Cal Biz Lit

When Is That Notice of Appeal Due? Hmm, Hard to Say

    I understand there is one thing California has in common with many jurisdictions:  the rule on when notice may be given of an appeal is strict and pretty inflexible.  Under California Rules of Court Rule 8.104(a), the Court of Appeal lacks jurisdiction to hear an appeal unless notice of the appeal is filed the earlier of:

• 60 days after the superior court clerk mails the party filing the notice of appeal either a document entitled "Notice of Entry of Judgment" or a file-stamped copy of the judgment, showing the date either was mailed;  or
• 60 days after the party filing the notice of appeal serves or is served by a party with a document entitled "Notice of Entry of Judgment" or a file-stamped copy of the judgment, with a proof of service;  or
• 180 days after the entry of judgment.

    In this era of electronic mail, what does it mean that the court clerk "mails" a document?  Particularly when the court has established procedures for service through the court's electronic filing system?

    We now have conflicting answers to that question, as explained after the jump.

Cal Supreme Court: Pre-Litigation Settlement Efforts Not a Prerequisite to Obtaining Private Attorney General Fees

    California's private attorney general fees statute, Code of Civil Procedure section 1021.5, allows fees to lawyers bringing suit in the public interest, and sets forth the criteria for when fees will be allowed.  CalBizLit did a lengthy post on this subject here.  Other posts on different California attorneys' fees provisions appear here and here.  And you can always learn more than you ever wanted to know on the subject at the recommended blog, California Attorneys Fees.

    As discussed in the earlier 1021.5 post, the Cal Supremes adopted the catalyst theory in Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, holding that a plaintiff may obtain fees even without obtaining a judgment if the "defendant changes its behavior substantially because of, and in the manner sought by, the litigation.”  However, catalyst fees are only allowed when the plaintiff seeking fees reasonably attempted to settle the matter short of litigation.

    Today, the Cal Supremes decided in Vasqez v. State of California (November 20, 2008) ___ Cal. 4th ____, S143710 that the bright line  Graham limitation -- no fees without a prelitigation effort to settle -- applies only to catalyst cases, not cases where the plaintiff obtains a judgment.  The presence or absence of a pre-litigation effort to settle is relevant to  "the necessity and financial burden of private enforcement," two of the elements to be considered by the trial court in determining whether to award fees.  But unlike catalyst cases, pre-litigation settlement effort is not an absolute prerequisite to obtaining fees.

    Also, the Court clarified that cases that settle with stipulated or consent judgments are not catalyst cases.

A Lesson on Default Judgments

We have this happen at least a couple of times a year:  an out-of-state company calls us, tells us they were sued, they turned the summons and complaint over to (a) an insurer;  or (b) their local counsel;  or (c) to a clerk or a secretary or somebody in office, and now they have received a notice of entry of default.

The common perception seems to be that we can get a default set aside just for the asking.  But that ain't so.  The standard for setting aside a default appears in Code of Civil Procedure section 473, which essentially allows a court to set aside the default for mistake, inadvertence or excusable neglect.  There are hundreds of appellate cases on this subject, and they are all over the map. 

Here's the latest one:        Fasuyi v. Permatex (October 15, 2008) ___ Cal.App.4th ___ (A117760).  And the holding and language are very helpful for somebody trying to get the default set aside: 

So, what do we have? We have a legal department at ITW which initially assisted Fasuyi’s counsel in effecting service. Once that service was accomplished, the legal department immediately did what any good department would, forwarding the summons and complaint to its insurance broker for appropriate handling. The broker also did what any good broker should, and immediately forwarded the complaint on to the appropriate insurers, received back the requested confirmation, and believed that the matter would be tended to.  Sadly, it was not.

That is the record here. No lack of cooperation from the defense side. Indeed, the converse. No deception. No duplicitousness. No stonewalling. No evasion. And no disregard of any warning. In fact, no warning.

It will be recalled that Fasuyi’s counsel had  been in contact with ITW’s legal department, which, not incidentally, had helped counsel effect service by identifying the location of CT Corporation. Notwithstanding that, Fasuyi’s counsel took the default without so much as a reminder, let alone a warning, about any responsive pleading.

You may not be surprised to learn that the Court of Appeal was not too nice to plaintiff's counsel, made some observations about the ethics of taking the default, and reversed the trial court for refusing to set aside the default.

