Davis v. Kozak, No. 156234A (D1d3, Aug. 19, 2020)
The Court of Appeal finds that an arbitration agreement in an employment was unconscionable when it: (1) limited default discovery to only two depositions—no documents, interrogatories, etc.—subject to a showing to the arbitrator of “sufficient cause” to get more; (2) carved out the employer’s claims under a confidentiality and invention agreement from the scope of arbitrability.
Affirmed.
Williams v. 3620 102nd St., Inc., No. B297824 (D2d8 Aug. 24, 2020)
Arbitration clauses in residential leases are void as against public policy under Civil Code § 1953. And since residential leases generally don’t have anything to do with interstate commerce, in most situations, § 1953 is not going to be preempted by the FAA. So no arbitration here.
Affirmed.
Akopyan v. Superior Court, No. B304957 (D2d7 Aug. 24, 2020)
This case got reversed and remanded last fall with an order that the trial court conduct a full Batson inquiry over the Defendants having exercised peremptory strikes against a number of Hispanic jurors. When the case got back to the superior court, Plaintiff exercised the other kind of peremptory strike—against the trial judge under Code of Civil Procedure § 170.6. The court accepted the strike and Defendant took a writ, which the Court of Appeal grants.
The issue here is the application of § 170.6 on a remand. The statute does permit a new strike after a reversal and a remand for a new trial. But conducting the Batson inquiry ordered in the prior reversal is not a “new trial” in any sense of that term. And policy-wise, it’s also particularly important for the same judge to do the full Batson analysis since that judge oversaw the allegedly problematic voir dire in the first instance. Only if the trial judge finds a Batson violation will there be a new trial. So the Court of Appeal says the trial court should have put the § 170.6 on ice till the Batson inquiry is done and then granted it only if he ordered a new trial.
Writ granted.
Employee signed an acknowledgement of an employee handbook that contained an arbitration clause. The acknowledgment didn’t specifically call out the arbitration provision—there was no requirement of separate initialing or something like that. Plaintiff now says he’s not bound to the agreement. But that’s wrong. In Sanchez v. Valencia Holding Co., LLC, 61 Cal. 4th 899, 914 (2015) the California Supreme Court held that there is no obligation to highlight an arbitration clause in a contract and that if someone doesn’t bother to read a contract before signing it, it is their problem.
Of course, the context of the signing does go to procedural unconscionability. The fact that a clause is buried in a take it or leave it employee handbook gives rise to at least mild procedural unconscionability. And here, two parts of the agreement were substantively unconscionable—it required an employee to pay its pro rata share of the arbitrator’s fees, and it permits a prevailing employer to recover its attorneys’ fees. Both of those violate Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal. 4th 83, 112 (2000). The Court of Appeal, however, finds that these terms are severable. So remands for the trial court to sever the unconscionable terms and to otherwise compel the case to arbitration.
Reversed.
Starks v. Vortex Indus., Inc., No. B288005 (D2d1 Aug. 25, 2020)
Yet again, the Court of Appeal finds that a judgment in a PAGA case is res judicata to another PAGA case alleging the same violations by a different aggrieved employee. That’s not particularly controversial.
This case, however, illustrates how treating PAGA claims as a qui tam and not a class action can yield some pretty funky results. Plaintiff #1 and Plaintiff #2 both have PAGA claims over the same violations. Because Plaintiff #1 was the first to file by about six monts, Plaintiff #2’s case got stayed.
During the stay, Plaintiff #1 settled. The settlement should have raised some red flags. Plaintiff #1’s lawyers got $630k. Plaintiff #1 got a $10k incentive award. And then $25k was allocated as the penalty for the PAGA violation, which get split 75/25 between the LDWA and the aggrieved employees. So that’s $18,750 for the LWDA and $6,250 for the aggrieved employees, with each aggrieved employee getting $33.30 each. Suffice it to say, a settlement like that that would probably never get approved for a class action.
But this isn’t a class action. PAGA requires notice to the LDWA and that the court review and approve any settlement. See Labor Code § 2699(l)(2). So after the deal was struck, Plaintiff #1 mailed the settlement agreement to the LDWA. None of the other aggrieved employees got notice. The parties moved for approval of the settlement on an ex parte basis. The ex parte didn’t explain the potential value of the claims and it did not give any information that would have permitted a loadstar calculation for Plaintiff #1’s attorney’s fees. And it included a specific request that Plaintiff #2 didn’t need to be informed of the settlement. The LDWA never objected, and the trial court approved the settlement and entered judgment.
