Recent Court Decisions and Legislation
New California Law for Employment Claims Settlement Agreements
California recently signed into law the “Silenced No More Act” (SB 331), which expands limitations on confidentiality provisions in settlement agreements for sexual harassment and other sex discrimination claims. The statute will now apply to all forms of employment settlement agreements for harassment and discrimination—not just those based on sex. This includes but not limited to, harassment and discrimination based on race, religion, color, national origin, disability, and gender. The statue further prohibits the use of non-disparagement clauses in separation agreements. In addition to the new restrictions, agreements related to an employee’s separation from employment may not include language that denies “the employee the right to disclose information about unlawful acts in the workplace.” However, separation agreements may include a non-disparagement or non-disclosure clause that restricts an employee’s ability to disclose information related to workplace conditions if accompanied by a statutory disclaimer protecting the right to report unlawful acts in the workplace. It also requires employers to inform employees of their right to consult with an attorney and to provide at least five business days for employees to do so.
Recent comments about settlement discussions by Judge Michael Marcus of ADR Services:
> “We expect significant movement from (the opposing party)” or “They need to make a big move.” MDM’s observation –The speaker sounds like a doctor performing a yearly physical.
> “This is not a six-figure case.” MDM’s observation – The defense is not so subtly signaling that the case must settle below $99,000 while, at the same time, the plaintiff’s demand is somewhere around $600,000. “This is not a five-figure case.” MDM’s observation – This is the polar opposite of the “six figure” comment, above. Generally, it is made after the defendant has offered successive sums of $5,000, $10,000, and $15,000 in response to demands of $550,000, $535,000 and $525,000.
> “We don’t want to create a floor.” MDM’s observation – Is the speaker in linoleum sales? How can a floor be created when mediation negotiations are confidential and cannot be referenced in future discussions, should the mediation be unsuccessful?
> “Their offer (or demand) is not in the ballpark.” MDM’s observation – This is a mixed metaphor because a ball hit out of the park is most desirable.
> “Why are we here (when negotiations are not going well)?” – MDM’s observation – What am I, an existentialist? Where’s Jean Paul Sartre when I need him?
> “They’re not here in good faith (when the offer or demand doesn’t meet expectations).” MDM’s observation – How does the speaker know this? Has he or she a hidden microphone in opposing counsel’s room?
> “They’re the ones who wanted this mediation (when the negotiations aren’t going well).” MDM’s observation – Interestingly, opposing counsel is saying the very same thing.
> “I hate brackets.” MDM’s observation – The attorney has probably never used brackets before because they’re effective when marketplace bargaining has stalled.
> “This is not my first rodeo.” MDM’s observation – If it isn’t, why are you gripping the arms of your chair like you’re afraid of falling off?
> “We don’t want to send the wrong signal.” MDM’s observation – These lawyers think they’re traffic guards.
> “I’m not bidding against myself.” MDM’s observation – Self-flagellation is unseemly.
> “I increased my offer by 100% while they’ve only decreased their demand by 25%.” MDM’s observation – What the speaker didn’t mention is that he or she increased its offer from $5,000 to $10,000 while opposing counsel decreased his or her demand from $300,000 to $225,000.
> “They’re negotiating with Monopoly money.” MDM’s observation – Hasbro should be advised that counsel is engaging in the dilution of a trademark. An alternative to the foregoing comment is “Our money is real money.”
> “We’re running out of room.” MDM’s observation – Well, then, get a bigger room.
> “They’re going in the wrong direction.” MDM’s observation – The only wrong direction occurs when a party walks out of mediation without a settlement.
> “Where did they get that demand or offer?” MDM’s observation – Only a proctologist can answer that question.
Tenant Can Attack UD Complaint Based on Service of Summons and Complaint
On May 3rd, 2021, the California Supreme Court held that a motion to quash service of summons is not the proper remedy to test whether a complaint states a cause of action for unlawful detainer. Landlord, the City of Redwood City, filed a UD complaint against Tenant. In response, Tenant filed a motion to quash service of summons, relying on Delta Imports Inc. v. Municipal Court, 146 Cal.App.3d 1033 (1983) to argue that a motion to quash service is the only method by which the defendant can test whether the complaint states a cause of action for unlawful detainer. The Supreme Court held that the Superior Court correctly found that Tenant's motion to quash was not the proper procedure to argue that the City was not a proper plaintiff. A motion to quash service of summons under section 418.10 is limited to challenge the service of process as improper or the summons as defective and hat proper service of process undersections 412.20 and 1167, providing a copy of the summons and complaint to the defendant, confers personal jurisdiction in an unlawful detainer.
