Is there a triable issue of fact concerning company lawyer as a cause of termination of employee when company lawyer co-represents employer and employee?

November 13, 2013

lawyers-140579-m.jpgIn Yanez v. Plummer (filed & published 11/5/13) C070726, Plaintiff Yanez sued his former employer, Union Pacific, for wrongful discharge and its in-house counsel, Plummer for legal malpractice, breach of fiduciary duty and fraud. Yanez had witnessed the injury of a co-worker who filed a personal injury lawsuit under the Federal Employers Liability Act (FELA) against Union Pacific. Yanez was twice asked to give the employer written statements about the accident, to which he complied (the employer request the second statement because the first statement "lacked details.") In the second statement, Yanez wrote that he saw the employee slip and fall on the greasy floor where they were working; the first statement merely observed the greasy condition of the floor and that the co-worker had slipped and fell on that floor. Plummer represented both Union Pacific and Yanez at Yanez's deposition, at which Yanez admitted he did not actually see the co-worker slip--that the second statement was a miswording on his part. Based on these circumstances, Union Pacific fired Yanez for dishonesty.

Plummer's motion for summary judgment in Yanez's lawsuit was granted by the trial court. Plummer convinced the court that Yanez could not prove that any conduct on Plummer's part could have caused the termination. The Court of Appeal, Third Appellate District, disagreed, finding that Yanez had raised a triable issue of material fact that but for Plummer's conduct, Union Pacific would not have fired Yanez. The judgment was reversed, and Yanez's claims against Plummer were reinstated.

The appellate court found particular significance in facts set forth by Yanez concerning the pre-deposition meeting he had with Plummer. Plummer instructed Yanez to meet with him shortly before Yanez's deposition. Plummer confirmed with Yanez that he had not actually seen the co-worker fall down and asked about the work-site conditions at the time of the accident. There was no discussion about the two written statement. When Yanez expressed concern as to who would protect him during the deposition, and that he felt his job might be in jeopardy because his testimony would likely be unfavorable to Union Pacific, Plummer responded that Plummer was his attorney for the deposition and so long as he told the truth his job would not be affected. Plummer never advised Yanez about counsel's conflict of interest.

At the deposition, the attorney for the injured co-worker elicited testimony from Yanez that he did not witness the accident, but he did observe the unsafe, slippery conditions at the accident site. Plummer's questioning of Yanez essentially aimed at highlighting Union Pacific's safety culture and discrediting Yanez; Yanez offered that the second written statement was "worded wrong." Attending the deposition was a supervisor of Yanez, Magures, who obtained a transcript of the deposition. On the basis of the deposition testimony, Magures brought disciplinary charges against Yanez, leading to his termination.

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May trial court order temporary removal of attorney's website postings which could prejudice jurors?

Easy access to social media and the Internet provide great learning and informational tools. But with these benefits have come abuses and challenges for many of society's institutions, educational and judicial to name two. For educators, the challenge involves patrolling some students' trying to cheat their way through their education. For judges, it is a matter of guaranteeing a fair trial where jurors are to decide cases based only on evidence presented in the court proceedings, and not from outside sources.

In Steiner v. Superior Court (filed and published 10/30/13) No. B235347, after jurors were impaneled, defendants Volkswagen and Ford moved the trial court to order that plaintiffs' counsel remove from her website, until the conclusion of trial, two entries touting recent successes against Ford and others in similar asbestos cases. The first article discussed a $1.6 million award, boasting the jury there overcame "defendants' court confusion" to finding them at fault. A second article listed a similar $4.3 million award. Defendants here claimed that the curious human nature of jurors might cause them to Google the attorney and become prejudiced by this provocative information. Plaintiffs and their counsel opposed the motion as infringing upon counsel's right to free speech; that the more appropriate remedy would be to admonish the jurors to not search the Internet.

The trial court granted the motion and additionally admonished the jurors not to Google the attorneys, nor to use the Internet in any way. Plaintiffs petitioned the Court of Appeal, Second Appellate District, Division Six, for a writ of mandate, which was initially summarily denied. Petitioners petitioned for review in the California Supreme Court. The petition misstated that the trial court had ordered plaintiffs' counsel to "take down her firm's entire website," but went on to say that even if the order was more limited, it would be unreasonable. The Supreme Court granted review and transferred the case back to the appellate court to issue an order to show cause. The appellate court did so, and concluded the order was an unlawful prior restraint on the attorney's free speech rights under the First Amendment. Even though the order was limited (and not as plaintiff's counsel had represented to the Supreme Court), and even under the lesser standard for commercial speech, the public interest in assuring a fair trial is adequately met by juror admonitions and instructions.

