Category: Uncategorized

A July 21, 20017 article in the Wall Street Journal reports that Wall Street Firms are aggressively purchasing single family homes that they then rent to would-be home buyers.  The buyer is forced into “would-be” status because they can’t outbid the Wall Street firm, who pays cash with no questions asked.  Families can then be forced into renting homes that they can’t buy. The Journal cites a study that renting can be about 30% more costly that home ownership, a burden felt in the here and now.    And in the long term, these renters are denied the opportunity to invest in themselves — there is no equity, they don’t get a home, just a box that they can use for awhile.

And so, some of our working Americans, the little guy, and young families looking to invest in their future, can’t own a piece of America, they can only rent it!

I wonder if our “leaders” in DC can stop cannibalizing each other long enough to look into this issue for a few minutes?

Nelson v. Tucker Ellis, DCA1/3

Attorney Nelson litigates asbestos cases for the defense, formerly for the law firm of Tucker Ellis LLP. While working for Tucker Ellis, Nelson exchanged emails with scientists at Gradient Corporation. The subject of the email concerned research articles on whether things other than asbestos (like tobacco) cause mesothelioma. Ultimately, Tucker Ellis may have retained Gradient, and Gradient apparently published an article on this subject.  After leaving Tucker Ellis, a law firm prosecuting an asbestos case back east subpoenaed Tucker Ellis.  The scope of the subpoena included whether Tucker Ellis paid Gradient for research articles and also sought emails between Nelson and Gradient. For reasons that are not clear (and are hard to fathom) Tucker Ellis produced the emails. Those emails didn’t look good for Nelson and, according to some, may have had the flavor of a defense firm trying to procure (to put it nicely) research to help defend asbestos cases. Once produced, the emails were published on the internet together with harsh commentary about the appearance of trying to “rent a white coat.” Nelson claims he was fired from his new firm because of those emails and that his reputation has been damaged so he can’t work in this area anymore. He sued Tucker Ellis claiming that it violated the work-product privilege by disclosing the emails. In granting summary adjudication on the issue of duty, the trial court agreed with Evans’s claim that he controlled the work product privilege.  Tucker filed a writ.  Held: Reversed. 


California’s civil work product privilege is codified in section 2018.030.  Subdivision (a) provides absolute protection to any “writing that reflects an attorney’s impressions, conclusions, opinions, or legal research or theories.”  Such a writing “is not discoverable under any circumstances.” Thus, the attorney work product privilege recognizes what is termed an ‘absolute’ privilege as to writings containing the attorney’s impressions, opinions, legal research and theories and recognizes a ‘qualified’ privilege as to all written materials and oral information not reflecting the attorney’s legal thoughts. 

The statute does not explicitly say that the individual employee attorney, versus the employer law firm, controls the privilege.

But the work product privilege is meant also to protect the attorney in giving his/her opinions and protect that person from ridicule.  In Hickman v. Taylor (1947) 329 U.S. 495, the U.S. Supreme Court said the following: “In performing his various duties, … it is essential that a lawyer work with a certain degree of privacy, free from unnecessary intrusion by opposing parties and their counsel. Proper preparation of a client’s case demands that he assemble information, sift what he considers to be the relevant from the irrelevant facts, prepare his legal theories and plan his strategy without undue and needless interference. That is the historical and the necessary way in which lawyers act within the framework of our system of jurisprudence to promote justice and to protect their clients’ interests. This work is reflected, of course, in interviews, statements, memoranda, correspondence, briefs, mental impressions, personal beliefs, and countless other tangible and intangible ways—aptly though roughly termed by the Circuit Court of Appeals in this case as the ‘work product of the lawyer.’ Were such materials open to opposing counsel on mere demand, much of what is now put down in writing would remain unwritten. An attorney’s thoughts, heretofore inviolate, would not be his own. Inefficiency, unfairness and sharp practices would inevitably develop in the giving of legal advice and in the preparation of cases for trial. The effect on the legal profession would be demoralizing. And the interests of the clients and the cause of justice would be poorly served.”  The California Supreme Court has cited that language approvingly. Coito v. Superior Court (2012) 54 Cal.4th 480, 490

In finding that the law firm controlled the privilege and not the attorney, the court pointed to the case of People ex rel. Lockyer v. Superior Court in support .  But that was a criminal case where the attorney prosecutor himself was being investigated for criminal conduct and his documents had been seized pursuant to a warrant.  (Presumably issues related to the crime/fraud exception applied.)  

