Up In Smoke

A recent decision by the Third Appellate District is a reminder of the opportunity and the limits of a motion for judgment on the pleadings.  The case is Collins v. eMachines, Inc. 

In Collins, the plaintiffs brought a putative class-action against eMachines for defects in its computers.  eMachines moved for judgment on the pleadings.  As set forth in Code of Civil Procedure section 438, judgment on the pleadings allows a plaintiff to assert that the answer does not state facts sufficient to constitute a defense.  And as is more commonly used, judgment on the pleadings allows a defendant to allege jurisdictional defects or that the complaint/cross-complaint fails to state a cause of action.  Judgment on the pleadings can be used if the opportunity to demur has passed.

The trial court, in a two-sentence order, granted judgment on the pleadings as to plaintiffs' Consumer Legal Remedies Act (CLRA), Unfair Competition Law (UCL), common law fraud and unjust enrichment causes of action, then dismissed the complaint with prejudice.  The court stated that plaintiffs did not and could not allege any facts to support their claims. 

The plaintiffs appealed.

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Goin Round in Circles

A recurring theme is that collectively speaking, lawyers often make and evaluate Code of Civil Procedure section 998 offers without a complete understanding of how the statute operates.  That knowledge gap is a little scary. 

But before you conclude I am talking down to trial lawyers (and many have heard me admire how trial lawyers react in real time and keep all those plates in the air), check this out: judges sometimes get 998 offers wrong too.  And think about this – if anyone sees 998 offers in operation the most – it’s the civil trial court judges.  After all, they have the robust caseloads and are more apt to regularly deal with 998 offers.

In preparing for the upcoming 2011 MCLE Spectacular presentation, I came across a splendid example of how section 998 trips up lawyers and sometimes judges alike.  The case is Warfield v. Chandler 2011 Cal.App. Unpub. LEXIS 4024.  Warfield has a lot to offer.

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The Right Words

Speaking of Code of Civil Procedure section 998 offers, another decision came out on May 25, 2011.  It is interesting because one would think that the issue had already been covered by a published opinion, but apparently not.  The case is Puerta v. Torres, 2011 Cal.App. LEXIS 649.  And it holds, simply enough, that if a 998 offer lacks a place for the offeree to accept by signing, the offer is invalid. 

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Magic Words

A recent appellate decision is notable for two reasons.  First, it has to be one of the shortest published opinions on record -- the text fits on one page.  Second, it holds that when a Code of Civil Procedure section 998 offer includes the phrase, "each side to bear their own costs," the word "costs" includes any attorney fees available to the offeree as a prevailing party.  The case is Martinez v. Los Angeles County Metropolitan Transportation Authority 2011 Cal.App. LEXIS 620 (2d Dist.).  

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Legal Eagles

As appellate veterans know, oral arguments in the Ninth Circuit frequently tend to be hotter than in the state appellate courts.  And one of the great things about being director of the Hastings Appellate Project, the clinical program in which Hastings students handle pro bono cases in the Ninth Circuit, is watching the students argue their cases.  On any given day, the Hastings students are easily among the best advocates on the calendar.  Which brings to mind that old saw about how you get to Carnegie Hall...

And last week was no exception.  Teresa Li, third-year law student at Hastings and Archer Norris law clerk, argued in the Ninth Circuit.  Under my supervision as well as that of assistant director Stephen Tollafield, Teresa and fellow student Brian Pettit represented a pro se plaintiff in an employment discrimination case.  The case involved the unsettled state of the federal pleading requirements since the United States Supreme Court decided Twombly and Iqbal.  Those cases set out a "plausibility--fair notice" standard replacing the longstanding "no set of facts" standard from Conley v. Gibson.  The federal courts have been perplexed ever since, including the district court which dismissed the complaint for failure to meet the Twombly and Iqbal standards.

But on March 16, 2011, Teresa argued before Circuit Judges William Fletcher, Procter Hug, and Milan Smith.  After Teresa laid out a litany of reasons why the plaintiff's complaint satisfies Twombly and Iqbal, Circuit Judge Smith interjected that he thought her client has a "slum dunk" case.  The decision is pending. 

