Wednesday, March 25, 2015

Class Cert Denied for Sephora Specialists

Mies v. Sephora USA, Inc., No. A139410 (D1d1 Feb. 26, 2015)

Assistant managers at makeup retailer Sephora—called “Specialists” in Sephora-ise—bring a class action alleging that they are misclassified as exempt from the wage and hour laws. The big issue is whether they spend more than half their time on nonexempt work. Problem for plaintiffs is that “Specialist” turns out to be a pretty broad category at Sephora. Some of them spend the bulk of their time dealing with customers on the sales floor (which is not exempt work). Others spend most of their time on management and training activities (which can be exempt). 

The trial court quite reasonably determined that while there might be some simple common legal questions about what work was and was not exempt, the key issue in the case under the relevant legal standard—how did the class members actually spend their time at work—was “heavily individualized.” The court here holds that, under the circumstances, the trial court did not abuse its discretion because “[g]iven the evidence before it, the trial court here could reasonably view the likely disputes at trial as being less about how to classify certain tasks (such as selling) and the impact of company policies, and more about how individual Specialists spend their time.”


Tuesday, March 24, 2015

With Adversaries Like this, Who Needs Client Conflicts?

Acacia Patent Acquisition, LLC v. Superior Court, No. G050226 (D4d3 Feb. 27, 2015)

This is a conflicts riddle much harder than anything on the MPRE. 

Citing AAA Rules Held Sufficent to Let the Arbitrator Decide Class Arbitration Issue

Univ. Protection Serv. v. Superior Court, No. D066919 (D4d1, as amended Mar. 12, 2015)

As we’ve discussed, when it comes to deciding whether an arbitration can occur on class basis there is a division of authority (upon which review has been granted by the California Supreme Court) as to whether it is an issue for the court to decide. Although there is general agreement that the issue can be assigned to the arbitrator if the parties clearly express that intent. Going with the majority rule (that the court decides) the court here holds that the trial court erred in determining that the issue is by default for the arbitrator. But the parties agreement specifically invoked a set of AAA rules that clearly state that the arbitrator decides whether a class claim can be brought. That was enough, in the court’s opinion, to get out of the default rule. So even though the trial court got the rule wrong, the result was right.

Writ denied.

Update: Review granted June 10, 2015.

Unconscionable Arb Provision Held Severable

Trabert v. Consumer Portfolio Servs., Inc., No D065556 (D4d1 Mar. 3, 2015)

This case involves a rather poorly drafted arbitration clause in a used car sales contract. In a prior appeal, the court had found that one discrete parts of the clause was unconscionable, but remanded to the trial court to decide whether they were severable. The trial court said no severance, but the court of appeal disagrees. Generally, the rule in California favors severance. Here, the problematic clauses—which dealt with the finality of an arbitral award—could be severed by removing the language that made certain awards non-final.


Update: Review granted, June 10, 2015.

Friday, March 20, 2015

On the Dangers of Finding a Cite and Calling It Quits

Rodriguez v. Brill, No. F068518 (D5 Feb. 20, 2015)

This case touches on what, to me, is one of the most significant questions of practical appellate jurisprudence: In issuing a reasoned decision, what is the court’s obligation to independently research issues that are presented by the parties, but not thoroughly briefed? (Or, for that matter, issues that appear to be thoroughly briefed, but aren’t.)

Wednesday, March 18, 2015

This Fight Doesn't Seem Over

Franco v. Arakellian Enters., No. B232583 (D2d1, as modified Mar. 11, 2015)

This is an employee class action where the plaintiff asserts claims under both the Labor Code Private Attorney General Act as well as other statutes. This is the Second District’s third shot in this case, which has been ping-ponging through the courts as the law regarding the arbitrability of certain claims kept changing.  This time, the court gets the case on transfer from the California Supreme Court to reconsider in light of Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014), which held that PAGA claims are not arbitrable under arbitration clauses in an employment agreement because the claims actually belong to the state government, even if they are prosecuted by an employee on a quasi-qui tam basis.

