Serrano v. Stefan Merli Plastering decides interesting fee dispute over court reporting charges

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Greatsealcal100Serrano v. Stefan Merli Plastering (May 7, 2008), arising from a fee dispute between the plaintiffs and a court reporting agency, is an interesting decision that may ultimately affect complex cases with far greater frequency than simple cases like Serrano.  In Serrano, the Court of Appeal (Second Appellate District, Division Three) reviewed a ruling by the trial court that required plaintiffs to pay the full amount charged by a court reporting agency to receive their certified copies of various transcripts:

The defendant noticed the depositions of several of the Serranos’ expert witnesses, including Robert Audell. The Audell deposition took place on June 26, 2006, and was reported by a certified shorthand reporter employed by Coast. Counsel for the Serranos requested a certified copy of the transcript. The trial was scheduled to begin on July 25, 2006.

(Slip op., at p. 4.)  Despite the fact that the defendant requested the expedited transcripts, the court reporting agency also charged the plaintiffs an "expedite" fee on top of the cost of the certified copies.  (Ibid.) "The Serranos filed an ex parte application on July 5, 2006, for an order requiring Coast to provide a copy of the Audell deposition transcript without charging any expedited service fee." (Slip. op., at p. 5.)

At this point, things get exciting.  The court reporting agency provided the transcripts on the condition that the plaintiffs agree to be bound by the trial court's ruling on the charges.  At the ex parte hearing, the trial court expressed sympathy with the plaintiffs, but denied them relief:

“I would love to give you relief. I don’t think I can. So take it up. Maybe, you know, one of the divisions up there will feel sympathetic.”

(Slip op., at p. 6.) The Serranos then petitioned the Court of Appeal for an extraordinary writ on August 25, 2006. The Court of Appeal summarily denied the petition on September 20, 2006 (parenthetical note: the denial of a petition for a writ is many times not an opinion on the merits of the issue raised).  The parties settled, but the trial court carved out the issue of the transcript fees on appeal.  Then, the Court of Appeal considered the merits, the court reporting agency appearing as objector and respondent.  After dispensing with various standing and jurisdictional arguments, the Court didn't mince words when examining the core contention:

Coast argues that a court ordering a deposition reporter to provide a copy of a transcript to a party pursuant to section 2025.510, subdivision (c) must order that party to pay the fee charged by the deposition reporter regardless of the amount of the fee. We firmly reject that argument. As we now explain, if a deposition reporter either refuses to provide a copy of a deposition transcript to a non-noticing party in a pending action, for whatever reason, or imposes unacceptable conditions upon such delivery, and the court must intervene, we conclude that the “expense” that the court may require the non noticing party to pay for the transcript must be reasonable.

(Slip op., at pp. 27-28.)  Continuing to pound in the point, the Court said:

Depositions play an important role in litigation and trial preparation, and deposition testimony may be offered as evidence in pretrial proceedings and, in some circumstances, at trial. In light of the importance of deposition testimony in a pending action and the non-noticing party’s lack of bargaining power, a trial court must be cautious not to lend assistance to overreaching by the deposition reporter. For a deposition reporter to refuse to provide a copy of a transcript to a non-noticing party in a pending action unless the party agrees to pay an unreasonable fee would be grossly unfair. Moreover, for a deposition reporter, as an officer of the court, to engage in such conduct would be an abuse of the reporter’s authority. For a trial court to condone such conduct by conditioning the party’s right to receive a copy of a transcript on payment of an unreasonable fee would undermine rather than promote the administration of justice and could very well result in a denial of due process to the non-noticing party victimized by the reporter’s conduct. It therefore follows that the only monetary condition that the court may properly place upon the non noticing party’s right to receive a copy of the deposition transcript would be payment of a reasonable fee.

