Handoush v. Lease Finance Group, LLC, No. A150863 (D1d3 Oct. 31, 2019)
The right to civil jury trial in California is kind of a big deal. In this case, the Court of Appeal holds that California courts won’t enforce a venue selection provision in a contract that also contains a jury trial waiver that the selected venue would uphold.
Read about it in full in the piece I wrote for Kirkland with my partner David Klein.
Monday, November 11, 2019
Tuesday, November 5, 2019
How to Lose Your Appeal
Davis v. TWC Dealer Grp., Inc., No. A155030 (D1d2 Oct. 30, 2019)
So I have to cop that I only got around to writing up the Supreme Court’s decision in Kho because I read this case. It involves the essentially same Toyota arbitration agreement that the Supreme Court invalidated in Kho this past August. The same firm that represented the Toyota dealership in Kho represents a Toyota dealership here. Kho was decided a few weeks after the last brief was filed in this case. But nobody gave any notice of supplemental authority.
The Court of Appeal flagged Kho in a pre-argument notice and asked the Dealership to explain why the parts of the agreement the Court in Kho found so oppressive were replaced with ellipses in the Dealership’s briefs. It also requested an explanation for why the Dealership never apprised the Court of the Kho decision, citing “Batt v. City and County of San Francisco (2007) 155 Cal.App.4th 65, 82, fn. 9,” which deals with attorneys’ duty of candor. (The Court later explains that the duty has been made express by the recent restyling of the Rules of Professional Conduct, which now, in Rule 3.3, require attorneys to “disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel[.]”)
The Dealership’s law firm (called out by name in the opinion) sent an associate to the argument—his name wasn’t even on the briefs. He had no explanation for the ellipses—he didn’t write the brief and hadn’t spoken to the attorney who did. He didn’t read the footnote in Batt. The arguing claimed only that the Dealer didn’t give notice Kho as supplemental authority because it was “different.”
This all, quite understandably, makes the Court of Appeal very mad. Especially when framed in the context of the somewhat hyperbolic arguments the Dealership made in its brief. Arguments like a claim—unsupported by citation—that arbitration clauses “identical in all material terms to arbitration provisions that have been routinely enforced by appellate courts, including the state Supreme Court.”
The Court, describing the Dealership’s arguments as “wrong on all counts,” “easily affirm[s]” the trial court’s denial of the motion to compel arbitration. The opinion concludes by noting that “It is hard to imagine legal authority more ‘directly adverse to the position of’ [the Dealership] than Kho—hard to imagine a more obvious violation of Rule 3.3.”
Easily Affirmed.
So I have to cop that I only got around to writing up the Supreme Court’s decision in Kho because I read this case. It involves the essentially same Toyota arbitration agreement that the Supreme Court invalidated in Kho this past August. The same firm that represented the Toyota dealership in Kho represents a Toyota dealership here. Kho was decided a few weeks after the last brief was filed in this case. But nobody gave any notice of supplemental authority.
The Court of Appeal flagged Kho in a pre-argument notice and asked the Dealership to explain why the parts of the agreement the Court in Kho found so oppressive were replaced with ellipses in the Dealership’s briefs. It also requested an explanation for why the Dealership never apprised the Court of the Kho decision, citing “Batt v. City and County of San Francisco (2007) 155 Cal.App.4th 65, 82, fn. 9,” which deals with attorneys’ duty of candor. (The Court later explains that the duty has been made express by the recent restyling of the Rules of Professional Conduct, which now, in Rule 3.3, require attorneys to “disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel[.]”)
The Dealership’s law firm (called out by name in the opinion) sent an associate to the argument—his name wasn’t even on the briefs. He had no explanation for the ellipses—he didn’t write the brief and hadn’t spoken to the attorney who did. He didn’t read the footnote in Batt. The arguing claimed only that the Dealer didn’t give notice Kho as supplemental authority because it was “different.”
This all, quite understandably, makes the Court of Appeal very mad. Especially when framed in the context of the somewhat hyperbolic arguments the Dealership made in its brief. Arguments like a claim—unsupported by citation—that arbitration clauses “identical in all material terms to arbitration provisions that have been routinely enforced by appellate courts, including the state Supreme Court.”
