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Case Review

Posey v. Lake Pend Oreille Sch. Dist. No. 84

  • Public Entities

The ninth Circuit made it harder for public entities to prevail on motions for summary judgment when the court decided that the question of whether a public employee’s speech is protected by the First Amendment is a mixed question of fact and law.

Facts

Plaintiff was employed as a “security specialist” for the School District. He believed that the District’s safety and emergency policies were inadequate. Plaintiff spoke with the school Principal about his concerns, but the Principal did not respond directly to Plaintiff. Plaintiff then wrote a letter to several District administrators outlining his specific concerns with examples in support thereof. It was undisputed that Plaintiff wrote the letter at home, on his own time and using his own resources. However, the parties disputed whether Plaintiff wrote the letter as part of his official employment responsibilities. A year after writing his letter, Plaintiff’s job was eliminated, and he was not hired into the “new” position created for a “preventative specialist.” Plaintiff brought suit under 42 U.S.C. § 1983 asserting that the elimination of his position and failure to rehire him into the new position was retaliation in violation of his First and Fourteenth Amendment rights. The District moved for summary judgment arguing that Plaintiff’s speech was not protected under the First Amendment since his speech (letter) was made pursuant to his duties in his role as “security specialist.” The District Court agreed with the School District and the Ninth Circuit reversed.

Holding

The Ninth Circuit concluded that the question of whether a public employee’s speech is protected by the First Amendment is a mixed question of fact and law. The Court found summary judgment inappropriate here where (1) the Plaintiff spoke out on a matter of public concern, (2) the state lacked adequate justification for treating an employee differently that a member of the general public, and (3) there was a genuine issue of material fact as to whether the speech fell within the scope and content of Plaintiff’s job duties.

Sanchez v. County of San Bernadino

  • Public Entities

Facts

Sanchez was a high-ranking employee for the County, and considered a rising star. After it was discovered she was involved in a physical and romantic relationship with a labor union president she previously negotiated with, her supervisor insisted she resign. The parties entered into a written severance agreement, which provided neither side would disclose the facts and issues that gave rise to her resignation, unless required by applicable law. Newspaper articles then appeared detailing her resignation and relationship that quoted county representatives. Sanchez filed suit for breach of contract. The County filed a motion for summary judgment against the breach of contract because it had a duty to disclose Sanchez’s misconduct and therefore the confidentiality provision was void against public policy. The trial court granted the motion on the ground that the confidentiality provision was void against public policy. Sanchez appealed arguing the County had no duty to disclose the information and the severance agreement was not void against public policy.

Holding

Reversed. Under the Public Records Act, “every person has a right to inspect any public record.” However, where there is no request under the Public Records Act of a particular document, there is no duty to disclose the information, and the County was not required by law to disclose the information. Thus, the severance agreement preventing the disclosure of the information, except as may be required by applicable law is not void against public policy.

Achene v. Pierce Joint Unified School District

  • Public Entities

Facts

Achene was a probationary teacher during the 2006-2007 school year for the district. She received two evaluations that did not indicate her performance was unsatisfactory, but instead cited areas for improvement. The district then provided written notice to Achene of her unsatisfactory performance just one week before she was dismissed during the school year. The trial court determined the district failed to timely notify Achene that her performance was unsatisfactory or work with her to improve her performance. The district appealed on the grounds the requirement for ninety-day written notice of unsatisfactory performance does not apply to probationary employees.

Holding

Affirmed. The dismissal of probationary employees during the school year requires timely written notice of instances of particular unsatisfactory performance and an opportunity to correct these deficiencies. Here, since Achene was only provided a week of notice and not given the opportunity to correct these deficiencies, her dismissal during the school year for unsatisfactory performance was determined void.

Tucker v. Grossmont Union High Sch. Dist.

  • Public Entities
  • Employment

Under Ed. Code § 45298 a laid-off employee has a right to reemployment in preference to a new applicant regardless of the laid-off employee’s class, so long as the laidoff employee is qualified for the position.

Facts

In 1982, Plaintiff began his employment with the School District as a general maintenance worker and was promoted to maintenance supervisor. He left the District for several years, worked for another District and earned his MBA. When Plaintiff returned to the District in 1996, he held the position of director of maintenance and operations. He then assumed more responsibilities and his job title became director of operations, safety and special projects. Due to lack of work and/or funds, Plaintiff’s position was eliminated in April 2005, and he was laid off. That same month, Plaintiff applied for the position of maintenance manager, which according to the District was a position of a lower class. Although Tucker was qualified for the position, the District hired an individual who had never worked for the Districit. Plaintiff Petitioned the Court for a writ of mandate and declaratory relief, claiming that he had a right to reemployment preference over the new applicant. The District argued that Ed. Code § 45298 when read in conjunction with § 45308, provided preference for laid-off employees only within the class in which he was formerly employed.

