Litigation Update

Litigation Section News: March 2017

 • 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                                                                 

Court Erred in Denying Jury Trial in Breach of Loan Agreement Action.

The parties had entered into agreements containing New York choice-of-law provisions and jury waiver provisions. Plaintiffs filed a complaint, and  defendants moved to strike plaintiffs’ request for a jury trial. The trial court granted the motion, conducted a bench trial, and entered judgment for the defendants. The Court of Appeal reversed the judgment in part, concluding the choice of New York law is unenforceable, the validity of the jury waivers is governed by California law, and California law does not permit a predispute waiver of the right to a jury trial by parties who submit their dispute to a judicial forum.  The Court of Appeal stated, “California has an interest in enforcing its policy that only the Legislature can determine the permissible methods for waiving the right to jury trial when parties submit their civil disputes to a court in this state for resolution.” (Rincon EV Realty LLC v. CP III Rincon Towers, Inc. (Cal. App. 1st Dist., Div. 4, Jan. 31, 2017) 8 Cal.App.5th 1.)

Court Erred in Holding Plaintiff in Contempt When She Didn’t Show Up For Her Deposition.

The trial court found a plaintiff in an employment case in contempt and ordered monetary sanctions after finding she disobeyed a prior court order by refusing to attend a deposition noticed by defendant employer. In annulling the contempt finding, the Court of Appeal stated:  “We conclude that neither the contempt finding nor the imposition of sanctions of $7,713 can be affirmed.”  The appellate court explained that punishment by contempt rests upon a clear and intentional violation of a court order, and that Code of Civil Procedure § 2025.450 requires the person sanctioned to have violated a court order, but in this case, there was no court order. There had been a motion by plaintiff asking the court to stay her deposition pending receipt of documents from defendant, but the order of the court consisted of one word:  “Denied,” and did not compel plaintiff to attend her deposition. (Van v. LanguageLine Solutions (Cal. App. 6th Dist., Jan. 24, 2017) 8 Cal.App.5th 73.)

Corporate Shell Game. 

The managing member of LLC #1 signed an agreement on behalf of LLC #2. LLC #1 is the manager of LLC #2, but Managing Member of LLC #1 does not have the actual authority to execute an agreement on behalf of LLC #2. The way the agreement should have been signed was:  “LLC #2 by LLC #1 by Managing Member of LLC #1, but it was actually signed:  “LLC #2 by Managing Member of LLC #1.” Plaintiff sued LLC #2 for breach of an indemnity agreement, and LLC #2 contended it was not bound by the agreement “because [plaintiff] failed to exercise due diligence to assure that [Managing Member of LLC #1 who signed the agreement] was in fact [LLC #2’s] managing member.” The trial court granted summary judgment to plaintiff, and the Court of Appeal affirmed, holding that, pursuant to Corporations Code § 17703.01, subdivision (d), LLC #2 is bound by the signature of the Managing Member of LLC #1. (Western Surety Co. v. La Cumbre Office Partners, LLC (Cal. App. 2nd Dist., Div. 6, Feb. 2, 2017) 8 Cal.App.5th 125.)

No Paramedic Liability For Delay in Taking Injured High School Football Player to Hospital.

Plaintiff sustained an injury to his head while playing in a high school football game. The coaches noticed he was unsteady when he walked and examined him. He complained of head pain and winced when a coach shined a flashlight in his eyes. The coaches waved over the standby ambulance and its crew.  Five minutes after paramedics arrived and assessed the young man, the paramedics radioed dispatch for a backup ambulance to transport him to the hospital without lights and siren. From the time paramedics first made contact with plaintiff until emergency room personnel took over, 48 minutes had gone by, 30 minutes of which were consumed transporting him to the hospital. A CT scan showed a subdural hematoma. Plaintiff sued the ambulance company for failing to recognize he had suffered a traumatic brain injury and required urgent care. The trial court granted defendant’s motion for summary judgment. In affirming, the Court of Appeal noted that EMT’s are only liable for civil damages for gross negligence under Health and Safety Code § 1799.106, subdivision (a), and that plaintiff failed to show there was an unreasonable delay or that there existed a triable issue of fact regarding causation. (Sanchez v. Kern Emergency Medical Transportation Corp. (Cal. App. 5th Dist., Jan. 13, 2017) 8 Cal.App.5th 146.)

Employer Contends It Fired Woman For Eating Stale Cake. 

The plaintiff alleged she was fired by a grocer because of gender discrimination and asserted a Title VII claim in federal court. The trial judge granted summary judgment for the employer. Using a burden-shifting analysis, the Ninth Circuit reversed, stating that if the plaintiff succeeds in establishing a prima facie case of discrimination, the burden shifts to the employer to articulate a legitimate nondiscriminatory reason for its allegedly discriminatory conduct. Plaintiff presented direct evidence of discrimination: her supervisor commented that a man would be better leading the safety committee and that he didn’t like a girl running the freight crew. On another occasion, the supervisor criticized the plaintiff, but not her male counterpart, for the same conduct. The employer contended it fired the plaintiff because she took a stale cake to the break room and shared it with other employees. The Ninth Circuit held: “In sum, circumstantial evidence raises a material dispute of fact regarding pretext. This is particularly true when the circumstantial evidence is viewed in conjunction with the powerful direct evidence of [] discriminatory comments.” (Mayes v. Winco Holdings, Inc. (9th Cir., Feb. 3, 2017) 846 F.3d 1274.)

