Litigation Update

Litigation Section News: September 2016

 • 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

Who Decides Whether Arbitration Agreement Permits or Prohibits Classwide Arbitration, the Court or the Arbitrator?

section survey link box. complete the survey!An automobile salesperson filed a discrimination class action lawsuit on behalf of himself and other employees of color. The dealership moved to compel arbitration. At the hearing, plaintiff asserted he was handed a stack of 100 preprinted forms and was required to sign them as a condition of his employment. He says he signed them as quickly as possible and did not realize he was signing multiple arbitration agreements. The trial court found the agreements were not unconscionable and ordered the matter into arbitration. The trial court also decided that the arbitration agreements did not permit class arbitrations, and it struck the class allegations. On appeal, plaintiff challenged the dismissal of his class allegations under the death knell doctrine. The California Supreme Court ultimately held: “A salient question is whether that agreement permits or prohibits arbitration on a classwide basis. Here we must answer a question one step removed—who decides whether the agreement permits or prohibits classwide arbitration, a court or the arbitrator? The question has divided the many state and federal courts to consider it. We conclude no universal rule allocates this decision in all cases to either arbitrators or courts. Rather, who decides is in the first instance a matter of agreement, with the parties’ agreement subject to interpretation under state contract law. Under state law, these parties’ arbitration agreement allocates the decision to the arbitrator. Under federal arbitration law, no contrary presumption requires a different result, so the issue remains one for the arbitrator.” (Sandquist v. Lebo Automotive, Inc. (July 28, 2016) 51 Cal.5th 233.)

Disabled Person’s Allegations of Discrimination Demonstrate He Has Standing to Sue.

Plaintiff alleges he is a paraplegic and uses a service dog. Management of the hotel refused to rent him and his family an $80 room unless they first paid a non-refundable fee of $300. He did not rent the room or pay the fee. In two actions, he and his family sued defendants, who own and manage the hotel. However, under the Unruh Civil Rights Act (Civ. Code, § 51), “a person must tender the purchase price for a business’s services or products in order to have standing to sue it for alleged discriminatory practices relating thereto.” The trial court ruled in favor of defendants. The Court of Appeal reversed, stating: “When a disabled person . . . alleges that he presented himself to a business establishment and was required to pay a fee relating to his disability before accessing the products or services offered, he has stated facts sufficient to establish that he is a person aggrieved as defined in section 52, subdivision (c), and he has therefore alleged facts sufficient to demonstrate standing to sue under the Unruh Act.” (Osborne v. Yasmeh (Cal. App. 2nd Dist., Div. 4, July 28, 2016) 1 Cal.App.5th 1118.)

Anti-SLAPP Statute Targets Only Claims Based on the Conduct Protected by the Statute.

The California Supreme Court tackled the problem that arises from the anti-SLAPP statute’s (Code Civ. Proc., § 425.16) use of the terms “cause of action” and “claim,” noting the terms usually apply to situations where a complaint has been filed, but not explaining what happens when a person may have a cause of action or claim even if no suit has been filed. In its much-needed explanation of the statute, California’s highest court stated: “Viewing the term in its statutory context, we conclude that the Legislature used ‘cause of action’ in a particular way in section 425.16(b)(1), targeting only claims that are based on the conduct protected by the statute. Section 425.16 is not concerned with how a complaint is framed, or how the primary right theory might define a cause of action. While an anti-SLAPP motion may challenge any claim for relief founded on allegations of protected activity, it does not reach claims based on unprotected activity.” In the case at issue, the Court of Appeal held an anti-SLAPP motion must be brought against a mixed cause of action in its entirety, and it affirmed the denial of defendant’s motion because plaintiff established a probability of succeeding on claims based on allegations of activity not protected by § 425.16. In reversing the Court of Appeal, the Supreme Court stated: “This application of the anti-SLAPP statute unduly limits the relief contemplated by the Legislature.” So, gone are the old days when if any part of the cause of action survived, the whole cause of action survived; now, a trial court may strike part of a cause of action. (Baral v. Schnitt (Aug. 1, 2016) 1 Cal.5th 376.)

Attorney Fees Against California Highway Patrol (CHP) Affirmed in Class Action.

Penal Code § 849.5 provides that if a person is arrested and released and no accusatory pleading is filed, the arrest shall be deemed a detention only. Section 851.6 (b) provides that the arresting law enforcement agency shall issue the person a certificate describing the action as a detention. Subdivision (d) of the section provides that the official criminal records shall delete any reference to an arrest and refer to the action as a detention. The California Highway Patrol (CHP) does not comply with sections 849.5 and 851.6. The trial court certified a class action, issued a writ of mandate and awarded attorney fees of $296,100 pursuant to Code of Civil Procedure § 1021.5. That statute provides an award of fees if the action results in the enforcement of an important right affecting the public interest. On appeal, the CHP argued there was no significant benefit conferred on the general public. In affirming, the Court of Appeal noted: “Society as a whole benefits when law enforcement agencies properly interpret and implement the law.” (Schmidt v. California Highway Patrol (Cal. App. 2nd Dist., Div. 6, Aug. 1, 2016) 1 Cal.App.5th 1287.)

Asylum-Seeker Wins Appeal.

