Tuesday, August 23, 2016

Commercial Speech Exception Applies Even When the Product Is Judging

JAMS, Inc. v. Superior Court, No. D069862 (D4d1 Jul. 27, 2016)

An unhappy arbitrant sued JAMS for misstating the bios of one of its neutrals. The trial court denied JAMS’s anti-SLAPP motion based on the commercial speech exception. The court of appeal affirms. JAMS’s claims about its practices and neutrals fall firmly within Code of Civil Procedure §425.17(c). They are factual statements made by the seller of a product intended to induce members of the consuming public to by the product. That’s all that’s required.


Monday, August 22, 2016

If You Don't Actually Try to Find Them, They Tend Not to Come

Duran v. Obesity Research Inst., LLC, No. D067917 (D4d1 Jul. 15, 2016)

Plaintiff in this class action alleged false marketing claims by the makers and sellers of some weight loss pills. The case settled for a “claims made” agreement with small per-plaintiff recoveries—a double refund for claim-filing customers with a receipt and $15 for those without. There’s also a $100,000 clear-sailing attorney fees clause. Although the class had a about half a million members, 895 claims were submitted, for a total of $31,800 in refunds.

The settlement draws some objectors—who happen to be the named plaintiffs in an overlapping class action. The objectors suggest the fix was in on this settlement. The complaint in the case was cribbed word for word from the objectors’ CLRA demand letter—a non-public document that objectors claim could only have come from a Defendant. Plaintiffs, in turn, accuse the objectors counsel of copying their complaint from an earlier action. And they claim that the objectors offered to settle for $750k in fees with basically no benefit to the class. As the court sees it, “[t]he lawyers on both sides accuse each other of greed and disregarding the class interests.” But it doesn’t need to get to the bottom of the mudslinging to resolve the appeal.

Objectors key claim is that the notice given to the class was shoddy. And it was. It misstated the settlement consideration, named an entirely different product that wasn’t even in the litigation, and explained the release included a Civil Code § 1542 waiver of unknown claims, even though the trial court had already said it would not approve a release that broad.  

It doesn’t take Carnac to guess this is a reversal. The claim form contained several material misstatements about the terms of the settlement. So even if the settlement itself were reasonable, the lack of proper notice rendered it invalid. Indeed, the notice was particularly key here because this is a “claims made” settlement—the defendant only pays those class members who submit a claim form. There’s no fund that gets distributed if there are no claims. So if the bad notice detrimentally affected the claims rate, it can have a significant impact on the benefit of the overall settlement to the class.

The court goes on to give some advice on two issues for remand. The first is the method of notice. Generally, notice must be given by “the best practicable [method], reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” (quotation omitted). The notice here was given by (1) a blast email to email addresses associated with about half of the class members; (2) a website setup by the settlement administrator; and (3) an ad in USA Today. But objectors submitted evidence that actual mailing addresses were available through various retailers, such that a legit direct notice was possible. Plaintiffs argument to the contrary was notably unsupported by any sworn evidence.

The court finds that Plaintiffs didn’t give enough foundation to show that they should have been let off the hook of giving direct mailed notice. Although the court doesn’t rule it’s required, it explains that Plaintiffs will need to make a much better showing. Nor did it find the USA Today ad adequate. Notably, objectors’ media expert testified that the publication would reach, at best, about 1 percent of the class. No effort was made to find a publication that the members of the plaintiff class were particularly likely to actually read. 

Second, the court takes a dig at the value of the injunctive relief secured in the settlement. At best, the relief included minor changes in the Defendants’ wording of ads, advertising methods and refund policy. The court finds these changes don’t offer any material benefit to consumers. It finds it “difficult to conceive how this injunctive relief adds value.”


Sunday, August 21, 2016

Lies Aren't Offered for Their Truth

Janice H. v. 696 N. Robertson, LLC, No. B256913A (D2d3, upon reh'g, Jul. 14, 2016).

Plaintiff was sexually assaulted in the bathroom of a bar she was patronizing by one of the bar’s employees. She sued both the bar and the employee/assailant. The assailant was interviewed by the cops, on videotape. In the interview, the assailant told an implausible story denying the assault, wherein his stories shifted. He claimed she propositioned him and followed him into the stall but he never touched her. When confronted with the fact that his DNA was found on plaintiffs dress, he changed his story. Now he was drunk and didn’t remember much, but just might have masturbated on her. 

Plaintiff wanted to put the tape into evidence but the bar and the employee objected on hearsay grounds. The trial court let it in. In a very short analysis without citation to any authority other than Evidence Code § 1200’s statement of the hearsay rule, the court affirms. The tape wasn’t offered for the truth of what the employee said. It was offered to show that the alleged assailant was lying about the incident, which showed consciousness of guilt. So it wasn’t hearsay.


