Television and the Public Interest

Musero v. Creative Arts Agency, LLC, No. B305066 (D2d7 Dec. 15, 2021)

This is a Desny case where plaintiff, a screen Writer, accuses his former Agent of stealing an idea for a TV show called Main Justice and giving it to his other more-famous, client. Agent filed an anti-SLAPP motion, which the trial court denied, finding that Writer came forward with enough evidence to show a shot at success on the merits. The Court of Appeal affirms, but for a different reason.

None of the activity in this case involves speech in a public forum. So the Defendant needs to show that acts that make up an essential element of plaintiff's claim are "other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.” Code Civ. Proc. § 415.16(e)(4). 

As the Supreme Court explained in Wilson v. CNN, (e)(4) encompasses two general types of “other conduct.” (1) Non-speech Conduct that its itself expressive, e.g., “the burning of flags, the wearing of armbands, and the like”; and (2) conduct that is not, in itself, inherently expressive, but which “facilitates expression.” The Court of Appeal here does not focus on that distinction here. But in finding the (e)(4) test satisfied, the Court describes that relevant conduct as Agent's alleged “participation in the creation and development of” the other version of Main Justice. That seems to view the conduct as expressive. As that conduct makes out Desny's element of the use of the idea in breach of an implied agreement to pay for use, the “arising from” part of (e)(4) is satisfied.

But (e)(4) also requires the conduct to relate to public issue. The trial court thought it was satisfied because the “other” Main Justice was supposedly about Eric Holder and his role as the first Black U.S. Attorney General, which is an issue of public concern. As the Court of Appeal explains, however, that runs afoul of FilmOn v. Doubleverify, which seeks to avoid overgeneralization in the public issue inquiry. FilmOn requires a close examination of the public interest in the context of the facts of the case, looking to the speaker, the audience, and the purpose of the speech. This case isn't about the public exhibition of a TV show about a historic figure. It is about the private act of Agent's taking Writer's idea—which was more of a regular procedural about the DOJ—and giving it to Agent's other client. That did not meaningfully contribute to a public conversation about any issue of public interest.

Affirmed.

This is a pretty solid analysis of the public interest element post-FilmOn, and it makes a larger point that I've been harping on for a long time. A flaccid analysis of (e)(4) basically subjects any cause of action against a defendant whose business touches on media or the arts subject to an anti-SLAPP motion. If conduct in furtherance means anything, for instance, that “helps” make a TV show, and if it's enough that the public is interested in TV, we've just created a huge procedural hurdle that sweeps way too broadly to protects stuff that has nothing to do with free speech. Wilson narrowed the analysis for non-expressive “in furtherance” conduct by requiring the conduct to meaningfully foster some legit First Amendment interest. And FilmOn gave teeth to the public issue requirement by looking closely at the actual speech or conduct at issue asking if it really contributes to some meaningful public conversation. This has been a project long in the making, and not without its wrong turns. But it seems to have righted the ship quite a bit.  
 

Foundation!

Gamboa v. N.E. Cmty. Clinic, No. B304833 (D2d7 Nov. 30, 2021)

This is an appeal of the denial of a motion to compel arbitration. But it is really about a basic point of evidence.

A party seeking to compel arbitration bears the burden of proving that “an agreement to arbitrate the controversy exists[.]” Code Civ. Proc. § 1281.2. As the Court explains here, that’s done on a motion, using a three-step process. First, the moving party needs to come forward with a prima facie case that an agreement to arbitrate exists. Usually that entails attaching the agreement to the petition. At that stage, there’s no formal evidentiary requirements, such as a requirement to authenticate the contract. Second, if a prima facie case is made, the opposing party needs to come forward with evidence that there was no, in fact, an agreement. And then if that happens, the framework falls away and the movant needs to prove the existence of an agreement by a preponderance of the evidence. 

Here, the movant (an Employer) submitted a declaration of its HR Director with its motion. The declaration stated, in a conclusory manner, that the opponent (an Employee) signed an arbitration clause as part of her employment agreement, and purported to attach a contract containing an arbitration clause that appeared to be signed by a representative of the Employer and an Employee. Employee, however, put in a declaration stating that she had never seen the contract, that she had no recollection of discussing arbitration, and that she would not have signed an arbitration agreement if she had seen it and it were explained to her. Employer did not put in a supplemental declaration with its reply.

Employee objected to the HR Director’s declaration on foundation grounds, which the trial court sustained. It then found that Employer failed to meet its burden to prove an agreement, and thus denied the motion. Employer appealed.

I’m hunching that there’s a pretty good chance that Employee really did sign the document that Employer submitted. Her declaration notably did not deny that it bore her signature, which is something she would ordinarily say if she could. (As a jury instruction given in every case explains, when “a party provided weaker evidence when it could have provided stronger evidence,” the trier of fact can “distrust the weaker evidence.” See CACI 203.)

In an ordinary litigation, this could have been cleared up with a single request for admission or depo question: Is that your signature? But what makes a motion to compel arbitration tricky is that the moving party generally needs to forego taking any discovery, because taking discovery risks waiver of the right to arbitrate. So, once Employee denied being party to the contract, Employer here couldn’t rely on the most common rejoinder: that notwithstanding her recollection, she had signed the document.