Here, the court rested its conclusion in part on its belief that its holding would result in a more workable rule – it gave the example of cases were a memorandum was written by more than one attorney and noted it would be harder to secure permission from multiple attorneys to disclose the work product.  However, the rule is a matter of strong public policy and should not be diluted, let alone for administrative convenience.  Moreover, nothing in the statute suggests that a law firm can override the privilege of the attorney to his/her work product. 

This is not a good case for the many thousands of associates who are writing memos for their clients while working for law firms. As the U.S. Supreme Court said:  It is the attorney who must “sift what he considers to be the relevant from the irrelevant facts, prepare his legal theories and plan his strategy without undue and needless interference.”  We can’t weaken the privilege for all attorneys just because of what some attorneys do.  Protecting the individual attorney is also right and fair: The attorney bears all the professional and ethical duties of an attorney representing the client.  How can that attorney fulfill those duties if he/she knows that the “firm” might disclose this information and embarrass the attorney at some later point?!  

Ford Motor Warranty Cases 5/8/17 CA2/8

In 2015, Ford was facing almost 775 Lemon Law (i.e., breach of warranty) cases concerning certain Fiesta and Focus models.  The cases had been filed in 44 separate California counties.  In Los Angeles, Ford moved to coordinate the cases before one judge, and the coordinated motion judge granted Ford’s petition as to 470 of the cases, which were venued mostly in southern counties.  The coordinated case was assigned to the coordinated trial judge.  Just a few months later, Ford petitioned to add-on 467 substantively identical cases, many of which had been recently filed, although some had been inadvertently or intentionally (for procedural reasons related to pending trial dates) left off of its first petition.  The coordinated trial judge denied the add-on petition because, it felt, that Lemon Law cases are not amendable to complex management.  Ford filed a writ petition.  Held: Reversed.

Code of Civil Procedure 404 says that a petition for coordination shall be supported by a declaration stating facts showing that the actions are complex and that the actions meet the factors set out in Code of Civil Procedure 404.1.  Section 404.1 says that “coordination of civil actions sharing a common question of fact or law is appropriate if one judge hearing all of the actions for all purposes in a selected site or sites will promote the ends of justice taking into account whether the common question of fact or law is predominating and significant to the litigation . . .”  That section goes on to list the common sense factors that should guide the decision (e.g., the relative development of the actions, judicial efficiency, convenience of parties, witnesses and counsel; and avoiding inconsistent rulings).  

The trial court found that only one factors weighed in favor of granting Ford’s petition: The “relative development of the actions and the work product of counsel.” In other words, all cases were at an early stage. All other factors weighed against coordination: The facts and issues in each case was individualized; it would be inconvenient for counsel and witnesses from San Diego, Riverside etc. to travel to court in Los Angeles; it was not judicially efficient; there was no risk of inconsistent rulings because each case is individualized; and, the cases were simple Lemon Law cases and not complex.

Given that a prior trial judge had already ordered coordination – basically confirming that the section 404.1 factors had been met for cases subject to the original petition, and would necessarily be met for similar future cases – the court placed special emphasis on the “relative development of the actions and the work product of counsel.”  In fact, the court found that this “suggests the primacy of that factor in determining the propriety of adding a case or cases to a coordination proceeding.” If discovery and motion work for the coordinated cases had been going on for years, then dropping 400 new cases into the mix might be disruptive.  However, the trial court had stayed the originally coordinated actions, and not much had happened in the interim.  DCA8/2 found that the coordinated trial judge’s denial of the add-on petition acted as a repudiation of the earlier judge’s order granting coordination.

