Litigation Section News:
• Senior Editor, Eileen C. Moore, Associate Justice,
California Court of Appeal, Fourth District
• Managing Editor, Reuben Ginsburg
• Editor, Jessica Riggin
Table of Contents of This Issue
“A License to Practice Law is Not a License to Take Advantage of An Elderly And Mentally Infirm Client.” - Court of Appeal opinion.
An opinion beginning, “An ethical estate planning lawyer will plan for his client, not for himself,” may foretell trouble for the lawyer. Here, the nieces of a decedent successfully moved to invalidate a “donation” of $5 million to the lawyer in their uncle’s will and trust. The decedent grieved the death of his domestic partner and was “more often drunk than sober during the last six months of his life. He would drink heavily, howl like a dog, and fall down and injure himself. Neighbors had to pick him off the floor, help him out of his car, and shower him.” Probate Code § 21380 provides that a provision in a will making a donative transfer to the person who drafted the instrument is presumed to be the product of undue influence. The trial court declared the will and trust invalid, removed the lawyer as trustee, found the lawyer caused the loss of the original trust instrument, and ordered the lawyer to turn over the trust assets and pay $1,256,971 in attorney fees. Agreeing with the trial court, the Court of Appeal affirmed the judgment.
(Butler v. LeBouef (Cal. App. 2nd Dist., Div. 6, June 20, 2016) 248 Cal.App.4th 198.)
Summary Judgment Reversed in Wrongful Termination Case.
Two years after plaintiff was hired by a university and two months after she was diagnosed with a heart problem that required an external monitor for two to three weeks, a new department head ventured to restructure the department. According to the plaintiff, after the department head became aware of her health condition, she took such actions as eliminating plaintiff’s main responsibilities, looking over plaintiff’s shoulder as she worked, arranging meetings previously arranged by plaintiff, and sending plaintiff’s work to freelancers. Then plaintiff’s job classification was reduced, although her salary was not. Plaintiff later emailed the department head regarding the scheduling of a “ ‘few days off’ ” for a procedure to insert an internal heart monitor. The department head did not respond to plaintiff’s requests, but within two months of the initial request, the department head decided to eliminate plaintiff’s new position, despite the fact that plaintiff had seniority over another person who would not be terminated. Plaintiff was informed “that she was being laid off because her position was being eliminated due to ‘lack of work’ and ‘budget reasons.’ ” Plaintiff sued under FEHA (Fair Employment and Housing Act; Gov. Code, §§ 12900-12966) for disability discrimination, failure to accommodate, failure to engage in the interactive process, and retaliation. Plaintiff also sued for interference with her rights under CFRA (California Family Rights Act; Gov. Code, §§ 12945.1, 12945.2) and retaliation under CFRA. The trial court granted the university’s motion for summary judgment. Stating that summary adjudication was appropriate for plaintiff’s retaliation claim under FEHA but finding numerous questions of fact pertaining to plaintiff’s other claims, the Court of Appeal reversed the remainder of the trial court’s order.
(Moore v. Regents of the University of California (Cal. App. 4th Dist., Div. 1, June 20, 2016) 248 Cal.App.4th 216.) http://www.courts.ca.gov/opinions/documents/D067120.DOC
Summary Judgment in Favor of President of a Homeowners Association Reversed.
Defendant was president of a homeowners association, and the HOA sued her in connection with actions she took as president. The trial court granted summary judgment to defendant as to the claim for breach of fiduciary duty on the basis of the business judgment rule and an exculpatory provision contained in the association’s covenants, conditions, and restrictions (CC&Rs). The association appealed. Noting that case law is clear that conduct contrary to governing documents may fall outside the business judgment rule, the Court of Appeal reversed, stating, “We agree that the record discloses triable issues of fact that should not have been resolved on summary judgment.” Specifically, the appellate court stated that disputed issues of material fact exist as to whether defendant exercised reasonable diligence in connection with the actions at issue, such as investigating whether or not a roofer was licensed, hiring the roofer without a contract, and paying inflated charges. (Palm Springs Villas II Homeowners Assn., Inc. v. Parth (Cal. App. 4th Dist., Div. 1, June 21, 2016) 248 Cal.App.4th 268.) http://www.courts.ca.gov/opinions/documents/D068731M.DOC
Objectors to Class Action Settlement Did Not Demonstrate Error.
In this class action, plaintiffs contend defendant marketed and labeled two face creams without disclosing all of the ingredients. Before the class was certified, defendants agreed to settle the action. Nine class members objected to the settlement. The objectors contended the settlement amount was inadequate because the named plaintiffs did not allege they suffered any physical injuries; whereas, the objectors did suffer physical injuries. Some of the objectors also alleged inadequate notice and that the attorney fee and incentive awards in the settlement indicated collusion. The trial court overruled the objections. The appellate court held the objectors did not demonstrate error, finding the trial court did not abuse its discretion in making its rulings and orders, and the one-time publication of notice of settlement did not violate the CLRA (Consumer Legal Remedies Act; Civ. Code, § 1750 et seq.). (Choi v. Mario Badescu Skin Care, Inc. (Cal. App. 2nd Dist., Div. 3, June 21, 2016) 248 Cal.App.4th 292.) http://www.courts.ca.gov/opinions/documents/B257480A.DOC
Independent Medical Review Late, But Valid Nonetheless.