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Is it improper for a trial court to consider insurer's potential liability for judgment in excess of policy limits in evaluating whether 998 demand was reasonable?

file5601297827370.jpgIn Aguilar v. Gostischef (filed October 11, 2013) 2013 DJDAR 13678, judgment for $2.3 million was entered in favor of plaintiff for motor vehicle accident personal injury, where defendant was insured by Farmers under a $100,000 policy limit. Earlier in the case, plaintiff's counsel had twice requested discovery from Farmers of the policy limit. After more than 2 months had gone by without receiving a response, counsel expressed his desire to resolve the case; that he wished to have that information in order to make a policy limits demand. Again, Farmers failed to respond. Suit was filed nearly 7 months after the initial request. About 2 months after the filing, Farmers tendered the $100,000 policy limit to settle the case. It advised counsel that defendant lived on Social Security and had no assets. Two weeks later, a California Code of Civil Procedure section 998 offer to compromise was formally presented by defendant in that sum. The offer went unaccepted, and counsel for plaintiff advised Farmers of his contention that it would be liable for an excess judgment because it ignored three attempts to settle the matter within the policy limits.

Thereafter, plaintiff made a 998 offer to settle in the sum of $700,000. Farmers, acting for the defendant, countered at $100,000. The matter proceeded to jury trial, followed by an appeal; eventually a $2,339,657 damage award was finally adjudged. Plaintiff followed with a cost bill in the sum of $1,639,451. A large portion of the claimed costs (including prejudgment interest) was claimed as awardable due to defendant's rejection of plaintiff's 998 offer which was exceeded by the award. Defendant moved to tax the costs, arguing that 998 offer was not made in good faith. The trial court disagreed finding that it was not bad faith for plaintiff to make that offer in spite of the lower policy limit because it was within the reasonable range of damages for the nature of his injury, the loss of a leg. Farmers, as the intervener at trial, appealed the cost award.

The Court of Appeal, Second Appellate District, Division Eight, affirmed. The court agreed with Farmers that it was not on this appeal presented with the question of Farmers' liability for the excess judgment. However, Farmers failed to demonstrate that plaintiff acted in bad faith in light of the circumstances of the case when he made the 998 offer in excess of the policy limits. This good faith requirement is to encourage settlement where an offer "is realistically reasonable under the circumstances of the case." (CCP section 998.) It mattered not that what triggered plaintiff's claim that he exposed Farmers to an excess judgment was Farmers' failure to respond to informal (rather than formal) settlement overture of a settlement within the policy limit; counsel's numerous efforts seeking Farmers cooperation in divulging policy limit information had fallen on deaf ears. (See Boicourt v. Amex Assurance Co. (2000) 78 Cal.App.4th 1390.)

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What is the effect of the U.S. Supreme Court's invalidation of a California rule imposed to refuse enforcement of arbitration provisions upon similar cases?

u-s--supreme-court-1-1038827-m.jpgThe U.S. Supreme Court found in At&t Mobility LLC v. Concepcion (2011) 563 U.S. ___ [131 S.Ct. 1740] that a California Supreme Court rule stated in that case, which found the arbitration clause agreed upon between the parties was invalid due to unconscionability, was preempted by the Federal Arbitration Act. Shortly before Concepcion, the state high court held in Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal. 4th 659 (Sonic I), as a categorical rule, that it was contrary to public policy and unconscionable for an employer to require as part of an arbitration clause that employee waive the right to a "Berman" hearing, which had been provided by the state legislature to assist employees in recovering wages claimed owed by the employer. Very predictably, the U.S. Supreme Court granted certiorari in Sonic I, vacated the judgment and remanded the case back to the California Supreme Court for reconsideration in light of Concepcion.

