Friday, May 28, 2010

Second District Reverses Denial of Certification of Negligent Medical Treatment Claim: Bomersheim v. Los Angeles Gay & Lesbian Center

On May 26, 2010, the Second District (Division One) reversed an order denying class certification of a medical malpractice claim in Bomersheim v. Los Angeles Gay & Lesbian Center, __ Cal. App. 4. __ (2010). In that case, plaintiffs sought to certify various negligence claims arising out defendant’s alleged systematic usage of an improper form of penicillin in treating syphilis between 1999 and 2004, which defendant purportedly admitted in a March 2004 advisory informing patients of the alleged mistreatment. Plaintiffs sought damages associated with subsequent retreatment, including damages for pain and suffering. In denying plaintiffs’ motion, the trial court found that common questions did not predominate because each class member would be required to present individual proof relating to causation and damages. The Court disagreed, remanding the case with a specific order to certify the class. The opinion is interesting, as certification of personal injury type claims is generally disfavored.

In reversing, the Court of Appeal seemingly agreed with the trial court’s premise “that individuals who underwent retesting and retreatment for reasons other than having originally been mistreated would be unable to prove causation” [Slip Opinion, at 11], but disagreed that this issue relegated the causation analysis to a case by case inquiry.  Id, at 11-12. As reasoned by the Court, an inference of causation could be premised on class members seeking re-treatment after receiving the March 2004 advisory:
An inference of causation arises when a material event impacts an individual whose subsequent actions constitute a reasonable response. In the class context, where individuals are uniformly subjected to a material stimulus and thereafter uniformly act in a manner consistent with a reasonable response, a classwide inference is raised that the stimulus caused the response.
Here, putative class members all came to the Center seeking treatment for syphilis, a potentially life-threatening disease. They were given the wrong medication. After being informed that the treatment may have been ineffective, they sought retreatment. A reasonable inference as to the entire class is that the initial mistreatment caused members to seek retreatment. Causation can therefore be presumed on common proof.
Slip Opinion, at 12-13.

Moreover, while acknowledging that the defendant had a due process right to challenge the presumption individually, the Court concluded that doing so would not entail individualized testimony insofar as such determinations could be made based on treating records in defendant's position:
Though defendant must be given an opportunity to defeat the presumption as to any class member it contends sought retreatment for a reason other than having been initially mistreated, it adduces evidence only as to two such individuals—Aguilar and Rauch. If there are more, it should be a simple matter to ascertain from medical records—most of which defendant already possesses—when most of the class members as to whom causation is disputed received retreatment and whether they indicated they did so for some reason other than the initial mistreatment.
Slip Opinion, at 15.

Finally, citing to longstanding precedent, the Court concluded that the individualized nature of damages did not preclude certification. Quoting Sav-On, the Court concluded that the trial court had “‘an obligation to consider the use of … innovative procedural tools proposed by a party to certify a manageable class.’” See id., at 16. As reasoned by the Court, the trial court erred by failing to consider the proposals offered by plaintiffs to streamline adjudication of the damages issue:
Plaintiffs propose a number of ways to streamline the determination of damages, including making exemplar findings to establish a range of recovery, utilizing a proof of claim questionnaire, and establishing a special arbitration forum. Defendant offers no response to the proposals, and the trial court made no comment on them other than to note that they may require defendant to waive its right to a jury trial. Plaintiff's proposals suggest that damages can be determined fairly and expediently. Nothing suggests otherwise. If, after reasonable discovery, it appears that damages in this matter cannot be handled efficiently class wide, the court can divide the class into subclasses or decertify it altogether. (See Vasquez v. Superior Court, supra, 4 Cal.3d at p. 821.)
Slip Opinion, at 16.

Wednesday, May 26, 2010

Northern District Certifies Wage Class Arising Out Of Unpaid Temp Agency Interviews: Sullivan v. Kelly Services, Inc.