Still, probably better not to allow the default in the first place . . . .

 

Court of Appeal Endorses Early Use of Code of Civil Procedure Section 998 Offers of Judgment

I’ve blogged often on California’s Code of Civil Procedure Section 998 – recent previous posts are here and here.  Briefly, Section 998 is our version of FRCP 68, and can be effective for obtaining pre-judgment interest, and for shifting both enhanced costs (primarily expert costs, which can be substantial) and sometimes attorneys’ fees.

Some of the open questions have been these:  When the case is brand new, and there has effectively been no time for discovery, can one party set up the other for cost and fee shifting by sending out an offer of judgment, with thirty days to respond?  Can the party receiving the offer object that it is premature?  It now appears that the answers to these questions are “yes” and “no.”

Barba v. Perez (2008) ___ Cal.App.4th ___ (3rd Dis., C05428) was a personal injury case.  Nine days after filing, plaintiff served defendant with the summons, complaint and a Section 998 offer to compromise for $99,999.99.  The case went to trial, and the jury awarded $117,053.432.  So Plaintiff beat the offer.

When the plaintiff sought pre-judgment interest and enhanced costs, the defendant contested on the ground that “[i]t is unreasonable to expect that [he], when first faced with the service of summons and a complaint, would have a reasonable basis to believe an offer to compromise was fair,” and he “had absolutely no basis to determine if the offer was reasonable.”  The trial court granted enhanced costs and interest.

Held:  affirmed.  The trial court had discretion to award interest and enhanced costs, and there is no waiting period for an offer of judgment: 

"Even assuming a situation . . . where a defendant has no information about the plaintiff’s damages when served with an early section 998 offer, defense counsel may request that plaintiff provide informal discovery on the damage issue and/or allow an extension of time to respond to the demand.  If plaintiff’s counsel refused to accord the defendant these courtesies and unyieldingly insisted that defendant respond without information, such conduct could then be presented to the trial court when it considered whether to award special fees and costs.”

California Discovery Motion Department -- Finger-wagging at judges division

     In yesterday's post, I reported on  Felton-Shepherd Industries, Inc. v. Delta Packaging Products, Inc. (August 19, 2008) ___ Cal.App.4th ___, where the Court of Appeal strictly applied the time limits in California's Discovery Act, reversing a trial court judge for bending the rules to allow a late discovery motion.  I also mentioned that in some of the smaller and more rural counties of this state, the judges tended to be a little relaxed in erring on the side of discovery.

    I should have mentioned that the Court of Appeal was extraordinary open in blasting the long-time small, rural county judge by name(well, I guess San Joaquin county isn't as small as it used to be)  for having "botched" the ruling.  We see this kind of personal criticism in published appellate rulings almost never -- the trial judge, while always identified in the introduction of an appellate decision, is thereafter usually cloaked in the anonymity of "the trial court." 

    As today's Legal Pad points out, this may be part of an ongoing  dispute between the Court of Appeal and Judge Peter Saiers.  As I had mentioned yesterday, published decisions on discovery matters are few and far between, and one has to wonder if this one was published because of who the judge was.

California Discovery Motions -- This Just In: Judges and Attorneys Have to Follow the Law

    As I've shown in my White Paper on discovery, California has a remarkably lengthy and convoluted set of discovery procedures, which differ substantially from the Federal Rules.  Our discovery act addresses in a ponderous set of about 192 statutory sections (Code of Civil Procedure sections 2016.010 - 2034.730) that which in the Federal Courts is dispensed with in twelve rules (FRCP 26 - 37). 

    Despite this level of statutory detail, and despite some fairly strict rules that, for example, close discovery thirty days before the first trial date and require discovery motions to be heard no later than fifteen days before the first trial date (CCP section 2024.020), there is a tendency among some judges, particularly in the smaller and more rural counties, to figure that they can't go wrong if they err on the side of allowing discovery.  And since our Courts of Appeal hear very few discovery cases and publish decisions in even fewer, there is often very little the parties can do about it.

