Arbitration bid sunk in Sprunk

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Yes, yes I did write that post title.  In Sprunk v. Prisma LLC (August 23, 2017), the Court of Appeal (Second Appellate District, Division One) considered whether a defendant in a putative class action can waive its right to compel arbitration against absent class members by deciding not to seek arbitration against the named plaintiff.  The Court agreed that it did, holding that Prisma LLC "waived its right to seek arbitration by filing and then withdrawing a motion to compel arbitration against the named plaintiff, Maria Elena Sprunk, and then waiting until after a class had been certified to seek arbitration against class members."  Slip op., at 2.

Some of the less interesting issues in the opinion concern the sufficiency of evidence of arbitration agreements with class members.  The juicy stuff, however, is described as follows:

Plan B [Prisma LLC] also raises a legal issue concerning the status of absent class members. Plan B argues that the trial court erred in considering Plan B’s delay in moving to compel arbitration before the court decided class certification because the unnamed class members were not parties until a class was certified. Because this argument raises an issue of law concerning the time period that the trial court could properly consider in analyzing waiver, we review it de novo. (Sky Sports, Inc. v. Superior Court (2011) 201 Cal.App.4th 1363, 1367 (Sky Sports) [applying the de novo standard to the issue whether a defendant “waived its right to compel arbitration because it did not bring the motion before certification of a class that included parties to the arbitration agreement”].)

Slip op., at 12.  The Court concluded that strategic delay can properly result in waiver:

An attempt to gain a strategic advantage through litigation in court before seeking to compel arbitration is a paradigm of conduct that is inconsistent with the right to arbitrate. For example, Bower was a putative wage and hour class action in which the defendant engaged in discovery and attempted to settle the case on a classwide basis when the class was a modest size. (Bower, supra, 232 Cal.App.4th at pp. 1038–1040.) When the plaintiff sought an amendment that would have expanded the class, the defendant (Inter-Con) moved to compel arbitration. The trial court found waiver, and the appellate court affirmed, concluding that Inter-Con’s decision to delay seeking arbitration “appears to have been tactical.” (Id. at pp. 1045, 1049). Based upon Inter-Con’s litigation conduct, “[o]ne can infer that InterCon chose to conduct discovery, delay arbitration, and seek a classwide settlement because it saw an advantage in pursuing that course of action in the judicial forum.” (Id. at p. 1049.) Such conduct provided substantial evidence to support the finding that “Inter-Con’s actions were inconsistent with a right to arbitrate.” (Id. at p. 1045.)

Slip op., at 18.  The discussion about waiver is extensive (seriously - about 24 pages of the opinion concern waiver).  The Court seems to leave the door open for situations where the trial court believes that there is a bona fide desire to wait for an expected clarification in the law, but it would seem to be a risky bet for a defendant if its actions could just as well be perceived as done for strategic benefit.

I'm somewhat surprised that this hasn't come up more frequently.

Knapp, Petersen & Clarke, André E. Jardini, Gwen Freeman and K. L. Myles successfully represented Plaintiff and Respondent.

Further nuances to PAGA and arbitration clauses in Esparza v. KS Industries, L.P.

Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014) held that PAGA representative claims for civil penalties are not subject to arbitration.  In Esparza v. KS Industries, L.P. (August 2, 2017), the Court of Appeal (Fifth Appellate District) tackled the question of whether any claims asserted under PAGA can be "individual" claims, and, if so, how are they treated for purposes of arbitration agreements. The issue arose, in particular, because it appeared that the plaintiff asserted, within the PAGA claim, a claim to recover wages under Labor Code section 558, which, unlike the other PAGA penalties (in the sense of the word meaning something akin to a fine) sought, would result in the recovery of the underlying wages owed, with no portion going to the State from the recovered wages.  The Court directed the plaintiff on remand to declare unequivocally whether only penalties would be sought or whether, in addition, individual recovery claims would be pursued.  The Court concluded that such individual recovery claims would be severed and arbitrated.

Don't see the Fifth Appellate District having to wade into these issues regularly, so hat tip to that District for getting into the PAGA mix.

The trial court was technically affirmed, but the holding and directions on remand make this one a win for defendant/respondent, who was represented by Call & Jensen, John T. Egley and Jamin S. Soderstrom.

The California Rules of Court require revision or clarification regarding Motions for Preliminary/Final Approval of class action settlements

The California Rules of Court are just bursting with procedural rules designed to operate in conjunction with the Code of Civil Procedure.  However, while much effort clearly went into ensuring that the Rules work with each other in a smooth fashion, every now and then the Rules conflict with each other.  One area where I find this to be so arises in the context of motion page length when filing motions for preliminary (or final) approval of class action settlements. 

