Employee or independent contractor?--State doesn't get do-over on new claim of wage statement violations.

Contract1.jpgThe California Employment Development Department (EDD) and the state's Division of Labor Standards Enforcement (DLSE) are two state agencies that enforce the law concerning what each finds to be "employment" by issuing assessments and penalties respectively against employers. In each instance, the state agency's determination is subject to administrative review including the determination of whether a working party is an employee or an independent contractor in providing services to another party. In the latter instance, the working party is not employed by a claimed employer and thus the claimed employer is not subject to such assessments or penalties.

In Happy Nails & Spa of Fashion Valley, L.P. v. Julie A. Su, as Labor Commissioner (filed 7/19/13) D060621, Happy Nails sought to set aside an administrative decision assessing civil penalties in a DLSE matter for its failure to provide cosmetologists who work in its salon in Fashion Valley and Mira Mesa with employee wage statements that itemize deductions. Previously, in an EDD matter, the Unemployment Insurance Appeals Board (UIAB) rendered a final opinion overruling assessments imposed there against Happy Nails finding the cosmetologists so situated were independent contractors. In the instant matter, the trial court (San Diego Superior Court) denied Happy Nails' request for relief, entering judgment in favor of the Labor Commissioner. However, the Court of Appeal, Fourth Appellate District, Division One, agreed with Happy Nails; a final decision of the UIAB that the cosmetologists are not employees collaterally estops the Commissioner from assessing penalties in this DLSE case. The judgment was reversed, and remanded to allow Happy Nails to be heard on its requests for a permanent injunction and attorney fees.

The appellate court focused on the requirements that were met here for application of collateral estoppel or issue preclusion; that the prior case involved: (1) the identical issue, (2) actual litigation, (3) necessary decision, (4) determination that was final and on the merits, and (5) the party there was in privity with the present party against whom preclusion is sought.

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Manufacturer of grinder has no liability for nor duty to warn of grinder's use with blade expressly excluded from intended use of grinder.

Manufacturer.jpgIn Sanchez v. Hitachi Koki, Co., Ltd. (filed 7/9/13) 2013 DJDAR 8970, plaintiff sued the manufacturer of a grinder for personal injuries resulting from plaintiff's use of a saw blade manufactured by a third party. The grinder's safety manual and instructions expressly warned that saw blades should not be used with the grinder. Plaintiff was trying to grind down a truck tire. When the grinder he was using did not get the job done, plaintiff went to a hardware store (sued also) to get a bigger grinder, one manufactured by defendant Hitachi. Plaintiff alleges that a store employee recommended that a Razor Back tooth saw blade be used with the grinder. Plaintiff did so, and when the saw blade came in contact with the tire, he lost control of the grinder, cutting his left hand.

Hitachi moved for summary judgment, relying on O'Neil v. Crane Co. (2012) 53 Cal. 335. (See discussions on this blog dated June 1, 2012.) The California Supreme Court stated in O'Neil that a manufacturer has no duty to warn about another manufacturer's product even if it was forseeable that the two products would be used together; this defendant's product would have to contribute substantially to the harm in order for there to be liability. The trial court agreed with Hitachi and granted summary judgment. On plaintiff's appeal, the Court of Appeal, Second Appellate District, Division Four, affirmed.

Plaintiff argued that O'Neil is distinguishable because the grinder itself was defective on three bases: (1) Hitachi's grinder lacked "kickback" protection, (2) this particular blade and other common circular saw blades fit the grinder, and (3) there was no applicable warning on the grinder itself. The appellate court disagreed quickly dispatching this argument as follows: (1) the product was not designed or intended to be used with a blade and in fact warned against such, even though Hitachi had no duty to warn, thus the question of kickback protection is irrelevant and such a requirement would be contrary to public policy; (2) likewise irrelevant is the fact that blades could fit into the grinder because manufacturer's intended use rather than mere compatabilty is the appropriate question; and (3) the adequacy of the warning given by Hitachi is irrelevant as it had no duty to warn. In sum, there was no evidence that any conduct of Hitachi contributed substantially to the harm caused to plaintiff, thus the O'Neil rule applied.

