Welcome to the summer 2017 edition of our newsletter. As always, we aim to provide you timely and useful insights into recent legal, regulatory and industry news in a brief, accessible and interesting way. We look forward to your feedback and to any suggestions you might have on how we can improve our efforts in this regard. Happy reading!
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Welcome to the Salisian | Lee LLP Newsletter
|
Welcome to the summer 2017 edition of our newsletter. As always, we aim to provide you timely and useful insights into recent legal, regulatory and industry news in a brief, accessible and interesting way. We look forward to your feedback and to any suggestions you might have on how we can improve our efforts in this regard. Happy reading!
|
|
|
|
|
|
|
|
|
|
|
| | | |
|
|
|
Firm News
In June, we welcomed a new member of our team. Melissa Pender joined us as an associate and will be working closely with attorneys across our practice areas. Welcome, Melissa!
Also in June, we celebrated the completion of our 7th year as a firm with our 8th annual reception. This year, our event was held at the Los Angeles Athletic Club and gave us an opportunity to thank firm clients and friends for allowing us to achieve continued grow and success as a firm.
Congratulations to associate Natalie Rastegari, who was chosen as a top 30 finalist for the Los Angeles Business Journal's Women Summit Awards. Natalie, an accomplished attorney with our firm, is also this year's president of the Iranian American Bar Association. Her role has been particularly challenging this year as a result of President Trump's Travel Ban, which has had a significant impact on the Iranian American community and its attorneys.
|
|
|
In this Issue
|
|
Cases to Watch
By Melissa Pender, Associate
|
|
|
CASE LAW: California Supreme Court Decision in McGill v. Citibank, N.A., Case No. S224086 (Apr. 6, 2017)
|
|
In our March 2016 newsletter, we discussed the anticipated decision of the California Supreme Court in McGill v. Citibank, N.A., on whether the Federal Arbitration Act (the "FAA") preempts California case law providing for the availability of public injunctive relief under the Consumers Legal Remedies Act (the "CLRA"), the Unfair Competition Law (the "UCL"), and false advertising law. Previously, the Court of Appeal held that the FAA preempts this canon of California jurisprudence, known as the Broughton-Cruz rule (from Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, and Cruz v. PacifiCare Health Systems, Inc. (2003) 40 Cal.4th 303). On April 6, 2017, the California Supreme Court reversed the appellate court's decision, but sidestepped the preemption issue, holding only that an arbitration agreement purporting to prevent public injunctive relief in any forum is invalid and unenforceable under California law.
|
|
McGill arose from a dispute between plaintiff McGill and defendant Citibank, N.A. regarding Citibank's "credit protector" plan. McGill filed a class action against Citibank for misrepresentation under the UCL, the CLRA, false advertising law, and the Insurance Code. Among other remedies, McGill sought an injunction to prevent Citibank from continued engagement in its allegedly illegal practices.
|
|
Citibank moved to compel McGill to arbitrate her claims individually based on an arbitration provision in the "credit protector" plan agreement. The trial court granted Citibank's motion in part but denied it as to McGill's injunctive claims, citing the Broughton-Cruz rule. The Court of Appeal reversed and remanded, ordering all of McGill's claims to arbitration and concluding that, pursuant to the decision of the United States Supreme Court in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), the FAA preempts the Broughton-Cruz rule.
|
|
The California Supreme Court reversed, analyzing the arbitration provision as a blanket prohibition on seeking public injunctive relief in any forum, an interpretation to which both parties stipulated. The Court therefore found that the Broughton-Cruz rule, which applies when parties agree to arbitrate claims for public injunctive relief, was not at issue. Instead, the Court found that pre-dispute waivers of the right to seek public injunctive relief under the UCL, the CLRA, and false advertising law would compromise the intended purpose of the statutes. Consistent with the Court's previous decisions interpreting Civil Code Section 3513, which provides that "a law established for a public reason cannot be contravened by private agreement," the Court held that such waivers are invalid and unenforceable under California law.
|
|
In so holding, the Court rejected Citibank's argument that the FAA would preempt a California rule precluding enforcement of the waiver. The Court responded by citing U.S. Supreme Court decisions explaining that the FAA’s purpose is to make arbitration agreements equally as enforceable as other contracts, but not more so.
