Cal Biz Lit

What Does It Take To Allege A Cause of Action In California State Court?

    About six weeks ago, the US Supremes issued their pleading decision in Ashcroft v. Iqbal, ___ U.S. ___ (May 18, 2009, No. 07-1015).  The  Wall Street Journal quotes those ubiquitous "legal experts" as saying Iqbal may be the most important case of the term.  While Iqbal was a discrimination case, SCOTUS seems to impose requirements for pleading any cause of action much more stringent than many practioners may have assumed under FRCP, Rule 8's "short and plain statement of the claim" standard.

    Well, this blog isn't about federal practice;  it's about California practice.  And what is the standard for pleading a cause of action in the Golden State?  According to Code of Civil Procedure section 425.10(a)(1), a complaint must contain "a statement of the facts constituting the cause of action, in ordinary and concise language."  So what does that mean?  It means the plaintiff must allege "ultimate facts," not "conclusions of law."  Huh? 

    There are an awful lot of defense lawyers around these parts who cut their teeth in their formative years drafting demurrers (California's version of a FRCP Rule 12(b)(6) motion) addressing just whether or not complaints met this standard, and there are tons of appellate cases on the subject.  But the fact is, in a typical product liability or other personal injury tort case these attacks on the pleadings rarely achieve anything very useful and, fortunately, they seem to be less common than they used to be. 

    Anyway, some years ago, California's Judicial Council began adopting check box forms to be used as pleadings.  Besides taking away some of the more stylish flourishes that used to appear in pleadings in the olden days (". . . plaintiff alleges that she was injured in her health and her strength and in her ability to do her work, all resulting in damages in an amount presently unknown, but plaintiff will seek leave of this honorable court to amend this Complaint when the amount becomes known. . ."  etc., ad nauseum) these forms, while not mandatory,  have resulted in what we at CalBizLit sometimes call "no-notice pleading." 

    Here's what the Judicial Council considers to be an adequate allegation of a product liability cause of action.  Do you think filling out this form would get the plaintiff past Iqbal?  I'm thinking not so much.

    So that's reason 1,546 why defendants like Federal Court.

California: We May Be Broke, But We've Joined the Twenty-First Century

    As I posted here two and one half years ago, despite California's status as the home of Silicon Valley, the birthplace of Google, Amazon.com, Intel, Yahoo, Hewlett Packard, Oracle, McAfee, Intuit, Symantic and scores of other companies that used silicon and ones and zeroes to change the way we work, play, practice law, etc., California has had no statutes, no rules, and scarcely any case law addressing issues of electronic discovery.

    Late last year (as discussed here), the legislature finally passed an e-discovery act.  But at the time, the Governator and the legislature were at each others throats over the then projected $28 billion state budget deficit, Ahnuld was vetoing every non-budget bill that crossed his desk, and what was then AB 926 landed on the scrap heap.

    Well, as luck would have it, California now has a budget gap of more than $26 billion for one year, the treasury is paying its bills (and tax refunds) with IOUs, and the current donnybrook  between legislature and governor makes last December's squabble look trivial by comparison.  But while the governor is still talking about vetoing all non-budget related legislation, he did manage to take a moment away from the budget smack-down to sign AB 5, which is essentially the same as the act he vetoed last year.  The new act adds Code of Civil Procedure section 1985.8 specifically dealing with subpoenas of electronically stored data, adds a variety of related provisions throughout the Discovery Act, and addresses issues of reasonable accessibility and the format(s) in which electronically stored data shall be produced.  The entire act, which takes effect immediately,  is here.

More About The Smelly Bentley: Court of Appeal Finds Trial Court Was Required to Impose Terminating Sanction For Discovery Abuses

    Earlier today, I posted about the Court of Appeals' decision in Doppes v. Bentley Motors, Inc. (June 8, 2009) ___Cal.App.4th___ (GO39922),
There, the Court held that the trial court had jurisdiction to award 7% pre-judgment interest in an action under California's Song-Beverly Consumer Warranty Act, California Civil Code section 1790 and following.

    But when it issued this decision, the Court of Appeal also issued a decision in Doppes v. Bentley Motors, Inc. (June 8, 2009) ___Cal.App.4th___ (G037834).  In this case, the Court of Appeal took the remarkable step of reversing a judgment in favor of the plaintiff because the trial court judge's discovery sanction against the defendant had not been sufficiently severe.  