(Slip op., at pp. 28-29.)  The Court of Appeal concluded by expressly holding that "[t]he cost of transcription must be borne by the party noticing the deposition, unless the court on motion and for good cause orders otherwise (§ 2025.510, subd. (b)), so a reasonable fee for a copy of the transcript would not include any amount that compensates the deposition reporter for the cost to expedite the transcription."  (Slip op. at p. 31.)

So out of a simple personal injury case that settled, we now know that court reporters cannot charge non-noticing parties an expedited transcript fee if it was the noticing party that requested the expedited transcript.  Court reporters around the state must be calling the respondent to thank them for clearing up this point of law.  Complex, multi-party cases may see a significant bottom-line cost savings, although I do not profess to know whether there is an industry practice by court reporters to charge non-noticing parties an expedited transcript fee when it was the noticing party that initially requested the expedited processing.

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(Just Slightly) OFF TOPIC: Neo blames paparazzo for damaging Neo's car with body. Mr. Smith laughs evilly.

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I am very sorry, but I am constitutionally incapable of remaining serious for the life of this blog.  Thus, when I read on California Punitive Damages that Keanu Reeves lost a motion to strike punitive damage claims brought by a photographer that acccused Mr. Reeves of intentionally running into him, I saw a fat one in my wheelhouse.  Imagine the hearing...

NEO:  Your Honor Dude, I move to strike that paparazzo's outrageous punitive damage claims.

MR. SMITH:  Mr. ... Anderson.  We have your file.  We know how much force you applied to the accelerator.  We know you backed up to look for tread marks.  You struck the photograher.  Your motion to strike is denied Mr. Anderson.  And you know what they say; two strikes do make an intentional tort.  [Laughs evilly.]

NEO:  Who are you?  I want my lawyer.

MR. SMITH:  And how will you speak to your lawyer...when you don't have a mouth.  [Laughs even more evilly as NEO claws at his now mouthless face in horror.]

If you didn't watch the Matrix films (i.e., if you are older than me or lack the nerd/geek gene) this will all be meaningless to you.  It was really, really funny to me.  For an ever so slightly less fanciful version of this story, head over to California Punitive Damages.  If you have no idea what I am talking about, but are curious enough to do some research, take a look at Wikipedia's page on the Matrix.

[Via, oddly enough, California Punitive Damages.]

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Apologies to the blogroll members

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Due to a configuration error, a number of highly commendable blogs were not appearing on The Complex Litigator's "Blogs of Note" blogroll, despite having been entered on the administrator's site.  That has been corrected.  The Complex Litigator invites all readers to explore what these "Blogs of Note" have to offer, as some of the early entries were pushed off the list for the past several weeks.

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In light of the Federal Reserve's proposed new credit card regulations, are we looking at the next frontier in unfair practice class actions?

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On May 2, 2008, the Federal Reserve Board proposed rules "to prohibit unfair practices regarding credit cards and overdraft services that would, among other provisions, protect consumers from unexpected increases in the rate charged on pre-existing credit card balances."  (See, May 2, 2008 Press Release.)The proposed revisions to the FTC Act include five key protections for consumers that use credit cards:

  • Banks would be prohibited from increasing the rate on a pre-existing credit card balance (except under limited circumstances) and must allow the consumer to pay off that balance over a reasonable period of time.
  • Banks would be prohibited from applying payments in excess of the minimum in a manner that maximizes interest charges.
  • Banks would be required to give consumers the full benefit of discounted promotional rates on credit cards by applying payments in excess of the minimum to any higher-rate balances first, and by providing a grace period for purchases where the consumer is otherwise eligible.
  • Banks would be prohibited from imposing interest charges using the "two-cycle" method, which computes interest on balances on days in billing cycles preceding the most recent billing cycle.
  • Banks would be required to provide consumers a reasonable amount of time to make payments.

The proposed rule revisions would also address subprime credit cards by limiting the fees that reduce the available credit to the consumer. In addition, banks that offer credit by advertising multiple rates or credit limits would be required to disclose in their solicitation the factors that determine whether a consumer will qualify for the lowest rate and highest credit limit.