The issue presented in this appeal relates to Labor Code § 4610.6, which the Legislature adopted in 2012 as part of reforms to California’s workers’ compensation system. The section created a new procedure that an injured worker may use to challenge an employer’s timely denial, delay, or modification of a request for medical treatment. It requires the organization conducting an independent medical review (IMR) to complete its review and make its determination in writing within 30 days after receipt of the request for review. Here, the IMR determination was received after the 30-day period. The appeals board concluded the 30-day requirement is mandatory and a determination after that period is invalid. The Court of Appeal annulled the decision of the appeals board, stating: “We disagree with the appeals board and conclude the 30-day time limit in section 4610.6, subdivision (d), is directory and, accordingly, an untimely IMR determination is valid and binding upon the parties as the final determination of the director. Our interpretation of the statute in this manner is consistent with long-standing case law regarding the mandatory-directory dichotomy, and implements the Legislature’s stated policy that decisions regarding the necessity and appropriateness of medical treatment should be made by doctors, not judges.”
(State Comp. Ins. Fund v. Workers’ Comp. Appeals Bd. (Cal. App. 2nd Dist., Div. 3, June 22, 2016) 248 Cal.App.4th 349.) http://www.courts.ca.gov/opinions/documents/B269038.DOC
Court of Appeal Reverses Trial Judge’s Refusal to Compel Medical Malpractice Case Into Arbitration.
In a medical malpractice action, the trial court denied defendant’s petition to compel the matter into arbitration. The trial court reasoned the liposuction procedure did not involve interstate commerce because it was conducted wholly within California and the parties contracted that the venue would be the Los Angeles Superior Court, with California as the jurisdiction. The Court of Appeal reversed, stating: “The uncontroverted evidence shows defendants’ medical practice bears on interstate commerce in a substantial way such that it falls within the scope of the Federal Arbitration Act. Approximately 20 percent of the medical supplies were shipped from out of state.” With regard to the 30-day right to rescission required by Code of Civil Procedure § 1295, subdivision (c), the trial court found there was no agreement because the patient died before that period ended, but the Court of Appeal held that rescission “right” is preempted by the Federal Arbitration Act.
(Scott v. Yoho (Cal. App. 2nd Dist., Div. 5, June 22, 2016) 248 Cal.App.4th 392.)
Court of Appeal Reverses Trial Judge’s Refusal to Compel Employment Discrimination Case Into Arbitration.
Plaintiff alleges racial discrimination, harassment, and retaliation towards himself and other African-American employees by defendants. The employer moved to compel arbitration. The alleged arbitration agreement was attached as Appendix A to an employee handbook plaintiff acknowledged receiving. Page one of the handbook states: “ ‘It is each employee’s responsibility to read, understand and follow the provisions of this Handbook; accordingly, you will find it to your advantage to read promptly the entire Handbook.’ ” Page nine of the handbook explains that agreement to the company’s dispute resolution policy is “ ‘an absolute prerequisite to your hiring. . . . This means that neither you nor the Company can file a civil lawsuit against the other to seek redress for any employment related grievances.’ ” The trial court denied defendant’s petition to compel the matter into arbitration. Finding the agreement to arbitrate is not illusory and that the agreement is not unconscionable, the Court of Appeal reversed. (Harris v. TAP Worldwide, LLC (Cal. App. 2nd Dist., Div. 5, June 22, 2016) 248 Cal.App.4th 373.) http://www.courts.ca.gov/opinions/documents/B262504.DOC
U.S. Supreme Court Approves Holistic Admissions Approach by University.
Plaintiff, who was not in the top 10% of her high school class, was denied admission to the University of Texas’s freshman class. She filed suit, alleging the university’s consideration of race as part of its admission process violates the Equal Protection Clause and disadvantages her as well as other Caucasian applicants. The university uses an undergraduate admissions system containing two components. First, it offers admission to students who graduate at the top 10% of a Texas high school. It then fills the remainder of its incoming freshman class by combining the applicant’s SAT score and high school academic performance with the applicant’s Personal Achievement Index, a holistic review containing numerous factors, including race. The United States Supreme Court held the university’s race-conscious admissions program is lawful under the Equal Protection Clause. (Fisher v. Univ. of Texas at Austin (June 23, 2016) 136 S.Ct. 2198.) https://www.supremecourt.gov/opinions/15pdf/14-981_4g15.pdf
Breath Test: Yes; Blood Test: Only With a Warrant.
Determining whether a driver who has been drinking is over the legal limit requires a test, and many drivers decline to give permission to have a test performed. Every state has long had what are known as implied consent laws, which assume that by driving a vehicle the driver has agreed to submit to a chemical test, and punish drivers who refuse to give their consent for a test. The United States Supreme Court was called upon to decide whether laws punishing drivers for not consenting violate the Fourth Amendment. The high court held the Fourth Amendment permits warrantless breath tests incident to arrests for drunk driving, but not warrantless blood tests. (Birchfield v. North Dakota (June 23, 2016) 136 S.Ct. 2160.) https://www.supremecourt.gov/opinions/15pdf/14-1468_8n59.pdf
Supplier of Materials Does Not Always Enjoy Protection of Component Parts Doctrine.
A foundry worker developed pulmonary fibrosis. He and his wife filed an action against a variety of companies that supplied products for use in the manufacturing process, asserting their products, when used as intended, produced harmful fumes and dust that were a substantial cause of his pulmonary illness. In Maxton v. Western States Metals (2012) 203 Cal.App.4th 81, the appellate court held that under the so-called component parts doctrine set forth in Artiglio v. General Electric Co. (1998) 61 Cal.App.4th 830, 838-839, a supplier of materials was not liable for injuries suffered under circumstances very similar to those involved in the present case. In reliance upon Maxton, the trial court sustained defendants’ demurrer without leave to amend. The Court of Appeal disagreed with Maxton and held the component parts doctrine set forth in Artiglio is not applicable because the injury in this case was not caused by a finished product but by the supplied product itself. The California Supreme Court granted review and affirmed the Court of Appeal’s decision, stating: “[T]he protection afforded to defendants by the component parts doctrine does not apply when the product supplied has not been incorporated into a different finished or end product but instead, as here, itself allegedly causes injury when used in the manner intended by the product supplier. Because the trial court sustained defendants’ demurrer solely on the basis of the component parts doctrine, the Court of Appeal properly concluded that the trial court’s dismissal of plaintiffs’ action cannot be upheld.”
