Is the stipulation to "high-low" arbitration binding only if reflected in the judgment in the case?

arbitration.jpgIn Horath v. Hess (filed 4/10/14) D063124 & D063709, prior to arbitration of an automobile personal injury case, the parties stipulated in writing to the acceptance of a minimum award of $44,000 and a maximum of $100,000; the agreement was not disclosed to the arbitrator who was to independently determine his award. Any costs awarded by the arbitrator would be added to the stipulated amount. The arbitrator awarded plaintiff $329, 644.61 in damages, plus $36,882.61 in costs. Plaintiff petitioned the trial court to confirm that award. After more than 100 days had passed, defendant filed two motions: the first to limit the judgment for damages to $100,000, and the second for relief from default. Both motions were denied, and the arbitrator's award was confirmed.

After having paid the stipulated $100,000, plus $36,882.61 in costs, to plaintiff, defendant filed a motion in a separate action for acknowledgment of satisfaction of judgment. The trial court denied the motion, determining that judgment was as confirmed from the arbitrator's award, the face of the arbitrator's award governed, and defendant had untimely challenged that award.

On appeal of the two consolidated cases, the Court of Appeal, Fourth Appellate District, Division One, concluded the trial court erred by denying defendant's motion for satisfaction of judgment. Determinative of the appeal was the application of Code of Civil Procedure section 724.050, the section under which defendant sought to obtain a court-entered satisfaction of judgment. That section provides, at subdivision (d), that a judgment debtor may apply to the court for satisfaction where the creditor refuses the debtor's demand for such. Section 724.010, subdivision (a) states that a satisfaction does not require full payment of the amount of judgment where there has been "acceptance by the judgment creditor of a lesser sum in full satisfaction of the judgment." The trial court had agreed with plaintiff that the parties' pre-arbitration award stipulation did not exempt defendant from the requirement of timely seeking to vacate or correct the award before entry of judgment.

Plaintiff argued in its respondent's appellate brief that, even if the statute provided the method for a judgment debtor to enforce a judgment creditor's agreement to accept less than the full judgment, the statute calls for a situation where the stipulation or agreement arose after the judgment was entered rather than before entry, as was the case here. The court of appeal saw this as a distinction without a difference. Under general contractual principals, the parties mutually agreed to the "high-low" provision including that both parties benefited by taking a degree of the risk out of the arbitrator's independent determination. It was understood that this independent award would not govern the payment necessary to satisfy the judgment; rather their stipulation would govern.

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May an HMO be found negligent in the delegation of its statutory duty to reimburse non-contracting emergency physicians?

physicians.jpgEmergency room physicians have a legal duty to treat a patient regardless of patient's inability to pay the physician's bill. Where patient is enrolled in an HMO (Health Maintenance Organization care service plan), even where the emergency physician is not under contract to the HMO, the obligation to pay for the physician's services still rests with the HMO. But HMO's are statutorily allowed to delegate this responsibility to IPA's (independent practice associations). Where this delegation has occurred, and the emergency physician providing treatment neither contracted with the patient's HMO nor was a member of the delegated IPA, is the physician entitled to payment from the HMO when the IPA fails to pay?

The answer to this complex question is equally complex, and is found in Centinela Freeman Emergency Medical Associates v. Health Net of California, Inc. (filed 4/2/14) B238867a. It may seem surprising that the answer is more a matter of tort law than contract law. And much like the inquires found in the venerable tort law authority in Rowland v. Christian (1968) 69 Cal.2d 108, public policy considerations play a large role. As the discussion below indicates, central to the answer is the policy that the HMO patient (the consumer) not be vulnerable to such billings in violation of their HMO contractual entitlement. In resolving a split of appellate authority, that answer found in Centinella is the HMO has a duty not to delegate its obligation to reimburse emergency physicians to an IPA it knows, or has reason to know, will be unable to pay. On the facts alleged in this case, the Court of Appeal, Second Appellate District, Division Three, found a sufficient basis for the physicians to seek payment from the HMO on the claim of negligent delegation. The trial court's sustaining of the HMO's demurrer without leave was reversed, and the matter was remanded.