Photo, left to right:  Stephen Tollafield, Brian Pettit, Teresa Li, Gary Watt

The oral argument audio is available at:
http://www.ca9.uscourts.gov/media/view_subpage.php?pk_id=0000007204

Remand Diplomacy

Ever notice how the appellate courts provide "guidance" to the lower courts on remand?  You know what I mean, "we take no position" and "while the lower court is free to revisit" and so on.  Of course, usually followed by a magnificent qualifier, that says "but" in capital letters.  Here's a gem:

Because we are vacating the district court's Rule 11 orders on other legal grounds, we express no opinion at this stage about the particular reasonableness of any fees the district court elected to award Mattel.  We do, however, encourage the district court on remand to ensure that the time spent by Mattel's attorneys was reasonably and appropriately spent in relation to both the patent frivolousness of Christian's complaint and the services directly caused by the sanctionable conduct. FN 12

FN 12: For example, because the action was frivolous on its face, why would Mattel's attorneys need to spend 700 hours . . . for the summary judgment motion and response? . . . Mattel's theory was stunningly simple and required little explication . . .  Christian v. Mattel, 286 F.3d 1118, 1131-32, FN 12 (9th Cir. 2002).

Don't you love it?!  We express no opinion but see our footnote for our actual opinion.  And oh, by the way, if you (district court) fail to correctly read our "no opinion" you will be reversed.  Again!

Remand diplomacy. 

Wrinkles

Code of Civil Procedure section 998 offers rest upon a simple concept.  As one Court of Appeal put it, 998 offers "encourage settlement by providing a strong financial disincentive to a party--whether it be a plaintiff or a defendant--who fails to achieve a better result than that party could have achieved by accepting [a 998] settlement offer. (This is the stick. The carrot is that by awarding costs to the putative settler the statute provides a financial incentive to make reasonable settlement offers.)"  (Bank of San Pedro v. Superior Court (1992) 3 Cal. 4th 797, 804.)  But if the carrot and stick is a simple concept, it's the actual business that can be complicated. 

The starting point is a valid offer that a trial court finds to be "reasonable and made in good faith."  (See, e.g., Nelson v. Anderson (1992) 72 Cal.App.4th 111, 134.)  A recent Court of Appeal decision aptly demonstrates a wrinkle--the tricky business of serving a 998 offer with a complaint.  Wait a minute, can you do that?  The answer is, "it depends."

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Stimulus Package?

The Great Recession has been a trying time, calling for innovative leadership and creative thinking by the California Legislature.  And the Legislature appears to have spent 2010 concerned with your spirits.  The fluid, drinkable kind, that is.  A review of the legislation enacted effective January 1, 2011 includes the following intoxicating mix of beverage measures.

The new laws:

Permit licensed winegrowers to produce "spirits of wine" without having to obtain a distilled spirits manufacturer's license.  Bus. & Prof. Code sections 23015; 23358; 23358.2, and 23390.5;

Create a new type of license allowing for wine, beer and distilled spirits tasting at off-sale licensed premises.  Bus. & Prof. Code sections 2339.6 & 25503.56;

Permit beer manufacturers and holders of beer and wine importer's licenses to conduct "instructional events" at on-sale retail licensee premises featuring beer.  Bus. & Prof. Code section 25503.45;

Allow for the return of wine taken out of state.  Bus. & Prof. Code sections 23661.7 & 25238;

Enable licensed distilled spirits rectifiers to donate or sell their "products" to specified nonprofit entities for the purpose of assisting in fund-raising efforts.  Bus. & Prof. Code section25503.9;

Enable guests to purchase beer and wine in sealed containers from hotel or motel gift shops.  Bus. & Prof. Code section 2339.61;

Permit armed forces members to buy alcohol using a military identification card.  Bus. & Prof. Code section 25660.

Oh, there is one other little change.  Civil Code section 1714 has been amended to limit the social host immunity of a "parent, guardian or another adult who 'knowingly furnishes' alcoholic beverages at his or her residence, to a person under 21 years of age..." 