On April 27, 2010, Northern District Court Judge, Claudia Wilken, certified a proposed class action in Sullivan v. Kelly Services, Inc., 2010 U.S. Dist. LEXIS 50623 (N.D. Cal. Apr. 27, 2010), arising out of the temporary staffing agency’s failure to pay individuals for time spent interviewing with the staffing agency’s customers. While the proposition that a colorable wage claim could exist for attending job interviews seems, at first blush, untenable, the action actually arose out of a prior action wherein Kelly Services successfully obtained summary judgment on a Section 203 waiting time penalty claim based on the argument that persons whose temporary job assignment had ended were not discharged within the meaning of Labor Code Section 201. See id., at 6-7. In other words, by successfully arguing that the plaintiff continued to be an employee by virtue of the fact she went on multiple job interviews for other temporary assignments after her temp position ended, Kelly Services opened itself to liability for unpaid wages for these subsequent job interviews (oops!). Prior to moving for certification, the Court granted plaintiff’s summary judgment motion on her claims under Labor Code § 1194 and the UCL for the time she spent attending interviews with Kelly customers. See id., at 8. However, there did not appear to be any objection by defense counsel as to a post-merits-ruling certification motion.

Friday, May 21, 2010

California Supreme Court Rejects Economic Reality Test in Favor of IWC’s Expansive Definition of “Employer” : Martinez v. Combs

On May 20, 2010, the California Supreme Court issued an important opinion in Martinez v. Combs, __ Cal.4th __ (2010), concluding that the definition of “employer” contained in the IWC's wage orders define the employment relationship, and thus, who may be liable for unpaid wages. Slip Opinion, at 14-15. The decision comes nearly 100 years after the first variation of Labor Code Section 1194 was enacted, and is the first in which the Court has squarely weighed in on the proper definition of “employer” for purposes of unpaid wage liability. Previously, California courts have looked to the federal “economic reality test” – the thrust of which is focused on “control” – to define employer status under California law. See id., at 37-40. However, the Court concluded that the IWC’s definition of “employer” is more expansive than under federal law, as the Wage Orders were amended to broaden the definition of employer status in response to Congress’ passage of the Portal-to-Portal Act in 1947. See id., at 26-28.  As held by the Court, the applicable IWC test provides several potential avenues to employer status, each of which were adopted to address specific policy concerns relating to the protection of employees:
To employ, then, under the IWC‘s definition, has three alternative definitions. It means: (a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.
Slip Opinion, at 35.

The Court’s opinion goes on to discuss application of each prong under the facts of the case, which dealt with whether downstream entities from the immediate employer of strawberry field workers were technically employers under California law. Ultimately, the Court concluded they were not. However, in my humble opinion, this decision is nonetheless a substantial one, and likely will place the issue of “employer” status directly in question for a lot of business relationships formed under the more narrow economic realty/control test regime.

Wednesday, May 19, 2010

California Supreme Court Rules Attorney Advertising Not Exempt From Anti-SLAPP Protection: Simpson Strong-Tie Co., Inc. v. Gore

On May 17, 2010, the California Supreme Court issued an opinion in Simpson Strong-Tie Co., Inc. v. Gore, __ Cal.4th __ (2010), concluding that attorney advertising directed at users of specific allegedly defective product did not come within the commercial speech exemption to California’s Anti-SLAPP statute, codified at Code Civ. Proc. § 425.17(c).

The opinion considered trial and appellate court rulings which held that an attorney’s newspaper advertisement offering to evaluate potential claims arising out of potential defective deck screws was not the variety of commercial speech which the legislature intended to exempt from Anti-SLAPP protection when codifying Section 425.17. The Supreme Court agreed, concluding that it was not. Boiled to its essence, the Court’s conclusion turned on the fact that the defendant’s underlying action for defamation/libel did not “arise from” the attorney’s promotion of his services, but rather, the implied statements contained in the promotion that the defendant’s products were defective. Slip Opinion, at 20. However, as reasoned by the Court, “even an implication that Simpson's screws are defective ‘is not ‘about’ Gore's or a competitor's ‘business operations, goods, or services’” as required by Section 425.17(c)(1), and as such, “falls squarely outside section 425.17(c)'s exemption for commercial speech.” See id., at 20-23.