(Ramos v. Brenntag Specialties, Inc. (June 23, 2016) 63 Cal.4th 500.)
Your City Hall at Work.
Plaintiffs obtained a building permit to construct a crematorium on a site in defendant city. Five days later, the city council passed an emergency ordinance requiring a conditional use permit to operate new crematoria. The planning commission denied plaintiffs’ administrative appeal of a determination that the emergency ordinance applied to the proposed crematorium, and plaintiffs brought the present action in superior court. Both the trial court and the appellate court held the emergency ordinance was not sufficiently necessary to the public welfare to justify an impairment of plaintiffs’ vested right, rejecting the city’s claims that (a) plaintiffs had no vested right, (b) even if plaintiffs had a vested right, it was not impaired, and (c) even if there was a vested right that was impaired, the impairment was sufficiently necessary to the public welfare.
(Stewart Enterprises, Inc. v. City of Oakland (Cal. App. 1st Dist., Div. 1., June 23, 2016) 248 Cal.App.4th 410.) http://www.courts.ca.gov/opinions/documents/A143417.DOC
Failed Attempt to Make an End Run Around MICRA Limits.
A patient was admitted to a Kaiser Foundation Hospitals (Kaiser Hospitals) emergency room and died after she was transferred to another hospital. In this action, the patient’s family sued Kaiser Foundation Health Plan (Health Plan), alleging the patient, who was not a Health Plan member, received treatment inferior to that provided to Health Plan members. Health Plan moved for summary judgment, arguing that none of its employees had ever been contacted or consulted regarding the patient’s care or treatment, and that it did not direct or require health care providers to deal with patients in any particular way. The trial court granted summary judgment to Health Plan. On appeal, plaintiffs contend Health Plan, Kaiser Hospitals, and Southern California Permanente Medical Group (SCPMG) formed a single enterprise and Health Plan could be liable for any breach of duty by Kaiser Hospitals or SCPMG. In affirming the grant of summary judgment, the Court of Appeal stated: “[T]here is nothing inequitable in requiring Appellants to look to Kaiser Hospital and SCPMG—the providers at issue—for compensation for their claims; appellants are not without recourse or remedy. Appellants, however, seek to hold Health Plan liable because it is not subject to the Medical Injury Compensation Reform Act of 1975 (MICRA) limitation of damages. (Civ Code, § 3333.2.) The fact that health care providers, and not health plans, are subject to MICRA is not an inequitable result, but a public policy determination made by the Legislature.” (Gopal v. Kaiser Foundation Health Plan, Inc. (Cal. App. 2nd Dist., Div. 1, June 23, 2016) 248 Cal.App.4th 425.) http://www.courts.ca.gov/opinions/documents/B259808.DOC
Undue Burden On Abortion Access.
Texas passed a statute, two provisions of which are at issue here. The first requires that a physician performing or inducing an abortion must have active admitting privileges at a hospital that is located not farther than 30 miles from the location at which the abortion is performed or induced. The second states the minimum standards for an abortion facility must be equivalent to the minimum standards adopted for surgical centers. A group of abortion providers filed this action seeking an injunction, contending both provisions violate the Fourteenth Amendment as interpreted in Planned Parenthood of Southeastern Pa. v. Casey (1992) 505 U.S. 833. The United States Supreme Court held in favor of plaintiffs, noting, “Texas seeks to force women to travel long distances to get abortions in crammed-to-capacity superfacilities.” The high court concluded, “neither of these provisions offers medical benefits sufficient to justify the burdens upon access that each imposes. Each places a substantial obstacle in the path of women seeking a previability abortion, each constitutes an undue burden on abortion access [citation], and each violates the Federal Constitution.”
(Whole Woman's Health v. Hellerstedt (June 27, 2016) 136 S.Ct. 2292.) https://www.supremecourt.gov/opinions/15pdf/15-274_p8k0.pdf
Plaintiff Failed to Show a Proabaility of Prevailing on Defamation Claim Based on Statements of “Ditzy” Character in Movie.
Plaintiff is a well-known author in the environmental field, pointing out health dangers of the use of various electrical devices and household items. Based on some statements of a character in the film “American Hustle,” plaintiff brought the instant action for defamation and related claims. The dialogue that concerned plaintiff was about a microwave oven, with such comments as microwaves take the nutrition out of food and set the house on fire, the totality of which plaintiff believes damaged his reputation by misquoting him. Based on the character’s statements, plaintiff sued defendants who are entertainment companies, producers, and distributors of the film. Defendants filed a special motion to strike the complaint, contending the complaint was based on speech that is of public interest or concerns a person in the public eye, and that plaintiff could not show a probability of prevailing on his claims. Defendants appealed from the denial of their motion. The Court of Appeal reversed, concluding the complaint arose from protected activity, but plaintiff failed to establish a probability of prevailing on his claims. The appeals court pointed out the general tenor of “American Hustle” was "entirely farcical" with regard to the oven scene, also noting the “ditzy nature” of the person who commented on microwave ovens. (Brodeur v. Atlas Entertainment, Inc. (Cal. App. 2nd Dist., Div. 8, June 27, 2016) 248 Cal.App.4th 665.) http://www.courts.ca.gov/opinions/documents/B263379.DOC
Like a Good Neighbor….