Held

The court held that Tucker had the right to reemployment preference over the new applicant in any job for which he applied and for which he was qualified. Section 45298 specifically describes the preferential rights of laidoff employees for rehire with respect to new applicants. And, § 45308, which explains the order in which employees in the same class must be laid off and rehired, does not limit reemployment rights under -45298 with respect to new applicants to a job only within a particular classification. Since Plaintiff was qualified for and applied for the maintenance manager position, he was entitled to preferential reemployment rights over new applicants.

Fitzgerald v. Barnstable Sch. Committee

  • Public Entities

Facts

The Fitzgeralds’ daughter was a kindergarten student in the Barnstable, Massachusetts school system who rode the bus to school. She informed her parents that a third grade boy bullied her into lifting up her skirt. The parents met with principal and a school investigator who could not substantiate the claims. No action was taken. Later, the girl reported escalating harassment to her parents. The parents once again met with the principal but, again, the school could not substantiate and no action was taken. The parents sued under Title IX, 42 U.S.C. § 1983, & state law, alleging the school inadequately responded to allegations of harassment.

The U.S. Supreme Court granted review to resolve a split in the circuits over whether Title IX precludes use of § 1983 to redress unconstitutional gender discrimination in schools.

Holding

Title IX does not preclude section 1983 action alleging unconstitutional gender discrimination in schools. Because Title IX does not include a comprehensive remedial scheme, the U.S. Supreme Court concluded that it was not meant to be an exclusive mechanism for addressing gender discrimination in schools or a substitute for § 1983 suits as a means of enforcing constitutional rights.

Education – Discrimination Donovan v. Poway Unified Sch. Dist.

  • Public Entities

To prevail on an Education Code Section 220 claim for peer sexual orientation harassment against the School District, the Plaintiff must apply the stricter Title IX elements, including actual knowledge of the harassment rather that the FEHA’s elements and negligence standard of “known or should have known.”

Facts

Plaintiffs (two students) brought a Section 201 harassment claim against the District seeking monetary damages. The trial court appliend the elements of a FEHA harassment claim as the same elements applicable to a Section 210 claim. Under FEHA, a Plaintiff would only have to prove that the District “knew or should have known” of the harassment and failed to take immediate and appropriate corrective measures to remedy the harassment. The Plaintiff’s prevailed against the District under these elements. The District appealed and argued that the more strict elements of Title IX should be applied under a Section 201 harassment claim. The Appellate Court agreed.

Holding

In order to prevail on a peer sexual orientation harassment claim under Section 201, the student must prove the elements of a Title IX discrimination claim; namely, (1) “severe, pervasive and offensive” harassment which deprives the student of the right to equal access to educational benefits and opportunities; (2) the school district had actual knowledge of the harassment” and (3) the district acted with deliberate indifference in the face of that knowledge.

By applying the elements of Title IX instead of the FEHA, the court assured that school districts are not responsible for the underlying student/peer misconduct, but rather only for its “own misconduct determined by its own deliberate indifference to known acts of harassment.”

Forecast Homes, Inc. v. Steadfast Insurance Co.

  • Construction

Facts

Forecast is a housing developer. It required its subcontractors to obtain policies of insurance that included Additional Insured Endorsements naming Forecast as an additional insured under the policy. Forecast did not require any specific language regarding the insurances policies’ self-insured retention (SIR) provisions.

Several subcontractors obtained the required insurance coverage from Steadfast. Steadfast denied Forecast’s tender of defense on the ground that the subcontractor had not paid the policy’s SIR. Steadfast argued that, under the terms of the policy, only the named insured (not Forecast) could satisfy the SIR and trigger coverage.

Forecast filed a declaratory relief action against Steadfast. The trial court ruled in favor Steadfast. Forecast appeals.

Holding

Affirmed. The language of the insurance policy controls. Here, the policy endorsements regarding SIRs specifically defined and identified the named insured (not an additional insured) as the entity required to satisfy the SIR as a precondition to coverage. Who may satisfy an SIR depends on a policy’s express terms.

Suarez v. Pacific Northstar Mechanical

  • Construction

Facts

Pacific Northstar Mechanical was the HVAC subcontractor working at a multi-employer construction site. One of its employees was slightly injured by a preexisting, nonobvious hazard (an ungrounded light fixture) that was not created in the course of Pacific’s work. The employee told his foreman about the incident; the foreman did not report it to the general contractor. Shortly thereafter, Suarez (an employee of the general contractor) was seriously injured by the same hazard.

Suarez sued Pacific. Pacific filed a motion for summary judgment on the ground that it owed no duty of care to Suarez, as it did not own or control the property, did not create the dangerous condition, and was not hired to inspect or work on the ungrounded light fixture. The trial court granted summary judgment for Pacific on Suarez’s cause of action for negligence. Suarez appealed.

Holding

Reversed. The court held that although no common law or contractual duty existed, Pacific owed a statutory duty of care under Labor Code Section 6400.

