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Crashing the American Dream — Aggressive Wall Street Firms Edge Out Families Trying to Buy Homes

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?

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Law Firm Not Lawyer Holds Work Product Privilege Per an Extraordinary Ruling by DCA1/3

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?!  

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Appellate Court Tells Trial Court to Add-On Another 400-plus Cases to Coordinated Proceeding

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: 

        “That these cases may be coordinated does not mean they need be tried in one forum; it does not even indicate that ultimate trial of the cases need be unified.” (citations)  Further, “the procedures which may be utilized by the coordinating judge are flexible indeed.” (citations) McGhan pointed out the rules would permit the coordination trial judge to order any issue or defense tried separately; order hearings conducted at various sites in the state to provide convenience to witnesses, parties and counsel; “prescribe all manner of pretrial discovery devices designed to aid the litigation”; sever cases or claims and transfer them back to their original venue; and try specific issues separately. The coordination trial judge is vested with “whatever great breadth of discretion may be necessary and appropriate to ease the transition through the judicial system of the logjam of cases which gives rise to coordination.”


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.”

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Under Equal Pay Act, Employers Use of Prior Salary to Set Wages Can be Valid, But is Fraught With Peril

Rizo v. Yovino, Ninth Cir., 04/27/17

Aileen Rizo, employee of Fresno County public schools, filed a lawsuit against Fresno County Superintendent of Schools after discovering that she was getting paid a lower salary than her male co-workers for the same work.  Rizo claimed that this disparity in pay was in violation of the Equal Pay Act, Title VII of the Civil Rights Act of 1964, and the California Fair Employment and Housing Act, Cal. Gov. Code § 12940.  Despite the County’s concession that it paid Rizo less than comparable male employees for the same work, the County moved for summary judgment arguing that a pay differential “based on any other factor other than sex” is an affirmative defense to a claim under the Equal Pay Act. In this case, that “other factor” was recent prior salary, supported by the various reasons why the County considered prior salary. The district court rejected the County’s argument and denied summary judgment. Held: Vacated and Remanded.

Rizo was hired by the County as a math consultant.  The County uses a multi-level salary structure – with many levels and with many steps in each level.  As with other employees, Plaintiff’s salary was set at the level that corresponded to her prior salary. Rizo had lived and worked in Arizona and was making about $50k/year.   Therefore, her prior salary was way below the lowest step of the first level, and so her salary was set at the bottom rung (about $62k).  County policy required that new employees be paid at least 5% more than their prior salary.  All of Rizo’s male counterparts received a higher salary, presumably because their past salaries were higher.  The County had various reasons for its system – it removed bias and created consistency; the 5% increase over past salary helped lure employees to the County; and, it saved tax dollars.

The district court refused to consider the County’s justifications and instead determined that, under the Equal Pay Act, prior salary alone can never qualify as “a factor other than sex,” reasoning that “a pay structure based exclusively on prior wages is so inherently fraught with the risk . . . that it will perpetuate a discriminatory wage disparity between men and women that it cannot stand, even if motivated by a legitimate nondiscriminatory business purpose.” The court therefore denied the County’s motion for summary judgment.

Its conclusion didn’t square with the Ninth Circuit’s decision in Kouba v. Allstate Insurance Co.  In Kouba, the appeals court said that an employee’s prior salary can be considered “a factor other than sex” under the federal Equal Pay Act if the employer can show that doing so “effectuate[s] some business policy” and is done “reasonably in light of [its] state purpose as well as its other practices.” However, the district court refused to consider the County’s business reasons.  The Ninth Cir. noted that “[w]e do not see how the employer’s consideration of other factors would prevent the perpetuation of existing pay disparities if, as we assumed in Kouba and as is the allegation here, prior salary is the only factor that causes the current disparity.”  The Ninth Circuit therefore vacated the district court’s order and remanded to the court to consider the justifications of the County.

My view – This case shows how facile it is to simply presume that prior salary can never qualify as a factor other than sex, or that prior salary only perpetuates prior sex discrimination.  The County’s system itself had nothing to do with sex, and applied equally to men and women.  Moreover, the disparity was likely based on the fact that Ms. Rizo lived and worked in Arizona. (Google this query: What is the cost of living differences between Arizona and California . . . .)

A few notes of interest:

• Under federal law, Equal Pay Act creates a form of strict liability.  The burden is on the claimant, who makes a prima facie case by showing he/she is receiving different wages for equal work.  The burden of persuasion then shifts to the employer to justify the disparity in one of four statutory exceptions: seniority, merit, quantity/quality of production or a differential based on any other factors other than sex.
• In Kouba, the court found that the Equal Pay Act does not impose a strict ban on the consideration of prior salary; at the same time, past salary does not automatically qualify as a factor other than sex.
• Other jurisdictions have held that the prior salary alone cannot justify pay disparities between the sexes.
• Effective January 1, 2017, California passed AB 1676 which amended Section 1197.5 of the Labor Code to explicitly prohibit an employer from justifying an otherwise unlawful difference in pay on an employee’s or applicant’s prior salary alone. California employers may still use prior salary as one “bona fide factor other than sex” justifying a gender, race, or ethnicity wage disparity, so long as, the pay gap is also based on at least one other reasonable factor, such as education, training or experience.