In 2001, a man from Indonesia arrived in the USA on a tourist visa. While here, he and his wife had two children born in the USA, who are both American citizens. The Department of Homeland Security initiated removal proceedings because he overstayed his tourist visa. The Board of Immigration Appeals (BIA) denied his motion to re-open his removal proceedings after the man lost his request to remain in the country. The man is a practicing Catholic and contends that circumstances in his country have changed for Christians in Indonesia since his initial hearing. He submitted evidence that the Indonesian government no longer takes steps to protect religious freedom and also submitted documentation showing the rising violence against Indonesian Christian communities. His documentation included a letter from his sister in Jakarta who described the recent targeting of her local church. The Ninth Circuit Court of Appeals concluded the BIA abused its discretion in denying the man’s motion to re-open his case, stating: “Substantial evidence supports his claim of changed country conditions, and he has presented sufficient evidence of individualized risk to establish a prima facie case for the relief sought.” (Salim v. Lynch (9th Cir. Aug. 1, 2016) 2016 WL 4073315.)

No Special Discovery in Defamation Action Anti-SLAPP Motion.

In producing a film involving an alien invasion of Los Angeles, there were accusations by Sony Pictures that a visual effects company named Hydraulx had used Sony’s equipment and resources to produce the film in violation of their vfx agreement, so Sony sued in arbitration. Sony dropped the arbitration after it was satisfied its special effects were not used. Doe 2 is an anonymous individual who sent two substantially identical emails to business associates of Hydraulx, which emails contained allegations that Hydraulx was “running on life support,” was “on the verge of financial collapse” and couldn’t make payroll. Hydraulx filed suit for defamation. Doe 2 filed a special motion to strike pursuant to the anti-SLAPP statute (Code Civ. Proc., § 425.16). Hydraulx filed a motion to conduct special discovery to demonstrate Doe 2’s statements were provably false. The trial court concluded Hydraulx had made a sufficient showing of libel to obtain special discovery, and Doe 2 filed a petition for writ of mandate for immediate stay of the discovery order with the Court of Appeal. In issuing the petition for writ of mandate, the Court of Appeal stated: “Hydraulx failed to make a prima facie showing that Doe 2’s emails are provably false and defamatory statements of fact or that the emails caused Hydraulx to suffer actual damage. We therefore issue a writ of mandate ordering the trial court to vacate its discovery order and issue a new order denying Hydraulx’s special discovery motion.” (Doe 2 v. Superior Court (Cal. App. 2nd Dist., Div. 3, Aug. 2, 2016) 1 Cal.App.5th 1300.)

MICRA Statute of Limitations Does Not Apply.

A paramedic supervisor was on his way to supervise and/or assist medical technicians who had responded to an injured fall victim. While en route, he collided with another vehicle. A year and a half later, he was sued for negligence. Does MICRA’s (Medical Injury Compensation Reform Act; Code Civ. Proc., § 340.5) one-year statute of limitations apply, or does the two-year statute of limitations for other torts apply? The trial court held the action is time-barred by MICRA. The Court of Appeal reversed, citing the recent decision of the California Supreme Court, Flores v. Presbyterian Intercommunity Hospital (2016) 63 Cal.4th 75, noting the defendant is indeed a medical professional, but that the traffic accident was of the “garden variety.” (Aldana v. Stillwagon (Cal. App. 2nd Dist., Div. 6, Aug. 3, 2016) 2 Cal.App.5th 1.)

Scope of Proposed Release Invalidates 998 Offer.

Plaintiff in a personal injury action was offered $75,000 by defendant to settle the action under certain terms, including that plaintiff execute a release. Plaintiff rejected the offer and subsequently obtained a judgment against defendant for $70,000. Defendant sought to tax plaintiff’s costs and obtain her own costs, pursuant to Code of Civil Procedure § 998. The trial court concluded defendant’s settlement offer was invalid under § 998, and denied her the cost-shifting benefits of that statute. Defendant appealed. In affirming, the Court of Appeal stated: “Because the release defendant submitted to plaintiff as part of her settlement offer sought to release defendant and others from claims outside the scope of the current personal injury action, it rendered the offer invalid under section 998. We therefore affirm.” (Ignacio v. Caracciolo (Cal. App. 2nd Dist., Div. 8, Aug. 3, 2016) 2 Cal.App.5th 81.)

To Be Void or Voidable: That is the Question.

After a temporary judge was found to be disqualified, a question arose whether the orders made by the temporary judge prior to disqualification were void or voidable. The Court of Appeal held: “Our resolution rests heavily on the temporary judge’s failure to either consent to disqualification or answer the statement of disqualification. The temporary judge’s failure to contest the claims that she failed to disclose in writing or on the record, and also that she was biased and prejudiced against petitioner, means that those factual allegations must be taken as true, and she was therefore automatically disqualified. [¶] We shall find that (1) the rulings and orders issued by the temporary judge are all void and must be vacated. . . .” (Hayward v. Superior Court (Cal. App. 1st Dist., Div. 2, Aug. 3, 2016) 2 Cal.App.5th 10.)

“In the Circumstances in Which Bullets are Flying Like Rain and Wind, the Soldiers are Running Around at the Risk of Losing Their Lives . . . If You Want Them to Have a Rest in Such a Situation, a Comfort Women System is Necessary. Anyone Can Understand That,” 2013 BBC report, quoting Osaka Mayor Toru Hashimoto.

Before and during World War II, the Japanese Imperial Army forced women from other countries to serve as sexual partners for its soldiers. Thus, in 2013, the City of Glendale installed a public monument commemorating the Comfort Women who South Korea asserts—and Japan disputes—were forced to serve as sexual partners for Japanese soldiers. A Japanese-American resident of Los Angeles and a nonprofit organization brought suit contending the City of Glendale’s installation of the monument intrudes on the federal government’s foreign affairs power. The Ninth Circuit ruled: “We conclude that Plaintiffs have standing to challenge Glendale’s installation of the monument but have failed to state a claim that Glendale’s actions are preempted. Accordingly, we affirm the district court’s judgment dismissing Plaintiff’s preemption claim with prejudice.” (Gingery v. City of Glendale (9th Cir., Aug. 4, 2016) 2016 WL 4137637.)

