E-Discovery: Outside Law Firm and One Of Its Partners Stung By Fees And Expenses For Not Producing Native Formatted Database

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California is making a second attempt to revise the Civil Discovery Act to address the unique issues surrouding e-discovery.  On March 3, 2009, Assembly Bill 5 passed the Assembly Judiciary Committee.  Assembly Bill 5 is almost identical to Assembly Bill 926 that was vetoed by Gov. Arnold Schwarzenegger on Sept. 27, 2008.  The only new provision in Assembly Bill 5 is the inclusion of an urgency provision that would make the proposed law effective immediately upon signature by the Governor.  (See David M. Hickey and Veronica Harris, California Rules to Amend Inaccessible ESI (March 27, 2009) www.law.com.)

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In Franco v. Athens Disposal Company, Inc., another "no class action" arbitartion clause bites the dust, and with a kicker

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Greatsealcal100Today, in a putative class action asserting various Labor Code violations, the Court of Appeal (Second Appellate District, Division One) invalidated as unconscionable an arbitration agreement containing a “no class action or private attorney general action (PAGA) clause” in Franco v. Athens Disposal Company, Inc. (March 10, 2009).

The Court held:

“We conclude that the class arbitration waiver is unconscionable with respect to the alleged violations of the meal and rest period laws given “the modest size of the potential individual recovery, the potential for retaliation against members of the class, [and] the fact that absent members of the class may be ill informed about their rights.” (Gentry v. Superior Court (2007) 42 Cal.4th 443, 463 (Gentry).) In addition, because the arbitration agreement prevents plaintiff from acting as a private attorney general, it conflicts with the Labor Code Private Attorneys General Act of 2004 (PAGA) (§§ 2698–2699.5) — an act that furthers Gentry’s goal of comprehensively enforcing state labor laws through statutory sanctions (see Gentry, supra, 42 Cal.4th at pp. 462–463).

(Slip op., at p. 2.) But you have to admire the employer for the sheer chutzpah of it. A “no private attorney general” clause?  Bold, and daring.

The opinion is longer than you might expect.  Several preliminary issues required discussion before the Court moved to the meat of the issues.  And the Court provided an extensive discussion of both Gentry and the nature of PAGA actions.  If this happens to be your bailiwick, the opinion is a must read.  If you never confront arbitration agreements or wage & hour matters, move along - there is nothing to see here.

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HealthMarkets, Inc. v. Superior Court tries to add clarity to parent-subsidiary jurisdictional questions

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Greatsealcal100I must apologize. I know that you have been wondering whether a parent company purposefully avails itself of a forum solely because a subsidiary does so. And it took me hours to bring the answer to you. For that, I am ashamed. But the opportunity for redemption is at hand, as the Court of Appeal (Second Appellate District, Division Three) answered that question in HealthMarkets, Inc. v. Superior Court (Berman) (March 9, 2009).

After providing a basic primer on general personal jurisdiction, specific personal jurisdiction and the current condition of California law on the jurisdictional impact of subsidiaries, the Court held: “A parent company purposefully avails itself of forum benefits through the activities of its subsidiary, as required to justify the exercise of specific personal jurisdiction, if and only if the parent deliberately directs the subsidiary’s activities in, or having a substantial connection with, the forum state.” (Slip op., at pp. 10-11.) You’d think that a holding this absolute would take care of jurisdictional questions about subsidiaries, but I expect that what we will get, instead, are complaints with generic allegations about how the parent corporation “deliberately directed” the activities of its subsidiary in the forum state. And the never-ending chess game continues.

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California Supreme Court grants itself additional time to consider Petition in Brewer v. Premier Golf Properties

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Greatsealcal100On February 23, 2009, the California Supreme Court extended the time for granting or denying review in Brewer v. Premier Golf Properties (2008) 168 Cal. App. 4th 1243. The Complex Litigator’s initial post about Brewer discusses its holding that punitive damages are unavailable for violations of at least some Labor Code provisions.  The Supreme Court now has to and including April 8, 2009 to grant or deny review.