Bottoms up!

SLAPPED Around

Most cases, if they have any interest to us at all, are interesting because of what they say.  After all, the holding gives us insights into how a particular statute or rule applies to a given set of facts.  Sometimes, it's the facts that draw our interest, simply because the facts are so out of the ordinary.  And then there are those cases that are interesting by what they don't say.  It's the unanswered questions they raise - questions that are more entertaining and curious than a hundred ground-breaking decisions.

A recent decision by the Fourth District is one of the latter.  Baharian-Mehr v. Smith 2010 Cal.App. LEXIS 1779.  There, the appellate court affirms the dismissal of an anti-SLAPP motion and an award of $1,500 in attorney fees, describing it as "one of the weakest anti-SLAPP motions this court has reviewed in some time, which is not an inconsiderable achievement."  It doesn't exactly give counsel a gold star when it later adds, "Although Smith's [appellate] briefing is an improvement over his original motion in the trial court, his legal arguments are equally devoid of merit, and therefore, attorney fees [on the appeal] are appropriate."

But more intriguing are the unspoken premises and unanswered questions.  Who appeals an award of attorney fees when the award is only $1,500?  Did counsel tell the client that losing the appeal would mean, um, more attorney fees?  That opposing counsel's fees on the appeal would far outpace the $1,500 at issue?  And who takes on the appeal knowing the award is so small?  What is counsel's hourly rate?  I mean, creating the shell document for the appeal will pretty much burn through the $1,500 right?  Okay, add the notice of appeal, the case information statement, designate the record.  Are we there yet?

But here's the clincher; maybe it was barter.  Smith was in the adult entertainment business.  And I'm pretty sure that doesn't mean baseball.  See?  In this one, it's the unspoken premises and the unanswered questions that make it memorable!

Speak Freely

The California Supreme Court heard oral argument today in a case that could result in a chilling effect on attorney-client communications.  The questions presented are 1) Are the private conversations of an attorney and client for the purpose of mediation entitled to confidentiality under Evidence Code sections 1115 through 1128; and, 2) Is an attorney a "participant" in a mediation such that communications between the attorney and his or her client for purposes of mediation must remain confidential under Evidence Code section 1119, subdivision (c) and 1122, subdivision (a) (2)?  As to third-parties, the answers would seem obvious.

But this is not about third-parties.  It's about a subsequent malpractice claim.

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Words Matter

“It doesn't take Hamlet to figure out that something rotten happened in this case.” So begins Great West Contractors, Inc. v. Irvine Unified School District 2010 Cal.App. LEXIS 1521. And when the author is the Fourth District’s Justice David Sills, a little entertainment is bound to be included with the enlightenment. But if you are involved in public works contracting, Great West is far from comedy. It’s a dramatic reminder of the perils and pitfalls facing contractors and counsel. With fewer private projects underway, more firms are bidding on public work. And it’s not like there’s a lot of public projects to bid on either. To the qualified low bidder, goes the rare and coveted work. That’s the theory anyway. Great West exemplifies how ephemeral the phrase “winning bid” can be.

"Responsible bidder” means “a bidder who has demonstrated the attribute of trustworthiness, as well as quality, fitness, capacity and experience …” (Public Contracts Code § 1103.) If the low bidder is found to be nonresponsible, it is entitled to a hearing before the bid can be awarded to another bidder.  (D.H. Williams Construction Co. v. Clovis Unified School Dist. (2007) 146 Cal.App.4th 757, 772.) In contrast, “a bid is responsive if it promises to do what the bidding instructions demand.” (Taylor Bus Service, Inc. v. San Diego Bd. of Educ. (1987) 195 Cal.App.3d 1331, 1341.) Responsiveness is “readily ascertainable on the face of the bid.” (Great West Contractors, 2010 Cal.App. LEXIS 1521 at p. *65.) Examples of nonresponsiveness include the low bidder proffering an “insurance trust” instead of the requested CGL policy, proposing to lease a phone system instead of selling it as the bid package required, failure to include requested documentation of compliance with an outreach program, and failure to list the required “class A” license.  