I see the appellate court here saying to litigants the Supreme Court meant what it said in providing that a manufacturer, as a matter of public policy, cannot be expected to warn about other products for which it is not responsible. One should have a viable theory of liability before suing any party within sight. In Sanchez, the plaintiff will have his day in court against the seller who allegedly recommended the use of the blade in the manner in which it was used.

The information contained in this blog is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients, clients or otherwise, should act or refrain from acting on the basis of any content included in this blog without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. The content of this blog contains general information and may not reflect current legal developments, verdicts or settlements. The Firm expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this blog.

Must on-call, 24-hour, live-in employees be compensated by their employer for hourly wages for the full 24-hour shift including sleep time?

allcenter.jpgIn Mendiola v. CPS Security Solutions, Inc. (filed 7/3/13) B240519, the Court of Appeal, Second Appellate District, Division Four, gives a Solomon-like answer. In this class action, the plaintiffs are trailer guards employed by defendant to provide around-the-clock security at construction sites. During the nighttime periods, defendant considered the trailer guards "on call" and generally compensated them only for the time spent actively conducting investigations. Individual employment contracts provided that employees working 24-hour weekend shifts would not be paid for the time period of 9 p.m. to 5 a.m. with exceptions The trial court granted a preliminary injunction requiring defendant to compensate plaintiffs for all on-call time spent in live-in trailers.

The appellate court's disposition lays out the split-the-baby response, partially reversing the injunctive order: "On those days (24-hour weekend shifts), the guards must be compensated for 16 hours; eight hours may be excluded for sleep time, provided the guards are afforded a comfortable place to sleep, the time is not interrupted, the guards are compensated for any period of interruption, and on any day they do not receive at least five consecutive hours of uninterrupted sleep time, they are compensated for the entire eight hours."

The primary focus of the appellate court's discussion is California Industrial Welfare Commission (IWC) Wage Order No.4, which defines hours worked as "the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so." First, the defendant-employer claimed that plaintiffs were free to engage in personal activities while "on call," thus not actively engaged in work unless prompted otherwise. Second, defendant argued the time period from 9 p.m. to 5 a.m. constituted excludable "sleep time," whether or not the employee actually slept during all or part of this time period.

The first issue (on-call time) caused the court to recite seven factors in determining degree to which employees are free to pursue private matters: (1) on-premise living requirements, (2) geographic restrictions, (3) frequency of calls, (4) time limits to respond, (5) ability of employee to trade on-call times with others, (6) whether use of paging could ease restrictions, and (7) actual engagement in personal activities. (Gomez v. Lincare, Inc. (2009) 173 Cal.App.4th 508, 523.) Applying these factors to this case, the court found the employer exercised a high degree of control: employees were required to live at the jobsite and respond immediately in uniform to suspicious activity, they were very limited in being relieved of duties or being any distance from the worksite, and they were forbidden from normal freedoms (children, pets, alcohol and entertaining others). Thus on-call time, except for weekend around-the -clock "sleep time," fell within "hours worked."

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Does laches bar beneficiary's action filed after settlor's death contesting capacity to amend trust when issue known long before death?

1221950_to_sign_a_contract_1.jpgIn Drake v. Pinkham (published 6/21/13) 2013 DJDAR 8028, appellant and respondent were the surviving daughters of mother, the settlor of a revocable trust. Their father and mother had a living trust that provided upon one's death there would be a split into a survivor's trust to support the survivor, and a family trust that would give equal shares to the two daughters upon death of the surviving spouse. Father died first. When settlor-mother died in 2009, appellant petitioned the probate court to invalidate two amendments mother had made to the survivor's trust--one executed in 2001, the other in 2004--primarily claiming the mother lacked mental capacity and was unduly influenced by respondent-sister. These amendments eliminated appellant as a beneficiary of the survivor's trust, and named respondent acting co-trustee with the mother and sole successor trustee.