    But here is some fresh ammo for parties and litigants with an interest in strict application of the rules: Felton-Shepherd Industries, Inc. v. Delta Packaging Products, Inc. (August 19, 2008) ___ Cal.App.4th ___.  In the published portions of this forty-five page magnum opus, the Court of Appeal holds that the Discovery Act means what it says:

• The last day to have a discovery motion heard is fifteen days before trial  (CCP section 2024.020(a));
• The trial court cannot extend the time for such a motion to be heard (presumably in the absence of a stipulation of the parties) unless one side makes a motion  (CCP section 2024.050(a)); 
• Once the motion is made, the court must exercise its discretion considering various factors, including but not limited to "[t]he necessity and the reasons for the discovery" and [t]he diligence or lack of diligence of the party seeking the hearing of a discovery motion and the reasons that . . . the discovery motion was not heard earlier"  (CCP sections 2024.050(a) and (b)(1), (2));  and
• If the trial court allows a discovery motion after the cut-off without a motion specifically seeking the tardy discovery motion, or without considering the appropriate factors, it is an abuse of discretion and reversible on a showing of prejudice.

   This powerful and unambiguous limit on the trial court's power should apply not only to the motions cut-off, but to the thirty day discovery cut-off itself and to the similar cut-offs for expert depositions (15 days before trial, per CCP section 2024.030) and for hearing expert motions  (ten days before trial per CCP section 2024.030).

Court of Appeal Rules Pass-On Defense Applies in Cartwright Act Anti-Trust Suits

    California has long had its own anti-trust law, the Cartwright Act (Bus. & Prof. Code §§16700 and following), and the California anti-trust jurisprudence is similar, but by no means identical to, that deriving from the Federal Sherman Anti-Trust Act (15 U.S.C. § 1, and following).  Last month, the Court of Appeal for the First District decided a case of first impression, creating another clear difference between the two.
    In Clayworth v. Pfizer, Inc. (July 25, 2008) ___ Cal.App.4th )___ (A116798), the Court held that the “pass-on defense” is available to defendants accused of price-fixing.  The issue, previously discussed by the U.S. Supremes in Hanover Shoe v. United Shoe Mach. Corp. (1968) 392 U.S. 481, is this:  Plaintiffs (in our case, a large number of retail pharmacists) buy products (here, prescription drugs) from Defendants (in our case, a large number of pharmaceutical companies).  Defendants unlawfully conspire to keep the prices artificially high.  Plaintiffs pass along every last nickel of the supra-market price to its customers.  Do Plaintiffs have a claim under the anti-trust laws?
    In Hanover Shoe, the U.S. Supremes said “yes,” or “maybe,” depending on how you interpret the decision.  Nine years later, in Illinois Brick v. Illinois (1977) 431 U.S. 720, the Court said that only the Plaintiffs had such a claim – not the customers to whom the unlawful increases were “passed on.”  This is what is known as the “indirect purchaser” doctrine, and it was eliminated by statutory amendment in a number of states, including California.  (Stats. 1978, ch. 536,§ 2, p. 1696).
    Surprisingly, the “pass-on defense” was never directly considered by a California Court of Appeal until last month.  And the Court held that it applied and barred Plaintiffs’ Cartwright Act claims.  The theory was this: since the unlawful increases were all passed on to somebody else, there were no damages, and you can’t have a Cartwright Act claim without damages.
    OK, I understand the decision, but here is what I don’t understand:  is it so clear that the plaintiffs didn’t have any damages?  If I recall my economics classes at Cal oh so many years ago, there is such a thing as “price elasticity of demand.”   If product has negative price elasticity (as I assume pharmaceuticals, like most consumer products, do), then an increase in price results in a decrease in demand.  If demand decreases, unit sales decrease, and if a retailer’s unit sales decrease as a result of a price increase which does not affect per-unit profits (as would be the case when price increases are “passed on”), isn’t the retailer damaged by a reduction in profits?  The pass-on defense might prevent the plaintiffs from recovering as damages the price increases.  But why couldn't they recover other damages, such as lost profits?  What am I missing here?

Personal Injury Plaintiff Recovers Full Amount Billed for Medical Services -- Not Just Amounts Paid By Insurance

   Anyone who has had major medical experience in the past thirty years or so knows there is a big difference between what gets billed for medical services and what providers accept from insurers as payment in full.  Health insurers typically have negotiated rates with hospitals, physicians and other providers, so while, for example a $100,000 billing is sent to the patient and the insurer, $30,000 of this is paid by the insurer and the rest is written off.  Under Hanif v. Housing Authority (1988) 200 Cal.App.3d 635 and Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298, when a plaintiff has medical insurance, damages are limited to the amount actually paid or incurred, not the greater amount billed by the medical provider.    It is an article of faith among defense lawyers that if a plaintiff wins a personal injury case at trial, his or her medical specials will be the amount paid by the insurer, not the amount billed by the provider. 

