Cal Biz Lit

Oh For The Bad Old (Pre-Prop 64) Days

For those of you who are late arrivals to the party, back in the old days we used to have large amounts of litigation under California's UCL (Business and Professions Code sections 17200 and following).  Plaintiffs' lawyers would find an industry they could challenge based on hyper-technical, meaningless violations of obscure laws and regulations, and have one client sue everyone in the industry "acting in the public interest."  It mattered not whether the plaintiff had ever done business with, had any connection with, or even heard of any of the defendant businesses.

Then those killjoys the California voters came along and enacted Proposition 64, prohibiting private enforcement actions unless the plaintiff had "suffered injury in fact and lost money or property as a result" of the defendant's acts.  And that amendment to the law -- with its revolutionary premise that people who are wronged are the ones who get a remedy -- seems to have shut down most of the UCL litigation.

But some people just never give up.  Take, for example, O'Brien v. Camiscasca Automotive Engineering (2008) ___ Cal.App.4th ___ (B195641).  Mr. O'Brien filed his purported class action under the UCL, the Consumer Legal Remedies Act (Civil Code section 1750 and following) and the False Advertising Act (Business and Professions Code section 17500 and following) contending that the  defendants  had made false representations concerning the origin of their products.  But he admitted in his deposition that he had never seen the representations  before he bought the product, so the Court of Appeal affirmed summary  judgment against him;  if  he didn't see the allegedly false representation, it certainly didn't cause him harm. 

And the Court of Appeal further found there was nothing wrong with the trial court entering judgment five weeks later, before the plaintiff had a chance to confer with the court about amending his complaint to add a new plaintiff that actually had seen the representation.  Thus, Mr. O'Brien was deprived of the right to lead the charge protecting consumers against fraudulent misrepresentations by these defendants.

And what was the false representation?  Mr. O'Brien bought an Audi license plate frame.  Stamped on the back of the package were the words "Made in USA."  O'Brien alleged that it was not, in fact, made in the USA.  He admitted he had no complaints about the quality of the license plate frame, which "looked good," "was nice," "appeared to be new" and fit the expectations he had when he placed the order.

Quelle horror!  I just can't understand why the California voters would want to put a stop to this kind of nonsense.

Friday off-topic post:

RIP Israel "Cachao" Lopez, bassist and the inventor of Mambo, passed away last Saturday at age 89 in Florida.

Cachoa continued to delight as recently as last year, as evidenced by the following:

And if that's not enough, here he is with the legendary Cuban pianist, Bebo Valdez.  Have a great weekend.

Attorneys’ Fees and Fee Awards In California – Part II

    Last week, I posted about contractual attorney fee provisions, and situations where a prevailing party could be awarded attorneys’ fees because of a provision in a contract.  This week, the subject is the award of fees in civil rights, employment and public interest litigation.  This is a long post, so I'm putting the rest of it after the jump.  When all three posts are up, I'll probably try to incorporate them all into a white paper.

So as we often say, lots more after the jump.

Just in Time for March Madness -- NCAA Anti-Trust Settlement

So the record is clear, CalBizLit is an avid fan of college football's University of California Golden Bears, and an ever hopeful fan of the same institution's men's round-ball squad, which just squeaked by its first round in the obscurity of the NIT (before a home crowd of, ahem 1900).  And demonstrating a triumph of west-coast bias over sports acumen and common sense, he's picked UCLA to beat Kansas in the big dance.

I'm also well aware of, and concerned about the abuses of college sports. The fact is, in big time sports there are parallel educational institutions for athletes and non-athletes.  The system often fails to serve all but the top-tier athletes, and they often leave long before graduation anyway (See The Game of Life, for example.  So I'd had some interest in White v. NCAA, Central District No. CV 06-0999, an anti-trust class suit by basketball and football players contending that "full ride" scholarships just always, somehow, seemed to come up  a few thou short of the real cost of an education.

But I had forgotten about the case until I was catching up on  back issues of Verdict Search California (subscription req'd) and saw that the case had settled. I did a little digging on the internets, and found  (a)  the order certifying the class (the reason, of course, for the settlement) and (b)  the notice setting out the terms of the settlement. 

More after the jump.

Attorneys’ Fees and Fee Awards Under California Law, Part I

    The original purpose of this blog was to provide commentary on California law for out-of-state companies and others who only occasionally have to deal with litigation here in the Golden State.  And one area where I get many questions in my practice has to do with attorneys’ fees and California’s fee-shifting statutes.

    I’ve been trying to get around to writing a white paper on the subject, and haven’t been able to do it (that pesky law practice of mine keeps getting in the way).  So instead, I’m going to try to put together a series of posts, probably three of them, discussing the fundamental rules having to do with fee shifting.  In today’s post, I’ll be talking about the basic rule, where the parties pay their own fees, and Civil Code section 1717, California’s contractual fees reciprocity statute.  The second post will be about the public attorney general statute, fees in civil rights and employment litigation, lodestars and multipliers.  The final post (probably) will discuss fees in consumer litigation.

    So first, the basic rule: Under California’s Code of Civil Procedure section 1021, if there is no statute or contract to the contrary, the parties to a suit pay their own fees (although the prevailing party is entitled to certain costs, which are usually pretty minimal).

    That was the easy part.  We start with the hard part after the jump.