|
|
Applying Section 3153 to the arbitration provision as a general contract defense rather than a specific attack on an arbitration agreement, the Court explained, does not implicate the FAA. The Court emphasized that the decision invalidated only the portion of the arbitration provision waiving the right to public injunctive relief under the UCL, the CLRA, or false advertising law, leaving the fate of the rest of the agreement to the lower courts on remand.
|
|
Ultimately, the Court's holding here is far narrower than the expected decision on whether the FAA preempts the Broughton-Cruz rule as a general matter. For now, the Court has spoken only on provisions in arbitration agreements—or any contracts, for that matter—that purport to waive the right to public injunctive relief in any forum under the UCL, the CLRA, or false advertising law.
|
|
CASE LAW: California Court of Appeal Decision in Rossdale Group, LLC v. Walton, Case No. H043476 (Jun. 15, 2017)
|
|
California Code of Civil Procedure Section 367 provides that every action must be prosecuted in the name of the real party in interest. Thus, the Santa Cruz County Superior Court held that by suing under a fictitious name, a plaintiff lacks standing to sue. On June 15, 2017, the Court of Appeal reversed, holding that the use of a fictitious name does not raise standing or jurisdictional issues under California law.
|
|
Plaintiff, as The Rossdale Group, LLC ("Rossdale"), sued defendant Timothy Walton ("Walton") for malicious prosecution related to an earlier lawsuit. Rossdale was a fictitious business name registered in Florida to a Florida limited liability company called Miami Legal Resources, LLC ("Miami Legal"). Miami Legal thereafter dissolved, and Walton argued that the lawsuit should be dismissed because the plaintiff, as a legal entity, no longer existed. The trial court agreed with Walton, dismissing the suit on the ground that Rossdale lacked capacity to sue because it was only ever a fictitious business name, and no party existed to be granted relief.
|
|
The Court of Appeal, reversing, first noted that Section 367 does not create a standing requirement equal to that used in federal courts. Federal standing, the court explained, is rooted in the limited subject matter jurisdiction of the federal courts, and therefore requires that a plaintiff establish an entitlement to bring suit separate from the merits of a claim. Without opining on the "exact contours of the concept of standing" in California, the Court held that a corporate entity's status is not relevant to the issue.
|
|
The actual purpose of Section 367, the Court noted, is to prevent a defendant from harassment by others than the real party in interest, a concern not present here. Ultimately, the Court found that neither this Code Section nor the concept of standing prohibits a corporate entity from suing under a fictitious name in California.
|
|
In conclusion, the Court noted that "whatever other complications might arise from the use of fictitious names, doing so does not, in and of itself, raise a question of standing or jurisdiction."
|
|
|
|
|
| | | |
|
|
| | | |
|
|
|
|
|
California Single-Payer Healthcare Tabled For 2017
By Yujin Chun, Associate
|
|
|
|
| | | |
|
|
| | | |
|
|
|
|
| | |
A legislative bill shelved this month has one Assembly Speaker receiving death threats: California Assembly Speaker Anthony Rendon has been the target of much criticism after his decision to shelve the universal health care legislation in California. Senate Bill 562, the focus of great many article and op-eds this early summer, was arguably the nation's most ambitious proposal to institute single-payer health care. On June 23, 2017, however, Rendon announced that the bill was being tabled for the rest of the year.
Single-payer health care, or "Medicare for all," refers to a system in which a single public or quasi-public public agency organizes the financing, but in which the delivery of that care remains largely in private hands. It would have involved, if passed, a complete overhaul of California's existing healthcare system as the government takes over healthcare. It also would have meant that all residents of California would be covered for all necessary medical services, including vision and dental.
For this reason, when the California Senate voted to pass the bill mid-June, it appeared that it enjoyed quite the widespread support from the public. Under the "Healthy California Act," all residents would be entitled to healthcare without having to pay premiums, deductibles, or copays. As with all things that seem too good to be true, however, critics questioned whether the legislation was realistic: was it economically viable? Rendon's response explaining his decision was that the bill was "woefully incomplete" for its failure to address, among other things, financing and cost controls.
