Cal Biz Lit

Breaking News: Big Win for Automobile Dealers in Lease Documents Cases

For at least seven years, plaintiffs' counsel have tenaciously prosecuted In re Vehicle Lease Documents Cases (Trygar) in Los Angeles Superior Court.  This Unfair Competition Law case was brought by Ed Masry (of Erin Brockovich fame) on behalf of Louis Trygar and several other plaintiffs against nearly every new car automobile dealership in California.  (Mr. Masry passed away, and the case is now being prosecuted by two of his former associates.) 

Plaintiffs initially challenged the use of "pay-off adjustment forms" in connection with consumer vehicle leases as violations of the "single document rule."  Then, when that claim crashed on the Proposition 64 shoals, they proceeded with a purported class claim against all the dealerships based on claims that the dealerships hid "negative equity" -- amounts owed on traded in vehicles -- in new car leases.

Among many other problems, of course, was that neither Trygar nor the several other plaintiffs ever had a case against any of the dealerships other than the ones where they leased their vehicles.  And under Proposition 64, they couldn't sue dealerships that hadn't caused them injury in fact.  So Trygar moved for leave to conduct discovery against all 1400+ dealerships so that he could go through their records finding customers who could serve as class representatives against each of the defendants.

The parties soon realized that this discovery motion was the entire battle, and the battle lasted more than a year, with some four sets of briefs filed by either side.   

Monday, Los Angeles Superior Court Judge Anthony Mohr ruled, and it's a slam dunk for the defense:  no discovery allowed.  The Plaintiffs are invited to bring a writ petition to the Court of Appeal.  But assuming the appeal fails, the case very probably is effectively over.  Judge Mohr's decision is here.

A very good day for the defense.  (Full disclosure:  CalBizLit doesn't usually engage in overly obvious bragging or shameless self-promotion, but will make an isolated exception here -- Bruce Nye was primary author of the defense briefs, working in consultation with an able and very helpful steering committee).

Defense Verdict in JDS Uniphase Trial

There is probably no  jury verdict more likely to strike fear in the hearts of board members and officers everywhere than a securities trial verdict.  The amounts at stake are nearly always mind-boggling, the cases involve concepts not exactly familiar to your average juror, and the defendant corporations and officers -- well, they don't usually start the race with a leg up.  Perhaps that is why these cases so rarely go to trial.

But the case against JDS Uniphase just did.  The fiber optics manufacturer was sued by the State of Connecticut, which claimed that investors lost $18 billion because JDS failed to timely disclose that demand for its products was falling.  And after two days of deliberations in Federal Court in Oakland, the jury returned with a defense verdict. 

Update:  WSJ.com law blog reports on the verdict, and describes a securities fraud class-action trial as "rare as a pygmy marmoset."

Why Corporate Defendants Like the Federal Courts

I blogged not long ago (and there's also a discussion in my product liability white paper) on Lockheed Litigation Cases, a Court of Appeal decision upholding a California trial judge for performing something that looked a lot like Daubert gate-keeping when it came to renowned junk scientist Daniel Teitlebaum.  The case went to the Cal Supreme Court, then disappeared from the books when the majority of the Supremes disqualified themselves.

In a part of the case I didn't discuss, the trial court had held that epidemiology (as relevant here, the study of occurrence or non-occurrence of disease or its absence in persons who are or are not exposed to alleged toxins) was only admissible to prove causation if the "relative risk" exceeded 2.0 -- i.e., when the occurrence of the disease in the exposed persons was at least twice that in the unexposed.  The Court of Appeal held that was going too far, and that the 2.0 standard was not required.

Monday, Judge Charles Breyer of California's Federal Northern District (and brother of U.S. Supreme Court Justice Breyer) issued a Daubert ruling in the Pfizer Celebrex litigation.  The decision followed three days of hearings including examination and cross-examination of proposed expert witnesses.   

