Pay Those Jury Fees!

Tricoast Builders v. Fonnegra, No. S273368 (Cal. Feb. 26, 2024)

The State Constitution says that a jury trial can be waived only by means proscribed by a statute. In most instances, that statue is Code of Civil Procedure § 631. It lists various ways to waive, including a failure to timely demand a jury and failure to timely post jury fees. It also affords a trial court the discretion to nonetheless permit a jury trial, even if waived, “upon just terms.” § 631(g).

Here, Plaintiff clearly waived. It never demanded a jury or posted fees. But Defendant did, only to expressly waive jury on the day of trial. Plaintiff argues, however, that absent harm to the Plaintiff, it was entitled to have its waiver excused under § 631(g). But—canvassing the authority—the Court finds that prejudice to the opposing party isn’t the only grounds to deny relief from a waiver. In particular, most of the cases that grant relief based on lack of prejudice do so to excuse technical failures that lead to waiver, like posting an incorrect amount of fees. In those cases, the discretion to excuse a waiver is generally broadly exercised. But in other cases—where excuse is sought tardily or for tactical advantage, where the prior waiver was express, and where the party lacked good reason to seek relief—denial of relief has been affirmed.

The facts here aren’t so clear. Plaintiff clearly prepared for a jury trial, because Defendant had heretofore demanded one, and up to the trial date, that was everyone expectation. So the timing of its belated request for an excuse wasn’t the kind of gamesmanship that usually merits denial of relief. The Supreme Court finds the record unclear, and, as we shall see, finds other grounds to affirm anyway. But it offers some dicta for the benefit of litigants in similar situations.

1. Each side is required to make its own jury demand and to timely post fees. Nothing stops a party that complied with that requirement, when the other side didn’t, from dropping its demand in the eve of trial.

2. But when that happens, the other side can seek excuse under § 631(g).

3. In considering that request, the court can consider the circumstances of the belated waiver by the demanding party, such as whether it was tactical, potential unfairness to the non-demanding party, who went to the trouble of preparing for a jury trial, and whether the non-demanding party could have protected its options by posting its own fees.

Regardless, an erroneous denial of § 631(g) isn’t structural error, like the wrongful denial of a jury, properly demanded. There is a difference between the erroneous denial of a jury and the erroneous denial of a relief from waiver. The State Constitution, after all, does recognize that a jury trial can be waived. And given that a denial of relief from waiver is not structural error, under article VI, section 13 of the Constitution, an appellant must show prejudice resulting from the error to obtain a reversal. Which Plaintiff here can’t do. The court notes that a party wrongfully denied a jury (including a wrongfully denied request for relief under § 631(g)) has recourse to a writ. Indeed, state courts have been historically willing to take up writs on that ground, even though writ review is discretionary. 

Court of Appeal affirmed. 

This all makes basic sense. But there is a clear, unspoken upshot of the prejudice requirement. 

If relief from waiver § 631(g) is denied, and it matters to you, you must take a writ. Post-judgment proof of prejudice in these circumstances is essentially impossible, as it requires an attack on one of the most basic collective assumptions that our judicial system relies on to maintain its legitimacy—that juries can’t be hoodwinked. Given that assumptions, you can basically never establish, ex post, that a case would have had a different result but for it had been tried to a jury instead of a judge. The system fundamentally cannot accept the argument that “if only I got a chance to bamboozle 9 out of 12 ordinary citizens, instead of that cynical trial judge, I would have won.” And in any event, the counterfactual is basically unprovable. What are you going to do, interview a bunch of imaginary jurors who were never actually called an put in their affidavits under Evidence Code § 1150?

You can, of course, say in an appeal that a trial judge who denied relief under § 631(g) also screwed up the facts or the law, or was unfairly biased, or raise any other error under the applicable standard of review. But if that’s what happened that is the grounds for appeal, not denial of the relief from waiver of a jury trial. 

Justice Kruger is certainly smart enough to know this. Which means the issue is likely to never reach the Court again for lack of provable prejudice. Hence the dicta.

In Search of Administrative Finality

Jackson v. Board of Civil Service Comm’rs of the City of L.A., No. B328414 (D2d7 Feb. 8, 2024)

This one is pretty deep into the weeds in the intersection of administrative law and appellate jurisdiction. But since I have a case before the Supreme Court in that same neighborhood, it’s interesting to me, at least.

Petitioner is an LAPD Officer who got disciplined for being late to a shift under what sound like some not so great circumstances. He was suspended from duty for 10 days. He challenged the suspension administratively, and when he lost, filed an administrative appeal, which he also lost. 

Officer filed a petition for writ of administrative mandate in LA Superior, raising sufficiency of the evidence and due process issues regarding the administrative process because LAPD’s justification for the discipline apparently evolved over the course of the administrative hearings. The superior court found that the evidence supported three of the four charges but that the administrative process had failed in some respects to appropriately account for Petitioner’s due process rights as a public employee. It remanded to the administrative system to address that issue. Petitioner appealed.

A threshold question on appeal is whether the trial court’s remand to the administrative process counts as a “final judgment” that can be appealed under Code of Civil Procedure § 904.1(a). That would seem to be an easy question because there’s a 2017 Supreme Court decision that held that a judgment that remands to the agency is sufficiently final to be appealable. Dhillon v. John Muir Health, 2 Cal. 5th 1109 (2017). But the Court here finds Dhillon to be distinguishable. 

As the Court sees it, Dhillon found finality for two reasons. First, in Dhillon, the superior court’s remand decided everything before it. It didn’t reserve any issues for itself during the remand. That’s true here as well.

But Dhillon’s second basis for finding finality had to do with the particular procedural posture of that case. There, a hospital’s administrative review board was reviewing the discipline of a physician. The review board determined that the physician was not entitled to receive a hearing. On a writ of administrative mandate, the superior court disagreed and remanded for the hearing to be held. In that case, the Supreme Court explained, if the remand order weren’t appealable, the hospital would have no avenue to review the superior court’s order that a hearing was required. 