Just two days before Rendon's decision, however, economist Robert Pollin penned an op-ed on this issue for the LA Times, concluding from the research he conducted with his colleagues at the University of Massachusetts, Amherst, that yes, it was economically viable, in addition to being beneficial to most. He found that the proposal was "not only financially sound but that it will produce greater equity in the healthcare sector for families and businesses of all sizes." As Pollin stated:
|
Most businesses would also see a drop in spending. Small firms that have been providing health insurance for their workers will see costs fall by 22% as a share of payroll. For medium sized firms, costs will fall by an average of between 6.8% and 13.4% as a share of payroll. Even most large firms will see costs fall, by an average of between 0.6% and 5% of payroll.
|
|
The study also concluded that the actual cost would end up at around $331 billion, an amount lower than a prior legislative analysis that had concluded it to be $400 billion. Furthermore, because public programs already covered 70% of California's current spending on health care, the state would only need to come up with $106 billion in new revenue, which could be done through two new taxes with exemptions for small businesses, as well as tax credits for low-income families.
In response to California Chamber of Commerce's opposition to the bill, calling it a "job killer" that would "result in significant new taxes on all Californians and California businesses," Pollin's study indicated that most businesses, even those that would have to pay an extra gross receipts tax, would be significantly better off under single-payer because they would no longer have to pay for health care for their employees. "When the Chamber of Commerce comes out against it, they're not acting in interest of majority of their constituents," Pollin said.
The significance of California's failure to pass single-payer extends beyond the state borders. The general consensus appeared to be that if California could not pass it, no other state could do so.
Rendon's decision also came at a bad time. Only a day earlier, U.S. Senate Republicans had revealed the first draft of their health care reform plan that would take insurance away from 22 million Americans.
SB 562 will now lie in committee without any hearings "until further notice." Deborah Burger, the nurses' association co-president, said the late announcement was "a cowardly act, developed in secret without engaging the thousands of Californians who have rallied to enact real health care reform."
While one of the bill's criticisms was that it did not have a funding plan, it also provided that the system would only be launched if funded. Pollin felt that Rendon's objections were hyper-technical ones that needed to be addressed, but which did not raise any issues that could not be resolved. "The concerns that they raised were pretty narrow. Nobody said this is crazy, we can't do this," he said.
Thus, in tabling the bill, Rendon may have given up before even giving the Assembly a chance to work out the details. Meanwhile, Rendon emphasizes that this does not mean the bill is dead; this leaves open the exact deep discussion and debate the senator who voted for the bill repeatedly said is needed.
|
|
|
|
|
| | | |
|
|
| | | |
|
|
|
|
|
New and Interesting California Laws For 2017 You May Have Missed
By Han Pai, Senior Associate
|
|
|
|
| | | |
|
|
| | | |
|
|
|
|
| | |
With 2017 already in full swing, some of us may not have noticed the plethora of new laws that went into effect on January 1st.
Attorneys must regularly keep abreast of new laws, consider the potential impacts in their practice, and in turn, share those considerations with their clients. Yet, the process of reviewing new laws – sometimes involving complex and dry statutory language – can often times be mundane and uneventful.
But once in a blue moon, we come across some curious – indeed, even smile-inducing – new laws that provide a breath of fresh air in an otherwise humdrum statutory landscape.
In no particular order, here are our favorite new California laws for 2017:
-
Sip, Sip, Clip, Clip. Free Alcohol at Your Local Hair Stylist/Barber - Business and Professions Code Section 23399.5.
California beauty salons and barbershops are now legally permitted to offer complimentary alcoholic beverages to their customers. The alcohol must be complimentary, no more than 12 ounces for beer and six ounces for wine, and served only during business hours and no later than 10 p.m. The law was passed in response to an apparently wide-spread practice in the state, which was technically in violation of alcohol-licensing requirements. Now, those practices are above-board.
The lawmakers likely enjoyed the process of legislating this statute, with one commenting that "[r]elaxing with a glass of wine while getting those tootsies pampered at the salon may appear to be a simple act of hospitality but the salon is very likely running afoul of alcoholic beverage licensing laws."
So the next time you get a hair cut, it may be worth highlighting this new law to your stylist.
-
#Selfie #RockTheVote - Government Code Section 14291.
