Journal of Consumer Attorneys Associations for Southern California
The
Changing Faces
Employment & Labor Law
of
Also in this Issue
Dampened Wings
A successful trial lawyer opens up about his struggles with alcohol
Expert testimony that persuades
Direct exam lets your experts do their jobs
Howell and the cost of future care for Medicare recipients Pack Patient Safety Act It’s about time!
The annual employment and labor law issue The best and worst employment cases of 2013 Whistleblowers: Sarbanes-Oxley
Resisting attempts to unduly narrow the scope of SOX-protected activity
Critical mistakes in mediating employment cases When an agreement to arbitrate is not an agreement to arbitrate Attacking the arbitration clause
Sticks and stones may break my bones, but words can destroy my reputation Defamation and employment
Hunter v. CBS: A collision of public policies
FEHA, First Amendment free speech, and California’s anti-SLAPP laws collide
June 2014
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Volume 41, Number 6, JUNE 2014 Editor-in-Chief Jeffrey Ehrlich Associate Editors Martin Aarons, Joan Kessler, James Kristy, Spencer Lucas, Beverly Pine, Norman Pine, Rahul Ravipudi, Ibiere Seck, Geraldine Weiss, Ronnivashti Whitehead Editors-in-Chief Emeriti Kevin Meenan, William Daniels, Steven Stevens, Christine Spagnoli, Thomas Stolpman Managing Editor Cindy Cantu cindy@caala.org Copy Editor Eileen Goss
Publisher Richard Neubauer rn@theadvocatemagazine.com Art Director David Knopf
Consumer Attorneys Association of Los Angeles President Treasurer Geoffrey Wells Michael Arias President-Elect Secretary Joseph Barrett Shawn McCann First Vice President Immediate Past President David Ring Lisa Maki Second Vice President Executive Director Ricardo Echeverria Stuart Zanville Board of Governors Martin Aarons, Mike Armitage, Shehnaz Bhujwala, Todd Bloomfield, John Blumberg, Michael Cohen, Scott Corwin, David deRubertis, Danica Dougherty, Jeffrey Ehrlich, Tobin Ellis, Mayra Fornos, Stuart Fraenkel, Scott Glovsky, Jeff Greenman, Genie Harrison, Arash Homampour, Neville Johnson, Bill Karns, Aimee Kirby, James Kristy, Lawrence Lallande, Tobin Lanzetta, Tim Loranger, Anthony Luti, Minh Nguyen, Christa Ramey, Rahul Ravipudi, Taylor Rayfield, David Rosen, Jeffrey Rudman, Ibiere Seck, Doug Silverstein, Kathryn Trepinski, Geraldine Weiss, Ronnivashti Whitehead, Andrew Wright Orange County Trial Lawyers Association Secretary President
Casey Johnson
B. James Pantone
President-Elect First Vice President Vincent Howard Second Vice President
Treasurer Jonathan Dwork Parliamentarian Jerry Gans Immediate Past President
Third Vice President Geraldine Ly
Executive Director Janet Thornton
Ted Wacker
H. Shaina Colover
Scott Cooper
Board of Directors Melinda S. Bell, Anthony W. Burton, Brent W. Caldwell, Darren J. Campbell, Cynthia A. Craig, Robert B. Gibson, T. Gabe Houston, Paul E. Lee, Kevin G. Liebeck, H. Gavin Long, Solange E. Ritchie, Sarah C. Serpa, Adina T. Stern, Douglas B. Vanderpool, Janice M. Vinci, Atticus N. Wegman Periodicals postage paid at Los Angeles, California. Copyright © 2014 by the Consumer Attorneys Association of Los Angeles. All rights reserved. Reproduction in whole or in part without written permission is prohibited. ADVOCATE (ISSN 0199-1876) is published monthly at the subscription rate of $50 for 12 issues per year by the Consumer Attorneys Association of Los Angeles, 800 West Sixth Street, #700, Los Angeles, CA 90017 (213) 487-1212 Fax (213) 487-1224 www.caala.org
POSTMASTER:
Send address changes to ADVOCATE c/o Neubauer & Associates, Inc. P.O. Box 2239 Oceanside, CA 92051
Contents
Features:
14 The best and worst employment cases of 2013
The good, the bad, and the most useful: a look back at the most important employment law cases of 2013.
Andrew H. Friedman and Courtney Abrams
and stones may break my bones, but words 24 Sticks can destroy my reputation
Learning that false, negative statements have been made by a former employer can be as damaging as losing one’s job. An overview of defamation claims, with specific emphasis on defamation by employers against employees.
Iris Weinmann
36 Critical mistakes in mediating employment cases
By careful preparation, strategic negotiation and unfailing optimism, almost every employment case can be closed through mediation.
Jan Frankel Schau
whistleblowers: Sarbanes-Oxley’s 46 Protecting “Protected Activity” requirement
The Sarbanes-Oxley Act of 2002 was designed to provide broad protection against retaliation to corporate whistleblowers. But as years passed, certain decisions unduly narrowed the scope of the law’s protected activity protections. The author discusses plaintiff’s response to bogus defense attempts to unduly narrow the scope of SOX-protected activity.
David M. deRubertis
60 Dampened Wings
Recognized as CAALA’s “Trial Lawyer of the Year.” Repeatedly successful results in trial. Popular speaker at major conventions. What people “wouldn’t give to be him.” Yet, alcohol almost ruined it all. Arash Homampour shares his own personal struggles to help others facing similar demons.
Arash Homampour
an agreement to arbitrate is not 68 When an agreement to arbitrate
A look at applying the rules of contract formation and the unconscionability doctrine to defeat an employer’s arbitration clause.
Stacy Tillett
82 Hunter v. CBS: A collision of public policies
A recent decision of the California Court of Appeal, Hunter v. CBS Broadcasting, Inc. may have far-reaching implications for employees in creative industries and for all employment litigation. Hunter involved the collision of three bodies of law which seek to promote important public interests – FEHA , First Amendment right to free speech and California’s anti-SLAPP statute.
John West
Advertising Sales: Neubauer & Associates, Inc. Chris Neubauer - Sales Manager. 760-721-2500 Fax: 760-721-0294 e-mail: advertising@theadvocatemagazine.com Rate card available online at www.theadvocatemagazine.com Submitting articles for publication: Check the annual editorial calendar at www.theadvocatemagazine.com to see when your legal topic would be most appropriate. Articles on time sensitive matters are welcome throughout the year, as are opinion columns, humor pieces, human-interest stories, lifestyle and personality features. Send your article as a WordPerfect or Word document attachment to e-mail: editor@theadvocatemagazine.com. Please check the website for complete editorial requirements. Reprint permission: E-mail written request to Managing Editor Cindy Cantu: cindy@caala.org
6 — The Advocate Magazine
JUNE 2014
and the cost of future care for 90 Howell Medicare recipients
How Howell v. Hamilton Meats & Provisions, Inc. relates to a claimed Medicare reduction on future medical expenses.
Ara Jabagchourian and Christopher Lavorato
94 Expert testimony that persuades
Your experts can be persuasive when your direct exam allows them to simplify the complex and satisfy jurors’ curiosity.
John P. Blumberg
Departments:
8 101
A BOUT THIS I SSUE Employment and labor law Norman Pine and Beverly Pine F ROM
THE
E XECUTIVE D IRECTOR
Consumer Attorneys Association of Los Angeles
CAALA’s successful programs start with great volunteers Record attendance at CAALA programs boosted by volunteers.
Stuart Zanville
102 103
G OVERNMENT R EL ATIONS B ULLETIN Political Updates from Sacramento and Washington F ROM
THE
P RESIDENT
Orange County Trial Lawyers Association
Understanding is not doing Getting behind the Troy and Alana Pack Patient Safety Act.
104
CAALA C ONNECTION C ENTER Welcoming the newest members to CAALA.
105
CAALA R ESOURCE C ENTER New CAALA Affiliate Vendors
106 108
D IRECTORY OF A DVERTISERS C ALENDAR OF E VENTS
Affiliate Vendors are an excellent resource to help improve your practice and a way to save money.
F ROM
THE
P RESIDENT
Consumer Attorneys Association of Los Angeles
The Pack Patient Safety Act – It’s about time! Medical errors can affect anyone – my personal story.
Geoffrey Wells
Casey Johnson
On the cover: Main Image: A Variety of Seated Business Executives | Purestock | www.thinkstockphotos.com
JUNE 2014
The Advocate Magazine — 7
About this issue Norman Pine
Beverly Tillett Pine
Employment and labor law
Our authors distill what’s new and most important In last year’s Employment Issue of Advocate we dubbed our editors’ column “‘Hot off the presses’ and then some.” That issue contained an in-depth analysis by David deRubertis of the Supreme Court’s recent decision, Harris v. City of Santa Monica (2013) 56 Cal.4th 203. At the time, we proclaimed how important Harris was because of its treatment of the causation element in Fair Employment and Housing (FEHA) cases. David’s analysis of the case was extremely valuable given that he had taken the laboring oar in drafting the appellate briefs at the Supreme Court level and had brilliantly argued the case. (Our firm edited and co-authored the Supreme Court briefs). Readers of Advocate were thus privileged to hear – from the horse’s mouth – about what Harris meant and why it was so important. We were not alone in our belief. This year, California Lawyer Magazine gave a “CLAY Award” to David for his role in Harris, labeling that case “the most significant employment case of the year” and a “landmark decision.” (We happily note that two other CAALA members, Mike Alder and Jim DeSimone also received CLAY awards in their respective fields.) This issue of Advocate contains another insightful analysis by David. This time the subject concerns the SarbanesOxley law that prevents retaliation against
people who expose fraud in areas of securities law. David’s article explains how to respond to employer’s counsel’s attempts to reduce the scope of protected activity covered by the Sarbanes-Oxley law. It draws on David’s recent experience in having litigated and tried a SarbanesOxley retaliation case that generated national media attention. Moving from the micro to the macro, we are again privileged to have Andrew H. Friedman and Courtney Abrams (of Helman & Friedman) provide an overview of the most important employment law cases decided in 2013. That is a sweeping challenge and they handle it with skill and insight. The article is a must-read reference for employment litigators and, especially, for other attorneys considering taking on an employment case. However, before anyone can litigate an employment case, they must be able to avoid the ever-widening trap of mandatory arbitration clauses. To aid in that critically important endeavor, Stacy Tillett (of Pine & Pine) has written a detailed article concerning how to avoid being forced into arbitration. Filled both with case law and with arguments that can be plucked out and put into trial court briefs, Stacy examines two different ways one can avoid arbitration: (1) demonstrating that there was an error or omission that renders the
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arbitration clause illusory; or (2) showing that the agreement as a whole is unconscionable. We are also fortunate to have a very useful teaching tool written by seasoned mediator, Jan Frankel Schau (of ADR Services, Inc.). Jan’s article discusses the most critical mistakes lawyers make in mediating employment cases and how to avoid them. She demonstrates how careful preparation, strategic negotiation, and having an effective closing plan are crucial in settling even the most challenging employment cases. Iris Weinmann (of Greenberg & Weinmann) has repeatedly been a valuable contributor to the Employment issue of Advocate. This year, she penned an article on how and when to buttress your employment case with a defamation claim. In the proper circumstances, a defamation claim can (1) bolster the damage award; and (2) may trigger insurance coverage. Iris’s article explains what facts are needed to bring such a claim. A recent appellate decision which may have far-reaching implications for employees in creative industries is discussed in an article by John West (of Allred, Maroko & Goldberg). In Hunter v. CBS Broadcasting, Inc., three bodies of law seeking to promote important public interests (the FEHA; the First Amendment right to free speech; and the anti-SLAPP statute) collided. John’s article examines the interrelationship of these key policy matters and raises interesting issues that are sure to arise when these doctrines again conflict. Had enough employment law yet? Good, because at the opposite end of the spectrum Arash Homampour (of the Homampour Law firm) has penned an intensely personal account of his battle with alcoholism. As the vast majority of you know, Arash is one of the most successful and highly-respected trial lawyers in the state, if not the country. Yet, he did not hesitate to make himself extremely vulnerable in writing this cautionary tale so that others – especially
About this Issue continues
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About this Issue — continued
those who admire him – might benefit thereby. We salute his honesty, unselfishness and courage. Also beyond the boundary of employment law we have two more excellent articles: Veteran trial attorney John Blumberg
discusses what you must do to ensure that the direct examination of your expert captures the jury’s attention, establishes the expert’s credibility and provides a framework for comprehension. The expert must translate the unfathonable into con-
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cepts the jurors will understand, and your role in this is critical. We are all too familiar with the major setback to the collateral source rule arising from the Howell decision. Now, the defense bar/insurance industry wants even more, and seeks to take Howell beyond its holding on past medical bills and stretch it to cover future medical treatments. Authors Ara Jabagchourian and Christopher Lavorato (of Cotchett, Pitre & McCarthy) recently encountered this problem and have written an insightful article on how to deal with it. Finally, as we have done every year, we want to end this editor’s column by saluting 2013’s winner of the California Employment Lawyers Association’s (CELA) most prestigious honor – the “Joe Posner Award.” This year’s deserving recipient was Kathryn Dickson (Dickson Geesman), a veteran employment lawyer from Northern California. Besides achieving impressive litigation victories, Kathryn is respected for her exceptional ability to relate to her clients. Congratulations, Kathryn. Norman Pine, a Certified Appellate Law Specialist (SBLS), handles civil appeals on behalf of plaintiffs throughout California. His honors include: CAALA’s 2003 “Appellate Attorney of the Year”; CELA’s highest honor, the “Joe Posner Award” (2008); AV-rating; Daily Journal’s “Top Employment Lawyers” in California (2009, 2011, 2012, 2013); and consistent selection as a Southern California “Super Lawyer” in appellate law. He is one of only a handful of appellate lawyers to make the “Top 100” Super Lawyers list (2009-2014, inclusive) and Best Lawyers in America, 20122013 and 2013-2014. He graduated from Boalt Hall, where he was a Note and Comment editor on the California Law Review. Beverly Pine was the recipient of CAALA’s 2012 “Appellate Lawyer of the Year” award. She received CELA’s prestigious Joe Posner Award in 2008 and has been repeatedly recognized as a Southern California Super Lawyer in Appellate Law. She graduated from Loyola Law School cum laude where she was a member of the Loyola Law Review and Moot Court Honors Board. She belongs to CAOC, CAALA and CELA and has spoken on appellate and/or employment law issues at each of their national conventions.
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The best and worst employment cases of 2013 For better and for worse, the cases employment litigators must know today As 2014 begins, we reflect back on some of the best and worst employment cases of 2013 and consider how they can help or hurt our clients during the coming year. The cases highlighted here are neither necessarily the best nor the worst, but the ones that we believe would be of the most utility to the employment litigator. Unfortunately, in 2013, the worst cases were often quite bad and left us wishing that we could, as Justice Kagan wrote in her scathing dissent in Genesis Healthcare v. Symczyk (2013) __ U.S. __ 133 S. Ct. 1523 “relegate the majority’s decision[s] to the furthest reaches” of our minds. The best cases, however, gave us hope that good decisions and good judges still exist – even if they are increasingly rare to find.
Worst Nowhere was a bad decision more apparent than the Supreme Court’s ruling in American Express Co. v. Italian Colors (2013) __ U.S. __, 133 S.Ct. 2304. Italian Colors, a non-employment case, and a horrific example of how large corporate defendants attempt to force plaintiffs into binding arbitration while, at the same time, precluding them from bringing their claims as class/collective actions. Although technically an antitrust class action, this case has huge ramifications for employment-law practitioners. Brought by merchants accepting American Express credit cards, the plaintiffs argued that their arbitration agreement, which precluded class-wide arbitration, was invalid. Likely taking a page from their employees’ own lawsuits (and 14 — The Advocate Magazine
JUNE 2014
making an argument they will no doubt disavow in future employment litigation brought against them), the merchants argued that the cost of bringing an individual claim outweighed the maximum possible recovery thereby preventing, as a practical matter, their ability to effectively vindicate their statutory rights. Predictably – and in line with his previous decisions frustrating the core purpose of Rule 23 and the FLSA – Justice Scalia, writing for the majority, held that the Federal Arbitration Act does not permit courts to invalidate a contractual waiver of class arbitration even if it prevents the effective vindication of statutory rights. In doing so, defendants have already begun to argue that Justice Scalia effectively signaled the death-knell to class-wide arbitration of employment claims, and further subverted not only Gentry v. Sup. Ct. (2007) 42 Cal.4th 443 – which holds that classarbitration waivers cannot be enforced if class-wide arbitration would be a significantly more effective way of vindicating statutory rights under California’s wage and hour laws – but also Armendariz v. Found. Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83 – which holds that employment arbitration agreements must meet certain minimum requirements including neutrality of the arbitrator, adequate discovery, a written decision that permits judicial review, and limitations on the costs of arbitration. Another “Katy bar the door” case for the class/collective-action plaintiffs is the “pick off ” tactic commonly utilized by defendants, and 2013 gave us a despicable example of how this technique could
very well undermine the entire classaction mechanism. In Genesis Healthcare v. Symczyk, supra, 133 S.Ct. 1523, Laura Symczyk, a registered nurse, brought an FLSA collective action alleging that her employer automatically deducted 30 minutes for a meal period, regardless of whether or not she and the other employees actually took the meal break. When the defendant answered Ms. Symczyk’s complaint, it simultaneously served her with a Rule 68 offer of judgment for her unpaid wages, and unspecified costs and attorneys’ fees. Although Ms. Symczyk never accepted the offer, and the defendant did not make a similar offer to the other adversely affected employees, the defendant filed a motion to dismiss, arguing there was no subject matter jurisdiction for either Ms. Symczyk’s individual claims or her collective action. The Supreme Court, in a 5-4 decision authored by Justice Thomas, sided with the defendant and held that the defendant’s unaccepted Rule 68 offer – despite the fact that no money was ever paid – had mooted the case because Ms. Symczyk lacked any personal interest in representing others. Understandably, Justice Kagan eviscerated this holding in her dissent, instructing us to “[f]eel free to relegate the majority’s decision to the furthest reaches of [our] mind[s]: The situation it addresses should never again arise.” (Id. at 1534.) Perhaps forgetting for a moment that she was no longer in a Harvard lecture hall, Justice Kagan further chided, “[a]s every first-year law student learns, the recipient’s rejection of
2013 Cases continues
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an offer leaves the matter as if no offer had ever been made” and wrote that an unaccepted Rule 68 offer would not moot a case. [Editor’s Note: The majority in Symczyk did not hold that an unaccepted Rule 68 offer would moot a case; it held that this was the rule in the Third Circuit, which it applied because the plaintiff had challenged the rule in the Supreme Court. Hence, the comment in the dissent about a case that would “never arise again.”] Heeding the wisdom of Justice Kagan’s dissent, the Ninth Circuit, in Diaz v. First Am. Home Buyers Prot. Corp. (9th Cir. 2013) 2013 WL 5496762, rejected the majority’s ruling in Genesis Healthcare as dicta and held that a claim is not mooted where a defendant makes an unaccepted Rule 68 offer of judgment even if it is made in an amount sufficient to make plaintiff whole. Even if an individual plaintiff is able to make it to the courthouse doors, the California Supreme Court’s holding in Harris v. City of Santa Monica (2013) 56 Cal.4th 2013, has now made it that much more difficult to win once the plaintiff is there. Wynona Harris, a former Santa Monica city bus driver sued the City for sex discrimination, alleging that the City
fired her after she disclosed to her supervisor she was pregnant. Apparently attempting to position himself for a nomination to the United States Supreme Court, Justice Liu wrote a business-friendly opinion holding that in FEHA lawsuits, a plaintiff can no longer prevail by proving that discrimination is “a” motivating factor in the adverse employment action; rather, the plaintiff must prove that discrimination was a substantial motivating reason for the adverse employment decision. Worse, if the employer can prove that it would have made the same adverse employment decision absent the discrimination, the employee-plaintiff is limited to the recovery of declaratory and injunctive (not including reinstatement or instatement) relief only (i.e., no compensatory or punitive damages), and the recovery of his or her costs and attorneys’ fees. In what can only be described as oxymoronic reasoning, the Court concluded that although discrimination resulted in “stigmatic harm,” compensation for such harm would result in a “windfall” to the plaintiff if there are other, nondiscriminatory reasons for the plaintiff ’s discharge. (Id. at 233.)
If a defendant is unable to win by fabricating a non-discriminatory reason for an employee’s termination, the defendant can always try to use the Constitution as a backstop. Further stacking the deck in favor of defendants this year was Hunter v. CBS Broadcasting, Inc. (2013) 221 Cal.App.4th 1510. In Hunter, Kyle Hunter filed an employment discrimination lawsuit alleging that two local CBS television stations had repeatedly shunned him for a weather anchor position due to his gender and his age. Mr. Hunter alleged that such actions were “part of [the stations’] plan to turn prime time weather broadcasting over to younger attractive females.” CBS moved to strike Mr. Hunter’s complaint under anti-SLAPP, arguing that the selection of its weather anchor qualified as an act in furtherance of the exercise of the stations’ free speech. In a decision insulting to female weather anchors everywhere, the Court agreed. The Court held that CBS’ selection of its weather anchors was “essentially casting decisions regarding who was to report the news on a local television newscast, ‘helped advance or assist’ both forms of First Amendment expression.” (Id. at 1521.)
2013 Cases continues
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2013 Cases — continued
Media company employers won big in 2013, and this was especially true in Carter v. Entercom Sacramento, LLC (2013) 219 Cal.App.4th 337, a truly lecherous case. After the radio station-defendant held a contest called “Hold your wee for a Wii,” (we could not make this up if we tried) – in which participants, vying for a Nintendo Wii, were challenged to drink water at regular intervals without urinating – a participant died. Matt Carter, a radio-station employee, sought indemnification from the radio station for the attorneys’ fees he expended defending against both the ensuing wrongful-death lawsuit, and potential criminal homicide charges. Mr. Carter argued that his retention of an attorney versed in criminal law, and who would be able to defend against punitive damages, was a necessary expenditure under Labor Code section 2802. The Court of Appeals disagreed. The Court reasoned that “necessity was a question of fact,” and held that Mr. Carter was required to use his employer’s insurance attorney if he wanted his defense paid for. In doing so, the Court reminded us of a frightening reality: corporate interests will always trump an individual plaintiff ’s right to defend himself against possible felony homicide charges and punitive damages – such trivialities are simply not “necessary expenditures.” Even non-media scored big in 2013 as some courts continued to narrowly construe employment discrimination claims to favor employers. For example, in Hatai v. Dep’t of Transp. (2013) 214 Cal.App.4th 1287, Kenneth Hatai, sued under FEHA for discrimination alleging that his supervisor, who was of Arab ancestry, discriminated against him because of his Japanese ancestry and Asian ethnicity. At trial, the court excluded Mr. Hatai’s proffered “me too” evidence from other non-Arab employees, showing that his supervisor discriminated against any employee who was not of Arab descent. The Court of Appeals agreed. It concluded this evidence was properly excluded because it was not actually “me too” evidence. In a line of reasoning which can only be described as, “We didn’t 18 — The Advocate Magazine
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fire him because he was Asian, we fired him because he wasn’t Arab,” the Court concluded that Mr. Hatai pled his case as an anti-Asian case, not an Arab favoritism case and “the “me-too” doctrine did not entitle Hatai to present evidence of discrimination against employees outside of Hatai’s protected class . . . .” (Id. at 1298.) Sadly, this decision should serve to remind us that because pro-business courts will use semantic formalism to dismiss our cases, we must be mindful and careful in drafting our complaints (and discovery responses). In addition to narrowing the scope of employer liability under California employment laws, 2013 also gave employers the opportunity to insulate themselves further under Federal employment laws. If you practice under Title VII, Vance v. Ball State University (2013) __ U.S. __, 133 S.Ct. 2434, is critical as it defines the word “supervisor.” In this case, Maetta Vance brought a lawsuit against her university-employer, alleging that an employee created a racially hostile work environment in violation of Title VII. While Ms. Vance conceded that the alleged harasser did not have the power to hire, fire, demote, promote, transfer or discipline her, the alleged harasser did have the power to direct Ms. Vance’s day-to-day work activities. Nevertheless, Justice Alito, bowing to his corporate masters, adopted an oppressively narrow definition of the word “supervisor.” Despite the fact that Ms. Vance’s alleged harasser wielded control over her work, the Court, as Justice Ginsburg noted in her dissent, exhibited “remarkable resistance to the thrust of [the Court’s] prior decisions, workplace realities, and the EEOC’s Guidance,” and instead held that a “supervisor” is only an individual who is empowered by the employer to take “tangible employment actions.” (Id. at 2462.) Last year this article discussed In Re D.R. Horton, Inc., 357 NLRB No. 184, 2012 WL 36274 – a little ray of light in the context of employer efforts to force employees into binding arbitration. This year, that light was extinguished. D.R. Horton, Inc. v. N.L.R.B. (5th Cir. 2013)
737 F.3d 344, 348, reverses the NLRB’s decision that held that an employer violates Section 8(a)(1) of the National Labor Relations Act when it requires employees to sign an agreement precluding them from filing class claims. Instead, the Fifth Circuit, subtly signaling its loyalties, cited The Chamber of Commerce’s amicus brief, and held that the NLRB did not give proper weight to the Federal Arbitration Act, and the arbitration agreement at issue had to be enforced according to its terms – meaning no class-wide arbitration. Attempting to buttress its imprudent holding, the Circuit reasoned that when Congress enacted the FAA, “Congress did not discuss the right to file class or consolidated claims against employers.” Of course, such a discussion would not have occurred at the time of the passage of the FAA (1925) as neither Rule 23 (1934) nor the FLSA (1938) were in existence.
