Social Networks and Hiring Discrimination?
Maybe I’m just getting old(er) and (more) conservative, but in this job market, I don’t think there is much traction in trying to claim an employer is discriminating by not hiring, or even firing, over what they see on a social networking site.
The fact is, jobs are hard to come by and jurors aren’t all that sympathetic to claims that an employer is being unfair by checking out future or present employees on the internet. I think the attitude is, “you’re lucky to have a job if you can get one.”
This, of course, is not the case if there is a bonafide discriminatory act based on a protected classification such as race, gender, national origin or sexual orientation. But people are justifiably skeptical of those claims (me too, I turn down 99% of the potential cases I review), so it better be the real thing with compelling evidence if you are going to head for court. On the other hand, if there is actual discrimination at work, then that is something that needs to be addressed and remedied. This is America, after all. We still get to fight for equal opportunity, though it is often an uphill battle.
Free Speech and 140 Characters
According to the New York Times, a National Labor Relations Board office claims Thomson Reuters Corp. violated federal labor law with its Twitter policy.
“Labor law specialists say employees have the right to criticize or disparage their companies or supervisors as part of a conversation aimed at improving working conditions, but do not have the right to merely curse supervisors or make untrue, disloyal statements that damage a company’s reputation.”
Regardless of the legal right, it simply isn’t smart to bad mouth your employer using social media. That being said, the NLRB action indicates that American free speech principles remain alive and well, even if the speech is limited to 140 characters.
Agreeing to a settlement doesn’t mean it’s over.
DHL Express Inc. has agreed to settle a putative wage-and-hour class action brought in California federal court by former employees.
Although DHL has agreed this week on the settlement, the case is not actually closed.
Once the parties agree to a settlement, the Court needs to approve it. The process is generally a motion for preliminary approval, where we explain the terms of the settlement to the Court, preliminary approval (or disapproval) by the Court, notice to the class about the terms of the settlement with an opportunity to object or opt out, motion for final approval and final approval (or disapproval) by the Court.
It can take quite awhile for the entire process, much more cumbersome than a conventional individual case.
More on Class Actions: 5 Tips for Understanding Class Actions
Wallmart Stores v Dukes transcript
The Supreme Court heard oral argument Tuesday on a challenge to the certification of a class-action lawsuit on behalf of female employees against the giant retailer Wal-Mart.
This is an important case. We are all waiting to see how the Supreme Court treats class actions in the context of gender discrimination.
Click here to read the Supreme Court transcript.
Simplicity and Balance in the Plaintiff Profession
I was building a pump shed with my judge friend, Margie (aka, the Honorable Margaret Oldendorf), when she told me she intended to re-read Walden by Henry David Thoreau. She said her life was getting complicated and she wanted to focus on getting back to basics, especially when it comes to staying better connected with family and friends.
Now, Thoreau, you may recall, is one of our treasured American philosophers. Walden, of course, was his account of living by a pond for two years in Massachusetts under fairly primitive conditions, even for the 1840’s. Most of us know about Thoreau only because we were forced to read him in high school. Depending on how well we followed the assignment, we may or may not remember his admonition:
Simplicity, simplicity, simplicity! I say, let your affairs be as two or three, and not a hundred or a thousand; instead of a million count half a dozen, and keep your accounts on your thumb nail. In the midst of this chopping sea of civilized life, such are the clouds and storms and quick-sands and thousand and-one items to be allowed for, that a man has to live, if he would not founder and go to the bottom and not make his port at all, by dead reckoning, and he must be a great calculator indeed who succeeds. Simplify, simplify. Instead of three meals a day, if it be necessary eat but one; instead of a hundred dishes, five; and reduce other things in proportion.
I think that was the passage Margie wanted to revisit.
To which, I would guess most of us would say, “Yeah, right!” and smirk, because we know that being a plaintiff lawyer in the first part of the 21st Century is anything but simple. It’s one thing to be simple while hanging out by the pond back before the Civil War. It’s another to try the same feat in an era of Blackberries, fast track and malpractice liability exposure.
Then, I ran into a prominent sole practitioner, John Torgeson, at the Loyola Civil Justice Program fundraiser. I asked him how he’s been doing. He smiled at me and it didn’t even looked strained. “There’s a new word in my vocabulary,” he told me enthusiastically. “It’s called, balance.” I was a little taken aback. Simplicity? Balance? Just what is going on here, anyway?
In truth, Judge Oldendorf’s simplicity and John Torgeson’s balance have always been with us, but in our rush to service clients, find new work, get the money in and everything else that goes with a busy law practice, we tend to forget these basics unless something pops up to force them into our awareness.
We all probably know people who are caught up in complexity in their practices. They rush about. They struggle endlessly to find time to attend to everything on their plate. We probably have all been that person from time to time.
As for unbalanced lives, we’ve all seen that defect destroy friends and their families, be it through over-work, drug addiction, alcohol abuse or love lost through neglect.
