When a party is added to an action, it bears the burden to show its interests are adverse to other parties for purposes of a 170.6 challenge

The Courts of Appeal are killing me. It has been a barren wasteland of decisions in state and federal appellate courts. Why aren't you people filing ridiculous appeals that elicit strange and wonderful new decisions about which I may write?  So, it has come to this.  I must comment on a peremptory challenge opinion.

In Orion Communications v. Superior Court (May 14, 2014), the Court of Appeal (Fourth Appellate District, Division One) granted a petition for writ of mandamus after the trial court granted a peremptory challenge pursuant to Code of Civil Procedure section 170.6. In the trial court, Plaintiff Orion obtained a judgment against DTS. After encountering difficulty enforcing the judgment, Orion filed a motion to amend the judgment to add Sameis as a judgment debtor. Orion argued Sameis was the alter ego of DTS and was liable as the successor to DTS's business. Sameis opposed the motion. Then, Sameis filed a section 170.6 peremptory challenge, asserting it was a proposed party in the action under the motion to amend and stating its belief a fair and impartial trial or hearing could not be had in that court. The trial court granted the challenge.

Granting the petition and directing that the challenge be denied, the Court of Appeal said:

Based on our review of the record, we conclude, as Orion asserts, the trial court erred by granting Sameis's section 170.6 peremptory challenge because Sameis did not present sufficient evidence showing it is not on the same side as DTS for purposes of section 170.6's one challenge per side limitation. In filing a section 170.6 peremptory challenge, Sameis, as a potential judgment debtor along with DTS, had the burden to present evidence showing it and DTS have substantially adverse interests with respect to the motion to amend the judgment in the action. (Home Ins., supra, 34 Cal.4th at p. 1037; People v. Escobedo (1973) 35 Cal.App.3d 32, 41 [no conflict shown between two defendants regarding motion to suppress evidence].) It is a question of fact whether two joined parties are on the same side for purposes of section 170.6 or whether they have substantially adverse interests. (Home Ins., supra, 34 Cal.4th at p. 1036.) Although the Order did not contain any express discussion of the issue, we conclude the trial court, by granting the peremptory challenge, implicitly found Sameis and DTS have substantially adverse interests and are not on the same side for purposes of section 170.6's one challenge per side limitation. Because that finding was based on the undisputed facts set forth in Sameis's peremptory challenge, we determine de novo, or independently, whether the trial court erred in so finding.

Slip op., at 11-12.  The Court then concluded that the declaration of counsel was insufficient because the majority of its contents were merely argument:

However, that declaration states only Sameis's belief that a fair and impartial trial or hearing cannot be held before Judge Taylor because he is prejudiced against it or its attorney or their interests. That declaration does not present any evidence on the question of whether Sameis and DTS have substantially adverse interests and therefore are not on the same side. The California Supreme Court has stated: "[A] party that seeks to exercise a subsequent peremptory challenge on the ground that, in effect, it is on a different side from another party despite appearances to the contrary, is required to provide evidence of a conflict to enable the trial court to decide whether the interests of the joined parties are actually substantially adverse." (Home Ins. Co., supra, 34 Cal.4th at p. 1037, italics added.)

Slip op., at 13. Elaborating on the insufficiency of the submitted declaration, the Court said:

The arguments and factual assertions made in Sameis's section 170.6 peremptory challenge appearing on the pages following Broker's declaration (i.e., those labeled as pages 2 and 3) are not evidence, but rather merely argument on the issue. (See § 2015.5 [regarding declarations]; Cal. Rules of Court, rule 3.1306(a) [regarding evidence allowed at law and motion hearings]; cf. Strauch v. Eyring, supra, 30 Cal.App.4th at p. 186; In re Marriage of Reese & Guy, supra, 73 Cal.App.4th at pp. 1222-1223 [unsworn declarations are improper and cannot be considered].)

Slip op., at 13.

The reason why this might be of interest to complex litigation practitioners if the frequency with which those matters are multi-party matters. If a newly arrived defendant tries to spoil your party with a 170.6, make sure they have submitted real evidence of the conflict.