The Court here finds that to be a distinguishing factor. Here, following the remand, the Officer will be able to file a new or renewed writ petition, and, should that be decided against him, appeal any adverse ruling subsumed into a post-remand judgment. See generally Code of Civ. Proc. § 906 (appeal of final judgment permits review of any intermediate ruling, provided that ruling substantially affected the appellant’s rights). That includes issues affirmed by the superior court on this petition. The Court relies on a pre-Dhillon Court of Appeal opinion—Kumar v. National Medical Enterprises, Inc. (1990) 218 Cal. App. 3d 1050—that makes that very point. As the Court notes, although there is some superficial tension, the Supreme Court distinguished Kumar on the same ground the Court here is distinguishing Dhillon. In this case and in Kumar, the petitioner whose case is administratively remanded will ultimately have an opportunity to appeal anything adversely decided.

The Court finds all this to be consistent with federal practice, which, although not identical to California’s, nonetheless applies analogous principles in assessing the finality of administrative action for appeal. In doing so, the Court notes that in this context, the agency sometimes has the right to appeal a remand order, but the affected individual, almost never does.

Finally, although the Court has the discretion to treat a premature appeal as a writ petition, it declines to do so here. This is not a case of great public interest. It is, instead, a largely fact-bound question regarding the manner in which the Officer was disciplined. So the Officer needs to wait for a ripe appeal.

Appeal dismissed.

A Claim Is a Claim Is a Claim

Miszkewycz v. County of Placer, No. C095426 (D3 Jan. 25, 2024)

As we discussed last summer, there’s a developing split of authority over what a defendant bringing an anti-SLAPP motion needs to do to raise an argument (perhaps in the alternative) that a “claim”—a distinct theory of liability— arises from protected liability, even if the whole case doesn’t. Some call that a Bonni argument, based on the Supreme Court case that laid out how it works, procedurally. Park v. Nazari said to make a Bonni argument, the moving party needs to identify “in the initial motion, each numbered paragraph or sentence in the complaint that comprises a challenged claim.” My take was that Park essentially required the moving party to follow Rule of Court 3.1322, which demands that the notice of motion for a traditional motion to strike needs to identify, line by line and word by word, the precise material the movant wants stricken.

But now the Court of Appeal says it’s not necessary to follow Rule 3.1322. The Court notes that, although Bonni analogized an anti-SLAPP to a traditional motion to strike, nowhere did the Supreme Court suggest that the similarity required compliance with Rule 3.1322. Moreover, some of the the text of 3.1322, including references to the timing in which a motion to strike must be brought, clearly apply to a traditional motion to strike, not an anti-SLAPP. So Rule 3.1322 does not apply to anti-SLAPP motions. 

Here, the moving defendant’s brief explained that the complaint at issue presented two theories of liability and argued that one of them arose from protected activity. That’s all that defendant needed to do to make a Bonni argument. So the trial court erred.

The Court goes on, in an unpublished part of opinion to nonetheless affirm the denial of the motion on the merits.

Affirmed.

I think the court gets it right here. The antecedent of Rule 3.1322—old Rule 329—was enacted in 1984. It pre-dates the anti-SLAPP statute by a decade and a half. If the Legislature or the Judicial Council wanted Rule 3.1322 to apply to anti-SLAPP motions, they have had twenty years to say so.

That said, cases like this one say you can satisfy Bonni with an explanation of a “claim” in your brief, while others say you need to identify specific paragraphs or sentences, even if they don’t formally demand compliance with Rule 3.1322. Until the Supreme Court weighs in on this issue, we’re in an Auto Equity situation where there is no way to predict what rule a trial court will apply. That being the case, safest bet is to do both.

Experts, Standards of Review, and Meta-Evidence

Garner v. BNSF Railway Co., No. D082229 (D4d1 Jan. 4., 2024)

This is a wrongful death case where decedent’s family claims that exposure to diesel exhaust while working as a railroadman caused the non-Hodgkin’s lymphoma that lead to his death. In the run-up to trial, the Company moved in limine to exclude Plaintiff’s general causation experts for failing to satisfy the Sargon standard.

Plaintiffs put up three experts on this point. Generalizing a bit, each testified that diesel exhaust was an established cause of cancer. They pointed to, among other things, epidemiological studies that showed that the exposure could lead to three to four thousand excess cancers per million people, which is clearly significant. But that was cancer in general. None of the experts, however, pointed to any study that linked non-Hodgkins lymphoma, in particular, to diesel exhaust, or that suggested a dosing that could merit causation. But they testified that, more generally, the mutagenic way diesel exhaust acts on human issue merits a conclusion that it can cause cancers that were no just limited to one specific organ. 

The Company pointed out these apparent gaps in the analysis. But it didn’t provide evidence of its own that experts’ reasoning or methodologies were scientifically unsound.

After tentatively accepting the opinions of Plaintiff’s experts, the trial court ultimately excluded them. It found that the gap between the underlying epidemiological evidence and the ultimate conclusions as to general causation was too broad to be bridged by the experts’ opinions. And without the experts, there was no evidence of causation, and thus the case could not go to trial. Plaintiff appealed.

Before getting to the evidentiary issue, the Court of Appeal discusses the standard of review. It recognizes that rulings on evidence, and the admissibility of expert testimony in particular, are generally subject to an abuse of discretion. But, relying on a number of cases, the court says that when an in limine ruling precludes a whole cause of action, it is treated as a nonsuit and reviewed de novo.

But that’s not entirely right. No doubt, the court pulls in language from cases that say, literally, that a motion in limine ruling that excludes all evidence and therefore resolves a whole cause of action is essentially a nonsuit that gets reviewed de novo. But all the cases the court cites deal with circumstances where a trial court decides a legal issue, which then makes all evidence irrelevant and thereby dooms a cause of action. 