Given cumulative effects of the U.S. Supreme Court’s decision in AT&T Mobility v. Concepcion, 563 U.S. ---, 131 S.Ct. 1740 (2011) and the state supreme court’s Iskanian ruling, the results are pretty clear: Plaintiff’s non-PAGA claims are arbitrable and subject to a class valid action waiver. Plaintiff’s PAGA claims are not arbitrable and the waiver of his right to bring representative PAGA actions is unenforceable, but severable from the otherwise valid arbitration provision. On remand, the trial court should stay the PAGA claims under Code of Civil Procedure 1281.4, pending resolution of the non-PAGA claims by arbitration.

Remanded with orders.

Bogus Crossclaims Can't Block Attachment

Lydig Const. v. Martinez Steel Corp., No. D066854 (D4d1 Feb. 26, 2015)

The case is a government contact construction dispute where a contractor alleges that its steel supplier didn’t get work done on time. The contractor moved for a pretrial writ of attachment. The supplier filed a cross-complaint which, if successful, would have completely offset the contractor’s damages. The supplier argued that the cross-claim precluded attachment, but the trial court disagreed and entered a writ for about $200k.

The court of appeal affirms. A writ of attachment can be issued when the plaintiff has a contractual claim for a readily ascertainable sum more than $500. Under Code of Civil Procedure § 483.010, the movant needs come forward with evidence establishing that: (1) that the claim is a proper claim for attachment; (2) the probably validity of the claim; (3) that the attachment is not sought for some ulterior purpose; and (4) that the amount to be secured is more than zero. On the fourth element, under § 483.015, the amount to be secured must be offset by any amount sought in a cross-complaint if that claim is one upon which an attachment could issue. The relevant precedents
gloss on the statute requires the cross-claimant to come forward with at least prima facie evidence on the merits of its claims in order to get setoff credit.

Here, the supplier didn’t submit credible evidence showing the merit of its cross-claims, so it was not entitled to the setoff. The contractor, on the other hand, did establish the probable validity of its claims. So the writ properly issued.


Thursday, March 5, 2015

The Real Stepsons of Tulare County

Grenier v. Taylor, No. F067263 (D5 Feb. 18, 2015)

A megachurch pastor’s stepson and another congregant started accusing the pastor and his wife of some pretty bad stuff on the Internet. Stuff like child molestation, tax evasion, dealing drugs, and stealing money from the church. Pastor and wife sued for defamation and intentional infliction of emotional distress. As one would expect, that was met with an anti-SLAPP motion, which was denied because plaintiffs established a likelihood of success.

Applying the two-step anti-SLAPP analysis, the court first holds that the Internet postings were protected activity as defined by Code of Civil Procedure § 425.16(e)(3), which addresses statements made in public fora on issues of public concern. As the court explains, public concern doesn’t need to be world-wide concern. As the large volume of anti-SLAPP litigation involving homeowners associations shows, public concerns can address an issue of significant concern to a discrete community. A mega-church with 500 to 1,000 members counts, and allegations of child abuse and stealing church funds would clearly be of community interest to the congregants.

But that doesn’t matter because the pastor and his wife made the requisite prima facie showing that their claims would succeed. The pastor wasn’t a public figure, so no proof of New York Times malice was required. Ministers aren’t automatic public figures, and the pastor here was, as the trial court remarked, “no Jerry Falwell, Jesse Jackson, or Louis Farrakhan.” Nor did he inject himself into the controversy over the Internet remarks in a way that made him a limited purpose public figure. So the elements of ordinary private defamation applied. And because plaintiffs met their burden of coming forward with evidence of these elements, as well as the elements of IIED, so the motion was properly denied.


