Journal of Consumer Attorneys Associations for Southern California My defendant is dead, now what?
Collecting judgments from offshore defendants
There is no such thing as a “mild” traumatic brain injury
Class Actions and other
Forum non conveniens and mass torts Is it ever a convenient place for the defendant?
Navigating the waters of a mass-tort case
Post-Concepcion case developments in the employment sector — A cautionary tale
Understanding special provisions of the Consumers Legal Remedies Act Recent developments in mass-tort law
Unfair Competition Law: Is Section 17200 still the consumer’s best friend?
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The Advocate Magazine â€” 5
Contents Volume 40, Number 1, JANUARY 2013 Editor-in-Chief Jeffrey Ehrlich Associate Editors Joseph Barrett, Mary Bennett, Joan Kessler, James Kristy, Beverly Pine, Norman Pine, Rahul Ravipudi, Linda Rice, Ibiere Seck, Geraldine Weiss Editors-in-Chief Emeriti Kevin Meenan, William Daniels, Steven Stevens, Christine Spagnoli, Thomas Stolpman Managing Editor Publisher Cindy Cantu Richard Neubauer firstname.lastname@example.org email@example.com Copy Editor Art Director Eileen Goss David Knopf
Consumer Attorneys Association of Los Angeles President Treasurer Lisa Maki Ricardo Echeverria President-Elect Secretary Geoffrey Wells Michael Arias First Vice President Immediate Past President Joseph Barrett Michael Alder Second Vice President Executive Director David Ring Stuart Zanville Board of Governors Martin Aarons, Mike Armitage, Shehnaz Bhujwala, Todd Bloomfield, John Blumberg, Michael Cohen, Scott Corwin, Jeffrey Ehrlich, Mayra Fornos, Stuart Fraenkel, Scott Glovsky, Steve Goldberg, Jeff Greenman, Christa HaggaiRamey, Genie Harrison, Arash Homampour, Neville Johnson, Bill Karns, Aimee Kirby, James Kristy, Lawrence Lallande, Anthony Luti, Shawn McCann, Minh Nguyen, Linda Fermoyle Rice, David Rosen, Jeffrey Rudman, Ibiere Seck, Douglas Silverstein, Armen Tashjian, Kathryn Trepinski, Geraldine Weiss, Jeff Westerman, Ronnivashti Whitehead, Andrew Wright, Dan Zohar
14 An inconvenient forum for whom?
Defendants are never happy with the forum, but traditional motions to dismiss for forum non conveniens are often not appropriate in mass-tort cases.
26 My defendant is dead, now what?
Guidance at the intersection of probate and tort law.
Ara Jabagchourian & Aron K. Liang
38 Section 17200: Still the consumer’s best friend? 44 Brian Kabateck
Part One: A review of the Unfair Competition Law and its stormy history Part Two: A review of the case law that defines the UCL
58 Recent mass-tort developments
A summary of the most noteworthy mass-tort developments in 2012.
Michael L. Armitage
is no such thing as a “mild” traumatic 74 There brain injury
Even so-called “mild” TBI can be life-altering. We review critical evidence and typical defenses in TBI cases.
Orange County Trial Lawyers Association President Secretary Scott Cooper Geraldine Ly President-Elect Treasurer
86 Class actions & the Consumers Legal Remedies Act
The mass-tort case: Are you ready to make the 92 commitment?
B. James Pantone
Second Vice President Vincent Howard Third Vice President
First Vice President
H. Shaina Colover
Parliamentarian Jonathan Dwork Immediate Past President Executive Director Janet Thornton
Board of Directors Melinda S. Bell, Gregory G. Brown, Anthony W. Burton, Brent W. Caldwell, Cynthia A. Craig, Jerry N. Gans, Robert B. Gibson, Paul E. Lee, Kevin G. Liebeck, Christopher E. Purcell, Solange E. Ritchie, Sarah C. Serpa, Adina T. Stern, Douglas B. Vanderpool, Janice M. Vinci, Atticus N. Wegman Periodicals postage paid at Los Angeles, California. Copyright © 2013 by the Consumer Attorneys Association of Los Angeles. All rights reserved. Reproduction in whole or in part without written permission is prohibited.
ADVOCATE (ISSN 0199-1876) is published monthly at the subscription rate of $50 for 12 issues per year by the Consumer Attorneys Association of Los Angeles, 800 West Sixth Street, #700, Los Angeles, CA 90017 (213) 487-1212 Fax (213) 487-1224 www.caala.org
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Understanding the special provisions of Civil Code section 1770.
There is a steep learning curve to handling a mass-torts case, requiring both patience and a big financial commitment. Then there’s the matter of selecting plaintiffs.
Ann Howitt & Richard P. Kinnan
Post-Concepcion developments in employment 96 litigation – a cautionary tale
Employment law has been impacted by this consumer-arbitration decision. It’s a mess out there.
Linda S. Klibanow
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Collecting your judgment from an offshore defendant “Offshore” does not have to mean “out of reach.”
8 101 103 104
Class actions and other complex litigation
Are there any non-complex cases? Rahul Ravipudi A PPELL ATE R EPORTS Recent cases of interest to members of the plaintiffs’ bar. Jeffrey Isaac Ehrlich F ROM
Orange County Trial Lawyers Association
105 106 107
OCTLA turns 50
Come celebrate at the gala Installation and Judicial Awards Dinner January 26. Scott Cooper F ROM
E XECUTIVE D IRECTOR
Consumer Attorneys Association of Los Angeles
2012 Election Aftermath: The good, the bad and the ugly Statewide wins will be offset by Court budget woes. Stuart Zanville
K NOW CAALA
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The Advocate Magazine — 7
About this Issue Rahul Ravipudi
Complex litigation and class actions Are there any non-complex cases?
While it is true that the past couple of years have netted high profile decisions in the realm of class actions, e.g., Concepcion and Brinker, and we all know that every single case in our offices is, or has the ability to become, complex. In reaching out to my colleagues for articles for this edition, the question that kept ringing in my head was, are there any non-complex cases? With that in mind, this issue of Advocate identifies and provides guidance not only on class-actions and complex multi-plaintiff litigation, but also on some of the everyday, complex issues we face as trial lawyers. What happens when you represent a client who sustained damages by a defendant who subsequently dies? Ara Jabagchourian and Aron Liang, partners at Cotchett, Pitre & McCarthy, have teamed up to address this issue and show you how you can navigate through the Probate Court and adequately protect your client’s rights to recover. It has always puzzled me that, no matter how big a defendant’s tentacles, it always seems that the forum where your client suffered injuries is “inconvenient”
for defendant. My colleague at Panish, Shea & Boyle, Pete Kaufman, provides a thoughtful article addressing the appropriateness – or inappropriateness – of forum non conveniens motions in a masstort matter and how they can be successfully defeated. Richard Kinnan and Ann Howitt of Engstrom, Lipscomb & Lack have spent their careers litigating mass torts, including toxic torts. Using their nearly fifty years of collective experience, they offer a roadmap, both cautionary and instructive, to successfully litigating a mass-tort matter. There is nothing more complex than the human brain. That is why every time you represent a client who suffered a Traumatic Brain Injury (TBI), you are immediately faced with complex issues. A common issue presented is the defendant’s effort to minimize the injury and characterize it as a “mild” injury. Spencer Lucas has successfully litigated countless TBI cases and his article provides the ammunition to ensure that your braininjured client is properly compensated. To bring you up-to-date on classaction law, we look at the Consumers
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Legal Remedies Act: Civil Code section 1770, as explained by the new president of Consumer Attorneys of California, Niall McCarthy. For a rundown on recent mass-tort developments, we turn to Michael L. Armitage of Waters, Kraus & Paul. For a look at how Business & Professions Code section 17200 has evolved into a class action tool, we are offered insight and analysis from Brian Kabateck of Kabateck, Brown, Kellner. Finally, no matter how brilliantly you manage your complex case, it’s pointless if you can’t collect the judgment. David Cook of Cook Collection Attorneys explains why an offshore debtor doesn’t have to mean an uncollectible judgment. Rahul Ravapudi is a partner at Panish Shea & Boyle, Los Angeles, where he handles catastrophic injury and wrongful death cases and represents consumers in class actions against businesses engaged in unfair and illegal practices. Since 2005, Mr. Ravipudi has been recognized as a “Rising Star” by California Law & Politics magazine. He is an adjunct professor at Loyola Law School where he teaches trial advocacy.
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An inconvenient forum for whom?
In mass-tort litigation, defense motions to dismiss for forum non conveniens require careful analysis
The doctrine of forum non conveniens originated in the United States with Willendson v. Forsoket (DC Pa 1801) 29 Fed Cas 1283, in which a federal district court in Pennsylvania declined to exercise jurisdiction over a Danish sea captain who was being sued for back wages by a Danish seaman. The court stated that the matter “must be settled by a Danish tribunal.” The court’s analysis was elegantly simple: U.S. courts had not been established to settle disagreements between parties from other countries, even if the controversy had some connection with the forum sufficient to give the court jurisdiction. After all, the parties were not Americans, their bargain had not been struck or broken in the U.S., and in any event, what interest would American taxpayers have in financing the judicial resolution of a controversy that ultimately would not affect them at all? On these facts, the doctrine of forum non conveniens seems perfectly logical. But, of course, logic’s place in the U.S.’s legal system is never permanently secure. The adversarial system, though perhaps not intended to reward torturous applications of doctrine, certainly has contributed to this practice. One notable recent example is the use of the forum non conveniens doctrine, by mass-tort defendants, to dispose of cases which might otherwise move relatively quickly to trial. The typical claim – anodyne enough on its face – is that another forum is more “convenient” than the one chosen by the plaintiff. But a closer look at the facts – as we will see in one notable example – demonstrates that convenience of the parties is at best an ancillary concern, and that the moving party’s chief motivation is to delay the plaintiff ’s day in court.
The doctrine of forum non conveniens
The common law doctrine of forum non conveniens allows a court to dismiss
14 — The Advocate Magazine
a case over which it would normally have jurisdiction if doing so “best serves the convenience of the parties and the ends of justice.” (Kamel v. Hill-Rom Co., Inc. (7th Cir.1997) 108 F.3d 799, 802 (citing Gulf Oil Corp. v. Gilbert (1947) 330 U.S. 501, 507.) “Dismissal for forum non conveniens reflects a court’s assessment of a range of considerations, most notably the convenience to the parties and the practical difficulties that can attend the adjudication of a dispute in a certain locality.” (Sinochem Int’l Co. Ltd. v. Malaysia Int’l Shipping Corp. (2007) 549 U.S. 422, 429.) Under the doctrine of forum non conveniens, a case may be dismissed only when two conditions are met: (1) there is an available and adequate alternative forum that has jurisdiction over the case; and (2) the balance of private and public interest factors weighs in favor of dismissal. (Clerides v. Boeing Co. (7th Cir. 2008); 534 F.3d 623, 628; In re Bridgestone/Firestone, Inc (7th Cir. 2005) 420 F.3d 702, 703-04.) Balancing private interests requires determining the convenience of the parties, affording domestic plaintiffs “a strong presumption” that their forum choice is sufficiently convenient, and a weaker presumption applying in cases brought by foreign plaintiffs. (Piper Aircraft Co. v. Reyno (1981) 454 U.S. 235, 256.) Relevant public interests, on the other hand, include administrative difficulties with deciding litigation in congested centers rather than at their origin, the imposition of jury duty on a community unrelated to the litigation, the relative interests of the possible fora, and the interest in a court avoiding the necessity of “untangl[ing] problems in conflict of laws, and [applying] law foreign to itself.” (Gulf Oil Corp. v. Gilbert, 330 U.S. at 508-09.)
The example of the ASR hip litigation
While these factors seem reasonable enough, the application of the doctrine
to mass-tort cases has the potential to yield results that seem unlikely to have been intended by any of the decisions interpreting the rule. The chief reason for this is that the doctrine assumes that all cases have a center of gravity, which points to the most “convenient” forum. But mass-tort cases as a rule involve parties from numerous locations, far-flung sources of evidence and multiple appropriate fora. A defendant’s argument that any one of these potential jurisdictions is “most convenient” is usually pretext for some tacit design. The stated concern may be to compel refiling of the plaintiff ’s case in a more appropriate forum, but these motions usually have the practical effect of prolonging litigation. Consider the case of the recalled ASR hip implant, a medical device which was designed and manufactured by a company headquartered in the United Kingdom, and marketed throughout the U.S. by a company based in Indiana. The ASR hip was developed in collaboration with surgeons in California and across the globe. The data which ultimately damned the device came from Australia, the United Kingdom, the United States and elsewhere. The ASR’s recall resulted in the filing of thousands of lawsuits, against most of the aforementioned parties, in nearly every state in the Union. The defendants are being called to task in courtrooms from West Palm Beach to San Francisco. More than 7,000 cases involving the ASR hip have been filed in federal and state courts. More than two-thirds of these are consolidated before a single federal judge; the so-called multidistrict litigation (“MDL”) court. But more than 2,000 cases are pending in state court in California, as well. Jurisdiction lies in this state because one of the defendants, Dr. Thomas Schmalzried, is a California resident. Dr. Schmalzried played a critical role in the development and marketing
See Forum, Page 16
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of the ASR hip implant device. Indeed, because of his involvement, as well as another surgeon/designer in this state, a substantial amount of evidence relevant to all cases involving the ASR is located in California. Of course, these facts are well known to the defendants. Still, this has not stopped them from urging courts to dismiss cases on the basis that “the evidence” – a curiously monolithic phrase – is all located in the plaintiff ’s home state. Indeed, to hear the defendants describe it, foreign plaintiffs’ (residents of states other than California) cases have no connection to California other than, possibly, the location of their attorneys’ office. Of course, this is not so. The evidence in this case is located across the country and, in fact, across the globe. Defendant DePuy Orthopaedics, Inc., is headquartered in Warsaw, Indiana; its parent company, Johnson & Johnson, Inc., in New Brunswick, New Jersey (collectively “DePuy”). The ASR hip was manufactured in the UK. The surgeon design team was comprised of physicians from California (including Dr. Schmalzried), the United Kingdom, South Africa, Australia and Germany. Admittedly, mass-tort litigation, in which critical evidence is located across disparate locations, is cumbersome, expensive and inconvenient for all parties. But the suggestion that the location of the evidence weighs “heavily” in favor of trial in the plaintiff ’s home state, as opposed to California, is absurd. For example, defendants have argued that they will: have to obtain medical records from the plaintiff ’s home state; will have to take depositions of multitudinous physicians, co-workers and family members there; and will be especially prejudiced because they will not be able to compel witnesses from the home state to appear at trial in California. But none of these reasons is particularly supportive of defendants’ argument. The plaintiff ’s medical records will have to be obtained from her home state no
See Forum, Page 18
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matter where the case is tried. The same holds true with respect to the depositions of third-party witnesses, including the plaintiff ’s family members, none of whom are party to the suit. And while it is true that defendants would not be able to compel residents of the plaintiff ’s home state to appear at trial in California, this difficulty is hardly unprecedented in mass-tort litigation, and unfairly disadvantages neither side. The plaintiff will not be able to compel critical witnesses from Indiana or the UK to appear at trial, either in her home state or California. And while live testimony is preferable to testimony by video, mass tort proceedings invariably require some amount of videoed deposition testimony. The evidence in this case emanates from multiple fora, most of it from
18 — The Advocate Magazine
outside nearly every plaintiff ’s home state. To date, DePuy has produced in excess of 35 million pages of material. Witnesses have been deposed in multiple states and countries. Much of the evidence relevant to this case is located in California. One of the defendants is a resident of California. Indeed, this is the basis of the court’s jurisdiction. The defendants are not being dragged to some random forum to try this case. They are party to more than 2,000 similar cases pending in California courts, and here they will remain until the litigation is concluded. Considering the grounds raised in the standard motion to dismiss for forum non conveniens, it would appear that the defendants are not interested in finding a more convenient forum in which to try this case, but
rather in finding a way to avoid trying this case altogether.
Forum non conveniens: The California perspective
Forum non conveniens is an equitable doctrine. (Stangvik v. Shiley Inc. (1991) 54 Cal.3d 744, 751.) “Grounded in equity, its purpose is to see that equity is done.” Martinez v. Ford Motor Co. (2010) 185 Cal.App.4th 9, 18, as modified on denial of reh’g (June 25, 2010), citing Elbert, Limited v. Federated Income Properties (1953) 120 Cal.App.2d 194, 206 [“It is a measure of the virility and flexibility of equitable principles that they may be applied to the end that neither party is permitted to secure an advantage to the prejudice of
See Forum, Page 20
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another...”].) The doctrine permits a court to invoke its discretionary power to decline to exercise its jurisdiction over a case “when it believes that the action may be more appropriately and justly tried elsewhere.” (Stangvik, 54 Cal.3d at 751.) But this power is not to be exercised lightly. In California the plaintiff ’s choice of forum is entitled to great weight even if she is a nonresident. “[U]nless the balance is strongly in favor of the defendant, the plaintiff ’s choice of forum should rarely be disturbed.” (Ford Motor Co. v. Ins. Co. of N. Am. (1995) 35 Cal.App.4th 604, 610-11; Stangvik, 54 Cal.3d at p. 753.) The forum non conveniens’ analysis requires a three-step process. As applied in this matter, the court must first determine whether the proposed alternative forum is a “suitable” place for trial. If the
20 — The Advocate Magazine
court makes this finding, it must then consider: 1) the private interests of the litigants; and 2) the public interests in retaining the action in California. As the moving party, defendants bear the burden on each issue. (Stangvik , 54 Cal.3d at 751.) The defendants’ motion must be supported by evidence – not merely bald assertions. (Bechtel Corp. v. Industrial Indem. Co. (1978) 86 Cal.App.3d 45, 48.) Thus, the court’s analysis in considering a forum non conveniens motion “must start from the premise that defendants [bear] the burden of producing sufficient evidence to overcome the strong presumption of appropriateness attending plaintiff ’s choice of forum.” (Ford Motor Co., 35 Cal.App.4th at 611.) Moreover, “[t]he inquiry is not whether [the alternate forum] provides a better
forum than does California, but whether California is a seriously inconvenient forum.” (Ibid.) Therefore, “[u]nless the balance [of the private and public interests] is strongly in favor of the defendant, the plaintiff ’s choice of forum should rarely be disturbed.” (Id. at 610-611.)
The plaintiff’s home state may not be a suitable alternate forum
Under many circumstances, the plaintiff ’s home state would be a suitable, alternate forum. However, given the practical context of coordinated mass-tort case, it can be far less suitable to other fora. In most mass-tort cases, the plaintiff is the only party residing in her home state. If she refiles there, jurisdiction will lie in federal court under 28 U.S.C. § 1332. Of
See Forum, Page 22
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course, any ASR case filed in federal district court would be transferred by the Judicial Panel on Multidistrict Litigation to MDL 2197, in the Northern District of Ohio. Transfer to any MDL usually means the plaintiff ’s case will languish in that court until it is remanded to the transferor court. There is no indication when this would happen, if ever; though if history is any guide, the chances are slim. Since the inception of the MDL panel, in 1968, only four percent of all cases subjected to MDL proceedings have been remanded to the transferor court. As one court has observed, “compared to the processing time of an average case, MDL practice is slow, very slow.” (Delaventura v. Columbia Acorn Trust (D. Mass 2006) 417 F. Supp. 2d 147, 150.)
Neither private nor public interest factors support forum non conveniens motions in mass-tort actions
The private-interest factors are those that make trial and the enforceability of the ensuing judgment expeditious and relatively inexpensive, such as the ease of access to sources of proof, the cost of obtaining attendance of witnesses, and the availability of compulsory process for attendance of unwilling witnesses. (Stangvik, 54 Cal.3d at 751.) Defendants bear the burden of showing that these factors weigh heavily in support of trial in the plaintiff ’s home state.
Typically, mass-tort defendants urge that “all” the evidence in a litigation is located in the plaintiff ’s home state. As discussed above, this is not the case. Admittedly, some evidence related to any mass-tort case will be located in the plaintiff ’s home state, though the situation is not as extreme as most defendants would have us believe. For example, defendants protest that numerous witnesses (such as the plaintiff ’s physicians, co-workers and family members) are located in her home state. But defendants will routinely omit that scores of witnesses are located elsewhere. Defendants also argue that they will have to obtain medical records from a “multitude of out-of-state health-care providers and depose them.” The same argument is raised with respect to thirdparty witnesses such as the plaintiff ’s coworkers and family members. Defendants also protest that they will have to rely on the use of videotaped deposition testimony, because they will be unable to compel unwilling witnesses to appear at trial. As an initial matter, plaintiff should remind courts that, ordinarily, no allegations of wrongdoing are made against any of her physicians or other healthcare providers. The mere fact that a plaintiff ’s surgery is performed someplace other than the trial court’s jurisdiction should not overcome the fact that plaintiff ’s claims are almost always based
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on defendants’ misconduct in designing, manufacturing, and marketing of a product – most of which took place someplace other than her home state. As a practical matter, regardless of where any ASR case is ultimately tried, defendants and plaintiff will need to gather evidence and take depositions in the plaintiff ’s home state (where her physicians and medical records are located), in California (where at least one defendant is located), and in Indiana, New Jersey and – as has already been in the case – in the United Kingdom, and perhaps elsewhere. In short, costs to obtain evidence and attendance of witnesses will occur whether this matter is litigated in California or in any other forum. There will be “out-of-state” depositions either way. Accordingly, this factor is, if anything, neutral. Similarly, the availability of compulsory process for attendance of unwilling witnesses is also a neutral factor, as plaintiff will not be able to compel defendant’s officers, directors or employees to appear in her home state, and defendant will not be able to compel plaintiff ’s physicians to appear in California. The public-interest factors “include (1) avoidance of overburdening local courts with congested calendars, (2) protecting the interests of potential jurors so that they are not called upon to decide
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cases in which the local community has little concern, and (3) weighing the competing interests of California and the alternate jurisdiction in the litigation.” (Stangvik, at 751.) As discussed above, the balance of public interests between California and the plaintiff ’s home state is, at best, neutral. Any argument about the congestion in California courts is usually a neutral consideration because defendants persistently fail to produce evidence that the plaintiff ’s home state’s courts are less congested than California’s. (See Ford Motor Co., at 615 [finding that congestion of the courts was a neutral public interest factor where “there is no evidence that [an alternative jurisdiction’s] courts have any less of a problem in this regard [than California], and the instant action is less likely to clog the courts”].)
Further, where a JCCP court is the chosen forum, the plaintiff can argue forcefully that it is clearly the most prepared to efficiently hear her case. Coordinated proceedings have proven very capable of presiding over thousands of similar cases; one more will not add any additional burden. Retaining cases within any particular JCCP will conserve judicial resources by avoiding the duplication of effort that would result if the matter was litigated in a separate forum. Thus, considerations of judicial economy weigh in favor of California as a convenient forum. When facing a motion to dismiss for forum non conveniens, it is critical for a mass-tort plaintiff to educate the court on the facts applicable to the doctrine. The plaintiff is entitled to choose the forum in which she wishes to proceed with her action, and this choice is entitled to
deference. Claims that an alternate forum is more convenient should be scrutinized closely. It can be easy for courts to take the path of least resistance (dismissal moves the matter off their plate), without appreciating that an established legal doctrine may not be applicable to certain types of cases. Attempts to delay a plaintiff ’s day in court which are masquerading as forum non conveniens motions should be countenanced.
Pete Kaufman is an attorney at Panish, Shea & Boyle, LLP. He specializes in pharmaceutical and medical device litigation, and has practiced for ten years. He is a graduate of the University of Wisconsin-Madison and the University of Florida Levin College of Law. He served as co-chair with Gerald Meunier of the Vioxx MDL Trial Package Committee.
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My defendant is dead, now what?
Where probate law meets the Code of Civil Procedure: A primer
Some of you may have come across a situation in which the defendant has died before the case comes to your doorstep or the defendant dies during litigation. Typically, the plaintiff ’s lawyer waits for an estate to be opened for that defendant and then either initiates or amends the action against the administrator of the estate. But what do you do if the person dies and no probate is opened or a trust has been set up which avoids probate all together? There are procedural obstacles that need to be overcome in such cases, but with foresight and planning they can be dealt with. This article outlines different methods that a practitioner can pursue with a discussion of pertinent code sections and case law.