No Miscarriage of Justice in Ordering Code of Civil Procedure § 638 Reference Even If It Was Error To Do So. 

Pursuant to a general reference under Code of Civil Procedure § 638, a referee entered a judgment of dismissal after sustaining defendants’ demurrers without leave to amend. In the trial court, the appellant contended the fraud causes of action did not arise out of the limited partnership agreement’s provisions requiring a judicial reference. The trial court appointed a referee.  On appeal, among other arguments, the appellant contended the trial court erred in enforcing the judicial reference provisions in the parties’ limited partnership agreements. In affirming, the Court of Appeal stated: “The judgment based on a statement of decision following a consensual general reference is treated as if the action had been heard by the court (Code Civ. Proc., § 644, subd. (a)) and is reviewed on appeal using the same rules that apply to a decision by the trial court.” The appeals court found that any error in ordering a section 638 reference was harmless because the statute of limitations defense was righteous. (Stella v. Asset Management Consultants, Inc. (Cal. App. 2nd Dist., Div. 7, Jan. 17, 2017) 8 Cal.App.5th 181.)

If All Disputes, Not Just Those Arising Under An Agreement, Are To Be Arbitrated, Say So. 

A collective bargaining agreement contained an arbitration provision. An employee sued the employer in a wage and hour case, and the trial court denied the employer’s petition to compel arbitration. The Court of Appeal affirmed, stating: “The collective bargaining agreement here required arbitration of claims arising under the agreement, but it did not include an explicitly stated, clear and unmistakable waiver of the right to a judicial forum for claims based on statute.” (Vasserman v. Henry Mayo Newhall Memorial Hospital (Cal. App. 2nd Dist., Div. 4, Feb. 7, 2017) 8 Cal.App.5th 236.)

Insurance Company Not On Hook For Accident Caused By Its Insured. 

A woman driving her employer’s car was running a personal errand during work hours when she caused an accident injuring a man. A court found the self-insured employer was not vicariously liable, thus limiting its responsibility to the $15,000 statutory limit. Later, in an arbitration, an arbitrator awarded the injured man a half a million dollars. The woman who caused the accident had car insurance on a car she personally owned, but her insurer refused to either defend her or pay the judgment. The injured man sued the woman’s insurer, and the trial court granted summary judgment in favor of the insurer. The Court of Appeal affirmed, stating: “We conclude that under the circumstances of this case, since [the woman who caused the accident] was able to use the van for both business and personal purposes, and her personal use of the van at the time of the accident was not a departure from its customary use, the van was furnished to [the woman] for her regular use and there is no coverage under the GEICO policy,” which had an exclusion for the insured’s use of a non-owned vehicle, but only if the vehicle was not available for regular use. (Medina v. GEICO Indemnity Co., Cal. App. 5th Dist., Feb. 8, 2017) 8 Cal.App.5th 251.)

Husband Who Failed To List Asset in Divorce Proceeding Ordered To Give Wife Half The Value of the Asset, and Court of Appeal Reversed.

Family Code § 1101, subdivisions (g) & (h) requires financial disclosures in dissolution proceedings. In this case, the husband did not list certain side business income received and spent during the year before separation because, under his view, the wife had no interest in the asset. He argues that his failing to disclose the $164,614 in pre-separation income was not a breach of fiduciary duty because that money was spent during the marriage. The trial court disagreed and ordered the husband to pay half the value of the asset to the wife for breaching his fiduciary duty to disclose it.  Finding that, because the pre-separation income had been spent during the marriage, the failure to disclose does not support a breach of fiduciary duty claim under section 1101, the Court of Appeal reversed the trial court’s order. (In re Marriage of Schleich, Cal. App. 6th Dist., Feb. 8, 2017) 8 Cal.App.5th 267.)

Real Estate Brokers Face a Nasty World Out There. 

A licensed real estate broker entered into a written agreement giving her the exclusive and irrevocable right to sell a parcel of land for a year, and, if sold, she would receive $200,000. Only one of six owners signed the agreement; however, he told the real estate broker he was authorized to act on behalf of the other owners. Although the other owners did not sign the listing agreement, they knew about it, as they told the broker they were impressed by her hard work. The broker found a buyer, but the seller who signed the listing agreement ordered her not to speak with that particular potential buyer anymore. The sale was never consummated, and the broker sued the sellers. The defendants demurred to the complaint. The defendant who did sign as an owner also demurred, arguing that even he was not bound by the agreement because his undivided interest in the property could not be sold without the signature of the others. The trial court sustained the demurrer without leave to amend. The Court of Appeal reversed, stating that neither the statute of frauds nor the parole evidence rule bars the broker’s claims. (Jacobs v. Locatelli (Cal. App. 6th Dist., Feb. 8, 2017) 8 Cal.App.5th 317.)

“That Which We Call A Rose By Any Other Name Would Smell As Sweet,” William Shakespeare. 

