In DeSaulles v. Community Hospital of the Monterey Peninsula, the California Supreme Court explains what "prevailing party" means

You thought you could figure this one out all by yourself, right?  You can read Code of Civil Procedure section 1032.  It's written in English (sort of). You know what a "prevailing party" is without some Supreme Court telling you what it means.  But this is law, and when we are talking about the law, you can guarantee that somebody figures out how to find that exception that threads the needle.  Thus, we have DeSaulles v. Community Hospital of the Monterey Peninsula (March 10, 2016), in which the Supreme Court had to determine whether a plaintiff who voluntarily dismisses an action after obtaining a monetary settlement on a few of the claims remaining in the case is the "prevailing party" for purposes of section 1032.

The Court of Appeal held that the plaintiff was a prevailing party because he received a net monetary recovery as consideration for his dismissal.  In so holding, the Court of Appeal disapproved of Chinn v. KMR Property Management, 166 Cal. App. 4th 17 (2008), which held that settlements were not net monetary recoveries. The Supreme Court affirmed.  In affirming, the Supreme Court also did everyone a favor by saying that the presumption of section 1032 could be altered by agreement of the settling parties.  Regardless, it's a good thing the Supreme Court held as it did; given the sorry state of our court funding, we don't need more issues complicating settlement discussions.
 

In Gilkyson, et al. v. Disney Enterprises, Inc., et al., doctrine of continuous accrual gets a boost in the licensing contract setting

The doctrine of continuous accrual serves to prevent the inequitable circumstance where one act of malfeasance is used to create immunity in perpetuity for even very recent bad acts.  In Gilkyson, et al. v. Disney Enterprises, Inc., et al., the Court of Appeal (Second Appellate District, Division Seven) found that the doctrine of continuous accrual should apply to a royalty contract for song reproduction rights.

Terry Gilkyson, a successful songwriter in the 1950’s and 1960’s.  He wrote a number of songs for the animated film The Jungle Book, one of which was used in the movie.  Gilkyson signed single-song contracts with Disney’s predecessor-in-interest, Walt Disney Productions, that obligated it to pay Gilkyson specified royalties for sales of sheet music and for licensing or other disposition of the mechanical reproduction rights. Disney paid Gilkyson over the years and, after his death in 1999, his heirs royalties for sheet music and for audio reproductions of Gilkyson’s songs (vinyl records, compact discs (CDs) and digital downloads).  However, Disney did not pay, and has never paid, Gilkyson or his heirs royalties for the use of his songs in any audiovisual medium, including digital video disc recordings (DVDs).  The heirs of Gilkyson sued Disney Enterprises, Inc. and other entities, alleging Disney had breached its contractual obligation to pay royalties in connection with the licensing or other disposition of the mechanical reproduction rights to Gilkyson’s songs. The trial court dismissed the lawsuit after sustaining Disney’s demurrer to the first amended complaint without leave to amend, ruling the Gilkyson heirs’ causes of action were barred by the applicable statutes of limitations.

The Court of Appeal first explained the continuous accrual doctrine as an exception to statutes of limitation:

Under the continuous accrual doctrine each breach of a recurring obligation is independently actionable.  (Aryeh, supra, 55 Cal.4th at p. 1199 [“‘[w]hen an obligation or liability arises on a recurring basis, a cause of action accrues each time a wrongful act occurs, triggering a new limitations period’”]; see ibid. [“[b]ecause each new breach of such an obligation provides all the elements of a claim—wrongdoing, harm, and causation [citations]—each may be treated as an independently actionable wrong with its own time limit for recovery”]; Howard Jarvis, supra, 25 Cal.4th at p. 809 [same]; Armstrong Petroleum Corp. v. Tri-Valley Oil & Gas Co. (2004) 116 Cal.App.4th 1375, 1388 (Armstrong) [continuous accrual applies to contract where performance is severed into intervals, such as installment contracts, leases with periodic rental payments and periodic pension payments]; Wells Fargo Bank v. Bank of America (1995) 32 Cal.App.4th 424, 439, fn. 7 [“a new breach occurs each month the bank persists in its refusal to pay [monthly] rent at the gold clause rate”].)  The effect of the doctrine is that “a suit for relief may be partially time-barred as to older events but timely as to those [acts of wrongdoing occurring] within the applicable limitations period.”  (Aryeh, at p. 1192; accord, Howard Jarvis, at p. 809.)[1]   In this way, the doctrine represents an equitable “response to the inequities that would arise if the expiration of the limitations period following a first breach of duty or instance of misconduct were treated as sufficient to bar suit for any subsequent breach of misconduct; [absent the doctrine,] parties engaged in long-standing misfeasance would thereby obtain immunity in perpetuity from suit even for recent and ongoing misfeasance.  In addition, where misfeasance is ongoing, a defendant’s claim to repose, the principal justification underlying the limitations defense, is vitiated.”  (Aryeh, at p. 1198.)