Probate Code for Dummies
Probate law and most civil trial lawyers have a long-standing, unspoken agreement: I’ll stay away from you if you stay away from me. It is a long time coming for this agreement to be broken. Probate law needs to be harnessed by civil justice lawyers as another tool to aid clients in seeking justice. At least to the authors’ eyes, probate law has a lot to offer. The typical understanding of what to do when a defendant dies is to sue the estate through the administrator under Probate Code sections 9000, et seq. That’s great if you have an estate that has already opened and it has some corpus to pursue after the creditors are done with it. In this situation, once the estate is opened, creditors have an opportunity to file creditor claims against the estate. The personal representative of the estate has the obligation to provide notice of the administration of the estate to all known and reasonably ascertainable creditors. (Prob. Code, §§ 9050, et seq.) Probate Code section 9150 requires the creditor to file a claim with the court and
26 — The Advocate Magazine
serve a copy of that claim on the personal representative. In California, there are forms that are available for filing a creditor claim. They are not too difficult to find and can be found, for example, on Legal Solutions. But what happens if no probate is opened or there is a trust that has been set up to avoid probate all together? For many non-probate civil lawyers, the first thought is likely that you must open one yourself. That is not necessarily true. Probate Code sections 13000 13660 is Division 8 of the Probate Code and is entitled “Disposition of Estate Without Administration.” Division 8 is separated into two “Parts.” Part 2 is entitled “Passage of Property to Surviving Spouse Without Administration” and begins at Probate Code section 13500. The title is self-explanatory and involves a situation where a person dies and all of the assets transfer automatically to the surviving spouse. Who ends up with the ill-gotten gains? The spouse or the victim? The answer lies in Chapter 3 of Part 2 of Division 8 of the Probate Code. Chapter 3 is entitled “Liability For Debts Of Deceased Spouse” and is promulgated under Probate Code sections 1355013554. The statutory scheme sets forth the liability that exists against a surviving spouse for the debts of a deceased spouse when there is no administration of an estate. Probate Code section 13550 reads: Except as provided in Sections 11446, 13552, 13553, and 13554, upon the death of a married person, the surviving spouse is personally liable for the debts of the deceased spouse chargeable against the property described in Section 13551 to the extent provided in Section 13551. Probate Code section 13551 states: The liability imposed by Section 13550 shall not exceed the fair market value at the date of the decedent’s
death, less the amount of any liens and encumbrances, of the total of the following: (a) The portion of the one-half of the community and quasi-community property belonging to the surviving spouse under Sections 100 and 101 that is not exempt from enforcement of a money judgment and is not administered in the estate of the deceased spouse. (b) The portion of the one-half of the community and quasi-community property belonging to the decedent under Sections 100 and 101 that passes to the surviving spouse without administration. (c) The separate property of the decedent that passes to the surviving spouse without administration. What does all this mean? In interpreting these two sections, the California Supreme Court stated that “[s]ubject to certain exceptions and limitations, Probate Code sections 13550 and 13551 make a surviving spouse personally liable for the debts of the deceased spouse . . .” (Collection Bureau of San Jose v. Rumsey (2000) 24 Cal.4th 301, 303 (“Rumsey”) (emphasis added).) Probate Code section 13551 places a limit on this liability, restricting the recovery to the total of: (1) one half of the community property transferred from the decedent to the surviving spouse, (2) the other half of the community property held by the surviving spouse and (3) all of the separate property held by the deceased spouse that transferred to “the surviving spouse without formal probate administration.” The Probate Code’s answer to the question of the liabilities of a surviving spouse for the debts of the deceased spouse is logical. If the defendant dies and the assets transfer to the surviving spouse without probate, the creditor can and should be able to recover from:
See Defendant, Page 28
Defendant — continued from Page 26
(1) all of the community property of the couple and (2) the separate property of the deceased spouse. While some may argue that this is unfair to the “innocent” surviving
28 — The Advocate Magazine
spouse, it is not. If the defendant had not died, the creditor would have been able to recover from exactly the same assets. Family Code section 910(a) provides that “the community estate is liable for a debt
incurred by either spouse before or during marriage.” In other words, if the defendant was still alive, the creditor could recover: (1) all of the community property of the couple and (2) the separate property of the defendant spouse. There is no reason why death of the defendant should allow the surviving spouse to escape with the ill-gotten gains. Probate Code section 13553, entitled “Exemption from liability” states that: [t]he surviving spouse is not liable under this chapter if all the property described in paragraphs (1) and (2) of subdivision (a) of section 13502 is administered under this code. What this means is that the Probate sections relating to the liability of a surviving spouse when the assets are transferred without administration does not apply if a probate estate is opened. Again, common sense. Probate Code section 13554 “clarifies that these debts may be enforced against the surviving spouse in the same manner as they could have been enforced against the deceased spouse if he or she had not died.” (Rumsey, 24 Cal.4th at 307; Prob. Code, § 13554(a).) The surviving spouse “may assert any defense, cross-complaint, or setoff which would have been available to the deceased spouse if the deceased spouse had not died.” (Rumsey, 24 Cal.4th at 307; Cal.Prob.Code, § 13554(b).) Probate Code section 13554 means that the surviving spouse steps into the shoes of the deceased spouse. The creditor can enforce the debt against the surviving spouse in the exact same manner as if the deceased spouse was still alive. In the same vein, the surviving spouse has the exact same right to assert any defense, cross-complaint or set-off which the deceased spouse could have raised if they had not died. Reading all of these Probate Code sections together, it shows that a creditor does not need to open an estate when a defendant dies. The surviving spouse has an option. If he or she opens a probate estate, you will have to file a creditor claim in the probate case to protect your rights. However, if the surviving spouse
See Defendant, Page 30
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Defendant — continued from Page 30
does not open a probate estate, the Probate Code provides you with an opportunity to go after the surviving spouse as the successor-in-interest. Just remember, under Probate Code section 13554, the surviving spouse can assert the same defenses, cross-complaints and/or setoffs that the deceased spouse could have, so you will still have to litigate your case. However, at least you still have a right and ability to go to court to pursue recovery for your clients.
One-year statute of limitations on claims
It is important to remember that, if the defendant dies, there is a one-year statute of limitations for bringing a claim against the defendant’s successor-ininterest. The one year starts to accrue
after the date of death of the defendant. Code of Civil Procedure section 366.2(a) states that: If a person against whom an action may be brought on a liability of the person, whether arising in contract, tort, or otherwise, and whether accrued or not accrued, dies before the expiration of the applicable limitations period, and the cause of action survives, an action may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply. Probate Code section 13554(c) specifically states that Code of Civil Procedure section 366.2 applies to all causes of action brought under Probate Code sections 13550, et seq.
Code of Civil Procedure section 366.2 (entitled “Death of person against whom action may be brought; limitation period”) demonstrates the fact that the California Legislature intended for injured parties to have recourse, even in situations where the defendant has died. The December 1989 California Law Revision Commission recommendation on the proposed legislation amending Code of Civil Procedure former section 353 explained that: the one year statute of limitations is intended to apply in any action on a debt of the decedent, whether against the personal representative under Probate Code Sections 9350 to 9354 (claim on cause of action), or against another person such as a distributee under Probate Code Section 9392
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(liability of distributee), a person who takes the decedent’s property and is liable for the decedent’s debts under Sections 13109 (affidavit procedure for collection or transfer of personal property), 13156 (court order determining succession to real property), 13204 (affidavit procedure for real property of small value), and 13554 (passage of property to surviving spouse without administration), or a trustee. (Rumsey, 24 Cal.4th at 308, quoting, Recommendation Relating to Notice to Creditors in Estate Administration (Dec. 1989) 20 Cal. Law Revision Com. Rep. (1990) p. 515.) It thus appears that when the amendments to former section 353 were enacted, they were done so with the clear understanding and intent that such provisions would govern and apply to ‘any action on a debt of the decedent’ regardless of whom the action was brought against, and specifically including the surviving spouse. (Ibid.) This is legal authority for the proposition that the California Legislature specifically envisioned and intended to create a mechanism by which an injured party could get relief from the surviving spouse of an injured defendant. Early on in this article, we asked the question: “Who ends up with the ill-gotten gains? The spouse or the victim?” Rumsey and the Probate Code indicate that the answer is and should be: The victim. This makes sense and should be the right answer under California law.
Rumsey: Sections 13550, et seq
Rumsey is the seminal case decided by the California Supreme Court that interprets Probate Code sections 13550, et seq. Rumsey involved a spouse who had incurred medical expenses with a hospital before her death. The hospital’s agent then brought suit against the surviving spouse under a common count claim of open book account. There was no existing judgment, but rather the cause of action had to be litigated against the surviving spouse for the debts of the deceased spouse. In addition to the
unlitigated debts of the deceased spouse, the decedent’s “estate involved a trust but was not subject to formal administration.” In interpreting “sections 13550, 13551 and 13554 of the Probate Code” the Court held that the surviving spouse: was ‘personally liable’ [ ] for the debts left behind by his deceased spouse . . . to the extent of his own share of the community property and her separate property that passed to him without formal administration. (Id. at 309.) The Court then went on to state that the hospital had one year “within which to file an action against her estate, or against [surviving spouse] derivatively, seeking to collect any such unpaid debts.” (Id., emphasis added.)
Family Code section 914
As discussed above, under the Probate Code, the surviving spouse is liable for the debts of the deceased spouse up to: (1) all of the couple’s community property; and (2) only the separate property of the deceased spouse. In other words, the creditor can access the exact same assets of the deceased spouse after he or she died that the creditor could have obtained if the deceased spouse was still alive. There are some exceptions to this general rule, such as Family Code section 914, which states: (a) Notwithstanding Section 913, a married person is personally liable for the following debts incurred by the person’s spouse during marriage: (1) A debt incurred for necessaries of life of the person’s spouse while the spouses are living together. (2) Except as provided in Section 4302, a debt incurred for common necessaries of life of the person’s spouse while the spouses are living separately. (b) The separate property of a married person may be applied to the satisfaction of a debt for which the person is personally liable pursuant to this section. If separate property is so applied at a time when nonexempt property in the community estate or separate property of the person’s spouse is
available but is not applied to the satisfaction of the debt, the married person is entitled to reimbursement to the extent such property was available. Family Code section 914 allows a creditor to go after the separate property of the surviving spouse but only for “necessaries of life” and “common necessaries of life.” There is no bright line rule of “necessaries of life” but expenses such as hospital expenses likely fall into this category. However, if you are a creditor on a commercial debt or a plaintiff in a tort or breach of contract action, it is not likely that Family Code section 914 will be relevant to your case.
Applicability of Probate Code methods
The above-mentioned interpretation of the Probate Code and California case authority is logical and comports with the canons of statutory interpretation. At least to the authors, this is and should be the law in California on this subject matter. However, there is not a wealth of cases interpreting these provisions of the Probate Code. In no way is the law on this issue settled. If you pursue recovery using any of these provisions of the Probate Code, you can expect a major fight. One argument that the authors have seen raised is that, if the defendant dies without an estate being opened, the creditor or plaintiff bears the burden of opening an estate just so that he or she can turn around and sue it. As discussed above, this argument doesn’t make much sense. The title of Division 8 of the Probate Code (which includes Probate Code sections 13550-13554) is entitled “Disposition of Estate Without Administration.” However, if you have a pending case (and no judgment) and the defendant dies, you may to deal with the argument that the word “debt” in Probate Code sections 13550-13554 means only liquidated debts, like a judgment, and not pending actions. In other words, defense will raise the argument that these derivative methods of suit only apply in pursuit of judgments, not actions. While this seems JANUARY 2013
The Advocate Magazine — 31
Defendant — continued from Previous Page
counterintuitive and counter to the language of the Probate Code sections cited above, this argument has been presented to courts in the State of California. Below are several arguments that support the proposition that one can pursue an action against a deceased person using the Probate Code sections discussed above, rather than the expensive proposition of having to open and administer an estate. • Rumsey involved a debt not reduced into a judgment In Rumsey, no judgment existed at the time the matter was filed against the surviving spouse for the debts of the deceased spouse. Rather, in that case, the agent of the hospital filed an action against the
surviving spouse for an open book account, which required a factual finding of liability. In Rumsey, there was no finding that the open book account had in fact not been paid, or that services were in fact rendered by a judge, jury or arbitrator. No judgment was ever entered in Rumsey prior to the commencement of the action against the deceased spouse. Rather, the Court held that the surviving spouse was “personally liable” for the debts left behind by his deceased spouse. Yet, the debt was never reduced to a judgment. In fact, the action for open book account against the surviving spouse was an issue to be resolved by a jury. Therefore, under the California Supreme Court’s own analysis of Probate Code section 13550, the
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term “debts” means amounts owing prior to a finding of liability. • Liability of the person means personal accountability Probate Code section 13554(c) explicitly sets forth the applicability of Code of Civil Procedure section 366.2 to liability for debts of a deceased spouse. Code of Civil Procedure section 366.2 allows for an action “brought on a liability of the person . . . [to] be commenced within one year of death.” (Code Civ. Proc. §366.2(a) (emphasis added).) Stated another way, a lawsuit can be commenced based on the liability of a deceased person. (Rumsey, supra, 24 Cal.4th at 308.) The phrase “liability of the person” under section 366.2 means “‘[l]iability for which one is personally accountable and for which a wronged party can seek satisfaction out of the wrongdoer’s personal assets.’” (Estate of Yool (2007) 151 Cal.App.4th 867, 875; citing Black’s Law Dict. (8th ed. 2004) p. 933.) Issues of liability and accountability are typically issues that are resolved prior to a case being rendered into a judgment. • Derivative liability is not restricted to collection actions In addition, the action based on the liability of a decedent can “aris[e] in contract, tort or otherwise”. (Code Civ. Proc., § 366.2(a).) Again, section 366.2 does not constrict its application to collection efforts associated with final judgments. If the California Legislature meant that liability of a decedent could arise only through a judgment, then it could have so stated. • Accrual of an action arises when decedent commits an injury Further, pursuant to Code of Civil Procedure section 366.2, the matter can be “accrued or not accrued”. Accrual of a claim means when it arose in time, not that it was reduced to a judgment. (Dacey v. Taraday (2011) 196 Cal.App.4th 962, 983-984 [“we are not aware of any case that has applied the statute when the decedent did not commit the injury or did not already have a collectible debt at the time of death.”] (emphasis added).) Code of Civil Procedure section 366.2 and the case law interpreting it permits claims to be brought against the successor-in-interest
See Defendant, Page 34
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Defendant — continued from Page 32
or surviving spouse after the death of the deceased spouse, since Probate Code section 13554(c) expressly incorporates Code of Civil Procedure section 366.2
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to a collection action. Rather, an “action” under the statute means “an ordinary proceeding in a court of justice by which one party prosecutes another for the declaration, enforcement, or protection of a right, the redress or prevention of a wrong, or the punishment of a public offense.” (Farb v. Superior Court (2009) 174 Cal.App.4th 678, 684.) An “action” under 366.2 allows for prosecution of claims, including those which have not been liquidated or reduced to a judgment. Furthermore, section 366.2’s “language contemplates a cause of action that could have been asserted against the decedent while he was alive.” (Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 552.) No court has limited actions brought forth under Code of Civil Procedure section 366.2 to actions reduced to judgments. • Section 366.2’s statute of limitations Applicability of the one-year statute of limitations associated with Code of Civil Procedure section 366.2 also undercuts the “debt equals judgment” position. The statute of limitations set forth under section 366.2 does not apply where the claim has already been reduced to a judgment. (In re Estate of Bennett (2008) 163 Cal.App.4th 1303, 1310.) Therefore, neither Probate Code section 13550, et seq., nor Code of Civil Procedure section 366.2 can be limited to judgments, as the statute of limitations set for under Code of Civil Procedure section 366.2 does not apply only to claims associated with existing judgments. It must therefore deal with “debts” not reduced to a judgment or else Code of Civil Procedure section 366.2 and Probate Code section 13554(c) would have no meaning or function. • The Legislature and the word “debt” and the phrase “judgment for the debt” In addition, California law provides that “the community estate is liable for a debt incurred by either spouse before or during marriage, regardless of which spouse has the management and control of the property and regardless of whether one or both spouses are parties to the debt or to a judgment for the debt.” (Century Surety Co. v. Polisso (2006)
See Defendant, Page 36
Defendant — continued from Page 34
139 Cal.App.4th 922, 942; citing Fam. Code, § 910.) If the words “debt” and “judgment” were synonymous, the California Legislature and California courts would not have used those terms separately. A statute must be construed with regard to the statutory scheme of which it is a part and the court should give meaning to every word if possible, avoiding a construction that will render any part surplusage. (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1118.) • Cross-complaints in first-party collection efforts Probate Code section 13554 states that “the surviving spouse may assert any defense, cross-complaint, or setoff ” that would have been available to the
36 — The Advocate Magazine
deceased spouse had he been alive. (Prob. Code, § 13554(b.)) If Probate Code sections 13550, et seq. were restricted to the collection of debts that have been reduced to a judgment, then there would be no reason to bring a “defense” or “cross-complaint,” as those defenses and cross-complaints in firstparty suits would have been compulsory at the time of the suit. (Code Civ. Proc., § 426.30.)
As we mentioned in the article, in no way is this an area of law that is well settled. But given the language of the Probate Code and the cases interpreting them, we believe that the provisions raised above will provide plaintiffs’
attorneys more tools to pursue the justice that their clients deserve.
Ara Jabagchourian is a partner at Cotchett, Pitre & McCarthy LLP, where he practices civil litigation in several areas, including financial fraud, injury and intellectual property. Prior to joining private practice, Jabagchourian served as a staff attorney for the Federal Trade Commission’s Bureau of Competition in Washington, D.C. Aron K. Liang is an associate at Cotchett, Pitre & McCarthy, LLP, where he practices civil litigation in a number of different fields, including business litigation, antitrust litigation, environmental litigation, class actions, securities fraud and consumer protection.
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Section 17200: Still the California consumer’s best friend?
Part One: A review of the Unfair Competition Law and its stormy history
The information in this article was presented at the 30th Annual CAALA Las Vegas Convention in September 2012
Business and Professions Code section 17200 et seq, otherwise known as California’s “Unfair Competition Law” or the “UCL”, has been designed as a powerful pro-consumer statute, arguably the toughest in California, primarily because the statute does not proscribe any specific conduct, but broadly prohibits “unfair competition.”
38 — The Advocate Magazine
It protects consumers by defining as “unfair competition” those business acts or practices that are: “unlawful,” “unfair,”or “fraudulent.” The purpose of the UCL is to protect both consumers and competitors from unfair competition: the statute is defined in the disjunctive to encompass a wide variety of claims. As a result, a practice may be found “unfair” or fraudulent,” even if not “unlawful” and vice versa. (See Cel-Tech Communications & Cel-Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.)
By proscribing “any unlawful business practice,” Section 17200 “borrows” violations of other laws and treats them as unlawful that the unfair competition law makes independently actionable. However, the law does more than just borrow. The statutory language referring to “any unlawful, unfair practice” makes clear that a practice may be deemed unfair even if not specifically proscribed by some other law. (Bardin v. Daimler Chrysler Corp. (2006) 136 Cal.App.4th 1255, 1265 (emphasis added).)
Take note that an act that is otherwise lawful can still be challenged as unfair. However, if the conduct complained of has been specifically determined as lawful, it cannot be actionable under the “unfair” prong of section 17200. Trial lawyers can bring a UCL claim even if they believe they can only satisfy one of the three prongs, and a single business practice may simultaneously violate two or all three prongs. Therefore, trial lawyers should evaluate the potential to bring a UCL claim in business lawsuits, as there is a strong likelihood it could apply in a variety of cases. Tip to plaintiffs’ attorneys: When bringing a UCL claim, try to plead all three prongs and plead facts specific as to each. If the unfair business practice you allege does not survive on demurrer under one prong, one of the other two might still be viable. While the UCL is an equitable, proconsumer tool with equitable remedies for restitution and/or injunctive relief, attorney’s fees are not generally awarded. However, a prevailing party “may seek attorney fees as a private attorney general pursuant to Code of Civil Procedure section 1021.5.” (Walker v. Countrywide Home Loans, Inc. (2002) 98 Cal.App.4th 1158, 1179.)
Section 17200 Pre-2004 and Prop. 64
The UCL changed the business litigation landscape because it was extremely far-reaching. The requirements to state a UCL claim before Proposition 64’s passage in 2004 were (1) A business practice that is (2) “Unlawful,” “unfair” or “fraudulent”. The unique standing provision provided that any private party could bring an action so long as it was acting “for the interests of itself, its members, or the general public.” (Former Bus. & Prof. Code, § 17204.) A plaintiff did not need to have actually suffered any damages as a result of the challenged unfair business practice. No link was required between the plaintiff and the specific practice that the plaintiff challenged. The California Court of Appeal explained the coverage of the UCL as
“sweeping, embracing anything that can properly be called a business practice and that at the same time is forbidden by law.” (Roskind v. Morgan Stanley Dean Witter & Co. (2000) 80 Cal.App.4th 345, 350.) For class actions, a class representative did not need to show that he suffered any actual harm. For representative actions that were not class actions, a private party would have standing to sue not only on his or her own behalf, but also on behalf of “members of the public” without having to satisfy the classaction requirements. This meant any person could sue in a representative capacity as an alternative to class actions. There were no formal class action requirements. UCL judgments bound only the named plaintiff who was suing on behalf of the general public and raised the issue of a company’s repeat liability for the same underlying conduct. For those suing in a representative capacity, there was no requirement that a member of the public suffer damages as a result of a defendant’s violation.
Litigation abuses pre-Prop. 64
With such wide reach, the UCL became the “go-to” statute and established itself as an essential part of California law, used in a broad array of claims. Unfortunately, this led to abuse of the UCL by some attorneys. Frivolous lawsuits were being filed because of the breadth of the statute, the ability to bring private representative actions (without class certification) and the possibility of recovering attorney’s fees. There were highly publicized reports of a few law firms filing numerous “shake down” lawsuits against small, independent businesses, for example auto repair shops that failed to timely renew their registrations with the Bureau of Automotive Repair.
Prop. 64 and why it was propelled to victory
Responding to these litigation abuses, a ballot proposition was born that would forever change the UCL: It is the intent of California voters in enacting this act to eliminate frivolous
unfair competition lawsuits while protecting the right of individuals to retain an attorney and file an action for relief pursuant to [the UCL]. – Official Voter Information Guide dated 8/9/2004, “Proposition 64, Analysis by the Legislative Analyst,” Section 1(d) (emphasis added). Prop. 64 narrowed the reach of section 17200 to try to address the problems brought on by the statute’s lax requirements. The proposition did two major things: (1) Standing requirement: Prohibit plaintiffs (consumers and competitors) from filing unfair competition lawsuits unless they have actually suffered injury and have “lost money or property” as a result of unfair competition. (2) Prohibit the filing of “representative” actions as a substitute for class actions.
Section 17200 post-Prop. 64
With the passage of Prop. 64, the Business and Professions Code section 17204 added new restrictions on private enforcement by circumscribing standing to bring UCL claims: To have standing, plaintiff must now make a two-fold showing: (1) Suffered direct injury AND (2) Lost money or property as a result of the unfair competition. In Kwikset, the California Supreme Court had to define the new terms of section 17204. Regarding the order in which to best consider the new elements of standing, the court observed: If one has alleged/proven “a personal, individualized loss of money or property in any nontrivial amount, he or she has also alleged or proven injury in fact. Because the lost money or property requirement is more difficult to satisfy than that of injury in fact, for courts to first consider whether lost money or property has been sufficiently alleged or proven will often make sense. (Kwikset Corp. v. Super. Ct. (2011) 51 Cal.4th 310, 325) Business and Professions Code section17203 was amended to impose new requirements for private representative JANUARY 2013
The Advocate Magazine — 39
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actions: Plaintiff bringing a representative claim must satisfy the requirements of California Code of Civil Procedure section 382 for class actions AND satisfy
section 17204 by showing he/she has suffered direct injury and lost money or property as a result of the unfair competition.
Important post-Prop. 64 developments
The courts are trying to deal with novel issues that arose as a result of the new amendments: • Whether the new requirements applied to cases already pending when Prop. 64 passed in November of 2004. The California Supreme Court determined that the Proposition 64 amendments to the UCL applied to cases already on file in November, when the initiative was effectuated. (See Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223.) • Big issue for class actions: Whether in class actions, Prop. 64’s standing requirements apply to the named class representative only or to all class members? In re Tobacco II Cases involved an unfair competition law action brought on behalf of a class of California smokers who alleged that cigarette makers engaged in a long campaign of fraudulent advertising. The Supreme Court, looking at the “fraud” prong of the UCL, analyzed the impact of the Proposition on UCL class actions and limited Prop. 64’s new standing requirements to named class representatives only. (See In re Tobacco II Cases (2009) 46 Cal.4th 298.)
Despite Prop. 64, UCL claims still offer benefits
Even though the pool of individuals who can now bring a claim has shrunk, there are still valuable benefits to those who use it. Let’s consider four of them: A claim under the “fraudulent” prong of business practices does not have to be stated with particularity, as does a general fraud cause of action: “[T]he elements a plaintiff must prove to establish a fraudulent business practices cause of action under the UCL are more favorable to plaintiffs than those for common law fraudulent inducement and negligent misrepresentation…” (Fairbanks, supra, at 561.) Injunctive relief and restitution are powerful tools. The UCL states that “[u]nless otherwise expressly provided, 40 — The Advocate Magazine
See Friend, Page 42
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the remedies or penalties provided by this chapter are cumulative to each other and to the remedies or penalties available under all other laws of this state.” (Bus. & Prof. Code, § 17205.) Even if a private cause of action is not otherwise provided in the underlying statute, subject to limitations, the prohibition of “unlawful” business acts/practices allows redress for statutory violations. California case law has interpreted the “unlawful” prong to hold illegal a business practice that violates any other law, making it independently actionable under section 17200. (See Cel-Tech Communications & Cel-Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) Subject to important limitations, section prohibition of “unfair” and “decep-
42 — The Advocate Magazine
tive” acts allows plaintiffs to attack business practices that are not expressly proscribed by any established law, i.e., you cannot attack them under the “unlawful” prong of the UCL. The disjunctive definition of unfair competition allows a UCL claim to proceed on an unfair/deceptive basis even though the “unlawful” claim may be barred (for instance, defendant may bring a defense to the predicate statute plaintiff “borrowed” for his or her UCL claim). Examples: If a newly enacted statute’s legislative history establishes that a practice is disfavored, but there is no explicit prohibition of an act, one may attack it as “unfair”; If new technology raises a concern, but there is no specific law that pro-
scribes the use of that technology, one may bring an “unfair” claim to try to prohibit the use of that technology as “unfair” under the UCL.
In the second part of this article, we’ll look at the cases that have defined the UCL and those that are likely to define it in the future.
Brian S. Kabateck is a consumer rights attorney and founder of Kabateck Brown Kellner LLP in Los Angeles. President-elect of the Consumer Attorneys of California, he represents plaintiffs in personal injury, mass torts litigation, class actions, insurance bad faith, insurance litigation and commercial contingency litigation.
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Section 17200: Still the California consumer’s best friend?
Part Two: A review of the case law that defines the Unfair Competition Law
The information in this article was presented at the 30th Annual CAALA Las Vegas Convention in September 2012
In this second part of our review of the Unfair Competition Law, Business and Professions Code Section 17200 (the UCL), we look at recent cases that have defined the law post-Prop. 64 and those that will likely define it in the future.
