AOC moves to smother criticism by judges, stifling First Amendment rights along the way

A story first made the rounds quietly in November of last year about a proposed ethics rule that is just broad enough and vague enough that it can be used as a tool by AOC to punish any judge with the gumption to criticize decisions of the AOC.  That rule has passed, unsurprisingly (Note: when you see a news report that something entirely likely to occur is "unexpected," that should tip you off to the agenda of the reporter, not that the event was "unexpected").  It was entirely expected that it would pass.  It was proposed to stifle dissent by using the costs associated with an ethics inquiry to shut down free speech.

We have two simultaneous problems in California's judicial branch of government, a constitutional and co-equal branch.  First, the judicial branch is catastrophically underfunded.  The Los Angeles Superior Court should not be shutting down courtrooms.  A member of the bench who shall remain nameless told me that with the coming courtroom closures in Los Angeles, the average caseload that is currently running somewhere between 550 and 600 cases per judge will jump by about 150 cases per courtroom.  What sort of justice will anyone receive under those conditions?

Second, the AOC has ballooned into a bloated bureaucracy that serves itself.  Why did the AOC mushroom from 100 employees to well over 1,000 employees inside of a decade?  Fixing this bloat would save some money.  Getting rid of the endless boondoggle of the unicorn known as CCMS saved some money, but it doesn't close the gap between current funding levels and what those levels should be at to have courts in each county that can manage the caseloads they face.  I don't know the right caseload for a civil trial court, but it isn't 550 case, and it surely isn't 700 cases.  You'd probably receive real attention and a better measure of justice if those caseloads were more like 250-300 cases per courtroom.

I condemn the current and past legislatures for allowing this to happen.  I condemn AOC for succumbing to corruption and administrative bloat (I refer to the allegation of embezzlement in the alleged amount of $100,000 that was not reported or charged as an example of that).

So to the massive audience of Legislators reading this and waiting for my go-signal, here it is: Fix the funding shortfall (who cares if you have to cancel a high speed train to do it - this is a co-equal branch of government we're talking about) and root out the administrative bloat (in other words, start insisting upon the firing of AOC staff until you have half the number you started at and then reassess, and then get rid of some more).

By the way, if someone handed me half the amount of money that was wasted on CCMS, I could have a Statewide court system database up and running in a few years, with enough left for me to retire on in a castle that I would have constructed out of rare marble on my own private island.

Ordinary agency principles apply in UCL and FAL cases

And now I get to try and play catch-up after spending so much time with the back-end issues that have to be ironed out to start a podcast.  To many visitors, this may be old news, but I'd like to note significant cases from the last month so they are here for reference.  I've faced down the issue of whether agency principles apply in UCL and FAC cases.  In People v. JTH Tax, Inc. (January 17, 2013), the Court of Appeal (First Appellate District, Division Two) tackled that exact issue.  Of primary significance as far as I am concerned is the fact that the Court criticized two cases commonly cited by defendants on this issue, People v. Toomey, 157 Cal.App.3d 1 (1985) and Emery v. Visa Internat. Service Assn., 95 Cal. App. 4th 952 (2002).

The background is complex, but a brief summary puts the discussion in context.  Liberty provides certain tax preparation and related loan services throughout the United States.  Liberty had more than 2,000 franchised and company-owned stores throughout the United States.  Liberty offered tax preparation services, e-filing, “refund anticipation loans” (RAL) and “electronic refund checks” (ERC).  The Attorney General filed a complaint against Liberty, alleging that Liberty had violated the UCL and the FAL.  The lawsuit claimed there were misleading or deceptive statements in print and television advertising by Liberty and its franchisees regarding Liberty's RAL's and ERC's and inadequate disclosures to customers in Liberty's RAL and ERC applications regarding debt collection, certain costs and interest on the extension of credit, the time it takes to receive money under refund options offered, and other matters. The remedies the People sought included injunctive relief, civil penalties, and an order of restitution.

When the Court turned to the legal issue of agency liability for UCL and FAL violations, the Court said:

Also, as the People point out, our Supreme Court has held, without the limitations urged by Liberty in the present case, that “section 17500 [the FAL] incorporates the concept of principal-agent liability.” (Ford Dealers Assn. v. Department of Motor Vehicles (1982) 32 Cal.3d 347, 361 ( Ford Dealers ).) Since violations of the UCL “include any . . . unfair, deceptive, untrue or misleading advertising and any act prohibited by [the FAL]” (§ 17200), Ford Dealers establishes that persons can be found liable for misleading advertising and unfair business practices under normal agency theory. To the extent that Toomey, supra, 157 Cal.App.3d 1, or Emery, supra, 95 Cal.App.4th 952 hold otherwise, which defendant implies without stating outright in the course of arguing its limiting theories, these cases are mistaken.