The court also found that Lemon Law cases can meet the definition of “complex” cases because of the large number of represented parties in related actions pending in different counties.  The court then proceeded to do an analysis of each factor listed in section 404.1.  This is very much worth reading, if only for the description of the flexibility and latitude the coordinated trial judge has in managing a coordinated proceeding: 

Final thing to note:

• Based on precedent, the court found that  review of the trial court order denying coordination is de novo.  The rationale — “[T]his is a decision which requires the ‘exercise [of] judgment about the values that animate legal principles,’ and hence the concerns of judicial administration . . . favor the appellate court, and the question should be classified as one of law and reviewed de novo.”

Sumrall v. Modern Alloys, Inc., 4/13/17 CA4/3

Williams v. Yamaha Motor Corporation, 9th Cir., 3/24/17

Yamaha Motor Co. Ltd. (YMC) is a Japanese company that makes boat motors that are sold around the world, including in California. The motors are imported through it wholly owned subsidiary, Yamaha Motor Corporation U.S.A (YMUS).  Plaintiffs filed a class action in California district court against YMC and YMUS, alleging that the motors they bought were defective in violation of federal and state warranty claims. YMC filed a motion to dismiss for lack of personal jurisdiction — it has no offices or employees in California; YMUS filed successive 12(b)(6) motions to dismiss, arguing that Plaintiffs’ warranty claims weren’t plausible. In its final stage, the class action covered plaintiffs from five different states.  The trial court ultimately granted all motions to all claims and dismissed the entire case with prejudice.  Held: Affirmed.

Plaintiffs arguments that the court had general and specific jurisdiction over YMC both failed.  Per Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011), courts have general jurisdiction over a foreign corporation only if the corporation’s connections to the forum state are so ‘continuous and systematic’ as to render it essentially at home in the forum State.   This generally (though not always) means that the defendant must be incorporated or have its principal place of business in the forum state; continuous contact by itself is not enough.  Using principles set out in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), the Ninth Cir. rejected plaintiffs argument that YMUS’s (subsidiary) contacts could be imputed to YMC (parent) for purposes of establishing general jurisdiction, even if the those contacts could in fact be imputed to its parent. If the rule were otherwise, it could render a foreign corporation subject to general jurisdiction wherever its subsidiary engages in a substantial, systematic and continuous course of business.  Finally, while 17% of YMC worldwide sales were in California, that didn’t render it “at home” in California.

There was also no specific jurisdiction.  Finding specific jurisdiction must conform to traditional notions of fair play and substantial justice, and defendant’s suit-related conduct must create “a substantial connection with the forum state.”  The contacts must be created by the defendant itself (e.g., purposefully avails itself of the forum’s laws) and must be with the state itself, not just with people who reside there.

In Daimler, the U.S. Supreme Court left open whether agency principles could be used to support specific (as opposed to general) jurisdiction.  But given the logic of the holding in Daimler, the Ninth Cir. seriously questioned (without actually killing forever) the notion that agency is sufficient to establish specific jurisdiction. The court also noted that even if the existence of an agency relationship was still relevant to the issue of specific jurisdiction, plaintiffs failed to make out a prima facie case in support of agency — Agency turns on control and plaintiffs failed to plead or show how YMC had the right to control YMUS in any manner at all.

The attorneys for Yamaha, Gibson Dunn, also took out the warranty claims against YMUS: Plaintiffs alleged that the subject engines corroded in a way that significantly reduced their life expectancy. All engines have a life expectancy. In their 12(b)(6) motion, YMUS argued that the notion that a reduced life expectancy made engines an “unreasonable safety hazard” (an element of a warranty claim) was not plausible under the pleading standards of Twombly.  The Ninth Cir. agreed.

Great lawyering!