This case created a new duty of care that requires each employer at a multiemployer worksite to report (to the general contractor) all non obvious hazards about which the employer learns because its employees were exposed to the hazard even if the employer did not create the hazard.

Crawford v. Metropolitan Government of Nashville & Davidson County

  • Employment

Facts

Respondent Metropolitan Government of Nashville & Davidson County undertook internal investigation of rumors of sexual harassment by the Metro School District employee relations director, Hughes. When a human resources officer asked Petitioner Crawford if she had witnessed any inappropriate behavior by Hughes, she cited three examples of his behavior toward her. Hughes was not disciplined but Crawford was fired.

Crawford sued under Title VII of the Civil Rights Act of 1964, which prohibits employers from retaliating against employees who report workplace discrimination.

The U.S. Supreme Court granted review to resolve a split in the circuits over whether Title VII protects an employee who does not initiate a complaint but merely responds to questions during an investigation.

Holding

An employee has a retaliation claim even though she merely addressed discrimination in response to an internal investigation. Because California statutory law already recognized retaliation claims on this basis, there should be no major impact in California.

Sullivan v. Oracle Corporation

  • Employment

Facts

Defendant is a Delaware Corporation with its principal place of business in California. Plaintiffs are employed by Defendant as Instructors. Instructors are required to travel throughout the United States, including California, to perform work for Oracle. The Plaintiffs resided in Colorado and Arizona, but worked in California from 2001 through 2004. None of the Plaintiffs worked more than 33 days in California in any given year. Plaintiffs filed a Complaint alleging claims for violation of the Labor Code and California’s Unfair Competition Law for failing to pay overtime wages for the days they worked in California, and a third claim for failing to pay overtime throughout the United States. Defendant filed a motion for summary judgment and argued that California labor laws do not apply to non-residents who work primarily in other states. The District court granted summary judgment.

Holding

Reversed in part. California’s Labor Code applies to work performed in California by nonresidents of California. The Ninth Circuit applied California state law, where the Supreme Court has previously ruled that California’s employment laws govern all work performed within the state, regardless of the residence or domicile of the worker.

McDonald v. Antelope Valley Community College District

  • Employment

Facts

Plaintiff complained of discrimination in a letter to the Vice Chancellor of Human Resources, followed by a formal administrative complaint with the Chancellor’s Office in November of 2001. The Chancellor’s Office informed Plaintiff that she could also file a FEHA complaint with the Department of Fair Employment and Housing at any time. Plaintiff filed a DFEH complaint on October 11, 2002 and filed suit in the Superior Court on October 24, 2003. Defendant filed a motion for summary judgment, arguing that Plaintiff’s complaint was untimely because equitable tolling did not apply to Plaintiff’s voluntary pursuit of her complaint with the Chancellor’s Office prior to filing her complaint with the DFEH. The superior court granted the motion, and the Court of Appeal reversed.

Holding

Affirmed. The FEHA does not preclude equitable tolling during the voluntary pursuit of internal administrative remedies. The Legislature has demonstrated the intent to increase the common law remedies available to employees for employment discrimination. Where the purpose of equitable tolling is met, the promotion of resolution of employee grievances through internal administrative procedures, equitable tolling should be applied.

FEHA – Statute of Limitations Tolled

  • Employment

The statute of limitations on an employee’s FEHA claim is subject to equitable tolling When an employee voluntarily pursues an internal administrative remedy prior to filing a complaint under the California Fair Employment and Housing Act.

ADA Amendments Act of 2008

  • Employment

The ADA Amendments Act of 2008 became effective January 1, 2009. The Act has expanded protections of disabled workers under Federal law, bringing Federal disability laws in sync with already broad protections California offers disabled employees under the Fair Employment and Housing Act (FEHA.)

In the Amendments Congress expressed its intent to specifically overrule the U.S. Supreme Court’s holdings over the years with regard to the definition of “disabled.” Now, the term “disability” is to be interpreted broadly. And, according to the Amendments, the question of whether an individual’s impairment is a disability should not demand extensive analysis.

The following are some specific areas addressed by the Amendments:

An Impairment That Substantially Limits

A Major Life Activity. In order for an impairment to be considered a disability, it need not limit more than one major life activity.

The list of major life activities covered under the ADA has been expanded to include many previously recognized activities and to include a list of Major Bodily Functions not specified before such as digestive, neurological, respiratory, brain, reproductive and circulatory functions.

The Amendments also specify that an individual with an impairment which is episodic or in remission, will be considered disabled if that impairment substantially limits a major life activity when it is active.

Mitigating Measures

Congress specifically rejected the Supreme Court’s prior holing in Sutton v. United Airlines, and its companion cases, that required a court to consider whether mitigating measures such as medication, should be considered in determining whether an individual is disabled under the ADA. Now, the determination of whether an impairment substantially limits a major life activity shall be made without regard to the ameliorative effects of mitigating measures, other than “ordinary eyeglasses or contact lenses.”