Best If you have not been so depressed by the foregoing that you have chosen to stop reading (or change the side of the bar you are practicing on), 2013 did give us some helpful cases which, while failing to level the playing field completely, at least helped a little bit. This was especially true in Villacorta v. Cemex Cement, Inc. (2013) 221 Cal.App.4th 1425, a critical case to combat arguments that noncomparable employment, obtained posttermination, must be used to offset your client’s compensatory damages. In Villacorta, Alfredo Villacorta sued his employer for national origin discrimination in violation of FEHA. Although Mr. Villacorta eventually found new employment earning more than the job from which he was fired, it took Mr. Villacorta so long to commute to his new job each day that he was forced to rent an apartment and be away from his family five days per week. After finding for Mr. Villacorta, the jury awarded Mr. Villacorta three years of lost wages, although he was actually unemployed for eight months. The defendant appealed,
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asserting that any emotional distress resulting from Mr. Villacorta’s distance from his family should have been considered in non-economic damages, and besides, Mr. Villacorta found comparable employment (earning more!), so what was he even complaining about? In a heartening decision, the Court of Appeals rejected this callous line of reasoning and affirmed Mr. Villacorta’s judgment. The Court held: Wages actually earned from an inferior job may not be used to mitigate damages because if they were used then it would result ‘in senselessly penalizing an employee who, either because of an honest desire to work or a lack of financial resources,’ is willing to take whatever employment he can find. (Id. at 446, citing Rabago-Alvarez v. Dart Indus., Inc. (1976) 55 Cal.App.3d 91.) In other words, Mr. Villacorta’s new job was not comparable because of its inferior location, in addition to any emotional distress he suffered at being away from his family. Sanchez v. Swissport, Inc. (2013) 213 Cal.App.4th, is a wonderful case of first impression for female employees suffering from high-risk pregnancies, and, although it confirms the obvious, another reassuring decision. Ana G. Fuentes Sanchez was an employee who became disabled by her high-risk pregnancy, and in the months leading up to the birth of her child, took the full amount of leave allotted to her under the Pregnancy Disability Leave Law (“PDLL”). After Ms. Sanchez gave birth, she would have been able to return to work with the need for only minimal accommodations. Nevertheless, just months before Ms. Sanchez gave birth, and after providing Ms. Sanchez with leave under the PDLL, the defendant terminated Ms. Sanchez, arguing that its compliance with the PDLL satisfied its duty to comply with FEHA. The Court swiftly disabused the defendant of this notion, concluded defendant’s position was a “fallacy” and held that the trial court erred in sustaining the defendant’s demurrer without
leave to amend – the PDLL supplements rather than displaces the FEHA. In the event that your client makes it past the pleading stage and on to trial, but is awarded only a minimal or nominal verdict, Muniz v. United Parcel Serv., Inc. (9th Cir. 2013) 2013 WL 6284357 and Arizona v. ASARCO, LLC (9th Cir. 2013) 733 F.3d 882, make it clear that all is not lost, and provide great support for attorneys’ fees and punitive damages respectively. Muniz v. United Parcel Serv., Inc. teaches that simply because your client receives a low verdict, it does not mean you will receive a low-fee award for all of your efforts in securing this verdict. In Muniz, Kim Muniz sued UPS in California State court for gender discrimination in violation of FEHA. After UPS removed the case to Federal court and it was tried to a jury, the jury returned a verdict in Muniz’s favor and awarded damages of $27,280. Despite this minimal verdict, the Court awarded Ms. Muniz’s attorneys $697,972 in statutory attorneys’ fees. In response, UPS’s attorneys, whose attorneys’ fees were undoubtedly significantly higher than $697,000, appealed the award, arguing that Ms. Muniz’s damages constituted “nominal” or “minimal” damages, therefore the Court was required to reduce Ms. Muniz’s attorneys’ fees accordingly. The Ninth Circuit rejected UPS’ argument, and affirmed Ms. Muniz’s attorneys’ fee award. In a final slap to UPS, the Ninth Circuit ordered the district court to award attorneys’ fees to Ms. Muniz’s attorneys which they incurred in defending the appeal. Arizona v. ASARCO, LLC is another strong case to use in the event your client has been awarded low damages, and supports the proposition that discrimination and harassment are deserving of high punitive damage awards even if compensatory damages are nominal. Plaintiff Angela Aguilar worked at ASARCO, LLC – a large copper mining and refining company located in Arizona. Ms. Aguilar alleged that during her employment, she was repeatedly sexually harassed, and
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oppressive, malicious, and/or fraudulent conduct against Ms. Davis. The Court of Appeals reversed, reasoning that the defendant, “by simply restating the applicable legal standard under White for the determination of whether [one of Ms. Davis’s supervisors] was its managing agent, did not satisfy its initial burden of production.” Providing additional fodder for plaintiffs seeking punitive damages, the Court further held that “evidence showing an employee’s hierarchy and job duties, responsibilities, and authority may be sufficient, absent conclusive proof to the contrary, to support a reasonable inference by a trier of fact that the employee is a managing agent of a corporation.” Rounding out the list of 2013’s best cases is Benton v. Telecom Network Specialists, Inc. (2013) 220 Cal.App.4th 701 − the sole wage and hour case in this year’s review. Benton is the most recent in a line of cases instructing us that an employer’s lack of a policy governing meal and/or rest periods is the glue that can make or break class certification. Brought as a class action by technicians who worked on the cell phone towers and other cell phone equipment of wireless service providers, they alleged violations of the California Labor Code’s meal and rest break requirements and overtime requirements. Adopting the pro forma argument of virtually every single defendant facing class-action litigation, the defendants argued that the technicians could not possibly prevail on class certification as individual issues predominated, and their lack of policy on meal and rest periods was irrelevant. In a rebuke to both the defendants and the trial court, the Court of Appeals held otherwise. Instead, citing Brinker Rest. Corp. v. Sup. Ct. (2012) 53 Cal.4th 1004, the Court held: [T]he fact that individual inquiry might be necessary . . . is not a proper basis for denying certification. Rather, for purposes of certification, the proper inquiry is whether the theory of recovery advanced by the plaintiff is likely to prove amenable to class treatment. In this case, the plaintiffs’ theory
of recovery is that [the defendant] violated wage and hour requirements by failing to adopt a policy authorizing and permitting meal and rest breaks to its technicians. (Id. at 726.) The Court also definitively rejected the argument that the defendant would not be liable to any employee who was co-employed by a staffing company that did have a lawful meal and rest break policy. Instead, the Court reasoned that such an “assumption . . . is not supported by the language of the Wage Order, which imposes an affirmative obligation on every employer to authorize and provide legally-required meal and rest breaks; if it fails to do so, it has violated the law and is liable.” (Id. at 728.) Andrew H. Friedman is a partner with Helmer Friedman LLP in Culver City. He received his B.A. from Vanderbilt University and his J.D. from Cornell Law School, where he was an Editor of the Cornell Law Review. He clerked for the Honorable Judge John T. Nixon (U.S. District Court for the Middle District of Tennessee). Mr. Friedman represents individuals and groups of individuals in employment law and consumer rights cases and is the author of Litigating Employment Discrimination Cases (James Publishing 2005-2013). Courtney Abrams is an associate attorney with Helmer Friedman LLP in Culver City. She received her B.A. from University of California, Los Angeles, and her J.D. from Southwestern Law School in 2009. Ms. Abrams represents employees in all aspects of employment litigation, including harassment, discrimination and retaliation. Ms. Abrams serves on the Saturday Morning Seminar Committee of the Labor and Employment section of the Los Angeles County Bar Association, and is also a member of the Executive Committee of the Labor and Employment section of the Beverly Hills Bar Association.
after she complained, retaliated against. After a trial on Ms. Aguilar’s Title VII and constructive discharge claims, the jury found ASARCO liable on Ms. Aguilar’s sexual harassment claim and awarded Ms. Aguilar nominal compensatory damages. The jury also awarded Ms. Aguilar $868,750 in punitive damages, which the district court reduced to $300,000 – the statutory maximum under Title VII for an employer of ASARCO’s size. On appeal, the Ninth Circuit unequivocally found ASARCO’s conduct deserving of punitive damages, holding the defendant’s conduct was “targeted, worse than reckless, and served no possible productive purpose.” The Court reasoned that “many other cases involving lengthy periods of harassment and discrimination have noted that similar conduct is highly reprehensible along these dimensions.” After reviewing other punitive damage awards in cases of discrimination, the Court reduced Ms. Aguilar’s punitive damage award to $125,000 – the highest punitive award supportable under due process and “in accord with the highest ratio [the Court] could locate among discrimination cases.” (Id. at 891.) Davis v. Kiewit Pac. Co. (Cal.Ct. App. 2013) 2013 WL 5530356 [although unpublished and therefore not citeable in California state courts] provides ammunition against defendants providing canned declarations in support of their motions for summary adjudication of punitive damages’ claims. Lisa Davis was one of two women who worked the day shift excavating a canal in Imperial County. After Ms. Davis reported to her supervisor that her job site lacked portable toilets for females, she was subjected to a hostile work environment and retaliation. On summary judgment, the defendant submitted threadbare declarations, devoid of any facts but which parroted the legal conclusions of White v. Ultramar, Inc., 21 Cal.4th 563 (1999). The trial court granted summary adjudication as to Ms. Davis’s request for punitive damages, finding no officer or managing agent ratified or engaged in any
Iris Weinmann
Sticks and stones may break my bones, but words can destroy my reputation An overview of defamation claims, especially defamation by employers against employees “The worst thing that can happen to a man is to lose his money, the next worst is his health, the next worst his reputation.” — Samuel Butler For employees, having false, negative statements made about them can be as damaging as losing their job. In California, a body of defamation law exists to protect an employee’s reputation and to provide civil liability for the publication of false, negative statements. Defamation may consist of either libel or slander. (Civ.Code, § 44.) Libel is “a false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye, which exposes any person to hatred, contempt, ridicule or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation.” (Civ. Code, § 45.) Slander involves “a false and unprivileged publication, orally uttered,” which either charges a person with a crime, loathsome disease or want of chastity, or “[t]ends directly to injure [any person] in respect to his office, profession, trade, or business, either by imputing to him general disqualification in those respects which the …occupation peculiarly requires, or by 24 — The Advocate Magazine
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imputing something with reference to his… profession, trade or business that has a natural tendency to lessen its profits.” (Civ. Code, § 46(3).) Where the defamation is clear without the need of any explanation, it is considered defamation per se, and damages are presumed. (Contento v. Mitchell (1972) 28 Cal.App.3d 356, 358 [“in an action for damages based on language defamatory per se, damage to the plaintiff ’s reputation is conclusively presumed and he need not introduce any evidence of actual damages in order to obtain or sustain an award of damages.”].) Where the defamation is not per se, and some explanation is needed to show why the statement was defamatory, the plaintiff is required to allege and prove that he or she suffered special damages, such as harm to reputation, shame or economic damages. (Civ. Code, §§ 45, 48a(4).)
Pleading defamation In pleading defamation, a plaintiff should allege (a) a publication, (b) that the published statement is false, (c) that the published statement is defamatory, (d) that the published statement is not privileged or was motivated by malice
and (e) that the statement has a natural tendency to injure, or caused special damage. (Taus v. Loftus (2007) 40 Cal.4th 683, 720; Lundquist v. Reusser (1994) 7 Cal.4th 1193, 1202; CACI 1700-1705.) Note that it is the defendant’s burden to prove that a particular statement is privileged, but the plaintiff ’s burden to prove the statement was made with malice, in order to overcome a claimed conditional privilege. (Lundquist v. Reusser, supra, 7 Cal.4th at 1203.) Privileges and malice are discussed in greater detail later in this article. One question that often arises is the level of specificity needed to plead a defamation claim. It is not uncommon for a defendant to demur where a plaintiff has not specified the name of the individual to whom the defamatory statement was published. In opposing such a demurrer, the plaintiff should point out to the court that the defendant has “confused the rules of pleading with the rules of evidence.” (Semple v. Andrews (1938) 27 Cal. App.2d 228, 233 [drawing a distinction between what facts are necessary to plead a cause of action for defamation and what facts the plaintiff would ultimately need to prove at trial].)
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Several courts have rejected the argument that a complaint for slander must specify the persons who heard the defamatory statements. For example, in Schessler v. Keck, the court of appeal held that the trial court had erred in sustaining a demurrer to a cause of action for defamation where the complaint did not specifically identify the individual who heard the defamatory statements, but rather pled that the statements were made “at various times and places to numerous persons.” (Schessler v. Keck (1959) 125 Cal.App.2d 827, 835-836.) The court explained that “less particularity is required in the allegations of the complaint where, from the nature of the matters alleged, the adverse party has a knowledge of the facts superior to the party pleading them.” (Id. at 835-836; Okun v. Superior Court (1981) 29 Cal.3d 442, 458.) Thus, while it is best to put as much specificity as possible in the complaint, the failure to do so should not be fatal. Defendants will have the opportunity during discovery to obtain greater detail about what was said, by whom and to whom. It should also be noted that different standards apply depending on whether the plaintiff is a private figure or a public figure, whether the published statements involve matters of public concern or matters of private concern, and whether the defendant is a media defendant or a non-media defendant. The types of differences include who bears the burden of proving whether the statement at issue is true or false, and whether and how much malice must be proven. For example, in matters involving private plaintiffs and matters of private concern, it is the defendant’s burden to prove that the statement at issue is false. In such cases, truth is a defense. (Moyer v. Amador Valley Joint Union High School District (1990) 225 Cal.App.3d 720, 724, n. 2; CACI 1720.) However, where the plaintiff is a public figure or where the published statement involves matters of public concern, it is the plaintiff ’s burden to prove that the statement was false. (Nizam-Aldine v. City of Oakland (1996) 47 Cal.App.4th 364, 26 — The Advocate Magazine
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373; Brown v. Kelly Broadcasting Co. (1989) 48 Cal.3d 711, 747.)
Defamation per se in the employment context In connection with employment cases, the defamatory statements are often tied to employment issues, such as false statements about an employee’s work performance or ethics. The definitions set forth in Civil Code section 46 “have been held to include almost any language which, upon its face, has a natural tendency to injure a person’s reputation, either generally, or with respect to his occupation . . .” (Washer v. Bank of America (1943) 21 Cal.2d 822, 827, disapproved on other grounds in MacLeod v. Tribune Publishing Co., Inc. (1959) 52 Cal.2d 536, 551.) Thus, criticism of work performance or ethics can be defamation per se. Examples of statements about employees relating to their work performance or ethics abound in the case law. Following are the types of statements that have been found by the courts to be defamatory: • An employer’s statement that an employee made a $100,000 mistake in estimating a bid was found to be defamatory, since it tended to impute to the employee incompetence in his trade. (Gould v. Maryland Sounds Ind., Inc. (1995) 31 Cal.App.4th 1137, 1154.) • Statements that conveyed that an employee was “dishonest,” an “unsatisfactory” worker, “inefficient” and “insubordinate” were also found to be defamatory per se as they related to the plaintiff ’s qualifications as an employee. (Washer v. Bank of America, supra, 21 Cal.2d at 828-829.) • Similarly, the statement that a businessman was “out for a fast buck” in describing a businessman of questionable ethics was held to constitute slander per se. (Cameron v. Wernick (1967) 251 Cal.App.2d 890, 894.) • A corporate officer who was accused of being “a black sheep,” “unscrupulous,” “proud, snobbish and vain” and “irresponsible” and using “lies and
hypocrisies,” was also able to state a claim for defamation per se. (Correia v. Santos (1961) 191 Cal.App.2d 844, 854.) • Statements that an employee was fired “for not doing things properly and for not following office rules” and that other employees had also had trouble with the plaintiff impugned the plaintiff ’s vocational capacity and was found to be slanderous per se. (Mercado v. Hoefler (1961) 190 Cal.App.2d 12, 21.) • Publications that an engineer lacked job knowledge and failed to cooperate have also been held to support a defamation claim. (Agarwal v. Johnson (1979) 25 Cal.3d 932, 944-945, disapproved on other grounds in White v. Ultramar (1999) 21 Cal.4th 563, 574 n. 4.) Notably, internal publications within a company are actionable. Employers may try to argue that since the defamatory statements were internally published within the company, there was no publication. That argument would be legally inaccurate. Publication of defamation can be completely internal, that is, published and received solely by other employees of the employer. (Kelly v. General Telephone Co. (1982) 136 Cal.App.3d 278, 284-285 [publication applies to an employee’s statement to a fellow employee].) See also, Agarwal v. Johnson, supra, 25 Cal.3d at 944 [recognizing that wholly internal company statements can be deemed publications].) In fact, even false criticisms in a performance review can form the basis of a defamation claim if they accuse the employee of “criminal conduct, dishonesty, incompetence or reprehensible personal characteristics or behavior.” (Jensen v. Hewlett-Packard Co. (1993) 14 Cal.App.4th 958, 965.) Thus, the fact that the defamatory statements may have been made by one employee of the employer to another does not bar the plaintiff ’s defamation claim. Moreover, it is important to note that the employer is liable for statements made by its employees in the scope of employment. This is true even if the statement was not made for the employer’s benefit, and even if the employer was unaware that the statement was made.
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(Sanborn v. Chronicle Publishing Co. (1976) 18 Cal.3d 406, 411; Kelly v. General Telephone Co., supra, 136 Cal.App.3d at
284; Rivera v. Nat’l Railroad Passsenger Corp. (9th Cir. 2003) 331 F.3d 1074, 1080.)
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To be actionable, the statement must not be privileged If the statement at issue was privileged, then a defamation claim cannot survive. Thus, in response to a defamation claim, the employer will inevitably argue that the slanderous statements are privileged. A publication may be absolutely privileged, meaning there can be no liability for the publication, regardless of the harm caused and regardless of whether the publisher knew the statement to be false. The types of statements that are absolutely privileged are set forth in Civil Code section 47. These include statements made in the proper discharge of an official duty or in a legislative, judicial, or other official proceeding. (Civ. Code, § 47.) Other types of publications may be conditionally privileged. A publication is privileged where made: In a communication, without malice, to a person interested therein, (1) by one who is also interested, or (2) by one who stands in such a relation to the person interested as to afford a reasonable ground for supposing the motive for the communication to be innocent, or (3) who is requested by the person interested to give the information. (Civ. Code, § 47(c) (emphasis added).) With respect to defamation in the workplace, the employer will inevitably argue that the defamatory statements were published within the company among managers or employees who had a reason to be given the information, and that the publications are therefore nonactionable because of the “common interest” privilege. However, the privilege afforded by Civil Code section 47(c) is a conditional privilege which is lost if the privilege is abused, or if the publication was motivated by malice. (Deaile v. General Tel. Co. of Calif. (1974) 40 Cal.App.3d 841, 847; McMann v. Wadler (1961) 189 Cal.App.2d 124, 129.) Thus, in order to overcome or eliminate any conditional privilege, a plaintiff need
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only show some evidence of either malice or abuse of privilege. (Ibid.) The existence or nonexistence of malice is a question of fact for the jury. (Agarwal v.Johnson, supra, 25 Cal.3d at 944-945 (factual issue whether publication was motivated by hatred or ill will towards the plaintiff); Larrick v. Gilloon (1959) 176 Cal.App.2d 408, 416, disapproved on other grounds by Field Research Corp. v. Superior Court (1969) 71 Cal.2d 110, 114 [“the question of whether a publication was inspired by actual malice is essentially and peculiarly a question of fact.”]) Malice may be evidenced by showing such things as: That the defendant bore a longstanding grudge against the plaintiff, that there were former disputes between them, that defendant had formerly been in the plaintiff ’s employ, and was dismissed for misconduct. Any previous quarrel, rivalry or ill-feeling between plaintiff and defendant – in short, almost everything defendant has ever said or done with reference to the plaintiff – may be urged as evidence of malice. (Larrick v. Gilloon, supra, 176 Cal.App.2d at 416.) The key to establishing malice is demonstrating that the publication was “motivated by hatred or ill will toward plaintiff or by any cause other than the desire to protect the interest for the protection of which the privilege is given.” (Mamou v. Trendwest Resorts, Inc. (2008) 165 Cal.App.4th 686, 729.) Malice sufficient to defeat the conditional privilege has been found in the following situations: • Where there has been a failure to investigate thoroughly and verify the facts stated. (Widener v. Pacific Gas & Electric Co. (1977) 75 Cal.App.3d 415, 434-35, disapproved on other grounds by McCoy v. Hearst Corp. (1986) 42 Cal.3d 835, 846 n. 9.) • Where the investigation was grossly inadequate under the circumstances. (Fisher v. Larsen (1982) 138 Cal.App.3d 627, 640.) • Where there has been purposeful avoidance of the truth or a deliberate decision not to investigate facts. 30 — The Advocate Magazine
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(Antonovich v. Superior Court (1991) 234 Cal.App.3d 1041, 1048.) • Where the employer has failed to interview obvious witnesses who could have confirmed or disproved the allegations. (Khawar v. Globe Intern., Inc. (1998) 19 Cal.4th 254, 276.) • Where the facts stated are “exaggerated, overdrawn, or colored to the detriment of plaintiff, or are not stated fully and fairly.” (Shumate v. Johnson Publishing Co. (1956) 139 Cal.App.2d 121, 138.) • Where the statement is made despite the publisher having serious doubts of the truthfulness of the statement he or she is publishing. (Reader’s Digest Ass’n v. Superior Court (1984) 37 Cal.3d 244, 256.) • Where the statement is made despite the knowledge of its falsity. (Roemer v. Retail Credit Co. (1970) 3 Cal.App.3d 368, 371.) If the employer is merely negligent in its investigation of facts, by inadvertently overlooking something or making an unintentional error, that alone does not establish malice. (Bierbower v. FHP, Inc. (1999) 70 Cal.App.4th 1, 9.) However, if the “negligence amounts to a reckless or wanton disregard for the truth, so as to reasonably imply a willful disregard for or an avoidance of accuracy, then malice is shown.” (Roemer v. Retail Credit Co., supra, 3 Cal.App.3d at 372.) Not much specificity is required to plead malice. In Kelly v. General Telephone, the Court of Appeal reversed the grant of a demurrer on a slander cause of action, finding that the plaintiff ’s bare allegations that the statements were made by the defendant with malice because he bore ill will and hatred toward the plaintiff was sufficient to overcome a demurrer. (Kelly v. General Telephone Co., supra, 136 Cal.App.3d at 285.) Nevertheless, it is best for counsel to plead in the complaint specific facts demonstrating malice. It is important to note that the conditional privilege only applies where the defaming party admits making the statement at issue, and believed it to be true at the time it was uttered. The conditional privilege is lost if the defaming party denies having made the statements at all,
or did not believe the statements to be true at the time they were made. (Russell v. Geis (1967) 251 Cal.App.2d 560, 566-567.)
Opinion versus fact Another argument employers may use to try to defeat a defamation claim is that the defamatory statements published about the employee were statements of opinion, rather than fact. In order to constitute actionable defamation, the offensive publication must consist of statements of fact, rather than opinion. (CACI 1707.) The statements at issue should be carefully examined to determine if they are statements of fact or opinion. Often, apparent expressions of opinion imply an assertion of fact and are therefore actionable. (Weller v. American Broadcasting Companies, Inc. (1991) 232 Cal.App.3d 991, 999.) Thus, a statement in the form of an opinion may be actionable if it is implied that it is based on some undisclosed defamatory facts. (Baker v. L.A. Herald Examiner (1986) 42 Cal.3d 254, 266; Okun v. Superior Court, supra, 29 Cal.3d at 451452.) The issue of whether the statement is fact or opinion is then one for the jury. (Slaughter v. Friedman (1982) 32 Cal.3d 149, 154.) The dispositive question for the court is whether a reasonable fact finder could conclude that the published statements imply a provably false assertion of fact. (Moyer v. Amador Valley Joint Union High School District, supra, 225 Cal.App.3d at 724.) To answer this question, the court applies a “totality of the circumstances” test, pursuant to which the court reviews the meaning of the language in the total context in which the statement was made. Depending on the status of the defamer, apparent expressions of opinion may imply an assertion of fact where the defamer’s expertise lends authority to his or her statements that would cause the average reader to assume they were asserting facts and “carry a ring of authenticity that reasonably might be understood as being based on fact.” (Slaughter v. Friedman, supra, 32 Cal.3d at 154). In Slaughter, accusations were made
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that a dentist charged excessive fees or performed unnecessary work. The Court explained that such accusations by laymen might constitute mere opinion, but such accusations by professional dental plan administrators carry a ring of authenticity and reasonably might be understood as being based on fact. Similarly, where the defamer is a managerial employee, his or her expertise regarding the plaintiff ’s competence or performance in executing his or her job duties may reasonably be understood as being based on facts. In such a situation, where the person to whom the statement was published could have understood it in either sense, it is for the jury to decide whether the statement is fact or opinion. (Id. at 154.) See also Good Government Group of Seal Beach, Inc. v. Superior Court (1978) 22 Cal.3d 672, 682.
