Friday, June 27, 2014

You Can't Do that in California State Court (Part 374)

Paramount Petroleum v. Superior Court, No. B253290 (D2d3 June 20, 2014)

Code of Civil Procedure § 437c(f) limits the types of issues amenable to summary adjudication. Under that provision—which is peculiar to California procedure—a court may only grant a summary adjudication motion if it completely disposes of a cause of action, an affirmative defense, a claim of damages, or an issue of duty. The court here holds that, in a breach of contract case, § 437c(f) summary adjudication of liability for a plaintiff in a breach of contract case when the amount of damages is contested.

Monday, June 23, 2014

Quantum Meruit for Attorney Can't Include a Lodestar Multplier

Chodos v. Borman, No. B252446 (D2d5 as modified, July 9, 2014)

An attorney sues his client to collect fees for representations in two divorce cases and a Marvin action. But, contrary to Business & Processions Code §§ 6147 and 6148, he never got a signed agreement. That limits him to quantum merit. After trial, the jury found that the attorney had done 1,800 hours of work and that his reasonable rate was $1,000 an hour. It then, as permitted by the court’s instructions, applied a lodestar multiple of five, ultimately awarding $7.8 million. The court here reverses, finding that a lodestar multiplier cannot be applied in awarding an attorney quantum meruit for services performed without a written fee agreement. To do so could reward attorneys for breaching their ethical obligations to get client fee agreements in writing.


Holding the Line on Alter Ego

Wells Fargo Bank, NA v. Weinberg, No. E057011 (D4d2 June 18, 2014)

Wells got a judgment against a solo practice law firm. Afterwards, it successfully moved
under Code of Civil Procedure § 187 to add the lawyer to the judgment as an alter ego of the judgment debtor firm. The court here affirms. For good reason. It looks like, post-judgment, the lawyer sucked the firm’s accounts dry and engaged in some dodgy “loan” accounting while continuing his practice under his own name. Unfortunately, the court relies principally on Greenspan v. LADT LLC, 191 Cal. App. 4th 486 (2011), which—as I have previously discussed—contains some unfortunately loose language about the “fraud or injustice” prong of the alter ego analysis. Indeed, here, the court doesn’t really discuss that element at all. It seems clear from the evidence that the standard would have been satisfied anyway by way of the lawyer’s deliberate undercapitalization of the firm in light of the pending judgment. But the failure to cite the element of the test is a little concerning.


Armendariz Survives Concepcion

Sabia v. Orange Cnty. Metro Realty, Inc., No. B243141 (D2d8 May 18, 2014)

In this putative class action, the trial court granted an order compelling arbitration on an individual basis because the arbitration agreement contained a class action waiver. The court here reverses. It first finds that, although orders granting motions to compel arbitration are generally not appealable, under the “death knell” doctrine, it could hear the appeal in this case. The nature of plaintiffs’ claims were such that there was no way they could practically be arbitrated on an individual basis. So the order compelling arbitration was, for all practical purposes, a dismissal of the case.

The court proceeds to reverse because the arbitration clause at issue applied only to claims brought by plaintiffs. It did not require arbitration of defendants’ claims. That made it unconscionable under Armendariz v. Foundation Health Psychcare Services, 24 Cal. 4th 83 (2000), which generally prohibits non-bilateral arbitration agreements. The court goes on to explain that the Armendariz rule survives AT&T v. Concepcion’s ruling that California’s judicially made rule deeming class action waivers unconscionable was preempted by the FAA because it discriminated against arbitration. According to the court, the Armendariz rule does not discriminate against arbitration. Indeed, it just prevents a more powerful party from cynically foisting arbitration on the weaker party, while reserving a judicial forum for itself. One-sided arbitration clauses—particularly when contained in contracts of adhesion—reflect the very mistrust of arbitration that the U.S. Supremes have repeatedly repudiated.