Regarded as Having an Impairment

One area where Congress actually limited the ADA’s coverage is with respect to individuals who are regarded as disabled.

Now, it is clear that an employer need not provide a reasonable accommodation to an individual who is not actually impaired, but is merely regarded as having an impairment that affects a major life activity.

Such an individual may still have a discrimination claim against his employer on another ground, but he or she is not entitled to an accommodation for a nonexistent disability.

Further, the definition of a disability, which includes a person regarded as having an impairment that substantially limits a major life activity, will not extend to a “transitory impairment” with an actual or expected duration of 6 months or less.

How do the Amendments Affect the California Employer?

As a practical matter, for California employers, these Amendments mean little since California law has long offered extremely broad protections to the disabled in the employment arena. However, California courts will now be able to look to Federal law more readily for interpretive cases to guide their decisions in disability-discrimination cases.

And, the ADA Amendments Act should serve as a good reminder to review your policies with regard to hiring, firing and managing your employees so that your business handles all issues regarding disabled employees and applicants in compliance with these broad laws.

Haberman v. Cengage

  • Employment

Facts

Alicia Haberman was employed by Cengage as a text book sales representative. After she was placed in a “performance improvement program” following consecutive years of failing to meet her sales goals, Haberman sued Cengage, her former supervisor (Reed), and Cengage’s national manager (Bredenberg) for sexual harassment under FEHA and other causes of action.

The trial court granted summary judgment for defendants, finding that the alleged acts of harassment did not rise to the level of establishing a hostile work environment as a matter of law. Haberman appealed.

Holding

Affirmed. The hostile work environment form of sexual harassment is actionable only when the harassment is pervasive or severe. There is no recovery for harassment that is occasional, isolated, sporadic, or trivial. Here, the conduct alleged by Haberman occurred over an extended period and consisted of a few isolated comments and mild innuendos. Plaintiff did not show a concerted pattern of harassment of a repeated, routine or generalized nature. As a matter of law, the conduct alleged by plaintiff did not constitute a hostile work environment.

McCarther v. Pacific Telesis Group

  • Employment

Facts

PTG employees are allowed an uncapped number of compensated days off for their own illnesses. However, PTG does not maintain a policy to pay employees for absences to care for ill family members. PTG’s attendance policy has a progressive discipline scheme, but absences are excluded from discipline if they constitute protected leave under workers compensation or FMLA. Plaintiffs filed a complaint alleging PTG failed to provide paid leave under Labor Code § 233, which allows an employee to use accrued sick leave to attend to an ill family member. PTG filed a motion for summary judgment and Plaintiffs filed a motion for summary adjudication seeking a determination whether PTG’s sickness absence policy constituted “sick leave” within the meaning of § 233. The trial court granted PTG’s motion for summary judgment on the basis that PTG’s sickness absence policy did not constitute “sick leave” pursuant to § 233. Plaintiffs appealed and the appellate court reversed, holding that PTG’s sickness absence policy did constitute “sick leave” within the meaning of § 233.

Holding

Reversed. Labor Code § 233 applies to “accrued and available sick leave.” It does not apply to paid sick leave policies that provide for an uncapped number of days off. Where sick leave is not accrued, it is impossible to determine how much sick leave an employee is entitled to and how much could be used to attend to an ill family member. Employees had other types of leave available to use to care for family members.

Milan v. City of Holtville

  • Employment

Facts

In 1998, Plaintiff began working as a water treatment operator for the City of Holtville. By September 2002, Plaintiff has been promoted to a Grade III operator. On September 10, 2002, while Plaintiff was moving a large L-shaped piece of metal from one room to another, the metal hit a wall and severely injured the Plaintiff’s neck. Plaintiff suffered two herniated discs that required immediate surgery. Plaintiff applied for workers’ compensation benefits and was examined by a physician on behalf of the Defendant who concluded, unbeknownst to the Plaintiff, that she would not be able to return to work at the water treatment plant. In March 2004, Plaintiff received a letter from Defendant City terminating her employment. The letter stated that based on the physician’s evaluation, Plaintiff could not return to her customary position because there was no job within the City which she could reasonably perform. Plaintiff sued alleging that Defendant had violated FEHA by failing provide effective accommodations for her disability. At trial, Defendant contended it had met its obligations under the FEHA because Plaintiff had never sought an accommodation for her disability and, in any event, no accommodation was possible because she could not perform the essential functions of her job. The trial court determined that Defendant had failed to provide a reasonable accommodation for her disability. Defendant appealed.

Holding

Reversed. Section 12940(n) requires that an employer, “engage in a timely, good faith, interactive process with the employee…to determine effective reasonable accommodations, if any, in response to a request for reasonable accommodation by an employee…” By its terms, section 12940(n) requires that the employee initiate the process. The Plaintiff did not meet her obligation under the statute and no obligation to engage with her with respect to possible accommodation arose.