In an earlier action in 2005, appellant had petitioned the court to appoint her as an acting co-trustee of the survivor's trust, replacing the mother, based on the mother's alleged inability to act as trustee and the alleged undue influence of respondent over mother. This petition met with mother's objection: she denied she was incapable to act as trustee and that, while respondent did assist her, respondent did not control her. She additionally pointed to the 2001 and 2004 amendments which excluded appellant as beneficiary and made no provision for her to serve in any trustee position. Rather than challenge the amendments, appellant reached a settlement agreement in which mother as sole acting trustee of the family trust agreed not to dispose of any family trust property without the consent of both daughters.

Back to the present action, respondent moved for summary judgment on the grounds that applicable statutes of limitation, principles of res judicata and the doctrine of laches barred the petition. The trial court granted summary judgment finding that some of appellant's causes of action were barred by res judicata and the remaining were barred by the statute of limitations. It did not reach the issue of laches. The Court of Appeal, Third Appellate District, affirmed, finding the petition barred by laches.

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May City avoid, based on policymaking powers, collectively bargained MOU arbitration regarding grievance over mandatory employee furloughs?

City.jpgIn City of Los Angeles v. Superior Court ( filed 6/21/13) S192828, City, after declaring a fiscal emergency, placed civilian employees on a mandatory unpaid furlough requiring one less 8-hour work day during each 80-hour work period. Employees filed grievances. Wage and hour provisions of the collectively bargained MOU provided that employees would be compensated for 40 hours per week based on 52 weeks per year. Contractually, MOU grievances were to be submitted to arbitration. City refused to arbitrate the grievances because arbitration here would constitute an unlawful delegation to the arbitrator of discretionary policymaking powers.

Employees through their union petitioned the Superior Court to compel arbitration. The court granted the petition. City then petitioned the Court of Appeal, which agreed with City that it could not be compelled to arbitrate. In its 4-3 majority opinion, the California Supreme Court reversed the Court of Appeal, finding arbitration of this dispute does not constitute an unlawful delegation of discretionary authority, and City is contractually obligated to arbitrate.

The City argued its right to unilaterally impose furloughs is found in the MOU provision that City could "relieve City employees from duty because of . . . lack of funds;" that a grievance can only be brought as to the practical consequence of a furlough decision. The Union countered that the quoted provision authorized layoffs, not furloughs and does not override the MOUs' wage and workweek provisions. While saying the contractual language is not free of ambiguities, the Supreme Court majority agreed with the Union. It found that, by ratifying the MOU, City made discretionary choices regarding salaries and the overall budget; what was being determined in these grievances is a matter of contractual interpretation typically vested in the courts, or in this case an arbitratorial tribunal; the arbitrator would not be exercising any discretionary policymaking authority as complained of by City.

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Where law firm represents a company and a member against another member of the company giving rise to hypothetical conflict of interest, but no actual conflict or reasonable likelihood exists, must law firm be disqualified?

I am becoming more and more convinced that trial courts should be more restrained in disqualifying law firms based on mere appearances of potential conflicts of interest. That certainly seems to be the message in a trend of appellate cases. And I may have been a participant in this trend, when I authored the opinion in Baker Manock & Jensen v. Superior Court (2009) 175 Cal.App.4th 1414, in which the Fifth Appellate District found the mere possibility that a conflict of interest existed for a law firm to represent the executor of an estate and a beneficiary against another beneficiary did not warrant the trial court's order of disqualification.

More recently in this blog's May 8, 2013 entry, I discussed (with some reservation as to the reasoning) Khani v. Ford Motor Company (published 4/25/13) 2013 DJDAR 5399, in which the Second Appellate District reversed the trial court's disqualification of an attorney who sued a former client; the appellate court found no evidence the attorney had been actually exposed in the prior representation to information similar to that in the case of his current client opposing his former client.