In an action against an insurance company for breach of insurance contract, bad faith, and elder abuse involving a claim for damage to a home after heavy rains, the trial court granted summary adjudication/summary judgment and struck the request for punitive damages in favor of the insurance company. The Court of Appeal affirmed with regard to the bad faith and elder abuse causes of action and the request for punitive damages, but reversed on plaintiffs’ claim for breach of insurance contract. The appellate court noted there were triable issues of fact concerning work undertaken in the master bedroom and the replacement of drywall ceilings.
(Paslay v. State Farm General. Ins. Co. (Cal. App. 2nd Dist., Div. 4, June 27, 2016) 248 Cal.App.4th 639.) http://www.courts.ca.gov/opinions/documents/B265348.DOC
“My Father Was a Statesman. I Am a Political Woman. My Father Was a Saint. I Am Not,” Indira Gandhi.
Plaintiff and defendant were rival candidates for the California Assembly. Defendant ran a 30-second commercial on television characterizing plaintiff as an unscrupulous lawyer, stating, “ ‘Legal records show that [plaintiff] is an unscrupulous lawyer.’ ” Plaintiff sued defendant for defamation. The trial court sustained defendant’s demurrer and granted his special motion to strike under Code of Civil Procedure § 425.16, finding the allegedly defamatory statements arose from protected activity and plaintiff failed to demonstrate a probability of prevailing on the merits. In affirming, the Court of Appeal noted that nothing in the record supports plaintiff’s contention that defendant acted with malice, actual knowledge of falseness, or intent to deceive. The appeals court found the statement “does not declare or imply a provably false statement of fact” and that plaintiff did not show it was probable he would prevail on the merits.
(Reed v. Gallagher (Cal. App. 3d Dist., June 29, 2016) 248 Cal.App.4th 841.) http://www.courts.ca.gov/opinions/documents/C079432.DOC
“The Only Effective Answer to Organized Greed is Organized Labor,” Thomas Donahue.
As part of a campaign designed to induce Walmart to provide better working conditions and pay to its California employees, a union organized demonstrations at Walmart stores. During the demonstrations, as many as 30 or 40 demonstrators at a time entered a store loudly chanting, singing, marching, carrying placards, taking photographs, and distributing written materials or releasing helium balloons with messages. Walmart filed a complaint for trespass. The trial court issued a permanent injunction barring defendant union from conducting demonstrations inside Walmart stores. On appeal, the union contends the trial court had no jurisdiction to enter the injunction because the matter was preempted by the National Labor Relations Act (NLRA; 29 USC § 151). Citing to Sears, Roebuck & Co. v. Carpenters (1978) 436 U.S. 80, the Court of Appeal affirmed, stating, “Sears further indicates that when a dispute involves conduct that is arguably prohibited under the NLRA and also constitutes trespass under state law, the NLRA will not preempt the state trespass claim so long as it concerns the location of union conduct, rather than the objective, purpose, or effect of the conduct. The union does not argue the in-store demonstrations are protected under the NLRA, only that the NLRA arguably prohibits the union’s conduct. This trespass case, like Sears, turned on the location of the union’s conduct, rather than its objective, purpose, or effect.”
(Wal-Mart Stores, Inc. v. United Food & Commercial Workers Internat. Union (Cal. App. 2nd Dist., Div. 8, June 30, 2016) 248 Cal.App.4th 908.) http://www.courts.ca.gov/opinions/documents/B259926.DOC
Fact Finding Done in Anticipation of Litigation.
Plaintiff began working as a firefighter and paramedic for the defendant city in 2008. She was the first and only woman to hold that position. She claims she was immediately subjected to harassment and discrimination based upon her sex, and subjected to retaliation when she complained. For its part, the city maintains that its records show that plaintiff never complained to her supervisors, to city supervisors, or to anyone in the city’s human resources department about harassment or discrimination. The U.S. Equal Employment Opportunity Commission (EEOC) sent a notice to the city that plaintiff filed a complaint against it. Pursuant to its established policy, the city conducted an investigation after hiring outside counsel. Plaintiff sought to discover the results of the investigation, and the city claimed the information was privileged. The trial court found that outside counsel was acting as a fact finder and not as an attorney who was providing legal advice and that the city waived any privilege, and ordered the information to be given to plaintiff. The Court of Appeal issued a writ of mandate for the trial court to vacate its order, concluding the trial court erred because the dominant purpose of outside counsel’s factual investigation was to provide legal services to the city in anticipation of litigation.
(City of Petaluma v. Superior Court (Cal. App. 1st Dist., Div. 3, June 30, 2016) 248 Cal.App.4th 1023.) http://www.courts.ca.gov/opinions/documents/A145437.DOC
Tolling Provision Does Not Apply to This Medical Malpractice Case.
Plaintiff is serving a life sentence in state prison, with the possibility of parole. While serving his sentence, he was taken to a hospital for medical care. More than a year later, he filed this action contending defendant hospital negligently overmedicated him and allowed an infection to develop at the intravenous site. The hospital demurred on the ground the action was time-barred under Code of Civil Procedure § 340.5. Plaintiff opposed, citing Code of Civil Procedure § 352.1, which grants a two-year tolling of the statute of limitations to persons who are imprisoned “for a term less than for life.” The trial court sustained the hospital’s demurrer, finding the tolling statute does not apply here. The Court of Appeal reversed, concluding the holding in Grasso v. McDonough (1968) 264 Cal.App.2d 597—which found the phrase “for a term less than for life” includes a life sentence with the possibility of parole—applies to the instant case. (Brooks v. Mercy Hospital (Cal. App. 5th Dist., July 1, 2016) 204 Cal.Rptr.3d 289.) http://www.courts.ca.gov/opinions/documents/F071884.DOC
Likely a Pyrrhic Victory For Injured Prisoner When Employer Does Not Have to Pay For Abuse By its Employees.