In the trial court, the HMO had succeeded in arguing that no duty arose for it to protect the financial interests of the third party physician-plaintiffs under Biakanja v. Irving (1958) 49 Cal.2d 647. The trial court agreed that Biakanja barred relief in that it requires an intent to harm a plaintiff specifically, which was not alleged here. The appellate court disagreed with this interpretation of Biakanja, discussing the split of authority on the issue. The proper interpretation, ruled the court, is that the duty of the HMO is owed to the plaintiff or to a class of which plaintiff is a member.

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Is homebuilder's contractual construction-defect pre-litigation procedure unenforceable due to its variance from statutory procedure, and unenforceable when used with subsequent home purchasers?

Homebuilder.jpgIn The McCaffrey Group, Inc. v. Superior Court (filed 3/24/14) F066080, the trial court denied homebuilder McCaffrey's "Motion to Compel ADR" brought in an action filed by real parties in interest who were the owners of 24 homes built by McCaffrey which allegedly contained construction defects. McCaffrey petitioned for writ of mandate to enforce provisions in the home purchase contracts that require the homeowners to submit their construction defect claims to non-adversarial pre-litigation procedures before proceeding with a lawsuit. The trial court had found the contract provisions unenforceable as being unconscionable. The Court of Appeal, Fifth Appellate District, granted the petition.

The appellate court opinion addressed the three categories of suing homeowners: (1) pre-2003 original purchasers, (2) post-2003 original purchasers, and (3) subsequent purchasers who bought an existing McCaffrey-built home from a third party. The distinction in the first two categories derives from the Legislature's passage of the so-called "Right to Repair Act," effective January 1, 2003, found at Civil Code sections 895 through 945. Prior to 2003, there was no statutory procedure; after 2003, the builder has the option of contracting for an alternative non-adversarial procedure in lieu of the statutory procedure. Those contracts that came after this date stated that McCaffrey opted for its own procedure; essentially the same procedure it used before that date.

In short, both statutory and contract procedures provide for the homeowner giving written notice of claimed defects; some written acknowledgment by builder, followed by inspection and the opportunity to propose repairs/compensation; a determination by the homeowner to accept the builder's proposal or have the dispute mediated. If still unresolved, litigation may then follow; the contract procedure has an additional judicial reference procedure.

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Where settlement agreement provides for a discounted principal amount to be paid in installments and the entire original liability becomes due because of a late payment, is default judgment for amount in excess an unenforceable penalty?

In promissory note cases, it is not uncommon in my role as a mediator to assist parties in framing terms of a settlement that provides for installment payments. The creditor normally wants some "teeth" in the agreement in exchange for its promise to accept gradual payments rather than the full sum immediately upon settlement. On the other side, the debtor wants the benefit of a discounted principal as a reward for timely payment. This appears to be the scenario that was played out in Purcell v. Schweitzer (ordered published 3/17/2014) 2014 DJDAR 2387.

Plaintiff had received from defendant a promissory note for $85,000. Plaintiff sued defendant for default on the full sum. The parties reached a settlement agreement: plaintiff agreed to reduce the principal amount to $38,000, conditioned upon defendant's payment of 24 timely monthly installment payments to include 8.5% interest; the full, discounted amount would be paid within these 24 months. The payments were due the first of each month; should a payment not be received by the fifth day of any month, the entire original liability of $85,000 would then become immediately due. The settlement agreement further provided that the late-payment provision was not a penalty, and that defendant waived any right to appeal and any right to contest or otherwise set aside a judgment.

Defendant paid the settlement note down to a balance of $1,776.58, then made a late payment of that balance, which was accepted by defendant. Asserting the late-payment clause of the settlement agreement, plaintiff filed this lawsuit and received a default judgment for $58,829.35, reflecting reinstatement of the original liability. Defendant's motion to set aside this default judgment was granted, and plaintiff appealed. The Court of Appeal, Fourth Appellate District, Division One, affirmed, finding the default judgment was the result of an unlawful penalty or forfeiture.

