Cal Biz Lit

Major California Rule Change For Depositions Takes Place In 2013

It's been quite a long time since the California legislature turned its attention to civil discovery.  But man, they sure did this time.  Yesterday, the Governor signed AB1875,

limiting deposition length in many cases to seven hours.  The guts of the bill, heavily lobbied for by the Plaintiff's bar, provides as follows: 

Except as provided in subdivision (b), or by any court order, including a case management order, a deposition examination of the witness by all counsel, other than the witness’ counsel of record, shall be limited to seven hours of total testimony. The court shall allow additional time, beyond any limits imposed by this section, if needed to fairly examine the deponent or if the deponent, another person, or any other circumstance impedes or delays the examination. 

This is somewhat different than Federal Rules of Civil Procedure, Rule 30(d)(1), which limits depositions to one day of seven hours and on its face includes questionning by the deponent's attorney.  AB 1875 has a seven hour limit, but does not limit the examination to a single day.  Furthermore, AB 1875 has specific exceptions.

The first exception recognizes agreements by the parties, which will be enforced.  Other exceptions to the limit include expert witness depositions, depositions of corporate representatives (referred to in California as "persons most qualified"), plaintiffs (and all witnesses) in employment cases and "second served" depositions,  taken by parties served in a case after one or more initial depositions were completed.  

Also excepted are cases designated "complex" (most of which are asbestos cases) with one very large exception: 

. . . unless a licensed physician attests in a declaration served on the parties that the deponent suffers from an illness or condition that raises substantial medical doubt of survival of the deponent beyond six months, in which case the deposition examination of the witness by all counsel, other than the witness’ counsel of record, shall be limited to two days of no more than seven hours of total testimony each day, or 14 hours of total testimony. 

When the Consumer Attorneys of California – the organized Plaintiff tort bar – was lobbying for this bill, some of the examples of abusive, overly-long depositions they cited were from asbestos plaintiff depositions and from employment depositions.  But the bill that ultimately passed both houses and was signed by the Governor allows unlimited depositions in employment cases and limits asbestos plaintiff depositions only when the plaintiff is dying. 

The new law takes effect on January 13, 2013.  CBL will be most interested to see the extent to which the parties reach stipulations in appropriate cases and also the extent to which Superior Court judges are willing to make case-by-case accommodations.  As California Court resources have become scarcer and scarcer, getting timely relief through discovery motions has become increasingly difficult.

 

Witness Statements: Work Product or Not? Cal Supremes to Decide

It's been more than two years since the Cal Supremes agreed to hear the case of Coito v. Superior Court of Stanislaus County (March 4, 2010) (F057690) and decide this question:  "Is the statement of a witness that is taken in writing or otherwise recorded verbatim by an attorney or the attorney's representative entitled to the protection of the California work product privilege?" 

The case is now set for hearing at the California Supreme Court in San Francisco on Thursday, May 31 at 9:00 a.m.

As CBL has posted here and here, Courts of Appeal are divided on this question, meaning the trial courts have so far been able to rule either way.  Cal Supremes hearings are often like press-conferences for the outcome, so we may well know how this is going to come out right after the hearing.  CBL will keep you posted.

Happy New Year. Now Put Away That Computer!

Comes the new year, and lots of law firms, pundits, reporters and bloggers like to write about the new laws coming into effect the first of the year.  And CBL may get around to that.  But here's our favorite:  Last August, as reported by the SF Chronicle, the California legislature passed, and Governor Brown signed, AB 141, designed to prevent jurors from blogging, tweeting, or facebook posting about their jury service in progress or from conducting internet research.  

California law has long held that before a jury separates, the trial judge must give jurors an "admonishment," telling them they are not to conduct any research, go to the scene of the relevant events, communicate with anyone about the case or otherwise learn anything about the case anywhere other than the courtroom while court is in session.  They are also told not to form or express any opinions about the case before it is given them for decision. (And of course, we all know jurors faithfully follow this admonition and neither form nor express opinions until deliberations begin.  Right.)