Statute of Limitations Starts When Employee Knew or Should Have Known Of Employers Wrongful Actions
The California Supreme Court in Pollock v. Tri-Modal on July 2, 2021 vacated the judgment of the court of appeal and its award of costs holding that a claim for failure to promote brought under the harassment provision of the Fair Employment and Housing Act (FEHA), Cal. Gov. Code 12940, subd. (j), 12960, accrues, and thus the statute of limitations begins to run, at the point when an employee knows or reasonably should know of the employer's allegedly unlawful refusal to promote the employee. Plaintiff alleged that her employer passed her over for promotions because she refused to have sex with the company's executive. The Supreme Court held (1) the court of appeals erred in concluding that the statute of limitations began to run when Plaintiff's employer offered a promotion to someone else, and she accepted it; and (2) the court of appeal erred in awarding costs on appeal to Defendants without first finding that Plaintiff's underlying claim was objectively groundless.
Duo of Cases where Property Owner Not Liable for Contractors Negligence
In Sandoval v. Qualcomm (September 9, 2021) the California Supreme Court held that the property owner that hired the contractor to perform electrical work which injured plaintiff was not liable for the plaintiff's injuries. Plaintiff, an electrical parts specialist, sustained burns from circuit he did not realize was flowing electricity. At issue was whether the entity that hired the independent contractor, owed a tort duty to Plaintiff. The Supreme Court held that Defendant owed no tort duty to Plaintiff because Defendant neither failed to sufficiently disclose the hazard nor affirmatively contributed to the injury. Defendant argued that when a person or organization hires an independent contractor, the hirer presuptively delegates to the contractor the responsibility to do the work safely. This decision was preceded by an August 19, 2021, California Supreme Court decision in Gonzalez v Mathis that held "unless the landowner retains control over any part of the contractor's work and negligently exercises that retained control in a manner that affirmatively contributes to the injury, it is not liable to an independent contractor or its workers for an injury resulting from a known hazard on the premises."
Use of Social Media Evidence in Litigation - Don't Post It If You Don't Want It Marked "Exhibit A"
“Use of Social Media Evidence in Litigation” was written by Robert M. Freedman to help business and legal professionals understand how trending social network communications can be used as evidence during the litigation process. Published in the Spring, 2015, edition of the Journal of American Law, this article discusses various types of social media evidence available in today’s tech-savvy world, as well as pitfalls to avoid when harnessing social media postings for admission in court. When commenting on the article, Circuit Court Judge Catherine L. Heise wrote “As a trial judge in the criminal division of a busy metropolitan court, the evidentiary issues arising out of the use of social media are presenting themselves more and more frequently… Your article provides valuable insight and a wealth of useful citations…” Below is the link to the full article.
Article by Mr. Freedman on Valuing Cases in Litigation - How Much Is This Case Worth?
"What if, especially on complex cases, we turned the tables on the process? Instead of adverse parties approaching mediation as a battle in which they sit in separate rooms attacking each other, what if the adverse parties sat in the same room and focused their energies and resources on finding neutral ground and establishing a structure for an unbiased and informed evaluation of the case? "
Here is the link to the article:
US SUPREME COURT RULES THAT CLASS MEMBERS OF CLASS ACTION MUST HAVE BEEN HARMED.