The Court of Appeal recited the rule of enforceability of a liquidated damage clause: it must bear a reasonable relationship to the range of actual damages that the parties could have anticipated from the breach (Civil Code sections 1670 and 1671). Plaintiff argued that the settlement agreement here recited that the $85,000 was an agreed upon amount actually owed and was expressly stated as not being a penalty. However, the appellate court cited Greentree Financial Group Inc. v. Execute Sports, Inc. (2008) 163 Cal.App.4th 495, 499, for the proposition that the relevant breach here is the breach of the stipulation contained in the settlement agreement (in that case the stipulation for entry of judgment of installment payments of a lesser total sum than sought, which would be increased to the greater sum if not timely paid), not the breach of the underlying contract for which recovery was sought.

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Does the alleged defective design of car's seat allow application of " consumer expectation" test, engineer strict-liability, and non-apportionment of general damages among designers?

seat-424212-m.jpgIn Romine v. Johnson Controls, Inc. (filed 3/17/14) B239761, the chain collision caused by a speeding vehicle crashing into a line of vehicles stopped at an intersection resulted in the striking of plaintiff's vehicle, rendering her a quadriplegic. The force of the collision caused plaintiff's seatback to collapse and her head violently struck the vehicles back seat. Parties sued by plaintiff included the manufacturer of the car seat and the engineering company which participated in the design of the Nissan Frontier vehicle's driver's seat. Other defendant-parties settled before trial. Plaintiff tried the case on the theory of strict product liability alone. The jury found these remaining defendants 20% responsible, with total verdict of $24.745 million; the trial court entered judgment against them in the sum of $4.607 million.

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On appeal, the instant defendants contended (1) the trial court erred in permitting plaintiff to try the case under the consumer expectations design defect test;(2) the component parts doctrine precluded a strict liability finding; (3) the provider of engineering services could not be held strictly liable; (4) apportionment of fault should have been allowed among other manufacturers; and (5) the full billings of past medical care were erroneously admitted. The Court of Appeal, Second Appellate District, Division Five, while disagreeing with contentions (1), (2) and (5), reversed and remanded the matter for a partial retrial because the engineering company could not be strictly liable for its services, and the seat manufacturer was entitled to an apportionment of fault with the others within the stream of manufacture, as well with other defendants found by the jury to be a substantial cause of plaintiff's injuries.

First, the appellate court found the consumer expectation test was properly put before the jury. Defendant argued that the jury should have only been allowed to consider the risk/benefit test. Under the consumer expectation test, the objective condition of the product (the seat) is evaluated by the jury to see if its design meets a consumer's ordinary expectation of safety under the circumstances, regardless of the merits of the design. Such a test should not be used by a jury where the theory of defect seeks to examine "obscure components under complex circumstances." (McCabe v. American Honda Motor Co. (2002) 100 Cal.App.4th 1111, 1122.) The Court of Appeal found this not to be a matter of a component part at all, the seat itself being a product; furthermore this was not matter so complex as to render the jury incapable of assessing. Consumers have expectations about whether a vehicle's driver seat will collapse in a rear-end collision.

Next, the court ruled that because the engineering company did not "manufacture, sell, or otherwise place the car seat into commerce", it could not be held strictly liable. It could be liable for negligence, which was a cause of action in plaintiff's complaint; but plaintiff chose only to try the case on the strict liability theory.