Arbitration Is More Efficient, Except when It Isn't

Assoc. of L.A. Deputy Sheriffs v. Cnty. of L.A., No. B254982 (Feb. 17, 2015)

The union representing thousands of Deputy Sheriffs claims that they are being deprived of pay for so-called donning and doffing time under the terms of their collective bargaining agreement. The CBA requires members to grieve that kind of issue in an individual, not a class, arbitration. The union tried to sidestep that obligation by filing a case in superior court. When the county moved to compel, the union argued that Code of Civil Procedure § 1281.2(c) afforded the court discretion to stay the arbitrations pending a class-wide interpretation of certain terms of the MOU.  The trial court agreed, but the court of appeal reverses.  

Section 1281.2 lets the court stay an arbitration pending a decision on issues  “not subject to arbitration,” which might moot the need to arbitrate. Because the interpretation of the CBA was clearly arbitrable, § 1281.2(c)’s not subject to arbitration rule couldn't apply. So even if it would have been more efficient to for the court to globally decide the question, instead of having it decided 10,000 times in different arbitrations, that’s what the CBA and the law required.


The Axis of Conveniens

Aghaian v. Minassian, No. B252326 (D2d8 Feb. 17, 2015)

This case reverses a trial court finding that the courts of Iran are a suitable alternative forum for the purposes of staying a case on forum nonconveniens grounds.

Wednesday, March 4, 2015

I Didn't Demand Inauthentic Documents, Did You Produce Them?

Gerard v. Orange Coast Med. Ctr., No. G048039 (D4d3 Feb. 10, 2015)

This is a meal break class action involving hospital workers. The principal substantive issue is whether a wage order permitting an employee to waive one of the two meal breaks he or she is required to receive in working a twelve hour shift is void because it is contrary to the Labor Code. (It is.) But the court also addresses two minor procedural issues.

First, in reversing an order granting summary judgment, the court addresses one of defendant’s evidentiary objections.  Defendant objected to the authenticity of wage statements that Defendant itself had produced in discovery. The documents were authenticated by a declaration from plaintiff’s attorney attesting that they were true and correct copies of records produced in discovery produced in response to his demands. Plaintiff himself also provided a declaration.

The court holds that party’s acting upon documents as authentic by producing them in response to inspection demands is evidence that “[t]he party against whom it is offered has at any time admitted its authenticity” and also that they “have been acted upon as authentic by the party against whom it is offered.” Evidence Code § 1414(a), (b). The case relied upon by defendants in arguing to the contrary—Claudio v. Regents of the Univ. of Cal., 134 Cal. App. 4th 224, 244 (2005)—involved an attorney’s declaration as to his own client’s documents, so § 1414 couldn’t apply. Moreover, in this case, plaintiff did also provide his own declaration attesting to the authenticity of the documents as his wage statements. Defendants were thus doubly wrong. And California lawyers now have a clean cite on the attorney authentication of opponent discovery point, which has rather doggedly evaded clear articulation in a published case.

Finally in reversing the denial of class cert, the court makes a point that should be self-evident : the certification decision is separate from the merits. So when the trial court refused to certify a class because the “proposed Representative Plaintiffs have failed to show that they have any claim against the Defendant,” it erred.

Reversed in relevant part. 

Update: Review granted, May 28, 2015, albeit probably not on this issue.

Some Motions Deserve a Swearing Contest

Ashburn v. AIG Fin. Advisers, Inc., No. A138620 (D1d2 Feb. 6, 2015)

A group of plaintiffs sued their investment adviser over some allegedly negligent advice. The adviser moved to compel the case to FINRA arbitration, claiming that plaintiffs had signed customer agreements that incorporated an arbitration clause.  Plaintiffs, however, submitted declarations disputing that they never signed the agreements and were not provided with copies of the document containing the clause.  In their opposition papers, plaintiffs specifically requested that the court conduct an evidentiary hearing to address the key disputes of fact going to whether the parties had agreed to arbitrate. The trial court ignored the request, granted the adviser’s motion, and stayed the case pending the conduct of the arbitration, in which the adviser prevailed completely.