It is clear that, as the trial court recognized, we must be mindful that we are applying agency theory in the context of the franchisor-franchisee relationship. A franchisee, by definition, operates a business “under a marketing plan or system prescribed in substantial part by a franchisor,” which operation “is substantially associated with the franchisor's trademark, service mark, trade name, logotype, advertising or other commercial symbol designating the franchisor . . . .” (Corp. Code, § 31005, subd. (a)(1), (2).) Accordingly, “the franchisor's interest in the reputation of its entire [marketing] system allows it to exercise certain controls over the enterprise without running the risk of transforming its independent contractor franchise into an agent.” (Cislaw , supra, 4 Cal.App.4th at p. 1292, quoted in Kaplan, supra, 59 Cal.App.4th at p. 745.) Thus, a franchisor may exercise a right of control over such activities as advertising to protect its marks and goodwill.

However, it is equally clear that the franchisor's unique interests do not eliminate or alter the application of agency theory if the franchisor exercises a right of control that goes beyond its interests in its marks and goodwill. It is a question of fact as to whether, as the court considered in Cislaw, the franchisor retains " 'the right to control the means and manner in which the result is achieved' " and exercises "complete or substantial control over the franchisee." ( Cislaw, supra, 4 Cal.App.4th at p. 1288.) This is precisely the standard applied by the trial court. Therefore, Liberty's argument that the court applied the wrong legal standard to determine that it was liable for its franchisees' misleading advertising lacks merit.

Slip op., at 24-25.  The opinion, overall, is massive, since much of the discussion focuses on the factual record in the trial court.  The legal discussion of principle-agent liability for UCL and FAL violations is sure to work its way into civil litigation.

A note on the Class Re-Action Podcast

I have received some feedback on the sound quality, and I want anyone who has listened to the premier episode to know that the sound quality isn't where I want it either, but it will get there.  I had to process out a lot of background noise coming in from one of the connections, and heavy noise removal causes other issues.  In the long run, I will likely provide better microphones to repeat guests.  There simply is no comparison between a good microphone and the built-in microphone that comes with many laptops or webcams.  Anyhow, thanks to all the people that have given the show a first listen.

Class Re-Action Podcast now available through iTunes

The Class Re-Action Podcast has been accepted in the iTunes store.  You can follow this link to the iTunes preview page, which can then lauch iTunes and allow subscription to the podcast.

Recent California Supreme Court Activity

While I configured and wired a veritable recording studio, the world marched on, with the issuance of interesting appellate opinions here and elsewhere in U.S.  The California Supreme Court has been up to some interesting activity this year as well.  For instance, the recent debpulication of opinion from the Second Appeallate District, Division Eight, that seemed inconsistent with the manner in which Brinker instructed courts to evaluate class issues, at least in the wage & hour field.  And in the last few weeks the California Supreme Court's Conference events included the following item of note:

• The Court granted review in Ayala v. Antelope Valley Newspapers, Inc. (pub ord. Oct. 17, 2012), previously published at 210 Cal. App. 4th 77.  In Ayala the Court of Appeal partially reversed a trial court order denying class certification.  The wage & hour case stems from the classification of workers as independent contractors.

The grant of review in Ayala raises the question of whether Bradley v. Networkers International LLC, 211 Cal. App. 4th 1129 (2012), as modified (Jan. 8, 2013), might turn on some issue that the Supreme Court intends to resolve in Ayala.

First episode of Class Re-Action now available for streaming

Episode 1 of the Class Re-Action podcast is now available for streaming.  It should also be available for subscription through iTunes shortly.  I think it's a respectable first production, though technical aspects should improve with tinkering and practice.  CLE credit for listening will be offered as an option soon.  It was a lot of fun to putting this together, though it diverted a lot of my spare time that I could have used to try to keep current with updated posts.  Hopefully the podcast will settle into a routine and take less time going forward.  Feel free to suggest topics that would interest you or guests that you'd like me to try and get on future shows.

The Class Re-Action Podcast is almost here!

That's right; it was not an empty promise.  It took a lot of wires and audio gear, a boatload of software, and some new skill development, but the inaugural episode of the Class Re-Action podcast is in the can!  I need to navigate a few more hoops to get to the finish line, but I will hopefully have the first episode syndicated out through iTunes and the Microsoft Xbox Music store in the next day or so.  Until then, thanks to my first episode guests of Tim Blood (Blood, Hurst & O'Reardon), Michael Singer (Cohelan, Khoury & Singer) and Tom Kaufman (Sheppard Mullin).