Suit Against Private Health Plan Preempted by Federal Law.

Plaintiff enrolled in a private health plan offering benefits to persons 65 and over as well as disabled persons under the federally funded Medicare Advantage program (42 U.S.C. § 1395w-21 et seq.), and went to an urgent care center outside of the plan’s network for medical services. As a result, he was forced to pay a $50 copayment instead of the $30 copayment for in-network centers. Alleging that the plan’s marketing materials misled him and other enrollees as to the availability of in-network urgent care centers and their smaller copayments, and that the absence of any in-network urgent care centers in California rendered the plan’s network inadequate, plaintiff filed a class action for unfair competition, unjust enrichment, and financial elder abuse. The Court of Appeal held plaintiff’s misrepresentation and adequacy-of-network claims are expressly preempted by the preemption clause applicable to Medicare Advantage plans (42 U.S.C § 1395w-26(b)(30)). The appellate court further concluded plaintiff did not exhaust his administrative remedies under the Medicare Act. (Roberts v. United Healthcare Services, Inc. (Cal. App. 2nd Dist., Div. 2, Aug. 4, 2016) 2 Cal.App.5th 132.)

Retaliation Claim Against City.

A former employee of an Arizona city brought an age discrimination action against the city pursuant to the ADEA (Age Discrimination in Employment Act; 29 U.S.C § 623(d)). The plaintiff in the instant case, who was an employee of the city when he heard about the ADEA case, planned to testify in the former employee’s action against the city. However, the plaintiff herein was fired, allegedly in retaliation for planning to testify in the other case, so he brought his own action against the city, not for violating the ADEA, but a First Amendment claim under 42 USC § 1983. The Ninth Circuit was called upon to decide whether the retaliation provision under the ADEA precludes plaintiff from bringing a First Amendment retaliation claim. The appeals court concluded, “We hold that it does not.” (Stilwell v. City of Williams (9th Cir., Aug. 5, 2016) 2016 WL 4151221.)

City Council Members Would Vote for a Contract in Which They Held a Financial Interest??? . . . No Way!

A city sued three of its former councilmembers and an administrator for voting on a waste management contract in which they held a financial interest. The city sought to invalidate the contract and force defendants to disgorge campaign contributions made by the company that was awarded the contract. Defendants moved to strike the complaint pursuant to the anti-SLAPP statute (Code Civ. Proc., § 425.16). The California Supreme Court noted the anti-SLAPP statute has always included an exemption for public enforcement actions, and that a split of authority has developed on the scope of that exemption. California’s highest court concluded a case adopting a narrow interpretation of the exemption, City of Colton v. Singletary (2012) 206 Cal.App.4th 751, is consistent with the statutory language, stating: “The terms of section 425.16(d) unambiguously limit the scope of the exemption to enforcement actions brought both ‘in the name of the people of the State of California’ and ‘by the Attorney General, district attorney, or city attorney, acting as a public prosecutor.’” Accordingly, the Supreme Court held this case does not come within the exemption for public enforcement actions. Nonetheless, the court did find “the votes cast in favor of the contract at issue were protected activity under section 425.16.” The high court added that “elected officials may assert the protection of section 425.16 when sued over how they voted without chilling citizens’ exercise of their right to challenge government action by suing the public entity itself.” (City of Montebello v. Vasquez (Aug. 8, 2016) 1 Cal.5th 409.)

Lease Language Trumps Clever Argument.

A dentist in a commercial building hired a carpet cleaner for the dental suite. In a stairwell in the common area of the building, the carpet cleaner was injured, and he sued the landlords. The landlords filed cross-complaints against the dentist/tenant. The dentist/tenant moved for summary judgment on the cross-complaints on the grounds that the landlords had the exclusive right to management and control of the common areas. The landlords opposed, arguing there were material disputed facts concerning whether the carpet cleaner slipped on soapy water he was carrying, it was dentist who hired him, and the determination of rights to indemnity and apportionment of fault rested on how these disputed facts were resolved. The trial court granted summary judgment to the dentist, and the landlords appealed. The Court of Appeal affirmed the trial court’s order, stating: “We hold that under the indemnity clause in this case, the injury to a third party that occurred outside the dental suite, in a common area over which the landlords have exclusive control, did not arise out of the tenant’s use of the dental suite.”  (Morlin Asset Management LP v. Murachanian (Cal. App. 2nd Dist., Div. 8, Aug. 8, 2016) 2 Cal.App.5th 184.)

Man Beats Parking Ticket; Gets $722,000 For His Effort.

When a driver challenges a parking citation, the Vehicle Code provides three potential levels of review: initial review, administrative hearing, and de novo appeal to the superior court. (Veh. Code, §§ 40215, subds. (a)-(c), 40230, subds. (a), (d).) In the instant appeal by the city involved, the city appeals from the trial court’s grant of a writ of mandate to the driver. The Court of Appeal was called upon to consider whether the city as the “issuing agency” for notice of parking violations in the city must conduct the “initial review” of challenged citations, or whether it may delegate that duty to a private company acting as its “processing agency.” The Court of Appeal held in favor of the driver who challenged his parking ticket: “We hold, as did the trial court, that the city is required to conduct the initial review and cannot contract with Xerox to perform that duty. Therefore, we affirm the trial court’s issuance of a writ of mandate. We also affirm the trial court’s award of approximately $722,000 in attorney fees to [the driver] pursuant to the California private attorney general statute, Code of Civil Procedure section 1021.5.” (Weiss v. City of Los Angeles (Cal. App. 2nd Dist., Div. 4, Aug. 8, 2016) 2 Cal.App.5th 194.)

