtesy of Flickr by Alan Cleaver (no changes).

Illinois Supreme Court Agrees to Decide Complex Landfill Dispute

By Kirk Jenkins on Posted in Illinois

 

Can the Illinois state courts order mandatory cleanups of older landfills? The Illinois Supreme Court agreed to decide that issue late last month, allowing a petition for leave to appeal in People ex rel. Madigan v. J. T. Einoder, Inc.

Einoder involves a husband and wife and two corporations which they control. The landfill site was held in a land trust for the benefit of one of the corporate defendants, which was wholly owned by the husband. The other corporate defendant – owned 90% by the wife and 10% by the husband – leased equipment and operators to the first corporation for use at the site.

In 1995, two years after the site was purchased, the state Environmental Protection Agency received anonymous reports of open dumping there. An inspector visited and issued a citation for dumping without a permit. Additional citations were issued in 1996 and 1997. The Agency conducted a multi-hour inspection in 1998, and subsequently, another citation was issued for alleged dumping and disposal of waste without a permit.

The Agency initially threatened suit in 1998, but agreed to dig test pits first to determine the content of material at the site. After sporadic inspections in 1999 and 2000 revealed an increasing amount of “clean” construction and demolition debris (“CCDD”) above the grade of the surrounding land, the Attorney General filed suit in 2000, alleging open dumping, unpermitted waste disposal operations, development and operation of a solid waste management site without a permit, and various other violations.

Following a bench trial, the Circuit Court found for the State on all counts relating to waste disposal and operation of a waste disposal site without a permit, but directed a verdict for the defendants on various more minor charges. The court then proceeded to the remedies portion of the bifurcated trial, and ultimately issued a permanent injunction requiring the defendants to remove the above-grade waste pile and undertake groundwater testing. The court also imposed substantial fines against both corporations and both individuals.

The Appellate Court affirmed the trial court. The court began by rejecting the defendants’ claim that the trial court lacked jurisdiction over the agency’s complaint because the agency had not properly notified the defendants of its intent to sue the individuals in their individual capacities. The court found that the notice requirements were not jurisdictional, and given the extensive contact between the agency and the defendants leading up to the suit, the defendants could not show prejudice.

The Circuit Court’s finding that defendants had operated a waste disposal site without a permit depended on a finding that defendants’ CCDD didn’t constitute “waste.” The statute provided that CCDD was exempt from permit requirements (to the degree Federal law didn’t provide differently) only when “used as fill materials below grade.” The defendants attempted to avoid this language by pointing to three excerpts of testimony, but the Appellate Court concluded that two statements had been taken out of context, and the third snippet of testimony from the bench trial was contrary not only to the plain language of the statute, but even to the remainder of that witness’ testimony. The defendants challenged the finding of personal liability against the wife, but the Appellate Court found sufficient evidence to support the court’s finding that the wife had been involved in the operations.

The court then turned to what is likely to be the central issue before the Supreme Court: the availability of mandatory injunctive relief. The parties agreed that the pre-2004 form of the Environmental Protection Act didn’t authorize such relief, while the post-2004 form of the Act did authorize it. So the question was whether the 2004 amendments applied retroactively – a simple question of statutory construction. Although Section 42(e) of the Act, the provision directly at issue, didn’t indicate a temporal reach, the Court concluded that several other clauses of the 2004 Act suggested that the legislature intended the statute to apply retroactively: the Act was intended to “restore, protect and enhance” Illinois’ environment, and to require that “adverse effects” be mediated by “those who cause them.” In so holding, the court followed the decision of the Second District in State Oil Co. v. People.

The Court concluded by upholding the fines assessed against the corporate and individual defendants. Sufficient evidence supported the view that the defendants had derived economic benefit from their violations, the Court found, and the defendants’ continued operations for five years after receiving their initial violation notices suggested that severe penalties were needed. Justice Mary Anne Mason dissented solely from the portion of the opinion holding that the 2004 Act applied retroactively.

We expect Einoder to be decided in six to eight months.

Image courtesy of Flickr by Ell Brown (no changes).

Illinois Supreme Court to Decide If Innocent Insured Doctrine Applies to Renewal Application

By Kirk Jenkins on Posted in Illinois

 

The concept behind the innocent insured doctrine is simple: where there are multiple insureds on an insurance policy, a breach by one does not necessarily eliminate coverage for those not personally involved in the breach. But what if the breach occurs in conjunction with a renewal application? That’s the question the Illinois Supreme Court agreed to decide late last month in Illinois State Bar Association Mutual Insurance Co. v. Law Office of Tuzzolino & Terpinas.

The case began when a former client filed a malpractice suit against one of the partners. The attorney persuaded the former client to drop the suit and instead retain the attorney to sue the attorney who handled a related bankruptcy. That suit was dismissed, however. When the client discovered the dismissal, the attorney made an offer to settle the malpractice claim, but the offer was rejected.

Not long after, the same partner filed a renewal form with the firm’s malpractice insurance carrier. In response to a question on the form, “[h]as any member of the firm become aware of a past or present circumstance[s] which may give rise to a claim that has not been reported,” the attorney answered “no.” The attorney signed the form, but the second partner was not required to do so.