Publication Another argument employers often make in response to a defamation claim is that the statement was not published. The first line of attack often is that the statement was only made internally, and therefore there was no publication. As discussed more thoroughly above, that is simply inaccurate. Publication of
defamation can be completely internal; that is, published and received solely by other employees of the employer. (Kelly v. General Telephone Co., supra 136 Cal.App.3d at 284-285; Agarwal v. Johnson, supra, 25 Cal.3d at 944.) Moreover, even where the statements were published only to the employee and not to any third party, the defamation may be actionable under the theory of self-compelled publication, i.e., that the employer had reason to know that the person defamed would be under a strong compulsion to disclose the defamatory statement to a third person. (Schneider v. United Airlines, Inc. (1989) 208 Cal.App.3d 71, 75.) The seminal California case dealing with compelled self publication in the employment context is McKinney v. County of Santa Clara (1980) 110 Cal.App.3d 787. In McKinney, the Court of Appeal held that the originator of the defamatory statement regarding the reasons for the plaintiff ’s termination could be held liable for re-publication by the employee to prospective employers, where it was foreseeable that the plaintiff would have a strong compulsion to republish wrongful grounds stated for his termination to prospective employers.
(Id. at 797-798.) See also, Live Oak Publishing Co. v. Cohagan (1991) 234 Cal.App.3d 1277, 1285 [Theory of compelled self publication applies where an employee must explain a derogatory statement in his or her personnel file to subsequent employers who will surely learn of it if they investigate his or her past employment].) Thus, in addition to determining whether the employer published defamatory statements to third parties, counsel should also determine whether the employee felt compelled to relay defamatory reasons for his or her termination to a prospective employer in the course of responding to direct questions in a job interview.
Defamation claims are not subject to workers’ compensation exclusivity A claim for defamation is not barred by the exclusivity provisions of the Workers’ Compensation Act. (Howland v. Balma (1983) 143 Cal.App.3d 899, 904905.) In Howland, the court explained that injury to reputation is not the type of injury contemplated by the Workers’ Compensation Act. Slander of an employee by his employer is not a risk of
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employment or in any manner compensable under the Act. The conclusion reached by the Howland court was cited with approval by the California Supreme Court, confirming that actions for defamation, even
when occurring in the workplace, are not preempted by the Workers’ Compensation Act. (Shoemaker v. Myers (1990) 52 Cal.3d 1, 16.) See also, Davaris v. Cubaleski (1993) 12 Cal.App.4th 1583, 1591 (“Patently, however, defamatory
statements which have no other purpose than to damage an employee’s reputation are neither a ‘normal part of the employment relationship’ nor a risk of employment within the exclusivity provision of the Workers’ Compensation Act.”)
Statute of limitations An action based on defamation must be brought within one year. (Code Civ. Proc., § 340(c).) However, the one-year period begins to run on the date the plaintiff discovers the defamation. (Manguso v. Oceanside Unified School District (1979) 88 Cal.App.3d 725, 731.) Notably, each publication of the defamatory statement is a separate tort, which triggers the running of the statute of limitations and which entitles the plaintiff to separate damages. (Schneider v. United Airlines (1980) 208 Cal.App.3d 71, 77-78; Neal v. Gatlin (1973) 35 Cal.App.3d 871, 877 n. 4.)
Conclusion There are several benefits to a defamation claim. First, juries take harm to reputation seriously and even conservative juries who may have difficulty awarding a plaintiff damages for wrongful termination or discrimination may have an easier time awarding damages for harm to reputation. Second, defamation can be asserted against the individual who published the statement, thus allowing a local individual defendant to be named to prevent diversity of citizenship. Finally, inclusion of a defamation claim may trigger insurance coverage. Thus, in appropriate cases, counsel should consider including a defamation claim in employment lawsuits. Iris Weinmann is a partner in Greenberg & Weinmann in Santa Monica. Ms. Weinmann has concentrated her practice on the representation of employees in civil rights and other employment-related litigation since 1994. Together with her partner, Paul Greenberg, Ms. Weinmann has successfully tried multiple employment cases to verdict. She has also argued several appeals before the Court of Appeal for the State of California. She is a frequent contributor to the Advocate’s annual Employment Law issue. 34 — The Advocate Magazine
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Jan Frankel Schau
Critical mistakes lawyers make in mediating employment cases By careful preparation, strategic negotiation and unfailing optimism, most every case can be closed through mediation It is 10:25 a.m., and your client has just arrived (25 minutes late) for the mediation. The mediator is already in the other room with your opposing counsel breaking the ice and getting a better understanding of the fine points raised in their brief. Your case involves an egregious set of facts arising out of an abrupt termination of a 17-year employee after being diagnosed with a frozen shoulder, which required surgery and possibly a long recovery period. The personnel files show that the plaintiff had a history of tardiness, for which she had been repeatedly admonished. Mediation is your chance to demonstrate pretext and get your client a respectable six-figure settlement before you have to incur considerable costs in the case. You are (understandably) upset and embarrassed that your client is late for the mediation and further stressed by the fact that you were unable to reach her to prepare for the mediation yesterday.
Mistake No. 1: Failing to prepare “Never cut what you can untie.” — Joseph Joubert Before you suggest mediation to your client or opposing counsel, you should carefully analyze whether the case is likely to be subject to a motion for summary judgment. If so, would the timing be best before the motion is filed, during the long period while it is pending or after it is heard? This is, of course, a measure of your confidence in successfully defeating the motion. Some cases will simply not settle for their true value until a judge has denied a motion for summary judgment. Others may be significantly devalued if, for example, the judge is likely to grant a motion for summary adjudication as to causes of action that provide for attorneys’ fees. 36 — The Advocate Magazine
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Discuss the timing of the mediation with your opposing counsel to determine if they will come to the table earnestly before a motion for summary judgment is filed or heard. Your client should also be consulted on this issue to make a determination of her level of appetite for the risk associated with the motion. A mediation is most effective at that pivotal moment in time when enough discovery has been undertaken that all parties are roughly aware of the evidence, but before every stone has been unturned. Plan your initial discovery strategically to reach that point before the date of the mediation hearing. The failure to invest in your case sufficiently to demonstrate your commitment to it signals a willingness to accept a settlement that is less than the case’s full value. In preparing, bring the salient evidence with you to the hearing. Although you may not have formal declarations or depositions, a simple recording of an interview of a key witness done on your smartphone (with permission) can be a clever tool. Be at least as smart and creative as your mobile phone! There are no rules of evidence at a mediation hearing, so consider this your first mini-presentation of the facts and law to effectively persuade your opposing party (the decision-maker and the lawyer) that there is a real risk of a significant verdict against them if they are unable to resolve the matter in this informal and confidential way. Many attorneys lose sight of the fact that there is no proscription against ex parte communication with a mediator. If you have a troubling issue, call your mediator and discuss it. In your premediation call, you will want to consider whether a joint session, or a meeting with lawyers only or clients only is necessary or advisable.
If, for example, you have determined that the only way your client will accept any amount of money is if she has the chance to tell her former employer about all of the outrageous misconduct that went on in the work place, tip off your mediator that a brief joint session may be welcome or even critical to a successful mediation. If, on the other hand, your client makes a terrible witness, or has a language or cultural barrier which will make communication challenging, inform your mediator that you wish to avoid a joint session unless absolutely necessary. If you have concerns about your client’s own ability to make decisions, problems with certain evidence or discovery issues pending, explain those to the mediator too. Engage your mediator as your ally instead of allowing the other side to put you on the defensive. Before the hearing, spend the time preparing your client in the same way you would prepare her for a deposition. From coaching her on her story to making sure she knows where to park her car and when to arrive, your client should present herself in the best possible light on that day. This includes the critical concept of managing your client’s expectations. Your client should be informed that the mediation is generally a long process, during which there may be hours of time before any dollars are offered and true negotiation begins. While you should discuss the range of possible settlement, you should also prepare your client that there may be new facts or wrinkles that come up which may throw your early evaluation out the window. Prepare her to be flexible and open-minded. It is crucial that you prepare yourself by sorting through and providing all of
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the key evidence supporting your theories on both liability and damages. If you have a critical deposition transcript, bring it, highlight the relevant sections, and be prepared to show the video of those highlights to your mediator and to the decision-makers. If your case rests upon personnel records, employment agreements or handbooks, do not depend upon the employer to have them on hand. Bring them to the hearing and be prepared to make copies of the relevant portions for the mediator to use as leverage. Finally, if you have medical bills or other evidence of damages, make a summary, find out what liens there may be on your case, and provide that documentation to both the mediator and your opposing counsel in advance of the hearing. Since so many more cases are resolved through mediation rather than trial, preparing for a successful mediation should be no less of an effort than preparing for trial. Consider trying out your trial theme, be prepared to present evidence that will substantiate your claims where they are disputed, and be prepared to come up with some logical evaluation of a range of damages that might be assessed. If possible, come armed with reports or stories of recent verdicts or settlements on similar facts or legal issues.
Mistake No. 2: Failing to plan your negotiation strategy “In business, you don’t get what you deserve, you get what you negotiate.” — Chester L. Karrass Now it is 2:30 p.m. and your client is understandably steamed at you since you chastised her earlier for arriving late, and you still have no offer in response to your initial demand of $1.25 million. While you are determined to get to a “mid-six figure settlement” on this case, the defendants seem to be bogged down in the details of a dispute as to who bears the liability for the termination, since the company was sold after the plaintiff was fired. There
seem to be unresolved coverage issues about which carrier has primary exposure on liability and whether they will need to litigate the rights of the various carriers under a declaratory relief action before you can get plaintiff ’s settlement paid. One of the ways you can best address these detours in the negotiation is to contact each of the opposing counsel before the mediation, assure yourself that all of the appropriate decisionmakers will be present and that they are all aware of the opening demand and how you arrived at it. If there is a need, for example, to put an excess carrier on notice, you should ask the defense counsel whether there is excess coverage and then make clear that your demand will exceed the primary policy limits. If there is not, you may want to consider making your initial demand within policy limits in order to facilitate breaking through what may be a difficult conversation between insurer and insured in the other room where there is a policylimits demand made, exposing the insured to excess at the time of a verdict. In formulating your initial demand, you should assess liability, damages and the likelihood of collecting damages. In other words, with a defendant who is a small business that is struggling financially and has no insurance, making an initial demand at $1 million will only serve to discourage defendant from negotiating at all. If there is an insurance policy of $1 million and no excess coverage, then making an initial demand of $4.5 million may be equally futile. Your initial demand should be calculated to entice the opposing side into negotiating with you. Without preparing yourself as to the availability of funds, your opening offer may have an effect of shutting down negotiations before they begin. Start with a reasonable initial demand based upon your knowledge of the claims, damages and the particular defendants against whom you have brought the lawsuit. The initial communication is crucial to set the tone for the beginnings of the negotiations.
It is always a mistake to approach the mediation hearing with arrogance and without taking the time to develop a rapport with your negotiating “partner”. Though you and the opposing counsel may be adversaries in motion practice and at trial, do not lose sight of the fact that negotiation is a collaborative process that requires a willing partner. A failure or refusal to meet with defense counsel, extend your hand and offer some encouragement about the process that you are entering into is a mistake, which cannot be easily remedied at the end of the day when you hit an impending impasse. Part of any negotiating strategy must be a determination to remain flexible and adjust as needed. If your expectation was that defendant would respond to your initial demand of $1.25 million with an offer of $100,000 and instead there is an offer of $7,500 at 2:30 p.m., you probably will not want to reduce your demand by your expected $100,000 in response. Use your mediator to translate the basis for that low offer. Are there coverage issues, which remain unresolved? Is there some evidence that undermines the liability or damages in your case about which you are unaware? If, for example, you learn that there is a $1 million policy and no excess coverage, you may want to go down to $1 million. If, on the other hand, there is no insurance, you may want to offer a bracket designed to demonstrate your willingness to reduce your demand more quickly once a reasonable offer has been made. There are times when the most difficult task in mediation is to summon some humility and listen to the mediator and opposing counsel to understand why they are evaluating your case so differently than you are. If necessary, have your mediator deliver the bad news to you and then to your client, so that your client does not see you at fault for the way the negotiation is proceeding. Admit to the mediator that you cannot refute all of the defenses raised, but be fully prepared to refute enough of the defenses to persuade the mediator, your own client and your adversary that your case has
merit and deserves a respectable settlement. Everyone has a different advocacy style, but the most effective advocates both give and command respect. In a mediation hearing, this will mean an openmindedness to honest misunderstandings, cultural differences, communication breakdowns and limitations imposed by outside forces about which you may know nothing at all. A critical part of your negotiation strategy should be to include patience, strive to understand that which is unstated and to be prepared for the occasional low points that will cause you and your client to recalibrate your strategy if you are to get to the finish line. Part of the advantage of mediation is that it allows you to learn the information upon which your opponent is relying in defending the claim in a confidential, informal way. Listen to it. It will help you to evaluate and re-evaluate your chances of success at trial. In terms of the negotiation itself, there are several techniques that you can employ to maintain some control over the negotiations. In the hypothetical where you made an initial demand of $1.25 million and the defense countered with $7,500 at 2:30 in the afternoon, you may want to be prepared with a series of ranges or brackets which would be acceptable to you and your client. If you had pre-determined that you would not settle for less than $100,000, you may want to offer a range of $250,000 to $750,000, but be prepared to also offer a lower range of $100,000 to $500,000. Failing to plan out a series of reasonable moves is a mistake. For example, if you offer a bracket of $25,000 to $125,000 in a case which you expect to bring in $100,000, you can be almost assured that the case will settle for something less than $75,000, based upon your proposed mid-point. Don’t be afraid to use a calculator, but look at the midpoints before you articulate a range that sells your client short. A common mistake is to give too much negotiating power to either the mediator or your opposing counsel by inviting them to offer a range first, or by entering into too low of a range at the
outset. In this example, you could have offered a range of $50,000 to $150,000, signaling a mid-point of $100,000. But in response, the defendant might well ask for a range of $10,000 to $50,000, thus anchoring the negotiation at a five-figure number. Failing to have the courage of your convictions and taking the lead on the numbers in the proposed ranges is a common mistake that should be avoided. It is also a mistake to underestimate your mediator’s listening skills and power to “escort” the negotiation towards an outcome that you channel would be acceptable. Like psychologists and other professionals, mediators are trained to listen to every word you and your clients say. If, for example, you suggest early on that your client would accept between $60,000 and $80,000 in a settlement, do not expect the mediator to push the defendant too hard once they make an offer of $70,000. It is okay to be honest with your mediator, with an understanding that all negotiation is confidential, but it is really difficult to get your mediator to change the course of the negotiation if the train is steering towards an acceptable range and then you communicate it is no longer acceptable late in the day. Be clear but fair to you, your client and your mediator. Another mistake is to leave money on the table by failing to test that “last, best and final” offer. Here is where it is advisable to engage your mediator in some testing before you accept a “final” offer. Most mediators will not lie to you about whether there is any more money on the table, but they won’t offer it to you if you don’t ask for it. It is worth the extra half hour it can take to assure yourself that you have gotten the highest settlement you can.
Mistake No. 3: Failing to prepare to close the deal “My father said: ‘you must never try to make all the money that’s in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t — J. Paul Getty have many deals.’”
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It is now 6:30 p.m., and you are starting to believe that you may not be able to close the gap between your current demand of $550,000 and the defendant’s global offer of $55,000. You need to call your wife and let her know you will be late for dinner. You have asked the mediator to make a mediator’s proposal, but she is reluctant to do it because she thinks any proposal over $100,000 will be rejected by the defense. Your client is growing impatient and has child-care issues that will require her to leave very soon. What do you do? While it is awkward to initiate a joint session after a long day in separate caucus rooms, a late day counsel-only meeting can be an extremely effective means of breaking impasse. Ask your mediator to facilitate a meeting with your opposing counsel, extend a hand, smile polite-
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ly and level with him. Often times, he will want to close this deal as much as you do. Be prepared to suggest some nonmonetary terms that may sweeten the deal: a willingness to take payment over time, an offer to extend critical deadlines so that he can take care of the lingering issues, the value of converting your client’s termination to a voluntary resignation, or taking the payment in the next tax year. Often, these creative brainstorming meetings between counsel on non-monetary issues can pave the road to an agreement on the larger issue of damages. Failing to earnestly acknowledge the hard work the other side has done to get a reluctant client from $7,500 to now $55,000 is also a mistake. Thank your opposing counsel and recognize that they
are not making the ultimate decision, but likely are urging their clients to settle this lawsuit just as you are. Assuming that you get to an agreement, it is a mistake to overlook the critical details involved in its documentation. According to mediator Nikki Tolt, many trial attorneys do not understand the way that worker’s compensation figures into settling an employment dispute. Is there a lien in the civil case? Is worker’s compensation the exclusive remedy for damages such as emotional distress? What is the interplay between worker’s compensation and FEHA? How does a pending worker’s compensation claim affect damages in your civil case? What is the language that would either extinguish the lien or release the claim? Can it be carved out? What is the value of an
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enhancement under the worker’s compensation system? Does the civil lawyer have the right to make a global settlement, which includes a pending worker’s compensation claim? It is a mistake not to arm yourself with answers to all of these questions before the mediation begins. If there is a settlement agreement made late in the day of the hearing, the plaintiff ’s worker’s compensation lawyer’s office might be closed for the day! Contact the worker’s compensation lawyer before the mediation and inform yourself on these issues fully. Another oft-misunderstood issue, according to defense attorney Jeremy Mittman of Proskauer Rose is the tax allocation of damages in settlement of an employment case. While insurance carriers are generally not opposed to making
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settlement payments in a lump sum, employers usually have some justifiable concerns that there must be at least some allocation made towards wages, subject to tax withholdings in order to avoid tax consequences for both employee and employer. Failing to consider what allocation you would deem fair and acceptable to your client under their particular financial and tax circumstances is a mistake. Encourage your client to discuss this with their accountant, or inform yourself as to the tax consequences of an employment settlement so that you are prepared to request a reasonable allocation be made. You should always have an early discussion with your own client about your attorney’s fees in the event of a settlement, too. It is painful for mediators and lawyers to be having discussions at the
literal eleventh hour about the costs and fees. It is a terrible mistake to have mismanaged your client’s expectations to such an extent that the attorney-client relationship is deteriorated at the end of a mediation and she is demanding for you to reduce your already discounted rate in order to make the deal that has been negotiated with the defense palatable to her. Discuss the net to client early on in the mediation so that your client is not surprised or disappointed at the end of the day. Finally, counsel should come prepared with a term sheet or template for drafting an acceptable long-form agreement, with all of the necessary terms, including language regarding the Older Worker’s Protection Act, carve outs for
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any worker’s compensation claims, handling of any liens, including a Medi-Cal lien if applicable and all of the necessary language involved for the indemnity of that lien, confidentiality language and language which will allow you to enforce the settlement should there be a breach. Before the mediation, you should have a fair idea of how any outstanding liens can be negotiated and at least be able to set forth all liens and how they will be paid upon settlement of the case. Before beginning the mediation be prepared to conclude it by either bringing all necessary forms, having access to an acceptable template electronically, or specifically asking the mediator or your opposing counsel to have those forms ready. It is a mistake not to do so.
Mistake No. 4: Failing to remain open to a later closing “He who has learned to disagree without being disagreeable has discovered the most valuable secret of a diplomat.” — Robert Estabrook It is now 8:00 p.m. and the decisionmaker for the defendant has had to make his flight home. You have worked out a lot of the non-monetary terms, but defendant has only offered you $72,000 and your client will not accept anything under $100,000. Your last demand was $185,000. Some frustrated attorneys will give up, slam doors, pack up and storm away. This is always a mistake. It is disrespectful to the mediator, the opposing side and your own client. What is worse,
it makes it all the more difficult to bridge the gap that remains following the mediation session. Instead of losing patience when it appears you cannot get to your “bottom line,” plan your appropriate exit strategy in advance. Do you want to ask your mediator to make a reasonable proposal that will remain open for 24 hours? Do you want to again meet with opposing counsel and suggest that you have some flexibility in your “bottom line” demand? Do you want to arrange to speak through the mediator and continue the dialogue by phone once the claims adjuster gets back to Connecticut? Make a plan to exhaust every possibility, even if it means taking a few more depositions or getting a bit closer to trial and then pre-arranging to revisit the discussions 30 days later. By careful preparation, strategic negotiation and unfailing optimism, most every case can be closed through mediation. Although your clients may be constrained by the confidentiality provisions of the settlement agreement from disclosing details of the settlement, they will nevertheless sing your praises loudly to their friends and colleagues for representing them flawlessly and getting them the satisfaction that they deserve without the risk, uncertainty, expense or delay of trial. In this age where more clients have real experiences in mediation than in trial, you do not want to make the ultimate mistake of failing to take that critical day to showcase what a truly experienced and skilled advocate you are. Jan Frankel Schau, a mediator with ADR Services, Inc., settles cases arising out of tort, employment and business disputes throughout Southern California. She has over 20 years of experience as a litigator. Since 2003, Jan Schau has mediated over 1,000 litigated cases throughout Southern California. She was recognized as a Top 50 Neutral in California by the Los Angeles Daily Journal for 2013 and named as Super Lawyer in ADRS annually since 2010.
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Protecting whistleblowers: Sarbanes-Oxley’s “Protected Activity” requirement Responding to bogus defense attempts to unduly narrow the scope of SOX-protected activity In December 2001, Enron filed the then-largest Chapter 11 bankruptcy in United States history. Enron’s collapse was the result of widespread accounting malfeasance. Among other things, Enron – with knowledge and approval of its accountants, auditors and lawyers – “had used thousands of off-the-books entities to overstate corporate profits, understate corporate debt and inflate Enron’s stock price.” (Committee Reports of 107th Congress (2001-2002), Senate Report 107-146, at 2.) As Congress held hearings to investigate what led to Enron’s collapse, one of the many disturbing findings was that corporate whistleblowers lacked any legal protection in certain states: In a variety of instances when corporate employees at both Enron and Anderson [Enron’s outside auditing firm] attempted to report or “blow the whistle” on fraud, they were discouraged at nearly every turn. For instance, a shocking e-mail responds to a request for legal advice after a senior Enron employee, Sherron Watkins, tried to report accounting irregularities at the highest levels of the company in late August 2001. The outside lawyers counseled Enron, in pertinent part, as follows: You asked that I include in this communication a summary of the possible risks associated with discharging (or constructively discharging) employees who report allegations of improper accounting practices: 1. Texas law does not currently protect corporate whistleblowers. The Supreme Court has twice declined to create a cause of action for whistleblowers who are discharged.... In other words, after this high level employee at Enron reported 46 — The Advocate Magazine
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improper accounting practices, Enron did not consider firing Anderson; rather, the company sought advice on the legality of discharging the whistleblower. Of course, Enron’s lawyers would claim that they merely provided their client with accurate legal advice – there is no protection for corporate whistleblowers under Texas law. In the end, Ms. Watkins did not report the matter to the authorities until after she had been subpoenaed, and after “tons” of documents had been destroyed. (Id. at 4-5.) Congress was troubled by the fact that “[c]orporate employees who report fraud are subject to the patchwork and vagaries of current state laws” such that “a whistleblowing employee in one state may be far more vulnerable to retaliation than a fellow employee in another state who takes the same actions.” (Id. at 10.) It found that “[t]his is a significant deficiency because often, in complex fraud prosecutions, these insiders are the only firsthand witnesses to the fraud” and “the only people who can testify as to ‘who knew what, and when,’ crucial questions....” (Ibid.) In part to address this gaping hole of protection provided by state law, Congress passed and, on July 30, 2002, President George W. Bush signed into law, the Corporate and Criminal Fraud Accountability Act of 2002, commonly known as the SarbanesOxley Act of 2002 (“SOX”). SOX’s Section 806 protects employees of publicly traded companies or employees of their private contractors or subcontractors from retaliation for making disclosures of reasonably believed violations of certain enumerated fraud or securities laws. (18 U.S.C. §1514A; Lawson v. FMR, LLC (2014) 134 S.Ct. 1158, 1161 [Section 806’s anti-retaliation provisions protect employees of private
contractors or subcontractors who serve public companies].) SOX’s whistleblower anti-retaliation provisions state that covered employers may not “discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee”: ... (1) to provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of sections 1341, 1343, 1344, or 1348, any rule or regulation of the Securities and Exchange Commission, or any provision of Federal Law relating to fraud against shareholders, when the information or assistance is provided to or the investigation is conducted by – (A) a Federal regulatory or law enforcement agency; (B) any Member of Congress or any committee of Congress; or (C) a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct); or (2) to file, cause to be filed, testify, participate in, or otherwise assist in a proceeding filed or about to be filed (with any knowledge of the employer) relating to an alleged violation of section 1341, 1343, 1344, or 1348, any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders. (18 U.S.C. § 1514A(a)(1), (2).) Thus, in addition to providing an anti-retaliation provision for participating in an official investigation or one
about to be filed, SOX also protects against retaliation for internal disclosures made directly to the employer relating to six enumerated categories of potential violations: (1) mail fraud under section 1341; (2) wire fraud under section 1343; (3) bank fraud under section 1344; (4) securities fraud under section 1348; (5) any rule or regulation of the Securities and Exchange Commission (“SEC”); or (6) any provision of federal law relating to fraud against shareholders. (Van Asdale v. International Game Tech. (9th Cir. 2009) 577 F.3d 989, 996.) When SOX was passed, corporate whistleblowers took a sigh of relief. But, unfortunately, in the years that followed, some courts and administrative law judges began to interpret SOX’s protected activity provisions so narrowly as to defeat the robust protections that Congress intended to provide corporate whistleblowers. This article will discuss some of these decisions and offer tips on how to handle them.