Slip op., at 6-7.  The Court then concluded that the continuous accrual doctrine applied to the contractual obligation to pay periodic royalties under a licensing arrangement:

Here, as in Aryeh, Disney’s obligation to pay royalties based on its licensing or other disposition of the mechanical reproduction rights to Gilkyson’s songs was unquestionably a continuing one.  As alleged in the first amended complaint (consistent with the original complaint), the parties agreed in paragraph 6 of the single-song agreements that Gilkyson “will receive as a royalty ‘[an] amount of money equal to Fifty Percent (50%) of the net amount received by our music publisher on account of licensing or other disposition of mechanical reproduction rights in and to material so written by you.’”  The first amended complaint also alleged Disney had issued quarterly royalty statements to Gilkyson and, after his death, to his heirs.  The continuing nature of the obligation to pay periodic royalties renders each breach of that obligation separately actionable.  (Aryeh, supra, 55 Cal.4th at p. 1201; see Armstrong, supra, 116 Cal.App.4th at p. 1392 [contract to provide periodic oil and gas royalties was severable, with each failure of the continuing obligation to pay a proper royalty separately actionable and subject to its own limitation period].)  The result is that, while portions of the Gilkyson heirs’ contract claim are undoubtedly time-barred, the action is timely as to those breaches occurring within the four-year limitations period preceding the filing of the original lawsuit.

Slip op., at 8-9.  The Court noted that it was not resolving the substantive issue, raised by Disney, of whether use of songs in DVDs and other audiovisual media was governed by the same portion of the agreement that governed mechanical reproduction.

Watching how they make the sausage...Eastern District set to try Taco Bell wage & hour class actions

Class actions don't make it to trial all that often.  But when they get close, things can get pretty ugly.  In Medlock, et al. v. Taco Bell Corp., et al., the United States District Court for the Eastern District of California (Magistrate Stanley A. Boone presiding) issued an Order on nine motions in limine filed by the Plaintiffs. See 2016 WL 430438 (February 4, 2016).

In Medlock, the Court certified three classes, on claims for meal period violations, rest period violations, and improper time record adjustments.  With trial approaching on February 22, 2016, the Plaintiffs filed nine motions in limine to exclude expert testimony (motions 1 and 2), rates of meal and rest period violation (motion 3), challenges to the authenticity of raw time clock data (motion 4), evidence of job performance or discipline (motion 5), evidence related to elements of class certification (motion 6), evidence of explicit instructions to class members to skip meal or rest periods (motion 7), evidence of the likeability of working at Taco Bell (motion 8), and alterations to the testimony of Taco Bell's Rule 30(b)(6) designee.  The court denied all motions other than motion 6, and that motion was limited to ordering that the defendants could not discuss the Rule 23 elements before the jury.

Considering the evidence the Court described as potentially probative, it appears that the jury will get to hear the kitchen sink of Defendants' reasons why meal and rest periods were missed. 

And yes, I am not dead.

STUPIDERER: Two North Carolina teens hit with child porn charges after consensual sexting→

We're well on our way to self extinction by using unnatural selection to make ourselves as dumb as possible. Two teens sending dirty pictures to each other should be a parental matter, not a criminal case with both willing participants getting charged with adult felonies.

Source: Arstechnica

Class Re-Action Podcast Links Fixed

I just discovered over the weekend that links to the Class Re-Action podcasts were broken. I fixed the change in the back-end support that caused the problem, and everything appears to be working correctly again. Sorry for the inconvenience.

PRODUCT SUGGESTION: Microsoft Surface Pro 3

Once again I find myself apologizing for the hiatus in blogging. I've been in depositions all over the place, dealing with massive document productions, and writing to the point of stupor. I've decided to add an additional topic that I've flirted with on this blog in the past. Specifically, I am going to mention (in short posts) some technology products that have made my life easier in different ways or are of notable quality (I'm not going to try to do comprehensive product reviews - plenty of people do that online). Some products will be nothing more than a $10 accessory, and some will be like this one, a full computer.