La Jolla Cove has been described as a place that is beautiful, but stinks. The sea lion population there has grown exponentially in recent years, resulting in significant waste buildup on the bluffs. Residents and business owners complain their property values and businesses are affected. A nonprofit citizens group sued the city and the State of California for “the foul, noxious and sickening odors emanating from the excrement of cormorants and sea lions deposited on the rocks adjacent to the La Jolla Cove.”  Both the trial court and the Court of Appeal found there was no duty on the part of the public entities to prevent harms caused by wild animals. The Court of Appeal noted there is a difference between a private and a public nuisance, stating: “[T]he public nuisance doctrine has historically distinct origins and aims at ‘the protection and redress of community interests.’. . . To qualify as a public nuisance, the interference must be both substantial and objectively unreasonable.”  (Citizens For Odor Nuisance Abatement v. City of San Diego (Cal. App. 4th Dist., Div. 1, Feb. 9, 2017) 8 Cal.App.5th 350.)

“I’m Gonna Git You Sucka” Marlon Wayans Movie. 

Plaintiff, an actor, worked as an extra in a movie entitled, A Haunted House 2. Defendant Marlon Wayans co-wrote, produced, and starred in the movie. Plaintiff sued defendant and others, alleging, inter alia, that he was the victim of racial harassment because during his one day of work on the movie he was compared to a black cartoon character and called “nigga.” Defendant filed a special motion to strike the complaint pursuant to Code of Civil Procedure § 425.16, arguing that plaintiff’s claims arose from defendant’s constitutional right of free speech because the core injury-producing conduct arose out of the creation of the movie and its promotion over the Internet. The trial court agreed with defendant and found that plaintiff had failed to establish a probability of prevailing on any of his claims against defendant. The trial court therefore granted the special motion to strike and awarded defendant his attorneys’ fees. On appeal, plaintiff challenged the trial court’s ruling on both prongs.  The Court of Appeal affirmed.   (Daniel v. Wayans (Cal. App. 2nd Dist., Div. 1, Feb. 9, 2017) 8 Cal.App.5th 367.)

Attorney Did Not Have a Signed Written Agreement With Client, Only An Email. 

A lawyer performed contract work for another lawyer on a case. The other lawyer died, and the contract lawyer and client reached an agreement via email. Business & Professions Code § 6148 requires a contract for legal services to be in writing. The client paid the lawyer for about two years, but the billings kept increasing, and the client fell behind in payments.  Eventually the lawyer sued the client for breach of contract and account stated. The trial court granted the client’s motion for summary judgment because the email did not constitute an enforceable attorney fee contract because it was not signed by any party as required by section 6148.  The Court of Appeal affirmed, finding both that the email did not satisfy section 6148 and that plaintiff could not collect in quantum meruit because the two-year statute of limitations barred the claims. (Leighton v. Forster (Cal. App. 1st Dist., Div. 4, Feb. 9, 2017) 8 Cal.App.5th 467.)

Copyright Infringement of Software. 

Plaintiff designed and owns software that contains computer aided design (CAD) engineering codes for three-dimensional drawings and models that enable the fabrication of steel components and assist in the building of structures. Defendant, a California corporation, sells steel detailing CAD files created by contractors in China. One of defendant’s Chinese contractors created CAD images using an unauthorized copy of plaintiff’s software, and advertised it uses plaintiff’s software “if required.” Plaintiff sued defendant for copyright infringement. Defendant contends its downloading was de minimis. A federal trial court dismissed the action after granting defendant’s motion for summary judgment because the unauthorized use of a copyright work is not actionable unless it is significant, and this was not significant enough to constitute infringement. The Ninth Circuit Court of Appeals reversed, stating that, taken in the light most favorable to plaintiff, defendant intentionally downloaded a complete copy of plaintiff’s software, allowing circumvention of the licensing requirement.  (Design Data Corp. v. Unigate Enterprise, Inc. (9th Cir., Feb. 9, 2017) 847 F.3d 1169.)

Immigration and Rock, Paper, Scissors. 

At issue in this emergency proceeding is the January 27, 2017 Executive Order 13769 entitled, “Protecting the Nation From Foreign Terrorist Entry Into the United States.”  The Executive Order cites the terrorist attack of September 11, 2001 and states that numerous foreign-born individuals have been convicted or implicated in terrorism-related crimes, and bans for 90 days the entry into the United States of individuals from seven countries. The Executive Order further states that “the United States must ensure that those admitted to this country do not bear hostile attitudes toward it and its founding principles.” The U.S. Government argued that courts lack authority to enjoin enforcement of the Executive Order because the President has unreviewable authority to suspend the admission of any class of aliens, even if those actions potentially contravene constitutional rights and protections. The Government further contended “that it violates separation of powers for the judiciary to entertain a constitutional challenge to executive actions such as this one.”  Washington and Minnesota challenged the Executive Order as unconstitutional and violative of federal law. A federal district court preliminarily ruled in favor of the two states, temporarily enjoining enforcement of the Executive Order. The U.S. Government moved for an emergency stay of the trial court’s temporary restraining order while its appeal of the underlying order is pending. The Ninth Circuit Court of Appeals considered several factors, including whether the Government has shown that it is likely to succeed on the merits of its appeal. The appeals court held that “the Government has not shown a likelihood of success on the merits of its appeal, nor has it shown that failure to enter a stay would cause irreparable injury” and therefore denied the emergency motion for a stay. (Washington v. Trump (9th Cir., Feb. 9, 2017) 2017 U.S. App. LEXIS 2369.)