McMahon v. Craig

  • Personal Injury

Facts

McMahon is the owner of a purebred dog named Tootsie, who is the last of her bloodline. When Tootsie became ill, McMahon took her to Craig, a veterinarian. Craig recommended corrective surgery with possible complications. McMahon informed Craig she was very fond of the dog prior to the procedure. The dog suffered these complications and died. Craig informed McMahon the dog died but hid the cause of death from her. McMahon sued Craig for intentional infliction of emotional distress and other charges. The trial court granted a demurrer without leave to amend, on the grounds a pet owner cannot be emotionally damaged for injuries caused by a veterinarian’s malpractice. The trial court also struck from the complaint statements of emotional distress. McMahon appealed the demurrer, pleading when Craig intentionally hid the reason for the dog’s death his conduct was outrageous.

Holding

Affirmed. Any extension of a duty of care to avoid causing emotional distress to pet owners is a matter best left to the legislature. Further, in evaluating whether a defendant’s conduct is outrageous it is not enough the defendant acted with a fraudulent intent. The conduct must be so outrageous in character to be utterly intolerable in a civilized community. Here, Craig’s attempt to hide his malpractice after McMahon knew it had died was not outrageous.

Tan v. Arnell Management Co.

  • Personal Injury

Facts

Plaintiff was shot in an attempted carjacking in an ungated portion of the common area of an apartment complex and rendered quadriplegic. The incident occurred at about 11:30 p.m. when he was driving about the apartment complex looking for an open parking space. He eventually parked his vehicle near the leasing office which was beyond the gated confines of the complex.

The trial excluded plaintiff’s evidence of prior similar criminal activity which consisted of 10 incidents which plaintiff’s expert argued placed the owner and property manager on notice of violent incidents including three very similar violent incidents defined as sudden attacks, late at night at the ungated portion of the premises.

Holding

Prior violent criminal acts lessen degree of foreseeability required by landlord in premises liability case. In reversing the trial court’s decision, the Appellate court noted that perfect identity of prior crimes to the attack on plaintiff is not necessary, rather, under the sliding scale balancing formula, and given the minimal burden placed on the landlord in the subject case, “the three prior incidents cited are sufficiently similar to make the assault on plaintiff foreseeable and to place a duty of care on defendants.”

Medical Insurer’s Negotiated Rate Differential Between the Full Amount of the Medical Provider’s Bills and the Lesser Amount Paid by the Private Health Care Insurer is Subject to Collateral Source

  • Personal Injury

(Howell v. Hamilton Meats & Provisions, Inc., November 23, 2009, 4th Appellate District, Divsion 1, 2009 DJDAR 16478)

A car versus commercial truck motor vehicle accident caused the car driver significant personal injuries resulting in two spinal fusion surgeries. The plaintiff was insured by PacifiCare PPO which paid $59,691.73 of her $189,978.63 medical bills. The remainder was written off and permanently adjusted pursuant to the PacifiCare contract with her health care providers.

At trial, the defense sought a post-trial reduction of plaintiff’s medical special damages from $189,978.63 to the amount paid by her health care provider, $59,691.73. The trial court granted the post-trial motion, but the Fourth Appellate District overturned the trial court allowing the plaintiff to obtain the full amount of her medical expenses, though a significantly lesser sum was actually paid in full satisfaction of the billing.

The Appellate Court started with California Civil Code §3333 which states that in negligence cases, the measure of damages is the amount which compensates for all detriment proximately caused by the injury-producing event. California courts have held that the special damages a plaintiff may recover in a personal injury action for past medical expenses are limited to the reasonable amount paid or incurred, whether by the plaintiff or a collateral source. This analysis set up a dispute as to whether the amount incurred (the full amount billed) versus the amount actually paid (the lesser amount paid by PacifiCare) was recoverable by this plaintiff. This court answered the question by applying the collateral source rule that provides that where an injured party receives some compensation for his injuries from a source independent of the tortfeasor, such payment should not be deducted from the damages which the plaintiff would otherwise collect from the tortfeasor. Extending this protective doctrine in favor of the injured plaintiff, the court allowed her to recover the full amount of medical billings, though her health insurance carrier paid but a fraction of them in full satisfaction of all of her bills. The court called upon the legislature to weigh in on a plaintiff’s recovery of full medical billings versus amounts paid by private health insurers.

This case will very likely be reviewed by the California Supreme Court which should once and for all weigh in on the proper measure of medical special damages when a private health care insurer has paid a fraction of the billings pursuant to health care provider contract, and the damages are fully satisfied without further contribution by the injured plaintiff.

Our firm has very strong feelings about the proper way to present this issue to a trial judge and on appeal. Rather than focus on the medical bills, defense attorneys should focus on the CACI jury instructions which provide that the reasonable amount of medical bills is a question of fact for the jury’s determination. That reasonable value can be established any number of ways including but not limited to amounts paid and accepted in full for the services as well as expert testimony utilizing private health care insurance contracts to set the basis for the reasonable value of service.