UCL cases pending before the California Supreme Court
Aryeh v. Canon Business Solutions, Inc. S184929, (2010) 185 Cal.App.4th 1159 (statute of limitations case, involving section 17208). Review granted. Issue: Appellant wanted to apply the doctrine of continuing violations to UCL violations to include wrongful acts occurring outside the statute of limitations period. Facts: In 2001, Canon leased two copy machines to Aryeh. In the agreement Aryeh agreed to pay a monthly fee for X amount of copies, and an additional excess copy charge for copies exceeding the monthly allowance. Shortly after entering the rental agreements, Aryeh learned he was being charged for “test” copies that Canon service personnel made when they serviced the machines. Canon failed to reimburse him for excess charges that were imposed over a period of time “beginning outside the limitations period and continuing into the limitations period.” Rule: A UCL cause of action under section 17200 must commence within four years after the cause of action accrues. (§ 17208) The cause of action accrues when the defendant’s conduct occurs, not when the plaintiff learns about the conduct. Analysis: The Court found Snapp & Associates Ins. Services, Inc. v. Robertson
44 — The Advocate Magazine
(2002) 96 Cal.App.4th 884 controlling, in which the appellate court determined that plaintiff ’s UCL action was timebarred because while defendant’s wrongful conduct was ongoing, the conduct had begun more than four years prior to plaintiff ’s action. The Court determined that the conduct complained of here is not conduct that the doctrine is meant to deter (egregious and harassing conduct) and a claim for recovery of past damages is not within the contemplation of the UCL. Holding: Appellant’s UCL cause of action accrued more than four years before he filed the instant action; the continuing violation doctrine does not apply; affirmed judgment sustaining Canon’s demurrer without leave to amend. Tip to plaintiffs’ attorneys: This illustrates why you should not rely on the discovery rule to toll the statute of limitations because the rule does not apply to causes of action arising under section 17200. Instead, try to invoke the equitable tolling doctrine (in Aryeh, the Court stated that the statute of limitations on a UCL action begins to run upon accrual unless plaintiff could establish equitable tolling, which the plaintiff had failed to allege in that case). * * * Loeffler v. Target Corp. S173972, (2009) 173 Cal.App.4th 1229. Review granted. Issue: Was Target entitled to collect sales tax reimbursement from customers on the purchase of hot coffee “to go”? Facts: In California, retailers who are obligated to pay sales taxes on their gross receipts may in turn seek reimbursement of the tax from their customers. Plaintiffs wanted a refund of that reimbursement from Target individually and on behalf of a class of
purchasers and an injunction that would prohibit Target from collecting the reimbursement. Plaintiffs alleged Target engaged in “unfair” and “unlawful” business acts or practices by imposing the tax, which increased the costs to class members. Rule: Article XIII, section 32 of the California Constitution prohibits injunctions against the collection of state taxes and provides that refunds of sales taxes may only be recovered in a manner provided by the state legislature. Under the legislative scheme, the only way to litigate a sales tax refund dispute is for the retailer, as the taxpayer, to pay the tax, exhaust administrative remedies available to it with the State Board of Equalization (“SBOE”), and if the claim is denied, then file a suit for refund. Customers, however, may only obtain a refund of excess sales tax reimbursement under Revenue and Taxation Code section 6901.5 if: 1) The SBOE ascertains that excess reimbursement was collected, OR 2) The retailer prevails in a suit against the SBOE for a refund of overpaid sales tax. Analysis: The Loeffler court concluded that plaintiffs’ lawsuit was barred because the regulatory scheme enacted by the Legislature was the sole means by which to obtain reimbursement of wrongfully collected sales tax: Plaintiffs cannot use the UCL and CLRA to circumvent article XIII, section 32 and section 6931. Plaintiffs do not have standing to commence a sales tax refund suit because only the retailer, as the taxpayer, may file suit as the Legislature has not provided a private cause of action for customers to seek a refund of sales tax reimbursement. Plaintiffs therefore do not have the right to a sales tax reimbursement because
See UCL, Page 46
UCL — continued from Page 44
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The end result of enjoining Target from collecting reimbursement would be a restraint on collection of sales tax by the state, because Target might rely on the injunction to stop paying the taxes due on these purchases. Holding: Court of Appeal affirmed trial courts order sustaining Target’s demurrer without leave to amend. * * * Yabsley v. Cingular Wireless S176146, (2009) 176 Cal.App.4th 1156. Review granted, further action deferred pending disposition in Loeffler. Issue: Whether Cingular’s advertising practices were deceptive under 17200 and 17500 by failing to inform prospective customers that a sales tax would be charged on the undiscounted price of the customer’s cell phone. Facts: California Code of Regulations requires sales tax be calculated on the non-sale price of a phone. Cingular did so without informing the customer prior to sale, although the amount of tax is shown on the invoice. Analysis: Yabsley does not meet the UCL standing requirements. Injury in fact: “Invasion of a legally protected interest which is…concrete and particularized.” Yabsley’s argument that he has a legally protected interest in receiving truthful advertising under the consumer remedy laws is insufficient for standing purposes; the “legally protected interest” must be an interest that is protected by a source other than the remedial provisions of the UCL. The only independent statute Yabsley cites is 6051, which only requires that a retailer pay the sales tax based on gross receipts. Lost money or property: The UCL’s lost money or property requirement limits standing to individuals who suffer losses that are eligible for restitution. Here, there has been no determination by the Board that Yabsley is eligible for restitution. Causation: Causal connection between the harm suffered and the unlawful business activity.
Regulation 1585 allows Cingular to collect the sales tax from the consumer based on the undiscounted price of a phone, so whether Cingular discloses or does not disclose the amount of tax to be collected on the purchase does not change the amount of sales tax that is still due, so the causal connection is broken. Holding: Court of Appeal agreed with Loeffler Court of Appeal’s conclusion that the UCL and FAL and the policies they promote cannot take precedence over article XIII, section 32 and the administration of the tax laws requires adherence to statutory procedures for the proper administration of the sales tax law. * * * Zhang v. Superior Court S178542, (2010) 178 Cal.App.4th 1081. Review granted. This case may have a substantial impact on insurance law in California. If the California Supreme Court were to allow section 17200 claims based on advertising and promises regarding timely payment for claim, then insureds would possibly be able to enjoin the wrongful company practice. Issue: Whether fraudulent conduct by an insurer, which is connected with conduct that would violate Insurance Code section 790.03 et seq., can also give rise to a private cause of action under the UCL. Facts: Zhang is suing her insurer, California Capital Insurance Company. She alleges misconduct relating generally to insurer’s handling of her loss claim and that the insurer engaged in unfair, deceptive, untrue, and/or misleading advertising because of the insurer’s promises that it will timely pay proper coverage in case of loss, but has no intention of doing so. Analysis: In Moradi-Shalal, the Supreme Court held that Insurance Code section 790.03 (which prohibits insurance companies from engaging in a variety of unfair and deceptive conduct) did not carry a private right of action. (See Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287.) Some
cases, such as Textron Financial Corp., interpreted this holding to bar UCL “unlawful” prong claims against insurers based on conduct prohibited by section 790.03, and held that UCL claims could not be based on common-law claims. Other cases, which the Court of Appeal followed in Zhang, rejected this view. (See, e.g. State Farm Fire & Cas. Co v. Superior Court (Allegro)(1996) 45 Cal.App.4th 1093. Here, the court held that MoradiShalal exempted insurance companies from UCL claims only to the extent that the UCL claim was based solely on “conduct that violates the UIPA but is not otherwise prohibited.” The conduct alleged as violating the UCL is not merely improper under the UIPA, but also amounted to fraudulent misrepresentation and misleading advertising, which the UCL prohibits independently of the UIPA. Holding: Moradi-Shalal does not bar a UCL “fraudulent” prong claim against an insurance company and, on a petition for writ of mandate, the court reversed the trial court’s order holding to the contrary. * * * Hughes v. Progressive Direct Ins. Co. S195069, (2011) 196 Cal.App.4th 754. Review granted, briefing deferred pending disposition in Zhang. Issue: Whether Insurance Code section 758.5 can serve as a predicate for a UCL claim in light of Moradi-Shalal. Facts: Plaintiff alleged that after a car accident he was improperly forced by his insurer to have the damage to his car repaired at an auto body repair shop that was approved and controlled by Progressive, rather than the shop of his choice. While the car was returned to him, it was not restored to its pre-accident condition. Plaintiff argued that Progressive thereby ran afoul of section 758.5 of the Insurance Code, and based on these allegations, asserted a single UCL cause of action. Note. Section 758.5 is a non-UIPA insurance code provision. Analysis: A private right of action under the predicate statute is not necessary in order to state a cause of action under the UCL for violations based on that
statute. Here, Hughes is not suing the insurer for violating the UIPA and the wrongful conduct alleged here is not similar to the bad faith refusal to settle claims (as was the case in Morad-Shalal). Recognizing a violation of section 758.5 as to predicate unlawful business practices under the UCL does not appear to disturb Moradi-Shalal nor does it conflict with the case law extending the holding to UCL causes of action based solely on violations of the UIPA. Looking at the legislative history of 758.5, the Legislature “neither authorized direct private enforcement [of the statute]…nor intended simply to classify a violation of the section as another unfair insurance practice with enforcement limited to those remedies set forth in the UIPA.” An alleged violation of statutes, other than violations of the UIPA, applicable to insurers may serve as the predicate for a UCL claim absent an express legislative direction to the contrary. Holding: Violation of a statute (section 758.5 of the Insurance Code) requiring notice of the right to select a repair dealer may serve as a predicate for a UCL claim.
UCL-related Appellate Cases of Interest
Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191 (overtime case). Three nonresident employees who performed work for a California-based employer in California brought action against employer for failure to pay overtime wages under the California Labor Code. The court held that: 1) Overtime statutes apply to the work nonresidents perform in California; 2) The UCL applies for failure to pay overtime for the work nonresidents perform in California; AND 3) Nonresident employees’ claim for overtime under the federal Fair Labor Standards Act cannot “serve as predicates for UCL claims” for work performed outside California. The Court did not address whether the California Labor Code may serve as a predicate to a UCL cause of action for JANUARY 2013
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UCL — continued from Previous Page
work temporarily performed outside of California by a California resident. * * * Pineda v. Bank of America, N.A. (2010) 50 Cal.4th 1389 (failure to pay wages case). An employee who did not receive timely payment of final wages after resignation brought an action seeking to represent a class of employees for those untimely wages. In addition to other claims, the employee brought a UCL cause of action pursuant to section 203 of the Labor Code for continued wages as a penalty for employer’s untimely wage payment. The unpaid but earned wages that spark a 203 penalty are recoverable as restitution, because the employee “has
given his or her labor to the employer in exchange for that property.” However, the penalty itself is not recoverable as restitution because it does not restore to the employee funds in which the employee, by having performed the labor, now has an ownership interest. Rather, the penalty is imposed to encourage employers to pay the final wages on time. The court held that section 203 penalties are not recoverable as restitution under the UCL because “employees have no ownership interest in the funds.” * * * Bower v. AT&T Mobility, LLC (2011) 196 Cal.App.4th 1545: Customer’s class action against telephone company under various causes of action, including the
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UCL, challenging the company’s misrepresentation that it was required by law to pass on the cost of sales tax to customers. Holding: Customer did not suffer “injury in fact” from telephone company’s alleged misrepresentation about sales tax, because her claim that she was told that charging her sales tax on the full, undiscounted price of the phone was mandatory, and that she was denied an opportunity to shop around for another retailer that doesn’t use this practice, “pleads at the most a conjectural or hypothetical injury, not an injury in fact.” The Court distinguished these facts from Kwikset, in which the consumer would not have purchased the product but for the misrepresentation; also, the Court noted that Bower, the consumer, did not allege that she could have obtained a bundled transaction for a new cell phone at a lower price from another source. * * * People, ex rel. Harris v. PacAnchor Transportation, Inc. (2011) 195 Cal.App.4th 765: State action against trucking company for alleged misclassification of workers as independent contractors rather than employees. Holding: Action was not preempted by the Federal Aviation Administration Authorization Act because the action under the UCL was not related to the price, route or service of a motor carrier (the FAAAA “preempts state and local regulation relating to the prices, routes or services of motor carriers with respect to the transportation of property.” 49 U.S.C. §14501(c)). Rather, the state’s UCL action was based on the employers’ statutory obligations as to its employees. * * * Archer v. United Rentals, Inc. (2011) 195 Cal.App.4th 807: Customers, among other claims, brought UCL class action against United Rentals in connection with the store’s request that customers provide personal identification when making credit card purchases. The Court turned to the California Supreme Court’s analysis in Kwikset, in which the Court established that the “lost
See UCL, Page 50
UCL — continued from Page 48
money or property” requirement for standing is more difficult to satisfy than the requirement of “injury in fact.” Holding: Customers failed to establish standing because they were required to show they lost money or property in order to have standing to maintain a UCL claim for injunctive relief, and the customers could show neither. The court found that plaintiff customers failed to allege that the unlawful collection and recording of their personal identification information, a privacy violation as plaintiffs alleged, “translates into a loss of money or property” for standing purposes. * * * Fairbanks v. Farmers New World Life Ins. Co. (2011) 197 Cal.App.4th 544: Class action alleging various causes of
action, including the UCL under the “fraudulent” prong, in connection with the insurer’s marketing and sale of universal life insurance policies to insured. Plaintiffs argued, “proof of [the] fraudulent scheme could be established by common, rather than individual, proof, based on a combination of common policy language, common language in policyholder statements, and a common marketing scheme.” The trial court had denied the motion for class certification because common issues did not prevail; specifically, the trial court found no common marketing strategy. The defendant insurer introduced evidence showing that it taught agents to tailor their presentations to customers’ objectives, and that it considered the individual policyholder’s situation.
To state a UCL claim based on false advertising or promotional practices, one need only show that “members of the public are likely to be deceived.” Still, a class action for a fraudulent business practice under the UCL cannot proceed if a plaintiff cannot establish that the defendant engaged in uniform conduct that would be likely to mislead the entire class. When you have a class action for misrepresentations, class certification denial will be upheld if individual evidence will be required to determine whether representations were actually made to each member of the class. Holding: In the absence of a common marketing scheme, the class action fails.
See UCL, Page 52
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* * * Sharp Healthcare Two cases issued on the same day involving the same hospital and its billing practices: Hale v. Sharp Healthcare (2010) 183 Cal.App.4th 1373: Uninsured patient brought class action against hospital and its owner for violating the “fraud” and “unlawful” prongs of the UCL (the “unlawful” prong was predicated on Civil Code section 1770 (CLRA), pertaining to misrepresentations). The court determined that when the predicate conduct alleged is misrepresentation, Tobacco II’s reliance requirement and reasoning applies equally in this case under the “unlawful” prong. Here, Hale signed an Admission Agreement for services, at which time she expected to be charged reasonable rates. Therefore, she adequately pled reliance. Holding: Patient had standing to bring action under the unlawful and fraud prongs of the UCL because she adequately alleged reliance on statements made by Sharp. Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350: Plaintiff alleged hospital engaged in unfair and deceptive practices by billing uninsured patients full rates for services, versus discounts to those patients covered by insurance/ Medicare. As in Hale, the court reiterated that when the predicate conduct alleged is misrepresentation, Tobacco II’s reliance requirement and reasoning applies equally in this case under the “unlawful” prong (which was predicated on Civil Code section 1770 (CLRA), just as in Hale). However, here, the second amended complaint did not allege that Durell relied on Sharp’s Web site presentations or the language in the services agreement that he signed, which obligated him to pay the “usual and customary charges…for services.” Holding: Patient lacked standing to bring action under the unlawful and unfair business practices prongs of the UCL because he could not show causation. * * * In re Steroid Hormone Product Cases (2010) 181 Cal.App.4th 145: Consumer
brought class action against retailer GNC that sold products containing a controlled steroid. In Tobacco II, the California Supreme Court concluded that the standing provision added by Prop. 64 did not have an effect on unnamed class members: Once the named plaintiff shows he or she has suffered injury in fact and lost money or property as a result of the unfair competition, “no further individualized proof is necessary.” Here, the trial court ruled, without applying Tobacco II (because it was issued several months after the trial court’s ruling) that Prop. 64 did have an effect on unnamed class members, meaning in this case that individual issues predominated because “each class member would need to show that he or she was injured by GNC’s alleged unlawful sale of the controlled steroid, which would turn on whether the legality of the sale of the steroid was material” to the consumer. Holding: In light of Tobacco II, the Court of Appeal determined that common issues predominated to support class certification for UCL claims. * * * Pfizer Inc. v. Superior Court (2010) 182 Cal.App.4th 622: Plaintiff alleged Pfizer, manufacturer of Listerine mouthwash, marketed the product in a misleading manner by representing that “the use of Listerine can replace the use of dental floss in reducing plaque and gingivitis.” (Id. at 625.) Pfizer opposed the Superior Court’s certification of a class action brought pursuant to the UCL and FAL, arguing individual issues predominated. One of the issues Pfizer enumerated was “whether the consumer suffered injury in fact and lost money or property as a result of the alleged deception or reliance.” The Court of Appeal in its prior decision concluded the trial court’s ruling, was overbroad. The California Supreme Court granted review in 2006, and ordered briefing deferred, pending its decision in Tobacco II. The Supreme Court then transferred the case back to the
See UCL, Page 56
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Court of Appeal in 2009 with directions to vacate and reconsider the matter in light of Tobacco II.
Holding: Court of Appeal ultimately concluded that Tobacco II did not change the disposition that the class is over-
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broad. Regarding the fraud prong of the UCL, the court found that, historically, to state a cause of action under either the UCL or FAL, case law only required a showing that “‘members of the public [were] likely to be deceived.’” (internal citations omitted). Allegations of actual deception, reasonable reliance and damage were unnecessary and the “likely to be deceived” standard was not altered by Proposition 64. (citing Tobacco II at pg. 312, 320). However, Proposition 64 altered the standing requirement for the class representative in a UCL class action. A private person has standing to sue only if he or she has suffered injury in fact and has lost money or property as a result of such unfair competition. Here, the certified class is grossly overbroad because many class members are clearly not entitled to restitution; a large number of class members were never even exposed to the “as effective as floss” campaign so there is no likelihood they were deceived. The court further held that Tobacco II allows a class representative who actually relied on the defendant’s misleading ad campaign to represent other class members who may have lost money (‘may have been acquired’ being the restitution language of 17203) by means of the unfair practice. The court also said Tobacco II does not stand for the proposition that a consumer who was never exposed to an alleged false or misleading ad/promotional campaign is entitled to restitution. Brian S. Kabateck is a consumer rights attorney and founder of Kabateck Brown Kellner LLP in Los Angeles. President-elect of the Consumer Attorneys of California, he represents plaintiffs in personal injury, mass torts litigation, class actions, insurance bad faith, insurance litigation and commercial contingency litigation.
Michael L. Armitage
Recent mass tort developments
A review of developments in the law of mass torts in 2012
Toxic Torts – Component Parts Doctrine
•O’Neil v. Crane Co. et al. (Jan. 12, 2012) 53 Cal.4th 335 Facts: Plaintiff served on navy vessel for two years in the 1960s, during which time he was exposed to airborne asbestos fibers, including as a result of work performed on asbestos-containing equipment. (Id. at 345.) Defendants manufactured and sold asbestos-containing valves and pumps that were used on the vessels. These valves and pumps had internal gaskets and packing (used as sealants) that contained asbestos when they were originally installed on the vessel. In the 1940s, they also were used in conjunction with external asbestos-containing products, such as insulation. Plaintiff alleges to have been exposed to both sources of asbestos. Defendants’ pumps and valves that contained internal asbestos (in the form of packing and gaskets) when they were originally installed on the vessel were replaced by those of other manufacturers before plaintiff ’s exposure. (Ibid.) Held: Defendants are not strictly liable for plaintiff ’s injury because (1) any design defect in defendant’s products was not a legal cause of injury to O’Neil, and (2) defendants had no duty to warn of risks arising from other manufacturers’ products. (Id. at 348.) The Court’s reasoning centered on two primary findings: defendants did not manufacture or sell the external asbestos to which plaintiff was exposed, nor did defendants manufacture or sell the actual internal asbestos to which plaintiff was exposed. (Id. at 347-53.) Moreover, defendants’ valves and pumps did not require that asbestos be incorporated into them for them to operate, nor did defendants mandate that the external asbestos-containing products be used with their valves and pumps. Accordingly, that a consumer would be exposed to asbestos through use of the pumps and valves was merely foreseeable, and the Court believed mere foreseeability
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is an insufficient justification for the imposition of strict liability outside the stream of commerce. (Id. at 350.) In sum, “ . . . where the hazard arises entirely from another product, and the defendant’s product does not create or contribute to that hazard, liability is not appropriate.” (Id. at 361-62.) 1. Thus, O’Neil sets forth a general rule: a product manufacturer generally may not be held strictly liable for harm caused by another manufacturer’s product. (Id. at 362.) 2. There are two exceptions to this rule: (1) if the defendant’s own product contributed substantially to the harm, or (2) if the defendant participated substantially in creating a harmful combined use of the products, liability may be appropriate. (Ibid)
•O’Neil applied: Bettencourt v. Hennessy Industries, Inc. (May 4, 2012) 205 Cal.App.4th, 1103 Facts: Plaintiffs worked with defendant’s brake shoe grinding machine to grind brake shoe linings for use in automobiles, light trucks and commercial trucks. (Id. at 1108.) The brake shoe linings themselves contained asbestos, the fibers of which were released into the air during the grinding process and inhaled by plaintiffs, causing subsequent injury. (Ibid.) The court granted defendant’s motion for judgment on the pleadings and plaintiffs requested leave to amend their complaint. Trial court granted the former and denied the latter. (Id. at 1110.) Held: Although defendant did not manufacture or sell the asbestos-containing brake shoe linings, defendant’s brake shoe grinding machine was solely intended and used for the grinding of asbestos-containing brake shoe linings. Accordingly, plaintiffs alleged sufficient strict liability and negligence causes of action. (Id. at 1117-18.) Plaintiffs’ allegations, then, fall within the first O’Neil exception, that defendant’s grinding machine contributed substantially to plaintiff ’s injury. Trial court judgment
reversed; plaintiffs’ leave to amend complaint granted. (Ibid.)
•O’Neil applied and Bettencourt distinguished: Barker v. Hennessy Industries, Inc. (May 22, 2012) 206 Cal.App.4th 140 Facts: Plaintiff used defendant’s brake shoe arcing machine and brake drum machines to work on various asbestoscontaining products in an automotive repair shop. These machines were useful on non-asbestos products as well as asbestos-containing products. Defendant moved for summary judgment, arguing that it cannot be held liable for another’s dangerous product, even if it is foreseeable that its product (the machine) will be used in conjunction with asbestos-containing products. (Id. at 144-45.) Held: Because the shoe arcing machine and brake drum machine were not intended to be used nor required to be used solely on asbestos-containing products (as opposed to Bettencourt), plaintiffs established that it was merely foreseeable that defendant’s machines would be used on asbestos-containing products. This, as set forth in O’Neil, is an inadequate justification for the imposition of strict liability outside the stream of commerce (i.e., a component). Defendant’s motion for summary judgment granted. (Id. at 145.)
Loss of consortium
•Vanhooser v. Hennessy Industries Inc. (June 1, 2012) 206 Cal.App.4th 921 Facts: Decedent was exposed to asbestos throughout the 1960s, 1970s as well as from 1988 to 1990. Plaintiff married decedent in 1991 or 1992. (Id. at 926.) Held: Trial court held that spouse has a valid loss-of-consortium claim even if consortium with spouse developed after (or long after) exposure to the toxin in question. LASC Judge Emilie Elias certified her ruling to the court of appeals, which affirmed, stating that injury in cases of latent illnesses, such as asbestos-related diseases, occurs upon diagnosis or when
Facilitating Practical Solutions to the Most ChallengingProblems symptoms of an asbestos-related disease appear. (See id. at 930.) “It is illogical to conclude [otherwise].” (Ibid.) Although the first element of the loss of consortium cause of action is the existence of a marriage at the time of plaintiff ’s injury, for purposes of loss of consortium, injury doesn’t occur at the time of exposure, but at the time the spouse discovers or should reasonably have discovered he suffers from a compensable injury. (See id. at 928.)
•Jones et al. v. ConocoPhillips et al. (Aug. 30, 2011) 198 Cal.App.4th 1187 Facts: Plaintiffs filed a complaint alleging exposure to toxins contained in defendants’ products but did not identify which specific toxins were contained in each. Defendants demurred. (Id. at 119293.) Held: Plaintiffs’ complaint need not identify the specific toxins contained in the hazardous product(s) that caused alleged injury. Plaintiffs can maintain products liability action by identifying the specific products that caused the injury, without identifying the specific toxins within those products. (See id. at 1195.) Trial court erred in sustaining defendants’ demurrers.
Attorney work product
•Cotio v. Superior Court (Cal., June 25, 2012) 278 P.3d, 860 Facts: A 13-year-old boy drowned in the Tuolumne River in Modesto, California; six juveniles witnessed the drowning. (Id. at 863.) Decedent’s mother filed a wrongful death complaint naming, inter alia, the City of Modesto (“Modesto”) and the State of California (“the state”) as defendants. (Ibid.) After Modesto noticed depositions for five of the six witnesses, the state interviewed four of those witnesses at the direction of the state’s counsel. (Ibid.) (emphasis added.) Later, in its supplemental interrogatories, plaintiff sought (1) the names, addresses, and telephone numbers of those four witnesses (interrogatory “No. 12.3”) and (2) the audio recordings obtained by the state in the interviews. (Id. at 864.) The state objected to the request, to which plaintiff filed a motion to compel
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an answer. (Ibid.) The state opposed the motion, arguing that recorded witness statements are entitled to absolute workproduct protection and that No. 12.3 is entitled to qualified work-product protection. (Ibid.) The trial court denied plaintiff ’s motion to compel1, and held as a matter of law that the recorded witness interviews were entitled to absolute workproduct protection and that the information concerning the identities of the witnesses was entitled to qualified workproduct protection. The Court of Appeal reversed, and the Supreme Court granted review. (Ibid.) The applicable statute is Code of Civil Procedure section 2018.030: (a) A writing that reflects an attorney’s impressions, conclusions, opinions, or legal research or theories is not discoverable under any circumstances.