Episode 10 of the Class Re-Action podcast is now available

After a month off from recording, the Class Re-Action podcast is back with a new episode. Episode 10 is now available to stream directly or download through your preferred podcasting service.

The shows have been listened to over 1,500 times, so thanks for taking the time to check it out. If I keep practicing, eventually I'll get it right.

After getting through the first year of this experiment, I'd like to take moment out to note a number of the firms and organizations that have been represented in podcast episodes:

• Blood, Hurst & O'reardon
• Cohelan, Khoury & Singer
• Sheppard Mullin
• Call & Jensen
• Desai Law Firm
• Public Justice
• Littler Mendelson P.C.
• Schneider Wallace Cottrell Konecky LLP
• Proskauer
• Kingsley of Kingsley & Kingsley
• Manatt
• Rudy, Exelrod, Zieff & Lowe
• JAMS
• First Mediation Corporation
• Sidley
• Fisher & Phillips LLP

If we haven't gotten to your firm yet, we are working on it (we've only had 10 episodes, and we know a lot of excellent lawyers in the class action world that we'd like to have on as guests).

We are also pleased to announce that MCLE credit has been issued in the first four episodes, which qualifies The Complex Litigator to apply for blanket provider status.  If you need the credits, soon you will be able to do so for all of our episodes.

Update: Fixed those typos that got past the elaborate error-correcting software matrix.

Arbitration agreement that arguably applied California law on the issue of enforceability is, ironically, unenforceable

It's been a while since I have posted here.  It's not for lack of interest in finding something appropriate to address, but the interesting decisions have been few and far between.  Plus this "start your own firm" thing tends to eat up a lot of time in the early days.  Of course, with several big decisions likely to drop from the California Supreme Court any day, this may have been the calm before the storm.  While we wait for those fireworks, here's a fascinating arbitration decision.  In Imburgia v. DirecTV, Inc. (April 7, 2014), the Court of Appeal (Second Appellate District, Division One) affirmed the denial of a petition to compel arbitration.  The analysis is striking for the fact that it forcefully challenges some contrary conclusions by federal courts.  Whether it remains published while other arbitration decisions have been taken and held is another question.

The particulars of the case are all but ignored as irrelevant, though it is clear that the case is a consumer class action from the claims alleged.  The customer agreement specified that JAMS rules would apply.  However, the agreement went on to state as follows:

“Neither you nor we shall be entitled to join or consolidate claims in arbitration by or against other individuals or entities, or arbitrate any claim as a representative member of a class or in a private attorney general capacity. Accordingly, you and we agree that the JAMS Class Action Procedures do not apply to our arbitration. If, however, the law of your state would find this agreement to dispense with class arbitration procedures unenforceable, then this entire Section 9 is unenforceable.”

Slip op., at 3.  The customer agreement also specified that Section 9, containing the arbitration requirement, was governed by the FAA and that the entire section was unenforceable if the agreement to dispense with class arbitration procedures was found to be unenforceable.

The trial court found the agreement unenforceable.  On appeal, the Court considered the conundrum created by a clause incorporating state law into the determination as to whether a class action waiver was unconscionable:

The question before us, then, is how to interpret section 9’s choice of law concerning enforceability of the class action waiver. Where section 9 requires us to consider whether “the law of your state would find this agreement to dispense with class arbitration procedures unenforceable,” does it mean “the law of your state to the extent it is not preempted by the FAA,” or “the law of your state without considering the preemptive effect, if any, of the FAA”? Plaintiffs argue that it means the latter, and we agree

Slip op., at 6.  The Court agreed that the basic rule of construction under which the specific controls the general where the two are inconsistent.  The Court observed that:

If we apply state law alone (for example, the antiwaiver provision of the CLRA) to the class action waiver, then the waiver is unenforceable. If we apply federal law, then the class action waiver is enforceable and any state law to the contrary is preempted. That is a sufficient inconsistency to make plaintiffs’ principle of contract interpretation applicable. Indeed, the entire preemption analysis of Concepcion is based on a conflict or inconsistency between the Discover Bank rule and the FAA.