The Court notes, however, that Employer didn’t need to authenticate the signature to authenticate the document. What it did need to provide was admissible evidence that the contract was authentic and that Employee was party to it. So, for instance, a declaration from a custodian of records that says:

I am the Head of HR at Employer. I am aware of Employer’s record-keeping practices when it comes to employment documents. Accurate maintenance and updating of personnel files is a requirement of my employment duties and the duties of those who report to me. Employer requires all employees to sign Employment Agreements, which include an arbitration agreement. It then provides the Employee with a copy and puts the original of the signed agreements in the employee’s personnel file. The Employment Agreements of other employees would not be contained in that file. I accessed Employee’s personnel file and obtained a copy of an Employment Agreement, which appears to have been executed by Employee and a representative of Employer, a true and correct copy of which is attached as Exhibit A.

But what Employer did, instead, was:

I am the head of HR at Employer. Employee signed an Employment Agreement containing an arbitration clause when she was hired, a true and correct copy of which is attached as Exhibit A.

See the difference? We have no way of knowing how HR Head knows Employee signed the contract. Did she see her? Did Employee admit it? Was HR Head’s knowledge based on some unstated record keeping practice? Without that information, we don’t actually know that HR Head knows. 

That’s what trial lawyers call foundation. Under Evidence Code § 403(a)(2), you need to provide the preliminary facts that establish a witness’s personal knowledge of the subject matter of her testimony. Otherwise, the testimony is rendered inadmissible under § 702(a). It is not an incredibly heavy burden. Personal knowledge does not need to be proven—there just needs to be enough evidence to give the trier of fact a basis to find that the witness does, in fact, know of what she speaks. And notably, § 702(a) specifically says you don’t need to lay that foundation until someone objects. (Otherwise, trials would be incredibly tedious.) So Employer could even have fixed it on reply with a supplemental declaration. 

But it didn’t. So Employee gets her day in court.

Affirmed.

Jurisdictional Mumbo Jumbo

Drink Tank Ventures LLC v. Real Soda in Real Bottles, Ltd., No. B298881 (D2d2 Nov. 11, 2021)

A and B are parties to a merger diligence NDA that does not result in a transaction. Later, A and B are competitively bidding on C. B wins and acquires C. A sues B for tortious interference with A’s prospective economic advantage with C. A's theory is that B breached the NDA in connection with buying C, and that B’s breach was the kind of independently wrongful conduct that can substantiate a claim for tortious interference with prospective advantage.

As a matter of substance, the Court here holds it is not. To be independently wrongful, some thing must be tortious on its own or otherwise violate some positive law like a statute or regulation. With limited exceptions that don’t apply here, a breach of contract is not tortious. So a breach of contract that interferes with someone else’s pre-contract economic expectancy is not sufficient to support a claim of tortious interference with prospective advantage. 

That all makes sense, and it clears up a somewhat open question. This comes up a lot because plaintiffs like to use this theory to turn what should be claim for consequential damages for breach of contract into a tort claim that is easier to prove with better remedies. Although there are some prior cases from which the rule can be gleaned, this case has a nice clean holding that “[b]ecause a bare breach of contract, without more, is not tortious, such a breach cannot constitute independently wrongful conduct capable of giving rise to the tort of intentional interference with a prospective economic advantage.”

But then there’s the procedure. The case was tried to a jury on the breach-of-contract-as-independent-wrong theory. The jury was instructed that, to satisfy the independent wrong element, it needed to find that B breached the NDA. The jury found that A proved that breach, along with the other elements, and awarded $350k to A. The first time Defendant raised the flaw in the theory was in a post-judgment JNOV. The trial court denied that and B appealed.

The court perceives a procedural quandary here in that everyone acquiesced in trying the case on the breach as wrong theory and instructing the jury on it. No doubt, a new trial motion can raise unpreserved or even invited legal error in jury instructions. See McCarty v. Cal. Dep’t of Transp., 164 Cal. App. 4th 955, 984 (2008). But nobody actually wants a new trial here because the choice is binary. If the theory is valid A wins. If not B wins. Can we even do that with a JNOV—a motion that is fundamentally directed to the adequacy of the evidence? Code Civ. Proc. § 629(a).

se

McCarty v. State of California Dep't of Transp., 164 Cal. App. 4th 955, 984 (2008)

And with that, we are in the wacky funhouse of California post-judgment procedure. 

There are, frankly, lots of ways to get to a reversal here.

#1. Generally where a jury “instruction is erroneous on material elements of the law, the giving of the instruction is deemed excepted to, even in the absence of objection.” Manguso v. Oceanside Unified Sch. Dist., 153 Cal. App. 3d 574, 581–82 (1984); see also Code Civ. Proc. § 647. The Court cites cases here that suggest forfeiture is possible. But they generally entail invited error, estoppel, or something more than mere failure to object, or instructional errors that do not rise to the level of failure to include an essential element. So, if the instruction was erroneous and prejudicial, it seemingly can be attacked in a direct appeal of the judgment, so the post-trial motion question is not relevant. This seems like the most straightforward approach. 