A month after completion of the renewal form, the second partner received a lien letter from the attorney hired to represent the first partner in the impending malpractice claims. The second partner forwarded the information to the insurer. He alleges that this was the first time he was aware of any potential claims arising out of his partner’s representation of the client.

The insurer filed suit seeking rescission of the policy with respect to both partners and the firm, arguing that the first partner’s failure to disclose the potential claim voided the policy ab initio. The second partner counterclaimed for a declaratory judgment that he was covered by the policy in connection with the client’s suit.

The plaintiff moved for summary judgment on all counts against all defendants.   The trial court granted the motion, finding that the insurance contract was indivisible, and could not be rescinded with respect to one partner only. The court accordingly held that the insurer had no obligation to defend the firm or the innocent partner. The innocent partner and the firm appealed.

The Appellate Court reversed.

The attorney argued that the innocent insured clause contained in the policy preserved coverage. The court pointed out, however, that the attorney was ignoring the distinction between a misrepresentation during the life of the policy and one in the application process. Therefore, the question was not whether the language of the policy covered the innocent partner, but rather whether the common law innocent insured doctrine permitted the policy to remain in place as to him.

The common law innocent insured doctrine applies when two or more insureds maintain a policy and one commits an act that would normally void the policy but a “reasonable person would not understand that the wrongdoing of [the] coinsured would prevent recovery.” The doctrine is often applied, for example, where one of multiple owners sets fire to a property without his or her co-owner’s knowledge.

The Appellate Court rejected the insurer’s claim that the first partner’s misrepresentation rendered the policy void ab initio. In fact, the Court held, the policy was voidable, not void. For that reason, the Court chose to follow Economy Fire & Casualty Co. v. Warren. In Warren, a husband and wife co-owned a house destroyed by fire. The couple settled their claim with their homeowner’s policy insurer. When it became known that the wife has set the fire, the insurer tried to rescind the settlement agreement on grounds of fraud. The Court applied the innocent insured doctrine to hold that the husband – who claimed to have no knowledge of his wife’s actions – was entitled to retain half of the settlement.

The Court further held that Section 154 of the Insurance Code (215 ILCS 5/154) – which provides that no misrepresentation or false warranty in an insurance application can defeat coverage unless material or made with an intent to deceive – supported application of the common law innocent insured doctrine.

Finally, the Court held that public policy favored application of the doctrine, since allowing rescission would mean that the innocent party had no coverage not only in connection with the plaintiff’s claim, but in connection with any claim during the policy period.

We expect Tuzzolino & Terpinas to be decided in six to eight months.

Image courtesy of Flickr by Alan Cleaver (no changes).

The Future is Here – Is the Internet a Place?

By on Posted in California

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 (no changes).

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

By Kirk Jenkins on Posted in California

 

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 (no changes).

Illinois Supreme Court to Decide Whether Self-Critical Analysis Privilege Exists in Illinois

By Kirk Jenkins on Posted in Illinois

 

We continue our previews of the civil cases accepted for review in the closing days of the Illinois Supreme Court’s March term with Harris v. One Hope United, Inc. In Harris, the First District declined to recognize the existence of a self-critical analysis privilege in Illinois, calling the recognition of new common law privileges “a matter best left to the legislature.”

The self-critical analysis privilege is a relatively recent innovation in the common law, as privileges go. The privilege seems to have been first recognized by the federal district court in Washington, D.C. in a 1970 medical malpractice case, Bredice v. Doctors Hospital, Inc. Since that time, a few jurisdictions have adopted narrow versions of the privilege. As a general rule, courts require proponents of the privilege to prove at least three elements: (1) the information sought comes from a critical self-analysis undertaken by the party seeking protection; (2) the public has a strong interest in preserving the free flow of the type of information sought; and (3) the information must be of the type whose flow would be curtailed if discovery were allowed. Some courts have added a fourth element: the document was prepared with the expectation that it be kept confidential, and it has in fact been kept confidential.

The principal defendant in Harris is a private contractor which works with the state Department of Children and Family Services providing services to troubled families. DCFS received a complaint in late 2009 alleging neglect and/or abuse of a small child. The DCFS assigned the matter to the defendant, which commenced an investigation. Two months later, the child was hospitalized, and upon release, was sent to live with her aunt. The child was soon returned to her mother, however, and not long after, was accidentally drowned when her mother left her unattended.

The plaintiff – the Public Guardian of Cook County – filed a wrongful death suit against the defendant and various others. The plaintiff alleged that the defendant was negligent in permitting the child to be returned to her mother, given the mother’s history and failure to complete parenting classes.

During a deposition, the executive director of the defendant testified that the defendant maintains a “continuous quality review department” which investigates cases and prepares reports. The reports evaluate the quality of the defendant’s services, identify “gaps in service delivery” and assess outcomes. The defendant refused to produce the report, the plaintiff moved to compel production, and the defendant opposed, citing the self-critical analysis privilege.

The trial court found that the privilege did not apply. At defendant’s request, the trial court held defendant in “friendly contempt” and fined defendant $1 per day pending production of the report. The defendant then appealed the contempt order.