The new additions to California's Code of Civil Procedure and Penal Code provide that the court's admonition must include a clear explanation "that the prohibition on research, dissemination of information, and conversation applies to all forms of electronic and wireless communication."  The bailiff or court attendant in charge of the jury is required to enforce the ban (how?  by taking away electronic devices?  I doubt that.)  And willful violation is contempt of court, which is a misdemeanor.

So, happy new year.  Now, put down the device.  Put down the device.

 

What's New At Cal Supremes

Here are a couple of updates on cases CBL has reported on over the last few months.

First, under the category "Court of Appeals Pokes SCOTUS in Eye," binding arbitation division, CBL reported on July 14 about Brown v. Ralph's Grocery Stores (July 12, 2011) ___Cal.App.4th ___ (2nd Dist., B222689) wherein the Court of Appeals used some extremely convoluted reasoning to try to get around the US Supremes' disapproval of  Discover Bank v.  Superior Court (2005) 36 Cal.4th 148.  The Brown court essentially tossed a  binding arbitration provision with a class action waiver in an employment action brought under California's Private Attorney General Act.  The employer has petitioned the Cal Supremes for a hearing.  They have until November 21 to grant or deny a  hearing (if they grant themselves a 30-day extension).  The Cal Supremes' case number is S195850.

Second, under the category "Who just took my $15 million verdict away?" ancient precedent division, CBL reported in March on Leung v. Verdugo Hills Hospital (now an unciteable case) where the Court of Appeal relied on some very old authority to hold that release of one defendant in a multi-defendant lawsuit could result in the release of all defendants.  The Court of Appeal begged the Cal Supremes to take the case up.  The Cal Supremes have obliged and granted a hearing, and the first brief on the merits is due September 7.  The Cal Supremes' case number for this one is S192768.

Stay tuned.  CBL will keep you up to date.

Can Foreign Corporations Be Compelled To Appear For Deposition in California?

Warning, warning:  long post ahead with a whole bunch of confusing citations to California discovery statutes.  But this one is pretty important for non-California corporations ensnared in litigation in the golden state.  So please bear with us, even if the post sometimes reads like a tax code analysis.

All you in-house counsel and defense counsel, consider this scenario:  Say your company is headquartered in Michigan.  A plaintiff sues your company in California Superior Court.  His lawyers then notice the depositions of your president, vice president, chief engineer and assistant design engineer, locating them conveniently in the attorney’s offices in . . . . Los Angeles.  Well, conveniently for him anyway, but not so much for the witnesses, since they all live in Michigan.  Can the trial court order those corporate employees to get on the airplane from Michigan and go to Los Angeles for deposition?

Until last week, the answer was “yes” under Glass v. Superior Court (1988) 204 Cal.App.3d 1048.  But last week, in Toyota Motor Corporation v. Superior Court (July 27, 2011) ___Cal.App.4 ___, (Second Div., B225393) (and see the modification order here) the answer became “hold on there, not so fast.  Maybe not.”

Here's what happened:  The trial court had compelled a group of Toyota employees to come to California for their depositions from Japan.  The Court of Appeal quashed the order, using the following logic:

Code of Civil Procedure section 1989 says “[a] witness . . . is not obliged to attend as a witness before any court,  judge, justice or any other officer, unless the witness is a resident within the state at the time of service.”  Section 1878 defines a “witness” as “a person whose declaration under oath is received as evidence for any purpose, whether such declaration be made on oral examination, or by deposition or affidavit.”  And under section 2025.230, depositions must be taken in front of officers -- court reporters.  So section 1989 applies to depositions. 

We also have section 2025.250(a), providing that:

Unless the court orders otherwise under Section 2025.260, the deposition of a natural person, whether or not a party to the action, shall be taken at a place that is, at the option of the party giving notice of the deposition, either within 75 miles of the deponent's residence, or within the county where the action is pending and within 150 miles of the deponent's residence.

And section 2025.260 allows the trial court to make exceptions to 2025.250 after going through a balancing analysis.  But, said the court of appeal, the statute doesn’t allow exceptions to section 1989, so maybe the deposition can be more than 150 miles from the deponent’s residence, but you still can’t make him fly here from Japan.  Or, presumably, Michigan.