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Does selling real estate broker incur disclosure liability to buyer who relied on reference to 24 year old earthquake-zone study's statement that property was "buildable"?

property-for-sale-1-1150485-m.jpgUnder the circumstances of Saffie v. Schmeling (filed 3/7/14) E055716, the answer is no. In 2006, seller's broker posted in the multiple listing service (MLS) the listing of a commercial parcel that stated the property was within an earthquake study zone, but a fault hazard zone investigation by a licensed geologist had determined the parcel buildable. With the help of his own broker, buyer negotiated an agreeable purchase contract. During escrow, seller's broker provided a copy of the 1982 Fault Hazard Investigation report, bearing the 1982 approval of Riverside County, wherein the property was located; he advised buyer's broker to "check out" the report. Neither buyer nor his broker read the report nor investigated the issue; buyer's broker led buyer to believe the property was "ready to build," and buyer so relied in completing the transaction. After closure of the deal, buyer learned that the state of the art concerning investigation of fault hazards had changed since the 1994 Northridge earthquake, and the County of Riverside no longer accepted investigation reports that predated that earthquake. Buyer's intended use of the property was rendered impractical by the costs it would now take to make the property buildable for his purposes.

Buyer sued seller, seller's broker and his own broker. At bench trial, the court found buyer's broker liable in the sum of $232,147 for breach of fiduciary duty and negligence. Seller and seller's broker were found not liable. Buyer appealed the finding of non-liability as to seller's broker. The Court of Appeal, Fourth Appellate District, Division Two, affirmed the judgment.

Without disputing the truthfulness of seller's statements, buyer contended the statements gave the false impression that the Fault Hazard Investigation report remained valid as a basis for developing the property in 2006. The appellate court began its analysis by commenting that, while a real estate broker owes his own client fiduciary duties, the only duties owed to third parties are statutory, specifically those found in Civil Code Section 1088. There, it is stated that one is responsible for the truth of all representations made in an MLS so far as one has knowledge or should have knowledge; a broker may be found negligent to anyone injured by the falseness or inaccuracy of such statements.

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May an adhesive, yet bilateral, employment arbitration clause that is not unduly harsh, oppressive or one-sided be found unconscionable and unenforceable?

In Sanchez v. CarMax Auto Superstores California, LLC (filed 2/6/14, publication ordered 3/4/14) B244772, plaintiff signed an arbitration agreement as a part of his employment application. He was hired as service manager and remained in that position until he was terminated about 4½ years later. In his lawsuit, plaintiff claimed the reason cited for his termination, unsatisfactory performance, was not the true reason; rather, he had been terminated because he raised safety issues about cars sold by CarMax. CarMax's motion to compel arbitration was denied by the trial court, which found the arbitration agreement to be unconscionable and thus unenforceable. CarMax appealed. The Court of Appeal, Second Appellate District, Division One, reversed, directing the matter to arbitration.

The appellate court, in its de novo review, did find the agreement evidenced some degree of procedural unconscionability due to its adhesive nature. However, continued the court, the arbitration agreement must also be substantively unconscionable to be unenforceable. That would require a contract term to be unduly harsh, oppressive, or one-sided. The trial court had found unenforceability here because it viewed the arbitration agreement as not sufficiently allowing discovery, as placing certain requirements on an employee that were not placed on employer, as not giving the arbitrator authority to require just cause for an employment termination, and as not allowing claims of multiple employee claimants to be adjudicated in a single arbitration. The appellate court disagreed on each of these points.

The arbitration agreement here limited each side to 20 interrogatories and 3 depositions; discovery could be expanded by the arbitrator if there is a showing of "substantial need" and additional discovery "is not unduly burdensome and will not unduly delay the conclusion of the arbitration." The trial court concluded the permitted amount of discovery is too low and the burden of showing a need for more discovery is so high as to thwart the ability to prove ones claims. The Court of Appeal disagreed because plaintiff here made no showing of any need for additional discovery. While a requesting party should not have to"demonstrate that a fair hearing would be impossible without additional discovery" (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 716), the standard here was merely a showing of substantial need.

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Where law exempts requirement, may owner who rents out a residence be liable for failure to install self-closing door latch of door leading to swimming pool where minor guest of tenant drowned?