Cabral v. Ralphs Grocery Company

  • Personal Injury

Facts

On February 27, 2004, Cabral’s pickup truck collided with a big rig driven by Hen Horn (an employee of Ralphs), which was stopped on the side of the freeway in an emergency parking area. Cabral died in the collision and his widow sued Ralphs for wrongful death. Ralphs cross-complained for property damage to the big rig. The jury returned a verdict for Plaintiff on her complaint and for Ralphs on its cross-complaint. Ralphs appealed, contending that, as a matter of law, Horn owed no duty to Cabral to avoid stopping in the emergency parking area.

Holding

Reversed. There is no duty on the part of Ralphs (and its driver, Hen Horn) to ensure that Cabral’s vehicle, upon leaving the roadway, would have a “safe landing.” As a matter of law, a reasonable person would not conclude that Horn’s act of stopping on the side of the freeway, sixteen (16) feet away from the edge of lane four, in the dirt area, would subject motorists using the freeway to an unreasonable risk of harm.

Ontiveros v. 24 Hour Fitness Corp.

  • Product Liability

Facts

Plaintiff member of 24 Hour Fitness Center alleged she was injured on a “Stairmaster” and sued 24 Hour Fitness for strict products liability. Plaintiff alleged that the “dominant” purpose for her membership was for the use of the exercise machines at the gym. The 24 Hour countered that the primary purpose of all of its memberships was the “provision of fitness services.”

Holding

Affirmed. The dominant purpose of the plaintiff’s membership with the fitness center was for the provision of fitness services, and for that reason the defendant was not a proper products liability defendant.

Conte v. Wyeth, Inc., et al.

  • Product Liability

Facts

Plaintiff developed tardive dyskinesia, a debilitating and incurable neurological disorder. She alleges that she developed the condition after taking metoclopramide for almost four years. The name brand form of the drug, Reglan, is manufactured by Wyeth, Inc. Plaintiff only used the generic version of the drug. Plaintiff claimed that the Wyeth knew or should have known of the tendency of doctors to prescribe the drug for long periods of time, even though it had only been approved for 12 weeks of use. Plaintiff filed a Complaint alleging that she was injuriously exposed to metoclopramide due to Wyeth’s dissemination of false, misleading, and/or incomplete warnings about the drug’s side effects. The court granted the summary judgment motion filed by Wyeth on the ground that a name-brand manufacturer does not owe a duty of care to users of generic versions of the drug, which are manufactured by other companies.

Holding

Reversed. The common law duty to use due care by a name-brand prescription drug manufacturer when providing product warnings extends to both consumers of its product and those whose doctors foreseeably rely on the name-brand manufacturer’s product information when prescribing a drug, even if the generic form of the drug is ultimately used to fill the prescription.

Arriaga v. CitiCapital Commercial Corp.

  • Product Liability

Facts

An employee was injured when his finger became entangled in a glue spreading machine. Originally, JLA Credit Corporation had entered into a finance lease with AVP, Ltd. Klor Machinery sold the machine to JLA who took title to the machine, paid for it, and leased it to AVP. Klor shipped the machine directly to AVP. While in possession of the machine, AVP removed one corner of a safety guard. Near the end of the lease term, AVP entered into an agreement to sell the machine to Orepak, Plaintiff’s employer. Orepark wired the purchase amount to CitiCapital Commercial Corp., the successor in interest to JLA. Orepak took possession of the machine, after which Plaintiff was injured. Plaintiff filed a Complaint, contending that CitiCapital was strictly liable for his injuries because CitiCapital was instrumental in placing the machine in the stream of commerce. CitiCapital prevailed on its motion for summary judgment, which was filed on the basis that it was a finance lessor only, and not part of the chain of commerce.

Holding

Affirmed. Strict liability does not apply to a party that only acts as a finance lessor and merely provides funding. Further, CitiCapital was outside the original chain of distribution and is not liable as an entity instrumental in placing the product in the stream of commerce.

Christoff v. Nestle USA, Inc.

  • Business Litigation

Facts

In 1986, Christoff posed for a photograph to be used on a label for bricks of coffee in Canada. Sixteen years later, he saw his face on a jar of Taster’s Choice instant coffee in the United States. This label had been in use for six years. Christoff filed suit for the appropriation of his likeness. Nestle moved for summary judgment based on the statute of limitations. The trial court applied a two-year statute of limitations from his initial discovery on the grounds the single publication rule does not apply to claims for appropriation of likeness. The jury awarded him 15 million dollars in damages. The appellate court reversed on the grounds the single publication rule applied and Christoff had not filed his lawsuit within two years after Nestle first published the label. Christoff appealed to the Supreme Court.