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in brief: UCL Practitioner has more on Sullivan, et al. v. Oracle Corporation

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The UCL Pracitioner has a series of posts on Sullivan, et al. v. Oracle Corporation.  In particular, the most recent post sets forth the questions certified by the Ninth Circuit to the California Supreme Court.

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in brief: Ninth Circuit opinion in Sullivan, et al. v. Oracle Corporation is withdrawn

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Ninth Circuit SealThe Ninth Circuit issued an Order today in Sullivan, et al. v. Oracle Corporation, withdrawing its prior opinion. The Court said, "We have today issued an order requesting the California Supreme Court to answer three certified questions of California law presented in this case. We hereby withdraw our published opinion in this case, Sullivan v. Oracle Corp., 547 F.3d 1177 (9th Cir. 2008), pending a decision by the California Supreme Court on those questions. Appellants’ Petition for Rehearing and Appellees’ Petition for Rehearing En Banc are dismissed as moot." The Complex Litigator will have more on the certified questions in another post.

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Cristler v. Express Messenger says more about the standard of review on appeal than it does about class actions or employee misclassification

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Greatsealcal100When does a class action go to trial? That’s not an easy question to answer. The potential recovery is a factor, but not always. Personalities involved in the litigation are a factor, but not always. The jury pool is factor, but not always. However, when the class is seeking to declare unlawful a delivery company’s classification of delivery drivers as “independent contractors,” it looks like a sure bet that the class action will go to trial.

In Christler v. Express Messenger Systems, Inc. (February 11, 2009), the Court of Appeal (Fourth Appellate District, Division One) considered challenges to a number of rulings surrounding the trial of plaintiffs’ claim that defendant misclassified its delivery drivers as “independent contractors.” While this opinion does discuss the legal standard for determining employment, the Court of Appeal limited its review, based upon what appellant presented:

“ Cristler emphasizes throughout its briefing that other cases addressing the proper classification of package delivery drivers have resulted in findings that the drivers were employees, rather than independent contractors. (See Estrada, supra, 154 Cal.4th at pp. 11-12 [reciting litany of factors that provided substantial evidence to support trial court's finding that FedEx drivers were employees, including "FedEx's control over every exquisite detail of the drivers' performance, including the color of their socks and the style of their hair"]; JKH Enterprises, Inc. v. Department of Industrial Relations (2006) 142 Cal.App.4th 1046, 1065 [listing factors that provided substantial evidence for trial court's conclusion that drivers were employees and thus "reject[ing] JKH's contention" that the evidence "dictate[d] but one conclusion here — that the drivers are independent contractors"]; Air Couriers, supra, 150 Cal.App.4th at p. 938 [same].) The simple answer to these references is that these cases concerned different circumstances presented to a different finder of fact. Indeed, even if the facts of this case were identical to those in the cases Cristler cites (and they are not), we would not be authorized to overrule the determination of the jury to achieve conformity with other cases — particularly as Cristler does not even argue that the jury's verdict is unsupported by substantial evidence.

(Slip op., at p. 8, fn. 2.) If nothing else, this certainly suggests a trend when suing delivery companies who have, as their business model, decided to classify delivery drivers as “independent contractors.”

As part of the appeal, plaintiffs contended that the trial court erred by failing to continually review the class definition to ensure that class members were not inappropriately excluded: “In the instant case, regardless of whether the trial court erred in defining the class, Cristler fails to carry its burden of establishing reversible error as there is no showing of prejudice from the trial court's assertedly erroneous rulings.” (Slip op., at p. 11.) Continuing, the Court explained: “In light of the trial court's refusal to expand the class definition, the drivers who remained in the class — those without any employees of their own and who did not deliver even an occasional package for clients other than Express Messenger — were the most likely to be characterized as Express Messenger's employees rather than as independent contractors.” (Ibid.) Losing at trial with a narrow class didn’t do much for the plaintiffs’ arguments.

