Berger Kahn's monthly e-publication 
The most important court decisions of the month
Welcome to Berger Kahn's monthly e-publication summarizing the most important California state and federal court decisions.

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A Class Is Properly Certified When The “Right” To Control The Worker Is Retained
Ayala v. Antelope Valley Newspapers
(Cal. Sup. Ct.), filed June 30, 2014

Four newspaper carriers filed a wage and hour class action against Antelope Valley Newspapers alleging they had been improperly classified as independent contractors. The California Supreme Court considered the control Antelope Valley exercised over the carriers, but emphasized that in determining proper certification, it was “not how much control the hirer exercises, but how much control the hirer retains the right to exercise.” The Court commented that the trial court had improperly considered the merits and denied certification based on the differences in how Antelope exercised its control over the carriers. Ultimately, the Court noted that the class action was appropriate for certification, noting that the relevant question is “whether the scope of the right of control, whatever it might be, is susceptible to class-wide proof.”

Refusing To Sign Disciplinary Notice Is Not Misconduct That Precludes Unemployment Benefits
Paratransit, Inc. v. Unemployment Ins. Appeals Bd.
(Cal. Sup. Ct.), filed July 3, 2014

Craig Medeiros was a vehicle operator for Paratransit. Medeiros was disciplined for a passenger complaint. Medeiros was asked to sign his disciplinary notice and he refused. He was terminated for insubordination for failing to sign the notice. The EDD denied his unemployment benefits because he was discharged for misconduct. On review, the California Supreme Court found that Medeiros’ “refusal to sign at the moment was not misconduct, but at most, a good faith error in judgment that did not disqualify him for unemployment benefits.”

Architects May Be Liable In Construction Defect Suit
Beacon Residential Community Assn. v. Skidmore, Owings & Merrill LLP
(Cal. Sup. Ct.), filed July 3, 2014

In a construction defect action, Beacon Residential Community Association sued SOM and HKS who performed architectural services. The Court ruled that the architects’ demurrer was improperly sustained. The Court found that owners relied on the “architect’s specialized training, technical expertise, and professional judgment,” and the “architect cannot escape liability on the ground that the client makes the final decisions.” The Court noted that because the architects had allegedly approved defective windows and designed defective ventilation systems, they “played a lead role not only in designing the Project but also in implementing the Project design. Therefore, the Court held that the architects owed a duty of care to the homeowners.


Drinking Buddies May Be Liable For Negligence And Willful Misconduct In A Drunken Fall
Carlsen v. Koivumaki
(Cal. Ct. of App., 3rd Dist.), filed on July 7, 2014

Jason Carlsen fell from a cliff when he was drunk and was seriously injured. While he did not remember what happened, Carlsen sued his companions for allowing him to be on the cliff’s edge while he was drunk. The Court dismissed the assault and battery cause of action because there was no evidence that Carlsen was pushed off the cliff. The Court held that the negligence claim survived summary judgment since there was a “legal duty to take affirmative action to assist or protect [Carlsen] after he fell.” Similarly, the Court held that there was a triable issue of fact on the willful misconduct cause of action because there was a “duty owed to [Carlsen] by bringing him to the cliff side when... he was intoxicated and waiting several hours to call 911 or otherwise summon aid after the fall.” Finally, Carlsen’s intentional infliction of emotional distress claim was dismissed because Carlsen could not allege mental distress since he had no memory of the accident.

Same Decision Defense Instruction Not Applicable Where The Only Evidence Established A Single Cause Of Termination
Avila v. L.A. Police Dept.
(9th Cir. Ct. of App.), filed July 10, 2014

Police officer Leonard Avila claimed he was fired in retaliation after he testified in a Fair Labor Standards Act lawsuit filed by another police officer. The police department, however, argued Avila was fired for not reporting overtime. Avila presented evidence the only officers disciplined were those who testified in the lawsuit. Ultimately, the jury returned a verdict in Avila’s favor. The Ninth Circuit upheld the jury’s verdict, finding that it properly determined the termination excuse was a pretext. The trial court also properly declined to offer a same decision defense special jury instruction, because it “simply cannot be argued on this record that Avila would have been fired had he not testified.”

Commissions Paid Cannot Be Applied To Other Pay Periods To Satisfy Minimum Wage Requrements
Peabody v. Time Warner Cable, Inc.
(Cal. Sup. Ct.), filed July 14, 2014

Susan Peabody was a commissioned salesperson for Time Warner Cable, receiving biweekly paychecks for hourly wages in every pay period and commission wages every other period. Peabody filed a wage and hour class action suit for unpaid overtime wages, wages for pay periods where she had not earned minimum wage, and unpaid commissions. The Ninth Circuit held that Peabody was not entitled to commissions that pre-dated the commission program. The Ninth Circuit rejected Time Warner’s argument that the commission wages paid in one biweekly pay period could be attributed to other pay periods to satisfy the minimum wage requirements. The Court recognized that the minimum earnings depend on the amount of wages actually paid in the pay period and therefore, an “employer may not attribute wages paid in one pay period to a prior pay period to cure a shortfall.”