The basic requirements of SOX’s protected activity prong SOX does not require that the concerns disclosed by the whistleblower were actually illegal. Instead, “[t]o encourage disclosure, Congress chose statutory language which ensures that ‘an employee’s reasonable but mistaken belief that an employer engaged in conduct that constitutes a violation [of a SOX enumerated statute or rule] is protected.’” (Van Asdale, supra, 577 F.3d at 1001 [italics added].) The “reasonable belief ” standard has both an objective and a subjective component. (Van Asdale, supra, 577 F.3d at 1000.) “Objective reasonableness is evaluated based upon the knowledge available to a reasonable person with the same training and experience.” (Prioleau v. Sikorsky Aircraft Corp. (Nov. 9, 2011) ARB No. 10-060; 2011 WL 6122422, *6.) The subjective component requires that the whistleblower actually held “a subjective belief that the conduct being reported violated a listed law.” (Van Asdale, supra, 577 F.3d at 1000.)
Countering defense attempts to unduly narrow the scope of SOX-protected activity Proof of an “existing” as opposed to “future” or “potential” violation One common defense strategy to try to unduly narrow SOX’s protected activity provision is to assert that the whistleblower must have a reasonable belief of an existing violation, rather than a reasonable concern that a violation may happen in the future. Taken to its extreme, the employer argues that if the whistleblower’s disclosure stopped the potential violation from occurring, it was not a report of an existing violation and is not protected. Under this reasoning, successful whistleblowing that actually prevents a violation from occurring is not protected. As contrary as this result is to the SOX policy of encouraging internal reporting to deter violations from occurring, decisions requiring proof of an existing violation seem at first blush to lend support to this position. (See e.g., Livingston v. Wyeth, Inc. (4th Cir. 2008) 520 F.3d 344, 352; Walton v. Nova Info. Sys. (E.D. Tenn. Apr. 11, 2008) No. 3:06CV-292; 2008 WL 1751525, **8-9.) Livingston illustrates these decisions. There, the whistleblower disclosed that his employer was going to miss an internal deadline for implementing a compliance procedure required by federal law relating to its manufacturing processes. (Livingston, supra, 520 F.3d at 346-347.) Previously, the company had suffered negative regulatory action taken against it for non-compliance with the required manufacturing processes and, consequently, entered into a consent decree with the Food and Drug Administration (“FDA”). The whistleblower reported internally that: the company was going to miss the deadline for implementing the compliance procedure; this failure would render it at risk for similar regulatory action as occurred in the past; failing to disclose these facts to shareholders or auditors would be misleading; and management sent a message that it intended to hide these facts from auditors. (Id. at 347-349.)
The company conducted an internal investigation which concluded that no violation occurred – partly because the company did meet the compliance deadline that the whistleblower believed would not be met. The Fourth Circuit held that the whistleblower’s reports were not protected because “the statute requires Livingston to have held a reasonable belief about an existing violation, inasmuch as the violation requirement is stated in the present tense: a plaintiff ’s complaint must be ‘regarding any conduct which [he] reasonably believes constitutes a violation of [the relevant laws].’” (Id. at 352 [original italics].) The appellate court stated that to satisfy the “existing violation” requirement it was imposing, the “reasonable belief that a violation has occurred or is in progress” cannot be based on “a belief that a violation is about to happen upon some future contingency.” (Ibid.) The court reasoned that the disclosures were not of an “existing violation” because they presumed future contingencies would need to occur before an actual violation had occurred. (Id. at 353-356.) There are fundamental problems with the reasoning of cases like Livingston: “Requiring an employee to essentially prove the existence of fraud before suggesting the need for an investigation would hardly be consistent with Congress’s goal of encouraging disclosure.” (Van Asdale, supra, 577 F.3d at 1002.) Rather, a key policy underlying SOX’s anti-retaliation provision is encouraging corporate insiders to disclose reasonably suspected impending violations to prevent (and, if it already began, to contain or stop) the violation. But if the whistle cannot be blown until the violation has already begun to occur, the corporate insider cannot safely report the potential impending violation to stop it in its tracks. This remedial statute cannot be given such a narrow construction – particularly one that defeats key statutory policies. (Morefield, supra, 2004 WL 5030303 at *2 [“[I]t does not serve the purposes or policies of the act to take too pinched a view of this remedial statute when it comes to protecting those in an organization who can address the concerns Congress sought to correct.”].) JUNE 2014
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Fortunately, other courts and the Administrative Review Board (“ARB”) (the administrative agency with final decision-making authority in SOX cases pursued administratively) have rejected
the flawed logic of cases like Livingston. (Smith v. Corning, Inc. (W.D. N.Y. 2007) 496 F.Supp.2d 244; Sylvester v. Parexel Int’l LLC (ARB May 25, 2011) ARB Case No. 07-123, ALJ Case Nos. 2007-SOX-
39, 2007-SOX-42, 2011 WL 2165854; Van Asdale, supra, 577 F.3d at 1002.) In Smith, the employer asserted that the employee’s disclosures were not SOXprotected because they “only pertain to the potential for fraud occurring in the future.” (Smith, supra, 496 F.Supp.2d at 249.) According to the employer, “Smith alleges that he reported supposed concerns about future risks; as opposed to present fraudulent violations.” (Ibid.) The employer argued that “[t]here is a crucial distinction [for SOX-protected activity purposes] between conduct that is alleged to be fraud and conduct that is alleged to place the employer at greater risk.” (Ibid.) Rejecting the employer’s position, the court declined to impose a requirement that the employee prove that the disclosure related to an existing violation, finding instead that the allegations that the conduct reported “would have resulted in the issuance of incorrect quarterly reports” to the SEC if not corrected was sufficient to establish SOXprotected activity. (Id. at 248-249.) Likewise, in Sylvester, the ARB directly rejected the rationale of the Livingston line of cases. There, the administrative law judge (“ALJ”) had held that “‘until enforcement action is taken,’ allegations that Parexel engaged in fraud ‘are speculative and deemed insufficiently material to [Parexel’s] financial picture to form a basis for securities fraud or to affect shareholder investment decisions.’” (Sylvester, supra, 2011 WL 2165854 at *13.) The ARB emphatically rejected this standard finding that the ALJ erred by requiring that the whistleblower allege that “an illegal act had already taken place” by the time of the internal disclosures: A whistleblower concerning a violation about to be committed is protected as long as the employee reasonably believes that the violation is likely to happen. Such a belief must be grounded in facts known to the employee, but the employee need not wait until a law has actually been broken to safely register his or her concern. (Ibid.)
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As a reasonable construction of the statute by the agency charged with enforcing it which is faithful to the policies underlying SOX, Sylvester should be given deference under Chevron U.S.A, Inc. v. Natural Resources Defense Council, Inc. (1984) 467 U.S. 837. The “definitively and specifically” standard Many corporate insiders realize that “something is going wrong” or that the employer is engaging in practices the employee suspects are improper, but the employee either lacks knowledge of the specific law being violated or describes the violation in general (non-technical or legally specific) terms. Given these and other realities, another common defense approach is to assert that the disclosure must “‘definitively and specifically’ relate to one of the listed categories of fraud or securities violation under 18 U.S.C. §
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1514A(a)(1).” (Van Asdale, supra, 577 F.3d at 996-997.) From this, the employer argues that the employee’s disclosures were insufficiently clear and specific to alert the employer to a SOX-concern. The “definitively and specifically” standard requires the whistleblower to “show that his communications to his employer definitively and specifically relate to one of the laws listed in § 1514A.” (Day v. Staples, Inc. (1st Cir. 2009) 555 F.3d 42, 55; see also Harp v. Charter Communications, Inc. (7th Cir. 2009) 558 F.3d 722, 725.) Taken to its extreme, employers will argue that if the disclosure is not excruciatingly specific – even legalistic – in either pointing out the law being violated or, at least, giving proof of all facts that would establish an actual violation of one of the enumerated laws (rather than a reasonable belief a violation was occurring even in the absence of concrete evidence
on each element required to establish the violation), then the employee’s disclosure is not protected. There are two responses to this tactic. • First, the better-reasoned and more current cases reject this “definitively and specifically” standard, the genesis of which was the ARB’s decision in Platone v. FLYi, Inc. (ARB Sept. 29, 2006) ARB Case No. 04-154, 2003-SOX-27, at *2. After Platone, the ARB reversed itself and rejected Platone’s “definitely and specifically” requirement as having “evolved into an inappropriate test” which “is often applied too strictly.” (Sylvester, supra, 2011 WL 2165854 at *15.) According to Sylvester, the “definitively and specifically” test of Platone has created “a heightened evidentiary standard espoused in case law but absent
Whistleblowers continues
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Whistleblowers — continued
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from the SOX itself.” (Ibid.) Thus, since Sylvester, the ARB has consistently rejected it. (Mara v. Sempra Energy Trading, LLC (ARB June 28, 2011) ARB Case No. 10-051, 2009-SOX-18 at **8-10; Inman v. Fannie Mae (ARB June 28, 2011) ARB Case No. 08-060, 2007-SOX-47 at *7.) Despite this clear reversal by the ARB, employers in California inevitably note that the Ninth Circuit embraced the “definitively and specifically” standard in Van Asdale and assert that district courts within the Ninth Circuit are thus bound by it. (Van Asdale, supra, 577 F.3d at 996997.) But a closer reading of Van Asdale disproves this view. Van Asdale noted that the genesis of the “definitively and specifically” standard was the ARB’s decision in Platone, that three other circuits’ courts of appeal that considered the issue followed the ARB’s interpretation and, thus, Van Asdale “similarly defer[red] to the ARB’s reasonable interpretation of the statute...” (Van Asdale, supra, 577 F.3d at 996-997.) Because Van Asdale adopted this standard by granting Chevron deference to the ARB’s reasonable administrative construction of the statute, the ARB’s reversal of its position should likewise be accepted by the Ninth Circuit: “In Sylvester, the ARB abandoned the ‘definitive and specific’ standard announced in Platone. ... We conclude the ARB’s rejection of Platone’s ‘definitive and specific’ standard is entitled to Chevron deference.” (Wiest v. Lynch (3rd Cir. 2013) 710 F.3d 121, 129 & 131.) • Second, if the court nonetheless feels bound by Van Asdale and requires that the employee’s disclosure “definitively and specifically” relate to one of the enumerated violations, this does not mean that the employee must have specifically identified what law was being violated or used any legal “buzzwords.” Van Asdale rejected the argument that the disclosure must use the word “fraud” or other similar words: To be sure, Brown testified that she did not believe Shawn used the words “fraud,” “fraud on shareholders,” or “stock fraud” and she could only say that Shawn “may have” used the term “Sarbanes-Oxley” or “SOX”; the record similarly contains no evidence that Shawn used any such
language in his conversation with Pennington. However, as the Fourth Circuit has recognized, “[a]n employee need not cite a code section he believes was violated” to trigger the protections of §1514A. (Welch, 536 F.3d at 276 (internal quotation marks omitted).) (Van Asdale, 577 F.3d at 997; see also Day, supra, 555 F.3d at 56 [employee “need not reference a specific statute”].) Thus, even if the “definitively and specifically” standard is applied, the disclosure “need not have specifically identified the law or regulations” believed to have been violated; rather, it “must be specific in relation to a given practice, condition, directive, or event.” (Tice v. Bristol-Myers Squibb Co. (ALJ Apr. 26, 2006) 2006-SOX-20 at *17.) Stated differently, the key question is whether the facts disclosed would sufficiently alert the employer to the fact that what was being disclosed was a potential SOX issue, not whether the employee clearly identified and described all necessary facts to state a violation or identified the particular violation or underlying legal theory. Reporting as part of one’s regular job duties Another attempt to unduly narrow SOX’s protected activity provisions is to assert that an employee who makes a disclosure as part of carrying out his or her job duties does not engage in SOX-protected activity. Initially, some administrative law judges had accepted this defense argument. (See e.g., Andrews v. ING N. Am. Ins. Corp. (ALJ Jan. 8, 2009) 2005SOX-50, 2005-SOX-51; Williams-Wilson v. NDC Health Corp. (ALJ Jan. 31, 2007) 2005-SOX-97.) The irony of these rulings is that they would mean that those who are most likely to have inside corporate information about SOX-related violations (e.g., controllers, accountants, financial executives, etc.) would fall outside of SOX’s protection if they reported SOX violations. That is, the very individuals SOX most likely was enacted to protect would fall outside of its protection. Fortunately, the ARB has since clarified that disclosures made as part of doing one’s regular job duties can be SOX-
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protected. (Robinson v. Morgan Stanley (ARB Jan. 10, 2010) ARB Case No. 07-070, ALJ Case No. 2005-SOX-44, at 13-14.) In Robinson, the ARB held that section 1514A does not require “that an employee’s report or complaint about a potential violation must involve actions outside the complainant’s assigned duties.” (Robinson, supra, ARB Case No. 07-070 at 13-14.)
Predicating a SOX claim on reports of violations, or attempted violations, of internal accounting controls SOX’s fifth and sixth enumerated violations are reasonably suspected violations of “any rule or regulation of the Securities and Exchange Commission, or any provision of Federal Law relating to fraud against shareholders....” (18 U.S.C. §1514A(a)(1).) Both the rules and regula-
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tions of the SEC, and federal law relating to fraud against shareholders, require that publicly traded companies devise, maintain and follow internal accounting controls. (15 U.S.C. §78m(b)(2)(B); 17 C.F.R. §240.13a-15(f).) Federal law also makes it unlawful to try to “knowingly circumvent or knowingly fail to implement a system of internal accounting controls or knowingly falsify any book, record, or account described in paragraph 2.” (15 U.S.C. § 78m(b)(3)(5).) Another way to ensure appropriately broad anti-retaliation protection under SOX – consistent with Congressional intent – is to consider whether the conduct reported was an actual or attempted internal control violation. Courts and the ARB consistently recognize that disclosures of violations, or attempted violations of internal controls, may constitute
SOX-protected activity. (See e.g., Collins v. Beazer Homes USA, Inc. (N.D. Georgia 2004) 334 F.Supp.2d 1365, 1377 [SOXprotected activity based on disclosures alleging “attempts to circumvent the company’s system of internal accounting controls” which “state a violation of Section 13 of the Exchange Act.”]; Bishop v. PCS Admin (N.D. Ill. May 23, 2006) No. 05-C-5683, 2006 WL 1460032, **8-9 [disclosure of attempt to violate internal control may constitute SOX-protected activity]; Feldman v. Law Enforcement Associates Corp. (E.D. N.C. 2011) 779 F.Supp.2d 472, 492; Hemphill v. Celanese Corp. (5th Cir. 2011) 430 Fed.Appx. 341, 344 fn. 3; Smith, 496 F.Supp.2d at 248250; Sequeira v. KB Home (S.D. Tex. 2009) 716 F.Supp.2d 539, 554; Morefield v. Exelon Services, Inc. (Jan. 28, 2004)
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2004-SOX-2; 2004 WL 5030303, *6; Klopfenstein v. PCC Flow Technologies Holdings, Inc. (May 31, 2006) ARB No. 04-149; 2006 WL 3246904, *12; Leznik v. Nektar Therapeutics, Inc. (Nov. 16, 2007) 2006-SOX93; 2007 WL 5596626, **6-7; Mallory v. JPMorgan Chase & Co. (Nov. 20, 2009) 2009SOX-29; 2009 WL 6470454, *30.) Internal controls are defined as “a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations.” (Committee of Sponsoring Organizations of the Treadway Commission – Internal Control –
Integrated Framework [May 2013], at 3.) Given the broad definition of what constitutes an internal control, and the wide range of subjects typically covered by a company’s internal controls, SOX’s protection of disclosures of reasonably perceived actual or attempted violations of internal controls renders its anti-retaliation protection very broad – as it should be given SOX’s status as a remedial statute. (Morefield, supra, 2004 WL 5030303 at *2.) Collins illustrates the point. There, the plaintiff, a director of marketing, reported internally that her division was overpaying a vendor’s invoices based on a personal relationship between the vendor and another employee, that management was violating employee commission plans by overpaying sales agents who
were their friends, and that there were suspected kickbacks as to another vendor. (Collins, 334 F.Supp.2d at 1376-1377.) The plaintiff asserted that “these disclosures [were] protected because they allege attempts to circumvent the company’s system of internal accounting controls and therefore state a violation of Section 13 of the Exchange Act.” (Id. at 1377.) The court held that, while “the connection of Plaintiff ’s complaints to the substantive law protected in Sarbanes-Oxley is less than direct,” her complaints “detailed violations of the company’s internal accounting controls” so that “reasonable jurors could find by a preponderance of the evidence that Plaintiff engaged in protected activity” under SOX. (Id. at 1377-1378.)
Conclusion SOX cases can be very compelling cases. Given the turmoil corporate financial and accounting malfeasance has caused to our economy, juries are sympathetic to financial or accounting whistleblower claims. Given the rightful fear employers have of these cases reaching juries, they have tried to reduce the scope of protection provided by this law in disregard of the policies and purposes of the law. To ensure SOX continues to be the robust warrior against corporate fraud and financial or accounting misfeasance, the whistleblower’s counsel must be prepared to address the various tactics used by the employer’s counsel to try to improperly reduce the scope of SOX’s protection. David M. deRubertis, the principal of The deRubertis Law Firm, APC, tries employment cases statewide including as “eve of trial” trial counsel. He is a recipient of CELA’s Joe Posner Award, a member of ABOTA, a CAALA Trial Lawyer of the Year nominee, consistently a Top 100 SuperLawyer, and, in 2014, was a CLAY Award recipient and Best Lawyers’ “Lawyer of the Year Employment Law - Individuals.” He serves on the Boards of Governors of CAALA, CELA and CAOC. deRubertis was lead trial counsel in Zulfer v. Playboy Enterprises, Inc., the largest jury verdict in history in a SarbanesOxley retaliation case.
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Dampened Wings A successful trial lawyer opens up about his struggles with alcohol By Arash Homampour As a young adult, my master plan included alt-rock stardom. I took a cue from Morrissey and wrote songs where you “sing your life.” One song I wrote was called “Between the Drops.” It Homampour went like this: You were my lover and my best friend My favorite companion until the very end Your warmth and your passion so close to my lips A shot of confidence I gain from your kiss My dampened wings, they won’t take me too far The earth kept on spinning, so I held onto the grass But here I go again … and again ... and again I used to walk between the drops But now all I do is drown I used to walk between the drops But now all I do is drown If you haven’t figured it out, this song is about alcohol, my love affair with it and my realization early on that my “dampened wings” were threatening to drown me. Unfortunately, it took me more than 20 years to really listen to my own youthful insight … and to heed my own warnings. 60 — The Advocate Magazine
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Through the years, I navigated between the drops of life pretty well and controlled my drowning – or least I thought I did. Given my drive, Type A+ personality and my vanity, I developed a pretty rigid set of rules. The most important rule was that the practice of law came first. After all, I was not an everyday drinker and would never drink before or during any deposition, important hearing, trial or presentation as a speaker. I would never drive after having had even one drink. But outside of these rules, all bets were off. And if I did not deliberately flick the “rule switch” before I started drinking, anything could happen … and quite often did. Meanwhile, I was married to a wonderful wife (who was and still is one of the prettiest human beings both inside and out), had three lovely children and a great group of friends. With my friends, the rigid rules went out the window and there was a disconnect between the Arash they knew and the Arash that was a successful lawyer. To be frank, my friends knew the charming buffoon and could not comprehend my skill set as a lawyer, although they could see and experience all the material possessions accumulated as a result of my successes. Even my wife would come to see some of my closing arguments and ask me, “Who is that guy,” reconfirming the disconnect between who I was or “who I be” as a social drinker and the sober Arash who is “on,” doing what he loves and being in control. Dampened Wings continues
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Dampened Wings — continued
Why did I drink? I suspect for the same reasons most people do. It was an easy crutch and a way to escape myself and be comfortable around others.
Despite my cocky arrogance and confidence, I was always uncomfortable in any social setting, by which I mean any interaction with any human. In a deposition
or a courtroom, I was in my element and was totally in control. But outside of that domain, I was still a little kid. Imagine a totally disconnected person roaming a bar, a club or a social event, looking for a connection. After a few drinks, I would wander around with my metaphorical power cord and strike up conversations with random people, just trying to connect. Not surprisingly, it never worked and my friends would have to take turns monitoring me or blocking me before I escaped. Fun stuff? Nope! I also subscribed to the b.s. that I was “special” and that I “deserved” to do whatever I wanted because I worked so hard and was so successful as a lawyer. I also had a very bad case of “next bar-itis.” This is a particularly infectious disease that plagues a lot of people who are always looking for the next bar, next lover, next job, next car, next house, next verdict and on and on and on the hamster wheel we go. Some have a hamster wheel that is very small and cramped and some have one with ten bedrooms, a pool and a wine cellar. But they are all still hamster wheels where all you can do is run in circles, searching for fulfillment that never comes. Of course, in the end, if you just get off the hamster wheel, take inventory and appreciate what you have, you’ll find that fulfillment is already right there in front of you. The reality is that I had a wife and three kids and they were my responsibility and we were living our lives together. It was not just me and what I wanted or deserved. At some level, I knew that all along but never really accepted it. So how long did it take for me to grow up? What was the bottom? Well, when the love of your life declares that she is “done” and that means the literal destruction of your entire family, the decision was not hard for me to make. Two years ago, in April 2012 (at the age of 44), I stopped drinking. And now, I am literally free. No more anxiety about what stupid thing I am going to say or do. No more nasty side effects from drinking like limb checks when waking up, slurred words,
Dampened Wings continues
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buffoonery, unattractive physical appearance, hangovers, apologies for what was said or done the night before, embarrassment, etc. No more nonsense. Period. So the way I look at it and the way I now experience life is that I am not missing out on anything. I make it clear that no one should feel sorry for me because if they knew what I was like when I drank, they would be elated that I am not drinking. I take and live life... one day at a time. Yes, that phrase can be cliché, but it works for me. Now, whenever my mind wanders to how “fun” it would be to drink, I think about both the before and the after. Because when you collapse the events of drinking to include drinking and the next day, it’s not difficult to remember that it is simply not worth it.
And don’t get me started on the whole “it’s not a disease” or “alcoholics are weak” nonsense. I can safely say that I am as high-functioning as it gets and I could not manage my drinking − no matter how many rules I had. How has my life improved? The list is endless. I am happier, healthier, funnier, still winning tough trials and getting amazing results at work. I am more present and connected to my family and friends. “Friends” I have had for 15 years have commented on how I have, for the first time, actually carried on two-way conversations for more than two minutes. It’s like I’m living in that Beastie Boys song that goes: Yeah, you m*****f******, I am all that I see you lookin’ at me sayin’
How can he be so skinny and live so phat? You know why, ‘cause I’m the maestro I am now actually in total, 100 percent control of myself and my life at all times and there is no better feeling. I don’t understand why some people feel sorry for people who no longer drink because I actually feel 100 times cooler, more powerful and a tad bit more arrogant (if that’s humanly possible) than I ever have. As bizarre as it sounds − and this is a good thing − I am pretty sure that it is now hip to be sober in Los Angeles. My one big vice now? Candy!! Where I used to drink a bottle of wine, I now have Skittles, Sour Patch, Red Vines and Peanut M&Ms … but I make sure to balance that out by working out a lot more and doing hot yoga.
Dampened Wings continues
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Anyway, why did I write this article? Because I have long subscribed to the belief system that we are not a “success”
only because of our results as trial lawyers in and out of the courtroom. I don’t care how many “eight-figure”
verdicts one has gotten. If their personal life is a mess and in a shambles, there is no true success. I have always tried to embrace my faults, tried not to be stingy and tried to appreciate the concept of “sharing.” I do what I do as a trial lawyer to help people. I’m writing this now for the same reason. If even one lawyer out there reads this and realizes that they are not alone and that life does get better (and I assure you, it does), then mission accomplished. Arash Homampour is a trial attorney and owner of The Homampour Law Firm, a five-lawyer firm in Sherman Oaks that represents individuals in catastrophic injury/ wrongful death, employment and insurance bad-faith matters throughout the State. He was named CAALA’s 2010 trial attorney of the year and has been nominated as trial attorney of the year every year since 2004. In 2007, he was named one of the Top 20 Attorneys under the Age of 40 by the Los Angeles Daily Journal. From 2005 through the present, he has earned the distinction of being a “Super Lawyer”, with the additional recognition since 2010 as one of the top 100 Southern California Attorneys. He is also an accomplished appellate attorney who has successfully briefed and argued many appeals, including matters before the California Supreme Court.
66 — The Advocate Magazine
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The Advocate Magazine — 67
Stacy Tillett
When an agreement to arbitrate is not an agreement to arbitrate
Applying the rules of contract formation and the unconscionability doctrine Passed in 1925, the Federal Arbitration Act (“FAA”) intended to curtail the expenses and delay of judicial proceedings. For over 50 years, the FAA applied only in federal courts. However, beginning with Southland Corp. v. Keating (1984) 465 U.S. 1 [the FAA preempts state law and applies in state cases], and rapidly metastasizing during the ensuing 20 years, Supreme Court law has vastly expanded the concept of arbitration. These expansions are often neither quicker, nor cheaper, than litigation, and are frequently biased towards repeat-player large employers, especially those with repeat-arbitrator relationships. (See, e.g., Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105 [the FAA applies to all employment contracts] and AT&T v. Concepcion (2011) 131 S. Ct. 1740, 1753 [the FAA preempts California law refusing to enforce an arbitration agreement containing a class-action waiver, because “States cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons”].) This article discusses how to preserve your client’s right to her day in court, and how to oppose her employer’s attempts to stack the arbitral deck in its own favor. First, it will discuss whether the client actually entered into a binding arbitration agreement (i.e., lack of contract formation). Second, it will walk through both the procedural and substantive sides of the unconscionability defense to enforcement of an agreement, in whole or part. Finally, it will discuss the circumstances under which a court may – and should − void an arbitration agreement entirely, rather than merely severing its unconscionable provision[s].