Open Meetings Law Meets Anti-SLAPP Statute.

Neighbors brought suit against their city for violating open meeting requirements (Brown Act; Gov. Code, § 54950), alleging the city council discussed a change in parking restrictions in their neighborhood and took action on the issue, even though it was not on the agenda. The parking restrictions were imposed in 1982 when residents of Farragut Drive complained that parishioners of a church jammed their street with parked cars during church services. In 2004, the city council adopted an ordinance for the establishment of preferential parking zones throughout the city and included the 1982 Farragut Drive parking restrictions as one such zone. In 2013, other restrictions were put in place. At some point, the church sent a letter to a member of the city council about “onerous parking restrictions.” In response to the letter, the councilmember, mayor, public works director, and city engineer had a six-minute discussion about the Farragut Drive parking restrictions, and the matter was placed on the next month’s agenda. It is that six-minute discussion that gives rise to the present action. The city filed an anti-SLAPP motion (Code Civ. Proc., § 425.16), which the trial court granted, dismissing the complaint. In affirming, the Court of Appeal said it saw nothing more than a city council member clarifying the appropriate avenue of response to the church’s letter. The court found the discussion was protected activity and the neighbors did not show it was likely they would prevail on the merits. (Cruz v. City of Culver City (Cal. App. 2nd Dist., Div. 8, Aug. 8, 2016.) 2 Cal.App.5th 239.)

Violation of a Written Agreement After Mediation is an “Action to Enforce Governing Documents” Within the Meaning of the Davis-Stirling Act.

Owners of a condominium made patio improvements in violation of the homeowners association’s covenants, conditions, and restrictions (CC&Rs). The parties mediated their disagreement, and a written agreement was reached. The present lawsuit alleges the homeowners violated the written agreement. While this action was pending, the homeowners made the modifications required by the written agreement. Nevertheless, the two sides disagreed over (what else?) attorney fees. The trial court awarded $18,991 in attorney fees and $572 in costs to the association. The question for the Court of Appeal was whether the phrase “action to enforce governing documents” in Civil Code § 5975, subdivision (c) of the Davis-Stirling Act encompassed an action to enforce the written agreement. The appellate court noted, “Narrowly construing the phrase ‘action to enforce the governing documents’ to exclude actions to enforce agreements arising out of that mandatory ADR process would discourage such resolutions, and encourage gamesmanship.” The judgment was affirmed. (Rancho Mirage Country Club Homeowners Association v. Hazelbaker (Cal. App. 4th Dist., Div. 2, Aug. 9, 2016) 2 Cal.App.5th 252.)

Trial Court Erred in Setting Aside Default Judgment.

A home building company filed an action against a plumbing company for defective performance of a plumbing subcontract. Prior to the filing, however, the plumbing company was defunct, and it was suspended by the Secretary of State. Plaintiff effected service on an attorney the plumbing company had designated as its agent for service of process. The attorney did not notify either the plumbing company or its insurance carrier of the action. Plaintiff obtained a default judgment. Thereafter, plaintiff notified the carrier for the plumbing company of the default judgment, and four and a half months later, the insurer’s retained counsel filed a motion to set aside the default judgment under Code of Civil Procedure § 473, subdivision (b) on the grounds of mistake, inadvertence, surprise, or excusable neglect. In the alternative, the motion sought relief under § 473.5 on the ground the plumbing company had not received actual notice of the proceedings, and sought equitable relief. Without specifying its reason, the trial court granted the motion, and plaintiff filed an appeal. In reversing the trial court’s order because the court abused its discretion, the Court of Appeal stated: “[The] motion was filed less than six months after entry of the default judgment, but more than six months after entry of its default. The trial court therefore could not set aside the default under Code of Civil Procedure section 473. . . . [¶]We therefore conclude [the plumbing company] had actual notice of the action, and therefore it was not entitled to relief under Code of Civil Procedure section 473.5.” The Court of Appeal also concluded the plumbing company did not show a satisfactory excuse or diligence so as to justify equitable relief based on extrinsic mistake. (Pulte Homes Corporation v. Williams Mechanical, Inc. (Cal. App. 4th Dist., Div. 2, Aug. 9, 2016) 2 Cal.App.5th 267.)

Expert Declaration in Medical Malpractice Case; Defendant is U.S. Doctor and Plaintiff’s Expert is Licensed to Practice Medicine in Mexico.

Plaintiff’s expert declaration, submitted in opposition to defendant’s motion for summary judgment in a medical malpractice case, contained the expert’s opinion. Plaintiff’s expert doctor was licensed to practice medicine in Mexico. His declaration stated defendant’s treatment was done “carelessly or unskillfully.” Defendant objected that the expert’s opinions “were speculative and lacked foundation” and that plaintiff “failed to establish that [plaintiff’s expert] was sufficiently familiar with the applicable standard of care.” The trial court sustained defendant’s objections and granted summary judgment, stating the doctor supplied “absolutely no information about the appropriate standard of care in the United States. There is no information whether [plaintiff’s expert doctor] has spoken with American doctors or reviewed American publications regarding the treatment of thoracic outlet syndrome in the United States.” In reversing, the Court of Appeal stated:  “In fact, defendant fails to offer any explanation as to how the conditions or circumstances of plaintiff’s treatment in California would differ from those in Mexico. Citing to Code of Civil Procedure section 437c, subdivision (d), he instead asserts it is plaintiff’s burden to present evidence that the standard of care in Mexico is the same as the standard of care in the United States. That statute provides: ‘Supporting and opposing affidavits or declarations shall be made by a person on personal knowledge, shall set forth admissible evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated in the affidavits or declarations. An objection based on the failure to comply with the requirements of this subdivision, if not made at the hearing, shall be deemed waived.’ The last sentence of this provision arguably suggests that the burden of proof actually falls on the party making the evidentiary objection, in this case defendant.” The appeals court also noted the significant experience of plaintiff’s expert. (Borrayo v. Avery (Cal. App. 1st Dist., Div. 1, Aug. 10, 2016) 2 Cal.App.5th 304.)