This means we have conflicting rulings on this subject.  As regular readers know, when there are conflicting decisions from two courts of appeal on a question of law, every court in the State is free to follow either of them.  Auto Equity Sales, Inc. v. Superior Court Of Santa Clara County (1962) 57 Cal.2d 450.

This all begs two interesting questions.  First, will this ruling be taken to the State Supremes, and will they agree to hear it?  A conflict in Court of Appeal decisions is one of the main reasons the State Supremes accept review.  We’ll be watching and will let you know.

But just as important is this question:  Does the caseapply when the deponent is a corporation?  California’s version of FRCP 30(b)(6) is Code of Civil Procedure section 2025.230:

If the deponent named is not a natural person, the deposition notice shall describe with reasonable particularity the matters on which examination is requested. In that event, the deponent shall designate and produce at the deposition those of its officers, directors, managing agents, employees, or agents who are most qualified to testify on its behalf as to those matters to the extent of any information known or reasonably available to the deponent.

 Section 2025.250(b) states the following concerning the place of deposition of a corporation:

The deposition of an organization that is a party to the action shall be taken at a place that is, at the option of the party giving notice of the deposition, either within 75 miles of the organization's principal executive or business office in California, or within the county where the action is pending and within 150 miles of that office.

If the organization has not designated a principal executive or business office, then section 2025.250(d) allows its deposition to be taken either within the county where the deposition is pending or within 75 miles of any of its executive or business offices. 

 Until now, most attorneys have assumed that if the organization is giving the deposition, it has to produce its testifying representatives in California.  But does Toyota Motor Corporation also apply to the deposition of organizations?  Do the requirements of section 1989 require that the deposition of a corporation be taken in  its home state?  In its Order Modifying Opinion, the Court of Appeals writes:

We express no opinion, however, as to whether our analysis or the conclusions we have reached in this opinion would or should extend or apply to a court order made pursuant to section 2025.230 which provides for the circumstance where “[] the deponent named is not a natural person . . . .

Now that’s a pretty curious thing for the Court to say, since section 2025.230 doesn’t provide for any court order, and neither do sections 2025.250(b) and (d).  In other words, a court can go through a balancing test under 2025.260 to decide if an individual deponent has to appear for a deposition farther from his residence than section 2025.250(a) would otherwise require, so long as he is a California resident as required by section 1989.  But when it comes to corporate depositions, there are no exceptions to sections 2025.250(b) and (c).

Cal Biz Lit thinks section 1989 should apply to the deposition of corporations, just as it applies to the deposition of individuals.  Here’s why: 

• We now know that section 1989 means that no witness can be compelled by a California court to appear for deposition unless the witness is a resident of this state.
• Section 1878 defines a witness as, among other things, a “person” who gives testimony in a deposition;
• A corporation is a person under Santa Clara County v. Southern Pacific R. Co. (1886) 118 U. S. 394.
• Where is the corporation a resident?  Well, under federal diversity jurisprudence, it is a resident of the state where its corporate nerve center is located and the state where it is incorporated.  Hertz v. Friend (2010) 130 S.Ct. 1181.  This may or may not apply, but a corporation is certainly not a resident of every state where it does business;  logically, a corporation resides where its executive offices, headquarters, etc. are located.
• The fact that California courts may have personal jurisdiction over a corporation does not mean that the corporation is a resident of California, anymore than the State’s jurisdiction over a non-resident individual makes that individual a State resident.
• Therefore, under Toyota Motor Corporation v. Superior Court, it should not be possible to compel a foreign corporation to appear for its deposition in California any more than it is possible to compel its management employees to appear here.

Of course, somebody will likely have to take this to at least the Court of Appeal, and possibly the State Supreme Court, in order to prove CBL is right.  Any companies out there interested?

Cal Court of Appeal to US Supremes: "Oh yeah, says who?"

Let's review where we are on arbitration agreements and class action waivers. 

• First, there was Discover Bank v.  Superior Court (2005) 36 Cal.4th 148,  where the Cal Supremes held that "at least under some circumstances, the law in California is that class action waivers in consumer contracts of adhesion are unenforceable, whether the consumer is being asked to waive the right to class action litigation or the right to classwide arbitration” and that “the FAA [does not preempt] California law in this respect."
• Next, we had AT&T Mobility LLC v. Concepcion (2011) ___ US ___, overruling Discover Bank and holding that the rules it established were preempted by the FAA.
• And now we have a mad scramble in California to try to find the cracks and crevices and exceptions that will keep consumer lawsuits and employment lawsuits out of the clutches of FAA preemption and alive in the good old fashioned California court system..