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Consolidation of Multiple Actions Can Transform Those Actions Into a “Mass Action” For Purposes of CAFA Removal

Dunson v. Cordis Corporation, Ninth Cir., 04/14/2017

Plaintiffs claimed that they were injured by a medical device made by Cordis Corporation.  Between them, Plaintiffs filed eight separate actions in state court.  Each case involved less than 100 plaintiffs; however, the aggregate number of plaintiffs in all eight actions exceeded 100.  Plaintiffs moved to consolidate the actions for “for all pretrial purposes, including discovery and other proceedings, and the institution of a bellwether-trial process.” They told the state judge that this would help avoid inconsistent adjudications.  The state court granted their request for consolidation; Cordis then removed the consolidated case to federal court under CAFA’s mass tort provision.  The district court remanded the case. Held: Affirmed.

The Class Action Fairness Act (CAFA) provides more permissive removal provisions for certain class actions, and for certain mass actions as well.  For CAFA, a “mass action” means those in which the monetary claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact.” 28 U.S.C. § 1332(d)(11)(B)(i). 


Claims that are subject to a “bellwether trial” process, are not necessarily “tried jointly” for purposes of CAFA?  There are two kinds of bellwether trials: Those that bind plaintiffs in other actions, and those that are used for strictly informational purposes. Only the first type of bellwether trial meets the requirements of § 1332(d)(11)(B)(i).  

Where plaintiffs agree to a bellwether trial process, without saying more, the bellwether trial is not binding but informational. Here, plaintiffs didn’t say that “something more.” For example, merely agreeing to “consolidation” is not enough because, under California law, the parties can consolidate cases for pretrial purposes only. While plaintiff did ask for consolidation “to avoid inconsistent adjudications,” it was unclear whether plaintiffs were referring to inconsistent rulings at trial or inconsistent rulings on other pre-trial motions (like motions for summary judgment and motions in limine.)  

Finally, Plaintiffs included this language in their motion for consolidation: “To be clear, Moving Plaintiffs are not requesting a consolidation of Related Actions for purposes of a single trial to determine the outcome for all plaintiffs, but rather a single judge to oversee and coordinate common discovery and pretrial proceedings.”  That pretty much settles it.

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Wylie Aitken Does It Again — Court Reverses Summary Judgment Against His Client Using Novel Application of the Business Errand Exception

Sumrall v. Modern Alloys, Inc., 4/13/17 CA4/3
It’s hard not to appreciate the outcome of this case based on the questionable employment practice of Modern Alloys. 
Campos was employed by Modern Alloys as a cement finisher.  He was required to drive to the company’s yard at 8 a.m., pick up a truck and then drive equipment and other employees to the job site, where he would work from 9 to 5.  He was not paid commute time from his home to the yard (that’s okay); nor was he paid for his commute time from the yard to the jobsite (that’s not okay).  On his way driving from home to the yard one day, he hit a motorcyclist, and the motorcyclist sued the company.   Modern Allows asked for summary judgment, asserting that the coming and going rule was a bar to recovery; plaintiff argued the “business errand” exception applied and the Campos was acting within the scope of employment at the time of the accident. The trial court threw the case out on summary judgment.  Held: Reversed.

Ordinarily, an employee is considered outside the scope of employment while he/she is commuting.  An exception to that is the “business errand” exception.  That is normally a question of fact for the jury.  In reversing summary judgment, the Court explained: “Here, it is undisputed that Campos was driving his own vehicle from his home to the Modern Alloys yard at the time of the collision. Thus, there is a reasonable inference that Campos was on a normal commute. However, it is also undisputed that Campos transported Modern Alloys’ vehicle, workers, and materials from its yard to the jobsite, and that Modern Alloys did not pay Campos until he reached the jobsite. Thus, there is a reasonable inference that Campos was also on a business errand for Modern Alloys’ benefit while commuting from his home to the yard.”

While there is no published case that resembles the facts of this case, the court noted that tort law is not static, each case is driven by its facts, and where plaintiff’s interests are entitled to protection, then the novelty of the case is not a bar to a remedy.

Typically, the business errand exception applies when there is an incidental benefit to the employer not common to the ordinary commute.  One of the important factors in the court’s analysis of whether there was an “incidental benefit” was that Modern Alloy did not pay Campos for driving their truck and hauling their equipment and other employees from the yard to the jobsite.  No kidding — An hour of driving a truck, equipment and employees from the yard to the jobsite is a HUGE incidental benefit.  In fact, it was so important that if Modern Allow had paid Campos for his drive time from the yard to the jobsite, the Court didn’t think the business errand exception could apply. 
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Arbitration Agreements and Arbitration Procedures — Handling the Hiring Process With Less Paper!

A new hire packet for an employee can be painfully long (for the employer and the employee).  The company’s grievance and arbitration policy and procedure can take up a lot of space in the packet.  Getting an enforceable arbitration agreement is obviously critical.  So that raises the question: Can an employer have a one-page arbitration agreement in the new hire packet and incorporate the grievance and arbitration procedures (which can span over 10 pages) by reference. The answer is yes, but the employer has to handle this process carefully.