Looking at the detailed regulations governing mortgage lending (TILA and Regulation Z), and the decisional law that followed, it appears that even sophisticated banks routinely fail to implement practices and procedures that are fully compliant with regulatory requirements.  Assuming similar difficulty by lenders in adjusting their practices to comply with new credit card-related regulations, we may be looking at the "next thing" in consumer class action litigation.  After all, we're still waiting to see what the Seventh Circuit will do with the trial court decision in Andrews v. Chevy Chase Bank FSB (E.D.Wis. 2007) 474 F.Supp.2d 1006, a case holding that a declaration of the right to rescind under TILA was available on a class-wide basis.  If that question still isn't settled under TILA to this day, you can safely wager your home that new credit card practices regulations will leave much for Courts to decide.

[Via Consumer Law & Policy Blog]

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COMPLEX TECH: Are you protecting your (and your client's) data with encryption?

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Well?  If you aren't entirely clear on what is meant by "encryption," you need to be.  If you understand encryption and aren't using it, are you waiting for a data breach or loss before you actually implement any form of encryption security?  Depending upon your level of tech know-how, you should either be learning about encryption or using it.

Consider the recent Ninth Circuit decision in United States v. Arnold.  In that opinion, the Ninth Circuit held that border patrol agents can search your laptop or other digital device without limitation when you are entering the country.  The Electronic Frontier Foundation suggest encryption as one solution: "If you encrypt your hard drive with strong crypto, it will be prohibitively expensive for CBP to access your confidential information."  (Jennifer Granick, Protecting Yourself From Suspicionless Searches While Traveling (May 1, 2008) www.eff.org.)

But you don't travel outside the country with a laptop, so United States v. Arnold doesn't impress.  So consider this hypothetical that probably hits close to home for many attorneys.  You are at Big Firm's offices for endless days of deposition testimony in a massive toxic chemical spill case.  Big Firm graciously provides an open wireless network for you to access while in their offices.  You don't know anything about WiFi, other than your Windows laptop is set to look for open WiFi networks and connect automatically.  It seems to work every time you go to offices like Big Firm's, so you don't worry about it.  You surf the Internet during breaks, you log onto your office e-mail server, you check your bank account balance online, all with not a care in the world.  But did you know that all your wireless data is flying through the air in an unencrypted format that any junior high school hacker could capture and analyze.  You might luck out if some of the sites you visit use SSL encryption for password submission, but you are basically operating your computer out in the open.  Even Big Firm's IT staff could be reading and recording your transmissions...

Subsequent posts in the COMPLEX TECH series (i.e., those posts that follow after this very first post under the COMPLEX TECH moniker) will identify some specific encryption options.  But for now, a simplified explanation of what is meant by "encryption."  In grade school you likely discovered the substitution cypher.  A simple substitution cypher is created by writing down the alphabet and then writing a second copy of the alphabet under the first shifted over by an arbitrary number.  For example, if you shift two letters right, your second alphabet's "A" appears under the "C" of the first.  Your second alphabet's "B" appears under the "D" of the first, and so on.  When you get to the end of the first alphabet, you wrap back around to the beginning.  The second alphabet is used to encode a message.  First, you write out your message.  Next, you find each letter of your message in your first alphabet and record those letters.  The result is that the original message is replaced with a set of letters that have been shifted using your "key."  The problem with substitution cyphers is that they are incredibly easy to crack, even without computers.

In WWII, the Germans created the Enigma machine, which created encoded messages that were very hard to break.  Essentially, the machine used a substitution cypher that changed every time a key was typed on the keyboard.   In other words, every letter was encoded with a different substitution cypher.  But even that complex encoding system was cracked without the use of the computing power available today.

Encryption techniques used today take data and either divide it into blocks, scrambling and obscuring each block individually, or convert a block of text into a large number and perform mathematical operations on that number with other huge numbers.  The important piece of information that you should take from this discussion is that secure encryption methods, like PGP, are believed at present to be secure from all decryption techniques, or so secure that only governments with the highest level of technical know-how could every crack the encryption technique (it is generally believed that if PGP is breakable, perhaps only the NSA is capable of doing so).