Two deputy sheriffs assaulted a jail inmate, using pepper spray on his anus and genital area. The county provided a defense under a reservation of rights. A jury awarded compensatory damages of $255,000. The deputies were also ordered to pay $50,000 in punitive damages, $189,331.67 for attorney fees, and $6,754.80 for costs. The deputies sought indemnification from their employer, and the trial court granted summary judgment to the deputies against the county on that issue. The Court of Appeal reversed, concluding that because the county’s defense was conducted under a reservation of rights, the deputies had to satisfy the requirements of Government Code § 325.2 for indemnification. The appellate court held that a reservation of rights “includes reservation of the right not to indemnify for acts committed with actual fraud, corruption or actual malice.”
(Chang v. Cty. of Los Angeles (Cal. App. 2nd Dist., Div. 5, July 1, 2016) 204 Cal.Rptr.3d 293.) http://www.courts.ca.gov/opinions/documents/B261194.DOC
No Independently Wrongful Act Need Be Alleged in Wrongful Interference Claim.
The gist of plaintiff’s complaint is that after he objected to Apple’s alleged unlawful trade practices, Apple convinced his employer to terminate him on a trumped-up charge, thereby blackballing him from his profession, which involves developing products for high-tech customers. Plaintiff sued Apple for interference with contract and with his prospective business advantage. The trial court sustained Apple’s demurrer without leave to amend. In concluding the trial court erred, the Court of Appeal noted the elements of the two claims are substantially the same, but that a plaintiff alleging business interference must also show that the defendant was wrongful by measure beyond the fact of the interference itself. In addition to holding that plaintiff was not required to prove as part of his contract interference claim that Apple’s conduct in interfering with his at-will employment contract was independently wrongful, the appellate court stated: “[Plaintiff] was not required to allege that he was directly harmed by an independently wrongful act so long as he alleged (as he did) that Apple’s wrongful act interfered with his economic relationship with [plaintiff’s employer.]”
(Popescu v. Apple Inc. (Cal. App. 6th Dist., July 1, 2016) 204 Cal.Rptr.3d 302.) http://www.courts.ca.gov/opinions/documents/H040508.DOC
Question of Fact Whether There Exists Illegal Agreement to Curb Exports.
Plaintiffs brought an antitrust action against automobile manufacturers and dealer associations, alleging they conspired to keep lower-priced, yet virtually identical, new cars from being exported from Canada to the United States, thereby keeping new vehicle prices in California higher than they would have been in a properly competitive market. After years of litigation, the trial court granted summary judgment in favor of the two remaining defendants in the action, Ford U.S. and Ford Canada. The Court of Appeal affirmed with regard to Ford U.S. because there were no triable issues of fact. With regard to Ford Canada, however, the appellate court discussed several categories of evidence involving questions of fact as to whether there existed an illegal agreement to curb exports and reversed.
(In re Automobile Antitrust Cases I & II (Cal. App. 1st Dist., Div. 4, July 5, 2016) 204 Cal.Rptr.3d 330.) http://www.courts.ca.gov/opinions/documents/A134913.DOC
Motion to Quash Should Have Been Granted.
A company filed a petition for a workplace violence restraining order against a resident of Texas, who filed a motion to quash for lack of personal jurisdiction. The Texas resident also filed other motions. The trial court concluded that, since the Texas resident participated in the litigation beyond filing the motion to quash, he made a general appearance, and denied the motion to quash. The Court of Appeal found the trial court erred, stating: “The motion should have been granted because under [Code of Civil Procedure] section 418.10, subdivision (e), a party who moves to quash may—concurrently with or after filing a motion to quash—participate in the litigation and ‘no act’ by the party constitutes an appearance unless and until the proceedings on the motion to quash are finally decided adversely to that party.” (ViaView, Inc. v. Retzlaff (Cal. App. 6th Dist., July 6, 2016) 2016 WL 3626708.) http://www.courts.ca.gov/opinions/documents/H041521.DOC
Petition to Compel Arbitration Denied.
The College Network (TCN), in partnership with Indiana State University, solicited California vocational nurses to buy online courses to complete their necessary coursework for B.S. degrees at Indiana State University and qualify for the R.N. examination offered by the California Board of Registered Nursing. In their first year of study, the students learned they would not be eligible for formal admission to the university, but when they requested the return of their funds, they were refused, so the students sued. The back side of the purchase agreement contained a preprinted arbitration provision that required arbitration in Indiana, telephonically or by video, and allowed the defendant to select an arbitrator. TCN petitioned to compel arbitration. Finding the agreement both procedurally and substantively unconscionable, the trial court denied the petition to compel arbitration. In affirming the order, the Court of Appeal found that substantial evidence supported the trial court’s factual findings and that the court properly denied the petition. (Magno v. Coll. Network, Inc. (Cal. App. 4th Dist., Div. 1, July 8, 2016) 2016 WL 3667572.) http://www.courts.ca.gov/opinions/documents/D067687.DOC
Superior Court’s Order That Patient Records Be Produced Is Reversed.