(b) The work product of an attorney, other than a writing described in subdivision (a), is not discoverable unless the court determines that denial of discovery will unfairly prejudice the party seeking discovery in preparing that party’s claim or defense or will result in an injustice. Subdivision (a) refers to absolute work product protection; subdivision (b) refers to qualified work product protection (Id. at 863.) The term “writing” includes any form of recorded information, including audio recordings. (Code Civ. Proc., § 2018.030(c).) Issues: What work product protection, if any, should be accorded to (1) the recordings of witness interviews conducted by defendant’s counsel’s investigators and (2) information concerning the identity of witnesses from whom defendant’s
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counsel has obtained statements? (Id. at 863.) Held: (1) The recorded witness statements are entitled, as a matter of law, to at least qualified work-product protection.2 The statements may be entitled to absolute protection if defendant can show that disclosure would reveal its “attorney’s impressions, conclusions, opinions, or legal research or theories.” If not, then the recording may be subject to discovery if plaintiff can show that “denial of discovery will unfairly prejudice [her] claim . . . or will result in an injustice,” thus defeating qualified work-product protection. Further, (2) information concerning the identity of the witnesses is entitled neither to absolute nor qualified work-product protection as a matter of law. To invoke the privilege, defendant must make a showing that the
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disclosure of the information would reveal the attorney’s tactics, impressions, or evaluation of the case (absolute privilege) or would result in opposing counsel taking undue advantage of the attorney’s industry or efforts (qualified privilege). (Ibid.) Witness Interview Statements: As to its first holding, the Court reasoned that witness interview statements could disclose an attorney’s strategy and evaluation of which issues he/she deems important, and which issues he/she does not. (Id. at 869.) For instance, “[l]ines of inquiry that an attorney chooses to pursue through followup questions may be especially revealing.” (Ibid.) The witness’s answers to questions, even if the attorney’s questions are redacted, may be especially revealing as well. (See id.) In these instances, the witness statement will be entitled to absolute
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work-product protection. On the other hand, explained the Court, witness statements procured by an attorney will not always reveal an attorney’s thought process. (Id. at 869. In this instance, the witness statement will become entitled to qualified work-product protection. (Ibid.) Whether or not witness statements will be entitled to absolute work-product protection will ultimately, then, be decided on a case-by-case basis. (Ibid.) Essentially, this holding gives the objecting party an opportunity to persuade the Court that the witness statements it procured somehow reveal “attorney’s impressions, conclusions, opinions, or legal research or theories,” thereby entitling the witness statement to absolute work product protection. (See id. at 863.) If the objecting party is not successful in
doing so, the witness statement is automatically entitled to qualified work-product protection. At this point, the party seeking production may attempt to demonstrate that denying discovery of the witness statement would be unfairly prejudicial, thereby vitiating the qualified work-product protection. (Ibid.) However, if the seeking party is not successful in doing so, the witness statement will remain undiscoverable, protected as qualified work product. (Ibid.) Witness Identities: As to its second holding, the Court set forth its rationale in the form of examples. To be sure, information concerning the identities of witnesses interviewed by opposing counsel is usually discoverable (Id. at 874); however, some such information may reveal an “attorney’s impression of the case,” thus entitling it to
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absolute work-product protection. (Id. at 873.) “Take, for example, a bus accident involving 50 surviving passengers and an allegation that the driver fell asleep at the wheel. If an attorney for one of the passengers took recorded statements from only 10 individuals, disclosure of the list may well indicate the attorney’s evaluation or conclusion as to which witnesses were in the best position to see the cause of the accident.” (Ibid.) Such a list, the Court explained, could be entitled to absolute work-product protection. (Ibid.) If the objecting party does not sufficiently show such information to be entitled to absolute work-product protection, it may still be entitled to qualified workproduct protection if it reflects the attorney’s “industry and effort in selecting which witnesses to ask for a record statement.” (Ibid.) In continuing with the bus
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accident example, the Court mused, “perhaps the attorney devoted significant effort to tracking down bus tickets and passenger logs in order to determine which passengers sat in which seats, and then decided to take recorded statements from the 10 passengers closest to the driver. Even without obtaining the witness statements themselves, the [defendant’s] lawyer would gain valuable information by free-riding on the attorney’s identification of the most salient witnesses.” (Ibid.) This would be an example of qualified workproduct protection. Essentially, with respect to witness identities, an objecting party may be entitled to work-product protection “if it can make a preliminary and foundational showing that answering the interrogatory would reveal the attorney’s tactics, impressions, or evaluations of the case (absolute
protection), or would result in opposing counsel taking undue advantage of the attorney’s industry efforts (qualified protection).” (Id. at 874.) Conclusion: Judgment of the Court of Appeal reversed and case remanded for further proceedings, consistent with the Court’s opinion.
Pharmaceuticals – brand-name manufacturers & federal pre-emption
•Johnson & Johnson v. Superior Court (Jan. 20, 2011) 192 Cal.App.4th 757 Holding: The burden is on manufacturers to ensure their drug labeling is adequate at all times, regardless of FDA approval of existing labeling. (Id. at 767.) Facts: A 15-year-old suffered a severe skin injury after taking Motrin. The manufacturer did not warn of this specific
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adverse reaction to the drug. Defendant brand-name drug manufacturer filed motion for summary adjudication on the issue of punitive damages. (Id. at 760.) Court’s analysis: If a drug manufacturer knows of the connection between its product and a risk, but does not submit a supplemental warning application (via the “Changes Being Affected” (CBE) provision of the Code of Federal Regulations § 314.70(c)(6), allowing drug manufacturers to modify their labels without preliminary agency approval) then there is a triable issue of fact as to whether the manufacturer’s previous FDA-approved label could evidence despicable conduct, and thus liability for punitive damages. (Ibid.) Accordingly, unless the manufacturer defendant can show clear evidence that the FDA would not have approved the change to the drug label via the
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supplemental application, then the manufacturer could have complied with both federal and state law by modifying the label pre-FDA approval. (Id. at 763.) (The manufacturer could have complied with federal law by submitting the supplemental application and immediately changing its warning upon the FDA’s receipt of that application, while simultaneously complying with stricter state failure-to-warn standards.) As noted in the decision, if foreign drug labels for the same generic drug (ibuprofen, e.g.) include the warning at issue, this evidences that the FDA would have approved the new label, and defeats defendants’ argument that FDA would have rejected it. (See id. at 766.) Impact on consumers: In California, brand-name drug manufacturers now have another compelling reason to continually
update drug labels, even after initial approval by the FDA. This opinion is ultimately highly beneficial to consumers, as brand-name drug manufacturers will not only be unable to rely on federal preemption as an affirmative defense to their failures to warn consumers, but will also face severe financial punishment for not doing so. In sum, an FDA approval does not indicate the be-all and end-all be warning label by any stretch, and brandname manufacturers ought to continually look to foreign equivalents of their particular drugs’ warnings to make sure they are sufficiently warning consumers.
Pharmaceuticals – generic manufacturers & federal pre-emption
•Gaeta v. Perrigo Pharmaceuticals Co. (9th Circuit, Jan. 24, 2011) 630 F. 3d, 1225
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Holding: The state law duty to warn for a generic drug was not preempted by federal law. (Id. at 1239.) Facts: A child took over-the-counter generic ibuprofen and suffered injury, requiring the amputation of certain tissue in his fingers and toes. Though factually similar to Johnson, the court here focused on the issue of pre-emption (not discussed in Johnson) as opposed to punitive damages. Defendant Perrigo filed a motion for summary judgment, arguing that a claim against a generic manufacturer of drugs for failure to warn is preempted. The court held that it is not. Court’s analysis: The state law duty to warn by an appropriate label on the generic ibuprofen drug is not preempted by federal law. Compliance with both state and federal law was not “impossible.” Additional warnings would not stand as an obstacle to the accomplishment of purposes and objectives of the MDA (Medical Device Amendments). Perrigo, as manufacturer of the generic ibuprofen, had three options that would have allowed it to comply with both federal regulations on generic drugs, and state law-duties: (1) the CBE approval process mentioned in Johnson, (2) the “prior approval” process (similar to the CBE process, but requires actual approval by
the FDA rather than mere receipt of the application) or (3) the generic manufacturer can request that the FDA send “Dear Doctor” warning letters to health-care professionals. Again (like Johnson), had Perrigo presented clear evidence that the FDA would have rejected the specific hepatotoxicity warnings, then its motion for summary judgment would likely have been granted due to federal pre-emption. (Id. at 1239.) Impact on consumers: This decision would have been highly beneficial to generic drug consumers, as it would allow state law causes of action to be brought against generic drug manufacturers. However, it was vacated and remanded on October 31, 2011, due to the recent U.S. Supreme Court case of Pliva Inc. v. Mensing.
Pharmaceuticals – generic manufacturers vs. brand-name manufacturers & federal pre-emption • Gaeta v. Perrigo Pharmaceuticals Co. (9th Circuit, Jan. 24, 2011) 630 F. 3d, 1225 Holding: Claims against brand-name drug manufacturers are not preempted by federal law but claims against generic drug manufacturers are preempted.
Facts: In separate suits, two plaintiffs sued generic drug manufacturers for injuries resulting from their use of a generic drug, metoclopramide, as opposed to the brand-name counterpart (“Reglan”) that the two plaintiffs were actually prescribed. Both manufacturers argued federal pre-emption and lost in the Courts of Appeal. The U.S. Supreme Court consolidated the cases and found the following: Court’s analysis: Pursuant to FDA regulations, generic manufacturers’ warning labels need only mirror those of their corresponding brand-name drug labels. Generic drug warnings, in other words, must be “equivalent” to the brand-name drug label that it has duplicated. Accordingly, while a brand-name drug manufacturer is responsible for the continual update of its warnings (Johnson, e.g.), the generic drug manufacturer duplicating that drug is only responsible for ensuring that its warning label is the same as the brand name’s. The CBE process then, is unavailable to the generic manufacturer until the brand-name manufacturer utilizes it. “Dear Doctor” letters are likewise not available, as such letters are considered “labels” in and of themselves. (Id. at 2574-77.) According to the above analysis, there is impossibility here. The generic drug
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manufacturer could not have updated its warning label without conflicting with either federal or state law. Indeed, by unilaterally altering their labels, the manufacturers would have violated federal law, as generic drugs are required by the FDA to have the same warning label as their counterpart brand-name drug labels. Thus, federal law would permit the generic manufacturers to comply with the stricter state law labeling requirements if, and only if, the FDA and the brand-name manufacturer changed the brand-name label to do the same. In sum, state law imposed a duty on the generic manufacturers to change their labels, and federal law barred them from doing so. Therefore, plaintiffs’ tort claims are pre-empted by the Supremacy Clause. (Id. at 2577-81.)
Impact on consumers: The Supreme Court has made it very clear that a consumer’s claim for failure-to-warn against a generic drug manufacturer will be preempted by federal law, while those against a brand-name manufacturer will not be. As suggested by the dissent, this distinction does appear rather arbitrary. Regardless, this holding will inevitably lead to harm for those consumers who can only afford/prefer to purchase the generic versions of the brand-name medication prescribed to them. (Generic drugs dominate the market. (Id. at 2584.) (Note: Although it is not expressly clear in the Pliva opinion whether only prescription drugs are affected here; because Gaeta was vacated as a result of Pliva, it appears that Pliva applies to all drugs, prescription as well as over-thecounter.)
Smart phones’ medical devices & the conflict with federal pre-emption
Summary: A recent influx of mobile medical “applications,” such as those available on the iPhone or Android Smartphones, have prompted the FDA to issue a July 19, 2011 “draft guidance” seeking input as to how the agency will regulate those applications that “present the greatest risk to patients when they don’t work as intended.”3 Essentially, some of these applications fall into the FDA’s definition of a “medical device,” and are thus subject to the same (sometimes very stringent) regulations, potentially including: premarket
approval, proper labeling, tracking of devices and postmarket surveillance. Some of these applications, or “devices,” are actually used to diagnose or treat medical conditions. The FDA-issued draft guidance lists 34 types of mobile phone applications as “mobile medical apps,” including those that analyze medical data, screen patients for blood transfusions or control other medical devices etc. Other medical applications on the market today include blood pressure monitors, glucose meters, eyeglass prescription readers and ultrasounds.4 The issue is complex, not only due to the widespread access to the rapidly growing mobile application market, but also in determining which applications actually fall within the definition of a “medical device.” Whether a mobile phone application is a “medical device” depends on whether the application was intended for specified medical purposes. This can be very difficult to discern, especially considering the many steps and parties involved in the manufacture of the application. However, the FDA seems to be focused on those who create and control the application’s software itself.5 On June 20, 2012, the U.S. Congress passed a bill allowing the FDA to regulate medical devices on Smartphones, but this legislation will not manifest itself for months. The bill requests that a strategy for a risk-based regulatory framework be posted by the secretary of Health and
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Human Services within 18 months.6 Accordingly, there is still uncertainty as to how the FDA will actually go about regu-
lating this seemingly relentless new market, one certainly not accustomed to oversight by this previously unrelated agency.
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Impact on consumers: By implication, it appears that at least some of the smart phone applications that are to be regulated by the FDA will eventually be subject to pre-emption by federal law. For instance, if a mobile medical application misdiagnoses a consumer’s symptoms or reports an erroneous glucose level that leads to an injury, this device may not be subject to state tort law if the mobile application’s prior FDA regulation passes the Riegel Pre-emption test in California.7 Should this occur, a consumer’s state law claims will likely not survive a manufacturer’s motion for summary judgment. Though it is unlikely that the FDA will even categorize any mobile medical applications as class III (due to the high-risk nature of class III devices – replacement heart valves, a pacemaker, e.g.), it is certainly possible that several Smartphone applications may be termed as class II (pregnancy test kits, e.g.), a class inherently less risky than class III, and thus likelier to stem from a mobile platform. A recent 9th Circuit decision held for federal pre-emption for a class II device because it passed the Riegel Test. This suggests that future class II mobile medical applications may also be subject to federal pre-emption as well. (Dengelmann v. Advanced Medical Optics, Inc. (2011) 659 F.3d 835.) Considering the number of Smart-phone users, and the incredible growth of this market, the FDA may need to reconsider whether the Medical Devices Amendments8 ought to be further amended to specifically include smart phone medical devices. Mike Armitage is a partner at Waters, Kraus & Paul and is the managing attorney for the firm’s Los Angeles and San Francisco offices. Admitted to practice in both California and Louisiana, Mike Armitage’s practice focuses on personal injury, product liability, pharmaceutical and Qui Tam (Whistleblower) cases. He oversees the firm’s toxic tort practices in both Los Angeles and San Francisco, and his work on asbestos-related cancer cases has resulted in some of the firm’s most notable verdicts. He is a member of the Consumer Attorneys of Los Angeles Board of Governors as well as other groups.
For the entire article including endnotes, please see www.theadvocatemagazine.com or the Advocate archives at www.caala.org.
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There is no such thing as a “mild” traumatic brain injury A look at critical evidence issues in brain-injury claims
Brain injuries can be classified into “mild,” “moderate,” and “severe” categories. The Glasgow Coma Scale (GCS) has historically been used as a common indicator for classifying severity based on a person’s level of consciousness on a scale of 3-15 based on verbal, motor, and eyeopening reactions to stimuli. Recent research shows that 75 percent of all traumatic brain injuries (“TBI”) are “mild” in nature. But these so-called “mild” injuries often plague an injured person for life and cause dramatic effects in their work and personal lives. While in most “mild” TBI cases the patient recovers fully, available research indicates that up to 15 percent of patients diagnosed with a “mild” TBI may experience persistent disabling problems. Throughout the evolution of the study of trauma to the brain, doctors and lawyers alike are recognizing how significant any trauma to the brain can be. With the recent publicity of football-related trauma and the increased attention to repetitive concussions, the public at large – and therefore juries – are recognizing how severe even so-called, “mild” brain injuries can be. The purpose of this article is to highlight some of the critical areas of evidence used as well as the potential pitfalls encountered in brain injury trials so that you can maximize the value of your traumatic brain injury case. The reality is that no brain injury is “mild.”
Evaluation of a traumatic brain injury
Plaintiff ’s lawyers see a wide spectrum of clients with varying levels of traumatic brain injury, from the concussion to the vegetative-state brain injury. Oftentimes, critical things are overlooked by plaintiff ’s lawyers in so-called, mild-moderate TBI cases. The simple reality is that any trauma to the brain, the most vital organ in the human body, is significant. The most important task at the outset of the case is to properly identify your
74 — The Advocate Magazine
client’s injury and develop a game plan to prove up the injury. With an understanding of the critical evidence used in braininjury trials, and the potential pitfalls along the way, a strategy can be developed that will position your case for success. In any intake of a head-trauma case, it is recommended to use the approach adopted by the Center for Disease Control in assessing the brain injury. First, evaluate: Any period of observed or self-reported: • Transient confusion, disorientation, or impaired consciousness; • Dysfunction of memory around the time of injury; or • Loss of consciousness lasting less than 30 minutes. Observed signs of other neurological or neuropsychological dysfunction, such as: • Seizures acutely following injury to the head; • Irritability, lethargy, or vomiting following head injury; or • Headache, dizziness, irritability, fatigue, poor concentration. Any findings of the above criteria place your client into the category of a “mild” TBI at a minimum. Although more important, the evaluation must delve deeply into your client’s ongoing problems. In the context of the personalinjury plaintiff, for those who end up seeking legal counsel for their ongoing sequelae of the brain injury, many of the initial problems become persistent. Some indications of a serious problem that you should watch out for include: memory problems, problems focusing, emotional issues, personality changes, persistent tinnitus, fatigue, dizziness, headaches, vision problems, loss of organizational skills, problems multi-tasking, lack of motivation, and apathetic behavior. As part of the evaluation process, it is helpful to obtain the initial hospital treatment records. Such records typically include the EMS report and discharge summary from the initial hospital. Look
for any deficit in the Glascow Coma Scale (anything below 15), and the extent to which the patient was treated for TBI. Do the documents reflect memory loss or other cognitive dysfunction? If so, these are clear indicators of TBI. Next, obtain the follow-up treatment records and employment information. Evaluate the extent to which the treatment records confirm diagnosis of “head injury” or at least your client’s complaints of memory loss, for example. Investigate how the incident affected your client’s work. Often times in “mild” TBI cases, a client may have gone back to work, but their performance has suffered as a result. Dig in early and interview witnesses as appropriate. The next step of initial focus is to evaluate the forces involved in the collision and assess the impact to the brain. Ask yourself: (1) Was there a skull or facial fracture? (2) Was there a scalp laceration? (3) Was there surgical intervention (craniotomy, craniectomy, burr hole, scalp sutures?). Try to determine at an early stage the forces involved in the impact by obtaining police photos, vehicle damage photos, and repair estimates. Use your accident reconstructionist to help you understand the forces and the occupant kinematics your client experienced. Even in admitted-liability cases, it can be extremely helpful to do a full accident reconstruction with animation workup in order to illustrate for the jury what happened to your client for purposes of damages and causation. Often a defendant may admit liability but dispute causation and the nature/extent of your client’s injuries. In a big-force impact, use the reconstruction and animation to your advantage and get the defense experts to admit that the underlying forces are relevant to your client’s future outcome – the more severe the initial impact, the worse the potential outcome. This common-sense approach, even where your client has
See Injury, Page 76
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arguably made a relatively good recovery, has tremendous visual impact with the jurors, who begin to realize, “It’s no wonder the plaintiff has a brain injury; she was hit by that truck at 45 miles per hour!” Often a TBI that is classically “mild” or “moderate” goes unnoticed to the untrained eye. A thorough assessment of your client’s ongoing problems will illuminate if there are truly any ongoing sequelae of TBI, which may warrant a full TBI workup. This full workup is expensive and time consuming, but is essential if your client has persistent deficits relating to the underlying trauma. For a full TBI checklist, please contact the author.
Assist your client with rehabilitation and therapy
Whether you are dealing with a double craniotomy or a concussion, the most important thing you can do at the outset is to develop a strong game plan for the TBI workup and execute the plan from the very beginning. Typically this involves the hiring of medical experts to evaluate your client as well as to meet and coordinate with any treating doctors involved in the client’s ongoing treatment. It seems that more often than not, clients with TBI are not provided with the rehabilitation and therapy they need, and are left to their own devices. Part of the initial client game plan should include assessing whether the client is an appropriate candidate for residential treatment
in a facility such as Casa Colina, Learning Services, or Centre for Neuro Skills. Some of these facilities will accept the patient on lien given the right situation of liability, insurance, etc. These facilities can provide 24-hour rehabilitation services and also a day-treatment option depending on the severity of the situation. In less severe situations, the client may benefit from weekly counseling, support groups, and publicly available brain-injury rehabilitation courses. One option which many clients may benefit from is brain-injury courses offered through various community colleges. In Los Angeles, Santa Monica College is a viable option, which offers both for-credit and non-credit classes. Such programs typically focus on cognitive improvement including memory, concentration, and processing speed. Additionally, some colleges offer courses to assist students with more complex activities of daily living, such as handling basic finances and community-living-skills development. These programs are helpful in the litigation context in that they show the plaintiff is actively trying to get better to mitigate damages. Often defense experts will argue the brain-injured plaintiff would get back to baseline if he or she only had some basic rehabilitation and therapy. A diligent course in a rehab program not only takes away this frequently used defense, but also usually results in helpful damages testimony.
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In virtually every brain-injury trial, the rehab therapists (speech, occupational, and physical) end up testifying. Depending on the severity of your client’s impairments, and the brain-injury savvy of the therapist, this testimony can be either helpful or hurtful. You can imagine that defense lawyers love to call the physical therapist who treated your braininjured client for his orthopedic injuries to mention how he had no idea your client even had a brain injury. For this reason, it is a good idea to have an understanding who the therapists involved are and reach out to them before the defense lawyers try to subpoena them.
Diagnostic Imaging – A picture is worth a thousand words
The single most persuasive piece of evidence in a brain-injury trial is often a visual image of the brain damage itself. The problem faced by most mild-moderate level TBI cases is that brain damage typically does not manifest itself on CT scans unless there is a traumatic bleed (subdural/epidural hematoma, etc.). With the use of a specialized MRI, known as the 3.0 Tesla (“3T”) and the correct imaging sequence, known as susceptibility weighted imaging (“SWI”), previously unidentifiable damage can be seen diagnostically. Most trauma centers treating potentially brain-injured victims will run a CT scan or basic MRI, which does not
See Injury, Page 78
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Injury — continued from Page 76
3T MRI Corpus Callosum — Black dot shows area of damage. utilize the full technology available today. In fact, the 3T imaging is only available at a handful of radiology clinics in Southern California. It is critical to ensure the 3T MRI is done appropriately with the correct sequence. You may consult with your treating neurologist to determine his or her preferred sequence. Once the 3T comes back and a report is generated by the neuroradiologist confirming the diagnosis (i.e. diffuse axonal injury, focal hyper-intensity signaling consistent with trauma), the best use of this imaging is to create a medical illustration for use at mediation/trial. A very effective
illustration can be the actual MRI image on the left with an intensified medical illustration on the right that identifies and highlights the blood/brain damage. In the scenario that the imaging comes back “negative,” this is not a deathknell. In fact, studies have shown that imaging alone is not the best indicator of a brain injury. Imaging must be correlated with clinical evidence of ongoing sequelae of injury (cognitive deficits, emotional problems, etc.). With emerging trends in “mild” TBI, including blast neurotrauma, it is becoming more apparent that the MRI is not the end-all-be-all in terms of
diagnosis. With thousands of brain-injured war veterans returning home, the VAs across the country are seeing young men and women with classically moderatesevere deficits, yet the imaging comes up negative for organic damage. The studies in this area go back to the 1970s and provide persuasive proof that just because a patient does not have visible injury on a brain scan does not mean that he or she is not seriously impaired as a result of a brain injury. If your case involves a “negative” scan, the best way to combat the defense in this regard is to focus on the clinical evidence of your client’s impairments. Clearly, the treating physicians, therapists, and family members of your client know more about the deficits the plaintiff is facing than the radiologist does. In a recent brain injury trial, Rivas v. JB Hunt, we were able to use evidence of a “tiny” hole in an area of the brain known as the corpus callosum to help explain our client’s severe chronic-pain disorder. In the Rivas case, the client required a walker to ambulate and was essentially non-functioning due to severe chronic pain. However, her Glascow Coma Score was 15 at the scene and she did not have any physical injuries what would explain her severe pain. TBI research confirmed
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that the corpus callosum is involved in the transfer of pain signals which we used in trial to explain that even though the physical damage appeared relatively small (less than the size of a pea) this damage was only the “tip of the iceberg” in terms of what actually appears on a scan. This damage in the area that transfers signals back and forth between the left and right brain supported our claim that due to diffuse axonal injury (widespread shearing) Ms. Rivas sustained a brain injury that was the cause of her pain disorder.
Focus on the impact
Whenever possible in a TBI case it is key to focus on the severity of the impact from a biomechanical standpoint. Jurors have a tendency to focus on whether it is a big impact or not, and a good biomechanist is required to explain the forces your client’s brain endured. The problem in “mild” TBI cases is often that the impact was relatively minor. This analysis begins with an evaluation of the speeds and forces of impact and the weights of the vehicles/cargo involved. This also includes an appreciation of the rotational forces, if any, as rotational shearing of the brain is one of the most common and problematic forms of traumatic brain injury. After the accident reconstruction workup has been completed (vehicle inspections, ECM downloads, police and witness depositions) it is important to speak with your medical team about the biomechanics involved. It is good practice to work with the treating doctors, whether it be the neurosurgeon or ER trauma doctor. Often the treating doctors are more receptive to helping your case if they are asked to assist in the preparation of medical illustrations/animations, as opposed to just being subpoenaed to testify in deposition or trial. In virtually any case worth going to trial, a biomechanist can be utilized to highlight the severity of the impact and the kinematics of precisely what occurred to the plaintiff ’s brain. In recent trials we have used specially-designed kinematic animations to depict the plaintiff ’s body, the force of impact, and the trauma to the brain. While such endeavors are
• You’ll get a detailed typed report and CD audio recording of what actually occurred during the examination — and witness testimony, if the need arises, to refute inconsistencies in the DME doctor’s report.