In dictum (but dictum he's pretty clearly going to follow in the future) Judge Breyer stated that epidemiological evidence cannot be used to prove "specific causation" -- whether the exposure caused the disease in a specific individual -- when the relative risk is less than 2.0.  There is an excellent discussion of statistical significance and confidence intervals, with the Judge excluding evidence which epidemiologists and statisticians would hold to be not statistically significant.

There's more on the ruling at the Wall Street Journal Law Blog, Legal Pad, and Drug and Device Law.

This is the sort of process I really wish we had in California -- it gives both sides a fair trial while substantially increasing the likelihood that case outcomes will be based on real science.

Staples Wage and Hour Settlement

The focus of this blog is not employment law, and there are other blogs (Storm on the employer side, Wage Law on the employee side) whose authors do an excellent job in this field. But anybody  who conducts any kind of business at all in California needs to be aware of the dangers of misclassifying as  "managers" employees who stock shelves, mop up spills and counters, apply price stickers, run the cash register and have other non-management duties.   The exposure for non-payment of overtime is enormous, as Staples recently found out, according to this report in Wage Law:  $38 million, or more than $22,000 per "assistant manager."

Another Boomer Verdict From the Electronics World

Verdict Search California (subs. req.) reports on the September, 2007 verdict for UniRamTechnology, Inc. against Taiwan Semiconductor Manufacturing Corporation (TSMC).  UniRam shared some proprietary semiconductor design information with TSMC under an NDA, while they explored having TSMC manufacture the semiconductors.  TSMC decided it would indeed manufacture the semiconductors -- for one of UniRam's competitors. 

Not good said the jury.  That will be $30.5 million, thank you very much.  Ouch. 

And as often happens, "Defense counsel did not respond to the [VerdictSearch] reporter's phone calls."

The Real Reasons for Litigation Delay

Say what you will about California.  Sometimes we have a sense of humor, and sometimes we have manners.  Sometimes we have both.  Tentative ruling from Judge Barbara Zuniga from Contra Costa Superior Court (one of the nicer people on the California Superior Court bench, by the way), continuing hearing for the second time:

1.  COURT APOLOGIZES TO COUNSEL.
2.  COURT NEEDS TO PUT THIS OVER ONE MORE TIME.
3.  COURT JUST RETURNED FROM A CONFERENCE IN PHILADELPHIA.  HOWEVER, LUGGAGE WITH MOTION PAPERS AND COURT’S NOTES STAYED IN PHILADELPHIA.
4.  LUGGAGE WAS DELIVERED TOO LATE FOR COURT TO COMPLETE TENTATIVE.
5.  MOTION CONTINUED TO NOVEMBER 21, 2007.

Tip of the hat to LegalPad and The Legal Reader.

Cal Supremes Dismiss Potential Major Case Re: Science and the Law

In early 2005, the California's Court of Appeal for the Second District issued a fascinating (and highly favorable for defendants) decision in the toxic tort, solvent-exposure case Lockheed Litigation Cases, B166347.  In a case involving the admissibility of the opinions of the notorious and well-traveled  Dr. Daniel Teitelbaum , the Court of Appeal held that California Evidence Code section 801(b) allowed the trial court to act as a gate-keeper -- much as in Federal Court under Daubert --and excluded Teitelbaum's opinions because they were based on epidemiological studies of multiple solvent exposures, with no indication that there was a risk posed by the specific solvents involved in this case.  The Court also found no error in excluding expert opinion based on case reports, animal studies and toxic registries.  In short, the decision answered all kinds of frequently encountered toxic tort evidentiary questions, moved California a bit closer to Daubert, and contained much anti-junk science ammunition for defendants in these cases.

The California Supremes granted review a couple of months later, and under California law, this made the decision unciteable, and not authority for anything.  But it did look as though we would see some really useful evidentiary authority from the Supreme Court once the case was briefed and argued at that level.

No such luck.  Last week, the Supremes dismissed the review under very unusual circumstances:  that a majority of the members of the seven-justice court had been required to recuse themselves.  This despite the fact that rules of court (and common practice) provide for appointment of "pro tem' justices when members are disqualified, and on at least two past instances -- none recently -- all seven justices have been recused and replaced by pro tems.