Juvenile Sentenced to Life Without Possibility of Parole. 

Four months prior to his 18th birthday, a criminal defendant murdered a woman in her 50’s and was sentenced to life without the possibility of parole (LWOP). He chased down the woman—who tried to run away while he was robbing her—and shot her in the back. When he was asked why he shot the woman, he explained, “because the bitch bit me.” The Eighth Amendment provides that “[e]xcessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishment inflicted.” Over the past several years, the United States Supreme Court has addressed the constitutional limits of punishment for a juvenile’s criminal offenses in several opinions. In Graham v. Florida (2010) 560 U.S. 48, the high court held that the Eighth Amendment prohibits states from sentencing a juvenile convicted of non-homicide offenses to LWOP. The court relied on studies showing that developments in psychology and brain science continue to show fundamental differences between juvenile and adult minds. During the sentencing hearing in the present case, the trial judge noted, “[i]t was the defendant who recommended [to his friends] that they go out and rob Mexicans because they keep their money on them, and apparently, it was maybe payday.” Defendant also took a gun with him. After he shot the woman, rather than fleeing in horror at what he had done, he took the time to stop and collect the shell casing off the ground, knowing that it could be used as evidence against him. The trial judge remarked: “That simply does not show youthful impetuousness. It shows sophisticated criminal activity.” The Court of Appeal affirmed the sentence, holding that, while it is undoubtedly harsh, it does not shock the conscience and is not unconstitutional under the Eighth Amendment. (People v. Watson (Cal. App. 4th Dist., Div. 1, Feb. 10, 2017) 8 Cal.App.5th 496.)

Builders May Not Ignore Notice of Defects Under Right to Repair Act. 

The goal of the Right to Repair Act (Civ. Code, § 895 et seq.) is to resolve, if possible, construction defect claims without resort to litigation. The Act requires that, before initiating litigation, construction defect claimants must give a builder notice of alleged defects “in reasonable detail,” and an opportunity to inspect and repair the noticed defects. Here, homeowners served defendant builder with a list of alleged defects no later than February 2, 2016. In a letter dated February 23, 2016, defendant asserted the alleged defects were not set forth in reasonable detail. On February 26, the homeowners asserted defendant’s response was untimely and excused the homeowners from any obligations under the Act. The homeowners filed a construction defection action, and the trial court stayed the action pending completion of notice and inspection procedures required under the Act. The Court of Appeal granted the homeowners’ petition for extraordinary relief, noting that section 13 of the Act requires a builder to acknowledge receipt of notice within 14 days. With regard to the builder’s claim the alleged defects were not set forth in reasonable detail, the appellate court stated that “service of the notice will trigger the 14-day response time set forth in section 913. If a builder believes the notice is not sufficient to determine the nature and location of the claimed violation, the builder may within that 14-day period, bring the lack of specificity to the claimant’s attention. However, the requirement for specificity is not a ground upon which the developer may choose to ignore the notice of a defect and the 14-day time period within which it must respond.” (Blanchette v. Superior Court (Cal. App. 4th Dist., Div. 1, Feb. 10, 2017) 8 Cal.App.5th 521.)

Request To Raise Insurance Rates Denied. 

The California Insurance Commissioner denied an insurance company’s request to increase its homeowners’ insurance rates. The Commissioner deducted the insurance company’s advertising budget in its rate calculation and found the insurance company had not demonstrated a deep financial hardship. The insurance company, joined by insurance trade organizations, unsuccessfully challenged the Commissioner’s decision in the superior court. The Court of Appeal affirmed, finding that the insurance company’s advertising is to promote its umbrella group as a whole, and its umbrella group is not a specific insurer, stating: “The Mercury Insurance Group is not a legal entity in any state and not a licensed insurer in California.” The insurance trade associations argued on appeal that the exclusion of institutional advertising expenses from the rate formula violates the First Amendment by imposing a content-based penalty on speech. The appellate court was not persuaded, finding the government had a duty to ensure that insurance companies pass on to consumers through premium rates “only expenses for advertising that directly benefits consumers.”  (Mercury Casualty Co. v. Jones (Cal. App. 3rd Dist., Feb. 10, 2017) 8 Cal.App.5th 561.)

The Aftermath. 

Plaintiff was forced out of her home in Jalawla, Iraq in 2003 by Kurdish troops aligned with the United States.  She fled to Baghdad and eventually left Iraq, enduring many hardships. She represents a class of persons consisting of “all innocent Iraqi civilians who through no fault of their own suffered damage.” She contends defendants had planned an invasion of Iraq for years, and that they invaded, even after the International Atomic Energy Director reported there was no indication of resumed nuclear activities. She alleges defendants’ conspiracy violates the law of nations. A federal trial court dismissed the action, and the Ninth Circuit affirmed, citing the Westfall Act (28 U.S.C. § 2679, subd. (d)), which accords federal employees absolute immunity from common law tort claims arising out of acts they undertake in the course of their official duties. (Saleh v. Bush (9th Cir., Feb. 10, 2017) 2017 U.S. App. LEXIS 2415.)