• The nurse professionally and (if necessary) assertively interfaces with the examiner and stops any inappropriate questions.
• Your client will be more comfortable knowing that you sent an experienced nurse observer to accompany them at their DME.
MICHAEL HAIBY, RN
(661) 252-3435 Cell: (661) 414-6972 LNCassist@aol.com
ED FERNANDEZ MEDIATOR Ed has over 30 years of experience in general civil litigation with an emphasis in personal injury, vehicular accidents, premises liability, construction (both injury and defect) and business litigation. PROFESSIONAL AFFILIATIONS
• Southern California Mediation Association (SCMA) • Conflict Resolution and Mediation Exchange • Mediators Beyond Borders • Commercial & Industry Arbitration & Mediation Group • American Board of Trial Advocates-San Bernardino/Riverside Chapter • ABA Section of Dispute Resolution, ADR • American Institute of Mediation • Mediators and Peacemakers • Alternative Dispute Resolution (ADR) Professional For scheduling contact Tracie Grossi 951.320.1444 • email: email@example.com 4590 Allstate Drive • Riverside, CA 92501
www.toppickmediator.com • email: firstname.lastname@example.org JANUARY 2013
The Advocate Magazine — 79
Injury — continued from Previous Page
definitely expensive, they are extraordinarily persuasive to a jury. After polling a recent jury following an eight-figure verdict for a severely brain-injured young man, the foreman mentioned that the most compelling evidence for her was the animation showing how the brain gets sheared as it bounces around inside the skull. Certain stock animations can be purchased cheaply online, and sometimes are available for free.
How to approach the DME
The defense medical exam for brain injuries seems to be devolving into an often protracted, multi-expert, quest to find malingering. It is a rare occurrence that a reasonable proposal of defense exams is presented, and therefore court intervention is often needed to set the scope. The last thing you want is your client attempting to commit suicide after repeated psych DME’s, right? This stuff happens, trust me. Clearly, defendants have their one bite at the apple with the medical exam allowed by code. If defense counsel wishes to have a standard neurological exam without leave of court, there is usually not much one can do to stop such an exam. In fact, a course that has routinely worked for defendants is to conduct an exam with
3T MRI — Black dots show areas of axonal shearing their expert which allows you to get their expert report in 30 days. After that, when defendants seek to compel additional examinations, you have the benefit of knowing their neurologist’s opinions. More often than not, the defense hired gun says your client is not injured and doesn’t need any further evaluation. This report can come in handy when arguing against additional examinations. More importantly, the common theme seems to be that no matter what you agree to, the defense will always want more. Set the parameters early, and insist on obtaining a clear list of all the neuropsychometric
batteries they request. Determine what is best for your client, whether he or she can do an all-day evaluation, or if two sessions is better. From surveying a number of local neuropsychologists and attorneys on this issue, the standard in the industry seems to be one day of neuropsychological testing. It is worth the good fight to protect your client from unduly burdensome examinations.
Malingering & sub-rosa
As we all know, the standard defense in brain-injury cases is that your client is a fraud. He’s a faker, a malingerer, an
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Ms. Rivasâ€™ Nissan impacted by J.B. Hunt truck
exaggerator, or, in med-speak, suffers from somatoform disorder. Be prepared from the outset on this issue and use this to your advantage.
Rivasâ€™ head struck by grill of J.B. Hunt truck
Before any medical examinations, caution your client about this issue. No matter how brain injured they are, they must understand the importance of giving
their best effort and always being truthful. Tell them from day one that the likelihood is that at some point they are going to be followed and videotaped. The last
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The Advocate Magazine â€” 81
Injury — continued from Previous Page
thing you want is to learn in supplemental disclosures that there is video footage of your brain-injured client giving an eloquent speech on the bow of a yacht to a
hundred party-goers for his 30th birthday yelling “I’m on Top of The World” like DiCaprio in Titanic. This also happens, trust me.
Effectively cross-examining defense experts
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When defendants embark on the subrosa, get every shred of sub-rosa evidence including the depositions of all investigators, and use it to your advantage. Sub-rosa discovery begins with Form Interrogatory Series 13.0; however, at early stages of litigation when plaintiffs typically serve form interrogatories, defendants most likely have not conducted sub-rosa surveillance. The key is to send out requests for production of documents asking for all documents reflecting any surveillance, including billing statements, reports, and correspondence. Suezaki v. Superior Court (1962) 58 Cal.2d 166 allows discovery of sub-rosa information over an objection on the grounds of attorney work product. Please contact the author for sub-rosa sample discovery and sample motion to compel. In a recent mild-moderate TBI trial, the defense had conducted 350 hours of surveillance of the plaintiff. The investigator was brought to trial who testified that he could not find anything inconsistent with the plaintiff ’s claims. This ended up being perhaps the best evidence that the plaintiff was truly as impaired as she claimed.
The cross-examination of defense experts at trial begins with obtaining as many concessions as possible in the videotaped depositions, and forcing the experts to solidify their final opinions. While the examination of a defense expert is the proper subject of many legal treatises, for purposes of this article there are two examples of a recent brain-injury trial that highlight both ends of the spectrum of the defense “expert.” A recent case tried by our firm resulted in a an eight-figure verdict for a plaintiff with a “mild-to-moderate” TBI. The defendant retained a neuropsychologist and neurologist who both examined the plaintiff at length. These two witnesses highlight both ends of the spectrum in terms of how a defense expert deals with a cross-exam, and how to effectively use either a concession or an unreasonable refusal to concede against the expert. On the one hand, the defense neuropsychologist played fair and made
appropriate concessions in accordance with the evidence. On the other hand, the defense neurologist remained incorrigible in his opinion that the plaintiff was not injured, created medical nonsense to support his opinion, and ultimately had no credibility before the jury. The trick is knowing how to get what you need from each kind of expert. In this case, the neuropsychologist report confirmed the severity of plaintiff ’s ongoing deficits, but blasted the plaintiff as being a malingerer even though she passed five of six malingering measures. The issue really was that her chronic pain disorder and depression – both of which are admittedly somewhat subjective – were hindering her cognitive performance. When it came time to testify under oath, the neuropsychologist backed off the malingering opinion completely and merely said any exaggeration was likely due to somatoform issues related to pain and depression. Under questioning, he was locked into the position that the plaintiff was not faking, malingering, or exaggerating. This neuropsychologist was also ill-prepared to discuss the neuroradiology findings in a recent 3T MRI scan of the brain and parroted the findings documented by plaintiff ’s expert. In this particular case, plaintiff had a tiny hole in her corpus callosum, which was arguably clinically insignificant. However, when led down the golden path of concessions, the good doctor admitted
how critical the corpus callosum is and that the injury as documented in the 3T was likely the cause of plaintiff ’s ongoing sequelae. This result highlights the importance of two points of strategy. First, a medical practitioner should never discount your clients’ subjective complaints of pain and depression, especially when they pass most of the malingering measures. Second, be prepared to cross-examine the expert with the best medical records that are helpful to your case. Using the 3T MRI to your advantage whenever possible is extremely effective. In trial, the selected video deposition testimony was played in the plaintiff ’s casein-chief and this defense expert essentially became a plaintiff expert. The defense neurologist wrote a DME report stating that the plaintiff needed no further medical care, and no further medical imaging was necessary. After his exam the plaintiff did in fact have the 3T MRI, which undoubtedly had signs of diffuse axonal injury and other trauma. This physician stuck to his guns and claimed that the brain damage on the MRI was “not that bad” and that the holes in her brain were “tiny.” This position became ridiculous at trial in the context of the other experts explaining that any hole in one’s brain is not a good thing. Furthermore, without the benefit of the support of the psychologist claim of malingering, the neurologist was forced to concede that he could not dispute
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Injury — continued from Previous Page
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to get overly technical on the medical side of the testimony, jurors seem to really focus on the real life information that comes from the family members, friends, and co-workers of the plaintiff. Collateral-witness information is absolutely critical in any brain-injury case. Even more so than the doctors and the imaging, the single most important piece of evidence in a brain-injury trial is usually the key damage witnesses. Often a “mild” TBI patient will perform reasonably well on neuropsychometric testing but still have complaints of depression, personality change, fatigue, and other complaints that don’t necessarily get illuminated in the testing. Information from your client’s friends, family, and co-workers is crucial in this context to explain the before and after. The best witness in this context is an uninterested third-party witness who does not have any kind of stake in the litigation. In one recent brain injury trial of a 16-year old with a moderate TBI, a neighbor from the plaintiff ’s mobile home park was located who testified that the boy would occasionally do yardwork for him. After his accident, he continued to hire the plaintiff to do odd jobs, but found that the boy could not even figure out how to work a garden hose. This testimony was real and, in polling the jury after the verdict, several jurors stated that it was the most persuasive evidence in the case. At the outset of your case, get a list of damage witnesses and reach out to them. Have your life-care planner interview the best ones, and share this information with your team of experts so they can rely upon it in forming their opinions that your client has suffered serious and lifechanging impairments. Nine times out of ten the defense experts won’t have the opportunity to get this valuable collateral information, which you have a leg up on obtaining.
The life-care plan
The question with the “mildly” impaired brain-injured victim becomes, “so what future medical care does he/she really need?” The answer is that a braininjured victim requires all the necessary medical care that would put him or her
back into their shoes before the injury. Even a person with mild deficits that is still working likely relies upon family members for many activities of daily living. These plaintiffs are often referred to as the “walking wounded.” They are working, driving, and generally going about their business. But they are doing it in an impaired fashion with much more effort and more reliance on friends and family. The life-care plan should include the obvious things such as a case manager, therapy, diagnostics, neurology follow up, medications, neuropsychiatry, neuropsychology testing, ongoing attendant care and assistance in the home. If your client is relying on friends and family members for assistance and supervision, these items should be given a focus in the life-care plan based on the average cost for attendant care in the marketplace. Your client’s anticipated deterioration over time should also be accounted for in the life-care plan, especially in the context of a pre-disposition for dementia. Research has shown that risk of dementia nearly doubles in TBI victims. Most of the research in this area is focused on moderate-severe TBI; however, there is no question that any TBI only decreases a person’s ability to cope with age-related problems. As such, your experts and life-care planner should be prepared to discuss age-related complications and to include certain assistance as either a line item or contingency item in the life-care plan.
cases be worked up properly with an eye for critical focus points should the case go to trial.
Spencer Lucas is a trial lawyer at Panish Shea & Boyle LLP in Los Angeles.
Insurance companies across the board have been cutting costs, and the big-money payouts seem to be fewer and fewer. In the case of TBI, the trend appears to be that a verdict is required to prove to the carriers that your client is injured. Obviously there are some exceptions, but by and large, the default is that your client is faking and any money offered will be a pittance in comparison to your client’s impairment. As for mild TBI, insurance companies are even more reluctant to appreciate that your client is one of the walking wounded and is likely to have life-long impairments. For these reasons it is all the more important that TBI JANUARY 2013
The Advocate Magazine — 85
Niall P. McCarthy
Class actions and the Consumers Legal Remedies Act Understanding the special provisions Civil Code section 1770
The information in this article was presented at the 30th Annual CAALA Las Vegas Convention in September 2012
This article summarizes specific provisions of the Consumers Legal Remedies Act (CLRA) along with recent case law interpreting those provisions. Generally speaking, the CLRA is a statutory scheme designed to “protect consumers against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection.” (Cal. Civ. Code, § 1760.) The CLRA contains 24 specific subdivisions prohibiting a wide range of conduct, ranging from using deceptive representations of geographic origin in connection with goods or services to inserting an unconscionable provision in a contract. The CLRA was originally passed by the California State Legislature in 1970 and has proven to be an effective tool for consumers.
Selected proscribed actions/recent case law
•Blue Sky Natural Beverage Company Pursuant to Section 1770, subdivision (a)(4), of the CLRA, it is unlawful for an individual to use deceptive representations or designations of geographic origin in connection with goods or services. (Cal. Civ. Code, § 1770, subd. (a)(4).) In Chavez v. Blue Sky Natural Beverage Co., the plaintiff alleged that the company “Blue Sky Natural Beverage Co.” misrepresented the origins of their beverage company, thereby violating the CLRA. (Chavez v. Blue Sky Natural Beverage Co., 268 F.R.D. 365, 368 (N.D. Cal. 2010) (granting motion for class certification).) Though the labels on the beverages read, “SANTA FE, NEW MEXICO” or “SANTA FE, NM,” there was not a company named “Blue Sky Natural Beverage Co.” which was operating or manufacturing beverages in Santa Fe, New Mexico, at the time the beverages were being
86 — The Advocate Magazine
produced for sale. (Chavez, supra, 268 F.R.D. at 368.) Additionally, the plaintiff alleged that he relied on the defendant’s misrepresentations and consequently lost the full value of the price he paid for the beverages since he would not have paid that price had he been aware of the true geographic origin of the products. (Ibid.) Blue Sky argued that a class should not be certified because it was unascertainable, and that each class member’s claims of individualized reliance on the misrepresentations of the product must be proven. (Id. at 375.) The court rejected the argument and held that the consumer’s claims for violation of the CLRA “do not require individualized showing of reliance” as “ reliance on the alleged misrepresentations may be inferred as to the entire class if the named plaintiff can show that material misrepresentations were made to the class members.” (Id. at 376.) Thus, the plaintiff was therefore able to certify a class under the CLRA by showing that the misrepresentation was the cause of the class members’ harm. (Ibid.) •Allegations against Chevron Pursuant to Section 1770, subdivision (a)(5), of the CLRA, it is unlawful for an individual to represent that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval status, affiliation, or connection which he or she does not have. (Cal. Civ. Code, § 1770, subd. (a)(5).) In Klein v. Chevron U.S.A., Inc., consumers brought a class action against Chevron alleging that Chevron effectively bought gasoline at one temperature, yet sold it at another, resulting in customers receiving less gas than that which they paid for. (Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1348) (reversing the trial court’s order granting Chevron’s motion for judgment on the pleadings).) Additionally, the plaintiffs alleged that
the company paid an unfairly low tax rate on account of the temperature difference, and further that consumers were unable to make fair price comparisons between retailers. (Ibid.) Chevron convinced the trial court that the claims against it should be dismissed and the plaintiffs appealed. (Id. at 1349.) The State’s Second Appellate District ruled that the plaintiffs adequately alleged violations under the CLRA, noting that the plaintiff ’s allegation “that Chevron’s failure to disclose the effect of temperature on motor fuel is deceptive because it advertises the price of its product in what consumers understand to be standardized units (gallons)” was “sufficient to state a CLRA claim predicated on a material omission.” (Id. at 1383.) •Allegations against Fiji In Hill v. Roll International Corp., plaintiffs alleged that a green drop symbol on Fiji bottles falsely represented that the water was environmentally superior to other waters, as well as endorsed by an environmental organization, consequently violating the CLRA. (Hill v. Roll Int’l Corp. (2011) 195 Cal.App.4th 1295, 1298 (affirming the trial court ruling that Hill’s amended complaint failed to state a cause of action and dismissing the complaint).) Though the court acknowledged that the plaintiff was misled to believe that the green drop symbol on Fiji bottles was a marker that implicitly indicated approval by a third-party organization, and also gave the impression that the product was environmentally superior to competitors’ bottled water, the court held that the consumer’s beliefs did not satisfy the reasonable consumer standard. (Hill, supra, 195 Cal.App.4th at 1304.) The court noted that the reasonable consumer standard, which is applied to the CRLA, “does not include one who is overly suspicious,” and in the case at bar the green drop bore no name or recognized logo of any group, much less a third party organization. (Ibid.)
•Allegations against Apple In In re iPhone Application Litigation, a nationwide class of plaintiffs (who are users of Apple products, including the iPhone, iPad and iPod Touch) have brought suit against Apple alleging Apple devices enable mobile advertising companies to collect users’ personal data at any time that free applications are downloaded, without user consent or knowledge. (In re iPhone Application Litigation, 2012 WL 2126351, at *1 (denying defendant’s motion to dismiss CLRA claims).) Moreover, the plaintiffs claim that Apple has stored geolocation data on users’ iDevices for Apple’s own benefit, at a cost to consumers, and further that Apple continued to collect users’ geolocation data even when users actually switched their “Location Services” setting to “off.” (Id. at *23.) Accordingly, the plaintiffs argue they ultimately overpaid for the products since Apple failed to clearly articulate how the applications would use their personal information. (Ibid.) Apple argued that the plaintiffs’ CLRA claim should be dismissed for three reasons: “(1) Plaintiffs have not alleged any facts establishing that Plaintiffs sustained any actual damage, (2) Plaintiffs’ claim is based on the downloading of software, which is not covered by the CLRA, and (3) the CLRA applies only to the purchase or lease of goods or services, and Plaintiffs’ claim is based on the downloading of free apps.” (Ibid.) On June 12, 2012, a federal judge ruled against Apple, holding that at the pleading stage, “Plaintiffs have sufficiently alleged that they are consumers under the CLRA, and their allegations relate to the purchase of goods.” (In re iPhone Application Litigation, 2012 WL 2126351, at *23.) In arriving at this conclusion, the judge explained that “the gravamen of the CLRA claim of the Geolocation Class is not that free apps downloaded by Plaintiffs were deficient, but rather that the iPhones (a ‘good’ covered by the CLRA) purchased by the class members did not perform as promised based on a specific functionality of the device.” (Ibid.) Moreover, the court reasoned that
the “Plaintiffs’ CLRA claim on behalf of the iDevice class is also premised on Plaintiffs’ purchase of the iDevices themselves, and not exclusively on the downloading of free apps.” (Ibid.) Thus, the court concluded that the plaintiffs may pursue claims against Apple Inc. under both the CLRA and the Unfair Competition Law to allege that Apple caused them to overpay for their devices. (Ibid.)
Inserting an unconscionable provision in the contract
•Allegations against Comcast Pursuant to section 1770, subdivision (a)(19), of the CLRA, it is unlawful for a person engaged in a transaction that is supposed to result in the sale or
lease of goods to insert an unconscionable provision in the contract. (Cal. Civ. Code, § 1770, subd. (a)(19).) In Belton v. Comcast Cable Holdings, LLC, cable subscribers brought an action against Comcast challenging the provider’s practice of offering music service only as part of a basic tier cable package including television service. (Belton v. Comcast Cable Holdings, LLC (2007) 151 Cal.App.4th 1224, 1229 (affirming an order to dismiss a cause of action under the CLRA).) In order for a provision in a contract to be deemed unconscionable under the CLRA, the court noted that it must be both procedurally and substantively unconscionable. (Id. at 1245.) The court described procedural unconscionability as encompassing both
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the factors of oppression and surprise, explaining that oppression “arises from an inequality of bargaining power which results in no real negotiation and ‘an absence of meaningful choice’” and surprise “involves the extent to which the supposedly agreed-upon terms of the bargain are hidden in a prolix printed form drafted by the party seeking to enforce the disputed terms.” (Belton, supra, 151 Cal.App.4th at 1245.) The substantive element of unconscionability, on the other hand, “focuses on the actual terms of the agreement and evaluates whether they create ‘overly harsh’ or ‘one-sided’ results as to ‘shock the conscience.’” (Ibid.) Ultimately, the court held that the cable service provider’s requirement that subscribers purchase a basic tier package
in order to receive music service did not “shock the conscience,” particularly as there were alternative sources of music available that were carried by the cable service provider’s FM music service, and subscribers had the ability to access music through broadcasting programming, compact disc, the internet, or satellite service. (Id. at 1246.) Moreover, the court reasoned that procedural unconscionability was not at issue since alternative sources for music were available, thereby providing plaintiffs with a meaningful choice. (Id. at 1245.) •Allegations against U-Haul In Aron v. U-Haul Co. of California, customers brought a class-action complaint against U-Haul of California, a truck rental company, alleging that its refueling charges and practices violated
the CLRA. (Aron v. U-Haul Co. of Cal. (2006) 143 Cal.App.4th 796, 800 (order affirming dismissal of plaintiff ’s claims of unconscionability under (a)(19).) Within their allegations, the plaintiffs specifically challenged U-Haul’s established practice of requiring customers to return trucks with an equal amount of fuel as that which they had at the time of rental. (Aron, supra, 143 Cal.App.4th at 800.) The plaintiffs contend that this practice leads to many customers returning trucks with excess fuel for which they were not reimbursed since the level of the fuel gauge is the exclusive means of measurement. (Id. at 801.) Ultimately, the court held that the customers’ claims must fail since the terms of the refueling policy were clearly disclosed in the rental contract and the consumers had a meaningful choice to rent a truck from another company. (Id. at 809.) Additionally, the fueling fees imposed by the company did not “shock the conscience” as a matter of law, so substantive unconscionability was not an issue. (Ibid.)
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•Civil Code section 1780(a)-(c) Under the CLRA, litigants may recover or obtain any of the following: (1) actual damages (statutory minimum for an award of damages in a class action shall not be less than $1,000); (2) an order enjoining the methods, acts, or practices; (3) restitution of property; (4) punitive damages; or (5) any other relief that the court deems proper. (Cal. Civ. Code, § 1780, subd. (a)(1-5).) If the plaintiff is over 65 or disabled, statutory penalties are also available up to the amount of $5,000. (Cal. Civ. Code, § 1780, subd. (b).) Additionally, pursuant to section 1780(c), treble damages may be awarded when the defendant has been found by a preponderance of the evidence to have engaged in charging unreasonable fees to assist an applicant or recipient in securing public social services. (Cal. Civ. Code, § 1780, subd. (c).) •Attorney’s fees Pursuant to section 1780, subdivision (e), of the CLRA, “The court shall award court costs and attorney’s fees to a
prevailing plaintiff in litigation filed pursuant to this section.” (Cal. Civ. Code, § 1780, subd. (e).) As it is well recognized that limiting a fee award to an amount which would be less than that incurred in prosecuting such a case “would impede the legislative purpose underlying section 1780,” awarding plaintiffs reasonable attorney’s fees thereby allows consumers to pursue actions where the compensatory damages may be relatively modest (Hayward v. Ventura Volvo (2003) 108 Cal.App.4th 509, 516.) It is important to note that the CLRA also provides for prevailing defendants to recover reasonable attorney’s fees “upon a finding by the court that the plaintiff ’s prosecution of the action was not in good faith.” (Cal. Civ. Code, § 1780, subd. (e).)
•Class-action certification requirements Pursuant to section 1781 of the CLRA, any consumer may bring an action on behalf of himself, as well as any other consumer who is similarly damaged under section 1780 for class certification, if the following criteria are met: “(1) It is impracticable to bring all members of the class before the court; (2) The
questions of law or fact common to the class are substantially similar and predominate over the questions affecting the individual members; (3) The claims or defenses of the representative plaintiffs are typical of the claims or defenses of the class; and (4) The representative plaintiffs will fairly and adequately protect the interests of the class.” (Cal. Civ. Code, § 1781.) Superiority is not a listed criteria. The only difference between a CLRA class action and a non-CLRA class action is that “a plaintiff moving to certify a class under the CLRA is not required to show that substantial benefit will result to the litigants and the court.” (Corbett v. Superior Court (2002) 101 Cal.App.4th 649, 670, fn. 9.) Thus, “the CLRA does not require that a plaintiff show a probability that each class member will come forward and prove his or her separate claim to a portion of the recovery.” (Ibid.)
Thirty-day notice requirement for damages
Pursuant to section 1782, subdivision (a), of the CLRA, at least 30 days prior to the commencement of an action for damages, the consumer shall “(1) Notify the person alleged to have
employed or committed methods, acts, or practices declared unlawful by Section 1770 of the particular alleged violations of Sections 1770” and “(2) Demand that the person correct, repair, replace, or otherwise rectify the goods or services alleged to be in violation of Section 1770.” (Cal. Civ. Code, § 1782, subd. (a)(1-2).) A consumer may bring an action for injunctive relief, however, without giving notice to the defendant. (Cal. Civ. Code, § 1782, subd. (d).) Additionally, under section 1782(d), a consumer who brings an action for injunctive relief may later amend her complaint to include a request for damages once a suit has been filed and following 30 days after notice has been given. (Cal. Civ. Code, § 1782, subd. (d).)
•Requirements for design defect allegations In Wilson v. Hewlett-Packard Co., the plaintiff, who was the owner of a HewlettPackard (HP) laptop that became defective, alleged that HP misrepresented and concealed a common and uniform design defect with the power jacks. (Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1139
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(2012).) The Ninth Circuit Court of Appeals ultimately affirmed a district court decision to dismiss the case against HP holding that plaintiffs who allege that a manufacturer has concealed a design defect must also allege that the design defect caused an unreasonable safety hazard. (Id. at 1143.) Furthermore, the court held that the plaintiff ’s conclusory allegations that the manufacturer “became familiar with” or was “on notice” of a manufacturing defect did not sufficiently assert that the manufacturer knew of the alleged defect at the time of the sale. (Id. at 1147.) Despite the holding in Wilson, it is important to note that certain California case authority supports a recognition of a CLRA claim where a manufacturer has concealed a material fact independent of safety concerns. (Falk v. Gen. Motors Corp., 496 F.Supp.2d 1088, 1094 (N.D. Cal. 2007).) In such cases, however, the safety considerations were discussed in the court’s finding that certain nondisclosed information was material. (Oestreicher v. Alienware Corp., 544 F.Supp.2d 964, 971 (N.D. Cal. 2008).) Moreover, the Wilson opinion justifies their holding by citing to O’Shea v. Epson Am., Inc. which notes that “‘[a]lthough
California courts are split on this issue,’ the weight of authority suggests that the duty to disclose is limited to safety issues.” (Wilson, 668 F.3d at 1141 (quoting O’Shea v. Epson Am., Inc., 2011 WL 3299936, at *7-9).)