Agreements to arbitrate are treated the same as other agreements The FAA requires that California courts treat contracts to arbitrate the same as other contracts. Recently, for those who doubted, our Supreme Court 68 — The Advocate Magazine
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has expressly reiterated that “unconscionability remains a valid defense to a petition to compel arbitration.” (SonicCalabasas A v. Moreno (2013) 57 Cal.4th 1109, 1142.) While courts cannot, in applying California’s unconscionability doctrine, “mandate procedural rules that are inconsistent with fundamental attributes of arbitration,” California courts may still refuse to enforce an arbitration agreement if it finds that the totality of the agreement is unconscionable. Unconscionability applies to all California contracts, not merely arbitration contracts. (Civ. Code, § 1670.5.) In fact, it has been used to invalidate contracts in a variety of non-arbitration contexts. (See e.g., Carboni v. Arrospide (1991) 2 Cal.App.4th 76, 83-86 [interest rate invalidated as unconscionable]; A&M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 493 [disclaimer of warranties and exclusion of consequential damages invalidated as unconscionable].) In determining whether a person entered into an enforceable agreement to arbitrate her claims, the court will construe the agreement according to settled rules of contract interpretation. The court will only order arbitration if it first determines that an agreement to arbitrate was formed. (Code Civ. Proc., § 1281.2.) The defendantemployer carries the initial burden of proving the existence of an arbitration agreement covering the claims at issue; if, and only if, defendant meets this burden will it then shift to the plaintiff to establish, by a preponderance of evidence, the factual basis for any defense to enforcement of the agreement (e.g., unconscionability). (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)
Contract formation: did the plaintiff enter into a mutual agreement to arbitrate? The policy “favoring” arbitration exists only for the purpose of protecting
the parties’ joint desire to arbitrate their disputes. It is not intended to impose arbitration as a preferred method of dispute-resolution where both parties did not fully assent to a clearly-defined agreement to arbitrate. As noted in Romo v. Y-3 Holdings, Inc. (2001) 87 Cal.App.4th 1153, 1158: There is no public policy in favor of forcing arbitration of issues the parties have not agreed to arbitrate. [Citation.] It follows that when presented with a petition to compel arbitration, the trial court’s first task is to determine whether the parties have in fact agreed to arbitrate the dispute. [&] We apply general California contract law to determine whether the parties formed a valid agreement to arbitrate. [Citations.] (Emphasis added.) Thus, the most effective opposition to an employer’s petition to compel arbitration is to demonstrate that the plaintiff never agreed to arbitrate in the first place. “[W]hen an employee is unaware of the contractual provisions, there is no meeting of the minds, no mutuality, and no fundamental fairness.” (Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th 696.) In rejecting a demand for arbitration in Metters, the appellate court forcefully expressed its disapproval of any intentional obfuscation in drafting purported arbitration agreements. (Id. at 702.) It is important to find out if your client was aware of the alleged arbitration agreement, or of an arbitration provision contained within a larger agreement. Was your client provided with papers containing or referring to arbitration? Was an arbitration agreement a condition of employment when your client started with the company, or was an arbitration provision allegedly “phased in” sometime during your client’s employment?
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Were the employment and arbitration documents properly integrated? An employment contract, like any other contract, may generally include pro-
visions of a separate document not physically part of the contract if those provisions have been properly incorporated by reference. Reference to the would-be incorporated document (e.g., an arbitration agree-
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ment or “employee handbook” containing an arbitration provision) must be: 1) clear and unequivocal; 2) called to the attention of the other party who must consent thereto; and 3) the terms of the would-be incorporated document must be known or easily available to the contracting parties. (Williams Constr. Co. v. Standard-Pacific Corp. (1967) 254 Cal.App.2d 442, 454.) When reviewing a separate, allegedlyincorporated arbitration agreement, take note of numbering or formatting that might not match up between the referring document and the document being referenced. These documents are often drafted independently, and an employer may strip or alter the formatting in a way that makes it difficult (if not impossible) for the employee to know for certain what is being incorporated (e.g., an employment agreement incorporating the provisions of “Section IV” in a standalone employee handbook, but the handbook does not contain a Section IV). The same logic applies to titles referenced in the main contract versus those appearing in the incorporated document. An inconsistency can demonstrate that the incorporation is not “clear and unequivocal,” especially where the arbitration provisions were allegedly “incorporated” after employment commenced. Also look for language in the employment contract prohibiting incorporation by reference. A boilerplate employment contract may include a “Complete Agreement of the Parties” provision that states that the contract sets forth the entire understanding and agreement between the parties, and supersedes any previous or contemporaneous agreements. Such language could preclude incorporation by reference of a contemporaneously-written arbitration agreement.
Did either side fail to sign the arbitration agreement or an acknowledgment? Was there a line on the arbitration agreement, or on an arbitration acknowledgement form, for the employee’s and/or employer’s signature? If so, and if either signature block was unexecuted,
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this may demonstrate the lack of mutual assent to arbitrate. Romo, supra, 87 Cal.App.4th 1153, explains the legal significance of an unsigned signature block. It discusses the significance of the fact that an employee handbook’s section on arbitration “contemplates a signature from the employee separate from that required after the heading [Employee Acknowledgment], as well as a signature by the employer.” (Id. at 1159, original capitalization, italics added.) The court reasoned that this separate arbitration agreement, requiring its own signatures, “suggests a separate and severable agreement.” (Ibid., emphasis added.) In short, signature blocks mean something and cannot be ignored. (Id. at 1158-1159.) This conclusion had been presaged by Marcus & Millichap Real Estate Investment Brokerage Co. v. Hock Investment Co. (1998)
72 — The Advocate Magazine
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68 Cal.App.4th 83, 88-89. There, the arbitration agreement contained signature lines for both the seller and buyer. However, only the buyer – i.e., the party who did not draft the contract at issue – initialed the arbitration agreement. Relying on standard rules of contract interpretation, the court of appeal determined that the contract, itself, “contemplated that the arbitration of disputes provision would be effective only if both buyers and sellers assented to that provision by initialing it. Since the sellers did not initial that provision, it did not become effective.” (Id. at 92, emphasis added.)
Did the employer physically supply, or provide easy access to, all the documents necessary? The arbitration agreement may state that arbitration will take place in accor-
dance with a particular body of governing rules, such as “the relevant rules” of the American Arbitration Association. However, if the employer failed to adequately specify the rules to govern arbitration, or failed to provide the employee with a copy of (or easy access to) the governing rules, the employee may not have had the requisite adequate notice of the agreement’s terms needed to form a binding contract. Ask your client whether her employer ever provided a copy of the rules governing arbitration. Also check the agreement’s language – does it direct your client to a mailing address or a Website where she could obtain a copy of these incorporated rules? But merely providing a Website may be insufficient. Does a visit to the site make clear which set of rules is
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meant to govern, or does the Website provide multiple sets of rules? If the latter, does the arbitration provision specify which of these multiple sets of rules will govern? In Sparks v. Vista Del Mar Child & Family Servs. (2012) 207 Cal.App.4th 1511, 1514, the court held that the “plaintiff is not bound by the arbitration clause because... the specific rules referred to in the arbitration clause were not provided to plaintiff....” At the very least, an arbitration agreement’s failure to include and/or specify the applicable rules is evidence of unconscionability (see discussion later in this article).
Even if an agreement to arbitrate was validly formed, unconscionability principles may preclude enforcement Our Supreme Court’s recent decision in Sonic-Calabasas A v. Moreno (“Sonic II”) (2013) 57 Cal.4th 1109, 1142, makes explicit that “unconscionability remains a valid defense to a petition to compel arbitration” in California. Of special note, five of the seven justices went out of their way to expressly label Armendariz v. Foundation Health Psychcare Services, Inc. (“Armendariz”) (2000) 24 Cal.4th 83, as “the seminal California case to examine unconscionability in the context of adhesive arbitration agreements….” (Sonic II, 57 Cal.4th at 1159.) Thus, notwithstanding the rapidly changing legal arbitration landscape, the unconscionability defense – and its seminal expression in Armendariz – remain vibrant in California. “[T]he FAA does not require arbitration when there are valid contract defenses to the enforcement of the arbitration agreement.” (Id. at 1142.) A court may refuse to enforce an arbitration agreement if the agreement fails to satisfy California’s conscionability standards. (Civ. Code, § 1670.5; Armendariz, 24 Cal.4th at 114.) Unconscionability has both procedural and substantive elements; “the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required…and vice versa.” (Armendariz, 24 Cal.4th at 114.) 74 — The Advocate Magazine
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Procedural unconscionability Procedural unconscionability can be shown by a disjunctive test that “[focuses on] oppression or surprise. (Little v. Auto Stiegler , Inc. (“Little”) (2003) 29 Cal.4th 1064, 1071, citations omitted.) “‘Oppression’ arises from an inequality of bargaining power which results in no real negotiation and ‘an absence of meaningful choice.’” (A&M Produce Co., supra, 135 Cal.App.3d at 486, emphasis added, citations omitted.) “‘Surprise’ involves the extent to which the supposedly agreedupon terms of the bargain are hidden in a prolix printed form drafted by the party seeking to enforce the disputed terms.” (Ibid.) Oppression An arbitration clause or agreement is oppressive if the arbitration obligation was imposed on the plaintiff as a take-itor-leave-it condition of employment. Our Supreme Court has made clear that conditioning employment upon acceptance of an adhesive arbitration agreement generally satisfies the procedural portion of the unconscionability test in cases other than those few involving only “the most sought-after employees.” (Little, supra, 29 Cal.4th at 1071, quoting Armendariz, supra, 24 Cal.4th at 115.) Investigate whether your client had any real negotiating power in entering her employment contract. Did she try to request a larger salary (or other significant term), and was that request rejected? This can demonstrate the adhesiveness of the overall contract, and your client’s lack of bargaining power. Keep in mind that whether your client had some choice in accepting this particular job versus another job does not mean that your client had the clout to reject the employer-drafted arbitration provision and still gain employment. Likewise, your client’s successfulness in their field of work does not moot the oppressive nature of a non-negotiable arbitration provision. Contracts may be adhesive despite the plaintiff being “a successful and sophisticated corporate executive.” (Nyulassy v. Lockheed Martin Corp. (“Nyulassy”) (2004) 120 Cal.App.4th 1267, 1285, citation omitted.)
Surprise The procedural part of the unconscionability doctrine can also be satisfied by the element of surprise. If the employer did not provide your client with a copy of an incorporated-by-reference arbitration provision, your client might not have been aware of the fact that she was agreeing to arbitrate all future claims. If opposing counsel argues that your client’s employment contract made reference to arbitration in bolded, or all-capital, letters, check whether all or nearly all of the contract’s text is likewise capitalized and/or bolded. If so, the emphasis has lost any meaning. Failure to attach a copy of the rules to govern arbitration is also an element of surprise – at the time of contracting, the employer rendered your client uninformed of the rules she would be subjected to during arbitration. As noted above, an employer’s failure to include and/or adequately specify the applicable rules is evidence of the arbitration agreement’s unconscionability. (See e.g., Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 797; Samaniego v. Empire Today LLC (2012) 205 Cal.App.4th 1138, 1146; Zullo v. Superior Court (2011) 197 Cal.App.4th 477, 486; Trivedi v. Curexo Technology Corp. (2010) 189 Cal.App.4th 387, 393; Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 721; Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 84, 89.) Fitz, 118 Cal.App.4th at 726, involved an arbitration agreement with a highly restrictive discovery provision that violated Armendariz’s minimum discovery requirements. The employer claimed its arbitration agreement incorporated by reference the AAA rules, which trumped the improper discovery restrictions in the agreement itself. (Id. at 720-721.) Because the AAA rules were not attached, and because the employee would have “to go to another source in order to learn the full ramifications of the arbitration agreement,” the appellate court rejected the employer’s effort to save the otherwiseunconscionable provision. (Id. at 721.) Fitz found that allowing the AAA rules to govern when they were not
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provided to the employee “would fail to provide employees with adequate notice of the applicable rules” [of discovery]. (Ibid.)
Substantive unconscionability Substantive unconscionability focuses on the actual terms of the arbitration agreement. Although “[n]o precise definition…can be proffered,” the issue is whether the agreement’s terms are “overly harsh” or create “one-sided results.” (A&M Produce Co., supra, 135 Cal.App.3d at 487.) Substantive “‘unconscionability turns not only on a ‘one-sided’ result, but also on an absence of ‘justification’ for it.’” (Armendariz, supra, 24 Cal.4th at 117118, citation omitted, emphasis added.) With this in mind, you should review each provision concerning arbitration assessing: 1) whether the provision favors the employer over your client, either blatantly or implicitly; and 2) if there is any possible legitimate reason for this favoritism. Items such as those discussed below may contribute to a finding of substantive unconscionability. Does the arbitration agreement contain a unilateral modification provision? Check whether your client’s arbitration agreement contains a provision that gives the employer the unilateral right to amend, supplement, or otherwise modify the agreement. Take particular note of whether the employer’s execution of this provision requires any notice to, or consent from, your client. This type of provision is the antithesis of mutuality, and is powerful evidence of the unjustifiable one-sidedness of the arbitration agreement. One example of a unilateral modification provision involves those contracts which give the employer unlimited discretion to construct additional hoops through which your client must jump before finally reaching an arbitrator. Reservation of the right to change the agreement at any time means that, even after your client has initiated a complaint, the employer might then change substantive provisions in an implicit effort to discourage your client from further pursuing her claims or to make it 76 — The Advocate Magazine
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harder (or even impossible) to do so. Conversely, if the employer has a claim against your client, it could simply remove all arbitration-related provisions, and proceed directly to litigation in court against your client. Employers’ counsel have sometimes successfully argued that these concerns are unfounded, because all contract provisions are restrained by California’s implied covenant of good faith and fair dealing. (See, e.g., 24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199.) However, a good response to this defense was provided in Sparks v. Vista Del Mar Child & Family Servs. (“Sparks”) (2012) 207 Cal.App.4th 1511. Sparks, held that, “[a]n agreement to arbitrate is illusory if, as here, the employer can unilaterally modify the [employee] handbook” [which contained the arbitration clause].” (207 Cal.App.4th at 1523.) Unlike 24 Hour Fitness, Sparks was decided after Armendariz, in which our Supreme Court emphasized lack of “justification” for a “one-sided” result. (Armendariz, 24 Cal.4th at 117-118.) Sparks is also in accord with multiple federal circuit decisions finding unilateral modification provisions unconscionable and/or illusory. (See, e.g., Ingle v. Circuit City Stores, Inc. (9th Cir. 2003) 328 F.3d 1165, 1179, fn. 22 [citing Dumais v. American Golf Corp. (10th Cir. 2002) 299 F.3d 1216, 1219-1220; Floss v. Ryan’s Family Steak Houses, Inc. (6th Cir. 2000) 211 F.3d 306, 315-316; Hooters of Am., Inc. v. Phillips (4th Cir. 1999) 173 F.3d 933, 939; Gibson v. Neighborhood Health Clinics, Inc. (7th Cir. 1997) 121 F.3d 1126, 1133].) Does the arbitration agreement spell out prerequisites to arbitration? A one-sided, pre-arbitral internal grievance resolution mechanism may contribute to a finding that the arbitration agreement is substantively unconscionable. Check whether your client’s agreement contains prerequisites to arbitration, such as requiring that your client “preview” the details of her complaint to the other party before arbitration. “[R]equiring plaintiff to submit to an
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employer-controlled dispute resolution mechanism (i.e., one without a neutral mediator) suggests that defendant would
receive a ‘free peek’ at plaintiff ’s case, thereby obtaining an advantage if and when plaintiff were to later demand
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arbitration.� (Nyulassy, supra, 120 Cal.App.4th at 1283.) The dangers of allowing an employer to enjoy a “free peek� at an employee’s case were elaborated upon in McKinney v. Bonilla (S.D. Cal., 2010) 2010 WL 2817179. There, no arbitration could occur until after the employee submitted a detailed writing concerning the dispute and proceeded up-the-ladder through successive levels of company management. (Id. at *7.) In McKinney, the defendant’s internal dispute resolution policy theoretically applied to both parties. However, the court noted: [I]t is difficult to see how the internal dispute resolution mechanisms could apply to claims raised by Defendant. Requiring Defendant to seek the approval of its senior management and president...imposes no burden on Defendant while requiring Plaintiff to reveal the details of his case prior to reaching a neutral mediator [does]. (Ibid.) McKinney discusses another consideration. The defendant’s internal grievance policy required two mandatory steps before the plaintiff could reach a neutral mediator. (Ibid.) The court reasoned “the internal dispute resolution procedures serve largely to create a series of hurdles to be cleared so that only the most persistent employees will ever reach a decision maker outside of the company.� (Ibid., emphasis added.) If your client’s arbitration agreement prohibits an arbitrator from hearing or deciding your client’s claim unless they were processed in accordance with the employer’s pre-arbitration hurdles (e.g., previewing her case to management), this one-sided burden may help you establish substantive unconscionability. Does the arbitration agreement carve out from arbitration claims typically brought by employers? The agreement may carve out from arbitration certain injunctive claims typically brought by employers, not employees. While facially neutral (i.e., applying to both parties), this carve-out provision exempts from arbitration those claims most likely to be brought by employers.
It thus enables the employer to proceed directly to court, while restricting to arbitration claims most likely brought by employees. This contributes to an arbitration agreement’s unjustified one-sidedness and is evidence of an employer’s intent to impose arbitration not as an alternative forum, but as an inferior one. In Samaniego, supra, 205 Cal.App.4th at 1142, an employer-promulgated arbitration provision provided that the agreement “shall not apply to any claims brought by any party for declaratory or preliminary injunctive relief involving [specified sections] of this agreement.” The court pointed out that this seemingly-bilateral provision exempts from arbitration the kind of claims typically brought by employers, while restricting to arbitration those claims plaintiffs were likely to bring. This factored into the
court’s analysis of “whether the multiple one-sided provisions in the Agreement, considered together, support the trial court’s finding that it exhibits strong indicia of substantive unconscionability.” (Id. at 1147-1148.) Mercuro v. Superior Court (“Mercuro”) (2002) 96 Cal.App.4th 167, involved a similar situation. There, employer Countrywide argued its arbitration plan’s injunctive carve-out was not unconscionable because it applied equally to claims brought by employees. (Id. at 176.) The Mercuro court recognized that this “bilateral” argument was a sham – the agreement compelled arbitration of the claims employees were most likely to bring against Countrywide, while exempting from arbitration the claims Countrywide was most likely to bring against its employees. (Ibid.)
Does the arbitration agreement impose an unconscionable cost structure? Armendariz mandates that, where employment is conditioned on mandatory arbitration, the employer cannot impose on the employee any costs (or fees) he or she would not normally have to pay if the case were litigated in a court. (Armendariz, supra, 24 Cal.4th at 110-111; Little, supra, 29 Cal.4th at 1076.) One example of possibly unconscionable costs arises if the agreement states that the American Arbitration Association’s (“AAA’s”) costs’ provisions apply to your client’s arbitration. The applicable AAA cost provision depends on whether a dispute arises from an employer-promulgated plan, or from an “individually-negotiated” employment agreement or contract. For disputes arising from an employer-promulgated plan,
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the employer bears the substantial bulk of the costs. Conversely, the AAA’s “Commercial Fee Schedule,” which applies to disputes arising out of “individually-negotiated employment agreements and contracts,” allows allocation of AAA commercial fees to either party. What this means is, if your client negotiated any part of her employment agreement (e.g., salary or vacation time), your client’s dispute might trigger the AAA’s “individually-negotiated employment agreement” cost structure, even if the balance of your client’s contract incorporates an adhesive, employerpromulgated arbitration agreement. This result would create fundamental unconscionability problems. Moreover, uncertainty about how the costs’ issue might ultimately be resolved could “chill” your client’s decision to pursue a claim. It is important to note that an employer cannot moot unconscionability by offering to make concessions after the litigation has commenced. Whether an employer is willing, once the employment relationship has ended, to allow arbitration provisions to be mutually applicable, or to waive aspects of provi-
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sions in an individual case, is irrelevant. Armendariz expressly states that courts are to interpret a contract, and decide whether or not it is unconscionable, as of the time the contract was made. (24 Cal.4th at 125; Civ. Code, §1670.5.)
Severability of the unconscionable provision[s] versus voiding the agreement When faced with unconscionability in an arbitration agreement, courts may either sever the unconscionable provision(s), or declare the entire agreement void. (Civ. Code, § 1670.5 (a); Wherry v. Award, Inc. (2011) 192 Cal.App.4th 1242, 1250.) Armendariz discusses the circumstances in which these distinct remedies would be most appropriate in cases involving FEHA (or similar public policy) claims. “The overarching inquiry is whether the interests of justice... would be furthered by severance.” (Armendariz, 24 Cal.4th at 124, internal quotations omitted.) Armendariz discusses the following factors to weigh in deciding whether severance would be appropriate: 1) whether the illegality was the product of “bad
faith”; 2) whether “multiple” (i.e., two or more) provisions were tainted (thus requiring contract reformation, rather than simply striking a provision); and 3) the public policy consideration of deterring employers from “overreaching.” (Id. at 124-127.) In Armendariz, the arbitration agreement at issue contained only two unconscionable provisions. Nonetheless, the Court concluded that “more than one unlawful provision” in an arbitration agreement weighed against severance. (Id. at 124.) Specifically, the Court reasoned that “[s]uch multiple defects indicate a systematic effort to impose arbitration on an employee not simply as an alternative to litigation, but as an inferior forum that works to the employer’s advantage.” (Ibid.) Thus, the presence of two or more unconscionable provisions in your client’s arbitration agreement demonstrates an effort by the employer to impose arbitration as an inferior forum, and weighs in favor of voidance rather than severance. Armendariz identified two policy reasons favoring severance over voidance: 1) conserving the contractual relationship; and 2) preventing the parties from
gaining undeserved benefit or suffering undeserved detriment as a consequence of voidance, particularly when there has been at least some performance under the contract. (Id. at 123-124.) Odds are that the employment relationship between your client and her employer is already over, rendering the first policy concern moot. As for the second policy concern, the “benefit of the bargain” between your client and her employer was not the agreement to arbitrate, but rather compensation for employment. Indeed, if severance is being debated, the employer’s “bargain” has already been found both procedurally and substantively unconscionable. Moreover, striving to save the agreement despite multiple unconscionable provisions would give
employers the incentive to knowingly overreach. “An employer will not be deterred from routinely inserting such a deliberately illegal clause into the arbitration agreements it mandates for its employees if it knows that the worst penalty for such illegality is the severance of the clause after the employee has litigated the matter.” (Id. at 124, fn. 13.) Finally, when an agreement lacks mutuality, its “unconscionable taint” cannot be removed by striking or restricting “a single provision. (Id. at 124-125.) Rather, the court would have to… reform the contract, not through severance or restriction, but by augmenting it with additional terms. Civil Code section 1670.5 does not authorize such reformation….Because a court is
unable to cure this unconscionability through severance or restriction and is not permitted to cure it through reformation and augmentation, it must void the entire agreement. [Citation.] (Id. at 125.) Stacy Tillett is an appellate associate with Pine & Pine in Sherman Oaks. She received her B.A. from UC Berkeley, and her J.D. from Columbia University in 2008, where she was recognized as a Harlan Fiske Stone Scholar. During law school, she served as a judicial extern to Hon. Joseph Bianco (E.D.N.Y.); was a Moot Court editor and a member of the Columbia Journal of Law & the Arts. Before joining Pine & Pine, Ms. Tillett spent three years as an associate with Latham & Watkins.
JUNE 2014
The Advocate Magazine — 81
John West
Hunter v. CBS: A collision of public policies may leave only one survivor In Hunter, the collision of FEHA, free speech and anti-SLAPP laws will long impact employment litigation From time to time, laws with the most noble of purposes can collide. When they do, the consequences may be both unintended and harsh. A recent Opinion of the California Court of Appeal, Hunter v. CBS Broadcasting, Inc. (2013) 221 Cal.App.4th 1510, 1514 (“Hunter”), illustrates the collateral damage to public policy that may result from such a collision. The Hunter case involved the collision of no less than three important bodies of law: (1) the Fair Employment and Housing Act, embodied in California Government Code section 12920 et seq. (“FEHA”), (2) the First Amendment right to free speech and (3) California’s Strategic Lawsuits Against Public Participation statute, California Code of Civil Procedure section 425.16 (the “antiSLAPP statute”). As will be shown, all three bodies of law seek to promote some important public interest. The plaintiff in Hunter, a male weather broadcaster over the age of 40, sued CBS for gender and age discrimination in violation of FEHA. His FEHA causes of action alleged that two CBS stations refused to hire him for open broadcast positions pursuant to a policy of filling openings with females (the alleged gender discrimination) under 40 years of age (the alleged age discrimination). California Government Code section 12920 reflects FEHA’s important public policy goals, stating: “It is hereby declared as the public policy of this state that it is necessary to protect and safeguard the right and opportunity of all persons to seek, obtain, and hold employment without discrimination . . . on account of . . . sex, gender, . . . age . . . It is recognized that the practice of denying employment opportunity and discriminating in 82 — The Advocate Magazine
JUNE 2014
the terms of employment for these reasons foments domestic strife and unrest, deprives the state of the fullest utilization of its capacities for development and advancement, and substantially and adversely affects the interests of employees, employers, and the public in general.” Mr. Hunter’s claims arose in the broad context of television news. As the Court of Appeal noted in its opinion, reporting the news and creating television shows “both qualify as ‘exercise[s] of free speech.’” (Hunter , supra, 221 Cal.App.4th at 1521.) The United States Supreme Court has recognized the “great” public interest in “having free and unhindered debate on matters of public importance.”(Pickering v. Board of Education of Township High School District 205, Will County, Illinois (1968) 391 U.S. 563, 573.) CBS brought the third body of law, the anti-SLAPP statute, into the mix by filing a special motion to strike the plaintiff ’s complaint pursuant to Code of Civil Procedure section 425.16. “The purpose of section 425.16 is to protect the valid exercise of constitutional rights of free speech and petition from the abuse of the judicial process . . . by allowing a defendant to bring a motion to strike any action that arises from any activity by the defendant in furtherance of those rights.” (Flatley v. Mauro (2006) 39 Cal.4th 299, 324.) On its face, section 425.16(a) reflects the Legislature’s underlying public policy concerns: “The Legislature finds and declares that it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled through abuse of the judicial process.”