Holding

Reversed and Remanded. The single-publication rule is intended to prevent a single integrated publication from resulting in numerous causes of action. This rule does apply to claims for the misappropriation of a person’s likeness. However, since the parties did not have an opportunity to present evidence to establish whether the production of the coffee label with Christoff’s likeness was a single integrated publication or republished, the case is remanded.

Jeewarat v. Warner Bros. Entertainment, Inc.

  • Business Litigation

Facts

An employee for Warner Bros. attended a three-day out-of-town business conference, approved by his employer. He left the conference early. On his way home, he drove by the office without stopping and took his normal route home, until he was involved in a motor-vehicle collision that caused injuries to Jeewarat. Jeewarat filed a personal injury action against the employee and Warner Bros. Warner Bros filed motion for summary judgment on the grounds the employee was commuting from work to home when the accident occurred, and therefore under the “going and coming rule,” the employee was not acting in the scope and course of his employment. The trial court granted the motion. Jeewarat appeals on the grounds the business conference attended by the employee was a special errand that had not concluded and therefore the “going and coming” rule does not apply to preclude liability against Warner Bros.

Holding

Reversed. An employee’s attendance at an out-of-town business conference may be considered a special errand. The special errand is concluded when the employee returns home or deviates from the errand for personal reasons. Thus, because Warner Bros. failed to show the employee had deviated from the special errand for personal reasons at the time of the accident, summary judgment was improperly granted.

Jankey v. Lee

  • Business Litigation

Facts

Plaintiff Jankey filed a lawsuit under the ADA, Unruh Civil Rights Act (including Civil Code § 55), the CA Disabled Persons Act, and Health & Safety Code § 19955, alleging that a four-inch step located at the entry of Lee’s K & D Market was an architectural barrier preventing him and other wheelchair bound individuals from “wheeling directly into the store.” Lee’s motion for summary judgment was granted and he brought a motion to recover his attorney fees under Civil Code § 55. In ruling on the fee motion, the parties disagreed as to the applicable law. Jankey argued that the court should require Lee to show that his claims were frivolous, unreasonable or groundless, as required under the ADA (based on Hubbard v. SoBreck, LLC, 554 F.3d 742). Lee argued that the fees were automatically available to a prevailing defendant under Section 55, regardless of the characterization of Plaintiff’s claims, and the ADA does not preempt such an award (based on Molski v. Arciero Wine Group, 164 Cal.App.4th 786). The trial court applied Molski and awarded Lee his attorneys’ fees under Section 55. Jankey appealed.

Holding

Affirmed. The mandatory fee award under Civil Code § 55 is not preempted by the discretionary standard under the ADA. Civil Code § 55 exposes a plaintiff to an adverse fee award because if it is not enforced, plaintiffs might take a “scorched earth” approach to litigation with no consequences.

Zhang v. Superior Court of San Bernardino County

  • Insurance

Can an Unfair Insurance Practices Act violation support a private civil cause of action under the Unfair Competition Law?

Zhang v. Superior Court of San Bernardino County, 4th Appellate District, Case No. E047207 (2009 DJDAR 15454), October 30, 2009

An insured sustained a fire loss sued her insurer for alleged delay in authorizing adequate payment for repair and restoration of the burned premises. In addition to Breach of Contract and Breach of Implied Covenant of Good Faith and Fair Dealing claims, the insured asserted a cause of action for breach of the “Unfair Competition Law” alleging that the carrier engaged in unfair and deceptive advertising by promising its insureds that it would timely pay benefits in the event of a covered loss. The trial court sustained the carrier’s demurrer to the Unfair Competition Law cause of action relying on Moradi-Shalal v. Firemans Fund Insurance Cos.(1988) 46 Cal.3d 287, as well as Textron Financial Corp. v. National Union Fire Insurance Co.(2004) 118 Cal.App.4th 106, for the proposition that the Unfair Insurance Practices Act does not give rise to private civil causes of action in its own name or under other statutes.

The Fourth District Court of Appeal disagreed with the trial court’s decision and remanded the matter with the order that the Unfair Competition Law cause of action be reinstated. In so doing, the Fourth District acknowledged a split of authority within the appellate districts in the State of California perhaps setting up review by the California Supreme Court to once and for all answer whether the Unfair Insurance Practices Act can give rise to a private civil cause of action in a first party context.

The Fourth District’s decision is notable for its distinction of those first party cases which give credence to the Moradi-Shalal prohibition of private causes of action based on the Unfair Insurance Practices Act. In noting this distinction, the Appellate Court stated:  A[t]here is no reason to treat insurers differently from other businesses when it comes to actions under the UCL except as required by Moradi-ShalalMoradi-Shalal prohibited a private cause of action for alleged violation of Unfair Insurance Practices Act in a third party context only. Therefore, to the extent that other appellate courts have extended Moradi-Shalal into the first party setting via the Unfair Competition Law, this appellate court disagreed with that extension. While the Unfair Insurance Practices Act does not provide a private cause of action, that same limitation should not be read into the Unfair Competition Law which has provided a private cause of action albeit for equitable remedies only.