Pool.jpgIn Johnson v. Prasad (filed 2/25/14) 2014 DJDAR 2325, homeowners (the Prasads) bought a home in 2000 which had a 14-year-old pool in the backyard. A six foot fence blocked access to the pool, except from the interior of the home via a kitchen sliding door. That door had a security gate, but lacked a self-closing mechanism. California law requires (since 1996) that new and remodeled pools either be fenced or otherwise have self-closing mechanism at entry points; existing pools are otherwise exempt. (Health & Safety Code section 115922.) In 2009, the residence was occupied by renters, who hosted a party at the home. Among their guests were four-year-old Allen, his father and grandmother. The group left the pool area to go into the house; grandmother left the security door open as others were still coming in. Grandmother lost track of Allen after he went into the house. Unfortunately, Allen went back outside into the pool area unnoticed, and drowned in the pool.

Allen's mother sued for Allen's wrongful death; the Prasads were named among other defendants. The Prasads' motion for summary judgment was granted by the trial court; that court found no triable issues of fact remained with respect to breach of any duty and causation. The Court of Appeal, Third Appellate District, reversed, finding as a matter of law that the homeowners owed a duty of care to protect the child from drowning in the home's pool, and that there were triable issues of fact as to whether the failure of the owners to install a self-closing mechanism was a substantial factor in casing the child's death.

In its opinion, the appellate court analyzes policy considerations involved in determining duty and causation in the context of the above-cited Swimming Pool Safety Act. More specifically, it examined the burden and consequence of imposing a duty of care here. The trial court had found that the Prasads were not negligent per se with respect to failing to install a self-closing mechanism as they were exempt from that requirement. But the Court of Appeal sees the statute as having a broader applicability: that the Act reflects a policy of this state to impose some responsibility on certain homeowners to prevent swimming pool drownings; the extent and burden on even exempt homeowners is slight, in the court's view, when compared with the benefit to the community in saving lives.

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May server of alcohol at a fee-generating event be liable for the vehicular tort committed by an obviously intoxicated paying minor?

Social hosts furnishing alcohol generally enjoy immunity from liability as not being the proximate cause for injuries caused by an intoxicated guest. (Civil Code section 1714 (b).) However, this immunity is not available for a server falling within Business and Professions Code section 25601.2, which provides that a person not required to have a liquor license may be held liable if a sale of alcohol to an obviously intoxicated minor occurs.

The critical question for the California Supreme Court in Ennabe v. Manosa (filed 2/24/14) S189577 was whether the circumstances there constituted a sale within the meaning of section 25601.2. Manosa hosted a party at her parent's vacant rental residence, paying for a disc jockey to play music, and providing $60 worth of alcoholic beverages, as well as cups and cranberry juice. Two of Manosa's friends paid for a portion of the initial purchase of alcohol. A number of guests were invited to the party free of charge. She asked a friend to act as a "bouncer" at the side gate entry to the party, instructing him to charge uninvited guests $3 to $5. Thomas Garcia was among those who paid an entrance fee. Once $50 to $60 had been collected, those funds were use to purchase additional alcohol. Garcia, a minor, as were most of the people at the party, had 4 shots of whiskey before arriving at the party and continued to consume the provided alcohol once there. Ennabe, a late-arriving invited guest, escorted the unruly Garcia to Garcia's car. The intoxicated Garcia ran over Ennabe, killing him.

In the wrongful death action brought by Ennabe's heirs, Manosa was granted summary judgment in the trial court on the defense of civil immunity; the Court of Appeal affirmed. The Supreme Court reversed based on the liability provision of section 25601.2.

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May employee sue for whistleblower retaliation under the federal False Claims Act in state court, and have that right decided in a petition for extraordinary relief?

February 17, 2014

file000127834430.jpgIn Driscoll v. Superior Court (filed 1/30/14) 2014 DJDAR 11270, the Court of Appeal, Fifth Appellate District, answered yes on both counts, issuing a writ of mandate instructing the state trial court to overrule the demurrer it had previously sustained without leave to amend.