I once asked a lawyer of humble beginnings who had banked a large fortune if wealth was everything he’d dreamed it would be. “It’s more of a curse, actually,” he told me. He was struggling at the time with one of his children in a rehab program populated exclusively by other children from wealthy families. I felt great compassion for him, but also a certain helplessness. Balance comes from within, I think.
Ralph Waldo Emerson, another great American philosopher who was friends with Thoreau, had an interesting theory about how all this works. He published his notions in an essay called “Compensation.”
Basically, Emerson believed that in life, just as in physics, for every action there is something akin to an equal and opposite reaction. “Polarity, or action and reaction, we meet in every part of nature,” he wrote. “The same dualism underlies the nature and condition of man. Every excess causes a defect; every defect an excess. Every sweet has its sour, every evil its good.”
Emerson had an apt warning for those of us who might envy colleagues that seem more successful, or more prominent, or more powerful than we: “The farmer imagines power and place are fine things. But the President has paid dear for his White House. It has commonly cost him all his peace, and the best of his manly attributes.”
Was Emerson on to something? Or is it all nonsense and are the only things of true value in this world material goods, large mansions and political clout?
I suppose you have to decide the answer to that question for yourself. In truth, it is one of the questions that, when answered honestly, will define you as an individual. I don’t suppose there is any single correct answer to the question. Not that we’ll learn in this life, anyway.
As for me, two years ago, I turned 50 and realized that while my professional and family life seemed in sync, my physical fitness left a lot to be desired. So I rebalanced a little, cut out some volunteering that didn’t seem productive, competed in my first triathlon at 51 and will run my first marathon in February. What I’ve found is, now that I’m no longer neglecting my fitness, my focus at work has improved and I’m having more fun with the family. I think that, for now, my life is simpler and better balanced. It’s a constant struggle, though.
I was discussing all this with my friend, Ed Wallace, as we were cycling over the Sepulveda pass to Santa Monica from the Valley. As I recall, our conversation went something like this . . .
I told Ed I was writing a column and asked him if he thought balance was important in his life and practice. I already knew where he stood on simplicity; he’s told me many times that in his practice, the simpler the better.
Ed was quiet for a long time, at first I wasn’t sure if he had heard me. Then he started talking thoughtfully. I had to strain to hear him over the wind.
“I know there’s been times when I spent too much time on my practice,” he said slowly. I knew he was thinking about his two boys. “But then,” he added, “sometimes, when there could be more business coming in, I think that I’m not spending enough time.”
“So, balance is a moving target?” I asked.
“I suppose so,” he said, as we downshifted to spin up the hill.
“Probably different for everyone,” I mused.
“I suppose,” he answered.
Then we both fell silent as we peddled simply up through the pass. I imagined Thoreau and Emerson looking down at us. I thought I saw them smile.
Due Process
Labor Code Section 203 provides a waiting time penalty that is consistent with constitutional due process.
State Farm v. Campbell (2003) 538 U.S. 408 concerns constitutional due process limits on punitive damages, not civil penalties. As the Supreme Court notes, one prong of its test in BMW of North America, Inc. v. Gore (1996) 517 U.S. 559 (which refused to sustain a $2 million punitive damages award accompanying $4,000 in compensatory damages) is “the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.” The evil Campbell sought to remedy was the risk of an excessive punitive award imposed by a lay jury. “We have admonished that ‘[p]unitive damages pose an acute danger of arbitrary deprivation of property. Jury instructions typically leave the jury with wide discretion in choosing amounts, and the presentation of evidence of a defendant’s net worth creates the potential that juries will use their verdicts to express biases against big businesses, particularly those without strong local presences.”
The law does not view wage penalties as implicating property rights, which puts the 203 penalty outside of Campbell right at the start.
“A statute entitled ‘An act to provide for the protection of servants and employees of railroads,’ relating to the payment of unpaid wages without abatement or deduction on discharge of an employe[e], does not amount to deprivation of property, as the act is purely prospective in its operation. It does not interfere with vested rights, existing contracts, or destroy, or sensibly encroach upon, the right to contract, although it imposes a duty in reference to the payment of wages actually earned, which restricts future contracts in the particular named.” [Citation omitted.]
Moore v. Indian Spring Channel Gold Mining Co. (1918) 37 Cal.App. 370, 378 (quoting St. Louis, etc., R.R. Co. v. Paul, 173 U.S. 409).
When the section 203 penalty scheme withstood a constitutional due process challenge early in the last century in Moore v. Indian Sprint Channel Gold Mining Co. (1918) 37 Cal.App. 370, the remedial purpose of the penalty was highlighted in the decision. After a penal statute imposing misdemeanor liability and a fine not to exceed five hundred dollars was ruled unconstitutional (Matter of Crane, 26 Cal.App. 22), the legislature changed the law to impose a penalty based on wages with a thirty day limit.
Appellant expresses difficulty in discovering any material distinction between the two acts. In the act of 1911, continues the brief, the penalty is nothing more nor less than a fine not exceeding five hundred dollars; while in the amendment of 1915 the penalty is in effect a fine not exceeding thirty times the servant’s daily wage.” It seems to us that the distinction is obvious in this: The act of 1911 declares that a violation of its provisions is a crime for which the violator is answerable to the state, while by the amendment he must compensate the wage-earner by way of penalty.”