Now we have Havasu Lakeshore Investments, LLC v. Fleming (published 6/18/13) G047244, in which the Fourth Appellate District, Division Three, too reverses a trial court's disqualification. In this case, the trial court had disqualified a law firm from simultaneously representing a limited liability company, its manager member which itself is a partnership, and the person managing that partnership in a lawsuit against two of the company's minority members. The appellate court found no actual conflict of interest and that there was no reasonable likelihood a conflict would arise; thus, there was no reason to order disqualification because of the appearance of split loyalty (that being the basis of the trial court's disqualification in reliance on rule 3-310(C) of the California State Bar Rules of Professional Conduct).

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Must medical provider prove charges were "reasonable and necessary" in seeking lien on portion of award for medical expenses patient received from third party?

medical.jpgThe Court of Appeal, Fourth Appellate District, Division One, answers, "yes." Sounds pretty straight-forward. But more may be involved here than meets the eye.

To place this question in context, when a party without medical coverage is injured in an automobile accident, that party might say to the treating hospital, "Just bill the liability insurance company of the person responsible for the accident." The hospital's financial offices might run a quick check of the situation and determine an insured third party is responsible for the injuries, and figure it will get paid eventually. It might also feel protected by the Hospital Lien Act (California Civil Code Sections 3045.1-3045.6) which says the hospital, in providing reasonable and necessary services to a patient who was injured as a result of the legal fault of a third party, has a lien upon the damages recovered from the third party by the patient.

The above scenario approximately describes the position of the defendant healthcare provider in State Farm Mutual Automobile Insurance Co. v. Huff and Pioneers Memorial Healthcare Dist. (published opinion filed 6/11/13), D062550. The provider treated Huff for injuries he incurred in an automobile accident for which it billed $34,320.86 for medical services. Neither Huff nor anyone on his behalf paid for these services. Huff in turn sued the other driver, insured by State Farm, and obtained a judgment for $356,587.92 in damages; as part of this, the jury found that Huff's past medical expenses incurred in this matter were $232,708.80. State Farm received notice from the provider of its Hospital Lien Act claim, then filed the present interpleader action, essentially asking the court to whom and in what proportion it should pay the asserted lien amount of $34,320.86.

The trial court found the authenticated hospital statement was prima facie evidence that the services were rendered and billed for, and that the Hospital Lien Act does not require detailed description or expert declaration to establish reasonableness and necessity, viewing the lien procedure to be a simplified process. It saw the matter as one of collection on common counts, rather than one where "reasonable and necessary" proof would be required for the purpose of proven causation and damages in a contested tort action It awarded the provider the lien amount less a pro rata share of the costs and attorney fees incurred in the interpleader action.

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Is plaintiff's initial statutory offer to settle extinguished regarding expert costs incurred after that offer yet before a second one, where judgment met or beat either offer?

writing_check.jpgIn Martinez v. Brownco Construction Company, Inc. (published opinion file June 10, 2013) S200944, Gloria Martinez offered to compromise her loss of consortium claim concerning serious injuries suffered by her husband, co-plaintiff Raymond, via two settlement offers pursuant to California Code of Civil Procedure section 998. In August 2007, she offered by way of a demand for $250,000. She received no response from defendant during the statutory 30-day period to respond. Shortly before trial, in February 2010, she served a compromise offer in the lessened sum of $100,000. Again no response followed. At trial she obtained a $250,000 judgment.

Mrs. Martinez incurred $188,537 in expert fees in the time that intervened between the two 998 offers. The statute allows a party prevailing on a 998 offer to recover such fees incurred after the serving of the offer. She took the position that her August 2007 initial offer preceded the incurrence of these fees and sought this item as a recoverable cost. The trial court (Los Angeles County Superior Court) found, under Wilson v. Wal-Mart Stores, Inc. (1999) 72 Cal.App.4th 482, the most recent offer was the only pertinent offer--that this item of cost was incurred before that February 2010 offer, and thus the court disallowed its recovery. The Court of Appeal reversed based on the statute's language and purpose. After granting defendant's petition for review, the California Supreme Court ruled that where two statutory offers to compromise are served by plaintiff, and defendant fails to obtain a more favorable judgment than either offer, expert fees may be recovered from the date of the first offer.