It will be interesting to know if and how the California Supreme Court will weigh in on the issue. Will it allow insureds to utilize the Unfair Claims Practices Act to generate Unfair Competition claims under Business & Professions Code ‘17200, et seq.?  In doing so, it will yield a new claim to plaintiffs in bad faith litigation allowing additional opportunity to obtain injunctive and equitable remedies as well as attorneys’ fees. While the injunctive and equitable remedies may be limited by the circumstances of the case, attorneys’ fees will not.

Van Horn v. Watson

  • Personal Injury

Facts

After a night of drinking and smoking marijuana together, plaintiff and defendant Lisa Torte were traveling in separate vehicles. The vehicle that plaintiff was in spun out and struck a light pole. Torte’s vehicle stopped behind plaintiff’s car and the passengers attempted to assist the occupants. Torte claimed that she saw smoke coming from the vehicle and carefully removed plaintiff for fear the vehicle would catch fire. In contrast, plaintiff and co-defendants claim there was no indication the vehicle might explode and that Torte pulled plaintiff out like a rag doll. Plaintiff sustained an injury to her cervical vertebrae, which resulted in paralysis. Plaintiff claimed that defendant Torte’s conduct in jerking her from the car caused the paralysis.

Torte obtained summary judgment in the trial court on the grounds that the Good Samaritan statute provided immunity for any injury she may have caused in rendering aid. The section relied upon provides, “no person who in good faith, and not for compensation, renders emergency care at the scene of an emergency shall be liable for any civil damages resulting from any act or omission. …”

Holding

The California Supreme Court disagreed with the trial court’s decision and interpretation of the Good Samaritan immunity statute. Because Torte was not rendering “emergency care,” she was not protected. The duty of a Good Samaritan was summarized by the California Supreme Court as follows:

“While there is no general duty to help, a Good Samaritan who nonetheless undertakes to come to the aid of another is under a duty to exercise due care in performance. … it is ancient learning that one who assumes to act, even though gratuitously, may thereby become subject to a duty of acting carefully, if he acts at all.”

Howell v. Hamilton Meats & Provisions, Inc.

  • Insurance

Medical Insurer’s Negotiated Rate Differential Between the Full Amount of the Medical Provider’s Bills and the Lesser Amount Paid by the Private Health Care Insurer is Subject to Collateral Source

Howell v. Hamilton Meats & Provisions, Inc., November 23, 2009, 4th Appellate District, Divsion 1 (2009 DJDAR 16478)

A car versus commercial truck motor vehicle accident caused the car driver significant personal injuries resulting in two spinal fusion surgeries. The plaintiff was insured by PacifiCare PPO which paid $59,691.73 of her $189,978.63 medical bills. The remainder was written off and permanently adjusted pursuant to the PacifiCare contract with her health care providers.

At trial, the defense sought a post-trial reduction of plaintiff’s medical special damages from $189,978.63 to the amount paid by her health care provider, $59,691.73. The trial court granted the post-trial motion, but the Fourth Appellate District overturned the trial court allowing the plaintiff to obtain the full amount of her medical expenses, though a significantly lesser sum was actually paid in full satisfaction of the billing.

The Appellate Court started with California Civil Code §3333 which states that in negligence cases, the measure of damages is the amount which compensates for all detriment proximately caused by the injury-producing event. California courts have held that the special damages a plaintiff may recover in a personal injury action for past medical expenses are limited to the reasonable amount paid or incurred, whether by the plaintiff or a collateral source. This analysis set up a dispute as to whether the amount incurred (the full amount billed) versus the amount actually paid (the lesser amount paid by PacifiCare) was recoverable by this plaintiff. This court answered the question by applying the collateral source rule that provides that where an injured party receives some compensation for his injuries from a source independent of the tortfeasor, such payment should not be deducted from the damages which the plaintiff would otherwise collect from the tortfeasor. Extending this protective doctrine in favor of the injured plaintiff, the court allowed her to recover the full amount of medical billings, though her health insurance carrier paid but a fraction of them in full satisfaction of all of her bills. The court called upon the legislature to weigh in on a plaintiff’s recovery of full medical billings versus amounts paid by private health insurers.

This case will very likely be reviewed by the California Supreme Court which should once and for all weigh in on the proper measure of medical special damages when a private health care insurer has paid a fraction of the billings pursuant to health care provider contract, and the damages are fully satisfied without further contribution by the injured plaintiff.

Our firm has very strong feelings about the proper way to present this issue to a trial judge and on appeal. Rather than focus on the medical bills, defense attorneys should focus on the CACI jury instructions which provide that the reasonable amount of medical bills is a question of fact for the jury’s determination. That reasonable value can be established any number of ways including but not limited to amounts paid and accepted in full for the services as well as expert testimony utilizing private health care insurance contracts to set the basis for the reasonable value of service.