The legal issue could be the interpretation of a statute, a contract or case law. It could also be a determination that there’s just not enough evidence to make it to a jury—itself a legal decision that basically a nonsuit. The cases cited all have these kinds of fact patterns. See Kinda v. Carpenter, 247 Cal. App. 4th 1268, 1285 (2016) (on in limine motion, trial court held that evidence was insufficient to get to the jury); McMillin Companies, LLC v. Am. Safety Indem. Co., 233 Cal. App. 4th 518, 529 (2015) (trial court excluded all contrary evidence on a duty issue based on a legal ruling that rendered the evidence irrelevant); Legendary Inv. Grp. No. 1, LLC v. Niemann, 224 Cal. App. 4th 1407, 1411 (2014) (similar); City of Livermore v. Baca, 205 Cal. App. 4th 1460, 1465 (2012) (exclusion of all evidence on the ground that the plaintiff's theory of liability was fatally defective); Dillingham-Ray Wilson v. City of L.A., 182 Cal. App. 4th 1396, 1401 (2010) (trial court interpreted contract as a matter of law and found that interpretation made evidence irrelevant and thus inadmissible); Fergus v. Songer, 150 Cal. App. 4th 552, 570 (2007) (trial court determined that, as a matter of law, attorney fee agreement was voidable and thus that evidence of damages based on it could not go to the jury). But the standard of review in these cases is de novo because the trial courts are fundamentally deciding questions of law, which always get reviewed de novo.

That, however, not the same thing as when a trial court makes an evidentiary ruling that makes certain evidence inadmissible, which then potentially has the consequence that the plaintiff can’t get to a jury. The ultimate significance of a pretrial ruling on a question of the admissibility of evidence should not change the standard of review. Notably, the court doesn’t cite any cases applying de novo review to the exclusion of a causation expert, even when that exclusion is potentially case dispositive. (This recent one, for instance, certainly didn’t.) 

If the evidentiary question is one normally one which is reviewed for an abuse of discretion—a classic example of which is the admissibility of expert testimony, see Sargon Enterprises v. University of Southern California, 55 Cal.4th 747, 773 (2012)—it should be reviewed under that standard, consequences be damned. Then, whether whatever is left is enough to get to a jury is a legal and that question should get reviewed de novo. But reviewing discretionary decisions de novo just because a plaintiff might lose as a result puts a thumb on the scale in favor of a plaintiff because, especially in cases of causation, excluding expert testimony on causation issues is usually case dispositive, but admitting it is generally not. It is completely arbitrary and nonsensical for a standard of review to change based on whether the trial court’s decision was to admit vs. to exclude. The standard of review should turn on the nature of the decision, not its consequence.

(FWIW, I just realized I digressed at length on this point in a post nearly eight years ago. While my memory is imperfect, my point stands nonetheless.)

In any event, moving on to the evidentiary question, the Court of Appeal drills down to the issue of the kind of inference a scientific expert can permissibly draw from underlying source material. As noted, these experts, relying on evidence of increased carcinogenicity in general, concluded that diesel exhaust could cause the specific kind of cancer that killed the decedent. They supported that conclusion with some more testimony explaining why that was a permissible inference, in their fields of expertise, to draw. Like that the kind of pathology caused by exposure to diesel exhaust—mutagenic damage to cellular level DNA—made it reasonable to conclude that the exposure could cause a bunch of different types of cancer. 

So the Court of Appeal concludes that in the absence of any evidence submitted by the Company establishing that that kind of conclusion was an inappropriate one for an epidemiologist to draw from the underlying data, the trial court abused its discretion in excluding the testimony because the inferential gap was too wide.

This is, admittedly, a hard epistemic task. As David Hume explained a couple hundred years ago in An Enquiry Concerning Human Understanding, you can never definitively prove the answer to a question of causation. All you can really do is observe a set of correlations that are significantly close from which an inference of causation can be drawn. So here, the Sargon question is how close does epidemiological statistical data—itself an observation of correlation—need to be to make a methodologically sound inference that a relationship is causal. And even more specifically, what kind of evidence (or law) validates the soundness of that inference.  

Some more extreme facts can illustrate the question. On one hand, say an expert relies on a study of a large population is exposed to some agent in a specific and measurable way. All or nearly all of them develop some rare disease that is almost never seen in the pubic at large. And there’s nothing else about the exposed group that otherwise meaningfully differs from the public. In that case, provided the methods in which the data were collected were sound, the gap between that data and the inference of a causal relationship between the exposure and the plaintiff’s disease isn’t very big at all.

On the opposite end, say the study of a small population correlates exposure a number of different outcomes, which also occur almost as frequently in the unexposed population, the sample was taken from a population that is atypical in some way, and the plaintiff suffers an outcome that is not among the ones measured in the sample. There, the gap between the data and a conclusion of causation is clearly too wide to stand. The fact that a couple of lactose intolerant people get a tummy aches from eating dairy does not justify an inference that ice cream causes pancreatic cancer.

Easy cases like these at the outer limits can likely be resolved as a matter of law or undisputed fact by well-informed judicial common sense. But there is obviously a wide field of grey area in between. And there, the question of “is this a reasonable inference to draw?” seems itself to be a factual question that could itself be a potential subject of expert opinion: Do professionals in the relevant field, employing appropriate methodologies, and outside of litigation, think that, data A rationally merits the more likely than not inference of a causal relationship?

Those situations can turn on a kind of meta-evidence. That is, evidence that, while potentially irrelevant to the merits, goes to a question of whether other evidence is even admissible. Here, that was, to some degree provided by Plaintiff. Its experts testified why it was reasonable to infer causation of non-Hodgkin’s lymphoma from general cancer data concerning exposures to diesel exhaust. On the other hand, the Company didn’t put in anything to the contrary. So that resolves the appeal.

But what if the Company put in evidence that in the practices in field of epidemiology, the inference drawn by Plaintiff’s expert wasn’t a reasonable one to draw? In that case, it seems to me, under Evidence Code §§ 403 and 405(a), as a condition to admitting the testimony, the trial court would be obliged to decide whether, as a matter of fact, a preponderance of the evidence established that the inference was justifiable or the gap was to big. A trial court should not be able to engage in another round of meta-punting on the basis that that question too is a subject of debate within the field.