In a perhaps rare example of the Legislature keeping fairly up to date with current technology, Californians are now legally permitted to share their ballots via one of modern day's most popular methods of self-expression – the selfie.
California has a long history of protecting voters' right to cast a secret ballot, rooted in preventing voter intimidation or coercion. As a result, laws were enacted to prohibit voters from showing his or her ballot to reveal its contents. But with the progress of time comes change in societal behaviors, with the law typically playing catch up. In this case, however, the legislators have apparently kept up with our current social media environment in sanctioning the beloved selfie in the voting booths.
-
Swiping While Driving? - Vehicle Code Section 23123.5.
In another attempt to stay current with habits formed by the latest gadgets, the Legislature had a "do over" of trying to police the persistent problem of using electronic devices while driving.
Before, the law prohibited sending any text-based communication from electronic devices while driving, but was ambiguous as to other ways of using the devices that perhaps fell outside of the strict definition of "texting."
That prior statute was deleted and replaced with another that attempts to clarify that a driver cannot hold the device in his or her hand while driving, and can only use the device if (1) it is mounted on the dashboard or windshield, and (2) its features can be activated or deactivated with a single swipe or tap of the finger.
No new statutes are ever crystal clear, and this new one is no exception, as new questions now arise, such as whether a second swipe now illegal and how will this law be enforced?
-
California's Official State Fabric: Denim - Government Code Section 423.6.
Jeans are such a ubiquitous part of California society for so many years, that one likely does not even notice them. But the Legislature has taken notice, as shown in its findings. Among other things, the Legislature found and declared that:
-
"[d]enim jeans were invented in San Francisco during the Gold Rush Era,"
-
"[t]hey eventually became a symbol of American culture,"
-
"[j]eans have been worn by ... beatniks, hippies, and people of all walks of life,"
-
"[t]oday, California is responsible for about 75 percent of the premium denim jeans sold throughout the world," and
-
even the amazing statistic that "[d]enim jeans can be found in the wardrobes of 96 percent of American consumers who, on average, own seven pairs."
In perhaps a fitting commemoration of the fabric loved by many in California and beyond, denim is now officially the state fabric. The category feels at home on the already abundant list of exciting state insignia:
-
State motto: "Eureka"
-
State folk dance: Square Dance
-
State dance: West Coast Swing
-
State Gold Rush ghost town: Town of Bodie
-
State animal: California Grizzly
-
State reptile: Desert Tortoise
-
Stars and Stripes Made in the USA - Government Code Section 434.7.
The Legislature now requires state and local government agencies to purchase U.S. or California flags that are made in the U.S. only.
In addition to the surprise that such a law did not already exist, even lawmakers are unclear on the extent to which this law would change current purchasing practices, as they acknowledge in their findings that the state already purchases U.S.-made flags, while local governments that were surveyed did the same.
-
California Space Day - Government Code Section 6726.
The governor is required to proclaim the first Friday in May of each year to be Space Day. Among other reasons, the proclamation seeks to encourage space observation and appreciation, and promote California's global aerospace industry.
The statute also contains practical requirements meant to encourage such space observation, as the governor must also turn off all nonessential lights in the State Capitol Building between 9 p.m. and 10 p.m. on Space Day, and encourage every resident, business, and public entity to do the same. Such a requirement was implemented no doubt due to not only the sea of artificial lights in most major cities in the state, but also to counteract the unfortunate man-made smog that plagues those same cities.
|
|
|
|
|
| | | |
|
|
| | | |
|
|
|
|
|
California Assembly Bill 383: New Legislative Effort to Streamline Discovery Disputes May Do More Harm Than Good
By Jay Lichter, Associate
|
|
|
|
| | | |
|
|
| | | |
|
|
|
|
| | |
On February 9, 2017, the California Legislature introduced AB 383 in the hopes of streamlining the often combative and expensive discovery process in civil litigation. While it is still being debated, AB 383 is specifically aimed at authorizing courts to conduct informal discovery conferences to assist parties in working through discovery disputes. The law, however, has a long way to go before it can be considered effective.