So the current situation is that the Lockheed decision has no effect on anyone but the immediate parties, and the law on admissibility of expert testimony remains as wide-open as ever. 

(N.B.:  For more on expert testimony in a world without Daubert, see the Adams Nye white paper on product liability law starting at page 9, or my post here.)

(More N.B.:  The link to Dr. Teitelbaum above is to news about another California case where he testified, a case where the plaintiffs -- his clients -- lost.)

Toxics Verdict Against Dole Pineapple and Dow Chemical

DBCP is a nematocide (i.e., it's used to kill nematodes), used in connection with pineapple and banana farming, and discontinued in the United States beginning in the late 1970's based on allegations that the chemical reduced male sperm counts.  It's been the subject of litigation in California for nearly thirty years.  And, there's been much litigation by field workers against Dole Food Co. and Dow Chemical Co. in Central America, none of which has resulted in any money changing hands.

The first California trial by Central American field workers against the two companies resulted in a mixed verdict yesterday.  The cases of twelve plaintiffs were tried together.  Six plaintiffs won, and six lost.  The total awarded to the six winning plaintiffs was $3.2 million, not a particularly dramatic verdict for six plaintiffs in a toxic injury case (and probably not much of a pay day for their lawyers, given what it takes to prepare and try a case such as this).  The jury is reported to have assigned 60 - 80% fault to Dole and 20 - 40% to Dow, depending on the plaintiff. 

Reactions by the two companies were interesting.  Dole was happy to win six of the cases, and lauded the jury in that respect.  On the other hand,

". . . .the six verdicts against Dole are flat wrong and the result of junk science, raw emotional appeals and false testimony. These six men were not injured by DBCP or Dole, and it is unjust for them to be awarded money from us. We are appealing to set the record straight.”

Furthermore:

"Dole will not be intimidated by ugly accusations, fraudulent claims, junk science or threats from U.S. trial lawyers, and is prepared to fully litigate each and every case of workers over the last 30 years. . . ."

Dow, who is now only in this for a small share, was apparently a bit more sanguine.  The AP quoted Gus Felice, it's chief trial counsel, as follows:

"Dow Chemical Co. is very pleased that this jury, after four months of listening to the evidence, concluded that six of the 12 plaintiffs were entitled to no recovery whatsoever..."

The case was scheduled to go back to the jury today to determine whether the defendants acted with malice, whether punitive damages should be awarded, and if so, how much and against whom.

Initial MSM reporting on the verdict is here, here and here.  Dow's press release is here.

Objections to Form Interrogatories

Just a few hours after posting my white paper on written discovery, I encountered this post at Storm's Employment Law, criticizing the abuse of form interrogatories and raising the issue whether these interrogatories -- approved by the California Judicial Council -- can be objected to.  Actually, it seems quite clear that they can be objected to just like any other inappropriate interrogatories.  The Court of Appeal held in Nacht & Lewis Architects, Inc. v. Superior Court (1996)  47 Cal.App.4th 214 that Form Interrogatories 12.2 and 12.3 (asking for names of persons from whom a party has taken statements) violate the attorney client privilege and work product doctrine.

New Adams Nye White Paper on Discovery

One of the primary reasons for this blawg is to provide useful information for non-California lawyers, general counsel and others who only occasionally deal with California litigation.  And it has been my intention to periodically post white papers with fairly comprehensive treatments of nuts and bolts issues for this audience.  These white papers may be old news for those of us who are in the trenches here every day, but will undoubtedly contain surprises for those lawyers for whom California litigation is a strange and rare experience.

I haven't been able to post as many of these as I'd like;  they do take some time.  In the past, I've posted a white paper on Proposition 65 and another on product liability law.

Today, I'm posting a new one:  The Discovery Follies:  Inspection Demands, Interrogatories, Requests for Admissions and Expert Disclosure in California.
Hope some of you find this useful.