In Meyer v. Sprint Spectrum L.P., the plaintiffs brought a class action against Sprint alleging that the remedial provisions within their cellular phone customer service contracts were unconscionable and illegal under the CLRA. (Meyer v. Sprint Spectrum L.P. (2009) 45 Cal.4th 634, 638.) The California Supreme Court held that the CLRA requires a plaintiff to allege that he/she has suffered “some damage” as a result of a purported unlawful practice in order to have standing to sue, and therefore the plaintiffs’ claims in the case at bar must fail. (Id. at 641.) In their holding, the court explained that the mere presence of an allegedly unconscionable provision within a consumer contract could not, by itself, suffice to confer CLRA standing – some damage must be experienced by the consumer. (Ibid.) Moreover, the court noted that the legislature, in drafting
the act, “set a low but nonetheless palpable threshold of damage, and did not want the costs of a lawsuit to be incurred when no damage could yet be demonstrated.” (Id. at 646.)
Insurance practices/financial services
•Life insurance is not a good or service In Fairbanks v. Superior Court, plaintiffs who had purchased insurance policies from Farmers alleged that Farmers engaged in numerous deceptive and unfair practices under the CLRA in connection with the marketing of their policies. (Fairbanks v. Superior Court (2009) 46 Cal.4th 56, 60.) The California Supreme Court ultimately held that life insurance is neither a “good” nor a “service” within the meaning of the CLRA, and thus the plaintiffs’ claims must fail. (Id. at 61.) The court noted that, “Because life insurance is not a ‘tangible chattel,’ it is not a ‘good’ as that term is defined in the Consumers Legal Remedies Act.” (Ibid.) Additionally, the court stated that life insurance is not a service since “An insurer’s contractual obligation to pay money under a life insurance policy is not work or labor, nor is it related to the sale or repair of any tangible chattel.” (Ibid.)
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•Extension of credit is excluded under the CLRA In Berry v. American Express Publishing, the plaintiff, who was an American Express cardholder, alleged that American Express violated section 1770, subdivision (a), of the CLRA by including an unconscionable arbitration provision in their agreement with cardholders. (Berry v. Am. Express Publ’g (2007) 147 Cal.App.4th 224, 226.) The Fourth District Court of Appeal ultimately held that credit transactions which are separate and apart from the sale or lease of goods or services are not covered by the CLRA. (Id. at 233.) In arriving at this conclusion, the court highlighted the fact that “The extension of credit is not a tangible chattel” since a credit card “has no intrinsic value and exists only as indicia of the credit extended to the card holder.” (Id. at 229.) Additionally, the court explained that while early drafts of the CLRA included references to “money” and “credit” within the definition of a consumer, the fact that the legislature eventually deleted those terms signifies that the provision should not be stretched to include extensions of credit that are unrelated to the purchase of a specific good or service. (Berry, supra, 147 Cal.App.4th at 230.)
staffing requirements that are enunciated in the California Health and Safety Code, and sought damages for up to the maximum allowed under the CLRA. (Ibid.) The trial lasted seven months, and the jury ended up awarding damages close to $677 million, including $58 million for a violation of the CLRA. (Ibid.) Vinnie Lavender was the first class action that was tried to a verdict that involved the understaffing of nursing homes, and at the time was the largest verdict ever in a case against a nursing home chain. (Ibid.)
The CLRA is an effective tool in the battle to protect consumer rights. However, cases brought under the CLRA must be for sharp practices which are
offensive to juries. Otherwise, the effectiveness of the CLRA will be eroded over time.
Niall P. McCarthy is a principal at Cotchett, Pitre & McCarthy, LLP, in Burlingame, CA. He is a graduate of the University of California at Davis and Santa Clara University School of Law. He has repeatedly been selected as one of the top plaintiff attorneys in California and the United States by multiple publications. McCarthy is the 2012 President of the Consumer Attorneys of California and past chairman of San Mateo County Bar Business Litigation Section. Gina Gribow was formerly a law clerk at Cotchett, Pitre & McCarthy, LLP, and assisted in the preparation of this article.
Impact litigation under the CLRA
•Allegations against nursing homes In the case Vinnie Lavender v. Skilled Healthcare Group, Inc., the CLRA proved to be a successful tool in obtaining justice on behalf of thousands harmed by understaffed nursing homes in California. (CAOC 2011 Award Recipients, CONSUMER ATTORNEYS OF CALIFORNIA, https://www.caoc.org/index.cfm?pg =11AwardRecipients.) Vinnie Lavender was filed on behalf of 32,000 residents, former residents, and family members of residents of 22 California nursing facilities, which were owned by Skilled Healthcare Group, in response to a large number of wrongful death and severe injury claims linked to inadequate staffing. (Ibid.) In this suit, the plaintiffs alleged that Skilled Healthcare Group routinely failed to meet the minimum JANUARY 2013
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Richard P. Kinnan
The mass-tort case: Are you ready to make the commitment? There is a steep learning curve to handling mass torts, requiring both patience and a big financial commitment. Then there’s the matter of selecting plaintiffs
A mass-tort case involving numerous plaintiffs is by definition a “complex case” under California Rules of Court, rule 3.400. Navigating your way through the complexities of the mass-tort case can be difficult but not impossible. We offer the following general observations based on our experiences in several mass-tort actions, including the well-known “Erin Brockovich” case involving PG&E’s toxic contamination at its three gas cooling facilities in California.
Some preliminary but very important matters to consider include the need to recognize that your case will likely not be resolved in five years, so it is important to take measures early and often to protect the five-year statute (Code Civ. Proc., § 583.310). Keep your eye on the five-year ball at all times during your mass-tort case (as interesting and challenging issues will arise concerning the five-year statute on the cases that are eventually stayed while the test plaintiffs are litigated and tried). For example, last year the California Supreme Court found that only a stay of all proceedings will toll the running of the five-year statute of limitations. (See Bruns v. E-Commerce Exchange, Inc. (2011) 51 Cal.4th 717, 723 [a stay under Code Civ. Proc., § 583.310 “applies only when a stay encompasses all proceedings in the action and does not include partial stays”].) Therefore, if there is not a complete stay of all proceedings, it is advisable that plaintiffs’ counsel obtain a stipulation from defense counsel extending the five-year well in advance of the date that the five-year is set to run. If there is only a partial stay of proceedings and no stipulation, plaintiffs’ counsel will have the burden of showing that the partial stay made it impractical, impossible or futile to bring the case to trial within the five-year statute of limitations. (Id. at 730-731.)
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You must also take care to ensure that your attorney-client agreement addresses the event of a mass settlement. There are certain legal and ethical considerations to consider when representing numerous plaintiffs and when settling a mass-tort action. Research and resolve these issues before setting sail. Another preliminary matter involves statute of limitations under the so-called “delayed discovery rule.” “Under the [general] delayed discover rule, a cause of action accrues and the statute of limitations begins to run when a plaintiff has reason to suspect an injury and some wrongful cause.” (Fox v. Ethicon EndoSurgery (2005) 35 Cal.4th 797 803.) In toxic-tort cases in California there is a special delayed discovery rule: “In any civil action for injury or illness based upon exposure to a hazardous material or toxic substance, the time for commencement of the action shall be no later than either two years from the date of injury, or two years after the plaintiff becomes aware of, or reasonably should have become aware of 1) an injury, 2) the physical cause of the injury, and, 3) sufficient facts to put a reasonable person on inquiry notice that the injury was caused or contributed to by the wrongful act of another.” (Code Civ. Proc., § 340.8.) If delayed discovery is an issue – which it commonly is, given the latency period of many illnesses caused by drugs or environmental contamination – careful screening must be done when selecting the plaintiffs for your case. Obtain all statute of limitations documents from all plaintiffs at the outset of the litigation, including newspaper articles plaintiffs may have read, as well as all available pharmacy/pharmaceutical records in a drug case. A related issue involves proper case management to have an early statute-of-limitations motion made by defendants so that expensive, expert medical-causation analysis is not wasted
on those plaintiffs that will not make the cut. Another preliminary matter concerns medical causation (which is at least half, if not more than half, of the battle in most mass-tort cases). In California, the burden of proof remains clear: plaintiff must prove, to a reasonable degree of medical probability, the defendants’ conduct was more likely than not a substantial contributing factor in plaintiffs’ injury. (Bockrath v. Aldrich Chemical Co., Inc. (1999) 21 Cal.4th 71, 79-80; Rutherford v. Owens Illinois, Inc. (1997) 16 Cal.4th 953, 982-983.) Expert testimony is required to prove medical causation, and medical specialists are absolutely necessary. Thus, again, before setting sail, preliminary investigation and research should be done on medical causation and the appropriate and available experts you will need to prove causation. You are strongly advised to pinpoint the type of illnesses caused by the defendants’ drug or environmental contamination and limit your claims to only those specific illnesses and do not overreach in terms of the maladies you attribute to defendant’s conduct. As a final preliminary note, it is recommended that you regularly send out case status reports to all plaintiffs (perhaps quarterly); this makes for happier clients and fewer calls from plaintiffs requesting to know what is happening on their case.
Structuring the complex case
In a multi-plaintiff case, counsel should be thinking about settlement from the outset. What is the best method to demonstrate to the defense the value of the case? Plaintiffs’ counsel should devise a strategy which will efficiently and cost-effectively lead the case to settlement and present the plan to the court in the form of a case-management order or a series of case-management orders.
Pasadena Mediation Group If the case drags on too long, the costs will be astronomical and make it difficult to reach a reasonable settlement. Discussed below are suggestions to incorporate within the ultimate case strategy. • Selecting trial plaintiffs In a case involving a large group of plaintiffs, a single trial for all cases is obviously impossible. At the outset of the case, plaintiffs’ counsel should select a group of cases for concentrated discovery and trial preparation. The method of selecting test plaintiffs (or Bellwether cases) in a multi-party/mass-tort case is within the trial court’s discretion. The Manual for Complex Litigation, Fourth discusses the importance of test case trials and the need to “streamline presentation of the evidence” and to achieve efficiency and expedition for both courts and parties. (The Manual for Complex Litigation, Fourth, Federal Judicial Center 2004 at § 22.93.) The most important function of the test trial is to promote settlement of the entire action: “Representative Cases: The results of a trial of one or a few representative lead cases can provide information and motivation helpful to settlement of related cases.” (Id. at §13.13.) There are a number of ways to select the test plaintiffs. The court may order a random selection of test plaintiffs. This method is an approach often suggested by defendants. The court may also order that plaintiffs select half of the test plaintiffs and defendants select the other half. (See In re Hydroxycut Marketing and Sales Practice Litigation (SD Cal 2012 Westlaw 2522859.) The primary disadvantage to both these approaches is that the result will not inform the parties of the strengths and weaknesses of their respective cases. Defendants’ selection of trial plaintiffs is likely to be the extreme worst cases, without any representation of the strong or middle-of-the road claims. Selection by random sampling cannot predict the average outcome because random sampling cannot capture truly represented individuals. Another approach is to allow plaintiffs to select all the test plaintiffs with or without limitations set by the court. This approach is likely to result in some of the
strongest cases going first. These are the cases most likely to provide the parties and the court with important information necessary to access the overall value of the case. Since plaintiffs are most familiar with their own cases, it makes sense for plaintiffs to select the trial plaintiffs. Plaintiffs have the burden of proof at trial, so plaintiffs alone should be permitted to decide the order in which their cases will be tried. In a multiparty personal-injury case, it is most efficient to select plaintiffs with similar injuries. A selection of like plaintiffs will streamline the process in that it will limit the number of medical causation experts the party will need to call. As for the number of test plaintiffs selected to go to trial first, defendants tend to urge the court to proceed with a large number, such as 50 or so. Fifty test plaintiffs is too large of a group. A manageable size is 15. We have seen all testplaintiff selection types used by the courts, and we have also seen courts use different numbers of selected test plaintiffs from as many as 50 down to 10. Plaintiffs’ counsel are urged to fight hard for their preference and not let the court and/or defense counsel dictate the selection process. • Placing limits on discovery Case Management Orders are the mechanism for streamlining and limiting discovery in multi-plaintiffs’ complex litigation. The court has inherent authority to manage cases. (Code Civ. Proc., § 187.) California has recognized the necessity of closely managing large complex cases so as to avoid placing undue burden on the litigants and the court. (See Asbestos Claims Facility v. Berry and Berry (1990) 219 CalApp.3d 9, 20.) Unfortunately there is no case which specifically addresses how much discovery is too much in complex litigation. There are, however, cases and guidelines that urge the court to adopt procedures so as to move the proceedings along expeditiously and fairly and to exercise reasonable control over all phases of the proceedings. (See Volkswagen of America, Inc. v. Superior Court (2001) 94 Cal.App.4th 695, 707-708 and First State
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Ins. Co. v. Superior Court (2000) 79 Cal.App.4th 324, 332.) A case-management order should limit the amount of discovery and set time limits on depositions. The need for time limits is expressed in the Standard of Judicial Administration, Standard 2.20., which lists “[a]fter consultation with counsel, set reasonable time limits” as a basic trial management technique. Standards of Judicial Administration, Standard 3.10 addresses complex cases specifically. Standard 3.10 (d) states as follows, “[t]ime limits should be regularly used to expedite major phases of complex litigation. Time limits should be established early, tailored to the circumstances of each case, firmly and fairly maintained, and accompanied by other methods of sound judicial management.” To encourage the court to limit the time of depositions, the parties should consider simplifying their cases. For example, in a toxic-tort case, instead of claiming every possible health effect, the claim should be limited to those illnesses where there is strong scientific support for a connection between the claimed illness and the subject toxin. Stipulating to submit expert reports in exchange for limits on depositions is also a consideration. The case-management order should also set a cut-off for each discovery phase. The Deskbook on the Management of Complex Civil Litigation states that, “[m]ost importantly, the court needs to
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set a firm, realistic cut-off date for each phase of discovery.” (Id at 2.52). The Deskbook describes the objectives of complex case management as expediting the case, keeping costs reasonable, and promoting good decision making. (Id. at 2.02.) In short, it is important to convince the court to set reasonable limits on each phase of discovery. The court’s authority to manage complex cases is unlimited so long as the procedures and order do not conflict with already existing statutes or judicial council rules. (See Hernandez v. Superior Court (2003) 112 Cal.App.4th 285, 297.) In the Hernandez case, the trial court granted defendant’s request for unilateral early disclosure of plaintiffs’ expert witnesses. The appellate court found that this discovery order conflicted with the statute that requires mutual and simultaneous expert disclosure and was therefore “not a proper exercise of the court’s power to manage complex litigation.” (Id. at 299-300.) The Court in Hernandez noted that the order at issue was distinguishable from the order upheld in Cottle v. Superior Court (1992) 3 Cal.App.4th 1367, in that the plaintiffs in Cottle did not object to the unilateral exchange of experts. Additionally, the order in Cottle came on the eve of trial after completion of discovery. In California, although a court has broad discretion to make case-management orders, rest assured that such orders will be invalidated if they directly conflict with an existing statute. • Overcoming dispositive motions In complex litigation, it is essential to have a plan concerning the handling of dispositive motions. The most common motions filed by the defense in multi-party litigation involve the statute of limitations and medical causation. With respect to statute of limitations on the issue of delayed discovery, plaintiffs have the burden of proof. As mentioned above, it might be beneficial to have a motion for summary judgment based on the statute of limitations heard earlier on in the case so as to avoid expensive expert medical causation analysis on cases that will not make the cut under
Michael Zea the statute of limitations. With respect to motions regarding medical causation, it is plaintiffs’ burden to prove through the use of expert testimony that, to a reasonable degree of medical probability, it is more likely than not that defendants’ conduct was a substantial contributing factor in plaintiffs’ injury. (Bockrath v. Aldrich Chemical Co., Inc., supra, 21 Cal.4th at pp. 79-80; Rutherford v. Owens Illinois, Inc., supra, 16 Cal.4th at pp. 982983.) Because defendants will always make dispositive motions on medical causation, it is helpful to work with your experts to develop detailed expert reports that can be produced in defense of any causation motion. • Mediation The parties should jointly select a respected mediator early on in the case and work with that mediator throughout the litigation with the goal of resolving the case at the earliest possible point after sufficient information is available to assess the value of the case given the issues of liability, medical causation, and damages. It is important to select a mediator who is willing to learn about the complicated issues presented. Masstort litigation is hugely expensive and mediation and settlement is mutually beneficial to both sides in terms of limiting risks and expense.
There is a steep learning curve to handling a multi-plaintiff, mass-tort case. Plaintiffs’ counsel should approach the case with a clear plan and sound knowledge of their clients’ cases. In terms of clients/plaintiffs, it is best to go with quality over quantity. Be proud of the case and its plaintiffs, and avoid the defense strategy of putting plaintiffs’ counsel on the defensive in terms of liability and damages claims being made on behalf of the client. Ann Howitt is a California lawyer with 19 years of experience in civil litigation matters. She is currently an associate at the law firm, Engstrom, Lipscomb & Lack in Century City. For the past 14 years, she has worked primarily on complex multi-plaintiff mass tort litigation. She received her law degree from Southwestern University School of Law and her undergraduate degree from Bennington College.
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The Advocate Magazine — 95
Linda S. Klibanow
Post-Concepcion developments in employment litigation – a cautionary tale Employment law has been impacted by this consumer-arbitration decision. It’s a mess out there
Still raging on is the jurisprudential firestorm ignited by the United States Supreme Court’s April 2011 decision in AT&T Mobility, Inc. v. Concepcion (2011) _ U.S.__ ,131 S.Ct. 1740. In this terse, 5-4 decision the Court reversed the Ninth Circuit’s holding that, pursuant to the California Supreme Court’s decision in Discover Bank v. Superior Court (2005) 36 Cal.4th 148, the prohibition of class actions in AT&T Mobility’s arbitration agreement with consumers was unenforceable as unconscionable, because AT&T had not shown that bilateral arbitration adequately substituted for the deterrent effects of class actions. The Ninth Circuit had further found that the Discover Bank rule was not preempted by the Federal Arbitration Act (“FAA”) inasmuch as it was simply a refinement of the unconscionability analysis applicable to contracts generally in California. In Concepcion, however, the Supreme Court broadly held that “States cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons.” Although Concepcion arose in the consumer, not the employment, context, the employment defense bar immediately celebrated Concepcion as dramatically limiting employer exposure to “big ticket” employment litigation and likely imperiling not only the Discover Bank rule, but also the holding in Gentry v. Superior Court (2007) 42 Cal.4th 443, concerning enforceability of class-action waivers in employment cases involving nonwaivable statutory rights, as well as the watershed Armendariz due-process standards for enforceability of mandatory pre-dispute employment arbitration of statutory or public-policy rights. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83.) Adding to the conflagration, in January 2012 the phoenix-like National Labor Relations Board (“NLRB”) in D. R. Horton, Inc. (2012) 357 NLRB 184 [currently pending before the Fifth Circuit] held that an employer’s requirement that,
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as a condition of employment, employees sign arbitration agreements prohibiting joint, class or collective actions, in any forum (arbitral or judicial), regarding their terms and conditions of employment, is a violation of an employee’s right to protected “concerted activity” pursuant to Section 7 of the National Labor Relations Act (“NLRA”). (See also, Advanced Services, Inc., 2012 NLRB LEXIS 399) [ALJ found that mandatory arbitration procedures which prohibited class claims have a “chilling effect on employees’ Section 7 rights” and violate Section 8(a)(1) even in the absence of enforcement].)
The broad application of Concepcion
In CompuCredit Corp v Greenwood (2012) 132 S.Ct. 665 and Coneff v. AT&T Corp (9th Cir. 2012) 673 F.3d 1155, the courts broadly construed Concepcion to render competing state or federal public-policy concerns (including the NLRA policy protecting “concerted activity”) immaterial to Section 2 preemption. Guided by the CompuCredit and Coneff decisions, in Jasso v. Money Mart Express, Inc. (N.D. Cal. 2012) 2012 U.S. Dist. LEXIS 52538, which involved a putative class for Labor Code violations, held that Concepcion abrogated the Discover Bank rule concerning classaction waivers and rejected plaintiff ’s contention that Gentry governed employment cases involving unwaivable statutory rights where plaintiffs can demonstrate a class waiver would function as an exculpatory clause. The Jasso court did not discuss: (i) the differing employment context; (ii) the Due Process Protocols of the American Arbitration Association or the National Academy of Arbitrators, or; (iii) any Armendariz concerns. Similarly, in Morvant v. P.F. Chang’s China Bistro, Inc. (N.D. Cal. 2012) 2012 U.S. Dist. LEXIS 63985, the court rejected contentions that Concepcion left Gentry undisturbed and that courts must view class waivers in employment contracts with “particular scrutiny.” Noting concurrence
with other district courts, the court held it could “find no principled basis to distinguish between Discover Bank and Gentry.” Noting Coneff ’s broad reading of Concepcion to the effect that “policy concerns cannot undermine the FAA,” as well as the Jasso decision, the Morvant court concluded it could not “do other than read the Concepcion decision the same way” and held that this analysis applied to NLRA policy concerns. The court in Morvant directed arbitration of plaintiff ’s claims brought under California’s Private Attorney General Act (“PAGA”) (Lab.Code, §§ 2698 et seq.), having concluded it must enforce the parties’ agreement even were this to prevent plaintiffs from acting as private attorneys general. (To similar effect, see Grabowski v. C. H. Robinson Co. (S.D. Cal. 2011) 817 F.Supp.2d 1159.) Rejecting citations of post-Concepcion cases in which courts invalidated, on the basis of unconscionability, arbitration agreements containing PAGA waivers, the court held that such authorities relied on the Broughton-Cruz rule prohibiting arbitration of claims for public injunctive relief. (Broughton v. Cigna Healthplans of California (1999) 21 Cal.4th 1066; Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303.) The BroughtonCruz rule was also strongly repudiated by the Ninth Circuit in Kilgore v. KeyBank, National Assoc. (9th Cir. 2012) 673 F.3d 947, where the court held that “the Broughton-Cruz rule may be based on the sound public policy judgment of the California legislature, [but] the court is not free to ignore Concepcion’s holding that state public policy cannot trump the FAA when that policy prohibits the arbitration of a particular type of claim.” In September 2012, the court granted a petition for en banc review in Kilgore. (See also Coleman v. Jenny Craig (S.D. Cal. 2012) 2012 U.S. Dist. LEXIS 70789 [arbitral class action waiver deemed non-violative of PAGA and NLRA objection rejected without discussion; waiver enforced];
Valle v. Lowe’s HIW, Inc., (N.D. Cal. 2011) 2011 U.S. Dist. LEXIS 93639 [court rejected plaintiffs’ contention that arbitrator exceeded her authority by manifestly disregarding controlling California authority in enforcing a private agreement that waived their rights under PAGA, commenting that “The major flaw …is that the governing law in this area is neither well defined nor explicit.”])
The narrow application of Concepcion
Other courts in California have taken the opposite approach. In Brown v. Ralph’s Grocery Co. (2011) 197 Cal.App.4th 489, cert. den. (2012) 132 S.Ct. 1910, where plaintiff sought to pursue class and PAGA claims, the appellate court held that, because plaintiff failed to meet her evidentiary burden to show obstacles to vindication of class members’ rights to overtime pay through individual arbitration, the trial court erred in invalidating the class waiver. The appellate court concluded, however, that Concepcion did not invalidate precedent finding PAGA waivers unenforceable. The appellate court in Brown held that a PAGA action is fundamentally a lawenforcement action and, therefore, it did not frustrate FAA purposes, which govern private arbitrations. And in Urbino v. Orkin Services of California (C.D. Cal. 2011) 2011 U.S. Dist. LEXIS 114746, notwithstanding Concepcion, the court denied enforcement of an arbitration agreement containing a class-action waiver on the ground that the PAGA waiver contradicted the fundamental purpose of a representative enforcement action and was unconscionable. (To similar effect, see Plows v. Rockwell Collins, Inc. (C. D. Cal. 2011) 812 F.Supp.2d 1063.)
Dodging the issue
Numerous California courts have dodged the question of whether Concepcion overrules Gentry by finding that the plaintiff failed to establish the criteria required by Gentry. In Kinecta Alternative Financial Solutions, Inc. v. Superior Court (2012) 205 Cal.App.4th 506, the court held that Gentry appears to remain “binding law” but, nevertheless, ruled that the trial court erred in denying dismissal of wage/hour class allegations where the arbitration agreement was enforceable and did not authorize class
arbitration because plaintiff failed to make the requisite Gentry showing. In Nelsen v. Legacy Partners Residential, Inc. (2012) 207 Cal.App.4th 1115, a decision on a putative class action where the arbitration agreement precluded class arbitration, the court held that plaintiff failed to establish that compelling her to individual arbitration violated state or federal law or public policy. While noting that “the continuing vitality of Gentry has been called into “serious question” by Concepcion, the court in Nelsen determined it need not decide whether Concepcion abrogates the rule in Gentry since the plaintiff failed, as required under Gentry, to adduce factual evidence supporting her position that classwide arbitration was required. The Nelsen court also held that it need not determine whether or not the FAA trumped the NLRA as argued by the NLRB in D.R. Horton. In this regard the court noted that: (i) decisional law under the NLRA excludes “managerial employees” from coverage; (ii) plaintiff ’s job title was “property manager ... which suggests she would not even be covered by the NLRA” (notwithstanding her complaint allegation that, as a matter of statute, her duties did not support her employer’s treating her as an exempt employee not entitled to overtime) and; (iii) there was no record evidence as to the nature of plaintiff ’s job duties, therefore, “we have no basis to conclude the NLRA or Horton have any relevance to the arbitration agreement before this court.” In Truly Nolen of America v. Superior Court (2012) 208 Cal.App.4th 487, following extensive review of California due process and federal FAA preemption precedent, the court concluded that, despite Concepcion’s “implicit disapproval” of the reasoning in Gentry, it could “not disregard the California Supreme Court’s decision without specific guidance from our high court.” The court also found that the NLRB’s holding in Horton, that the NLRA expressed a congressional command overriding the FAA, was “unpersuasive.” In Reyes v. Liberman Broadcasting, Inc. (2012) 2012 Cal.App. LEXIS 945, the court noted conflict between Iskanian v. CLS Transportation of Los Angeles LLC (2012) 206 Cal.App.4th 949, review granted 2012 Cal. LEXIS 8925 and several district court
decisions, on the one hand, and Brown, on the other, and agreeing with the decisions in Kinecta and Nelsen, found that plaintiff did not meet his burden under Gentry, and thus declined to rule as to whether Gentry remains good law following Concepcion. And see the recent district court decision in Davis v. Nordstrom, Inc. (N.D. Cal.) 2012 U.S. Dist. LEXIS 139563 in which the court, while denying the motion to compel arbitration on the ground the employer failed to prove the existence of a valid arbitration agreement, reviewed ongoing, unsettled State and Federal precedent as to Gentry and Horton challenges to Concepcion in the employment context.