The Department of Consumer Affairs, acting on behalf of the Medical Board of California, issued a subpoena for a psychiatrist’s patient records after the patient complained about a doctor. Later, the patient withdrew the complaint and ordered the doctor not to disclose the treatment given or the records. Evidence Code § 1014 precludes a subpoena’s enforcement over the patient’s objection. The superior court ordered the doctor to comply with the subpoena. The Court of Appeal held the Board failed to establish any exception to the patient’s invocation of the psychotherapist-patient privilege and issued a writ of mandate directing the superior court to vacate its order to produce the patient’s records. (Gerner v. Superior Court (Cal. App. 2nd Dist., Div. 1, July 8, 2016) 2016 WL 3676210.) http://www.courts.ca.gov/opinions/documents/B268621.DOC
Pay the $2 Already.
The Franchise Tax Board publishes a list of California’s “Top 500” income tax debtors. In this case, the petitioner wants his name removed from the list because it violates his privacy rights. He previously sought the same order in federal court, and the court dismissed his case for failure to state a claim. The superior court did just what the federal court did, but also sanctioned petitioner $5,000. The Court of Appeal affirmed, holding the petition is barred under the doctrine of res judicata. (Franceschi v. Franchise Tax Board (Cal. App. 2nd Dist., Div. 1, July 8, 2016) 2016 WL 3676157.) http://www.courts.ca.gov/opinions/documents/B267719.DOC
Danger in a Unisex Bathroom.
Plaintiff was in a lounge waiting for a friend. To attract customers, the lounge hires promoters who use social media to encourage attendance and set themes for certain days. The theme at the time plaintiff went to the lounge was “size matters.” To foster a sexually charged atmosphere, the bartenders wear nothing but underwear. The lounge has a common restroom area, accessible to both men and women, consisting of unisex bathroom stalls, a urinal trough in the back of the stalls, and two larger Americans with Disabilities Act (ADA) stalls with lockable full-length doors. Security guards were instructed to prevent more than one guest from entering a stall at a time. Plaintiff was turning to sit on a toilet in an ADA stall when a man she had never seen before also entered her stall. The man was later identified with DNA evidence as a bus boy at the lounge. Plaintiff stood to adjust her clothing when he grabbed her and pushed her against a wall and forced her to orally copulate him and forcibly had vaginal intercourse with her, resulting in plaintiff’s loss of virginity. Plaintiff sued the lounge and the bus boy for sexual battery, negligence, and other causes of action. The jury returned a verdict against both for over $5 million, apportioning 40% responsibility to the lounge and 60% to the bus boy and finding no negligence on the part of plaintiff. The lounge appealed, and the Court of Appeal affirmed, finding there was substantial evidence the lounge breached its duty to use reasonable care in securing the restrooms for its patrons. The appellate court also found plaintiff proved causation, as there were no security guards in the restroom when she used it, and that it was reasonable to conclude that, had a security guard been present in the restroom area when plaintiff entered, the assault and rape would not have occurred. (Janice H. v. 696 N. Robertson, LLC (Cal. App. 2nd Dist., Div. 3, July 14, 2016) 2016 WL 3896244.) http://www.courts.ca.gov/opinions/documents/B256913A.DOC
Video of Arrest Ordered Released.
A police arrest of a minor was video recorded by a camera on a patrol car. Prosecutors filed a petition against the minor, but later withdrew it. A citizen lodged a complaint regarding the officers’ handling of the minor, and an internal affairs investigation ensued. As a result, one of the officers was charged with misdemeanor assault by a police officer without lawful necessity and making a false report. In reviewing the evidence, experts hired by both the police officer and the prosecution determined the officer did not use excessive force during the arrest, and the charges against the officer were dropped. A newspaper reporter filed a request for the video under California’s Public Records Act (Gov. Code, § 6250 et seq.), and the city denied the request. Undeterred, the reporter filed another request for the video pursuant to Welfare & Institutions Code § 827, which authorizes disclosure of juvenile records under limited circumstances. The minor waived any right to confidentiality of the arrest video, but both the city and the county opposed releasing it to the reporter. The court ordered the video released after the minor’s name was redacted from it and the minor’s image blurred. The city filed the instant petition just prior to the court’s scheduled viewing of the edited video. But the city did not raise either the Public Records Act or the juvenile records issue before the Court of Appeal, instead arguing the patrol car’s dashboard video was a protected police personnel record of the police officer, requiring a Pitchess motion. The Court of Appeal rejected the protected police personnel record argument and affirmed the trial court’s order to release the video. (City of Eureka v. Superior Court of Humboldt Cty (Cal. App. 1st Dist., Div. 5, July 19, 2016) 2016 WL 3944576.) http://www.courts.ca.gov/opinions/documents/A145701A.DOC
Attempt to Rescind Loan Transaction.
Plaintiff alleged defendant fraudulently signed and recorded numerous documents, which purported to divest plaintiff of title to the real property it had obtained through foreclosure after defendant defaulted on her loan. However, defendant contends she had rescinded the loan transaction pursuant to the Truth in Lending Act (TILA; 15 USC § 1601), and the security was therefore void, so plaintiff has no interest in the property. The trial court ruled the notice of rescission was insufficient to rescind the loan transaction. The Court of Appeal vacated the judgment and remanded the matter for further proceedings, stating: “[W]e conclude that a borrower may rescind the loan transaction under the TILA without filing a lawsuit, but when the rescission is challenged in litigation, the court has authority to decide whether the rescission notice is timely and whether the procedure set forth in the TILA should be modified in light of the facts and circumstances of the case.”
(U.S. Bank National Association v. Naifeh (Cal. App. 1st Dist., Div. 5, July 19, 2016) 2016 WL 3944575.) http://www.courts.ca.gov/opinions/documents/A142994.DOC
Law Firms That Collect Debts: BEWARE!