Given this directive, the state supreme court majority, in Sonic-Calabasas A Inc. v. Moreno (filed 10/17/13) S174475 (Sonic II), concluded that "because compelling the parties to undergo a Berman hearing would impose significant delays in the commencement of arbitration, we now hold, that the FAA pre-empts our state-law rule categorically prohibiting waiver of a Berman hearing in a predispute arbitration agreement imposed on an employee as a condition of employment." (Slip opinion, page 2.) However, the court went on to say that state courts may continue to enforce unconscionablity rules that don't interfere with the "fundamental attributes of arbitration", and remanded this matter back to the trial court to allow further development of the unconscionability claim to determine whether this arbitration agreement is unconscionable.

Predictably again, the majority opinion drew very lively concurring and dissenting/concurring opinions. In spite of the 70 pages of discussion found in the majority opinion, a concurring justice astutely notes that the majority failed to clearly state what standards of unconscionability it is talking about. The majority stated that the trial court on remand should weigh the Berman advantages waived against its benefits to determine if the agreement is "unreasonably one-sided." But as the concurring justice and the two concurring/dissenting justices agreed, the agreement would have to be "so one-sided as to shock the conscience."

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Under what circumstances will a non-settling medical malpractice defendant found liable at trial pay only a token amount to plaintiff as a result of other defendants' pretrial settlement?

Medical.jpgThe case of Rashidi v. Moser (filed 9/23/13) 2013 DJDAR 12903 provides such circumstances. And the circumstances are not terribly unusual. What causes a virtual victory here for to a losing defendant is the confluence of the following statutes: California Civil Code section 3333.3 (MICRA), section 1431 (Prop 51), and Code of Civil Procedure section 877 (concerning good faith settlements).

Plaintiff Rashidi had gone to the emergency room of defendant Cedar-Sinai Hospital with a severely bleeding nose. Based on his ER examination, Defendant physician Franklin Moser proceeded to perform an embolization procedure that same day utilizing embosphere microspheres manufactured by defendant Biosphere Medical. The process was to inject these particles through a catheter to stop the bleeding. Immediately after the procedure, Rashidi lost sight in one eye. He sued the hospital and doctor for medical practice, and additionally alleged Biosphere was liable for product defect for failing to warn that there was a risk the manufactured particles would enter into the wrong part of the blood system and cause blindness.

Court approved good-faith settlements were reached as follows: with Cedar-Sinai for $350,000, and with Biosphere for $ 2 million. Moser was the sole defendant to go to and participate at trial. The jury found him liable, awarding $125,000 for economic damages (future medical), $331,250 for past non-economic damages, and $993,750 for future non-economic damages. The trial court reduced both categories of non-economic damages to a total amount of $250,000 under MICRA, leaving a total damage award of $375,000 against Moser. Moser argued he was entitled to a greater reduction under MICRA, Prop 51 and CCP section 877 in light of the amounts paid by the settling defendants. The trial court disagreed, denying the claimed offset because there was no basis to allocate the settlements between economic and non-economic damages and the jury was not required to attribute any portion of the fault to the settling defendants.

The Court of Appeal, Second Appellate District, Division Four, disagreed with the trial court and modified the judgment to defendant being liable for only $16,655 in total damages after appropriate offsets. It took some nifty arithmetic to get there, which I will briefly explain below. But first, I will summarize the applicable legal principals discussed by the appellate court. CCP section 877 explains that the settlements reduce the claims against other defendants in the amount paid. Under Prop 51 all of the settling and liable defendants are jointly liable for economic damages; but they are proportionately liable for noneconomic damages. As to the medical malpractice defendants, under MICRA, the aggregate total of noneconomic damages is capped at $250,000.

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May an employer who requires employee to use her vehicle be liable for employee's negligence en route to personal business in the course of driving home?

September 30, 2013

In Moradi v. Marsh USA, Inc. (filed 9/17/13) 2013 DJDAR 12540, Judy Bamberger worked as a salesperson-marketer for Marsh, an insurance broker. She was required to use her personal vehicle under a "car allowance" program; two to five times a week she would use it primarily for off-site appointments, meetings, and transporting Marsh executives and clients. On April 15, 2010, Bamberger drove herself and other employees to a company-sponsored program at a middle school. She returned to the office to end her work day. From the office she planned to stop on her way home at a yogurt shop to get a bite to eat and then go to a yoga class. As she made a left turn into the yogurt shop, she collided with a motorcyclist, Moradi.