The U.S SUPREME COURT in CEDAR POINT NURSERY v. HASSID, in an appeal from the Ninth Circuit, stuck down a California law forcing property owners to allow persons onto their property. A California regulation grants labor organizations a “right to take access” to an agricultural employer’s property to solicit unionization. Cal. Code Regs., tit. 8, §20900(e)(1)(C). United Farm Workers sought access to property owned by California grower. The growers filed suit in Federal Court to enjoin enforcement of the access regulation because t established, without compensation an easement for union organizers to enter their property and constituted an unconstitutional physical taking under the Fifth and Fourteenth Amendments. When the government acquires private property for a public use, the Takings Clause obligates the government to provide the owner with just compensation. A different standard applies when the government imposes regulations restricting an owner’s ability to use his own property. To determine whether such a use restriction amounts to a taking, the Court has applied the approach set forth in Penn Central v. New York City, 438 U. S. 104, considering factors such as the economic impact of the regulation, its interference with reasonable investment-backed expectations, and the character of the government action. California’s regulation is a right to invade the growers’ property and is a physical taking. Rather than restricting the growers’ use of their own property, the regulation appropriates for the enjoyment of third parties (here union organizers) the owners’ right to exclude. The right to exclude is “a fundamental element of the property right.” Kaiser Aetna v. United States, 444 U. S. 164.
ROBERTS, C. J., delivered the opinion of the Court, in which THOMAS, ALITO, GORSUCH, KAVANAUGH, and BARRETT, JJ., joined. KAVANAUGH, J., filed a concurring opinion. BREYER, J.
INJURIES WHILE WORKING REMOTELY - BLURRED LINES
Working remotely has been increasing over the past year and has greatly accelerated due to COVID. Per the U.S. Bureau of Labor Statistics, over one-third of the workforce worked from home during COVID-19 and this "new normal" appears to be here to stay. This new employment dynamic imposes different risks on employers, and they should be considered in preparing management policies for remote employees before a work accident is claimed. Among other things, consideration should include the multi-jurisdictional nature of federal and state labor and employment laws.
Examples of issues to consider and document what constitutes the work to be performed, and who owns, maintains, and ensures the workspace, furniture, equipment and employees use of shared workspaces. Examples of risks include a problematic workspace, lack of proper office equipment, and ergonomic concerns could result in work-related trips, falls, or repetitive motion claims. In addition to creating a reduced-risk remote workspace, employers may want to establish guidelines concerning work hours, flex time, and lunch breaks. This includes how much flexibility employees may have to handle personal or family obligations. Employers may want to consider software to monitor "clock in" and "clock out" data, recorded breaks, computer use, monitoring employees’ communications, or when employees appear to step away from their computers. Despite employers taking measures to reduce the risk of accidents there will continue to be worker compensation claims. With regard to an accident that occurs in a remote workspace, it is important to document the accident with photos, videos, and other supporting evidence as the line between accidents occurring while working or while performing personal tasks can quickly become blurred.
US Supreme Court Rules that “Unharmed” Class Members Not Entitled to Damages
In the June 2021 decision in TransUnion v. Ramirez, the Court addressed standing in a class action. The Ninth Circuit Court of Appeals approved a $40 million award to a class of 8,185 individuals alleging violations of the Fair Credit Reporting Act despite questions whether many class members had suffered an injury. The class consisted of persons who TransUnion had identified in credit reports as being on criminals” by the federal Office of Foreign Assets Control. 1,853 of the class members had their credit reports disseminated to third parties. The Supreme Court held that the 1,853 class members whose reports were disseminated to third parties did suffer “a concrete injury in fact under Article III,” but “[t]he remaining 6,332 class members [were] a different story.” The Court held that these 6,332 class members, representing 77% of the certified class, lacked any concrete injury and did not have standing to assert a claim for damages. Accordingly, the court reversed the $40 million judgment. The majority explained granting standing to unharmed plaintiffs to sue defendants who violate federal law violates Article III and infringes on the Executive Branch’s Article II authority. The plaintiffs bear the burden of demonstrating that they have standing. Every class member must have Article III standing to recover individual damages. The specific facts set forth by the plaintiff to support standing ‘must be supported adequately by the evidence adduced at trial.’ And standing is not dispensed in gross; rather, plaintiffs must demonstrate standing for each claim that they press and for each form of relief that they seek (for example, injunctive relief and damages).”