Moore at 373-374. The court of appeal compared the penalty to other statutes, such as Code of Civil Procedure sections 732, 733 and 735 which impose treble damages on tenants who commit waste, cut down trees or forcibly detain property. “The constitutionality of these sections is not questioned. They are held not to be penal, but remedial.” Id. at 375.
The Court of Appeal distinguished between remedial civil penalties and punitive damages in Los Angeles County Metropolitan Transportation Authority v. Superior Court (2004) 123 Cal.App.4th 261, and held that a government entity is not immune from civil penalties imposed by the Unruh Civil Rights Act (Civil Code section 52 et seq.) under Government Code section 818, which bars imposing punitive damages against public entities. “[A] number of courts have concluded that to be condemned as punitive, a penalty, generally speaking, must simply and solely serve that purpose.” Id. at 272 “It is apparent from this legislative history that section 52 has at least two important non-punitive purposes. The first is simply to provide increased compensation to the plaintiff. The second purpose, and perhaps the most important one, is to encourage private parties to seek redress through the civil justice system by making it more economically attractive for them to sue. . . . If not for the civil penalty, many such litigants would neither have the economic incentive nor the means to retain counsel to pursue perpetrators under the statute.” Id. at 271-272.
Moore notes that the 203 penalty has a similar purpose. “There has been a pronounced tendency in state and national legislation for many years, not only to ameliorate the working conditions of the wage earner, but to safeguard him in his relations to his employer in respect of hours of labor and the compensation to be paid for his labor. . . the public safety and welfare demand . . . laws which are designed to secure [for labor] a reasonable wage, [and] to provid, where practicable, for the enforcement of payment by way of liens on the product of his labor . . . The intention of the penalty imposed by the act in question is to make it to the interest of the employer to keep faith with [its] employees and thus avoid injury to them and possible injury to the public at large.” Id. at 381-382.
Note: Moore repeatedly refers to the wage and labor laws under discussion as applicable to a class, e.g., “The act refers to all wage-earners, designated as employees, as the class referred to, and it unquestionably applies equally to all of the class.” Id. at 379.
Asking for Whom the Statute Tolls: Continuing Representation and the Statute of Limitations
A. Continuing Representation and Tolling.
As a general rule, the statute of limitations for legal malpractice claims is tolled during the time that an attorney continues to represent a client. A recent Court of Appeal decision, Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort, 91 Cal. App. 4th 875, 110 Cal. Rptr. 2d 877 (2001), demonstrates that where there is objective evidence of a continuing attorney-client relationship, tolling becomes an indefinite proposition.
Lockley involved plaintiff Kim David Lockley, a former City of Seal Beach police officer of Korean descent who was subjected to racial taunts and harassment at work. When his brother became involved in legal problems out of state, the City targeted Lockley in an April 1988 internal affairs investigation and terminated him. Lockley appealed the firing to the civil service board, filed a workers’ compensation claim and filed an Equal Employment Opportunity Commission complaint alleging racial discrimination.
Cantrell, Green, Pekich, Cruz & McCort (“Cantrell”) represented Lockley on his workers compensation claim. The City and Lockley entered into a compromise and release agreement (“C&R”) under which Lockley agreed to relinquish all claims against the City. For its part, the City agreed to process an application for retirement benefits for Lockley, treating him as having a non-work related disability and to notify the Public Employees Retirement System (“PERS”) that Lockley was entitled to retirement benefits. With the C&R in hand, Lockley resigned from the force and dropped all his claims.
The City reneged on its agreement. It notified PERS that Lockley was terminated for misconduct and delayed notifying PERS of Lockley’s entitlement to retirement benefits for four months, long enough to disqualify him.
Lockley revived his workers’ compensation claim. After a long episode of legal wrangling, the matter worked its way up to the Fourth District Court of Appeal, where Justice Sonenshine’s concurring opinion wondered aloud why Lockley’s attorney had not pursued a breach of contract claim after the City breached the C&R agreement.
Cantrell filed a petition for rehearing, asking that Justice Sonenshine’s remarks be deleted or clarified. The Court of Appeal ordered a modification of the opinion to add a footnote stating: “Lockley’s attorney on this appeal did not represent him at the time.”
Lockley sued Cantrell for legal malpractice on February 8, 2000. The trial court sustained a demurrer without leave to amend based on the statute of limitations after taking judicial notice of the modified opinion. The Second District Court of Appeal reversed.
B. The Statute of Limitations.
The statute of limitations for legal malpractice is found at Code of Civil Procedure section 340.6, which states:
(a) An action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first. In no event shall the time for commencement of legal action exceed four years except that the period shall be tolled during the time that any of the following exist:
(1) The plaintiff has not sustained actual injury;
(2) The attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred;
(3) The attorney willfully conceals the facts constituting the wrongful act or omission when such facts are known to the attorney, except that this subdivision shall toll only the four year limitation; and
(4) The plaintiff is under a legal or physical disability which restricts the plaintiff’s ability to commence legal action.