**Note: Review granted September 21, 2014.

Workers' Comp. Court Can't Peek for Privilege

Regents of the Univ. of Cal. v. Workers’ Compensation Appeals Bd., No. G048217 (D3 June 17, 2014)

The court here holds that the provisions of the Evidence Code dealing with privilege apply in workers’ comp. appeals. Since § 915 prohibits a presiding officer from ordering the in camera production of materials to see if they are privileged, the WCAB erred in so ordering in this case.


Court Cures County's Reefer Madness

Hernandez v. County of Los Angeles, No. B243194 (D2d5 June 6, 2014)

Randy Hernandez got in a traffic accident on the 110. The CHP officer dispatched to investigate the accident While Randy and the other driver were waiting for the Highway Patrol to arrive, an L.A. County sheriff who happened to be driving on the freeway ran Randy over. Randy died. During the wrongful death case brought by Randy’s daughter, the county put in evidence that Randy used medical marijuana. But none of the county’s experts would attest that Randy’s reefer use bore any causal relationship to his getting run over. At closing, however, the county’s lawyer invited the jury to speculate that that it did. The jury verdict attributed 14 percent of the fault to Randy. The court here reverses.

An Open Question No Longer

Malone v. Superior Court, No. B253891 (D2d3 June 17, 2014)

The court declines to issue a writ ordering the trial court to vacate an order compelling arbitration where the arbitration clause delegates questions as to the enforceability of the arbitration clause to the arbitrator. Although it isn’t cited, the opinion is more or less a retread of last month’s Tiri v. Lucky Chances decision out of the first district. 

Thursday, June 19, 2014

2,764 Words on Inconsistencies in the Jurisprudence of Expert Disclosure. And Some Other Stuff . . .

Staub v. Kiley, No. C071500 (D3 June 16, 2014)

This med-mal case addresses the expert witness disclosure process under Code of Civil Procedure § 2034.010, et seq. Rather frustratingly, it creates a split of authority with another case from the same district. The two cases were decided within a day of each other, although this case was not ordered published until a month later. Worse, the justice who authored this decision joined the opinion in the previously published case. So we don’t just have an inter-district, an inter-division, or even an intra-division split. It
s a split between two opinions joined by the same justice over a two-day period. By publishing an opinion logically irreconcilable with its own prior published opinion, without so much as recognizing the conflict, the court does a disservice to litigants and trial judges throughout the state, who will be left to muddle through the inconsistent results.

Wednesday, June 18, 2014

No Anti-SLAPP Protection for Extortion Attempt

Stenehjem v. Sareen, No. H038342 (D6 June 13, 2014)

The underlying matter is an employment dispute concerning wrongful termination. But the employee’s attorney threatened that, unless employer settled, employee would expose the employer’s allegedly shady accounting practices to the DOJ and the DOD, which might potentially lead to a criminal false claims action. After litigation commenced, employer cross-claimed for civil extortion, and plaintiff responded by filing an anti-SLAPP motion, which the trial court granted.

On appeal, the court reviewed the evidentiary record of the parties’ correspondence, which established that the plaintiff was trying to milk a settlement out of defendant by threatening exposure to criminal prosecution for false claims activity unrelated to the merits of the employment dispute. That—demanding money to forgo exposing criminal conduct—is attempted extortion. The court, following the California Supreme Court’s decision in Flatley v. Mauro, 39 Cal. 4th 299, 305 (2006), holds that, because the cross-claim addressed extortionate conduct that was “illegal as a matter of law,” the anti-SLAPP statute categorically did not apply. It’s a more-or-less faithful application of the Flatley precedent. 

The Flatley “illegal as a matter of law” standard essentially requires the non-moving plaintiff to come forward with evidence that would entitle him to a summary judgment on the elements of the alleged illegality. See id. at 316 (“If, however, a factual dispute exists about the legitimacy of the defendant’s conduct, it cannot be resolved within the first step but must be raised by the plaintiff in connection with the plaintiff
s burden to show a probability of prevailing on the merits.”). That’s a pretty high bar, and it’s rarely met. But the court here finds it’s not an issue. The cross-defendant didn’t bother to submit evidence on the key issues, which allows the court to conclude that the facts were undisputed for purposes of the motion. See fn. 13 of the opinion.