Financial Services - New California Laws Enacted in 2020
California introduced the Department of Business Oversight (DBO), debt collection requirements, and student borrower rights. The DBO, now the Department of Financial Protection and Innovation (DFPI) was given authority to enforce California laws governing financial products or services. Among other things, it implements a new California Consumer Financial Protection Law (CCFPL) that includes a vast array of new consumer protections related to debt collectors, credit reporting agencies, some fintech companies and merchants that extend credit to consumers. Exempted are certain licensed companies such as escrow agents, mortgage loan originators, investment broker-dealers, capital access companies, etc. The DFPI can now require previously un-licensed entities to become licensed and bonded; prescribe regulations; establish rules for unfair, deceptive, or abusive acts and practices; bring legal enforcement actions; and prohibit retaliation against employees refusing to participate. It establishes a Financial Technology Information Office. The Student Borrower Bill of Rights amends existing law to prohibt abusive practices; requires late fees to be reasonable with a 6% cap; timely processing; minimize negative credit reporting; and created a private right of action against loan servicers. The Debt Collection Licensing Act requires registration of debt collectors; provides additional disclosures in collection communications; and disclosure of license numbers. Other recently enacted laws include amendments to Check Seller and Bill Payers and Protaters law; amendments to California Financing Law and Penalty Provisions; and extensions of time for Senior Citizens Recession of Contracts for those over 65.
A Two-Prong Analysis is Required to Determine if There is a Duty to Protect from Sexual Abuse
In Brown v USA Taekwondo, the plaintiffs were young girls who trained in Taekwondo. They sued the defendants, USA Taekwondo (USAT), the US Olympic Committee (USOC), and their coach based on allegations that the coach sexually abused the minor athletes. They alleged that defendants USOC and USAT were liable for negligently failing to protect them from the sexual abuse knowing of the alleged misconduct. USOC and USAT challenged the complaint citing failure to adequately allege that they had an affirmative duty to insulate the plaintiffs from the coach’s abuse and the trial court and dismissed the case. The plaintiffs appealed, and the Court of Appeals affirmed the judgement as to USOC but reversed as to USAT. The California Supreme Court clarified a two-step analysis. First, it must be determined if there is a special relationship between the defendant and the plaintiff giving rise to an affirmative legal duty to protect. Second, if such a relationship exists, the court must then weigh the Rowland factors to determine whether liability should be limited.
Realtor Required to Pay both Repair Cost and Benefit of the Bargain Damages
In Moore v Teed, a real estate fraud case against a realtor, the California Court of Appeal upheld a jury verdict awarding the buyer both out-of-pocket and benefit-of-the-bargain damages. The plaintiff was fraudulently induced by his realtor to purchase and renovate a residence, based on the defendant-realtor's representations that he could complete the renovations for $900,000. The defendant was not a licensed contractor, and the foundation that his team constructed was defective and the actual cost far exceeded what the defendant represented. The plaintiff prevailed and was awarded both the out-of-pocket repair expenses and benefit-of-the-bargain damages. In California there are two measures of damages for fraud, out-of-pocket and benefit-of-the-bargain. Out-of-pocket measure restores the plaintiff to the "financial position enjoyed by him prior to the fraudulent transaction, and thus awards the difference in actual value at the time of the transaction between what the plaintiff gave and what he received." The benefit-of-the-bargain measure satisfies "the expectancy interest of the defrauded plaintiff by putting him in the position he would have enjoyed if the false representation relied upon had been true; it awards the difference in value between what the plaintiff actually received and what he was fraudulently led to believe he would receive." In fiduciary cases, tort damages under Civil Code Sections 1709 and 3333 are available. Civil Code Section 1709 provides: One who willfully deceives another with intent to induce him to alter his position to his injury or risk, is liable for any damage which he thereby suffers." Civil Code §3333 provides the general tort measure of damages by permitting recovery of "the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not.
Settling Individual Claims Did Not Resolve Private Attorney General Claims.
The California Supreme Court in Kim v. Reins (2020) ruled that a Plaintiff who settled his individual claims against his employer could continue to litigate his Private Attorneys General Act (“PAGA”) suit against the employer. Restaurant operator Reins employed Kim as an exempt training manager. Kim sued Reins in a class action, claiming that his employer misclassified its training managers and violated the Labor Code violations for failure to pay wages and overtime (§ 1194); provide meal and rest breaks (§ 226.7); provide accurate wage statements (§ 226); waiting time penalties (§ 203); unfair competition (Bus. & Prof. Code, § 17200); and civil penalties under PAGA (§ 2699). The trial court ordered arbitration of all claims except the PAGA claim and stayed the PAGA litigation until the parties arbitrated the individual claims. The Parties settled the individual claims. Upon moving for summary adjudication in the PAGA action, the trial court ruled that the employee was no longer an “aggrieved employee” and thus had no standing under PAGA. On appeal, the California Supreme Court took a narrow view of the PAGA statutory language that defines an “aggrieved employee” as “any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.” The Supreme Court found that a plaintiff does not lose the status of an “aggrieved employee” simply because he/she settles his/her individual Labor Code claims. The Court noted that representative actions were different than class actions. Class actions are procedural devices for individual claims, while PAGA actions are brought on behalf of the state.
