Friday, July 22, 2016

A Little Less Illusory

Harris v. Tap Worldwide, LLC, No. B262504 (D2d5 Jun. 22, 2016)
 

This decision reverses a trial court’s denial of a motion to compel arbitration based on an arbitration provision in an employee handbook. The employee signed an acknowledgement that he received both the handbook and the arbitration agreement, and that they would apply to him if he continued to work after their effective date. That was sufficient to create a contract. Moreover the contract was not illusory by virtue of the fact that the employer retained the right to modify the handbook. There was a specific term in the arbitration provision that limited modifications to written changes necessary to comply with developments in the law for which the employee would be given thirty days written notice and which would apply only prospectively. That limitation governed over the handbook’s general right to modify, and because it prevented any “unfettered or arbitrary right to modify or terminate the parties’ understandings concerning the duty to arbitrate,” it kept the arbitration agreement from being illusory. In the course of making this ruling, the court backs away from an earlier decision of the same division.

Reversed.

Wednesday, July 20, 2016

FAA Preempts State Limits on Med-Mal Arbitration

Scott v. Yoho, No. B265641 (D2d5 Jun. 22, 2016)

The court here holds that some arbitration clauses between a plastic surgeon and his (dead) patient bore on interstate commerce such that the FAA applied. The fact that LA Superior Court was elected as the venue in which any collateral litigation would occur was not an election that the California Arbitration Act would apply instead. And because the FAA applied, it preempted Code of Civil Procedure § 1295(c)’s 30-day right to rescind arbitration agreements in medical services contracts. Because the right applies only to arbitration contracts, it is not a “grounds . . . at law or in equity for the revocation of any contract” and is thus not saved from preemption by 9 U.S.C. § 2.

Reversed

Tuesday, July 19, 2016

Sharp Cut in SLAPP Fees Affirmed

569 E. Cnty. Blvd. LLC v. Backcountry Against the Dump, Inc., No. D068538 (D4d1 Jun. 16, 2016)

A prevailing movant on an anti-SLAPP motion can recover its attorneys’ fees. But the fees they need to be reasonable. Defendant here sought fees for almost 200 hours of partner work, at a $750 rate, plus some associate time at half that rate. The trial court knocked the rate down to $275 and cut the time more or less in half. Under the applicable abuse of discretion standard, the ruling holds up because there was substantial evidence before the trial court to establish the rates and hours it used in its calculation.

Affirmed.

Monday, July 18, 2016

A Mistake in Service Is Not Extrinsic Fraud

Yolo Cnty. Dept. of Child Support Servs. v. Myers, No. C075671 (D3 Jun. 10, 2016)

Courts have equitable power to vacate default judgments—even really old ones—on certain narrow grounds, especially when a plaintiff established personal jurisdiction by filing a false proof of service. But to do that, the POS itself needs to be fraudulent; a motion to vacate does not lie simply because of some defect in service in the underlying action. Defendant didn’t satisfy that standard here. Nor could he challenge partiality of the judge in either this or the original case. In the original case, Code of Civil Procedure § 170.4 specifically says that a disqualified judge can still deal with defaults. So even if the old judge deserved a DQ—which the court here expresses some doubt—he still had power to sign the default order. And as to the current case, the challenge was based on disagreement with the merits of rulings, which is a legit not grounds to DQ the judge. And in any event, DQ motions aren’t appealable—they can be reviewed only by writ. Which plaintiff didn’t seek here.

Affirmed.

Friday, July 15, 2016

Writ Frees Kid from Notice Trap

Alex R. v. Superior Court, No. B270686 (D2d7 Jun 13, 2016)

The trial court in this case refused to appoint a guardian ad litem for a minor who needed to bring a parentage action as part of a process to adjust his immigration status. Because the litigation entailed the severance of the parental relationship between the minor and his father, the trial court conditioned the appointment of the guardian on the minor’s giving notice to the father. But that isn’t right. The guardian ad litem statutes—Code of Civil Procedure § 372 and some provisions of the Family Code—don’t have a notice requirement. And requiring one puts the minor in a Catch-22—without the guardian, the minor can’t file and serve the parentage documents on the father. It is that notice—the service of process—and the subsequent opportunity be be heard that give the father the due process to which he is entitled, should he want it.

Writ granted.

Thursday, July 14, 2016

Brandt Fees Are Part of the 1 in State Farm's Punis Ratio

Nickerson v. Stonebridge Life Ins. Co., No. S213879 (Jun. 9, 2016).

I wrote about this case back in 2013 when it was decided by the Court of Appeal. The focus of my post was on an instructional issue. But the Supreme Court granted review on a different issue in the case—one that merited three sentences paragraph in the Court of Appeal’s opinion: When deciding whether punitive damages in a bad faith insurance case exceed the constitutionally proscribed ration of nine or ten time the actual damages, should the baseline include so called Brandt fees. These are fees that, notwithstanding the American rule, can be recovered by an insurance coverage plaintiff to compensate for legal costs of obtaining coverage over the carrier’s objection. The Court of Appeal said they could not, citing a 2010 case on the point. But the Supreme Court—with Justice Kruger writing for a unanimous court—disagrees. Brandt fees are an element of compensatory damages in a bad faith case. It is thus appropriate to consider them as part of the starting point in the State Farm/Gore analysis, which puts a nine- or ten-to-one ratio of punitives to compensatories at the outer limits of the state’s power to punish. That’s the case even when the parties follow the common practice—as happened here—of stipulating to have the court calculate Brandt fees post-trial in the event of a bad faith verdict in the plaintiff’s favor.


Reversed.

Wednesday, July 13, 2016

Everything that's Old Is New Again

San Diegans for Open Government v. City of San Diego, No. D068421 (D4d1 Jun. 7, 2016)

In 1994, the Legislature changed California’s general civil sanctions rules to make them look and work more like Rule 11 of the Federal Rules of Civil Procedure. The 1994 amendments added Code of Civil Procedure § 128.7, which permits a court to sanction attorneys or parties for filing meritless pleadings that are “signed” by a party or its attorney. Like Rule 11, § 128.7(c)(1) includes a “safe harbor” requiring the service of a sanctions motion twenty-one days before filing and an opportunity to correct the sanctionable pleading before the motion can be heard. It also adopts an “objectively unreasonable” standard for sanctions—proof of bad faith or ill intent are unnecessary.