Stay tuned for more encryption discussions in the COMPLEX TECH series.

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Profit Concepts Management, Inc. v. Griffith provides further guidance on "prevailing party" definition

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Greatsealcal100 In complex litigation, as jurisdictional and factual circumstances become increasingly complicated, it is regularly difficult to ascertain the identity of prevailing parties.  In Profit Concepts Management, Inc. v. Griffith, the Court of Appeal (Fourth Appellate District, Division Three) offers some additional guidance on the concept.  Specifically, the Court considered whether a defendant that successfully quashed service for lack of personal jurisdiction was a "prevailing party" entitled to recover attorney's fees pursuant to a fee recovery clause in a contract underlying the dispute.

The Court first established the framework for its analysis: "Attorney fees are allowable as costs under Code of Civil Procedure section 1032 when they are authorized by contract. (Code Civ. Proc., § 1033.5, subd. (a)(10)(A).)" (Slip op., at p. 3.)  Next, the Court noted that authority cited in the trial court by appellant (Berard Construction Co. v. Municipal Court (1975) 49 Cal.App.3d 710) relied upon a prior version of Civil Code section 1717 that had been amended subsequently.  The Court than analyzed the outcome of the matter before it to determine if Griffith prevailed:

The only claims before the trial court were contained in Profit Concepts’s complaint, which sought compensatory and punitive damages in an amount to be determined, as well as preliminary and permanent injunctive relief. The case in California has been finally resolved. What was awarded on Profit Concepts’s complaint? Zero. Thus, the contract claim was finally resolved within the meaning of Hsu v. Abbara, and that case does not use the term “merits.”

(Slip op., at 7.)  Here's the real catch to all of this:  "Griffith moved to quash service of summons for lack of personal jurisdiction. Profit Concepts filed a notice of nonopposition to the motion to quash, and the trial court granted the motion."  (Slip op., at 3.)  You'd have to imagine that Profit Concepts would have opposed the Motion to Quash if it knew that the granting of the Motion would have resulted in Griffith obtaining attorney's fees as the "prevailing party."  While this action isn't complex, you can certainly imagine situations like this arising in complex actions with dozens of defendants and cross-defendants.  Moral:  Be careful who you name as a party in a contract-based action.  You might be writing them a check for their attorney's fees.

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Breaking (Unpleasant) News: U.S. federal courthouse in San Diego closed Monday due to bombing

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Wage Law, a usually pleasant read on developments in California's wage & hour litigation-scape, is the source for the unfortunate news on this blog that a pipe bomb exploded outside the federal courthouse in San Diego (Southern District of California).  According to FOXNews, the pipebomb exploded at 1:40 a.m. on Sunday, May 4, 2008.  Fortunately no injuries resulted from the late night detonation.  You can view the notice regarding the courthouse closure on the Southern District's homepage.

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Large majority of Am Law 200 firms not yet fully sold on blogging

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LexBlog, a company that helps build and maintain law blogs, conducted a survey of blogging activity by Am Law 200 firms.  As reported via a Law.com article, as of mid-March, 53 Am Law 200 firms were blogging in some manner, either through a blog the firm itself sponsored or a blog run on the side by one of its lawyers.  (Alan Cohen, Cutting a Winning Edge in Law Firm Blogs (May 2, 2008) www.law.com.)  The blogging activities of Am Law 200 firms is relatively new: "A little more than a third of those firms started blogging in the last six months alone, according to LexBlog."  (Ibid.)  Most Am Law 200 firms offer very targeted blogs, focusing on a specific area of law.

Large firms examining the bloggin issue return to the same questions:

  • How much business will a blog generate?
  • What if something goes wrong as a result of a blog?
  • How much nonbillable time will a blog take?