#2. There is also, however, a whole other statute that expressly deals with a post-judgment claim that the judgment cant be supported by a special verdict—Code of Civil Procedure § 663(2). That statute says, in relevant part, that a judgment “based upon . . . the special verdict of the jury, may, upon motion of the  a party aggrieved, be set aside and vacated  by the same court, and another and different judgment entered, for either of the following causes, materially affecting the substantial rights of the party and entitling the party to a different judgment: . . . (2) A judgment or decree not consistent with or not supported by the special verdict.” So a § 663(2) motion—which is admittedly somewhat obscure—was probably the most applicable way to attack the judgment prior to appeal. But that doesn’t seem to have occurred to anyone.

#3. There is also some authority to support the proposition that the “proper way to remedy [a] defective verdict was to grant [a] motion for JNOV on [the defectively defined] claim[.]” Saxena v. Goffney, 159 Cal. App. 4th 316, 329 (2008). But the fact that there’s authority for something in Calfiornia post-trial practice doesn’t mean that authority makes any sense, and I have a hunch that if I took the time trace back the citations in Sexena, it winds up being turtles all the way down. 

But the Court here does not even rely on that weak authority. It accepts the fact that failure to object to the instruction forfeited an appeal. And it dodges the JNOV issue. Indeed, the court rejects that idea that this is an issue of instructional error. It characterizes the error as the trial court’s erroneous legal decision that the breach/wrong theory was a valid way to prove the interference claim. (This seems a little too formalistic, given that the way the error was manifest was in the trial court’s telling the jury it could find a breach of contract as way to establish the independent wrong element.)

Then, to get out of the cage it built for itself, Court of Appeal holds that the trial court did not have subject matter jurisdiction to enter judgment for A when the element of independently wrongful conduct hadn’t been tried or proven. And since subject matter can’t be waived, the court can reach the issue and vacate the judgment. 

That, as Malcolm Gladwell might say, is bananas. Taken at face value, it is a claim that the trial court doesn’t have subject matter jurisdiction to be wrong on the law. But subject matter jurisdiction in California state court is not about what judgment a court can enter. Otherwise, the court could have subject matter jurisdiction throughout the whole case but then lose it by making a legal error. So every wrong judgment would be a void judgment, which gives rise to all kinds of downstream problems, like leaving judgments vulnerable to collateral attack. That does not make any sense. 

Part of the issue is terminology. As the Supreme Court has noted, “the term ‘jurisdiction’ . . . carries two distinct meanings[.]” People v. Chavez, 4 Cal. 5th 771, 780 (2018). “One refers to ordinary acts in excess of jurisdiction. The other concerns so-called ‘fundamental’ jurisdiction, the quality that dictates whether a court has any power at all to resolve a case.” “Fundamental jurisdiction is, at its core, authority over both the subject matter and the parties.” Subject matter jurisdiction is about what kinds of cases a court can even hear.* State court limits on subject matter jurisdiction are rare because “California’s superior courts are courts of general jurisdiction, which means they are generally empowered to resolve the legal disputes that are brought to them.”  Quigley v. Garden Valley Fire Prot. Dist., 7 Cal. 5th 798, 808 (2019). Generally, the limits on state court subject matter jurisdiction occur when some body other than state courts is authorized to adjudicate a dispute. Id. at 808-09 (using as examples the Public Utilities Commission and the State Bar).

But “[e]ven when there's no question that a court's action is well within the scope of its fundamental jurisdiction, the court may still exceed constraints placed on it by statutes, the constitution, or common law. When a trial court fails to act within the manner prescribed by such sources of law, it is said to have taken an ordinary act in excess of jurisdiction.” Chavez, 4 Cal. 5th at 780.

Here, there is no question that the trial court had the authority to adjudicate a claim over whether B tortiously interfered with A’s prospective economic advantage. The Court even straight out comes out and says that. So how it could it fundamentally lose jurisdiction by making an erroneous legal ruling about one of the elements of the claim?

Notably, the cases cited by the court, taken together or apart, do not stand for the proposition that a court, vested with jurisdiction to hear a kind of case, nonetheless lacked fundamental subject matter jurisdiction to enter a judgment because it mae a legal error about the elements of a common law tort claim. 

In People ex rel. Allstate Ins. Co. v. Weitzman, 107 Cal. App. 4th 534, 546 (2003), a statute specifically afforded superior court jurisdiction only over claims brought by certain types of qui tam plaintiffs. That appears to be excess of jurisdiction type of jurisdiction, and the only reference to subject matter jurisdiction is to the trial court ruling being overturned.

In Vaughn v. Condon, 52 Cal. App. 713, 716 (1921), the court held that a court could not afford garnishment against a public entity because that would exceed the scope of a statute permitting garnishment. There’s admittedly some discussion of jurisdiction in an Alabama case that is quoted for the point that the argument could not be forfeited. But Vaughn is an old case, and it likely doesnt square with the Supreme Courts more recent discussion of fundamental jurisdiction in Quigley, which similarly addresses statutory limits on remedies against public defendants.