Slip op., at 6.  The Court then addressed decisions identified by DirecTV as having rejected the plaintiffs' argument.  After dismissing two as inapplicable to the issue before it, the Court squarely addressed the third:

The third case, however, is a decision in the federal multidistrict litigation that parallels the instant state court actions. In an “[i]ndicative [r]uling” under rule 62.1 of the Federal Rules of Civil Procedure, the federal district court stated that the reference to “the law of your state” in section 9 of the customer agreement could not mean that enforceability of the class action waiver should be determined exclusively under state law, because that would render “meaningless” section 10’s general statement that the arbitration agreement is governed by the FAA. (In re DIRECTV Early Cancellation Fee Marketing and Sales Practices Litigation (C.D.Cal. 2011) 810 F.Supp.2d 1060, 1071.) We disagree. The specific reference to state law concerning the enforceability of the class action waiver creates a narrow and specific exception to the general provision that the arbitration agreement will be governed by the FAA. It does not render that general provision meaningless. In addition, the district court’s analysis does not address the principles that a specific provision controls over a general one and that ambiguous language is construed against the interest of the drafter. For all of these reasons, we decline to follow the district court’s decision.

Slip op., at 8-9.

The Court then discussed Murphy v. DIRECTV, Inc.  724 F.3d 1218 (9th Cir. 2013), decided after briefing was completed, for its holding that federal law "is the law of ever state":

We find the analysis in Murphy unpersuasive. On the one hand, insofar as the court’s reasoning is a matter of contract interpretation, it means that when the parties used the phrase “the law of your state,” they meant “federal law plus (nonfederal) state law.”  Murphy provides no basis for concluding that the parties intended to use the phrase “the law of your state” in such a way, and we a re aware of none. On the contrary, a reasonable reader of the customer agreement would naturally interpret the phrase “the law of your state” as referring to (nonfederal) state law, and any ambiguity should be construed against the drafter.  On the other hand, insofar as the court reasoned that contract interpretation is irrelevant because the parties are powerless to opt out of the FAA by contract, we are aware of no authority for the court’s position. Rather, as we have already observed, if the customer agreement expressly provided that the enforceability of the class action waiver “shall be determined under the (nonfederal) law of your state without considering the preemptive effect, if any, of the FAA,” then that choice of law would be enforceable; Murphy cites no authority to the contrary.  Consequently, the dispositive issue is whether the parties intended to make that choice.  As a result, “the parties’ various contract interpretation arguments” are not “largely irrelevant.”

Slip op., at 9-10 (parentheticals added by Court when discussing Murphy because Murphy asserted that all federal law is state law; footnotes omitted).  After ripping a few federal decisions to shreds, the Court concluded that the entire arbitration provision was nullified by its own terms.

What will happen now?  We'll have to wait for the petition for review to see.

I'll be back with a podcast the day before Easter and any case write-ups that come along before then.  Sorry to be away so long.

You can look at maps on your cellphone in California

As a victim (who later prevailed at trial) of law enforcement over-reach regarding the various Vehicle Code provisions relating to cell phones, it is nice to see some common sense out there (it is rare these days).  In People v. Spriggs (Feb. 27,  2014), the Court of Appeal (Fifth Appellate District) held, after weighty deliberation, that a statute about talking on a cell phone really doesn't apply to looking at a map on the phone (seeing as how the "talking" part isn't implicated).  Offered for informational purposes and your entertainment only.

Episode 9 of the Class Re-Action podcast is now available

Episode 9 of the Class Re-Action podcast is now published (a bit earlier in the day than usual).  Episode 9 guests are Jennifer Zargarof of Sidley and Eric B. Kingsley of Kingsley & Kingsley.  Show topics include discussions of Concepcion v. Amscan Holdings, Inc. (Feb. 18, 2014), Martinez v. Joe's Crab Shack Holdings (now held for Duran), and Williams v. Superior Court (Allstate Ins. Co.), 221 Cal. App. 4th 1353 (Dec. 6, 2013).