General contract law principles govern whether the parties have entered into a binding arbitration agreement.  Therefore, the employee’s acceptance of the arbitration policy may be express or implied-in-fact by the employee’s continued employment where acceptance of the agreement is made a condition of employment. 
  
Courts have drawn a line (although not perfectly) between the agreement to arbitrate, on one hand, and the procedures governing the arbitration process on the other.  The employer and employee can agree to arbitration, but use procedures of JAMS, AAA, the California Arbitration Act (CAA), or its own company specific grievance and arbitration procedure. 

It is also well established that the parties may incorporate by reference into their contract the terms of some other document. Each case turns on its facts.  Generally, for the terms of another document to be incorporated into the document executed by the parties the reference must (1) be clear and unequivocal, (2) be called to the attention of the other party who must consent thereto, and (3) the terms of the incorporated document must be known or easily available to the contracting parties.  The contract need not recite that it “incorporates” another document, so long as it guides the reader to the incorporated document. If these conditions are met, an employee may agree to arbitrate claims against his or her employer by signing an acknowledgment form that incorporates the employer’s employee handbook and the arbitration policy it contains.  But again, handle this with care and make sure it’s done right.

In litigation, an employee may still oppose a motion to compel arbitration even though it signed an acknowledgment re: arbitration agreement, by arguing that it didn’t get a copy of the arbitration procedures.   This shouldn’t present too much of a problem (perhaps depending on the judge) if the employer handles this part of the process really well.

In Cruise v. Kroger Co., 233 Cal.App.4th 390 (2015), a new hire signed a one-page document agreeing to arbitration.  Despite being only one page, the agreement was pretty specific and incorporated by reference the company’s dispute resolution policy (what many companies call a “DRP”).  The DRP wasn’t attached to the Agreement and the employee said she never got a copy.  The trial court accepted employee’s evidence and denied Kroger’s motion to compel arbitration, finding there was no agreement to arbitrate. The appellate court reversed.  The court drew a distinction between an agreement to arbitrate (which was detailed, in writing and signed by the employee) and procedures governing arbitration (which the employee said she never received). The court noted that in California, the general rule is that arbitration should be upheld unless it can be said with assurance that an arbitration clause cannot be interpreted to cover the asserted dispute.  The only impact of Kroger’s inability to establish the contents of its arbitration policy is that Kroger failed to establish that the parties agreed to govern their arbitration by procedures different from those prescribed in the CAA (found at Code of Civil Procedure §§ 1280 et seq.). Unless the parties otherwise agree, the conduct of an arbitration proceeding is controlled by the California’s Arbitration Act. (See, e.g., §§ 1281.6, 1282, 1282.2.)  So, the arbitration agreement was upheld as enforceable, but the appellate court said that arbitration would take place under the CAA.  (The CAA is actually first rate substitute.)

But there are various ways to avoid the issue faced by Kroger  — the employer just needs to think, plan and execute well (with the help of its labor attorney).

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Alleged Agency Relationship Between U.S. Subsidiary and its Foreign Parent Not Enough to Impose Personal Jurisdiction Over Foreign Company in California Court

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!

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An Emperor With No Clothes — American Apparel Founder’s Defamation Case Exposed by anti-SLAPP Motion

Charney v. Standard General, 3/28/17 CA2/5   

Charney is the type of litigant who wears as “kick me” sign on his back – but he put there himself.  The facts — He was CEO of American Apparel; the company conducted an investigation and terminated him based on that investigation.  Standard (an affiliate of American Apparel) issued a press-release as part of the termination. It was pretty innocuous as far as press releases go – It said an investigation was conducted by a third party, the investigation was thorough, and that Standard supported the Board’s decision to terminate Charney based on that investigation. Charney cried foul and sued Standard for, among other things, defamation.  Standard filed an anti-SLAPP motion (of course) and won (of course).  Apparently this didn’t compute, so Charney appealed the trial court’s decision.  Held: Affirmed.

The two-step anti-SLAPP analysis is well known:  Code of Civ. Proc. section 425.16 provides, a “cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.”  

Chaney conceded that Standard met prong one – In other words, his lawsuit was directed at Standard’s protected activity.  

Charney argued that he could satisfy prong 2 and show that his lawsuit had minimal merit.  In considering his argument, think of turning a car key where the engine turns over but won’t start.  To state a defamation claim, the plaintiff must present evidence of a statement of fact that is provably false. First, Charney claimed that an independent third party didn’t do the investigation. Whether the statement was false or not didn’t help him; the statement was made about a third person, not about him.  Charney also argued that the press release falsely characterized the investigation as impartial.  But “impartial” is a matter of opinion and subjective judgment, and therefore was not fact that would support a defamation action.  Finally, Charney inaccurately claimed that the press release said he was terminated for cause.  The release said no such thing and didn’t provide the underlying factual findings of any allegations against him.

It must be nice to be able to afford pointless litigation – but what a waste of the court’s time.  

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When Appeal Can Stay Enforcement of Money Judgment Without the Need for a Bond

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.