    More after the jump.

Nine Votes. That's Nine Votes. On Every Question.

    Unlike the federal courts, where verdicts must be unanimous, California courts require that in Civil cases, 3/4 of all jurors agree.  That's Code of Civil Procedure section 618.  In most cases of any consequence, we use "special verdicts" -- a series of questions for the jury to answer, usually ending with questions to be answered -- if necessary -- about damages.  After the verdict is announced in open court, either side can request that the jurors be individually polled, and if nine of them don't each agree with the verdict's answer to each of the questions, back to the room they go.  (It doesn't have to be the same nine for every question.)

    In complex cases with multiple causes of action, the special verdict can have many questions and go on for pages.  Drafting special verdict forms (and arguing them to the jury) is therefore very much an art form. 

    In order to avoid confusion, many trial judges give each juror a colored copy of the verdict form to fill out with his or her final vote, so that each will have a "cheat sheet" when polled.  Some of the more creative judges hand out "yes/no" paddles for the jurors to raise indicating their vote on each question.

    In the case of Keener v. Jeld-Wen (May 7, 2009) ___Cal.4th___ (S16430), decided last week by the Cal Supremes, the trial court messed up the polling, neglecting to poll one of the jurors on the verdict question apportioning liability between the parties.  Since the verdict was over $4 million, and the verdict apportioned 80% of the fault to the defendant, this was of more than academic interest to both sides.  And the defendant thought it worthwhile to discuss the significance with the Court of Appeal and then the Supremes.

    Too bad for the defendant, who should have discussed it with the trial judge.  And before the jury was sent home.  Per the Cal Supremes:  the verdict is presumed correct.  And if the irregularity isn't raised in time to correct it, the irregularity is waived.

Parent-Subsidiary Relationship Not Enough To Create Personal Jurisdicition -- And Neither Is "Alter-Ego" Relationship

    From time to time I have occasion to re-state the purpose and target audience for CalBizLit:  while all are welcome, this blawg is aimed at companies within and without California who are only infrequent (and usually involuntary) visitors to the strange world of California litigation and want to know more about what they have got themselves into.

    And for such companies, there is no more pertinent question than this:  How did the California courts get jurisdiction over our company in the first place?

    California takes a very broad view of "long-arm" personal jurisdiction.  Under Code Civ. Proc. sec. 410.10, the California courts have personal jurisdiction over non-resident defendants to the full extent allowed under the state and federal Constitutions.  This means that the California courts can assert jurisdiction if the defendant has sufficient “minimum contacts” with the forum state so that the exercise of jurisdiction “does not offend traditional notions of fair play and substantial justice.” (Internat. Shoe Co. v. Washington (1945) 326 U.S. 310, 316 [90 L.Ed. 95] ; accord, Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 268.) 

    Personal jurisdiction may be "general" -- based on the defendant's "substantial, continuous, and systematic" contacts.  (Perkins v. Benguet Mining Co. (1952) 342 U.S. 437, 445-446 [96 L.Ed. 485]; see Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445).  Or, it can be specific, with the cause of action arising out of the defendant's contacts.  (Helicopteros Nacionales de Columbia v. Hall (1984) 466 U.S. 408, 414, fn. 8 [80 L.Ed.2d 404]; Vons, supra, 14 Cal.4th at p. 446.)

    Now, however, thanks to Health Markets, Inc. v. Superior Court of Los Angeles County (March 9, 2009) ___Cal.App.4th___ (B211881) we know that specific jurisdiction cannot arise out of a parent-subsidiary relationship unless the parent "purposefully directed the activities" of the subsidiary giving rise to the cause of action.  Moreover, whether or not there is an "alter ego" relationship, of the type that could be used to pierce the corporate veil and hold the parent liable for the actions of the subsidiary, is not relevant for purposes of establishing jurisdiction.

Anatomy of A California Product Liability Case, Part II

            Back before CalBizLit went on hiatus, I had started what was intended to be a three or four part blawg post outlining the protocol for defending a small to mid-size, non-bet the company, non-class-action, non-mass litigation, non-unique garden variety product liability case.  Getting part two written and posted became more and more of a challenge as the lives professional and personal competed for my attention, and the next thing you know, it's a month later.  Ouch.  So, for those who need a refresher, here's Part I.