California Court Focuses on Insurer’s Conduct – Reasonableness of Settlement Demand in Bad Faith Ruling
In a new opinion, the California Court of Appeal held that CACI bad faith instruction 2334 [i] is incorrect. That an insurer can avoid opening-up the policy where it rejects a reasonable policy limit demand. Pinto v. Famers Insurance Exchange, (March 8, 2021). Plaintiffs’ attorneys maintain that it is per se bad faith for an insurer to reject a settlement demand if it is reasonable, and the insurer is essentially strictly liable for any excess judgment. On the other hand, insurers claim there are situations where a reasonable demand was rejected but, the insurer’s conduct was reasonable. The Pinto court ruled that CACI 2334 is missing the required element of the insurers unreasonable conduct.
Employees Must Be Compensated for Time Spent Calling in to See If They Are Required to Work
In Herrera v. Zumiez, Inc., (2020) the Ninth Circuit ruled that under Wage Order No. 7 and the California Labor Code, workers must be paid if they are required to call in to determine whether they should come to work.
The employee worked as a Sales Associate and was scheduled for work according to two policies. "Show-Up" shifts required employees to report by physically showing up and "Call-In" shifts required an employee to call to find out if they should show up. A Call-In shift might follow a Show-Up shift. Under either circumstance, the telephone call had to be made within a set period before the Show-Up shift. Phone calls lasted five to fifteen minutes. Whether she had a shift before the Call-In shift or not, an employee was required to be available to work the Call-In shift. Employees were not paid for Call-in shifts unless they were permitted to work and were not paid for the time they spent on the phone with their managers. Wage Order 7 requires that for "[e]ach workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee's usual or scheduled day's work, the employee shall be paid for half the usual or scheduled day's work" in an amount no less than two hours' wages and no more than four hours' wages. The Court ruled in favor of compensating the employees finding that requiring payment for calling in furthered the policy goals of California labor law by protecting workers from abusive employer practices.
RECENT CALIFORNIA INSURANCE COVERAGE CASES
Business Pursuits Exclusion: In Terrell v State Farm, (2019) the California Court of Appeal (First District) held that a standard homeowner’s policy did not cover injury to tenant at the insured’s rental property based on the “business pursuits” exclusion. Products Liability Insurance: In Target v Golden State Insurance, (2019) the California Court of Appeal (Fourth District) held that a product supplier’s insurer had no obligation to defend the retailer of the product (and an additional insured) against claims that the retailer mislabeled the product. EPLI Coverage: In Southern California Pizza v. Lloyds, (2019) the Fourth District California Court of Appeal ruled That wage and hour exclusion in an EPLI policy barred coverage for incomplete wage statements but did not bar coverage alleging failure to reimburse business expenses. Insurance Bad Faith: In 501 East 51st Street v. Kookmin Insurance, (2020) the Second District of the California Court Of Appeal held that the “genuine dispute doctrine” barred bad faith liability for an insurer who relied on an expert report concerning the cause of the damage. The insurer relied on an expert report showing the cause of the loss was long term settlement and earth movement, and not a water main “accident” as alleged. This is contrasted by Fadeeff v. State Farm (2020) where the First District Court of appeal held that the “genuine dispute doctrine” did not protect an insurer from bad faith liability over the reasonableness of an expert report. Excess Insurance / Exhausted Policies: In an asbestos case, in SantaFe Braun v. Ins. Co. of North America (2020) the First District Court of Appeal after applying Montrose v. Superior Court, held that “other insurance” clauses did not mandate the insured show all primary layer policies are exhausted to trigger excess insurance. In Axis Reinsurance v. Northrup Grumman the Ninth Circuit held that an excess insurer cannot dispute the exhaustion of underlying insurance by disputing underlying insurers decision to pay earlier claims. Insurance Subrogation: In Pulte v. CBR Electric 2020 the Fourth District Court of Appeal ruled that a subcontractor’s insurer that defended a construction defect action was against a general contractor was entitled to equitable subrogation from other subcontractors who breached their contractual duty to defend. Insurance Agents / Brokers: In Murray v UPS Capital (2020) the Fourth District Court of Appeal ruled that an insurance agent the represents himself out as an expert in a specialized field of insurance coverage may owe a heightened duty to explain to the insured the scope of coverage being provided.