Mr. Hunter argued that CBS’s antiSLAPP motion should be denied because it failed to meet the section 425.16 requirements (1) that a cause of action “arise” from protected activity and (2) that the protected activity be “in connection with a public issue.” With respect to the “protected activity” issue, he argued that discrimination is not a constitutionally protected activity, and that his claims were based upon a private, pre-broadcast employment decision. Mr. Hunter argued that CBS could not meet the “public issue” requirement because his claim was based upon a closed door, private employment decision. On that point, he cited cases holding that mere public curiosity is not to be confused with public issues. The trial court agreed with Hunter, finding that CBS had “not shown that its hiring decisions . . . constitute conduct in furtherance of Defendant’s right of free speech in connection with a public issue.” Since the trial court found that the plaintiff ’s claims did not fall under the antiSLAPP statute, it denied the motion without proceeding to the second prong of the statute, which involves determining whether the plaintiff has demonstrated a probability of prevailing on the challenged claim. CBS appealed the denial of its motion to the Second Appellate District. In a published opinion, the Court of Appeal (Division Seven) held that Mr. Hunter’s claims arose from protected activity, and that those claims were in connection with a public issue or issue of public interest. On that basis, the Court of Appeal reversed the trial court and remanded the matter for determination of the second prong of the anti-SLAPP statute.
Hunter continues
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The anti-SLAPP statute, California Code of Civil Procedure section 425.16(b)(1) provides: “A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” That statute goes on to provide: “(e) As used in this section, ‘act in furtherance of a person’s right of petition or free speech . . . includes: . . . (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.” Analysis of an anti-SLAPP motion requires a two-step process: First, the court must decide whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. Then, if the court finds the threshold showing has been made, it must determine whether the plaintiff has demonstrated a probability of prevailing on the claim. (California Back Specialists Medical Group v. Rand (2008) 160 Cal.App.4th 1032, 1036).
The “arising from” requirement before and after Hunter In order to trigger application of the anti-SLAPP statute, the “act underlying the plaintiff ’s cause” or “the act which forms the basis for the plaintiff ’s cause of action” must itself have been an act in furtherance of the right of petition or free speech. (Hylton v. Frank E. Rogozienski, Inc., (2009) 177 Cal.App.4th 1264, 1272.) If the conduct upon which the plaintiff ’s claim is premised is not itself based on protected
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Video Conferencing activity, the presence of protected activity somewhere in the factual background of the claim does not trigger the antiSLAPP statute. Discussing that distinction, the court in Kolar v. Donahue, McIntosh & Hammerton (2006) 145 Cal.App.4th 1532 held that the mere fact that a claim that is in some manner associated with a protected act does not necessarily mean that the claim arises from that act for purposes of the anti-SLAPP statute. According to Kolar, “‘California courts rightly have rejected the notion “that a lawsuit is adequately shown to be one ‘arising from’ an act in furtherance of the rights of petition or free speech as long as suit was brought after the defendant engaged in such an act, whether or not the purported basis for the suit is that act itself.” (Id. at 1537-38.) Until the Hunter opinion, no California court had ever held that a claim against a news organization for employment discrimination in the hiring of broadcasters “arises from” free speech by the news organization. Moreover, two opinions handed down prior to Hunter strongly suggested that a discrimination claim does not arise from protected activity for purposes of the anti-SLAPP statute. In Department of Fair Employment & Housing v. 1105 Alta Loma Rd. Apartments, LLC (2007) 154 Cal.App.4th 1273 (“Alta Loma”), the Court of Appeal affirmed the denial of an anti-SLAPP motion in the context of a FEHA housing discrimination claim. Defendant Alta Loma, the owner of an apartment building subject to local rent-control laws, filed papers to remove that building from the rental market. Ms. Mangine, a tenant in the building, maintained that she was “disabled” within the meaning of the local regulation and therefore entitled to a one-year notice period before eviction. Alta Loma evicted Ms. Magine, and the DFEH responded with a suit for housing discrimination. Alta Loma filed an anti-SLAPP motion, claiming that the DFEH’s complaint was based on two forms of protected speech: the filing of paperwork necessary to remove units from the rental
market and the filing of unlawful detainer actions. The trial court denied the motion, finding that the gravamen of the complaint was disability discrimination. Relying on the principle that the mere fact an action was filed after protected activity took place does not mean it arose from that activity, the Alta Loma court affirmed the denial. Alta Loma was of the view that while the suit might have been triggered by the defendant’s protected activity, it was, for anti-SLAPP purposes, based on the underlying discrimination against Mangine. (154 Cal.App.4th at 1287.) Moreover, according to Alta Loma, “if this kind of suit could be considered a SLAPP, then landlords and owners . . . could discriminate during the removal process with impunity knowing any subsequent suit for disability discrimination would be subject to a motion to strike and dismissal. We are confident the Legislature did not intend for section 425.16 to be applied in this manner either. As the trial court aptly observed, ‘I just feel like to rule for the defendant in this case would be to say that section 425.16 provides a safe harbor for discriminatory conduct and I don’t think that’s what it’s intended to do.’” (Id. at 1288.) An identical analysis was applied in another FEHA case, Martin v. Inland Empire Utilities Agency (2011) 198 Cal.App.4th 611. In that case, an African-American manager at a water district alleged that he suffered retaliation after protesting against the racial harassment of another employee. The alleged retaliation included the communication of false allegations about him to the district’s board. The defendants filed an anti-SLAPP motion arguing that the complaint was based upon communications protected by the official proceeding privilege in Civil Code section 47. The trial court denied the anti-SLAPP motion, finding that the complaint did not arise from protected activity. The Court of Appeal in Martin affirmed, stating: “Indeed, we agree with plaintiff ’s statement that it is immediately apparent to anyone who reads the Complaint [that this case] is clearly all
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The Advocate Magazine — 85
Hunter — continued
about race discrimination, harassment and retaliation.” (Id. at 624.) Martin went on to concur with the Alta Loma court’s observation that if an employment discrimination suit falls under the antiSLAPP statute, employers would “be able to discriminate with impunity knowing any subsequent suit for discrimination would be subject to a motion to strike and dismissal.” (Id, at 625.) Hunter considered Alta Loma and Martin, and summarily dismissed them both as distinguishable. “Rather, both cases examined the specific conduct underlying the particular discrimination claims at issue and concluded section 425.16 was inapplicable because the plaintiffs’ references to protected activity were merely incidental to the unprotected acts upon which their claims were based.” (Hunter v. CBS Broadcasting, Inc., supra, 221 Cal.App.4th at 1525.) According to Hunter , cases involving the intersection of the FEHA statutes and the anti-SLAPP statute are to follow the analysis set forth in Tuszynska v. Cunningham (2011) 199 Cal.App.4th 257. The plaintiff in that case was a female panel attorney for a prepaid legal plan. She sued the plan and one of its administrators alleging gender discrimination in the assignment of cases to panel attorneys. The defendants’ anti-SLAPP motion was denied, and they appealed. The Court of Appeal reversed, concluding that the trial court had improperly “conflate[d] defendants’ alleged injury-producing conduct – their failure to assign new cases to plaintiff . . . – with the unlawful, gender-based discriminatory motive plaintiff was ascribing to defendants’ conduct – that plaintiff was not receiving new assignments or continued funding because she was a woman.” (Id. at 268.) Tuszynska held that the antiSLAPP statute applies to claims arising from protected activity “regardless of any motive the defendant may have had in undertaking its activities, or the motive the plaintiff may be ascribing to the defendant’s activities.” (Id. at 269.) According to that court, “the defendant’s purported motive in undertaking speech and petitioning activities is irrelevant in 86 — The Advocate Magazine
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determining whether the plaintiff ’s cause of action is based on those activities.” (Id. at 271.) The Hunter court found that the plaintiff ’s claims in that case “cannot be meaningfully distinguished from Tuszynska” and were therefore “based squarely on CBS’s decisions regarding its choice of a weather anchor, which were acts in furtherance of its First Amendment rights.” (Hunter v. CBS Broadcasting, Inc., supra, 221 Cal.App.4th at 1523.) As the starting point for its First Amendment discussion, the court cited earlier decisions recognizing that activities such as news reporting and creating television shows “qualify as ‘exercise[s] of free speech.’” (Id. at 1521.) Based on those cases, the Hunter court held that “CBS’s selections of its KCBS and KCAL weather anchors, which were essentially casting decisions regarding who was to report the news on a local television newscast, “helped advance or assist” both forms of First Amendment expression” and were therefore “a form of protected activity.” (Ibid.) In order to find protected activity, the Hunter court rejected the plaintiff ’s argument that a hiring decision which took place before any broadcast or editorial conduct was created, was not protected activity under the anti-SLAPP statute. According to Hunter, the hiring decision fell under the statute because “section 425.16 is not limited to claims based on constitutionally-protected free speech or petitioning activity; it also extends to conduct undertaken ‘in furtherance’ of those constitutionally-protected activities.” (Id.at 1525.) The hiring decision at issue was seen as in furtherance of protected activity. (Ibid.) By endorsing the view that a defendant’s motive is irrelevant in the antiSLAPP analysis, the Court of Appeal seems to have marginalized, if not abrogated, the principle that the anti-SLAPP statute is only intended “to dispose of lawsuits that are brought to chill the valid exercise of constitutional rights.” (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1055.) Before Hunter, the Supreme Court had recognized that the “right to free
speech, “[a]lthough stated in broad terms, . . . is not absolute,” (Balboa Island Village Inn, Inc. v. Lemen (2007) 40 Cal.4th 1141, 1147.) and did not extend to speech that “either alone or in conjunction with conduct, amount[s] to employment discrimination.” (Aguilar v. Avis Rent A Car System, Inc. (1999) 21 Cal.4th 121, 134.)
Appeal rejected that argument, holding that “the proper inquiry is not whether CBS’s selection of a weather anchor was
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The “public issue” requirement before and after Hunter CBS’s anti-SLAPP motion was brought under section 425.16(e)(4), which applies to claims arising from “(4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.” As the Court of Appeal explained in Weinberg v. Feisel (2003) 110 Cal.App.4th 1122, 1132, the public interest requirement is intended “to have a limiting effect on the types of conduct that come within the third and fourth categories of the statute.” Cases decided before Hunter, such as Lieberman v. KCOP Television, Inc. (2003) 110 Cal.App.4th 156, 164 had described section 425.16’s “matters of ‘public interest’” as statements “made in a place open to the public or a public forum in connection with an issue of public interest.” In Price v. Operating Engineers Local Union No. 3 (2011) 195 Cal.App.4th 962, 97172, the court synthesized for “guiding principles” the public interest requirement: (1) public interest does not equate with mere curiosity, (2) it should be something of concern to a substantial number of people, (3) there should be some degree of closeness between the challenged statements and the asserted public interest and (4) the focus of the speaker’s conduct should be the public interest. Mr. Hunter argued that none of the announced public-interest criteria applied to his claims, pointing to the fact that he had sued for employment discrimination in the context of a private decision that was not itself a topic of widespread public interest. The Court of
itself a matter of public interest; the question is whether such conduct was ‘in connection with’ a matter of public interest.”
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Hunter — continued (Hunter v. CBS Broadcasting, Inc., supra, 221 Cal.App.4th at 1527.) Since weather reporting is a matter of public interest, the Court of Appeal concluded that “CBS’s decisions regarding who would present those reports to the public during its broadcasts was necessarily ‘in connection’ with that public issue.” (Ibid.)
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The post-Hunter legal environment
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As a result of the Hunter opinion, every employment-discrimination plaintiff who is a broadcaster or employed in a creative field faces the automatic stay of discovery imposed by Code of Civil Procedure section 425.16(b)(1) and, at the same time, the burden of establishing that “there is a probability that the plaintiff will prevail on the claim.” (Code of Civil Procedure section 425.16(b)(1).) The anti-SLAPP statute is especially problematic for discrimination plaintiffs because they face greater problems of proof than other categories of plaintiffs. Our “courts have acknowledged the difficulty of proving intentional discrimination: Proving intentional discrimination can be difficult because [t]here will seldom be “eyewitness” testimony as to the employer’s mental processes.” (Frank v. County of Los Angeles (2007) 149 Cal.App.4th 805, 822-23.) Post-Hunter, meritorious discrimination cases may be lost solely because of the discovery bar imposed by the anti-SLAPP statute. And, in addition to the real risk of losing a claim simply due to the discovery bar, defendants will undoubtedly argue that unsuccessful plaintiffs are subject to automatic liability for payment of the prevailing defendant’s attorneys fees under Code of Civil Procedure section 425.16(c)(1). In the introduction to this article, the author postulated that the collision of statutes grounded in public policy can produce effects that are contrary to public policy. Hunter is a classic example. The courts of this state had already expressed their disapproval of policies that “may chill the enthusiasm and frequency with which employment
discrimination claims are pursued.” (Murillo v. Rite Stuff Foods, Inc. (1998) 65 Cal.App.4th 833, 850.) That disapproval stems from the notion that in discrimination cases, a plaintiff is seen as “the chosen instrument of Congress to vindicate” a policy “of the highest priority.” (Christiansburg Garment Co. v. E.E.O.C. (1978) 434 U.S. 412; Cummings v. Benco Building Services (1992) 11 Cal.App.4th 1383, 1386-1388.) By subjecting the discrimination claims of broadcasters to automatic application of the anti-SLAPP statute, the Court of Appeal has certainly chilled, if not froze, the enthusiasm of broadcast employees for pursuing discrimination claims. All is not lost for those who seek to vindicate the anti-discrimination policies codified in FEHA. Hunter represents the views of the division within the Second Appellate District (Division Seven). As one court said, “We acknowledge we are not bound by an opinion of another District Court of Appeal, however persuasive it might be.” (Wolfe v. Dublin Unified School Dist. (1997) 56 Cal.App.4th 126, 137.) Those who disagree with the analysis in Hunter may pursue similar claims in other courts. Should one of those courts issue an opinion that conflicts with Hunter, the Supreme Court might be motivated to review the intersection of these laws, and to remember the words of Justice Brown’s dissent in Navellier v. Sletten (2002) 29 Cal.4th 82 cited in Grewal v. Jammu (2011) 191 Cal.App.4th 977, 997: “The cure has become the disease – SLAPP motions are now just the latest form of abusive litigation.” (Editor’s note: Amen.) John Steven West is a partner in the law firm of Allred, Maroko & Goldberg. A 1981 graduate of Loyola Law School, Mr. West specializes in employment law from the plaintiff ’s perspective. His practice includes “real time” employment counseling, negotiation of claims in the pre-litigation stage, and litigation through trial and appeal. He has been counsel in a number of high-profile and appellate matters and is a frequent speaker to bar and other professional organizations on the subject of employment law.
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The Advocate Magazine — 89
Ara Jabagchourian
Christopher Lavorato
Howell and the cost of future care for Medicare recipients How Howell relates to a claimed Medicare reduction on future medical expenses Despite the major setback to the collateral source rule arising from the Howell decision, the defense bar/insurance industry has not stopped. Seeking to take Howell beyond its holding, which relates to past medical bills actually paid, the insurance industry now seeks to stretch this decision to cover future medical treatments. In a matter recently handled by the authors, this position was aggressively pursued as it related to future medical treatments for a Medicare recipient. The core issue turned on whether despite the sporadic enforcement of Medicare set-asides for future care by CMS, would Medicare actually provide coverage for the future claimed treatments. In other words, the defense argument essentially becomes – that to the extent future medical bills would be reduced by a Medicare payment, the defendant should only be required to pay for the prospective reduced amount – not the reasonable cost of future medical expenses as required by CACI 3903A. This misapplication of Howell’s holding will undoubtedly come up in trial courts until the higher courts take up the issue and make law which will solidify the application of Howell as it relates to a claimed Medicare reduction on future medical expenses.
Medicare requires plaintiff to set aside money for future care Medicare began in 1965 as a program to pay for medical care for those 65 and over. In 1980, Congress enacted the Medicare Secondary Payer Act (“MSP”). The MSP purpose was to dictate the order of payment, essentially establishing Medicare as a secondary payer. (See generally Blue Cross and Blue Shield v. Shalala (5th Cir. 1993) 995 F.2d 70, 73-74.) On December 29, 2007, George W. Bush signed into law the Medicare, Medicaid 90 — The Advocate Magazine
JUNE 2014
and SCHIP Extension Act of 2007, which made several changes to the MSP. The obligation of the parties in a general liability suit involving a Medicare beneficiary requires two major things. The first, which was unchanged under the 2007 amendments, was that the parties were to protect Medicare’s interests with respect to benefits it has already paid at the time a personal injury case is resolved. The second requires that to the extent that the injured party recovers from the tortfeasor for future medical expenses that are within Medicare coverage categories, the recovery must be used to pay the post-settlement incidentrelated medical expenses until exhausted, and only then will Medicare coverage be available. Pursuant to 42 USC § 1395y(b), a third-party liability insurer is a primary payer under the “Medicare as secondary payer” scheme. “A primary plan’s responsibility for such [reimbursement] payment may be demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means.” (42 U.S.C. § 1395y(b)(2)(B)(ii).) Insurance that is included as a primary plan includes one for “[l]iability insurance.” (42 U.S.C. § 1395y(b)(8)(F).) In addition, the 2007 amendment sets forth obligations for set asides for “ongoing responsibility for medical payments”. (42 U.S.C. §§1395y(b)(2)(B)(ii) and 1395y(b)(9)(C); see also Big R Towing, Inc. v. Benoit, No. 10-538, 2011 WL 43219 (W.D. La. Jan 5, 2011) [court approving a settlement allocation as a set aside for future medical treatment under §1395(y) of the Medicare Secondary Payer Act in a liability action].)
Guidelines have also been set up by the federal administration responsible for enforcing Medicare’s subrogation rights. In the current version of the Medicare Secondary Payer Manual, “SetAside Arrangement” is defined as: [a]n administrative mechanism used to allocate a portion of a settlement, judgment or award for future medical and/or future prescription drug expenses. A setaside arrangement may be in the form of a Workers’ Compensation Medicare SetAside Arrangement (WCMSA), No-Fault Liability Medicare Set-Aside Arrangement (NFSA) or Liability Medicare SetAside Arrangement (LMSA). (Medicare Secondary Payer Manual (Section 20, August 3, 2012) (Emphasis added), located at http://www.cms.gov/ Regulations-and-Guidance/Guidance/ Manuals/downloads/msp105c01.pdf.) Thus, the federal government has set forth an obligation of a personal injury plaintiff to set aside monies for future medical treatment that he has received from settlement or judgment. Medicare will not pay for any treatment associated with monies received from a liability insurer until the amounts set aside for future treatment have been exhausted. (See CMS April 22, 2003 Memorandum, Medicare Secondary-PayerWorker’s Compensation (WC) Frequently Asked Questions, Questions 19 (April 22, 2003). See also the September 30, 2009 Town Hall Teleconference Transcript re: Section 111 of the Medicare, Medicaid & Schip Extension Act of 2007, Pages 25 and 26.) The policy of Centers for Medicare and Medicaid Services (“CMS”) is to require Set-Asides for liability cases. For instances, in a CMS Town Hall Teleconference, CMS stated the following Q: Hi. I’m with Global Aerospace in Short Hills, New Jersey. And we’re curious about the applicability of Medicare set asides to liability claims?
A: If you’ve read the transcripts from prior calls that is not a Section 111 issue. And we are limiting these calls to Section 111 issues. There is not – the same formal process for liability set asides that there is for Worker’s Compensation set asides. However the underlying statutory obligation is the same. For liability set asides if you – for Worker’s Comp the process is technically not required to have a CMS blessed set aside. For liability situations as I said, the underlying obligation is the same if you wish to pursue CMS approval of a liability set aside, your avenue approach is through the applicable regional office. Whether or not they agree to review it does not provide – if they decline to review it that doesn’t provide any type of safe harbor. And the regions are making their determinations based on their workload. If their workload permits and they believe there are significant dollars at issue, regional offices are reviewing proposed set aside amounts but certainly not typically at the same small level that it’s being reviewed through
our Worker’s Compensation review contractor or Worker’s Comp set aside. In another town meeting, CMS answered the following policy question: Q: One quick follow-up. We sometimes hear discussion in the course of settling cases and claims about whether on the liability side, not worker’s comp, but on the liability side, there is now, or is expected to be in the future, any vehicle such as what they refer to as a Medicare set aside, or starting to get into that sort of practice. Do you have any thoughts or any expectation that doing Medicare set asides is ever going to be something that enters the world of the liability and casualty payers? A: It has already entered. . . . We have a process for an informal process on the liability side that if a plaintiff ’s attorney or insurer, et cetera, wishes to approach the appropriate CMS regional office and the regional office has the ability to do so, workload or otherwise, that they can choose to review a proposed set aside amount if they believe there is significant dollars at issue. Again, it’s not the same extensive process that we have for worker’s compensation. But regardless of whether
CMS has a formalized process for worker’s compensation Medicare set aside, the statute has the same language in either situation. It’s not parallel language. It’s not similar language/ it’s literally the same physical sentence that we’re not to make payment where payment has already been made. So where future medicals are a consideration in arriving at the settlement, et cetera, then appropriate arrangements should be made for appropriate exhaustion of the settlement before Medicare is billed for related services. Furthermore, CMS has indicated in questions posed that “[t]hird-party liability insurance proceeds are also primary to Medicare.” Undoubtedly, some insurance defense attorneys mistakenly claim that a plaintiff ’s awarded reasonable future medical expenses, pursuant to CACI 3903A, would result in a windfall if prospective reduced Medicare payments are not applied. However, there is no indication of how or when plaintiffs are required to set aside an award for future damages, given Medicare’s secondary payer status. Consequently, at trial, defense counsel’s attempts to bring evidence related to a Medicare cost for future treatment is both irrelevant
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Future Care — continued
(as Medicare will not pay) and prejudicial and confusing (as the implication is that Medicare will pay for the future medical care). (See also the March 16, 2010 Town Hall Teleconference Transcript re: Section 111 of the Medicare, Medicaid & Schip Extension Act of 2007, Pp. 41 and 42.) If a court were to allow defense counsel to bring evidence on the issue of Medicare, this would require plaintiff ’s expert on life-care planning to now have to discuss how Medicare works as a secondary payer. And, in that circumstance, would it not be even more prejudicial to a plaintiff if a court disallowed discussion of how a defendant’s automobile and/or umbrella coverage would be sufficient to cover the cost of future medical care, and therefore Medicare would not pay for such treatments? Thus, a defense attorney’s permitted questioning on these topics would open the door on plaintiff ’s insurance coverage (which will not cover future medical expenses due to the setaside requirement) and similarly, a defendant’s personal coverage for liability in a particular incident. The point is that the entire line of questioning and argument opens the door to a whole
host of irrelevant and prejudicial topics of insurance coverage for both parties.
(2011) 52 Cal.4th 541. Where a plaintiff ’s past medical bills have already been paid and the amount paid is discounted, Howell indicates that the damages should be based on the actual amount paid, rather than the full amount billed. The holding in Howell was intended to prevent windfalls in cases where a plaintiff is covered by insurance and has paid a reduced rate for past medical bills. The Howell decision reasoned that if a plaintiff were to receive damages based on the undiscounted medical bill, the plaintiff would receive an unreasonable windfall. Still, Howell does apply to certain cases involving Medicare and Medi-Cal. Luttrell v. Island Pacific (2013) 215 Cal.App.4th 196. In Luttrell, the plaintiff ’s damages were based on the amount that had already been paid by Medicare rather than the amount billed by the hospital. (Id. at 198.) Like Howell, Luttrell only concerned the use of paid, discounted medical bills to determine the appropriate amount of damages. Essentially, Luttrell restated the holding of Hanif v. Housing Authority (1988) 200 Cal.App.3d 635 after the Howell decision. The holdings of these cases are limited and do not apply to future medical bills.
A plaintiff must only show that the cost of future care is reasonable To make a claim for future medical costs, California law requires that a showing be made that the cost is “reasonable.” (Under CACI 3903A, “To recover damages for future medical expenses, [Plaintiff] must prove the reasonable cost of reasonably necessary medical care that she is reasonably certain to need in the future.”) Unlike the Howell decision, future medical payments are not ones that have been paid. Therefore, there is no “windfall” to a Plaintiff as Medicare coverage will not pay for the future medical care when there is a requirement that monies be set aside for their payment in a general-liability suit.
The Howell decision applies to past medical expenses – not future The decision in Howell v. Hamilton Meats & Provisions, Inc. stands for the proposition that evidence of the full, undiscounted cost of past medical bills should not be presented to the jury. Howell v. Hamilton Meats & Provisions, Inc.