Moradi sued both Bamberger and employer Marsh. On the ground that employee Bamberger was not acting within the scope and course of her employment, the Los Angeles County trial court granted summary judgment in favor of Marsh. Moradi appealed. The Court of Appeal, Second Appellate District, Division One, reversed, finding that because the employer required employee to use her personal vehicle, the employer could be liable for this act committed while she was commuting home from work; her planned stops did not change the incidental benefit to the employer, nor were the planned stops unforeseeable, substantial departures from the employee's commute.

The court here had no problem finding a required use, and suggested that even an implied requirement may suffice. The focus here is on foreseeability, which, as a test for an employer's vicarious liability, merely means that the particular enterprise is not so unusual or startling that it would seem unfair to include the resulting loss from the costs of the employer's business. (Lazar v. Thermal Equipment Corp. (1983) 148 Cal.App3d, 458, 463-467.)

In its argument to the appellate court, Marsh apparently relied on the "special errand" exception cases to claim that because this case did not fall within that exception, the "going and coming" rule would preclude liability. The court did not buy the argument, stating that exception is "different from and more narrow than the required-vehicle exception." In other words, plaintiff did not need to show that employee was preforming a special errand for the employer. Once it was established that employee was required to use her vehicle, plaintiff need only demonstrate that employee's after-work activities planned as a part of her drive home were foreseeable as defined above.

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Does employee's statutory right to indemnity for attorney fees in defending action obligate employer to pay for attorney who duplicates work of employer-provided attorney?

September 16, 2013

employee.jpgLabor Code section 2802, subdivision (a), requires an employer to indemnify its employee for "necessary" expenditures or losses incurred as a direct consequence of the employee carrying out his employment duties.

In Carter v. Entercom Sacramento, LLC (filed 9/3/13) 2013 DJDAR 11886, Carter, as an employee of defendant's radio station, helped conduct an ill-conceived water-drinking contest that resulted in the death of a woman. The woman's family sued the station and employee Carter, among others. Carter tendered defense of the action to defendant station's insurer. The insurer accepted the tender and appointed conflict-free counsel to represent Carter rather than the attorney of Carter's choice. Carter declined the appointed attorney and insisted on utilizing the services of separate counsel. When the insurer refused to pay for that separate attorney, Carter brought this action seeking indemnity under section 2802. The trial court found that none of the fees and costs Carter incurred after the insurer appointed the attorney to represent him were necessary expenditures, thus found in favor of Entercom.

On appeal, Carter claims he had an absolute right to choose his own attorney at the employer's expense. This, he stated, was especially so because he faced potential liability for punitive damages and potential criminal charges. The Court of Appeal, Third Appellate District, disagreed, finding the question of whether the fees and costs claimed were necessary, and thereby subject to the duty of indemnity under section 2802, is a factual one; Carter failed to show the trial court's determination lacked substantial evidence to support it.

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Can commercial tenant sue landlord based on inaccurate pre-lease estimates of shopping center pro-rata costs portion of its rent?

landlord.jpgIn Thrifty-Payless, Inc. v. The Americana at Brand, LLC (certified for publication 8/14/13) 2013 DJDAR 10838, plaintiff, doing business as Rite-Aid, leased commercial space at defendant's shopping center in Glendale. Prior to execution of the lease, the parties negotiated through a letter of intent (LOI). In their final LOI, defendants stated that, as a part of the rent, plaintiff would be responsible for its pro-rata share of common area expenses including property tax, insurance and common area maintenance, giving per square foot estimates of what that would be. Plaintiff questioned the amount and it amended the LOI by crossing out the estimate figure and interlineating that the budget would be provided to tenant prior to lease execution. Defendant did produce budget figures and rendered a per square foot amount; it labeled the figures as "purely estimated values." The final lease of the parties provided that plaintiff would pay its pro rata share of such expenses; no details were stated.

After its first full year of occupancy, plaintiff received the bill for its share of these common area expenses. Instead of plaintiff's share being 2.2% of the total as indicated in defendant's estimates, plaintiff ended up being charged about 5.7%, resulting in about $342,700 more than estimated.

Plaintiff then sued defendant on claims of fraud and negligent misrepresentation. It claimed these expenses were material, and that it had relied upon the estimates to evaluate the suitability of the project; that defendant had reason to believe the estimates were false, and plaintiff relied upon defendant's superior knowledge. It alternatively claimed innocent misrepresentation and mutual mistake. Defendant demurred to the complaint alleging plaintiff did its own investigation and was relying on representations not contained in the integrated final lease agreement of the parties; that its estimates were non-actionable opinions and predictions. The trial court sustained the demurrer without leave to amend, finding the figures in question were only estimates.