The California Supreme Court may soon decide
The California Supreme Court may soon be expressing its view in two different cases as to limitations, if any, on Concepcion in the employment context. In Sonic-Calabasas, Inc. v. Moreno (2011) 51 Cal.4th 659, decided before Concepcion, the Court ruled that an employee was entitled to a “Berman hearing” before arbitrating and that the Berman hearing procedures were not preempted by the FAA. Upon the United States Supreme Court’s vacatur and remand, the California Supreme Court ordered supplemental briefing regarding Concepcion’s significance to the California Court’s holdings that: (i) a mandatory arbitration agreement could not deprive employee of right to invoke administrative Berman hearing procedures; (ii) the right to invoke the Berman process was unwaivable, and; (iii) invalidation of Berman waivers did not trigger federal preemption because it did not disfavor arbitration. As noted, the California Supreme Court also granted review in Iskanian, in which the appellate court, while concurring that “private attorney general laws [PAGA] which serve public benefit may be severely undercut by application of the FAA,” stated that it “respectfully disagreed” with Brown and concluded that “the United States Supreme Court has spoken on the issue and we are required to follow its binding authority.” That court also found that CompuCredit Corp. precluded “exceptional” treatment of NLRA policy-related concerns. JANUARY 2013
The Advocate Magazine — 97
Tale — continued from Previous Page
The Fair Labor Standards Act
There is also ongoing debate among the courts as to whether Concepcion applies to cases arising under the Fair Labor Standards Act (“FLSA”). Several district courts in other states have held that classaction waivers in mandatory employment arbitration agreements cannot be used to bar FLSA collective actions. In Owen v. Bristol Care, Inc. (W.D. Mo. 2012) 2012 U.S. Dist. LEXIS 33671, where plaintiff brought an FLSA collective action, the court held: “…[I]n the employment context, Concepcion is not controlling … [W]aivers of class arbitration are not permissible. D. R. Horton, Inc. [supra].” The Owen court held that denying plaintiff her substantive right to bring a class or collective action by compelling the action to arbitration violated the “plain language of the FLSA.” Similarly, in Herrington v. Waterstone Mortgage Corp. (W.D. Wis. 2012) 2012 U.S. Dist. LEXIS 36220, another decision where plaintiff also brought a collective FLSA action, the court found the arbitration agreement violated the NLRA because it prohibited collective action. Severing the prohibition, the court ordered arbitration, citing from D. R. Horton: “[T]he right to engage in collective action – including collective legal action – is the core substantive right protected by the NLRA and … the foundation on which the Act and Federal labor policy rest…Rule 23 may be a procedural rule, but the Section 7 right to act concertedly by invoking Rule 23…or other legal procedures is not.” The Herrington court held that Kaiser Steel Corp. v. Mullins (1982) 455 U.S. 72, grants a federal court authority to invalidate a contractual provision that violates the NLRA. See also, Raniere v. Citigroup Inc. (S.D. N.Y. 2011) 827 F.Supp.2d 294, where the court invoked federal statutory rights analyses in prior United States Supreme Court cases and rejected the assertion that Concepcion applies to FLSA cases, noting that FLSA collective actions are “a unique animal,” and; to similar effect, Sutherland v. Ernst & Young LLP (S.D. N.Y. 2012) 2012 U.S. Dist. LEXIS 31512. Contrastingly, in Delock v. Securitas Security Services USA, Inc. (E.D. Ark. 2012) 2012 U.S. Dist. LEXIS 107117, citing CompuCredit and its instruction that “there
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must be a ‘contrary congressional command’ to override the FAA’s mandate,” the court rejected FLSA class action and NLRA concerted action challenges to the FAA, noting precedent that the FLSA must bend to the FAA and reasoning, in the noted absence of argument as to the NLRA’s legislative history and refuting the NLRB’s assessment as to the limited impact of its decision, that “Horton’s result…would be more collective litigation and less arbitration…[a] result…at odds with the ‘emphatic policy in favor of arbitral dispute resolution.’ [citation omitted].” The court allowed an interlocutory appeal noting the issue to be a “pure legal question of statutory construction” as to how the conflict between the NLRA and the FAA raised by Horton and by the parties’ arbitration agreement should be resolved and further noting, since Horton, “plenty of district court cases reaching different conclusions and sharply conflicting,” as to the enforceability of arbitration agreements like the one between Delock and Securitas. Similarly, in Tenet Healthsystem Philadelphia, Inc. v. Rooney (E.D. Pa. 2012) 2012 U.S. Dist. LEXIS 116280, the court rejected respondent Rooney’s “manifest disregard of applicable law” challenge to an arbitral order which interpreted an employer’s “Fair Treatment Process” to require individual arbitration, thereby allegedly violating the NLRA. (See also, De Oliveira v. Citicorp. (M.D. Fla. 2012) 2012 U.S. Dist. LEXIS 69573, holding that Eleventh Circuit precedent upholds arbitral FLSA collective action waivers, and Quilloin v. Tenet Healthsystem Philadelphia (3rd Cir. 2012) 673 F3d 221, holding that the FAA preempts Pennsylvania law deeming class action waivers unconscionable.) And at least one court has held that a Title VII pattern or practice claim can only be brought in context of a class action. (Chen-Oster v. Goldman Sachs & Co, (S.D. N.Y. 2011) 785 F.Supp.2d 394.)
More compelling than the natural inclination to “keep a scorecard” is to acknowledge the multitudinous decisions in which courts reluctantly adhere to what they perceive as the binding or inevitably dispositive nature of the Concepcion holding,
without analysis of the underlying legal issues of individual due process of law and respect for fundamental federalist principles. The hermeneutics of the Citizens United era majority decision in Concepcion have, nevertheless, garnered reams of robust discussion in academic legal journals. Evolving jurisprudence may impinge upon State government enforcement of labor and employment law and regulation, as well as survival of the Due Process Protocol and the principled arbitrator’s ability to serve. The National Academy of Arbitators Policy Statement on Employment Arbitration provides that “if the arbitration plan under which a member is appointed lacks fundamental due process, the arbitrator should insist upon an agreed correction as a condition of service and, failing agreement, should decline the appointment or withdraw from any further participation.” California employment law practitioners nervously await their Supreme Court’s revisiting of such questions as whether the FAA requires States to enforce an arbitration agreement where such enforcement would deprive plaintiff employees of the opportunity to vindicate their statutory rights, that is, whether it will adhere to longstanding arbitral precedent that mandatory arbitration cannot serve as vehicle for the deprivation of substantive rights and that the FAA, through its Section 2 “savings clause,” permits States to override party agreements that would deprive arbitration of its basic fairness.
Linda S. Klibanow (B.A. Harvard College, J.D. Yale Law School) is a labor and employment law neutral in Pasadena, California. For over 30 years she exclusively practiced in the field of labor and employment law representing all sides of these disputes. For the past 15 years she has specialized in labor and employment arbitration, mediation, and independent factfinding. She is a member of the California Academy of Distinguished Neutrals, an arbitrator and mediator with the AAA, a labor arbitrator with FMCS and CSMCS, an EEOC mediator and also affiliated with ARC, PMG, and IVAMS and a Masters in International Affairs candidate with Tufts University Fletcher School of Law and Diplomacy.
Offshore isn’t out-of-reach
Collecting your award from an offshore defendant U.S. consumers face a tidal wave of potentially dangerous products manufactured offshore. Offshore manufacturers peddle defective scooters, asbestos,1 shoddy drywall2 food and candy products that maim and sicken, if not kill, Americans.3 The judgments in these products liability cases routinely hurdle past the $10 million mark. In attempting to domesticate the judgment in the offshore domicile of the defendant, the American creditor often confronts local law that is inhospitable to any enforcement.4 Offshore immunity to enforcement replaces insurance, whose usual purpose is to protect the assets of the insured. If the offshore local law immunizes the assets from enforcement, no purpose is served by spending millions on insurance or quality and safety controls, when the assets are truly judgment proof. American trial counsel is at a quandary. Chasing the offshore debtor is expensive, difficult and complex.5 At worst, enforcement overseas of U.S. judgments can be completely inaccessible.6
Is there a thread to unwind?
Most likely, the defendant manufacturer continues to peddle its product line in the U.S. If so, the judgment creditor can collect the judgment through the continuous stream of accounts receivable accruing to the manufacturer or other potential cash repositories.7 Whether the manufacturer continues to sell, or have some type of business transaction in the U.S., should be a significant consideration for the plaintiff attorney in deciding whether or not to accept the case in the first place. Stated succinctly, if the manufacturer is continuing to sell in the U.S. market, U.S. obligors are obligated to make payment, and therefore subject to garnishment and potential collection.
If the manufacturer is continuing to hire lawyers and pay settlements to resolve other claims, monies held by the lawyers or the revenue stream in favor of the manufacturer is subject to assignment orders or garnishments. If the manufacturer is paid through U.S. financial institutions or foreign institutions with a U.S. presence, the funds might be accessible to enforcement. The funds paid to other attorneys, and the funds in the hand of counsel to finance settlements are potential assets and points of great vulnerability.
Knowledge is power
Post-judgment discovery offers the judgment creditor the power of a subpoena or examination order, among other remedies.8 If however, the judgment debtor defaulted in responding to the lawsuit, the judgment debtor is not going to answer questions revealing assets and local customers.9 Common sense dictates continuous sales by the debtor for the simple reason that the debtor is reaping enormous profits without the burden of liability insurance and other expenses mandated by U.S. and local law.10 These product sales generate accounts receivable subject to enforcement under the money judgment due the judgment creditors, in which the obligors are subject to discovery. Finding information that discloses the customers is the first step. The judgment debtor ships its product line into the U.S. market via an oceangoing carrier (“shipping lines”), truck, or train.11 The shipping companies issue bills of lading subject to Division 7 of the Uniform Commercial Code.12 The bills of lading evidence the consignor13 who is the person placing products in the possession of the shipper, and the consignee14 who is the person receiving the product. Absent
the unusual or transaction through layers of parties, the consignor is the seller, exporter, distributor or manufacturer of the goods, and the consignee is the buyer (or recipient) of the goods and obligated to make payment.15 With the identity of the consignees at hand, the judgment creditor can levy on the consignees, or compel their appearance in court to testify as to any outstanding obligation which might be due. Shippers are subject to subpoena and will produce the bills of lading. Aside from consumer-direct sales through the manufacturer’s Web site, the manufacturer’s primary customers might be importers, wholesalers or distributors who specialize in the type of products. Trade magazines (both paper and online) might reveal wholesale buyers of the product.
Seizing the accounts receivable or other liquid assets
With the garnishee in its sights, the judgment creditor levies upon the obligation (payment for the product) due the judgment debtor (the consignor), and owed by its customer, now called the garnishee under a garnishment (the consignee). Be aware, however, that the consignor (the manufacturer) and consignee (the buyer) might connive to evade the levy by payment through alternative means, refusing to respond to the levy, or engaging in a complete fraud.16 This is a known risk.17 If the manufacturer defends lawsuits, payments due the attorneys and settlements are subject to enforcement through a series of assignment order, levies and restraints. This is a time-consuming, tedious and detailed process of tying up the manufacturers’ entire cash flow and reaching downstream any funds that flow
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Offshore â€” continued from Previous Page
to the U.S. based attorneys for their fees and funds available to other U.S. claimants for settlements.
Supplemental remedies available
Aside from a garnishment, the creditor can seek an assignment order authorized by the California Code of Civil Procedure section 708.510(a).18 These assignment orders reach the accounts due the judgment debtor and redirect them to the judgment creditor. Assignment orders reach out of state, which was the outcome in UMG Records v. BCD Music Group, Inc., 2009 WL 2213678 (C.D.Cal.). In that case, the court ordered a broad-based assignment against record wholesalers and distributors purchasing product from the judgment debtor. In that case, BCD (the
judgment debtor and obligee) was located in Texas and the obligors were nationwide. (See also, Global Money Management v. McDonnold, 2009 WL 3352574 (S.D.Cal.).)
Payment through U.S. financial institutions
Routinely offshore manufacturers accept American Express as payment on the grounds that Amex provides valuable points to the card holder, who is usually the principal of the corporate buyer. Large purchases in the $100,000 range produce a potpourri of points allowing the corporate principal to purchase airline tickets for worldwide travel free of charge and, given the informality of the transaction, free of taxes.19 The manufacturer
Trust your case to a Certified Appellate Specialist.
Products liability litigation accrues enormous expense, effort and risk, and cases can span over years. Service through the Hague Convention can cost thousands. The prospect of an actual recovery is paramount in gauging whether that expense and personal investment is a worthwhile investment. Nobody likes to tilt at windmills. In evaluating whether to accept the case, or pass, the criteria is whether the debtor continues to do business, directly or indirectly, in the U.S. If the debtor sells products in the U.S., does business with U.S. lawyers, pays settlements to other U.S. claimants, or in some way has a presence which creates an obligation due the obligor, the underlying claimant has some prospect of recovery and may render the accrual of the expense, effort and time on behalf of the client worthwhile. As the senior attorney of Cook Collection Attorneys PLC, located in San Francisco, David J. Cook has specialized in the enforcement of judgments and collection of debts for the last 36 years. David Cook represents Fred Goldman in his historic quest to recover from OJ Simpson. Contact him at Cook@SqueezeBloodFromTurnip.com.
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might accept PayPal, Google Wallet, or other forms of nontraditional payment vehicles. Nearly all of the financial institutions are subject to levy upon their agent for service of process which is usually CT Corporate Systems in Los Angeles or CSC in Sacramento. Of course, the majority of payments are still done by way of letters of credit and wire transfers.
For the entire article including endnotes, please see www.theadvocatemagazine.com or the Advocate archives at www.caala.org.
From the Editor Jeffrey Isaac Ehrlich Editor-in-Chief
Appellate Reports and Cases in Brief
Recent cases of interest to members of the plaintiffs’ bar Sargon Enterprises, Inc. v. Univ. of Southern Calif.
(2012) __ Cal.4th __ (Cal. Supreme) Who needs to know about this case: Lawyers who seek to present expert testimony to courts; lawyers making or defending claims for lost profits. Why it’s important: The opinion seeks to clarify the trial court’s role in admitting and excluding expert testimony, and to explain the type of expert testimony that is too speculative to be admitted in evidence. While not fully endorsing the federal Daubert standard for expert testimony, it makes clear that California trial courts have a duty to perform a “gatekeeper” function to exclude speculative expert testimony, and that their rulings in this regard are reviewed for abuse of discretion. The Court held that the trial court’s ruling excluding plaintiff ’s expert’s testimony about the lost profits that the plaintiff might have recovered if the defendant had not breached its contract with the plaintiff was not an abuse of discretion. Synopsis: Sargon Enterprises, Inc. (“Sargon”) invented a new dental implant, which could be implanted immediately following a tooth extraction and which contained both the implant and full restoration. At the time, the standard implant required multiple steps, including the surgical placement in a healed extraction socket, followed by a second surgery to inspect whether the implant had properly integrated with the bone, and finally the placement of a crown on the implant. Sargon’s implant was a one-step implant: it expanded immediately into the bone socket with an
expanding screw, and could be “loaded” with a crown the same day. Sargon contracted with USC for the school’s dentistry school to conduct a five-year clinical study of the implant. In 1999 Sargon sued USC for breach of contract. USC cross-claimed for breach of contract. Sargon prevailed at trial and the jury awarded $433,000 in compensatory damages. But the trial court had excluded all evidence of lost profits, and based on this ruling the Court of Appeal reversed. On remand the contract claim was retried, and USC moved to exclude the testimony of Sargon’s damages expert, James Skorheim, which purported to determine the lost profits Sargon sustained as a result of the breach by USC. The trial court held an eight-day evidentiary hearing. Following that, the trial court issued a 33-page ruling, ultimately concluding that Skorheim’s conclusions were too speculative and precluding him from offering them. Skorheim, an accountant, was prepared to offer an opinion that if USC had not breached the contract, the Sargon implant would have been a runaway hit in the dental-implant industry, and would have catapulted Sargon into the top six dental-implant makers in the world within the next decade. He calculated that the projected profits that Sargon lost ranged from $220 million to $1.1 billion, depending on how innovative the jury determined Sargon’s implant was. The trial court ruled that Skorheim’s market-share opinion was not based on any historical financial results or comparisons to similar companies, and was therefore not based on the type of matter an expert could rely on. In essence, Skorheim
assumed his conclusion and worked backward from there. He started his analysis with a comparison to industry leaders, who were all multi-million or multi-billion dollar international corporations, or their subsidiaries. The only thing that those companies had in common with Sargon was that they all sold dental implants. There was no similarity in terms of size, history, product line, sales force, access to financing, etc. In a 2-1 unpublished decision, the Court of Appeal reversed, finding that, at least some aspects of Skorheim’s testimony were not too speculative to go to the jury. The Supreme Court granted review, and in unanimous opinion authored by Justice Chin, reversed. The Supreme Court explained that, “This case stands at the intersection of two legal principles: (1) Expert testimony must not be speculative, and (2) lost profit damages must not be speculative.” It discussed each, in turn. Expert testimony. The Court explained that, “[u]nder California law, trial courts have a substantial ‘gatekeeping’ responsibility.” Section 801 of the Evidence Code requires expert opinion to be based on matter that is “of a type” that reasonably may be relied on by an expert in forming an opinion on the subject of his or her testimony. The Court cited with approval a statement from Lockheed Litigation Cases (2004) 115 Cal.App.4th 558, 563, construing this limitation in section 801 to mean “that the matter relied on must provide a reasonable basis for the particular opinion offered, and that an expert opinion based on speculation or conjecture is inadmissible.” The Court concluded, “Thus, under Evidence Code section 801, the trial court acts as a gatekeeper
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to exclude speculative or irrelevant expert opinion. As we recently explained, ‘[T]he expert‘s opinion may not be based on assumptions of fact without evidentiary support or on speculative or conjectural factors . . . . Exclusion of expert opinions that rest on guess, surmise or conjecture [citation] is an inherent corollary to the foundational predicate for admission of the expert testimony: will the testimony assist the trier of fact to evaluate the issues it must decide?’” The Court added that this limitation is also inherent in section 802 of the Evidence Code, which says that an expert offering an opinion may state the reasons for the opinion, unless “he is precluded by law from using such reasons or matter as a basis for his opinion.” The statute also gives trial courts discretion to allow an expert to be examined concerning the matter on which his or her opinion is based before the witness is permitted to testify. Hence, this statute governs judicial review of the “reasons” for an expert opinion, and authorizes courts to promulgate rules that restrict an expert’s “reasons.” Accordingly, “under Evidence Code sections 801, subdivision (b), and 802, the trial court acts as a gatekeeper to exclude expert opinion testimony that is (1) based on matter of a type on which an expert may not reasonably rely, (2) based on reasons unsupported by the material on which the expert relies, or (3) speculative. Other provisions of law, including decisional law, may also provide reasons for excluding expert opinion testimony.” The Court noted, however, that trial courts must also be “cautious” in excluding expert testimony. “The trial court‘s gatekeeping role does not involve choosing between competing expert opinions.” Citing Daubert, the Court explained, “The high court warned that the gatekeeper‘s focus ― must be solely on principles and methodology, not on the conclusions that they generate.” The Court noted in a footnote, that the “general acceptance” test for admissibility of expert testimony based on new scientific techniques articulated in People v. Kelly
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(1976) 17 Cal.3d 24, still applies in California despite its rejection in Daubert. The Court further cautioned that, “The trial court‘s preliminary determination whether the expert opinion is founded on sound logic is not a decision on its persuasiveness. The court must not weigh an opinion’s probative value or substitute its own opinion for the expert’s opinion. Rather, the court must simply determine whether the matter relied on can provide a reasonable basis for the opinion or whether that opinion is based on a leap of logic or conjecture.” Appellate review of the trial court’s decision is based on the abuse-of-discretion standard. Lost Profits. The Court surveyed the rules governing recovery of lost profits, which make their recovery available, provided that the evidence makes “reasonably certain” their occurrence and extent. Courts are generally distinguished between established and unestablished businesses in lost-profit cases, and have usually found that lost profits are too speculative for an unestablished business to recover, because it cannot point to historical data to support its claim. The Court cited with approval a case explaining that, “Where the fact of damages is certain, the amount of damages need not be calculated with absolute certainty.] The law requires only that some reasonable basis of computation of damages be used, and the damages may be computed even if the result reached is an approximation. This is especially true where . . . it is the wrongful acts of the defendant that have created the difficulty in proving the amount of loss of profits or where it is the wrongful acts of the defendant that have caused the other party to not realize a profit to which that party is entitled.” But it also cited with approval a recent case reversing a lostprofit award based on the breach of a real-property sales contract, finding that an appraiser’s testimony of what the profits would have been if the property had been developed according to the intended plans was too speculative and uncertain.
The Court cautioned that the lostprofits inquiry is always “speculative to some degree” and that “inevitably, there will always be an element of uncertainty.” “Courts must not eviscerate the possibility of recovering lost profits by too broadly defining what is too speculative. A reasonable certainty only is required, not absolute certainty.” In the context of the record before it, the Court concluded that the trial court had not abused its discretion in excluding Skorheim’s testimony. The Court concluded its opinion with a series of rhetorical questions, such as whether an expert could predict that a particular football team would have won the Super Bowl in a given year if a given play had more quarterback sacks, or was more adept at forcing turnovers. Or whether a first-time novelist could sue a publisher for breach of contract and offer an expert to testify that if the book had been published it would have been a bestseller and “spawned a megahit movie with several blockbuster sequels.” The Court concluded this section with the observation, “Because it is inherently difficult to accurately predict the future or to accurately reconstruct a counterfactual past, it is appropriate that trial courts vigilantly exercise their gatekeeping function when deciding whether to admit testimony that purports to prove such claims.”
Jeffrey Isaac Ehrlich is the principal of the Ehrlich Law Firm, with offices in Encino and Claremont, California. He is a cum laude graduate of the Harvard Law School, a certified appellate specialist by the California Board of Legal Specialization, and a member of the CAALA Board of Governors. His practice emphasizes appellate support for the Southern California trial bar and insurance bad-faith litigation. He is the editor-in-chief of the CAALA Advocate magazine and a contributing author of the Rutter Group’s Insurance Litigation practice guide.
From the President Scott Cooper
Orange County Trial Lawyers Association
OCTLA turns 50
Come celebrate at the gala Installation and Judicial Awards Dinner on January 26
Not many people look forward to their 50th birthday. Most would rather just forget about it and hope if they don’t acknowledge it, it won’t actually happen. Well, the Orange County Trial Lawyers Association turns 50 this year, and we couldn’t be more pleased. We plan not only to acknowledge this milestone, but to celebrate it as an opportunity to reflect on our past accomplishments and plan for our next 50 years. To provide some context, when OCTLA was founded in 1963, annual income averaged $5,807, and the average house cost just $12,650. The IBM Selectric typewriter dominated the market, and most offices still relied on carbon paper to make duplicate documents. On the pop culture front, the Beatles released their debut album (Please Please Me), General Hospital debuted on ABC, and Lawrence of Arabia won best picture at the 35th Academy Awards. Like the Beatles and Lawrence of Arabia – but not so much General Hospital or carbon paper – OCTLA has stood the test of time. Fifty years after its formation, due to the commitment and hard work of scores of dedicated people, OCTLA stands as one of the premier trial lawyer organizations in the state and remains dedicated to improving the quality of trial practice in Orange County through education, mentoring, networking, and advocating for the civil justice system. I am humbled and honored to take the reins of this organization as it enters its second half-century. In preparing for this year, I talked about OCTLA with many long-time members. When asked what OCTLA has meant to them personally, the answers almost invariably come back to mentorship and camaraderie. They described
how young lawyers could come to meetings and learn first-hand from the best trial lawyers in the county. They also remember how those same high-profile lawyers wouldn’t hesitate to sit down and just talk, one-on-one, or offer up resources to help the newcomers. For the solo and small-firm practitioners that constitute the vast majority of our membership, that’s like having the intellectual resources of a large law firm – without the billable hours requirement. In 2013, OCTLA will honor that history and build on that tradition. The building has already begun. The Board elections, which took place November 29th, resulted in the election of three new Board members. The talent, enthusiasm, and fresh ideas of these new members will add to the experience and dedication of the incumbent members, making this one of the most dynamic and productive Boards we have had. I look forward to working with them to make this a year worthy of the 50th Anniversary. We are already hard at work planning the year’s events, including the monthly MCLE dinner meetings, which allow lawyers and judges to gather together, “break bread” and learn from one another. As in past years, OCTLA’s monthly dinner meetings will take place on the fourth Thursday of every month (except August and December) at the Tustin Ranch Golf Club. The educational programs for the first three meetings are already set. January 24 will feature the traditional “What’s New in Tort and Trial,” a discussion of the most important cases and legislation from 2012. On February 28, we present “Medicine in the Law,” which will provide a simple approach to
understanding your client’s injuries and the causes of those injuries. The March 28 program, entitled “So You Want to Sue the Government,” will cover the insand-outs of pursuing government claims and litigation, including statute of limitations and burdens of proof.