            And after the jump, I've posted Part II.  Part III will appear early next week.  I promise.

Summary Judgment Motions: Strict Enforcement of Time Limits

    I'm on record any number of places over the years as having said that California law and California culture both effectively make summary judgment a disfavored motion, and a new case provides further evidence.

    Code of Civil Procedure section 437c, subd. (a), provides that a hand-served motion for summary judgment must be served at least 75 days before the hearing, and the hearing must be heard more than 30 days before trial.  So the motion has to be served at least 105 days before trial, a deadline likely to jam the moving party.  For service by mail, you add 5 days to the 75;  for express mail, overnight service or facsimile (if the other side has consented to facsimile) you add two days.

    Two previous cases, McMahon v. Superior Court (2003) 106 Cal.App.4th 112, Urshan v. Musicians’ Credit Union (2004) 120 Cal.App.4th 758 and Boyle v. CertainTeed Corp. (2006) 137 Cal.App.4th 645 all stand for the proposition that the court can't reduce the 75, 77 or 80 days notice period.  They are now joined by Robinson v. Woods (December 4, 2008) ___Cal.App.4th___, Second Appellate District No. B200145.

    But here's another wrinkle from the new Robinson case:  Robinson holds (in conformance with the summary judgment statute) that the court can't set the hearing within the 30 days before trial without a finding of good cause, and that the party opposing summary judgment can't be required to file substantive opposition until after that finding has been made.  Otherwise, it's a denial of due process.

Will California Finally Have An E-Discovery Law?

                                                   

    In a post almost two years ago --during the very first month of CalBizLit -- I posted here on the absence of any real e-discovery law in California.  So far, that hasn't changed.

    Earlier this year, both houses of the legislature approved AB 926, which would have added provisions to California's Code of Civil Procedure addressing this issue.  Unfortunately, Governor Ahnald, in a somewhat justifiable snit over the failure of the legislature to enact a budget, went on a bill-vetoing rampage, and this one, along with hundreds of others, went out to the Capitol dumpster.

    Now Legal Pad reports that Assemblywoman Noreen Evans, D – Santa Rosa is introducing just about the same bill, now AB 5.  If approved and signed by the Guv, AB 5 would amend our procedures relating to "Inspection Demands" as follows:

• A party could demand to inspect, copy, test or sample electronically stored information;
• The demanding party could specify the form or forms in which electronically stored information was to be produced;
• The recipient of such a demand could object that the stored information is "not reasonably accessible because of undue burden or expense," or could move for a protective order on the same ground;
• The objecting or moving party has the burden of showing the information is "not reasonably accessible," and even if he, she or it does so, the court can still order its production "for good cause," but can set conditions and can allocate the cost;  and
• If an inspection demand does not specify a form for producing electronically stored information, the responding party can produce it either in "the form in which it is ordinarily maintained" or "in a form that is reasonably usable."

    California needs to deal with this, and AB 5 doesn't seem unreasonable.  The problem is this:  California has a $28 billion budget shortfall over the next two years.  The Governator has called an emergency session of the legislature to deal with it.  Said legislature seems likely to do zilch.  I detect more rampages of vetoes coming.

And What Documents Did You Review? And Where Are They?

    While the rest of us, including CalBizLit, were suffering post-turkey dinner tryptophan fatigue (or were flat-out worn out for other reasons not related to the bird), Dan Hull was blogging away at What About Clients, where he reminded readers about the use of F.R.E. 612 in Federal case depositions.  You know the drill:  "What documents did you review before this deposition?  Did you review them to refresh your recollection?  Please turn them over now." 

    Well, CalBizLit, of course, is all about the California angle, so WAC's post got me thinking about the analogous situation in our state court practice.  Like F.R.E. 612, our Evidence Code section 771, subd. (a), provides that:

[I]f a witness, either while testifying or prior thereto, uses a writing to refresh his memory
with respect to any matter about which he testifies, such writing must be produced at the hearing at the request of an adverse party . . . .

    But the problem in California is with the rest of this code section.  If the witness fails to produce the document, the remedy is to strike his or her testimony.  And since the adverse party is the one taking the testimony at a deposition, the sanction of having that deposition testimony stricken isn't any too helpful. 