Reversed.

Separate Statement Smackdown

Beltran v. Hard Rock Hotel Licensing, No. G062736 (D4d3 Dec. 5, 2023)

Five years ago, my partner David Klein and I had an article in Los Angeles Lawyer called “Crafting Separate Statements in Motions for Summary Judgment.” The gist of the article was that there was a widespread misunderstanding about what facts and at what level of generality should go into the separate statement required under Rule of Court 3.1350(d). That document calls only for material facts, which basically means the facts, stated in a case-specific action, that make up the elements of the cause of action. So for any given cause of action, depending on the moving party, there could be as few as one at most a handful of facts that are truly material to an SJ motion. But in practice, that is not the way most separate statements are put together. Typically, the tend to be bloated useless documents stuffed to the gills with scores or even hundreds of purportedly “undisputed material facts.”

Other than the associates I have harangued on this point over the years, I don’t know if anyone ever read that article. (And maybe not even those associates...) I can’t link to it, although it is on Westlaw somewhere. (41-DEC L.A. Law. Rev. 14.) 

In any event, the Court in this FEHA sexual harassment case makes the same point. It identifies “the deeply problematic misuse of the separate statement of material facts by all parties and how separate statements can be brought into compliance with existing law.”

I’m not usually a block quote guy, but the court’s full analysis is worth a read:

Defendants filed three separate statements of undisputed material facts (separate statement or statements) in support of each of the three motions for summary judgment filed in this case. Each separate statement includes over 600 paragraphs of purportedly “material facts” and runs over 100 pages. After reviewing the Defendants’ separate statements and Beltran’s responses to them, as well as recent separate statements in other recent cases before us, we can only conclude that a document that was intended to be helpful to the court and provide due process to the parties (Parkview Villas Assn., Inc. v. State Farm Fire & Casualty Co. (2005) 133 Cal.App.4th 1197, 1210) is, in many cases, no longer serving either purpose. We write on this issue to remind both litigants and trial courts about the appropriate scope of the separate statement.

Code of Civil Procedure section 437c, subdivision (b)(1), requires each motion for summary judgment to be accompanied by a separate statement “setting forth plainly and concisely all material facts that the moving party contends are undisputed. Each of the material facts stated shall be followed by a reference to the supporting evidence.” (Italics added.) California Rules of Court, rule 3.1350(d)(2) states: “The separate statement should include only material facts and not any facts that are not pertinent to the disposition of the motion.” Under the Rules of Court, “‘Material facts’ are facts that relate to the cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion and that could make a difference in the disposition of the motion.” (Rule 3.1350(a)(2).)

What neither the rule nor the statute states is that the moving party must include in the separate statement every fact they intend to include in their motion, regardless of its materiality. For example, HRH’s very first “material fact” in its separate statement is: “The Hard Rock brand is known worldwide for its connection to music, fashion, and entertainment.” Under no interpretation of “material” does this qualify – it is merely background information that has no relevance to any cause of action or defense.

This is far from the only paragraph in the three separate statements that make absolutely no difference in the disposition of the motion. The paragraphs in a separate statement should be limited to facts that address the elements of a cause of action or an affirmative defense. (See Code Civ. Proc., § 437c, subd. (b)(1); rule 3.1350(a)(2), (d)(2).) The statute and Rules of Court do not preclude litigants from including background, nonmaterial information in their papers as long as they include a cite to the evidence, but nonmaterial facts should not be included in the separate statement. The point of the separate statement is not to craft a narrative, but to be a concise list of the material facts and the evidence that supports them. “The separate statement serves two important functions in a summary judgment proceeding: It notifies the parties which material facts are at issue, and it provides a convenient and expeditious vehicle permitting the trial court to hone in on the truly disputed facts.” (Collins v. Hertz Corp. (2006) 144 Cal.App.4th 64, 74.) There is nothing convenient or expeditious about the separate statements submitted in this case.

The duty to comply with the law regarding separate statements applies to both sides of a motion for summary judgment or adjudication. The opposing party’s responses to the separate statement must be in good faith, responsive, and material. Responses should directly address the fact stated, and if that fact is not in dispute, the opposing party must so admit. It is completely unhelpful to evade the stated fact in an attempt to create a dispute where none exists. For example, HRH’s separate statement included paragraph 14: “When Shepherd began working at the Hotel, Plaintiff Stephanie Beltran (“Plaintiff’) worked as a server in different parts of the Hotel, but primarily in the Hotel’s nightclub called the ‘Club.’” Beltran claimed this benign and indisputable fact was disputed: “Disputed. Although Plaintiff was already working at Hard Rock when Defendant Shepherd was hired, Plaintiff’s hire date was on or around February 10, 2017, as that’s when her Labor Code § 2810.5 Notice was filled out.” This response did not, in fact, dispute HRH’s statement, and the response should have been “undisputed.” If Beltran’s hire date was a material fact (and we do not see why it was – at best, it was background information) it should be listed under the opposing party’s additional facts with supporting evidence. The quoted paragraph is far from the only example of this problem in Beltran’s responses.

As we mentioned, one of the purposes of the Separate Statement is “to permit the trial court to focus on whether [the material] facts are truly undisputed.” (Parkview Villas Assn., Inc. v. State Farm Fire & Casualty Co., supra, 133 Cal.App.4th at p. 1210.) This can only be accomplished by both parties preparing the Separate Statement according to the statute and Rules of Court and acting in good faith. The moving party must include only material statements of fact, not incidental and background facts. The opposing party must concede facts that are truly undisputed and only add facts that are material. It is difficult to conceive of a properly drafted Separate Statement that includes over 600 paragraphs of undisputed material facts.

Trial courts should not hesitate to deny summary judgment motions when the moving party fails to draft a compliant separate statement – and an inappropriate separate statement includes an overly long document that includes multiple nonmaterial facts in violation of the Rules of Court. Courts should also not hesitate to disregard attempts to game the system by the opposing party claiming facts are “disputed” when the uncontroverted evidence clearly shows otherwise.