The Supreme Court notes that nothing in the 998 statute prevents a plaintiff from making more than one compromise offer, and it is silent as to the effect of a later offer upon an earlier one. The policy behind the statute, to encourage settlements before trial, is effectuated by giving a strong financial disincentive to parties failing to achieve a better result than it could have achieved by accepting a statutory offer. Strict adherence to contract principles could stifle this strong policy. With this backdrop, the state high court scrutinized the so-called "last offer rule."

The last offer rule strongly dictated the results in Wilson, upon which the trial court relied, and in another Court of Appeal decision cited by defendant, Distefano v. Hall (1969) 263 Cal.App.2d 380. In those cases, where the judgment rendered fell in between the earlier and later of two 998 offers, the later offer extinguished the earlier one. Thus where the amount of judgment was less than a plaintiff's second offer, yet greater that an earlier offer, the later offer was the only one that mattered in determining the time period for which 998 costs could be awarded. (Distefano). Where the reverse occurred: the amount of judgment was greater than a plaintiff's second offer, yet less than an earlier offer, again the second one was the only one that mattered, and the effect was to entirely disallow any 998 costs (Wilson).

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Can the alleged reckless failure of outpatient treating medical professionals to refer elder's case to vascular specialist constitute elder abuse?

Outpatient.jpgIn Winn v. Pioneer Medical Group, Inc. (published opinion filed 5/24/13) B23712, the 83-year-old patient of the defendant medical group died in January 2010 from blood poisoning after emergency vascular surgery was unsuccessful in stemming her long-term vascular impairment. She had been treated by defendants for about 10 years, and she was under their sole medical care for about 3 years. In 2007, although she was diagnosed with peripheral vascular disease, defendants failed to refer her to a vascular specialist. Even as her condition worsened while under their care up to several months before her death, according to the amended elder abuse complaint filed by her heirs, defendants recklessly "failed to provide such needed medical care to [decedent] under circumstances where [d]efendants . . . knew the health and well-being of [decedent] depended on such care."

Defendants twice demurred; the demurrer to the amended complaint was sustained without leave to amend. The trial court (Los Angeles Superior Court) concluded plaintiffs "failed to provide facts showing that the defendants denied the decedent needed care in a reckless sense as is required for a violation of the Elder Abuse Act . . . Instead, the allegations describe professional negligence and incompetence. . ." The Court of Appeal, Second Appellate District, Division Eight, in a 2-1 opinion, reversed. The majority found that the elder abuse statute does not limit liability to health care providers with custodial obligations, and the question of recklessness should be left for a jury to decide.

Welfare & Institutions Code section 15657 is the operative provision of the Elder Abuse Act in play here. That section states: "Where it is proven by clear and convincing evidence that a defendant is liable for physical abuse . . . , or neglect . . . , or fiduciary abuse . . .[of an elderly or dependent adult] and the defendant has been guilty of recklessness . . . in commission of this abuse, the following shall apply in addition to all other remedies provided by law: (a) [t]he court shall award to the plaintiff attorney's fees and costs." Additionally, where the elderly person dies, the plaintiff heirs are exempted from the exclusion of pain and suffering damages (allowed up to $250,000 under Civil Code section 3333.2). As to whether outpatient care is covered by this statute, two provisions provide potentially different interpretations: Section 15610.57 makes reference to "any person having the care or custody of the elder;" Section 15610.07 defines "abuse" as concerning "care custodians." Section 15657.2 excludes liability for acts of "professional negligence" brought against a health care provider.