The Appellate Court began by observing that nothing in the Illinois Rules of Evidence suggests the existence of a self-critical analysis privilege. Nor do any court rules support such a privilege claim. The court observed that what case law there was in Illinois on self-critical analysis had consistently refused to recognize the privilege.

The defendant argued that the privilege arises from the “intersect[ion]” of statute, public policy, discovery rules and evidence. Recognizing the privilege would further the purposes of legislation like the Child Death Review Team Act (20 ILCS 515/1), defendant suggested, but the Court concluded that the Act actually favors disclosure of the circumstances of an accidental death in hopes of preventing future tragedies. Defendant pointed out that the Medical Studies Act (735 ILCS 5/8-2101) specifically allows withholding of internal quality control documents by hospitals, but the Court declined to apply the Act by analogy to the defendant’s situation.

Although the court affirmed the order compelling production of the report, it recognized that the defendant had shown “no disdain” for the trial court, and had merely refused to comply “in good faith to secure appellate interpretation of this rather novel issue.” Accordingly, the court vacated the contempt finding.

Given the stakes, we should see multiple amicus curiae briefs before the Supreme Court. The case is likely to be argued in the fall, with a decision near the end of the year.

Image courtesy of Flickr by j3net (no changes).

Illinois Supreme Court to Clarify Mailing Standards for Notice of Appeal

By Kirk Jenkins on Posted in Illinois

 

The Illinois Supreme Court has decided a number of cases in recent years involving choices between form and substance or strict and substantial compliance. In most (but not all) cases, a majority of the Justices have sided with substantial compliance and proceeded to the merits. The Court took one more such case as the March term wound down. Huber v. American Accounting Association, a decision from the Fourth District, poses a question of considerable interest to appellate lawyers: what proof of timely filing is required when a notice of appeal is mailed before the due date, but not received by the clerk until after?

The defendant association incorporated in 1935. In 1996, the State dissolved the Association for failure to file an annual report. Six years later, the Association incorporated again, but the new entity appears to have been a shell; the Association deposited all dues paid by members into the 1935 Association’s account, and no assets were merged. In June 2011, the Association sought to voluntarily dissolve the 2002 entity and reinstate the 1935 entity. Both requests were granted.

Two months later, the plaintiff petitioned to dissolve the 1935 entity and vacate the dissolution of the 2002 entity, and then to judicially dissolve the 2002 Association for misconduct. The Association moved to dismiss, arguing (1) that there was no jurisdiction over the long-dissolved 2002 entity; (2) the plaintiff had no standing, having never been a member of the 2002 Association; (3) plaintiff was not entitled to any relief against the 1935 Association, having alleged no misconduct by the earlier entity; and (4) plaintiff failed to make the necessary showings for a preliminary injunction. The trial court granted the motion to dismiss.

The plaintiff appealed, but the defendant raised a preliminary issue: whether the plaintiff had timely filed a Notice of Appeal sufficient to give the Appellate Court jurisdiction over the appeal.

The judgment in Huber was filed on March 6. Rule 303(a) provides that a notice of appeal has to be filed within 30 days of the entry of the judgment or final order appealed from.

But Illinois also has a mailbox rule of sorts. According to Rule 373:

If received after the due date, the time of mailing, or the time of delivery to a third-party commercial carrier for delivery to the clerk within three business days, shall be deemed the time of filing. Proof of mailing or delivery to a third-party commercial carrier shall be as provided in Rule 12(b)(3).

Rule 12(b)(3) provides that proof of service consists of a “certificate of the attorney, or affidavit of a person other than the attorney, who deposited the document in the mail or delivered the document to a third-party commercial carrier, stating the time and place of mailing or delivery, the complete address which appeared on the envelope or package, and the fact that proper postage or the delivery charge was prepaid.”

The clerk received the plaintiff’s Notice of Appeal on April 9, thirty-four days after judgment. The envelope in which the NOA arrived clearly showed a postmark date of April 3 – twenty-seven days after entry of judgment, three days before the deadline.

What the NOA didn’t have, however, was either of the required proofs from Rule 12(b)(3) – an attorney’s certificate or a non-attorney affidavit.

So: is a NOA clearly mailed before the deadline nevertheless untimely because it didn’t prove mailing in the proper way?

The Appellate Court districts are split on the issue. The Second District held in People v. Hansen that a clearly legible postmark was good enough, notwithstanding the lack of an appropriate proof of service. The First (People v. Tlatenchi) and Fourth (People v. Smith and People v. Blalock)Districts have held that an attorney certificate or affidavit is necessary in every case.

The Huber Court sided with the Fourth District, following Blalock. Because the plaintiff didn’t comply with Rule 12(b)(3), the limited mailbox rule in Rule 373 didn’t apply. “[P]roof of a postmarked envelope contained within the record does not correct this defect,” the Court wrote, “nor does it serve as a substitute for the omitted affidavit.” The plaintiff’s notice of appeal was accordingly untimely, and the appeal was dismissed.

We expect a decision in Huber in eight to twelve months.

Image courtesy of Flickr by WallyGrom (no changes).

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