“If You Don’t Get Caught, You Deserve Everything You Steal,” Daniel Nayeri, Another Faust.

Administrators for the federal Medicare program pay Medicare Advantage organizations fixed monthly amounts for each enrollee based on risk data such as an enrollee’s demographic profile and health status as reflected in medical codes. These diagnosis codes are reported by Medicare Advantage organizations to the federal administrators. Under the False Claims Act (31 USC § 3729(a)(1)), a qui tam relator alleged Medicare Advantage organizations have set up a system of retrospective reviews of tens of thousands of Medicare Advantage patients to attempt to exaggerate the patients’ conditions in order to inflate the amount of money the government would pay out to the private insurance companies. The federal district court dismissed the complaint. The Ninth Circuit found the trial court abused its discretion, finding the proposed fourth amended complaint adequately alleged a false certification claim under the False Claims Act. (United States v. United Healthcare Ins. Company. (9th Cir., Aug. 10, 2016) 2016 WL 4205941.)

Attorney Fee Award in Class Action.

In a class action wage and hour case, a trial court approved an attorney fee award of $6,333,333.33, which was one-third of the recovery. The case made its way to the California Supreme Court, which stated its reason for granting review: “We granted review on the objector’s petition, which presented a single issue: whether Serrano III (Serrano v. Priest (1977) 20 Cal.3d 25) permits a trial court to calculate an attorney fee award from a class action common fund as a percentage of the fund, while using the lodestar-multiplier method as a cross-check of the selected percentage.” Agreeing with the decisions of both the trial court and the intermediate appellate court, the Supreme Court held: “We therefore agree with the Court of Appeal below that ‘[t]he percentage of fund method survives in California class action cases, and the trial court did not abuse its discretion in using it, in part, to approve the fee request in this class action.’ We hold further that trial courts have discretion to conduct a lodestar cross-check on a percentage fee, as the court did here; they also retain the discretion to forgo a lodestar cross-check and use other means to evaluate the reasonableness of a requested percentage fee.” (Laffitte v. Robert Half International Inc. (Aug. 11, 2016) 1 Cal.5th 480.)

Laches Does Not Apply.

A restaurant employee went to the backyard with a ladder to inspect a roof leak during a rain. A few minutes later, he was found lying on the ground unconscious with the ladder next to him. He suffered a brain injury and was paralyzed from the shoulder down, and has received 24-hour care since then. The day after the accident, the employer was notified. Labor Code § 5401, subdivision (a) requires an employer to provide a claim form and a notice of potential eligibility for workers’ compensation benefits within one working day of receiving notice or knowledge of certain injuries. Apparently, this was never done, and case law has held that the limitations period is tolled for the period of time that the employee remains unaware of his rights (see Kaiser Foundation Hospitals v. Workers’ Comp. Appeals Bd.(1985) 39 Cal.3d 57, 60). The employee’s wife filed a claim more than seven years later, in July 2012.  The employer’s insurance company contended the defense of laches barred the workers’ compensation claim. The Court of Appeal held that under Insurance Code § 11652, notice to the employer is deemed to be notice to the insurer as well, and that laches did not apply. (Truck Ins. Exchange v. Workers’ Comp. Appeals Bd. (Cal. App. 2nd Dist., Div. 8, Aug. 11, 2016) 2 Cal.App.5th 394.)

Not All Debts Are Extinguished by a Bankruptcy.

Shortly after the settlement of a lawsuit, the party who paid the settlement money declared bankruptcy. The party who received the settlement money was required to surrender the settlement proceeds to the bankruptcy court as a preferential payment. The party who had to surrender the money, who was the plaintiff in the underlying action, turned around and sued two other obligors under the original loan agreement. Both the trial court and the appellate court found those two other obligors had breached the settlement agreement. The Court of Appeal stated: “We affirm, holding that a debt of a contractual co-obligor is not extinguished by another co-obligor’s pre-bankruptcy payment to a creditor that is later determined to be a bankruptcy preference.” (Coles v. Glaser (Cal. App. 1st Dist., Div. 1, Aug. 11, 2016) 2 Cal.App.5th 384.)

Dad’s Former Girlfriend Gets the House.

A man purchased property in 2003, naming himself and his former girlfriend as joint tenants. The former girlfriend claimed sole ownership upon the man’s death in 2013, and his son brought an action to quiet title. The son’s claim was premised on the theory the grant deed was void ab initio, as well as an alternative theory that his father and the former girlfriend had severed their joint tenancy prior to the father’s death.  The trial court sustained the former girlfriend’s demurrer to the quiet title action on the ground it was barred by the three-year statute of limitations in Code of Civil Procedure § 338. On appeal, the son contended an action to quiet title may be brought at any time. While not deciding which statute of limitations actually applies (Code Civ. Proc., § 338 or § 343), the Court of Appeal concluded a claim to quiet title “is subject to a statute of limitation.”  With regard to the son’s alternative theory, the appellate court found the son neither alleged sufficient facts for such a theory nor demonstrated he could amend to allege them. (Walters v. Boosinger (Cal. App. 4th Dist., Div. 1, Aug. 12, 2016) 2 Cal.App.5th 421.)