Quiles v. Parent, 3/27/17 CA4/3

Plaintiff filed a wrongful termination case in state court under the Fair labor Standards Act (FLSA), 29 USC s. 215(a).  She claimed that her employer terminated her because she filed an FLSA wage and hour class action.  The jury agreed and awarded her compensatory and punitive damages (reduced after the court’s remittitur), totaling just over $200,000.   And then came the big boom: The court awarded almost $700,000 in attorney’s fees and $50,000 in costs, which the employer appealed.  The employer paid the damages portion of the judgment ($200k plus interest), leaving only the attorney’s fees and other court costs as the target of its appeal.  Despite the appeal, plaintiff sought to collect the award for attorney’s fees.  Employer asked the trial court to stay collection of the judgment for attorney’s fees pending appeal, but the trial court denied the request.  Employer asked the appellate court for help by filing a “petition for writ of supersedeas.” Held: Petition granted.

Here’s the law concerning stay of the enforcement of judgments pending appeal: Generally, an appeal stays the enforcement of judgment with one exception – an appeal does not automatically stay enforcement of money judgments.  That exception is a mile-wide because most civil cases are about one thing: Money.   In order to stay enforcement of a money judgment pending appeal, the appellant needs to post a bond.  A bond is essentially a very expensive insurance policy that insures payment of the ultimate judgment.   

The attorney’s fees and costs are part of the money judgment.  So why did employer file this petition? Because Code of Civil Procedure 917.1 provides that “no undertaking shall be required pursuant to this section solely for costs awarded under Chapter 6 (commencing with section 1021) of Title 14.”  For purposes of the CCP 1033.5 (which is within Chapter 6 of Title 14), attorney’s fees are costs.   This explains the employer’s strategic move to pay off the damage portion of the award, leaving only fees and costs for appeal.  

Here, the appellate court agreed with Ziello v. Superior Court (1999) 75 Cal.App.4th 651, which, under a pretty analogous fact pattern, held that an appeal of attorney’s fees only stays enforcement of the judgment for those fees.

The court asked whether an award of attorney’s fees is “solely for costs.”  The court looked at CCP 1033.5, with its laundry lists of what it defines as “costs,” and that list includes attorney’s fees. And so the court essentially adopted a bright line rule – almost anything listed and permitted by section 1033.5 qualifies as “costs” for purposes of this issue.  (Note that there are two exceptions in section 917.1: For example, an award of costs under Code of Civil Procedure section 998 are subject to a different rule, and the judgment creditor can enforce a judgment for those costs unless the appellant obtains a bond.)  

A big practical note: While an appeal “solely of costs” stays enforcement of the money judgment without posting a bond, the trial court retains the discretion, under CCP 917.9, to require the appellant to post an undertaking as a condition of the stay of enforcement.  That makes sense — The trial court may see something in the litigation conduct of the judgment debtor that causes it concern about its motives in filing the appeal.  For example, a judgment debtor can use the 18 months that the appeal process takes to do “financial planning,” and potentially render the judgment uncollectible.  And so, the appellate court went out of its way to say that its decision would not prevent plaintiff from asking the trial court to require the judgment creditor to post an undertaking as a condition of the stay. 

Thus, any semblance of an employer’s practical victory on this issue may be very short lived.

Coyne v. City and County of San Francisco, 3/21/17, 1DCA/5

Some historical background to this case — Back in the 1980s, a property owner called Nash was tired of rent control and wanted to go out of the business of renting property.  The City of Santa Monica refused to let him take his property off the rental market unless he could show he couldn’t make a “reasonable” return on the property.  He couldn’t make that showing, and so he sued.  In 1984, the California Supreme Court upheld Santa Monica’s decision.  In 1985, the California legislature enacted the Ellis Act, which was intended to overturn the court’s decision in the Nash case. The Act prohibits a city or county from “compel[ling] the owner of any residential real property to offer, or to continue to offer, accommodations in the property for rent or lease . . . .” Gov. Code, § 7060(a).   Since that time cities like San Francisco have been trying to find a way to defeat the Act.  And so enter the Coyne case.

From 1994 to 2014, San Francisco enacted a series of ordinances that required owners who exercise their rights under the Ellis Act to make relocation/mitigation payments.  These payments were initially set at about $1500, they increased to $4500, were adjusted for inflation to about $5500, and are subject to caps that eventually grew to approximately $16,000 per unit.  Owners had to make additional payments of about $4000 to elderly and disabled tenants. In 2014, SF was feeling it so it upped the ante. 