Legal Malpractice Action By Convicted Child Molester Against Criminal Defense Lawyer. 

In legal malpractice actions arising out of criminal proceedings, California requires proof of actual innocence. But in the present case, the criminal defendant was found guilty in 1988 of lewd and lascivious conduct with force upon a child under the age of 14. He served his time in prison and was released from prison but was later detained at a state hospital pending commitment proceedings under the Sexually Violent Predator Act (SVPA; Welf. & Inst. Code, § 6600 et seq.). The criminal defendant became the plaintiff in the present action when he sued his lawyer for legal malpractice. The trial court sustained the lawyer’s demurrer because of plaintiff’s failure to allege actual innocence. Instead of either affirming or reversing, the Court of Appeal remanded the action to the trial court with instructions to stay the action pending the SVPA proceedings, and stated: “Public policy considerations underlying the actual innocence requirement—namely, judicial economy and the desire to avoid conflicting resolutions—compel the conclusion that alleged SVPs should not be able to pursue causes of action for legal malpractice in the course of their SVPA proceedings unless and until such proceedings have been terminated in their favor. . . our conclusion does not leave alleged SVPs without a remedy while proceedings are ongoing, as they may still seek relief for ineffective assistance of counsel in the SVPA proceedings themselves.”  (Jones v. Whisenand (Cal. App. 3rd Dist., Feb. 10, 2017) Cal.App.5th 543.)

New Trial Ordered on Issue of Future Damages. 

Five recruit officers at a police academy were terminated or constructively discharged while recuperating from injuries sustained during training. The recruits sued the city under the Fair Employment and Housing Act (FEHA; Gov. Code, § 12940 et seq.). At the time they were injured, the police department had been assigning injured recruits to light-duty administrative positions indefinitely until their injuries healed or they became permanently disabled. The department ended this practice while the plaintiffs were still recuperating from their injuries. Rather than allowing them to remain in their light-duty assignments, the department asked them to resign or the department would terminate them, unless they could get immediate medical clearance to return to the Academy. None of the recruits was able to obtain the necessary clearance, and the department terminated or constructively discharged all of them. A jury awarded each recruit future economic losses all the way through their hypothetical retirement dates. The Court of Appeal affirmed in part, concluding that requiring the city to assign the recruits to light duty was not unreasonable as a matter of law, even though plaintiffs did not qualify for relief under FEHA. But the appeals court reversed and remanded for a new trial on the issue of future damages, which were determined to be speculative. (Atkins v. City of Los Angeles (Cal. App. 2nd Dist., Div. 7, Feb. 14, 2017) 8 Cal.App.5th 696.)

Court Abused Discretion in Denying Stipulated Motion to Continue Summary Judgment Hearing. 

Plaintiffs timely scheduled depositions of the persons whose declarations were attached to defendant’s motion for summary judgment, but they did not go forward because defendant’s counsel was engaged in a trial. The parties agreed to continue both the hearing on the motion and the trial for 60 days and presented a stipulation to the court. The trial court denied the parties’ requests and the Court of Appeal reversed, stating: “Under these circumstances, we conclude the court abused its discretion by failing to accommodate counsels’ joint request for a further 60-day continuance.” (Hamilton v. Orange County Sheriff’s Dept. (Cal. App. 4th Dist., Div. 3, Feb. 7, 2017) 8 Cal.App.5th 759.)

Judgment Based Solely on Statute of Limitations is Not on the Merits.  

Plaintiff sued two dentists, one for dental malpractice and the other under the doctrine of respondeat superior as well as for direct liability. The dentist who was alleged to have committed malpractice was dismissed after the trial court granted summary judgment on the issues of causation and the statute of limitations. The Court of Appeal affirmed, but only because it determined the action was not brought within the statute of limitations. The second dentist, who was sued for both vicarious and direct liability, thereafter moved for summary judgment, arguing the question of liability had already been determined and that he was entitled to judgment as a matter of law. The trial judge granted the second dentist’s motion for summary judgment. But the Court of Appeal noted that California law holds that a civil judgment based solely on the statute of limitations is not on the merits. The appeals court also noted the moving party challenged only the vicarious liability aspect of plaintiff’s claim, not the direct liability allegations. The judgment was reversed and remanded. (Samara v. Matar (Cal. App. 2nd Dist., Div. 7, Feb. 15, 2017) 2017 Cal. App. LEXIS 122.)

Protected Activity. 

Plaintiff alleged that for many years, agents of the State of California caused him to register as a sex offender, maintained him on a statewide registry, and publicly disseminated his name as a registered sex offender, including via a Megan’s Law website. In 2014, he was arrested and charged with failing to register. At some point thereafter, he discovered his sex offense conviction had been reversed, and he had not been required to register. Thereupon, he sued the State of California alleging various causes of action, including civil rights violations, negligence, and false imprisonment. The state filed an anti-SLAPP motion, contending its actions arose from protected activity within the meaning of Code of Civil Procedure § 425.16 and plaintiff could not establish a probability of prevailing on his claims. The trial court granted the motion. The Court of Appeal affirmed, finding plaintiff had not shown by evidence that he could prevail on the merits and stating: “State agents’ threats to arrest/prosecute John, collection of his information, and communications with local law enforcement and the public regarding John’s status as a registered sex offender, involved and furthered protected speech and petitioning activity. The protected activity also involved public issues or issues of public interest.” (Doe v. State of California (Cal. App. 4th Dist., Div. 1, Jan. 26, 2017) 2017 Cal. App. LEXIS 125.)