Friday, August 19, 2016

Speak Up, Or Lose Your Appeal

Morales v. 22d Dist. Agric. Assoc., No. D067247 (D4d1 Jul. 13, 2016)

This is an FLSA opt-in collective action largely beyond the scope of this blog. There are, however, two interesting procedural questions on appeal.

The first concerns the verdict form. But to preserve objections Plaintiffs needed to actually raise their objections in the trial court. Just submitting a form that gets rejected isn’t enough. They needed to make particular objections on the record to the form that gets used. Here, when the court proposed its own form, Plaintiffs said they had no objection. Nor, even after an adverse verdict, did they re-raise the issue in a new trial motion. Under the circumstances, they forfeited their right to dispute the jury form on appeal.

There’s also an issue of witness exclusion under Evidence Code § 777. Question is: Does § 777 apply to absent class members? But the court doesn’t reach that issue either, because it finds that Plaintiffs’ counsel failed to make any record why it was inappropriate to exclude any particular witness. Moreover, there was no evidence that the exclusion had any detrimental impact on Plaintiff’s case. Since it is Plaintiff who is appealing here, not some witness with a claim of being denied public access, the absence of prejudice dooms the appeal. 

Affirmed in relevant part.

Thursday, August 18, 2016

Patient Can Change Mind on Waiver of the Psychotherapist Privilege

Gerner v. Superior Court, No. B268621 (D2d1 July 8, 2016)

This is the second psychotherapist-patient privilege case in few months. Like the previous case, it involves an effort to get a patient’s records for use in a licensing investigation. The patient—who in this case was the source of the complaint—consented to the production of the records, but later changed his mind. The trial court compelled disclosure, notwithstanding objections based on Evidence Code § 1014 and the state constitutional right to privacy. The shrink took a writ.

The court of appeal holds that the licensing statutes for physicians don’t provide an exception to the privilege. Although the Business & Professions Code creates an exception to the doctor-patient privilege, it doesn’t actually create any exception to § 1014. Indeed, because the psychotherapist-patient implicates particularly private discussions, by its own terms, § 1014 permits only exceptions contained in the article governing the privilege itself. Notably, even though many psychotherapists—particularly psychiatrists like defendant—are also medical doctors, the exceptions to the doctor-patient privileges do not create any independent exceptions to § 1014. Thus, because licensing investigations are not included in the express exceptions to the psychotherapist-patient privilege in Evidence Code §§ 1016–1027, the records remained privileged.

Nor did the patient waive the privilege by complaining to an investigator for the licensor. Waivers in this context are viewed particularly narrowly, such that the patient’s disclosure of the general nature of the treatment does not create a waiver. Further, the patient’s complaint did not invoke the exception under § 1012, which applies to patient-psychiatrist litigation, because unlike a lawsuit, a licensing complaint seeks no affirmative relief. And in any event, the patient’s later change of mind needed to be honored.

Writ granted.

Wednesday, August 17, 2016

Can't Take a Writ from a Writ When You Can Take the Other Kind of Writ

City of Carlsbad v. Scholtz, No. D070253 (D4d1 July 8, 2016)

The underlying case here is a civil service proceeding before an ALJ. The municipality took an ordinary (non-administrative) writ to the superior court on some evidentiary issues, which was denied because the court determined that the city had an adequate remedy in administrative mandamus at the end of the case. The city then took an appeal. Question is whether in administrative proceeding, a denial of an interlocutory writ by the superior court is a final appealable judgment. It isn’t. 

Given that the superior court didn’t actually reach the merits of the issue on the writ and that the writ itself was interlocutory, the appeal shouldn’t be treated as an a appeal of a final judgment even though there weren’t any additional issues before the superior court. Nor would the appeal be accepted as a writ to the court of appeal. As the trial court previously determined, the presence of an adequate remedy in administrative mandamus meant that writ relief was unnecessary.

Appeal dismissed.

Tuesday, August 16, 2016


Magno v. The College Network, Inc., No. D068687 (D4d1 July 8, 2016)

The trial court in this case brought by nursing students against a for-profit college found an arbitration clause to be unconscionable. The Court of Appeal affirms. The evidence surrounding the signing of the contract supported some procedural unconscionability. The contract was adhesive and boilerplate, the plaintiffs young and impressionable, and the signing process hurried. And it was substantively unconscionable because its forum selection clause required Plaintiffs—nursing students in San Diego—to go to Indiana to arbitrate their claims. Moreover, the school got the first pick of the arbitrator and it shortened the statute of limitations. All told, the trial court did not err in finding the contract to be unconscionable. Nor—given the multiple unconscionable provisions—did the trial court err in declining to sever them.