(Emphases original, footnotes omitted).

Reversed.

To Stay or Not to Stay

Mattson Technology, Inc. v. Applied Materials, Inc., No. A165378 (D1d5, as modified Nov. 20, 2023)

Plaintiff and Defendant both make machines that are used make to semiconductor chips. Defendant hired Engineer, who has previously been employed by Plaintiff for a long time. Defendant similarly poached a bunch of other employees from Plaintiff. This is California, so there’s nothing, in itself, wrong about that.

But a bunch of the poached employees wiped their work phones shortly before their departure and lied about where they were going in their exit interviews. That’s kind of suspicious. And Engineer did them one better. Shortly before leaving, he accessed Plaintiff’s cloud-based data storage system and emailed more than a dozen emails to his personal email accounts, attaching highly sensitive Plaintiff company documents unrelated to Engineer’s work. In the world of trade secrets litigation, that’s pretty much a smoking gun.

So Plaintiff sued Defendant and Engineer in state court. It sought and obtained a preliminary injunction barring Defendant from using Plaintiff’s trade secrets. Defendant and Engineer than moved to compel arbitration based on an arbitration clause in Engineer’s employment agreement. The trial court granted as to Engineer, but denied as to defendant, on the grounds that it was a non-signatory. The court further declined to stay the litigation between Plaintiff and Defendant while the Plaintiff/Engineer arbitration was litigated. Defendant appealed.

There are three issues: (1) not compelling the claim against Defendant to arbitration; (2) the PI; and (3) the denial of the stay pending arbitration. The first two are pretty easy.

Defendant tried to hitch onto Engineer’s arbitration clause based on equitable estoppel. The basic point of equitable estoppel in the context of arbitration is that if you sue someone on claim that is inextricably bound up with a contract that includes an arbitration clause, that person gets to rely on the clause even if they aren’t a signatory to the contract. As the Court explains, “As a matter of fairness, when a party to a contract seeks to hold a non-signatory defendant liable for obligations imposed by the contract, the party cannot evade an arbitration clause in the contract simply because the defendant is a non-signatory.” 

But that’s not what is going on here. Plaintiff doesn’t assert that Defendant owed it some duty under Engineer’s employment agreement. It instead claims that Defendant misappropriated its trade secrets, which is a breach of statutory obligation that exists outside of any contract. The fact that the arbitration agreement would have included that claim, had Defendant been a signatory, is not enough to give rise to equitable estoppel. Nor is the fact that Defendant allegedly conspired with Engineer, a signatory, in carrying out the misappropriation. 

The PI is even more clear cut. There was credible evidence that Engineer sent some of the material to Defendant after he got hired. Defendant had no right to use that information. The equities are clearly on the side of Plaintiff. And the Trade Secrets Act specifically authorizes courts to enjoin “actual or threatened” misappropriation. Civil Code § 3426.2. Probably the better argument to make would have been that the injunction did not do enough to discern use of Plaintiff’s info from perfectly innocent activity that relied on Defendants own sources of knowledge. That’s almost always a difficult issue in granting an injunction in a trade secrets case. But Defendant doesn’t appear to have raised that issue in trial court, so it’s forfeited.

The third issue, however, is tricky. The Court reads Code of Civil Procedure § 1281.4 to require a stay of related litigation, even against different non-signatory parties, when an action with overlapping issues is compelled to arbitration. It does so because § 1281.4 uses the word “shall.” And the Court cites some cases that basically stand for those points. Heritage Provider Network, Inc. v. Superior Court, 158 Cal. App. 4th 1146, 1152 (2008); Cardiff Equities, Inc. v. Superior Court, 166 Cal. App. 4th 1541, 1551 (2008).

But a recent Court of Appeal case explains that the mandatory stay under § 1281.4 applies only to the “controversy”—the actual claims between the parties to the arbitration agreement that have been sent to arbitration. See Leenay v. Superior Court, 81 Cal. App. 5th 553, 564–65 (2022) (“[S]ection 1281.4 authorizes a stay only if a court has ordered arbitration of a question between the parties to an agreement, and the same question and the same parties are involved in the pending action.”). Leenay explains, quite convincingly, that the point of § 1281.4 is to stay the actual claims that are being arbitrated, not overlapping claims against different parties. A different statute, § 1281.2(c)(1), is addressed to that issue. Unlike § 1281.4, § 1281.2 affords the court wide discretion to address how to handle overlapping claims of additional parties that aren’t required to arbitrate. Options listed in the statute include: Refusing arbitration altogether, ordering full or partial intervention, ordering arbitration and staying the litigation, and staying arbitration until the litigation is done. If § 1281.4 applies to more than just the matter being arbitrated the contrary discretion afforded under § 1281.2 is surplusage. 

Notably Leenay tried to distinguish Heritage based on some procedural differences, but the logic of Leenay is not really reconcilable with the way these other cases read § 1281.4.

So there is a pretty clean split on this issue, although the parties’ apparent failure to flag it probably precludes review.

Reversed in part.

Roshamon and the Reporters' Shield Law

The Bakersfield Californian v. Superior Court, No. F086308 (D5 Nov. 7, 2023)

A guy is found murdered in a Target parking lot in Bakersfield. After reviewing a bunch of security footage, and a weird text message to an unconnected person that said, “I just killed someone! Turn on the news!” the police narrow their case down to two suspects. They appear to be two random, somewhat down-on-their luck-guys who just met for the first time in the parking lot and decided to do some drinkin’. Then yadda, yadda, yadda, someone murders a Target customer.

Guy #1—who is first approached by the cops, IDs then fingers Guy #2—from whose cell phone the super incriminating text message was sent. He tells a meandering story that ends with Guy #2 shooting the victim in some kind of failed robbery. Guy #2 picks up a murder charge with a special circumstance. 

