Wednesday, July 29, 2015

Hercules and the Not Very Hard Case

DKN Holdings v. Faerber, No. S218597 (Cal. Jul 13, 2015)

In a unanimous opinion written by Justice Corrigan, the California Supreme Court unanimously reverse the court of appeal’s strange ruling on res judicata on more or less exactly the same grounds as I pointed out in a post last year. (That post is one of my best-read ever.) So maybe Justice Corrigan is amongst those who read this blog and take note of the science dropped herein. Or maybe the court of appeal shouldn’t have rested its rationale on the grounds that an earlier Supreme Court decision, clearly on point, was “wrong.” We can only imagine.


Applying Rule Change to Pending Case Isn't Retroactive

Siry Inv., L.P. v. Farkhondehpour, No. B251250 (D2d2 Jul. 9, 2015)

While a prior appeal in this case was pending, the Judicial Council amended Rule of Court 8.278 to permit a prevailing party on appeal to recover the fees and net interest expenses incurred in obtaining an appellate bond. On remand from the prior appeal, the trial court awarded those costs to the prevailing appellant, even though the amended rule didn’t come into effect until after the opinion in the first appeal issued. The application, however, wasn’t retroactive, much less impermissibly so, because the rule did come into effect before the remittitur issued. In the court of appeal, a case remains pending until that occurs. And since there was adequate evidence that the appellants did, in fact, incur expenses in securing the bond, the trial court’s award is affirmed.

Tuesday, July 28, 2015

Reverend Unemployed Nazi Biker v. CALDOT, Fully Immune, but Poor

Martinez v. CALDOT, No. G048375 (D4d3 Jul. 7, 2015)

Except in the part at the beginning or end where counsel are listed, lawyers mostly don’t like to see their names in appellate opinions. Especially government lawyers. And especially in published opinions. For good reason. When it happens, somebody is usually in trouble.

For Whom the Death Knell Tolls Not

Munoz v. Chipotle Mexican Grill, No. 249505 (D2d1 Jun. 30, 2015).

Second Munoz case decided on the same day, but different Munozes.

This Munoz filed a class action alleging a slew of wage and hour claims, claims that expenses for work clothing were improperly deducted from pay, and claims under the Labor Code Private Attorney General Act. The court largely denied class cert because individual issues predominated. But the PAGA claims—which don
’t require cert because they are brought, effectively, on behalf of the state in an enforcement capacity—were unaffected. Munoz appealed.

Generally, a plaintiff can appeal an outright denial of class cert under the “death knell” doctrine. The rationale is that, with class treatment off the table, it often becomes economically unviable for an individual plaintiff to pay his attorney to continue to pursue the case to judgment. So, as a matter of policy, an interlocutory appeal is permitted. But the doctrine doesn’t permit an appeal when class cert is partially denied. So long as there’s enough of a claim to profitably prosecute, the plaintiff maintains an incentive to continue. The policy against piecemeal appeals trumps the policy supporting immediate review.

Here, class cert was denied in full. But Munoz still has his PAGA claims. He asserts them on behalf of 26,000 employees. And the PAGA penalties are $100 per employee, per pay period in which a violation continues, 25 percent of which go to the plaintiff. So there’s still plenty of economic incentive for him to forge on, even without the class. The death knell hath not tolled!

Appeal dismissed.

Monday, July 27, 2015

Stipulation Beats Five-Year Rule

Munoz v. City of Tracy, C075955 (Jun. 30, 2015)

This case got dismissed under Code of Civil Procedure §§ 583.310 and 583.630 for plaintiff’s failure to bring it to trial within five years. But two months before the five years had run, with a scheduled trial date only a month away, the parties jointly stipulated to continue the trial for six months, so that plaintiff’s newly hired trial attorney could get up to speed. The stip didn’t mention the five-year rule. Soon after the five years had run—and during the continuance to which Defendant had stipulated—Defendant moved to dismiss under §§ 583.310 and 583.360(a). The trial court held that the stip didn’t prevent dismissal, because it did not contain an express waiver of the five-year rule. It dismissed the case with prejudice.

If it seems unfair that a defendant can rock a plaintiff to sleep by stipulating to extend the trial date past the five-year window, and then jack him up with a motion to dismiss as soon as the five years run, that’s because it is. So the court of appeal reverses. Section 583.330 says that the five-year period can be extended by stipulation. It mentions no formalities. That is bolstered by § 583.130, which adopts a policy that the parties stipulations and agreements about the progress of a case are generally preferred over the statutory policy requiring trial within five years. The court finds further support in Miller & Lux. Inc. v. Superior Court, 192 Cal. 333, 337–38 (1923), a ninety-two year old California Supreme Court opinion. There, interpreting a prior version of the statute, the court noted that the five year window could be tolled by a stipulation that either expressly stopped the clock or extended the trial date beyond the five year window. Since the defendant took the second option, the dismissal was improper.


Disentitlement Strikes Again

Ironridge Global IV, Ltd. v. Scripsamerica, Inc., No B256198 (D2d8 Jun. 30, 2015)

Under the terms of a settlement, entered on the record as a judgment under Code of Civil Procedure § 664.6, Defendant had to pay Plaintiff by issuing stock and delivering it to Plaintiff. If the price went down, Defendant was required to pony up more stock. The price did, in fact, go down. When Defendant refused to turn over the stock, Plaintiff successfully sought to enforce the judgment in court. The court ordered Defendant (1) not to give away any of its stock to any other party; and (2) to give Plaintiff the stock it was entitled to.

Defendant appealed. Under established appellate procedure, that stayed order (2), because the turnover obligation is mandatory, but not order (1) which is just a prohibitory injunction. See Kettenhofen v. Superior Court, 55 Cal. 2d 189, 191 (1961) (“An appeal stays a mandatory but not a prohibitory injunction.”). But while the appeal was pending, Defendant violated order (1) by issuing 8.7 million shares of its stock to third parties. Bad idea. Under the disentitlement doctrine, when there’s no stay, an appellate court has the discretion to dismiss an appeal when the appellant violates the underlying trial court order being appealed. The court does so here.

Appeal dismissed.

Friday, July 24, 2015

Court Can Reconsider Arbitration Order

Pinela v. Nieman Marcus Grp., Inc., No A137520 (D1d4 Jun. 29, 2015).

This is a long and complicated decision addressing the enforceability of Nieman Marcus employee
’s arbitration agreement. A bunch of overlapping choice of law and enforceability issues are at issue. But it basically all boils down to the fact that the agreement’s election of Texas law to govern the merits of any dispute arising from the employment relationship (not just contract disputes) made it unconscionable. The election would deprive plaintiff of her unwaivable statutory wage and hour claims under California law. You can’t do that in California.

In getting there, the court makes an interesting point: the line of cases addressing the limited “vestigial” jurisdiction that trial courts retain after compelling arbitration does not apply to the court’s sua sponte power to reconsider the arbitration ruling itself. Here, the court initially compelled most of the case to arbitration, but following developments in the case law—including a published court of appeal case interpreting the exact same agreement—changed its mind. There’s nothing wrong with that.