As a reminder, the first four episodes now qualify for MCLE credit if you need that, and it shouldn't be long before all shows are eligible for MCLE credit.

Additional MCLE credits finally available

So I finally got off my duff and obtained MCLE credit approval from the California State Bar for more episodes of the Class Re-Action podcast.  You can now purchase credit, in one-hour blocks, for episodes 1 through 4.  They are now all priced to be highly affordable.  They aren't intended to be a profit-center, just an offset to hardware costs for each episode.  Now you can be entertained (I hope) and score some credit for California MCLE at the same time.  I will get the rest of the episodes up for credit as soon as I can.

Since I need to capture bar numbers as a MCLE provider, the checkout now includes a form to collect that information.  I won't be providing that information to anyone other than the State Bar, if they decide they want it.

Speaking of the Class Re-Action podcast, we will be recording another episode this Sunday.  If all goes well (and this miserable computer doesn't explode), I will have it published the same day.

A bit of clarity added to lodestar fee applications

I've had a long-running debate going with several of the judges in the complex litigation program regarding fee awards in class actions.  I contend that California has long recognized contingent fee awards, and there is nothing about class actions that justifies a "lodestar first" approach that seems to be a trend.  A decision issued yesterday didn't settle the debate (it's a decision in a lodestar award situation, not a common fund recovery), but it adds a bit of clarity in other respects.  If you are a plaintiff-side practitioner, you need to know about this one.  In Concepcion v. Amscan Holdings, Inc. (February 18, 2014), the Court of Appeal (Second Appellate District, Division Seven) considered a defendant's appeal of a $350,000 fee award following settlement of a Song-Beverly Credit Card Act suit.

Counsel for plaintiffs submitted declarations describing, in general terms, the categories of work they performed.  The trial court then required the in camera submission of billing records that were not provided to the defendant's attorneys. On appeal, the defendant argued that class counsel failed to submit sufficient evidence to justify the fee award and, in particular, did not demonstrate the time expended by the six law firms involved was reasonably necessary and nonduplicative.  The defendant also argued that the trial court’s in camera review of class counsel’s billing records to support the award was fundamentally unfair and denied it due process.  The Court agreed that it was improper for the court to rely upon billing information not provided to the defendant, preventing any opportunity to challenge it.

Upon learning that the Court rejected in camera review of billing records, you might be tempted to conclude that this means that detailed billing records must be provided to the defendant.  That is not required, and it is also why this case is important.

As the Court explained, it is not necessary to provide detailed billing records in order to support a fee award:

It is not necessary to provide detailed billing timesheets to support an award of attorney fees under the lodestar method. (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 254 [affirming lodestar fee award based on “declarations evidencing the reasonable hourly rate for [the attorneys’] services and establishing the number of hours spent working on the case”; “California case law permits fee awards in the absence of detailed time sheets”]; see Mardirossian & Associates v. Ersoff (2007) 153 Cal.App.4th 257, 269 [“there is no legal requirement that an attorney supply billing statements to support a claim for attorney fees”].) Declarations of counsel setting forth the reasonable hourly rate, the number of hours worked and the tasks performed are sufficient. (Steiny & Co. v. California Electric Supply Co. (2000) 79 Cal.App.4th 285, 293 [“[a]n attorney’s testimony as to the number of hours worked is sufficient to support an award of attorney fees, even in the absence of detailed time records”].) “‘Although a fee request ordinarily should be documented in great detail, it cannot be said . . . that the absence of time records and billing statements deprive[s] [a] trial court of substantial evidence to support an award . . . .’” (City of Colton v. Singletary (2012)
206 Cal.App.4th 751, 784-785.)