    The recent case of Olson v. Reid (2008) ___Cal.App.4th___ (Fourth Dist., G038478) shows how easy it is for a defendant to mess this up and  get stuck for the amount billed instead.  And perhaps even more significantly, an unusual concurring opinion makes a powerful case that Hanif and Nishihama were wrongly decided, and that an insured plaintiff should recover the full amount billed, not just the amounts paid by insurance.  More after the jump.

Clouded Crystal Ball Department

Yesterday, I spoke on the telephone with a lawyer I know in Indiana.  He went to law school about the same time I did (back when the earth was cooling) and he was commenting that when he was in law school, they'd read the cases on a particular issue, he'd think he understood the applicable law, and then they'd get to the case on California, where things were always, ah, well,  different . . . .

And in that regard, let us review the long and winding road of Barry and Benetta Buell-Wilson's litigation against Ford Motor Company, arising out of her 2002 catastrophic rollover accident in January, 2002:

June, 2004:  San Diego Superior Court jury awards the Buell-Wilsons  $122.6 million in compensatory damages and $246 million in punitive damages.

On post-trial motions, the trial court reduces this to a mere $75 million in compensatory damages and $75 million in punitive damages.

In July, 2006, the Court of Appeal affirms the finding of liability, but reduces compensatory damages to approximately $27.6 million and punitive damages to $55 million.  Buell Wilson v. Ford Motor Co., Inc. (2006) 141 Cal.App.4th 525.   In August, that court denies rehearing.  Buell Wilson v. Ford Motor Co., Inc. (2006) 141 Cal.App.4th 1421b.

Ford petitions the California Supreme Court for review, and this petition is denied in November, 2006.  Ford petitioned the U.S. Supreme Court for certiorari.  The U.S. Supreme Court issued a "GVR" order, granting certiorari, vacating the judgment, and remanding the case for reconsideration in light of Phillip Morris USA v. Williams (2007) 549 US ___ (127 S.Ct. 1057) (now known as "Williams I," as "Williams II" is presently before that court).

As discussed in CalBizLit here, and a whole bunch of other places, the Court of Appeal said "reconsider?  sure, we'll reconsider, and we'll come right back with exactly the same decision."  Buell-Wilson v. Ford Motor Company (2008) ___ Cal.App.4th___ (Fourth App. Dist. D045154, D045579).

    That astute observer of the legal scene Bruce Nye at CalBizLIt commented at the time: 

"This may be the end of the road for Ford.  The Court of Appeal seems to have set up enough procedural obstacles that the Supremes won’t get involved unless they really, really, really are determined to slap down excessive punitive damages awards."

Well, nice prognosticating.  Except it's 180 degrees wrong.  The Cal Supremes have granted review, and here's the statement of issues for decision:

(1) What procedural protections are required by Philip Morris USA v. Williams (2007) 549 U.S. __, 127 S.Ct. 1057, which held that due process requires that a jury not award punitive damages to punish for harm to third parties; and under what circumstances can those constitutional rights be deemed forfeited? (2) Are punitive damages prohibited in product liability cases where the manufacturer's design conforms to governmental safety standards and industry standards and custom, and there is a "genuine debate" about what the law requires? (2) Is the amount of the punitive damage award in this case unconstitutionally excessive and arbitrary?

The Supremes have put the case on hold pending the U.S. Supreme Court's decision in Williams II.

Sanctions for Failure to Attend Court-Ordered Mediation

The original mission of this blawg was to provide guidance to out-of-state businesses and others whose involvement in California litigation was infrequent, but potentially painful.  So a decision last Friday from the Court of Appeal in Sacramento is useful for understanding the appellate courts' view on the obligations of parties at court-ordered settlement conferences and mediations.  And given the Court of Appeals' prospective announcement about how it is going to approach this issue in the future, this is probably valuable for just about anybody.

The case is Campagnone v. Enjoyable Pools & Spas Service & Repairs (May 30, 2008) ___ Cal.App.4th___ (Third District, No. C055050).  More after the jump.