First out of the box in this regard:  plaintiff in Brown v. Ralph's Grocery Stores (July 12, 2011) ___Cal.App.4th ___ (2nd Dist., B222689).

(Ralph's Grocery Stores sure has been active in high profile appellate news this year.)

In this latest Ralph's case, the Plaintiff brought an action against his employer under Calfiornia's Private Attorney General Act, or "PAGA."  PAGA says that an aggrieved employee who is entitled to Labor Code penalties against his or her employer can sue on his own behalf of "other current or former employees" to recover those penalties for everybody (although 75% of the penalties go the State). 

Brown files a PAGA case against Ralph's.  Ralph's says:  "oh no you don't, you signed an arbitration agreement and class action waiver."  Ralph's loses at the trial court, the case goes to the Court of Appeal, everybody briefs, argues, submits it.  And then the US Supremes decide AT&T.  At which point Ralph's and its lawyers are feeling pretty good.  The Court of Appeal invites more briefing.  And then it lowers the boom.

On Ralph's. 

The purpose of the PAGA is not to recover damages or restitution, but to create a means of “deputizing” citizens as private attorneys general to enforce the Labor Code. . . . Here, the relief is in large part “for the benefit of the general public rather than the party bringing the action” . . . .

Dontcha' know, it's not a class action.  It's a representative action.  And AT&T doesn't say anything about representative actions.

So Ralph's comes in second in the case.  So says the Court of Appeal, 2 - 1.

To which I've got two words in response.

 

NINO SCALIA.

 

Cal Biz Lit Re-emerges From Under Rock

Here at CBL, we were pretty overwhelmed with our day job for a number of weeks, and then left town with Mrs. CBL to lie on a beach for a week reading books about rock and roll and baseball.  All of which means it’s been awhile between posts. 

Meanwhile, the legal wheels in California (and all over the country) kept spinning along.  Here are a few glimpses of what’s new:

Class Actions:  Those who do not themselves live under rocks already know that the US Supremes poleaxed the employment discrimination case against Wal-Mart Stores in  Wal-Mart Stores, Inc. v. Dukes, No. 10–277, (U.S. June 20, 2011).  CBL thinks this decision may have some major impacts in California consumer litigation, and will have a post devoted to that subject coming soon.

Medicare Reporting:  A district court judge in Arizona took a big swipe at CMS’s practice of demanding that plaintiff’s and their attorneys cough up Medicare reimbursements when the amounts are contested.  Haro v. Sebelius, No. CV 09-134 TUC DCB, (D. Az., May 5, 2011).  The court granted summary judgment and class certification, ruling:

• . . .  Defendant's demand for payment of her MSP reimbursement claims, under threat of collection actions before there has been a resolution of an appeal regarding the amount of the Defendant's MSP claim or a waiver request, exceeds her authority under the Medicare statute, and Defendant is enjoined from demanding payment of a MSP reimbursement claim with threats of commencing collection actions before there is a resolution of an appeal or waiver request.

and

• . . . Defendant's demand that attorneys withhold liability proceeds from clients pending payment of amounts claimed by the Defendant as MSP reimbursement exceeds her authority under the Medicare statute, and Defendant is enjoined from demanding that attorneys withhold liability proceeds from their clients pending payment of disputed MSP reimbursement claims.

CMS has suspended the use of its heavy-handed “Rights and Responsibilities” letters, but NB:  all of the obligations on both sides to protect the interests of Medicare, and all of the MMSEA reporting requirements, are still in effect.

Civil Procedure:  Hey there, defense counsel.  You won an order granting summary judgment.  Good for you. But that’s not a “judgment.”  You still have to get the court to sign one of those.  And if you don’t, the plaintiff can get a writ of mandate from the Court of Appeal forcing the trial court to sign one.  That way, the plaintiff has a judgment to appeal from. Even if it's a year or more after the motion was granted. Davis v. Superior Court (City of Los Angeles), No. B230666 (Second Dist., Div. Eight, June 13, 2011).