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Similarly, Corenbaum v. Lampkin held that undiscounted past medical bills cannot be used as the basis for anticipating the cost of future medical bills. (2013) 215 Cal.App.4th 1308, 1331. The underlying reasoning is essentially the same as in Howell v. Hamilton Meats: where insurance companies give a discount on medical bills, plaintiffs would receive unreasonable windfalls if future damages were based on an amount which they would not actually pay. Corenbaum is irrelevant to the case where a plaintiff has no intention of offering past medical bills in order to anticipate the cost of future medical bills. Further, there is no reason to anticipate that future medical bills will be discounted because Medicare is considered a secondary payer with the primary obligation to pay resting on the tortfeasor.
tions should apply to future medical bills as it relates to a monetary award? Simply put, plaintiff ’s counsel must file the appropriate motion in limine to preclude the argument that future medical care expenses should be reduced by a Medicare coverage level. The crux of the motion relates back to Medicare’s secondary payer policy, that the obligation falls on the personal injury plaintiff to set aside monies for future medical treatment that he has received from settlement or judgment and CACI 3903A – specifying that recovery for future medical expenses must be proven by a plaintiff to be reasonable. Ara Jabagchourian is a partner at Cotchett, Pitre & McCarthy LLP, where he practices civil litigation in several areas,
including financial fraud, injury and intellectual property. Prior to joining private practice, Jabagchourian served as a staff attorney for the Federal Trade Commission’s Bureau of Competition in Washington, D.C. Christopher Lavorato is a Senior Associate at Cotchett, Pitre and McCarthy, LLP, where he practices civil litigation. He focuses on a variety of complex civil matters including claims of commercial fraud, catastrophic injury, sex abuse allegations, products liability and commercial transit accidents. He received his B.A. in Communications from the University of San Francisco in 1992, followed by service in the United States Army as an Aviation Officer and UH-60 Blackhawk pilot. After his military service, he earned his J.D. from the University Of Santa Clara School Of Law in 2002.
Conclusion The issues addressed in this article will certainly resurface in the trial courts until a higher court takes up the issue. It will be unlikely that California courts will apply a Howell type reduction to future medical treatments under Medicare as the law of set asides preempts any effort by state court to alter the federal statutory scheme. Meanwhile, the import and practical lesson of this discussion becomes – what should a plaintiff ’s attorney do when faced with the defense argument at trial – that past Medicare reduc-
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John P. Blumberg
Expert testimony that persuades The expert can be persuasive if your direct allows him to simplify the complex and satisfy jurors’ curiosity Question: How do you turn a jury of laypersons into geniuses who will understand complicated medicine or engineering or science? Answer: You can’t. The secret: When you have finished this article, you will know how to translate the unfathomable into concepts that the jury can understand and accept. How? By designing the direct examination of your expert in ways that will capture attention, establish credibility, and provide a framework for comprehension. The Evidence Code allows a person with “special knowledge, skill, experience, training and education” to explain and describe a specialized or unfamiliar subject, and render an opinion if the subject matter is “sufficiently beyond common experience that the opinion of an expert would assist the trier of fact.” (See, e.g., §§ 720, 721, 801 and 802.) The expert’s testimony must include the reasons for the opinion. Sounds simple, right? What could possibly go wrong? The problem with competent expert testimony isn’t that it fails to adequately address the issues; the problem is that jurors either can’t understand it, don’t care about it, or are inclined to reject it.
The starting point Twelve people are gathered together in chairs that are set up in a semienclosed space. They have one thing in common: they are adults who either vote or hold driver’s licenses, which are the two sources from which the jury commissioner can identify potentially eligible jurors. They possess widely-varying levels of education and sophistication. They are usually not doctors or scientists. These folks will be asked to make a decision about your case. Usually, before the decision has to be made, they will have heard experts give explanations and render opinions. Then, the judge reads them CACI 219: As with any other witness, it is up to you to decide whether you believe the
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expert’s testimony and choose to use it as a basis for your decision. You may believe all, part, or none of an expert’s testimony. In deciding whether to believe an expert’s testimony, you should consider: a. The expert’s training and experience; b. The facts the expert relied on; and c. The reasons for the expert’s opinion. Of course, both sides have introduced expert testimony and, nearly always, the experts have rendered opinions that are diametrically opposed to each other. The defendant did/did not breach the standard of care. The event did/did not cause harm. The judge will read CACI 221: If the expert witnesses disagreed with one another, you should weigh each opinion against the others. You should examine the reasons given for each opinion and the facts or other matters that each witness relied on. You may also compare the experts’ qualifications.
The problem If jurors have no subject matter experience in medicine, science or biomechanics, how can they possibly decide which expert opinion to believe? Before they became jurors, these citizens lived normal lives where they frequently made decisions about unfamiliar things. When shopping for breakfast cereal, soup or cleaning products, they had to decide between competing products. When employing parenting skills, they had to accept or reject advice, such as “spare the rod, spoil the child.” When competing shows are on television, they had to decide which one to watch. (Well, maybe not, since they could use their DVR to watch one later. But they might have to choose between Fox News and CNN.) The point is that they had to constantly make decisions and choices. And to do so, they employed common methods, such as, “Which makes more sense to me?” So, their decision-making
process was based on existing knowledge and relatable experience. Stated another way, they drew on something they already knew about to understand something new and unfamiliar. These mental shortcuts are called heuristics. (For more on this subject, read Thinking Fast and Slow by Daniel Kahneman.) Case-in-point: My adult son is employed in the field of educational video games. My understanding of this field is limited. (Meaning, I don’t understand it at all; not a clue.) He was explaining to me about the process of how a third-party creator of a game gets a company to use it “on their platform” and then sell and market it. I got lost when he said “on their platform.” So, I tried to understand it by comparing it to what I did know. I’ll skip over the many questions I asked in trying to understand. (Imagine the Wright Brothers’ grandmother trying to understand Orville and Wilbur’s description about their flying machine.) But, finally, I asked my son if it was “sort of like the process where an author sells his book to a publisher who edits it, prints it and markets it.” My son patiently explained that there was more to it, but I was satisfied that I now had a frame of reference to understand what he does for a living. (I wouldn’t have had this problem if he had become a lawyer!) My experience in trying to grapple with a new and perplexing subject by reference to what I did understand is similar to how a jury needs help to understand the unfamiliar. But before the jurors will be motivated to understand the subject matter discussed by an expert, you will have to (1) get and keep their attention, (2) answer their unspoken questions, (3) inspire and satisfy their curiosity, and (4) help your expert simplify the complex.
Attention “Attention” has two aspects: (1) getting it, and (2) keeping it. If a juror is not
paying attention, your expert’s message will be lost. Getting attention requires an understanding of how our ancestors avoided being killed by enemies or eaten by predators. Their senses were stimulated, whether it was smelling smoke, hearing rustling in the bushes or seeing a potential threat. When the stimulation occurred, they were alert and attentive. And, although we can’t create a threat to stimulate a juror’s attention, we can stimulate intellectual attention. This attention is governed by what I call “the ten-second, ten-minute rule.” You have ten seconds to capture the jurors’ attention and ten minutes before their attention span runs out, unless it is reignited. Let’s examine both. The ability to capture and maintain attention in an opening statement or closing argument is much easier than in a direct examination, because you have the ability to craft a story. But just as the attention of our ancestors was heightened by a sudden change in the environment, a juror’s attention will be heightened when an expert witness is called. That attention can be quickly lost by a boring recitation that follows the question, “Please tell the jury about your education, training and experience.” Paradoxically, the lengthier the expert’s qualifications, the more tiresome the recitation will be. So, the first principle of expert examination is to create immediate interest. There is no rule that an expert’s examination must begin with a statement of qualifications. Instead, consider an attention-getting statement, such as “Dr. Jones, I am going to be asking you to explain whether there is a connection between repeated concussions and permanent brain damage.” With the prefacing statement, you have highlighted the subject matter the same way as a news headline. “Are you qualified to discuss that subject?” When Dr. Jones answers, “Yes,” the jury’s attention has been captured the same way that the headline spurred people to put a coin in the newsstand to read the story.
Curiosity and unspoken questions The jurors are now silently asking themselves, “I wonder what his qualifications are,” and you have aroused their
curiosity. Curiosity has been described as the mental pain that is caused by the realization that there is an absence of knowledge, and the need to erase that pain by finding out the answer. As long as that curiosity exists, you have the jurors’ attention. The next step in the expert-witness examination is to begin to satisfy the curiosity you have created. I thought of a way to do this during an arbitration when I had just called one of my expert witnesses. I asked, “So, why should the arbitrator pay any attention to what you have to say?” The arbitrator looked up, a little startled, then smiled slightly. That’s what he had been thinking. And he listened a little more intently to what my expert said about his qualifications. So, ask your expert, “Dr. Jones, can you explain why it is that you are qualified on this subject?”
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Expert Persuasion — continued As your expert explains his qualifications, the jurors’ curiosity results in the formation of silent questions, such as “why is that important?” and “what does that have to do with the issues?” Because these or other questions will be forming, your examination of the expert witness’s qualifications must provide answers. A simple template can be adapted for almost any expert and addresses the question of “why should the jury listen to you?” Here are examples: A medical malpractice expert • Are you knowledgeable about heart surgery on children? • What position do you hold where you use that knowledge? • How many heart surgeries on children do you perform each year? • Do you perform surgeries that are the same as plaintiff underwent? • How many such surgeries have you performed? • Are you involved in teaching others how to perform surgery? Describe. • Have you ever written anything on the subject? • For whom was the book/article written? • Is your book/article considered to be reliable authority on the subject matter it covers? • In your professional resume, how many of your presentations on the subject are listed? A personal injury expert • When you were in medical school, did you study about the lasting effects of concussions? • When you were trained in your residency program, did you deal with the subject? • Did you have exposure and hands-on experience in your fellowship? • In your medical practice, have you evaluated and treated patients with this condition? The above example converts “education, training and experience” from uninteresting theoretical qualifications to solid and relevant background that bolsters credibility and satisfies the requirements of Evidence Code section 720 (a): A person is qualified to testify as an expert if he has special knowledge, skill, experience, training, or education
sufficient to qualify him as an expert on the subject to which his testimony relates.
The purpose for this pre-opinion preface is to build credibility into what will follow and to create curiosity, now that
you have set the stage. The next step is for the expert to explain the reason for the evaluation method. Here is an example:
The expert’s analysis methodology It is natural to doubt a conclusion if there has been no explanation of the process by which the conclusion was reached. Accordingly, the next step in designing a persuasive expert examination is to satisfy the jury’s suspicion that the expert’s opinion has no real basis. The expert must be given the opportunity to educate the jurors about the analysis methodology that led to the opinion. An expert’s methodology will differ, depending on the subject matter, but it is essential for the expert to explain, in simple and straightforward terms, that a method was employed. Then, the method is described in linear fashion, step by step, so that there is a confluence of protocol and evidence that leads to a logical conclusion. With each step, the jurors will be led through the process so that, hopefully, the ultimate conclusion will not only make sense to them, but they will have been able to predict the outcome. This is called, “the inescapable conclusion.” Here is an example of how to start this examination: Q: Before reaching a conclusion, did you use any method of evaluation? A: Yes, I did. Q: Would you please explain how you went about the analysis of what happened? A: First, I reviewed the records. Second, I reviewed the sworn testimony from everyone involved. Third, I measured what happened against the standard of care, that is, what good doctors do in similar circumstances. Fourth, I reviewed the published medical literature on the subject. Q: Why did you use that method? A: Because it is the only honest and scientific way to reach a valid conclusion. Q: Why can’t you just start out with an opinion and then look for the evidence that supports it? A: Because that can lead to a biased and invalid conclusion. You end up looking only for what will support your predetermined opinion and ignoring everything else.
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Expert Persuasion — continued
Q: What records did you review? A: I reviewed the medical records, the x-rays, the laboratory tests, and the depositions. Q: Can you please explain why it was important for you to review these things? A: Well, the medical records contain an explanation of what happened after the accident and before any treatment was received. This is called “the history.” Then we see what medical tests were done so the treating doctors could arrive at a diagnosis of the patient’s condition. Finally, the treatment records show what was done to help the patient. All of these things, together, tell the whole story. Q: You said that you also read depositions. What was the importance of doing that? A: Depositions contain testimony given under oath. I wanted to know what every-
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body involved said about what they did or what happened from their perspective.
Using publications In many cases, it will be important to discuss publications that the expert has read and relied upon. There are two important reasons for the expert to talk about publications. First, it will buttress credibility because it shows the depth of the expert’s search for the truth. There is a widespread belief that scientific and medical journals and books are written by experts and contain important information. Second, it will set up your ability to cross examine the opposing expert using the text of the publications. Care must be taken in this process to stay within the boundaries of what is permitted by the Evidence Code. An expert may rely on admissible or inadmissible evidence, so long as it “is of
a type that reasonably may be relied upon by an expert in forming an opinion . . . .” (Evid. Code, § 801(b).) And an expert is permitted to say what he reviewed and even why it is important. In Brown v. Colm (1974) 11 Cal.3d 639, 644 (fn.4) the plaintiff ’s expert physician stated that his opinion was based on his review of medical literature. The Supreme Court said that “a professional physician may rely upon medical texts as the basis for his testimony.” Citing Wigmore, the court explained that, “a medical doctor possesses a professional experience which gives him a knowledge of the trustworthy authorities and the proper sources of information, as well as a degree of personal observation of the general subject enabling him to estimate the plausibility of the views expressed.” Similarly, in Roberti v. Andy’s Termite & Pest Control, Inc. (2003) 113 Cal.App.4th 893, 901, the Court held it proper that “Plaintiff ’s experts based their opinion testimony upon research papers and studies ... in peer-reviewed journals.” However, just because the expert can state what he reviewed and why he reviewed it, does not mean that the expert can read from or even paraphrase what is in the publication. That’s hearsay. The rule rests on the rationale that while an expert may give reasons on direct examination for his opinions, including the matters he considered in forming them, he may not under the guise of reasons bring before the jury incompetent hearsay evidence. (Grimshaw v. Ford Motor Co. (1981) 119 Cal.App.3d 757, 789.) Here is an example of how to elicit the expert’s testimony regarding what publications formed the basis of the opinion: Q: As part of the process of analyzing the subject, did you read any publications? A: Yes. Q: Why did you do that? A: Because the medical and scientific articles and textbooks contain the combined knowledge and wisdom of many of the most reputable and experienced experts in the field. I believe that it’s important to study the subject thoroughly before reaching a final opinion.
Q: What did you read? A: I read two recent articles by Dr. John Jones on the subject of repeated head trauma. Q: Did those articles contain information that was valuable in arriving at your opinion? A: Yes. Q: Would you say that the articles are reliable authority on the subject? A: Absolutely. Dr. Jones is one of the most renowned experts in the field. And the journal is what is called “peer reviewed” which means that before it could be published, other doctors had to review it and confirm that it was a valid study. The last question in the above example is the “set up” for your cross examination of the opposing expert. Evidence Code section 721(b)(3) provides that an expert witness “may not be cross-examined in regard to the content or tenor of any scientific writing unless . . . the publication has been established as a reliable authority by the testimony or admission of the witness or by other expert testimony . . . .” (Emph. added.) Accordingly, when your expert says that the publication is reliable authority, the foundation has been laid for you to use it in your cross examination. However, section 721 allows you only to
read the pertinent text into evidence; the publication itself is not allowed to be received as evidence. Practice Pointer: Before you decide to ask your expert what publication formed a basis of his opinion, make sure that the publication does not contain contradictory material that can be the basis for effective cross examination. When an expert admits to having referred to, considered or relied upon written material, the door is opened to cross examination. (Evid. Code, § 721(b)(1).)
Keeping it simple Your expert witness may want to present a multi-faceted analysis but his testimony will be better received if you help him condense his explanation. Successful cases have a theme, and expert testimony should also have a theme supported by three points. Why three? Because the human brain has limits. Cognitive load is the concept that the brain has only a finite ability to process new information and that learning and recall is impaired by overloaded short-term memory. Human experience has demonstrated that people are able to understand and remember things that are grouped into three sections. The rule of threes has
been applied for thousands of years and examples are found in the Bible and in classical Greek drama and rhetoric. It is practiced and applied in music, plays, stories, speeches and sayings. Whether it is an aspect of brain capacity or a memory device, the rule of threes is a tried and true method. But what if your expert has seven important points? Figure out a way to group them into three categories.
Stories and analogies Do you want your expert’s testimony to be memorable? Of course you do. But to be memorable, the expert must use techniques that will give meaning to difficult concepts and create a framework for recollection. In a time of gods and goddesses, the Goddess, Truth, walked naked into a village to enlighten the people. But the people shunned and ignored her. Dejected, she wandered into a forest where she met the Goddess, Story, and told her what had happened. “Take my cloak,” Story said, “and go back to the village.” When she returned to the village, the people welcomed her, listened and believed her words. The moral? For naked truth to be accepted, it must have the cloak of story.
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Expert Persuasion — continued
Stories have been the source of recall for the entirety of human history. Why? Because the world is a complex place and the actions of others can be confusing without context. So people look for explanations to make sense of the world. And those explanations are best understood in the framework of a story. Facts, by themselves, are not easily recalled. But facts that are part of a story can be easily recalled. It has been said that story is the union of idea and image. An expert’s testimony that consists only of facts will not be memorable. Earlier in this article, I suggested techniques to capture attention, establish credibility, create a framework to understand the analytical process, and avoid cognitive overload. The next step is to bring the story into the case. How? “Dr. Smith, what are the facts that you found
to be important in understanding what happened?” In answering, your expert can now tell a compelling story. Most experts are not born storytellers; you will need to work with them so that cold facts become empathetic events. Instead of “the patient was seen in the emergency room and was noted to have a headache,” the expert could say, “In the morning, Jason began suffering from a headache that kept getting worse as the day went on. When he was seen in the emergency room that night, he said it was the worst headache of his life.” Analogies are another technique your expert can use that will help the jurors understand the unfamiliar. “Analogies,” Sigmund Freud reportedly said, “decide nothing, but they can make one feel more at home” and that a good analogy “may help to clarify the issues.” Simply stated,
an analogy is a comparison between two things that can highlight similarity. For example, in a breast cancer misdiagnosis case: “When the cancer began to grow, it was like a wildfire that couldn’t be controlled.” In a slip-and-fall case: “The wax on the floor was like an invisible sheet of ice.” In the cancer case, the jurors might not understand oncology, but they know about wildfires. And in the slip-and-fall case, they might not know about coefficients of friction, but they know what happens when they slip on ice. Once the jurors can relate the subject to something they understand, it will be like an anchor (notice the analogy?) that will make them more secure in their understanding. Again, you will need to work with your expert to arrive at analogies that can be used in his or her testimony.
Conclusion In opening statement, you can tell the jurors what the evidence will be, and you can even couch it in a story. And in summation, you can tell the jurors what the evidence was, and how the law applies to the evidence. But the only evidence will come from the witnesses, and the only explanation of the evidence will come from your expert witnesses. If your expert witness has been able to establish his credibility, gain the trust of the jurors, and explain the facts in a way that is understandable, your chances of success will be greatly increased.
John P. Blumberg has been practicing for 37 years, specializing in medical and legal malpractice cases. He is AV-rated, Board Certified as a Trial Lawyer by the National Board of Trial Advocacy, Board Certified in Medical Malpractice by the American Board of Professional Liability Attorneys, and a Certified Specialist in Legal Malpractice by the California State Bar Board of Legal Specialization. He was accepted into the American Board of Trial Advocates (ABOTA) in 1991 and has earned the rank of Advocate with over 50 jury trials to verdict. He serves on the ABOTA National Board of Directors. He can be reached at jblumberg@BlumbergLaw.com.
100 — The Advocate Magazine
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From the Executive Director Stuart Zanville
Consumer Attorneys Association of Los Angeles
CAALA’s successful programs start with great volunteers
Our members may be busier than ever, but they make time to plan and present outstanding programs
From the Executive Director
If you attended a CAALA program, event or meeting this year, you probably noticed that they all had something in common. The meeting Stuart rooms Zanvillewere full. CAALA has always CAALA been recognized for presenting outstanding programs and events, but this year is only halfway done and we are already raising the bar to new heights. In 2014, we will offer nearly 70 in-person meetings, programs or events. This is truly remarkable, since all of the programs are managed by our inhouse staff of six dedicated professionals. Stuart Zanville CAALA
From the Executive Director
Record attendance
leaders are placing significant limitations on their ability to contribute to the association as in the past. The result is diminished time for association work. And when they do have time, it is compromised by personal and professional distractions and interruptions.” I agree with almost everything Coerver says about how to be a successful organization. However, in this case, he’s totally wrong. Sorry Harrison, what you describe just doesn’t happen at CAALA.
Case in point
I want to give you an example of one For the first half of the year, attensuccessful CAALA program and the harddance at every program has exceeded the working volunteers who made it possible. previous year and many have achieved Six weeks ago CAALA introduced record attendance. This is true whether the Plaintiff Trial Academy. This is a it’s an Education seminar or webinar, brand new program that provides newer Membership program, New Lawyer or trial lawyers with intensive training from Women in the Law Roundtable, member accomplished trial lawyers teaching them Stuart Zanville mixer or a special event like the CAALA advanced techniques in trial preparation Consumer Attorneys Association of Los Angeles Gala. Even the meetings of the Board of and trial practice. Governors have been standing-room only. Thirty-two CAALA members were There are numerous reasons why accepted into the program, which comattendance has been so strong. The topprised 16 sessions (38 hours) on trial ics and content are especially timely and advocacy topics ranging from Pre-Trial really resonated with our members. We’re Preparation to Preserving Issues for also doing a better job of communicating Appeal. It’s an idea that had been disto our members. We know that it helps cussed for years by CAALA staff and that all but a few of events are free of leaders but never implemented. Bythe Stuart Zanville charge, thanks to the financial success of of Los Angeles Last year, CAALA’s Treasurer Mike Consumer Attorneys Association our signature event, CAALA Vegas. Arias asked if he could take on the projBut I think there’s another reason ect. Working closely with CAALA’s Senior why our programs have done so well this Director of Education Cindy Cantu, Arias year. I believe the real reason is the volput together a planning committee that unteers – the members who give up their included Michael Cohen, Minh Nguyen, time to plan, moderate or present at a Christa Ramey and Doug Silverstein. program, seminar or event. Arias and the committee are all busy Harrison Coerver is a respected (and successful) trial lawyers. But Mike author and lecturer who specializes in and the group made the time and we are strategy and planning for trade associanow completing the curriculum for the tions, professional societies and taxfirst class of what will become one of the exempt membership organizations. most important programs CAALA presCoerver writes that one of the ents. biggest challenges facing associations But Mike and the PTA Committee today is that members don’t have the are only one example of the remarkable time they used to have. He says that members who volunteer their time to members “are busier than ever before plan, moderate or present a CAALA and that “the time pressures on volunteer program or event.