Driscoll had been employed as a medical doctor with real party Spencer's medical group. Spencer initiated the state action by suing Driscoll, alleging various causes of actions including breach of contract, disparagement, fraud and defamation. Driscoll proceeded to file a federal court action alleging retaliation under the FCA; he additionally cross-complained in the state action claiming whistleblower retaliation under the federal FCA and wrongful termination. The gist of his claims was that Spencer refused to pay him for excess hours worked and he was terminated in retaliation for requesting such pay and for complaining about Spencer's billing practices which he believed were fraudulent concerning Medicare and Medi-Cal patients.

In the state court action, Spencer demurred to the federal FCA causes of action alleging the trial court lacked subject matter jurisdiction. The trial court agreed, finding that the federal FCA statute's reference to the filing of such action in an "appropriate [federal] district court" implies that the state courts would not have concurrent jurisdiction. Driscoll then petitioned the state appellate court for a writ of mandate to reinstate the federal FCA causes of action.

Because Driscoll still had other causes of action he could pursue in his state action cross-complaint and still had to defend against Spencer's complaint, Driscoll did not have an order from which he could appeal; his resort for relief here thus was for extraordinary writ relief, which is a method of review dependent on the appellate court's exercise of discretion. Here, the court exercised that discretion because: (1) it appeared the trial court deprived Driscoll of the opportunity to plead his cause of action and immediate review may prevent a needless trial and reversal (Taylor v. Superior Court (1979) 24 Cal.3d 890, 894); and (2) the demurrer raised an important question of subject matter jurisdiction (San Diego Gas & Electric v. Superior Court (1996) 13 Cal.3d4th 893, 913).

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Where a sanction award is statutorily appealable, may the merits of a medical damages discovery dispute resulting in that sanction be reviewed at the same time?

February 14, 2014

file0001257337525.jpgIn Dodd v. Cruz (filed 2/5/2014) B247493, Dodd sued Cruz for injuries sustained in a vehicle accident, including medical surgical expenses he incurred with Coast Surgery Center as a result of the accident. Coast sold to Medical Finance LLC (MedFi) its medical lien for services provided to Dodd. (MedFi's president is Dodd's attorney, Waks.) Cruz sought discovery of documents relating to the lien transaction via subpoena; MedFi succeeded in a motion to quash the subpoena (joined by Dodd), including the trial court's award of $5,600 in sanctions. Cruz appealed the sanction order (sanctions in excess of $5,000 being immediately appealable under Code of Civil Procedure section 904.1, subd. (a)(12).). The Court of Appeal, Second Appellate District, Division Three, reversed the granting of the motion and awarding of sanctions.

The documents sought by Cruz were a contract between Med-FI and Coast that predated Dodd's surgery, a redacted assignment of the claim dated the day of the surgery, and "MedFi's Open Lien Detail;" these documents included evidence of the amount paid for its lien. MedFi objected on grounds of confidentiality, proprietary rights, and relevance. In its motion to quash the subpoena of the documents, MedFi claimed it would incur attorney fees of $5,600 in prosecuting it motion. The trial court granted the motion on grounds of relevancy and awarded the requested sanctions.

Respondents to the appeal first contend the trial court order to quash was not reviewable on a statutory appeal of the sanctions order. The appellate court disagreed, finding that a discovery ruling is reviewable if it "necessarily affects" an appealable order (section 906); here the underlying discovery ruling was "inextricably intertwined" with the monetary sanctions order.

Next, the Court Appeal discussed respondents' contention that the subpoena was not directed at obtaining any documents relevant to this personal injury litigation. It was undisputed that the amount of economic damages, if any, that Dodd may recover for his medical treatment by Coast was one of the subject matters of the lawsuit. The court thus reviewed the measure of damages for past medical expenses: the lesser of the reasonable value of the medical services and the actual amount paid to discharge that obligation. (Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 555.) The court found that the subpoena was reasonably calculated to lead to discovery of admissible evidence of reasonable value of the services. Coast's belief of reasonable value, allowing for the risk and expense of collection, could be explained from the amount it received for conveying the lien to Medfi. As a part of this inquiry, what a medical provider is willing to accept in relinquishing its claim may be an adjustment downward from the face amount of its gross billing.