(b) In an action based upon an instrument in writing, the effective date of which depends upon some act or event of the future, the period of limitations provided for by this section shall commence to run upon the occurrence of such act or event.
The statute was adopted in 1997 as the Legislature’s response to the companion cases of Neel v. Magana, Olney, Levy, Catchcart & Gelfand, 6 Cal. 3d 176, 98 Cal. Rptr. 837 (1971) and Budd v. Nixen, 6 Cal. 3d 195, 98 Cal. Rptr. 849 (1971), which established that delayed discovery and lack of actual (called “appreciable”) harm both acted to toll the statute of limitations.
In Neel, the Supreme Court acknowledged that introducing tolling into the limitations equation came with a cost. We recognize that the instant ruling will impose an increased burden upon the legal profession. An attorney’s error may not work damage or achieve discovery for many years after the act, and the extension of liability into the future poses a disturbing prospect. On the other hand, when an attorney raises the statute of limitations to occlude a client’s action before that client has had a reasonable opportunity to bring suit, the resulting band of the action not only starkly works an injustice upon the client but partially impugns the very integrity of the legal profession. The solution, the high court suggested, was for the Legislature to provide a limitation period for legal malpractice similar to that found in Section 340.5, the medical malpractice statute, which has a one year from date of discovery, four year absolute limit. Section 340.6 adopted the one year/four year scheme as suggested in Neel. However, along with the notion of defined time limits are specific tolling mechanisms designed to extend the time frames in (1) absence of actual damage, (2) during continuing representation, (3) where there is misrepresentation by the attorney and (4) where physical or legal disability restricts the client. An attorney’s special fiducial relationship with the client, combined with the reality that defective legal work will not always cause appreciable harm for sometime are the primary reasons why tolling is specifically incorporated in Section 340.6.
C. Continuing Representation is Interpreted Broadly The purpose of the “continuous representation” rule is to avoid disrupting the attorney-client relationship by a lawsuit and to enable an attorney to correct or minimize an apparent error, while at the same time preventing lawyers from defeating malpractice claims by continuing to represent the client until the statute has run. Laird v. Blacker, 2 Cal. 4th 606, 618, 7 Cal. Rptr. 2d 550 (1992). The Court of Appeal in Lockley applied an objective standard in analyzing whether Cantrell’s representation of Lockley met the standard for tolling. “Continuity of representation ultimately depends, not on the client’s subjective beliefs, but rather on evidence of an ongoing mutual relationship and of activities in furtherance of the relationship.” The general rule is that the attorney’s representation does not end “until the agreed tasks or events have occurred, the client consents to termination or a court grants an application by counsel for withdrawal.” [Emphasis in original.]Lockley, supra, 91 Cal. App. 4th at 887-888, 110 Cal. Rptr. 2d 877. Using the objective standard, the Court held that Lockley’s complaint stated a claim that avoided the statute of limitations by virtue of its allegations that Cantrell had continued to represent him until within one year of filing. “On appeal, Lockley contends that statute of limitations governing attorney malpractice claims was tolled while [Cantrell] continued to represent him. This is a correct statement of the law.” 91 Cal. App. 4th at 887. In reaching its holding, the Second District panel decided it was not bound by the Fourth District’s earlier footnote implying that Cantrell’s representation of Lockley was not continuous. In a lengthy discussion of judicial notice doctrine, the Second District concluded that the additional footnote added to Justice Sonenshine’s concurring opinion did not meet the standard of being based on an adversary proceeding adjudicating a fact question and found no substantial evidence in the record to support the conclusion. The question of whether or not Cantrell’s representation was continuous, the Second District determined, remained in dispute. Cantrell, for its part, argued that during the relevant period, it represented Lockley only on his workers’ compensation claim, not the C&R agreement. Since the two items were not the same specific subject matter, the continuing representation doctrine did not apply. The Court of Appeal rejected that argument without difficulty. Distinguishing Foxborough v. Van Atta, 26 Cal. App. 4th 217, 229, 31 Cal. Rptr. 2d 525 (1994) (“the limitations period is not tolled when an attorney’s subsequent role is only tangentially related to the legal representation the attorney provided to the plaintiff”), in which a continuing representation was held as not occurring where the attorney was discharged, then rehired as an expert witness, the court found that Cantrell’s argument attempted to draw too fine a line in defining the limits of representation. On its face, Lockley’s complaint alleges [Cantrell] continuously represented appellant’s legal interests on the same specific matter of “claim for worker’s compensation from 1988 until March 1999.” We may reasonably infer from the amended complaint that Lockley hired [Cantrell] in only one capacity, that of legal representative. [Emphasis in original.] Lockley, supra, 91 Cal. App. 4th at 889, 110 Cal. Rptr. 2d 877.