Thursday, June 12, 2014

When Veil Piercing Backfires ...

Hill v. Degery, No. H038874 (D6 June 6, 2014)

In a (second) appeal of an attorney fee award to a prevailing defendant, the court rejects several arguments that the award must be reduced. The trial court found the primary defendant, an LLC, liable for breaching a contract with the plaintiff. But Degery, the defendant here, was sued only in his capacity as a member of the LLC. At trial, represented by the same counsel as the LLC, Degery successfully established his immunity under Corporations Code § 17101, which limits the liability an LLC’s members for the LLC’s debts and judgments. (That is, after all, what it means to be a limited liability company.) A prior, unpublished, appeal established that Degery was entitled to a fee award under Civil Code § 1717.  This appeal deals only with objections to the amount of the award—about $330,000.

First, the court holds that the court did not need to apportion the award to carve out common work done for both Degery and the principal defendant. So long as the work done was necessary to Degery’s defense, the fees for it are recoverable. As the court notes, Degery could readily recover these fees had he been represented by separate counsel. The efficiencies should not inure to the losing plaintiff’s benefit. Second, and similarly, there was no reason to reduce the lodestar amount because Degery rode on the principal defendant’s coattails or because the award would result in a “windfall” to the principal defendant. And third, Degery did not fail to mitigate his fees by declining to move for summary judgment on the limited liability issue. At trial, the court denied Degery’s nonsuit motion addressed to the issue, which suggests that a summary judgment motion wouldn’t have had any traction with the trial judge. Under the circumstances, the trial court didn’t abuse its discretion in approving Degery’s fee application.


Wednesday, June 11, 2014


People v. Goldsmith, No. S201443 (Cal. June 5, 2014)

In a unanimous opinion in a criminal appeal of a $450 red light camera ticket, Chief Justice Cantil-Sakauye explains in detail the Evidence Code’s law regarding the authentication of photographs. Suffice it to say, you really don’t need very much to authenticate a photo. Here, authentication was satisfied in part by a statutory presumption from Evidence Code §§ 1552 and 1553, which say that a printout of stored digital image is an accurate depiction of the recorded image. Along with some testimony from a police investigator about where the camera was located and how the red light camera system operated to connect the remaining dots, that’s all that was needed. The court also rejects the defendant’s argument that the photograph was hearsay, based on the relevant definitions in the Evidence Code. Viz: To be hearsay, evidence needs to be in the form of a statement. § 1200(a)(defining of hearsay). A statement can only be made by a person. § 225 (defining statement). And a computerized camera is not a person. § 175 (defining person).


Friday, June 6, 2014

Graft, Garbage, and Protected Activity

City of Montebello v. Vasquez, No. B245959 (D2d1 May 30, 2014).

Yet another (inadvertent) split of authority.

Lies, Damn Lies, and Statistics

Duran v. U.S. Bank Nat’l Assoc., No. S200923 (Cal. May 29, 2014)

In this significant case that the wage-and-hour class action bar has been eagerly awaiting, the California Supreme Court reverses a wage-and-hour class action that actually went to trial. That makes it, as the court explains, “an exceedingly rare beast.” But it isn’t just the fact that this case was tried that is unusual. The way it was tried is also outside of the ordinary. The trial court selected twenty-one plaintiffs out of a total class of 260. It then tried those claims and extrapolated their results class-wide. It refused to admit any evidence outside of the sample plaintiffs. This all resulted in a finding that the entire class was erroneously misclassified as exempt, and a $15 million judgment ($57,000 per class member) against the defendant. While the court does not go so far to say that trial by sample can never be appropriate, what happened in this case can’t withstand scrutiny.