AB 383 seeks to add the brand new Section 2016.080 to the Code of Civil Procedure, vesting courts with the new authority to require the parties to engage in an “informal discovery conference” “for the purpose of discussing discovery matters in dispute between the parties. As currently amended, Section 2016.080 provides:
-
If an informal resolution is not reached by the parties, as described in Section 2016.040, the court may conduct an informal discovery conference upon request by a party or on the court's own motion for the purpose of discussing discovery matters in dispute between the parties.
-
If a party requests an informal discovery conference, the party shall file a declaration described in Section 2016.040 with the court. Any party may file a response to a declaration filed pursuant to this subdivision. If the court does not grant, deny, or schedule the party’s request within ten (10) calendar days after the initial request, the request shall be deemed denied.
-
(1) If a court grants or orders an informal discovery conference, the court may schedule and hold the conference no later than thirty (30) calendar days after the court granted the request or issued its order, and before the discovery cut-off date.
-
(2) If an informal discovery conference is granted or ordered, the court may toll the deadline for filing a discovery motion or make any other appropriate discovery order.
-
If an informal discovery conference is not held within thirty (30) calendar days from the date the court granted the request, the request for an informal discovery conference shall be deemed denied, and any tolling period previously ordered by the court shall continue to apply to that action.
-
The outcome of an informal discovery conference does not bar a party from filing a discovery motion or prejudice the disposition of a discovery motion.
-
This section does not prevent the parties from stipulating to the timing of discovery proceedings as described in Section 2024.060.
Supporters of AB 383 argue that the bill will make litigation of civil claims more efficient and less costly by authorizing courts to assist parties in working through discovery disputes by compelling an "informal discovery conference." Such conferences, they claim, increase the level of civility between parties, improve settlement opportunities, and are a cost-effective way for the judge to promote claim resolution.
The bill's supporters, however, fail to see some of the major pitfalls of this legislation. That is, standard discovery disputes already entail a drawn-out meet and confer process between the parties, involving the exchange of formal letters and phone calls in the hopes of resolving any discovery dispute before involving the court. If no resolution can be reached, a motion is filed, briefed, and argued at a hearing before the presiding judge.
AB 383 seeks to add an additional layer to these steps, empowering judges to require the parties to also prepare opposing declarations with the court to request and reserve what is essentially a discovery motion pre-hearing. AB 383 also does not indicate what information should actually be included in those declarations. Any real chance of resolution, though, will necessarily involve the briefing usually associated with actual motion filing.
AB 383 thus potentially requires multiple rounds of filings, briefings, hearing reservations, court intervention, and arguing, where only one round was previously required. This added layer will essentially double the paperwork and attorney time spent on trying to resolve discovery disputes.
Further, given AB 383 contemplates the new discovery conferences to be "informal," it seems the court will not be inclined to provide any sort of binding orders on the merits of the dispute, but rather some form of informal guidance to assist in its resolution.
This failure in formality is problematic. The world of litigation typically requires concrete rulings and orders from courts in order to compel an unwilling party to produce documents it wants to conceal, or supplement discovery responses with information it does not want to provide. A strong-willed client, without the backing of an actual court order, may disregard the court's informal guidance, without impunity.
Finally, the introduction of AB 383 sheds light on an issue involving the scope of judicial powers. While California judges generally enjoy an inherent power to control the course of litigation in their courtrooms, that power does not necessarily entail requiring parties to attend discovery hearings not contemplated by the Code of Civil Procedure.
Indeed, the fact that AB 383, if passed, will authorize a judge to set an informal discovery conference indicates that judges do not currently possess that authority under the Code. That fact, however, has not stopped some judges from exercising that purported authority. Multiple judges in Los Angeles County alone already require parties to undergo an informal discovery conference prior to filing a discovery motion, despite the fact that no such laws grant them the authority to do this, and no such laws outline the scope of a party's filing requirements prior to such a conference.
If AB 383 is ultimately signed into law, this will obviously become a moot point. The law's financial effects, however, will have real consequences as to the costliness of litigation. But whether those consequences will increase or decrease those costs remains to be seen.
|
|
|
|
|
| | | |
|
|
| | | |
|
|
|
Legal Disclaimer: The information contained in this newsletter is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this newsletter, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the state of California.
|
|
|
|
|
| | | |
|
|
|
|
|
|
|
|
Copyright © 2016 Salisian Lee | LLP. All rights reserved.
|
|
|