As most civil litigation practitioners in California would know off of the of their head, California Rules of Court, rule 3.1113(d) specifies that motions other than summary judgment or summary adjudication motions can be no longer than 15 pages, with 20 pages permitted for the summary adjudication and judgment motions.  There are no other listed exceptions in that rule. But California Rules of Court, rule 3.764(c) specifies that any motion seeking certification (or decertification) of a class action can be up to 20 pages in length.  Rule 7.764 then says that the remaining provisions of rule 3.1113 apply, apparently meaning that the page limit is intended as an exception to 3.1113.  The confusion arises in what is expected by Court ruling on motions for preliminary (or final) approval of class action settlements.  Those motions are required to discuss the key settlement terms, the settlement process, why the settlement if fair and adequate, and (and here's the rub), why certification of a settlement class is appropriate.  Now, that certification discussion is certainly more streamlined than on contested motion, but Courts still expect at least some discussion of certification requisites.  So, which page limit applies?  Is it 15 pages, or 20 pages, given that motions for preliminary (or final) approval of class action settlements discuss certification of a settlement class?

Another PAGA versus arbitration decision, this time from the Second Appellate District in Perez v. U-Haul Co. of California

Law is driven as much by unforeseen consequences as it is by any rational planning. The Labor Code Private Attorneys General Act of 2004 (PAGA) is exhibit one.  Over the last five or so years, inexorable advance of the Federal Arbitration Act looked as if it would cut a fatal swath through many class actions. But, somewhat unexpectedly, PAGA has served as a counterpoint in the wage & hour sector.  In Perez v. U-Haul Co. of California (Sept. 16, 2016), the Second Appellate District, Division Seven, affirmed the trial Court's ruling that U-Haul could not assert an arbitration agreement to compel the plaintiffs to individually arbitrate whether they qualified as “aggrieved employee[s],” to determine in arbitration whether they had standing to pursue a PAGA claim.

The Court agreed with Williams v. Superior Court, 237 Cal. App. 4th 642 (2015), which also held that California law prohibits the enforcement of an employment agreement provision that requires an employee to individually arbitrate whether he or she qualifies as an “aggrieved employee” under PAGA, and then (if successful) to litigate the remainder of the “representative action in the superior court.”  Slip op., at 11-12.  The Court concluded by dismissively rejecting the notion that the FAA can apply to claim belonging to a governmental entity or its designated proxy.

Gregg A. Farley, of the Law Offices of Gregg A. Farley, and Sahag Majarian, of the Law Offices of Sahag Majarian, represented Plaintiff and Respondent Sergio Lennin Perez; Larry W. Lee and Nicolas Rosenthal. of the Diversity Law Group, and Sherry Jung, of the Law Offices of Sherry Jung, represented Plaintiff and Respondent Erick Veliz.

Hernandez v. Restoration Hardware, Inc. tells class action objectors to get party status or get lost

I frequently contemplate things without any real expectation that I will get an answer.  One thing I wonder about in the practice of law is whether California Courts of Appeal develop cultures as an institution (i.e., whether each Appellate District has a significant impact on its constituent members over time), or whether the tendencies are happenstance of the appointments (i.e., whether the tendencies of each Appellate District -- and Division therein -- is just the sum of random events like the preferences of the appointing administration and the timing of open seats). An application of this pondering occurred to me mere moments ago, when I read Hernandez v. Restoration Hardware, Inc. (March 14, 2016), in which the Fourth Appellate District, Division One, held that named party status is required to appeal a class action judgment. Jinkies!

In Hernandez v. Restoration Hardware, a bench trial resulted in a class recovery of up to $36,412,350.  The class representatives requested fees of $9,103,087.50 (25 percent of the total maximum fund). Francesca Muller, a class members, requested that the court order notice of the fee motion be sent to all class members.  The court denied the request, awarded the fees, and entered judgment.  Muller filed a notice of appeal. Class representative Hernandez substantively opposed the appeal but argued that Muller lacked standing to appeal at all. The Court of Appeal addressed the threshold issue of whether Muller had standing to appeal.

Recognizing that only an aggrieved party has standing to appeal, the Court began by recognizing the distinction between names class representatives and absent class members:

Indeed, "[t]he structure of the class action does not allow absent class members to become active parties, since 'to the extent the absent class members are compelled to participate in the trial of the lawsuit, the effectiveness of the class action device is destroyed.' "  (Ibid., fn. omitted.)  Although unnamed class members may be deemed "parties" for the limited purposes of discovery (Southern California Edison Co. v. Superior Court (1972) 7 Cal.3d 832, 840), unnamed class members are not otherwise considered "parties" to the litigation.  (Cf. National Solar Equipment Owners' Assn. v. Grumman Corp. (1991) 235 Cal.App.3d 1273, 1282 ["unnamed class members do not 'stand on the same footing as named parties' "].)

Slip op., at 9.  The Court then began its analysis by considering Eggert v. Pac. States S. & L. Co., 20 Cal. 2d 199 (1942), which considered the same issues presented here.  Concluding that Eggert was factually almost identical, theCourt concluded that Eggert required dismissal of the action:

Eggert appears to be on "all fours" with the present action: both involved a class action; both involved a matter litigated to judgment; both involved a challenge to the postjudgment attorney fee award to the counsel for the named plaintiff; both involved appellants who were members of the class, but not named parties, and who had appeared through counsel to object to the attorney fee award; and both involved members who took no steps to be added as named plaintiffs.  Accordingly, under Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, we must adhere to Eggert and dismiss the appeal.

