Monday, August 31, 2020

Did the Stay Affect Service?

Steciw v. Petra Geosciences, Inc., No. G057375 (D4d3 Jul. 29, 2020)

Defendant here was originally sued as a doe. Almost three years into the case, Plaintiff discovered Defendant’s identity. Plaintiff subbed in the doe with Defendant. Ultimately, Defendant got served three years and 38 days after the complaint was filed. Defendant moved to dismiss under Code of Civil Procedure § 583.210(a), which requires service of summons within three years of the filing of a complaint. The trial court granted the motion. Plaintiff appealed.

The three year limit in 583.210 is subject to statutory tolling. One grounds is if “prosecution of the action or proceedings in the action was stayed and the stay affected service.” § 583.210(b). Here, the case was stayed for nine months pending some ADR. During that time, discovery was stayed. The Court of Appeal explains that service needs only to be “affected” not “prevented.” So the fact that the stay didn’t prevent Plaintiff from serving Defendant isn’t dispositive. Service could have been “affected,” if, for instance, the stay delayed discovery in which Plaintiff ultimately discovered Defendant’s true identity. 

But the record on appeal is unclear as to the nexus between discovery and Defendant’s identity. On one hand, if discovery was truly crucial or even important in learning the identity, the tolling would apply. But on the other, if this was something Plaintiff could readily have figured out informally, the delay in discovery would not have affected the practical ability to accomplish service. The trial court needs to figure that out on remand.

Reversed and remanded.

Sunday, August 30, 2020

Grounds vs. Reasons

King v. U.S. Bank, N.A., No. C085276 (D3 Jul. 28, 2020)

Plaintiff, an employee of a Bank, won a $24.4 million jury verdict in a wrongful termination and defamation action based on the Bank’s having trumped up a bunch of fake grounds for discipline. The damages award has several elements: front and back pay, occupational harm, reputational injury, and emotional distress. Plus $15.6 million in punitives. On a new trial motion, the trial court issued a remittur on various grounds, reducing the judgment to $5.6 million, which Plaintiff accepted. 

The Bank appeals on the insufficiency of the evidence on a host of different issues. As is generally the case, it loses.

Plaintiff appeals the grant of the new trial motions and remittitur. Generally, a plaintiff who accepts a remittitur can’t appeal. But he can cross-appeal if the defendant does. The rationale is that the appeal deprives the plaintiff of the benefit of the remittitur.

The Court of Appeal reverses part of the new trial grant, where the trial court ruled that some of the categories of damages were repetitive. The reasons stated in the trial court’s order weren’t supported by the record.

It also reverses a reduction of the $1 million emotional distress award to $25k, but on a procedural grounds. As I have discussed elsewhere, the Code of Civil Procedure imparts very specific requirements on a trial court judge who grants a new trial on certain grounds, including excessive damages. Under § 657, the court needs to issue an order that states both the statutory grounds for the order as well as its reasons. A statement of reasons doesn’t need to be a tome. But it does need to make at least some reference to the evidence that is sufficient to facilitate appellate review. And if the order is procedurally inadequate, the new trial is reversed and the original judgment automatically reinstated. There’s no chance to fix anything on remand.

On the emotional distress reduction, the court’s order stated only that it “finds that the evidence does not clearly support the emotional distress damages award and the award is excessive,” and that the award should accordingly be reduced to $25k. That’s not good enough because it’s little more than a statement of grounds of excessive damages. To hold up, it needed to at least refer to what aspects of the evidence the trial court found to be inadequate.

Finally, in an order that was adequate to hold up under § 657, the trial court found that the evidence of the Bank’s misconduct was sufficient to withstand only a 1:1 ratio of compensatory to punitive damages. The Court of Appeal does not agree with certain aspects of that analysis. But, subjecting the award to the independent due process review required of punitive awards, the Court of Appeal nonetheless agrees that the evidence supports only a 1:1 ratio. Therefore, the punitives were reduced to about $8 million.

Affirmed on modified judgment of $17,179,392.

Friday, August 28, 2020

Estoppel Follows the Underlying Merits

Alston v. Dawe, No. G057157 (D4d3 Jul. 27, 2020)

This is an appeal of a granted anti-SLAPP motion in a malicious prosecution case. It’s a bit of a Russian doll surrounding the issue of the merits prong of the analysis, touching on the “favorable termination” element of malicious prosecution and the functioning of collateral estoppel.

Basically, this is case #3 between these parties. Plaintiff here won case #1, wherein it got a ruling in its favor on a Key Issue. Defendant here sued Plaintiff here in case #2, which got dismissed on collateral estoppel grounds because Key Issue had already been determined between the parties. The Plaintiff here sued Defendant here for malicious prosecution. 