So what happened in Great West

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There's Rules and There's Rules

On August 9th, the Second District reversed a trial court's dismissal of a personal injury/auto accident case on statute of limitations grounds.  The case has a certain Kafkaesque feel to it. Or perhaps Monopoly's "do not pass go" is a better description.

In Mito v. Temple Recycling Center Corp. 2010 Cal.App. LEXIS 1372, the plaintiffs faxed their complaint to the superior court clerk on July 24, 2008, a date within the two-year statute of limitations.  But the trial court clerk rejected the filing because plaintiffs failed to include the "Civil Case Cover Sheet Addendum and Statement of Location" required by local court rule.  The filing included the civil case cover sheet required by California Rules of Court, rule 3.220 subdivision (a).  The clerk stamped the submission "Received Fax Filing July 24, 2008."  The next day, the clerk rejected it, faxing a "Notice of Rejection-Fax Filing" back to plaintiffs.

So on July 28, plaintiffs faxed the same documents again, this time including the local rules cover sheet.  The receipt time printed on top of the superior court copies of the documents showed transmission between 4:16 p.m. and 4:22 p.m. that day.  But the court clerk (probably doing the work the next day), stamped the complaint as filed the following day, July 29, 2008.

That was one day after the statute of limitations expired.

Defendants demurred on statute of limitations grounds.  The trial court's tentative ruling sustained the demurrer without leave to amend.  But at the hearing, the trial court granted plaintiffs 60 days to file a motion to amend the filing date nunc pro tunc under rule 2.304, subdivision (d).  When plaintiffs dutifully filed their motion, defendant objected on the grounds that the supporting declaration submitted as to timeliness of the June 28 fax filing should be excluded.  The reason?  Because the declarant-attorney (Ms. Mito) was also one of the plaintiffs, so could not satisfy the "At the time of transmission I was at least 18 years of age and not a party to this legal proceeding" language required of declarants by rule 2.304 subdivision (d).

So the trial court denied the motion.  Do not pass go.

The Court of Appeal reversed.  After observing that plaintiffs failed to argue in the trial court that their original June 24, 2008 filing was timely, the appellate court reached that issue anyway.  It did so under the doctrine that an appellate court may decide pure questions of law based on undisputed facts and that the original filings were part of the record.  It then held that rule 3.220 subdivision (c) prohibited the court clerk from rejecting the filing for failure to comply with the local rules.  "So long as a complaint complies with state requirements, the clerk has a ministerial duty to file."  The lower courts retain their right to levy lesser, appropriate sanctions.

Lessons?  Don't get into car accidents with lawyers?  Don't file anything less than a week before the statute runs?  Preserve issues for appeal by raising them in the trial court?  Even if they weren't raised below, raise them on appeal?  How about check the local rules, not just the California Rules of Court?  After all, the appellate court's "get out of jail free" card was not exactly free.  It has been two years and additional trial and appellate court briefings since that fateful fax filing. 

There's rules and there's rules.

The M Word

No, not that word. I am referring to "mistake" as in "mistake, inadvertence, surprise or neglect." On August 5th, the Fifth Appellate District issued an opinion in Henderson v. Pacific Gas & Electric 2010 Cal.App. LEXIS 1368. There, plaintiff's counsel "waited until the eleventh hour to begin opposing a summary judgment motion he had known about for months . . . assigned the preparation of that opposition to a paralegal who he failed to supervise." And when the paralegal left town the day before the opposition was due, promising to get it done despite heading for a cruise ship, counsel "hoped for a miracle instead of immediately going to court to request an extension of time."

The trial court found belated attempts to file pieces of opposition untimely. It also granted summary judgment for PG&E. Nothing to worry about. That's where Code of Civil Procedure section 473 subdivision (b) comes in right?