The Court, describing the Dealership’s arguments as “wrong on all counts,” “easily affirm[s]” the trial court’s denial of the motion to compel arbitration. The opinion concludes by noting that “It is hard to imagine legal authority more ‘directly adverse to the position of’ [the Dealership] than Kho—hard to imagine a more obvious violation of Rule 3.3.”
Easily Affirmed.
Saturday, November 2, 2019
Sliding Scales and Points of Comparison
OTO, LLC v. Kho, No. S244630 (Cal. Aug. 29, 2019)
A little late on this one. As I noted in my write up of the Court of Appeal decision in this case, the result—upholding an arbitration clause in an employment contract in the face of an unconscionability challenge—felt a little sideways with a Supreme Court decision generally referred to as Sonic II. So I was hardly surprised by the grant of review.
These are all wage-and-hour cases where an employee is entitled to an administrative remedy called a Berman hearing, which is “designed to give claimants a ‘speedy, informal, and affordable method’ for resolving wage disputes.” Sonic II suggested, but did not decide, that the waiver of a Berman hearing in a wage and hour case would be substantively unconscionable unless the arbitration procedure itself incorporated procedural elements of a Berman hearing.
The agreement in this case foresees an arbitration that would be very much like a state court trial. Indeed, it provides for full discovery and adopts a number of law and motion and trial procedures that are not required in an arbitration. But it does not incorporate the elements that make a Berman hearing easy for an employee to litigate. As the Court explains in an opinion by Justice Corrigan, in isolation, a trial-like arbitration isn’t substantively unconscionable. But an analysis of substantive unconscionability needs to look to the parties’ options but for the arbitration as a point of comparison. Here, that’s not a court trial, it’s a Berman hearing.
The agreement here was a “paragon of prolixity”—“only slightly more than a page long but written in an extremely small font.” (The parties fight over whether it was 7 or 8.5 point.) It made numerous opaque and sometimes ambiguous references to legal jargon such that a lay person would have difficulty in deciphering key terms.” It was offered on a take it or leave it basis, the employee was given only a few minutes to sign, and he wasn’t even provided a copy. Given the overwhelming procedural unconscionability entailed, the Court—using a “sliding scale”—finds that although giving up the Berman procedures is close call on substantive unconscionability, it is enough to make the agreement unenforceable.
Court of Appeal reversed.
Justice Chin dissents, at length. He dissented in Sonic II too. Among other things, he generally believes that the standard set up by the Court is discriminatory against arbitration and thus preempted by the FAA under the logic of U.S. Supreme Court cases like AT&T v. Concepcion. He also takes issue with the sliding scale approach, as applied here. Although a high degree of substantive unconscionability might require only a small amount of procedural unconscionability, he says the scale shouldn’t slide the other way. And Justice Chin also doesn’t agree that the contract is quite so procedurally unconscionable as the majority does.
A little late on this one. As I noted in my write up of the Court of Appeal decision in this case, the result—upholding an arbitration clause in an employment contract in the face of an unconscionability challenge—felt a little sideways with a Supreme Court decision generally referred to as Sonic II. So I was hardly surprised by the grant of review.
These are all wage-and-hour cases where an employee is entitled to an administrative remedy called a Berman hearing, which is “designed to give claimants a ‘speedy, informal, and affordable method’ for resolving wage disputes.” Sonic II suggested, but did not decide, that the waiver of a Berman hearing in a wage and hour case would be substantively unconscionable unless the arbitration procedure itself incorporated procedural elements of a Berman hearing.
The agreement in this case foresees an arbitration that would be very much like a state court trial. Indeed, it provides for full discovery and adopts a number of law and motion and trial procedures that are not required in an arbitration. But it does not incorporate the elements that make a Berman hearing easy for an employee to litigate. As the Court explains in an opinion by Justice Corrigan, in isolation, a trial-like arbitration isn’t substantively unconscionable. But an analysis of substantive unconscionability needs to look to the parties’ options but for the arbitration as a point of comparison. Here, that’s not a court trial, it’s a Berman hearing.