A third case,  Dollenmayer v. Pryor, 150 Cal. 1, 4 (1906), is the kind of case where limits on subject matter jursidiction have been found—the question was whether the state surveyor general had authority to hear certain kinds of claims.

Finally, People v. Vasilyan, 174 Cal. App. 4th 443, 450 (2009) permitted a convicted defendant to collaterally attack his conviction, because the statute he was convicted of violating was later adjudged not to have defined a criminal offense. That could only occur if the confiction was void, which required a defect in fundamental jurisdiction. 

I’ll concede that Vasilyan is probably the closest case on point. But the analyis is pretty strained. The court appears to be going out of its way to get to a remedy, because, although being convicted for a noncrime is pretty unfair, and it had pretty unfair collateral effects on the defendant, the factual particularities of the case made relief by writ of habeas corpus or coram nobis unavailble. 

Also, the opinion relies on statutory constraints on subject matter jurisidiction in the criminal context that don’t exist with regards to the superior courts’ jurisidciton over common law claims.

Finally, there’s a pretty strong dissent that makes the points about the different kinds of jurisdiction that I reference above. 

But even if Vasilyan is right, and even if it could be ported into the civil context, it takes another big step to get to the restult here. This case would be the equivalent of saying that a criminal court lacks subject matter jurisdiction—and thus that its convictions are void—if it erroenously interprets a statute and instructs that an element of a crime was less strict than the appellate court ultimately found it to be. (For instance, if it said that a willful mens rea didn’t require a defendant’s knowlege that his conduct was illegal, even if a higher court later found that it did. See, e.g., Ratzlaf v. United States, 510 U.S. 135, 141 (1994).) A jurisdictional rule like that would have enormous and destabalizing effects on the finality of judgments.

Don’t get me wrong. Post-jugment remedies in California are a wreck that demands reform. I spend a non-minisclue amount of time tring to explain how they work to out-of-state lawyers at my firm. When I do, they react like I am explaining Joseph K’s appellate options. Our Legislature should replace the various overlapping and confusing statutory remedies, each of confusing scope and with its own procedural mousetraps, with a single raitional procedural vehicle to challenge a judgment after it is entered but prior to appeal. If someone wants, I’ll even write the statute. But injecting a layer of jurisdictional mumbo-jumbo into the process is not going to fix anything. 

Reversed. 

*Due to the interpretation of Article III’s case or controversy requirement as cabining the jurisdiction of the federal courts, standing, ripeness, and mootness are treated as jurisdictional and sometimes as addressing subject matter jurisdiction in federal cases. See Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010); Bland v. Fessler, 88 F.3d 729, 732 n. 4 (9th Cir. 1996). But California does have a limitation akin to Article III, so it tends to treat these doctrines as prudential, not jurisdictional. Wilson & Wilson v. City Council of Redwood City, 191 Cal. App. 4th 1559, 1575 n.8 (2011).

cil, 940 F.2d 1239, 1242 (9th Cir. 1991)

The proper way to remedy the defective verdict was to grant Goffney's motion for JNOV on plaintiffs' battery claim, not to order a new trial

Saxena v. Goffney, 159 Cal. App. 4th 316, 329 (2008)

Husbands, Wives, and Reverse Outside Piercing

Blizzard Energy, Inc. v. Schaefers, No. B305774 (D2d6 Nov. 18, 2021)

Husband got hit with a $3.825 million fraud judgment in Kansas. The creditor domesticated the judgment in California. Then, while Husband was appealing the domestication, Creditor successfully moved under Code of Civil Procedure § 187 to add as a judgment creditor an LLC partially owned by Husband, which owns some commercial property in San Luis Obispo County. This is an appeal of that order. 

There's a threshold issue about whether the trial court had jurisdiction to amend the judgment because the appeal of the domestication was pending. (It was affirmed shortly thereafter.) Generally, the filing of a notice of appeal divests the trial court of jurisdiction and stays all proceedings, including enforcement of a judgment, under § 916. But § 916 is in Part 2 of the Code—“On Civil Actions.” Courts have held that the stay provisions in Part 2 only apply to ordinary civil actions, not to special proceedings of a civil nature—most of which are set out in Part 3.

The domestication of a sister state money judgment is governed by the Sister State Money Judgment Act, § 1710.10, which is in Part 3. That said, codification into Part 3 is not necessarily dispositive of whether something is an “action.” But because domestication of a judgment under the Act is a ministerial procedure that doesn’t bear any of the hallmarks of an ordinary civil action, the Court here finds that it is, in fact, a special proceeding. So the stay of trial court proceedings under § 916 did not apply.

On to the merits.

A thing about LLCs is that you generally can’t execute on LLC membership interests to collect on a judgment. (The theory is that doing so would make the creditor an involuntary partner of the other members.) The best you can get is something called a charging order, which creates a lien on any of the LLC’s distributions to the judgment debtor. Of course, if the judgment debtor controls the LLC, the debtor can just cause it not to make distributions. A lien on nothing isn’t worth much. Then the creditor can spend years trying to ensure that the debtor isn’t secretly leaking money out of the LLC, like by selling it stuff in non-arms length transactions. Little to wonder that hiding assets in LLCs is a popular collections avoidance strategy.