The parties returned to the trial court, wherein plaintiffs stated that they wanted to appeal the order granting the motion to compel. (Unlike order denying motions to compel, which are immediately appealable, Cal. Code Civ. Proc. § 1294(a), orders granting them can only be appealed by appealing the order when subsumed into a final judgment.)  Because plaintiffs did intend to not seek vacation of the award under § 1286.2, the trial court suggested that the parties stipulate to the entry of a judgment to avoid the need to litigate a petition to confirm the award. They did so and plaintiffs appealed.

The adviser moved to dismiss the appeal, on the grounds that an appeal does not ordinarily lay from a stipulated judgment. But the judgment here was clearly entered for the purpose of facilitating an appeal of the order granting the motion to compel. All parties were aware of that purpose and it was encouraged by the trial court to avoid unnecessary litigation. Nor were plaintiffs required to file a motion to correct or vacate the award to preserve their right to appeal. Plaintiffs weren’t attacking the award, just the court’s order compelling arbitration, so those procedures would be a futile waste of the court’s and the parties resources.

On the merits, the court notes that under § 1290.2, that motions to compel arbitration are to be resolved like any ordinary motion. That generally does not require an evidentiary hearing. But when the enforceability of an arbitration agreement depends on two sharply conflicting factual accounts, the “better course” would be for the trial court to take oral testimony to assess the credibility of the witnesses. Whether to do so is within the trial court’s discretion. 

But given the record here, one of two things happened. Either the trial court entirely failed to exercise any discretion by failing to even consider plaintiffs’ evidentiary hearing request. Or if it did, but just failed to address the issue in its order, then its discretion was abused. Given the significance of the dispute and the facial strength of plaintiffs’ evidence that the agreements were invalid, to discount one partys evidence and grant the motion without holding an evidentiary hearing was error.


The NCAA Can't Don the Man's Mantle in Sealing Fight

McNair v. NCAA, No. B245475 (D2d3 Feb. 6, 2015)

The underlying lawsuit involves allegations that the NCAA defamed plaintiff in its report regarding allegations that former USC running back Reggie Bush received improper benefits while a student athlete.  In connection with an appeal of an order denying an anti-SLAPP motion, the NCAA seeks to seal a number of documents that were lodged in connection with the motion. In a short published opinion, the court of appeal addresses a key issue regarding sealing.

NCAA argued that its investigations are subject to an overriding interest against public disclosure under the NBC Subsidiary standard because confidentiality is essential to its ability to get witnesses to come forward. It grounds this argument on its bylaws and the confidentiality agreements it enters with these witnesses. But since these are private agreements, as the court explains, the “mere agreement of the parties alone is insufficient to constitute an overriding interest to justify sealing the documents.”

Nor was the court swayed by the NCAA’s various policy arguments analogizing the NCAA to a public agency conducting an investigation and claiming that disclosure would destroy its ability to investigate. The NCAA isn’t part of the judicial system and it is not a law enforcement agency. It is a private organization that investigates violations of its rules akin to how an employer might investigate the misconduct of its employees. So, although the NCAA might perform an important service, its interests in doing so don’t outweigh the public’s right of access to the courts.

Motion to seal denied.

Tuesday, March 3, 2015

Indemitee Not Saddled with Underlying Plaintiff's Crappy Expert

National Union Fire Ins. Co. of Pittsburgh, PA v. Tokio Marine & Nichido Fire Ins. Co., Bo. B244899 (D2d5 Feb. 4, 2015)

Two co-defendants in a personal injury case—a manufacturer and a retailer—settled for a combined $6.6 million on the eve of trial. Now their insurers are slogging out the subrogation and indemnity issues. On a motion in limine, the trial court limited the retailer’s carrier—who was trying to establish that the product was defective—to presenting to the theories of defect presented by plaintiff’s expert in the underlying PI case. Those theories weren’t very compelling—the retailer’s expert refused to adopt them. So, after the trial court refused to permit the expert to testify about other product defect theories, it nonsuited the retailer and entered judgment in favor of the manufacturer’s insurer.