SF enacted a rule that landlords had to pay for “the difference between the tenant’s current rent and the prevailing rent for a comparable apartment in San Francisco over a two year period.” The law had no cap, and tenants could use these ransom payments for anything they liked – a fancy car or to increase their stock portfolio.  Courts struck down the ordinance.

The People’s Republic was not done.  In response, it enacted a similar ordinance, this time capping the mitigation/relocation payment at $50,000 and requiring tenants to promise they would use the ransom payments on relocation expenses.  SF also created a “hardship” process for owners who were willing to expose their entire financial picture to city bureaucrats, even though there were no objective standards concerning how bureaucrats would had to evaluate hardship petitions.  In addition, the ordinance allowed owners to ask for receipts from former tenants to ensure that the ransom payments were used for relocation, over a period of three years.  A provision designed for owners who have nothing else going on. 

Coyne filed suit to challenge this ordinance.

Again the court struck down the new ordinance.  The ordinance caused a head-on collision with California’s Constitution , which allows cities and counties to enact and enforce police powers so long as they don’t conflict with general state laws.  In determining whether there is a conflict between the ordinance and the Ellis Act, the court adopted a test used by many other courts: Whether the city placed a prohibitive price on owners who wish to exercise their rights under the Ellis Act.  A prohibitive price compels landlords to remain in the residential business, and would therefore defeat the Act. As one court has said: “The Ellis Act does not permit the City to condition plaintiff’s departure upon the payment of ransom. [¶] To allow the City to so enlarge the concept of mitigation that it prevents plaintiff from exercising his right to go out of business would make the Ellis Act a dead letter except for those owners fortunate enough to have no tenants to displace.” 

The court surveyed cases where cities had improperly imposed a “prohibitive price” on landlords who wished to take their property off the rental market, including ordinances requiring landlords 1) to obtain a permit before taking their property off the market; 2) to replace the housing stock or pay a fee in lieu; 3) to pay relocation assistance to all evicted tenants; and, 4) to provide notice to affected tenants of relocation assistance due when the property is taken off the market.

The court had no problem finding that SF’s ordinance was in conflict with the Act. The court could find no other ordinance where a city tried to force a massive payment as a condition of exercising rights under the Ellis Act.  And, allowing cities to ransom owners would defeat the law.

The court rejected the SF’s reliance on Government Code section 7060.1(c), a savings clause in the Ellis Act which preserves local authority to mitigate “any adverse impact on persons displaced by reason of the withdrawal from rent or lease of any accommodations.”  SF argued that increased rent was an “adverse impact” of eviction that the savings clause allowed them to regulate with the ordinance in question.  The Court disagreed: An increase in rent was not an adverse impact of the eviction but an impact that stemmed from the City’s rent control itself.  Rent prices are a function of the market (not of an eviction) and the increase in rent faced by a tenant is a result of the fact that rent control keeps rent at an artificially low rate.  Finally, the court noted that a savings clause must be strictly construed, and not be interpreted in a way that would defeat the purposes of the statute itself.  That’s statutory construction 101.  

Yale v. Bowne, 3/10/17 2DCA/2

Yale is well-to-do.  She married Knight subject to a prenup to protect her separate property.  Many years later, she hired Bowne to update her trust. She wanted to maintain the status of her separate property. Bowne drew up the trust documents, but the underlying property transfer documents (e.g., the deeds) designated her property as community property.  And this is where it gets strange: She testified that she actually saw the “community property” designation in the deeds that Bowne had prepared.  And stranger still — Seeing that the deeds said “community property,” she said nothing to Bowne and executed them.  (Make sense of that if you can!)  Knight subsequently did some bad things to Yale (read the case), and their marriage fell apart. With the help of another attorney, Yale was able to transfer her property back to her name and protect it.  Knight then filed for divorce.  On advice of counsel, Yale paid Knight $260,000 (in cash and assumed obligations) rather than risk a court finding that her entire estate (perhaps $2M) was community property.  She then sued her former attorney Bowne for legal malpractice.  The trial court agreed to give the comparative fault instruction to the jury.  The jury awarded damages but attributed 10% of the fault to Yale.  She appealed.  Held: Affirmed
The court said that the comparative fault principles set out in Li v. Yellow Cab Co. (1975) 13 Cal.3d 804 (Li) apply to negligence actions. Legal malpractice claims are a subset of negligence, ergo . . . .  Of course, a comparative fault instruction is not automatic: There must be substantial evidence to warrant giving the comparative fault instruction to the jury.  The court had little trouble find that substantial evidence supported the instruction given by the trial court. 