Slip op., at 17.  The Court then noted that, while the declarations of counsel provided total hours, the declarations, for the most part, did not break out the total number of hours each attorney spent on each type of work in a category.  This spartan showing was found to be insufficient by the Court:

As discussed, class counsel had the burden of proving the reasonable number of hours they devoted to the litigation, whether through declarations or redacted or unredacted time sheets or billing records. (See, e.g., Ellis v. Toshiba America Information Systems, Inc. (2013) 218 Cal.App.4th 853, 883; El Escorial Owners’  Assn. v. DLC Plastering, Inc., supra, 154 Cal.App.4th at p. 1366.) “A trial court may not rubberstamp a request for attorney fees, but must determine the number of hours reasonably expended.” (Donahue v. Donahue (2010) 182 Cal.App.4th 259, 271.)

Slip op., at 18.  The clear message is that, while it is proper for counsel to decline to submit billing sheets, the "reasonable" fees must be supported with a detailed declaration as an alternative approach.  It would appear that, to be definitely safe, a declaration for this purpose must include a thorough summary of the number of hours spent on various categories of work in the case.  But the practice of requiring the submission of detailed billing records is improper.  Whether you want to go that route and tell the trial court it is improper is another story.

Next, the Court considered the argument that the review of billing records in camera denied defendant a due process right to challenge the records.  The Court swiftly concluded that it did: "Under our adversarial system of justice, once class counsel presented evidence to support their fee request, Party City was entitled to see and respond to it and to present its own arguments as to why it failed to justify the fees requested."  Slip op., at 18.)

The Court essentially held that, while billing records weren't necessary to support a fee request, once provided, they had to be shared.  The Court dismissed the argument that the records were likely to contain a large volume of privileged information, suggesting that redaction would suffice.  The Court also found that cursory declarations with total numbers of hours were insufficient.  So, sufficient lies somewhere between billing records and cursory declarations with total hours listed.  Now you know what you can't do, what you don't have to do, and what you probably ought to do.

Tech Tip: Office 365 server connectivity

If you just moved to Office 365, but use Outlook on premises, or if you just bought a new computer that will run Outlook and connect to Office 365, this quick tip might be for you.  If things work during initial setup, but you lose connectivity later and can't get it back, IPv6 may be the culprit.  Office 365 does not play nicely with some IPv6 implementations (depends on the ISP, apparently).

In Network Connections, right click and choose Properties.  On the dialog that opens, scroll down in the protocols list and look for check marks by both IPv4 (Internet Protocol Version 4) and IPv6 (Internet Protocol Version 6).  Uncheck IPv6 and see if Outlook instantly connects.  Hope this saves a few people from migraines.  Note: you can find Network Connections by right-clicking the windows icon in the lower left corner of your screen in Windows 8.1.  I think you can also find it by hitting the start button in Windows 7, but it's been a while since I had a Windows 7 machine.

Ninth Circuit finds that California's "good cause" requirement for a license

The Ninth Circuit did us a solid yesterday.  In Edward Peruta v. County of San Diego (9th Cir. Feb. 13, 2014), the Court held, 2-1, that California's restrictions (as applied in San Diego County) on firearm carry in public improperly infringe upon the Second Amendment's guarantee of a citizen's right to keep and bear arms.  At least in the more populated counties of California, you essentially cannot obtain a license to carry a concealed weapon; almost no cause (other than being best buddies with the Sheriff or a prominent politician) is good enough.  Los Angeles County and Los Angeles City are both on the extreme end of this construction.  But this gives me hope that when I choose to carry a weapon for self defense, it will be a lawful act.  I am not suggesting, by the way, that I would ever choose to act in an unlawful manner; I'm just looking forward to the time when fewer of my rights will be implicitly negated by impossible requirements attached to their exercise.

The discussion of what it means to "bear" arms, in the historical context, is highly entertaining.

Romo v. Teva Pharmaceuticals USA, Inc. to be reheard en banc

Romo v. Teva Pharmaceuticals USA, Inc. was described as the end of the world by business interests when the Ninth Circuit held that attorneys could avoid CAFA removal by filing separate cases with fewer than 100 plaintiffs in each case to avoid the mass action provision in CAFA.  The Ninth Circuit is going to give those poor business interests a second bite at the apple; today the Ninth Circuit issued an order that the matter be reheard en banc.