Um, no. As Henderson reminds us, the majority of appellate courts take the view that the "mandatory relief" provision of 473 subdivision (b) does not apply to summary judgment motions. This provision, also referred to as the "attorney fault" provision, requires a court to grant relief so long as the attorney files an affidavit falling on the sword. The policy is to avoid unjust results where due to an attorney's inexcusable failure to act, a party loses its day in court. But, as Henderson observes, by its express terms, the mandatory relief provision only applies to defaults, default judgments or dismissals. And while some appellate courts have taken a broader view, the majority have characterized such decisions as "understandable, yet ultimately misguided quests to salvage cases lost by inept attorneys" applying the mandatory relief provision "far beyond the limited confines the Legislature intended."  (English v. Ikon Business Solutions, Inc. (2001) 94 Cal.App.4th 130, 148.) 

Of course, that leaves the discretionary provision of 473 (b) where a court "may" grant relief from a "judgment, dismissal, order, or other proceeding" due to "mistake, inadvertence, surprise, or excusable neglect." (Italics added.) Certainly, by its terms, relief here applies to more than the mandatory relief provision's "default, default judgment or dismissal."  But note the word "excusable" in the discretionary relief provision? Courts have interpreted it to mean that excusable mistakes are only those that can happen to any non-lawyer, not mistakes falling below the standard of care. Such mistakes include computers crashing, fax machines jamming, erroneous addresses on envelopes, that sort of thing.

But in Henderson, the Fifth District concludes that the trial court did not abuse its discretion in denying relief because, "a reasonably prudent  person . . . upon learning that the opposition would not be available to review before filing, [would not] simply wait to see if in fact the opposition is filed." Such conduct by an attorney is not only inexcusable, it falls below the standard of care.

And those last three words bring us back to the title of this post. 

Ain't Misbehavin?

Depositions. Place where zealous advocacy and misconduct are frequent companions. Or does it depend on where you are sitting? On July 29, the First District affirmed in part and reversed in part an appeal from discovery sanctions. Translation, somebody was "misbehavin."

The case is Tucker v. Pacific Bell Mobile Services, 2010 Cal.App. LEXIS 1255. After passing the deponent notes to read during the deposition, and instructing the deponent not to answer questions about the notes, on-the-record colloquies included the following "highlight." 

Deposing Lawyer: In the number of years I've been doing this, I have never had a witness -- I have never even seen a suggestion of a witness reviewing, while a question is being framed, material written by counsel for that witness.

Defending Lawyer:  I suggest maybe you need more seasoning. Maybe you haven't been a lawyer long enough.

After further contentious exchanges about defending lawyer's conduct, defending lawyer instructed his client not to answer questions about the allegations in the complaint, on the grounds that they called for a legal conclusion or concerned the merits of plaintiffs' claims!  Objection, allowing my client to answer may provide evidence!  Hmnn...

After the smoke cleared, deposing lawyer asked defending lawyer to stipulate to a discovery referee and other conditions.  Defending lawyer's response?

"As General McAuliffe stated to the Germans at Bastogne in December, 1944: 'Nuts!'"

I guess that's the "all's fair in love and war" interpretation of the Code of Civil Procedure.  Deposing counsel moved for sanctions under Code of Civil Procedure section 2030.030.  The trial court awarded sanctions of $7,500 which included costs for "further deposing the plaintiff."

So what does Tucker stand for?  First, an order awarding sanctions greater than $5,000 is directly appealable. (Code Civ. Proc. section 904.1, subd. (a) (12).) Second, discovery orders are generally reviewed for abuse of discretion. Third, a party does not have to move for an order compelling deposition responses (under section 2025.480) prior to moving for sanctions under section 2023.030. Fourth, the operative phrase in section 2023.030 subdivision (a) is "incurred by anyone." Therefore, trial courts can award sanctions for "reasonable expenses . . . incurred" by a party as the result of discovery abuse, but not for "costs related to the taking of a future deposition." Tucker remanded the matter to the trial court to recalculate the amount of sanctions limited to expenses actually incurred.

Tucker tells the party that was the victim of discovery abuse that some of the cost of that abuse will be absorbed by the victim.  After all, the deposition do-over is caused by the misconduct.  I suppose clever lawyers will find a way to recoup those costs, don't you?