Eventually Plaintiff #2 got word of the settlement. About three weeks after the judgment effectuating the settlement had been entered, Plaintiff #2 filed a motion to vacate under Code of Civil Procedure § 663. A few days later, he also filed a motion to intervene. While all this was going on, the LDWA cashed its $18,750 check. Also, Plaintiff #2’s wife got his $33.30 check in the mail and cashed it without telling Plaintiff #2.
The trial court denied Plaintiff #2’s intervention motion as untimely. It denied his § 663 motion because the LDWA—on whose behalf Plaintiff #2 was purporting to act—had cashed its check and thus waived any ability to object to the judgment. And then it granted summary judgment in Plaintiff #2’s case on because of the preclusive effect of the judgment in Case #1.
Plaintiff #2 appeals in both cases. The Court of Appeal affirms. If you think of a PAGA as a qui tam, each step of its analysis basically makes sense. It’s generally not ok to wait till judgment to intervene. And if a principal (LDWA) accepts the benefit of a settlement, it should not be able to object through some other agent (like Plaintiff #2). And as I said at the top, the res judiciata effect over successive PAGA actions based on the same violations is not controversial.
But treating the analysis as a purely qui tam question leaves out one group of constituents: the other aggrieved employees, who split 25 percent of the penalties. In this case, they got screwed. Because the LDWA is chronically underfunded, it does not have the resources to examine the merits of proposed settlements. So nobody, at any point in the case, was looking out for the interests of the other aggrieved employees. Indeed, although they had money on the line, they didn’t get so much as a notice.
That, generally, is the gist of Justice Bendix’s dissent. She agrees that the intervention was untimely, but she thinks the court should have reached the merits of the § 663 motion and vacated the judgment. As she sees it, because the LDWA is so understaffed, its cashing of a settlement check isn’t really indicative of approval of anything. It is certainly not knowing and voluntary enough to make out a waiver. Nor, for that matter, was Plaintiff #2’s wife’s act of cashing his check enough to show that Plaintiff #2 knowingly accepted the settlement’s benefits.
And given that Plaintiff #2 had a pecuniary interest that was affected by the terms of the settlement, he should have been considered a “party aggrieved” for both the purposes of § 663 and § 902, which governs standing on appeal. So his objections should have been taken on the merits. And given that the terms of the settlement were so uneven they suggested collusion, the trial court abused its discretion by failing to “review and approve” the agreement. Thus, the trial court should have vacated the judgment and conducted further inquiry. And without that judgment, nothing precluded Plaintiff #2’s case.
I get the feeling that a petition for review is in the future here.
Affirmed.
Thurston v. Fairfield Collectables of Ga., LLC, No. E072909 (D4d2 Aug. 26, 2020)
Defendant, which is located in Georgia, sells models over the Internet. It doesn’t have employees or stores in California, but it makes about 8 percent of its sales—about $350k annually—to customers here. Plaintiff, who is blind, brought an Unruh Act claim alleging that Defendant’s website did not accommodate her disability. The trial court quashed service for lack of personal jurisdiction.
So that gets us into the morass that is personal jurisdiction over the Internet. Personal jurisdiction requires: (1) contacts that demonstrate purposeful availment of the law of the forum state; (2) a connection between the contacts and the claim; and (3) the satisfaction of a gestalt test of overall reasonableness.
There are a whole bunch of tests for personal availment in the Internet context. The easiest one looks to whether the defendant used its Internet presence to make a substantial amount of sales to persons within forum state. Other tests also look for some state-specific direction of activity. The Court of Appeal here says that substantial sales are enough. But even if more direction were needed, there was some evidence that Defendant also mailed catalogs to Californians who requested them.
The Court says that relatedness is also satisfied. Even though Plaintiff never actually bought anything, her interaction with the website through which Defendant sold stuff to Californians was good enough.
Finally, the exercise of jurisdiction was reasonable. Although Defendant argued that it was unfair to force it to comply with the laws of 50 different states, the jurisdiction question is different than the choice of law one. Just because Defendant can be made to litigate here, doesn’t mean California law will ultimately apply.
Justice Menetrez dissents. His point is basically about relatedness. Because Plaintiff didn’t buy anything, her claim isn’t really related to any of Defendant’s California sales, regardless of volume. Her claim is, instead, based on the way that Defendant operated its website. But nothing about that purposefully availed itself of California. To me, that seems like a pretty good point.
Affirmed.
Koussaya v. City of Stockton, No. C089159 (D3 Sept. 21, 2020).
This case has crazy facts involving a bank robbery, hostages, a high-speed chase, and a firefight where the cops eventually killed everyone on the scene, including one of the hostages. Plaintiff, who correctly surmised the SWAT team in pursuit was going to blaze into the escape vehicle as soon as it was stopped, jumped out of the car when it was moving at a very high speed. She survived, but was hurt badly. She sued the cops and the city on various theories. The trial court granted summary judgment for defendants, and the Court of Appeal affirms.