Salaried Employee May Be Required To Use Annual Leave Hours When Absent For Part Of A Day
Rhea v. Atomics
(Cal. Ct. of App. 4th Dist.), filed July 21, 2014

Lori Rhea was a salaried employee for General Atomics. She was paid a salary and she accrued annual leave. General Atomics deducted hours from her accrued annual leave for any length of absence -- even a partial day. Rhea filed a class action alleging (1) illegal wage deduction and forfeiture of vested vacation wages; (2) failure to pay overtime wages; (3) failure to provide itemized wage statement; and (4) an unfair competition law violation. Rhea argued that requiring the employees to used accrued leave for partial day absence was in essence, substituting “the employee’s Annual Leave for the employee’s salary during the partial-day absences. But the Court rejected Rhea’s argument. The Court noted there was no evidence that employees were not receiving all their wages. General Atomics’ policy did not take away an employees’ accrued vacation; instead, the policy regulated its use. Accordingly, the trial court’s judgment allowing General Atomic to apply annual leave hours for even partial day absences was affirmed.

A Declaratory Relief Action Filed In Response To Prelitigation Letters Cannot Be Dismissed By An Anti-SLAPP Motion
Gotterba v. Travolta
(Cal. Ct. of App. 2nd Dist.), filed July 22, 2014

John Travolta, Alto, Inc. employed Douglas Gotterba as an airplane pilot from 1981 to 1987. Travolta argued that the termination agreement included a confidentiality agreement -- while Gotterba disagreed. Gotterba decided to write a book about working for Travolta. Travolta’s attorney, Martin Singer, wrote to Gotterba, reminding him about the confidentiality agreement and warning him to “proceed at [his] peril.” After a few letter exchanges, Gotterba filed a declaratory relief action for a determination that the agreement was unauthentic. Travolta filed an anti-SLAPP motion alleging that the action prevented Travolta from “exercising his right to send [pre-litigation demand] letters. The Court recognized that in deciding whether anti-SLAPP was appropriate, it had to “distinguish between speech or petitioning activity that is mere evidence related to liability, and liability that is based on speech or petitioning activity.” (orig. emphasis). The Court determined that while “the pre-litigation letters may have triggered Gotterba’s complaint and may be evidence in support of the complaint, they are not the basis of the complaint.” The Court warned that adopting Travolta’s argument would “lead to the absurd result that a person receiving a demand letter threatening legal action for breach of contract would be precluded from seeking declaratory relief to determine the validity of the contract.”

A Class Representative Cannot Stipulate To A Temporary Judge For Purposes Of Approving Pre-Certification Settlement
Luckey v. Superior Court
(Cal. Ct. of App., 2d Dist.), filed July 22, 2014

Roman Luckey filed a class action against Cotton On USA, Inc. and Cotton On Clothing Ltd. for improperly printing more than the last 5 digits of credit card numbers or the expiration dates on printed receipts. The parties reached a class settlement agreement before the class was certified. The parties stipulated to appointing a temporary judge who the parties would privately compensate to rule on the settlement approval. The Court, however, emphasized that “class action settlements should be scrutinized more carefully if there has been no adversary certification.” Ultimately, the Court held that Luckey had no authority to stipulate to the temporary judge on the absent class members’ behalf. Luckey and Cotton were the only parties who could stipulate to the temporary judge and if they wished to resolve their dispute with the temporary judge, they could do so, but not on the uncertified class’ behalf.

Unpaid Medical Bills Are Not Evidence Of The Reasonable Value Of The Services Provided
Ochoa v. Dorado
(Cal. Ct. of App., 2d Dist.), filed July 22, 2014

Driver Joaquin Ochoa and passenger Imelda Moreno were injured in a tractor-trailer accident with Felipe Dorado, Trimac’s driver. Dorado and Trimac conceded liability. During pre-trial motions, the court deferred ruling on the motion in limine to exclude the claim for noneconomic damages. The jury awarded damages after trial. The trial court ordered the plaintiffs to prepare a proposed judgment, but they failed to do so. The trial court ordered a partial new trial on economic damages, while striking noneconomic damages. Ochoa and Moreno appealed. Dorado and Trimac also appealed the court’s ruling on their motion for judgment notwithstanding the verdict. On appeal, the court noted that the appeal appeared to be premature because there was no official judgment. Then turning to the evidence of economic damages, the court went through an extensive overview of past medical expense recovery cases. The Court held that “the full amount billed, but unpaid, for past medical services is not relevant to the reasonable value of the services provided.” The Court specifically noted that this should not be limited to circumstances where medical providers agreed to accept a lesser amount. While the Court recognized that some courts have “held or suggested that unpaid medical bills are some evidence of the reasonable value of the services provided,” in some cases, the patients remained obligated on the bills -- even if they were not paid. But the Court emphasized, “an unpaid medical bill is not an accurate measure of the reasonable value of the services provided.” Therefore, it concluded, “evidence of unpaid medical bills cannot support an award of damages for past medical expenses.”



Our Dedicated Key Decisions Team! 

Lance LaBelle
Orange County

David Ezra
Orange County

Ann Johnston
S. F. Bay Area

Roberta Winston
San Diego




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