D. Applying Lockley’s Lesson The moral of the story is that in analyzing whether there is a continuing representation that will toll the statute of limitations, look to see if the attorney has continued to represent the client without interruption in the same capacity throughout the relationship. As a practical matter, Lockley means that as long as there are objective facts pointing to the continuation of an attorney-client relationship past what would otherwise be a time barred by the statute of limitations, there will be an argument that the Section 340.6(a)(2) tolling provision applies and a claim is timely. In your own practice, Lockley underlines the importance of documenting precisely the outlines of the attorney-client relationship in a fee agreement and the termination of that relationship in writing. As counselors-at-law who are privileged to represent people in California’s legal system, we carry great responsibility. Section 340.6 and decisional law such as Lockley underline that a breach of that responsibility carries with it a consequence that the prudent lawyer should not ignore. A. Introduction.
Whenever there are two or more causes of a loss, it is likely that the carrier’s investigation will focus on exaggerating an excluded cause and ignoring any fact that argues for coverage. Carriers habitually push the envelope when trying to deny coverage in concurrent causation situations. The most recent evidence is found in Palub v. Hartford Underwriters Ins. Co.,92 Cal. App. 4th 645, 112 Cal. Rptr. 2d 270 (2001) (rev. den. Dec. 12, 2001), where the Court of Appeal reaffirmed the basic principal that when the proximate cause of a loss is a covered peril, it doesn’t matter if there is an excluded peril somewhere else in the causation chain. To the extent that the “exclusion” would exclude loss proximately caused by [a covered peril], it violates Insurance Code section 530 and the long-standing principal that a property insurer is liable whenever a covered risk is the proximate cause of a loss, and is unenforceable. 92 Cal. App. 4th at 650, 112 Cal. Rptr. 2d at 274. Since this is an area fraught with the potential for the carrier to manipulate its investigation and coverage analysis to the policy holder’s detriment, it is critical to understand how California law applies proximate cause to insurance claims. B. Proximate Cause, Efficient or Otherwise. In California, it is settled that where a policy exclusion conflicts with state law the exclusion has no effect. Howell v. State Farm Fire & Cas. Co., 218 Cal. App. 3d 1446, 1464, n.4, 267 Cal. Rptr. 708 (1990). It is also settled that where there are two or more causes of loss “concurrent causes” and the efficient proximate cause is a covered peril, then there is coverage for the loss, even if one or more of the concurrent causes is excluded.. Garvey v. State Farm Fire & Cas. Ins. Co., 48 Cal. 3d 395, 257 Cal. Rptr. 292 (1989). Just as Justice Stanley Mosk warned in his Garvey dissent, the insurance industry has devoted considerable energy to twisting and contorting efficient proximate cause to fit any claims denial situation. Plaintiff’s counsel’s job is to us to cut through the confusion. Whenever there are two or more causes of a loss, and one or more of those causes is excluded, the analysis begins with Insurance Code section 530, which states: An insurer is liable for a loss of which a peril insured against was the proximate cause; although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause. If the covered cause is closer in time to the loss than the excluded cause, this is generally where the analysis will stop. A prime example of how this works is found in Brooks v. Metropolitan Life Ins. Co., 27 Cal. 3d 305, 163 P.2d 689 (1945). In Brooks, an insured with terminal cancer died in a fire. The carrier denied coverage under an accidental death policy, arguing essentially that since the insured would have not have died of his burns if he had not already been sick, the exclusion for “disease and mental infirmity” applied. Disease, argued the insurance company, was a concurrent cause and trumped the covered peril, i.e., death by fire. The California Supreme Court rejected the argument: The presence of preexisting disease or infirmity will not relieve the insurer from liability if the accident is the proximate cause of death; and [] recovery may be had even though a diseased or infirm condition appears to actually contribute to cause the death if the accident sets in progress the chain of events leading directly to death, or if it is the prime or moving cause. In other words, in a hypothetical claim situation such as where wind a covered peril requires replacing a roof that was previously functioning adequately and the carrier denies the claim by arguing (1) the roof was negligently installed, (2) third-party negligence is excluded, (3) the wind would not have blown off the roof but for the negligent installation, Brooks tells us that the carrier is not being reasonable. The Brooks rule is critical in understanding proximate cause and efficient proximate cause because it was expressly followed when our Supreme Court examined an excluded cause of loss within the causal chain in Sabella v. Wisler, 59 Cal. 2d 21, 32, 27 Cal. Rptr. 689, 696 (1963) and Garvey v. State Farm Fire & Cas. Co., 48 Cal. 3d 395, 403, 257 Cal. Rptr. 292, 296 (1989). Both Sabella and Garvey demonstrate how concurrent causation analysis becomes a shade more complex when an excluded cause occurs after a covered peril. The analysis then becomes a search for the “efficient proximate cause” of the loss, also known as the “predominate” cause. When an excluded peril appears within the causal chain, carriers often look to Insurance Code section 532 as a basis for denying coverage. The statute provides: If a peril is specially excepted in a contract of insurance and there is a loss which would not have occurred but for such peril, such loss is thereby excepted even though the immediate cause of loss was a peril which was not excepted. In 1963, the California Supreme Court reconciled sections 350 and 352 in Sabella v. Wisler, 59 Cal. 2d 21, 27 Cal. Rptr. 689 (1963), which concerned a subsidence damage claim made under a homeowner policy. In Sabella, the policy specifically excluded “settling” and the carrier denied coverage, relying on section 352. The policy holder argued that the reason the house settled was that a negligently installed sewer line had ruptured, spilling water into loose fill and “setting in motion the forces tending towards settlement.” The Supreme Court held that the loss was covered because third party negligence was a covered peril under the policy and that negligence was the efficient cause of the damage. “In determining whether a loss is within an exception in a policy, where there is a concurrence of different causes, the efficient cause the