So the basic question is whether the dismissal of case #2 on collateral estoppel grounds is prima facie evidence of favorable termination, sufficient for Plaintiff to meet her burden on the merits prong of the anti-SLAPP analysis. The Court of Appeal holds it is.

Favorable termination requires a merits-based dismissal. Procedural dismissals—lack of jurisdiction, mootness, standing—don’t count. A prior Court of Appeal opinion said that res judicata was one of those procedural grounds that didn’t give rise to a favorable termination. JSJ L.P. v. Mehrban, 205 Cal.App.4th 1512, 1527 (2012). But the court here declines to follow it, at least under the facts of this case. 

As the court explains, collateral estoppel can bind parties to both substantive and procedural rulings from prior litigation. When the prior ruling is a substantive matter decided on the merits, the application of collateral estoppel to dismiss a later cased based on that ruling is on the merits too. So here, where the Key Issue was decided on the merits in case #1, and the fact that it was caused the dismissal of case #2, the dismissal of case #2 was a favorable termination.

Reversed.

Wednesday, August 26, 2020

The Standard of Review Incorporates the Burden of Proof.

Conservatorship of O.B., No. S254938 (Cal. Jul. 20, 2020)

Factual findings get appealed for a sufficiency of the evidence under substantial evidence standard of review. That standard asks whether, crediting the inferences in favor of the finding, there was adequate evidence to sustain the finding as a matter of law. It’s basically the same amount of evidence necessary to defeat a summary judgment or jnov motion. The question before the Supreme Court this case is: how is that affected by the burden of proof?

This is a conservatorship case where the clear and convincing evidence burden of proof applies. That burden—more than preponderance but less than beyond a reasonable doubt—asks whether the evidence makes the fact in issue “highly probable.” So, it seems pretty uncontroversial that on an appeal for the sufficiency of the evidence, the reviewing court should ask whether there was enough evidence from which the trier of fact could find that the disputed fact was, indeed, highly probable. Logically, that needs to be somewhat more or better than the evidence required to sustain a finding that a fact is more likely than not. That would equate the standard with the way the burden of proof applies in the SJ or JNOV contexts. See Aguilar v. Atl. Richfield Co., 25 Cal. 4th 826, 850 (2001).

Unfortunately, some older Cal. Supreme Court cases were not super clear on the issue. And there are some Court of Appeal cases that get it wrong—many relying on some dicey language from Witkin—and hold that the substantial evidence standard does not account for the burden of proof. But the Chief Justice, writing for a unanimous Court, clears that up now.

Court of Appeal reversed.

Monday, August 24, 2020

The LWDA Doesn't Delegate Squat

Bautista v. Fantasy Activewear, Inc., No. B297070 (D2d1 Jul. 24, 2020)

Another case involving PAGA and arbitration. The clause has a PAGA representative action waiver and a delegation of arbitrability to the arbitrators. Defendant says the validity of the waiver has to be decided by the arbitrators. But that misses the point, which is the same point why PAGA claims aren’t arbitrable in the first place. The true party in a PAGA claim is the government—the Labor and Workforce Development Agency. Although plaintiffs bring PAGA claims on behalf of the LWDA, they can’t sign pre-dispute arbitration agreements on behalf of it—they don’t have the authority. Thus, since the LWDA is not a party to the agreement, it also could not have agreed to any delegation. The validity of the waiver was a matter for the court to decide, which it correctly did.

Affirmed.

Monday, August 17, 2020

$29k Is a Lot of Rent for 15 Minutes

Graylee v. Castro, No. G057901 (D4d3 Aug. 4, 2020)

To settle an unlawful detainer case, Landlord and Tenants stipulated on the record that Landlord was entitled to a $28,970 judgment, but it could only be entered if tenant failed to vacate by 3:00 p.m. on October 31. Tenants surrendered their key at 1:15 p.m., but told Landlord they weren’t going to hit the 3 p.m. deadline. Tenants asked for an extension, which was denied. Tenants ultimately vacated at some point between 3:15 p.m. and 10:30 a.m the following day.

Landlord moved to enter the judgment, which the trial court ultimately did. But the Court of Appeal reverses, holding that the judgment was an unenforceable penalty under Civil Code § 1671(b). Liquidated damages are permissible, but only if they are a reasonable estimate of the harm caused by a breach. In measuring the reasonableness, the court looks to the stipulation, not the underlying lease. Here, Tenants missed the deadline by somewhere between an hour and a day. $28,970 was not a reasonable estimate of the harm caused by that delay.

Reversed.

Wednesday, August 12, 2020

Can’t Split a PAGA Claim

Olabi v. Neutron Holdings, Inc., No. A156990 (D1d5 Jun. 19, 2020).