From the Executive Director
People power The volunteer chairs of CAALA’s key committees (Education, Membership, New Lawyers, Women in the Law, Government Relations, Public Relations, List Serve and CAALA Vegas) spend countless hours planning and implementing our programs. The programs are successful because of the efforts of committee chairs, co-chairs and vice chairs Genie Harrison, Christa Ramey, Jeff Rudman, Scott Corwin, Minh Nguyen, Ibiere Seck, Martin Aarons, Bill Karns, Kathryn Trepinski, Dena Weiss, Tim Loranger, Fran Campbell and this year’s CAALA Vegas chairs Harrison, Ramey, Rudman, Mike Arias, Shawn McCann, David Hoffman, Andrew Wright, Danica Dougherty, Tobin Ellis and Taylor Rayfield. But every program has a moderator and a group of talented presenters. I want to share with you the names of the members (other than the committee chairs) who have volunteered their time so far in 2014 to be a moderator or presenter of a CAALA seminar, program or roundtable: Martin Aarons, Mike Alder, Sharon Arkin, Joe Barrett, Todd Bloomfield, Bruce Broillet, Bruce Brusavich, Doug Carner, Michael Cohen, Jack Denove, David deRubertis, Gary Dordick, Carl Douglas, Conal Doyle, Ricardo Echeverria, Sherif Edmond El Dabe, Tobin Ellis, Bruce Fagel, Victor George, Jack Girardi, Scott Glovsky, Steve Heimberg, Liz Hernandez, David Hoffman, Arash Homampour, Aimee Kirby, James Kristy, Jill McDonell, Brian Panish, Daniel Pierson, Christa Ramey, Rahul Ravipudi, Dave Ring, Linda Rice, Tal Rubin, Ibiere Seck, Doug Silverstein, Dan Smith, Amy Solomon, Chris Spagnoli, Clayton Starnes, Steven Stevens, Kathryn Trepinski, Geoff Wells, Ronni Whitehead and Tom Zaret. Well-attended programs don’t happen by accident. It takes great volunteers to make them successful and CAALA has the best of both. JUNE 2014
The Advocate Magazine — 101
Sacramento Update By Nancy Peverini CAOC Legislative Director Protecting senior citizens with AB 2171 Elder abuse is a quiet epidemic that too often goes unnoticed by the general public, despite more than 2 million cases nationwide each year. But lately, media accounts of problems at assisted-living facilities and other residential care facilities for our seniors have focused new attention on the need for reform. Consumer Attorneys of California is pleased to co-sponsor AB 2171 by Assemblyman Bob Wieckowski (D-Fremont), which is the linchpin of a package of bills introduced this year to protect seniors and those with disabilities who reside in Residential Care Facilities for the Elderly (RCFE). Such assisted-living homes are fast becoming the go-to destination for our parents as they age and need help, with more than 7,500 in California serving as home to 170,000 elderly residents. The bill, vaulted over its first legislative test by garnering approval by the Assembly Committee on Aging and Long-Term Care, establishes a statutory bill of rights and private right-of-action for residents of RCFEs. AB 2171 will protect the dignity, safety and selfdetermination of seniors and disabled adults who live in RCFEs. Recent amendments altered the bill’s damage structure as well as significantly changing its provisions for administration of drugs to the elderly. The past year has brought many shocking revelations about the mistreatment of seniors in RCFEs. These reports and the broad press on the topic demonstrate that RCFE residents are increasingly exposed to serious harm and death due to poor state oversight and their extraordinary vulnerability, a problem made worse by a lack of recourse when they are mistreated. AB 2171 will help protect California’s at-risk elders in RCFEs by establishing a robust statutory Bill of Rights that addresses their fundamental needs in areas such as visitation, privacy, confidentiality, personalized care, autonomy, adequate staffing and many more. The measure will also strengthen a resident’s right to make choices about his or her care, treatment, and daily life in the facility and to ensure that the resident’s choices are respected. In addition, RCFE residents desperately need a better way to enforce their rights. California’s RCFE regulators have repeatedly shown that they are often unable to protect residents from abuse and neglect. AB 2171 addresses this problem by establishing a private right of action, the only real way a resident can enforce her own rights, particularly during a time where the regulatory agency lacks the resources to be effective. These rights are already in place for California’s nursing home residents. RCFEs, by comparison, lack even minimal government oversight and inspections, making this population extremely vulnerable to abuse and neglect. The private right of action in AB 2171 will provide a pathway for RCFE residents and their families to prevent and stop ongoing violations without costing California any money. 102 — The Advocate Magazine
JUNE 2014
AB 2171 will bring California in line with other states with protections for RCFE patients. While other states have taken steps to protect their seniors over the last 10 to 15 years, California has fallen behind. Currently, residents’ only recourse when their rights are violated is to file a complaint with state licensing authorities, but that agency has been decimated by cutbacks and is exceedingly slow to act. Thirty years ago, California’s regulatory agency for assisted living facilities inspected RCFEs twice a year. Today, due to budget cuts, they struggle to do drive-by inspections once every five years. When state regulators receive a specific complaint of a residentrights violation, it takes months and sometimes years for an inspector to complete an investigation, issue findings, and ensure the facility has fixed its deficient practice. In some cases, they do nothing. As a result, in countless cases of theft and loss of resident property, unlawful evictions, and retaliation for complaining, RCFE residents have had no access to justice.
Washington Update By Linda Lipsen CEO, American Association for Justice Sneaky move by General Mills With Congress on a two-week spring break, there was recently plenty of room in our 24/7 media world for consumers to learn the truth about a sneaky move a few weeks ago by General Mills. Thanks to tremendous action and response from trial lawyers, the General Mills corporation went from trying to pull a fast one over on consumers to – only days later – apologizing for having inserted a forced arbitration clause into its terms of service. It all started with a New York Times article that revealed: General Mills, the maker of iconic cereals like Cheerios and Chex as well as brands like Bisquick and Betty Crocker, has quietly added language to its website to alert consumers that they give up their right to sue the company if they download coupons, “join” it in online communities like Facebook, enter a company-sponsored sweepstakes or contest or interact with it in a variety of other ways. AAJ quickly turned to trial lawyers to get the word out on LinkedIn, Facebook and Twitter. The impact of your voice – along with those of your friends, colleagues, and clients – made a difference. In addition to the social networking sites, through Take Justice Back, users sent more than 4,000 letters to Congress with our “Trix Don’t Belong in the Fine Print” message. Media follow-up was tremendous. We received requests for interviews from around the country and abroad. General Mills had no choice other than to beat a hasty retreat and let consumers know that their voice was heard and their rights would not be eliminated. Together we can accomplish so much to ensure that the rights of individuals and families in this nation are protected.
From the President Casey Johnson
Orange County Trial Lawyers Association
Understanding is not doing
Getting behind the The Troy and Alana Pack Patient Safety Act Continuing a tradition that spans over seven years, OCTLA again sent one of the largest TLA contingents to Sacramento to meet with legislators and their staffers for CAOC’s Justice Day on May 6, 2014. The focus of this year’s meetings was Court funding and there appears to be some good news to report. Legislators appear to understand the impact of years of cuts in court funding on their constituents and appear committed to increase the funding for the courts. Legislators understand that underfunded courts adversely affect all Californians – consumers, small businesses, corporations, landlords, tenants, men, women, adults, children, Democrats and Republicans. All Californians suffer as a result of the current Court crisis – no county in California is being spared. However, remain many demands remain on available funds. Unfunded government pensions, statewide water shortages and the bipartisan- supported rainy day fund are among dozens of top priorities that will be competing for increased revenues. Unfortunately, while those with the power to grant Californians fair and timely access to justice, most refuse to commit to fully funding the Courts as a top priority. We must continue to share the stories of all Californians who are suffering as a result of underfunded courts. No elected official wants to wear the albatross around his or her neck of the battered woman who died at the hands of her batterer as a result of her inability to timely obtain an Order of Protection. No State Senator or Assembly person wants to be responsible for driving jobs out of California as the result of a small business or corporation being forced to wait up to five years for a judge or jury to decide a matter that could ultimately determine the company’s ability to exist, or reinvest in further jobs.
No Californian should have to bear the thought of a family losing their home as the result of an injured wage-earners inability to seek reasonable compensation for the injuries suffered due to no fault of their own. Increasingly, limited access to civil courts in California is adversely affecting each and every California citizen and slowing down justice for all consumers. All consumer attorneys should reach out to their elected representatives and share their clients’ stories – and continue putting human faces on the travesties facing all of those who need and depend on access to justice in the courts.
Getting into a courtroom is no guarantee of justice Haunting civil litigants who have been the victims of malpractice is the fact that no matter how great their loss, no matter how serious or life altering the injuries caused by the malpractice, victims will be denied justice. Put simply, California’s nearly 40-year-old limits on medical malpractice recoveries discriminate against Californians each and every day. In addition to discriminating generally against all victims of malpractice, the limits discriminate particularly against women, children and the elderly. A perfect example is the case of a delivery nurse in her mid-30’s who gave birth via C-section at the hospital where she worked. Within 24 hours of delivering her second child, she received an overdose of morphine that rendered her unable to walk, unable to talk, unable to care for her children, and in need of 24hour, around the clock attendant care. Due to the arbitrary limits set by MICRA, the value of the loss to the family as well as the value of that nurse’s physical pain, mental suffering, embarrassment, loss of enjoyment of life – for her more than 50-year life-expectancy – was limited to
$250,000. I challenge anyone to find a legislator, a doctor or an insurance representative who would give up their ability to walk and talk and their independence, for only $5,000 a year. Yet that is precisely what MICRA does and will continue to do unless consumer advocates step up to the plate and put to rest this discriminatory and unjust law. In addition to ensuring more reasonable compensation for losses caused by preventable malpractice, this November voters will have the unique opportunity to increase safety for all Californians. The Troy and Alana Pack Patient Safety Act will subject doctors with hospital privileges to random drug testing. With studies showing as many as one in five doctors suffering drug or alcohol dependency issues during the course of their careers, patients across California simply cannot afford the risk. School-bus drivers, pilots and even school janitors are subjected to random drug testing in the interest of public safety – why wouldn’t doctors, who literally hold our lives in their hands, be subjected to a similar mere inconvenience in the name of public safety? Furthermore, the Troy and Alana Pack Patient Safety Act will require doctors to consult the CURES database to help prevent patients from seeking prescription narcotics from multiple providers. The database already exists. That healthcare providers’ refusal to consult it is simply inexcusable. Patient safety and full accountability are civil rights and human rights issues. We are being given a once in a lifetime opportunity to change injustice that has spanned generations. The safety of our grandparents, parents, spouses, children and grandchildren depends on it. Understanding the issue is not enough. The time to act is now.
JUNE 2014
The Advocate Magazine — 103
CAALA Connection Center Connect with New CAALA Members:
We welcome the following CAALA Connection Centernew members who joined CAALA during the month of April. James Allemand
Daniel Kim
Lawrence Organ
Allemand Law Group
Law Offices of Daniel Kim
Attorney at Law
Christopher Asvar
Jessica King
Brandon Ortiz
Asvar Law, APC
Panish Shea & Boyle LLP
Pepperdine University School of Law
Vikas Bajaj
Michael Kline
Joshua Poulsen
The Law Office of Vikas Bajaj, APC
The Lawyers Group, Inc.
Harris Personal Injury Lawyers, Inc.
Katherine Bruce
Jean Kwon
Neama Rahmani
Girardi|Keese
Law Offices of Jean Kwon
West Coast Law Group
Jojo Caro
Lawrence Levy
William Ruiz
KistlerLawFirm
The Lawyers Group, Inc.
Kazan, McClain, Satterley & Greenwood
Jason Caruso
Ricardo Lopez
Theida Salazar
Hodes Millman Liebeck LLP
Law Offices of John Ye
The Honest Lawyers
Nicholas Fortino
Jessie Mahn
Jared Salter
Silverthorne Attorneys
Law Offices of Vincent W. Davis & Assoc.
Harris Personal Injury Lawyers, Inc.
Asmik Jasmine Gevorkyan
Gaby Maldonado
Michael Shemtoub
Gevorkyan Law Firm
Student Rights Attorneys
Attorney at Law
Greyson Goody
Carlos Martinez
Jennifer Siegel
The Simon Law Group
Reza Athari & Associates
Girardi|Keese
Joseph Hekmat
Erin Melody-Rosenfeld
Derek Waldron
Law Offices of Joseph M Hekmat
Heimberg Barr
Thomas Jefferson School of Law
Suliman Jamal
Vic Merjanian
Austin Ward
Law Office of Suliman Jamal
Krause Kalfayan Benink & Slavens, LLP
Pepperdine University
Daniel Jones
Andrew Neilson
Jeff Yates
Harris Personal Injury Lawyers, Inc.
Law Office of Andrew Neilson
Thomas Jefferson School of Law
Jeremiah Kelman
Parham Nikfarjam
Ilana Zelener
Jeremiah Kelman, Esq.
Loyola Law School
Loyola Law School
Eduardo Olivo Olivo & Associates
104 — The Advocate Magazine
JUNE 2014
CAALA Resource Center New CAALA Affiliate Vendors
Our Affiliate Vendors are an excellent resource to help improve your practice. They provide goods or services specifically for plaintiff trial lawyers. Please support our Affiliate Vendors by contacting them for your business needs and projects.
CATEGORY: Expert Witness | Medical Services on Lien | Psychiatry
Act — continued from Page 108 only 64 years old, they wanted to put in a pacemaker. Since my wife, Janet, had had a defibrillator procedure some three years earlier, I knew that this, although a serious procedure, was one that was done pretty regularly these days. I went down to San Diego and visited her before the surgery and then stayed overnight until she had the surgery the next day. After recovering from the surgery in the hospital the next day, I was able to visit with her and she seemed pretty good. I left to come back home to Los Angeles and return back to work. Two days later, I get a call from my Aunt Sandra, my mom’s sister, who said, “I have some bad news.” “What’s the bad news?” I asked. She said, “Your Mom is gone.” “What do you mean she’s gone?” I replied. “I mean, she passed away in the hospital that day,” she answered. “Well, what in the world happened?” I asked. Finally, she said she didn’t know and that the hospital and the doctor said they didn’t know. They were going to do an autopsy and try to find out. Subsequently, an autopsy was performed. We took the necessary measures to potentially have my mother’s body cremated and have a procedure in place for her funeral back up in the Seattle area in December.
Provides expert-witness testimony on psychiatric/mental injuries. Has generated numerous reports and testified many times. Providio MediSolutions 5613 DTC Parkway, Suite 600 Greenwood Village, CO 80111 Contact: Ginger Susman (877) 253-3120 Email: gsusman@providiomsa.com
Several weeks after the funeral, my Dad got an unexpected call: “Are you Mr. Wells?” the caller asked. “Yes, I am,” my father replied. “I was the coroner who did the autopsy on your wife, Joan, and I have to tell you that it looks like her heart was perforated three times by the leads for the pacemaker and that she just essentially bled to death in the hospital in her room in front of everyone and nobody noticed,” the caller explained. My dad called me to ask me what we should do, and I asked him what he wanted to do. He told me he didn’t really want to sue anybody because he’s never sued anybody in his life and didn’t want to start now. I asked him if he thought that that was the best way to go, and he said he would think about it and call me back. When my dad called me back about a week later, he said, “You know, I’ve thought about it and I thought about what that coroner said, and I think it’s important that this doesn’t happen to another family and that we stand up and make a claim.” Thereafter, I contacted Steve Heimberg and had him review the case. He took the case, filed the lawsuit and had the case resolved on the first day of trial. Unfortunately, I had to explain to my father, my two older brothers and my younger sister, that because my Mom had recently retired, she didn’t have any income other than her Social Security,
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the case had a $250,000 cap for the entire family and that they would never pay the $250,000 cap. I had to explain to my family members that most likely, this case would end up settling for somewhere around $100,000 and, much to their surprise, that on top of that, they would then have to pay attorney’s fees and costs. Fortunately, in our case, after we got the case settled, our lawyer, Mr. Heimberg, agreed to waive his fees and just pay his costs and everyone ended up with a small pittance of money to reflect a spectacular woman who was married for 46 years and gave everything she had to her husband, four kids and her six grandkids. I felt ashamed for having participated in the process because even though you try to tell someone the value of a case doesn’t represent the value of a life lost, to them it still does. This Fall, we have an opportunity to make a difference so that this does not have to continually happen over and over and over to people and citizens of our State – the most vulnerable citizens – people who are elderly, young children who don’t have an income, veterans who don’t have a big salary. These types of people deserve to be protected and they deserve to have us fight for them. Everyone is going to have to do their part and make sure that this bill passes in November. Thank you.
John M. Stalberg, MD, JD 2901 Wilshire Blvd., Suite 415 Santa Monica, CA 90403 Contact: JM Stalberg (310) 828-0800 Email: drstalberg@forensicpsychca.com
JUNE 2014
The Advocate Magazine — 105
Consumer Attorneys
ASSOCIATION OF LOS ANGELES
CalendarCAALA CalendarCAALA
June 24, 2014 Summer Member Mixer Sportsmen’s Lodge Studio City 6:00-8:00pm
Consumer Attorneys
ASSOCIATION OF LOS ANGELES
Consumer Attorneys Consumer Attorneys ASSOCIATION OF LOS ANGELES Association of Los Angeles
CAALA
Board & Committee Meetings Executive Committee – CAALA Offices Downtown Los Angeles, 6:00pm June 5, July 10
800 West Sixth Street,#700 Los Angeles, CA 90017 (213) 487-1212 www.caala.org
Advertiser’s Index
Board of Governors – CAALA Offices Downtown Los Angeles, 6:00pm June 19, July 17 Education Committee – CAALA Offices Downtown Los Angeles, 5:00pm June 19, July 17 New Lawyers Committee - CAALA Offices Downtown Los Angeles, 6:00pm June 10, July 15
Advertiser’s Index
Announcements and Career Opportunities CAALA Membership . . . . . . . . . . . . . . . . . . . . . . . . . .77 CAALA PAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73 CAALA VEGAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Attorneys – Appeals Bader, Donna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80 Ehrlich Law Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 Pine & Pine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 Attorneys – Accepting Referrals Bailey Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61 Bisnar | Chase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 CaseyGerry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Cook, David . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 Dolan Law Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 Dordick Law Offices . . . . . . . . . . . . . . . . . . . . . . .54-55 Edzant, Barry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84 Engstrom, Lipscomb & Lack . . . . . . . . . . . . . . . . . . . .49 Galipo, Dale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 Girardi | Keese . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Greene Broillet & Wheeler . . . . . . . . . . . . . . . . . . . . . .1 Hodes Milman Liebeck LLP . . . . . . . . . . . . . . . . . . . . .34 Kamanski Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88 Kesluk & Silverstein . . . . . . . . . . . . . . . . . . . . . . . . . . .87 Law Offices of Lisa Maki . . . . . . . . . . . . . . . . . . . . . .65 Law Offices of Marc I. Zussman . . . . . . . . . . . . . . .107 Law Office of Michels & Lew . . . . . .Inside Back Cover Makarem & Associates . . . . . . . . . . . . . . . . . . . . . . . .17
106 — The Advocate Magazine
JUNE 2014
Attorneys – Accepting Referrals (cont.) Manly & Stewart . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 McGonigle, Timothy . . . . . . . . . . . . . . . . . . . . . . . . . .21 McNicholas & McNicholas . . . . . . . . . . . . . . . . . . . . .9 Metzger Law Group . . . . . . . . . . . . . . . . . . . . . . . . . .51 Nemecek & Cole . . . . . . . . . . . . . . . . . . . . . . . . . . . .50 Panish Shea & Boyle . . . . . . . . . . . . . . . . . .Back Cover Richard Harris Law Firm . . . . . . . . . . . . . . . . . . . . . . . .4 Rizio & Nelson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Shegerian & Associates . . . . . . . . . . . . . . . . . . . . . . .37 Shernoff Bidart Echeverria Bentley LLP . . . . . . . . . . .33 Taylor & Ring, LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 The Traut Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Court Reporters Jonnell Agnew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 Kusar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53 Personal Court Reporters . . . . . . . . . . . . . . . . . . . . . .70 Defense Medical Exam Observation Advantage Representatives . . . . . . . . . . . . . . . . . . . .87 PRIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96 Expert Witnesses – Medical Forensic Autopsy Services . . . . . . . . . . . . . . . . . . . . .97 Graboff, Dr. Steven . . . . . . . . . . . . . . . . . . . . . . . . . . .64 Luckett, Karen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Physician Life Care Planning . . . . . . . . . . . . . . . . . . . .35 Roughan & Associates at LINC, Inc. . . . . . . . . . . . . .69 Expert Witnesses – Technical & Damages The TASA Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Financial Services California Attorney Lending . . . . . . . . . . . . . . . . . . . .79 CPT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98 EPS Settlements Group . . . . . . . . . . . . . . . . . . . . . . . .16 Farber, Patrick (Struct. Stlmts) . . . . . .Inside Front Cover Fast Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99 Fund Capital America . . . . . . . . . . . . . . . . . . . . . . . . .13 Millennium Settlements . . . . . . . . . . . . . . . . . . . . . . . .62 RD Legal Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . .66 Summit Structured Settlements . . . . . . . . . . . . . . . . . .78 Valdez Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95 Zea, Michael . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96
Graphics/Presentations/Video Court Graphix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66 Courtroom Presentations . . . . . . . . . . . . . . . . . . . . . . .42 Executive Presentations . . . . . . . . . . . . . . . . . . . . . . . .7 Juris Productions . . . . . . . . . . . . . . . . . . . . . . . . . .40, 81 Legal Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86 MotionLit Video Group . . . . . . . . . . . . . . . . . . . . . . . .76 Verdict Videos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Insurance Programs Lawyers Mutual Insurance Company . . . . . . . . . . . . .67 Lawyer’s Pacific Insurance . . . . . . . . . . . . . . . . . . . . .19 Matloff Company . . . . . . . . . . . . . . . . . . . . . . . . . . . .72 Narver Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Investigators Tristar Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . .78 Legal Marketing New Standard Solutions . . . . . . . . . . . . . . . . . . . . . .20 Legal Nurse Consultants Cross, Kathy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93 Nutris Consulting . . . . . . . . . . . . . . . . . . . . . . . . . . . .89 Legal Research Quo Jure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91 Legal Support Services USA Express Legal & Investigative Services . . . . . . .92 Medical & Dental Service Providers Buena Vista Pharmacy . . . . . . . . . . . . . . . . . . . . . . . .29 Doctors on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Injury Institute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 Landmark Imaging . . . . . . . . . . . . . . . . . . . . . . . . . . .28 North Valley Eye Medical Group . . . . . . . . . . . . . . .88 Software HiPerSoft Corporation . . . . . . . . . . . . . . . . . . . . . . . . .31 Verdict Reports Jury Verdict Alert . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83
ADR Providers ADR Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 Carrington, R.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97 Daniels, Jack . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95 Fields ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84 First Mediation Corp - Jeffrey Krivis . . . . . . . . . . . . .100 Gage, Sandy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Graver, Darryl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89 Hanger, Bob . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38 JAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 Jossen, Sanford Law Office . . . . . . . . . . . . . . . . . . . .93 Judicate West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48 Mehta, Steven G. Mediation . . . . . . . . . . . . . . . . . . .52 Rubin, Charles “Skip” . . . . . . . . . . . . . . . . . . . . . . . . .44 Sepassi & Tarighati, LLP . . . . . . . . . . . . . . . . . . . . . . .15 Watkins, Shirley . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
I refer all of my securities cases to Marc Zussman and I have also worked with him. He is an excellent lawyer. — Brian J. Panish Attorney
Refer your Securities Arbitration (FINRA) or Litigation Cases for a Generous Referral Fee. With a success rate greater than 90%, we are well equipped to maximize your clients’ recovery on a wide variety of securities law-related matters. We take pride in our referral relationships and our ability to share attorneys’ fees with referring attorneys. We represent investors who have lost money due to mismanagement of their portfolio by their investment professionals. We accept cases from the 2008/2009 market crash. SPECIALTIES INCLUDE: • Underperformance of stock in a bank trust account • Unsuitable investments or strategy • Fraud • Private Placements • Churning/Reverse Churning • Unauthorized Trading • Overconcentration/Asset Allocation • Margin Trading • Mutual Fund Fraud • Negligent Supervision and more
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From the President Geoffrey Wells
Consumer Attorneys Association of Los Angeles
The Pack Patient Safety Act – it’s about time! Medical errors can affect anyone
This month, there is going to history of stocking up on thoube a crucial push to get all of our sands of pills. Since that tragic members behind the Pack Patient day a decade ago, Troy and Safety Act. For many of you, this Alana’s dad, Bob Pack, has been might be the only time in your fighting to change State law to lifetime to make a real policy ensure that victims of medical change for the protection of connegligence receive justice and sumers in the health care field in that no other family ever has to our State. The thought of protectsuffer like that again. ing and preventing catastrophic My personal story injuries to our citizens is something that we must all get behind. Medical errors are linked to The key provisions of the some 440,000 deaths each year. Pack Patient Safety Acts include Unfortunately, my mom was one many positive messages such as: of those. • Protection for patients by requirIt was November 1998 and my ing random drug and alcohol testparents had just retired and sold Joan Wells with husband Carl and grandchildren Morgen ing of doctors – specifically the their small printing business in and Garrett (Geoff’s kids). provisions will require that hospiSeattle, Washington. They had tals conduct random drug and database before prescribing addictive purchased a used motor home and alcohol tests of doctors including conpain killers such as Vicodin or Oxycontin planned on spending their retirement tractors and those with admitting privifor the first time to a patient. years by driving out of the Pacific leges. • If a doctor over-prescribes, disciNorthwest in the winter time to get away • Random drug testing is modeled after plinary action would be taken against from the dark, wet days and come to the federal guidelines for airline pilots. him. Southern California and other warmer • If a patient is injured or dies because To ensure that injured patients and climates to visit their grandkids, children of a medical error, the hospital must test families are fairly compensated and can and friends. November 1998 was their all doctors involved in the patient’s care hold bad doctors accountable: first such visit in their retirement. the previous 24 hours. • The current $250,000 cap on My mom came and stayed at my Doctors testing positive for drugs damages, set in 1975, would be adjusted house in Manhattan Beach for approxiand alcohol would be reported to the for inflation. mately five or six days and then drove Medical Board. The doctors testing “pos• Stay-at-home moms, veterans, sendown to my sister’s house in San Diego itive” would be suspended pending an iors and children would not be denied to see her and her husband. While my investigation. The doctors are required to justice just because they lack a salary. mom was at our house, she had stated report suspected drug or alcohol abuse that she felt like her heart was racing a Who are Troy and Alana Pack? by other doctors. The disciplinary action bit and that her heart beat seemed irregthat would be required for an investigaular. I told her to have it checked when The Packs had a 10-year old boy tion includes that of a doctor who was she was down in San Diego because they named Troy Pack and a 7-year old impaired by drugs or alcohol while on have a lot of good hospitals and doctors daughter named Alana Pack. While walkduty. down there. Several days passed, and I ing down a sidewalk in their Bay Area got a call from my mom who told me neighborhood, the children were hit and Crackdown on prescription drug that she did in fact go in and have her killed by a drugged driver. The driver abuse and over-prescribing heart tested and was told that she had an was high on a prescription drug cocktail elevated heart rate. Even though she was authorized by negligent doctors who • Doctors would be required to connever bothered to check her prescription sult the statewide prescription history Act continues on Page 105 108 — The Advocate Magazine
JUNE 2014
& LAW LAW OFFICES OF MICHELS & LEW MEDICAL MALPRACTICE • PERSONAL INJUR INJURY Y
Verdicts and Settlements Totaling Over 10 Figures.
BRADFORD S. DAVIS, M.D.
MARTIN P. WENIZ
ELIZABETH HERNANDEZ
PHIL MICHELS
JIN LEW
STEVEN B. STEVENS
JEROME J. CALKINS
OUR TEAM • CAALA Trial Lawyer of the Year • CAALA Appellate Lawyer of the Year • Board Certified Physician • President Elect KABA • CAALA Board of Governors
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