Installation and awards dinner January 26
This milestone also gives us an opportunity to celebrate, which we’ll do at our 50th Anniversary Gala Installation and Judicial Awards dinner. The event is at the Island Hotel in Newport Beach on January 26. Through videos, vintage photos and memorabilia spanning the last 50 years, we will look back at the history of the organization, which in many ways mirrors the history of trial lawyers throughout the state. We will honor our founders and past presidents who, along with the many dedicated board members and volunteers, have built OCTLA into what it is today. Of course, we will also look forward to OCTLA’s future and install our new Board of Directors. Outgoing OCTLA President Doug Schroeder will confer the Judicial Excellence Award on the Hon. Franz Miller, Judge of the Orange County Superior Court. This will be a night not to be missed. Please join us for this 50th Anniversary Gala on the evening of January 26. Registration and sponsorship opportunities are available at www.OCTLA.org, or by calling 949-916-9577.
The Advocate Magazine — 103
From the Executive Director Stuart Zanville
Consumer Attorneys Association of Los Angeles
2012 Election aftermath: The good, the bad and the ugly Statewide wins will be offset by Court budget woes
I am writing this column two months after the November 6 election and it has taken this long to fully understand how the election results will impact consumers and CAALA’s 2,300 trial lawyer members. I never thought I would mention Clint Eastwood in one of my columns, but the best way to describe the election results is to plagiarize the title of his 1967 spaghetti western:
The election results were good, bad and ugly
Actually, the national and statewide results were mostly good, and just a little bit bad. Unfortunately, however, our recent political paralysis in Sacramento has led to dramatic changes for L.A. trial lawyers that can only be characterized as ugly. The good news started at the top of the ticket where President Barack Obama convincingly bested Mitt Romney and Democrats solidified their control of the U.S. Senate. The bad news is that conservative Republicans retained control of the House of Representatives. In California’s Congressional races, the news was better, with four Democrats (Ami Bera, Julia Brownley, Raul Ruiz and Lois Capps) defeating prominent conservative Republicans Dan Lungren, Tony Strickland, Mary Bono and Abel Maldonado.
The state results were good
Our state association Consumer Attorneys of California, worked tirelessly with legislative leaders John Perez and Darrell Steinberg to elect state Assembly and Senate candidates who are committed to the rights of consumers and the civil justice system. CAOC endorsed 13 Assembly and Senate candidates and remarkably, 12 of the 13 were victorious. What this means is that California has successfully bucked the national
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trend to put state legislatures into the hands of conservative Republicans. Instead, for the first time in decades, Democrats now have forged “Super Majorities” in both houses of the California legislature.
The news isn’t all good
Some of the newly elected Democrats are beholden to corporate interests, and there’s no guarantee that legislators will support the issues that are so important to consumers and CAALA members. CAALA members will continue to work to establish relationships with legislators. If you are interested in helping, contact our Grassroots Political Consultant Mark Wirth at (909) 794-7091 or by e-mail at email@example.com. CAOC and CAALA also took strong stands on seven vitally important ballot measures that would have dramatically affected the rights of your clients and your right to practice law. The voters agreed with all seven of the Consumer Attorney positions. The most important results were the passage of Proposition 30 and the defeats of Propositions 32 and 33. Proposition 30 implemented shortterm income and sales tax increases that will stave off legislature-mandated cuts to every aspect of government including courts, schools and our social safety net. Proposition 32 was a corporate funded measure whose purpose was to cripple labor unions politically. Proposition 33 was a measure funded by the chairman of Mercury Insurance that would have deregulated auto insurance, eroding the consumer rights established by Proposition 103 in 1988. The one piece of bad news in the statewide races was the narrow defeat of Assembly Member Betsy Butler in the 50th Assembly District. The race was not
decided for more than three weeks following the election and Butler lost by only a few hundred votes.
And, now for the ugly
For the past two years, California’s economic downturn has led the state legislature to make huge budget cuts to the state’s Courts and Justice System. As a result of the cuts, only a few weeks following the election, the Los Angeles Superior Court was forced to announce dramatic changes that will significantly alter the civil courts in Los Angeles, affecting every CAALA member and the way they litigate. Ten courthouses will be closed, but the most significant change for CAALA members is a return to a Master Calendar system for all personal injury lawsuits including wrongful death and medical malpractice. Many other costsaving changes will be implemented. Many people mistakenly thought that the passage of Proposition 30 would mean there would be no further cuts to the court budgets. This was not true, as Proposition 30 did not increase funding but only ensured there would not be even worse cuts. The L.A. Superior Court had no choice but to make the cuts for 201213. CAALA is an important liaison between the courts and our members and we will provide you with up-to-date information about the upcoming changes. Information will be disseminated to members as it becomes available and will also be posted on CAALA’s Court Report micro-site at www.lasccourtreport.com. On February 21, CAALA will present a joint seminar with SoCal Defense and leaders of the Superior Court to discuss the changes and how they will affect our members. Contact firstname.lastname@example.org
Get to Know CAALA
Jeffrey Greenman wins first CAALA “Rising Star Award A good lesson in overcoming obstacles By Linda Fermoyle Rice
It’s a very special honor, indeed, to be the first to achieve something and it’s rare when that happens. This year, Jeffrey Greenman, was awarded the first “Rising Star” award by CAALA. The Trial Lawyer of the Year committee vetted dozens of lawyers and cases to come up with this year’s nominees for that award, among the most prestigious and coveted. Jeff, who was admitted to the bar in 2007, was considered for his $1 million plus verdict in a medical malpractice case, Varney v. Hunt, M.D. As most of you probably know, it’s not easy to get a $1 million verdict in a medical malpractice case that does not involve catastrophic injury to a 40-yearold neurosurgeon or a newborn. It is all the more remarkable when the trial lawyer gets the case on a referral two weeks before trial because nobody wants to try it. The injury that forms the basis for the malpractice claim occurred as the result of a bar fight, and plaintiff ’s expert showed up at trial unkempt with a green polka dot tie and looked like he may have been pounding down tequila shots before taking the stand. These are only some of the obstacles Jeff faced during trial. His client, a saltof-the-earth type from southeast Texas, was assaulted with a pool cue at a dive bar in Torrance and had a serious shoulder injury as a result. He consulted the defendant, Dr. Hunt, who cut the axillary nerve during surgery, resulting in numbness and weakness in the shoulder, as well as loss of range of motion in the arm. Suffice it to say that the case had not been worked up in an ideal fashion. Numerous depositions that should have been taken had not been. When Jeff was finally able to get the file from the previous attorney (who refused initially to release it) it was a shambles. He had to get most of the medical records from the
defense lawyer. Jeff was facing down the trial date by that time, but assumed he would get a continuance, given the circumstances. When he showed up in Greenman Torrance to ask for that continuance, he was told “no,” the case was too old and there was an open trial courtroom downtown. That he was sent downtown instead of having to try the case in Torrance was the only break Jeff got on the case. Seasoned medical malpractice lawyer, Michael Zuk, from Herzfeld & Rubin, was defending and had some very experienced defense experts onboard. According to Jeff, the trial court judge was hard on him and the courtroom staff were openly hostile. Fortunately, although plaintiff ’s expert was a disaster (he conceded on the stand that some or all of the plaintiff ’s problems could be related to his being a smoker), plaintiff treated with Stephen Kay, M.D., after defendant’s surgery. Dr. Kay was a great witness who managed to make sense of the medical issues for the jury. Assuming he had nothing to lose, Jeff aggressively went after the multiple defense experts on cross-examination. After a two-week trial, the jury initially hung, eight to four in favor of the plaintiff. The following day, one juror couldn’t be in court and an alternate was seated. The alternate turned out to be a great note-taker and was 100 percent in favor of the plaintiff. The jury returned a verdict of $1,017,500, beating plaintiff ’s 998 demand for $750,000. After the verdict was returned, there was pandemonium in the courtroom with the client crying and hugging the jury, and the jury crying and hugging back. Several of the jurors told Jeff they hadn’t believed a word of his expert’s testimony, but they felt for his
client, liked and understood Dr. Kay’s testimony, and thought Jeff had done a masterful job discrediting the defense experts. Jeff described the experience, as “no better feeling in the world.” Anyone who has won a very tough case knows exactly what he means. Up against several high eight-figure verdicts by some of CAALA’s finest, Jeff knew he wouldn’t be the 2012 Trial Lawyer of the Year. But, he was thrilled just to be interviewed by someone from the TLOY committee. Several other relatively new trial lawyers who were interviewed expressed the same reaction – that it was an honor to have their names come up with the likes of Chris Spagnoli, Carney Shegarian and Michael Alder. That got the TLOY committee to thinking that maybe recognizing a “rising star” trial lawyer was something to consider. The winner would be a lawyer who has only been trying cases for a few of years, but who shows extraordinary promise and with a superb result to show for it. The concept was floated before the Executive Committee, which thought it was a great idea and authorized the TLOY to make a selection this year, even before criteria for the award were formally established. It was an easy call. Congratulations to Jeffrey Greenman, CAALA’s first “Rising Star” award winner who will be recognized for that achievement at January’s Installation & Awards Dinner. The Executive Committee will appoint a committee next year to formulate guidelines for the selection of nominees for CAALA’s new award. We look forward to interviewing dozens of newer lawyers to hear their stories and honor their achievements in the years to come. No one but Jeff, however, will be able to claim to have been CAALA’s first Rising Star.
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ADR Providers ADR Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 Carrington, R.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88 Daniels, Jack . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87 DiCaro Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Fernandez, Ed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79 Fields ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 First Mediation Corp - Jeffrey Krivis . . . . . . . . . . . . . .82 Gage, Sandy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Graver, Darryl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 Jossen, Sanford Law Office . . . . . . . . . . . . . . . . . . . .85 Judicate West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62 Mehta, Steven G. Mediation . . . . . . . . . . . . . . . . . . .52 PMA Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . .68 World Wide Mediators . . . . . . . . . . . . . . . . . . . . . . .46 Announcements and Career Opportunities CAALA Installation Dinner . . . . . . . . . . . . . . . . . . . . .77 CAALA Legal Education Center . . . . . . . . . . . . . . . . .75 CAALA Membership . . . . . . . . . . . . . . . . . . . . . . . . . .73 Attorneys – Appeals Bader, Donna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100 Ehrlich Law Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 Attorneys - Accepting Referrals Bailey Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Bisnar | Chase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Cheong Denove Rowell Bennett & Karns . . . . . . . . . .51 Cook, David . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Dordick Law Offices . . . . . . . . . . . . . . . . . . . . . . .54-55 Edzant, Barry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87 Engstrom, Lipscomb & Lack . . . . . . . . . . . . . . . . . . . .23 Fagel, Bruce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 Feldman, Phillip . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94 Geeting Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 Girardi | Keese . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Greene Broillet & Wheeler . . . . . . . . . . . . . . . . . . . . . .1 Hodes Milman Liebeck Mosier . . . . . . . . . . . . . . . . .40 Kesluk & Silverstein . . . . . . . . . . . . . . . . . . . . . . . .16,72 Law Offices of Lisa Maki . . . . . . . . . . . . . . . . . . . . . .61 McNicholas & McNicholas . . . . . . . . . . . . . . . . . . . . .9 Metzger Law Group . . . . . . . . . . . . . . . . . . . . . . . . . .37 Michels & Watkins . . . . . . . . . . . . . . .Inside Back Cover Panish Shea & Boyle . . . . . . . . . . . . . . . . . .Back Cover Richard Harris Law Firm . . . . . . . . . . . . . . . . . . . . . . . .4 Rizio & Nelson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Sabaratnam & Associates . . . . . . . . . . . . . . . . . . . . .72 Taylor & Ring, LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 The Traut Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Court Reporters Atkinson Baker Court Reporting . . . . . . . . . . . . . . . . .64 Jonnell Agnew & Associates . . . . . . . . . . . . . . . . . . .93 Kusar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 Personal Court Reporters65 Defense Medical Exam Observation Advantage Representatives . . . . . . . . . . . . . . . . . . . .84 Haiby, Michael . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79 PRIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76 Expert Witnesses – Medical American Medical Forensic Specialists . . . . . . . . . . .94 Graboff, Dr. Steven . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Luckett, Karen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83 Roughan & Associates at LINC, Inc. . . . . . . . . . . . . .69
Calendar Expert Witnesses - Technical & Damages Balian & Associates (Retail Industry) . . . . . . . . . . . . .90 Berman, Ron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Forensis Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Phillips, Fractor & Company, LLC . . . . . . . . . . . . . . . .84
Consumer Attorneys Association of LA 800 West Sixth Street,#700 Consumer Attorneys A L A Los Angeles, CA 90017 CAALA (213) 487-1212 Consumer Attorneys www.caala.org A
Financial Services Atlas Settlement Group, Inc . . . . . . . . . . . . . . . . . . . .50 California Attorney Lending . . . . . . . . . . . . . . . . . . . .81 CPT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70 Farber, Patrick (Struct. Sttlmnts.) . . . . .Inside Front Cover Fast Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78 Fund Capital America . . . . . . . . . . . . . . . . . . . . . . . . .21 Lawsuit Financial . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80 Pensions Annuities and Settlements LLC . . . . . . . . . . .13 RD Legal Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Ringler & Associates – Michael Zea . . . . . . . . . . . . .95 Summit Structured Settlements . . . . . . . . . . . . . . . . . .46 The James Street Group (Structured Settlements) . . . .91
January 19, 2013 64th Annual Installation & Awards Dinner 5:30 - 6:30pm Hosted Cocktail Reception 7:00pm Dinner & Program Beverly Wilshire Hotel 9500 Wilshire Blvd. Beverly Hills
Graphics/Presentations/Video Court Graphix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Courtroom Presentations . . . . . . . . . . . . . . . . . . . . . . .30 CSC Anatomy Arts . . . . . . . . . . . . . . . . . . . . . . . . . . .76 Executive Presentations . . . . . . . . . . . . . . . . . . . . . .7,45 Juris Productions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 Medivisuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83 Verdict Videos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70 Insurance Programs Lawyers Mutual Insurance Company . . . . . . . . . . . . .53 Lawyer’s Pacific Insurance . . . . . . . . . . . . . . . . . . . . .15 Narver Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 Investigators Hudson Investigations . . . . . . . . . . . . . . . . . . . . . . . . .60 Shoreline Investigations . . . . . . . . . . . . . . . . . . . . . . . .16 Tristar Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . .85 Legal Marketing Berbay Corporation . . . . . . . . . . . . . . . . . . . . . . . . . .36 Pro Se Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48 Legal Nurse Consultants Cross, Kathy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 Legal Research Quo Jure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95 Legal Support Services USA Express Legal & Investigative Services . . . . . . .89 Medical & Dental Service Providers Buena Vista Pharmacy . . . . . . . . . . . . . . . . . . . . . . . .27 Docs on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Glendale Surgery Center . . . . . . . . . . . . . . . . . . . . . .35 Injury Institute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 Landmark Imaging . . . . . . . . . . . . . . . . . . . . . . . . . . .34 North Valley Eye Medical Group . . . . . . . . . . . . . . .59 Orthopaedic Doctors on Liens . . . . . . . . . . . . . . . . . .12 Total Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Organizations CAOC – PAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
January 30, 2013 What's New in Tort & Trial: 2012 in Review 4:30 - 5:30pm Registration 5:30 - 9:00pm Program Beverly Wilshire Hotel 9500 Wilshire Blvd. Beverly Hills Board & Committee Meetings Executive Committee – CAALA Offices Downtown Los Angeles, 6:00pm Jan. 10, Feb. 7, Mar. 7 Board of Governors – CAALA Offices Downtown Los Angeles, 6:00pm Jan. 24, Feb. 22, Mar. 21 Education Committee – CAALA Offices Downtown Los Angeles, 5:00pm Jan. 24, Feb. 22, Mar. 21 New Lawyers Committee - CAALA Offices Downtown Los Angeles, 6:00pm Jan. 22, Feb. 19, Mar. 19
Orange County Trial Lawyers Assn. 25602 Alicia Parkway, #403 Laguna Hills, CA 92653 (949) 916-9577 www.octla.org January 26, 2013 50th Anniversary Gala Installation & Judicial Awards 6:00pm Cocktail Hour 7:00pm Dinner & Program The Island Hotel Newport Beach
CAALA Resource Center
Still need to complete your MCLE credits? Visit CAALA’s Legal Education Center at CAALA.org
Remember, California attorneys in State Bar Compliance Group 1 (with last names beginning with A-G) must complete their required MCLE credits by February 1, 2013. Attorneys are required to complete a total of 25 hours of approved credit every three years, including 4 Hours of Legal Ethics, 1 Hour Elimination of Bias, and 1 Hour Substance Abuse Prevention. CAALA’s Legal Education Center is an excellent resource to complete any missing credits. Plus, a special bundle package is offered to complete those last minute Legal Ethics and Specialty Credits at a discounted rate or FREE for 2012 Vegas Registrants. The bundle contains the Legal Ethics program (which contains 3 Legal Ethics Self-Study credits) and the Specialty Credits program (which includes 1 Legal Ethics SelfStudy credit, 1 Elimination of Bias Self-Study credit, and 1 Substance Abuse Self-Study credit) from the 2012 Las Vegas Convention. Topics and speakers include: Legal Ethics Hot Topics In Legal Ethics: Case Law and Statutory Developments — David Hoffman An Ethical Analysis of the Retainer Agreement: Write Better Fee Contracts — Thomas Peters Developing & Maintaining Successful Client Relationships — Christina Coleman Preventing Legal Malpractice: Avoid the Errors that Commonly Bring Claims — Antony Stuart How Ethical Conflicts & Professional Burnout Can Hurt Your Law Practice — John Torjesen Ethical Considerations in ADR — Hon. Judith Chirlin (Ret.)
Specialty Credits Legal Ethics: Practicing Under the State Bar’s Radar — Murray Greenberg, Thomas Layton, Hon. Donald Miles, Hon. Richard Platel Elimination of Bias Diffusing Bias in the Courtroom — Dr. Cynthia Veneciano and Nicholas Hariton Addressing Plaintiff’s Lifestyle Choices with Opposing Counsel — Neville Johnson Substance Abuse Prevention: Financial Stress & Substance Abuse — RJ Molligan Resources Available for Recovery — Gary Hoffman, The Other Bar
CAALA Launches Online-Resource Libraries https://www.caala.org/resourcelibraries
Visit CAALA’s new online, members-only resource libraries to save research time and avoid reinventing the wheel! Access the Sample Documents Library, Demand Letters Library and Closing Arguments Library filled with materials submitted by your fellow members. View documents that worked for other trial lawyers and will help you litigate the following cases: Auto Accidents, Class Action, Employment Law, Medical Malpractice, Premises Liability, Product Liability, and more. https://www.caala.org/resourcelibraries Additional documents will be added in the future. You can help grow the online resource libraries by submitting materials as PDF files, Word or Word Perfect documents. E-mail your documents to Cindy Cantu, CAALA’s Education Director: email@example.com.
New CAALA Affiliate Vendors Our Affiliate Vendors are an excellent resource to help improve your practice. They provide goods or services specifically for plaintiff trial lawyers. Please support our Affiliate Vendors by contacting them for your business needs and projects.
Allen Massihi, Inc. 311 N. Verdugo Road Glendale, CA 91206 (818) 748-7319 Contact: Allen Massihi Email: firstname.lastname@example.org
Podiatric physician/surgeon specializing in injuries and treatments of foot and ankle. Surgeries/treatments rendered on lien basis. CATEGORY: Orthopedics, Slip & Fall
Consumer Attorney Marketing Group 5550 Topanga Canyon Blvd, Suite 130 Woodland Hills, CA 91367 (818) 917-8755 Contact: Steve Nober Email: email@example.com
Experts in Direct Response Marketing; Committed to helping law firms create the most successful legal marketing campaigns possible. CATEGORY: Graphic Design/Marketing/Website
Edward T. Garcia, Zengler & Inouye, LLC 4 East Holly Street, Suite 205 Pasadena, CA 91103 (626) 405-1199 Contact: Edward T. Garcia Email: firstname.lastname@example.org
Forensic economomist specializing in economic damages from personal injury, wrongful death, employment, medical malpractice, insurance bad faith, business-related, brokerage negligence and other types of litigation.
CATEGORY: Economic Experts | Expert Witness
Parehjan & Vartzar Chiropractic, Inc. 13066 Van Nuys Blvd Pacoima, CA 91331 (818) 834-6966 Contact: Patrick Parehjan Email: email@example.com
Providing chiropractic and physiotherapy care on a LIEN basis to your injured clients at our six convenient locations. E. Los Angeles, Huntington Park, MidWilshire, Granada Hills, Glendale and Pacoima. CATEGORY: Chiropractic | Orthopedic | Pain Management/Physical Therapy
Physician Life Care Planning 11550 IH 10 West San Antonio, TX 78230 (210) 501-0995 Contact: Jacob Gonzales Email: firstname.lastname@example.org
Provides physician-directed life care plans and other high quality medicallyrelated litigation support, including: vocational, economic and neuropsychological assessments, MSAs, medical illustrations and more. CATEGORY: Life Care Planning | Medical Experts | Vocational Rehabilitation
The Advocate Magazine — 107
From the President Lisa Maki
Consumer Attorneys Association of Los Angeles
Life lessons learned on the streets There are angels in the most unlikely places
I have a friend who concludes all of her e-mails to me with this message: “Mitakuye Oyasin: We Are All Related.” It is the title of a book written by Dr. A.C. Ross. I will not likely read the book, not because I do not want to, but because I like the title and what it means to me based upon my own experiences and what I believe to be the mission of CAALA. I will not be seeing the movie Anna Karenina either. Not because I do not want to, but because I do not want to alter the images Tolstoy created for me in his words. When I was younger, if someone had predicted what my life was going to be, they would not have made me President of CAALA. In fact, they might have predicted I would be dead. While I had the best upbringing one could hope for; at the ripe age of four, Sister Lorraine, my teacher in Montessori school, predicted that I would have difficulties – noting that I “bore the weight of the world on my shoulders,” as she put it. My time growing up in Nebraska was largely spent pointing out that things “weren’t fair” or were “wrong.” I argued incessantly with my parents and teachers and remember many a time driving out to the stable to seek solace by galloping across the field on my trusty horse while tears streamed across my face in the wind. But, I couldn’t run from it, or myself. Simply put, and to preserve familial dignity, I was a bad kid. Luckily my parents had the good sense to tell all of their children to either go to college or get out of the house; meaning it was time to grow up. They insisted we all attend school in a big city. I chose Chicago and met some of the best teachers in the Jesuits at Loyola University of Chicago. My first day of Old Testament class started when one of them held up the Bible and told us that it was all a story. I
108 — The Advocate Magazine
do not think he believed it, but he wanted us to think, and question. I was home. Through my own doing I ended up living on the street in Chicago for part of the time I was in college. My parents did not know this and it took me many years to tell them. The reason I am telling you is because it changed me forever and made me realize that we are indeed, all related and that part of the human condition is that we need each other, and are here to help one another.
If you have not been homeless, let me try to describe what it feels like. Time stops. Survival kicks in. People do not acknowledge you and are afraid to look at you because they are afraid of “catching it” and becoming homeless themselves. You do not think about what you look like. You just want to eat and sleep and stay safe. Before time stops, you want to scream, “Notice me, I matter, I am a person, too.” But that goes away and soon everything blends in and becomes gray just like the Chicago sky does for months in the winter. Nothing matters, really, and you do not know that you have lost the thing that is likely most precious in life, your dignity. Depressing? Yes. But there are angels in the most unlikely of places. In my case there were two older women and men who grew up on the South side of Chicago who had family backgrounds I cannot imagine surviving. They did not know me, and I had nothing to give to them. But they taught me to respect myself and others and that the only thing that mattered in this world was to help other people. They taught me by example and that service to others is the key to a happy and fulfilling life. If Dr. A.C. Ross’s book had pictures, they would dance out on its pages. They taught me that no one could ever take away my dignity and that I had value and a purpose. I believed them and still do.
I never want anyone to lose their dignity or self and it is my mission to prevent that from happening or restore it for my clients if it does. A person is a person regardless if you are on the street or in a mansion; we are all the same and are supposed to be treated equally under the law. I have been blessed with colleagues at CAALA who have mentored me, encouraged me and also had the courage to stand up when things “were not fair” or “were not right.” My CAALA friends tell me when they think I am wrong, and challenge me to see things differently, and to walk through growing pains in good times and bad. CAALA is family. Charles Dickens wrote in A Tale of Two Cities, “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us…” Today, stark contrasts continue to appear on this the dawn of a new year. Our members right wrongs, bring wrongdoers to justice and create balance in our system of trial by jury all at great sacrifice to themselves and their families. Today our CAALA family, friends on the other side of the Bar, and our overworked Judiciary continue to face the mountains and valleys of living in an unpredictable time. CAALA is a community made up of good and caring women and men. Now, more than ever before, we have to focus on service and working with others, because after all, we are all related. Those words describe my goals as I begin my year as CAALA President. I look forward to working with each of you to help us achieve them.
OVER OVER TEN FIGURES IN VERDICTS & SETTLEMENTS 8-Figure Verdict Verdict Cerebral Palsy
8-Figure Settlement Wrongful W rongfu Death rongful
7-Figure Verdict Verdict Brain Damage
7-Figure Arbitration A Award ward Misdiagnosis
7-Figure Verdict Verdict Spinal Cord Injury
7-Figure Settlement Birth Injury
7-Figure Settlement Baby Injury
7-Figure Settlement TTransplant ranspla ransplant
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For 31 years, Advocate magazine has served attorneys who represent plaintiffs in Southern California