one that sets the others in motion is the cause to which the loss is attributed, though the other causes may follow it and operate more immediately in producing the disaster.” Sabella, supra, 59 Cal. 2d at 31, 27 Cal. Rptr. at 695 (quoting, 6 Couch, Insurance (1930) § 1466). As the high court later explained in Garvey: We reasoned [in Sabella] that sections 530 and 532 were not intended to deny coverage for losses whenever “an excepted peril operated to any extent in the chain of causation so that the resulting harm would not have occurred ‘but for’ the excepted peril’s operation.” Rather, we explained that when section 532 is read along with section 530, the “but for” clause of section 532 necessarily refers to a “proximate cause” of the loss, and the “immediate cause” refers to the cause most immediate in time to the damage. Garvey, supra, 48 Cal. 3d at 402, 257 Cal. Rptr. at 295. Garvey reaffirmed the Sabella analysis in 1989 when the Supreme Court considered another claim for damage to a home damaged by earth movement. Again the carrier denied coverage under an earth movement exclusion and again the insureds argued that their policy covered losses caused by third party negligence. The Supreme Court looked to efficient proximate cause to solve the coverage question. Sabella defined “efficient proximate cause” alternatively as the “one that sets others in motion” and as “the predominating or moving efficient cause.” We use the term “efficient proximate cause” (meaning predominating cause) when referring to the Sabella analysis because we believe the phrase “moving cause” can be misconstrued to deny coverage erroneously, particularly when it is understood to mean the “triggering” cause. Garvey, teaches a number of lessons. First, in determining an efficient proximate cause, look for an active cause that sets a causal chain in motion. Following Brooks, a simple condition of person or property can never be an efficient proximate cause. Second, an efficient proximate cause is a predominating cause and a term of art. In denying coverage, carriers will be creative and expansive in their own definitions of efficient proximate cause, but cannot be allowed to get away with loose definitions. C. Reading Exclusions Out of the Policy. Even though Sabella, Garvey, Howell and their progeny have been the law in California for over a generation, carriers still attempt to push the efficient proximate cause doctrine beyond its limits to deny coverage. For example, some carriers will argue that efficient proximate cause translates into the “most important” cause of a loss and then will fixate on an excluded event in the chain of causation in order to document a denial. This is a position that relies on a misstatement of the law. Garvey, after all, establishes that efficient proximate cause is equivalent to predominating cause, the meaning first offered in Sabella. Nowhere do the cases discuss “most important” cause as a standard. The distinction is not mere linguistics. Going back to our roof loss hypothetical, a sloppy roofing job may well prove adequate against the elements for a decade or more before a windstorm tears it apart. The roofer’s negligence cannot by definition be an efficient proximate cause of the loss because it sets nothing in motion. It is simply a state of condition and the Brooks rule is that “recovery may had even though a diseased or infirm condition appears to actually contribute to cause the [loss] if the [covered peril] sets in progress the chain of events leading directly to [the loss], or if it is the prime or moving cause.” 163 P.2d 689, 691. Since it is the windstorm a covered peril that sets the damage chain in motion, following Brooks, Sabella and Garvey, windstorm is the efficient proximate cause and triggers coverage under the policy. For its part, roofer negligence an excluded peril is an infirm condition that is a remote cause as a matter of law and cannot defeat coverage. The reasonable expectations of both insured and insurer that wind damage is covered are met. The carrier is free to pursue the roofer on its own in subrogation, but it must pay the claim benefits provided by the policy. Palub v. Hartford Underwriters Ins. Co., 92 Cal. App. 4th 645, 112 Cal. Rptr. 2d 270 (2001), provides a good example of how carriers continue to try to abuse efficient proximate cause analysis. In Palub, the insureds made a claim under their all-risk homeowner policy for damage to their home after a slope behind the house failed. The insured argued that weather conditions caused the slope to fail and were the efficient proximate cause of the loss. The insurer argued that weather conditions were excluded under the policy by a provision stating, “We do not insure against loss to property . . . caused by any of the following . . . (a) Weather conditions. However, this exclusion only applies if weather conditions contribute in any way with a cause or event excluded in paragraph 1. above to produce the loss.” The Court of Appeal observed that in light of this language, weather conditions were not an excluded cause of loss by themselves. The Court also held that to the extent that the policy provision attempted to exclude coverage for weather conditions that acted as the efficient proximate cause of a loss, the exclusion violated Insurance Code section 530 and was unenforceable. Palub, in turn, relied on Howell v. State Farm Fire & Cas. Co., 218 Cal. App. 3d 1446, 267 Cal. Rptr. 708 (1990), which addressed much the same problem. Howell involved an all-risk homeowner’s policy and a claim for damage due to landslide. The insured argued that fire had destroyed the vegetation on a nearby slope and unusually heavy rains then drenched the bare unprotected ground, resulting in a landslide. An expert testified that the landslide probably would not have happened had the ground cover been intact. The Court held that the fire was the efficient proximate cause of the loss under this analysis and found coverage. 218 Cal. App. 3d at 456, 267 Cal. Rptr. at 714-715. The primary issue decided by Howell is that an insurer cannot contractually exclude coverage when an insured peril is the efficient proximate cause of the loss, no matter how the policy is written. Any exclusion purporting to defeat coverage where the efficient proximate cause is a covered peril is simply read out of the policy. D. Conclusion. Just as Justice Mosk warned in Garvey, the efficient proximate cause analysis has tempted many a carrier to engage in studied mischief. But Sabella and Garvey provide the bedrock definitions for efficient proximate cause. Brooks confirms that a pre-existing, latent infirmity can never be an efficient proximate cause since is a condition rather than a moving cause. And Palub and Howell render inapplicable exclusions that seek to limit coverage where a covered peril is the efficient proximate cause of loss.