Cal Court of Appeal to US Supremes: Here’s a Thumb In Your Eye

    Today we discuss punitive damages.  But this post is not about your routine, garden variety, might I say even conservative $1 million or $5 million punitive damages award.  Rather, this is about mega-punitive damages, as in Buell-Wilson v. Ford Motor Company (March 10, 2008) ___ Cal.App.4th___ (Fourth App. Dist. D045154, D045579) (Buell-Wilson II).   Specifically, the question is, what does the Court of Appeal do when the US Supremes tells it to re-analyze a $55 million punitive damages award, already reduced twice, in light of Philip-Morris USA v. Williams (2006) 549 US ___?   The short answer:  spend some forty pages re-analyzing it and reach exactly the same result it did before.  And, more importantly, build a legal wall designed to keep the Supremes from touching the decision.

More after the jump.

For NPR and David Sedaris Fans

Utterly, completely and hopelessly off topic post:

That's Myles Nye, close relative to CalBizLit, as David Sedaris.  7000+ hits and still counting at Defamer.com.

Thanks to CalBizLit readers for indulging a proud dad.  Next week:  back to the practice of law in California.

Further Commentary on Unocal Punitive Damages Decision

Yesterday CalBizLit posted on Holdgrafer v. Unocal, wherein the Court of Appeal for the second district applied State Farm v. Campbell in reversing a punitive damages award.  The trial court had allowed evidence of other bad acts, which the Court of Appeal ruled were too dissimilar.

The appellate firm of Horvitz & Levy represented Unocal in the case, and is certainly entitled to plaudits.  Last night, in that firm's punitive damages blog California Punitive Damages - An Exemplary Blog,  Horwitz's Jeremy Rosen quibbled with my characterization of the San Luis Obispo County judge as "conservative" for reducing the jury's punitive verdict from $10,000,000.76 (a cute nod to Unocal's former name, Union 76) to $5,000,000. 

I guess I'm jaded by practicing in California's big cities, where we've seen a $50 million punitive damage award against UPS, a $28 billion punitive award against  Phillip Morris and a $50 million punitive award against DaimlerChrysler.  Pretty sad when a $5 million punitive judgment becomes, if not conservative, at least ho hum.

Punitive Damage Award Reversed Based on Erroneous Admission of Other Dissimilar Instances

Interesting application of State Farm Mutual Automobile Insurance Company v. Campbell (2003) 538 U.S. 408 in the California context in yesterday's decision in Holdgrafer v. Unocal Corp. (2008) ___ Cal.App. 4th ___ (2d Civil No. B175953). 

Unocal (now owned by Chevron) owned and operated oil wells, a refinery, and hundreds of miles of underground petroleum pipeline in Central California in general and San Luis Obispo County in particular.  The company replaced two of the pipelines in 1952, installed cathodic protection (which guards against corrosion) in 1957 and hired a full-time manager to monitor the cathodic protection system starting in 1984.  Alas, there were still some 426 leaks from 1972 to 1992, and most of these were related to corrosion.

In 1988, substantial contamination from the pipes was found on the plaintiffs' property.  After a rapid-fire negotiation session lasting a mere 13 years, negotiations broke down and the plaintiffs sued Unocal.  The jury awarded them $564,348 in damages for past economic loss and $2 million for diminished value of the property.

Civil Code section 3294 permits a jury to award punitive damages if it finds by clear and convincing evidence that the defendant has been guilty of "malice, fraud or oppression."  Section 3295(d) (scroll down) provides that on  application of the defendant,  evidence of the defendant's financial condition shall not be admissible until such time as the jury has found malice, fraud or oppression. 

What this means in most instances is that punitive damage cases are bifurcated.  In phase I, the jury decides all of the compensatory damage issues, and also decides whether there is malice, fraud or oppression.  If it so finds, then in phase II, it looks at evidence concerning what punitive award is appropriate, including the defendant's financial condition.  This bifurcation is the right of the defendant, who can also waive it.

Well, Unocal had other leak and petroleum release problems besides this one.  It spilled, and then cleaned up, 400,000 gallons of oil at Avila Beach.  It leaked about 8.5 million gallons of a diesel-like substance at its Guadalupe field.

And the trial court admitted evidence of both of these mishaps in connection with the plaintiff's punitive damage claims, both as evidence of malice and as evidence of the amount of punitive damages that were appropriate.  The evidence was admitted only in Phase II.  But the trial court bifurcated in an unusual way:  both the malice issue and the amount of punitive damages issue were decided in Phase II.  Only compensatory issues were decided in Phase I.  In order to prevent evidence of the other spills from being admitted in the liability phase, Unocal waived its right to a section 3295 bifurcation.

The jury somewhat whimsically awarded $10,000,000.76 in punitive damages (Unocal, of course, was previously known as Union 76).  Confirming my analysis that San Luis Obispo Superior Court is a pretty conservative place, the trial court reduced the number to an even $5 million, even taking away the seventy-six cents.

The Court of Appeal took away the rest, on the ground that Avila and Guadalupe were dissimilar incidents.  State Farm held that dissimilar incidents were not admissible to prove the amount of punitive damages.  The California court held that dissimilar incidents are inadmissible to prove the entitlement to punitive damages.

Of course, the case was remanded for JUST a trial on the punitive part of the case -- probably not a happy scenario for Unocal.  One questions how well it will do trying ONLY punitive damages, with the jury being instructed that the company has already been found liable, and the only thing they need to do is look at all the similar evidence and determine whether there is malice and how much is appropriate to punish the company.