Agency Relationship Shown. 

After plaintiff was injured in a taxi versus motorcycle accident, the jury returned a verdict in favor of plaintiff. The jury found the taxi driver was not defendant’s employee, but that he was defendant’s agent. The trial court granted defendant’s JNOV, finding there was insufficient evidence to support the jury’s conclusion the taxi driver was defendant’s agent. On appeal, defendant taxi company argued that as a matter of law, when a taxi company exercises control over its drivers in order to comply with public regulations or third party requirements, such activity cannot be considered in determining whether an agency or employment relationship exists. The Court of Appeal reversed the grant of JNOV, stating that “public regulation of an industry does not, as a matter of law, shield a party from vicarious liability when it hires independent contractors, rather than employees.” The appellate court also stated: “Because the test for agency is a multi-factored test, and there was substantial evidence that [defendant taxi company] controlled significant aspects of its drivers’ work, we cannot say that there was insufficient evidence as a matter of law to support the jury finding of agency.” The court ordered reinstatement of the jury’s verdict in favor of plaintiff. (Secci v. United Independent Taxi Drivers, Inc. (Cal. App. 2nd Dist., Div. 5, Feb. 15, 2017) 2017 Cal. App. LEXIS 126.)

No Tort of Intentional Interference With Prospective Economic Advantage in Bidding Process For Public Entity Contract. 

To prove the tort of intentional interference with prospective economic advantage, a plaintiff must establish “the existence of an economic relationship with some third party that contains the probability of future economic benefit to the plaintiff.”  The California Supreme Court decided in this case whether such an economic relationship existed between a bidder for a public works contract and the public entity soliciting bids. Here, plaintiffs alleged they submitted the second highest bids on several contracts awarded to defendant and that their bids would have been accepted but for defendant’s wrongful conduct during the bidding process. The Court decided the tort of intentional interference with prospective economic advantage is not implicated in such circumstances, stating: “In these highly regulated circumstances, plaintiffs had ‘at most a hope for an economic relationship and desire for future benefit.’” (Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (Cal., Feb. 16, 2017) 388 P.3d 800.)

It Ain’t Over ‘Til Somebody Pays the Receiver. 

At a previous stage of very complex proceedings, the trial court terminated a receivership and approved the receiver’s final accounting. This time around, a party requested the trial court award receivership fees to one of the prevailing parties as costs pursuant to Code of Civil Procedure § 1033.5, subdivision (c). The trial court denied the cost request on the grounds that the matter was previously decided. The Court of Appeal remanded the matter for the trial court to exercise its discretion with regard to the requested cost award, stating, “the court retained authority to exercise its discretion and consider whether the receivership fee should be paid by one party or shared between the parties.” (Southern California Sunbelt Developers, Inc. v. Banyan Limited Partnership (Cal. App. 4th Dist., Div. 3, Jan. 19, 2017) 2017 Cal. App. LEXIS 132.)

No Patent Infringement. 

Defendant manufactures one of five components of a product in the USA and then ships it to the UK, where the four other components are made and where all five of the product components are combined. Pursuant to a license, the finished product was to be sold in certain limited places. However, defendant began selling the product outside the licensed fields of use. Plaintiff sued, claiming patent infringement under 35 United States Code § 271, subdivision (f)(1). That statute prohibits the supply from the United States of “all or a substantial portion of the components of a patented invention.” A jury returned a verdict in favor of plaintiff, but a federal trial court granted judgment in favor of defendant, holding that “all or a substantial portion” did not encompass the supply of a single component of a multicomponent invention. A federal court of appeals reversed, determining that a single important component could constitute a “substantial portion” under the statute. The United States Supreme Court reversed the appellate court:  “We hold that the phrase ‘substantial portion’ in 35 U.S.C. § 271(f)(1) has a quantitative, not a qualitative, meaning. We hold further that § 271(f)(1) does not cover the supply of a single component of a multicomponent invention.” (Life Technologies Corp. v. Promega Corp. (U.S., Feb. 22, 2017) 2017 U.S. LEXIS 1428, 2017 WL 685531.)

Racist Expert Testimony “can be deadly in small doses.” 

A Texas jury convicted a defendant of capital murder. Under state law, the jury could impose a death sentence only if it found that the defendant was likely to commit acts of violence in the future. The defense counsel had called a psychologist as a witness to offer his opinion on the issue of future violence. The psychologist testified that the man probably would not engage in violent conduct. But the psychologist also stated that one of the factors pertinent in assessing a person’s propensity for violence was his race, and that the man was statistically more likely to act violently because he is black. The man now claims his Sixth Amendment right to effective assistance of counsel was violated. The United States Supreme Court agreed, stating: “There were only ‘two references to race in Dr. Quijano’s testimony’—one during direct examination, the other on cross. But when a jury hears expert testimony that expressly makes a defendant’s race directly pertinent on the question of life or death, the impact of that evidence cannot be measured simply by how much air time it received at trial or how many pages it occupies on the record. Some toxins can be deadly in small doses.” The man will now have an opportunity to go back to the trial court to argue that he should have a new sentencing hearing. (Buck v. Davis (U.S. Feb. 22, 2017) 2017 U.S. LEXIS 1429, 2017 WL 685534.)