Exposing Carriers Who Abuse Efficient Proximate Cause
Brooks, supra, 163 P. 2d at 691.
Garvey, supra, 48 Cal. 3d at 403-404, 257 Cal. Rptr. at 296.
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William A. Daniels is a Trial Attorney with BILL DANIELS | LAW OFFICES, APC, in Encino, CA. His practice focuses on class actions, employment and serious personal injury. A graduate of Loyola Law School of Los Angeles, he is a member of the Consumer Attorney Association of Los Angeles Board of governors and a founding member of the Civil Justice Program and the 21st Century Trial School at Loyola. For several consecutive years he has been names a “Super Lawyer” Los Angeles Magazine in Southern California.
He can be reached at William.Daniels@BillDanielsLaw.com; www.BillDanielsLaw.com
A Class Action Primer
1. Class Actions Help Address Common Problems.
Class actions are a way for groups of people with common problems to seek a solution in a convenient format.
Class actions typically seek to solve simple questions that impact large number of people. Whether all of an insurance company’s claims personnel are entitled to overtime or whether all of the bank’s credit card customers were overcharged because of a single, unfair, interest calculation are good examples of problems that class actions best address.
2. Class Actions are a Unique Class of Case.
For purposes of news reporting, it is important to remember that a class action is a process that is unique unto itself. For example, a class action is different than a “mass tort,” which tends to involve problems such as when a large number of people are injured in different ways by a single type of defective drug or product. Mass tort cases might involve one common element – generally a single defective product – that affects each affected individual in a unique manner.
Cases involving products like Vioxx or asbestos fall under the mass tort label. These cases are not generally prosecuted as class actions because, even though they involve a common product, the injuries each consumer suffers are individual to them. So, mass torts are generally litigated in systems such as the federal Multi-District Litigation system – where a single judge will preside over hundreds or thousands of individual cases coordinated for administrative purposes. While these systems allow large numbers of people with one common problem to have their claims resolved in an efficient fashion, they are not the same as class actions and make different demands on the reporter.
The point is, when reporting on a large action involving numerous individuals, always make sure that you know whether it is a class action, or some other legal mechanism that serves a similar, but different purpose. Then approach the story accordingly.
3. Understanding Class Action Procedure is Important in Covering the Story.
Class actions tend to be driven by legal procedure. Understanding the procedural steps is key to accurately capturing breaking class action stories.
Class actions can be brought in either state of federal court. State courts remain an important forum for class action litigation. Even so, recent federal legislation known as the “Class Action Fairness Act” has tended to make Class actions more of a federal area than it has ever been before.
The legislation was passed after years of effort by business interests and was intended to shrink the number of class actions filed across the country. Early reports indicate that during the first six months of the new legislation, there has been a “precipitous decline” in class action activity. Even so, class actions continue to make up an important part of legal landscape.
Unlike covering trials, class actions tend to take place mostly on paper. This can be both a blessing and a curse. It is blessing because, if a reporter is able to obtain a copy of an interesting case complaint or pleading at the time it is filed, it becomes relatively simple to write a story. On the other hand, trying to follow day-to-day activity in a class action can be quite difficult since legal filing generally take place at the clerk’s counter without notice or fanfare. Still, there are some constants in covering class action stories.
Class actions start with the filing of a complaint. Generally, the complaint will have specifics about what it is that the class actions seek to address and what kind of remedies the plaintiff class is looking for. The class plaintiffs named in the complaint seek to be representatives for the entire class, which may in turn total multiple thousands of people.
