No Free Pass for Misconduct While Away for the Summer in Federal Court.

Moofly Prods., LLC v. Favila, No. B294825 (D2d1 Mar. 4, 2020)

Two issues here: 1. Can a superior court issue terminating sanctions based on conduct that occurred while a case, since remanded, had been removed to federal court? 2. When is there a right to jury trial on a claim for fraudulent conveyance?

The terminating sanctions issue arose from discovery misconduct—including violating court orders—that occurred after the case had been removed based on a putative copyright infringement claim but before it was remanded. The magistrate judge recommended terminating sanctions. The district court, however, dismissed the copyright claim and declined jurisdiction under 28 U.S.C. § 1367(c)(3) to send the remainder of the case back to state court. Although the district judge found the recommendation for terminating sanctions to be well-founded, it left the ultimate decision to the superior court on remand.

Defendant renewed the terminating sanctions motion on remand. The superior court dismissed the claims, and the Court of Appeal affirms. The conduct at issue rose to the level of terminating sanctions. Plaintiff wholesale refused to participate in discovery and ignored court orders to the contrary. Given the lack of authority otherwise, that Plaintiff’s misconduct occurred while the case was removed to federal court did not matter.

The dismissal of Plaintiffs claims left standing Defendants’ cross-claims for fraudulent transfer of some IP between two related entities controlled by Plaintiff and his wife. Those claims got tried to the court, which found for Defendants. Plaintiff now claims that deprived it of its right to jury trial. 

Generally, claims for fraudulent conveyance or equitable trust are equitable and carry no right to jury trial. There is an exception, however, for claims to recover a determinate sum of money. Because that kind of claim most closely resembles remedies available at law in 18th Century England—replevin, trover, money had and received—the U.S. Supreme Court has determined that the right to jury trial would attach to such claims. See Granfinanciera, S.A. v.Nordberg, 492 U.S. 33 (1989). 

The Seventh Amendment hasn’t been incorporated against the states. But California courts would generally reach the same result under state law—the key distinction being that California law looks to the law of England in 1850 instead of 1789. In any event, the res in this case isn’t a sum certain of money, it’s intangible IP. Recovery of that kind of property has always required and still requires a resort to equity. So there’s no right jury trial.

Affirmed.

Sweating the Facts on Remand

Strategic Concepts, LLC v. Beverly Hills Sch. Dist., No. B264478M (D2d6 Jun. 6, 2018)

A while back, the Court of Appeal reversed and remanded a jury verdict for the plaintiff. The reversal was without qualification; it put no limit on the issues to be decided on remand. On a petition for rehearing, however, plaintiff asks for the modification of some facts in the opinion, arguing they will give her a problems on remand. The Court of Appeal doesn’t agree. In a situation where there’s an unqualified reversal and remand of a trial verdict, the facts recited in an appellate opinion aren’t binding on the ultimate merits. Which makes sense, since the Court of Appeal generally isn’t allowed to find facts on the first instance.

Reversed and remanded.

Turnabout on Remand

Crossroads Investors, L.P.  v. Fed. Nat’l Mortgage Assoc., No. C072585A (D3 Jul. 27, 2017)

This is an odd one. The Court of Appeal issued an opinion affirming the denial of an anti-SLAPP motion. The Supreme Court issued a grant-and-transfer, ordering reconsideration based on an intervening decision. And now, the the Court of Appeal reverses whole hog, in a ruling that is inconsistent with is prior decision in ways untouched by the intervening Supreme Court case.

Ok =< 10(Damages + Brandts)

Nickerson v. Stonebridge Life Ins. Co., No. B234271 (D2d3 Nov. 3, 2016)

This is our third go-round on this case, having covered the original D2 opinion and the Supreme Court’s partial reversal. The Supremes held that Brandt fees—fees incurred by an insured in its effort to obtain wrongfully denied coverage—should count in the denominator for the 9:1 or 10:1 ratio that more or less limits the ratio between actual and punitive damages under the constitutional Gore/State Farm due process framework.

On remand, the court runs through a full analysis on the puni award, finding that although the jury award of $19 million on a compensatory award of $35,000 and 12,500 in Brandt fees was out of whack, a punitive award of ten times that sum—$475,000—would hold up under Gore/State Farm. So the court vacates the new trial award that pertained to the remittitur and orders the trial court to amend the judgment to reflect punitives of $475,000. 

Affirmed, as modified.

This Fight Doesn't Seem Over

Franco v. Arakellian Enters., No. B232583 (D2d1, as modified Mar. 11, 2015)

This is an employee class action where the plaintiff asserts claims under both the Labor Code Private Attorney General Act as well as other statutes. This is the Second District’s third shot in this case, which has been ping-ponging through the courts as the law regarding the arbitrability of certain claims kept changing.  This time, the court gets the case on transfer from the California Supreme Court to reconsider in light of Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014), which held that PAGA claims are not arbitrable under arbitration clauses in an employment agreement because the claims actually belong to the state government, even if they are prosecuted by an employee on a quasi-qui tam basis.

Given cumulative effects of the U.S. Supreme Court’s decision in AT&T Mobility v. Concepcion, 563 U.S. ---, 131 S.Ct. 1740 (2011) and the state supreme court’s Iskanian ruling, the results are pretty clear: Plaintiff’s non-PAGA claims are arbitrable and subject to a class valid action waiver. Plaintiff’s PAGA claims are not arbitrable and the waiver of his right to bring representative PAGA actions is unenforceable, but severable from the otherwise valid arbitration provision. On remand, the trial court should stay the PAGA claims under Code of Civil Procedure 1281.4, pending resolution of the non-PAGA claims by arbitration.

Remanded with orders.

A McQueen Bullitt Dodged

Gray1 CPB LLC v. SCC Acquisitions, No. G04729A (D4d3 Jan. 27, 2015)

I wrote about this collections case when it was originally decided back in April of 2014. The Supreme Court subsequently granted review and held the case pending its decision in Conservatorship of McQueen, 59 Cal. 4th 602 (2014), which ultimately held that a motion to add attorneys’ fees to a judgment must be filed before the judgment is satisfied. This opinion is on a remand to reconsider in light of McQueen. But the crux of the original decision was that under the UCC rules that govern settlement of check payments, the judgment was actually satisfied when the creditor failed to refuse a cashier’s check as payment. So McQueen does not do any good for the creditor here, because, even under McQueen, the creditor moved for fees after satisfaction was accomplished.

Affirmed.

Yes, Forthwith. But to Whom?

Lewis v. City of Benecia, No. A134078 (D1d1 Mar. 26, 2014)

This is a post-trial appeal in a sexual harassment and retaliation case with the kind of a fact pattern that HR is always warning you about. Two individual defendants won summary judgment and a third, the city, prevailed at trial. The jury’s special verdict found that plaintiff had established three of the elements on his retaliation claim against the city, but that he had not established that the city was the proximate cause of his injury. In the course of reversing and remanding as to the city and one individual and affirming as to the other, the court of appeal deals with an evidentiary sanctions issue and an interesting issue about partial trials on remand.