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Does employer owe preconception duty-of-care to child of employee for harmful work environment, and is "duty" necessary to prove strict liability?

office-supplies-2-892172-m.jpgIn El sheref v. Applied Materials, Inc. (filed 1/27/14) H038333, the father of the plaintiff minor worked as an engineer at defendant's semiconductor manufacturing facility. Father's duties included working with tools containing mercury and ethylene glycol and being exposed to ionizing radiation. Defendant provided information, training, and medical advice to employees to assess and reduce potential workplace hazards. At one point, father was examined by a physician to authorize his wearing of a respirator at work; that examination included a questionnaire that posed, among its inquiries, some questions about his reproductive history. At another point, a report was completed by employer concerning whether a subject tool leaked mercury. No mercury was detected, according to the report, but the report went on to direct measures for limiting employees' skin from mercury exposure. Minor's mother conceived and gave birth to him during father's employment.

Minor was born with birth defects, alleged in his lawsuit to have resulted from father's exposure to reproductively toxic chemicals. The lawsuit further alleged that defendant knew or should have known of this danger, and failed to adequately protect its employees; that serious injury was a probable result to employee's future children. The causes of action asserted were negligence, strict liability/ultrahazardous activity, willful misconduct, misrepresentation and strict products liability. In the trial court, defendant moved for summary adjudication arguing that no legal duty was owed to minor for preconception injuries; only medical professionals and manufacturers related to conception/pregnancy owe such a duty of care. The trial court agreed. Through his guardians, minor appealed.

The Court of Appeal, Sixth Appellate District, concluded defendant employer did not owe a preconception duty to minor; however, because minor's strict products liability claim did not require the proof of duty, the court reversed the judgment with directions to the trial court to reinstate that cause of action.

A cause of action for a preconception tort was recognized by the California Supreme Court in Turpin v. Sortini (1982) 31 Cal.3d 220; the court narrowly limited such liability to negligent medical treatment of a mother during pregnancy or before conception. Liability was sought to be extended to a motorist who caused an accident that injured a mother years before she gave birth to a child born with a health defect in Hegyes v. Unjian Enterprises, Inc. (1991) 234 Cal.App.3d 1103. The Hegyes court found no liability could arise because defendant's conduct was not inextricably related to an inevitable future pregnancy, and there was neither a special relationship nor foreseeable injury.

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Is employee's verdict finding employer retaliated in violation of public policy in terminating him reversible and subject to retrial based on jury's instruction that retaliation was "a motivating reason" rather than "a substantial motivating reason?"

hammer-to-fall-673264-m.jpgIn Mendoza v. Western Medical Center Santa Ana (filed 1/14/14) G047394, plaintiff served as a staff nurse at defendants' hospital for more than 20 years. At times, he was supervised by fellow employee Del Erdmann, a per diem house supervisor since April 2010. Both men are gay. Mendoza complained to defendant's human resource department that Erdmann had harassed him with inappropriate comments, physical contact, and lewd displays starting in August 2010. Mendoza denied he had consented to this activity, Erdmann claimed he had. Defendants investigated and determined that both should be terminated; with respect to Mendoza, defendant cited him for "unprofessional conduct" in that he was complicit with Erdmann in engaging in inappropriate sexual behavior while on duty.

Plaintiff prevailed at trial on his claim of retaliation in violation of public policy; he was awarded $238,328. The trial court had instructed the jury with the 2012 version of CACI No. 2430 that the plaintiff must prove that his report of sexual harassment was "a motivation reason," for plaintiff's termination. Defendants had objected to this instruction. As the California Supreme Court later determined in Harris v. City of Santa Monica Target="_blank" (2013) 56 Cal.4th 203, the correct instruction is that plaintiff needed to prove that such was "a substantial motivating reason." Defendants appealed claiming the instruction constituted prejudicial error, and that because no substantial evidence supported the verdict, they were entitled to a defense verdict as a matter of law. The Court of Appeal, Fourth Appellate District, Division Three, reversed for prejudicial error, but denied the request for a defense judgment, remanding for retrial.

