Court Can't Improvise on SJ Ruling.

Lubke v. Automobile Club of S. Cal., No. B302782 (D2d7 Jan 6, 2021)

Plaintiff alleges that the Automobile Club of Southern California was negligent when it failed to send a tow truck he had summoned, leading to his being hit by a car while standing on the shoulder of a freeway. The Club moved for summary judgment, arguing that Plaintiff’s junky responses to written discovery established that he couldn’t show causation. In opposition, Plaintiff argued and submitted some evidence to the contrary. 

The trial court assumed that Plaintiff could fix the discovery to create a fact issue. But it granted summary judgment anyway, finding that Plaintiff could not establish that he and the Club had the kind of special relationship that would give rise to a duty that could be breached by non-feasance. Although Plaintiff argued at the hearing that such a duty could be found or implied in the his contract with the Club, the court rejected that argument because, for among other reasons, the contract wasn’t in the record.

That was error, both procedural and substantive. Procedurally, the trial court should not have reached out and granted summary judgment on some issue not raised in the moving papers. That’s not prohibited per se, but before doing so, the court needed to give Plaintiff notice and an opportunity to respond, including with evidence. Failing to due so is a due process violation.

And as to substance, the law, as reflected in the Restatement of Torts, does recognize that a duty of care can arise from non-feasance when an actor undertakes contractually to render services to another. The scope of that duty will depends on, among other things, the terms of the parties’ contract. So by deciding the issue without letting Plaintiff submit the contract, the trial court potentially deprived plaintiff of a meritorious argument.

Reversed.

If You Move and Don't Tell the Court, It's Your Fault if You Don't Get Mail

Kramer v. Traditional Escrow, Inc., No. G058522 (D4d3 Oct. 20, 2020)

After Defendants’ lawyer in this wage and hour case quit, they stopped participating in the case. They missed depos, ignored correspondence, and got sanctioned for it a couple of times. Eventually they wound up in default. They sought relief. Their excuse was that their principal had moved, but failed to tell the court. Also the principal’s divorce attorney had some confusing back and forth with Plaintiff’s attorney about the status of the case. 

Although that was good enough for the trial court, it’s not good enough for the Court of Appeal. As the Court puts it, “Defendants cannot deliberately neglect this lawsuit and go off-grid, so to speak, and then complain that they lacked notice of the proceedings.” 

Reversed.

Giving the Devil the Benefit of Civil Procedure, for Safety’s Sake...

Emerald Aero, LLC v. Kaplan, No. D070579M (D4d1 as modified on rehearing, Mar. 21, 2017)

I’m a little skeptical of the benefits of arbitration. The lack of formal procedure, in particular, makes me a bit queasy. But this case shows that some things are too much, even for arbitration.

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.”

Reversed.

From Now on, Just Demand $1 Trillion . . .

Dhawan v. Biring, No. B257977 (D2d5 Oct. 28, 2015)

Plaintiff here what I and every lawyer who has filed a state court complaint arising from a business dispute has probably also done. Notwithstanding Code of Civil Procedure § 425.10(a)(2)—which says that “[i]f the recovery of money or damages is demanded [in a non-personal injury case] the amount demanded shall be stated”—Plaintiff’s prayer for relief said only that he was entitled to damages “according to proof.” After all, in a case where the damages calculation likely depends on the testimony an expert who might not even be hired for many months, who wants to commit?

Generally it makes no difference. Under Code of Civil Procedure § 580(a), in a contested case the court can grant any relief consistent with the complaint, regardless of what’s in the prayer. But when defendant defaults, it becomes a bigger deal, because in those circumstances § 580(a) expressly prohibits any award of relief not demanded in the complaint. 

Defendant here did default, however, and that put Plaintiff in a pickle. Amending his complaint to state the now-absolutely necessary damages demand would require Plaintiff to serve Defendant anew and thus effectively relieve Defendant from the entered default on the original complaint. What’s the chance a defendant defaults twice? So to avoid that option, Plaintiff served Defendant with a “statement of damages” under Code of Civil Procedure § 425.11—which authorizes this practice in personal injury cases where, as an exception to the general rule, a plaintiff is not allowed to plead a damages number. The trial court ultimately entered a default judgment on the amount in the notice.

More than a year later, Defendant moved to vacate the judgment as void under Code of Civil Procedure § 473(d) because the damages exceeded those pleaded in the complaint. The court of appeal agrees, and reverses. 

Because of the due process issues implicated in defaults, § 580 gets strictly construed. Prior cases have held, for instance, that if the number isn’t in the complaint, it’s not enough even if Defendant had actual notice of the damages. Given that, the court isn’t inclined to let § 425.11 serve as an end-around of the facial requirement under § 580 that an ordinary plaintiff plead his damages in his complaint. For the same reason, Plaintiff couldn’t smuggle notice of his regular damages onto his statement of his punitive damages—the amount of which which also can’t be pleaded—as required under Code of Civil Procedure § 425.115. 

Further, a default judgment for more than demanded damages isn’t just voidable; it’s full-blown void. So it is subject to collateral attack under § 473(d), which doesn’t have the same time limits and factual predicates that apply to an attack on a merely voidable judgment under § 473(b).
 
Reversed.

Service by Birdcage-Liner

In re Establishment of The Press-Enterprise as a Newspaper of General Circulation, (D4d2 May 7, 2015)

When the law refers to something as “constructive,” it basically means it’s a lie. That’s how service by publication works. You try really hard to serve someone, and then, instead of just giving up, you publish a notice in some publication that nobody actually reads and get your default judgment. There is no real service. It’s the effort that counts.

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.

Reversed.