DON’T RECORD CELL OR CORDLESS COMMUNICATIONS WITHOUT CONSENT
The court in Smith v. LoanMe, Inc. (2021) held that no party can intentionally record a covered telephone communication without consent and is subject to both criminal and civil remedies. LoanMe gave a loan to the wife of plaintiff Smith and thereafter called a phone number they were given. Smith’s husband answered, on a wireless phone and told LoanMe his wife was not at home. LoanMe recorded the 18 second call. Although LoanMe caused a “beep” tone to sound during the call, the representative did not orally advise that the call was being recorded. Smith brought a class action against LoanMebbased on Calfifornia Penal Code Section 632.7. The California Supreme Court reversed the Trial Court and Court of Appeals, finding that statute applies to the intentional recording of a covered
communication regardless of whether the recording is performed by a party or nonparty to the communication. The Court concluded that a broad interpretation of the statute promotes the goal of protecting privacy in communications.
ONLINE SELLERS CAN BE HELD LIABILE FOR PRODUCT DEFECTS
On April 26, 2021, the California Appellate Court ruled that Amazon can be held liable for injuries caused by defective products sold through Amazon.com. In Loomis v. Amazon.com LLC, the plaintiff was injured by an exploding hoverboard, manufactured in China, purchased on Amazon.com, and shipped directly from the manufacturer to the Amazon customer. Amazon denied it was involved in the marketing, sale, and distribution of goods and that it was an “online advertiser.” Plaintiff argued that Amazon gets paid a percentage of the sales price on every product sold along with listing fees, handling fees, return fees, etc. Plaintiff further argued that the law needed to keep up with the changing digital marketplace and that online retailers, just like brick-and-mortar stores, were an integral part of the marketing, distribution and sales of products and should be held to the same legal standards. The Court of Appeals agreed, stating, “Amazon thus must face strict liability for Loomis’s fiery encounter with the hoverboard she bought from Amazon’s site. Imposing this duty on Amazon creates financial incentives that back up Amazon’s good words about its concern for customer safety.” This decision will likely be appealed to the California Supreme Court.
Corporate Transparency Act – No More Blind Shell Companies:
Attached to the defense bill recently passed by the Senate and signed into law by the President, was the Corporate Transparency Act (CTA). The CTA requires corporations and limited liability companies (LLCs) to disclose to law enforcement and financial institutions information on who is beneficial owner that owns and controls an entity. It requires disclosure of name, address, date of birth, and driver’s license or other identification number of individuals. No financial information or details about business purpose or operation is required. The information is reported to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) and is accessible by Federal, state, local and tribal law enforcement. The CTA requires updating when there is a change in ownership. Exceptions include certain publicly traded firms that file relevant information with the SEC, or certain private companies with real operations in the U.S. Civil and criminal penalties for failure to report include fines of up to $10,000 and up to two years in prison.
Insurer Gets Hit Hard for Insisting on too Little.
In Barickman vs. Mercury Casualty, 2 Cal.App.5th 508 (2016) the insurance company played “hardball” by refusing to deviate from its “form” release. Mercury’s insured injured two individuals in a car accident, and in the criminal proceeding, might have been required to pay restitution. Mercury agreed to pay its $15,000 policy limits but insisted the plaintiffs sign its “form” release. The plaintiffs’ requested a minor modification which would not prejudice the plaintiffs' entitlement to restitution. As a result, there was no settlement. The Plaintiffs sued Mercury’s insured for damages which was settled with a stipulated judgment for a total of $3 Million and an assignment of the insured’s bad faith rights. Mercury then paid the policy limits and thereafter the bad faith suit was tried before a referee who ruled that the insurer acted unreasonably and awarded the plaintiffs' $3 Million. The Court of Appeal ruled that Mercury unreasonably refused to accept the injured parties’ modified release and that its eventual offering of policy limits was not sufficient to defeat the bad faith claim.
