Cal Biz Lit

Proposition 65 -- The Madness Continues

I'll be writing a more detailed post on Proposition 65 early in the new year.  And if you want our firm's perspective in detail, you can read all about it in an Adams Nye White Paper. 

But Kevin Underhill writes today at Overlawyered about the Physicians Committee for Responsible Medicine's recent suit against McDonald's, Burger King and Outback Steak House seeking injunctive relief and penalties because those restaurant chains failed to warn consumers that they cooked meat.  Right.

Guess Next Time We'll Try a Different Trial Tactic

VerdictSearch California (subscription required) reports the November defense verdict in a ladder case tried by the retailer (Home Depot USA) and manufacturer (Krause, Inc.) against the unfortunate (and seriously injured) Robert Kurt Scherer in Scherer v. Home Depot, USA, Inc., USDC, Eastern District, Sacramento.  Seems the plaintiff attorney contended the ladder was defective because a user on the ladder could inadvertently kick the hinge release bar, causing collapse.  Defendants claimed this was impossible because, among other things, the weight of the user would keep the hinge from opening.

The plaintiff attorney tried an in-court experiment.  This is usually a bad idea.  She tried to unlock the hinges while standing on the ladder. Tried hard.  So did her expert.  In front of the jury.  No could do.  Defense verdict.

Harassment vs. Discrimination

Interesting new employment case today from the Third District Court of Appeal, Charlene Roby v. McKesson Corporation.  This disability discrimination and harassment case was tried in Yolo County, not typically considered a dangerous venue for employers and other business litigants.  After a jury, in the Court's words, "threw the book at McKesson," awarding the plaintiff more than $3.5 million in compensatory damages and $15 million in punitive damages, McKesson went to the Court of Appeal to see if they could make things better.

Much of the Court's opinion is going to be unpublished (making it unciteable in California), but in the cited section, the Court distinguished between the amount and type of evidence necessary to sustain a harassment verdict compared to that which would support a finding of discrimination.  The plaintiff's disability was a susceptibility to panic attacks, which caused her many absences and also caused a body odor which a number of co-employees found objectionable.  Her supervisor did the following:  (1)  gave small gifts and pies to all employees but plaintiff;  (2)  made plaintiff document all her calls and answer the telephone during the Christmas party;  (3)  greeted all employees but plaintiff, who she ignored;  (4)  made a "throat slash" gesture when plaintiff was on the telephone, then reprimanded her loudly in front of others;  (5)  called plaintiff's job a "no-brainer;" (6) told plaintiff her "arm digging" and heavy sweating (both related to the panic attacks) were disgusting;  (7)  showed plaintiff no compassion for her condition, and told her to bathe more frequently;  and (8)  did nothing when someone left soaps, shampoos and deodorants at the plaintiff's desk.

The Court held that while this was discriminatory, and hence actionable under California's Fair Employment and Housing Act, it wasn't the same thing as harassment.  Under Reno v. Baird (1998) 18 Cal.4th 640, harassment must be a type of conduct not necessary for job performance.  Therefore, the supervisor's acts in giving her undesirable work assignments, ignoring her at staff meetings, reprimanding her or casting her job in an unfavorable light could not constitute harassment.  On the other hand, they could constitute discrimination, and, interestingly, the defendant did not challenge the finding of discrimination.

Incidentally, in an unpublished part of the opinion, the Court both reduces the part of the compensatory award it finds duplicative and conducts an exhaustive State Farm v. Campbell review of the punitive damages award before finding that slightly better than a 1-to-1 ratio reaches the compensatory limits in this case.

Electronic Discovery in California Courts -- Not

Lawyers all over the country are being inundated by warnings (almost exclusively from vendors) to "Be Prepared for the New Federal Electronic Discovery Rules," and there certainly is a learning curve for all of us.  I'm working on a longer piece on this. 
But I spend much of my time in the California State court system, and became curious about what law was developing here on that subject. 
Come to find out, a Westlaw search on "electronic discovery" in the California cases brings up ONE case.  It's Toshiba America Electronic Components, Inc. v. Superior Court (2004) 124 Cal.App. 4th 762.  And the case says that the California statue on point means exactly what it says.  Here's California's statute on electronic discovery, Code of Civil Procedure section 2031.280(b) (formerly 2031.(g)(b)): 

 

"If necessary, the responding party at the reasonable expense
of the demanding party shall, through detection devices, translate any data compilations included in the demand into reasonably usable form."

That's the whole thing.  Looks like we may need to get a little more up to date in California.

Ounce of Prevention Worth Pound of Cure Department

Today, let's talk about avoiding litigation instead of what to do when you're in litigation.  December 13th's  National Journal (subscription required) has good coverage on California's law requiring sexual harassment training, Government Code section 12950.1 (scroll down).  Bottom line:  any U.S. firm with 50 or more employees and at least one supervisor in California must provide two hours of interactive sexual harassment training for supervisors at least every two years.  Live or via webinar.  Employment lawyers warn that "ignoring the mandate could be held against [the employers] in any future employment litigation."   While I agree, what they leave out is that evidence of training, besides reducing the likelihood of sexual harassment in the work place (always a good thing) is helpful when companies have to defend against these claims.

Employer Non-Liability for Internet Postings Revisited

Good analysis of the Agilent decision at Storm's California Employment Law.  My previous discussion is here.