Torts/Personal Injury Practice:  Nineteen years ago, in Knight v. Jewett (1992) 3 Cal.4th 296, the Cal Supremes pretty much reinvented the legal defense of “assumption of risk.” They held that assumption of risk was a complete defense to some personal injury actions involving sports and other rough activity involving inherent risks.  Put somewhat simplistically, the court held that the doctrine barred liability for injuries arising out of such activities, including acts or omissions that increased the risk, based on a judicial determination of 1) the nature of the activity or sport, and 2) the relationship between the parties.  So, unless the injury is inflicted intentionally, there’s usually no recovery for injuries caused by touch football games, baseball, skiing, fencing, raquet ball, etc. 

Which brings us to Nalwa v. Cedar Fair, LP, No. H034535 (Sixth Dist., June 10, 2011).  Dr. Nalwa went to Great America Amusement Park and rode the bumper cars.  The bumper cars ran into each other (Surprise!)  She broke her wrist.  She sued.  The trial court granted summary judgment on the basis of the assumption of risk doctrine.  The Court of Appeal reversed, holding the doctrine didn’t apply to bumper cars.  CBL’s prediction:  if the case doesn't settle, this goes to the Supremes and they either reverse or depublish.

Big Ol’ Product Liability Verdict:  And finally, from the Cal Biz Lit schadenfreude files, a $30 million product liability verdict in Butte County Superior Court (which used to be referred to as one of the “cow county courts”).  Design defect case against MasterCraft Boat Co. on a stability theory.  Really bad propeller injury (27 year old woman, loss of eye, frontal lobe damage, skull fracture).  Boat operator had been drinking, wasn’t legally drunk, was held for 20%.  But he’d apparently paid his $1 million policy for a covenant not to execute, meaning plaintiff intends to collect all the rest from MasterCraft.  The operator’s lawyer said he felt “vindicated.”  And in the now famous words of losing defense lawyers everywhere (and CBL has been there, done that, owns the T-shirt) MasterCraft’s attorney announced that "Obviously, we are very disappointed in the outcome," and they would explore their “appellate options.”

 

Federal Court Removal: Ninth Circuit Adopts "Later-Served" Rule

Companies who find themselves on the right side of the "v" in California product liability litigation like federal court.  Why?  Let's count the ways:  (a)  In Federal Court, the 
admissibility of expert testimony is governed by Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993).  On the other hand, the rule in California is that an expert is somebody who went to college and has a briefcase;  (b)  In California state court, a verdict requires nine out of twelve jurors, while in Federal Court, the verdict must be unanimous, including on damages (although we typically only get six to eight jurors);  (c) in Federal Court, pretrial orders require highly structured discovery and early disclosure of expert information, while in State Court, experts are disclosed and deposed in a mad scramble right before trial;  (d)  in Federal Court, a defendant can actually get summary judgment granted once in awhile in a meritless case, while in California Superior Courts, the summary judgment law is somewhat akin to the tax code and the culture is to deny; and (e)  while there really are plenty of good California State judges, in Federal Court the odds increase that you'll get a judge who is willing to rule and who believes in making both sides follow the law.

So here's a chronic problem.  28 U.S.C.§ 1448 says that removal to Federal Court must occur within thirty days "after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based. . . ." 

Consider this scenario:  Plaintiff files a product liability case in California Superior Court and sues five defendants.  The first defendant sends the summons and complaint to its insurer, who sends the case to defense counsel, who doesn't think about removal jurisdicition.  Counsel for Defendant 1 lets the thirty days go by, after which Plaintiff serves Defendants 2 through 5.  Assuming 2 through 5 can get Defendant 1's consent, can they remove within 30 days of when they were served?  There is a disagreement in the Federal Courts.  Compare:  Brown v. Demco, Inc., 792 F.2d 478, 481-82 (5th Cir. 1986) (thirty days starts running as to everybody with service on first defendant) and Brierly v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527, 533 (6th Cir. 1999) (each defendant gets 30 days from when it was served). 