The agreement here was a “paragon of prolixity”—“only slightly more than a page long but written in an extremely small font.” (The parties fight over whether it was 7 or 8.5 point.) It made numerous opaque and sometimes ambiguous references to legal jargon such that a lay person would have difficulty in deciphering key terms.” It was offered on a take it or leave it basis, the employee was given only a few minutes to sign, and he wasn’t even provided a copy. Given the overwhelming procedural unconscionability entailed, the Court—using a “sliding scale”—finds that although giving up the Berman procedures is close call on substantive unconscionability, it is enough to make the agreement unenforceable.
Court of Appeal reversed.
Justice Chin dissents, at length. He dissented in Sonic II too. Among other things, he generally believes that the standard set up by the Court is discriminatory against arbitration and thus preempted by the FAA under the logic of U.S. Supreme Court cases like AT&T v. Concepcion. He also takes issue with the sliding scale approach, as applied here. Although a high degree of substantive unconscionability might require only a small amount of procedural unconscionability, he says the scale shouldn’t slide the other way. And Justice Chin also doesn’t agree that the contract is quite so procedurally unconscionable as the majority does.
Friday, November 1, 2019
A Split of Authority on Evidence Code § 1291’s Interest and Motive Test
Berroteran v. Ford Motor Co., No. B296639 (D2d1 Oct. 29, 2019)
Evidence Code § 1291 creates a hearsay exception for “former testimony,” which includes deposition testimony taken in a different case. Under § 1291(a)(2), former testimony is admissible when the witness is unavailable and the party it is offered against was also a party to the prior action. But crucially, that party must have had “the right and opportunity to cross-examine the declarant with an interest and motive similar to that which he was at the hearing.”
This case is one of a large number of cases alleging that a diesel engine in certain Ford trucks was defective. Ford moved in limine to exclude the videotaped depositions of nine current and former Ford employees. The deposition transcripts appear to reflect that Ford took no re-direct testimony. But Ford it did not submit any other evidence in connection with its motion. Instead, it relied on Wahlgren v. Coleco Industries, Inc., 151 Cal. App. 3d 543 (1984), which held that because a deposition is primarily a discovery device, a party never has the same motive to examine his own witness as at trial, so depositions from other cases don’t come in under § 1291. The trial court agreed and plaintiff took a writ.
The question is whether, during the earlier depositions of its employees, Ford had “an interest and motive similar” to that it has at the impending trial. Parting ways with Walhgren, the court finds it did and grants a writ.
Relying principally on the Law Revision Commission’s commentary from when the statute was proposed and enacted, Wahlgren held that the interest and motive analysis “should be based on practical considerations and not merely on the similarity of the party’s position in the two cases.” The court recognized that because a deposition is primarily a discovery device, “[a]ll respected authorities, in fact, agree that given [a deposition’s] limited purpose and utility, examination of one’s own client is to be avoided.” Thus, the party’s motive to examine one of its officers during a deposition was not similar to its motive to do so at trial.
The Court here, however, disagrees. Citing several federal cases interpreting a textually similar requirement in Federal Rule of Evidence 804, the Court explains that a party’s “tactical or strategic incentive” is not the crux of the interest and motive analysis. Instead, the Court compared the similarity of the issues in the prior litigations with those at issue here. Finding the overall issues similar, notwithstanding minor differences, the Court finds that “Ford had a similar motive to examine each of the nine deponents.” In a footnote, the Court refers to the Law Revision Commission commentary relied upon by Wahlgren as a “partial legislative history,” and declines to address it because Ford did not “proffer any evidence that there was a strategic reason for not cross-examining its witnesses[.]”
Writ granted.
This seems a little off to me. The reason Ford didn’t examine its witnesses in the earlier cases should be pretty obvious. For the most part, no lawyer examines his or her own witness at a deposition if they are available to testify at trial. At most, you might clarify an ambiguity or two so the record is clear for summary judgment. But taking a non-leading direct in a deposition can be pretty hard. Why give free testimony or a chance for the witness to mess up when you can just use a declaration for summary judgment and have the witness testify at trial? For whatever reason, Ford apparently didn’t see the need to put that in a declaration. It could just be that with Wahlgren in the pocket, Ford didn’t find it necessary.