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Ninth Circuit certifies interesting e-mail question to California Supreme Court in Kleffman v. Vonage Holdings

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As I play weekend catch-up and work through the list of items to consider for posting, I saw a Ninth Circuit case that I saved for its technology angle.  Periodically, the Ninth Circuit gets a tricky question of first impression about California law.  When the answer to the question could prove significant, the Ninth Circuit will occasionally certify a question to the California Supreme Court, in the hope that the California Supreme Court will bail them out and take the question.  In Kleffman v. Vonage Holdings, the Ninth Circuit certified this question:

“Does sending unsolicited commercial e-mail advertisements from multiple domain names for the purpose of bypassing spam filters constitute falsified, misrepresented, or forged header information under Cal. Bus. & Prof. Code § 17529.5(a)(2)?

Yes.  Why yes?  Because there isn't any spam out there that isn't faking its header information.  Perhaps an overstatement, but so close to true that the differential is insignificant.  The fact that spam comes from multiple domain names is just an additional irritation.  Somebody oughta' file a class action...

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Travelers Casualty v. Brenneke: How to serve a recalcitrant defendant

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Ninth Circuit SealJust because your case is complex doesn’t mean that you don’t have to worry about ordinary tasks . . . like serving parties. While The Complex Litigator doesn’t spend much time covering civil procedure issues outside of the class action device, there are exceptions to almost every rule, as with a recent Ninth Circuit decision regarding service of process. In Travelers Casualty and Surety Company of America v. Brenneke (January 9, 2009), the Ninth Circuit examined the nature of “person service” when a defendant studiously avoids service of process.

Describing the disputed service of process, the Court said:

“ In connection with its motion to enter default, Travelers submitted the affidavit of Phil Sheldon (“Sheldon”), a process server for Barrister Support Service, which Travelers had hired to effectuate service upon Brenneke. Sheldon stated that he had experienced “significant difficulty” in serving Brenneke in the past, and that he was aware of other process servers’ having experienced similar difficulty. He also indicated that he had successfully served legal documents personally on Brenneke on prior occasions. As to the current matter, he stated that he had made four separate visits to Brenneke’s home between March 17, 2006 and April 2, 2006, attempting to accomplish service. No one answered the door or intercom even though, on more than one occasion, there were two or three vehicles in the driveway. On both his first and third visits to that residence, Sheldon left a note for Brenneke to contact Barrister Support Service, but he did not do so. During what was apparently the fifth attempt, on the evening of April 2, 2006, an adult male answering to the name of Paul Brenneke responded to Sheldon’s ringing on the intercom at Brenneke’s residence. When Sheldon identified himself as a process server, that person responded “Oh great,” but never opened the door. However, Sheldon observed Brenneke standing behind the window next to the front door watching him. Sheldon then held the summons and complaint out towards the window, and announced in a loud voice “You are served.” Sheldon further indicated that Brenneke watched him place the documents on the doorstep. Sheldon thereafter completed a proof of service form.

(Slip op., at p. 166.) I find this sort of behavior very entertaining. Many years ago, I was counsel in a matter where one defendant jumped in a car and locked the door to avoid service. The papers were left on the windshield. I was successful in arguing that “personal service” had been effectuated.

District Court Judge George H. Wu, sitting by designation, delivered the opinion of the Court.  As an aside, the Ninth Circuit has made viewing new opinions very easy through their website with an embedded PDF viewer.

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Petition for Review denied in Johnson v. Glaxosmithkline, Inc.

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Greatsealcal100This blog briefly reported on a new opinion in Johnson v. Glaxosmithkline, Inc. (September 19, 2008). You can read that post here. A Petition for Rehearing was filed on October 7, 2008. It was denied the day it was filed. On October 14, 2008, the Court of Appeal modified its opinion, without changing the judgment. In a later post, I guessed (not a stretch) that a Petition for Review was coming. The expected Petition was filed with the Supreme Court.  Today, the Supreme Court denied the Petition as part of its weekly conference.

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