Wednesday, June 4, 2014

An Objector's Choice

Litwin v. iRenew Bio Energy Solutions, LLC, No. B248759 (D2d1, as modified, May 29, 2014)

An objector appeals from an approval of a class action settlement over false advertising claims about the magical healing powers of some hippie bracelet. The notice that went to the class said that if an absent class members wanted to object, she needed to both give written notice and show up at the approval hearing to argue her case. Unfortunately, that’s wrong. Under Rule of Court 3.769(f), as interpreted by the court here, and buttressed by Newberg on Class Actions, a class member can lodge an objection by filing a written objection or by appearing at the hearing to object. She needn’t do both, which would be unfairly burdensome. Thus, because the class notice misstated the right of objectors, the settlement should not have been approved.


Treatment, Impact, What's the Big Diff...

Rosenfeld v. Abraham Joshua Heschel Day Sch., Inc., No. B239581 (D2d3 May 28, 2014)

Suppose you have a statute that has multiple theories of recovery. If you rely on one in your complaint, can you prove up the other when it comes time to try the case? The court here says no. Plaintiff pleaded a disparate treatment age discrimination case. But at trial, she started to argue about disparate impact. The trial court shut that down, and the court of appeal affirms.  This is useful precedent for defense lawyers who litigate cases under laws such as Business & Professions Code § 17200, where a single statute provides a basis for three different theories of liability for which the proof can vary greatly.

Fee Award Affirmed as Reasonable

Sayers Properties v. Rankin, No. A137610 (D1d2 May 27, 2014)

A plaintiff appeals the court’s lodestar* calculation of attorney’s fees awarded to a prevailing defendant under a contract containing a fee-shifting provision. He objects to both the hours expended and the rate applied. 

In affirming, the court notes that a fee applicant is not required to produce line-by-line billing entries to support a fee award. Breaking the bill up into hours spent on various task categories per biller is sufficient to establish the amount of work done, particularly when supported by the attorneys’ under oath declarations.

As to the rate, the issue is the reasonable market rate charged locally for similar work. It does not matter if the actual rate billed to the client differs from the market rate, even in non-contingency hourly billed matters. Here, defendants supported their rates with their lawyer’s declarations that the rates were in accord with those charged in the local market. They also relied on the Laffey Matrix, a publication that sets out standard fee rates for the Washington, D.C. market. Courts have adjusted the Laffey Matrix for geographic differences by applying locality premiums. It deciding rates, the trial court was not required to defer to either the attorney declaration or the Laffey Matrix. But it did not err by doing so. Given that the trial judge was in the best position to decide the value of the services rendered in his courtroom, he did not abuse his broad discretion in finding that these sources supported that the lodestar rates claimed by defense counsel were reasonable.


*This gets spelled “lodestar,” (212 reported California cases) but also occasionally “loadstar,” (5 reported California cases), and one one occasion, both ways in the same opinion. See U.S. W. Falun Dafa Assn v. Chinese Chamber of Commerce, 163 Cal. App. 4th 590, 597 (2008). Black’s Law Dictionary recognizes only the “lode,” version, but Garner's Legal Usage Dictionary recognizes both. Although Garner too thinks the “lode,” version is preferable as it is closer to the Middle English derivation of the term.

Tuesday, June 3, 2014

Trial Courts Have Inherent Authority to Police Bad Conduct in Expert Disclosure

Cottini v. Enloe Med. Cntr., No. C068915 (D3 May 21, 2014)
The critical question we must resolve is whether or not the trial court, on the objection of a party who has made a complete but untimely compliance with the expert witness exchange requirements of Code of Civil Procedure section 2034.260, has the authority to exclude from evidence expert testimony offered by a party who has completely and unreasonably failed to comply with these same requirements prior to the discovery cutoff date.
 (footnote omitted).

The answer, according to the court, is yes.

Arbitration Odds & Ends

Gloster v. Sonic Automotive, No. A137081 (D1d1 Apr. 23, 2014)

In this appeal of a denial of a motion to compel arbitration, the court resolves a key procedural issue regarding the parties’ capacity to contractually define the scope of arbitrability, declines to find a waiver, notwithstanding the moving party’s year-long delay before moving to compel and, perhaps unwittingly, widens a split of authority concerning third party rights to invoke arbitration clauses.