The court of appeal reverses. When an insurer settles a personal injury claim and then purses a third-party claim indemnity claim against a co-defendant’s insurer, no authority justifies limiting the indemnity plaintiff to the underlying plaintiff’s expert evidence in proving fault. The additional expert evidence was relevant to the question of comparative fault and the expert’s qualifications were unchallenged. The trial court thus erred. And its error was “undoubtedly prejudicial” because it resulted in depriving the retailer’s insurer of any evidence that the true fault was that the product was, in fact, defective.


We'll See Just How Suitable You Are ...

Inv. Equtity Life Holding Co. v. Schmidt, No. G048284 (D4d3 Feb. 4, 2015)

Several years ago, this case was stayed on forum non conveniens grounds. The court of appeal affirmed. The substance of the action involves the unwinding of a Hawaiian insurance company. The gist of the ruling was that the courts of Hawaii were a suitable alternative forum and that the balance of public and private interests favored staying this case in favor of litigation there.

On remand—and following some progress in the Hawaiian litigation—defendants moved to fully dismiss the case on FNC grounds. They asserted that certain factual statements in the prior opinion constituted law of the case and that, based on these facts, the circumstances had changed such that outright dismissal was warranted. The trial court agreed.

The court of appeal does not. First, it takes issue with the reliance on law of the case. The law of the case doctrine generally says that if an interlocutory appellate ruling lays down rules, those rules govern the subsequent case on remand or a later appeal. But the doctrine applies only to principles of law that are actually decided. The stuff offered by the defendants—recitations of defendants’ willingness to stipulate to Hawaiian jurisdiction, a statement regarding the residence of the plaintiff, and a remark that the Hawaiian statute of limitations appeared similar to California’s did not meet that standard. The first two points are essentially factual, and the latter was not decided in the prior appeal.

On the merits, a key element of the FNC analysis is that the alternative forum is “suitable.” California courts generally read that to mean that the defendants would be subject to jurisdiction and that the claims would not be barred by other jurisdiction’s the statute of limitations. It follows that a defendant can improve its lie on an FNC motion by, for instance, promising to stipulate to jurisdiction and to toll the statute of limitations. Defendant in this case did just that. But what that can lead to are circumstances where the suitability of the foreign court might turn on contingencies such as the parties’ actions or the foreign court’s interpretation of its own law. To account for these contingencies, California law permits to stay a case on FNC grounds, retaining jurisdiction to reopen the case if the contingencies don’t come to light and the alternative forum proves to be unsuitable. When a trial court stays a case on FNC grounds instead of dismissing it outright, its decision is afforded particularly broad discretion.

Those considerations drove the prior affirmance. But they wouldn’t justify an outright dismissal. While a dismissal might be warranted if the contingencies inherent in the suitability analysis were fulfilled, defendants did not offer any information about the status of the Hawaiian proceedings.  There were thus no circumstances meriting a dismissal, as opposed to a say, in favor of potential litigation in Hawaii.


Right to Appeal Lost for Fast and Loose Debtor

Blumberg v. Minthorne, No. G050428 (D4d3 Feb. 4, 2015)

Defendant in a probate court action disobeyed the trial court’s order to provide an accounting and to convey some property to plaintiff by quitclaim. She generally obstructed the trial court’s efforts to enforce its own orders. Under the circumstances, her appeal is subject to the disentitlement doctrine—an inherent authority of appellate courts to dismiss an appeal when a litigant has disobeyed the orders of lower courts.

Appeal dismissed.

Monday, March 2, 2015

A Conundrum for Mann-Hunter(s)

Baral v. Schnitt, No. B253620 (D2d1 Feb. 5, 2015)

Yet another court weighs in on the Mann rule, which says that an anti-SLAPP motion lies only to an entire cause of action. The upshot of the rule is that when a cause of action arises from both non-incidental activity protected under Code of Civil Procedure § 425.16(b)(1), as well as activity that is not subject to anti-SLAPP protection, the motion should be denied so long as the plaintiff can make a prima facie showing of success on any part of the claim. Over the last few years, a substantial split in appellate authority has arisen on this issue, with cogent arguments being raised on both sides.