Not You, Marine.

One California statute (Veh. Code, § 23640, passed in 1998) states that the court is prohibited from diverting drunk drivers away from criminal prosecutions, and another (Pen. Code, § 1001.80, effective 2015) says that when a person is or was in the military and suffers from certain maladies as a result, and is accused of any misdemeanor, the court may divert the person. Section 1001.80 applies to defendants suffering from such conditions as traumatic brain injury, post-traumatic stress disorder, sexual trauma, and substance abuse as a result of military service, and allows the court to place the person accused of a misdemeanor in a pretrial diversion program. Vehicle Code § 23640, on the other hand, provides the following regarding drunk drivers: “the court shall neither suspend nor stay the proceedings for the purpose of allowing the accused person to attend or participate, nor shall the court consider dismissal of or entertain a motion to dismiss the proceedings because the accused person attends or participates during that suspension, in any one or more education, training, or treatment programs, including but not limited to, a driver improvement program. . . .” In the instant two consolidated cases, one involves an active-duty Marine and the other a veteran of the Army, both of whom allege that they suffer from the maladies listed in §1001.80.  In both cases, the superior court suspended criminal proceedings and diverted the men away from normal prosecution for a court program pursuant to § 1001.80. The district attorney appealed, and the Court of Appeal reversed, stating: “We conclude military diversion is not available for defendants charged with driving under the influence offenses in violation of [Vehicle Code] sections 23152 and 23153.” (People v. VanVleck (Cal. App. 4th Dist. Div. 1, Aug. 11, 2016) 2 Cal.App.5th 355.)

Taking a Personal Injury Case to Trial.

In a lawsuit following injuries sustained in an automobile collision, the defendant stipulated that his negligence caused the accident. Plaintiffs presented evidence of injury and treatment. The jury awarded no damages. On appeal, the Court of Appeal stated that each of the claims depended upon the credibility of the testimony, and the jury reasonably found the testimony not credible. (Christ v. Schwartz (Cal. App. 4th Dist., Div. 1, Aug. 12, 2016) 2 Cal.App.5th 440.)

When City Condemns Private Property For Public Use.

A city condemned a strip of land on defendants’ property to build a road. The city contended that the owners were entitled to compensation based on the undeveloped state of the property rather than its value based on the land’s highest and best use. The California Supreme Court held that under article I, section 19 of the California Constitution, which governs eminent domain, only factually intensive questions directly related to compensation are to be submitted to a jury. The Court also found that the project effect rule found in Code of Civil Procedure § 1263.330, which states the fair market value of the property taken shall not include any increase or decrease in the value of the property that is attributable to the project for which the property is taken or any preliminary actions of the plaintiff relating to the taking of the property, “generally applies.” The Supreme Court explained the applicability of the project effect rule “thus turns on a preliminary factual question to be decided by the court,” and that in this case the trial court made no such factual findings because it did not think the project effect rule applied. (City of Perris v. Stamper (Aug. 15, 2016) 1 Cal.5th 576.)

Disabled CHP Officer.

Labor Code § 4800.5, subdivision (a) provides that a sworn member of the Department of the California Highway Patrol (CHP) who has been disabled by a single work-related injury is entitled to a leave of absence without loss of salary, in lieu of disability payments, for a period not to exceed one year. In a February 2013 decision, a workers’ compensation administrative law judge found a CHP sergeant to be temporarily totally disabled from July 18, 2011 to November 8, 2011. Although he received payments equal to the full amount of his salary during that period, a portion of those sums was charged against his accrued annual vacation leave. The Court of Appeal ordered the Workers’ Compensation Appeals Board to award the disabled sergeant additional compensation in an amount equal to the value of annual leave used during the disputed period of temporary disability as well as penalties and interest. (Hernandez v. Workers’ Comp. Appeals Bd. (Cal. App. 2nd Dist., Div. 7, Aug. 15, 2016) 2 Cal.App.5th 549.)

To Insurance Company: Repeat Three Times…A Stitch in Time Saves Nine.

Drunk driver seriously injured two women in a crosswalk with the walk signal in their favor. The women agreed to settle with the drunk driver’s insurance carrier for her policy limits of $15,000 each. However, the carrier would not agree to additional language the women inserted in the release: “This does not include court-ordered restitution,” so the case did not settle. Thereafter, the two women sued the drunk driver and reached a stipulated judgment for $3 million. The drunk driver then assigned her rights against her insurer to the two injured women who filed the present action against the drunk driver’s insurance carrier for breach of contract and breach of the implied covenant of good faith and fair dealing. Following trial, judgment was entered in favor of the two injured women for $3 million plus interest from the date of the stipulated judgment and costs. The Court of Appeal affirmed. (Barickman v. Mercury Casualty Company (Cal. App. 2nd Dist., Div. 7, Aug. 18, 2016) 2 Cal.App.5th 508.)

Sort of Like Patient Dumping.