At Guy #2’s prelim, Guy #1 tells his story. It doesn’t totally add up to what he originally told the cops. A bunch of the details change. On cross, it comes out that Guy #1 owns and has registered a gun that matches the 9mm caliber of the bullets found in the victim. But he says he gave that gun to an out-of-town buddy for safekeeping several months beforehand. The following day, however, #2’s lawyer produced the aforementioned buddy at the ongoing prelim. Buddy apparently drove a long way to get there. Buddy says he hasn’t had any contact with Guy #1 for more than a year. And he is definitely not holding #1’s 9.

This all gets Guy #1 indicted for the same murder. The two cases are consolidated. While in custody, Guy #1 gives an interview to a jailhouse reporter. He tells another version of the story. This time he has the gun. It’s in his backpack. The similar drinking and hanging around goes on. He hears #2 shoot the victim. But he doesn’t make a big deal of it because he’s scared. They hang out some more. Only the following day does he realize his gun was missing from his backpack. The reporter’s newspaper prints a story on it.

At this point, you may be asking yourself, “what does this have to do with civil procedure?” Here’s what. #2’s attorney drops a subpoena on the newspaper, demanding any unpublished material from the interview. Guy #1’s story shifted around so much that it seems like the notes might have more impeachment material. Newspaper moves to quash, citing California’s shield law, Evidence Code § 1070. The trial court ultimately denied it, finding that the privilege had to yield to the rights of accused Guy #2.

Newspaper filed a writ petition to challenge the ruling. But there’s a problem with that. The shield law is not actually an evidentiary privilege. It is an immunity from being held in contempt for refusing to reveal a source or to disclose unpublished material. Since the newspaper had not been held to be in contempt, the Court of Appeal denied the writ, noting that the trial court could enter a contempt order, if so warranted, and then stay it to give the newspaper time to seek another writ.

Back in the trial court, newspaper basically consents to being put in contempt, with the aforementioned stay entered. That happens, and the newspaper takes another writ. The Court of Appeal—in an unpublished part of the opinion—takes issue with that too. After a lengthy review of the procedures for which a conviction for civil contempt is to be secured, the Court finds that the trial court failed to follow that process. Although the trial court seemed to do what the order denying the first writ said, apparently the court was supposed to follow all the writ procedures (even though newspaper consented to contempt), enter a judgment of contempt (including a punishment) and then stay the execution of the punishment. Regardless, having spent many pages walking through this in a part of the order that will be unciteable by anyone else, the Court of Appeal decides it will get to the merits anyway for prudential reasons. So now two guys who will potentially spend the rest of their lives in prison have been adequately educated by a bunch of dicta about indirect civil contempt.

In an opinion that reads a lot like a Cal. Supreme Court opinion from the 90s—that is, a long recitation of prior case law preceding any actual analysis—the Court gets to applying the Shield law test around page 40. (FWIW, test has been settled law for more than 30 years.) Basically:

(1) The party invoking the privilege needs to show it facially applies. That is, that the claimant is a journalist who wants to withhold a source or unpublished information.

(2) If so, the party demanding the information (usually, like Guy #2, a criminal defendant) then must make a threshold showing that there is a reasonable possibility that the withheld information could be helpful to his case.

(3) And if so, the court balances four factors to decide whether the information should be disclosed: (a) whether the unpublished information is confidential or sensitive; (b) whether the interests sought to be protected by the shield law will be thwarted by disclosure; (c) the importance of the information to the defendant; and (d) whether there is an alternative source for the information.

Newspaper clearly meets the first element. 

As to Guy #2, the burden to show that something you can’t see potentially contains information that could be helpful to your case is a tricky one that turns on the difference between “reasonable possibility” (enough) and “mere speculation” (not enough). Here, although obviously Guy #2 doesn’t know what’s in the reporter’s notes, the contents of the article circumstantially suggest that the reporter talked to Guy #1 about a number of issues that might either incuplate Guy #1 or exculpate Guy #2. That also includes material that might impeach Guy #1’s testimony. For instance, the contents of the article showed that the reporter spoke to Guy #1 about, among other things, the use of the gun, Guy #2’s cell phone, from which the incriminating text was sent, and various other issues where #1’s version of the timeline shifted over time. This was good enough to say, at least, that the trial court didn’t abuse its discretion when it found #2 met his initial burden.

On the factors:

Confidential or Sensitive: #1 gave an on-the-record jailhouse interview to a reporter, so there is little reason to believe the notes contain anything confidential or sensitive. (Notably the newspaper resisted in camera review, which could have given the court a basis to make a contrary determination). 

Interests Protected by the Shield Law: Again, Guy #1 isn’t exactly Deep Throat. There’s no indication that he gave information to the reporter as a confidential source, demanded things remain off the record, or that he gave some info on background. When a witness gives information readily and without limitation for a reporter to use however that reporter deems fit, the interests implicated by the shield law are not strongly called into play.

Need for the Information: As one might expect, this factor overlaps a good bit with the threshold burden. The Court elaborates that while the chance that the info would be really valuable was low, the potential was quite high, particularly given that Guy #2 “is facing LWOP.” (For the civilly inclined, that’s Life Without an Opportunity for Parole.) 

Alternative Source: This one, as often is the case in the law, turns on the level of generality. Guy #2 says the reporter’s notes are the only source of what Guy #1 told to the reporter. The newspaper, on the other hand, argues that we’re just talking more generally about material that can impeach Guy #1, and there’s already tons of that floating around, between the interviews with the cops, the prelim, etc. The court says the newspaper’s argument is “not persuasive.” So there was no alternative source in the way the test is meant to apply.

A Final Word on in Camera Review: Finally, the Court notes that a lot of the uncertainty in this case could have been avoided if the court held an in camera hearing. The criminal subpoena statute, Penal Code § 1326, specifically authorizes a criminal court to hold an in camera hearing about whether a defendant is entitled to subpoenaed documents. On one hand, at an in camera hearing, Guy #2 could have explained his theory of relevance in more detail, without spilling the beans to the DA as to his defense theory. On the other hand, newspaper really had confidentiality concerns, it could have shown the notes to the court to prove why that was the case. Quoting another case, the court explains that “the better policy is to encourage parties to allow disputed materials to be examined by the trial court in camera, because the court’s review may resolve the matter expeditiously and short of a contempt adjudication.”