But contrary to what the court implies, I do think tactical considerations matter. If the Legislature wanted to say that prior testimony is admissible when the party it is offered against was able to cross and the cases and testimony presented similar issues, it could have done that. Instead, it chose the words “interest and motive.” In ordinary English, a party’s motive is its subjective rationale for doing something. I don’t see how a party’s tactical decision regarding the utility of an examination—and indeed a tactical decision almost any lawyer would make under similar circumstances—wouldn’t inform its “motive” as that word is used in § 1291.
The Legislature clearly thought it should. As you might be able to glean from “he”-only gendering in § 1291, this is not a brand new statute. It was enacted in the original 1965 codification of the Evidence Code. (Here, at p. 433 of the .pdf.) Contrary to the characterization in the Court’s footnote, the Law Revision Commission Report that accompanied its enactment is no ordinary piece of “partial legislative history.” As this particular report (available here) explains, “[t]hese Comments are especially significant because of the consideration of them by the legislative committees that considered the code.” When, like here, the Law Revision Commission proposes a comprehensive codification of a body of law, and then that proposal is adopted by Legislature, its commentary is entitled to “substantial weight.” Carmack v. Reynolds, 2 Cal. 5th 844, 852 (2017).
Pardon the block quote, but this is pretty on point:
Of course, there are times when a party-affiliated witness might not be available for trial. Like if she is about to retire and move to Florida, and can’t be coaxed back. In those cases, it makes sense to examine the witness at a deposition. And there, you have the same motive as at a trial.
So, Wahlgren, which was decided before depositions were regularly videotaped, might have missed the fact that a deposition (especially a videotaped deposition) can sometime be used as trial testimony device. To that extent, the opinion could be overbroad if it states a per se rule. But the suggestion here—that a tactical choice not to examine an affiliated witness who will appear at trial is irrelevant to motive—is overbroad too.
And in any event, none of this probably matters because all of these witnesses testified as current or former employees of Ford addressing issues within the scope of their employment, many of them as persons most qualified. It is thus highly likely that the testimony should have come in anyway as party- or authorized admissions under §§ 1220 or 1222.
Evidence Code § 1291 creates a hearsay exception for “former testimony,” which includes deposition testimony taken in a different case. Under § 1291(a)(2), former testimony is admissible when the witness is unavailable and the party it is offered against was also a party to the prior action. But crucially, that party must have had “the right and opportunity to cross-examine the declarant with an interest and motive similar to that which he was at the hearing.”
This case is one of a large number of cases alleging that a diesel engine in certain Ford trucks was defective. Ford moved in limine to exclude the videotaped depositions of nine current and former Ford employees. The deposition transcripts appear to reflect that Ford took no re-direct testimony. But Ford it did not submit any other evidence in connection with its motion. Instead, it relied on Wahlgren v. Coleco Industries, Inc., 151 Cal. App. 3d 543 (1984), which held that because a deposition is primarily a discovery device, a party never has the same motive to examine his own witness as at trial, so depositions from other cases don’t come in under § 1291. The trial court agreed and plaintiff took a writ.
The question is whether, during the earlier depositions of its employees, Ford had “an interest and motive similar” to that it has at the impending trial. Parting ways with Walhgren, the court finds it did and grants a writ.
Relying principally on the Law Revision Commission’s commentary from when the statute was proposed and enacted, Wahlgren held that the interest and motive analysis “should be based on practical considerations and not merely on the similarity of the party’s position in the two cases.” The court recognized that because a deposition is primarily a discovery device, “[a]ll respected authorities, in fact, agree that given [a deposition’s] limited purpose and utility, examination of one’s own client is to be avoided.” Thus, the party’s motive to examine one of its officers during a deposition was not similar to its motive to do so at trial.