42 CFR §483.12 (b)(3) requires skilled nursing facilities to permit a patient to return if the skilled nursing facility transfers the patient to another facility for care. In this case, a hospice recommended that a patient who had a psychotic episode be transferred from the skilled nursing home to an acute care facility. After the patient was stabilized at the acute care facility, the nursing home would not take the patient back again, claiming it was not violating the law because it was the hospice’s decision to transfer the patient, and not the decision of the skilled nursing home. The Department of Health Care Services ordered the skilled nursing home to re-admit the patient, and the matter was resolved while on appeal. In an unusual step, however, because there was also an ongoing civil case “in which the issue is likely to arise again,” the Court of Appeal decided the skilled nursing home was not exempted from the requirement to re-admit the patient simply because it was the hospice that made the call to transfer the patient. (St. John of God Retirement & Care Center v. Department of Health Care Services Office (Cal. App. 2nd Dist., Div. 4, Aug. 17, 2016) 2 Cal.App.5th 638.)

“Mining is Like a Search and Destroy Mission,” Stewart Udall.

At trial, a man was convicted of illegally engaging in suction mining, a process of using high powered vacuums to hose up material from the bottom of a water bed, which causes heavier matter, such as gold, to float on the water surface. Because of concerns that this type of dredging endangered coho salmon habitats and contributed to mercury contamination of both fish and humans, the California Legislature placed a moratorium on issuing permits for suction mining. The Court of Appeal, finding that the criminal statute may be preempted under federal law, remanded the matter to the trial court. The California Supreme Court granted review at the People’s request. The Supreme Court reversed the Court of Appeal, finding the moratorium is not preempted by federal law, stating: “The federal laws . . . reflect a congressional intent to afford prospectors secure possession of…the places they mine . . . but . . . [do not] . . . guarantee to them a right to mine immunized from exercises of the states’ police powers.” (People v. Rinehart (Cal., Aug. 22, 2016) 2016 WL 4434810.)

New Wrinkle in Class-Action-Waivers-as-a-Condition-of-Employment Issue.

As a condition of employment by a large accounting firm, plaintiffs were required to sign a “concerted action waiver,” in which they agreed not to join with other employees in bringing legal claims against the company. The agreement also required them to pursue any legal claims against the firm through individual claims in separate proceedings. Nonetheless, they pursued a class action in which they alleged the firm misclassified employees in order to deny overtime wages in violation of state and federal law. A federal trial judge ordered individual arbitrations and dismissed the court action. The Ninth Circuit reversed, holding the “concerted action waiver” violates the well-established principle that employees have the right to pursue work-related legal claims together under the National Labor Relations Act (NLRA; 29 USC § 157) and accordingly held that the “separate proceedings” terms in the arbitration agreement were unenforceable as inconsistent with Sections 7 and 8 of the NLRA. The court further stated: “Because the district court’s order compelling arbitration was based at least in part on the separate proceedings provision, we must vacate the order and remand to the district court to determine whether the ‘separate proceedings’ clause is severable from the contract. We take no position on whether arbitration may ultimately be required in this case.” (Morris v. Ernst & Young, LLP (9th Cir., Aug. 22, 2016) 2016 WL 4433080.)

Sexual Orientation Change Efforts.

California has a law prohibiting state-licensed mental health providers from engaging in “sexual orientation change efforts” (SOCE) with minor patients. (See Bus. & Prof. Code, § 865.) A few years ago, the Ninth Circuit Court of Appeals held the law does not violate the free speech rights of SOCE practitioners or minor patients, is not vague or overbroad, and does not violate the parents’ fundamental rights regarding the care and custody of their children. (Pickup v. Brown (9th Cir. 2013) 740 F.3d 1208.)  In the present action, the plaintiffs are two mental health practitioners who desire to provide SOCE to minors, claiming that under the Establishment Clause of the First Amendment, “Congress shall make no law respecting an establishment of religion.” Rejecting the practitioners’ claims. the Ninth Circuit held: “Although the scientific evidence considered by the legislature noted that some people seek SOCE for religious reasons, the documents also stressed that persons seek SOCE for many secular reasons. Accordingly, an informed and reasonable observer would conclude the primary effect of [the statute] is not the inhibition or endorsement of religion.” (Welch v. Brown (9th Cir., Aug. 23, 2016) 2016 WL 4437617.)

Judge Refused to Do Job.

After losing in the trial court, a self-represented litigant filed a motion for a settled statement pursuant to California Rules of Court, rules 8.140 and 8.137. The trial judge refused the request, stating: “The burden is placed on the court to conduct a settlement conference with the parties regarding the contents of the statement. Minute order contains ample information, there is no reason for a further settled statement.” The litigant lost her appeal because the appellate court determined the record was insufficient to permit review. The Court of Appeal noted, “To preserve the issue of the denial for appeal, the appellant may seek writ review at the time of the denial, or raise the denial in the opening brief on appeal…. In this case, appellant took none of those steps.”  (Randall v. Mousseau (Cal. App. 2nd Dist., Div. 7, Aug. 24, 2016) 2016 WL 4446574.)

Jury Verdict Reversed After Defendants “Overstepped the Judge’s Ruling” in Motions in Limine.

In a civil rights trial involving police shooting and killing a man, plaintiff’s motion in limine to exclude decedent’s gang affiliation was denied after the court found the issue was relevant to damages, but the court did exclude specific photographs and other evidence. Plaintiff then moved to bifurcate liability from damages, and the motion was denied. After deliberating for less than two hours, a jury found in favor of the police, and the man’s estate appealed. In reversing, the Ninth Circuit noted that “during trial—and over plaintiff’s repeated objections—the district court’s evidentiary rulings strayed from its pretrial rulings. As a result, the jury was exposed to a copious amount of inflammatory and prejudicial evidence with little (if any) relevance.” The appeals court further stated: “To avoid the runaway case—like this one, where the Defendants and their witnesses repeatedly overstepped the judge’s rulings—courts should use bifurcation to corral lawyers and witnesses, so the jury hears only evidence relevant to the issues at hand.” (Estate of Diaz v. City of Anaheim (9th Cir., Aug. 24, 2016) 2016 WL 4446114.)