Obviously, defendants who like Federal Court like the Brierly rule  (the "later served" rule), not the Brown decision (the "first served" rule).  And now, the Ninth Circuit has decided that the Later Served rule is the order of the day in California, Nevada, Alaska, Hawaii, and the other Ninth Circuit states.  Per Judge Kozinski: 

The removal statute speaks of “the defendant”—not “first defendant” or “initial defendant”—and its most straightforward meaning is that each defendant has
thirty days to remove after being brought into the case.

Destfino v. Reiswig, ___ F.3d ___ , 2011 WL 182241 (9th.Cir. 2011).  So in these parts, every defendant in a removeable case gets thirty days.

The New Expedited Trials: A Big Difference, Or A Non-Event?

Not long ago, the California legislature enacted, and the outgoing Governator signed, new legislation allowing for "expedited jury trials."  If the parties stipulated to it, they would get a one day jury trial, with an hour to pick a jury and three hours for each side to put on a case.  There'd be no appeal and not much in the way of post-trial motions.  This mechanism was presumably designed for small cases.  But the parties can stipulate to use the process for any case of any size.  The parties can also make a high-low deal (something they are free to do now, for that matter) with a floor for the planitiff and a ceiling for the defendant. 

Clearly the idea here is to provide a meaningful forum for the trial of cases that are too small for a traditional jury trial to make any economic sense.

Will this make any difference?  I have my doubts, at least for garden variety tort cases.  Why would a defendant, no matter what size the case, be willing to shortcut the jury trial process if the plaintiff won't voluntarily limit the exposure?  And why would the plaintiff want to voluntarily take the high end out of the case, even if the liklihood of a high end outcome is pretty remote? 

As things stand, California has a process for handling small cases:  non-binding judicial arbitration.  I get appointed as an arbitrator on these cases (which typically involve the fascinating fact patter of one vehicle running into another) 5 or 6 times a year.  Hearings typically take about an hour, and I send out a ruling (which is not effective unless both sides accept it) the same day.

One of two things happens when I get appointed an arbitrator:  the case settles before the arbitration, so my getting appointed and scheduling the case for hearing has the same effect as an approaching trial date usually has.  Or the plaintiff attorney just wants to get through the process so he or she can reject the award, get a trial scheduled, and find out how much money the defendant is really willing to pay.  So half the time, scheuling a hearing causes the case to settle without further proceedings.  The other half, it's just a bump in the road to settlement.  I'm not at all sure how a one-day jury trial changes things for the good.

Also, I'm a little skeptical about the one day trial with an hour of jury selection and 6 hours of testimony (not to mention instructing the jury, closing argument, opening statement, deliberation, etc.).  The typical trial day in most of our urban courts runs from 9:00 a.m. to noon and 1:30 to 4:30 with two fifteen minute breaks.  That's five and a half hours.  But plenty of courts have shorter trial days than that, and in some of the small rural counties where the judges both try cases and manage calendars, three to four per day hours isn't unusual.  So in those courts, the one day trial becomes a full two days or more.  Back in the good old days, when we had a municipal court for small cases, 2 - 3 day regular jury trials weren't all that unusual.

Still, it will be interesting to see if insurers and soft-tissue personal injury plaintiffs take advantage of the new system.  Even more interesting will be if litigants with larger cases but not many issues sometimes give it a try.  My guess in both cases is no.

By the way, in the spirit of simplifying the jury trial process in these "expedite" cases, the State Judicial Counsel is adopting some rules that will apply.  The document setting out these rules, and the reasons for them, is here.  A mere seventy pages long.

Predicting Settlement Set-Offs In Multi-Defendant Cases: Good Luck With That

One of the more complex questions of California tort law, with one of the more counter-intuitive answers,  can best be posed this way:  If plaintiff sues ten defendants in tort, nine of them settle and the plaintiff gets a verdict against the tenth, what credit, or set-off, does that tenth defendant get for the settlements?

My partner Barbara Adams blogs on toxics issues from time to time at Toxics Defense.  She has a multi-part series going right now on  this and related questions.  She does an excellent job of bringing clarity to the otherwise imponderable legal morass of credits and set-offs.  The first two installments are here and here.  Recommended!