The product:  The Surface Pro 3 from Microsoft.

The good:  The digital pen is extremely accurate.  When you couple the Surface Pro 3 with OneNote (which I am realizing is an awesome tool) and the digital pen, you get exceedingly good handwriting recognition and a great note-taking device for hearings.  Convert your written notes to text with the accurate OCR in OneNote. The device is a full PC that is very portable, attractive, and very well built.

Where to find it: Microsoft Store or other retailers

Disclaimer: I was not compensated for any positive comments about this product, and I was not asked to review this product.

IWC (or any agency) is limited by its statutory mandate

Agencies love their power.  They grow like a cancer, absorbing more and more of it from the body politic.  But every now and then a court reminds an agency that its power is limited by the terms of its statutory authority.  For instance, in Gerard v. Orange Coast Memorial Medical Center (Feb. 10, 2015), the Court of Appeal (Fourth Appellate District, Division Three) did just that with regard to a provision of an IWC Wage Order.

Health care workers sued their hospital employer in a putative class and private attorney general enforcement action for alleged Labor Code violations and related claims.  Plaintiffs alleged, among other things, that the hospital illegally let health care employees waive their second meal periods on shifts longer than 12 hours.  Under the Labor Code, employers are required to provide two meal periods for shifts longer than 12 hours. But an order of the Industrial Welfare Commission (IWC) authorizes employees in the health care industry to waive one of those two required meal periods on shifts longer than 8 hours.  The trial court, finding the IWC Wage Order valid, and granted summary judgment and denied class certification on that basis.

The Court examined Labor Code section 512 and Wage Order 5 to determine whether the Wage Order exemption was authorized.  The Court first observed that section 512 says: “An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.” (Italics added.)  And section 516 says: “Except as provided in Section 512, the [IWC] may adopt or amend working condition orders with respect to break periods, meal periods, and days of rest for any workers in California consistent with the health and welfare of those workers.” (Italics added.)

Next, the Court noted that the authority of an administrative agency is limited by enabling legislation, holding that the IWC is constrained where the Labor Code expressly sets forth requirements:

“The IWC has long been understood to have the power to adopt requirements beyond those codified in statute. [Citations.] Section 516 creates an exception; it bars the use of this power to diminish section 512’s protections. . . . While the Legislature in section 516 generally preserved the IWC’s authority to regulate break periods, it intended to prohibit the IWC from amending its wage orders in ways that ‘conflict[ ] with [the] 30-minute meal period requirements’ in section 512. [Citations.]” (Brinker, supra, 53 Cal.4th at pp. 1042-1043.)

Slip op., at 8.  In its discussion, the Court cited frequently to Bearden v. U.S. Borax, Inc., 138 Cal. App. 4th 429 (2006), which held that another provision of a Wage Order issued by the IWC was invalid as an act inconsistent with statutory provisions.

The Court then directed the trial court to determine the retroactive application of portions of the Court’s holding, since the issue of invalidity was not evaluated by the trial court, holding that “with the exception of plaintiffs’ premium wage claims based on section 226.7, the retroactive application of our decision must be litigated on remand.”  The Court concluded that “there is no compelling reason of fairness or public policy that warrants an exception to the general rule of retroactivity for our decision partially invalidating section 11(D).”  Slip op., at 17.

The Court then turned to the grant of summary judgment in the matter.  The discussion detoured into evidentiary disputes.  The defendant objected to the introduction of time cards attached to counsel’s declaration, saying that they were merely purported to be authentic.  The Court disagreed:

Evidence Code section 1414 provides: “A writing may be authenticated by evidence that: [¶] (a) The party against whom it is offered has at any time admitted its authenticity; or [¶] (b) The writing has been acted upon as authentic by the party against whom it is offered.” The Coats declaration satisfies both subdivisions.

Further, while Claudio v. Regents of University of California (2005) 134 Cal.App.4th 224, 244 did say the declaration of the plaintiff’s attorney was not proper authentication for the disputed letter, the critical problem was that, “Plaintiff’s [own] declaration did not mention the letter.” The same is not true in this case.