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Can pay, based on hours worked with no guaranteed minimum, be deemed a "salary," making employee exempt from overtime?

overtime.jpgCalifornia Labor Code section 515, subdivision (a), sets forth the requirements for determining whether an employee may be classified as exempt from pay requirements including those with respect to overtime: (1) the primary job duties are executive, administrative or professional), (2) the work involves the regular exercise of discretion and independent duties, and (3) the "salary" must exceed twice the minimum wage for full-time employment. More particulars are found in Industrial Welfare Commission (IWC) Wage Order 4.

The issue in the recent case of Negri v. Koning & Associates (published opinion filed 5/16/13) H037804 was whether a payment schedule for plaintiff insurance-claims-adjuster, that allowed him to determine his scheduling/number of hours and compensated him at the fixed rate of $29 per hour regardless of the number of weekly hours (whether below, equal to, or in excess of 40) but did not guarantee a minimum amount of pay per pay-period, qualified as a "salary" within the meaning of requirement (3) above.

The trial court (Santa Clara Superior Court), while factually finding that plaintiff had worked "20 hours of overtime a week," had concluded he was an exempt employee, thus not entitled to overtime pay for those hours exceeding 40 per week. The Court of Appeal, Sixth Appellate District reversed.

The appellate court looked to the "federal salary-basis test" found in the Fair Labor Standards Act as the IWC has construed this test to apply and state requirements need to be at least as protective to the employee as federal standards. Federal law requires that the employee would have to have been paid a predetermined amount that is not subject to reduction based upon the number of hours worked in order to meet the salary basis test. So even though insurance adjuster duties qualify for the administrative exemption, the employee must have received compensation on a "salary" basis as specified.

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Is the full amount billed for medical care admissible at personal injury trial to prove past medical, future medical or general damages?

medical_doctor.jpgThe recent appellate opinion in Corenbaum v. Lampkin (filed 4/30/13) 2013 DJDAR 5591 answers "no" on all counts. The California Court of Appeal, Second Appellate District, Division Three, determined that only the actual amount paid for past medical care (here, as is typical, the discount rate paid by the medical insurer) is relevant and admissible. The court acknowledges that in ruling this full-billing evidence inadmissible for all of these purposes, it plows new ground, beyond the holding of the California Supreme Court in Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal. 4th 541. There, the state high court took the minority view among U.S. jurisdictions in holding that an injured plaintiff may not recover as past economic damages more than the amount paid by medical insurance--the full amount of medical billing was not recoverable as past medical expense damages; the court "expressed no opinion as to its relevance or admissibility on other issues, such as noneconomic damages or future medical expenses."( Id., at p. 567.) Allow me to discuss briefly the underpinnings from Howell, how the Corenbaum court navigated its conclusion, and what might lie ahead.

In Howell, the Supreme Court had before it the following: the trial court had admitted evidence of the full medical billings, but granted the defense motion to reduce the medical damage award to reflect the amount actually accepted by medical providers as full payment (per Hanif v. Housing Authority (1988) 200 Cal.App.3d 625); the Court of Appeal reversed, holding the reduction violated the collateral source rule. The Supreme Court held: [W]e merely conclude the negotiated rate differential--the discount medical providers offer the insurer--is not a benefit provided to the plaintiff in compensation for his injuries and therefore does not come within the rule." (Howell, at p. 566.) Thus the trial court in Howell had properly reduced the past medical award post-verdict.

The Corenbaum court recognized the Howell court did not hold that full amount billed was inadmissible to prove past medical expenses, let alone that it was not at all relevant to prove future medicals and/or pain and suffering. It however theorized that because plaintiff can recover as past special damages no more than the amount incurred for past medical services, the value of those services exceeding what was paid is irrelevant and inadmissible to prove the past specials. As to future medical expenses, it reasoned that the billing rate not paid would be an improper foundation for an expert to use to project future medical expenses. Finally, because pain and suffering is so difficult to assess, any attempt to use the otherwise irrelevant "full amount billed" to gauge pain and suffering would be improper.