While the big firms wrestle with these issues, the biggest returns on the blogging investment are being realized by small firms.  (Gina Pasarella, Am Law Firms Giving Blogs The Stamp Of Approval (April 17, 2008) www.law.com.)  "Blogs can be more effective than almost any other marketing tool in showing a clear return on investment, according to one legal marketer."  (Ibid.)

Blogging in the legal industry is rapidly evolving, and I'm willing to confront the risks that have about three quarters of the Am Law 200 sitting on the sidelines.  The last 5 weeks since this blog launched have been exciting, educational, nerve-wracking, and tiring.  But it has been worth it so far.  And just in case you didn't read my disclaimer, I'm not offering you any legal advice on this blog, and we don't have an attorney-client relationship just because you found and read this blog.  Oh, and my blogging is unrelated to my employment or my employer.  Just so we're clear on those details.

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e-DISCOVERY: Updated online resources

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Rambrog100 In December 2007, Robert Ambrogi published a two-part article on his blog, Robert Ambrogi's Lawsites, that collected and reviewed e-discovery sites on the internet.  (See Part 1 and Part 2.) After the publication of that two-part article on Lawsites, two prominent e-discovery sites received substantial updates (one receiving a complete domain name change and makeover) that deserve follow-up coverage.  The first, DiscoveryResources.org, sets the standard as an e-discovery information repository.  According to Robert Ambrogi:

DiscoveryResources.org "may be the leading e-discovery portal" and that its Sound Evidence blog, written by e-discovery expert Mary Mack, is "one of the best known e-discovery blogs."

On May 1, 2008, the site relaunched with a number of updates and improvements.  Updates include: new navigation for tracking e-discovery best practices and case law; new "From the Experts" articles on current e-discovery issues and trends; RSS feeds for tracking the latest news and information; updated links to industry resources and judicial opinions; a newly designed monthly newsletter; and, links to industry blogs and other e-discovery community resources.

Another popular resource, Information Governance Engagement Area, has been discontinued in favor of a new site. The author, Rob Robinson, who has worked with several e-discovery companies, just launched Complex Discovery, which he describes as a source for "information, tools and tactics relevant to the growing discovery market." The site is organized around e-discovery stages, including collection, processing, review and production, and has a number of helpful resources. In addition to articles, news items, guidelines and the like, Robinson highlights several of the site's innovative features:

Scribd - iPaper Document Library: A growing online repository of interesting and applicable papers relevant to the field of electronic discovery.

Yahoo! Pipes EDD Mashup (RSS): An aggregation of key electronic discovery RSS feeds that serves to provide continuous updates on topics related to electronic discovery.

Twitter - ComplexDiscovery Updates: A Twitter feed that highlights the daily posting on the specific ComplexDiscovery RSS feed.

Mogulus - Video Learning on EDD: A video channel designed to share publicly available video presentations relating to electronic discovery.

Mofuse - Website Mobile Version: A mobile version of the ComplexDiscovery website designed specifically for mobile devices to include cell/iPhones.

(Robinson, InfoGovernance To ComplexDiscovery = More Robust And Objective eDiscovery Content (April 11, 2008) http://infogovernance.blogspot.com/.)

These sites are excellent springboards to e-Discovery resources online.

e-DISCOVERY posts will become a regular feature of The Complex Litigator.  Look for more on this rapidly changing subject soon.

[Via Robert Ambrogi's LawSites]  Aside:  Lawsites is a great way to learn about the evolving online legal community.

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Ninth Circuit confronts Morton's Fork in Negrete v. Allianz Life Insurance Co.

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Ninth Circuit SealIn a decision issued yesterday, the Ninth Circuit struck down an Order by District Court Judge Snyder that would have prohibited the nominal target of the Order, defendant Allianz, from settling similar or identical class actions pending in other state and federal courts without including, or obtaining consent from, plaintiff's co-lead counsel in the certified nationwide class action matter pending before Judge Snyder. (Negrete v. Allianz Life Insurance Co. (9th Cir. Apr. 29, 2008) ___ F.3d ___.)  The Order at issue in Negrete provided:

Any discussions of a settlement that would affect any claims brought in this litigation, other than claims of an individual plaintiff or class member, must be conducted or authorized by plaintiffs’ Co-Lead Counsel. Any proposed settlement that resolves, in whole or in part, the claims brought in this action shall first be subject to review and approval by the Court in this litigation.