    Furthermore, the witness is excused from producing the document used to refresh testimony if the document:

(1) Is not in the possession or control of the witness or the party who produced his testimony concerning the matter; and
(2) Was not reasonably procurable by such party through the use of the court's process or other available means.

    So the law in California is pretty weak.  And while it's very common for lawyers at deposition to ask one of the foundational questions:  "What documents did you review in preparation for this deposition," they often fail to follow up by demonstrating the documents were used to refresh the witness's recollection, and they often don't know what to do if they are refused documents once they've laid that foundation.

    Here's one solution:  Our Code of Civil Procedure section 2025.220, subd. (a), part (1), provides that a notice of taking deposition may include "[t]he specification with reasonable particularity of any materials or category of materials to be produced by the deponent."  And that means the witness has to produce those materials.  So, shouldn't the notice state that the witness is required to bring to the deposition "all documents or other things reviewed by the witness in preparation for the deposition, for the purposed of refreshing recollection or otherwise"  ?  Then, when Mr. Jones is asked what documents he reviewed in preparation for the deposition, and describes the company's ledgers from 2002 through 2006, but he didn't bring them along, don't we adjourn the deposition until the documents are produced?

    I think we do.

Trial of Legal and Equitable Issues in California Courts

           You all remember courts of chancery, right?  They were the ones where the chancellor  tried equitable issues, without a jury.  And the artifact of those courts, of course,  is the distinction between “legal issues” and “equitable issues.”  In California, and, in most instances, in the Federal courts, the former involve money damages and the parties have the right to a jury trial.  The latter involve things like injunctions, declaratory relief and “equitable defenses,” (including those old faves laches, estoppel, waiver, unclean hands, etc.) and are usually tried to the court.  The new case of Hoopes v. Dolan (November 12, 2008) ___Cal.App.4th___ does a nice job of summing up what happens in cases with both legal and equitable issues. 

             The Dolans leased commercial real estate to several tenants, one a café operator and one a trucking company.  Hoopes, who had the trucking company, contended back in 1996 that he had exclusive use of some or all of an adjacent parking lot.  Dolans and the café operator said no, it was shared.  Seemingly, that was the end of it, and the parties shared the lot until 2004, when Hoopes sent a snarlogram to Dolans and a new café operator tenant, claiming he had exclusive rights to most of the parking lot.  And in 2005, he sued them for compensatory damages, punitive damages, injunction, declaratory relief, etc., etc.  Dolans asserted the affirmative defense of equitable estoppel, which doesn’t seem unreasonable when everybody had gone about their business in peace for eight years.

            Despite Dolans urging, and at Hoopes’ insistence, the trial court conducted a thirteen day jury trial of the legal issues first.  The jury found for Hoopes and awarded compensatory and punitive damages.  Then, the court tried the equitable defense of estoppel (which trial looks as though it mostly consisted of reviewing briefs on both sides and considering the evidence the court had already heard).  As a court of equity, the court found that Hoopes was equitably estopped from taking the position that he had exclusive rights to the lot, and, notwithstanding the jury’s verdict, entered judgment for Dolans and the other tenant.

            The Court of Appeal affirmed the judgment, and made the following procedural observations:
 

• In federal practice, when there are legal and equitable issues, a jury first tries the legal issues, and any remaining equitable issues are then tried to the court.  (Beacon Theatres, Inc. v. Westover (1959) 359 U.S. 500, 510-511.)

• Preferred practice in California is exactly the opposite:  The trial court should hear any equitable issues first, and then convene a jury trial if anything is left.  (Bate v. Marsteller (1965) 232 Cal.App.2d 605, 617.)  But failure to follow this preference – as occurred here – is not reversible.

• In both the state and federal courts, a factual finding by the first fact finder (judge or jury) is binding on the second. (Raedeke v. Gibraltar Sav. & Loan Assoc. (1974) 10 Cal.3d 665, 671;  Hughes v. Dunlap (1891) 91 Cal. 385, 388-390; Beacon Theatres, Inc. v. Westover, supra, 359 U.S. 500, 504-505.)

            In my experience, most trial courts follow the “preference” for trying the equitable issues first, and when a plaintiff has asserted equitable causes of action in what is, at heart, a contract or other damage case, this presents some pretty interesting tactical questions.