“While Our Hearts Are With Ms. Dugard, the Law is Not,” The Ninth Circuit.

In 1991, while a criminal defendant, Phillip Garrido, who had a long history of predatory-pattern sexual abuse—often in conjunction with drug use—was on federal parole, he and his wife kidnapped an 11-year-old girl and kept her captive for 18 years, sometimes in chains. During that time, the captive gave birth to two of Garrido’s children without medical treatment or prenatal care. In 2009, she and the two children were discovered and released. In 2011, the woman who had been held captive filed a lawsuit against the federal government under the Federal Tort Claims Act for herself and as guardian ad litem of her two minor children. Both the federal trial court and the federal appeals court held the law precludes recovery for the incompetence of parole officers, who did not report 70 documented drug-related parole violations, commenting that, “unless we adopt a ‘throw away the key’ approach to convicts, tragic crimes by parolees and probationers inevitably will occur.” A dissenting justice on the three-judge panel, stated that but for the incompetence of government officials, these unspeakable crimes would never have occurred, and that the woman should be given her day in court. (Dugard v. United States (9th Cir., Aug. 26, 2016) 2016 WL 4488007.)

California Has Jurisdiction Over a Company That is Neither Incorporated Nor Headquartered Here. 

A pharmaceutical manufacturer conducts significant business and research activities in California but is neither incorporated nor headquartered here. Eight separate complaints against the pharmaceutical company were filed in a California superior court on behalf 678 plaintiffs, consisting of 86 California residents and 592 nonresidents. The company contests the California court’s exercising jurisdiction over it for purposes of adjudicating the nonresident plaintiffs’ claims. The California Supreme Court held California has jurisdiction over those nonresident plaintiffs’ claims against the company, stating: “Under the particular circumstances here, we conclude personal jurisdiction is authorized by Code of Civil Procedure section 410.10, which extends jurisdiction to the maximum extent permissible under the United States Constitution. Although [the pharmaceutical company’s] business contacts in California are insufficient to invoke general jurisdiction, which permits the exercise of jurisdiction over a defendant regardless of the subject of the litigation, we conclude the company’s California activities are sufficiently related to the nonresident plaintiffs’ suits to support the invocation of specific jurisdiction, under which personal jurisdiction is limited to specific litigation related to the defendant’s state contacts.” (Bristol-Myers Squibb Company v. Superior Court (Cal., Aug. 29, 2016) 2016 WL 4506107.)

Police Speak Out After Man Accuses Them of Abuse.

Two LAPD officers found plaintiff, an executive with Deutsche Bank and the former chairman of Fox Television and co-chairman of Universal Studios, acting erratically at the entrance to a college. They took him back to his car and then transported him and checked him into a motel. Later that night the same officers found the man running down the street screaming and trying to open the doors of locked cars. He refused to stop, and police eventually subdued him, after more officers assisted in handcuffing him. The man brought a claim against the city for assault, battery, and false imprisonment. Police leaked a story to the news media that the man was under the influence of drugs at the time of the incident and was a frequent user of bath salts, a synthetic stimulant with similar effects as amphetamines and cocaine. When the man filed a lawsuit against the police, he included a cause of action against the police for retaliation, contending police retaliated against him for exercising his First Amendment right to file an administrative claim against the city. The man argued public officials do not possess any First Amendment rights worthy of protection, and that the police should not have leaked the police report, a taped interview of him, and the fact he used bath salts. The federal district court granted summary judgment in favor of the police and the city, and the Ninth Circuit Court of Appeals affirmed, stating: “[W]e have set a high bar when analyzing whether speech by government officials is sufficiently adverse to give rise to a First Amendment retaliation claim. . . . [The man’s] viewpoint would cripple the ability of state actors to play a part in public discourse. It is well established that public employees and officials retain rights to free speech.” (Mulligan v. Nichols (9th Cir., Aug. 29, 2016) 2016 WL 4501684.)

Summary Judgment Reversed in Employment Discrimination Action. 

In a wrongful termination case, the facts alleged are that plaintiff’s son requires daily dialysis and plaintiff is the only person in the family who knows how to administer it. For several years, his supervisors scheduled him so that he could be home at night for his son’s dialysis. When a new supervisor took over, plaintiff was terminated for refusing to work a shift that did not permit him to be home in time for his son’s dialysis. The trial court granted defendant employer’s motion for summary judgment. The Court of Appeal acknowledged that Government Code § 12940, subdivision (m)(1) states it is an unlawful employment practice for an employer to fail to make a reasonable accommodation for the known disability of an employee, and that the person who needed dialysis here was not an employee. But the court also looked at Government Code § 12926, which states it is an unlawful business practice to perceive a person is associated with someone who has a physical disability as having a disability. The appellate court explained:  “In other words, association with a physically disabled person appears itself a disability under FEHA.” The court said that the two statutes taken together “may reasonably be interpreted to require accommodation based on the employee’s association with a physically disabled person.” The employer argued there was a reasonable nondiscriminatory reason for firing plaintiff:  he refused to work an assigned shift. However, the appellate court concluded that reasonable inferences from the evidence were that plaintiff’s termination for refusal to work the shift resulted from a discriminatory motive and was a pretext for the supervisor’s desire to be rid of someone whose disabled associate made the supervisor’s job harder.  (Castro-Ramirez v. Dependable Highway Express, Inc. (Cal. App. 2nd Dist., Div. 8, Aug. 29, 2016) 2016 WL 4506089.)


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