Court of Appeal Denies Liability-Based Class Certification

Interesting and useful decision for the defense was published yesterday:  Sony Electronics v. Superior Court, Fourth District, D048468.  The issue is this:  when ascertainability of a class depends on determining liability as to every class member, can the class be certified?  The Court comes very close to saying "no, never," although it leaves the plaintiff with a little glimmer of hope on remand.  Although the Court cites Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, the decision is really much broader than Hicks.

Sony is the defendant in class litigation involving a soldering problem in some, but not all, Viao GRX notebook computers.  Plaintiff sought to certify a class  of  all persons who bought the  notebook computer.  The  trial court denied that one, but  instead granted certification of a class of  persons who bought the notebooks that had the defect.

The Court of Appeal reversed.  Based not just on Hicks but on a series of out-of-state cases,  the Court held that when  class membership can be determined only by case-by-case liability determination, there is no ascertainability and the  class must not be certified.  The case was remanded to see if there was some other way to determine class membership of persons who  had causes of action (e.g., one or more calendar months  when all  notebooks had the defect, etc.).

This is kind of huge for the defense.  For example, in the Lease Documents cases in Los Angeles Superior Court, Mr. Trygar and his friends are suing just about every new car dealer in the State in a UCL class action on a variety of theories, arguing that class membership can be determined by reviewing all of the dealers' records about every transaction.  This seems to put the kaybosh on this kind of case (and could, all by itself, take the rest of the air out of the Lease Documents cases, in which yours truly happens to be one of the liaison counsel for the dealers.

The UCL Practitioner discusses this from the plaintiff perspective today.

Employers Not Liable for Employee's Internet Postings

Man, Silicon Valley is a strange place.  One of the weirder sideshows there over the past few years has involved a couple of former Varian Medical Systems employees, Delfino and Day, published large numbers of internet bulletin board messages about Varian and two of its two executives.  Varian and the executives sued, and Delfino responded with more messages, posting over 13,000 such messages on various bulletin boards and promising to continue to do so until they died.  A jury awarded $775,000, the Court of Appeal affirmed, and the  Supreme Court took it away. 

So now, meet son of Varian v. Delfino and Day, yesterday’s Court of Appeal decision in Delfino et al. v. Agilent Technologies, Inc. First District Court of Appeal No. H028993.  This case actually has significance for any California business running a network and providing internet access to employees (which is to say, just about all companies).  Fundamentally, the facts are these: an Agilent employee, upset with Delfino and Day, sent them a bunch of threatening e-mails using his Agilent e-mail account.  Delfino and Day sued Agilent for intentional and negligent infliction of emotional distress.  Citing Section 230 of the Communications Decency Act of 1996, and several state and federal cases applying it, the Court held that an employer who provides internet service to its employees is “a provider or user of an interactive computer service” for purposes of the act, and that it was absolutely immune from suit for its employees postings using that service. 

A good discussion of previous California and Federal cases on Section 230 appears in the California Supreme Court's recent decision in Barrett v. Rosenthal.

Consumer Privacy at the California Supreme Court

I’m working on either a long post or an uploaded white paper dealing with California’s Unfair Competition Law, Business & Professions Code section 17200 et seq., but want to briefly address arguments in a UCL case heard yesterday by the California Supreme Court in the case of Pioneer Electronics v. Superior Court, No. S133794. The subject of the case is consumer privacy and the interaction between that right and the defendant company’s right not to disclose customer identifying information.

Bear in mind that California has its own Constitutional protection for privacy rights, Article 1, section 1 of the State Constitution.  In the Court of Appeals’ decision in Pioneer Electronics, a consumer class action involving alleged product defects, the Court of Appeals held that if plaintiffs want to obtain identities of consumers who had complained to Pioneer about the defect in question, a neutral party would have to communicate with the consumers in question (of whom there were about 800), and the consumers would have to specifically assent to having their identities disclosed and being contacted by class counsel. The Supreme Court hearings on this were covered very well by Kimberly A. Kralowec’s blog, The UCL Practitioner. Kimberly presents UCL matters from the point of view of consumer’s counsel, but is always fair and thorough. If her read on the hearings is correct, the Court of Appeal is going to be reversed, and plaintiffs will have a much easier time obtaining customer identifying information, or at least having an opportunity to contact consumers.

Look Out What You Ask For -- You Might Get It

California Corporations Code section 1800 allows shareholders to sue for involuntary dissolution of a corporation on a number of grounds, including fraud by the controlling shareholders, and even some situations where an even number of directors is deadlocked or the shareholders just don't get along.  Corporations Code section 2000, though, says that when a suit is filed, the controlling shareholders can have it stayed and submitted to a three-person appraisal, buying out the plaintiff shareholder or shareholders.

This week's VerdictSearch California (available in hard copy only) reports on the recent outcome in just such a case in Sutter County, one of Northern California's rural counties.  One of three brothers in a timer harvesting business sued the corporation for fraud, etc., claiming the two others were using the corporation to enrich themselves with related party transactions.  The defendant corporation exercised its right to stay the case and have an appraisal, taking the position that the planitiff brother's share was worth $24.7 million.  The appraisers were close to agreeing with the corporation, arriving at an appraisal of $29.5 million.

According to VerdictSearch California, that wasn't good enough for Judge Horace E. Cecchettini, who conducted a ten day trial, and awarded the plaintiff a thumping $45,742,423.

Guess the timber harvesting business is better than we thought.