So creditor here tries a different move known as “outside reverse piercing,” which is a species of alter ego that, while not recognized in many jurisdictions, is recognized in California. In regular alter ego, you go up the chain and make the owner of an entity judgment debtor a co-debtor. In reverse outside piercing, you go down the chain to get at the assets of an entity owned by the debtor. But the test—requiring a unity of ownership and interest and fraud or injustice from upholding corporate separateness—is basically the same.

The Court here holds that both elements of the test were satisfied and the factual particulars aren’t that important.

But what gets tricky is that Husband isn’t the sole member of the LLC. He and Wife own it 50/50. In a slightly odd and not well explained twist, however, they came to own it about five years after they legally separated, which was itself more than 25 years ago. So although they are still married—Wife didn’t institute divorce proceedings till 2019—their membership interests are not community property. 

That means Wife could be completely innocent and have her legit interest in the LLC impaired if it were added as a judgment debtor. (Wife claims that she and Husband don’t really interact and that the cash thrown off by the LLC is retirement income.) The trial court, which thought everything was community property, did not consider any of that. So the case needed to be remanded to the trial court for a hearing on whether it would be inequitable to Wife’s interest to add the LLC as a debtor.

Reversed and remanded.

Well, I Read Some Documents Once

Chambers v. Crown Asset Mgm’t, LLC, D0079074 (D4d1 Nov. 12, 2021)

This is an appeal of a denial of a motion to compel arbitration in a dispute between a Consumer and a credit card Provider. Provider claims that it mailed Consumer an arbitration policy that said if Consumer thereafter used the card, she consented to arbitration. To support this assertion, Provider put in a declaration from an employee attesting that she had reviewed Provider’s business records, and they showed Consumer had been mailed a copy of the agreement and failed to object. 

Two problems with that. 

First, the employee’s declaration didn’t put in the work to show that the records she reviewed were, in fact, within the business records exception to the hearsay rule. In particular, she didn’t attest to the way the records were created or maintained in the course of the company’s regular operations, or even to Provider’s custom and practice regarding the way such records were created.

Second, the secondary evidence* rule does not save Provider from the fact that it failed to actually attach any of the records that were the subject of the attestation. The secondary evidence rule requires that the documents that are the subject of oral testimony must be otherwise admissible. Since Provider failed to lay the necessary foundation to establish that the records, what ever they were, were subject to a hearsay exception, the testimony was just another level of unexcepted hearsay.

Affirmed.

*FWIW, the secondary evidence rule, California’s version of the best evidence rule, is fundamentally indeterminate and arbitrary. Unlike the federal rule, which presumes that, absent specified reasons, oral testimony about the contents of documents does not come in, see Fed. R. Evid. 1002, 1003, 1004, the California rule presumes that oral testimony is admissible. See Evid. Code § 1521. The testimony is inadmissible only if there is a dispute about the contents and “justice requires the exclusion” or if admitting it would be “unfair.” Those are hardly bright line standards that can be uniformly applied. And practically, it seems like, in an age where most records are electronically created or stored, you should need to come up with a good reason why you can’t attach a document before someone can just attest to it in a declaration. Otherwise, the standard is in the eye of the beholder.

The Epistemology of Expertise

Strobel v. Johnson & Johnson, No. A159609 (D1d4 Oct. 21, 2021).

Since I became a lawyer, there have been two things I have always gone out of my way to avoid having any understanding of—ERISA and asbestos. This case deals with the latter. But it’s got an interesting evidentiary issue. So I’ll muddle through despite all the death and mineralogy. Just don’t tell anyone.

The main issue is about experts and hearsay. If you think about it, what we consider to be expertise is often largely a compilation of hearsay. We read lots and lots of books and sooner or later we know some stuff. I know what happened in Brown v. Board of Education because I read the opinion and commentary about it, not because I was in the courtroom observing with firsthand personal knowledge. And I know what’s in Code of Civil Procedure because I read my gold book and Witkin, not because I sat with the Assembly and watched the Governor sign the bills. And so it is with the kinds of folks who offer opinion testimony about whether some product had asbestos in it in 1964. 

If experts can’t testify to some hearsay, they could often offer little more than their unadorned opinions, which would not be very useful to the trier of fact. On the other hand, an expert shouldn’t be used as a vehicle to smuggle otherwise inadmissible hearsay into the jury box. The California Supreme Court addressed this issue in a criminal case called People v. Sanchez, 63 Cal. 4th 665, 670 (2016). 

In Sanchez, the Court explained that under Evidence Code §§ 801(b) and 802, an expert could provide “testimony concerning background information regarding his knowledge and expertise and premises generally accepted in his field” without running afoul of the hearsay rule. But “[i]f an expert testifies to case-specific out-of-court statements to explain the bases for his opinion, those statements are necessarily considered by the jury for their truth, thus rendering them hearsay.” 