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May employer who served alcohol at company party be vicariously liable for intoxicated employee's tortious conduct after he had reached his home?

employee Party.jpgIt has long been black-letter law that an employer may be held vicariously liable for torts committed by an employee acting within the scope of employment. (Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202, 208.) But in the context of an employee consuming alcohol during an employer party, must the act of negligent driving occur while the employee is still within the scope of employment? Or is the fact that employee's consumption of alcohol occurred during an employment event sufficient to cause employer liability for employee's driving beyond the scope of employment while still under the influence of the alcohol earlier consumed? In Purton v. Marriott International, Inc. (filed 7/31/13) 2013 DJDAR 10154, the Court of Appeal, Fourth Appellate District, Division One, held that an employer may be found liable for its employee's torts as long as the proximate cause of the injury (in the court's view, alcohol consumption) occurred within the scope of employment.

In Purton, employee Landri, himself a Marriott bartender, consumed alcohol at an employer-hosted party and became intoxicated. Another employee drove him to the party and evidently drove him to his home afterwards along with yet another coworker. Without consuming any more alcohol, Landri then left his home to drive that coworker home. He struck another car, killing the driver. In the wrongful death action asserting vicarious liability against employer Marriott, the trial court granted summary judgment for Marriott on the ground the employer's potential liability under the doctrine of respondeat superior ended when the employee arrived home. The Court of Appeal reversed, holding as stated above.

The appellate court acknowledged that the plaintiff bears the burden of proving the employee's tortious act was committed within the scope of employment. But this form of liability is not dependent on any act of the employer for which it may be at fault. Rather, it is based on the tort being an outgrowth of the employee's employment. And while the employer is not normally responsible for the employee's "going and coming" from a workplace event, if the tortious act itself occurred at the workplace event, the employer is responsible for foreseeable events that occur thereafter. Foreseeability in the context of respondeat superior merely means the "employee's conduct is not so unusual that it would not be unfair to include the loss as among other costs of the employer's business." (Farmers Ins. Group v. County of Santa Clara (1995) 1 Cal.4th 992, 1004.)

On the question of whether the accident itself must occur within the scope of employment, the Court of Appeal looked to six other jurisdictions, finding those states equally divided on the question. It additionally explored analogous situations in California that found that driving from the event was essentially foreseeable, thus within the scope of employment where sufficient facts supported intoxication occurring during employer's business-related event. In particular, the court in Childers v. Shasta Livestock Auction Yard, Inc. (1987) 190 Cal.App.3d 792, 805, 806 found an employer liable for actions of off-duty employees, when the employer provided alcohol and permitted drinking at the workplace "even where the danger may manifest itself at times and locations remote from the ordinary workplace."

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May law firm that represented now-deceased spouses in preparing their wills and trusts represent trustees against wife's personal representative?

Law Firm.jpgRulings on motions to disqualify opposing counsel have in recent months and years regularly found their way into the appellate courts. Some of these reviews have been by way of appeal as appealable injunctive orders. Others have taken the petition for writ of mandate route. The latter route was taken in Fiduciary Trust International of California v. Superior Court (filed 7/31/13) 2013 DJDAR 10119. And again, as was the case in the last disqualification case that appeared in this blog (June 26, 2013), the appellate court disagreed with the trial court. But this time it determined that disqualification should have been granted, rather than not.

Sandler & Rosen (S&R) drafted wills and trusts for Willet and Betty Brown concerning a joint estate worth more than $200 million. In short, the trusts generated substantial income and Betty became the marital trust income beneficiary for life upon Willet's death; upon Betty's death, the principal of the trust went into an Exemption Equivalent Trust that benefitted the parties' four adult children. But after Willet died, Betty revoked her will that had previously benefitted all four of the children, and transferred the large majority of her assets to a trust that benefitted her daughter, the only of the four children that was hers by blood.