Here, Gerard’s own declaration (an exhibit to the Coats declaration) states: “Attached as Exhibit B are true and correct copies of a portion of my time records from August of 2004 through March of 2008, which were produced by Defendant in this litigation. Also attached as Exhibit B are true and correct copies [of] a portion of my wage records from August of 2004 through March of 2008, which were produced by Defendant in this litigation.” A comparison of the bates numbers in Exhibit B reveals they are the same as the relevant documents in Exhibits 7 and 8.

Slip op., at 18.  The Court concluded its analysis of the summary judgment motion by finding that triable issues of fact were shown by the plaintiffs.

Finally, the Court held that the trial court abused its discretion when it denied class certification, relying on incorrect criteria:

McElroy and Carl argue the court improperly denied class certification for several reasons. Among other things they cite as an abuse of discretion the court’s community interest analysis based on its erroneous “legal assumption that ‘liability is not established by an illegal policy.’” Plaintiffs contend that assumption is contrary to the holding of Brinker, supra, 53 Cal.4th at page 1033, and Faulkinbury v. Boyd & Associates, Inc. (2013) 216 Cal.App.4th 220, 232. We conclude this argument has merit.

Slip op., at 20.  The Court remanded the matter for further consideration of the other aspects of certification that were not fully considered by the trial court.

Anti-SLAPP Motion fails to satisfy the first "arising from" prong under the customary two-part analysis

I regret that the press of work kept me away from this site for quite some time, other than the podcasts that I've continued to work on.  It looks like I'm going to be able to come up for air, so I am going to get back to posting on a more regular basis.

In Trilogy at Glen Ivy Maintenance Association, et al. v. Shea Homes, Inc., et al. (pub. ord. Mar. 19, 2015), the Court of Appeal (Fourth Appellate District, Division One) affirmed a trial court finding that an anti-SLAPP Motion lacked merit for failure to satisfy even the first prong of the two-part anti-SLAPP analysis.  As summarized by the Court, under the first step, "the defendant bringing an anti-SLAPP motion must make a prima facie showing that the plaintiff's suit is subject to section 425.16 by showing the plaintiff's claims arise from conduct by the defendant taken in furtherance of the defendant's constitutional rights of petition, or free speech in connection with a public issue, as defined by the statute."  Slip op., at 7-8.

The Court explained that, when evaluating whether a claim arises from protected speech, a trial court must look to the gravamen of the claim:

[W]e disregard the labeling of the claim (Ramona Unified School Dist. v. Tsiknas (2005) 135 Cal.App.4th 510, 522) and instead "examine the principal thrust or gravamen of a plaintiff's cause of action to determine whether the anti-SLAPP statute applies" and whether the trial court correctly ruled on the anti-SLAPP motion. (Id. at pp. 519-522.) We assess the principal thrust by identifying "the allegedly wrongful and injury-producing conduct . . . that provides the foundation for the claim." (Martinez v. Metabolife Internat., Inc. (2003) 113 Cal.App.4th 181, 189.) If the core injury-causing conduct on which the plaintiff's claim is premised does not rest on protected speech, collateral or incidental allusions to protected activity will not trigger application of the anti-SLAPP statute. (Ibid.)

Slip op., at 9. Following from this distinction, the Court concluded that the unusual choice of wording in the complaint was irrelevant to the analysis of the actual gravamen of the claim.  Specifically, the plaintiff used the word "repudiation" to describe a species of fiduciary breach, leading the defendant to claim that the complaint was about speech.  The Court was not persuaded, correctly identifying the fiduciary breach "gravamen" of the complaint.

Episode 15 of the Class Re-Action Podcast is now available

We are up to Episode 15 of the Class Re-Action Podcast, available here.  In case you missed the explanation previously, shows will now run between 30 and 45 minutes, due to changes in MCLE requirements.  I'm working on blanket provider status so that each show will qualify as MCLE.  However, nobody wants reading material as homework, so we are going to stay under an hour an avoid that added complication.

Article III federal judge takes prosecutor to task for lying in court

In an article from December 2014, Sidney Powell offers a colorful description of a proceeding in which a federal judge excoriated a federal prosecutor for lying in his courtroom.  Sidney Powell, Judge Kevin Thomas Duffy Blasts Federal Prosecutor For Lying in Court (December 16, 2014) observer.com.  Sidney Powell worked in the Department of Justice for 10 years and was lead counsel in more than 500 federal appeals. She is the author of Licensed to Lie: Exposing Corruption in the Department of Justice.  Sadly, these sorts of abused of power appear to be increasing in frequency (or the technology age has rendered them easier to detect and widely disseminate).