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When may an attorney represent in a new action a party adverse to former client he represented in previous actions?

attorney.jpgThe short answer is the attorney may represent the new client against his old client when the new case does not involve matters substantially related to the prior representations. A "substantial relationship" exists where " the attorney had a direct professional relationship with the former client in which the attorney provided legal advice and services on a legal issue closely related to the legal issue in the present representation. " (Jessen v. Hartford Casualty Ins. Co. (2003) 111 Cal.App.4th 698, 710, 711.) More specifically, the focus is on "the legal and factual similarities of the two representations." (Farris v. Fireman's Fund Ins. Co. (2004) 119 Cal.App.4th 671, 679.) In Farris, the attorney had worked as coverage counsel for Fireman's Fund for over 10 years handling coverage claims and assisting the client in shaping the company's practices and procedures. Six months after his last representation of that client, counsel filed a bad faith claim against it in representing Farris. The appellate court reversed the trial court's denial of Farris' disqualification motion, finding disqualification was required. (Id. at pp. 685, 688.)

Against this backdrop, the Court of Appeal, Second District, Division Four, reviewed the disqualification of attorney Shahian in the recent case of Khani v. Ford Motor Company (publication ordered 4/25/13) 2013 DJDAR 5399. The motion to disqualify Shahian from representing Khani in Khani's lemon law action against Ford came in an action filed about 4 years after Shahian's last representation of Ford. A partner in Shahian's former law firm declared that Ford was a client of the law firm, Shahian had worked on 150 cases of this client, and Shahian was privy to confidential communications with Ford and information with respect to defense, prelitigation strategies and tactics in the handling of lemon law cases brought against client Ford. The trial court granted the disqualification motion.

The appellate court in Khani reversed the disqualification order. The court cited the above Jessen and Farris opinions approvingly for their legal analysis; but the court saw differences in their facts from the Khani case. For example, the attorney in Farris had "shaped the company's practices and procedures in handling California coverage case." These practices and procedures in Farris were said to likely be at issue in the bad faith case the attorney was now bringing against his former client some six months after he had stopped working for it.

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What are the risks of filing an appeal as a tool to force settlement?

filing an appeal.jpgIn Kleveland v. Siegel & Wolensky, LLP (filed 4/17/13) 2013 DJDAR 4961, the appellate court answered this question with a stinging rebuke: where there was no arguable merit to the initial probate petition and appeal, the court awarded attorney fees and sanctions totaling more than $60,000 against the appellant's attorneys in the later appeal of a malicious prosecution action against the attorneys ("Siegel").

This case had a long and torturous history including this third appeal by appellant concerning the proceedings in the lower court. It all started with appellant Siegel's client's superior court challenge of respondent Kleveland's handling of a trust as trustee. In the first appeal, the Court of Appeal, Fourth Appellate District, Division One, affirmed the trial court's determination that Siegel's client pursued the probate petition in bad faith and for improper purpose, let alone that the challenge was meritless. The second appeal challenged the trial court sanctions imposed against Siegel; again affirmed. Kleveland then filed this malicious prosecution action against Siegel, which resulted in the favorable award for Kleveland including attorney fees. This appeal by Siegel challenged that award, arguing that probable cause existed to bring the probate petition, there was no malice, and the award of attorney fees was an abuse of discretion.

In its published opinion, the appellate court minces no words in affirming. It rejected all of the contentions and stated it was "troubled" by appellant's "utter failure" to provide a summary of significant facts taken for the record. The court was further "perturbed" by the use of asserted facts not contained in the record. Then, the court, on its own motion, found appellant's tactics "patently frivolous" and awarded, in addition to attorney fees, sanctions payable to the appellate court for the court's costs of the proceedings.

The Court of Appeal goes into the details of the lower court proceedings that led to this action and appellant's failures along the way. No need to elaborate here. I must say though that this opinion amounts to the strongest tongue-lashing against counsel that I can recall reading in a published case. In particular, the appellate court found that there was substantial evidence that the initial use of an appeal for the sole purpose of trying to force settlement was malicious. Here, the attorneys' initial malice was exacerbated by failure to follow the basic appellate requirement of stating facts from the record of the proceeding. The result: not only are attorney fees recovered by respondent both below and on appeal, but the attorneys are required to pay sanctions to the court in the sum of $8,500. Not good for either the law firm's finances or its reputation.