The Fair Debt Collection Practices Act (FDCPA; 15 USC § 1692g(a)) requires that within five days of the initial communication with a consumer about the collection of a debt, a debt collector must send the consumer a notice containing specified disclosures. In this case, after the plaintiff stopped making payments on her automobile loan, a debt collector sent her a letter, to which she did not respond. Defendant law firm was then hired to collect the debt, and the law firm sent plaintiff a collection letter, which letter did not contain all of the disclosures required under FDCPA. Plaintiff thereafter filed the instant class action suit, alleging defendant violated FDCPA. In arguing cross motions for summary judgment, defendant law firm contended its collection letter to plaintiff was not the initial communication because the earlier letter from the non-lawyer debt collector had been sent. A federal trial court granted summary judgment in favor of the law firm. The Ninth Circuit reversed, stating: “If there are multiple debt collectors that try to collect a debt, each one must send the required notice after the first communication with the alleged debtor about the debt.” (Hernandez v. Williams, Zinman & Parham PC (9th Cir., July 20, 2016) 2016 WL 3913445.) https://cdn.ca9.uscourts.gov/datastore/opinions/2016/07/20/14-15672.pdf
Oh Boy…Elder Abuse Gets Complicated!
There had been a series of thefts at a senior home, and police advised planting some money and installing video surveillance, which the facility did. The money, planted in a patient’s room, was stolen, and the facility thought plaintiff, a resident assistant, was the culprit when the video was viewed. Police were called, also watched the video, and arrested plaintiff after the facility’s director signed a citizen’s arrest form. Charges were filed against plaintiff and later dropped. Plaintiff filed an action against the facility and some employees. A jury awarded plaintiff $65,965 in damages. The facility employees filed a motion for JNOV in which they claimed they are immune from the false arrest claim pursuant to Welfare and Institutions Code § 15234 in that they are a mandated reporter of elder abuse. The trial court denied the JNOV motion, unconvinced that mandated reporters are immune from a false arrest claim, and the facility employees appealed. The Court of Appeal reversed, concluding that “mandated reporters [are protected] from liability for conduct that is integrally related to a report of suspected elder abuse, and further conclud[ing] that the undisputed evidence establishes that [the facility director’s] acts in this case constituted such conduct.” The trial court was ordered to grant the JNOV.
(Santos v. Kisco Senior Living, LLC (Cal. App. 4th Dist., Div. 1, July 22, 2016) 2016 WL 3960105.) http://www.courts.ca.gov/opinions/documents/D067929.DOC
After hours of questioning, a criminal suspect said to police: “I don’t want to talk no more.” Undeterred, the officers continued questioning him, and eventually the suspect made a number of incriminating statements, which turned out to be the lynchpin of the state’s prosecution against him. He was convicted and sentenced to 75 years to life in prison. In an unpublished opinion, the Court of Appeal previously rejected his claim that his statements should not be used against him, stating: “The words a defendant used must be considered in context. [Citation] At a single point, midway through the interview, appellant said, ‘I don’t want to talk no more, man.’ His next sentence, however, was, ‘You don’t want to hear what I’m telling you.’ Taken in context, considering appellant’s willingness to talk with detectives before and after that point in the interview, appellant was expressing frustration with the detective’s refusal to believe him, rather than unambiguously invoking his right to remain silent.” After his conviction and loss at the Court of Appeal, he petitioned to the federal court in a writ of habeas corpus, which was denied. In the instant matter, an appeal from the denial of the writ, the Ninth Circuit reversed, stating: “We hold that any reasonable jurist would have to conclude that when Jones said he did not want to talk ‘no more,’ he meant it. The Court of Appeal’s decision is both contrary to and an unreasonable application of clearly established Supreme Court law, and it is based on an unreasonable determination of the facts.”
(Jones v. Harrington (9th Cir., July 22, 2016) 2016 WL 3947820.) https://cdn.ca9.uscourts.gov/datastore/opinions/2016/07/22/13-56360.pdf
Adult Entertainment Trademark Assignment.
“Crazy Horse” is a registered trademark for exotic dance performances. Plaintiff uses the name for its Las Vegas strip club, and the federal district court held plaintiff has the right to use the name “because it is the assignee of a valid trademark co-existence agreement entered into with the former owner of the registered Crazy Horse mark.” The Ninth Circuit agreed. (Russell Road Food & Beverage, LLC v. Spencer (9th Cir., July 22, 2016) 2016 WL 3947821.) https://cdn.ca9.uscourts.gov/datastore/opinions/2016/07/22/14-16096.pdf
Peremptory Challenge of Trial Judge Pursuant to CCP § 170.6.
In Solberg v. Superior Court (1977) 19 Cal.3d 182, the California Supreme Court stated that Code of Civil Procedure § 170.6, which provides for the disqualification of trial judges by a party, “does not violate the doctrine of separation of parties or impair the independence of the judiciary.” Almost 40 years later, we have what might be called the “perfect storm” to test that holding. In the instant matter, a county prosecutor began to routinely file peremptory challenges against a trial judge (a former prosecutor and a very experienced criminal trial judge) who had previously found that prosecutors engaged in misconduct vis-à-vis the use of jail house informants in criminal prosecutions. In the instant case, a trial judge finally denied a motion to disqualify, and the district attorney sought extraordinary relief by filing a petition for writ of mandate. In granting the prosecutor’s petition, the Court of Appeal, in a two-judge opinion, stated: “Although we question the wisdom of the Solberg holding in light of the complexities of modern court administration, we are bound to follow Supreme Court authority. For reasons we explain anon, we urge the Supreme Court to revisit the issue of blanket papering to determine whether the impact of an abusive use of Code of Civil Procedure section 170.6, such as demonstrated in this record, can be viewed as inconsequential on a trial court in the performance of its duty to administer justice.” The dissenting judge stated: “The district attorney’s systematic abuse of section 170.6 undermined the principle of judicial independence and violated the separation of powers doctrine. We are not powerless to stop it. The petition should be denied.” (People v. Superior Court (Cal. App. 4th Dist., Div. 3, July 25, 2016) 2016 WL 3999773.) http://www.courts.ca.gov/opinions/documents/G052932.DOC
Arbitration/Mediation Service Must Go to Court.