(Slip op., at pp. 4579-80.)

Allianz argued that (1) the Order was actually an injunction, (2) the injunction in question was not proper under the All Writs Act, and, (3) even if it was, it was barred by the Anti-Injunction Act.  The Ninth Circuit agreed.  The Ninth Circuit first analyzed the Order and determined that, in effect, it was an injunction affecting the proceedings in other courts.  Turning to the All Writs Act, and theoretical circumstances where an injunction of this ilk might pass muster, the Court said:

Negrete Counsel floated out the specter of a reverse auction, but brought forth no facts to give that eidolon more substance. A reverse auction is said to occur when “the defendant in a series of class actions picks the most ineffectual class lawyers to negotiate a settlement with in the hope that the district court will approve a weak settlement that will preclude other claims against the defendant.” Reynolds v. Beneficial Nat’l Bank, 288 F.3d 277, 282 (7th Cir. 2002). It has an odor of mendacity about it. Even supposing that would be enough to justify an injunction of one district court by another one, there is no evidence of underhanded activity in this case. That being so, if Negrete’s argument were accepted, the “reverse auction argument would lead to the conclusion that no settlement could ever occur in the circumstances of parallel or multiple class actions — none of the competing cases could settle without being accused by another of participating in a collusive reverse auction.” Rutter & Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180, 1189 (10th Cir. 2002) (internal quotation marks omitted).

(Slip op., at pp. 4587-88.)  Turning to the Anti-Injunction Act, the Court described its restrictive provisions:

The authority conferred upon federal courts by the All Writs Act is restricted by the Anti-Injunction Act, which is designed to preclude unseemly interference with state court proceedings. It declares that: “A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” 28 U.S.C. § 2283. Therefore, unless one of the exceptions applies, the district court erred when it issued the injunction in question here.

At the outset, it is important to note that the Anti-Injunction Act restriction is based upon considerations of federalism and speaks to a question of high public policy. It is not a minor revetment to be easily overcome; it is a fortress which may only be penetrated through the portals that Congress has made available.

(Slip op., at pp. 4588-89, footnotes omitted.)

In this particular instance, one can sympathize both with the District Court and the Ninth Circuit (which seems to get so little sympathy).  On the one hand, the Ninth Circuit was obligated to respect the notions of federalism and limited jurisdiction granted to the federal courts.  On the other hand, this decision seems to invite the johnny-come-lately filers that simply watch for class action filings and jump the train, rather than investing any energy or resources in developing their own cases.  But is the outcome all bad?  Certainly, if I was prosecuting what I believed to be a bona fide class action, one in which the defendant was coming to the table to talk class settlement, I'd be mightily aggravated if some district court in some far away state told the defendant that they couldn't talk to me about settling my case without including some other counsel from some other case.  On the other hand, if I were stranded by Negrete while a defendant dodged my case to sort out a settlement with other counsel, that woud surely tweak me as well.  In the later instance, I'd have to resort to intervening in settlement approval proceedings in the event that the settlement was demonstrably deficient.  Negrete will generate some troubling outcomes, but I suspect that there is no viable alternative.  We have to assume that preliminary and final settlement approval in class actions won't be handed out where it isn't justified.  Perhaps this blog's recent post about Judge Alsup's denials of preliminary approval offer some comfort that the system works without the need for district court's to engage in jurisdictional wars over cases with other state and federal courts.

And it really is Morton's Fork, and not Hobson's choice or the prisoner's dilemma.  Neither settlement collusion and crashing nor internecine conflict in the court system are desirable alternatives.

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