Slip op., at 11.  The Court then commented on several decisions from Courts of Appeal that permitted appeals by non-party class members:

Muller also cites several cases in which California appellate courts stated a class member who was not a party to the action obtains appellate standing to challenge the judgment merely by interposing an objection to the judgment below.  However, neither of the cases cited by Muller, Consumer Cause, Inc. v. Mrs. Gooch's Natural Food Markets, Inc. (2005) 127 Cal.App.4th 387 and Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, made any effort to reconcile their conclusions with Eggert, and instead rooted their conclusions in the analysis contained in Trotsky v. Los Angeles Fed. Sav. & Loan Assn. (1975) 48 Cal.App.3d 134 (Trotsky).  (See Wershba, at pp. 235-236 [citing only Trotsky on issue of standing]; Consumer Cause, at pp. 395-396 [citing Trotsky and Wershba on issue of standing].)  Accordingly, we examine Trotsky.

Slip op., at 12.  That examination of Trotsky was not flattering, and the Court quickly concluded that Trotsky had failed to consider the "party" element of section 902:

Trotsky focused primarily on whether an objector to a settlement was "aggrieved" within the meaning of Code of Civil Procedure section 902, concluding objectors were aggrieved because " '[i]t is possible that, within a class, a group of small claimants might be unfavorably treated by the terms of a proposed settlement. For them, the option to join is in reality no option at all,' " and reasoning that because those claimants might be forced to choose between "equally unpalatable alternatives"—of accepting either nothing or an unfair settlement—those parties were sufficiently aggrieved for purposes of the right to appeal.  (Trotsky, supra, 48 Cal.App.3d at pp. 139-140.)  However, Trotsky did not examine the distinct "party" element of Code of Civil Procedure section 902, nor make any effort to reconcile its conclusion with Eggert's holding that unnamed class members whose only appearance was to object to the attorneys' fees had no standing to appeal because they were not "parties" and did not avail themselves of the "ample opportunity . . . to become parties of record . . . ."  (Eggert, supra, 20 Cal.2d at p. 201.)  Because Eggert teaches the "party" requirement of Code of Civil Procedure section 902 is not met merely because the "aggrieved" requirement of section 902 might also be satisfied as to a nonparty class member, we conclude Trotsky's analysis of standing is flawed and that Trotsky and its progeny (which includes both Consumer Cause, Inc. v. Mrs. Gooch's Natural Food Markets, Inc., supra, 127 Cal.App.4th 387 and Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th 224) should not be followed.

Slip op., at 13-14.  Well now.  That's....interesting.  The Court went on to point out that federal courts handle this differently, but California courts aren't federal courts, and there is no requirement that California follow the federal approach.  You have to at least respect the cut of this Court's jib to state that they are bound to follow a factually similar 1942 decision and reject much more recent decisions for failing to address the California Supreme Court's Eggert decision. That said, of the many things I ponder, one is whether this case case more than 90 days of shelf life.

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.

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.

Appellate court provides some guidance on electronic discovery obligations under California law

Vasquez v. CA School of Culinary Arts (pub. ord. September 26, 2014) (Second Appellate District, Division Two) is ostensibly about an award of attorney's fees following the plaintiffs' successful opposition of a motion to quash their electronic records subpoena directed to student loan servicing entity Sallie Mae, Inc.  After all, the Court describes the appeal as follows: "Sallie Mae, Inc. (Sallie Mae) appeals from an order awarding plaintiffs and respondents Daniel Vasquez, et al. (collectively, plaintiffs) $11,487 in attorney fees and costs incurred after plaintiffs successfully opposed Sallie Mae’s motion to quash a business records subpoena seeking electronically stored information pertaining to student loans made to them by Sallie Mae."  Slip op., at 2.

The real value of the case is found in its discussion of what defines a reasonable electronics evidence request:

The motion to quash was premised on the ground that the subpoena was improper because it required Sallie Mae to do more than produce records as they already exist and that Sallie Mae could not be compelled to perform research, or to compile data through a programming effort in order to create a spreadsheet.
There is little California case law regarding discovery of electronically stored information under section 1985.8. We look, therefore, to federal case law on the discovery of electronically stored information under the Federal Rules of Civil Procedure for guidance on the subject. “‘Because of the similarity of California and federal discovery law, federal decisions have historically been considered persuasive absent contrary California decisions.’ [Citation.]” (Ellis v. Toshiba America Information Systems, Inc. (2013) 218 Cal.App.4th 853, 862, fn. 6, quoting Liberty Mutual Ins. Co. v. Superior Court (1992) 10 Cal.App.4th 1282, 1288.)

Slip op., at 8.  Citing Gonzales v. Google, Inc.,  234 F.R.D 674 (N.D.Cal. 2006), the Court held that "a nonparty cannot avoid complying with a subpoena seeking electronically stored information on the ground that it must create new code to format and extract that information from its existing systems."  Slip op., at 9.

Until California Courts uniformly depart from this holding, or the statutory law is modified, it looks like federal courts will supply strong guidance in on the questions that arise during electronic discovery.