While Simpson does not ensure that an attorney advertisement will always trigger the first prong of Section 425.16, or that an attorney will ultimately prevail in prosecuting an Anti-SLAPP Motion, the Court’s decision is nonetheless important to ensure that practitioners at least have access to the Anti-SLAPP statute’s procedural protections – protections which are necessary to provide breathing room when in engaging promotional activity.

Friday, May 14, 2010

Second District Distinguishes Gentry from Discover Bank to Extract Second Class Action Waiver Test: Arturo Arguelles-Romero v. Superior Court

On May 13, 2010, the Second District, Division Three, issued an opinion in Arturo Arguelles-Romero v. Superior Court, __ Cal. App. 4th __ (2010), concluding that the California Supreme Court’s decisions in Gentry v. Superior Court, 42 Cal.4th 443 (2007) and Discover Bank v. Superior Court, 36 Cal.4th 148 (2005) “established two separate [class action waiver] tests which should be considered separately.” See Slip Opinion, at 13-14. As the Court explained “Discover Bank is a case about unconscionability” whereas “the rule set forth in Gentry is concerned with the effect of a class action waiver on unwaivable statutory rights regardless of unconscionability.” See id.

Underpinning the Court's analysis is the realization that a unique situation exists where a defendant seeks to compel individual arbitration on a non-waivable statutory right, as “an agreement to arbitrate a non-waivable statutory claim may, in fact, improperly compel the claimant to forfeit his or her statutory rights.” See id., at 18 (citing Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (2000)). According to the Court, Gentry involved a secondary analysis recognizing this distinction, as Gentry acknowledged that “a class action waiver would frequently have an exculpatory effect and would undermine the enforcement of the statutory right to overtime pay.” See id., at 19. Based on Gentry, the Court concluded that where non-waivable statutory rights are in play, a court must engage in a secondary analysis – distinct from the analysis regarding unconscionability – employing the following flexible, multi-factored test:
Gentry did not establish an absolute four-part test for the enforceability or unenforceability of class action waivers. Instead, “when it is alleged that an employer has systematically denied proper overtime pay to a class of employees and a class action is requested notwithstanding an arbitration agreement that contains a class arbitration waiver, the trial court must consider the factors discussed above: the modest size of the potential individual recovery, the potential for retaliation against members of the class, the fact that absent members of the class may be ill informed about their rights, and other real world obstacles to the vindication of class members’ right to overtime pay through individual arbitration. If it concludes, based on these factors, that a class arbitration is likely to be a significantly more effective practical means of vindicating the rights of the affected employees than individual litigation or arbitration, and finds that the disallowance of the class action will likely lead to a less comprehensive enforcement of overtime laws for the employees alleged to be affected by the employer’s violations, it must invalidate the class arbitration waiver to ensure that these employees can ‘vindicate [their] unwaivable rights in an arbitration forum.’ [Citation.]” (Gentry, supra, 42 Cal.4th at p. 463.)
Slip Opinion, at 20.

As a side note, the Court also acknowledged that the practice of some courts to extract a three-part test for unconscionability from Discover Bank is erroneous. This is an issue I previously opined upon here (see second article entitled “The Applicability of Discover Bank to Negligent Conduct”). The Court’s analysis on this point is as follows:
The Discover Bank court did not set forth a three-part test for unconscionability of a class action waiver in a consumer contract, although it is clear that the presence of three elements – (1) adhesion contract; (2) the dispute predictably involves small amounts of damages; and (3) allegations that the defendant has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money – was necessary to its analysis. (Discover Bank, supra, 36 Cal.4th at pp. 162-163.) For this reason, some federal cases applying Discover Bank have concluded that it established a three-part inquiry for determining the unconscionability of a class action waiver under California law. (See e.g., Shroyer v. New Cingular Wireless Services, Inc. (9th Cir. 2007) 498 F.3d 976, 983; In re Apple & AT & TM Antitrust Litigation (N.D.Cal. 2008) 596 F.Supp.2d 1288, 1298; Stiener v. Apple Computer, Inc. (N.D. Cal. 2008) 556 F.Supp.2d 1016, 1024.) This is not strictly accurate. While it is true that the presence of the three Discover Bank factors is sufficient to establish the unconscionability of a class action waiver, the Supreme Court did not hold that class action waivers are unconscionable only when those three elements are present.
Slip Opinion, at 16-17.