Personally, the merits of the SJ seem debatable. But that is best left for civil rights lawyers. The Court of Appeal, however, does find that the trial court erroneously excluded some hearsay, albeit harmlessly. The City’s Chief of Police had requested that an outfit called the Police Foundation to prepare a report about the way the incident was handled. The Foundation’s report made some findings that were critical of the way the police handled the incident. The City objected to admission of the findings on hearsay grounds, which the trial court sustained.
That was error. The adoptive admission exception to the hearsay rule renders an out-of-court statement admissible for its truth when “the statement is one of which the party, with knowledge of the content thereof, has by words or other conduct manifested his adoption or his belief in its truth.” Evid. Code § 1221 (gendered language original). Here, the Chief of Police admitted during his deposition that he said he agreed with the report during a press conference. And while the press conference statement was also out of court, that was only admitted for the fact that it had been stated, not that it was true. Section 1221 does not require the adoption to be subjectively believed, just “manifested.”
FWIW, the last point seems a little unnecessary, for two reasons. First, deposition testimony about something that the witness said out of court is still deposition testimony. So generally, regardless of a hearsay issue, it is admissible under Code of Civil Procedure § 2025.620. But the substance of the depo testimony isn’t 100 percent clear. If the Chief denied agreement with the report during the deposition, but admitted he made the press conference statement otherwise, I guess the not-for-the-truth point might be more germane.
Second, although the foundational facts to establish a hearsay exception need to be proven up to the court under Evidence Code § 405, that proof can likely be based on inadmissible evidence. California law doesn’t seem super clear on the issue, at least not anywhere I could find in some basic research. But the Federal Rules of Evidence are explicit about it. See Fed. R. Evid. 1101(d)(1) (“These rules . . . do not apply to . . the court’s determination, under Rule 104(a), on a preliminary question of fact governing admissibility”). There doesn’t seem to be strong policy reason why California state law would be otherwise.
Affirmed.
Marshall v. Webster, No. C088240 (D3 Aug. 27, 2020)
An order granting an anti-SLAPP motion is appealable under Code of Civil Procedure § 425.16(i). Like other appealable orders, the order is appealable when made--there doesn’t need to be some further formalization before the right to appeal is ripe. So Rule of Court 8.104’s 60-day clock to file a notice of appeal starts to run when the clerk mails the order.
Here, the trial court granted the motion in a minute order, which was promptly served on the parties by the clerk. Then the defendant submitted a proposed order granting the motion, which the court ultimately signed about six weeks later. But as the Court of Appeal explains, the clock started from the first ruling. The court unequivocally granted the motion in the first order, which made it appealable. There was no need for further proceedings or a more formal order by the trial court. Which means this appeal was filed too late.
Appeal dismissed.
Robinson v. So. Counties Oil. Co., No. A158791 (D1d4 Aug. 13, 2020)
The fact that a plaintiff bringing a PAGA claim stands in the shoes of a state agency is generally useful to plaintiffs, since, for instance, it lets them get around arbitration agreements and class action waivers. But in this case it isn’t. Here, a different employee brought and settled a prior PAGA claim, basically for the same violations. And since both claims are effectively brought by the DFEH, this new plaintiff’s claim is barred by res judicata.
Affirmed.
Bolger v. Amazon.com, No. D075738 (D4d1 Aug. 13, 2020)
This isn’t really civil procedure, but seems like it’s gonna be a big deal.
The 4/1 here holds that Amazon.com can be liable in strict products liability when a third-party manufactured laptop battery that Amazon offered for sale in its marketplace exploded and burned the plaintiff.
Plaintiffs here bring a taxpayer action under Code of Civil Procedure § 526a and a writ of mandate, challenging the legality of a confidential informant program the OC Sheriff is alleged running in the county jails.
The trial court dismissed for lack of standing. But that’s wrong.
Section 525a conveys broad standing in taxpayers to sue to enjoin unlawful government activity. And although § 3369 prohibits injunctions to “enforce a penal law,” against criminal conduct, it doesn’t apply here, even though some of the allegations implicate the OC DA and Sheriff in violating the provisions of the Penal Code that codify the Brady doctrine. As the Court explains § 3369’s reference to penal law is to criminal conduct, not criminal procedure.
There’s also standing for the writ claim. Mandamus standing generally requires the plaintiff to be beneficially interested. But there’s an exception for public interest claims. The exception is subject to some prudential limitations. For instance, it can’t be used to collaterally attack other proceedings. But none of them apply here.
Reversed.