In short, a frivolous appeal risks a whole lot more than simply losing the appeal.

The information contained in this blog is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients, clients or otherwise, should act or refrain from acting on the basis of any content included in this blog without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. The content of this blog contains general information and may not reflect current legal developments, verdicts or settlements. The Firm expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this blog.

When should a "negligence per se" jury instruction be given and what is the impact of the giving or not giving?

Jury-Box.jpgThere is a popular notion that if a party has violated a statute, legal liability necessarily flows from that violation. Not always so. Spriesterbach v. Holland (filed 4/9/13) 2013 DJDAR 4567 discusses some of important nuances concerning this subject.

Plaintiff rode his bicycle on a sidewalk in the direction opposite the direction of vehicular traffic on the adjoining roadway. He approached a supermarket parking lot to his left where he saw defendant's automobile stopped at the threshold of the sidewalk and parking lot. A hedge and wall separated the sidewalk from the parking lot with an opening at the driveway. Defendant did not see the bicycle as she edged over the sidewalk/driveway and onto the roadway, resulting in a collision that injured plaintiff. Plaintiff sued and the case was tried to a jury. At trial, each side claimed that the other was in violation of the California Vehicle Code.

Vehicle Code section 21804, on which plaintiff proposed a negligence per se instruction be given to the jury, provides that one exiting property to enter or cross a highway shall yield the right-of-way to traffic close enough to constitute a hazard; however once that driver has yielded until it is reasonably safe, other drivers shall yield. The trial court refused to give plaintiff's proposed instruction.

Vehicle Code sections 21605 and 21650.1, on which an instruction was given by the court over plaintiff's objection concerning the question of plaintiff's contributory negligence, provide that bicycles may be ridden on sidewalks; when bicycles are ridden on a roadway or shoulder of a highway, the bicycle shall be operated in the same direction as vehicles are required to be driven.

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Does a third party's criminal conduct of throwing concrete down onto a freeway relieve truck manufacturer's duty to design windshield to protect against such flying objects?

freeway.jpgIn Collins v. Navistar, Inc. (filed March 29, 2013) 2013 DJDAR 4169, a juvenile was throwing chunks of concrete from a freeway overpass onto the freeway, hitting a number of vehicles. One such vehicle was that of plaintiff's deceased spouse, William Collins; a two and a half pound chunk penetrated the windshield and hit William in the forehead, causing severe brain injuries and causing his Navistar truck to crash into a wall. Among those sued was Navistar for product liability on the theory the windshield was defective. Navistar contended it need not anticipate third party criminality when it designed its product. The trial court agreed to the extent that it instructed the jury that, based on a heightened standard of foreseeability, Navistar could be liable only if it foresaw or should have foreseen that a third party would act in this particular manner.

Based on such instruction, the jury reached a verdict on the preclusive issue of duty: the signed verdict form read that Navistar could not "have known or reasonably foreseen that a person would likely take advantage of the situation created by Navistar's conduct to commit" an act like the juvenile's rock throwing. Plaintiff appealed the judgment in favor of Navistar. The Court of Appeal, Third Appellate District reversed.

The appellate court found that language of the instructions and verdict forms given over the objection of plaintiff, even though taken from standard instructions, did not properly adapt from premises negligence law to products liability. As the California Supreme Court stated in Soule v. General Motors ( 1994) 8 Cal.4th 548, 560, in strict products liability cases, truck manufacturers must anticipate that their vehicles will be involved in traffic accidents generally. The foreseeability is of the risk of harm, not of the particular intervening act, even though the manufacturer could not have foreseen the extent of harm or manner in which it occurred. (Torres v. Xomox Corp. (1996) 49 Cal.App.4th 1, 18-19.)

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