So in Sanchez, the expert’s testimony that he relied on someone else’s having designated the defendant as a gang member was inadmissible hearsay that should not have been admitted into evidence. Later cases illustrate that the distinction lies around whether the alleged hearsay is the kind of non-case-specific background material that an expert in the field would ordinarily rely on. Compare People v. Veamatahau, 9 Cal. 5th 16, 26 (2020) (reliance on database to identify pill based on marking admissible) with People v. Valencia, 11 Cal. 5th 818 (2021) (expert’s testimony that defendant had committed prior offenses qualifying for enhancement was inadmissible hearsay).

Here, in support of his opinion that some mid-century baby powder contained asbestos, the plaintiff’s expert offered declaration testimony about testing of historical samples of the same powder at issue conducted by some other expert who did not testify in the case. The court here says that runs afoul of Sanchez. You can’t use an expert’s ability to testify on what he or she relied on to sneak in opinion testimony from some other undesignated expert who is not subject to cross.

The Court holds, however, that even without the hearsay, the expert relied on enough reasonable material to apply his expertise to submit an opinion that, if believed, could support a finding that there was asbestos in the power. So his declaration was adequate to defeat summary judgment.

Reversed.

Burdens and Standards on Administrative Writs

Li. v. Superior Court, No. C092584 (D3 Sept. 30, 2021)

Last year, in Conservatorship of O.B., the California Supreme Court cleared up some confusion regarding the way an underlying burden of proof affects the standard of review on appeal. Essentially, the court held that the standard of review bakes in the burden. So, for instance, when the substantial evidence standard applies, it will take more or better evidence to affirm a finding for a fact subject to a clear and convincing burden than it would for a fact that can be found by a preponderance.

This case applies that logic to administrative mandamus proceedings under Code of Civil Procedure § 1094.5. Administrative mandamus is a procedure that’s used to appeal the quasi-judicial decisions of administrative agencies to the superior court. In any administrative proceeding where the claimant is entitled to a hearing, the appeal is taken by § 1094.5 writ. The standard of review that applies to that appeal depends on the nature of the right affected. If the proceedings substantially affect a fundamental vested right, the record is reviewed de novo, and the statute directs the court to find an abuse of discretion if in its independent judgment, the agency’s findings are not supported by the weight of the evidence. If no fundamental right is involved, the superior court performs more of a traditional appellate role and reviews the findings for substantial evidence. 

The question, then, how the O.B. rule affects a superior court when the underlying burden in the administrative case is higher than a preponderance. The logic of O.B. pretty clearly applies to non-fundamental review that applies a substantial evidence standard. But for independent review, some older cases read the phrase “by the weight of the evidence” in § 1094.5(c) to require a preponderance burden even if the agency needed to make findings by clear and convincing. Particularly when combined with O.B., however, that leads to the odd result that the superior court winds up applying a more deferential standard of review in the independent review than it does on review for substantial evidence. That doesn’t make a lot of sense.

So the Court of Appeal here revisits those old cases. It does not find that they were implicitly overruled by O.B.—a probate appeal that had nothing to do with administrative mandamus. But regardless, the Court finds that the old cases mistakenly equated “weight of the evidence” with a preponderance and relied upon somewhat shaky somewhat out of context authority in doing so. In particular, there was a lot of conceptual conflation between burdens of proof and standards of review. With that underbrush cleared, there is no logical obstacle to applying an O.B.-style burden incorporation into the independent review standard.

Ironically, none of that affects the outcome of this case—the Medical Board of California’s revocation of petitioner’s physician’s license where the burden is clear and convincing and review is independent. The court finds that the petitioner failed to show that application of the correct standard would have altered the result in the superior court.

Writ denied.

Not that Special

Moreci v. Scaffold Solutions, Inc., No. A161193 (D1d2 Oct. 18, 2021)

A Plumber was injured when he fell from a construction scaffold. He sued ScaffCo. They settled. Under the terms of the settlement Plumber agreed to assume ScaffCo's defenses for any claims arising from the accident. Plumber’s employer Workers’ Comp Carrier—which had paid Plumber about $240k in benefits—intervened and crossclaimed against ScaffCo and one of the other contractors on the job site. The underlying case between Plumber and ScaffCo was dismissed. Subsequently, Plumber’s Lawyers associate in to defend ScaffCo in its litigation against WCC. 

WCC moves to disqualify Plumber’s Lawyers from repping ScaffCo. It argues that Plumber’s Lawyers can’t be allowed to switch sides like that. Substantively, that might be correct. But the problem with the argument is that to have standing to DQ a lawyer, you generally need to be a current or former client of that lawyer. Which WCC was not. So the trial court denied the motion. WCC appealed.

The Court of Appeal notes a split of authority regarding standing to bring a DQ. Under the so-called “majority rule,” only a client has standing. But under a “minority rule”—which appears to have developed largely in cases with very messy fact patterns—a non-client can have standing, but only if the attorney owed the non-client some kind of duty of confidentiality.