Class Action Suit Against 3M for Defective Earplugs.
3M is heading to trial in April 2021 in a class-action lawsuit over their duel ended earplugs. Their Combat Arms Earplugs were designed to protect users from loud sounds while allowing them to hear softer sounds like normal speech. It is alleged that the earplugs were too short for a snug fit and exposed the user to loud sounds, including explosions. In addition to the class action, there are over 200,000 separate lawsuits. The allegations focused on establishing that the product developer knew of the defect but decided not to redesign them – “putting profits ahead of public safety.”
Supreme Court Rules That Use of Generic Terms in Trademarks May Be Protectable
On June 30,2020, the U.S. Supreme Court issues a ruling in the matter of Booking.com. The Patent Office originally denied protection claiming the name was generic. Booking.com claimed, through evidence including consumer surveys, its use of the name acquired had acquired brand equity and had a secondary meaning that is protectable. The Court analyzed the intent of trademark law is to distinguish the source of goods or services from competing sources. The Court went on to describe the five types of marks generally used - Generic, Descriptive, Suggestive, Arbitrary and Fanciful. It set forth “guiding principles” with respect to whether a term is generic - that generic terms name a class of goods or services, as opposed to a feature or uniqueness. The Court acknowledged that the Booking.com registration would not preclude competitors from using the word “booking” and that “close variations are unlikely to infringe.”
California Enacted New Independent Contractor Laws Based on a Three-Part Test
In September 2019 California passed a new law to determine if one is an employee or independent contractor under the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission. It was based on the California Supreme Court "ABC" test adopted in Dynamex v. Superior Court (2018). Under the ABC test, to be an independent contractor three conditions must be satisfied: 1. The worker is free from the control and direction of the hiring entity in the performance of the work; 2. The worker performs work that is outside the usual course of the hiring entity’s business, and 3. The worker is independently engaged in a trade, occupation, or business of the same nature as that involved in the work performed.
Supreme Court Eliminated Intent to Infringe to Recover Defendant's Profits for Trademark Infringement
In Romag v. Fossil, the trial court jury found the defendant infringed on plaintiff's mark, however they had not done so “willfully." As a result, the Federal Circuit ruled that Plaintiff was not entitled to recover the Defendant's profits under Section 1117(a) of the Lanham Act. The Supreme Court reversed and concluded that the Act "never required a showing of willfulness to win defendant's profits."
Supreme Court Ruled That the Americans with Disability Act Applies to Website Accessibility
A blind person sued Dominos, claiming he was unable to order a pizza because Dominos' website did not have software that would allow him to communicate his order. Plaintiff argued that companies with physical locations must make their websites accessible to those with disabilities. Dominos argued that the A.D.A. applied to physical locations only. The 9th Circuit ruled that "alleged inaccessibility of Domino's website and app impedes access to the goods and services of its physical pizza franchises - which are places of public accommodation. The Supreme Court denied a petition from Domino's over the 9th Circuit's ruling. Dominos' Pizza v. Guillermo Robles, No 18- 1539.
Reptile Strategies and Nuclear Verdicts
"Reptile Theory" and "Nuclear Verdicts" are two topics that are being talked about at professional conferences. In the area of civil litigation, the plaintiff's bar has been using a researched-based strategy called "Reptile" to increase jury verdicts. It does this by using community consciousness arguments to instill fear in jurors’ minds that their safety could be at risk by alleged bad conduct like that of a defendant. It is routinely opposed by attacking plaintiffs attempts to get a jury to "send a message” and deciding a case by emotional reaction rather than objective evaluation. "Nuclear Verdicts” have been generally described as a multi-million verdicts that appear to be unrelated to actual damages. They are accelerating in areas due to many factors such as social, political, desensitization as to the value of money, media coverage of large verdicts, third-party financing of cases, high incomes of CEO's, entertainers, and sports figures, etc. Advancement use and courts acceptance of technology allows parties to forcefully demonstrate high-value arguments for both liability and damages. Avoiding Nuclear Verdicts requires consideration of venues, competency of counsel and experts, and witness presentation, among other things.