Writ granted, but only to the extent that the trial court judged the newspaper to be in contempt. Otherwise denied.

Costs of Proof Awarded for Needlessly Denied RFAs

Vargas v. Gallizzi, B317540 (D2d7 Oct. 13, 2023)

This is an appeal after a re-trial of damages in an auto injury case. In the first trial, the court excluded a bunch of medical records because the Plaintiffs didn’t obtain detailed enough business records foundation declarations and failed to have sealed envelopes containing the records delivered to the court under Evidence Code § 1560(b)-(d).* 

To avoid that rigamarole on retrial, Plaintiffs served requests for admissions, asking that the Defendant admit that the records were authentic and business records, subject to the business records exception of the hearsay rule. Defendants admitted the former, but not the latter. Defendants also denied some RFAs on the timeline of their treatment and causation. In a pretrial ruling, the Court ultimately ruled for plaintiff that the documents were authentic and within the business records exception. Defendant did not further object to the admissibility of the records at trial. 

After Plaintiffs won a somewhat meager damages award, they moved for costs of proof under Code of Civil Procedure § 2033.420. The court denied the award because the business records exception had not been proven “at trial,” and because the proof of causation and treatment did not require proof that was marginally greater than what Plaintiffs put on to prove their damages. Plaintiffs appealed.

As the Court of Appeal explains, § 2033.420(a) awards costs of proof when an RFA is denied and the propounding party “proves the genuineness of that document or the truth of that matter.” It doesn’t say that the proof needs to happen at a trial. Nor did Defendants satisfy the exception for when the respondent “had ground to believe that party would prevail on the matter.” § 2033.420(b)(3). Defendant’s only proof on that point is that she thought that Plaintiffs might screw up the process again so she wasn’t inclined to stipulate it away. That, however, is not a reasonable basis to believe that the documents were not actually business records. So the trial court erred in denying costs of proof for the business records RFAs. 

And since the business records were the proof of treatment and causation, the court’s denial of fees on those points was harmless.

Reversed and remanded.

*Section 1560 of The Evidence Code contains a 70-year old procedure for third parties to produce documents in response to a business records subpoena. Copies of the responsive records, along with the business records declaration under Evidence Code § 1651, are sealed in an inner envelope with the case title, number, witness name and subpoena date written on it. Then that envelope is sealed in an outer envelope addressed to the court clerk or deposition officer. The envelope, then, is opened only at the trial or deposition, in the presence of all parties or their counsel. The point of this is to maintain the chain of custody of the documents. 

In nearly 20 years of practicing law in California, I don’t think I’ve ever seen this done. Indeed, outside of very rare situations, I’ve basically never made or received a hardcopy production of documents. Maybe things might still work the old way in PI cases with medical records. (Medicine’s adaptation of digital technology seems to be twenty years behind the already pathetic state of technology in the legal industry.) 

But it would be nice if the code tried to adapt to modern practice a bit. Like, if the producing party places unique numbering on copies of the records to be produced, references that numbering scheme in a Evidence Code § 1561 business records declaration, and then transmits the records in a digital file to the appropriate recipient, the contents of that file are presumed to be the authentic business records of the subpoenaed party. That’s basically the way things work nowadays even in the absence of a rule.

The Inescapable Empire

EpicentRx v. Superior Court, No. D081670 (D4d1 Sept. 21, 2023).

So, back in 2019, the Court of Appeal decided that it would not enforce a forum selection clause in a contract if it would result in the case being sent to a jurisdiction that might enforce a void-in-California waiver of the right to a jury trial. This case doesn’t involve a jury waiver. But it does involve a bylaw requiring a company’s stockholders to litigate disputes over its internal affairs in the Delaware Court of Chancery. On several occasions, the Court of Appeal has found such bylaws to be valid, and on that basis sent stockholder cases packing to the First State.  

Plaintiff in this case, however, raises a new argument. The Court of Chancery is a court of equity, and as such, it doesn’t do juries. At all. So Plaintiff argues that choosing chancery is a de facto waiver of jury trial rights that would otherwise apply in California. Thus, as with Handoush and the cases it is based on, to enforce the forum selection would effectively result in a waiver of an otherwise unwaivable California right. The Court of Appeal agrees.

Notably, the Court of Appeal declines to enforce the selection for causes of action that the right to jury trial does not attach, even in California. That, according to the court, would result in unnecessary expense and piecemeal litigation.

Writ denied.

This seems kind of problematic to me. One of the reasons companies incorporate under Delaware law is to have the benefit of Delaware’s specialized courts in resolving disputes over their internal affairs. This ruling effectively denies that benefit by sheer virtue of the fact that the company is located in California. California’s courts are busy enough without making them the venue for complex disputes involving some other states’ laws. 

On the other hand, the logic of the ruling is not really much of a stretch from Handoush. But how far does a court need to go to allow a California jury right to trump an express (and completely logical) choice of venue? Do we need to make sure that a complaint doesn’t include any causes of action that California considers to be legal but some other state might view as equitable? And of course, a clever plaintiff lawyer could avoid all that by adding even a weak claim for fraud or breach of contract to any dispute over corporate governance. (Indeed, the Company’s briefs say that’s what happened here.)

Interestingly, the Supreme Court granted review in Handoush. But the appeal got dismissed due to some idiosyncratic concerns of the parties. Then, as the Court here notes, it granted review again on the same issue in an unpublished case called Gerro v. Blockfi Lending LLC, S275530. But that case has sat unbriefed for a year because the defendant went bankrupt. So—particularly given the effect this decision might have on many California-based companies incorporated under Delaware law and upon contractual arrangements that provide for Delaware law and venue—I would not be stunned to see a petition granted on this case as well.