WCC tried to glom onto some of the language in a federal minority rule case that suggested that having a “personal stake” in a conflicted representation is enough to afford standing. According to WCC, it had such a stake because Plumber’s Lawyers have an advantage given all they know from representing Plumber. But the language from that case was discussing Article III notions. And it ultimately held that the movant lacked standing because the lawyer it sought to DQ didn’t owe the movant any duties and that neither a “broad interest in the administration of justice” nor a “tactical interest” that a failure to DQ will “increase [the opposing party’s] chances of losing this lawsuit” were adequate to convey standing. 

WCC also tried to argue that its relationship as Plumber’s Employer’s Workers Comp Insurer created some kind of special relationship that would give rise to standing. The discussion involves a bunch of substantive issues regarding workers’ comp law that are way out of my lane as a civ pro blogger. But at the end of the day, the Court of Appeal finds that the substantive law does not so closely align the interests of employer, employee, and insurer to create some kind of special or privy relationship that would permit them to raise each others’ rights. 

Affirmed.

I Have Never Seen Your Client. And I'm Not a Florist.

Forest Law Memorial-Park Assoc. v. Superior Court, No. E076549 (D4d2 Oct. 7, 2021).

This one is kind of interesting. It’s a PI case where the main issue is respondeat superior. An Employee of the defendant, a Cemetery, hit someone while driving. The factual question is whether the Employee was merely coming from or going to work―which is generally not viewed as within the scope of employment―or whether he was driving as part of required duties―which is.

On summary judgment, the Employee put in a declaration that said he was basically the front desk receptionist―he never drove anywhere from work. Plaintiff, however, put in a declaration from a lady who said she was Florist, and who said she often saw Employee come by at her shop to pick up flowers for the Cemetery. The Court found that created enough of a fact dispute to deny SJ.

But then the Erstwhile Florist was deposed. She testified she had never seen Plaintiff and didn’t know who he was. She never say any of Cemetery's employees. Indeed, her only connection to the Cemetery is that she had a granddaughter who was buried there. Indeed, EF was not even a florist. She was the customer service manager at a grocery store that had a flower department, where she once picked up the phone when Plaintiff’s lawyer called, because the florist was on her break. EF said that she only signed the declaration because Plaintiff's attorney harassed her by calling twenty-some times, so she signed it to get him to leave her alone. She testified that she signed the document without understanding that it was going to be used in court or the significance of signing a document under penalty of perjury. 

The Cemetery renewed its SJ motion, this time using EF's depo transcript and objecting to the recanted declaration. The trial court again denied SJ. After specific supplemental briefing on this issue, it found that, because the four corners of the declaration failed to show any basis for exclusion, it was admissible. And because the court was not allowed to make credibility determinations on summary judgment, it had to credit EF’s since-disavowed declaration. And that gave rise to a disputed issue of material fact. Cemetery took a writ.

The Court of Appeal grants a writ. EF’s declaration was admissible evidence only if it was made within her personal knowledge, which may be shown by any otherwise admissible evidence, “including [her] own testimony.” Evid. Code § 702(a), (b). And under Evidence Code § 403(a)(2), the proponent of evidence bears the burden to come forward with facts sufficient to sustain a finding that the witness had personal knowledge concerning the subject of testimony. The converse of that rule is that, if the foundational evidence is such that no reasonable juror could or would find the witness has personal knowledge, the testimony is inadmissible under § 702.

Here, the trial court erred in limiting its inquiry to the face of the declaration. As noted, “any admissible evidence” can be considered. Here, that included the depo testimony recanting the declaration and describing shady the circumstances of its creation. And when that is taken into account, the Court finds that no jury could reasonably have found that EF had personal knowledge of the facts in her declaration. The Court notes that there were all kinds of circumstances that could merit a different result, like some corroboration, or the lack of an affirmative account of the circumstances of signing, or some basis to believe EF’s memory was better when she singed than when she was deposed. But since none of that was present here, Plaintiff failed to meet its burden under §§ 403 and 702, even if that is a pretty low bar to meet.

The court also address two ancillary issues. First, Plaintiff argues that the declaration was also admissible as a prior inconsistent statement under 
§ 1235, an exception to the hearsay rule that permits the introduction of such statements as substantive evidence. But § 1235 applies only at trial. Inconsistent statements of hearsay declarations are addressed under § 1202, which permits use for impeachment, but not matters of substance. And in any event, even if the declaration were not hearsay, that wouldn’t make it admissible because it still failed the personal knowledge requirement. (FWIW, the usual requirement of personal knowledge is dispensed with in the case of a party’s admission, Levy-Zentner Co. v. S. Pac. Transportation Co., 74 Cal. App. 3d 762, 787 (1977), but that doesn’t extend to prior insonsistent statements.) 

Finally, the court addresses and rejects Cemetery’s alternative argument that the declaration should have been excluded under the D’Amico rule, which holds that a declaration can’t contradict other sworn discovery responses to avoid summary judgment. The Court finds two reasons D’Amico doesn't apply. 