The appellate court focused on the causation requirement as the crux of the case. That concept gets a bit slippery here. Plaintiff claimed his report of sexual harassment caused defendants to fire him. Defendants cited their belief that he had willingly participated in sexual misconduct on the job as their motivation reason for termination. What gets tricky is that even under defendants'stated motivation, Mendoza's report did cause the firing in the indirect sense that he alerted them to what they ultimately determined was misconduct on plaintiff's part.

So defendants not only claimed that Harris disapproved of the instruction given by the trial court, but also that the instruction given, and its corresponding special verdict form, may have made the verdict inevitable because it allowed the jury to infer retaliatory intent based on a causal finding that Mendoza's report of sexual harassment even though their concern was misconduct revealed to them by this triggering report. They suggest that a more appropriate instruction would be plaintiff must prove that defendant acted based on the prohibited motivating reason and not the permitted motivating reason.

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Can allegation of employer's failure to reimburse for extensive vehicle use support constructive discharge or emotional distress claims?

In Vasquez v. Franklin Management Real Estate Fund, Inc. (pub. ordered 12/31/13) B245735, the Court of Appeal, Second Appellate District, Division Four, answered "yes" to the constructive discharge claim, and "no" to the emotional distress claim.

Defendant employed plaintiff as a maintenance technician at $10 per hour for a 40-hour week. Plaintiff's duties included driving his own vehicle to a hardware store and performing other errands in obtaining items needed in maintaining defendant's apartments. Plaintiff alleged in his lawsuit against defendant that he could not afford these vehicle costs which were incurred based on a minimum of 30 miles of travel per day; his requests for reimbursement were denied. He claimed he had no choice but to resign after his repeated requests were denied after 15 months on the job. His suit alleged violation of Labor Code section 2802 and that the denial of reimbursement effectively left him with less than minimum wage during his tenure. His claims included constructive discharge in violation of public policy, and intentional infliction of emotional distress.

Defendant demurrer to the first amended complaint was sustained without leave to amend. The trial court found that the failure to pay $15 per day for mileage expenses was "not conduct that was so intolerable or aggravated that a reasonable person in the employee's position would have felt no choice but to resign." Plaintiff appealed.

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Review granted of opinion on sleep-time compensation for round-the-clock security guards.

December 18, 2013

The blog dated July 12, 2013, discussed the Second District opinion of Mendiola v. CPS Security Solutions (2013) 217 Cal.App. 4th 851. As I stated then, the Court of Appeal decision appeared to be a split decision that (1) permitted employers so situated to deduct eight hours from an employee's pay for sleep time when the employee guard was on duty for 24 hours, yet (2) found that on-call time that did not fall within a truly uninterrupted sleep time feel within "hours worked" requiring compensation. The critical question was whether the employee was under the control of the employer and not free to pursue personal matters.

On October 16, 2013, the California Supreme Court granted review of that opinion. Other than the fact that the Court of Appeal opinion is no longer citable, what conclusions, if any, should one draw from this grant? In the first place, it is always dangerous to assume that when the Supreme Court grants review that it will reverse the appellate court. Often times, the state high court will determine that it is time that it speak to a particular issue, and that pronouncement might well be totally in lock-step with the lower court opinion. Trying to read the "tea leaves" in this instance is even more difficult because there may be portions of the opinion the court will agree with, and other portions that it takes issue with.

So how should similarly-situated parties conduct their business in the meantime (which can be a long time)? It would seem that parties need to expressly provide in employment contracts the circumstances under which compensation will be paid including precise statements of employee freedom during those times the employee will not be paid. But even then, an employer runs the risk that the Supreme Court may rule that contractual exclusions from "hours worked" violate public policy. So there really is no safe haven and we will await the Supreme Court's ruling for a clearer definition. Whether a "brighter line" will be drawn remains to be seen.

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