**Update: Review granted**

Mootness, Remedies, and Class Cert

Shaw v. LAUSD, No. B315814 (D2d4 Sept. 9, 2023)

This is a super important education case brought by some of my partners that alleges that a series of LAUSD-UTLA collective bargaining side deals to deal with remote learning during the pandemic violated LAUSD students’ rights to equal educational opportunities under the State Constitution and the Education Code. Congrats to my partners Ned and Mark and Sierra.

But in this venue, I’m gonna leave the substance to the ed reform lawyers. There are, however, a bunch of interesting procedural issues that are worth noting. 

They mostly arise from the procedural posture of the case. Plaintiffs got their complaint on file early in the 2020-21 school year. They tried to file a preliminary injunction as a noticed motion. But because their case was brought as a class action, the (completely non-statutory or rule based) automatic stay that issues in LA Civil Complex departments prevented them from getting that on file for a long long time. There was some also discovery fighting and later, an amended complaint. While that was all pending, the Legislation governing distance learning expired, as did the the final LAUSD-UTLA side letter, which ran to the end of the 2021 school year.

The District moved to strike the operative complaint’s prayer for retrospective injunctive relief, arguing that it was not a proper form or relief and that is could not be obtained on a class wide basis. The Union moved to strike the class allegations for failure to establish a well-defined community of interests. Both defendants demurred to the operative complaint on mootness grounds. The trial court essentially granted all the motions. Plaintiffs appealed.

After some confusing discussion about forfeiture and waiver, the Court of Appeal offers up an interesting discussion of the relationship between mootness and remedies. People who live in federal court world probably know this intuitively. Under the classic formulation of Article III standing, to have standing, a plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 559–560 (1992). As Justice Powell explained almost 50 years ago, the “standing question . . . bears close affinity to questions of ripeness—whether the harm asserted has matured sufficiently to warrant judicial intervention—and of mootness—whether the occasion for judicial intervention persists.” Warth v. Seldin, 422 U.S. 490, 499 n.10 (1975). That is, a case is moot when, due to events after filing, the court can no longer provide any meaningful remedy.

California state court does not have article III standing, so the relationship between mootness and the viability or remedies is less clear-cut doctrinally, but the court does a good job of explaining the relationship here. The upshot of that is if the trial court erred in striking the class allegations and the claim for retrospective injunctive relief, the mootness issue essentially falls with those rulings.

That brings up two related questions: 1. When can you strike class allegations at the pleadings stage; 2. Is there even such a thing as retrospective injunctive relief.

On the first question, striking class allegations on the pleadings, without taking any evidence, is pretty disfavored. Generally, a challenge to the viability of a class action needs to wait until class certification, so long as the complaint alleges facts that (1) there is an ascertainable class of plaintiffs; and (2) there are common questions of law and fact among them. Generally questions of predominance, and manageability, and typicality must await the more detailed analysis undertaken at class certification.

The Court of Appeal says that the trial court erred in striking the class allegations based on its assessment that to the extent retrospective injunctive relief is even a thing, it can’t be managed on a class-wide basis. Since the complaint showed that a class was clearly ascertainable (LAUSD students during the pandemic) and the were obvious common questions (the legality of LAUSD policy and the UTLA-LAUSD deals) that should have been the end of the inquiry at the pleadings stage. As the Court notes, there is no authority supporting the striking of class allegations on the pleadings due to the purported lack of a class-wide remedy.

So far as retrospective injunctive relief, of course that is a real thing. If a defendant’s violations of the law hurt the plaintiff in a way that can’t be fixed with money, the court clearly has the power to order the defendant to do things prospectively that remediate that harm. No doubt, those kinds of remedies re less common and harder to judicially administer than a typical prohibitory injunction that just says “stop doing x.” But, in the right circumstances, an equitable remedy to fix past harms is available. The Court cites cases providing the classic remedy of the reinstatement of a wrongfully terminated employee or the award of credit wrongfully withheld.

The Court then addresses the Union’s claim that, given the expiration of the side letters, it should be let out of the case. The only reason the Union got sued here was as a “relief defendant”—a defendant who is not in the case for committing its acts that harmed the plaintiff (the Union owes the plaintiffs no duty), but which needs to be present to afford effective relief. Ironically, the reason the Union got sued here was to avoid the result of another case involving UTLA—Reed v. United Teachers Los Angeles, 208 Cal.App.4th 322 (2012)*—an education reform case where UTLA successfully blew up a settlement agreement between LAUSD and student plaintiffs because, although UTLA wasn’t a party, the terms of the settlement affected the rights of its members. The Court points out Reed requires keeping the Union in the case as a necessary party. 

Finally, the Court holds that Plaintiffs’ challenge to the legality of automatic stay in L.A. Superior complex is non-justiciable. The theory was that the stay—which is not grounded in any statutory or rule-based authority—deprived Plaintiffs’ of their statutory right to move for a preliminary injunction. But the stuff Plaintiffs wanted to restrain—LAUSD’s distance learning polices and the LAUSD-UTLA side letters—have all since lapsed. So that question actually is moot. As the Court notes in explaining that the question is not one that evades review, a writ of mandate was available to challenge the stay, and some future plaintiff will be able to do so.

 Reversed.

*Full disclosure: I worked, briefly, on appellate issues in Reed a long time ago.

Pay to Play

Doe v. Superior Court, No. A167105 (D1d3 Sept. 8, 2023)

This case holds basically the same thing as the 2/8's decision in Cvejik back in June. Under Code of Civil Procedure § 1281.98, in an employment or consumer case, the party that drafted an arbitration clause needs to pay the Arbitrator’s bill within 30 days of it being due. And by “paid” it means payment received. Not the check is in the mail. The arbitration org—which has every incentive to let the rule slip—doesn’t get to extend the deadline or (as it did here) make up some kind of mailbox rule. 

So when the arb org—after reminding the employer like fifty times that it needed to pay on time—cashed a check and deemed it timely because it was sent, but not received, before the due date, it erred. And then the trial court erred too when it declined to find that the employer waived the right to arbitrate and restart the litigation.

Writ granted.

This is a great song about some long ago LA punk rock controversy, but the sentiment is well expressed. Lance was one of the greats...