The Court here, however, disagrees. Citing several federal cases interpreting a textually similar requirement in Federal Rule of Evidence 804, the Court explains that a party’s “tactical or strategic incentive” is not the crux of the interest and motive analysis. Instead, the Court compared the similarity of the issues in the prior litigations with those at issue here. Finding the overall issues similar, notwithstanding minor differences, the Court finds that “Ford had a similar motive to examine each of the nine deponents.” In a footnote, the Court refers to the Law Revision Commission commentary relied upon by Wahlgren as a “partial legislative history,” and declines to address it because Ford did not “proffer any evidence that there was a strategic reason for not cross-examining its witnesses[.]”
Writ granted.
This seems a little off to me. The reason Ford didn’t examine its witnesses in the earlier cases should be pretty obvious. For the most part, no lawyer examines his or her own witness at a deposition if they are available to testify at trial. At most, you might clarify an ambiguity or two so the record is clear for summary judgment. But taking a non-leading direct in a deposition can be pretty hard. Why give free testimony or a chance for the witness to mess up when you can just use a declaration for summary judgment and have the witness testify at trial? For whatever reason, Ford apparently didn’t see the need to put that in a declaration. It could just be that with Wahlgren in the pocket, Ford didn’t find it necessary.
But contrary to what the court implies, I do think tactical considerations matter. If the Legislature wanted to say that prior testimony is admissible when the party it is offered against was able to cross and the cases and testimony presented similar issues, it could have done that. Instead, it chose the words “interest and motive.” In ordinary English, a party’s motive is its subjective rationale for doing something. I don’t see how a party’s tactical decision regarding the utility of an examination—and indeed a tactical decision almost any lawyer would make under similar circumstances—wouldn’t inform its “motive” as that word is used in § 1291.
The Legislature clearly thought it should. As you might be able to glean from “he”-only gendering in § 1291, this is not a brand new statute. It was enacted in the original 1965 codification of the Evidence Code. (Here, at p. 433 of the .pdf.) Contrary to the characterization in the Court’s footnote, the Law Revision Commission Report that accompanied its enactment is no ordinary piece of “partial legislative history.” As this particular report (available here) explains, “[t]hese Comments are especially significant because of the consideration of them by the legislative committees that considered the code.” When, like here, the Law Revision Commission proposes a comprehensive codification of a body of law, and then that proposal is adopted by Legislature, its commentary is entitled to “substantial weight.” Carmack v. Reynolds, 2 Cal. 5th 844, 852 (2017).
Pardon the block quote, but this is pretty on point:
On the other hand, paragraph (2) does not make the former testimony admissible where the party against whom it is offered did not have a similar interest and motive to cross-examine the declarant. The determination of similarity of interest and motive in cross-examination should be based on practical considerations and not merely on the similarity of the party’s position in the two cases. For example, testimony contained in a deposition that was taken, but not offered in evidence at the trial, in a different action should be excluded if the judge determines that the deposition was taken for discovery purposes and that the party did not subject the witness to a thorough cross-examination because he sought to avoid a premature revelation of the weakness in the testimony of the witness or in the adverse party’s case. In such a situation, the party’s interest and motive for cross-examination on the previous occasion would have been substantially different from his present interest and motive.So, regardless of what federal cases interpreting the Federal Rules of Evidence (which weren’t enacted till 10 years later) might suggest, in California, motive should mean motive.
Of course, there are times when a party-affiliated witness might not be available for trial. Like if she is about to retire and move to Florida, and can’t be coaxed back. In those cases, it makes sense to examine the witness at a deposition. And there, you have the same motive as at a trial.
So, Wahlgren, which was decided before depositions were regularly videotaped, might have missed the fact that a deposition (especially a videotaped deposition) can sometime be used as trial testimony device. To that extent, the opinion could be overbroad if it states a per se rule. But the suggestion here—that a tactical choice not to examine an affiliated witness who will appear at trial is irrelevant to motive—is overbroad too.
And in any event, none of this probably matters because all of these witnesses testified as current or former employees of Ford addressing issues within the scope of their employment, many of them as persons most qualified. It is thus highly likely that the testimony should have come in anyway as party- or authorized admissions under §§ 1220 or 1222.
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