JAMS, an arbitration and mediation business, has a website including the following representations: that its family law neutrals are “ ‘ “trusted” experts’ ”; that JAMS ensures “ ‘the highest ethical standards’ ”; that “ ‘[e]verything we do and say will reflect the highest ethical and moral standards’ ”; and that “ ‘[w]e are dedicated to neutrality, integrity, honesty, accountability, and mutual respect in all our interactions.’ ” In a marital dissolution matter valued somewhere north of eight figures, plaintiff hired a retired Court of Appeal justice with JAMS as an arbitrator. During the proceeding, in which the arbitrator was acting as a privately compensated temporary judge, plaintiff “ ‘became alarmed by what he saw and doubted that [the arbitrator] possessed the business accomplishments her resume led him to believe she possessed,’ ” and concluded her JAMS biography “ ‘omitted key information,’ ” causing him to question her integrity. Plaintiff’s complaint alleges: “(1) violation of the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.) based on ‘deceptive representations’ made on [the arbitrator’s] biography posted on the JAMS Web site and based on ‘deceptive representations’ made by JAMS; (2) fraud based on (a) [the arbitrator’s] false representation she was the founder of the Escher Fund, ‘yet that fund never existed inasmuch as it was never funded,’ (b) JAMS’s false representation that its neutrals act with ‘highest ethical standards’ and JAMS acts with ‘integrity, honesty, accountability, and mutual respect in all our interactions,’ and (c) the defendants’ concealment regarding [the arbitrator’s] involvement with EquiCo and RSM EquiCo and the accusation of impropriety; (3) negligent misrepresentation; and (4) violation of Business and Professions Code sections 17200 and 17500.” Defendants JAMS and the arbitrator filed an anti-SLAPP (Code Civ. Proc., §425.16) motion to strike the complaint. The trial court found the action exempt from the anti-SLAPP statute pursuant to the commercial speech exemption in Code of Civil Procedure § 425.17, and denied the motion to strike. In affirming, the Court of Appeal agreed with the trial court, stating: “JAMS and [the arbitrator] are engaged in the business of selling ADR services. Kinsella’s causes of action arise from statements posted on the JAMS Web site about both [the arbitrator’s] background and experience and about JAMS’s operations. It is apparent all of the statements about which Kinsella complains were placed on the JAMS Web site to be viewed by actual or potential ADR buyers or customers, or attorneys representing actual or potential buyers or customers of ADR services. According to the complaint, Kinsella reviewed the JAMS Web site and agreed to use [the arbitrator] as a privately compensated temporary judge based on the statements. [Citation.] Therefore, the statements or conduct from which Kinsella’s causes of action arise is more ‘commercial speech’ than anything else.” (JAMS, Inc. v. Superior Court (Cal. App. 4th Dist., Div. 1, July 27, 2016) 2016 WL 4014068.) http://www.courts.ca.gov/opinions/documents/D069862.DOC
In Racial Discrimination Case, the State Told the Plaintiff One Thing and the Federal Government Told Him Something Else. The Court Applied the Doctrine of Equitable Tolling.
In a FEHA (California Fair Employment and Housing Act; Gov. Code, § 12900 et seq.) racial discrimination case, the trial court sustained a demurrer on statute of limitations grounds. Plaintiff, a state government employee, was the only nonwhite employee in his division. His original complaint was filed with the EEOC (U.S. Equal Employment Opportunity Commission), which transferred it to California’s DFEH (Department of Fair Employment and Housing). Nonetheless, his right-to-sue notice issued by the DFEH stated: "'EEOC will be responsible for the processing of this complaint. DFEH will not be conducting an investigation into this matter. EEOC should be contacted directly for any discussion of the charge. . . . Since DFEH will not be issuing an accusation, this letter is also your right-to-sue notice. According to Government Code section 12965, subdivision (b), you may bring a civil action under the provisions of the [FEHA] against the person, employer, labor organization or employment agency named in the above-referenced complaint. The lawsuit may be filed in a State of California Superior Court. . . . Pursuant to Government Code section 12965, subdivision (d)(1), this one-year period will be tolled during the pendency of the EEOC’s investigation of your complaint.'" After EEOC completed its investigation, the Department of Justice issued a federal right-to-sue notice, and 107 days later, plaintiff filed his FEHA action, which was 17 days beyond the federal right-to-sue period. Even though plaintiff had been told in writing that his FEHA statute of limitations would be tolled during EEOC’s investigation, the trial judge dismissed the action based upon the federal 90-day statute of limitations. Agreeing with plaintiff that his FEHA statute of limitations was equitably tolled during the period of EEOC’s investigation, the Court of Appeal reversed. (Mitchell v. California Department of Public Health (Cal. App. 2nd Dist., Div. 4, July 27, 2016) 2016 WL 4013645.) http://www.courts.ca.gov/opinions/documents/B265769.DOC
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