Plaintiff sued erstwhile employer for PAGA and under the UCL. Both claims are based on misclassification as an independent contractor. Plaintiff’s employment contract has an arbitration clause, but it carves out PAGA claims, which aren’t arbitrable anyway. Defendant moved to compel the UCL claim to arbitration, but Plaintiff dismissed the claim before the hearing. The trial court denied the motion to compel.

Defendant tries to argue that, even if the PAGA claim isn’t arbitrable, it’s entitled to arbitrate the gateway misclassification issue that underlies it. That really doesn’t make any sense. But the Court decides it doesn’t need to reach the issue because the arb clause clearly carved out PAGA claims—whole PAGA claims—to which proof of the misclassification was an essential part.

Affirmed.

Tuesday, August 11, 2020

It Is Very Hard to Waive the Right to Jury Trial

 Chen v. Lin, No. JAD19-10 (L.A. Super. App. Div. Nov. 14, 2019)

 This is a UD case where the Tenant (a pro se) demanded a jury trial. But she failed to comply with some of the procedures in the court’s general order re for preparing for jury trials in UD cases. Stuff like submitting jury instructions and verdict forms and meeting and conferring on various trial issues. So the trial court struck her jury demand. After losing the UD, tenant appealed, again pro se.


The L.A. Superior App. Div. holds that striking her demand was per se reversible error. Under Article I, section 16 of the California State Constitution, a jury trial can be waived only on grounds authorized by statute. Most of those grounds are listed in Code of Civil Procedure § 631(f). Failing to diligently prepare for trial is not one of them. Thus, although Tenant could have suffered other sanctions for failing to prepare, the trial court had no authority to strike her jury demand.


Reversed.

Monday, August 10, 2020

Another Bite at the Apple

Eghtesad v. State Farm Gen. Ins. Co., No. A147481 (D1d2 Jun. 29, 2020)

Plaintiff here filed a form complaint against an insurance company. The factual allegations, which included claims for breach of contract, bad faith, and slander, were less than clear. Defendant demurred. Plaintiff, pro se at the time, failed to file an opposition, but did ask the trial court for a continuance to try to settle and hire a lawyer. The trial granted a couple of more continuances based on Plaintiff’s claims to have been injured in an auto accident. But eventually the court’s patience ran out. It denied a final continuance and, plaintiff having failed to respond, granted the demurrer without leave and dismissed the case with prejudice.

That was not a good idea. In California state court, it is an abuse of discretion not to give leave after the granting of a demurrer to an original complaint unless the face of the complaint shows there is no way it can be amended. Here, plaintiff’s original complaint was not very well organized, but there were facts in it that potentially suggested Plaintiff could allege a claim for breach of contract and bad faith. The Court further notes that, because a failure to afford leave to amend can be reversed even if Plaintiff failed to ask for leave from the trial court, a plaintiff’s representation in an appellate brief that if given the opportunity certain facts can be alleged is adequate to support a reversal.

Plaintiff’s slander claim, on the other hand, fares less well. The person who made the allegedly defamatory statements in that claim is actually not the insurance company. It was a third party, neither named as a defendant nor served. And at oral argument, Plaintiff admitted that the statements were made, and he knew they were made, in 2015. So even if Plaintiff could amend to name the right defendant and serve him, the one-year statute on defamation has long run. Since that incurable defect was plain from the complaint itself and Plaintiff’s admissions, no amendment is going to fix it.

Reversed.

Friday, August 7, 2020

Welcome to Class Arbitration

Garner v. Inter-State Oil Co., No. C088374 (D3 Jul. 23, 2020)

Employee’s contact has an arb clause in it that requires him to take any and all disputes, including class actions, to arbitration. Then the contract acknowledges by doing so, he was waiving any right to a jury trial or to participate in a civil class action. Trial court compelled the individual claims, but dismissed the class claims, finding that plaintiff agreed not to litigate a class action. But the Court of Appeal reverses. Plaintiff didn’t waive the right to bring a class action. He waived the right to bring a class action in court. The arb provision itself said he needed to litigate class actions in arbitration. So that’s what he can do.
 

Reversed in part.

Wednesday, August 5, 2020

Attorneys’ Fees: Setting Precedent Creates a Significant Benefit

Doe v. Regents of the Univ. of Cal., No. B293153 (D2d6 Jun. 29, 2020)

A UCSB Student who appears to have been shabbily treated in the Title IX disciplinary process. In administrative mandamus proceedings, he won a PI requiring the school to revoke a temporary suspension. The school ultimately gave up and the case was dismissed as moot. Student moved for fees under Code of Civil Procedure § 1021.5, which codifies the private attorney general doctrine. The trial court denied the motion.