Wednesday, May 12, 2010

California Supreme Court Denies Petition for Review and Depublication Request in Jaimez v. Daiohs USA, Inc.

On May 12, 2010, the California Supreme Court denied the petition for review and request for depublication in Jaimez v. Daiohs USA, Inc., 181 Cal. App. 4th 1286 (2010). The docket statement to this effect is contained here. The Court of Appeal’s decision was discussed previously herehere, and here.

Friday, May 7, 2010

Fourth District Upholds Order Vacating $4M Class Default Judgment in Gutierrez v. G&M Oil Company, Inc.

On May 7, 2010, the Fourth District, Division 3, issued an interesting opinion in Gutierrez v. G&M Oil Company, Inc., __ Cal.App.4th __ (2010), holding that an in-house counsel’s act of concealing a wage class action from the board of the company was not, by virtue of his position, attributable to the company for purposes of Cal. Code Civ. Proc. § 473.

The case concerned an appeal of a trial court order setting aside a $4M class-wide default judgment that occurred when the in-house counsel decided to try his hand at some class litigation. After secretly accepting service of the complaint, and attending a couple of CMC hearings, the attorney apparently decided to call it a day, hiding the existence of the suit from his employer. [Is it just me, or are the facts of this case starting to parallel that episode of Leave It To Beaver entitled “The Haircut” (see “plot”)]. Subsequent to learning of the lawsuit, and the resulting $4M default judgment, the employer hired outside counsel, who thereafter had the judgment set aside under Section 473.

On appeal, the Court rejected plaintiff counsel’s argument that Section 473 was not available because the in-house counsel’s misconduct was attributable to the company, as a matter of law, by virtue of the in-house counsel relationship. Slip Opinion, at 8. Relying on the California Supreme Court’s decisions in General Dynamics Corp. v. Superior Court, 7 Cal.4th 1164 (1994) and PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084 (2000), the Court reasoned that the in-house counsel was acting in his capacity of counsel, and as such, was an “independent third party” for purposes of Section 473. Slip Opinion, at 8-11.

Wednesday, May 5, 2010

Attorneys Matt C. Bailey and Dylan F. Pollard Announce New Partnership in Los Angeles Based Complex Litigation Firm:

Its offical.  On April 16, 2010, I ended my 10 year career at KPA to set out on my own.  Exciting times.  I have set up shop with Dylan F. Pollard, also formerly of KPA.  The new Firm – Pollard | Bailey – is based in Beverly Hills and will focus on plaintiff-side class action and catastrophic personal injury litigation. 


The Firm website is located at http://www.pollardbailey.com/.  My new email address is mbailey@pollardbailey.com.

Monday, May 3, 2010

Petition for Review Granted in Pellegrino v. Robert Half Internat., Inc.

On April 28, 2010, the California Supreme Court issued a grant and hold in Pellegrino v. Robert Half Internat., Inc., 182 Cal. App. 4th 87 (Cal. App. 4th Dist. 2010). As previously discussed in a post contained here, Pellegrino upheld a trial court order granting summary judgment in favor of several plaintiff sales account executives on the administrative exemption. As identified on the Supreme Court’s website, the issue on review concerns the broad question of whether the administrative exemption applies to this job classification – an issue presently fully briefed in Harris v. Superior Court, Cal. Supreme Court Case No, S156555:
Petition for review after the Court of Appeal affirmed the judgment in a civil action. The court ordered briefing deferred pending decision in Harris v. Superior Court, S156555 (#07-443), which presents the following issue: Do claims adjusters employed by insurance companies fall within the administrative exemption (Cal. Code Regs, tit. 8, ? 11040) to the requirement that employees are entitled to overtime compensation?
Pellegrino may be found on the California Supreme Court's website here.  Harris may be found here.