Sometimes There IS a Duty to Protect a Plaintiff From Criminal Conduct By a Third Party.

Plaintiff’s complaint alleges that when she was 12 years old, her soccer coach sexually abused her during a ten-month period. The coach pleaded no contest to continuous sexual abuse of a child under age 14 and was sentenced to 15 years in state prison. When the coach applied for the position of coach, he was required to fill out a form that asked whether he had been convicted of a felony, a crime of violence, or a crime against a person. Though the coach had been convicted of battery against his spouse, he answered “no” to each of the inquiries. No criminal background check was conducted. Plaintiff brought a civil action against various soccer associations, including the one who hired the coach and the one that established the standards under which coaches are hired. The trial court sustained defendants’ demurrers on the ground they had no duty to protect plaintiff from criminal conduct by a third party. The Court of Appeal reversed, stating: “We hold that defendants had a duty to conduct criminal background checks of all adults who would have contact with children involved in their programs.” (Doe v. United States Youth Soccer Association, Inc. (Cal. App. 6th Dist., Feb. 22, 2017) 2017 Cal. App. LEXIS 148.)

The Going and Coming Rule. 

In this wrongful death action, the sole question on appeal is whether defendant’s temporary employee was acting within the scope of his employment when he caused an accident that resulted in the death of plaintiff’s husband and injured plaintiff.  Plaintiff argued the employee was required to work at a remote jobsite and then make a lengthy commute home after working long hours over three and a half days. The trial court granted summary judgment in favor of defendant.  The Court of Appeal affirmed the grant of summary judgment, concluding defendant was not vicariously liable for the accident under the doctrine of respondeat superior. (Lynn v. Tatitlek Support Services, Inc. (Cal. App. 4th Dist., Div. 2, Feb. 22, 2017) 2017 Cal. App. LEXIS 145.)

Expert Witness Declarations in Summary Judgment Proceedings. 

Normally a summary judgment motion will be heard and determined before the exchange of expert witness information is completed. But sometimes, due to such things as continuances, the expert witness exchange time has come and gone before the summary judgment motion is heard. In the present case, that is what happened, and the plaintiff in a personal injury case had not timely complied with Code of Civil Procedure § 2034.210, which requires a simultaneous exchange of expert witness information. Even though plaintiff had not exchanged expert witness information, he attached two expert declarations in his opposition papers to the summary judgment motion. The trial court sustained defendant’s objection to the declarations because plaintiff had failed to disclose the experts. Plaintiff moved for reconsideration, but the motion was never heard because it was discovered that the law license of plaintiff’s counsel had been suspended. After judgment was entered for defendant, plaintiff substituted counsel and unsuccessfully moved for permission to designate his experts. The Court of Appeal affirmed the judgment in favor of defendant. The California Supreme Court affirmed, noting that Code of Civil Procedure § 437c, subdivision (d) requires that declarations in summary judgment proceedings “set forth admissible evidence.” The Supreme Court stated: “Therefore, we hold that when the court determines an expert opinion is inadmissible because disclosure requirements were not met, the opinion must be excluded from consideration at summary judgment if an objection is raised.” Additionally, the California Supreme Court overruled Mann v. Cracchiolo (1985) 38 Cal.3d 18, to the extent it is inconsistent with the present case, and disapproved Kennedy v. Modesto Hospital (1990) 221 Cal.App.3d 575. (Perry v. Bakewell Hawthorne, LLC (Cal., Feb. 23, 2017) 2017 Cal. LEXIS 1351.)

County Lawyer Speaks to Newspaper and Ends Up Getting Fired. 

An Arizona lawyer working for a county gave a statement to a newspaper reporter to the effect that the county increased settlement offers to avoid having key county officials testify. She was accused of acting unprofessionally. Thereafter, the lawyer was not assigned any cases in which the county was a party and which involved risk management. At some point, she was terminated and she sued the county in federal court. A jury returned a verdict in the lawyer’s favor, and the federal trial judge entered judgment in her favor. The Ninth Circuit Court of Appeals reversed, stating the lawyer’s speech fell under the official duties she owed the county as its attorney and so was not constitutionally protected. (Brandon v. Maricopa County (9th Cir., Feb. 23, 2017) 2017 U.S. App. LEXIS 3259.)

Anti-SLAPP Motion Granted After Hospital Suspended Doctor and Doctor Sued Hospital. 

A doctor caused complications during a surgery on a child, which complications required corrective surgery. The hospital suspended the doctor, and every level of peer review upheld the suspension. The doctor did not seek mandamus, but did file suit against the hospital, medical staff, and doctors. The trial court granted defendants’ anti-SLAPP motion. The Court of Appeal discussed several different issues in its opinion. It affirmed the granting of the anti-SLAPP motion, finding defendants engaged in protected activity and that plaintiff did not show he could prevail on the merits. The Court of Appeal also discussed in the opinion which statute of limitations applies when a plaintiff alleges violation of Health and Safety Code § 1278.5 (discriminating or retaliating against a member of the medical staff who lodges a grievance), and stated, “it actually appears that a one-year statute of limitations may be appropriate here.”  The Court of Appeal further held that before filing suit, a plaintiff has to exhaust both administrative and judicial remedies, by seeking mandamus review of the peer review determinations. (Melamed v. Cedars-Sinai Medical Center (Cal. App. 2nd Dist., Div. 1, Feb. 27, 2017) 2017 Cal. App. LEXIS 161.)

