Wednesday, December 17, 2014

Back to the Memory Hole

J.B.B. Inv. Partners, Ltd. v. Fair, No. A140232 (D1d2 Dec. 5, 2014)

This was an interesting and novel opinion that addressed whether a party’s alleged email assent to a settlement agreement complied with California’s Uniform Electronic Transactions Act, Civil Code §1633.1, et seq.  Suffice it to say, the body of law interpreting that Act is rather thin. The statute is barely mentioned in passing a couple of published cases. Indeed, the only published decision of substance addresses a not-generally-applicable issue regarding whether an electronic signature can be used on an ballot initiative petition. Notably, the statute is not all that clear on the key question at issue in this case: when and how can people bind themselves to a contract by email. The issue would seem to come up all the time, but it is unaddressed by any citable California case.

It was thus puzzling, to say the least, that a few hours after this erstwhile published decision was posted, the court issued a modified opinion claiming that it “does not meet the standard for publication as set forth in rule 8.1105(c) of the California Rules of Court” and thus that it should be withdrawn from publication. Apparently, Rule 8.1105(c)(4), which requires publication when an opinion “[a]dvances a new interpretation, clarification, criticism, or construction of a provision of a . . . statute,” doesn’t mean what it says.

There’s clearly a back story here. But on the face of it, it seems fishy.

Tuesday, December 16, 2014

Uninsured and Unascertainable

Hale v. Sharp Healthcare, No. D064023 (D4d1 Dec. 5, 2014)

In this UCL and CLRA case brought as a putative class action, plaintiff alleges that defendant, a hospital group, charged her and her fellow class members higher fees for medical services because they were uninsured. The trial court initially certified a class based on a common question: whether the defendant represented to uninsured patients that they would be charged “regular rates,” but failed to do so.

But defendant later filed a motion to decertify.  It claimed that the class was not ascertainable, because its members could not be identified without an individualized examination of 120,000 patients’ billing records. Further, it said that class treatment was not a superior method to litigate the case because there was no manageable way to determine class-wide entitlement to damages. The trial court granted the motion and the plaintiff appealed.

The court of appeal affirms on both grounds. Because of the way the class was defined and the hospital’s practice of not obtaining insurance information until after treatment was provided, the class was unascertainable. The evidence showed that in many instances, uninsured patients ultimately paid rates that were far below what the hospital obtained from insurance companies, Medicare, and Medicaid. This could be due to rate reductions, charity payments, undiscovered coverage, or payments by third parties. But the hospital didn’t maintain information on ultimate payment outcomes on an aggregate basis, and, despite their efforts, the parties were unable to come up with a methodology for identifying patients who paid more than insured payments.

Further, there was a lack of predominance of common issues as to whether the class members were entitled to damages. In coming to this result, the court distinguishes a number of wage and hour cases requiring certification where the common issue is whether the employer maintained an unlawful policy. According to the court, these cases might have differed in the amount of damages, but if the plaintiff theory proved correct, the fact of damages could be determined on a classwide basis.  In contrast, in this case, whether or not each plaintiff was damaged at all required a case-by-case assessment, which precluded any liability determination on a classwide basis.

This result seems mostly reasonable. But I don’t know if I’m entirely comfortable with a ruling that denies class certification based largely on the fact that the defendant maintained its business records in a way that makes it tough to ascertain who is in a plaintiff class. Seems like a bad incentive. 


More SLAPP Sanity

Drell v. Cohen, No. B253688 (D2d8 Dec. 5, 2014)

An attorney who represented a plaintiff in obtaining a settlement sued the plaintiff’s former counsel to obtain a ruling on the validity of prior counsel’s attorney’s lien on the settlement proceeds. Defendants filed an anti-SLAPP motion, contending that the case arose from protected activity in the form of the letter they sent plaintiff asserting their rights under the lien. 

But that’s not really the case. The case does not allege that the defendants engaged in wrongful conduct in the assertion of their lien. It instead seeks a declaratory judgment on the lien’s validity. There’s nothing expressive or petitioning-related to the question of whether the defendants have the right to get paid out of the settlement fund. 

The court goes on to find that the plaintiff waived his right to contest the trial courts denial of attorney fees when he failed to cross-appeal on the issue. And as to fees on appeal, although the court finds the appeal “has no merit whatsoever and is poorly conceived,” the court is not convinced that it is entirely frivolous, so no fees will be awarded.


A Bit Too Clever ...