The fact that a class action complaint has been filed can in and of itself be a news event. Even so, a reporter needs to remember that the allegations and complaint are just that: they are the plaintiff’s counsel’s view of the best facts supporting their side of the argument and there are always two sides to every story.
After the complaint is filed, there will generally be some sort of paper work filed with the court attacking the complaint as deficient and asking the court to either knock the complaint out completely or require that it be amended. These pleadings are called demurrers and motions to strike in state court and motions to dismiss in federal court.
If the judge rules that the complaint is dismissed, then that could be a new story. On the other hand, if the judge says the complaint is sufficient, that fact might be of interest to a reporter following the story but may not prove newsworthy.
A motion for class certification is one of the defining events in a class action, because simply filing a complaint does not by itself a class action make. In the class action process, the judge acts as a gatekeeper for the case being formally designated as a vehicle to resolve problems applying to an entire class, and counsel for the plaintiff must bring a motion asking that the class be certified as such.
The ruling on class certification is generally a newsworthy event where there is interest in the underlying case. Obtaining class certification is considered to a major victory in the process for the plaintiff’s side. Conversely, denial of certification is generally seen as a major victory for the defense.
Either before or after class certification, a summary judgment/adjudication motion is likely. These motions ask the court to decide important parts of the case in favor of one side or the other.
For example, the plaintiff may ask the court rule that the defense is liable as a matter of law and that the only thing in dispute is damages. Or, the defense may ask the court to rule that the plaintiffs have no case as a matter of law and the thing should be thrown out in its entirety. Either way, rulings on summary judgment can generate news.
Just as important, the papers in support and in opposition to both summary judgment motions and certification motions can provide reporters with invaluable background information as they prepare their stories. Since the papers are part of the court file which is a public record, a reporter has a valuable resource available if there is time to review it.
4. Reporter Resources for Class Action Reporting.
More and more court systems are making court filings available on the internet. Since class actions are so paper intensive, subscribing to such a service can save quite a bit of leg work. Even so, it may be days before a key filing is scanned into the court system and available for downloading. So, it is a good idea to contact the lawyers in the case early on and ask if they are willing to provide tips on when key filings will make their way into the public record.
As always, where a reporter is following a story regarding a class action, it is critical to develop outside sources that can help explain the details behind each step of the process. While attorneys on both plaintiff and defense side can be valuable sources, developing relationships with law school professors or experts in the area can give the reporter an important edge.
Organizations such as the Consumer Attorneys Association of Los Angeles or the Association of Trial Lawyers of America have resources both over the telephone and on the internet. Also a Google search on the subject matter of the class action will often turn up leads for sources that are familiar with the case subject matter. As always, the internet is a powerful research tool.
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William A. Daniels is a Trial Attorney with BILL DANIELS | LAW OFFICES, APC, in Encino, CA. His practice focuses on class actions, employment and serious personal injury. A graduate of Loyola Law School of Los Angeles, he is a member of the Consumer Attorney Association of Los Angeles Board of governors and a founding member of the Civil Justice Program and the 21st Century Trial School at Loyola. For several consecutive years he has been names a “Super Lawyer” Los Angeles Magazine in Southern California.
He can be reached at William.Daniels@BillDanielsLaw.com; www.BillDanielsLaw.com
California employees are generally “at will,” which limits rights outside of discrimination or other illegal conduct
In California, employees are generally considered “at will,” which means that the law permits employers to suspend, demote or terminate (fire) them without providing a reason. As a result, if you believe your employer has simply been unfair to you in the workplace, there is usually no remedy other than finding another job.
There are important exceptions to this general rule, especially where an employer acts in a discriminator manner. It is illegal for an employer to discriminate in the workplace because of age, gender, race, national origin or sexual orientation, among other protected classes. It is also usually prohibited to fire or discipline an employee for reporting or complaining to officials or governmental agencies about illegal discrimination, what is usually referred to as “whistle-blower” conduct.
To protect our precious system of trial by jury, the law also prohibits firing or otherwise disciplining an employee for missing work due to jury service. However, your employer may limit the amount of paid time provided where an employee is selected to serve on a jury.
In some cases, if you quit or relocated because you were relying on a job offer, but the offer wasn’t made in good faith, you might have a remedy. However, this exception requires that you can show that the employer made the offer in bad faith, meaning they knew the job offer wasn’t serious at the time it was made.
Some employees have contracts for fixed employment terms or that state they can only be fired for good cause. Where an employer violates that agreement, the remedy is a breach of contract action in a civil court.
In some cases, a court will find an implied in fact contract that gives an employee rights beyond those the at will doctrine provides. In finding an implied in fact contract, the court will look at such factors as length of employment, job performance evaluations, job duties, commendations, assurances of employment for certain terms and promises made in an employee handbook or human resources policy manuals. There is no fixed standard in the court’s analysis and such factors as whether an employer is acting out of economics or was justified in acting because of poor job performance by the employee will all be taken into consideration.
Often, if you believe you have suffered illegal discrimination in the workplace or some other illegal job action, your best course is to consult an experienced employment attorney who can help you analyze your options.