Motion For Summary Judgment Affirmed After Registered Nurse Fired. 

Plaintiff is a registered nurse who was fired by a hospital after improperly administering narcotics to a patient and not properly documenting the patient’s chart. After she was fired, plaintiff sued the hospital and some staff for retaliation for whistleblowing, disability discrimination, failure to accommodate and engage in an interactive process, retaliation, and defamation. The trial court granted defendants’ motion for summary judgment and entered a judgment dismissing the complaint. The Court of Appeal affirmed the judgment. With regard to plaintiff’s cause of action for defamation, the appeals court said defendants’ statements were made to the Board of Registered Nursing and were absolutely privileged. As to the remainder of plaintiff’s complaint, the appeals court found plaintiff did not meet her burden to show defendants’ stated reasons were merely a pretext for retaliating against her. (Lemke v. Sutter Roseville Medical Center (Cal. App. 3rd Dist., Feb. 27, 2017) 2017 Cal. App. LEXIS 163.)

Arbitration Award of $30,835,152.57

Investor plaintiffs sued a limited liability company and an individual, alleging breach of fiduciary duties pertaining to their investment in a self-storage facility in Texas. Plaintiffs sought compensatory damages and declaratory relief, but did not seek punitive damages. The trial court granted defendants’ motion to compel arbitration, but the arbitration hearing was stayed while the individual defendant was being criminally prosecuted. At some point the individual defendant pled guilty to a wire fraud charge, and the arbitration hearing was scheduled. The day prior to the arbitration, plaintiffs emailed a brief, requesting punitive damages for the first time. The arbitrator awarded plaintiffs $30,835,152.57 without specifying the grounds or nature of the award. The trial court denied the individual defendant’s motion to vacate the award. The Court of Appeal reversed, stating: “ Although the award does not specify the nature of the damages, the parties agree a substantial portion of the award consists of punitive damages. The arbitrator issued the award after a hearing which [the individual defendant] elected not to attend. We conclude the judgment must be reversed. The arbitrator exceeded his authority by awarding punitive damages without adequate prior notice to [the individual defendant], in violation of the parties’ arbitration agreement and fundamental procedural fairness principles.” (Emerald Aero, LLC v. Kaplan (Cal. App. 4th Dist., Div. 1, Feb. 28, 2017) 2017 Cal. App. LEXIS 164.)

Wage and Hour Case Involving Employees Paid On Their Commissions. 

Commissioned employees sued their employer because they were paid in advance against their commissions and not separately compensated for rest periods mandated by state law. The trial court granted defendant’s motion for summary judgment. The Court of Appeal reversed, stating:  “Are employees paid on commission entitled to separate compensation for rest periods mandated by state law? If so, do employers who keep track of hours worked, including rest periods, violate this requirement by paying employees a guaranteed minimum hourly rate as an advance on commissions earned in later pay periods? We answer both questions in the affirmative, and reverse the trial court’s ruling granting summary judgment in favor of the employer.” (Vaquero v. Stoneledge Furniture LLC (Cal. App. 2nd Dist., Div. 7, Feb. 28, 2017) 2017 Cal. App. LEXIS 165.)

Previously We Reported:

Spare the Rod and Spoil the Child? 

The mother of a 12-year-old girl was reported for child abuse after she spanked her daughter, using a wooden spoon with enough force to produce visible bruises. Social Services “substantiated” the report and submitted it to the Department of Justice for inclusion in the Child Abuse Central Index (CACI) under the Child Abuse and Neglect Reporting Act (Pen. Code, § 11164 et seq.) On appeal, the mother contended that neither Social Services nor the superior court gave sufficient weight, or any weight, to the right of a parent to impose reasonable discipline on a child. The appellate court found the hearing officer committed a palpable and prejudicial abuse of discretion by refusing to permit the daughter to testify, and concluded: “We will therefore reverse the judgment of the superior court with directions to order [Social Services] to either conduct a new hearing or set aside its finding that the report is ‘substantiated’ and to inform the Department of Justice that the report is ‘unfounded.’”  (Gonzalez v. Santa Clara County Department of Social Services (Cal. App. 6th Dist., Oct. 8, 2013) 220 Cal.App.4th 326.)

The Latest Event.

After the mother successfully appealed, she asked the court to award her attorney fees of $60,000, billed by four different law firms. The trial court found she was eligible for fees but awarded her only $7,500, which covered the fees charged by her most recent lawyer. The Court of Appeal reversed, stating: “[W]e conclude that under the peculiar circumstances of this case, the court’s complete denial of relief as to three of plaintiff’s four attorneys exceeded the bounds of sound discretion. We will therefore remand for reconsideration of the fee request with respect to the other three attorneys.” Gonzalez v. Santa Clara County Department of Social Services (Cal. App. 6th Dist., Feb. 28, 2017) 2017 Cal. App. LEXIS 174.)

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