Lyons v. Santa Barbara Cnty. Sheriff’s Office, No. B256041 (D2d6 Dec. 3, 2014)

Unsurprisingly, you can’t file a taxpayer action under Code of Civil Procedure § 526a to collaterally attack an unlawful detainer judgment on the grounds that the decision was unconstitutional.

An Arbitrator Is Free to Make Legal Errors

Safari Assocs. v. Superior Court, No. D065684 (D4d1 Dec. 2, 2014)

In awarding attorneys’ fees to the plaintiff in a breach-of-contract arbitration, an arbitrator declined to apply the agreement’s definition of prevailing party in favor of that provided in § 1717 of the Civil Code. According to the arbitrator,  the Code trumps any conflicting definition in a private agreement
. The defendant moved the superior court to have the award corrected on the basis that the arbitrator exceeded his powers by ignoring the contractual definition in making the award. See Cal. Code Civ. Proc. § 1286.6. The trial court agreed; the award was amended. But the court of appeal here grants a writ reversing that decision. The arbitrator’s decision about the fee award was within the scope of his authority. His decision about what definition of prevailing party applied was, at worst, a legal error that is not subject to review by the court.

Writ granted.

Monday, December 15, 2014

Arbitrators Can Decide Ripeness

Bunker Hill Park Ltd. v. U.S. Bank Nat’l Assoc., No. B256822 (D2d4 Nov. 26, 2014)

A commercial landlord filed a petition to compel its tenant into an arbitration in order to seek declaratory relief involving a lease dispute. The trial court denied the petition, reasoning that declaratory relief was unavailable because the parties’ dispute hadn’t sufficiently ripened into an actual controversy. But, the court here says, ripeness is a jusiciability concept that applies to a judicial forum. Parties are free to agree to arbitrate unripe controversies. So unless the matter falls outside of the scope of the parties agreement to arbitrate, there isn’t a freestanding justiciablity exception to an otherwise valid arbitration agreement. Here, the parties’ agreement was very broad. Nothing in it suggests that the arbitrator would be limited to deciding ripe controversies, and thus that unripe ones aren
’t arbitrable. Of course, the tenant is free to argue in the arbitration, that there isn’t enough of an actual controversy to merit an award of declaratory relief under Code of Civil Procedure § 1060. But that’s a merits argument it can make to the arbitrator.


Privilege for the Attorneys' Attorneys

Edwards Wildman Palmer v. Superior Court, No. B255182 (D2d3 Nov. 25, 2014)

In this malpractice case, the trial court granted a motion to compel ordering a law firm to disclose intrafirm communications between various firm lawyers and the firm’s in house general and claims counsel. The emails related to potential malpractice claims threatened by a then-current client, who has now brought malpractice claims against the firm.

The court of appeal grants a writ. Although there are federal cases that rely on the ethical obligations of attorneys to their clients to create an exception to the privilege for intra-firm advise on potential malpractice issues, California does not afford a statutory exception on those grounds. As California courts have made clear, the attorney-client privilege is a creature of statute, and subject only to those exceptions that the legislature chooses to enact into law. Indeed, under somewhat different circumstances, the California Supreme Court rejected the argument that a fiduciary cannot assert the attorney client privilege against its beneficiary over its communications with its own counsel. Wells Fargo Bank v. Superior Court, 22 Cal. 4th 201 (2000). Because there was no statutory exception on this basis, the court would not create one.

Finding RFF Family Partnership, LP v. Burns & Levinson, LLP, 465 Mass. 702 (2013) to be persuasive, the court considers four (non-exclusive) factors that are germane to whether firm in-house attorneys can maintain an attorney-client relationship with other firm lawyers for the purpose of claiming privilege. These factors include: (1) whether certain lawyers have been designated to represent the firm as in-house or ethics counsel; (2) whether these attorneys have provided prior advice to the potentially adverse client; (3) whether the time spent on the internal communications is billed to the client; and (4) whether the communications are made in confidence and kept confidential.  Applying these considerations, the petitioner established an attorney-client relationship under the facts of the case.

Finally, the court holds that the exceptions to the attorney client privilege in Evidence Code §§ 958 (communications related to breach of duty) and 962 (joint client) are inapplicable.  The breach of duty exception applies only to otherwise privileged communications between attorney and her client insofar as they related to an attorney-client dispute. It does not apply to communications between an attorney and its own separate counsel.  Nor were the plaintiff and the attorneys joint clients. They were not co-parties in any case and they did not retain the firm jointly on a matter of common interest.

Writ granted.