A party can obtain fees under § 1021.5 when: (1) it is “a successful party” in an “action”; (2) the action “has resulted in the enforcement of an important right affecting the public interest”; (3) the action has conferred “a significant benefit, whether pecuniary or nonpecuniary, . . . on the general public or a large class of persons”; and (4) the necessity and financial burden of private enforcement are such as to make the award appropriate. 

The second part of the third element is the principal point of dispute here. How does an order that affects the college enrollment of a single student confer a significant benefit on the general public or a large class of people?

As the Court of Appeal explains, setting precedent on important constitutional issues can benefit the general public even when the relief sought is only individualized. Student’s litigation revealed a number of substantial due process problems with the way UCSB was handling Title IX investigations, and set an important precedent that a party could get a PI in an administrative mandamus case to enjoin a temporary suspension. Further, Student’s litigation will deter the school in failing to comply with it’s Title IX processes in the future, and appears to have motivated, so some degree, the Department of Education to get involved in obtaining a consent decree requiring USCB to promptly resolve investigations. Overall, the Court of Appeal says that’s enough to meet the third element.

Reversed.

Tuesday, August 4, 2020

Arbitration Appeal Smorgasbord

Kec. v. Superior Court, No. G058119 (D4d3 Jul. 9, 2020)

Martinez v. BaronHR, Inc., No B296858 (D2d4 Jul 8, 2020)

Lonky v. Patel, No. B295314 (D2d2 Jul. 2, 2020)

Collie v. The Icee Co., No. E071654 (D4d2 Jul. 20, 2020)

Dougherty v. Roseville Heritage Partners, No. C087224 (D3 Mar. 30, 2020)

Lange v. Monster Energy Co., No. B294091 (D2d Mar. 12, 2020)

Dennison v. Rosland Capital LLC, No. B 295350 (D2d8 Apr. 1, 2020)

Torrecillas v. Fitness Intl LLC, No. B296194 (D2d8 Jul. 21, 2020)


Here’s a whole raft of arbitration cases. Some came out right before or as the pandemic shutdown began and I didn’t manage to get to them. Along with a few new ones.

In Kec, the arb agreement contained a class/representative action waiver that specifically said it’s not severable and that the whole arb agreement is void if any part of it is invalid. And since the clause factually encompassed plaintiff’s PAGA claim, which can’t be compelled to arbitration, the whole thing goes down.

Writ granted.

In Martinez, an employment agreement had an arb clause. It included bolded language that the parties were waiving the right to jury trial. Next to that was a spot for the parties to initial. But they didn’t initial. They did, however, sign the agreement. The Court of Appeal holds the failure to initial doesn’t matter. By signing the agreement, Employee agreed to the whole thing notwithstanding the failure to initial. 

Reversed.

In Lonky an arbitrator spread out her rulings over three interim and one final award. The final award reconsidered a statute of limitations issue in one of the interim awards, which led to an increased award of damages. The final award also awarded costs and fees. Defendant argued that the reconsideration was improper because Code of Civil Procedure § 1284 puts a 30-day limit on an arbitrator’s ability to correct an award. 

But an interim award is not an “award” as that term is used in the Arbitration Act. Awards are basically like judgments—final resolutions of the controversy between the parties. There’s nothing wrong with conducting an arbitration in phases. But still it generally only produces one award. Nor was plaintiff judicially estopped for referring to one of the interim awards as an award at some earlier point in the litigation. 

Reversed.

In Collie, plaintiff brought a single cause of action under PAGA. PAGA claims are not arbitrable. And contrary to Defendant’s arguments, nothing about Epic Systems Corp. v. Lewis, --- U.S. ---, 138 S. Ct. 1612 (2018), says otherwise. Epic rejected the proposition that class action waivers are illegal under the National Labor Relations Act as an impingement on employee collective action. That has nothing to do with the reason PAGA claims aren’t arbitrable, which is that a PAGA plaintiff is suing in the place of state, which has not consented to arbitration. 

Affirmed.

And then Dougherty, Langhe, and Dennison, all held that arbitration provisions were unconscionable, while Torrecillas, held one was not. The stricken provisions all had some combination of strict limits on discovery, limits on punitive damages, limits on the right to recover statutory attorneys fees, waivers of injunction bonds, stipulations to irreparable injury, and waivers of jury for non-arbitrable claims. The provisions in Torrecillas didn’t have any of that stuff. 

Three affirmances and one reversal.

The Jurisprudence of Signification

Wood v. Superior Court , No. A168463 (D1d2 Mar. 14, 2024). Yes. You can change your legal name to Candi Bimbo Doll if you want to. See Cod...