Yale was a self-taught investor.  She was also very aware of the difference between the label separate property and community property; in fact, in her first marriage she had been hammered in the divorce because she allowed her separate property to transmute to community property status.  Moreover, before executing Bowne’s trust documents, she had recently entered a different real estate transaction where those designations were crucial, and she was careful to make sure the document designations were correct. Finally, she read and executed the property deeds that re-characterized her property as “community property.”  Frankly, under these facts, the fact that Yale spent money to appeal that issue is surprising:  The jury could have been a lot less forgiving and attributed much more than 10% of the fault to her.  

Finally, the court distinguished legal malpractice cases where the trial court had refused to give a comparative fault instruction, because those cases involved things like civil procedure, about which the normal client knows nothing.

• In its motion for new trial, the State presented a declaration from Juror 7 that denied all charges made against her.  She said that in the initial vote, 3 jurors had sided with the State, and also said that Jurors 1 and 2 had become friends during the trial and carpooled to court.
• In Cleveland, 25 Cal.4th 466, the Supreme Court upheld the reversal of a criminal conviction where a juror had been excused.  The trial court had excused a juror after 10 of 11 of the other jurors said that one of the jurors was not functionally deliberating.  The problem : The “discharge of the holdout juror violated the defendant’s constitutional right to a unanimous jury verdict.”  
• Here, the trial court could have allowed the deliberations to proceed for more time (90 minutes was not very long), and then revisited the subject, and done more investigation, as needed.

Betancourt v. Prudential Overall Supply 3/7/17, 4DCA/2

This case exalts form over substance.  Plaintiff filed a wage/hour representative action purporting to contain a single cause of action under PAGA.  However – and this is a big however – he alleged various Labor Code violations (the usual slew, including unpaid minimum wages, overtime, meal/rest, wage statements) AND prayed not just for penalties under PAGA, but also for recovery of minimum wages, overtime, Labor Code 226 damages, etc.  There was an arbitration agreement.  As we all know, normal wage/hour claims are subject to arbitration while PAGA claims (per Iskanian) are not. The issue wasn’t lost on counsel for Prudential, who filed a motion to compel arbitration and argued that the relief plaintiff was seeking was relief that was in fact subject to arbitration.  The trial court denied Prudential’s motion to compel arbitration.  Held: Affirmed.

At the hearing, the trial court explained that a motion to compel arbitration was not the proper vehicle to challenge plaintiff’s pleading; instead, the trial court invited defendant to file a motion to strike. 

Two issues with that  – First, the essence of a complaint is determined by the allegations. The courts of this state have long since departed from holding a plaintiff strictly to the ‘form of action’ he has pleaded and instead have adopted the more flexible approach of examining the facts alleged (to determine if a demurrer should be sustained.)  And so, if plaintiff alleged wage/hour violations and sought wage/hour remedies in addition to PAGA penalties, it shouldn’t really matter that plaintiff is trying to camouflage his wage/hour claims as a PAGA case.  

Therefore, the second problem – To the extent plaintiff’s complaint is for wage/hour claims, why can’t the trial court send those claims  — regardless of the label or lack thereof — to arbitration? The answer is, It can do exactly that and could have entered an order that says: “All wage and hour claims/causes of action are sent to arbitration except the PAGA cause of action, which is stayed pending the outcome of arbitration.”