After Betty's death, her personal representative, Fiduciary, and the marital trust trustees disputed who was required to pay the $27 million in estate and inheritance taxes due on Betty's assets. The Brown's estate plan indicated that upon the latter of the couple's death the Marital Trust would pay the estate and inheritance taxes. After Willet's death, Betty established a new trust that would, upon her death, distribute a significant majority of the trust assets to the one daughter mostly to the exclusion of the other children. Yet taxes due on her estate still were directed to be paid by the Marital Trust. In light of Betty's changes, the Marital Trust trustees argued that it would be unfair to pay the full amount of taxes owed on the assets of Betty's trust as the other 3 children would pay death taxes on funds they will never receive.

S&R represented the Marital Trust in this tax dispute. Fiduciary moved the court to disqualify S&R. The trial court determined that any communication that occurred at the time S&R prepared the estate plan (about 20 years earlier) were unlikely to be used in the current dispute and denied the motion to disqualify. The Court of Appeal, Second Appellate District, Division Seven, disagreed, finding that based upon the undisputed substantial relationship of the subject matter involved in both representations, and because the previous representation was "direct and personal" rather than "peripheral or attenuated," disqualification was virtually automatic not allowing the trial court to inquire into any actual breach of confidentiality that would affect the present dispute.

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May a trial court award defendant expert witness fees under CCP section 998 after plaintiff declined offer and then dismissed action?

attorney.jpgCalifornia Code of Civil Procedure section 998, subdivision (c) (1) states, "If an offer made by a defendant is not accepted, and the plaintiff fails to obtain a more favorable judgment or award . . . the court or arbitrator . . . in its discretion, may require the plaintiff to pay a reasonable sum to cover costs of the services of expert witnesses. . ." On its face, this provision is clear, and one that carries an important policy (as do reciprocal provisions favoring a prevailing plaintiff) to encourage parties to settle cases pretrial when reasonable offers of settlement are made by the opponent. But this provision does not specify whether a judgment is necessary to trigger recovery. Mon Chong Loong Trading Corp v. Superior Court (filed 7/23/2013) 2013 DJDAR 9593 seeks to resolve this ambiguity.

Plaintiff Cui had been offered $10,000 by defendant in exchange for a release from liability and dismissal of suit. In this personal injury lawsuit, plaintiff had been served with a demand to exchange witnesses and a notice for an independent medical examination (IME). Plaintiff did not respond to the offer, which expired; nor did she participate in the witness exchange or appear for the IME. Facing a motion in limine to exclude any expert testimony on plaintiff's part, plaintiff requested a voluntary dismissal of her complaint without prejudice, which was entered. Defendant, in turn, sought its expert witness fees. The trial court granted plaintiff's motion to tax the expert fees. The Court of Appeal, Second Appellate District, Division Three, disagreed and granted defendants request that the trial court reconsider under section 998.

On the merits of the above question, the appellate court found that section 998's "more favorable judgment award" language dictates that the appropriate moment for a court to assess whether a more favorable judgment or award has been obtained is at the conclusion of the lawsuit, regardless of whether that conclusion is in the form of a judgment. Here, the action ended, in the appellate court's view, with the voluntary dismissal. That is so, even if the dismissal is without prejudice and the potential exists for refiling. By comparison, the price of such a dismissal is the payment of other costs under CCP section 1032. In each instance, the possibility exists for a resumption of the lawsuit, but both" justice and judicial economy" require a swift cost award. The trial court must exercise its discretion in deciding whether to award costs in these situations, not simply say it has no power to do so, as the trial court did here.

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ABA Journal Blawg 100 Amici

I wish to extend to those of you who have utilized this blog as a resource to go to the ABA Journal's Blawg 100 Amici web page. You will see that the ABA is working on its annual list of 100 best legal blogs. If you think this blog qualifies, please fill out the form found there.

As many of you know, the California Appellate Lawyer Blog is a commentary on recent California appellate opinions that have an impact on the practice and study of law. As the principal author, I give the perspective of one who served 21 years on the state appellate bench. The advice drawn from selected current cases includes how to enhance ones chances on appeal, and the pitfalls to watch out for in appellate practice. Updates on trends in substantive law are also given to assist practitioners and law students.

A reading of the body of work contained in the blog makes it clear of the intent to be informative rather than promotional. I hope the injection of humor and originality distinguishes the content from what would find in a simple recitation of recent case developments.

Thank you for reading this blog. I am always interested in feedback, even if critical. And if there any suggestions of different types of cases you would like to see me write about, please let me know.

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.

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.

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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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