First, the Court says that D’Amico is premised on the value of party admissions and thus applies only to inconsistencies between parties' declarations and their discovery responses. Inconsistencies regarding third party witnesses like EF don’t fall within the rule. The Court notes in a footnote, however, that two published Court of Appeal cases apply D’Amico to third party witness statements. It disagrees with these cases. And it also explains that the uniform practice of federal courts applying the similar “sham affidavit” rule also applies to third party declarations. But, the Court notes, the federal rule requires the court to make factual findings about sham-ness, which are effectively credibility determinations, while in California, the non-moving party can avoid D’Amico by coming forward with an explanation of inconsistency that could be credited by a reasonable trier of fact.

The Court also finds that D’Amico applies only when the inconsistent deposition testimony happens before the declaration. When the deposition happens afterwards, the parties have a chance to cross examine the witness about the declaration. Sometimes, like here, they can show that the declaration was made without foundational facts being true. But there may be other times where, despite inconsistency, both the depo and the declaration could be admissible and the resolution of the conflict left up to the trier of fact.

Writ granted.

 

Do Not Settle. Do Not Collect a Contingency Fee. Go Straight to the State Bar.

Amjadi v. Brown, No. G059069 (D4d3 Aug. 30, 2021)

Sometimes clients won’t settle when their lawyers think they should. No matter how much you explain to them that it’s a good deal, that it’s better than anything they could expect even if they win at trial, or that they are letting emotional issues get in the way of what litigation is really about: money, they just won’t come around to your view of the situation. But if you didn’t want to deal with that, you should have told the interviewers at OCI that you want to be a capital markets lawyer. Because, as fools who decided to pursue a life in litigation, clients who don’t take our settlement advice are an occupational hazard we just need to suck up and deal with. 

Lots of strategic and tactical decisions in litigation belong to the attorney, not the client. But not settlement. Rule 1.2 of the Rules of Professional Conduct unequivocally states that a “lawyer shall abide by a client’s decision whether to settle a matter.” 

The plaintiff lawyers here (working on a contingency, no less) thought they could end around that rule by putting in their retainer agreement that the client delegated them the authority to decide if and when to settle, so long as the lawyers thought it was in the client’s interests. Bad idea.

Not only is that prohibited by the RPCs, cases have found that frustrating a client’s authority on when and under what terms to settle can constitute “moral turpitude.” So this all results in the Court of Appeal invalidating a settlement entered over the client’s objection, the Court declaring the retainer agreement void, and the lawyers being reported to the state bar, not just for the retainer agreement, but also for disclosing a bunch of client confidences in the course of the dispute over the settlement.

Reversed.

A Firm Line in the Peer Review Sand

Bonni v. St. Joseph Health Sys., No. S244148 (Cal. Jul. 29, 2021)

There has been a lot of litigation over the application of the anti-SLAPP statute employment litigation touching on hospital peer review processes. Peer review is an “official proceeding,” so questions often arise regarding whether employment decisions made in connection with a peer review process are “protected activity” under Code of Civil Procedure § 425.16(e). 

I have been droning on about the appropriate line to draw for years. If the rub of the litigation is that someone is liable for some statement made in connection with a peer review process, it is protected. But the ultimate decision or result of a peer review—generally a decision to continue or discontinue a physician’s employment or privileges—is not such a statement. So, for instance, when a doctor sues a hospital for retaliatory discharge, but the hospital claims that its peer review decision grounded in quality of care was a legitimate non-retaliatory reason for the firing, no protected activity is involved.

That’s basically what the Court of Appeal held in this case in 2017. And that’s what the Supreme Court, in a unanimous opinion by Justice Kruger, holds here. 

There is one little twist to the analysis, however. In Wilson, the Supreme Court refined the elements based “arising from” analysis from its prior decision in Park to specify that if any single element of a cause of action constitutes protected activity, it satisfies the test. So in Wilson the defendant—CNN—claimed that the very act of firing the plaintiff for plagiarism was protected because it itself was an act of journalistic ethics enforcement and thus affected its ability to speak on an issue of public concern. In reaching that result, the Court disapproved of the Court of Appeal’s decision in this case, to the extent that it somewhat categorically suggested that the act of terminating someone categorically cannot constitute protected activity. But that doesn’t really matter here, because, unlike CNN, the hospital here doesn’t claim that terminating the doctor for alleged poor care—the result of the peer review—was itself some kind of protected expressive act or otherwise an act in furtherance of its ability to speak. 

The Court also addresses a second issue, although it seems like that issue was already settled by the Court in Baral, which held that the anti-SLAPP analysis needs to parse and strike only the protected allegations within a claim. Plaintiff’s claim here was mixed—some of his allegations were addressed to protected statements made during the peer review, while others were addressed only to the unprotected outcome. 

But defendant’s motion—filed pre-Baral—was addressed only to the cause of action as a whole. So Plaintiff argues that Baral should only apply when the moving defendant specifies the sub-parts of a cause of action that should be struck. Otherwise, says the plaintiff, courts should apply the “gravamen” test that some courts used prior to Baral. The Supreme Court, however, isn’t buying it. If a moving defendant fails to show that specific portions of a cause of action arise from protected activity, it has not met its burden on those claims under Baral and the analysis of those claims needs to proceed no further.

Court of Appeal affirmed.